-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, k8aZZrmRr3on1x8qvpvRGjQxIULc8XdPhyjNizvSKB7250INAdfVMFqg1mIy/rq8 5oKX2y/ftMaOjyEs/vpn+Q== 0000912057-94-000013.txt : 19940113 0000912057-94-000013.hdr.sgml : 19940113 ACCESSION NUMBER: 0000912057-94-000013 CONFORMED SUBMISSION TYPE: S-4/A PUBLIC DOCUMENT COUNT: 36 FILED AS OF DATE: 19940106 FILER: COMPANY DATA: COMPANY CONFORMED NAME: P I RESORTS LTD CENTRAL INDEX KEY: 0000913454 STANDARD INDUSTRIAL CLASSIFICATION: 0000 STATE OF INCORPORATION: C5 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: 33 SEC FILE NUMBER: 033-50733 FILM NUMBER: 94500459 BUSINESS ADDRESS: STREET 1: P O BOX N 477 PARADISE ISLAND CITY: NASSAU STATE: C5 ZIP: 10012 BUSINESS PHONE: 8093633000 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RESORTS INTERNATIONAL INC CENTRAL INDEX KEY: 0000083394 STANDARD INDUSTRIAL CLASSIFICATION: 7990 IRS NUMBER: 590763055 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: 33 SEC FILE NUMBER: 033-50733-01 FILM NUMBER: 94500460 BUSINESS ADDRESS: STREET 1: 1133 BROADWALK CITY: ATLANTIC CITY STATE: NJ ZIP: 08401 BUSINESS PHONE: 6093446000 FORMER COMPANY: FORMER CONFORMED NAME: CARTER MARY PAINT CO DATE OF NAME CHANGE: 19680724 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RESORTS INTERNATIONAL HOTEL FINANCING INC CENTRAL INDEX KEY: 0000800469 STANDARD INDUSTRIAL CLASSIFICATION: 7990 IRS NUMBER: 222647317 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: 33 SEC FILE NUMBER: 033-50733-03 FILM NUMBER: 94500461 BUSINESS ADDRESS: STREET 1: 1133 BOARDWALK CITY: ATLANTIC CITY STATE: NJ ZIP: 08401 BUSINESS PHONE: 6093446000 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RESORTS INTERNATIONAL HOTEL INC CENTRAL INDEX KEY: 0000841281 STANDARD INDUSTRIAL CLASSIFICATION: 7990 IRS NUMBER: 210423320 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: 33 SEC FILE NUMBER: 033-50733-02 FILM NUMBER: 94500462 BUSINESS ADDRESS: STREET 1: 1133 BOARDWALK CITY: ATLANTIC CITY STATE: NJ ZIP: 08401 BUSINESS PHONE: 6093446000 S-4/A 1 FORM S-4/A AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 5, 1994 REGISTRATION NO. 33-50733 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ AMENDMENT NO. 1 TO FORM S-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------------ RESORTS INTERNATIONAL, INC. (Exact name of registrant as specified in its charter) DELAWARE 7011 59-0763055 (State or other (Primary Standard (I.R.S. Employer jurisdiction of Industrial Identification No.) incorporation or Classification Code organization) Number)
1133 BOARDWALK CHRISTOPHER D. WHITNEY, ESQ. ATLANTIC CITY, NEW JERSEY 08401 RESORTS INTERNATIONAL, INC. (609) 344-6000 1133 BOARDWALK (Address, including Zip code, and telephone number, ATLANTIC CITY, NEW JERSEY 08401 including area code, of registrant's principal executive (609) 344-6000 offices) (Name, address, including Zip code, and telephone number, including area code, of agent for service)
RESORTS INTERNATIONAL HOTEL FINANCING, INC. (Exact name of registrant as specified in its charter) DELAWARE 6719 APPLIED FOR (State or other (Primary Standard (I.R.S. Employer jurisdiction of Industrial Identification No.) incorporation or Classification Code organization) Number)
1133 BOARDWALK CHRISTOPHER D. WHITNEY, ESQ. ATLANTIC CITY, NEW JERSEY 08401 RESORTS INTERNATIONAL, INC. (609) 344-6000 1133 BOARDWALK (Address, including Zip code, and telephone number, ATLANTIC CITY, NEW JERSEY 08401 including area code, of registrant's principal executive (609) 344-6000 offices) (Name, address, including Zip code, and telephone number, including area code, of agent for service)
RESORTS INTERNATIONAL HOTEL, INC. (Exact name of registrant as specified in its charter) NEW JERSEY 7011 21-0423320 (State or other (Primary Standard (I.R.S. Employer jurisdiction of Industrial Identification No.) incorporation or Classification Code organization) Number)
1133 BOARDWALK CHRISTOPHER D. WHITNEY, ESQ. ATLANTIC CITY, NEW JERSEY 08401 RESORTS INTERNATIONAL, INC. (609) 344-6000 1133 BOARDWALK (Address, including Zip code, and telephone number, ATLANTIC CITY, NEW JERSEY 08401 including area code, of registrant's principal executive (609) 344-6000 offices) (Name, address, including Zip code, and telephone number, including area code, of agent for service)
P. I. RESORTS LIMITED (Exact name of registrant as specified in its charter) THE COMMONWEALTH OF THE BAHAMAS 7011 98-0137084 (State or other (Primary Standard (I.R.S. Employer jurisdiction of Industrial Identification No.) incorporation or Classification Code organization) Number)
P.O. BOX N-4777 CHRISTOPHER D. WHITNEY, ESQ. PARADISE ISLAND RESORTS INTERNATIONAL, INC. NASSAU, THE BAHAMAS 1133 BOARDWALK (809) 363-3000 ATLANTIC CITY, NEW JERSEY 08401 (Address, including Zip code, and telephone number, (609) 344-6000 including area code, of registrant's principal executive (Name, address, including Zip code, and offices) telephone number, including area code, of agent for service)
------------------------ COPIES TO: STEVEN R. FINLEY GIBSON, DUNN & CRUTCHER 200 PARK AVENUE NEW YORK, NEW YORK 10166-0193 ------------------------ Approximate date of commencement of proposed sale of the securities to the public. As soon as practicable after the registration statement becomes effective. ------------------------ If the securities being registered on this form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. / / - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- CALCULATION OF REGISTRATION FEE - ------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------- PROPOSED PROPOSED MAXIMUM TITLE OF EACH AMOUNT MAXIMUM AGGREGATE AMOUNT OF CLASS OF SECURITIES TO BE OFFERING PRICE OFFERING REGISTRATION TO BE REGISTERED REGISTERED PER UNIT PRICE (1) FEE
- ------------------------------------------------------------------------------------------------- 11% Mortgage Notes due 2003 (2).... $125,000,000 11.375% Junior Mortgage Notes due 2004 (2).......................... $35,000,000 Common Stock, par value $.01 per share (3)......................... 20,000,000 Class B Redeemable Common Stock, par value $.01 per share (3)...... 80,000 * $306,926,657 $95,915 Ordinary Shares, par value $.01 per share (4)......................... 25,000,000 Guarantees relating to the 11% Mortgage Notes due 2003 (5)....... Guarantees relating to the 11.375% Junior Mortgage Notes due 2004 (5)............................... - ------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------- (1) Estimated solely for the purpose of computing the registration fee. The proposed maximum aggregate offering price is based upon, pursuant to Rule 457(f): (i) the market value of $183,772,709 of Resorts International, Inc.'s Series A Senior Secured Redeemable Notes due April 15, 1994, as established by the average of the high and low prices thereof on October 21, 1993, as quoted on the American Stock Exchange, Inc.; plus (ii) the market value of $153,153,948 of Resorts International, Inc.'s Series B Senior Secured Redeemable Notes due April 15, 1994, as established by the average of the high and low prices thereof on October 21, 1993, quoted on the American Stock Exchange, Inc.; less (iii) the value of cash payments by Resorts International, Inc. estimated to be not less than $30,000,000.00 (2) Issued by Resorts International Hotel Financing, Inc. (3) Issued by Resorts International, Inc. (4) Issued by P. I. Resorts Limited. (5) Issued by Resorts International Hotel, Inc. * Not applicable.
------------------------ THE REGISTRANT HEREBY AMENDS 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 COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. RESORTS INTERNATIONAL, INC. RESORTS INTERNATIONAL HOTEL FINANCING, INC. RESORTS INTERNATIONAL HOTEL, INC. P. I. RESORTS LIMITED CROSS REFERENCE SHEET PURSUANT TO ITEM 501(B) OF REGULATION S-K, SHOWING THE LOCATION IN THE INFORMATION STATEMENT/PROSPECTUS OF THE INFORMATION REQUIRED BY PART I OF FORM S-4
S-4 ITEM NUMBER AND CAPTION LOCATION OR HEADING IN INFORMATION STATEMENT/PROSPECTUS - ------------------------------------------------------------ ------------------------------------------------------------ A. INFORMATION ABOUT THE TRANSACTION 1. Forepart of Registration Statement and Outside Front Cover Page of Prospectus................... Facing Page of Registration Statement; Cross Reference Sheet; Outside Front Cover Page of Information Statement/Prospectus 2. Inside Front and Outside Back Cover Pages of Prospectus....................................... Available Information; Enforceability of Civil Liabilities; Table of Contents 3. Risk Factors, Ratio of Earnings to Fixed Charges and Other Information............................ Summary; Risk Factors; Selected Historical Financial Data; Pro Forma Financial Data; Market Prices of Old Series Notes; Market Prices of RII Common Stock 4. Terms of the Transaction.......................... Summary; Risk Factors; The Restructuring; The Plan; Accounting Treatment; Description of New RIHF Mortgage Notes; Description of New RIHF Junior Mortgage Notes; Description of RIHF Senior Facility Notes; Description of New Equity Securities; Description of Paradise Island Purchase Agreement; Description of PIRL Standby Distribution Agreement; Description of the Caesars Payment; Description of Deferred Cash; Description of Excess Cash; Description of Litigation Trust Units; Description of Net Reserved Cash; Description of Net Plan Consummation Cash and Plan Expenses; Description of Griffin Warrants; Description of Old Series Notes; Certain Federal Income Tax Considerations 5. Pro Forma Financial Information................... Summary; The Restructuring; Capitalization of RII; Capitalization of PIRL; Pro Forma Financial Data 6. Material Contracts with the Company Being Acquired......................................... * 7. Additional Information Required for Reoffering by Persons and Parties Deemed to be Underwriters.... *
- ------------------------ * Item is omitted because the answer is negative or the Item is inapplicable.
S-4 ITEM NUMBER AND CAPTION LOCATION OR HEADING IN INFORMATION STATEMENT/PROSPECTUS - ------------------------------------------------------------ ------------------------------------------------------------ 8. Interests of Named Experts and Counsel............ Legal Matters; Experts 9. Disclosure of Commission Position on Indemnification for Securities Act Liabilities... * B. INFORMATION ABOUT THE REGISTRANT 10. Information with Respect to S-3 Registrants....... * 11. Incorporation of Certain Information by Reference........................................ * 12. Information with Respect to S-2 or S-3 Registrants...................................... * 13. Incorporation of Certain Information by Reference........................................ * 14. Information with Respect to Registrants Other than S-3 or S-2 Registrants........................... Summary; Risk Factors; The Restructuring; Selected Historical Financial Data; Pro Forma Financial Data; Market Prices of Old Series Notes; Market Prices of RII Common Stock; Management's Discussion and Analysis of Financial Condition and Results of Operations; Business of the Company; Management of RII; Management of RIHF; Management of RIH; Management of PIRL; Security Ownership; Certain Transactions; Description of New Equity Securities; Index to Financial Statements and Supplementary Data C. INFORMATION ABOUT THE COMPANY BEING ACQUIRED 15. Information with Respect to S-3 Companies......... * 16. Information with Respect to S-2 or S-3 Companies........................................ * 17. Information with Respect to Companies Other Than S-3 or S-2 Companies............................. * D. VOTING AND MANAGEMENT INFORMATION 18. Information if Proxies, Consents or Authorizations are to be Solicited.............................. Outside Front Cover Page of Information Statement/Prospectus; Summary; The Plan; The Solicitation; Management of RII; Management of RIHF; Management of RIH; Management of PIRL; Security Ownership; Certain Transactions 19. Information if Proxies, Consents or Authorizations are not to be Solicited or in an Exchange Offer............................................ *
- ------------------------ * Item is omitted because the answer is negative or the Item is inapplicable. SUBJECT TO COMPLETION, DATED JANUARY 5, 1994 RESORTS INTERNATIONAL, INC. 1133 BOARDWALK ATLANTIC CITY, NEW JERSEY 08401 (609) 344-6000 January , 1994 To: The Shareholders and Creditors of Resorts International, Inc. and GGRI, Inc. We are pleased to deliver to you the accompanying Information Statement/Prospectus (together with the related ballots, the SIHL Prospectus and other materials), pursuant to which Resorts International, Inc. ("RII") and GGRI, Inc. ("GRI") are soliciting votes for the acceptance or rejection of a "prepackaged" Plan of Reorganization and certain related consents for use by RII and GRI in contemplated voluntary cases under chapter 11 of the Bankruptcy Code. The Plan provides, among other things, for a restructuring of RII's and GRI's debt and equity capitalization as described in the accompanying Information Statement/Prospectus. Management of RII believes that the Restructuring will improve RII's financial position and allow management to create long-term value for the creditors and shareholders of RII and strengthen RII's position in the gaming industry. OTHER THAN GRI, RII DOES NOT INTEND TO INCLUDE ANY OF ITS SUBSIDIARIES IN ITS BANKRUPTCY CASE, NOR DOES RII INTEND TO CAUSE ANY OF ITS SUBSIDIARIES TO FILE ITS OWN BANKRUPTCY CASE. NEITHER RII NOR GRI CURRENTLY IS IN BANKRUPTCY. All capitalized terms not otherwise defined in this letter are defined in the accompanying Information Statement/Prospectus. RII believes that the Restructuring will improve its long-term liquidity and enhance its ability to meet its financial obligations as they become due. The Restructuring is intended, among other things, to reduce RII's financial obligations on its outstanding Old Series Notes due April 15, 1994, which were issued in two series, by exchanging the Old Series Notes for: (i) $125,000,000 principal amount of new mortgage notes issued by RIHF, a wholly owned subsidiary of RII, and guaranteed by RIH, a wholly owned subsidiary of RII that owns the Resorts Casino Hotel in Atlantic City, each of which is secured by a lien on the Resorts Casino Hotel; (ii) $35,000,000 principal amount of new junior mortgage notes issued by RIHF and guaranteed by RIH, each of which is secured by a lien on the Resorts Casino Hotel; (iii) 40% of the RII Common Stock on a fully diluted basis (excluding outstanding options issued pursuant to the 1990 Stock Option Plan and options to be issued under the 1994 Stock Option Plan); and (iv) either (A) $65,000,000 in cash, plus interest thereon at an annual rate of 7.5% from January 1, 1994 to the SIHL Closing Date, plus 40% of the capital stock of Sun International Hotels Limited ("SIHL"), representing the consideration received from the proposed sale of the Paradise Island Business to SIHL (the "SIHL Sale"), or (B) if the proposed SIHL Sale is not consummated on or before the Effective Date and the PIRL Spin-Off is consummated on or prior to the Effective Date, 100% of the common equity of PIRL, a wholly owned and newly formed subsidiary of RII, which through its subsidiaries will own and operate the Paradise Island Business. In addition, the holders on the Distribution Record Date of the Old Series Notes will receive (1) cash payments of Excess Cash which are projected to be at least $30,000,000 in the aggregate and (2) non-transferable rights to receive (a) payments from Net Reserved Cash, if any, resulting from any Reserved Cash in excess of that actually required to fund certain adjustments under either the proposed SIHL Sale of the Paradise Island Business pursuant to the Paradise Island Purchase Agreement or the PIRL Spin-Off of the Paradise Island Business pursuant to the PIRL Standby Distribution Agreement, (b) payments of Net Plan Consummation Cash, if any, resulting from any Plan Consummation Cash in excess of that actually required to pay Plan Expenses, and (c) payments of Deferred Cash, projected to total $2,500,000, resulting from distributions in respect of the Litigation Trust Units owned by RII. By proposing the Plan and conducting the Solicitation in advance of commencing chapter 11 cases, which is known as a "prepackaged bankruptcy", RII and GRI anticipate that the pendency of their chapter 11 cases will be shortened significantly and the administration of such cases will be simplified and less costly. The Plan is a result of months of negotiation by RII, Fidelity and TCW. In addition, discussions were held with the Griffin Group regarding the New Griffin Services Agreement and with representatives of SIHL regarding the Paradise Island Purchase Agreement. RII and GRI believe that the Plan is in the best interests of RII, GRI, and their respective shareholders and creditors. FIDELITY AND TCW, WHICH SEPARATELY ADVISE AND MANAGE VARIOUS FUNDS AND ACCOUNTS THAT AS OF OCTOBER 21, 1993 HELD IN THE AGGREGATE APPROXIMATELY $309,926,000 PRINCIPAL AMOUNT OF THE OLD SERIES NOTES, OR APPROXIMATELY 64% OF THE OUTSTANDING OLD SERIES NOTES, HAVE AGREED TO CONTINUE TO HOLD AN AGGREGATE OF AT LEAST 50.1% OF THE OLD SERIES NOTES THROUGH THE VOTING RECORD DATE (PROVIDED THAT THE VOTING RECORD DATE IS ON OR BEFORE JANUARY 10, 1994). FIDELITY AND TCW HAVE ENGAGED IN EXTENSIVE NEGOTIATIONS WITH RII AND GRI WITH RESPECT TO THE RESTRUCTURING AND HAVE AGREED, SUBJECT TO CERTAIN CONDITIONS, TO VOTE ALL OLD SERIES NOTES OWNED BY FUNDS AND ACCOUNTS MANAGED BY THEM AS OF THE VOTING RECORD DATE FOR ACCEPTANCE OF THE PLAN AND TO CONSENT TO THE TERMINATION AND RELEASE OF THE OLD SECURITY DOCUMENTS IN CONNECTION THEREWITH. PURSUANT TO THE PLAN, RIHF AND ONE OR MORE FUNDS MANAGED BY FIDELITY WILL ENTER INTO THE RIHF SENIOR FACILITY DESCRIBED BELOW. MERV GRIFFIN, WHO HOLDS 4,398,115 SHARES OF RII COMMON STOCK, OR APPROXIMATELY 21.82% OF THE OUTSTANDING RII COMMON STOCK, HAS AGREED TO VOTE FOR THE PLAN. IN CONNECTION WITH THE PLAN, THE NEW GRIFFIN SERVICES AGREEMENT WILL REMAIN IN PLACE, THE GRIFFIN GROUP WILL PAY THE GRIFFIN GROUP NOTE PROCEEDS TO RII AND THE GRIFFIN GROUP WILL RECEIVE THE GRIFFIN WARRANTS. THE HOLDERS OF 1,307,300 1990 STOCK OPTIONS ISSUED UNDER THE 1990 STOCK OPTION PLAN, OR APPROXIMATELY 74% OF THE OUTSTANDING 1990 STOCK OPTIONS, HAVE AGREED TO VOTE FOR THE PLAN. RII HAS AGREED TO VOTE ITS INTERCOMPANY CLAIM AGAINST GRI AND ITS EQUITY INTEREST IN GRI FOR ACCEPTANCE OF THE PLAN. To ensure that RII and RIH have adequate cash for working capital and general corporate purposes, one or more funds managed by Fidelity will enter into the RIHF Senior Facility with RIHF, which will allow RIHF to borrow up to $20,000,000 through the issuance of RIHF Senior Facility Notes. Any amount borrowed by RIHF under the RIHF Senior Facility will be loaned by RIHF to RIH, and possibly by RIH to RII, through intercompany transactions. The RIHF Senior Facility will be available for a single borrowing during the one-year period from the Effective Date, provided that, among other conditions, the public resale of the RIHF Senior Facility Notes by the purchasers thereof is registered, if required, under the Securities Act, and the RIHF Senior Facility Indenture has been qualified under the TIA. The RIHF Senior Facility Notes will by guaranteed by RIH and RII. Under the Bankruptcy Code, to confirm the Plan on a consensual basis, the holders of at least 66 2/3% in principal amount and more than 50% in number of the claims that vote in each impaired class of creditors, and the holders of at least 66 2/3% of the outstanding interests that vote in each impaired class of interests must vote to accept the Plan. No minimum number of votes is required for confirmation of the Plan and only those who affirmatively vote to accept or reject the Plan will be counted for purposes of determining acceptance or rejection of the Plan by any impaired class of claims or interests. Unexecuted ballots will not be counted. ANY EXECUTED BALLOT WITH RESPECT TO THE PLAN RETURNED WITHOUT AN INDICATION TO ACCEPT OR REJECT THE PLAN WILL BE DEEMED AN ACCEPTANCE THEREOF. In addition to the vote required by the Bankruptcy Code, a condition to confirmation of the Plan is the entry of an order declaring that, as of the Effective Date, the Old Security Documents under which the liens on the property securing the Old Series Notes were granted or created shall be deemed released and terminated. To effectuate such termination and release consensually, the record holders of at least 66 2/3% in aggregate principal amount of the outstanding Old Series Notes and the record holders of at least a majority in aggregate principal amount of each series of the Old Series Notes must execute consents pursuant to the terms of the Old Series Note Indenture. Accordingly, RII and GRI are seeking consents to terminate and release the Old Security Documents from the holders of Old Series Notes. Such consents must be evidenced by record holders separately from their vote on the Plan. The ballots for the holders of Old Series Notes permit holders to give or withhold such consent. 2 ANY EXECUTED BALLOT OF A HOLDER OF OLD SERIES NOTES RETURNED WITHOUT AN INDICATION TO WITHHOLD SUCH CONSENT WILL BE DEEMED TO GIVE SUCH CONSENT. If sufficient consents are received from the holders of Old Series Notes, RII and GRI will request the Bankruptcy Court to confirm release of the Old Security Documents by entry of an appropriate order. If insufficient consents are received from holders of Old Series Notes to effectuate a consensual termination and release of the Old Security documents, RII and GRI intend to request the Bankruptcy Court to order the release of the Old Security Documents; however, there can be no assurance that such an order will be entered. In no event will the consents to release the Old Security Documents be used to effectuate the termination and release of the Old Security Documents in the absence of the confirmation and consummation of the Plan. If RII and GRI fail to receive the Requisite Acceptances, notwithstanding receipt of sufficient consents to release and terminate the Old Security Documents pursuant to the Old Series Note Indenture, such consents will only be used in the event that RII and GRI continue to pursue confirmation and consummation of the Plan. In the event that RII and GRI elect or are required to resolicit Acceptances of the Plan, however, they reserve the right not to resolicit with respect to the consents to release the Old Security Documents and to use consents received from the initial Solicitation. The Plan is also subject to approval by the Casino Control Commission and the government of the Commonwealth of The Bahamas. RII and GRI have fixed the close of business on January 10, 1994 as the record date for the determination of holders of claims and of holders of interests to whom the accompanying Information Statement/Prospectus and related ballots, the SIHL Prospectus and other materials are being furnished and from whom votes to accept or reject the Plan will be accepted and consents to release the Old Security Documents are sought. TO BE COUNTED, BALLOTS MUST BE RECEIVED BY HILL AND KNOWLTON, THE SOLICITATION AGENT, NO LATER THAN 5:00 P.M., NEW YORK CITY TIME, ON [ ], 1994 (or such later time and date to which RII and GRI may extend the Solicitation in the manner described in the Information Statement/Prospectus). If you are being asked to vote on the Plan, a ballot (together with certain related materials) and a postage-paid pre- addressed return envelope have been enclosed for your convenience. As soon as practicable after the Confirmation Date, RII will furnish to each holder of Old Series Notes a letter of transmittal for remittance of such holder's Old Series Notes. Such holders should not send their Old Series Notes to RII at this time. THE BOARD OF DIRECTORS OF EACH OF RII AND GRI HAS UNANIMOUSLY APPROVED THE RESTRUCTURING, THE PLAN AND THE SOLICITATION AND RECOMMENDS THAT ALL IMPAIRED CREDITORS AND EQUITY INTEREST HOLDERS SUBMIT BALLOTS ACCEPTING THE PLAN AND, IF APPLICABLE, CONSENTING TO THE RELEASE OF THE OLD SECURITY DOCUMENTS. IT IS OF THE UTMOST IMPORTANCE THAT YOU READ AND CAREFULLY CONSIDER THE MATTERS DESCRIBED IN THE ACCOMPANYING INFORMATION STATEMENT/PROSPECTUS (TOGETHER WITH THE RELATED BALLOTS, THE SIHL PROSPECTUS AND OTHER MATERIALS) AND THAT YOU VOTE ON THE PLAN IN SUFFICIENT TIME TO ENSURE THAT YOUR VOTE CAN BE TRANSMITTED TO HILL AND KNOWLTON, THE SOLICITATION AGENT, BY THE VOTING DEADLINE. FOR INFORMATION WITH RESPECT TO SIHL, THE SIHL SALE, THE PARADISE ISLAND PURCHASE AGREEMENT AND THE SIHL SERIES A SHARES, REFERENCE IS MADE TO THE ACCOMPANYING SIHL PROSPECTUS RELATING TO THE SIHL SERIES A SHARES. RII HAS SUPPLIED CERTAIN INFORMATION REGARDING THE PARADISE ISLAND BUSINESS (SUCH AS IS FOUND IN RII'S REPORTS FILED WITH THE COMMISSION), AS WELL AS CERTAIN INFORMATION CONCERNING THE RESTRUCTURING, TO SIHL SPECIFICALLY FOR ITS USE IN THE PREPARATION OF THE SIHL PROSPECTUS (AND THE RELATED REGISTRATION STATEMENT FILED BY SIHL WITH THE COMMISSION UNDER THE SECURITIES 3 ACT). RII AND ITS ADVISERS DISCLAIM ANY RESPONSIBILITY FOR THE ACCURACY, COMPLETENESS, NATURE AND FORM OF PRESENTATION OF ANY INFORMATION CONTAINED IN THE SIHL PROSPECTUS (AND RELATED REGISTRATION STATEMENT), EXCEPT THAT RII HAS MADE IN THE PARADISE ISLAND PURCHASE AGREEMENT CERTAIN REPRESENTATIONS AND WARRANTIES TO SIHL AS TO THE ACCURACY OF THE INFORMATION SUPPLIED BY RII SPECIFICALLY FOR INCLUSION IN THE SIHL PROSPECTUS (AND RELATED REGISTRATION STATEMENT). Very truly yours, Christopher D. Whitney OFFICE OF THE PRESIDENT, EXECUTIVE VICE PRESIDENT AND CHIEF OF STAFF Matthew B. Kearney OFFICE OF THE PRESIDENT, EXECUTIVE VICE PRESIDENT-FINANCE, CHIEF FINANCIAL OFFICER AND TREASURER 4 INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. SUBJECT TO COMPLETION, DATED JANUARY 5, 1994 INFORMATION STATEMENT/PROSPECTUS AND SOLICITATION OF PLAN ACCEPTANCES RESORTS INTERNATIONAL, INC. GGRI, INC. RESORTS INTERNATIONAL HOTEL FINANCING, INC. RESORTS INTERNATIONAL HOTEL, INC. P.I. RESORTS LIMITED Resorts International, Inc., a Delaware corporation ("RII"), and GGRI, Inc., a Delaware corporation formerly known as Griffin Resorts Inc. ("GRI"), upon the terms and subject to the conditions set forth in this Information Statement/Prospectus and Solicitation of Plan Acceptances (this "Information Statement/Prospectus") and the accompanying forms of Ballot and Master Ballot, hereby solicit (the "Solicitation") from: (a) each owner of RII's Senior Secured Redeemable Notes due April 15, 1994 (and beneficiary of the related GRI Guaranty described below), which were issued in two series, the Series A Senior Secured Redeemable Notes (the "Old Series A Notes") and the Series B Senior Secured Redeemable Notes (the "Old Series B Notes"; and collectively with the Old Series A Notes, the "Old Series Notes"); (b) each owner of shares of RII's common stock, par value $.01 per share (the "RII Common Stock"); (c) RII, as the owner of all the outstanding common stock, par value $.01 per share, of GRI (the "GRI Common Stock"); (d) RII, as the holder of the RII Intercompany Claims (as defined below) against GRI; and (e) each holder of stock options (the "1990 Stock Options") issued under RII's Senior Management Stock Option Plan (the "1990 Stock Option Plan"), each as of the close of business in New York City on January 10, 1994 (the "Voting Record Date"), an acceptance (an "Acceptance") of that certain Joint Plan of Reorganization for RII and GRI proposed by RII, GRI, Resorts International Hotel, Inc., a New Jersey corporation and a wholly owned subsidiary of RII ("RIH"), P. I. Resorts Limited, a corporation organized under the laws of the Commonwealth of The Bahamas and a wholly owned subsidiary of RII ("PIRL"), and Resorts International Hotel Financing, Inc., a Delaware corporation and a wholly owned subsidiary of RII ("RIHF"), dated January __, 1994, a copy of which is attached hereto as Appendix A (the "Plan"), to be filed pursuant to chapter 11 of title 11 of the United States Code (the "Bankruptcy Code") and the rules promulgated thereunder (the "Bankruptcy Rules"). GRI has guaranteed payment of the Old Series Notes (the "GRI Guaranty"). Thus, the owners of the Old Series Notes are beneficiaries of the GRI Guaranty which is endorsed on the Old Series Notes. The term "Company" as used herein includes RII and/or one or more of its subsidiaries, as the context may require. From each holder of Old Series Notes (and beneficiary of the related GRI Guaranty endorsed thereon), RII and GRI hereby also solicit pursuant to this Information Statement/Prospectus consents to terminate and release the Old Security Documents (as defined below) so that certain of the collateral covered thereby, including the Resorts Casino Hotel, can be pledged to secure the New Debt Securities. The Plan will be consummated on the Effective Date. Consummation of the Plan will result in a restructuring of RII's debt and equity capitalization in the manner described below and the consummation of certain other transactions, including either (i) the sale (the "SIHL Sale") of the Company's operations and properties on or relating to Paradise Island, The Bahamas (the "Paradise Island Business") to Sun International Hotels Limited, a corporation organized under the laws of the Commonwealth of The Bahamas ("SIHL") and not affiliated with RII, or (ii) if the SIHL Sale is not consummated on or before the Effective Date and certain other conditions are satisfied, the spin-off to the holders of the Old Series Notes of the Paradise Island Business (the "PIRL Spin-Off"). The Paradise Island Business includes all of the outstanding capital stock (the "Paradise Island Shares") of Resorts International (Bahamas) 1984 Limited, a corporation organized under the laws of the Commonwealth of The Bahamas ("RIB"), substantially all of the real property owned by RII in the State of Florida and used primarily in connection with RII's operations on Paradise Island, The Bahamas (the "RII Real Estate Assets"), and substantially all of the assets of the U.S. Paradise Island Subsidiaries (the "RII Paradise Assets"). Such restructuring and such other transactions collectively are referred to herein as the "Restructuring". (COVER PAGE CONTINUED) The Plan provides, among other things, that record holders of the Old Series Notes as of the distribution record date (the "Distribution Record Date"), which is defined as the close of business in New York City on the date that the Plan becomes effective (the "Effective Date"), will receive the following consideration on the relevant Distribution Date for each $1,000 of principal amount of Old Series Notes outstanding on the Effective Date (and for any accrued interest thereon): -- $259.38 principal amount of 11% Mortgage Notes due 2003 (the "New RIHF Mortgage Notes") issued by RIHF and guaranteed (the "RIH Mortgage Guaranty") by RIH; -- One unit (a "Unit") comprised of (i) $72.63 principal amount of 11.375% Junior Mortgage Notes due 2004 (the "New RIHF Junior Mortgage Notes") issued by RIHF and guaranteed by RIH (the "RIH Junior Mortgage Guaranty"), and (ii) .07263 share of RII's Class B Redeemable Common Stock, par value $.01 per share (the "RII Class B Common Stock"); -- 35.33 shares of RII Common Stock; -- Either (A) $134.88 in cash, plus interest on such amount at an annual rate of 7.5% from January 1, 1994 to the closing date of the SIHL Sale (the "SIHL Closing Date"), plus 4.15 Series A Ordinary Shares, par value $.01 per share (the "SIHL Series A Shares"), issued by SIHL, representing a pro rata share of the consideration received from the SIHL Sale, or (B) if the SIHL Sale is not consummated on or before the Effective Date, 10.375 Ordinary Shares, par value $.01 per share (the "PIRL Ordinary Shares"), issued by PIRL pursuant to the PIRL Spin-Off; -- A pro rata share of Excess Cash, which pro rata share is projected to be a minimum of $62.25. "Excess Cash" means the amount by which RII's Available Cash exceeds the sum of: (i) $20,000,000 (the "RII Retained Cash"); (ii) Target Adjusted Cash, as defined in either (a) the Purchase Agreement dated as of October 11, 1993, between RII and SIHL, as amended (the "Paradise Island Purchase Agreement") or (b) the Standby Distribution Agreement dated as of October 15, 1993, between RII and PIRL, as amended (the "PIRL Standby Distribution Agreement"), as appropriate; (iii) such cash as RII reasonably estimates will be required to fund certain adjustments (including but not limited to any adjustment related to "Adjusted Working Capital") under either the Paradise Island Purchase Agreement or the PIRL Standby Distribution Agreement, as the case may be (the "Reserved Cash"); (iv) such cash as RII reasonably estimates will be necessary to pay Plan Expenses (as defined below) (the "Plan Consummation Cash"), and (v) a $400,000 cash payment to be made to Caesars World, Inc. on the Distribution Date (the "Caesars Payment"). "Available Cash" means all cash of RII and its subsidiaries on the Effective Date, including but not limited to cash deposited in depository accounts, cash on hand and cage cash, before giving effect to the SIHL Sale or PIRL Spin-Off, as the case may be, and the distributions under the Plan, but specifically excluding (1) any cash actually received by RII on or prior to the Effective Date, from Atlantic City Showboat, Inc., as tenant under the Showboat Lease (as defined below), which has been escrowed by RII to pay its current obligations with respect to the Showboat Notes (as defined below), (2) any restricted cash relating to the Litigation Trust or to the proceeds of the November 1993 sale of a .63 acre tract of land on Paradise Island, The Bahamas and (3) any portion of the SIHL Aggregate Cash Purchase Price; -- The non-transferable right to receive a pro rata share of Net Reserved Cash and Net Plan Consummation Cash; "Net Reserved Cash" means the amount of the Reserved Cash in excess of that required to fund certain adjustments under
2 (COVER PAGE CONTINUED) either the Paradise Island Purchase Agreement or the PIRL Standby Distribution Agreement, as the case may be, together with interest thereon at the average rate of return received by RII and its subsidiaries on invested cash from the Effective Date to but excluding the Distribution Date. "Net Plan Consummation Cash" means the amount of Plan Consummation Cash in excess of that required to pay Plan Expenses, together with interest thereon at the average rate of return received by RII and its subsidiaries on invested cash from the Effective Date to but excluding the Distribution Date; and -- The non-transferable right to receive a pro rata share of payments of Deferred Cash, which pro rata share is projected to be a minimum of $5. "Deferred Cash" means the aggregate amount of distributions (the "Litigation Trust Distributions") by the Litigation Trust from time to time after the Effective Date in respect of units of beneficial interest (the "Litigation Trust Units") in the Litigation Trust currently owned by RII.
Notwithstanding the foregoing, no fractional shares of New Equity Securities (as defined below) will be issued on the Distribution Date. Also, New RIHF Mortgage Notes and New RIHF Junior Mortgage Notes will be issued only in denominations of $1,000 or integral multiples thereof. Pursuant to the Plan, the disbursing agent for the holders of Old Series Notes will aggregate and sell all fractional amounts of New Equity Securities and New Debt Securities (as defined below) and distribute the net proceeds to the holders of Old Series Notes entitled thereto. If the SIHL Sale is consummated, assuming a reorganization enterprise value of approximately $225 million for RII and a reorganization enterprise value for SIHL of $150 million, the estimated recovery for holders of Old Series Notes is projected to be approximately 70% of the principal amount of Old Series Notes outstanding on October 15, 1993. If the SIHL Sale is not consummated and the PIRL Spin-Off is effected, assuming a reorganization enterprise value of approximately $225 million for RII and an assumed reorganization enterprise value of PIRL of $125 million, the estimated recovery for holders of Old Series Notes is projected to be approximately 70% of the principal amount of Old Series Notes outstanding on October 15, 1993. There can be no assurance that the assumed reorganization enterprise values of RII, of SIHL in the event of the SIHL sale or of PIRL in the event of the PIRL Spin-Off will be realized. The "Distribution Date" for any Claim that is an Allowed Claim on the Effective Date will be the Effective Date or as soon thereafter as practicable, but in no event later than 20 days after the Effective Date (except as described below). For any Claim that is a Disputed Claim on the Effective Date, the Distribution Date will be the date as soon as practicable, but in no event later than 30 days after the date upon which such Claim becomes an Allowed Claim. Notwithstanding the foregoing, the Distribution Date with respect to distribution to the disbursing agent for holders of Old Series Notes is as follows: (a) for distribution of the SIHL Aggregate Cash Purchase Price, the New Debt Securities and the New Equity Securities, the Effective Date; (b) for payments of Net Reserved Cash, as soon as practicable after the Effective Date, but in no event later than 90 days after the Effective Date; (c) for payments of Net Plan Consummation Cash, as soon as practicable but no later than 90 days after the Effective Date; provided, however, that if all Plan Expenses have not been paid by the 90th day after the Effective Date, RII and GRI may continue to hold back for an additional 60 days the portion of Net Plan Consummation Cash deemed by the Bankruptcy Court to be necessary to satisfy remaining Plan Expenses, after which time the remaining Net Plan Consummation Cash shall be distributed, unless otherwise ordered by the Bankruptcy Court; (d) for payments of Deferred Cash, within three business days after receipt by RII of the Litigation Trust Distributions in immediately available funds; and (e) for payments of Excess Cash, the Effective Date or as soon thereafter as is practicable, but in no event later than 20 days after the Effective Date. Distributions will be made by the disbursing agent only to holders of Old Series Notes that comply with the procedures for surrender of Old Series Notes set forth in section 6.11.5 of the Plan. 3 (COVER PAGE CONTINUED) Existing holders of RII Common Stock and of 1990 Stock Options will be impaired by the Plan. Generally speaking, a claim or interest is impaired under a plan of reorganization if the plan provides that such claim or interest will not be repaid in full or that the legal, equitable or contractual rights of the holder of such claim or interest will be altered. Only classes of claims or interests that are impaired are entitled to vote on the Plan. Pursuant to the Plan, each holder of RII Common Stock will retain its shares of RII Common Stock and each holder of 1990 Stock Options will retain his or her stock options. As a result of the issuance of the shares of RII Common Stock and RII Class B Common Stock to the holders of the Old Series Notes, the Griffin Warrants and the options to be granted pursuant to the 1994 Stock Option Plan, the resulting ownership interest in RII represented by the currently outstanding shares of RII Common Stock and the currently outstanding 1990 Stock Options will be substantially diluted and, therefore, the holders of such equity interests will be impaired within the meaning of the Bankruptcy Code. All intercompany claims against GRI will be resolved pursuant to the Plan. The intercompany claims against GRI consist of the intercompany debt obligations owing from GRI to RII (the "RII Intercompany Claim"). The RII Intercompany Claim against GRI will be impaired by the Plan. Pursuant to the Plan, RII will contribute the RII Intercompany Claim to the capital of GRI. RII has agreed to vote for the Plan in respect of the RII Intercompany Claim. Also, as a result of the Plan, RII's equity interest in GRI, as the holder of all the outstanding GRI Common Stock, will be impaired. RII has agreed to vote for the Plan in respect of its equity interest in GRI. SIHL SALE. SIHL, a corporation not affiliated with RII, was incorporated in the Commonwealth of The Bahamas in 1993 for the purpose of acquiring the Paradise Island Business pursuant to the terms of the Paradise Island Purchase Agreement. Pursuant to the Paradise Island Purchase Agreement, in exchange for 2,000,000 SIHL Series A Shares, representing 40% of the capital stock of SIHL to be outstanding after the SIHL Sale, and $65,000,000 in cash plus interest thereon at an annual rate of 7.5% from January 1, 1994, to the SIHL Closing Date (the "SIHL Aggregate Cash Purchase Price"), SIHL (i) will purchase from RII all the capital stock of RIB and (ii) directly or through subsidiaries of SIHL will purchase substantially all the assets of the U.S. Paradise Island Subsidiaries (as defined below) and the RII Real Estate Assets, and will assume substantially all the non-intercompany liabilities relating to such assets. If the SIHL Sale is consummated on the Effective Date, such SIHL Series A Shares and the SIHL Aggregate Cash Purchase Price will be distributed, as described above, to the disbursing agent on behalf of the holders of the Old Series Notes pursuant to the Plan. The remaining 60% of the capital stock of SIHL will be owned by Sun International Investments Limited ("SIIL"), which 60% equity interest in SIHL will be purchased by SIIL from SIHL for $90,000,000 plus interest at an annual rate of 7.5% on $65,000,000 from January 1, 1994 (the "SIIL Subscription Amount") on or prior to the SIHL Closing Date. SIHL will use $65,000,000 of the SIIL Subscription Amount plus interest at 7.5% per year from January 1, 1994, to fund the SIHL Aggregate Cash Purchase Price; the remaining $25,000,000 of the SIIL Subscription Amount will, as of the Effective Date, remain in SIHL. RII understands that the portion of the SIIL Subscription Amount which remains in SIHL ($25,000,000) will be used by SIHL to fund a capital expenditure and redevelopment program for the Paradise Island Business. The $25,000,000 of the SIIL Subscription Amount which remains in SIHL will increase the equity value of SIHL and, in effect, represents additional consideration in the amount of $10,000,000 (40% of $25,000,000) to RII for sale of the Paradise Island Business. Such consideration is realized by the holders of the Old Series Notes through the increased value of the 40% equity interest in SIHL to be distributed to such holders in the form of the Series A Shares. The holder of each Series A Share will be entitled to sell, and require SIHL to purchase on the fifth 4 (COVER PAGE CONTINUED) anniversary of the consummation of the SIHL Sale, such Share at a price equal to $35 per share (the "Put Right"). SIHL has pledged its 60% equity interest in SIHL to secure its obligation to make such purchase. In conjunction with the proposed SIHL Sale, RII placed $4,000,000 in escrow to fund, if necessary, any obligations of RII under the Paradise Island Purchase Agreement to reimburse SIHL for its reasonable out-of-pocket costs and expenses incurred in connection with the proposed SIHL Sale in the event of certain termination events identified in the Paradise Island Purchase Agreement (the "SIHL Buyer Expense Escrow"). Also in conjunction with the proposed SIHL Sale, SIHL placed $5,000,000 in escrow to secure SIHL's obligations under the Paradise Island Purchase Agreement (the "SIHL Escrow"). For a further description of the material terms of Paradise Island Purchase Agreement, see "Description of the Paradise Island Purchase Agreement". FOR INFORMATION WITH RESPECT TO SIHL, THE SIHL SALE, THE PARADISE ISLAND PURCHASE AGREEMENT AND THE SIHL SERIES A SHARES, REFERENCE IS MADE TO THE ACCOMPANYING PROSPECTUS, DATED [ ], 1994, OF SIHL RELATING TO THE SIHL SERIES A SHARES (THE "SIHL PROSPECTUS"). RII HAS SUPPLIED CERTAIN INFORMATION REGARDING THE PARADISE ISLAND BUSINESS (SUCH AS IS FOUND IN RII'S REPORTS FILED WITH THE COMMISSION), AS WELL AS CERTAIN INFORMATION CONCERNING THE RESTRUCTURING, TO SIHL SPECIFICALLY FOR ITS USE IN THE PREPARATION OF THE SIHL PROSPECTUS (AND THE RELATED REGISTRATION STATEMENT FILED BY SIHL WITH THE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED). RII AND ITS ADVISERS DISCLAIM ANY RESPONSIBILITY FOR THE ACCURACY, COMPLETENESS, NATURE AND FORM OF PRESENTATION OF ANY INFORMATION CONTAINED IN THE SIHL PROSPECTUS (AND RELATED REGISTRATION STATEMENT), EXCEPT THAT RII HAS MADE IN THE PARADISE ISLAND PURCHASE AGREEMENT CERTAIN REPRESENTATIONS AND WARRANTIES TO SIHL AS TO THE ACCURACY OF THE INFORMATION SUPPLIED BY RII SPECIFICALLY FOR INCLUSION IN THE SIHL PROSPECTUS (AND RELATED REGISTRATION STATEMENT). PIRL SPIN-OFF. PIRL, a wholly owned subsidiary of RII, was incorporated in the Commonwealth of The Bahamas in 1993 for the purpose of acquiring the Paradise Island Business pursuant to the terms of the PIRL Standby Distribution Agreement if the SIHL Sale is not consummated on or before the Effective Date. The closing under the PIRL Standby Distribution Agreement is subject to the satisfaction or waiver of certain conditions precedent. Pursuant to the PIRL Standby Distribution Agreement, in exchange for 5,000,000 PIRL Ordinary Shares, representing 100% of the PIRL Ordinary Shares to be outstanding after the PIRL Spin-Off, (i) PIRL will purchase from RII all the capital stock of RIB and (ii) subsidiaries of PIRL will purchase substantially all the assets of the U.S. Paradise Island Subsidiaries and the RII Real Estate Assets, and will assume substantially all the non-intercompany liabilities relating to such assets. If the PIRL Spin-Off is consummated on the Effective Date, all of the PIRL Ordinary Shares will be distributed, as described above, to the holders of the Old Series Notes pursuant to the Plan. For a further description of the material terms of the PIRL Spin-Off and the PIRL Standby Distribution Agreement, see "Description of PIRL Standby Distribution Agreement". For a discussion of the risks associated with the PIRL Spin-Off, see "Risk Factors -- Risks Associated with the Paradise Island Business". RIHF SENIOR FACILITY. As part of the implementation of the Restructuring, Fidelity Management & Research Company ("Fidelity"), which advises and manages various funds and accounts that hold Old Series Notes, will cause one or more of the funds it manages to enter into a senior secured note purchase agreement with RIHF (the "RIHF Senior Facility"), which will allow RIHF to borrow up to $20,000,000 through the issuance of notes issued under the RIHF Senior Facility (the "RIHF Senior Facility Notes"). Any amount borrowed by RIHF under the RIHF Senior Facility will be loaned by RIHF to RIH, and possibly by RIH to RII, through intercompany transactions for working capital and general corporate purposes. The RIHF Senior Facility will be available for a single borrowing during the one-year period from the Effective Date, provided that, among other conditions, the public 5 (COVER PAGE CONTINUED) resale of the RIHF Senior Facility Notes by the purchasers thereof upon a resale is registered, if required, under the Securities Act of 1933, as amended (the "Securities Act"), and the indenture under which the RIHF Senior Facility Notes (the "RIHF Senior Facility Note Indenture") has been qualified under the Trust Indenture Act of 1939, as amended (the "TIA"). The RIHF Senior Facility Notes and the RIH Senior Facility Guaranty (as defined below) are not included among the securities registered under the Registration Statement (as defined below), nor has the RIHF Senior Facility Note Indenture yet been qualified under the TIA. Any public offering of the RIHF Senior Facility Notes and RIH Senior Facility Guaranty will be made only by means of a prospectus pursuant to a separate registration statement to be filed by RIHF and RIH under the Securities Act. Information concerning the RIHF Senior Facility is included in this Information Statement/Prospectus because the RIHF Senior Facility is an integral part of the Restructuring and because execution of the RIHF Senior Facility and related documents and instruments is a condition precedent to the Effective Date of the Plan. All principal payments on the RIHF Senior Facility Notes will be due July 15, 2002. Interest on the RIHF Senior Facility Notes will accrue at the rate of 11% per year and will be payable in cash, semi-annually on January 15 and July 15 of each year, commencing on the January 15 or July 15 next following the date of the initial borrowing under the RIHF Senior Facility. The RIHF Senior Facility Notes will be secured by (i) a secured senior promissory note of RIH (the "RIH Senior Facility Note") in an aggregate principal amount of up to $20,000,000 payable in amounts and at times necessary to pay the principal of and interest on the RIHF Senior Facility Notes and (ii) a lien on all real property, improvements thereon and certain other property and equipment described below constituting Merv Griffin's Resorts Casino Hotel in Atlantic City, New Jersey (the "Resorts Casino Hotel"). The RIH Senior Facility Note and the Resorts Casino Hotel collectively are referred to as the "RIHF Senior Facility Trust Estate". The Resorts Casino Hotel is owned, and the liens will be granted, by RIH. In addition, RIH will issue a guaranty (the "RIH Senior Facility Guaranty") of the payment of principal of and interest on the RIHF Senior Facility Notes. The liens on the Resorts Casino Hotel securing the payment of the RIHF Senior Facility Notes and the RIH Senior Facility Guaranty will be senior to the liens securing the payment of the New RIHF Mortgage Notes, the RIH Mortgage Guaranty, the New RIHF Junior Mortgage Notes and the RIH Junior Mortgage Guaranty. RII also will issue a guaranty of the payment of principal and interest on the RIHF Senior Facility Notes. NEW RIHF MORTGAGE NOTES. Interest on the New RIHF Mortgage Notes will accrue from the Effective Date at the rate of 11% per year and will be payable in cash, semi-annually on March 15 and September 15 of each year, commencing on the March 15 or September 15 next following the Effective Date. See "Description of New RIHF Mortgage Notes." The New RIHF Mortgage Notes will be secured by (i) a secured senior promissory note of RIH (the "RIH Promissory Note") in the original principal amount of $125,000,000, payable in amounts and at times necessary to pay the principal of and interest on the New RIHF Mortgage Notes and (ii) a lien on the Resorts Casino Hotel. The RIH Promissory Note and the Resorts Casino Hotel collectively are referred to as the "New RIHF Mortgage Trust Estate". In addition, RIH will issue the RIH Mortgage Guaranty of the payment of principal of and interest on the New RIHF Mortgage Notes. The liens on the Resorts Casino Hotel securing the payment of the New RIHF Mortgage Notes and the RIH Mortgage Guaranty will be junior to the liens securing payment of the RIHF Senior Facility Notes and the RIH Senior Facility Guaranty and senior to the liens securing payment of the RIHF Junior Mortgage Notes and the RIH Junior Mortgage Guaranty. NEW RIHF JUNIOR MORTGAGE NOTES. Interest on the New RIHF Junior Mortgage Notes will accrue from the Effective Date at the rate of 11.375% per year and will be payable in cash or, at RIHF's option and subject to certain limitations, additional Units comprised of New RIHF Junior Mortgage Notes and RII Class B Common Stock, semi-annually on June 15 and December 15 of each year, commencing on the June 15 and December 15 next following the Effective Date. Interest may be paid in additional Units ("Payments-In-Kind") on any interest payment date on which RIH's Consolidated 6 (COVER PAGE CONTINUED) Cash Flow for the most recently completed four fiscal quarters is less than $35,000,000. Upon the redemption, or cancellation following the purchase thereof, of each $1,000 principal amount of New RIHF Junior Mortgage Notes, RII will redeem, at $0.01, the one share of RII Class B Common Stock issued as a Unit with each $1,000 principal amount of New RIHF Junior Mortgage Notes. THE NEW RIHF JUNIOR MORTGAGE NOTES AND THE RII CLASS B COMMON STOCK COMPRISING THE UNITS MAY NOT BE TRANSFERRED SEPARATELY. The New RIHF Junior Mortgage Notes will be secured by (i) a secured junior promissory note of RIH (the "RIH Junior Promissory Note") in the original principal amount of $35,000,000, payable in amounts and at times necessary to pay the principal of and interest on the New RIHF Junior Mortgage Notes and (ii) a lien on the Resorts Casino Hotel. The RIH Junior Promissory Note and the Resorts Casino Hotel collectively are referred to as the "New RIHF Junior Mortgage Trust Estate". In addition, RIH will issue the RIH Junior Mortgage Guaranty of the payment of principal of and interest on the New RIHF Junior Mortgage Notes. The liens on the Resorts Casino Hotel securing the payment of the New RIHF Junior Mortgage Notes and the RIH Junior Mortgage Guaranty will be junior to the liens securing payment of the RIHF Senior Facility Notes, the RIH Senior Facility Guaranty, the New RIHF Mortgage Notes and the RIH Mortgage Guaranty. GRIFFIN GROUP TRANSACTIONS. The Griffin Group, Inc., a company controlled by Merv Griffin (the "Griffin Group"), entered into a License and Services Agreement in April 1993, but dated and effective as of September 17, 1992 (as amended, the "New Griffin Services Agreement"), with RII and RIH. On September 17, 1993, RII paid $2,205,000 to the Griffin Group for the third year of the New Griffin Services Agreement, by reducing the principal amount of a $7,523,333 promissory note issued by the Griffin Group to RII (the "Griffin Group Note") in an equal amount. On or prior to the Effective Date, RII will pay $2,310,000 to the Griffin Group for the fourth year of the New Griffin Services Agreement also by reducing the principal amount of the Griffin Group Note in an equal amount. After payment of the $2,310,000 referenced above, but no later than the Effective Date, the Griffin Group will pay RII the remainder of the Griffin Group Note (approximately $3,000,000). RII will distribute the proceeds of such payment to the holders of the Old Series Notes as part of Excess Cash. Payment in full of the outstanding amounts under the Griffin Group Note is a condition to consummation of the Plan. The New Griffin Services Agreement also provides that, as additional compensation pursuant to the New Griffin Services Agreement, RII will issue warrants (the "Griffin Warrants") to the Griffin Group to purchase 4,665,000 shares of RII Common Stock, or approximately 10% of the RII Common Stock on a fully diluted basis. The Griffin Warrants will be exercisable on the Effective Date at an exercise price of the lesser of $1.875 and the average closing price of RII Common Stock for the 20 trading days following the Effective Date. TERMINATION AND RELEASE OF THE OLD SECURITY DOCUMENTS. RII is soliciting the consents of the record holders of outstanding Old Series Notes pursuant to the terms of the indenture under which the Old Series Notes were issued (the "Old Series Note Indenture") to terminate and release the Old Security Documents under which the liens on the property, including the Resorts Casino Hotel, securing the Old Series Notes were granted or created. Such consents must be evidenced by such record holders separately from their vote on the Plan. The ballots for the holders of Old Series Notes permit holders to give or withhold such consent. ANY EXECUTED BALLOT OF A HOLDER OF OLD SERIES NOTES RETURNED WITHOUT AN INDICATION TO WITHHOLD SUCH CONSENT WILL BE DEEMED TO GIVE SUCH CONSENT. RII is requesting the consents for the purposes of: (i) releasing the Resorts Casino Hotel from the liens of the Old Security Documents so that it may be encumbered to secure the RIHF Senior Facility Notes, the RIH Senior Facility Guaranty, the New RIHF Mortgage Notes, the RIH Mortgage Guaranty, the New RIHF Junior Mortgage Notes and the RIH Junior Mortgage Guaranty in connection with the Restructuring; (ii) effecting either the SIHL Sale or the PIRL Spin-Off; and (iii) releasing the Non-Operating Real Property from the liens of the Old Security Documents. Absent a release of the Old Security Documents either through consent or an appropriate Bankruptcy Court order, the 7 (COVER PAGE CONTINUED) transactions contemplated by the Plan cannot be consummated because RII will be unable to pledge the requisite collateral for repayment of the New Debt Securities and the RIHF Senior Facility. In no event will the consents to release the Old Security Documents be used to effectuate the termination and release of the Old Security Documents in the absence of the confirmation and consummation of the Plan. If RII and GRI fail to receive the Requisite Acceptances (as defined below), notwithstanding receipt of sufficient consents to release and terminate the Old Security Documents pursuant to the Old Series Note Indenture, such consents will only be used in the event that RII and GRI continue to pursue confirmation and consummation of the Plan. In the event that RII and GRI elect or are required to resolicit Acceptances of the Plan, however, they reserve the right not to resolicit with respect to the consents to release the Old Security Documents and to use consents received from the initial Solicitation. 1994 STOCK OPTION PLAN. As part of the Restructuring, the 1990 Stock Option Plan will be terminated and no further 1990 Stock Options will be issued. Existing holders of 1990 Stock Options will retain their options under the Plan and the exercise price for outstanding 1990 Stock Options shall remain fixed at the exercise price at the time of the grant thereof. In conjunction with the Restructuring, the Company will implement as of the Effective Date a new senior management stock option plan (the "1994 Stock Option Plan") for RII and its subsidiaries to attract, retain and motivate their officers, directors and key employees. TO THE EXTENT THAT SHAREHOLDER APPROVAL OF THE 1994 STOCK OPTION PLAN IS REQUIRED UNDER RULE 16B-3 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE "EXCHANGE ACT"), IF SUFFICIENT ACCEPTANCES ARE RECEIVED FROM HOLDERS OF RII COMMON STOCK AND OLD SERIES NOTES (INCLUDING THE RELATED GRI GUARANTY), RII AND GRI INTEND TO USE SUCH ACCEPTANCES, ALONG WITH THE CONFIRMATION ORDER (AS DEFINED BELOW), TO CONSTITUTE APPROVAL OF THE 1994 STOCK OPTION PLAN IN COMPLIANCE WITH RULE 16B-3. The form of the 1994 Stock Option Plan is attached as Exhibit C to the Plan. POST-RESTRUCTURING RII BOARD OF DIRECTORS. Pursuant to the Restructuring, a new classified Board of Directors of RII will be named. After the Restructuring, the holders of the RII Common Stock, voting as a class, will be entitled to elect four directors of RII and the holders of the RII Class B Common Stock, voting as a class, will be entitled to elect two directors of RII (the "Class B Directors"). Pursuant to the Plan, on the Effective Date the initial post-Restructuring board of directors of RII will be composed of directors designated by RII. If on more than six occasions (which need not be consecutive), RIHF either (i) makes Payments-In-Kind in respect of the New RIHF Junior Mortgage Notes or (ii) fails to make interest payments in respect of the New RIHF Junior Mortgage Notes (the "Class B Triggering Event"), the holders of the RII Class B Common Stock, voting as a class, will elect that number of additional Class B Directors such that the total number of Class B Directors will constitute, from time to time, a majority of the entire Board of Directors of RII. ------------------------ OTHER THAN GRI, RII DOES NOT INTEND TO INCLUDE ANY OF ITS SUBSIDIARIES IN THE BANKRUPTCY CASES, NOR DOES RII INTEND TO CAUSE ANY OF ITS SUBSIDIARIES TO FILE ITS OWN BANKRUPTCY CASE. NEITHER RII NOR GRI CURRENTLY IS IN BANKRUPTCY. The Old Series Notes and the RII Common Stock are traded on the American Stock Exchange (the "AMEX"). The closing prices for the Old Series A Notes (Symbol: RTG.A), the Old Series B Notes (Symbol: RTH.A), and the RII Common Stock (Symbol: RT) on April 15, 1993 (the last trading day prior to RII's public announcement of the initial proposed terms of the Restructuring) and January __, 1994 (the last trading day prior to the date of this Information Statement/Prospectus) for which closing prices were available, were as follows:
APRIL 15, JANUARY 4, 1993 1994 --------------- --------------- Old Series A Notes (per $1,000 principal amount)....... $ 610.00 $ 700.00 Old Series B Notes (per $1,000 principal amount)....... 610.00 697.50 RII Common Stock (per share)........................... .8125 1.6875
8 (COVER PAGE CONTINUED) In this Information Statement/Prospectus, (i) the New RIHF Mortgage Notes, the New RIHF Junior Mortgage Notes and the RIHF Senior Facility Notes, if issued on the Effective Date are sometimes referred to as the "New Debt Securities", and (ii) the RII Common Stock issued on or after the Effective Date pursuant the Plan, the RII Class B Common Stock and, if issued, the PIRL Ordinary Shares are sometimes referred to as the "New Equity Securities". The Company will apply to have the New RIHF Mortgage Notes, the Units comprised of New RIHF Junior Mortgage Notes and the RII Class B Common Stock, the RII Common Stock and (if issued) the PIRL Ordinary Shares listed on the AMEX. It is a condition to consummation of the Plan that such securities be listed on a national securities exchange or approved for quotation on the National Association of Securities Dealers Automated Quotation ("Nasdaq") National Market (subject to official notice of issuance). However, there can be no assurance that an active trading market for any such securities will develop on the AMEX, the Nasdaq National Market or otherwise, and no assurance can be given as to the price at which any such securities might trade. The Company has been informed that SIHL will apply to have the SIHL Series A Shares (if issued) listed on the Nasdaq National Market. For information regarding the trading market for the SIHL Series A Shares, see the accompanying SIHL Prospectus. For the Plan to be confirmed, Acceptances must be received from the holders of claims constituting at least 66 2/3% in principal amount and more than 50% in number of the Allowed Claims in each impaired class of claims that votes to accept or reject the Plan (the "Requisite Acceptances"). Although Acceptances from holders of at least 66 2/3% in amount of the Allowed Interests in each impaired class of interests that votes to accept or reject the Plan are desirable, such Acceptances are not required as the Plan may be confirmed even if an impaired class of interests votes to reject the Plan. See "The Plan -- Classification and Treatment of Claims and Interests". Pursuant to the Bankruptcy Code, only votes to accept or reject the Plan, and not abstentions, will be counted for purposes of determining acceptance or rejection of the Plan by any impaired class of claims or interests. Therefore, the Plan could be approved by any impaired class of claims with the affirmative vote of significantly less than 66 2/3% in amount and 50% in number of the class of such claims, or by any impaired class of interests with the affirmative vote of significantly less than 66 2/3% in amount of the class of such interests. IF THE REQUISITE ACCEPTANCES ARE OBTAINED, RII AND GRI CURRENTLY INTEND TO COMMENCE CASES UNDER CHAPTER 11 OF THE BANKRUPTCY CODE IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE (THE "BANKRUPTCY COURT") AND TO USE ALL OF THE ACCEPTANCES TO OBTAIN CONFIRMATION OF THE PLAN. IN ADDITION, RII AND GRI RESERVE THE RIGHT TO USE THE ACCEPTANCES TO SEEK CONFIRMATION OF A PLAN OF REORGANIZATION UNDER ANY OTHER CIRCUMSTANCE PERMITTED BY LAW, INCLUDING THE FILING OF AN INVOLUNTARY BANKRUPTCY PETITION AGAINST RII AND GRI. RII AND GRI RESERVE THE RIGHT TO WAIVE AT ANY TIME, WITHOUT NOTICE AND WITHOUT LEAVE OF OR ORDER OF THE BANKRUPTCY COURT, ANY CONDITION TO CONFIRMATION AND CONSUMMATION OF THE PLAN (SUBJECT IN EACH CASE TO THE APPROVAL OF FIDELITY AND TCW SPECIAL CREDITS ("TCW"), SO LONG AS THE FUNDS AND ACCOUNTS MANAGED BY EITHER OF THEM HOLD IN THE AGGREGATE AT LEAST 20% OF THE OUTSTANDING OLD SERIES NOTES) OTHER THAN THE REQUIREMENT OF THE ENTRY OF AN ORDER OF THE BANKRUPTCY COURT (THE "CONFIRMATION ORDER") CONFIRMING THAT THE PLAN HAS NOT BEEN STAYED. ____THE SOLICITATION WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON [_____________], 1994, UNLESS RII AND GRI, IN THEIR SOLE DISCRETION, EXTEND THE SOLICITATION TO A LATER TIME AND DATE (SUCH DATE AND ANY EXTENSION THEREOF BEING REFERRED TO HEREIN AS THE "VOTING DEADLINE"). ____RII and GRI can extend the Solicitation for that period of time necessary to obtain the Requisite Acceptances. As a practical matter, however: (a) without the consent of SIHL, the Solicitation cannot be extended beyond February 15, 1994, the date that Chapter 11 Cases must be filed (and the Solicitation thereby terminated) by RII and GRI to avoid terminating SIHL's obligations under the 9 Paradise Island Purchase Agreement; (b) if RII and GRI and unable to meet their payment obligations under the Old Series Notes on April 15, 1994, foreclosure or other collection actions may require RII and GRI to file chapter 11 cases and thereby terminate the Solicitation; and (c) RII and GRI currently intend to extend the Solicitation only if the Restructuring as proposed in the Plan is achievable if the Solicitation is extended and there is a likelihood that the extension will facilitate receipt of the Requisite Acceptances. ____Even if the Requisite Acceptances are obtained, the Plan will not be consummated, and the Restructuring will not occur, unless the Plan is confirmed as to both RII and GRI by the United States Bankruptcy Court or any court of competent jurisdiction exercising jurisdiction over RII's and GRI's chapter 11 cases. There is no assurance that the Bankruptcy Court will confirm the Plan. See "Risk Factors -- Certain Bankruptcy and Insolvency Considerations -- Certain Risks of Non-Compliance with Confirmation Requirements". In addition, the Plan is subject to the approval of the New Jersey Casino Control Commission (the "Casino Control Commission"). See "Risk Factors -- New Jersey Regulatory Matters". The SIHL Sale and the PIRL Spin-Off are subject also to the approval of the government of the Commonwealth of The Bahamas. See "Risk Factors -- Risks Associated with the Paradise Island Business -- Bahamas Regulatory Matters". Finally, the Plan is subject to a number of other conditions precedent to Confirmation and to the Effective Date, including but not limited to the requirements that the RIHF Senior Facility Note Purchase Agreement shall have been executed and delivered and that an order of the Bankruptcy Court be entered declaring that, as of the Effective Date, the Old Security Documents will be deemed released and terminated. See "The Plan -- Conditions Precedent to Confirmation and Consummation of the Plan". With the approval of Fidelity and TCW, so long as the funds and accounts managed by either of them hold in the aggregate at least 20% of the outstanding Old Series Notes, RII and GRI at any time, without notice, without leave of or order of the Bankruptcy Court, and without any formal action other than proceeding to consummate the Plan, may waive any condition precedent to confirmation or consummation of the Plan, other than the condition requiring the entry of the Confirmation Order which has not been stayed. As a practical matter, although the condition requiring the entry of an order declaring that, as of the Effective Date, the Old Security Documents shall be deemed released and terminated is waivable, the transactions contemplated by the Plan cannot be consummated if the Old Security Documents are not released and terminated. See "The Plan -- Conditions Precedent to Confirmation and Consummation of the Plan". RII and GRI expressly reserve the right, at any time and from time to time, to modify the terms of the Solicitation or the Plan (subject to compliance with the requirements of section 1127 of the Bankruptcy Code and to the approval of Fidelity and TCW, so long as the funds and accounts managed by either of them hold in the aggregate at least 20% of the outstanding Old Series Notes). See "The Plan -- Modifications of the Plan". ____RII and GRI are soliciting Acceptances by means of ballots ("Ballots") and master ballots ("Master Ballots"). Any holder of Old Series Notes (including the related GRI Guaranty), RII Common Stock, GRI Common Stock, the RII Intercompany Claim or 1990 Stock Options who wishes to vote with respect to the Plan should complete and sign the applicable Ballot or Master Ballot in accordance with the instructions set forth herein and return such Ballot or Master Ballot in accordance with the instructions set forth therein. Ballots or Master Ballots delivered to Hill and Knowlton (the "Solicitation Agent") may be withdrawn or revoked, subject to the procedures described therein, at any time until the Voting Deadline. Neither RII nor GRI intends to commence a case under chapter 11 of the Bankruptcy Code prior to the Voting Deadline, although either RII or GRI may do so in its sole discretion. After the commencement of a case under the Bankruptcy Code, Ballots and Master Ballots may be withdrawn or revoked only with the approval of the Bankruptcy Court. Master Ballots are to be completed by record holders, including nominees of beneficial owners of Old Series Notes or RII Common Stock. ____FIDELITY AND TCW SEPARATELY ADVISE AND MANAGE VARIOUS FUNDS AND ACCOUNTS THAT AS OF OCTOBER 21, 1993 HELD IN THE AGGREGATE APPROXIMATELY $309,926,000 PRINCIPAL AMOUNT OF THE OLD SERIES NOTES, OR APPROXIMATELY 64% OF THE OUTSTANDING OLD SERIES NOTES. FIDELITY AND TCW HAVE AGREED TO CONTINUE TO HOLD 10 AN AGGREGATE OF AT LEAST 50.1% OF THE OLD SERIES NOTES THROUGH THE VOTING RECORD DATE (PROVIDED THAT THE VOTING RECORD DATE IS ON OR BEFORE JANUARY 10, 1994), HAVE ENGAGED IN EXTENSIVE NEGOTIATIONS WITH RII AND GRI WITH RESPECT TO THE RESTRUCTURING, AND HAVE AGREED TO VOTE ALL OLD SERIES NOTES OWNED BY FUNDS AND ACCOUNTS MANAGED BY THEM AS OF THE VOTING RECORD DATE FOR ACCEPTANCE OF THE PLAN AND TO CONSENT TO THE TERMINATION AND RELEASE OF THE OLD SECURITY DOCUMENTS IN CONNECTION THEREWITH. ____MERV GRIFFIN, WHO HOLDS 4,398,115 SHARES OF RII COMMON STOCK, OR APPROXIMATELY 21.82% OF THE OUTSTANDING RII COMMON STOCK, HAS AGREED TO VOTE FOR ACCEPTANCE OF THE PLAN. IN CONNECTION WITH THE PLAN, THE NEW GRIFFIN SERVICES AGREEMENT WILL REMAIN IN PLACE, THE GRIFFIN GROUP WILL PAY THE GRIFFIN GROUP NOTE PROCEEDS (AS DEFINED IN THE PLAN) TO RII AND THE GRIFFIN GROUP WILL RECEIVE THE GRIFFIN WARRANTS. ____THE HOLDERS OF 1,307,300 1990 STOCK OPTIONS, OR APPROXIMATELY 74% OF THE OUTSTANDING 1990 STOCK OPTIONS, HAVE AGREED TO VOTE FOR ACCEPTANCE OF THE PLAN. ____RII HAS AGREED TO VOTE THE RII INTERCOMPANY CLAIM AND ITS EQUITY INTEREST IN GRI FOR ACCEPTANCE OF THE PLAN. ____THE BOARD OF DIRECTORS OF EACH OF RII AND GRI HAS UNANIMOUSLY APPROVED THE RESTRUCTURING, THE PLAN AND THE SOLICITATION AND RECOMMENDS THAT ALL IMPAIRED CREDITORS AND EQUITY INTEREST HOLDERS SUBMIT BALLOTS ACCEPTING THE PLAN AND, IF APPLICABLE, CONSENTING TO THE RELEASE OF THE OLD SECURITY DOCUMENTS. ------------------------ NO APPRAISAL RIGHTS ARE AVAILABLE TO IMPAIRED CREDITORS OR EQUITY INTEREST HOLDERS IN CONNECTION WITH THE PLAN. ------------------------ THE SECURITIES OFFERED HEREBY ARE SPECULATIVE SECURITIES AND INVOLVE A HIGH DEGREE OF RISK. THE RESTRUCTURING DESCRIBED HEREIN WILL RESULT IN DILUTION TO HOLDERS OF RII COMMON STOCK AND 1990 STOCK OPTIONS. SEE "RISK FACTORS". ------------------------ NEITHER THE TRANSACTIONS DESCRIBED HEREIN NOR THE SECURITIES OFFERED HEREBY HAVE BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE FAIRNESS OR MERITS OF SUCH TRANSACTIONS OR UPON THE ACCURACY OR ADEQUACY OF THIS INFORMATION STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ------------------------ NEITHER THE NEW JERSEY CASINO CONTROL COMMISSION NOR THE COMMONWEALTH OF THE BAHAMAS HAS PASSED UPON THE ACCURACY OR ADEQUACY OF THIS INFORMATION STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL. ------------------------ THIS INFORMATION STATEMENT/PROSPECTUS HAS NOT BEEN APPROVED BY THE BANKRUPTCY COURT WITH RESPECT TO THE ADEQUACY OF THE INFORMATION CONTAINED HEREIN. ONCE CHAPTER 11 CASES ARE COMMENCED, RII AND GRI INTEND PROMPTLY TO SEEK AN ORDER OF THE BANKRUPTCY COURT THAT THE SOLICITATION OF ACCEPTANCES TO THE PLAN BY MEANS OF THIS INFORMATION STATEMENT/PROSPECTUS WAS IN COMPLIANCE WITH SECTION 1126(B) OF THE BANKRUPTCY CODE. ------------------------ ____THIS INFORMATION STATEMENT/PROSPECTUS IS FIRST BEING MAILED ON OR ABOUT [JANUARY __], 1994 TO HOLDERS OF OLD SERIES NOTES, RII COMMON STOCK AND 1990 STOCK OPTIONS. 11 AVAILABLE INFORMATION ____RII, RIHF, RIH and PIRL (collectively, the "Registrants") have filed a Registration Statement on Form S-4 (the "Registration Statement") with the Securities and Exchange Commission (the "Commission") under the Securities Act with respect to the securities offered hereby. As permitted by the rules and regulations of the Commission, this Information Statement/Prospectus omits certain information, exhibits and undertakings contained in the Registration Statement. Such additional information, exhibits and undertakings can be inspected at and obtained from the Commission in the manner set forth below. For further information with respect to the securities offered hereby and the Registrants, reference is made to the Registration Statement and the financial schedules and exhibits filed as part thereof. Statements contained in this Information Statement/Prospectus as to the terms of any contract or other document are not necessarily complete, and, in each case, reference is made to the copy of each such contract or other document that has been filed as an exhibit to the Registration Statement. ____RII is subject to the informational requirements of the Exchange Act and, in accordance therewith, files periodic reports and other information with the Commission. If the SIHL Sale is consummated, SIHL will become subject to such informational requirements. If the PIRL Spin-Off is effected, PIRL will become subject to such informational requirements. After the issuance of the New Debt Securities and the related RIH Mortgage Guaranty and RIH Junior Mortgage Guaranty, RIH will become, and RIHF may become, subject to such informational requirements. Reports and other information filed with the Commission, as well as the Registration Statement, can be inspected and copied at the public reference facilities of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's regional offices located at Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511, and at 7 World Trade Center, New York, New York 10048. Copies of such material also can be obtained by mail from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The Old Series Notes and the RII Common Stock are listed on the AMEX, and such reports and other information regarding RII can be inspected and copied at the offices of the AMEX, 86 Trinity Place, New York, New York 10006. Copies of the various documents referred to herein may also be obtained from RII upon request to RII at its principal executive offices. ------------------------ ____NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION NOT CONTAINED IN THIS INFORMATION STATEMENT/PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MAY NOT BE RELIED UPON. THIS INFORMATION STATEMENT/PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THOSE TO WHICH IT RELATES, OR AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES IN ANY JURISDICTION IN WHICH, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS INFORMATION STATEMENT/PROSPECTUS NOR THE DISTRIBUTION OF ANY SECURITIES HEREUNDER, UNDER ANY CIRCUMSTANCES, SHALL CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF RII OR ANY OF ITS SUBSIDIARIES OR IN THE INFORMATION CONTAINED HEREIN SINCE THE DATE HEREOF. ------------------------ ENFORCEABILITY OF CIVIL LIABILITIES ____If the PIRL Spin-Off is effected, PIRL will become a Bahamian holding company, and all or a substantial portion of PIRL's assets may be located outside the United States. PIRL has appointed The Prentice-Hall Corporation System, Inc., 15 Columbus Circle, New York, New York, as its agent to receive service of process with respect to any action brought against it in the United States District Court for the Southern District of New York under the securities laws of the United States or any State, or any action brought against it in the Supreme Court of the State of New York in the County of New York under the securities laws of New York State. However, it may be difficult for investors to enforce outside the United States judgments against PIRL obtained in the United States in any such actions, including actions predicated upon the civil liability provisions of the United States Federal 12 securities laws. In addition, certain of the directors and officers of PIRL may be residents of The Bahamas, and all or a substantial portion of the assets of such persons are or may be located outside the United States. As a result, it may be difficult for investors to effect service of process within the United States upon such persons, or to enforce against them judgments obtained in United States courts, including judgments predicated upon the civil liability provisions of the United States Federal securities laws. PIRL has been advised by its Bahamian counsel, Harry B. Sands & Company, that there is uncertainty as to whether the courts of The Bahamas would enforce (i) judgments of United States courts obtained against PIRL or such persons predicated upon the civil liability provisions of the United States Federal securities laws or (ii) in original actions brought in The Bahamas, liabilities against PIRL or such persons predicated upon the United States Federal securities laws. ------------------------ ____FOR INFORMATION WITH RESPECT TO SIHL, THE SIHL SALE, THE PARADISE ISLAND PURCHASE AGREEMENT AND THE SIHL SERIES A SHARES, REFERENCE IS MADE TO THE ACCOMPANYING SIHL PROSPECTUS RELATING TO THE SIHL SERIES A SHARES. RII HAS SUPPLIED CERTAIN INFORMATION REGARDING THE PARADISE ISLAND BUSINESS (SUCH AS IS FOUND IN RII'S REPORTS FILED WITH THE COMMISSION), AS WELL AS CERTAIN INFORMATION CONCERNING THE RESTRUCTURING, TO SIHL SPECIFICALLY FOR ITS USE IN THE PREPARATION OF THE SIHL PROSPECTUS (AND THE RELATED REGISTRATION STATEMENT FILED BY SIHL WITH THE COMMISSION UNDER THE SECURITIES ACT). RII AND ITS ADVISERS DISCLAIM ANY RESPONSIBILITY FOR THE ACCURACY, COMPLETENESS, NATURE AND FORM OF PRESENTATION OF ANY INFORMATION CONTAINED IN THE SIHL PROSPECTUS (AND RELATED REGISTRATION STATEMENT), EXCEPT THAT RII HAS MADE IN THE PARADISE ISLAND PURCHASE AGREEMENT CERTAIN REPRESENTATIONS AND WARRANTIES TO SIHL AS TO THE ACCURACY OF THE INFORMATION SUPPLIED BY RII SPECIFICALLY FOR INCLUSION IN THE SIHL PROSPECTUS (AND RELATED REGISTRATION STATEMENT). 13 TABLE OF CONTENTS
PAGE NO. --------- AVAILABLE INFORMATION...................................................................................... 12 INDEX OF CERTAIN DEFINED TERMS............................................................................. 20 SUMMARY.................................................................................................... 24 General.................................................................................................. 24 The Registrants.......................................................................................... 25 Pre-and Post-Restructuring Ownership Structures.......................................................... 26 Background of the Restructuring.......................................................................... 29 Financial Forecasts for the Company...................................................................... 32 The Restructuring........................................................................................ 32 The Plan................................................................................................. 37 Comparison of New RIHF Mortgage Notes and New RIHF Junior Mortgage Notes to Old Series Notes............. 47 Description of New Equity Securities..................................................................... 54 SIHL Series A Shares..................................................................................... 56 Voting Procedures........................................................................................ 56 Interests of Certain Persons in the Restructuring........................................................ 59 Solicitation Agent....................................................................................... 60 Other Elements of the Restructuring...................................................................... 61 Risk Factors............................................................................................. 64 Certain Federal Income Tax Considerations................................................................ 64 Summary Historical and Pro Forma Financial Data.......................................................... 65 Market Prices of Old Series Notes and RII Common Stock................................................... 67 Market and Trading....................................................................................... 68 RISK FACTORS............................................................................................... 69 Continuing High Leverage; Future Refinancings............................................................ 69 Recent Net Losses........................................................................................ 69 Lack of Market for New Debt Securities and New Equity Securities......................................... 70 Risks Relating to the Forecasts.......................................................................... 70 Interests of Certain Persons in the Restructuring........................................................ 71 Involvement of Merv Griffin.............................................................................. 72 Certain Federal Income Tax Considerations................................................................ 72 Certain Bankruptcy and Insolvency Considerations......................................................... 73 Certain Considerations Related to Original Issue Discount in the Event of Subsequent Bankruptcy.......... 79 Additional Senior Secured Debt; Subordination............................................................ 80 Security for the New RIHF Mortgage Notes and the New RIHF Junior Mortgage Notes.......................... 80 Fidelity and TCW Not Fiduciaries......................................................................... 80 Competition.............................................................................................. 81 New Jersey Regulatory Matters............................................................................ 82 Potential Disqualification of Holders by the Casino Control Commission................................... 83 Certain Defaults......................................................................................... 83 Risks Associated with the Paradise Island Business....................................................... 84 THE RESTRUCTURING.......................................................................................... 85 Background............................................................................................... 85 Financial Forecasts for the Company...................................................................... 90 Forecast Financial Data.................................................................................. 90 Assumptions.............................................................................................. 93 Reorganization Values.................................................................................... 97 The Bondholders Support Agreement........................................................................ 100 Overview of the Restructuring............................................................................ 101 Certain Significant Effects of the Restructuring......................................................... 104
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PAGE NO. --------- THE PLAN................................................................................................... 105 Brief Explanation of Chapter 11.......................................................................... 105 Solicitation of Acceptances of the Plan.................................................................. 106 Proponents of the Plan................................................................................... 106 Voting on the Plan....................................................................................... 107 Treatment of Trade Creditors and Employees............................................................... 108 Use of Cash for Operations............................................................................... 108 Other First Day Orders................................................................................... 108 Paradise Island Interim Order............................................................................ 109 Subsidiaries of RII...................................................................................... 110 Classification and Treatment of Claims and Interests..................................................... 110 Summary of Other Provisions of the Plan.................................................................. 117 Confirmation of the Plan................................................................................. 121 Conditions Precedent to Confirmation and Consummation of the Plan........................................ 120 Modifications of the Plan................................................................................ 127 Consent Rights of Fidelity and TCW....................................................................... 128 Alternatives to Consummation of the Plan................................................................. 128 Means for Implementation of the Plan..................................................................... 129 Effects of Plan Confirmation............................................................................. 140 THE SOLICITATION........................................................................................... 142 General.................................................................................................. 142 Persons Entitled to Vote; Voting Record Date............................................................. 142 Voting Deadline; Extensions; Modifications............................................................... 143 Agreements Upon Furnishing Ballots....................................................................... 143 Procedure For Voting on the Plan......................................................................... 143 Waivers of Defects, Irregularities, etc.................................................................. 145 Consents to Termination and Release of Old Security Documents............................................ 146 Withdrawal; Revocation Rights............................................................................ 146 Termination.............................................................................................. 147 Fees and Expenses........................................................................................ 147 Solicitation Agent....................................................................................... 147 Security Ownership of Certain Beneficial Owners and Management........................................... 147 Interests of Certain Persons in the Restructuring........................................................ 148 CAPITALIZATION OF RII...................................................................................... 150 CAPITALIZATION OF PIRL..................................................................................... 151 ACCOUNTING TREATMENT....................................................................................... 152 SELECTED HISTORICAL FINANCIAL DATA......................................................................... 153 RII...................................................................................................... 153 RIH...................................................................................................... 156 PIRL Group............................................................................................... 158 PRO FORMA FINANCIAL DATA................................................................................... 159 RIHF..................................................................................................... 159 RII...................................................................................................... 160 RIH...................................................................................................... 164 PIRL..................................................................................................... 167 MARKET PRICES OF OLD SERIES NOTES.......................................................................... 171 MARKET PRICES OF RII COMMON STOCK.......................................................................... 171 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS...................... 172 Financial Condition...................................................................................... 172 Results of Operations.................................................................................... 176 First Three Quarters 1993 Compared to First Three Quarters 1992.......................................... 177 Comparison of the Years 1992, 1991 and 1990.............................................................. 178
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PAGE NO. --------- First Three Quarters 1993 Compared to First Three Quarters 1992.......................................... 180 Comparison of the Years 1992, 1991 and 1990.............................................................. 181 BUSINESS OF THE COMPANY.................................................................................... 185 Atlantic City............................................................................................ 185 The Bahamas.............................................................................................. 189 Airline Operations....................................................................................... 193 Foreign Operations....................................................................................... 193 Regulation and Gaming Taxes and Fees..................................................................... 194 The Company's Properties................................................................................. 197 MANAGEMENT OF RII.......................................................................................... 199 Directors and Executive Officers......................................................................... 199 Executive Compensation................................................................................... 201 MANAGEMENT OF RIHF......................................................................................... 206 Directors and Executive Officers......................................................................... 206 MANAGEMENT OF RIH.......................................................................................... 206 Directors and Executive Officers......................................................................... 206 Executive Compensation................................................................................... 207 MANAGEMENT OF PIRL......................................................................................... 209 Directors and Executive Officers......................................................................... 209 SECURITY OWNERSHIP......................................................................................... 210 Security Ownership of Certain Beneficial Owners.......................................................... 210 Security Ownership of Management......................................................................... 211 CERTAIN TRANSACTIONS....................................................................................... 211 Transactions with Management and Others.................................................................. 211 DESCRIPTION OF NEW RIHF MORTGAGE NOTES..................................................................... 212 General.................................................................................................. 212 Interest................................................................................................. 212 Sinking Fund Requirements................................................................................ 212 Mandatory Redemption..................................................................................... 212 Optional Redemption...................................................................................... 212 Limitation on Open-Market Purchases...................................................................... 213 Casino Control Act Regulation............................................................................ 213 Intercreditor Agreement.................................................................................. 213 Collateral............................................................................................... 213 Release and Substitution of Collateral................................................................... 214 Limitations on Ability to Realize on Collateral.......................................................... 214 Guaranty................................................................................................. 215 Ranking.................................................................................................. 215 Payments of Net Proceeds of Asset Sales.................................................................. 215 Change of Control........................................................................................ 215 Covenants................................................................................................ 215 Events of Default........................................................................................ 220 Limitation on Consolidation, Merger, Conveyance, Transfer or Lease of Property and Assets................ 223 Discharge of New RIHF Mortgage Note Indenture; Defeasance................................................ 224 Modification of Indenture................................................................................ 225 Trustee.................................................................................................. 225 Reports to Holders....................................................................................... 225 Certain Definitions...................................................................................... 226 DESCRIPTION OF NEW RIHF JUNIOR MORTGAGE NOTES.............................................................. 230 General.................................................................................................. 231 Interest................................................................................................. 231 Sinking Fund Requirements................................................................................ 231
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PAGE NO. --------- Mandatory Redemption..................................................................................... 231 Optional Redemption...................................................................................... 231 Limitation on Open-Market Purchases...................................................................... 232 Casino Control Act Regulation............................................................................ 232 Intercreditor Agreement.................................................................................. 232 Collateral............................................................................................... 232 Release and Substitution of Collateral................................................................... 233 Limitations on Ability to Realize on Collateral.......................................................... 233 Guaranty................................................................................................. 233 Ranking.................................................................................................. 234 Payments of Net Proceeds of Asset Sales.................................................................. 234 Change of Control........................................................................................ 234 Covenants................................................................................................ 234 Events of Default........................................................................................ 239 Limitation on Consolidation, Merger, Conveyance, Transfer or Lease of Property and Assets................ 241 Discharge of New RIHF Junior Mortgage Note Indenture..................................................... 243 Modification of Indenture................................................................................ 243 Trustee.................................................................................................. 243 Reports to Holders....................................................................................... 244 Certain Definitions...................................................................................... 244 DESCRIPTION OF RIHF SENIOR FACILITY NOTES.................................................................. 249 General.................................................................................................. 249 Interest................................................................................................. 249 Sinking Fund Requirements................................................................................ 249 Mandatory Redemption..................................................................................... 249 Optional Redemption...................................................................................... 250 Limitation on Open-Market Purchases...................................................................... 250 Casino Control Act Regulation............................................................................ 250 Intercreditor Agreement.................................................................................. 250 Collateral............................................................................................... 250 Release and Substitution of Collateral................................................................... 250 Limitations on Ability to Realize on Collateral.......................................................... 250 Guaranty................................................................................................. 251 Ranking.................................................................................................. 251 Payment of Net Proceeds from Asset Sales................................................................. 251 Change of Control........................................................................................ 251 Covenants................................................................................................ 251 Events of Default........................................................................................ 251 Limitation on Mergers.................................................................................... 251 Discharge of RIHF Senior Facility; Defeasance............................................................ 251 Modification of RIHF Senior Facility..................................................................... 251 Trustee.................................................................................................. 251 Reports to Holders....................................................................................... 251 DESCRIPTION OF NEW EQUITY SECURITIES....................................................................... 252 General.................................................................................................. 252 Casino Control Act Regulation............................................................................ 252 Description of RII Common Stock.......................................................................... 252 Description of RII Class B Common Stock.................................................................. 253 Description of PIRL Ordinary Shares...................................................................... 253 DESCRIPTION OF PARADISE ISLAND PURCHASE AGREEMENT.......................................................... 254 General.................................................................................................. 254 Purchase and Sale of the Shares and the U.S. Paradise Island Assets...................................... 255
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PAGE NO. --------- Representations and Warranties........................................................................... 255 Handling of Cash and Working Capital..................................................................... 256 RII Covenants............................................................................................ 257 Additional Agreements.................................................................................... 257 Conditions to Closing.................................................................................... 260 Termination.............................................................................................. 262 Transfer Taxes........................................................................................... 263 Amendment and Waivers.................................................................................... 263 Indemnification.......................................................................................... 263 DESCRIPTION OF PIRL STANDBY DISTRIBUTION AGREEMENT......................................................... 263 General.................................................................................................. 263 Purchase and Sale of the Shares and the U.S. Paradise Island Assets...................................... 264 RII Representations and Warranties....................................................................... 264 Handling of Cash and Working Capital..................................................................... 265 RII Covenants............................................................................................ 265 Additional Agreements.................................................................................... 266 Conditions to Closing.................................................................................... 267 Termination.............................................................................................. 268 Transfer Taxes........................................................................................... 269 Amendment and Waivers.................................................................................... 269 Indemnification.......................................................................................... 269 DESCRIPTION OF THE CAESARS PAYMENT......................................................................... 269 DESCRIPTION OF DEFERRED CASH............................................................................... 270 DESCRIPTION OF EXCESS CASH................................................................................. 270 DESCRIPTION OF LITIGATION TRUST UNITS...................................................................... 270 DESCRIPTION OF NET RESERVED CASH........................................................................... 271 DESCRIPTION OF NET PLAN CONSUMMATION CASH AND PLAN EXPENSES................................................ 272 DESCRIPTION OF GRIFFIN WARRANTS............................................................................ 273 General.................................................................................................. 273 Exercise of Griffin Warrants............................................................................. 273 Adjustments.............................................................................................. 273 Limitation on Right to Vote or Receive Dividends......................................................... 274 Certain Definitions...................................................................................... 274 DESCRIPTION OF OLD SERIES NOTES............................................................................ 275 Certain Terms of the Old Series A Notes.................................................................. 276 Certain Terms of the Old Series B Notes.................................................................. 276 Mandatory Redemption..................................................................................... 277 Optional Redemption...................................................................................... 277 Limitation on Open-Market Purchases...................................................................... 277 Casino Control Act Regulation............................................................................ 277 Put Option Upon Change of Control........................................................................ 277 Collateral............................................................................................... 278 Negative Pledge Covenant................................................................................. 279 Release and Substitution of Collateral................................................................... 279 Limitations on Ability to Realize on Collateral.......................................................... 280 Guaranty................................................................................................. 281 Ranking.................................................................................................. 281 Payment of Net Proceeds of Asset Sales................................................................... 281 Restrictive Covenants.................................................................................... 281 Events of Default........................................................................................ 281 Limitation on Mergers.................................................................................... 282 Discharge of Old Series Note Indenture; Defeasance....................................................... 283 Modification of Indenture................................................................................ 283
18
PAGE NO. --------- Trustee.................................................................................................. 283 Reports to Holders....................................................................................... 283 DESCRIPTION OF SHOWBOAT NOTES.............................................................................. 283 General.................................................................................................. 284 Interest................................................................................................. 284 Optional Redemption...................................................................................... 284 Casino Control Act Regulation............................................................................ 285 Collateral............................................................................................... 285 Certain Covenants........................................................................................ 286 Events of Default........................................................................................ 287 Modification of Indenture................................................................................ 287 Reports to Holders....................................................................................... 287 Limitation on Mergers.................................................................................... 287 Discharge of Showboat Note Indenture; Defeasance......................................................... 288 CERTAIN FEDERAL INCOME TAX CONSIDERATIONS.................................................................. 288 Treatment of New Debt Securities as Debt of RIH for Federal Income Tax Purposes.......................... 290 Classification of New Debt Securities as Debt Rather Than Equity......................................... 290 Exchange of Old Series Notes............................................................................. 291 OID With Respect to the New Debt Securities.............................................................. 292 Consequences if the New Debt Securities are Issued with OID.............................................. 294 Consequences of the Rights to Receive Payments from Deferred Cash........................................ 295 Consequences of Rights to Receive Payments from Net Reserved Cash and Net Plan Consummation Cash......... 296 Consequences of Holding the RII Common Stock and the RII Class B Common Stock............................ 296 Consequences of Holding the PIRL Ordinary Shares......................................................... 296 Certain Bahamian Tax Considerations...................................................................... 297 Sale, Exchange or Redemption............................................................................. 297 Market Discount.......................................................................................... 298 Tax Consequences to the Company.......................................................................... 298 Potential Application of High Yield Debt Obligation Rules................................................ 302 Backup Withholding....................................................................................... 302 APPLICABILITY OF FEDERAL AND OTHER SECURITIES LAWS TO RESALES OF SECURITIES................................ 302 Issuance of Securities Under the Plan.................................................................... 303 Transfers of Securities.................................................................................. 303 Certain Transactions by Stockbrokers..................................................................... 304 Shares Eligible for Future Sale.......................................................................... 304 LEGAL MATTERS.............................................................................................. 304 EXPERTS.................................................................................................... 305 INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA....................................................... F-1 APPENDIX A -- Plan of Reorganization....................................................................... A-1 APPENDIX B -- Liquidation Analyses......................................................................... B-1 APPENDIX C -- Amended RII Certificate of Incorporation..................................................... C-1 APPENDIX D -- Amended RII By-laws.......................................................................... D-1
19 INDEX OF CERTAIN DEFINED TERMS ____
TERM PAGE 1990 Letter Ruling................... 300 1990 Stock Option Plan............... 1 1990 Stock Options................... 1 1994 Stock Option Plan............... 7 Acceptance........................... 1 Acquisition Proposal................. 257 ACS.................................. 81 Adjusted Working Capital............. 2 Administrative Claim................. 38 Allowed Amount....................... 37 Allowed Claim........................ 37 Allowed Interest..................... 37 Alvarez & Marsal..................... 31 Amended RII By-laws.................. 61 Amended RII Certificate of Incorporation....................... 61 AMEX................................. 8 AMT.................................. 96 Annual Limitation.................... 300 ANTL................................. 25 Available Cash....................... 2 Awards............................... 135 Bankruptcy Code...................... 1 Bankruptcy Court..................... 9 Bankruptcy Exception................. 301 Bankruptcy Rules..................... 1 Bear Stearns......................... 31 Best Interests Test.................. 121 Board of Education................... 190 Bondholders Support Agreement........ 100 Caesars Payment...................... 2 Carnival............................. 30 Cash Collateral...................... 108 Casino Control Act................... 82 Casino Control Commission............ 10 CFC.................................. 297 Change of Control Put Option......... 277 Class B Directors.................... 8 Class B Triggering Event............. 8 Closing Date Balance Sheet........... 256 Closing Date Operations Statement.... 256 COD.................................. 73 Collateral Account................... 48 TERM PAGE Combination Transaction.............. 51 Commission........................... 12 Company.............................. 1 Confirmation Date.................... 123 Confirmation Order................... 9 cram-down............................ 76 CRDA................................. 189 Crystal Palace....................... 30 Deferred Cash........................ 3 Disbursing Agent..................... 124 disqualifying disposition............ 130 Distribution Date.................... 3 Distribution Record Date............. 2 DLJ.................................. 31 EBITDA............................... 93 Effective Date....................... 2 Eligible Participants................ 128 ERISA................................ 131 Escrow Agent......................... 253 Escrow Agreement..................... 253 ESS.................................. 62 Excess Cash.......................... 2 Exchange............................. 282 Exchange Act......................... 8 Excluded Employees................... 254 executory contract................... 114 Feasibility Test..................... 118 Fidelity............................. 5 Final Order.......................... 133 Force Majeure Event.................. 256 FPHC................................. 291 GAAP................................. 93 Gaming Act........................... 83 Great Island Property................ 190 GRH.................................. 29 GRI.................................. 1 GRI Common Stock..................... 1 GRI Guaranty......................... 1 GRI Pledge Agreement................. 50 GRI Priority Claim................... 112 GRI Releases......................... 85 Griffco.............................. 29 Griffin Group........................ 7
20
TERM PAGE Griffin Group Note................... 7 Griffin Group Note Proceeds.......... Griffin Note......................... 30 GRI Release Shares................... 85 Griffin Warrants..................... 7 Hanlon Employment Agreement.......... 59 Hanlon Termination Agreement......... 59 HCB.................................. 31 Hill and Knowlton.................... 60 Holding company...................... 187 IHC.................................. 25 Incentive Option..................... 128 Indenture Trustee Charging Liens..... 108 Information Statement/Prospectus..... 1 Insider.............................. 131 Intercontinental..................... 193 Intercreditor Agreement.............. 206 investment obligation................ 189 ISI.................................. 25 January Enterprises.................. 193 Liquidation Analysis................. 73 Litigation Claims.................... 264 Litigation Trust..................... 30 Litigation Trust Agreement........... 86 Litigation Trust Distributions....... 3 Litigation Trust Units............... 3 Litigation Trustee................... 30 Losses............................... 257 Market Discount...................... 292 MD&A................................. 165 NASDAQ............................... 8 Net Plan Consummation Cash........... 3 Net Reserved Cash.................... 3 New Debt Securities.................. 8 New Equity Securities................ 8 New Griffin Services Agreement....... 7 New Jersey bankruptcy court.......... 29 New Proposed Regulations............. 286 New RIHF Junior Mortgage Indenture... 47 New RIHF Junior Mortgage Notes....... 2 New RIHF Junior Mortgage Note Trustee............................. 224 New RIHF Mortgage Indenture.......... 47 New RIHF Mortgage Notes.............. 2 TERM PAGE New RIHF Mortgage Note Trustee....... 205 New RIHF Mortgage Trust Estate....... 6 New RIHF Junior Mortgage Trust Estate.............................. 7 NOL.................................. 72 Non-Operating Real Property.......... 25 NPO.................................. 62 OID.................................. 71 Old Chapter 11 Cases................. 29 Old Debtors.......................... 29 Old Effective Date................... 30 Old Griffin Services Agreement....... 63 Old PIK Payments..................... 31 Old Plan............................. 29 Old Plan Disputed Claims............. 85 Old Proposed Regulations............. 286 Old Security Documents............... 51 Old Series A Notes................... 1 Old Series B Notes................... 1 Old Series Note Indenture............ 7 Old Series Notes..................... 1 Option Committee..................... 128 Old Series Note Trustee.............. 50 Overbid Transaction.................. 78 Paradise Employee.................... 254 Paradise Island Agreements........... 185 Paradise Approval Order.............. 121 Paradise Island Business............. 1 Paradise Island Interim Order........ 104 Paradise Island Purchase Agreement... 2 Paradise Island Resorts.............. 25 Paradise Island Shares............... 1 Payments-In-Kind..................... 6 PBI.................................. 25 PEL.................................. 25 Pending Contingent Debt Regulations.. 289 Petition Date........................ 37 PFIC................................. 291 PIA.................................. 25 PIB.................................. 25 PIL.................................. 25 PIRL................................. 1 PIRL Ordinary Shares................. 2 PIRL Group........................... 65
21
TERM PAGE PIRL Spin-Off........................ 1 PIRL Standby Distribution Agreement.. 2 PIVI................................. 25 Plan................................. 1 Plan Consummation Cash............... 2 Post Termination Sale................ 253 Priority Tax Claim................... 108 Proposed Contingent Debt Regulations......................... 284 PSS.................................. 25 Purchase Price....................... 252 Put Right............................ 4 QSIPs................................ 287 Qualified Third Party................ 252 Radisson............................. 31 Registrants.......................... 12 Registration Statement............... 12 Requisite Acceptances................ 9 Reserved Cash........................ 2 Resorts Casino Hotel................. 6 Restoration Event.................... 293 Restructuring........................ 1 RIB.................................. 1 RIB Collateral....................... 50 RIB Collateral Assignment Agreement.. 50 RIB Gain............................. 293 RIB Mortgage......................... 273 RIB Note............................. 273 RIB Property......................... 273 RIB Stock............................ 50 RIB Subsidiary Guarantors............ 273 RIB Subsidiary Guaranty Agreements... 273 RIDI................................. 25 RIFI................................. 29 RIFI Releases........................ 85 RIFI Release Cash.................... 86 RIH.................................. 1 RIH Guaranty Mortgage................ 49 RIH Junior Guaranty Mortgage......... 49 RIH Junior Mortgage.................. 50 RIH Junior Mortgage Guaranty......... 2 RIH Junior Promissory Note........... 6 RIH Mortgage......................... 50 RIH Mortgage Guaranty................ 2 RIH Notes............................ 49 TERM PAGE RIH Pledge Agreement................. 50 RIH Promissory Note.................. 6 RIH Senior Facility Guaranty......... 6 RIH Senior Facility Mortgage......... 243 RIH Senior Facility Note............. 6 RIHF................................. 1 RIHF Senior Facility................. 5 RIHF Senior Facility Note Indenture........................... 6 RIHF Senior Facility Notes........... 5 RIHF Senior Facility Trustee......... 242 RIHF Senior Facility Trust Estate.... 6 RII.................................. 1 RII Class B Common Stock............. 2 RII Common Stock..................... 1 RII Intercompany Claim............... 4 RII Mortgage......................... 50 RII Pledge Agreement................. 50 RII Priority Claim................... 112 RII Property......................... 50 RII Paradise Assets.................. 1 RII Real Estate Assets............... 1 RII Retained Cash.................... 2 RII Summary Compensation Table....... 205 RRII................................. 25 Rum Point............................ 197 Salomon Brothers..................... 31 Securities Act....................... 5 Service.............................. 73 Settlement Agreement................. 271 SFAS 96.............................. 155 SFAS 109............................. 166 Showboat Casino...................... 81 Showboat Lease....................... 81 Showboat Mortgage.................... 285 Showboat Note Trustee................ 283 Showboat Notes....................... 30 Showboat Property.................... 285 SIHL................................. 1 SIHL Aggregate Cash Purchase Price... 4 SIHL Buyer Expense Escrow............ 4 SIHL Closing Date.................... 2 SIHL Escrow.......................... 5 SIHL's Escrowed Property............. 253 SIHL Expense Reimbursement........... 252
22
TERM PAGE SIHL Prospectus...................... 5 SIHL Sale............................ 1 SIHL Series A Shares................. 2 SIHL Subscription Agreement.......... 250 SIIL................................. 4 SIIL Subscription Agreement.......... 250 SIIL Subscription Amount............. 4 Solicitation......................... 1 SOP 90-7............................. 145 Taj Mahal............................ 79 Tax Code............................. 64 TCW.................................. 7 TGC Holdings......................... 62 TIA.................................. 5 TIN.................................. 296 TERM PAGE Trading Testing Period............... 286 Trump Parties........................ 264 Trump Partnership.................... 29 Trust Beneficiaries.................. 264 Union................................ 250 Union Contract Dispute............... 250 Union Contract Dispute Amount........ 250 Unit................................. 2 United States Holder................. 290 United States Trustee................ 113 Unsurrendered Public Debt Claims..... 85 U.S. Government Obligations.......... 217 U.S. Paradise Island Subsidiaries.... 25 Voting Deadline...................... 9 Voting Record Date................... 1
23 SUMMARY ____THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED INFORMATION AND FINANCIAL STATEMENTS CONTAINED ELSEWHERE IN THIS INFORMATION STATEMENT/PROSPECTUS. CERTAIN TERMS USED IN THE FOLLOWING SUMMARY AND ELSEWHERE IN THIS INFORMATION STATEMENT/PROSPECTUS ARE DEFINED ON THE COVER PAGE OF THIS INFORMATION STATEMENT/PROSPECTUS. GENERAL ____RII and GRI, upon the terms and subject to the conditions set forth in this Information Statement/Prospectus and the accompanying forms of Ballot and Master Ballot, hereby solicit from (a) each owner of Old Series Notes (and the beneficiary of the related GRI Guaranty endorsed thereon), (b) each owner of RII Common Stock, (c) RII, as the owner of the GRI Common Stock, (d) RII, as the holder of the RII Intercompany Claim against GRI, and (e) each holder of 1990 Stock Options, each as of the close of business in New York City on the Voting Record Date (January 10, 1994), an Acceptance of the Plan of RII and GRI to be filed pursuant to chapter 11 of the Bankruptcy Code and the Bankruptcy Rules. From each holder of Old Series Notes (and beneficiary of the related GRI Guaranty endorsed thereon), RII and GRI hereby solicit consents to terminate and release the Old Security Documents so that certain of the collateral covered thereby, including the Resorts Casino Hotel, can be pledged to secure the New Debt Securities to be issued pursuant to the Plan. ____Consummation of the Plan on the Effective Date will result in a restructuring of RII's debt and equity capitalization in the manner described below and the consummation of certain other transactions, including either the SIHL Sale or the PIRL Spin-Off. See "The Restructuring". ____The Solicitation will expire at 5:00 p.m., New York City time, on [_____________], 1994, unless RII and GRI, in their sole discretion, extend the Solicitation to a later time and date. RII and GRI can extend the Solicitation for that period of time necessary to obtain the Requisite Acceptances. As a practical matter, however: (a) without the consent of SIHL, the Solicitation cannot be extended beyond February 15, 1994, the date that Chapter 11 Cases must be filed (and the Solicitation thereby terminated) by RII and GRI to avoid terminating SIHL's obligations under the Paradise Island Purchase Agreement; (b) if RII and GRI and unable to meet their payment obligations under the Old Series Notes on April 15, 1994, foreclosure or other collection actions may require RII and GRI to file chapter 11 cases and thereby terminate the Solicitation; and (c) RII and GRI currently intend to extend the Solicitation only if the Restructuring as proposed in the Plan is achievable if the Solicitation is extended and there is a likelihood that the extension will facilitate receipt of the Requisite Acceptances. ____Even if the Requisite Acceptances are obtained, the Plan will not be consummated, and the Restructuring will not occur, unless the Plan is confirmed as to both RII and GRI by the Bankruptcy Court and certain other conditions are satisfied. Subject to the approval of Fidelity and TCW, so long as the funds and accounts managed by either of them hold in the aggregate at least 20% of the Old Series Notes, RII and GRI at any time, without notice, without leave of or order of the Bankruptcy Court and without any formal action other than proceeding to consummate the Plan, may waive any condition precedent to confirmation or consummation of the Plan, other than the condition requiring the entry of a Confirmation Order which has not been stayed. As a practical matter, although the condition to confirmation requiring the entry of an order declaring that, as of the Effective Date, the Old Security Documents shall be deemed released and terminated is waivable, the transactions contemplated by the Plan cannot be consummated if the Old Security Documents are not released and terminated. See "The Plan -- Conditions Precedent to Confirmation and Consummation of the Plan". RII and GRI expressly reserve the right, at any time and from time to time, to modify the terms of the Solicitation or the Plan (subject to compliance with the requirements of section 1127 of the Bankruptcy Code and to the approval of Fidelity and TCW, so long as the funds and accounts managed by either of them hold in the aggregate at least 20% of the Old Series Notes). See "The Plan -- Modifications of the Plan". 24 ____EACH OF FIDELITY AND TCW, SOLELY ON BEHALF OF FUNDS AND ACCOUNTS MANAGED BY THEM, HAS NEGOTIATED EXTENSIVELY WITH RII AND GRI REGARDING THE TERMS OF THE RESTRUCTURING. All information contained in the Information Statement/Prospectus other than information relating to Fidelity and TCW and the ownership of Old Series Notes by Fidelity or TCW, or funds and accounts managed by either of them, was prepared and furnished by RII and GRI. Fidelity and TCW are not responsible for the accuracy, completeness, nature and form of presentation of such information other than information related to Fidelity and TCW and the holdings respectively managed by them. See "The Restructuring -- Background". THE REGISTRANTS ____RESORTS INTERNATIONAL, INC. ____RII is a holding company which, through its subsidiaries, is principally engaged in the ownership and operation of the Resorts Casino Hotel in Atlantic City, New Jersey, and the Paradise Island Resort & Casino, the Ocean Club Golf & Tennis Resort and the Paradise Paradise Beach Resort (collectively, the "Paradise Island Resorts"), all located on Paradise Island, The Bahamas. In addition, RII owns land in Atlantic City at various sites (the "Non-Operating Real Property"), approximately 90 acres of which are available for development. RII was incorporated in 1958 and is a Delaware corporation. ____RESORTS INTERNATIONAL HOTEL FINANCING, INC. ____RIHF was incorporated in Delaware in 1993 for the purpose of issuing the New RIHF Mortgage Notes and the New RIHF Junior Mortgage Notes pursuant to the Plan. RIHF also will enter into the RIHF Senior Facility with Fidelity. RIHF is a wholly owned subsidiary of RII. ____RESORTS INTERNATIONAL HOTEL, INC. ____RIH is the subsidiary of RII that owns and operates all the property and improvements of the Resorts Casino Hotel. The Resorts Casino Hotel is located on the Boardwalk in Atlantic City, New Jersey, and has approximately 670 guest rooms, a 60,000-square-foot casino and related facilities. RIH was incorporated in 1903 and is a New Jersey corporation. RIH will issue the RIH Senior Facility Guaranty, the RIH Mortgage Guaranty and the RIH Junior Mortgage Guaranty. ____P. I. RESORTS LIMITED ____PIRL, a wholly owned subsidiary of RII, was incorporated in the Commonwealth of The Bahamas in 1993 for the purpose of effecting the PIRL Spin-Off if the SIHL Sale is not consummated on or prior to the Effective Date. If the PIRL Spin-Off is effected, then (a) PIRL will acquire from RII all the capital stock of RIB and (b) subsidiaries of PIRL will purchase the RII Real Estate Assets and substantially all the assets of (i) Resorts International Disbursement, Inc. ("RIDI"), (ii) Paradise Island Vacations, Inc. ("PIVI"), (iii) Resorts Representation International, Inc. ("RRII"), (iv) International Suppliers, Inc. ("ISI"), (v) Paradise Island Airlines, Inc. ("PIA"), and (vi) ANTL, Inc. ("ANTL"), and will assume substantially all the non-intercompany liabilities relating to such assets, in exchange for the PIRL Ordinary Shares. RIDI, PIVI, RRII, ISI, PIA and ANTL are all Florida corporations and are herein called the "U.S. Paradise Island Subsidiaries". ____RIB is the holding company for the Paradise Island assets located in The Bahamas, which are held in the following corporations organized under the laws of the Commonwealth of The Bahamas: (a) Island Hotel Company Limited ("IHC"); (b) Paradise Enterprises Limited ("PEL"); (c) Paradise Island Bridge Management Company Limited ("PIB"); (d) Paradise Island Limited ("PIL"); (e) Paradise Beach Inn, Limited ("PBI"); and (f) Paradise Security Services Limited ("PSS"). On the date hereof, RIB is a subsidiary of GRI. The Paradise Island Resort & Casino includes two hotel towers totaling 1,186 guest rooms, the 30,000 square-foot Paradise Island casino and related facilities. The Ocean Club Golf & Tennis Resort is an exclusive 71-room hotel with premium room rates. The Paradise Paradise Beach Resort is a 100-room hotel complex that offers more moderately priced accommodations. RIB and its subsidiaries also own and operate convention facilities, shops, restaurants, bars and lounges, tennis courts, an 18-hole golf course, swimming pools, approximately six 25 miles of beach and water frontage and other resort facilities on Paradise Island. RIB and its subsidiaries also own approximately 219 acres of land not used in the operation of the Paradise Island Resorts. The activities of the U.S. Paradise Island Subsidiaries support the operations of the Paradise Island Resorts. ____The principal executive offices of RII, RIHF and RIH are located at 1133 Boardwalk, Atlantic City, New Jersey 08401. The telephone number of RII, RIHF and RIH is (609) 344-6000. The principal executive offices of PIRL are located at P.O. Box N-4777, Paradise Island, Nassau, The Bahamas. The telephone number of PIRL is (809) 363-3000. PRE-AND POST-RESTRUCTURING OWNERSHIP STRUCTURES ____Set forth below is a chart summarizing the ownership structure of RII, GRI and certain related entities as they currently exist. [GRAPHIC] 26 ____Set forth below is a chart summarizing the ownership structure of RII, GRI and certain related entities, and SIHL and certain related entities, as they will exist after giving effect to the Restructuring assuming that the SIHL Sale has been effected. [GRAPHIC] 27 ____Set forth below is a chart summarizing the ownership structure of RII, GRI and certain related entities, and PIRL and certain related entities, as they will exist after giving effect to the Restructuring assuming that the PIRL Spin-Off has been effected. [GRAPHIC] 28 BACKGROUND OF THE RESTRUCTURING ____In 1983, the Company commenced construction of the Taj Mahal project. Although initially scheduled for completion in late 1986, the project experienced cost overruns and construction delays and remained unfinished at the time it was sold to a partnership controlled by Donald Trump (the "Trump Partnership") in late 1988. By March 31, 1988, RII's total indebtedness for borrowed funds exceeded $725,000,000. ____By the mid-1980s, the Company's position in the Atlantic City casino/hotel industry was severely disadvantaged. In an atmosphere of increased competition, the preoccupation of the Company's management with the Taj Mahal and several bids for control of the Company caused the Company's then existing management to neglect the Resorts Casino Hotel and allow its facilities to deteriorate and to fail to respond to new trends in the industry. ____In late 1988, through a stock purchase and merger, Griffco Resorts Holding, Inc., a corporation then wholly owned by Merv Griffin ("Griffco"), acquired RII from Donald Trump, the then Chairman of the RII Board of Directors and its controlling shareholder, and RII's other shareholders. The aggregate cost of this acquisition was approximately $296,207,750, in cash, and was principally funded by means of Merv Griffin's $50,000,000 investment in Griffco and the issuance of two series of public debt by GRI. ____Immediately after Griffco's acquisition of RII, the Company entered into an agreement pursuant to which it sold certain real and personal assets, including the Taj Mahal, to the Trump Partnership for $273,000,000 in cash and the assumption of approximately $19,000,000 of liabilities. In connection with the foregoing transactions, RII also terminated that certain "Comprehensive Services Agreement" which RII had entered into with the Trump Hotel Corporation and paid such corporation an aggregate amount of $63,689,750 for such termination and fees still owed under such agreement. ____In the period following the acquisition of RII from Donald Trump, the Company experienced a substantial deterioration in its results of operations from both the Resorts Casino Hotel and the Paradise Island Business. The decrease in earnings of the Resorts Casino Hotel was attributable largely to increased competition and, among other things, the disruption of operations and patron and employee relationships caused by ongoing renovations and the Company's financial difficulties. RII and its affiliates issued approximately $600,000,000 of subordinated debentures prior to the acquisition by Griffco, principally to fund the construction of the Taj Mahal, and issued $325,000,000 of additional notes to fund the acquisition. As a result, after certain repayments, the Company had approximately $911,000,000 of long-term debt outstanding in August 1989. In August 1989, faced with deteriorating results of operations and substantial debt service, the Company announced a moratorium on the payment of interest on its outstanding public debt. ____In late 1989, the Company embarked upon recapitalization negotiations with two unofficial committees representing the holders of the Company's outstanding public debt in respect of which the Company had declared the interest payment moratorium. For various reasons, however, RII came to believe that it would not be possible to achieve, on a solely out-of-court basis, the comprehensive restructuring needed to assure continued viability. Moreover, the possibility of an out-of-court settlement was adversely affected when involuntary petitions for relief under chapter 11 of the Bankruptcy Code were filed against RII and its former subsidiary, Resorts International Financing, Inc.("RIFI"), in November 1989. ____On December 22, 1989, RII and RIFI filed consents to the involuntary petitions and GRI and its then immediate parent, Griffin Resorts Holding Inc. ("GRH"), another former subsidiary of RII, filed voluntary petitions for relief under chapter 11 of the Bankruptcy Code (collectively, the "Old Chapter 11 Cases") in the United States Bankruptcy Court for the District of New Jersey (the "New Jersey bankruptcy court"). RII, RIFI, GRI and GRH (collectively, the "Old Debtors") filed the Second Amended Joint Plan of Reorganization dated as of May 31, 1990 (the "Old Plan"), which was 29 confirmed by the New Jersey bankruptcy court in August 1990. On September 17, 1990 (the "Old Effective Date"), all conditions to the effectiveness of the Old Plan were either met or waived and the Old Plan became effective. ____Pursuant to the Old Plan, the previously outstanding public debt issued by RII, RIFI and GRI was canceled, the Old Debtors were discharged from all other claims arising prior to the commencement of the Old Chapter 11 Cases and all previously outstanding shares of stock of RII were canceled. In exchange for such previously outstanding public debt, RII issued (i) debt securities consisting of $187,500,000 principal amount of the Old Series A Notes, $137,500,000 principal amount of the Old Series B Notes and $105,333,000 principal amount of First Mortgage Non-Recourse Pass-Through Notes due June 30, 2000 (the "Showboat Notes") and (ii) 15,100,000 shares of RII Common Stock. ____Further, pursuant to the Old Plan, Merv Griffin acquired 4,400,000 shares of RII Common Stock for which RII received $12,345,000 in cash and an $11,000,000 promissory note which bore interest at the rate of 8% per year (the "Griffin Note") secured by a bank letter of credit. Merv Griffin entered into a two-year contract with RII dated as of September 17, 1990, pursuant to which RII was granted a non-exclusive license to use his name and likeness to promote its facilities and operations, and Merv Griffin agreed to act as Chairman of the Board of RII and to provide certain other services without compensation. ____The Old Plan further provided for the establishment of a litigation trust (the "Litigation Trust") to pursue, for the benefit of certain classes of general unsecured creditors of the Old Debtors, all claims the Old Debtors or certain of their affiliates may have had against Donald J. Trump, the former Chairman of the Board and controlling shareholder of RII, and certain of his affiliates. In October 1990, RII funded the Litigation Trust by depositing with the trustee under the Litigation Trust (the "Litigation Trustee") the sum of $5,000,000 to cover expenses of the Litigation Trustee in pursuing such claims, with any unused balance of such amount to be distributed to the beneficiaries of the Litigation Trust. Under the Old Plan, the beneficiaries of the Litigation Trust received the Litigation Trust Units to represent their beneficial interests. Pursuant to the Old Plan, the holders of 1,785,000 Litigation Trust Units (out of a total of at least 10,000,000 Litigation Trust Units) had the right to require RII to purchase their Litigation Trust Units for approximately $3,880,000 in the aggregate if certain conditions were not met by September 17, 1991. The $3,880,000 was deposited with the Litigation Trustee in October 1990. The requisite conditions were not met and, as a result, approximately 1,760,000 Litigation Trust Units were purchased by RII in October 1991 for $3,831,000. See "Description of Litigation Trust Units". ____RII's ability to pay cash interest on the Old Series Notes, and the ultimate repayment of the Old Series Notes at maturity, was premised in large measure upon RII's ability to sell the Paradise Island Business (excluding PIA) at its then-estimated value, and to generate substantial excess cash flow from the Company's operations and the contemplated sale on acceptable terms of the Non-Operating Real Property. The recession in the United States, and more specifically in the northeast sector, the acute competition in Atlantic City and The Bahamas, and the impact of the conflict in the Persian Gulf in early 1991 and its effect on transportation and tourism, all adversely affected RII's ability to sell the Paradise Island Business at its then-estimated value and to generate substantial excess cash flow from operations. The Old Plan projected the Company's excess cash flow from operations for the initial two years of the Old Plan, net of capital expenditures and prior to the sale of the Paradise Island Business, to be $8,300,000. The Company's actual excess cash flow was $2,476,000. The Old Plan also contemplated additional cash flow in the amount of $15,000,000 from the sale of the Non-Operating Real Property in the initial two years of the Old Plan. However, such sales were never accomplished. Due to these and other factors, RII has never paid interest in cash on the Old Series Notes. ____In addition, in late 1991 Carnival Cruise Lines, Inc. ("Carnival") announced its plan to dispose of its Crystal Palace Resort and Casino (the "Crystal Palace"), the Company's principal competition in The Bahamas. Carnival reported operating losses on the Crystal Palace in excess of $60,000,000 in fiscal 1990 and 1991 combined, and in fiscal 1991 Carnival's investment in the Crystal Palace was 30 written down to its estimated net realizable value of approximately $90,000,000. In early 1992, a portion of the Crystal Palace complex, which Carnival had been leasing from The Hotel Corporation of The Bahamas ("HCB"), a corporation owned by the government of the Commonwealth of The Bahamas, was returned to HCB. That portion is now the HCB-owned Radisson Cable Beach Casino & Golf Resort (the "Radisson"), which has 679 guest rooms. RII believes that the announcement of the financial problems at Crystal Palace and the arrangements described above have had a further adverse impact on RII's ability to sell the Paradise Island Business. Carnival continues to operate the remainder of the Crystal Palace complex under the Crystal Palace name and, in October 1993, announced that it had signed an agreement in principle to sell an 81% interest in such complex to a group of German investors. This investor group has announced that it plans to increase the marketing of the Crystal Palace complex in Europe and will invest additional capital in the complex to establish it as a high-end resort destination. Although there can be no assurance that such sale will be completed, an upgraded Crystal Palace complex may adversely affect the Company's operations in The Bahamas. ____In addition to the Crystal Palace casino, the Bahamian government is obligated to facilitate the grant of a casino license to the operators of the Ramada Resort situated on the southwestern end of New Providence Island. The Bahamian government is also obligated to support a proposal for the operation of a slot machine casino at the Radisson resort on Cable Beach. ____RII's Business Plan and Financial Projections included in RII's Disclosure Statement relating to the Old Plan stated that RII believed that the net proceeds from the sale of the Paradise Island Business (excluding PIA) "could range from $250,000,000 to $300,000,000". After interviewing several investment banking firms, the Company retained Salomon Brothers Inc ("Salomon Brothers") on October 29, 1990 to prepare sales materials and formally offer the Paradise Island Business for sale. On August 1, 1991, the Company received an offer to buy the Paradise Island Business for a purchase price of $160,000,000. The offer was conditioned upon, among other things, satisfactory completion of due diligence and execution of definitive documentation. Subsequent discussions with the prospective purchaser did not lead to a definitive agreement. The Company received no other offer to purchase the Paradise Island Business prior to the proposed Restructuring. Based on the current economic climate, the events described above regarding the Crystal Palace, the very limited amount of interest indicated by prospective purchasers of the Paradise Island Business and, in particular, the estimated net proceeds of the only offer received prior to the proposed Restructuring ($150,000,000), RII does not believe that proceeds of the magnitude originally contemplated in 1990 will be realizable prior to the maturity date of the Old Series Notes on April 15, 1994. ____To facilitate the Company's capital expenditure program, which management believes was necessary for the Company's operating properties to remain competitive, and to conserve cash, RII elected to satisfy its interest obligations on the Old Series Notes by issuing additional Old Series Notes (the "Old PIK Payments") on October 15, 1990 and on April 15 and October 15 of 1991, 1992 and 1993. The aggregate face amount of Old Series Notes issued in lieu of cash for the payment of interest on these seven payment dates was approximately $156,000,000, which increased the outstanding principal amount of the Old Series Notes to approximately $482,000,000. If there are no principal retirements, the total obligation due on the Old Series Notes at maturity on April 15, 1994 will be approximately $518,000,000. ____Although the Company's liquidity is satisfactory until the maturity of the Old Series Notes in April 1994, the Company must reduce its debt to a level that can be supported by cash flow reasonably anticipated on a continuing basis. The effort to achieve that reduction through asset sales in the current economic environment has been unsuccessful. The Company therefore attempted to develop financial alternatives which could be coupled with continuing efforts to sell the Paradise Island Business. The Company retained Bear, Stearns & Co. Inc. ("Bear Stearns"), Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ") and Alvarez & Marsal, Inc. ("Alvarez & Marsal") on October 18, 1991, February 12, 1992 and March 1, 1992, respectively, as financial advisers to assist in the development and analysis of financial alternatives as well as the development of a long-term financial plan. Beginning in October 1991, the Company and its financial and legal advisors examined and 31 considered a number of financial alternatives, including continued pursuit of a cash sale of all or a portion of the Paradise Island Business, a spin-off of the Paradise Island Business, a transfer of the Paradise Island Business to the holders of the Old Senior Notes in the context of a restructuring of the Old Series Notes, and pursuit of an equity investment in the Company or the Paradise Island Business. The analysis indicated, among other things, that a total debt restructuring was necessary and that the separation of the Paradise Island Business from the rest of the Company was advantageous and could be a key component of a total financial restructuring of RII. In addition, the analysis indicated that accomplishing the separation through a cash sale or a combination cash and stock sale of the Paradise Island Business could provide additional advantages if a satisfactory sale price could be obtained. ____Acting on behalf of the Company, Salomon Brothers in January 1992 provided an affiliate of SIHL, World Leisure Group Limited, with information concerning the Paradise Island Business. From time to time thereafter, representatives of SIHL's affiliate expressed interest in buying all or a portion of the Paradise Island Business but made no formal offers. Moreover, the discussions contemplated prices which could only be considered by the Company in the context of a restructuring of the Old Series Notes. In June 1993, affiliates of SIHL began a series of discussions with representatives of Fidelity and TCW which culminated in the negotiation of the Paradise Island Purchase Agreement. ____During the summer of 1992, RII began a series of discussions with Fidelity and TCW, which represented to RII that various funds and accounts managed separately by each of them owned in the aggregate over 60% of the Old Series Notes. These discussions centered on RII's unsuccessful efforts to sell the Paradise Island Business and the implications of such failure with respect to the payment of the Old Series Notes upon their stated maturity in April 1994. These discussions resulted in a preliminary agreement among RII, Fidelity and TCW on December 14, 1992, which outlined a framework for the restructuring of RII's business and obligations with respect to the Old Series Notes. ____To facilitate further discussions with Fidelity and TCW, RII agreed to pay the cost of their retention of independent counsel. Negotiations resulted in the agreement by Fidelity and TCW to the Restructuring described in this Information Statement/Prospectus. The negotiations were frank, complex, comprehensive and protracted and involved not only RII, Fidelity and TCW, but also SIHL and its various advisers with respect to the sale of the Paradise Island Business and the Griffin Group with respect to the New Griffin Services Agreement. FINANCIAL FORECASTS FOR THE COMPANY ____The Company has prepared forecasts of certain financial data including net revenues, EBITDA (earnings before deduction of interest, income taxes, depreciation and amortization), net earnings, cash flow and condensed balance sheets for the Company's remaining operations after giving effect to the Restructuring. The forecasts project net earnings and positive cash flow throughout the five-year forecast period. The forecasts assume the Restructuring is completed as of December 31, 1993 and include no costs incurred or payments made in connection with the Restructuring subsequent to that date. The forecasts assume modest growth in revenues which are largely offset by increases in operating costs. They also assume no significant capital additions; capital expenditures are assumed to be primarily for maintenance projects. The forecasts are based on these and a variety of other assumptions. The Company believes these assumptions are reasonable; however, they are subject to significant business, industry, economic, regulatory and competitive uncertainties, many of which are beyond the control of the Company. See "The Restructuring -- Financial Forecasts for the Company" and "Risk Factors -- Risks Relating to the Forecasts". THE RESTRUCTURING The purpose of the Restructuring is to effect the changes to the Company's capital structure that the Company believes are necessary to return to profitability and to consummate the SIHL Sale (or, if the SIHL Sale is not consummated on or before the Effective Date, to effect the PIRL Spin-Off). Management of the Company believes that the Restructuring will improve the Company's financial position and allow management to create long-term value for the creditors and shareholders of the 32 Company and strengthen the Company's position in the gaming industry. The Restructuring is designed to alleviate the problems caused by the Company's excessive debt service levels and will help assure the Company's long-term viability. There can be no assurance, however, that implementation of the Restructuring will result in the Company's return to profitability. Likewise, there can be no assurance that, if the SIHL Sale is not consummated on or before the Effective Date, PIRL's operations will be profitable once the PIRL Spin-Off is effected. The Restructuring will be implemented pursuant to the Plan. The terms of the Plan have resulted primarily from an analysis of the Company's financial condition and operations conducted by RII and its financial advisers and from the negotiations conducted by RII and its financial and legal advisers with Fidelity and TCW. The Plan provides, among other things, that the holders of the Old Series Notes as of the Distribution Record Date, which will be the close of business in New York City on the Effective Date, will receive the following consideration on the relevant Distribution Date for each $1,000 of principal amount of Old Series Notes outstanding as of October 15, 1993 (and for any accrued interest thereon): -- $259.38 principal amount of the New RIHF Mortgage Notes; -- One Unit comprised of $72.63 principal amount of the New RIHF Junior Mortgage Notes and .07263 share of RII Class B Common Stock; -- 35.33 shares of RII Common Stock; -- Either (A) $134.88 in cash, plus interest on such amount at an annual rate of 7.5% from January 1, 1994 to the SIHL Closing Date, plus 4.15 SIHL Series A Shares, representing a pro rata share of the consideration received from the SIHL Sale, or (B) if the SIHL Sale is not consummated on the Effective Date, 10.375 PIRL Ordinary Shares pursuant to the PIRL Spin-Off; -- A pro rata share of Excess Cash, which pro rata share is projected to be a minimum of $62.25; -- The non-transferable right to receive a pro rata share of Net Reserved Cash and Net Plan Consummation Cash; and -- The non-transferable right to receive a pro rata share of payments from Deferred Cash, which pro rata share is expected to be a minimum of $5. See "Description of Litigation Trust Units".
Notwithstanding the foregoing, no fractional shares of New Equity Securities will be issued on the Distribution Date. Also, New RIHF Mortgage Notes and New RIHF Junior Mortgage Notes will be issued only in denominations of $1,000 or integral multiples thereof. Pursuant to the Plan, the disbursing agent for the holders of Old Series Notes will aggregate and sell all fractional amounts of New Equity Securities and New Debt Securities and distribute the net proceeds to the holders of Old Series Notes entitled thereto. If the SIHL Sale is consummated, assuming a reorganization enterprise value of approximately $225 million for RII and a reorganization enterprise value for SIHL of approximately $150 million, the estimated recovery for holders of Old Series Notes is projected to be approximately 70% of the principal amount of Old Series Notes outstanding on October 15, 1993. If the SIHL Sale is not consummated and the PIRL Spin-Off is effected, assuming a reorganization enterprise value of approximately $225 million for RII and a reorganization enterprise value for PIRL of approximately $125 million, the estimated recovery for holders of Old Series Notes is projected to be approximately 70% of the principal amount Old Series Notes outstanding on October 15, 1993. There can be no assurance that the projected enterprise values of RII, of SIHL in the event of the SIHL Sale or of PIRL in the event of the PIRL Spin-Off will be realized. The SIHL Aggregate Cash Purchase Price, the New Debt Securities and the New Equity Securities will be distributed to the disbursing agent for distribution to the holders of Old Series Notes on the Effective Date. Payments of Net Reserved Cash will be made as soon as practicable after the Effective Date, but in no event later than 90 days after the Effective Date. Payments of Net Plan Consummation Cash will be made as soon as practicable but no later than 90 days after the Effective Date; provided, however, that if all Plan Expenses have not been paid by the 90th day after the Effective Date, RII and GRI may continue to hold back for an additional 60 days the portion of Net 33 Plan Consummation Cash deemed by the Bankruptcy Court to be necessary to satisfy remaining Plan Expenses, after which time the remaining Net Plan Consummation Cash will be distributed, unless otherwise ordered by the Bankruptcy Court. Payments of Deferred Cash will be made within three business days after receipt by RII of the Litigation Trust Distributions in immediately available funds. Payments of Excess Cash will be made on the Effective Date or as soon thereafter as is practicable, but in no event later than 20 days after the Effective Date. As part of the implementation of the Restructuring, Fidelity, which advises and manages various funds and accounts that hold Old Series Notes, will cause one or more of the funds it manages to enter into the RIHF Senior Facility which will allow RIHF to borrow up to $20,000,000 through the issuance of RIHF Senior Facility Notes. Any amount borrowed by RIHF under the RIHF Senior Facility will be loaned by RIHF to RIH, and possibly by RIH to RII, through intercompany transactions and will be used for working capital and general corporate purposes. All principal payments on the RIHF Senior Facility Notes will be due July 15, 2002. Interest on the RIHF Senior Facility Notes will accrue at the rate of 11% per year and will be payable in cash, semi-annually on January 15 and July 15 of each year, commencing on the January 15 or July 15 next following the date of the initial borrowing under the RIHF Senior Facility. The RIHF Senior Facility will be available for a single borrowing during the one-year period from the Effective Date, provided that the public resale of the RIHF Senior Facility Notes by the purchasers thereof upon a resale is registered, if required, under the Securities Act and the RIHF Senior Facility Note Indenture has been qualified under the TIA. The RIHF Senior Facility Notes will be secured by a lien on the RIHF Senior Facility Trust Estate. In addition, RIH will issue the RIH Senior Facility Guaranty that will guarantee the payment of principal of and interest on the RIHF Senior Facility Notes. The liens on the Resorts Casino Hotel securing the payment of the RIHF Senior Facility Notes and the RIH Senior Facility Guaranty will be senior to the liens securing payment of the New RIHF Mortgage Notes, the RIH Mortgage Guaranty, the New RIHF Junior Mortgage Notes and the RIH Junior Mortgage Guaranty. RII also will issue a guaranty of the payment of principal and interest on the RIHF Senior Facility Notes. The following transactions, among others, will be effected in connection with the Restructuring: (a) the holders on the Distribution Record Date of the Old Series Notes will receive the New Debt Securities, the New Equity Securities, Excess Cash and the right to payments from Net Reserved Cash, Net Plan Consummation Cash and Deferred Cash in accordance with the terms of the Plan; (b)(i) if the SIHL Sale is consummated on the Effective Date, the holders on the Distribution Record Date of the Old Series Notes will receive the SIHL Series A Shares and the SIHL Aggregate Cash Purchase Price in accordance with the terms of the Plan; or (ii) if the SIHL Sale is not consummated on or before the Effective Date, the holders on the Distribution Record Date of the Old Series Notes will receive the PIRL Ordinary Shares and, at the election of PIRL, the Interim Management Agreement (as defined below) will be executed; (c) the RIHF Senior Facility will be executed and delivered; (d) the Amended RII Certificate of Incorporation and the Amended RII By-laws (as such terms are defined below) will be adopted; (e) the initial post-Restructuring directors of RII will be named to RII's Board of Directors (including two Class B Directors); (f) the Griffin Warrants will be issued; (g) various intercompany reorganization transactions described on Schedule 6.3 to the Plan will be effected; (h) the 1990 Stock Option Plan will be terminated and the 1994 Stock Option Plan will be implemented; and (i) the Old Security Documents will be released and terminated. If sufficient Acceptances are received from the holders of Old Series Notes and from the holders of RII Common Stock, such Acceptances will constitute approval of the 1994 Stock Option Plan by such holders for purposes of compliance with Rule 16b-3 promulgated under the Exchange Act. For information on the election of directors after the Effective Date, see "The Restructuring -- Overview of the Restructuring -- Post-Restructuring RII Board of Directors". If the Requisite Acceptances are not received by the Voting Deadline, RII and GRI will be forced to evaluate options then available to them. Pursuant to the Paradise Island Purchase Agreement, RII has committed, notwithstanding the failure to obtain the Requisite Acceptances, to continue to pursue confirmation of the Plan until the Paradise Island Purchase Agreement is terminated. This commitment could require RII to conduct a further solicitation with respect to the Plan until December 31, 1994. Because the Paradise Island Purchase Agreement can be terminated by SIHL if an RII 34 Chapter 11 case is not commenced by February 15, 1994, RII might conduct such solicitation after filing a chapter 11 case. RII's failure to abide by the terms of the Paradise Island Purchase Agreement would, under certain circumstances, give rise to a claim by SIHL for breach of such agreement and/or entitle SIHL to reimbursement from the SIHL Buyer Expense Escrow. Moreover, such failure, if not approved by Fidelity and TCW, may relieve Fidelity and TCW of their obligations under the Bondholders Support Agreement (as described below). The Paradise Island Purchase Agreement would remain in effect if RII filed for protection under the Bankruptcy Code by February 15, 1994 without a preapproved or consensual plan of reorganization, but thereafter could be terminated upon the occurrence of certain events set forth in the agreement. See "Description of Paradise Island Purchase Agreement -- Termination". Other options available to RII and GRI if the Requisite Acceptances are not obtained include submission of a revised prepackaged plan of reorganization or filing for protection under the Bankruptcy Code without a preapproved or consensual plan of reorganization. If bankruptcy cases were commenced without a preapproved plan, no assurance can be given that a plan would be confirmed or that any recovery would be realized by the existing holders of the RII Common Stock and the holders of 1990 Stock Options. In such event, the holders of the Old Series Notes might receive a substantially smaller recovery on their claims than that proposed under the Plan. In connection with the formulation and development of the Plan, RII and GRI and their financial advisors have explored various alternative plan structures. RII and GRI believe the Plan enables creditors and equity interest holders, including both the holders of Old Series Notes and of Old RII Common Stock, to realize greater value than would be realized under the alternatives which RII and GRI believe could be consensually implemented. On the other hand, an alternative reorganization plan could be formulated which would attempt to eliminate entirely the interests of equity interest holders. RII and GRI believe that this form of alternative plan would be vigorously contested by equity interest holders. The expense and delay associated with this dispute, coupled with its potential adverse impact on the operations of the Company and the morale of its employees, could substantially impair reorganization value. If such an alternative plan were confirmed, however, recoveries to holders of Old Senior Notes might, but not necessarily would, be greater than those projected under the Plan and no recovery would be available to holders of Old RII Common Stock. See "Risk Factors -- Certain Bankruptcy and Insolvency Considerations". Confirmation and consummation of the Plan is subject to certain conditions. There can be no assurance that such conditions will be satisfied. While RII and GRI (with the consent of Fidelity and TCW, so long as the funds and accounts managed by either of them hold in the aggregate at least 20% of the outstanding Old Series Notes) can waive many of such conditions, they cannot waive the condition requiring the entry of a Confirmation Order which has not been stayed. Absent satisfaction of this condition, the Restructuring cannot proceed. As a practical matter, although the condition requiring the entry of an order declaring that, as of the Effective Date, the Old Security Documents shall be deemed released and terminated is waivable, the transactions contemplated by the Plan cannot be consummated if the Old Security Documents are not released and terminated. See "The Plan -- Conditions Precedent to Confirmation and Consummation of the Plan". Implementation of the Restructuring would have important effects on the Company and on the current holders of the Old Series Notes, the RII Common Stock and the 1990 Stock Options and would result in a significant reduction of RII's financial obligations. The Restructuring would have the effect of reducing and rescheduling RII's principal and interest payments. See "-- Comparison of New RIHF Mortgage Notes and New RIHF Junior Mortgage Notes to Old Series Notes". The Restructuring would result in the modification or elimination of certain restrictive covenants now applicable to RII pursuant to the Old Series Note Indenture. The Restructuring also would result in either the sale of the Paradise Island Business to SIHL or the PIRL Spin-Off of the Paradise Island Business to the holders of the Old Series Notes. The following table shows, at the dates and for the periods shown, on a pro forma basis, the impact of the Restructuring as it affects the replacement of the Old Series Notes with the New Debt Securities. It should be noted that the table excludes the Showboat Notes and capital leases as it is the 35 Company's intention that such items will not be affected by the Restructuring. The pro forma data for the principal amount of New Debt Securities at September 30, 1993 are based on the assumption that the Restructuring occurred on that date. The pro forma data regarding the stated interest calculation for the New Debt Securities for the fiscal year ended December 31, 1992, and the three quarters ended September 30, 1993, are based on the assumption that the Restructuring occurred on January 1, 1992.
OLD SERIES NEW DEBT NOTES SECURITIES -------------- ----------- (IN THOUSANDS) Principal amount outstanding at September 30, 1993 (1).......................... $ 448,572 $ 160,000 Stated interest calculation for the fiscal year ended December 31, 1992........................................................................... 50,686(2) 17,731 Stated interest calculation for the three quarters ended September 30, 1993..... 47,224(2) 13,298 - ------------------------ (1) Represents the principal amount of the Old Series Notes on a historical basis and the principal amount of the New Debt Securities on a pro forma basis, exclusive of unamortized discounts. At October 15, 1993, giving effect to the payment of PIK interest on that date, the principal amount outstanding was approximately $482,000,000. (2) The calculation of the interest on the Old Series Notes was based on the stated interest rates with the principal amount increasing on April 15 and October 15 due to the issuance of additional Old Series Notes in lieu of paying cash interest.
If the Restructuring were implemented, 17,025,000 shares of RII Common Stock would be issued to holders of the Old Series Notes. Issuance of such number of shares of RII Common Stock would dilute significantly the equity interests of the existing holders of the RII Common Stock and the 1990 Stock Options. The following table shows the percentage of beneficial ownership of the RII Common Stock before and after consummation of the Restructuring by the holders of the securities listed below, based on the assumptions set forth in the notes thereto:
POST-RESTRUCTURING --------------------------------------- ASSUMING OPTIONS ASSUMING OPTIONS PRE-RESTRUCTURING NOT EXERCISED EXERCISED ------------------ ------------------ ------------------ SHARES % SHARES % SHARES % ---------- ------ ---------- ------ ---------- ------ Holders of RII Common Stock (1)......... 20,157,234 92.0% 20,872,234 49.0% 20,872,234 44.7% Holders of Old Series Notes (2)......... 17,025,000 40.0 17,025,000 36.5 Griffin Warrants (3).................... 4,665,000 11.0 4,665,000 10.0 1990 Stock Options (4).................. 1,758,800 8.0 1,758,800 3.8 1994 Stock Options (5).................. 2,333,000 5.0 ---------- ------ ---------- ------ ---------- ------ 21,916,034 100.0% 42,562,234 100.0% 46,654,034 100.0% ---------- ------ ---------- ------ ---------- ------ ---------- ------ ---------- ------ ---------- ------ - ------------------------ (1) Pre-Restructuring amount represents shares of RII Common Stock outstanding on November 30, 1993. Post-Restructuring amount includes 715,000 shares of RII Common Stock which are to be issued prior to the filing of RII's and GRI's bankruptcy cases to DLJ and Alvarez & Marsal in settlement of certain recapitalization costs. (2) Assumes holders of Old Series Notes are issued shares in an amount that would represent 40% of the shares of RII Common Stock outstanding assuming the Griffin Warrants are exercised. Such ownership will be subject to dilution by the exercise of the 1990 Stock Options outstanding as well as options to be granted under the 1994 Stock Option Plan. Also assumes that all holders of Unsurrendered Public Debt Claims (as defined in the Old Plan) and of Old Series Notes timely comply with the provisions of the Plan and the Old Plan that govern entitlement to distributions. (3) Assumes the Griffin Warrants are granted and exercised. (4) Represents shares of RII Common Stock which may be issued upon exercise of the 1990 Stock Options outstanding on November 30, 1993; related percentages assume all such options are exercised. (5) The 1994 Stock Option Plan will allow for the granting of options to purchase up to 5% of the outstanding RII Common Stock; related percentage assumes all such options are granted and exercised.
36 THE PLAN GENERAL. The Restructuring will be effected pursuant to the Plan. The Plan is a plan of reorganization under chapter 11 of the Bankruptcy Code for RII and GRI proposed by RII, GRI, RIH, RIHF and PIRL. If the Plan is confirmed and the other conditions to the consummation of the Plan proposed by RII, GRI, RIH, RIHF and PIRL are satisfied or waived, the Restructuring and each transaction comprising it will be effected. Since RII and GRI believe that all the elements of the Restructuring can be consummated only through reorganization under chapter 11 of the Bankruptcy Code, RII and GRI are soliciting Acceptances of the Plan, rather than approvals of an out-of-court restructuring. See "The Restructuring -- Overview of the Restructuring". For the Plan to be confirmed, Acceptances must be received from the holders of claims constituting at least 66 2/3% in amount and more than 50% in number of the Allowed Claims (as defined in the Plan) in each impaired class of claims that vote to accept or reject the Plan. Although Acceptances from holders of at least 66 2/3% in amount of the Allowed Interests (as defined in the Plan) in each impaired class of Interests that votes to accept or reject the Plan are desirable, such Acceptances are not required as the Plan may be confirmed even if an impaired class of interests votes to reject the Plan. See "The Plan -- Classification and Treatment of Claims and Interests". Pursuant to the Bankruptcy Code, only votes to accept or reject the Plan, and not abstentions, will be counted for purposes of determining acceptance or rejection of the Plan by any impaired class of claims or interests. Therefore, the Plan could be approved by any impaired class of claims with the affirmative vote of significantly less than 66 2/3% in amount and 50% in number of the class of such claims. The Plan must be confirmed as to both RII and GRI. See "Risk Factors -- Certain Bankruptcy and Insolvency Considerations". For a discussion of the procedures for voting on the Plan, see "The Solicitation". In addition, the Plan is subject to the approval of the Casino Control Commission. See "Risk Factors - -- New Jersey Regulatory Matters". The SIHL Sale and the PIRL Spin-Off are subject to the approval of the government of the Commonwealth of The Bahamas. See "Risk Factors -- Risks Associated with the Paradise Island Business -- Bahamas Regulatory Matters". Claims of the holders of the Old Series Notes ("RII Class 2 Claims"), and such holders' claims in respect of the GRI Guaranty ("GRI Class 2 Claims"), will be impaired by the Plan. In addition, the RII Intercompany Claim against GRI ("GRI Class 4 Claim") will be impaired by the Plan. The holders of the Showboat Notes ("RII Class 3 Claims") will not be impaired by the Plan. Creditors who hold general unsecured claims ("RII Class 5 Claims" and "GRI Class 3 Claims") will not be impaired by the Plan. Finally, intercompany claims against RII ("RII Class 6 Claims") will not be impaired by the Plan. Existing holders of RII Common Stock ("RII Class 7 Interests"), of 1990 Stock Options ("RII Class 8 Interests") and of GRI Common Stock ("GRI Class 5 Interests") will be impaired by the Plan. Pursuant to the Plan, each holder of RII Common Stock will retain its shares of RII Common Stock and each holder of 1990 Stock Options will retain his or her stock options. The 1990 Stock Option Plan will be terminated in conjunction with the consummation of the Plan. As a result of the issuance of additional shares of RII Common Stock and RII Class B Common Stock to the holders of the Old Series Notes and, the issuance of the Griffin Warrants and options to be granted under the 1994 Stock Option Plan, the resulting ownership interest in RII represented by the currently outstanding shares of RII Common Stock and the currently issued 1990 Stock Options will be substantially diluted. See the beneficial ownership table in "The Restructuring - -- Certain Significant Effects of the Restructuring -- Significant Dilution of Equity Interests". RII and GRI reserve the right to modify the terms of the Plan (subject to compliance with the requirements of section 1127 of the Bankruptcy Code and to the approval of Fidelity and TCW, so long as the funds and accounts managed by them hold in the aggregate at least 20% of the outstanding Old Series Notes), if and to the extent that RII and GRI determine that such modifications are necessary or desirable in order to complete the Restructuring. RII and GRI will give notice of such modifications as may be required by applicable law. Prior to the commencement of cases under chapter 11 of the 37 Bankruptcy Code, the validity and the effectiveness of the notice of such modifications of the Plan would be governed by applicable non-bankruptcy law; following commencement of chapter 11 cases, such modifications would be subject to the notice and approval requirements of the Bankruptcy Code and the Bankruptcy Rules. Under the Bankruptcy Rules, such modifications may be approved by the Bankruptcy Court without resolicitation of the votes of the members of any class whose treatment is not materially and adversely affected by such modifications. See "The Plan -- Modifications of the Plan". If the Requisite Acceptances are obtained, RII and GRI currently intend to file petitions for relief under chapter 11 of the Bankruptcy Code (the date on which such petitions are filed being referred to as the "Petition Date") and to use all of the Acceptances to obtain confirmation of the Plan. In addition, RII and GRI reserve the right to use Acceptances to seek confirmation of a plan of reorganization under any other circumstances permitted by law, including the filing of involuntary bankruptcy petitions against RII and GRI. Neither RII nor GRI intends to commence a case under chapter 11 of the Bankruptcy Code prior to the Voting Deadline, although it may do so in its sole discretion. Any party in interest, including any creditor, equity interest holder or indenture trustee, has standing to appear and be heard on any issue in the chapter 11 case. Other than GRI, RII does not intend to include any of its subsidiaries in its bankruptcy case, nor does RII intend to cause any of its subsidiaries to file its own bankruptcy case. Neither RII nor GRI currently is in bankruptcy. PROVISIONS FOR TRADE CREDITORS AND EMPLOYEES. Since the Plan and the chapter 11 filings will relate only to RII and GRI and not to RII's operating subsidiaries, the claims of trade creditors and employees of such operating subsidiaries will not be affected by such filings. GRI does not have any employees and believes that it does not have any trade creditors. Because it is a holding company RII has few trade creditors and employees. Nevertheless, to the extent necessary, RII intends promptly following commencement of RII's chapter 11 case to seek Bankruptcy Court approval of various measures designed to ensure that the trade creditors of RII who hold Allowed (as defined in the Plan) RII Class 5 Claims and employees of RII who hold Allowed Priority Claims, as described below, also are unaffected by the filing. Allowed RII Class 5 Claims will not be impaired by the Plan. An Allowed RII Class 5 Claim is a Claim (as defined in the Plan) (a) proof of which was timely filed and which is not disputed, (b) if no proof of claim was so filed, any claim which has been listed in RII's or GRI's chapter 11 schedules as liquidated in amount and not disputed or contingent, or (c) any claim otherwise allowed by a final order of the Bankruptcy Court. Each such Allowed RII Class 5 Claim will be treated on the Effective Date in the manner in which such RII Class 5 Claim would have been treated if RII's chapter 11 case had not been commenced. Pursuant to the Plan, RII and GRI have agreed not to pay, and not to cause their subsidiaries to pay, any claim except in the ordinary course of business and consistent with past practice and to collect, and to cause their subsidiaries to collect, receivables in the ordinary course of business and consistent with past practice. On the Effective Date, RII Retained Cash rather than Plan Consummation Cash shall be used to pay any prepetition Allowed Claims or post-petition Allowed Administrative Claims (as defined in the Plan) which, in the ordinary course of business and consistent with past practice, would not have been paid on or before the Effective Date. 38 CLASSIFICATION AND TREATMENT OF CLAIMS AND INTERESTS. The following table briefly summarizes the classification and treatment of claims and interests under the Plan. For a complete description of the classification and treatment of such claims and interests, including the definition of certain capitalized terms used herein and not otherwise defined in this Information Statement/Prospectus, see the Plan attached hereto as Appendix A and "The Plan".
CLASS DESCRIPTION: ESTIMATED AMOUNT OF CLAIMS: TREATMENT UNDER THE PLAN: Administrative Claims -- Post-petition $ 10,000,000 -- Each holder will receive on the Distri- costs and expenses of restructuring bution Date cash equal to the amount of and operations its Allowed Administrative Claim, unless Estimated Number of Holders:[] such holder shall have agreed to different treatment of its Allowed Administrative Claim; PROVIDED, HOWEVER, that (a) subject to section 14.6 of the Plan, Allowed Ad- ministrative Claims of Professional Persons (as defined in the Plan) and of the Indenture Trustees (identified below), Fidelity and TCW (and their agents) shall be paid within ten days after allowance by Final Order and (b) Allowed Administrative Claims representing obligations incurred in the ordinary course of business or as- sumed by either RII or GRI shall be paid or performed by RII or GRI in accordance with the terms and conditions of each agreement relating thereto and consistent with past practice. -- Recovery: 100% of Claim. Priority Tax Claims $ [ ] -- Unimpaired. Estimated Number of Holders:[] -- Each holder will receive, at RII's or GRI's option, as applicable: (1) cash in full payment of such holder's Allowed Priority Tax Claim (as defined in the Plan) on the later of the Distribution Date and the date such Claim becomes due and payable or (2) the amount of such holder's Allowed Priority Tax Claim, with post-confirma- tion interest thereon at the rate of , in equal annual cash installments on each anniversary of the Effective Date, until the earlier of the sixth anniversary of the Effective Date and the sixth anniversary of the date of assessment of such Allowed Priority Tax Claim; provided, however, that any distributions made on account of Allowed Priority Tax Claims shall be paid from RII Retained Cash.
39
CLASS DESCRIPTION: ESTIMATED AMOUNT OF CLAIMS: TREATMENT UNDER THE PLAN: -- Recovery: 100% of Claim. RII Class 1 -- Non-tax claims given $ [ ] -- Unimpaired. priority under the Bankruptcy Code, -- Each holder of an Allowed RII Class 1 including employee claims for Claim, at RII's option, shall receive such pre-petition wages not to exceed treatment as (1) will not alter the legal, $2,000 per employee. equitable or contractual rights to which Estimated Number of Holders:[] such Allowed RII Class 1 Claim entitles the holder thereof, or (2) otherwise will render such Allowed RII Class 1 Claim unimpaired pursuant to section 1124(2) of the Bankruptcy Code. -- Recovery: 100% of claim. RII Class 2 -- The Old Series Notes 482,$000,000 (as of October) -- Impaired. Claims 15, 1993 -- For each $1,000 principal amount of Old Estimated Number of Holders:[] Series Notes, holders as of the Distribution Record Date will receive on the relevant Distribution Date on account of their Allowed RII Class 2 Claims, the following: -- $259.38 principal amount of New RIHF Mortgage Notes;* -- One Unit comprised of $72.63 principal amount of the New RIHF Junior Mortgage Notes and .07263 shares of RII Class B Common Stock*; -- 35.33 shares of RII Common Stock*; -- Either (A) $134.88 in cash, plus in- terest on such amount at an annual rate of 7.5% from January 1, 1994 to the SIHL Closing Date, plus 4.15 SIHL Series A Shares, representing a pro rata share of the consideration received from the SIHL Sale, or (B) if the SIHL Sale is not consummated on the Effective Date, 10.375 PIRL Ordinary Shares pursuant to the PIRL Spin-Off; -- A pro rata share of Excess Cash, which pro rata share is projected to be a minimum of $62.25; - ------------------------ * No New RIHF Mortgage Notes will be issued in a principal amount other than $1,000 or an integral multiple thereof. No fractional shares of New Equity Securities will be issued. All fractional interests will be aggregated and sold at market; the proceeds therefrom will be distributed in lieu of such fractional interests.
40
CLASS DESCRIPTION: ESTIMATED AMOUNT OF CLAIMS: TREATMENT UNDER THE PLAN: -- The non-transferable right to receive a pro rata share of Net Reserved Cash and Net Plan Consummation Cash; and -- The non-transferable right to receive a pro rata share of payments from Deferred Cash, which pro rata share is expected to be a minimum of $5. -- Post-Restructuring ownership interest (fully diluted): 36.5%. -- Estimated Recovery (including GRI Class 2 Claim and approximate reorganization value of ownership interest): 70% of principal amount (SIHL Sale); 70% of principal amount (PIRL Spin-off). RII Class 3 -- The Showboat Note Claims $ 105,333,000 -- Unimpaired. Estimated Number of Holders:[] -- At RII's option, each holder of an Allowed RII Class 3 Claim will receive such treatment as (1) will not alter the legal, equitable and contractual rights to which such Allowed RII Class 3 Claim entitles the holder thereof or (2) otherwise will render such Claim unimpaired pursuant to section 1124(2) of the Bankruptcy Code. To the extent not previously paid when due, interest shall be paid in cash on the Distribution Date (at the applicable, non-default contractual rate), together with any additional amount required to be paid to render such Allowed RII Class 3 Claim unimpaired pursuant to section 1124(2) of the Bankruptcy Code. -- Recovery: 100% of Claim. RII Class 4 -- Miscellaneous Secured $ [ ] -- Unimpaired. Claims -- At RII's option, with respect to each Estimated Number of Holders:[] Allowed RII Class 4 Claim, the Plan either (1) will not alter the legal, equitable and contractual rights to which such Allowed RII Class 4 Claim entitles the holder thereof, or (2) otherwise will render such Allowed RII Class 4 Claim unimpaired pursuant to section 1124(2) of the Bankruptcy Code. To the extent not previously paid when due, interest
41
CLASS DESCRIPTION: ESTIMATED AMOUNT OF CLAIMS: TREATMENT UNDER THE PLAN: shall be paid in cash on the Distribution Date (at the applicable, non-default contractual rate), together with any additional amount required to be paid to render such Allowed RII Class 4 Claim unimpaired pursuant to section 1124 of the Bankruptcy Code. -- Recovery: 100% of Claim. RII Class 5 -- General Unsecured Claims $ [ ] -- Unimpaired. Estimated Number of Holders: [] -- At RII's option, with respect to each Allowed RII Class 5 Claim, the Plan either (1) will not alter the legal, equitable or contractual rights to which such Allowed RII Class 5 Claim entitles the holder thereof, or (2) otherwise will render such Allowed RII Class 5 Claim unimpaired pursuant to section 1124(2) of the Bankruptcy Code. -- Recovery: 100% of Claim. RII Class 6 -- Paradise Subsidiary $ [2,342,000] -- Unimpaired. Claims -- At RII's option, each holder of an Allowed Estimated Number of Holders:[] RII Class 6 Claim will receive such treatment as (1) will not alter the legal, equitable and contractual rights to which such Allowed RII Class 6 Claim entitles the holder thereof or (2) otherwise will render such Claim unimpaired pursuant to section 1124(2) of the Bankruptcy Code. -- Recovery: 100% of Claim. RII Class 7 -- RII Common Stock -- -- Impaired. Estimated Number of Record -- Each holder will retain its shares of RII Holders:2,003 Common Stock held as of the Effective Date; provided, however, that as a class all shares of RII Common Stock held by holders of RII Class 7 Interests will be diluted by the issuance under the Plan of (1) additional RII Common Stock to the holders of RII and GRI Class 2 Claims, (2) the Griffin Warrants, (3) options under the 1994 Stock Option Plan and (4) the RII Class B Common Stock. -- Post-Restructuring ownership interest (fully diluted): 44.7%.
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CLASS DESCRIPTION: ESTIMATED AMOUNT OF CLAIMS: TREATMENT UNDER THE PLAN: RII Class 8 -- 1990 Stock Options -- -- Impaired. Estimated Number of Holders:37 -- Each holder retains his or her outstanding 1990 Stock Options and the exercise price for the outstanding 1990 Stock Options will remain fixed at the exercise price at the time of grant; provided, however, that as a class all 1990 Stock Options held by holders of RII Class 8 Interests will be diluted by the issuance under the Plan of (1) additional RII Common Stock, (2) the Griffin Warrants, (3) options under the 1994 Stock Option Plan and (4) the RII Class B Common Stock. The 1990 Stock Option Plan will be terminated as of the Effective Date. -- Post-Restructuring ownership interest (fully diluted): 3.8%. GRI Class 1 -- Non-tax Claims given $ [ ] -- Unimpaired. priority under the Bankruptcy Code, -- Each holder of an Allowed GRI Class 1 Claim including employee claims for shall, at GRI's option receive such pre-petition wages not to exceed treatment as (1) will not alter the legal, $2,000 per employee equitable or contractual rights to which Estimated Number of Holders:[] such Allowed GRI Class 1 Claim entitles the holder thereof, or (2) otherwise will render such Allowed GRI Class 1 Claim unimpaired pursuant to section 1124(2) of the Bankruptcy Code. -- Recovery: 100% of claim. GRI Class 2 -- GRI Guaranty Claims $ 482,000,000 -- Impaired. Estimated Number of Holders:[] -- The distribution to holders of Allowed RII Class 2 Claims also will constitute the Plan consideration to holders of Allowed GRI Class 2 Claims. -- Recovery: See RII Class 2 Recovery. GRI Class 3 -- General Unsecured Claims $ [0] -- Unimpaired. Estimated Number of Holders: None known -- At GRI's option, with respect to each Allowed GRI Class 3 Claim, the Plan either (1) will not alter the legal, equitable or contractual rights to which such Allowed GRI Class 3 Claim entitles the holder thereof, or (2) otherwise will render such Allowed GRI Class 3 Claim unimpaired pursuant to section 1124(2) of the Bankruptcy Code. Recovery: 100% of Claim.
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CLASS DESCRIPTION: ESTIMATED AMOUNT OF CLAIMS: TREATMENT UNDER THE PLAN: GRI Class 4 -- RII Intercompany $40,196,000 -- Impaired. Claims -- The RII Intercompany Claim will be Estimated Number of Holders: 1 satisfied by the contribution by RII of the RII Intercompany Claim to the capital of GRI. GRI Class 5 -- GRI Common Stock -- -- Impaired. Estimated Number of Holders: 1 -- RII, as the holder of the GRI Class 5 Interest, will retain such Interest which is impaired by virtue of the transfer of a substantial portion of GRI's assets pursuant either to the Paradise Island Purchase Agree- ment or the PIRL Standby Distribu- tion Agreement, as the case may be.
EFFECTIVE DATE AND DISTRIBUTION DATES. The Effective Date is the later of (a) the first business day on which no stay of the Confirmation Order is in effect and that is ten days after the Confirmation Date, and (b) the date on which each of the conditions precedent to consummation of the Plan have been either satisfied or waived. It is anticipated that the Effective Date will occur on or around April 15, 1994, although no assurance can be given that Effective Date will not be delayed, perhaps materially. Among other things, a relatively brief delay in the Effective Date will delay distributions under the Plan and increase the interest payable with respect to the SIHL Aggregate Cash Purchase Price. Any delay in the Effective Date beyond June 30, 1994 could result in a termination of the Paradise Island Purchase Agreement. See "Description of Paradise Island Purchase Agreement -- Termination". In addition, a delay in the Effective Date may result in a termination of the Bondholder Support Agreement and would increase the risk that the Restructuring will not be consummated. The Distribution Date for any Claim that is an Allowed Claim on the Effective Date will be the Effective Date or as soon thereafter as practicable, but in no event later than 20 days after the Effective Date. For any Claim that is a Disputed Claim on the Effective Date, the Distribution Date will be the date as soon as practicable, but in no event later than 30 days after the date upon which such Claim becomes an Allowed Claim. Notwithstanding the foregoing, the Distribution Date with respect to distribution to the disbursing agent for holders of Old Series Notes is as follows: (a) for distribution of the SIHL Aggregate Cash Purchase Price, the New Debt Securities and the New Equity Securities, the Effective Date; (b) for payments of Net Reserved Cash, as soon as practicable after the Effective Date but in no event later than 90 days after the Effective Date; (c) for payments of Net Plan Consummation Cash, as soon as practicable but no later than 90 days after the Effective Date; provided, however, that if all Plan Expenses have not been paid by the 90th day after the Effective Date, RII and GRI may continue to hold back for an additional 60 days the portion of Net Plan Consummation Cash deemed by the Bankruptcy Court to be necessary to satisfy remaining Plan Expenses, after which time the remaining Net Plan Consummation Cash will be distributed, unless otherwise ordered by the Bankruptcy Court; (d) for payments of Deferred Cash, within three business days after receipt by RII of the Litigation Trust Distributions in immediately available funds; and (e) for payments of Excess Cash, the Effective Date or as soon thereafter as practicable, but in no event later than 20 days after the Effective Date. See "Description of Litigation Trust Units". CONFIRMATION REQUIREMENTS. If the Requisite Acceptances are received, RII and GRI will seek to implement the Plan by commencing cases under chapter 11 of the Bankruptcy Code and will request that the Bankruptcy Court as promptly as practicable hold a hearing on the adequacy of the Information Statement/Prospectus and on the Confirmation of the Plan. Parties in interest, including all holders of claims and interests, will receive notice of the date and time fixed by the Bankruptcy Court for the hearing on the adequacy of the Information Statement/Prospectus and the confirmation hearing. The Bankruptcy Code provides that any party in interest may object to the adequacy of the 44 Information Statement/Prospectus or confirmation of the Plan. The Bankruptcy Court will establish procedures for the filing and service of objections to the adequacy of the Information Statement/ Prospectus and to confirmation of the Plan. For the Plan to be confirmed, and regardless of whether all impaired classes of claims and interests vote to accept the Plan, the Bankruptcy Code requires that the Bankruptcy Court determine that the Plan complies with the requirements of section 1129 of the Bankruptcy Code. Section 1129 of the Bankruptcy Code requires, among other things, that: (i) the Plan be accepted by the requisite votes of holders of impaired claims and interests, except to the extent that the Plan may be confirmed under section 1129(b) of the Bankruptcy Code without the acceptance of each impaired class; (ii) the Plan be feasible under section 1129(a)(11) of the Bankruptcy Code (that is, there is a reasonable probability that RII and GRI will be able to perform their obligations under the Plan and continue to operate their businesses without further financial reorganization); (iii) the Plan be accepted by at least one class of impaired creditors (excluding insiders); and (iv) the Plan meet the "best interests of creditors" test of section 1129(a)(7) of the Bankruptcy Code which requires that each impaired holder of a claim or interest either accepts the Plan or receives at least as much pursuant to the Plan as such holder would receive in liquidations of RII and GRI under chapter 7 of the Bankruptcy Code. See "The Plan -- Confirmation of the Plan". Although RII and GRI believe that the Plan will meet such tests, as well as the other requirements of section 1129 of the Bankruptcy Code, there can be no assurance that the Bankruptcy Court will reach the same conclusion. Furthermore, even if the Requisite Acceptances have been received prior to the commencement of the chapter 11 cases, the Bankruptcy Court may determine not to confirm the Plan if the Bankruptcy Court finds that the Solicitation did not comply with all the applicable provisions of the Bankruptcy Code and the Bankruptcy Rules (including the requirement under section 1126(b) that the Solicitation comply with any applicable non-bankruptcy law, rule or regulation governing the adequacy of disclosure or that the Solicitation be made after disclosure of adequate information). In such an event, the Bankruptcy Court might order RII and GRI to resolicit Acceptances. If any impaired class or classes reject the Plan, section 1129(b) of the Bankruptcy Code provides that, so long as at least one impaired class has accepted the Plan (excluding votes cast by insiders), RII and GRI may seek confirmation of the Plan if they can demonstrate that the Plan "does not discriminate unfairly" and is "fair and equitable" with respect to any dissenting class. RII and GRI reserve the right to seek to apply section 1129(b) of the Bankruptcy Code if the Plan is accepted by any, but not all, impaired classes of claims or interests. See "The Plan -- Confirmation of the Plan -- Confirmation Without Acceptance by All Impaired Classes". CONDITIONS TO CONFIRMATION. Confirmation of the Plan is subject to the following conditions: (i) the Confirmation Date shall occur no later than December 31, 1994; (ii) the Confirmation Order shall approve in all respects all of the provisions, terms and conditions of the Plan; (iii) the Confirmation Order shall provide for the confirmation of the Plan as to both RII and GRI; (iv) the Confirmation Order shall be acceptable in form and substance to RII, GRI, Fidelity and TCW (so long as the funds and accounts managed by either of them hold in the aggregate at least 20% of the outstanding Old Series Notes), and to SIHL (to the extent provided in the Paradise Island Purchase Agreement); (v) the Confirmation Order shall contain a finding that, except as expressly provided in the Plan, all of the property distributed under the Plan shall vest in the recipients thereof free and clear of all liens, claims, encumbrances and interests of any nature whatsoever and that consummation of the Plan shall not result in a fraudulent transfer with respect to either RII or GRI or any of their affiliates; and (vi) the Bankruptcy Court shall have entered an order declaring that, as of the Effective Date, the Old Security Documents under which the liens on the property securing the Old Series Notes were granted or created shall be deemed released and terminated. Subject to the approval of Fidelity and TCW, so long as the funds and accounts managed by them hold in the aggregate at least 20% of the outstanding Old Series Notes, RII and GRI reserve the right at any time, without notice, without leave or order of the Bankruptcy Court, to waive any condition to confirmation of the Plan. As a practical 45 matter, although the condition requiring the entry of an order declaring that, as of the Effective Date, the Old Security Documents shall be deemed released and terminated is waivable, the transactions contemplated by the Plan cannot be consummated if the Old Security Documents are not released and terminated. To effect such release, RII is soliciting the consents of the record holders of the outstanding Old Series Notes pursuant to the terms of the Old Series Note Indenture to terminate and release the Old Security Documents. The Old Series Note Indenture requires that consents be obtained from the record holders of at least 66 2/3% in aggregate principal amount of the outstanding Old Series Notes and the record holders of at least a majority in aggregate principal amount of each series of the Old Series Notes to terminate and release of the Old Security Documents. Such consents must be evidenced by such record holders separately from their vote on the Plan. The ballots for the holders of the Old Series Notes permit holders to give or withhold such consent. ANY EXECUTED BALLOT WITH RESPECT TO THE PLAN RETURNED WITHOUT AN INDICATION TO WITHHOLD SUCH CONSENT WILL BE DEEMED TO GIVE SUCH CONSENT. IF SUFFICIENT CONSENTS ARE RECEIVED FROM HOLDERS OF OLD SERIES NOTES, RII AND GRI WILL REQUEST THE BANKRUPTCY COURT TO CONFIRM RELEASE OF THE OLD SECURITY DOCUMENTS, EFFECTIVE AS OF THE EFFECTIVE DATE, BY ENTRY OF AN APPROPRIATE ORDER. IF INSUFFICIENT CONSENTS ARE RECEIVED FROM HOLDERS OF OLD SERIES NOTES TO EFFECTUATE A CONSENSUAL TERMINATION AND RELEASE OF THE OLD SECURITY DOCUMENTS BY THE HOLDERS OF OLD SERIES NOTES, RII AND GRI INTEND TO REQUEST THE BANKRUPTCY COURT TO ORDER THE RELEASE OF THE OLD SECURITY DOCUMENTS; HOWEVER, THERE CAN BE NO ASSURANCE THAT SUCH AN ORDER WILL BE ENTERED. In no event will the consents to release the Old Security Documents be used to effectuate the termination and release of the Old Security Documents in the absence of the confirmation and consummation of the Plan. If RII and GRI fail to receive the Requisite Acceptances, notwithstanding receipt of sufficient consents to release and terminate the Old Security Documents pursuant to the Old Series Note Indenture, such consents will only be used in the event that RII and GRI continue to pursue confirmation and consummation of the Plan. In the event that RII and GRI elect or are required to resolicit Acceptances of the Plan, however, they reserve the right not to resolicit with respect to the consents to release the Old Security Documents and to use consents received from the initial Solicitation. CONDITIONS TO EFFECTIVE DATE. The Plan will be consummated on the Effective Date. The occurrence of the Effective Date of the Plan is subject to the following conditions: (i) the Confirmation Order shall have been entered and not stayed; (ii) the New RIHF Mortgage Note Indenture and the New RIHF Junior Mortgage Note Indenture shall have been qualified under the TIA; (iii) the securities to be issued under the New RIHF Mortgage Note Indenture and the New RIHF Junior Mortgage Note Indenture, the RII Class B Common Stock and the RII Common Stock to be issued pursuant to the Plan, and the SIHL Series A Shares or PIRL Ordinary Shares, as the case may be, shall be registered under the Securities Act and accepted or admitted on a national securities exchange or approved for quotation on the Nasdaq National Market (subject to official notice of issuance); (iv) the Effective Date shall occur no later than January 31, 1995; (v) all required regulatory approvals shall have been obtained (including without limitation any regulatory approvals from the Casino Control Commission, the Bahamian Government and the U.S. Department of Transportation); (vi) all indentures, mortgages, security agreements and other agreements and instruments to be delivered under or necessary to effectuate the Plan, including without limitation the RIHF Senior Facility Note Purchase Agreement, shall have been executed and delivered; (vii) either (a) the closing of the SIHL Sale shall have occurred or (b) the closing of the PIRL Spin-Off shall have occurred; and (viii) all outstanding amounts under the Griffin Group Note shall have been paid in full. Subject to the approval of Fidelity and TCW, so long as the funds and accounts managed by them hold in the aggregate at least 20% of the outstanding Old Series Notes, RII and GRI reserve the right at any time, without notice, without leave of or order of the Bankruptcy Court, and without any formal action other than proceeding to consummate the Plan, to waive any condition precedent to consummation of the Plan, other than the condition requiring the entry of the Confirmation Order which has not been stayed. 46 MODIFICATION OF THE PLAN. Subject to the approval of Fidelity and TCW, so long as the funds and accounts managed by them hold in the aggregate at least 20% of the outstanding Old Series Notes, RII and GRI expressly reserve the right to modify, at any time and from time to time, the terms of the Plan in accordance with the provisions of section 1127 of the Bankruptcy Code if, and to the extent that, RII and GRI determine that such modifications are necessary or desirable in order to complete the Restructuring. After the date on which the Plan is confirmed by the Bankruptcy Court, RII and GRI may institute proceedings in the Bankruptcy Court to remedy any defects or omissions or reconcile any inconsistencies in the Plan or the Confirmation Order as may be necessary to carry out the purposes and intent of the Plan so long as the Plan as modified meets the requirements of the Bankruptcy Code and prior notice of such modification is served in accordance with Bankruptcy Rules 2002 and 9014. See "The Plan -- Modifications of the Plan". COMPARISON OF NEW RIHF MORTGAGE NOTES AND NEW RIHF JUNIOR MORTGAGE NOTES TO OLD SERIES NOTES The following is a brief comparison of the terms of the New RIHF Mortgage Notes and New RIHF Junior Mortgage Notes to the terms of the Old Series Notes as set forth in the Old Series Note Indenture, the indenture pursuant to which the New RIHF Mortgage Notes will be issued (the "New RIHF Mortgage Indenture"), and the indenture pursuant to which the New RIHF Junior Mortgage Notes will be issued (the "New RIHF Junior Mortgage Indenture"). Certain capitalized terms used in the following summary are defined below under the captions "Description of Old Series Notes", "Description of New RIHF Mortgage Notes" and "Description of New RIHF Junior Mortgage Notes". The Company will apply to have the New RIHF Mortgage Notes, the Units comprised of New RIHF Junior Mortgage Notes and the RII Class B Common Stock, the newly issued RII Common Stock and (if issued) the PIRL Ordinary Shares listed on the AMEX. The Company has been informed by SIHL that SIHL will apply to have the SIHL Series A Shares (if issued) listed on the Nasdaq National Market. It is a condition to consummation of the Plan that all of such securities, if issued, be listed on a national securities exchange or approved for quotation on the Nasdaq National Market (subject to official notice of issuance). However, there can be no assurance that an active trading market for any such securities will develop on the AMEX, Nasdaq National Market or otherwise, and no assurance can be given as to the price at which any such securities might trade. Moreover, subject to the consent of Fidelity and TCW (so long as the funds and accounts managed by them hold in the aggregate at least 20% of the outstanding Old Series Notes), the condition requiring listing on a national securities exchange or approval for quotation on the Nasdaq National Market may be waived by RII and GRI. For more information regarding the trading market for the SIHL Series A Shares, see the accompanying SIHL Prospectus.
NEW RIHF NEW RIHF MORTGAGE NOTES JUNIOR MORTGAGE NOTES OLD SERIES NOTES - ------------------------------------ ------------------------------------ ------------------------------------ PRINCIPAL AMOUNT TO BE ISSUED: PRINCIPAL AMOUNT TO BE ISSUED: PRINCIPAL AMOUNT OUTSTANDING: $125,000,000 will be issued by RIHF $35,000,000 will be issued by RIHF Approximately $482,000,000 as of upon consummation of the upon consummation of the October 15, 1993, issued by RII. Restructuring. Restructuring.
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NEW RIHF NEW RIHF MORTGAGE NOTES JUNIOR MORTGAGE NOTES OLD SERIES NOTES - ------------------------------------ ------------------------------------ ------------------------------------ INTEREST: INTEREST: INTEREST: 11% per year, payable in cash, semi- 11.375% per year, payable in cash, -- Old Series A Notes -- 6% per year annually on March 15 and September or at RIHF's option and subject to from April 11, 1990 until April 15, 15 of each year. Interest will certain limitations, additional 1991, 9% in the year ended April accrue from the Effective Date. Units comprised of New RIHF Junior 15, 1992, 12% in the year ended Mortgage Notes and RII Class B April 15, 1993, and 15% in the year Common Stock, semi-annually on June ending April 15, 1994, payable 15 and December 15 of each year. semi-annually on April 15 and Interest will accrue from the October 15 of each year. Interest Effective Date. Interest may be is payable, at the option of RII, paid in additional Units on any in cash or in additional Old Series interest payment date on which A Notes. RIH's Consolidated Cash Flow for -- Old Series B Notes -- 11% per the most recently completed four year from May 8, 1990 until April fiscal quarters is less than 15, 1991, and thereafter 15% per $35,000,000. year, payable semi-annually on April 15 and October 15 of each year. Interest is payable, at the option of RII, in cash or in additional Old Series B Notes. MATURITY: MATURITY: MATURITY: September 15, 2003. December 15, 2004. April 15, 1994. SINKING FUND REQUIREMENTS: SINKING FUND REQUIREMENTS: SINKING FUND REQUIREMENTS: None. None. None. MANDATORY REDEMPTIONS: MANDATORY REDEMPTIONS: MANDATORY REDEMPTIONS: In the event of an RIH Sale, all the In the event of an RIH Sale, all the Upon certain sales by RII or any of New RIHF Mortgage Notes will be New RIHF Junior Mortgage Notes will its subsidiaries of any assets redeemed by RIHF whether such RIH be redeemed by RIHF whether such listed in a schedule to the Old Sale occurs before, on or after the RIH Sale occurs before, on or after Series Note Indenture, certain real fifth anniversary of the Effective the fifth anniversary of the property or the capital stock of Date, at par together with Effective Date, at par together any RII subsidiary, the proceeds interest, if any, accrued and with interest, if any, accrued and are deposited in an account (the unpaid thereon to the Redemption unpaid thereon to the Redemption "Collateral Account"). If the Date; provided, however, that such Date; provided, however, that such balance in the Collateral Account obligation of RIHF to redeem the obligation of RIHF to redeem the exceeds $15,000,000, RII is New RIHF Mortgage Notes in the New RIHF Junior Mortgage Notes in required to redeem Old Series Notes event of a proposed RIH Sale shall the event of a proposed RIH Sale with the entire balance in the cease to exist if the Holders of shall cease to exist if the Holders Collateral Account at 100% of the not less than 66- 2/3% in of not less than 66- 2/3% in principal amount thereof plus Outstanding Amount of the Outstanding Amount of the accrued and unpaid interest to the Outstanding New RIHF Mortgage Notes Outstanding New RIHF Junior redemption date. have consented to such proposed RIH Mortgage Notes have consented to Sale. such proposed RIH Sale. OPTIONAL REDEMPTION: OPTIONAL REDEMPTION: OPTIONAL REDEMPTION: The New RIHF Mortgage Notes are The New RIHF Junior Mortgage Notes The Old Series Notes are redeemable redeemable at any time in whole, or are redeemable at any time in at any time in whole, or from time from time to time in part, on or whole, or from time to time in to time in part, at the election of after the fifth anniversary of the part, on or after the fifth RII, at 100% of their principal Effective Date at the election of anniversary of the Effective Date amount plus accrued interest to the RIHF, at 100% of the principal at the election of RIHF, at 100% of redemption date. Any such amount thereof plus accrued the principal amount thereof plus redemption must be made of both Old interest to the redemption date. accrued interest to the redemption Series A Notes and Old Series B date. Notes, pro rata according to the respective principal amounts of the Old Series Notes of each such Series then outstanding.
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NEW RIHF NEW RIHF MORTGAGE NOTES JUNIOR MORTGAGE NOTES OLD SERIES NOTES - ------------------------------------ ------------------------------------ ------------------------------------ LIMITATION ON OPEN-MARKET PURCHASES: LIMITATION ON OPEN-MARKET PURCHASES: LIMITATION ON OPEN-MARKET PURCHASES: Generally, none. See "-- Certain Generally, none, provided that See "-- Certain Other Covenants". Other Covenants". interest on the New RIHF Junior Mortgage Notes was paid in cash on the interest payment date next preceding the date of the open-market purchase in question. See "-- Certain Other Covenants". GUARANTY: GUARANTY: GUARANTY: RIH guarantees payment of principal RIH guarantees payment of principal GRI guarantees payment of principal of and interest on the New RIHF of and interest on the New RIHF of and interest on the Old Series Mortgage Notes pursuant to the RIH Junior Mortgage Notes pursuant to Notes pursuant to the GRI Guaranty. Mortgage Guaranty. The RIH Mortgage the RIH Junior Mortgage Guaranty. GRI's assets consist principally of Guaranty is secured by a lien on The RIH Junior Mortgage Guaranty is promissory notes made by RIH in the the Resorts Casino Hotel pursuant secured by a lien on the Resorts aggregate principal amount of to a mortgage and security Casino Hotel pursuant to a mortgage $325,000,000 (the "RIH Notes") and agreement with an assignment of and security agreement with an the capital stock of RIB. RIB and rents, and an assignment of leases assignment of rents, and an its subsidiaries own the Paradise and rents (collectively, the "RIH assignment of leases and rents Island properties, including the Guaranty Mortgage") between RIH, as (collectively, the "RIH Junior Paradise Island Resort & Casino, mortgagor, and the New RIHF Guaranty Mortgage") between RIH, as the Ocean Club Golf & Tennis Resort Mortgage Note Trustee for the mortgagor, and the New RIHF Junior and the Paradise Paradise Beach benefit of the holders of the RIH Mortgage Note Trustee for the Resort, and all related furniture, Mortgage Notes and is junior to the benefit of the holders of the RIH fixtures, machinery and equipment. RIHF Senior Facility Guaranty. Junior Mortgage Notes and is junior The RIH Notes and the Paradise to the RIHF Senior Facility Island properties, including all Guaranty and the RIH Mortgage additions or improvements, directly Guaranty. or indirectly, comprise part of the collateral securing the Old Series Notes. Such collateral also includes the lien on the Resorts Casino Hotel, owned by RIH, together with all additions or improvements thereto.
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NEW RIHF NEW RIHF MORTGAGE NOTES JUNIOR MORTGAGE NOTES OLD SERIES NOTES - ------------------------------------ ------------------------------------ ------------------------------------ COLLATERAL: COLLATERAL: COLLATERAL: The New RIHF Mortgage Notes are The New RIHF Junior Mortgage Notes The Old Series A Notes and the Old secured by a lien on the New RIHF are secured by a lien on the New Series B Notes rank PARI PASSU with Mortgage Trust Estate comprised of RIHF Junior Mortgage Trust Estate respect to amounts realized upon the assignment by RIHF to the New comprised of the assignment by RIHF the sale or other disposition of RIHF Mortgage Note Trustee for the to the New RIHF Junior Mortgage the collateral (as described benefit of the holders of the New Note Trustee for the benefit of the below). RIHF Mortgage Notes, of (i) the RIH holders of the New RIHF Junior The collateral consists of: (i) Promissory Note in the original Mortgage Notes, of (i) the RIH RII's fee and leasehold interests principal amount of up to Junior Promissory Note in the in substantially all of its real $125,000,000, payable in amounts original principal amount of up to properties, additions or all and at times necessary to pay the $35,000,000, payable in amounts and improvements constructed thereon principal of and interest on the at times necessary to pay the (other than the Showboat Lease and New RIHF Mortgage Notes, and (ii) a principal of and interest on the the real property that is subject lien on the Resorts Casino Hotel, New RIHF Junior Mortgage Notes, and to the Showboat Lease and an office I.E., RIH's fee and leasehold (ii) a lien on the Resorts Casino building in Miami, Florida) interests comprising the Resorts Hotel, I.E., RIH's fee and (collectively, the "RII Property"), Casino Hotel, the contiguous leasehold interests comprising the pursuant to an indenture of parking garage and property, all Resorts Casino Hotel, the mortgage and assignment of leases additions or improvements contiguous parking garage and and rents (the "RII Mortgage") constructed thereon (other than property, all additions or between RII and the trustee under certain designated facilities) and improvements constructed thereon the Old Series Note Indenture (the all furniture, fixtures, machinery (other than certain designated "Old Series Note Trustee"); (ii) and certain other property and facilities) and all furniture, RIH's fee and leasehold interests equipment of RIH related thereto, fixtures, machinery and certain comprising the Resorts Casino encumbered pursuant to a mortgage other property and equipment of RIH Hotel, the contiguous parking and security agreement with related thereto, encumbered garage and property, all additions assignment of rents, and an pursuant to a mortgage and security or improvements constructed thereon assignment of leases and rents agreement with assignment of rents, (other than certain designated (collectively, the "RIH Mortgage") and an assignment of leases and facilities) and all furniture, between RIH, as mortgagor, and rents (collectively, the "RIH fixtures, machinery and certain RIHF, as mortgagee, securing the Junior Mortgage") between RIH, as other property and equipment of RIH payment of the RIH Promissory Note. mortgagor, and RIHF, as mortgagee, related thereto, assignment of Such lien is junior to the lien securing the payment of the RIH leases and rents and a security securing the RIHF Senior Facility. Junior Promissory Note. Such lien agreement (collectively, the "RIH is junior to the liens securing the Mortgage") between RIH and the Old RIHF Senior Facility and the RIHF Series Note Trustee; (iii) all the Mortgage Notes. outstanding capital stock of RIH, GRI and all RII's other direct and indirect domestic subsidiaries pledged by RII to the Old Series Note Trustee pursuant to a pledge agreement (the "RII Pledge Agreement") between RII and the Old Series Note Trustee; (iv) the RIH Notes, pledged by GRI to the Old Series Note Trustee pursuant to a pledge agreement (the "RIH Pledge Agreement") between GRI and the Old Series Note Trustee; (v) 66% of the outstanding voting stock of RIB (the "RIB Stock"), pledged by GRI to the Old Series Note Trustee pursuant to a pledge agreement (the "GRI Pledge Agreement") between GRI and the Old Series Note Trustee; and (vi) the RIB Note, the RIB Subsidiary Guaranty Agreements and the RIB Mortgage (collectively, the "RIB Collateral") pledged by RIH to the Old Series Note Trustee pursuant to a Pledge and Assignment Agreement between RIH and the Old Series Note Trustee (the "RIB Collateral Assignment
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NEW RIHF NEW RIHF MORTGAGE NOTES JUNIOR MORTGAGE NOTES OLD SERIES NOTES - ------------------------------------ ------------------------------------ ------------------------------------ Agreement" and, collectively with the other documents described in clauses (i) through (v), the "Old Security Documents"). RANKING: RANKING: RANKING: The New RIHF Mortgage Notes are The New RIHF Junior Mortgage Notes The Old Series Notes are senior secured obligations of RIHF. are junior secured obligations of secured obligations of RII. The RIH Mortgage and the RIH RIHF. Guaranty Mortgage are PARI PASSU The RIH Junior Mortgage and the RIH with each other and subordinated to Junior Guaranty Mortgage are PARI the liens on the Resorts Casino PASSU with each other and Hotel securing payment of the RIHF subordinated to the liens on the Senior Facility Notes and the RIH Resorts Casino Hotel securing Senior Facility Guaranty and any payment of the RIHF Senior Facility other secured Working Capital Notes, the RIH Senior Facility Facility and related guaranty. Guaranty, any other secured Working Capital Facility and related guaranty, the New RIHF Mortgage Notes and the RIH Mortgage Guaranty. PAYMENT OF NET PROCEEDS OF ASSET PAYMENT OF NET PROCEEDS OF ASSET PAYMENT OF NET PROCEEDS OF ASSET SALES: SALES: SALES: None. None. See "-- Mandatory Redemption". CHANGE OF CONTROL: CHANGE OF CONTROL: CHANGE OF CONTROL: Neither RIHF nor RIH will Neither RIHF nor RIH will Any holder of Old Series Notes may consolidate, combine or merge with consolidate, combine or merge with require RII to purchase its Old or into any other Person or permit or into any other Person or permit Series Notes upon the occurrence of any other Person to consolidate, any other Person to consolidate, any of the following events combine or merge with or into RIHF combine or merge with or into RIHF (unless, in certain circumstances, or RIH, as the case may be; and or RIH, as the case may be; and RII calls all the Old Series Notes neither RIHF with respect to its neither RIHF with respect to its for redemption): (i) a assets nor RIH with respect to the assets nor RIH with respect to the consolidation or merger of RII in New RIHF Mortgage Trust Estate New RIHF Junior Mortgage Trust which RII is not the surviving shall sell, assign, convey or Estate shall sell, assign, convey entity; (ii) the sale of all or transfer its interest in such or transfer its interest in such substantially all of RII's assets; assets or the New RIHF Mortgage assets or the New RIHF Junior (iii) the percentage of RII voting Trust Estate, as the case may be, Mortgage Trust Estate, as the case stock held by Merv Griffin and substantially as an entirety to any may be, substantially as an affiliates falls below 15%, other other Person or group of Persons, entirety to any other Person or than because of RII's issuance of in one transaction or series of group of Persons, in one additional voting stock; or (iv) a related transactions, or permit any transaction or series of related person or group not affiliated or other Person or group of Persons to transactions, or permit any other associated with Merv Griffin convey or transfer all or Person or group of Persons to sell, acquires 50% or more of RII voting substantially all of its assets, assign, convey or transfer all or stock. subject to liabilities other than substantially all of its assets, RII is required to give to the DE MINIMIS liabilities, to RIHF or subject to liabilities other than holders of Old Series Notes notice RIH; and RIHF and RIH shall not DE MINIMIS liabilities, to RIHF or of any event described above within transfer, convey, sell or otherwise RIH; and RIHF and RIH shall not 30 business days of the occurrence dispose of to any other Person, or transfer, convey, sell or otherwise thereof. Such notice must specify issue to any Person, any equity dispose of to any other Person, or the event, the repurchase date and interest in RIHF or RIH, as the issue to any Person, any equity repurchase instructions. The case may be (each such transaction interest in RIHF or RIH, as the repurchase price is 100% of the referred to as a "Combination case may be (each such transaction principal amount plus accrued and Transaction"); provided, however, referred to as a "Combination unpaid interest. that (i) RIHF may engage in a Transaction"); provided, however, Combination Transaction in which that (i) RIHF may engage in a the only other party or parties is Combination Transaction in which RIH or a direct or indirect wholly the only other party or parties is owned Subsidiary of RIHF or RIH, RIH or a direct or indirect wholly and (ii) RIHF or RIH may engage in owned Subsidiary of RIHF or RIH, any other Combination Transaction, and (ii) RIHF or RIH may engage in subject to certain conditions. any other Combination Transaction, subject to certain conditions.
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NEW RIHF NEW RIHF MORTGAGE NOTES JUNIOR MORTGAGE NOTES OLD SERIES NOTES - ------------------------------------ ------------------------------------ ------------------------------------ CERTAIN OTHER COVENANTS: CERTAIN OTHER COVENANTS: CERTAIN OTHER COVENANTS: The New RIHF Mortgage Note Indenture The New RIHF Junior Mortgage Note The Old Series Note Indenture will contain covenants on the part Indenture will contain covenants on contains certain restrictive of RIHF, RIH and each of their the part of RIHF, RIH and each of covenants on the part of RII, Subsidiaries, including without their Subsidiaries, including including, without limitation, limitation restrictions (subject to without limitation restrictions restrictions (subject to certain certain exceptions) on: (i) the (subject to certain exceptions) on: exceptions) on: (i) the payment of ability of RIHF, RIH and each of (i) the ability of RIHF, RIH and cash dividends or redemptions of their Subsidiaries to terminate each of their Subsidiaries to capital stock by RII (other than as their corporate existence or the terminate their corporate existence required by the Casino Control rights (charter and statutory), or the rights (charter and Act); (ii) the repurchase (other licenses, permits, approvals and statutory), licenses, permits, than as required by the Casino governmental franchises necessary approvals and governmental Control Act) of any Old Series to the conduct of its and their franchises necessary to the conduct Notes other than at par unless all respective businesses; (ii) the of its and their respective interest due on the Old Series ability of RIHF, RIH and each of businesses; (ii) the ability of Notes on the immediately preceding their Subsidiaries to make certain RIHF, RIH and each of their interest payment date was paid in Restricted Payments; (iii) the Subsidiaries to make certain cash and the funds used for the ability of RIHF, RIH and each of Restricted Payments; (iii) the repurchase are not the proceeds of their Subsidiaries to incur any ability of RIHF, RIH and each of asset sales that are required to be Indebtedness other than (a) the New their Subsidiaries to incur any deposited in the Collateral Account RIHF Mortgage Notes, (b) the Junior Indebtedness other than (a) the New and that have not been so Mortgage Facility, (c) the RIHF RIHF Mortgage Notes and the New deposited; (iii) the incurrence of Senior Facility or any other RIHF Junior Mortgage Notes, (b) the additional indebtedness for Working Capital Facility, (d) Junior Mortgage Facility, (c) the borrowed money, with exceptions for Capitalized Lease Obligations in an RIHF Senior Facility or any other (A) certain purchase money amount not in excess of $5,000,000 Working Capital Facility, (d) financing not to exceed $15,000,000 in the aggregate at any time Capitalized Lease Obligations in an in aggregate principal amount at outstanding, (e) FF&E Financing amount not in excess of $5,000,000 any time outstanding, (B) financing Agreements in an amount not in in the aggregate at any time to develop certain property in The excess of $10,000,000 in the outstanding, (e) FF&E Financing Bahamas to fulfill RIB's obligation aggregate at any time outstanding, Agreements in an amount not in to the Bahamian Government to (f) certain unsecured Indebtedness excess of $10,000,000 in the construct at least 150 first-class in an amount not in excess of aggregate at any time outstanding, hotel rooms or (after satisfaction $5,000,000, (g) Non-Recourse (f) certain unsecured Indebtedness of such obligation) otherwise, not Indebtedness in an amount not in in an amount not in excess of to exceed $20,000,000 in aggregate excess of $25,000,000 in the $5,000,000, (g) Non-Recourse principal amount at any time aggregate at any time outstanding, Indebtedness in an amount not in outstanding, and (C) after the sale (h) After-Acquired Fee Mortgage excess of $25,000,000 in the of the Paradise Island Business and Debt in an amount not in excess of aggregate at any time outstanding, application of such sale proceeds $3,000,000 in the aggregate at any (h) After-Acquired Fee Mortgage to prepay Old Series Notes such time outstanding, and (i) Debt in an amount not in excess of that the aggregate principal amount Intercompany advances between RIH, $3,000,000 in the aggregate at any of Old Series Notes remaining RIHF or any of their Subsidiaries time outstanding, and (i) outstanding does not exceed on the one hand, and RII, on the Intercompany advances between RIH, $75,000,000, financing for the other hand, in an aggregate amount RIHF or any of their Subsidiaries construction of new hotel not to exceed $1,000,000; (iv) the on the one hand, and RII, on the facilities, including a parking ability of RIHF, RIH and each of other hand, in an aggregate amount garage to serve the Resorts Casino their Subsidiaries to repay the not to exceed $1,000,000; (iv) the Hotel, not to exceed $75,000,000 in principal of any Indebtedness which ability of RIHF, RIH and each of aggregate principal amount at any is subordinated in right of payment their Subsidiaries to repay the time outstanding; (iv) transactions to the New RIHF Mortgage Notes, principal of any Indebtedness which with affiliates, with exceptions except for certain repurchases or is subordinated in right of payment for transactions that RII's Board redemptions under the Junior to the New RIHF Junior Mortgage of Directors determines to be on Mortgage Facility; (v) the ability Notes; (v) the ability of RIHF, RIH terms as favorable as could be of RIHF, RIH and each of their and each of their Subsidiaries to obtained from a non-affiliated Subsidiaries to repurchase any New repurchase any New RIHF Junior party, certain transactions in RIHF Mortgage Notes in the open Mortgage Notes in the open market regard to acquisition of and market if an Event of Default shall if an Event of Default shall have financing for new hotel facilities, have occurred and be continuing occurred and be continuing under and contribution by RII or any of under the New RIHF Mortgage Note the New RIHF Mortgage Note its subsidiaries of undeveloped Indenture, the New RIHF Junior Indenture, the New RIHF Junior land to joint ventures, provided Mortgage Note Indenture or the RIHF Mortgage Note Indenture or the RIHF that neither RII nor any of its Senior Facility Note Indenture; Senior Facility Note Indenture; subsidiaries may enter into any of (vi) the ability of RIHF, RIH and (vi) the ability of RIHF, RIH and the foregoing transactions in each of their Subsidiaries to each of their Subsidiaries to excess of $10,000,000 without a engage in certain activities; (vii) engage in certain activities; (vii) fairness opinion of an independent the ability of RIHF and RIH to the ability of RIHF and RIH to financial adviser; (vi) mergers and create or acquire any additional create or acquire any additional consolidations with entities other Subsidiaries; (viii) the creation Subsidiaries; (viii) the creation than affiliates of RII; and of of
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NEW RIHF NEW RIHF MORTGAGE NOTES JUNIOR MORTGAGE NOTES OLD SERIES NOTES - ------------------------------------ ------------------------------------ ------------------------------------ additional liens on the Mortgage (vii) the ability of RII and its additional liens on the Mortgage Documents or the New RIHF Junior subsidiaries to sell their Documents or the New RIHF Mortgage Mortgage Trust Estate with respective assets. The Old Series Trust Estate with exceptions for, exceptions for, among other things, Note Indenture also requires RII, among other things, liens created liens created in connection with at all times after December 31, in connection with permitted permitted Indebtedness described in 1990, to maintain a consolidated Indebtedness described in clause clause (iii) above; (ix) tangible net worth (as defined) (iii) above; (ix) non-compliance non-compliance with all applicable equal to at least $50,000,000. with all applicable statutes, statutes, rules, regulations and rules, regulations and orders; (x) orders; (x) non-payment of taxes, non-payment of taxes, (xi) (xi) maintenance of properties, maintenance of properties, (xii) (xii) maintenance of insurance, maintenance of insurance, (xiii) (xiii) the ability of RIHF, RIH and the ability of RIHF, RIH and their their Subsidiaries to insist upon, Subsidiaries to insist upon, plead plead or claim any stay or or claim any stay or extension law extension law or usury law or other or usury law or other law that law that would prohibit or forgive would prohibit or forgive RIHF or RIHF or RIH from paying the RIH from paying the principal of, principal of, or interest on the or interest on the New RIHF New RIHF Junior Mortgage Notes or Mortgage Notes or the RIH the RIH Junior Promissory Note or Promissory Note or the RIH the RIH Junior Guaranty; (xiv) the Guaranty; (xiv) the ability of ability of RIHF, RIH and their RIHF, RIH and their Subsidiaries to Subsidiaries to engage in certain engage in certain transactions with transactions with Affiliates. Affiliates. MODIFICATION OF INDENTURE: MODIFICATION OF INDENTURE: MODIFICATION OF INDENTURE: Requirement of vote by two-thirds in Requirement of vote by two-thirds in Requirement of vote by two-thirds in aggregate principal amount of New aggregate principal amount of New aggregate principal amount of Old RIHF Mortgage Notes in order to RIHF Junior Mortgage Notes in order Series Notes (including the vote of amend or supplement the New RIHF to amend or supplement the New RIHF a majority of each of the Old Mortgage Note Indenture, the Junior Mortgage Note Indenture, the Series A Notes and the Old Series B Mortgage Documents, the Assignment Mortgage Documents, the Assignment Notes) in order to amend the Old Agreement or the New RIHF Mortgage Agreement or the New RIHF Junior Series Note Indenture or any Old Notes, except no such amendment, or Mortgage Notes except no such Security Document, except no such supplement without the consent of amendment or supplement, without amendment, without the consent of the holder of each New RIHF the consent of the holder of each the holder of each Old Series Note Mortgage Note affected may (i) New RIHF Junior Mortgage Note affected, may change the terms of change the stated maturity of the affected may (i) change the stated payment of principal and interest, principal, or any installment of maturity of the principal, or any adversely change the redemption interest, reduce the principal installment of interest, reduce the provisions, waive payment defaults amount, change any Place of Payment principal amount, change any Place thereon, or reduce the aforesaid where, or the coin or currency in of Payment where, or the coin or voting amounts required for which, principal or interest is currency in which, principal or amendments. payable, or impair the right to interest is payable, or impair the institute suit for the enforcement right to institute suit for the of payment, (ii) reduce the enforcement of payment, (ii) reduce aforesaid voting amount required the aforesaid voting amount for amendments, (iii) modify the required for amendments, (iii) term "Outstanding", (iv) modify the modify the term "Outstanding", (iv) provisions described in this modify the provisions described in paragraph or the provisions this paragraph or the provisions regarding waiver of default, (v) regarding waiver of default, (v) with certain exceptions, permit the with certain exceptions, permit the creation of any lien ranking prior creation of any lien ranking prior to the lien of the RIH Mortgage. to the lien of the RIH Junior Mortgage. In addition, the holders of two-thirds in aggregate principal amount of New RIHF Mortgage Notes must consent to any amendment of the New RIHF Junior Mortgage Note Indenture allowing for redemption of the New RIHF Junior Mortgage Notes prior to the fifth anniversary of the Effective Date unless such redemption is in connection with an RIH Sale.
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NEW RIHF NEW RIHF MORTGAGE NOTES JUNIOR MORTGAGE NOTES OLD SERIES NOTES - ------------------------------------ ------------------------------------ ------------------------------------ TRUSTEE: TRUSTEE: TRUSTEE: State Street Bank and Trust Company U.S. Trust Company of California, Chemical Bank (successor to of Connecticut, National N.A. Manufacturers Hanover Trust Association. Company). The New RIHF Mortgage Note Trustee The New RIHF Junior Mortgage Note The Old Series Note Trustee may may require reasonable indemnity Trustee may require reasonable require reasonable indemnity before before exercising any of its rights indemnity before exercising any of exercising any of its rights or or powers under the New RIHF its rights or powers under the New powers under the Old Series Note Mortgage Note Indenture. RIHF Junior Mortgage Note Indenture. Indenture.
See "Description of Old Series Notes", "Description of New RIHF Mortgage Notes" and "Description of New RIHF Junior Mortgage Notes". DESCRIPTION OF NEW EQUITY SECURITIES RII COMMON STOCK RII Common Stock will be issued to the holders of the Old Series Notes as of the Distribution Record Date. The existing holders of RII Common Stock will continue to hold their RII Common Stock. Issuer............................ RII. Number of shares.................. Up to 100,000,000 authorized, (i) 20,157,234 of which are outstanding as of November 30, 1993, and (ii) 17,025,000 of which will be issued as of the Distribution Date (assuming all distributions to be made under the Plan are made on the Distribution Date and no options and warrants to purchase RII Common Stock have been exercised). Dividends......................... Dividends may be declared by the RII Board of Directors and would be payable from legally available funds. Redemption........................ Subject to redemption if a holder required to qualify under the New Jersey Casino Control Act and regulations promulgated thereunder (the "Casino Control Act") refuses or fails to so qualify and subsequently fails to divest itself of such RII Common Stock. Liquidation rights................ The net proceeds of any liquidation will be payable pro rata to the holders of the RII Common Stock and the RII Class B Common Stock to the extent of par value per share of each such class (I.E., $.01), with the balance of such proceeds payable pro rata to the holders of the RII Common Stock. Restrictions on transfer.......... None. Election of directors............. Holders of the RII Common Stock are entitled to elect two-thirds of the entire RII Board of Directors (or following the Class B Triggering Event in respect of the New RIHF Junior Mortgage Notes, one less than one-half of the entire RII Board of Directors). Such directors are divided into three classes of directors serving staggered three-year terms. This classified board provision could have the effect of making the removal of incumbent directors more difficult and, therefore, of discouraging a third party from attempting to obtain control of RII, even though such attempt might be beneficial to RII and its shareholders.
54 Voting rights..................... One vote per share on all matters on which shareholders are entitled to vote, other than the election of directors by the holders of the RII Class B Common Stock. Preemptive rights................. None.
See "Description of New Equity Securities". RII CLASS B COMMON STOCK The RII Class B Common Stock will be issued as part of the Units to the holders of the Old Series Notes as of the Effective Date and is essentially a non-participating stock that entitles its holders to elect the Class B Directors. Issuer............................ RII. Number of shares.................. Up to 80,000 authorized, 35,000 of which will be issued as of the Distribution Date (assuming all distributions to be made under the Plan are made on the Distribution Date). Dividends......................... None. Redemption........................ Upon redemption, or cancellation following the purchase thereof, of each $1,000 principal amount of New RIHF Junior Mortgage Notes, RII will redeem, at a price of $.01 per share, the share of RII Class B Common Stock issued as a Unit with each $1,000 principal amount of New RIHF Junior Mortgage Notes. Subject to redemption if a holder is required to qualify under the Casino Control Act refuses or fails to so qualify and subsequently fails to divest itself of such RII Class B Common Stock. Liquidation rights................ The net proceeds of any liquidation of RII will be payable pro rata to the holders of the RII Class B Common Stock to the extent of the $.01 par value per share. Restrictions on transfer.......... Each share of RII Class B Common Stock will be issued as part of a Unit with each $1,000 principal amount of New RIHF Junior Mortgage Notes and may not be transferred separately from such New RIHF Junior Mortgage Note. Election of directors............. Holders of the RII Class B Common Stock to elect one-third of the entire RII Board of Directors (or following the Class B Triggering Event in respect of the New RIHF Junior Mortgage Notes, a majority of the entire Board of Directors of RII (the "RII Board of Directors"). Voting rights..................... None, other than (i) the election of directors by the holders of RII Class B Common Stock, (ii) to the extent required under Delaware law, and (iii) with respect to certain amendments to the Amended RII Certificate of Incorporation (as defined in the Plan) or the Amended RII Bylaws (as defined in the Plan) that would impact the RII Class B Common Stock. Preemptive rights................. None. See "Description of New Equity Securities".
PIRL ORDINARY SHARES If the SIHL Sale is not consummated on or before the Effective Date, then, subject to the satisfaction of certain conditions, PIRL Ordinary Shares will be issued to the holders of the Old Series Notes as of the Distribution Record Date to effect the PIRL Spin-Off. The PIRL Ordinary Shares will be the only outstanding class of capital stock of PIRL as of the Distribution Date. Issuer............................ PIRL.
h-TM- 55 Number of shares.................. Up to 25,000,000 authorized, 5,000,000 of which will be issued as of the Distribution Date (assuming all distributions to be made under the Plan are made on the Distribution Date). Dividends......................... Dividends declared by the PIRL Board of Directors would be payable from legally available funds. Redemption........................ None. Liquidation rights................ The net proceeds of any liquidation of PIRL will be payable pro rata to the holders of the PIRL Ordinary Shares. Restrictions on transfer.......... None. Election of directors............. Holders of the PIRL Ordinary Shares to elect all directors of PIRL. Voting rights..................... One vote per share on all matters on which shareholders are entitled to vote. Preemptive rights................. None.
See "Description of New Equity Securities" and "Description of PIRL Standby Distribution Agreement". SIHL SERIES A SHARES If the SIHL Sale is consummated on or before the Effective Date, then the SIHL Series A Shares, representing 40% of the capital stock of SIHL to be outstanding after the SIHL Sale, will be issued to the holders of the Old Series Notes on the Distribution Date. Such shares are entitled to the benefit of the Put Right. See "Description of Paradise Island Purchase Agreement." FOR INFORMATION WITH RESPECT TO SIHL, THE SIHL SALE, THE PARADISE ISLAND PURCHASE AGREEMENT AND THE SIHL SERIES A SHARES, REFERENCE IS MADE TO THE SIHL PROSPECTUS RELATING TO THE SIHL SERIES A SHARES. RII HAS SUPPLIED CERTAIN INFORMATION REGARDING THE PARADISE ISLAND BUSINESS (SUCH AS IS FOUND IN RII'S REPORTS FILED WITH THE COMMISSION), AS WELL AS CERTAIN INFORMATION CONCERNING THE RESTRUCTURING, TO SIHL SPECIFICALLY FOR ITS USE IN THE PREPARATION OF THE SIHL PROSPECTUS (AND THE RELATED REGISTRATION STATEMENT FILED BY SIHL WITH THE COMMISSION UNDER THE SECURITIES ACT). RII AND ITS ADVISERS DISCLAIM ANY RESPONSIBILITY FOR THE ACCURACY, COMPLETENESS, NATURE AND FORM OF PRESENTATION OF ANY INFORMATION CONTAINED IN THE SIHL PROSPECTUS (AND RELATED REGISTRATION STATEMENT), EXCEPT THAT RII HAS MADE IN THE PARADISE ISLAND PURCHASE AGREEMENT CERTAIN REPRESENTATIONS AND WARRANTIES TO SIHL AS TO THE ACCURACY OF THE INFORMATION SUPPLIED BY RII SPECIFICALLY FOR INCLUSION IN THE SIHL PROSPECTUS (AND RELATED REGISTRATION STATEMENT). VOTING PROCEDURES GENERAL. RII and GRI, upon the terms and conditions set forth herein and in the voting instructions set forth in the Ballots, are soliciting an Acceptance of the Plan from each person that was a beneficial owner on the Voting Record Date of (a) any Old Series Notes (and the beneficiary of the related GRI Guaranty endorsed thereon), (b) any RII Common Stock, (c) the GRI Common Stock, (d) the RII Intercompany Claim and (e) any 1990 Stock Options. A form of Ballot to be used for voting to accept or reject the Plan (and, in the case of holders of Old Series Notes, for indicating consents to the termination and release of the Old Security Documents), together with a pre-addressed, postage-paid envelope, has been provided with this Information Statement/Prospectus. The terms of the Solicitation are for the sole benefit of RII and GRI and may be asserted by RII and GRI regardless of the circumstances or may be waived by RII and GRI, in whole or in part, at any time and from time to time, in their sole discretion (subject to the approval of Fidelity and TCW so long as the funds and accounts managed by them hold in the aggregate at least 20% of the outstanding Old Series Notes). Any determination by RII and GRI concerning the terms of the Solicitation will be final and binding upon all parties. Master Ballots, which will be distributed separately to banks and brokerage firms, will be used to record the votes of beneficial owners. 56 The following classes of claims and interests are impaired under the Plan and all holders of Allowed Claims or Interests in such classes as of the Voting Record Date are entitled to vote to accept or reject the Plan: RII Class 2 -- Claims of holders of Old Series Notes (use gray Ballot) RII Class 7 -- Interests of holders of RII Common Stock (use blue Ballot) RII Class 8 -- Interests of holders of 1990 Stock Options (use green Ballot) GRI Class 2 -- Claims of holders of GRI Guaranty (use gray Ballot) GRI Class 4 -- Claims of RII, as the holder of the RII Intercompany Claims GRI Class 5 -- Interest of RII, as the holder of all GRI Common Stock ANY HOLDER OF CLAIMS AND INTERESTS IN MORE THAN ONE CLASS IS REQUIRED TO VOTE SEPARATELY WITH RESPECT TO EACH CLASS IN WHICH SUCH HOLDER HAS CLAIMS AND INTERESTS. PLEASE USE A SEPARATE BALLOT OF THE APPROPRIATE FORM TO VOTE EACH SUCH CLASS OF CLAIM AND INTEREST. Although RII Class 2 and GRI Class 2 Claims are to be voted on the same Ballot, holders of such Claims must use a separate Ballot for each series of Old Series Notes which they hold and for each account in which Old Series Notes are held. In addition, banks and brokerage firms must submit separate Master Ballots for each series of Old Series Notes for which they have beneficial owners. The Voting Record Date for voting on the Plan is the close of business in The City of New York, State of New York on January 10, 1994. To be entitled to vote to accept or reject the Plan, a holder of an RII Class 2 Claim, RII Class 7 Interest, RII Class 8 Interest, GRI Class 2 Claim, GRI Class 4 Claim, or GRI Class 5 Interest must have been the beneficial owner of such claim or interest at the close of business on the Voting Record Date. It is important that all beneficial owners vote to accept or reject the Plan. Under the Bankruptcy Code, for purposes of determining whether the Requisite Acceptances have been received, only beneficial owners who vote will be counted. Each beneficial owner electing to vote on the Plan should (i) carefully read the voting instructions set forth in the applicable Ballot, (ii) complete the applicable Ballot, (iii) mark the Ballot to indicate such holder's vote on the Plan, (iv) indicate in the appropriate place on the Ballot whether such holder consents to the release of the Old Security Documents (record holders of Old Series Notes only), and (v) sign and return the Ballot in accordance with the instructions set forth thereon. ANY BALLOT THAT IS EXECUTED BY A RECORD HOLDER AND DOES NOT INDICATE A REJECTION OF THE PLAN WILL BE DEEMED AN ACCEPTANCE OF THE PLAN. See "The Solicitation". CONSENTS TO TERMINATE AND RELEASE OLD SECURITY DOCUMENTS. RII also is soliciting the consents of the record holders of outstanding Old Series Notes pursuant to the terms of the Old Series Note Indenture in order to effect the termination and release of the Old Security Documents under which the liens on the property securing the Old Series Notes were granted or created. The Old Series Note Indenture requires that consents be obtained from the record holders of at least 66 2/3% in aggregate principal amount of the outstanding Old Series Notes and the record holders of at least a majority in aggregate principal amount of each series of the Old Series Notes in order to terminate and release the Old Security Documents. Such consents must be evidenced by such record holders separately from their vote on the Plan. The Ballots for the holders of Old Series Notes permit holders to give or withhold such consent. ANY BALLOT EXECUTED BY A HOLDER OF OLD SERIES NOTES RETURNED WITHOUT AN INDICATION TO WITHHOLD SUCH CONSENT WILL BE DEEMED TO GIVE SUCH CONSENT. RII is soliciting these consents for the purposes of: (i) releasing the Resorts Casino Hotel from the liens of the Old Security Documents so that it may be encumbered to secure the RIHF Senior Facility Notes, the RIH Senior Facility Guaranty, the New RIHF Mortgage Notes, the RIH Mortgage Guaranty, the New RIHF Junior Mortgage Notes and the RIH Junior Mortgage Guaranty; (ii) effecting either the SIHL Sale or the PIRL Spin-Off; and (iii) releasing the Non-Operating Real Property from the liens of the Old Security Documents. Absent a release of the Old Security Documents through either consent or an appropriate Bankruptcy Court order, the transaction contemplated by the Plan cannot be consummated because RII will be unable to pledge the requisite collateral for repayment of the New Debt Securities and the RIHF Senior Facility. In no event will the consents to release the Old Security Documents be used to effectuate the termination and release of the Old Security Documents in the absence of the confirmation and 57 consummation of the Plan. If RII and GRI fail to receive the Requisite Acceptances, notwithstanding receipt of sufficient consents to release and terminate the Old Security Documents pursuant to the Old Series Note Indenture, such consents will only be used in the event that RII and GRI continue to pursue confirmation and consummation of the Plan. In the event that RII and GRI elect or are required to resolicit Acceptances of the Plan, however, they reserve the right not to resolicit with respect to the consents to release the Old Security Documents and to use consents received from the initial Solicitation. VOTING DEADLINE; EXTENSIONS; WITHDRAWAL OR REVOCATION OF BALLOTS. The Solicitation will expire at 5:00 p.m., New York City time, on the Voting Deadline. Except to the extent RII and GRI so determine or as permitted by the Bankruptcy Court, Ballots or Master Ballots that are received after the Voting Deadline will not be accepted or used by RII and GRI in connection with RII's and GRI's request for confirmation of the Plan (or any permitted modification thereof). Pursuant to the instructions set forth in the Ballots and Master Ballots, votes may be submitted prior to the Voting Deadline by facsimile. RII and GRI expressly reserve the right, at any time or from time to time, to extend the Voting Deadline by giving oral or written notice to the Solicitation Agent of such extension. The Solicitation can be extended for that period of time necessary to obtain the Requisite Acceptances. Any extension or expiration of the Voting Deadline will be followed as promptly as practicable by a public announcement made through the Dow Jones News Service. There can be no assurance that RII and GRI will exercise their right to extend the Voting Deadline. As a practical matter: (a) without the consent of SIHL, the Solicitation cannot be extended beyond February 15, 1994, the date that Chapter 11 Cases must be filed (and the Solicitation thereby terminated) by RII and GRI to avoid terminating SIHL's obligations under the Paradise Island Purchase Agreement; (b) if RII and GRI are unable to meet their payment obligations under the Old Series Notes on April 15, 1994, foreclosure or other collection actions may require RII and GRI to file Chapter 11 Cases and thereby terminate the Solicitation; and (c) RII and GRI currently intend to extend the Solicitation only if the Restructuring as proposed in the Plan is achievable if the Solicitation is extended and there is a likelihood that the extension will facilitate receipt of the Requisite Acceptances. During any extension of the Voting Deadline, all Ballots and Master Ballots previously given will remain subject to all the terms and conditions of the Solicitation, including the withdrawal and revocation rights specified herein. At any time prior to the Voting Deadline, a party may withdraw or revoke a Ballot that it has previously delivered; provided however, that a vote of a beneficial owner evidenced by a Master Ballot which has been previously delivered may be withdrawn or revoked only by the nominee completing such Master Ballot. A Ballot may be revoked or withdrawn either by submitting a superseding Ballot or by providing written notice to the Solicitation Agent. Neither RII nor GRI intends to commence a case under chapter 11 of the Code prior to the Voting Deadline, although they reserve the right to do so in their sole discretion. After commencement of a case under the Bankruptcy Code, withdrawal or revocation may be effected only with the approval of the Bankruptcy Court. OWNERSHIP OF RII COMMON STOCK BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. As of November 30, 1993, there were 2,003 record holders of RII Common Stock. The following table sets forth certain information as to the beneficial ownership of RII Common Stock as of November 30, 1993, by persons known by RII to be holders of 5% or more of RII Common Stock, by each director of RII, by each executive officer named in the RII Summary Compensation 58 Table (below), by all directors and officers of RII as a group and by all persons expected to become holders of 5% or more of RII Common Stock when the Restructuring is effected. Information as to the number of shares beneficially owned has been furnished by the persons named in the table.
PRE-RESTRUCTURING POST-RESTRUCTURING -------------------------------------- ------------------------------------ AMOUNT AND AMOUNT AND NATURE OF SHARES PERCENT OF NATURE OF SHARES PERCENT OF NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED CLASS BENEFICIALLY OWNED CLASS(6) - ---------------------------------------- --------------------- ------------ ------------------- ------------ Merv Griffin............................ 4,398,115 21.82% 9,063,115(4) 21.29% Antonio C. Alvarez II................... 5,000 .02 5,000 .01 Warren Cowan............................ 5,000 .02 5,000 .01 Thomas E. Gallagher..................... -- -- -- -- Joseph G. Kordsmeier.................... -- -- -- -- Paul C. Sheeline........................ 5,000 .02 5,000 .01 Christopher D. Whitney.................. 100,000(1) .49 100,000 .26 Matthew B. Kearney...................... 87,500(1) .43 87,500 .23 David G. Bowden......................... 25,000(1) .12 25,000 .07 Directors and officers as a group (nine 4,625,615(2) 22.71 9,290,615(5) 21.72 persons)............................... David P. Hanlon......................... 1,094,800(3) 5.15 1,094,800 2.81 Fidelity................................ -- -- 6,714,941(7) 17.72 TCW..................................... -- -- 4,234,733(7) 11.17 - -------------------------- (1) Ownership represents shares issuable upon exercise of 1990 Stock Options. Related percentages shown give effect to the exercise of all such stock options. (2) Includes 212,500 shares which are issuable upon exercise of 1990 Stock Options. Related percentage shown gives effect to the exercise of all such stock options. (3) Ownership represents shares issuable upon exercise of certain fully vested stock options issued pursuant to the 1990 Stock Option Plan. Related percentages shown give effect to the exercise of all such stock options. See Note (5) to RII Summary Compensation Table under "Management of RII -- Executive Compensation". (4) Includes 4,665,000 shares issuable upon exercise of the Griffin Warrants assuming that the Griffin Warrants are issued. Related percentage gives effect to their exercise. (5) Includes 212,500 shares which are issuable upon exercise of 1990 Stock Options and 4,665,000 shares issuable upon exercise of the Griffin Warrants. Related percentage shown gives effect to the exercise of all such stock options and the Griffin Warrants. (6) The percentages shown give effect to the issuance of 17,025,000 shares to the holders of the Old Series Notes and 715,000 shares to financial advisers in settlement of certain recapitalization costs. (7) Assumes that the funds and accounts managed by Fidelity and TCW continue to own on the Distribution Record Date all the Old Series Notes they own as of October 21, 1993.
INTERESTS OF CERTAIN PERSONS IN THE RESTRUCTURING The following directors and officers of RII may have, to the extent indicated, an interest in the Restructuring. In April 1993, RII, RIH and the Griffin Group executed the New Griffin Services Agreement to be effective as of September 17, 1992, the termination date of the Old Griffin Services Agreement. Merv Griffin serves as a director and the Chairman of the Board of RII; the Griffin Group is a company controlled by Merv Griffin. The New Griffin Services Agreement will be assumed by RII and remain in place after the Effective Date. The New Griffin Services Agreement has a four-year term. Under certain circumstances, however, the New Griffin Services Agreement could remain in force up to an additional year. Pursuant to the New Griffin Services Agreement, Mr. Griffin and the Griffin Group will promote the operations of the Company in Atlantic City and The Bahamas. Fees have already been paid to the Griffin Group for the first three years of the term of the New Griffin Services Agreement. In conjunction with the negotiations among Fidelity, TCW and the Griffin Group relating to the Griffin Group's performance under the New Griffin Services Agreement, certain modifications to the New Griffin Services Agreement were negotiated. As a result of these modifications, the following will occur: (1) on or prior to the Effective Date, RII will pay $2,310,000 to the Griffin Group for the fourth year of the New Griffin Services Agreement by reducing the principal amount of the Griffin Group Note in an equal amount; (2) subsequent to such payment, but no later than the Effective Date, the Griffin Group will pay the balance of the Griffin Group Note (approximately $3.0 59 million) to RII; and (3) on the Distribution Date, RII will issue to the Griffin Group the Griffin Warrants to purchase 4,665,000 shares of RII Common Stock, or approximately 10% of the RII Common Stock on a fully diluted basis. The Griffin Warrants will be exercisable on the Effective Date at an exercise price of the lesser of $1.875 and the average closing price of RII Common Stock for the 20 trading days following the Effective Date. In conjunction with the negotiations among Fidelity, TCW and the Griffin Group, the Griffin Group negotiated a reduction in the exercise price for the Griffin Warrants from the original exercise price set forth in the New Griffin Services Agreement. The exercise prices prior to such amendment were based upon percentages of the average closing price of the RII Common Stock during the 20 trading days following the Effective Date (with certain minimum prices) and ranged from the greater of $1.00 or 125% of such price as to the first 25% of the Griffin Warrants up to the greater of $1.75 or 200% of such price as to the final 25% of the Griffin Warrants. The change in the exercise price was approved by RII, Fidelity and TCW to provide additional incentives to the Griffin Group for its efforts to improve the operations and value of RII. Pursuant to an agreement dated as of September 27, 1993, between RII and David P. Hanlon (the "Hanlon Termination Agreement"), RII and Mr. Hanlon mutually agreed to the termination, as of October 31, 1993, of Mr. Hanlon's September 17, 1992 employment agreement with RII (the "Hanlon Employment Agreement"). Mr. Hanlon served as President and Chief Executive Officer of RII and owns fully vested 1990 Stock Options to purchase 1,094,800 shares of RII Common Stock (or 5.15% of the outstanding shares of the RII Common Stock assuming such options were exercised). RII entered into the Hanlon Termination Agreement to effectuate an orderly restructuring of its senior management. Pursuant to the Hanlon Employment Agreement, Mr. Hanlon is entitled to $850,000 earned under the Hanlon Employment Agreement but not yet paid as of October 31, 1993. In addition, pursuant to the Hanlon Termination Agreement, Mr. Hanlon is entitled to receive a total of $2,648,656, consisting of the present value of future base salary under the Hanlon Employment Agreement as determined under the Hanlon Termination Agreement in the sum of $1,303,076 and $1,345,580 in respect of the performance bonuses for fiscal years ending 1994 and 1995 payable under the Hanlon Employment Agreement, half of which was paid on October 31, 1993 and half of which will be paid upon the earlier of (i) the acceptance of a reorganization or recapitalization of RII by the requisite number and amount of RII's creditors voting on such restructuring or reorganization and (ii) April 15, 1995. In addition, Mr. Hanlon will receive a bonus from RII in the amount of $325,000 in connection with the reorganization or recapitalization of RII, payable prior to any bankruptcy filing by RII. Finally, Mr. Hanlon will receive a bonus of $300,000 upon the disposition of the Paradise Island Business. Accordingly, Mr. Hanlon would receive a total of $625,000 in connection with the Restructuring. The payment to be made to Mr. Hanlon with respect to the disposition of the Paradise Island Business may be subject to the approval of the Bankruptcy Court. Mr. Alvarez, a director of RII, also is the Chairman of Alvarez & Marsal, a financial advisory firm which RII has retained to provide it with advice regarding RII's financial alternatives, including the Restructuring. If the Requisite Acceptances are obtained, Alvarez & Marsal will receive a payment in the amount of $250,000 and 125,000 shares of RII Common Stock prior to any bankruptcy filing by RII. SOLICITATION AGENT Hill and Knowlton, Inc. ("Hill and Knowlton") will act as Solicitation Agent in connection with the Solicitation. Its telephone number is (212) 210-8850 (call collect). As part of its responsibilities as Solicitation Agent, Hill and Knowlton will tabulate all votes cast in connection with the Solicitation. All inquiries relating to the Solicitation should be directed to Hill and Knowlton at such telephone number. Requests for information or additional copies of this Information Statement/Prospectus or Ballots should be directed to Hill and Knowlton. All deliveries to Hill and Knowlton in its capacity as Solicitation Agent should be directed to one of the addresses set forth on the back cover page of this Information Statement/Prospectus. 60 Hill and Knowlton will receive reasonable and customary compensation for services rendered in connection with the Solicitation, will be reimbursed for reasonable out-of-pocket expenses and will be indemnified against certain expenses in connection therewith. OTHER ELEMENTS OF THE RESTRUCTURING The transactions described below will be effected upon consummation of the Restructuring. Each such transaction is provided for in the Plan. RIHF SENIOR FACILITY. The RIHF Senior Facility with one or more funds managed by Fidelity will be executed and delivered (although conditions precedent to funding may not have then been satisfied.) AMENDMENTS TO RII'S CERTIFICATE OF INCORPORATION AND BY-LAWS. Upon the consummation of the Restructuring and pursuant to the Plan, the Restated Certificate of Incorporation of RII will be amended (the "Amended RII Certificate of Incorporation") to provide for: (i) an increase in the authorized number of shares of RII Common Stock; (ii) the authorization and issuance of the RII Class B Common Stock; (iii) the authorization of preferred stock; (iv) the election of two-thirds of the entire RII Board of Directors by the holders of RII Common Stock (or following the occurrence of the Class B Triggering Event with respect to the New RIHF Junior Mortgage Notes one less than one-half of the entire RII Board of Directors); and (v) the election of one-third of the entire RII Board of Directors by the holders of RII Class B Common Stock (or following the occurrence of the Class B Triggering Event with respect to the New RIHF Junior Mortgage Notes, a majority of the entire RII Board of Directors). The form of the Amended RII Certificate of Incorporation is attached as Appendix C. Upon consummation of the Restructuring and pursuant to the Plan, the By-laws of RII will be amended (the "Amended RII By-laws") as necessary in connection with the Restructuring. The form of the Amended RII By-laws is attached as Appendix D. Pursuant to the Delaware General Corporation Law, the Amended RII Certificate of Incorporation and the Amended RII By-laws may be adopted upon confirmation of the Plan without further action by RII's directors or the holders of RII Common Stock. INTERIM MANAGEMENT AGREEMENT. If the SIHL Sale is not consummated on the Effective Date, then, at the election of PIRL, RII will enter into the Interim Management Agreement with PIRL to operate the Paradise Island Business. The Interim Management Agreement would have an initial term of one year and be renewable on a yearly basis thereafter. The annual management fee payable to the Company under the Interim Management Agreement would be 3% of gross revenues of the Paradise Island Business. PIRL may terminate the Interim Management Agreement for any reason upon 30 days' prior notice. In the event of such a termination, RII will be entitled to a termination fee of $1,000,000, in addition to the unpaid balance of the annual management fee actually earned through the date of termination. MANAGEMENT COMPENSATION ARRANGEMENTS. All existing compensation arrangements with management of the Company, except for the 1990 Stock Option Plan, will continue. Existing employment contracts with management of the Company are expected to be renewed in the ordinary course of business. As part of the Restructuring, the 1990 Stock Option Plan will be terminated and no further 1990 Stock Options will be issued. Existing holders of 1990 Stock Options will retain their options under the Plan. The exercise price of the 1990 Stock Options shall remain fixed at the existing exercise price, and shall not be altered. See "Management of RII". 1994 STOCK OPTION PLAN. In conjunction with the Restructuring, RII will adopt the 1994 Stock Option Plan for RII and its subsidiaries to attract, retain and motivate their officers, directors and key employees. To the extent that shareholder approval of the 1994 Stock Option Plan is required under Rule 16b-3 promulgated under the Exchange Act, if sufficient Acceptances are received from holders of RII Common Stock and Old Series Notes (including the related GRI Guaranty), RII intends to use 61 such Acceptances, along with the Confirmation Order, to constitute approval of the 1994 Stock Option Plan in compliance with Rule 16b-3. The form of the 1994 Stock Option Plan is attached as Exhibit C to the Plan. TRANSACTIONS RELATIVE TO SIHL SALE OR PIRL SPIN-OFF. On the Effective Date, the following will occur (amounts reflected are balances as of September 30, 1993; actual amounts to be effected will be balances as of the Effective Date): (1) GRI will assume the obligation of RIB to repay the intercompany debt owed by RIB to RIH ($50,000,000) plus accrued interest thereon and the intercompany debt owed by RIB to RII ($11,192,000). As a result of such assumptions, RIB will have no obligations to repay any intercompany debt. (2) If the SIHL Sale is consummated (or, with the consent of Fidelity and TCW (so long as the funds and accounts managed by them hold in the aggregate at least 20% of the outstanding Old Series Notes) if the PIRL Spin-Off is effected), GRI will distribute to its immediate parent, RII, all the outstanding capital stock of RIB that is owned by GRI. RIB is the holding company for the Paradise Island assets located in The Bahamas, which are held in the following corporations: (a) IHC; (b) PEL; (c) PIB; (d) PIL; (e) PBI; and (f) PSS. As a result of such distribution, RIB will be a first-tier subsidiary of RII. (3) Either: (A) pursuant to the Paradise Island Purchase Agreement, in exchange for 2,000,000 SIHL Series A Shares, representing 40% of the capital stock of SIHL to be outstanding after the SIHL Sale, and the SIHL Aggregate Cash Purchase Price, SIHL will purchase (i) from RII all the capital stock of RIB and (ii) directly or through subsidiaries the RII Real Estate Assets and substantially all the assets of the U.S. Paradise Island Subsidiaries and will assume substantially all the non-intercompany liabilities relating to such assets; or (B) if the SIHL Sale is not consummated on the Effective Date, (i) RII will contribute all the capital stock of RIB then directly owned by RII to the capital of PIRL, which was formed as a first-tier subsidiary of RII to effect the PIRL Spin-Off, in exchange for PIRL Ordinary Shares (which, when added to the PIRL Ordinary Shares already owned by RII, shall equal all the issued and outstanding PIRL Ordinary Shares which are to be distributed to the holders of the Old Series Notes on the Distribution Date) and (ii) subsidiaries of PIRL will acquire the RII Real Estate Assets and substantially all the assets of the U.S. Paradise Island Subsidiaries and will assume substantially all the non-intercompany liabilities relating to such assets. For a chart summarizing the ownership structure of RII, including RIB and its subsidiaries and the U.S. Paradise Island Subsidiaries, as of the date hereof and after giving effect to the Restructuring, see "Pre-and Post-Restructuring Ownership Structures". ISSUANCE OF PROMISSORY NOTES BY RIH TO RIHF. In order to effect the issuance of the RIH Promissory Note and the RIH Junior Promissory Note by RIH, which promissory notes will be held by the Collateral Agent as security for payment of the New Debt Securities, the following will occur on the Effective Date (amounts reflected are balances as of September 30, 1993; actual amounts to be effected will be balances as of the Effective Date): (1) RIH will distribute the RIH Promissory Note and the RIH Junior Promissory Note, secured by the RIH Mortgage and the RIH Junior Mortgage, respectively, to RII in repayment of the intercompany debt owed to RII by RIH ($51,325,000) and as a distribution to its shareholder. (2) RII will exchange the RIH Promissory Note and the RIH Junior Promissory Note, together with the related RIH Mortgage and RIH Junior Mortgage, for New RIHF Mortgage Notes and New RIHF Junior Mortgage Notes to be issued by RIHF. (3) The holders of Old Series Notes will receive the New RIHF Mortgage Notes and the New RIHF Junior Mortgage Notes and RIHF will assign to the Collateral Agent the RIH Promissory Note, the RIH Junior Promissory Note, the RIH Mortgage and the RIH Junior Mortgage. 62 (4) RII will contribute to GRI the intercompany obligation of GRI to RII ($51,388,000). (5) Upon termination and release of the RIH Pledge Agreement on the Effective Date, GRI will exchange with RIH the $325,000,000 of non-interest bearing RIH Notes for an amount of stock representing on a fully diluted basis 99.99% of the issued and outstanding common stock of RIH. SUBSIDIARY TRANSACTIONS. On the Effective Date, after the transactions described above have occurred, RII will contribute to the capital of GRI the remaining .01% of the issued and outstanding stock of RIH held by RII on the date hereof. RIH will become a wholly owned first-tier subsidiary of GRI and an indirect subsidiary of RII. RIH will then distribute to GRI, as a return of surplus, the intercompany debt owed by GRI to RIH ($50,000,000) plus accrued interest thereon. The other subsidiaries of RII not discussed above, I.E., TGC Holding Corp. ("TGC Holdings"), New Pier Operating Company, Inc. ("NPO"), and Ess Zee Corporation ("ESS"), will remain in place and will be unaffected by the Plan. GRIFFIN COMPENSATION ARRANGEMENTS. In September 1990, Merv Griffin entered into a License and Services Agreement, among Merv Griffin, Griffin Group and RII (the "Old Griffin Services Agreement"). Pursuant to the Old Griffin Services Agreement, Griffin Group granted the Company a non-exclusive license to use the name and likeness of Merv Griffin for purposes of advertising and promoting the Company's facilities and operations and Merv Griffin agreed to serve as Chairman of the Board of Directors of RII. In addition, Griffin Group agreed to provide to the Company the non-exclusive services of Merv Griffin, on a limited basis, to host or present shows in which he is a featured performer at the Company's facilities. Under the Old Griffin Services Agreement, the Company was not required to compensate the Griffin Group and the Company has not paid any compensation to the Griffin Group, or to Mr. Griffin directly, for Mr. Griffin's services to the Company under the Old Griffin Services Agreement. The term of the Old Griffin Services Agreement was for a period of two years, which expired on September 16, 1992. Pursuant to the New Griffin Services Agreement, which replaced the Old Griffin Services Agreement as of its expiration, the Griffin Group granted RII and RIH a non-exclusive license to use Merv Griffin's name and likeness for the purpose of advertising and promoting the Resorts Casino Hotel and the Paradise Island Business. Subject to the performance of their obligations, RII and RIH also were granted the non-exclusive services of Merv Griffin, as Chairman of the Board of Directors of RII and in other capacities, including without limitation spokesperson for RII and RIH. The New Griffin Services Agreement has a basic term of four years. Under certain circumstances, however, the New Griffin Services Agreement could remain in force for up to an additional year. The Griffin Group was entitled to receive from RII or RIH $4,100,000 upon execution of the New Griffin Services Agreement as compensation for the first two years of services. The Griffin Group is entitled to compensation in the amounts of $2,205,000 and $2,310,000 for the third and fourth years of such services, respectively. Additional prorated compensation also may be paid to the Griffin Group if the New Griffin Services Agreement continues in force longer than four years. RIH made the $4,100,000 payment for the first two years under the New Griffin Services Agreement in April 1993. Simultaneously, Merv Griffin made a partial prepayment of the Griffin Note in an equal amount to RII thereby reducing the principal amount of the Griffin Note to $7,523,333. RII then canceled the Griffin Note in exchange for the Griffin Group Note in the principal amount of $7,523,333. The Griffin Group Note is payable on demand and bears interest at the rate of 3% per year. The bank letter of credit securing the Griffin Note was released by RII. Merv Griffin has personally guaranteed payment of the Griffin Group Note. Under the New Griffin Services Agreement, RII and RIH have the right, at their option, to elect to satisfy any compensation obligation to the Griffin Group by reducing the outstanding amount of the Griffin Group Note. On September 17, 1993, RII made the $2,205,000 payment for the third year of the New Griffin Services Agreement by reducing the principal amount of the Griffin Group Note in an equal amount. 63 On or prior to the Effective Date, RII will pay $2,310,000 to the Griffin Group for the fourth year of the New Griffin Services Agreement also by reducing the principal amount of the Griffin Group Note in an equal amount. If for any reason the Griffin Group fails to fulfill its obligations under the New Griffin Services Agreement, it will be obligated to reimburse the Company for all amounts paid with respect to periods for which such obligations are not fulfilled. After payment of the $2,310,000 referenced above, but no later than the Effective Date, the Griffin Group will pay RII the balance of the Griffin Group Note (approximately $3,000,000); RII will distribute the proceeds of such payment to the holders of the Old Series Notes as part of Excess Cash. Payment in full of outstanding amounts under the Griffin Group Note is a condition to consummation of the Plan. The New Griffin Services Agreement also provides that, as additional consideration thereunder, the Griffin Group will be granted the Griffin Warrants. Finally, RII and RIH also will provide the Griffin Group and Merv Griffin with certain indemnification and insurance coverage and reimburse them for certain expenses incurred in connection with the New Griffin Services Agreement. Pursuant to the Restructuring, the New Griffin Services Agreement will remain in place. See "Description of Griffin Warrants". FRACTIONAL INTERESTS AND ODD-LOT HOLDINGS. Pursuant to the Plan, fractional shares of the New Equity Securities that would be distributable on the basis of the provisions of the Plan will not be issued or distributed. The New RIHF Mortgage Notes and the New RIHF Junior Mortgage Notes will be issued only in denominations of $1,000 and integral multiples thereof. As soon as practicable after the Effective Date, the disbursing agent for the holders of Old Series Notes will aggregate and sell all fractional amounts of the New Equity Securities, the New RIHF Mortgage Notes and the New RIHF Junior Mortgage Notes at then prevailing prices and distribute the net proceeds pro rata to the security holders entitled thereto. Notwithstanding the foregoing, no distribution of less than $25 in cash or less than five shares of RII Common Stock shall be made under the Plan. Such undistributed amount will become the property of RII. Undistributed RII Common Stock will be held as treasury shares. RISK FACTORS In evaluating the Solicitation, impaired creditors and impaired equity interest holders should consider, among other risks: (i) the continuing high leverage of the Company; (ii) the Company's recent net losses; (iii) the possible lack of a market for the New Debt Securities and the New Equity Securities; (iv) uncertainties relating to financial forecasts; (v) interests of certain persons in the Restructuring; (vi) the importance of the involvement of Merv Griffin in the affairs of the Company; (vii) certain Federal income tax considerations; (viii) certain bankruptcy and insolvency considerations; (ix) certain considerations related to original issue discount in the event of bankruptcy; (x) limitations on the Company's ability to incur additional senior debt; (xi) security holders' possible inability to realize value from the security for the New RIHF Mortgage Notes or the New RIHF Junior Mortgage Notes; (xii) the fact that Fidelity and TCW acted on their own behalf, and not as fiduciaries; (xiii) competition; (xiv) certain regulatory matters; (xv) the potential disqualification of security holders by the Casino Control Commission; (xvi) the new ownership of the Paradise Island Business; (xvii) if the PIRL Spin-Off shall be effected, the enforceability of civil liabilities against PIRL; (xvii) certain considerations regarding ownership of SIHL Series A Shares; (xviii) certain defaults by RII under the Old Series Note Indenture; and (xiv) if the SIHL Sale is not consummated and the PIRL Spin-Off occurs, the recent and continuing operating losses of the Paradise Island Business. See "Risk Factors". CERTAIN FEDERAL INCOME TAX CONSIDERATIONS The Company intends to take the position that the exchange of the Old Series Notes for the RII Common Stock and the RII Class B Common Stock will not be treated as the receipt of stock pursuant to a recapitalization as such term is defined in Section 368(a)(1)(E) of the Internal Revenue Code of 1986, as amended (the "Tax Code"). Accordingly, gain or loss will be recognized by a holder of Old 64 Series Notes as a result of the Restructuring to the extent that such holder's basis for his Old Series Notes exchanged is less than (or greater than) the sum of the respective fair market values of the New Debt Securities, the RII Common Stock, the RII Class B Common Stock, the SIHL Series A Shares, the SIHL Aggregate Cash Purchase Price, Excess Cash, Net Plan Deferred Cash and Net Plan Consummation Cash. See "Certain Federal Income Tax Considerations -- Exchange of Old Series Notes." The New RIHF Mortgage Notes may be, and the New RIHF Junior Mortgage Notes will be, issued with original issue discount ("OID"). Accordingly, holders may be required to include amounts in income in advance of the receipt of cash interest. See "Certain Federal Income Tax Considerations -- OID with Respect to the New Debt Securities." The Company expects that, as a result of the Restructuring, it will undergo an "ownership change" within the meaning of Tax Code Section 382; however, the Company believes that an exception available to corporations in chapter 11 will apply. See "Certain Federal Income Tax Considerations -- Tax Consequences to the Company -- Net Operating Loss Carryovers and Limitations." SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA The following tables set forth certain historical and pro forma consolidated financial data for RII and RIH. Certain historical financial data also are presented for RIB, consolidated with its subsidiaries, and the U.S. Paradise Island Subsidiaries on a combined basis. This group of companies is sometimes hereinafter referred to as the "PIRL Group". If the SIHL Sale is not consummated on the Effective Date and certain other conditions are satisfied or waived, the PIRL Spin-Off will be effected. The pro forma information presented for the PIRL Group assumes the PIRL Spin-Off occurs. Because the PIRL Spin-Off will result in RIB becoming a subsidiary of PIRL and other subsidiaries of PIRL acquiring the assets and related liabilities of the U.S. Paradise Island Subsidiaries and the RII Real Estate Assets relating to the Paradise Island Business (and the related non-intercompany liabilities), the pro forma information presented for this group is for PIRL consolidated with its subsidiaries. The historical financial data for the year 1990 is presented separately for the periods "Through August 31" and "From September 1" due to a change in control and accounting basis that occurred effective August 31, 1990 as a result of the confirmation of the Old Plan. The pro forma statement of operations data give effect to the Restructuring as if it had occurred on January 1, 1992. The pro forma balance sheet data give effect to the Restructuring as if it had occurred on September 30, 1993. The unaudited pro forma financial information is not necessarily indicative of future results or what the respective entities' financial position or results of operations would actually have been had the transactions occurred on the dates indicated. Such information should not be used as a basis to project results for any future periods. For additional information, see the Consolidated Financial Statements and the Combined Financial Statements and the notes thereto and "Pro Forma Financial Data" and the notes thereto.
HISTORICAL ------------------------------------------------------------- FOR THE YEAR ENDED DECEMBER 31, PRO FORMA -------------------------------------------- -------------------------------- FOR THE FOR THE 1990 THREE QUARTERS FOR THE THREE QUARTERS --------------------------- ENDED YEAR ENDED ENDED THROUGH FROM SEPTEMBER 30, DECEMBER 31, SEPTEMBER 30, AUGUST 31 SEPTEMBER 1 1991 1992 1993 1992 1993 ----------- ------------- ------ ------ --------------- -------------- --------------- (IN MILLIONS, EXCEPT PER SHARE DATA AND RATIOS) RII STATEMENT OF OPERATIONS DATA: Operating revenues............ $ 294.0 $ 129.6 $418.2 $436.9 $ 337.9 $ 270.6 $ 214.8 Depreciation.................. 20.0 6.2 23.8 25.3 20.9 11.5 10.3 Earnings (loss) from operations................... 13.5 (1.2) 16.0 21.5 20.7 25.6 22.5 Interest income (expense), net (a).......................... 1.9 (12.3) (58.4) (73.5) (73.2) (23.9) (19.5) Recapitalization costs (b).... (187.0) (2.8) (4.9) Earnings (loss) before income taxes and extraordinary item......................... (171.6) (13.5) (42.4) (54.8) (57.4) 1.7 3.0 Extraordinary item (b)........ 429.8 Net earnings (loss)........... 258.2 (13.5) (41.6) (53.5) (58.4) 3.0 2.0 Earnings (loss) per share (c).......................... (.68) (2.07) (2.65) (2.90) .08 .05 Ratio of earnings to fixed charges (d).................. -- -- -- -- -- 1.1 1.1
65
SEPTEMBER 30, 1993 ------------------------ HISTORICAL PRO FORMA ----------- ----------- (IN MILLIONS, EXCEPT PER SHARE DATA) RII BALANCE SHEET DATA: Cash and cash equivalents (e)............................................................. $ 71.0 $ 20.0 Net property and equipment................................................................ 454.1 277.4 Total assets.............................................................................. 586.6 328.9 Current maturities of long-term debt (f).................................................. 429.5 0.1 Long-term debt, excluding current maturities (f).......................................... 84.5 232.0 Shareholders' equity (deficit)............................................................ (64.6) 4.5 Book value per share...................................................................... (3.21) .12 - ------------------------------ (a) Amounts presented include amortization of debt discount. During the period through August 31, 1990, RII was in bankruptcy and did not accrue interest or amortize discounts or issuance costs on its public debt. (b) See Note 2 of Notes to Consolidated Financial Statements of RII for a discussion of these items in 1990. (c) For the period through August 31, 1990 there was a sole shareholder of RII. Accordingly, no per share data is disclosed for that period. (d) The ratios of earnings to fixed charges were computed by dividing earnings available for fixed charges (earnings before income taxes and extraordinary item, adjusted for interest expense, amortization of debt discount and one-third of rent expense) by fixed charges. Fixed charges include interest expense, amortization of debt discount and one-third of rent expense. Earnings were insufficient to cover fixed charges by $171,594,000 for the period through August 31, 1990; $13,531,000 for the period from September 1, 1990; $42,402,000 for 1991; $54,802,000 for 1992; and $57,370,000 for the three quarters ended September 30, 1993. (e) Excludes restricted cash equivalents. (f) Amounts are net of unamortized discounts.
HISTORICAL ------------------------------------------------------------ FOR THE YEAR ENDED DECEMBER 31, PRO FORMA ------------------------------------------- -------------------------------- FOR THE FOR THE 1990 THREE QUARTERS FOR THE THREE QUARTERS --------------------------- ENDED YEAR ENDED ENDED THROUGH FROM SEPTEMBER 30, DECEMBER 31, SEPTEMBER 30, AUGUST 31 SEPTEMBER 1 1991 1992 1993 1992 1993 ------------ ------------ ------ ------ --------------- -------------- --------------- (IN MILLIONS, EXCEPT RATIOS) RIH STATEMENT OF OPERATIONS DATA: Operating revenues................. $ 158.8 $ 76.2 $247.5 $262.7 $ 208.8 $ 262.7 $ 208.8 Depreciation....................... 10.7 1.9 9.1 11.4 10.3 11.4 10.3 Earnings from operations........... 3.4 2.3 14.8 21.0 15.8 21.0 15.8 Interest income (expense), net (g)........................... 5.3 2.7 7.0 7.3 5.5 (18.0) (13.5) Recapitalization costs (h)......... (119.8) (.9) (1.6) Affiliated bad debt write-off (h)............................... (99.0) Earnings (loss) before income taxes and extraordinary item............ (210.1) 5.0 21.8 27.4 19.7 3.0 2.3 Extraordinary item (h)............. (17.3) Net earnings (loss)................ (227.4) 5.0 13.1 16.4 19.3 3.0 1.9 Ratio of earnings to fixed charges (i)............................... -- 14.2 15.5 21.5 23.3 1.2 1.2
SEPTEMBER 30, 1993 ------------------------ HISTORICAL PRO FORMA ----------- ----------- (IN MILLIONS) RIH BALANCE SHEET DATA: Cash and cash equivalents................................................................. $ 30.8 $ 15.0 Net property and equipment................................................................ 166.4 166.4 Total assets.............................................................................. 275.4 209.0 Current maturities of notes payable to affiliate and other long-term debt................. 325.1 .1 Notes payable to affiliate and other long-term debt....................................... -- 147.6 Shareholder's equity (deficit)............................................................ (145.1) 17.3 - ------------------------------ (g) Pro forma amounts include amortization of debt discount. (h) See Note 2 of Notes to Consolidated Financial Statements of RIH for a discussion of these items in 1990. (i) The ratios of earnings to fixed charges were computed by dividing earnings available for fixed charges (earnings before income taxes and extraordinary item, adjusted for interest expense and one-third of rent expense) by fixed charges. Fixed charges include interest expense and one-third of rent expense. Earnings were insufficient to cover fixed charges by $210,129,000 for the period through August 31, 1990.
66
HISTORICAL -------------------------------------------------------------- FOR THE YEAR ENDED DECEMBER 31, PRO FORMA --------------------------------------------- -------------------------------- FOR THE FOR THE 1990 THREE QUARTERS FOR THE THREE QUARTERS ---------------------------- ENDED YEAR ENDED ENDED THROUGH FROM SEPTEMBER 30, DECEMBER 31, SEPTEMBER 30, AUGUST 31 SEPTEMBER 1 1991 1992 1993 1992 1993 ------------ ------------- ------ ------ --------------- -------------- --------------- (IN MILLIONS, EXCEPT PER SHARE DATA) PIRL GROUP STATEMENT OF OPERATIONS DATA: Operating revenues............ $ 129.4 $ 50.9 $163.2 $166.4 $ 123.0 $ 166.4 $ 123.0 Depreciation.................. 9.0 4.3 14.6 13.8 10.6 9.0 6.9 Earnings (loss) from operations................... 8.0 (6.2) (5.8) (5.7) (3.1) (4.5) (2.0) Interest income (expense), net.......................... (3.8) (2.1) (6.6) (6.5) (4.8) .2 .3 Recapitalization costs (j).... (41.3) (1.1) (1.7) Affiliated bad debt write-off (j).......................... (2.3) Net earnings (loss)........... (39.4) (8.3) (12.4) (13.3) (9.6) (4.3) (1.7) Earnings (loss) per share (k).......................... (.86) (.34)
SEPTEMBER 30, 1993 ------------------------ HISTORICAL PRO FORMA ----------- ----------- (IN MILLIONS, EXCEPT PER SHARE DATA) PIRL GROUP BALANCE SHEET DATA: Cash and cash equivalents (l)............................................................. $ 12.9 $ 12.1 Net property and equipment................................................................ 176.6 112.0 Total assets.............................................................................. 211.5 143.9 Long-term debt............................................................................ .2 .2 Shareholders' equity...................................................................... 104.1 125.0 Book value per share (k).................................................................. 25.00 - ------------------------------ (j) See Note 2 of Notes to Combined Financial Statements of the PIRL Group for a discussion of these items in 1990. (k) For historical presentation, members of the combined PIRL Group are directly or indirectly wholly owned subsidiaries of RII. Accordingly, no per share data is disclosed on a historical basis. Pro forma per share data was calculated assuming 5,000,000 shares were issued to holders of the Old Series Notes in accordance with the Plan. (l) Excludes restricted cash equivalents.
MARKET PRICES OF OLD SERIES NOTES AND RII COMMON STOCK The Old Series Notes and the RII Common Stock are listed and traded on the AMEX. The following table sets forth, for the periods listed, the high and low trading price on the AMEX for each $100 principal amount of Old Series A Notes, for each $100 principal amount of Old Series B Notes and for each share of RII Common Stock.
OLD OLD RII SERIES A SERIES B COMMON NOTES NOTES STOCK ------------------ ------------------ ------------------ FISCAL YEARS HIGH LOW HIGH LOW HIGH LOW ------------------------- ------- ------- ------- ------- ------- ------- 1991: First Quarter............ 48 7/8 34 54 35 2 3/8 5/8 Second Quarter........... 55 44 55 51 2 1 3/8 Third Quarter............ 58 52 3/4 62 54 1/8 2 1 1/2 Fourth Quarter........... 62 56 63 3/4 57 1/2 1 5/8 1 1992: First Quarter............ 76 58 75 58 3/4 2 3/4 1 1/4 Second Quarter........... 70 1/4 63 73 1/2 65 2 3/8 1 Third Quarter............ 68 1/2 60 1/2 69 3/4 60 1/2 1 1/4 3/4 Fourth Quarter........... 62 50 1/2 63 49 1/2 1 1/4 11/16 1993: First Quarter............ 68 56 1/2 67 3/4 55 1 1/8 13/16 Second Quarter........... 74 60 74 59 1/2 3 7/8 13/16 Third Quarter............ 77 69 76 68 1/4 2 3/4 1 9/16 Fourth Quarter........... 72 66 72 64 1/2 2 1/8 1 3/8 1994: First Quarter (through January,1994)...........
67 On January 4, 1994, the last trading day prior to the date of this Information Statement/ Prospectus for which closing prices were available, the closing prices on the AMEX for each $100 principal amount of Old Series A Notes, for each $100 principal amount of Old Series B Notes and for each share of RII Common Stock were $70.00, $69.75 and $1.6875, respectively. No cash dividends on the RII Common Stock were paid during any of the periods listed above. MARKET AND TRADING The Company will apply to have the New RIHF Mortgage Notes, the Units comprised of the New RIHF Junior Mortgage Notes and the RII Class B Common Stock, the RII Common Stock and (if issued) the PIRL Ordinary Shares listed on the AMEX. It is a condition to consummation of the Plan that such securities be listed on a national securities exchange or approved for quotation on the Nasdaq National Market (subject to official notice of issuance). However there can be no assurance that an active trading market for any such securities will develop on the AMEX, the Nasdaq National Market or otherwise, and no assurance can be given as to the price at which any such securities might trade. See "Risk Factors -- Market for New Debt Securities and New Equity Securities". The Company has been informed that SIHL will apply to have the SIHL Series A Shares (if issued) listed on the Nasdaq National Market; such listing is a condition to the SIHL Sale and to consummation of the Plan. For information regarding the trading market for the SIHL Series A Shares, see the accompanying SIHL Prospectus. 68 RISK FACTORS IN CONSIDERING WHETHER OR NOT TO VOTE TO ACCEPT THE PLAN, EACH IMPAIRED CREDITOR AND EQUITY INTEREST HOLDER SHOULD CAREFULLY CONSIDER THE FOLLOWING FACTORS, TOGETHER WITH ALL OF THE OTHER INFORMATION CONTAINED IN THIS INFORMATION STATEMENT/PROSPECTUS. FOR INFORMATION WITH RESPECT TO SIHL, THE SIHL SALE, THE PARADISE ISLAND PURCHASE AGREEMENT AND THE SIHL SERIES A SHARES, REFERENCE IS MADE TO THE ACCOMPANYING SIHL PROSPECTUS RELATING TO THE SIHL SERIES A SHARES. RII HAS SUPPLIED CERTAIN INFORMATION REGARDING THE PARADISE ISLAND BUSINESS (SUCH AS IS FOUND IN RII'S REPORTS FILED WITH THE COMMISSION), AS WELL AS CERTAIN INFORMATION CONCERNING THE RESTRUCTURING, TO SIHL SPECIFICALLY FOR ITS USE IN THE PREPARATION OF THE SIHL PROSPECTUS (AND THE RELATED REGISTRATION STATEMENT FILED BY SIHL WITH THE COMMISSION UNDER THE SECURITIES ACT). RII AND ITS ADVISERS DISCLAIM ANY RESPONSIBILITY FOR THE ACCURACY, COMPLETENESS, NATURE AND FORM OF PRESENTATION OF ANY INFORMATION CONTAINED IN THE SIHL PROSPECTUS (AND RELATED REGISTRATION STATEMENT), EXCEPT THAT RII HAS MADE IN THE PARADISE ISLAND PURCHASE AGREEMENT CERTAIN REPRESENTATIONS AND WARRANTIES TO SIHL AS TO THE ACCURACY OF THE INFORMATION SUPPLIED BY RII SPECIFICALLY FOR INCLUSION IN THE SIHL PROSPECTUS (AND RELATED REGISTRATION STATEMENT). CONTINUING HIGH LEVERAGE; FUTURE REFINANCINGS The Company is highly leveraged. Although completion of the Restructuring will reduce significantly the Company's debt obligations, the Company will remain highly leveraged following the Restructuring. The Company had approximately $482,000,000 principal amount of publicly issued recourse indebtedness at October 15, 1993 (I.E., not including the Showboat Notes). After giving effect to the Restructuring, the Company's estimated aggregate publicly issued recourse indebtedness would total approximately $160,000,000, assuming no borrowing is made under the RIHF Senior Facility. The Company's high leverage poses substantial risks to holders of the Company's debt and equity securities. Debt service on the New Debt Securities is premised solely on cash flows generated from the continued operation of the Resorts Casino Hotel. The Company's management believes that, following the completion of the Restructuring, the Company will have sufficient cash flow from operations to pay interest on all its outstanding debt as those payments become due. There can be no assurance that the Company will generate sufficient cash from operations to repay, when due, the principal amount of the New RIHF Mortgage Notes maturing in 2003, the principal amount of the New RIHF Junior Mortgage Notes maturing in 2004 or the principal amount of the Showboat Notes maturing in 2000. As a result, the Company may be required to refinance such amounts as they become due and payable. While the Company believes that it will be able to refinance such amounts, there can be no assurance that any such refinancing would be consummated or, if consummated, would be in an amount sufficient to repay such obligations, particularly in light of the Company's high level of debt. If the Company is unable to effectuate such refinancings or renewals in the ordinary course of business, it may be required to sell equity interests in the Company. The sale of additional equity interests in the Company could result in substantial dilution of the interests of the Company's existing equity holders. There can be no assurance that such sales would be consummated or, if consummated, would be in an amount sufficient to repay such obligations in full. The failure to raise sufficient amounts of capital from such sales could ultimately result in the Company's inability to meet its debt obligations, including its obligations under the New Debt Securities. RECENT NET LOSSES RII. The Company experienced net losses of $41,571,000 and $53,454,000 in its fiscal years ended December 31, 1991 and 1992, respectively, and $58,370,000 for the three quarters ended September 30, 1993. In addition, the Company's earnings before fixed charges were inadequate to 69 cover fixed charges by $42,402,000, $54,802,000 and $57,370,000 for the fiscal years ended December 31, 1991 and 1992, and the three quarters ended September 30, 1993, respectively. The Company's recent net losses and its liquidity problems make it extremely unlikely that the Company will be able, unless it is able to consummate the Restructuring, to continue as a going concern beyond April 15, 1994 when the Old Series Notes mature. PARADISE ISLAND BUSINESS. The PIRL Group experienced net losses of $12,399,000 and $13,257,000 in its fiscal years ended December 31, 1991 and 1992, respectively, and $9,616,000 for the three quarters ended September 30, 1993. LACK OF MARKET FOR NEW DEBT SECURITIES AND NEW EQUITY SECURITIES The New Debt Securities are new issues of securities for which there currently is no market. If the New Debt Securities are traded after their initial issuance, their trading price will depend on a number of factors beyond RII's control, including (i) the number of holders thereof, (ii) prevailing interest rates and the market for similar securities, (iii) a possible belief that the New Debt Securities bear interest at a rate insufficient to compensate investors for the risks inherent in owning the New Debt Securities, (iv) a risk that an active trading market in the New Debt Securities may not develop and (v) volatility in the market for "high yield" securities such as the New Debt Securities. The Company will apply to have the New RIHF Mortgage Notes, the Units comprised of the New RIHF Junior Mortgage Notes and the RII Class B Common Stock, the RII Common Stock and (if issued) the PIRL Ordinary Shares listed on the AMEX. It is a condition to consummation of the Plan, unless waived, that such securities be listed on a national securities exchange or approved for quotation on the Nasdaq National Market (subject to official notice of issuance). However, there can be no assurance that an active trading market for any such securities will develop on the AMEX, the Nasdaq National Market or otherwise, and no assurance can be given as to the price at which any such securities might trade. Factors such as quarterly fluctuations in the financial and operating results of the Company, negative announcements by the Company or others, and developments affecting the Company, its customers or the gaming industry generally, could cause the market price of such securities to fluctuate substantially. The Company has been informed that SIHL will apply to have the SIHL Series A Shares (if issued) listed on the Nasdaq National Market; such listing is a condition to the SIHL Sale and to consummation of the Plan. For information regarding the trading market for the SIHL Series A Shares, see the accompanying SIHL Prospectus. RISKS RELATING TO THE FORECASTS The Company has prepared forecasts of certain financial data for the five-year period following the Restructuring. The forecasts represent the Company's best estimate of the most likely results of its operations and financial position following the Restructuring. Such forecasts are based on numerous assumptions with respect to industry performance, general business and economic conditions and other matters, such as interest rates and the regulatory climate, that are beyond the Company's control. Because the Paradise Island Business will not be continued by the Company after the Restructuring, no forecasts for the Paradise Island Business have been prepared by the Company. If the PIRL Spin-Off occurs, the Paradise Island Business will be owned by the holders of the Old Series Notes. Any forecasts for the Paradise Island Business will be prepared by the new management of the Paradise Island Business. The recent net losses and liquidity problems relative to the PIRL Group, including the scarcity of cash for necessary capital improvements, create significant uncertainty regarding the ability of the PIRL Group to continue to operate the Paradise Island Business as a going concern in its present form beyond April 1994. See "Risk Associated with the Paradise Island Business." Holders of Old Series Notes and RII Common Stock are cautioned not to place undue reliance on the forecasts. See "The Restructuring -- Financial Forecasts for the Company". In connection with the Old Plan, the Company prepared and publicly disseminated forecasts of certain financial data for fiscal 1990 through fiscal 1994, including net revenues, operating expenses, 70 operating income and earnings before interest and taxes, describing the projected financial performance of the Company after consummation of the Old Plan. The Company's actual results varied significantly from the forecasted results prepared in connection with the Old Plan due, in large part, to the Company's inability to sell the Paradise Island Business at a satisfactory price. INTERESTS OF CERTAIN PERSONS IN THE RESTRUCTURING The Company believes that the terms of the Restructuring are the result of arm's-length negotiations between the Company and representatives of Fidelity and TCW. In addition, discussions were held with representatives of SIHL regarding the Paradise Island Purchase Agreement and with the Griffin Group regarding the New Griffin Services Agreement. In April 1993, RII, RIH and the Griffin Group executed the New Griffin Services Agreement to be effective as of September 17, 1992, the termination date of the Old Griffin Services Agreement. Merv Griffin is a shareholder and serves as a director and the Chairman of the Board of RII; the Griffin Group is a company controlled by Merv Griffin. The New Griffin Services Agreement will be assumed by RII and remain in place after the Effective Date. The New Griffin Services Agreement has a four-year term. Under certain circumstances, however, the New Griffin Services Agreement could remain in force up to an additional year. Pursuant to the New Griffin Services Agreement, Mr. Griffin and the Griffin Group will promote the operations of the Company in Atlantic City and The Bahamas. Fees have already been paid to the Griffin Group for the first three years of the term of the New Griffin Services Agreement. In conjunction with the negotiations among Fidelity, TCW and the Griffin Group relating to the Griffin Group's performance under the New Griffin Services Agreement, certain modifications to the New Griffin Services Agreement were negotiated. As a result of these modifications, the following will occur: (1) on or prior to the Effective Date, RII will pay $2,310,000 to the Griffin Group for the fourth year of the New Griffin Services Agreement by reducing the principal amount of the Griffin Group Note in an equal amount; (2) subsequent to such payment, but no later than the Effective Date, the Griffin Group will pay the balance of the Griffin Group Note (approximately $3.0 million) to RII; and (3) on the Distribution Date, RII will issue to the Griffin Group the Griffin Warrants to purchase 4,665,000 shares RII Common Stock, or approximately 10% of the RII Common Stock on a fully diluted basis. The Griffin Warrants will be exercisable on the Effective Date at an exercise price of the lesser of $1.875 and the average closing price of RII Common Stock for the 20 trading days following the Effective Date. In conjunction with the negotiations among Fidelity, TCW and the Griffin Group, the Griffin Group negotiated a reduction in the exercise price for the Griffin Warrants from the original exercise price set forth in the New Griffin Services Agreement. The exercise prices prior to such amendment were based upon percentages of the average closing price of the RII Common Stock during the 20 trading days following the Effective Date (with certain minimum prices) and ranged from the greater of $1.00 or 125% of such price as to the first 25% of the Griffin Warrants up to the greater of $1.75 or 200% of such price as to the final 25% of the Griffin Warrants. The change in the exercise price was approved by RII, Fidelity and TCW in order to provide additional incentives to the Griffin Group under the New Griffin Services Agreement for its efforts to improve the operations and value of RII. Consequently, Mr. Griffin may have interests which conflict with those of RII and the interests of the holders of the Old Series Notes, of RII Common Stock (including Mr. Griffin in his capacity as a shareholder of RII) and of 1990 Stock Options. Mr. David Hanlon, the President and Chief Executive Officer of RII until October 31, 1993, owns fully vested 1990 Stock Options to purchase 1,094,800 shares of RII Common Stock (or 5.15% of the outstanding shares of the RII Common Stock assuming such options were exercised). RII entered into the Hanlon Termination Agreement in an effort to effectuate an orderly restructuring of its senior management. Pursuant to the Hanlon Employment Agreement, Mr. Hanlon is entitled to $850,000 earned under the Hanlon Employment Agreement but not yet paid as of October 31, 1993. In addition, pursuant to the Hanlon Termination Agreement, Mr. Hanlon is entitled to receive a total of $2,648,656, consisting of the present value of future base salary under the Hanlon Employment Agreement as determined under the Hanlon Termination Agreement in the sum of $1,303,076 and $1,345,580 in respect of the performance bonuses for fiscal years ending 1994 and 1995 payable under 71 the Hanlon Employment Agreement, half of which was paid on October 31, 1993 and half of which will be paid upon the earlier of (i) the acceptance of a reorganization or recapitalization of RII by the requisite number and amount of RII's creditors voting on such restructuring or reorganization and (ii) April 15, 1995. In addition, Mr. Hanlon will receive a bonus from RII in the amount of $325,000 in connection with the reorganization or recapitalization of RII, payable prior to any bankruptcy filing by RII. Finally, Mr. Hanlon will receive a bonus of $300,000 upon the disposition of the Paradise Island Business. Accordingly, Mr. Hanlon would receive a total of $625,000 in connection with the Restructuring. The payment to be made to Mr. Hanlon with respect to the disposition of the Paradise Island Business may be subject to the approval of the Bankruptcy Court. Consequently, Mr. Hanlon may have interests which conflict with those of RII and the interests of the holders of the Old Series Notes, of RII Common Stock and of 1990 Stock Options. Mr. Antonio Alvarez is a director of RII. Mr. Alvarez is also the Chairman of Alvarez & Marsal, a financial advisory firm which RII has retained to provide it with advice regarding RII's financial alternatives, including the Restructuring. RII paid Alvarez & Marsal a monthly fee of $50,000 for such advice amounting to $300,000 as of September 1, 1992, at which time RII's payment of such fees was suspended. If the Requisite Acceptances are obtained, Alvarez & Marsal will receive $250,000 and 125,000 shares of RII Common Stock prior to any bankruptcy filing by RII. Consequently, Mr. Alvarez may have interests which conflict with the interests of RII and the interests of the holders of the Old Series Notes, of RII Common Stock and of 1990 Stock Options. Pursuant to the Restructuring, all existing compensation arrangements with members of the Company's management will continue after the Effective Date. As part of the Plan, the 1990 Stock Option Plan will be terminated and the 1994 Stock Option Plan will be adopted. Holders of outstanding 1990 Stock Options will retain their 1990 Stock Options and the exercise price therefor will remain fixed at the exercise price at the time of grant. See "Management of RII -- Executive Compensation -- Employment Agreements; Termination of Employment and Change in Control Arrangements". INVOLVEMENT OF MERV GRIFFIN The involvement of Merv Griffin in the affairs of the Company is believed to be extremely important to its future prospects. The Company believes Merv Griffin's participation enhances and projects a high positive profile for the Company's operations, and helps to distinguish the Company from its competitors. There can be no assurance that Merv Griffin's involvement will continue beyond September 17, 1996, the termination date of the New Griffin Services Agreement. No later than the Effective Date, the Griffin Group will have received advance payment of the full amount due under the New Griffin Services Agreement, but will be required to reimburse the Company for any advance payment that may not have been earned if the Griffin Group fails to perform its obligations thereunder through September 17, 1996. Under certain circumstances, the New Griffin Services Agreement could remain in force up to an additional year. See "Summary -- Other Elements of the Restructuring -- Griffin Compensation Arrangements". CERTAIN FEDERAL INCOME TAX CONSIDERATIONS TAXATION OF THE EXCHANGE OF OLD SERIES NOTES. The Company intends to take the position that the exchange (the "Exchange") of Old Series Notes for New Debt Securities, RII Common Stock, RII Class B Common Stock, SIHL Series A Shares and the SIHL Aggregate Cash Purchase Price (or if the SIHL Sale is not consummated on the Effective Date, PIRL Ordinary Shares), Excess Cash and non-transferable rights to receive payments from Net Reserved Cash, if any, Net Plan Consummation Cash, if any, and Deferred Cash will be a taxable event for exchanging holders upon which gain or loss will be recognized, except that a holder of Old Series Notes will recognize ordinary income on the exchange to the extent a portion of the consideration is treated as received in respect of accrued interest that the holder has not included in income. If the Exchange is treated as a recapitalization, no loss would be recognized by any holder of the Old Series Notes, and gain, if any, would be recognized 72 only to the extent a holder receives "boot" (E.G., cash and property other than stock or securities of the Company) in the Exchange that is not deemed to be in payment of accrued interest. See "Certain Federal Income Tax Considerations -- Exchange of Old Series Notes". ORIGINAL ISSUE DISCOUNT. The New RIHF Junior Mortgage Notes will be, and the New RIHF Mortgage Notes may be, issued with original issue discount. A holder of such Notes may be required for Federal income tax purposes to report interest income at a rate that is higher than the stated interest rate and in advance of the receipt of cash interest. See "Certain Federal Income Tax Considerations -- OID With Respect to the New Debt Securities". AVAILABILITY OF NET OPERATING LOSSES. Because the exchange of the Old Series Notes for the New Debt Securities and New Equity Securities will occur pursuant to the Plan in the chapter 11 cases, the Company does not expect to be required to include in its gross income any cancellation of debt ("COD") income realized by reason of the consummation of the Plan. Moreover, the Company expects that it will not be required to reduce any of its tax attributes as a result of such cancellation of debt. If, however, the stock-for-debt exception were determined not to apply to the exchange of RII Common Stock for a portion of the Old Series Notes, the Company would be required to reduce certain of its tax attributes (including net operating loss carryforwards) by the amount of COD income arising from such exchange that would be excluded from the Company's gross income under Section 108 of the Tax Code. The stock-for-debt exception expires on December 31, 1994. Therefore, if the Effective Date does not occur on or before December 31, 1994, the stock-for-debt exception will not apply to the exchange of RII Common Stock. See "Certain Federal Income Tax Considerations -- Tax Consequences to the Company -- Cancellation of Indebtedness". The Company expects that, as a result of the Restructuring, it will undergo an "ownership change" within the meaning of Section 382 of the Tax Code; however, the Company believes that an exception available to corporations in title 11 cases will apply (and the Company does not intend to elect for such exception not to apply). Assuming such exception applies, the amount of the Company's net operating loss ("NOL") carryforwards will be reduced to a certain extent, but such remaining NOLs will not be subject to an annual use limitation (except for NOLs that arose prior to October 1, 1990, which are already subject to an annual use limitation). There can be no assurance, however, that the Internal Revenue Service (the "Service") will not successfully challenge the applicability of such exception. Moreover, the Federal income tax returns of the Company for the periods in which the NOLs were generated have not been examined by the Service. Therefore, if the Service were to determine that (i) no ownership change occurred in connection with the Restructuring, with the likely result that an ownership change would occur shortly after the Restructuring when the exception available to corporations in title 11 cases would not be available, (ii) an ownership change did occur, but the exception to corporations in title 11 cases does not apply, or (iii) all or a portion of the NOLs were to be disallowed for any reason, the ability of the Company to offset future taxable income with NOLs remaining after the consummation of the Restructuring could be substantially limited. See "Certain Federal Income Tax Considerations - -- Tax Consequences to the Company -- Net Operating Loss Carryovers and Limitations". CERTAIN BANKRUPTCY AND INSOLVENCY CONSIDERATIONS Use of a bankruptcy case to implement the Restructuring also entails risks that should be considered carefully. GENERAL. If the Requisite Acceptances are received, RII and GRI currently intend to commence prepackaged bankruptcy cases and to seek to confirm the Plan using the Requisite Acceptances. See "The Solicitation -- Procedure for Voting on the Plan" and "The Plan -- Confirmation of the Plan". RII and GRI believe that obtaining the Requisite Acceptances before commencing bankruptcy cases would minimize disputes during such cases, would substantially reduce the time and costs of such cases and would afford the best opportunity to accomplish the Restructuring. If RII and GRI do not obtain the Requisite Acceptances prior to the Voting Deadline, RII and GRI will be forced to evaluate options then available to them. 73 One such option is to conduct another solicitation with respect to the Plan. Pursuant to the Paradise Island Purchase Agreement, RII and GRI have committed, notwithstanding the failure to obtain the Requisite Acceptances, to continue to pursue confirmation of the Plan until the Paradise Island Purchase Agreement is terminated. This commitment could require RII and GRI to conduct a further solicitation with respect to the Plan until December 31, 1994. Because the Paradise Island Purchase Agreement can be terminated by SIHL if RII and GRI bankruptcy cases are not commenced by February 15, 1994, RII and GRI might conduct such solicitation after filing a chapter 11 case. RII's and GRI's failure to abide by the terms of the Paradise Island Purchase Agreement would, under certain circumstances give rise to a claim by SIHL for breach of such agreement and entitle SIHL to reimbursement from the SIHL Buyer Expense Escrow. Moreover, such failure, if not approved by Fidelity and TCW, may relieve Fidelity and TCW of their obligations under the Bondholders Support Agreement. Other options available to RII and GRI if the Requisite Acceptances are not obtained include submission of a revised prepackaged plan of reorganization and filing for bankruptcy protection under the Bankruptcy Code without a pre-approved or consensual plan of reorganization. There can be no assurance that a restructuring other than pursuant to the Plan will result in a reorganization of RII and GRI rather than a liquidation, or that any reorganization would be on terms as favorable to the holders of Old Series Notes (and beneficiaries of the related GRI Guaranty endorsed thereon), the holders of the RII Common Stock and the holders of 1990 Stock Options as the terms of the Plan. If a liquidation or non-consensual reorganization were to occur, there is a substantial risk that (i) there would be no value available for distribution to holders of the RII Common Stock and holders of 1990 Stock Options, (ii) there would be much less value available for distribution to holders of Old Series Notes and (iii) the holders of Old Series Notes might receive a substantially smaller recovery on their claims than that proposed under the Plan. See "The Plan -- Alternatives to Consummation of the Plan." LIQUIDATION ANALYSIS. For purposes of comparison with the distributions under the Plan, RII and GRI have prepared an analysis of estimated recoveries in a liquidation under chapter 7 of the Bankruptcy Code (the "Liquidation Analysis"). The Liquidation Analysis is attached as Appendix B, and includes a description of procedures followed and the assumptions and qualifications used in connection with the Liquidation Analysis. A general discussion of the Liquidation Analysis is included under "The Plan -- Confirmation of the Plan -- Best Interests Test". Confirmation of the Plan requires a finding that each non-accepting creditor and equity interest holder receive as much under the Plan as in a chapter 7 liquidation of RII and GRI. RII and GRI believe that the Liquidation Analysis demonstrates this result. The Bankruptcy Court, however, may reach a differing conclusion. The Liquidation Analysis represents the Company's best estimate of the most likely outcome in the event of a liquidation of the Company under chapter 7 of the Bankruptcy Code. It is based on numerous assumptions regarding factors which may be beyond the Company's control. Holders of Old Series Notes and RII Common Stock are cautioned not to place undue reliance on the Liquidation Analysis. SECOND BANKRUPTCY FILING. The Plan provides for a restructuring of the Old Series Notes issued in connection with the Old Plan. No provision of the Bankruptcy Code expressly limits the ability of a debtor to file a second chapter 11 case. In addition, the United States Supreme Court, in an analogous context involving the filing of a second chapter 13 case, refused to impose a limitation on the ability of the debtor to file a second chapter 13 case absent an explicit limitation in the Bankruptcy Code. See JOHNSON V. HOME STATE BANK, 111 S. Ct. 2150 (1991); IN RE TARAS, 136 B.R. 941, 954 (Bankr. E.D. Pa. 1992). The court in IN RE JARTRAN, 886 F.2d 859 (7th Cir. 1989) found that a second chapter 11 filing was permissible so long as it was filed in good faith. The court indicated that the second filing could satisfy the good faith requirement if the second chapter 11 filing was for the purpose of effecting a liquidation rather than a reorganization involving a restructuring of the debt treated in the prior chapter 11 filing. A number of other courts also have held that a second chapter 11 filing is in good faith if the 74 filing is the result of unforeseen changed circumstances. See, E.G., ELMWOOD DEVELOPMENT COMPANY V. GENERAL ELECTRIC PENSION TRUST, 964 F.2d 508 (5th Cir. 1992); IN RE CASA LOMA ASSOCS.,122 B.R. 814 (Bankr. N.D. Ga. 1991). Several courts have limited the ability of a debtor that has emerged from chapter 11 to file a second chapter 11 case to modify obligations undertaken in the reorganization plan confirmed in the first case. See, E.G., IN RE JARTRAN, 886 F.2d 859 (7th Cir. 1989); IN RE NORTHHAMPTON CORP., 59 B.R. 963 (E.D. Pa. 1984); IN RE AT OF MAINE, INC.,56 B.R. 55 (Bankr. D.Me. 1985). The NORTHHAMPTON and AT OF MAINE courts found that a second chapter 11 filing after substantial consummation of a plan confirmed in a prior chapter 11 case was PER SE impermissible. Courts which have held that there are limitations on the ability of a debtor to make a second chapter 11 filing have relied principally on the provisions of section 1127 of the Bankruptcy Code, which provide that a confirmed chapter 11 plan that has been substantially consummated may not be modified under section 1127. RII and GRI believe that the filing of new chapter 11 cases in connection with seeking confirmation of the Plan would satisfy any applicable good faith requirement and would be permissible under the Bankruptcy Code. As a result, among other things, of the unforeseen difficulty in selling the Paradise Island Business, which was a critical component of the Old Plan, the Company believes that it will be able to satisfy the good faith requirement for filing a second bankruptcy case. Accordingly, while it is possible that these filings by RII and GRI could be challenged, RII and GRI believe that they would prevail against any such challenge. DISRUPTION OF OPERATIONS. RII believes that it has sufficient cash on hand to fund its working capital needs during a prepackaged bankruptcy case, including the continued timely payment of pre-petition employee and trade obligations to the extent permitted by the Bankruptcy Court. Since the Plan and the chapter 11 filings will relate only to RII and GRI and not to RII's operating subsidiaries, the claims of trade creditors and employees of such operating subsidiaries will not be affected by such filings. Although there is a risk that the filing of chapter 11 cases by RII and GRI will disrupt their business operations, RII and GRI believe that such risk is minimal. GRI does not have any employees and does not believe that it has any trade creditors; it has no operating business which could be disrupted. As a holding company, RII has few trade creditors and employees. To the extent necessary, RII, upon commencement of its chapter 11 case, intends promptly to seek the authorization of the Bankruptcy Court to maintain flexibility to pay, prior to confirmation of the Plan, the pre-petition claims of trade creditors. In addition, RII intends to seek the approval of the Bankruptcy Court to pay all accrued prepetition salaries and wages, expense reimbursements and severance, to permit affected employees to utilize their paid vacation time which accrued prior to the date of the filing of the prepackaged bankruptcy case (so long as they remain employees of RII) and to continue paying medical benefits under RII's health plan. There can be no assurance that such authorization will be obtained. In any event, the Plan provides that claims of employees and trade creditors which are not paid or honored, as the case may be, prior to consummation of the Plan will be paid or honored in full at the Distribution Date or as soon thereafter as such payment or other obligation, consistent with past practice and in the ordinary course of business, becomes due or performable. See "The Plan -- Treatment of Trade Creditors and Employees". The Solicitation of Acceptances for the Plan or any subsequent commencement of chapter 11 cases, even in connection with the Plan, could adversely affect the Company's relationships with patrons, suppliers and employees. However, the Company designed the Plan to minimize such effects. If such relationships were adversely affected, the Company's financial position could materially deteriorate. This deterioration could adversely affect the Company's ability to complete the Solicitation of Acceptances of the Plan, or if the Solicitation is successfully completed, to obtain confirmation of the Plan. Any disruption in relationships with the Company's suppliers could reduce the quality and availability of casino facilities, entertainment and promotional events, as well as guest and other patron services which could result in a loss of earnings. 75 EFFECT ON SUBSIDIARIES. Other than GRI, RII does not currently intend to seek protection under the Bankruptcy Code for any of its subsidiaries. CERTAIN RISKS OF NON-COMPLIANCE WITH CONFIRMATION REQUIREMENTS. Even if the Requisite Acceptances are received, there can be no assurance that the Bankruptcy Court will confirm the Plan. The Bankruptcy Court might determine that the disclosure contained herein or the Solicitation hereunder are inadequate. See -- "Risk of Inadequacy of Solicitation" and "Risk of Improper Voting Procedures." Moreover, the Bankruptcy Court could still decline to confirm the Plan if it were to find that any statutory condition to confirmation had not been met. Section 1129 of the Bankruptcy Code sets forth the requirements for confirmation and requires, among other things, a finding by the Bankruptcy Court that the confirmation of the Plan will not be followed by a further need for financial reorganization, and that the value of distributions under the Plan to non-accepting creditors and equity interest holders is not less than the value of distributions such creditors and equity interest holders would receive if RII and GRI were liquidated under chapter 7 of the Bankruptcy Code. See "The Plan -- Confirmation of the Plan -- Confirmation Requirements". There can be no assurance that the Bankruptcy Court will conclude that these requirements have been met. If the Plan is filed, there can be no assurance that modifications thereof would not be required for confirmation, or that such modifications would not require a resolicitation of Acceptances. RII and GRI believe that the Plan does comply with all of the confirmation requirements, including the requirements that confirmation of the Plan not be followed by a need for further financial reorganization and that non-accepting creditors and equity interest holders receive distributions under the Plan at least as great as would be received if RII and GRI were liquidated pursuant to chapter 7 of the Bankruptcy Code. See "The Plan". There can be no assurance, however, that the Bankruptcy Court would reach the same conclusion. The confirmation and consummation of the Plan also are subject to certain conditions imposed by RII and GRI. See "The Plan -- Conditions Precedent to Confirmation and Consummation of the Plan". There can be no assurance that such conditions will be satisfied or, if not satisfied, that RII and GRI (with the consent of Fidelity and TCW if the funds and accounts managed by them hold in the aggregate at least 20% of the Old Series Notes) would waive such conditions. The consummation condition requiring entry of a Confirmation Order that has not been stayed must be satisfied and may not be waived under any circumstances. The confirmation condition requiring the entry of an order declaring that, as of the Effective Date, the Old Security Documents shall be deemed released and terminated is waivable, but the transactions contemplated by the Plan cannot be consummated if the Old Security Documents are not released and terminated because RII and GRI will be unable to pledge the requisite collateral to secure the New Debt Securities. RISK OF INADEQUACY OF SOLICITATION. Section 1126(b) of the Bankruptcy Code provides that the holder of a claim against, or interest in, a debtor who accepts or rejects a plan of reorganization before the commencement of a chapter 11 case is deemed to have accepted or rejected such plan under the Bankruptcy Code so long as the solicitation of such acceptance was made in accordance with applicable non-bankruptcy law governing the adequacy of disclosure in connection with such solicitation, or, if such law does not apply, such acceptance was solicited after disclosure of "adequate information". Bankruptcy Rule 3018(b) requires, in the case of a prepackaged plan of reorganization, that: (i) the plan of reorganization be disseminated for a vote to substantially all impaired creditors and equity holders entitled to vote; (ii) the time prescribed for voting on such plan must not be unreasonably short; and (iii) the solicitation must be conducted in compliance with all applicable non-bankruptcy laws or, in the absence of such laws, that the disclosure statement for such plan contain "adequate information". This Information Statement/Prospectus is being transmitted to all holders of claims against, and all holders of interests in, RII and GRI to satisfy the requirements of section 1126(b) of the Bankruptcy Code and Bankruptcy Rule 3018(b). Notwithstanding the foregoing, votes on the Plan only are being solicited from impaired creditors and equity interest holders of RII and GRI. RII and GRI believe that the Solicitation complies with the requirements of Bankruptcy Rule 3018(b) and that the 35-day time period prescribed for voting on the Plan is not unreasonably short. In addition, RII 76 and GRI believe that the Solicitation is being conducted in compliance with state and Federal securities laws and all other applicable non-bankruptcy laws. However, failure of the Solicitation to comply with the requirements of section 1126(b) of the Bankruptcy Code or Bankruptcy Rule 3018(b) could result in the Bankruptcy Court requiring resolicitation of Acceptances. If a resolicitation were required, there can be no assurance that the SIHL Sale would remain a viable option to the Company or that Fidelity and TCW would continue to support the Plan. RISK OF IMPROPER VOTING PROCEDURES. Even if the Requisite Acceptances are received, the Bankruptcy Court may find that impaired creditors and equity interest holders have not validly accepted the Plan if the Bankruptcy Court determines that the Solicitation did not comply with the requirements of section 1126(b) of the Bankruptcy Code in respect to voting procedures. In an effort to avoid such a result, RII and GRI are soliciting both Ballots and Master Ballots. Master Ballots are to be completed by record holders of Old Series Notes and RII Common Stock who are not the beneficial owners of such securities to reflect the votes of the beneficial owners of such securities that hold through such record holder. RII and GRI believe that the use of Ballots and Master Ballots for the purpose of obtaining Acceptances is in compliance with the Bankruptcy Code. In addition, RII and GRI will take certain measures in accordance with the practices of the securities industry and the requirements of applicable non-bankruptcy law to ensure that this Information Statement/Prospectus and other Solicitation materials are received by beneficial owners of RII's securities in sufficient time to enable such parties to instruct their nominees with respect to voting on the Plan. There can be no assurance, however, that the Bankruptcy Court will decide that the voting procedures employed by RII and GRI meet the requirements of section 1126(b) of the Bankruptcy Code. If the Bankruptcy Court determines that the Solicitation does not comply with the requirements of section 1126(b) of the Bankruptcy Code, RII and GRI may seek to resolicit Acceptances. RISK THAT PLAN MAY BE CONFIRMED OVER REJECTION OF IMPAIRED EQUITY CLASSES. If certain conditions are met, the Plan may be confirmed even if it is not accepted by the holders of the RII Common Stock or the holders of 1990 Stock Options. Section 1129(b) of the Bankruptcy Code sets forth the conditions to a confirmation (or "cram-down", as it is generally called) of a plan of reorganization without the acceptance of all impaired classes. So long as at least one impaired class of claims has accepted the plan (excluding votes cast by insiders), such plan may be confirmed if it does not "discriminate unfairly" and is "fair and equitable" with respect to each of the non-accepting classes. It is generally accepted that a plan does not "discriminate unfairly" if holders in a non-accepting class receive treatment under a plan that is economically equivalent to that given to other classes whose holders have the same legal priorities. In general terms, a plan is "fair and equitable" to a non-accepting class of secured claims if provision is made under the plan for the holders of such secured claims to retain the liens securing such claims and to receive deferred cash payments totalling at least the allowed amount of such claim having a present value on the effective date of the plan at least equal to the value of the property securing claims. In general terms, a plan is "fair and equitable" to a non-accepting class of unsecured claims or interests if the plan provides that either (i) such holders receive or retain property having a value as of the effective date of the plan equal to the allowed amount of such holders' unsecured claims or interests, or (ii) the holders of claims and interests that are junior to any such non-accepting class do not receive or retain any property under the plan in respect of such junior claims or interests. It is possible for a plan to be confirmed by the bankruptcy court notwithstanding the non-acceptance of a class of claims or interests and the holders of such claims or interests must accept whatever distribution, if any, is provided for them under such plan, so long as the requirements set forth above are satisfied. RII and GRI believe that section 1129(b) of the Bankruptcy Code would permit confirmation of the Plan over the rejection of the classes of holders of outstanding RII Common Stock and 1990 Stock Options, but would not permit confirmation of the Plan over the rejection of the holders of Old Series Notes. The Company intends to seek to confirm the Plan even if the holders of outstanding RII Common Stock or 1990 Stock Options vote as a class to reject the Plan. See "The Plan -- Confirmation of the Plan -- Confirmation Without Acceptance by All Impaired Classes". Under a cram-down, distributions to all classes of creditors and equity interest holders would not change. 77 RISK OF IMPROPER CLASSIFICATION OF CLAIMS AND INTERESTS. Pursuant to section 1122 of the Bankruptcy Code, RII and GRI must classify claims and interests in classes that contain claims and interests that are substantially similar to the other claims and interests in such class. Although RII and GRI believe that they have classified all claims and interests in compliance with section 1122, it is possible that the Bankruptcy Court may find that a different classification is required for the Plan to be confirmed. In such event, it is the current intention of RII and GRI to modify the Plan to provide for whatever reasonable classification might be accepted by the Bankruptcy Court for confirmation and to use the Acceptances received in the Solicitation to obtain the approval of the class or classes of which the accepting holder is ultimately deemed to be a member. Any such reclassification could adversely affect the class in which such claim or interest was initially classified or any other class under the Plan by changing the composition of such class and the required vote of such class for approval of the Plan. Furthermore, a reclassification of claims or interests after approval of the Plan could necessitate the resolicitation of Acceptances, which could result in a delay in the consummation of the Restructuring and could increase the risk that the Restructuring will not be consummated. To the extent a reclassification of claims or interests after approval of the Plan materially and adversely changes the treatment of the claim of any creditor or the interest of any equity interest holder, such creditor or equity interest holder would no longer be bound by its Acceptance of the Plan and RII and GRI would be obliged to obtain such creditor's or equity interest holder's consent in writing to the modification. The need to obtain any significant number of consents could result in a delay in the consummation of the Restructuring and could increase the risk that the Restructuring will not be consummated. UNANTICIPATED CLAIMS. The Plan provides that general unsecured claims will be unimpaired. This provision is based on the assumption, which the Company believes to be correct, that general unsecured claims will not exceed $__________. If general unsecured claims materially exceed this amount, the Company may be unable to treat general unsecured claims as unimpaired and may be forced to modify the treatment of such claims in the Plan. Such modification may require solicitation of the Plan as modified to holders of general unsecured claims and to other classes of creditors and equity interest holders. See "The Plan -- Classification and Treatment of Claims and Interests -- RII Class 5" for a discussion of potential disputed claims which have been or may be asserted. The Company believes that any claims based on Federal or state environmental protection statutes will be discharged in connection with consummation of the Plan. Under certain circumstances, however, environmental claims may survive consummation of the Plan and remain assertable against the Company after the conclusion of the Restructuring. The Company believes that environmental claims, even if they survive consummation of the Plan, will not have a material impact on the ability of the Company to effect the Restructuring or meet the Company's financial forecasts. The feasibility of the Plan may be jeopardized if the Company is found to have significant unanticipated environmental liability. AVOIDANCE OF CERTAIN PREPETITION TRANSFERS. The Company has made or, pursuant to the Restructuring, intends to make certain transfers to third parties during the year preceding the date of filing of the chapter 11 cases which may be subject to avoidance and recovery as either preferential transfers or fraudulent conveyances. These transfers could include payments made under the Hanlon Termination Agreement and the New Griffin Services Agreement. The Company does not believe that these or any other transfers made by it or to be made by it pursuant to the Restructuring constitute voidable transfers. The Company, however, has conducted no investigation into the existence of potential voidable transfer. Moreover, there can be no assurance that the Bankruptcy Court would agree. Even if the Bankruptcy Court were to determine that certain prepetition transfers were voidable, the Company does not believe such a determination would materially and adversely affect the Restructuring. Pursuant to section 6.14 of the Plan, RII and GRI will waive and release any avoidance and recovery actions (other than such avoidance and recovery actions that have been or are permitted to be filed in connection with the Old Chapter 11 Cases). A fraudulent conveyance action styled "__________" is pending in the United States Bankruptcy Court for the District of New Jersey. This action which seeks recovery of the merger consideration paid by RII to Mr. Lowenshuss' pension plan will be continued after the Effective Date. 78 RISKS RELATED TO PARADISE ISLAND INTERIM ORDER.__Pursuant to the Paradise Island Purchase Agreement, RII has committed to request, within five days after the filing of its chapter 11 case (and if the Paradise Island Purchase Agreement has not been terminated), and to use its best efforts to obtain the entry of an order approving certain provisions of the Paradise Island Purchase Agreement (the "Paradise Island Interim Order"). Such provisions relate primarily to (i) the establishment of a procedure for the consideration of competing bids for the Paradise Island Business and (ii) the provision of certain reimbursements to SIHL if, through no fault of its own, the SIHL Sale is not consummated. For a detailed description of the provisions of the Paradise Island Purchase Agreement which RII will seek to have approved by the Bankruptcy Court through the Paradise Island Interim Order, see "Description of Paradise Island Purchase Agreement -- General -- Paradise Island Interim Order". If, despite the best efforts of RII, the Paradise Island Interim Order is not entered by the Bankruptcy Court, the Paradise Island Purchase Agreement will continue in full force and effect. Subject to the requirements of the Paradise Island Interim Order, RII and GRI may receive other bids for the Paradise Island Business during the pendency of RII's and GRI's chapter 11 cases. Such bids, if received, may lead to further proceedings before the Bankruptcy Court, including the conduct of an auction. If a bidder other than SIHL prevails at such at auction, the Plan may be modified, as may be necessary, to accommodate the particular requirements of the prevailing bidder. Any such modification will be subject to compliance with applicable bankruptcy laws and the approval of Fidelity and TCW (so long as the funds and accounts managed by either of them hold in the aggregate at least own 20% of the outstanding Old Series Notes). In addition, the Bankruptcy Court may, but not necessarily will, require a new solicitation. The Paradise Island Purchase Agreement imposes significant restrictions upon the Company's ability to consider and ultimately accept acquisition proposals for the Paradise Island Business other than the SIHL Sale. Pursuant to the Paradise Island Purchase Agreement, the Company cannot consider any alternative acquisition proposal unless such proposal constitutes an "Overbid Transaction" from a financially qualified third party which provides for consideration attributable to the entire Paradise Island Business having a fair market value of more than $130 million. The imputed fair market value of the SIHL proposal is $125 million. Moreover, when considering whether to approve an "Overbid Transaction" from a competing bidder, the Bankruptcy Court will likely take into consideration that the Company is required, under the terms of the Paradise Island Purchase Agreement, to pay SIHL's out-of-pocket costs and expenses incurred in connection with the proposed SIHL Sale and adjust the value of the competing bid accordingly. CERTAIN CONSIDERATIONS RELATED TO ORIGINAL ISSUE DISCOUNT IN THE EVENT OF SUBSEQUENT BANKRUPTCY In general, a debt security represents a potential bankruptcy claim equal to its face amount, plus accrued and unpaid interest through the date of commencement of the bankruptcy case, less unamortized OID, if any, at that date. It is unclear as to whether and to what extent the issuance of debt securities in a bankruptcy should be determined to involve OID for the purpose of fixing the claim of a holder of such debt securities in a subsequent bankruptcy. Although the method of calculating unamortized OID in a bankruptcy is uncertain, the Bankruptcy Court could determine that the claims of the holders of the Old Series Notes and the GRI Guaranty, which pursuant to the Plan are to be allowed in full face amount plus accrued interest thereon and collection costs through the Petition Date, should be reduced by the amount of unamortized OID related to such instruments. Because the percentage recovery to such holders would be less the 100% even if this determination were made, confirmation of the Plan would not be adversely affected by such determination. However, a bankruptcy court in a bankruptcy proceeding involving RIHF and RIH subsequent to the Restructuring could determine that the New RIHF Mortgage Notes and the New RIHF Junior Mortgage Notes were issued at the OID represented by the difference between the face amount of the New RIHF Mortgage Notes and the New RIHF Junior Mortgage Notes and the closing sales prices for the Old Series Notes on the Effective Date. Such OID would be increased to the extent a bankruptcy court allocated any portion of the fair market value of the Old Series Notes to the New Equity Securities, Excess Cash and the right to receive payments from Net Reserved Cash, if any, Net Plan Consummation Cash, if any, and 79 Deferred Cash. In such a case, the bankruptcy claim of the holders of Old Series Notes might be determined to be the stated principal amount of the New RIHF Mortgage Notes and the New RIHF Junior Mortgage Notes less the amount of unamortized OID at the time of bankruptcy. In recent decisions both the Second and Fifth Circuit Courts of Appeals have held that, for bankruptcy law purposes, no new OID arises by virtue of a face value debt-for-debt exchange in a consensual out-of-court workout, even if the fair market value of the old bonds is less than the face amount of the old and new bonds. See IN RE CHATEAUGAY CORP., 961 F.2d 378 (2nd Cir. 1992) and IN RE PENGO INDUSTRIES, 962 F.2d 543 (5th Cir. 1992). These cases, while not directly on point, support the argument that no new OID should arise by virtue of a debt for debt exchange embodied in a confirmed chapter 11 plan such as the Plan or the Old Plan. No assurances can be given that this argument would prevail. ADDITIONAL SENIOR SECURED DEBT; SUBORDINATION The RIHF Senior Facility will be available to meet working capital needs. The Company currently does not forecast a need to use such a facility. See "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Financial Condition -- Liquidity." If borrowings are made under the RIHF Senior Facility, the Company's post-Restructuring debt burden would increase. The RIHF Senior Facility Notes will be senior secured obligations issued by RIHF and guaranteed by RIH pursuant to the RIH Senior Facility Guaranty. RII also will issue a guaranty of the payment of principal and interest on the RIHF Senior Facility Notes to the extent the proceeds of the RIH Senior Facility are loaned to RII. The RIH Mortgage, the RIH Guaranty Mortgage, the RIH Junior Mortgage and the RIH Junior Guaranty Mortgage on the Resorts Casino Hotel securing the payment of the New RIHF Mortgage Notes, the RIH Mortgage Guaranty, the New RIHF Junior Mortgage Notes and the RIH Junior Mortgage Guaranty, respectively, will be subordinated to the liens securing the RIHF Senior Facility Notes and the RIH Senior Facility Guaranty. SECURITY FOR THE NEW RIHF MORTGAGE NOTES AND THE NEW RIHF JUNIOR MORTGAGE NOTES If an Event of Default (as defined in either the New RIHF Mortgage Note Indenture or the New RIHF Junior Mortgage Note Indenture) occurs, there can be no assurance that a foreclosure on the Resorts Casino Hotel would produce proceeds in an amount that would be sufficient to pay, FIRST, the principal of, and accrued interest on, the RIHF Senior Facility Notes (if any), SECOND, the principal of, and accrued interest on, the New RIHF Mortgage Notes, and THIRD, the principal of, and accrued interest on, the New RIHF Junior Mortgage Notes. In any foreclosure sale of the Resorts Casino Hotel, the purchaser would be required to be licensed to own the Resorts Casino Hotel under the Casino Control Act and the regulations promulgated thereunder. If the Collateral Agent were unable to, or chose not to, sell the Resorts Casino Hotel, the Collateral Agent would be required to be licensed under the Casino Control Act to operate the Resorts Casino Hotel. Such requirements limit the number of potential bidders and may delay the sale of, and may adversely affect the sales price for, the Resorts Casino Hotel. The ability to take possession and dispose of the Resorts Casino Hotel upon acceleration of the RIHF Senior Facility Notes, the New RIHF Mortgage Notes and the New RIHF Junior Mortgage Notes is likely to be significantly impaired or delayed by applicable bankruptcy law if a reorganization case were to be commenced by or against RII, RIHF or RIH prior to the foreclosure upon or disposition of the Resorts Casino Hotel by the Collateral Agent. FIDELITY AND TCW NOT FIDUCIARIES RII and GRI have been informed by Fidelity and TCW that, in the opinion of Fidelity and TCW, they owe no fiduciary, agency or other obligation to any holder of Old Series Notes (and beneficiary of the related GRI Guaranty endorsed thereon). If RII and GRI were to commence their chapter 11 cases as other than prepackaged cases, a creditors' committee comprised of certain creditors of RII and GRI would be appointed by the office of the United States Trustee and, if it were so appointed, such committee would owe a fiduciary obligation to the creditors of RII and GRI, including the holders of Old Series Notes. Because RII and GRI intend to commence their chapter 11 cases after receipt of the Requisite Acceptances to the Plan and to seek expedited confirmation of the Plan, they will request the Office of the United States Trustee to forego the appointment of an official creditors' committee. 80 COMPETITION GENERAL. The Company competes, and PIRL will compete, directly with other casino operators in each market in which it operates principally on the basis of price, quality and customer service. Such competition has intensified in recent years. See "Business of the Company". The Company faces competition from cruise lines, riverboat gambling, casinos located in Atlantic City, New Jersey, New York, Connecticut, Nevada, Puerto Rico, The Bahamas and other locations outside the United States, from other forms of legalized gaming in New Jersey and in its surrounding states such as lotteries, horse racing, jai-alai, dog racing and other legalized gaming activities and from illegal wagering of various types. The Company also would compete with any facilities in jurisdictions that may authorize casino gaming or other forms of wager in the future. Legalized gambling in some form or another is now allowed in 48 states. Since 1989 at least 65 Indian reservation casinos have opened in 17 states. In addition, 80 more Indian tribes have plans to start gambling ventures in 12 additional states. The large increase in Indian reservation casinos, along with a rapid expansion of riverboat gambling and other casino gambling, may adversely affect the Company's operations, particularly if casino gaming were permitted in jurisdictions adjacent to, or elsewhere in, New Jersey. Currently, casino gaming is not allowed in other areas of New Jersey, but is under consideration in Pennsylvania and the District of Columbia. Recently, the U.S. Secretary of the Interior approved a plan by the Mashantucket Pequot Indians to operate a casino facility in Ledyard, Connecticut, located in the eastern portion of the state. Such facility opened in early 1991 and was only authorized to conduct table gaming operations. In January 1993, such casino was authorized to operate slot machines. In July 1993, the Oneida Indians opened a casino near Syracuse, New York. In October 1993 approval was granted for the construction of a second high-stakes gambling casino on the St. Regis Mohawk reservation in New York State near the Canadian border, 50 miles southwest of Montreal. Under New York state law, poker and slot machines currently are not permitted. The casinos in Connecticut and New York may have an adverse effect on the Atlantic City casino industry. ATLANTIC CITY. Competition in the Atlantic City casino/hotel market is intense. Casino/hotels compete primarily on the basis of promotional allowances, entertainment, advertising, services provided to patrons, caliber of personnel, attractiveness of the hotel and casino areas and related amenities and parking facilities. There are 12 casino/hotels located in Atlantic City, including the Resorts Casino Hotel, all of which compete for patrons. In the aggregate, those casino/hotels contain approximately 836,000 square feet of casino space including simulcast betting and poker rooms and 9,400 hotel rooms. The total amount of gaming area of these competing properties is expected to increase as the Showboat casino/hotel (the "Showboat Casino") has recently announced plans, although preliminary, for a sizable addition to its casino gaming floor. The Showboat Casino is located on approximately ten acres of "Boardwalk" property owned by the Company and leased to Atlantic City Showboat, Inc. ("ACS") under a 99-year net lease (the "Showboat Lease"). Also several competitors are expected to add racetrack simulcasting rooms which are permitted to house authorized table games. Unlike casino gaming floor area, which is regulated based on the number of guest rooms at a particular property, the size of simulcasting rooms is not limited. The Resorts Casino Hotel is located at the eastern end of the Boardwalk adjacent to the Taj Mahal Casino-Resort (the "Taj Mahal") and the Showboat Casino. These three properties have a total of more than 2,400 hotel rooms and 277,000 square feet of gaming space in close proximity to each other. A 28-foot wide enclosed pedestrian bridge between the Resorts Casino Hotel and the Taj Mahal allows patrons of both hotels and guests for events being held at the Resorts Casino Hotel and at the Taj Mahal to move between the facilities without exposure to the weather. A similar enclosed pedestrian bridge connects the Showboat Casino to the Taj Mahal, allowing patrons to walk under cover among all three casino/hotels. The remaining nine Atlantic City casino/hotels are located approximately one-half mile to one and one-half miles to the west on the Boardwalk or in the Marina area of Atlantic City. PARADISE ISLAND. The Company's Paradise Island facilities compete with other hotels and resorts on Paradise Island, elsewhere in The Bahamas, the southeastern United States, the Caribbean and Mexico, as well as cruise ships serving these areas. As new hotels are constructed or new cruise ships are introduced into service in these areas, competition can be expected to increase. 81 The Company's properties principally compete with a casino/hotel and resort complex on Cable Beach, New Providence Island, comprised of Carnival's Crystal Palace, with 860 guest rooms, a 33,500 square foot casino, a show theater and other amenities, and the HCB-owned Radisson with 679 guest rooms. There is a total of approximately 7,600 rooms for overnight guests on New Providence Island and Paradise Island combined. Of such rooms, approximately 3,100 are located in hotels on Paradise Island, including 1,357 in hotels owned and operated by RIB. In October 1993, Carnival announced that it had signed an agreement in principle to sell an 81% interest in the Crystal Palace complex to a group of German investors. This investor group has announced that it plans to increase the marketing of the Crystal Palace complex in Europe and will invest additional capital in the complex to establish it as a high-end resort destination. Although there can be no assurance that such sale will be completed, an upgraded Crystal Palace complex may adversely affect the Company's operations in The Bahamas. In addition to the Crystal Palace casino, the Bahamian government is obligated to facilitate the grant of a casino license to the operators of the Ramada Resort situated on the southwestern end of New Providence Island. The Bahamian government is also obligated to support a proposal for the operation of a slot casino at the Radisson resort on Cable Beach. In recent years, the Company's Bahamian hotel and casino operations have experienced increased competition from the new, larger cruise ships which have begun serving this area as these cruise ships have effectively provided more available rooms. Also, the Company's Paradise Island casino competes with two casinos on Grand Bahama Island, with casinos located on various Caribbean islands and, to a lesser extent, with Atlantic City and Las Vegas casino/hotels. NEW JERSEY REGULATORY MATTERS The ownership and operations of casino/hotel facilities and related businesses in Atlantic City are the subject of strict state regulation under the Casino Control Act. The Casino Control Act also imposes substantial restrictions on the ownership of equity and debt securities of a company holding a casino license, or an intermediary, holding company or affiliate of a casino licensee. As a holding company of a casino licensee, RII is required to register with the Casino Control Commission and obtain qualification approval by meeting essentially the same requirements as a casino licensee. A casino license initially is issued for a term of up to one year and must be renewed annually by action of the Casino Control Commission for the first two renewal periods succeeding the initial issuance of a casino license. Thereafter, a casino license is renewed for a period of up to two years, although the Casino Control Commission may reopen licensing hearings at any time. A license is not transferable and may be conditioned, revoked or suspended at any time upon proper action by the Casino Control Commission. The Casino Control Act also requires an operations certificate which, in effect, has a term coextensive with that of a casino license. On February 26, 1979, the Casino Control Commission granted a casino license to RIH for the operation of the Company's Atlantic City casino. In February 1992, RIH's license was renewed until February 26, 1994. RIH's renewed license is subject to several conditions, including: (i) the submission of additional monthly financial reports to the Casino Control Commission and the Division of Gaming Enforcement; (ii) monthly notification to such bodies of any significant deviation from certain financial forecasts and related information provided by the Company in connection with the 1992 renewal proceedings; (iii) monthly notification of any significant variance in operating results from the prior year; and (iv) quarterly reporting on its progress in the development of a financing plan regarding its debt due in April 1994 and, by June 30, 1993, submission of an outline of terms to satisfy that obligation. There can be no assurance that the Company will receive or continue to receive all authorizations needed for the operation of the Company's Atlantic City casino and thereby be permitted, in the future, to continue to operate the Resorts Casino Hotel. Failure to maintain a casino license would have a material adverse effect on the Company's ability to make payments in respect of the RIHF Senior Facility Notes (if issued), the New RIHF Mortgage Notes and the New RIHF Junior Mortgage Notes. See "Business of the Company -- Regulation and Gaming Taxes and Fees -- New Jersey". It is a condition to the effectiveness of the Plan that the Casino Control Commission issue various approvals in connection with the Plan and the transactions described in this Information Statement/ 82 Prospectus. Among other approvals, the Casino Control Commission must find that the Company will continue to be financially stable after the consummation of the Plan and that all substantial (in excess of __%) holders of debt and equity securities of the Company are qualified unless the qualification requirement is waived by the Casino Control Commission. The Casino Control Commission considers various factors in determining whether a company is financially stable, including without limitation the ability of a company to make necessary capital and maintenance expenditures, and to pay all debts, including applicable taxes, as they come due. POTENTIAL DISQUALIFICATION OF HOLDERS BY THE CASINO CONTROL COMMISSION Additionally, the Casino Control Commission imposes certain restrictions upon the ownership of securities issued by a corporation which holds a casino license or is a holding, intermediary, subsidiary or affiliated company of a corporate licensee. Among other restrictions, the sale, assignment, transfer, pledge or other disposition of any security issued by a corporation which holds a casino license is conditional and shall be ineffective if disapproved by the Casino Control Commission. If the Casino Control Commission finds that an individual owner or holder of any securities of a corporate licensee or any holding or affiliated company must be qualified and is not qualified under the Casino Control Act, the Casino Control Commission has the right to propose any necessary remedial action. In the case of corporate holding or affiliated companies whose securities are publicly traded, the Casino Control Commission may require divestiture of the security held by any disqualified holder who is required to be qualified under the Casino Control Act. If entities or persons required to be qualified refuse or fail to qualify and fail to divest themselves of such security interest, the Casino Control Commission has the right to take any necessary action, including the revocation or suspension of the casino license. If any security holder of the licensee or any holding or affiliated company who is required to be qualified is found disqualified, it will be unlawful for the security holder: (i) to receive any dividends or interest upon any such securities; (ii) to exercise, directly or through any trustee or nominee, any right conferred by such securities; or (iii) to receive any remuneration in any form from the corporate licensee for services rendered or otherwise. The Restated Certificate of Incorporation of RII provides, and the Amended RII Certificate of Incorporation will provide, that all securities of RII and any of its subsidiaries are held subject to the condition that if the holder thereof is found to be disqualified by the Casino Control Commission pursuant to provisions of the Casino Control Act, then such holder must dispose of his or her interest in the securities. CERTAIN DEFAULTS Based on the monthly internal closing of RII's accounts as of October 31, 1993, RII is not in compliance with its covenant contained in the Old Series Note Indenture to maintain a Tangible Net Worth (as defined in the Old Series Note Indenture) of at least $50,000,000. At that date, RII's Tangible Net Worth was $44,579,000. Such non-compliance constitutes a "Default" under the Old Series Note Indenture and will become an "Event of Default" under the Old Series Note Indenture if RII fails to cure the Default within 30 days after receipt of a formal notice from the Old Series Note Trustee. The Old Series Note Trustee, on January 3, 1994, furnished a notice of default to the Company, stating that if such Default were not cured within 30 days of receipt it would become an Event of Default under the Old Series Note Indenture. The holders of two-thirds in aggregate principal amount of the Old Series Notes may waive a Default or an Event of Default under the Old Series Note Indenture. [Fidelity and TCW, which separately advise and manage various funds and accounts that as of October 21, 1993 held in the aggregate approximately $309,926,000 principal amount of the Old Series Notes, or approximately 64% of the outstanding Old Series Notes, have agreed to waive the Default.] If the Old Series Notes were accelerated, the Old Series Note Trustee would have the right to realize upon the collateral that secures the Old Series Notes pursuant to the Old Security Documents. The collateral includes the Resorts Casino Hotel, the outstanding capital stock of RIH, GRI and all of RII's other direct and indirect domestic subsidiaries, as well as the RIB Collateral. If the requisite number of holders of the Old Series Notes demand repayment or if the Old Series Note Trustee seeks 83 to realize upon the collateral securing the Old Series Notes, there is a substantial likelihood that RII and GRI, as guarantor of the Old Series Notes, and certain of their Subsidiaries (including RIH and RIB) whose assets are pledged to secure the Old Series Notes would be forced to seek protection under applicable bankruptcy law. RISKS ASSOCIATED WITH THE PARADISE ISLAND BUSINESS If the SIHL Sale is not consummated ownership of the Paradise Island Business will be transferred to the holders of the Old Series Notes through the PIRL Spin-Off. Even if the SIHL Sale is consummated, partial ownership of the Paradise Island Business is a substantial component of the consideration under the Plan to holders of Old Series Notes. In considering whether or not to vote to accept the Plan, holders of Old Series Notes should consider the following additional risk factors associated with the Paradise Island Business. Additionally, for a full discussion of the risk factors related specifically to the SIHL Sale, reference is made to the SIHL Prospectus and the related Registration Statement. NEW OWNERSHIP OF PARADISE ISLAND BUSINESS. Pursuant to the Restructuring, ownership of the Paradise Island Business will be transferred either to SIHL through the SIHL Sale or to the holders of the Old Series Notes through the PIRL Spin-Off. Consequently, the Paradise Island Business will come under new ownership and new management. No assurances can be made as to the ability or experience of such new ownership or management, or as to the future earnings of the Paradise Island Business thereunder. RECENT NET LOSSES. The PIRL Group experienced net losses of $12,399,000 and $13,257,000 in its fiscal years ended December 31, 1991 and 1992, respectively, and $9,616,000 for the three quarters ended September 30, 1993. If the PIRL Spinoff occurs, the recent net losses and liquidity problems relative to the PIRL Group create significant uncertainty regarding the ability of the PIRL Group to continue to operate the Paradise Island Business as a going concern in its present form beyond April 15, 1994 when the Old Series Notes mature. Moreover, if the SIHL Sale occurs, there can be no assurance that SIHL will be able to stem such losses or to continue to operate the Paradise Island Business as a going concern in its present form. SIHL SERIES A SHARES. For information regarding certain consideration associated with ownership of the SIHL Series A Shares, see the accompanying SIHL Prospectus relating to the SIHL Series A Shares. BAHAMAS REGULATORY MATTERS. The operation of casinos in The Bahamas is regulated under The Lotteries and Gaming Act, 1969, as amended (the "Gaming Act"), of the Commonwealth of The Bahamas. The Gaming Act established a Gaming Board which observes the count of all gaming receipts, prescribes accounting and control procedures and regulates personnel and security matters. Gaming licenses are renewable annually. The Gaming Board also is empowered to revoke or suspend any gaming license if a violation occurs. PEL currently is licensed under the Gaming Act to operate the Paradise Island casino. PEL's gaming license is subject to a number of conditions relating to PEL's activities and operations. Pursuant to amendments of PEL's casino license, the Company, among other things, is required to: (i) continue its efforts to achieve a prompt sale of the Paradise Island Business to a purchaser satisfactory to the government of the Commonwealth of The Bahamas and HCB; (ii) consult with HCB in advance with respect to material aspects of any contemplated disposition of the Paradise Island Business; (iii) provide quarterly reports to HCB describing the progress made by the Company in implementing plans for separating various functions relating to its Bahamian operations from the Company's non-Bahamian operations; (iv) provide to HCB various financial reports; and (v) reimburse the government of the Commonwealth of The Bahamas and HCB for legal and advisory fees incurred by them relative to any restructuring of the Company. 84 Additionally, approval by the government of the Commonwealth of The Bahamas is required for foreign ownership of real property in The Bahamas. Moreover, any foreign investment in The Bahamas requires exchange control approval by the Central Bank of The Bahamas. No sale of any property located in The Bahamas to non-Bahamian nationals may be completed until such governmental approvals are obtained. ENFORCEABILITY OF CIVIL LIABILITIES AGAINST PIRL.__If the SIHL Sale is not consummated on the Effective Date, the PIRL Spin-Off will be effected and the operations of the Paradise Island Business will come under the control of PIRL. PIRL is a Bahamian holding company, and all or a substantial portion of its assets are or may be located outside the United States. PIRL has appointed an agent to receive service of process with respect to any action brought against it in the United States District Court for the Southern District of New York under the securities laws of the United States or any State, or any action brought against it in the Supreme Court of the State of New York in the County of New York under the securities laws of New York State. However, it may be difficult for investors to enforce outside the United States judgments against PIRL obtained in the United States in any such actions, including actions predicated upon the civil liability provisions of the securities laws of the United States. In addition, certain of the directors and officers of PIRL are or may be residents of The Bahamas, and all or a substantial portion of the assets of such persons are or may be located outside the United States. As a result, it may be difficult for investors to effect service of process within the United States upon such persons, or to enforce against them judgments obtained in United States courts, including judgments predicated upon the civil liability provisions of the securities laws of the United States. There can be no assurance as to whether the courts of The Bahamas would enforce (i) judgments of United States courts obtained against PIRL or such persons predicated upon the civil liability provisions of the securities laws of the United States or (ii) in original actions brought in The Bahamas, liabilities against PIRL or such persons predicated upon the securities laws of the United States. THE RESTRUCTURING The following section of this Information Statement/Prospectus sets forth certain information regarding the events leading to the Restructuring, the terms of the Restructuring, the effects of the Restructuring on RII and the holders of its securities and the Company's plan for post-Restructuring operations. The Restructuring will be effected by means of the Plan. BACKGROUND EVENTS LEADING TO THE FILING OF THE OLD PLAN CONSTRUCTION OF THE TAJ MAHAL. In 1983, the Company commenced construction of the Taj Mahal project. Although initially scheduled for completion in late 1986, the project experienced cost overruns and construction delays and remained unfinished at the time it was sold to a partnership controlled by the Trump Partnership in late 1988. By March 31, 1988, RII's total indebtedness for borrowed funds exceeded $725,000,000. By the mid-1980s, the Company's position in the Atlantic City casino/hotel industry was severely disadvantaged. In an atmosphere of increased competition, the preoccupation of the Company's management with the Taj Mahal and several bids for control of the Company caused the Company's then existing management to neglect the Resorts Casino Hotel and allow its facilities to deteriorate and to fail to respond to new trends in the industry. THE ACQUISITION. In late 1988, through a stock purchase and merger, Griffco, a corporation then wholly owned by Merv Griffin, acquired RII from Donald Trump, the then Chairman of the RII Board of Directors and its controlling shareholder, and RII's other shareholders. The aggregate cost of this acquisition was $296,207,750, in cash, and was principally funded by means of Merv Griffin's $50,000,000 investment in Griffco and the issuance of two series of public debt by GRI. Immediately after Griffco's acquisition of RII, the Company entered into an agreement pursuant to which it sold certain real and personal assets, including the Taj Mahal, to the Trump Partnership for $273,000,000 in cash and the assumption of approximately $19,000,000 of liabilities. In connection 85 with the foregoing transactions, RII also terminated the Comprehensive Services Agreement which RII had entered into with the Trump Hotel Corporation and paid such corporation an aggregate amount of $63,689,750 for such termination and fees still owed under such agreement. DETERIORATION IN FINANCIAL CONDITION. In the period following the acquisition of RII from Donald Trump, the Company experienced a substantial deterioration in its results of operations from both the Resorts Casino Hotel and the Paradise Island Business. The decrease in earnings of the Resorts Casino Hotel was attributable largely to increased competition and, among other things, the disruption of operations and patron and employee relationships caused by ongoing renovations and the Company's financial difficulties. RII and its affiliates had issued approximately $600,000,000 of subordinated debentures prior to the acquisition by Griffco, the proceeds of which were principally used to fund the construction of the Taj Mahal, and GRI issued $325,000,000 of additional notes to fund the acquisition. As a result, after certain repayments, the Company had approximately $911,000,000 of long-term debt outstanding in August 1989. In August 1989, faced with deteriorating results of operations and substantial debt service, the Company announced a moratorium on the payment of interest on its outstanding public debt. NEGOTIATIONS WITH UNOFFICIAL COMMITTEES. In late 1989, the Company embarked upon recapitalization negotiations with two unofficial committees representing the holders of the Company's outstanding public debt in respect of which the Company had declared the interest payment moratorium. For various reasons, however, RII came to believe that it would not be possible to achieve, on a solely out-of-court basis, the comprehensive restructuring needed to assure continued viability. Moreover, the possibility of an out-of-court settlement was adversely affected when involuntary petitions for relief under chapter 11 of the Bankruptcy Code were filed against RII and its former subsidiary, RIFI, in November 1989. OVERVIEW OF THE OLD PLAN THE OLD BANKRUPTCY PROCEEDING. On November 12, 1989, certain creditors of RII and RIFI filed involuntary petitions for relief under chapter 11 of the Bankruptcy Code. On December 22, 1989, RII and RIFI filed consents to the involuntary petitions and GRI and GRH, another former subsidiary of RII, filed the Old Chapter 11 Cases in the New Jersey bankruptcy court. The Old Debtors subsequently filed the Old Plan, which was confirmed by the New Jersey bankruptcy court in August 1990. On the effective date of the Old Plan (September 17, 1990), all conditions to the effectiveness of the Old Plan were either met or waived and the Old Plan became effective. FEATURES OF THE OLD PLAN. Set forth below is a brief summary of the material features of the Old Plan. The summary is qualified in its entirety by reference to the provisions of the Old Plan which has been filed as an exhibit to the Registration Statement. See "Available Information". Pursuant to the Old Plan, the previously outstanding public debt issued by RII, RIFI and GRI was canceled, the Old Debtors were discharged from all other claims arising prior to the commencement of the Old Chapter 11 cases and all previously outstanding shares of stock of RII were canceled. In consideration for the previously outstanding public debt of $911,000,000 and other unsecured liabilities and claims of approximately $20,000,000, RII issued (i) debt securities consisting of $187,500,000 principal amount of the Old Series A Notes, $138,750,000 principal amount of the Old Series B Notes and $105,333,000 principal amount of the Showboat Notes and (ii) 15,237,234 shares of RII Common Stock. The distribution with respect to the previously outstanding public debt was made to the indenture trustees for such debt. As of October 15, 1993, the Old Series Note Trustee continues to hold approximately $1,160,000 principal amount of Old Series A Notes, $1,243,000 principal amount of Old Series B Notes, 86,434 shares of RII Common Stock and approximately $125,000 in cash on behalf of holders of the previously outstanding public debt of RII, GRI and RIFI that have not yet surrendered such previously outstanding public debt in accordance with the provisions of the Old Plan (the "Unsurrendered Public Debt Claims") and other claimants entitled to participate in such distribution. Under the terms of the Old Plan, holders of Unsurrendered Public Debt Claims have five years from September 17, 1990, to surrender such Unsurrendered Public Debt Claims and to receive the distribution provided by the Old Plan. Any distributions that remain unclaimed on September 17, 1995, will revert to and become the property of RII. 86 Certain claims against the Old Debtors are the subject of proceedings pending in connection with the Old Plan ("Old Plan Disputed Claims") and the distributions with respect to such Old Plan Disputed Claims are being held by the Old Series Note Trustee pursuant to the Old Plan. Such Old Plan Disputed Claims include without limitation claims asserted by Fred Lowenschuss and claims for approximately $6,600,000 by certain participants in the "Officers Supplemental Plan." Litigation is pending with respect to these claims in the United States Bankruptcy Court for the District of New Jersey. The Company has negotiated a settlement related to the claims under the Officers Supplemental Plan. Pursuant to this settlement, which has not yet been approved by the United States Bankruptcy Court for the District of New Jersey, such claim would be treated as a $6.6 million "Class 3C" claim under the Old Plan and entitled to the following distribution: 155,623 shares of Old RII Common Stock and $2,318,003 Old Series B Notes (inlcuding PIK interest). Because the settlement is not yet evidenced by an executed stipulation approved by the bankruptcy court, the calculations contained in this Information Statement/Prospectus do not reflect the issuance of these additional shares or Old Series B Notes. If the settlement is approved, the recoveries projected herein to equity interest holders and holders of Old Series Notes will be diluted slightly. Another Old Plan Disputed Claim is a claim in the amount of $616,000 filed by Dadras International ("Dadras") related to architectural services rendered to RII. Dadras has filed a motion with the United States Bankruptcy Court for the District of New Jersey seeking to allow this claim as an administrative claim in the Old Chapter 11 Case; such motion has not yet been determined by the Court. RII has disputed the claim filed by Dadras and intends to oppose the motion filed by Dadras. Although settlement discussions have been held, no settlement has yet been reached with Dadras. To the extent that such Old Plan Disputed Claims are allowed, the holders thereof will be entitled to the distributions set forth in the Old Plan. For a discussion of the treatment of Unsurrendered Public Debt Claims and Old Plan Disputed Claims under the Plan, see "The Plan -- Treatment of Unclaimed Consideration from the Old Plan". Pursuant to the Old Plan, Merv Griffin acquired 4,400,000 shares of RII Common Stock for which RII received $12,345,000 in cash and the Griffin Note for $11,000,000 secured by a bank letter of credit. In connection therewith, Merv Griffin and the Griffin Group entered into the Old Griffin Services Agreement, pursuant to which RII was granted a non-exclusive license to use his name and likeness to promote its facilities and operations, and Merv Griffin agreed to act as Chairman of the Board of RII and to provide certain other services without compensation for the two-year period ended September 16, 1992. Merv Griffin also made approximately $2,655,000 available to the indenture trustee for the outstanding GRI public debt in exchange for voluntary releases of Merv Griffin, the Company and others (the "GRI Releases") by the holders of such debt. The trustee paid the $2,655,000 to RII in consideration for the purchase of an additional 500,000 shares of RII Common Stock (the "GRI Release Shares"). The GRI Release Shares were distributed, in accordance with the formula set forth in the Old Plan, to holders of GRI public debt. Merv Griffin also made $2.5 million in cash (the "RIFI Release Cash") available to the indenture trustee for the outstanding RIFI public debt in exchange for voluntary releases of Merv Griffin, the Company and others by the holders of such debt (the "RIFI Releases"). The RIFI indenture trustee distributed most of this sum, in accordance with the formula set forth in the Old Plan, to the RIFI public debt holders which delivered RIFI Releases. At the present time, the indenture trustee for the old RIFI public debt continues to hold approximately $227,000 of the RIFI Release Cash which has not yet been exchanged for RIFI Releases. Under the terms of the Old Plan, electing holders of old GRI public debt were to have delivered their RIFI Releases to the indenture trustee for the RIFI public debt prior to the effective date of the Old Plan to receive a pro rata portion of the RIFI Release Cash. The remaining RIFI Release Cash currently held by the indenture trustee is subject to disputes as to whether the respective RIFI public debt holders complied with the terms of the Old Plan relating the RIFI Releases and the RIFI Release Cash. To the extent that any portion of the RIFI Release cash is not ultimately exchanged for RIFI Releases, such remaining RIFI Release Cash will be returned to Merv Griffin. For a discussion of the treatment under the Plan of the RIFI Release Cash which is not exchanged for releases of Merv Griffin and others, see "The Plan -- Treatment of Unclaimed Consideration from Old Plan". The Old Plan further provided for the establishment of the Litigation Trust pursuant to a litigation trust agreement dated as of September 17, 1990, between the Old Debtors and the Litigation 87 Trustee (the "Litigation Trust Agreement"), to pursue, for the benefit of certain classes of general unsecured creditors of the Old Debtors, all claims the Old Debtors and certain of their affiliates may have had against Donald Trump and certain of his affiliates. In October 1990, RII funded the Litigation Trust by depositing with the Litigation Trustee the sum of $5,000,000 to cover reasonable expenses of the Litigation Trust in pursuing such claims, with any unused balance of such amount to be distributed to the beneficiaries of the Litigation Trust. Under the Old Plan, the beneficiaries of the Litigation Trust received the Litigation Trust Units to represent their beneficial interests. Pursuant to the Old Plan, the holders of 1,785,000 Litigation Trust Units (out of at least 10,000,000 Litigation Trust Units) had the right to require RII to purchase their Litigation Trust Units for approximately $3,880,000 in the aggregate if certain conditions were not met by September 17, 1991. The $3,880,000 was deposited with the Litigation Trustee in October 1990. Such conditions were not met and, consequently, approximately 1,760,000 Litigation Trust Units were purchased by RII in October 1991 for $3,831,000. See "Description of Litigation Trust Units". RII accounted for its reorganization pursuant to the Old Plan by use of "fresh start" accounting. Accordingly, all RII's assets and liabilities were restated to reflect their estimated fair values and RII's accumulated deficit was eliminated. RII recorded the effects of the reorganization as of August 31, 1990. OPERATIONS SUBSEQUENT TO THE OLD PLAN RII's ability to pay cash interest on the Old Series Notes, and the ultimate repayment of the Old Series Notes at maturity, was premised in large measure upon RII's ability to sell the Paradise Island Business (excluding PIA) at its then-estimated value, and to generate substantial excess cash flow from its operations and the contemplated sale of the Non-Operating Real Property. The recession in the United States, and more specifically in the northeast sector, the acute competition in Atlantic City and The Bahamas, and the impact of the conflict in the Persian Gulf in early 1991 and its effect on transportation and tourism, all adversely affected RII's ability to sell the Paradise Island Business at its then-estimated value and to generate substantial excess cash flow from operations. The Old Plan projected the Company's excess cash flows from operations for the initial two years of the Old Plan, net of capital expenditures and prior to the sale of the Paradise Island Business, to be $8,300,000. The Company's actual excess cash flow was $2,476,000. The Old Plan also contemplated additional cash flow in the amount of $15,000,000 from the sale of the Non-Operating Real Property in the initial two years of the Old Plan. However, such sales were never accomplished. Due to these and other factors, RII has never paid interest in cash on the Old Series Notes. In addition, in late 1991, Carnival announced its plan to dispose of the Crystal Palace, the Company's principal competition in The Bahamas. Carnival reported operating losses on the Crystal Palace in excess of $60,000,000 in fiscal 1990 and 1991 combined, and in fiscal 1991 Carnival's investment in the Crystal Palace was written down to its estimated net realizable value of approximately $90,000,000. In early 1992, a portion of the Crystal Palace complex, which Carnival had been leasing from HCB, was returned to HCB. That portion is now the HCB-owned Radisson, which has 679 guest rooms. RII believes that the announcement of the financial problems at Crystal Palace and the arrangements described above have had a further adverse impact on RII's ability to sell the Paradise Island Business. Carnival continues to operate the remainder of the Crystal Palace complex under the Crystal Palace name and, in October 1993, announced that it had signed an agreement in principle to sell an 81% interest in such complex to a group of German investors. This investor group has announced that it plans to increase the marketing of the Crystal Palace complex in Europe and will invest additional capital in the complex to establish it as a high-end resort destination. Although there can be no assurance that such sale will be completed, an upgraded Crystal Palace complex may adversely affect the Company's operations in The Bahamas. RII's Business Plan and Financial Projections included in RII's Disclosure Statement relating to the Old Plan stated that RII believed that the net proceeds from the sale of the Paradise Island Business (excluding PIA) "could range from $250,000,000 to $300,000,000". Various other parties in interest in the Old Chapter 11 Cases, such as RII's then financial advisers and certain creditors' committees, concurred in such belief, and the Old Plan, which contemplated the sale of the Paradise Island Business, was approved. Based on the current economic climate, the events described above 88 regarding the Crystal Palace, the very limited amount of interest indicated by prospective purchasers of the Paradise Island Business and, in particular, the estimated net proceeds of the only offer received prior to the proposed Restructuring ($150,000,000), RII does not believe that proceeds of the magnitude originally contemplated in 1990 will be realizable prior to the maturity date of the Old Series Notes on April 15, 1994. Subsequent discussions with the prospective purchaser that offered $150,000,000 (net) did not lead to a definitive agreement. RII elected to make Old PIK Payments on the interest due on the Old Series Notes on October 15, 1990 and on April 15 and October 15 of 1991, 1992 and 1993, in order to continue the Company's capital expenditure program, which management believed was necessary for the Company's operating properties to remain competitive, and to conserve cash. For the 33 months ended September 30, 1993, RII's capital expenditures totaled approximately $69,000,000. The aggregate face amount of Old Series Notes issued in lieu of cash for the payment of interest on these seven payment dates was approximately $157,000,000, which increased the outstanding principal amount of the Old Series Notes to approximately $482,000,000. If RII were to make Old PIK Payments through the maturity date of the Old Series Notes and there were no principal retirements, the total obligation due on the Old Series Notes outstanding at maturity on April 15, 1994 would be approximately $518,000,000. Although the Company's liquidity is satisfactory until the maturity of the Old Series Notes in April 1994, the Company must reduce its debt to a level that can be supported by cash flow reasonably anticipated on a continuing basis. The effort to achieve that reduction through asset sales in the current economic environment has been unsuccessful. The Company therefore attempted to develop financial alternatives which could be coupled with continuing efforts to sell the Paradise Island Business. Between October 1991 and March 1992, RII retained Bear Stearns, DLJ and Alvarez & Marsal as financial advisers to assist RII in the development and analysis of such financial alternatives as well as the development of a long-term financial plan. Beginning in October 1991, the Company and its financial and legal advisors examined and considered a number of alternatives, including continued pursuit of a cash sale of all or a portion of the Paradise Island Business, a spin-off of the Paradise Island Business, a transfer of the Paradise Island Business to the holders of the Old Series Notes in the context of a restructuring of such notes, and pursuit of an equity investment in the Company or the Paradise Island Business. The analysis indicated, among other things, that a total debt restructuring was necessary and that the separation of the Paradise Island Business from the rest of the Company was advantageous and could be a key component of a total financial restructuring of RII. In addition, the analysis indicated that accomplishing the separation through a cash sale or a combination cash and stock sale of the Paradise Island Business could provide additional advantages if a satisfactory sales price could be obtained. Acting on behalf of the Company, Salomon Brothers provided an affiliate of SIHL, World Leisure Group Limited, with information concerning the Paradise Island Business in January 1992. From time to time thereafter, representatives of SIHL's affiliate expressed interest in buying all or a portion of the Paradise Island Business but made no formal offers. Moreover, the discussions contemplated prices which could only be considered by the Company in the context of a restructuring of the Old Series Notes. In June 1993, affiliates of SIHL began a series of discussions with representatives of Fidelity and TCW which culminated in the negotiation of the Paradise Island Purchase Agreement. During the summer of 1992, RII began a series of discussions with Fidelity and TCW, which represented to RII that various funds and accounts managed separately by them owned in the aggregate over 60% of the Old Series Notes. These discussions centered on RII's unsuccessful efforts to sell the Paradise Island Business and the implications of such failure with respect to the payment of the Old Series Notes upon their stated maturity in April 1994. These discussions resulted in a preliminary agreement among RII, Fidelity and TCW on December 14, 1992, which outlined a framework for the restructuring of RII's business and obligations with respect to the Old Series Notes. 89 To facilitate further discussions with Fidelity and TCW, RII agreed to pay the cost of retention of independent counsel. Thereafter, negotiations resumed in earnest with Fidelity and TCW, culminating in the agreement of Fidelity and TCW to the Restructuring described in this Information Statement/Prospectus. The negotiations were frank, complex, comprehensive and protracted and involved not only RII, Fidelity and TCW, but also SIHL and its various advisers with respect to the sale of the Paradise Island Business and the Griffin Group with respect to the New Griffin Services Agreement. The resulting proposed Restructuring described in this Information Statement/Prospectus has the support and approval of the Boards of Directors of each of RII and GRI, of Merv Griffin, and of Fidelity and TCW. FINANCIAL FORECASTS FOR THE COMPANY Set forth below are forecasts of certain financial data including net revenues, EBITDA (defined below under "-- Assumptions -- EBITDA"), net earnings, cash flow and condensed balance sheets for the Company's remaining operations after giving effect to the Restructuring. The forecasts assume the Restructuring is completed on December 31, 1993. The forecasts are based on a variety of assumptions as set forth below. The Company believes these assumptions are reasonable; however, they are subject to significant business, industry, economic, regulatory and competitive uncertainties, many of which are beyond the control of the Company. Although these forecasts represent the best estimates of the Company, for which it believes it has a reasonable basis as of the date of preparation thereof, September 1993, they are only estimates and actual results may vary materially from the forecasts. Consequently, the inclusion of the forecasts herein should not be regarded as a representation by the Company that the forecast results will be achieved. Because the forecasts are subject to significant uncertainties and are based upon assumptions that may not prove to be correct, prospective holders of the New Debt Securities and the New Equity Securities are cautioned not to place undue reliance on the forecasts. See "Risk Factors -- Risks Relating to the Forecasts". Except as required in connection with the hearing on the confirmation of the Plan, the Company does not intend to update or otherwise revise the forecasts to reflect the actual date of the completion of the Restructuring, events or circumstances existing or arising after the date hereof or the occurrence of unanticipated events. Any updated forecasts will be available at or prior to the Confirmation Hearing. Any delay in the Effective Date beyond June 30, 1994 could result in a termination of the Paradise Island Purchase Agreement and could jeopardize the Company's ability to consummate the Restructuring. See "Description of Paradise Island Purchase Agreement -- Termination". The forecasts should be read together with the information contained in RII information under "Pro Forma Financial Data", "Business of the Company" and the Consolidated Financial Statements of RII and the related notes included elsewhere in this Information Statement/Prospectus. The forecasts were prepared in compliance with the GUIDE FOR PROSPECTIVE FINANCIAL INFORMATION published by the American Institute of Certified Public Accountants. The Company's independent auditors have not performed any procedures with respect to the forecasts and, accordingly, accept no responsibility for them. FORECAST FINANCIAL DATA
YEAR ENDING DECEMBER 31, ---------------------------------------------------- 1994 1995 1996 1997 1998 -------- -------- -------- -------- -------- (IN MILLIONS, EXCEPT PER SHARE DATA) Net revenues: Resorts Casino Hotel: Casino.................... $ 259.1 $ 264.2 $ 269.5 $ 274.9 $ 280.5 Rooms..................... 7.3 7.4 7.5 7.7 7.8 Food and beverage......... 16.6 17.2 17.6 17.8 18.1 Other casino/hotel........ 4.9 5.0 5.1 5.2 5.3 Real estate related......... 8.3 8.5 8.8 9.1 9.3 -------- -------- -------- -------- -------- $ 296.2 $ 302.3 $ 308.5 $ 314.7 $ 321.0 -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
90 EBITDA: Resorts Casino Hotel........ $ 42.3 $ 43.4 $ 44.6 $ 45.8 $ 47.0 Real estate related......... (1.6) (1.7) (1.7) (1.8) (1.9) Corporate expense........... (6.3) (6.5) (6.8) (7.0) (7.3) -------- -------- -------- -------- -------- Consolidated EBITDA....... $ 34.4 $ 35.2 $ 36.1 $ 37.0 $ 37.8 -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- Net earnings: Consolidated EBITDA......... $ 34.4 $ 35.2 $ 36.1 $ 37.0 $ 37.8 Depreciation expense........ (13.1) (12.1) (9.9) (8.4) (7.1) Interest expense............ (17.7) (17.7) (17.7) (17.7) (17.7) Amortization of debt discount................... (3.0) (3.3) (3.7) (4.2) (4.7) Income taxes................ -- -- -- -- (2.0) -------- -------- -------- -------- -------- $ 0.6 $ 2.1 $ 4.8 $ 6.7 $ 6.3 -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- Net earnings per share........ $ 0.02 $ 0.06 $ 0.13 $ 0.18 $ 0.17 -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- Cash flow: Consolidated EBITDA......... $ 34.4 $ 35.2 $ 36.1 $ 37.0 $ 37.8 Capital expenditures........ (12.0) (12.0) (12.0) (12.0) (12.0) CRDA deposits, net of provision.................. (1.6) (1.6) (1.6) (1.7) (1.7) Payments of fees pursuant to New Griffin Services Agreement, net of expense.................... 2.1 (.2) 2.3 1.8 -- Interest payments........... (13.6) (17.7) (17.7) (17.7) (17.7) Income taxes................ -- -- -- (0.1) (2.1) -------- -------- -------- -------- -------- $ 9.3 $ 3.7 $ 7.1 $ 7.3 $ 4.3 -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
See "-- Assumptions" below. BECAUSE THE FORECASTS ARE BASED ON A NUMBER OF ASSUMPTIONS AND ARE INHERENTLY SUBJECT TO SIGNIFICANT UNCERTAINTIES AND CONTINGENCIES THAT ARE BEYOND THE COMPANY'S CONTROL, THERE CAN BE NO ASSURANCE THAT THE FORECASTS WILL BE REALIZED, AND ACTUAL RESULTS MAY BE HIGHER OR LOWER THAN THOSE SHOWN, POSSIBLY BY MATERIAL AMOUNTS. 91 Condensed Balance Sheets:
FORECAST ----------------------------------------------------------- ACTIVITY DECEMBER 31, HISTORICAL THROUGH 1993 BEFORE SEPTEMBER 30, DECEMBER EFFECT OF EFFECT OF DECEMBER 31, 1993 31, 1993 RESTRUCTURING RESTRUCTURING 1993 -------------- ----------- ------------ ------------ --------------- (IN MILLIONS) ASSETS Current assets: Cash and cash equivalents............. $ 71.0 $ (2.6) $ 68.4 $ (48.4) $ 20.0 Restricted cash equivalents........... 8.1 2.0 10.1 (6.7) 3.4 Receivables, net...................... 13.9 3.0 16.9 (10.4) 6.5 Note receivable from related party.... 2.3 -- 2.3 (2.3) -- Inventories........................... 8.5 -- 8.5 (7.0) 1.5 Prepaid expenses...................... 13.5 (0.5) 13.0 (2.3) 10.7 ------- ----------- ------------ ------------ ------- Total current assets.............. 117.3 1.9 119.2 (77.1) 42.1 ------- ----------- ------------ ------------ ------- Note receivable from related party...... 3.0 -- 3.0 (3.0) -- Property and equipment, net............. 454.1 (5.7) 448.4 (173.6) 274.8 Deferred charges and other assets....... 12.2 0.4 12.6 (1.3) 11.3 ------- ----------- ------------ ------------ ------- $ 586.6 $ (3.4) $ 583.2 $ (255.0) $ 328.2 ------- ----------- ------------ ------------ ------- ------- ----------- ------------ ------------ ------- LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) Current liabilities: Current maturities of long-term debt, net.................................. $ 429.5 $ 37.1 $ 466.6 $ (466.5) $ 0.1 Accounts payable and accrued liabilities.......................... 83.2 (8.7) 74.5 (34.1) 40.4 ------- ----------- ------------ ------------ ------- Total current liabilities......... 512.7 28.4 541.1 (500.6) 40.5 ------- ----------- ------------ ------------ ------- Long-term debt, net..................... 84.5 0.5 85.0 147.4 232.4 Deferred income taxes................... 54.0 -- 54.0 -- 54.0 Shareholders' equity (deficit).......... (64.6 ) (32.3) (96.9) 98.2 1.3 ------- ----------- ------------ ------------ ------- $ 586.6 $ (3.4) $ 583.2 $ (255.0) $ 328.2 ------- ----------- ------------ ------------ ------- ------- ----------- ------------ ------------ -------
See "-- Assumptions". 92
DECEMBER 31, ----------------------------------------------------- 1994 1995 1996 1997 1998 --------- --------- --------- --------- --------- (IN MILLIONS) ASSETS Current assets: Cash and cash equivalents................................... $ 29.3 $ 33.0 $ 40.1 $ 47.4 $ 51.7 Restricted cash equivalents................................. 3.4 3.4 3.4 3.4 3.4 Receivables, net............................................ 6.6 6.6 6.6 6.6 6.6 Inventories................................................. 1.5 1.5 1.5 1.5 1.5 Prepaid expenses............................................ 8.6 8.8 6.5 4.7 4.7 --------- --------- --------- --------- --------- Total current assets.................................... 49.4 53.3 58.1 63.6 67.9 --------- --------- --------- --------- --------- Property and equipment, net................................... 273.7 273.6 275.7 279.3 284.2 Deferred charges and other assets............................. 12.8 14.4 16.0 17.7 19.4 --------- --------- --------- --------- --------- $ 335.9 $ 341.3 $ 349.8 $ 360.6 $ 371.5 --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities -- accounts payable and accrued liabilities.................................................. $ 44.6 $ 44.6 $ 44.6 $ 44.6 $ 44.6 Long-term debt, net........................................... 235.5 238.8 242.5 246.7 251.4 Deferred income taxes......................................... 54.0 54.0 54.0 53.9 53.8 Shareholders' equity.......................................... 1.8 3.9 8.7 15.4 21.7 --------- --------- --------- --------- --------- $ 335.9 $ 341.3 $ 349.8 $ 360.6 $ 371.5 --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
See "-- Assumptions". BECAUSE THE FORECASTS ARE BASED ON A NUMBER OF ASSUMPTIONS AND ARE INHERENTLY SUBJECT TO SIGNIFICANT UNCERTAINTIES AND CONTINGENCIES THAT ARE BEYOND THE COMPANY'S CONTROL, THERE CAN BE NO ASSURANCE THAT THE FORECASTS WILL BE REALIZED, AND ACTUAL RESULTS MAY BE HIGHER OR LOWER THAN THOSE SHOWN, POSSIBLY BY MATERIAL AMOUNTS. ASSUMPTIONS At the date of preparation of these forecasts, the Company was unable to reliably estimate the Effective Date of the Restructuring. In order to provide five complete years of comparable forecast data, the forecasts assume the Restructuring is completed as of December 31, 1993. The forecasts do not include any data related to the Paradise Island Business or any costs incurred or expenditures made in connection with the Restructuring subsequent to December 31, 1993. Described below are other assumptions that management believes are material to the forecasts; however, not all assumptions used in the preparation of the forecasts are set forth herein. ACCOUNTING POLICIES. The forecasts were prepared using generally accepted accounting principles and accounting policies consistent with those currently being used, and expected to be used during the forecast period, in preparing historical financial statements of the Company. These include a new income tax accounting standard (Statement of Financial Accounting Standards No. 109), which was adopted at the beginning of 1993. Although the individual components of net earnings and cash flow are not presented on a comparable basis with the Company's historical financial statements, net earnings and cash flow are presented on a comparable basis, in all material respects. 93 NET REVENUES RESORTS CASINO HOTEL GENERAL. The following factors are anticipated to increase the number of visitors to Atlantic City and, therefore, favorably impact the Atlantic City casino/hotel industry during the forecast period: -continuing improvements to be made to the Atlantic City International Airport over the next one to two years making it more attractive for carriers to provide scheduled air service to Atlantic City; -the opening of the new Atlantic City Convention Center scheduled for the fall of 1996; -proposals by ten casino/hotels to add hotel rooms in Atlantic City in conjunction with their applications for CRDA financing of such projects from a special fund set aside to spur construction of new hotel rooms to support the new convention center; and -Atlantic City's continuing efforts to position itself as a destination resort. CASINO. The Company's casino revenue forecasts are based on projected industry growth and the Company's projected market share. The Company projects the Atlantic City casino industry's gaming revenues (excluding simulcast and poker revenues, as these games were introduced in June 1993) to experience a growth rate of approximately 2% per year from 1993 through 1998. Management believes these projections are reasonable given Atlantic City's historical gaming revenue growth performance and in light of the factors noted above under "-- General". These forecasts consider the potential effects of the opening of a new casino near Syracuse, New York by the Oneida Indians and the expansion of the gaming facilities at the Foxwoods Indian Casino in Connecticut; however, they assume no other jurisdictions on the east coast will approve and commence casino gaming during the forecast period. Resorts Casino Hotel contains a 60,000-square-foot casino and an 8,000-square-foot simulcast betting and poker area. In July 1993, Resorts Casino Hotel operated 1,859 slot machines, 82 table games and 25 poker tables. This represented 7.6% of the slot machines, 7.4% of the table games and 17.5% of the poker tables in use in the Atlantic City casino industry at that time. For the years 1994 through 1998 the Company projects its market share to be 7.5% for both slot and table game revenues. This projected market share is slightly greater than the average 7.3% market share that the Company has experienced in the 33 months ended September 30, 1993 for slot revenues. Management believes that the following factors will enable the Company to achieve this improved market share: -completion in 1993 of an extensive five-year capital improvements program for the entire property, including conversion of the garage to self-parking (completed in 1992); -opening of a new VIP slot and table player lounge, and completion of recent casino renovations including upgrade of high limit slot area and high limit baccarat and table pit area, purchase of certain new slot machines, and completion of the simulcast betting and poker room; and -implementation of new marketing programs aimed at higher margin drive-in customers coupled with a reduction in marketing efforts aimed at lower margin bus patrons. In addition, the forecasts include poker and simulcasting revenues, which are projected to increase at 2% per year after 1994, the first full year of offering such wagering. ROOMS. In recent years the 670-room Resorts Casino Hotel has experienced occupancy rates of 90% or better; however, consistent with industry practice, the Company reserves a portion of its hotel rooms and suites as complimentary accommodations for casino patrons. The Company currently is shifting its marketing focus to higher margin players, so it is expected that more rooms will be provided to casino patrons on a complimentary basis during the forecast period than have been provided in recent history. Thus, fewer rooms are expected to be available for sale. 94 In spite of this, the Company is projecting a slight increase in its room revenues (net of complimentaries) due to projected increases in its average room rates. The Company believes increased rates will be realizable because (i) the demand for first class casino/hotel rooms in Atlantic City has historically been very strong, (ii) the Company's facilities have recently undergone a major renovation program and (iii) the factors noted above under "General" are expected to increase the number of visitors to Atlantic City. FOOD AND BEVERAGE. Resorts Casino Hotel's food and beverage operations currently include three gourmet restaurants, four volume restaurants, two cocktail and entertainment lounges, room service and banquet operations, and the Turf Club, a bar with food service located in the new simulcast and poker room. The Company plans a restaurant master plan reconfiguration during 1994 and 1995 which is to include the addition of a mid-priced restaurant and the consolidation of kitchen operations for the gourmet restaurants. The kitchen consolidation should allow for faster service in the gourmet restaurants, thereby increasing the number of patrons served. Because of these changes planned by the Company and in light of the factors noted above under "General" that are expected to increase the number of visitors to Atlantic City, the Company projects an increase in food and beverage revenues to result from a modest increase in the number of patrons served, other than complimentaries provided to guests of the casino, and a slight increase in prices. OTHER CASINO/HOTEL REVENUES. Revenues in this category are derived primarily from entertainment and concessions. Resorts Casino Hotel's entertainment revenues are from ongoing production and headliner shows presented in the Superstar Theatre and special events (such as boxing matches) held in the Coconut Ballroom. As the Company's marketing efforts are targeting higher margin casino customers, the entertainment policy is shifting to more top name headliners than have been presented in recent years. The Company plans to continue to capitalize on Merv Griffin's celebrity status in attracting top name entertainers. Increased ticket prices are projected with the addition of headliners and more ticket sales and retail outlet sales are projected with the increase in the number of visitors to Atlantic City anticipated due to factors described under "-- General" above. However, because the majority of seating at shows and special events are typically provided to guests of the casino on a complimentary basis, the projected increase in other casino/hotel revenues during the forecast period is slight. REAL ESTATE RELATED Although the Company plans to continue its efforts to sell the Non-Operating Real Property in Atlantic City, no revenues from such sales are included in the forecasts. Real estate related revenues forecast herein represent rental revenues pursuant to the Showboat Lease. Revenues under this lease currently amount to $8,118,000 per lease year and are adjusted annually based on changes in the consumer price index. The forecasts assume a 3% increase per year in the consumer price index. EBITDA GENERAL.__"EBITDA" represents earnings before deduction of interest, taxes, depreciation and amortization. EBITDA should not be construed as an alternative to operating earnings (as determined in accordance with generally accepted accounting principles ("GAAP")) as an indicator of operating performance, or to cash flows from operating activities (as determined in accordance with GAAP) as a measure of liquidity. Although EBITDA is not an accepted measure under GAAP, the Company uses EBITDA as an indicator of performance of the Company's operations. Thus, like GAAP's operating earnings, EBITDA excludes non-operating income and expense items, income taxes and any extraordinary items. However EBITDA, unlike operating earnings, is not "penalized" by depreciation expense, which (i) is beyond the control of the Company's operating management, (ii) for the Company, has experienced significant fluctuations, as the Company's assets have been restated to estimated market value twice in the last several years, and (iii) is a non-cash expense. Although in 95 EBITDA, depreciation, routinely the Company's most significant non-cash expense, is not considered. EBITDA differs from cash flow from operating activities by the cash flow effect of changes in certain balance sheet accounts. RESORTS CASINO HOTEL. The operating margin (net revenues divided by EBITDA) for Resorts Casino Hotel is projected to increase slightly throughout the forecast period as the projected revenue increases discussed above are projected to be largely offset by increased operating expenses. REAL ESTATE RELATED. Rental revenues pursuant to the Showboat Lease, which make up the forecast real estate related revenues, are not included in EBITDA for Non-Operating Real Property. Such lease payments are passed through as interest to holders of RII's Showboat Notes due June 30, 2000, and are not otherwise available to the Company. No expenses are forecast relative to the Showboat Lease as it is a net lease. Real estate related EBITDA is primarily forecasted real estate taxes associated with the Company's Non-Operating Real Property holdings in Atlantic City. Although the Company plans to continue its efforts to sell these properties, no decreases in real estate taxes or other expenses which would result from the sale of these properties have been forecast. The forecasts assume that current assessed values for the properties will remain unchanged during the forecast period, and allow for increased property tax rates of 3.5% per year, which is the average of the rate increases experienced in 1992 and 1993. CORPORATE EXPENSE. Corporate expense includes payroll and related taxes and benefits of RII officers and employees in certain other corporate office functions, RII's directors' fees and expenses, and insurance and other overhead expenses. These expenses are forecast to increase by an annual inflation factor of between 3% and 4%. NET EARNINGS DEPRECIATION EXPENSE. Forecast depreciation expense is based on existing property and equipment as well as capital expenditures projected to be made throughout the forecast period. INTEREST EXPENSE. Forecast interest expense comprises interest on the New RIHF Mortgage Notes and the New RIHF Junior Mortgage Notes only. Based on forecast operating results, it is assumed the Company will not need to make a borrowing under the RIHF Senior Facility. Interest expense on the Showboat Notes due June 30, 2000 is not forecast here, as the rental income under the Showboat Lease which services such interest obligations is not included in the forecast Consolidated EBITDA. AMORTIZATION OF DEBT DISCOUNT.__Forecast amortization of debt discount comprises amortization of estimated discounts on the New Debt Securities and the discount on the Showboat Notes. INCOME TAXES. The Company has significant net operating loss carryforwards for Federal income tax purposes which, based on the forecasts, will be sufficient to offset all taxable income generated during the forecast period. Based upon its analysis of the transactions that will occur on the Effective Date, the Company believes that it will have in excess of $194,700,000 of net operating loss carryovers, which loss carryovers would be available to offset taxable income without restriction. In addition, the Company believes that it will have in excess of $388,500,000 of net operating loss carryovers the use of which is subject to an annual limitation. If all of the Company's net operating loss carryovers were subject to an annual limitation on use, the Company believes that it will be able to utilize approximately $2,000,000 of net operating loss carryovers per year to offset taxable income. Accordingly, to the extent that the pre-tax income of the Company exceeds $2,000,000 and all of the Company's net operating loss carryovers were determined to be subject to an annual limitation on use, the Company's tax liability would be higher than indicated in the forecast. To the extent taxable income is completely offset with net operating loss carryforwards, the Company will be subject to the alternative minimum tax ("AMT") with respect to such income at an effective rate of 2%. For financial reporting purposes, the current tax provision resulting from such AMT will be offset by a deferred tax benefit, as the AMT gives rise to a credit that carries forward indefinitely. 96 For state income tax purposes, RIH has significant net operating loss carryforwards which will expire in 1997. All forecast taxable income through 1997 for RIH is anticipated to be offset by the utilization of such carryforwards. The taxable income forecast for RIH in 1998 gives rise to $2,000,000 of state income taxes included in the forecasts for 1998. RII and its other subsidiaries are not forecast to have taxable income for state purposes during the forecast period. NET EARNINGS PER SHARE Net earnings per share data were calculated assuming 715,000 shares of RII Common Stock are issued in payment of financial advisory fees on the Restructuring prior to the Effective Date and 17,025,000 shares of RII Common Stock are issued to holders of Old Series Notes pursuant to the Restructuring. CASH FLOW CAPITAL EXPENDITURES. Since Resorts Casino Hotel will be completing an extensive capital improvements program in 1993, the majority of capital expenditures during the forecast period are for maintenance projects. CRDA DEPOSITS, NET OF PROVISION. This adjustment reflects the cash outflow for amounts projected to be deposited with the CRDA and eliminates from cash flow a non-cash expense associated with the Company's obligation to purchase CRDA bonds which bear below-market rates. PAYMENTS OF FEES PURSUANT TO NEW GRIFFIN SERVICES AGREEMENT, NET OF EXPENSE.__This adjustment reflects the cash outflow for fees payable in 1995 (the fees payable in 1994 are to be offset against the balance of the Griffin Group Note at the Effective Date, thus requiring no cash outflow) and eliminates from cash flow the non-cash expense recorded as prepaid fees are written off. INTEREST PAYMENTS. Forecast interest payments reflect interest on the New RIHF Mortgage Notes and the New RIHF Junior Mortgage Notes only. Such interest is projected to accrue from January 1, 1994; therefore, based on proposed interest payment dates, interest payments forecast for 1994 are less than one full year's interest. Based on forecast operating results, it is assumed the Company will not need to make a borrowing under the RIHF Senior Facility. Interest payments on the Showboat Notes due June 30, 2000 are not forecast here, as the rental income under the Showboat Lease which services such interest obligations is not included in the forecast Consolidated EBITDA. INCOME TAXES. See discussion of income taxes under "-- Assumptions -- Net Earnings". CONDENSED BALANCE SHEETS The forecast balance sheets assume the Restructuring is completed as of December 31, 1993. See RII information under "-- Summary Historical and Pro Forma Financial Data" for a description of the nature of the adjustments included in the forecast effect of the Restructuring. REORGANIZATION VALUES Over the past two years, RII and GRI have been advised by Bear Stearns with respect to: the value of post-Restructuring RII; in the case of the SIHL Sale, SIHL; in the case of the PIRL Spin-Off, the value of PIRL; and the imputed value of the distributions to the holders of the Old Series Notes. The total fees paid to date by the Company to Bear Stearns have been $_______. The Company requested that Bear Stearns provide it with such valuation advice for purposes of a plan of reorganization under chapter 11 of the Bankruptcy Code and did not impose any limitations on the scope of Bear Stearns' analysis. Solely for the purposes of the Plan, the reorganization enterprise value of RII was assumed by the Company, based on advice from Bear Stearns, to be approximately $225 million as of October 15, 1993. Under the Plan, based upon such reorganization enterprise value, the Company believes that the imputed reorganization value of its common equity is approximately $70 million or approximately $1.80 per share of RII Common Stock (based upon approximately 38 million shares of RII Common Stock outstanding as of the Distribution Date). 97 Solely for purposes of the Plan, the reorganization enterprise value of SIHL, in the case of SIHL Sale, and of PIRL, in the case of the PIRL Spin-Off, was assumed by the Company, based on advice from Bear Stearns, to be approximately $150 million and $125 million, respectively, as of October 15, 1993. Under the Plan, based upon such assumed reorganization enterprise values, the Company believes that the imputed reorganization value of the common equity of SIHL, in the case of the SIHL Sale is approximately $150 million or approximately $30 per share of SIHL Series A Shares and of PIRL, in the case of the PIRL Spin-Off is approximately $125 million or approximately $25 per share of PIRL Ordinary Shares (as the case may be) (based upon approximately 5 million SIHL Series A Shares and approximately 5 million PIRL Ordinary Shares outstanding as of the Distribution Date.) Based on consideration of such factors as the Company, based on the advice of Bear Stearns, believed to be relevant, the Company believes that: (a) the RIHF Mortgage Notes have an aggregate reorganization value of approximately $117 million or 93% of face; (b) the RIHF Junior Mortgage Notes have an aggregate reorganization value of approximately $31 million or 89% of face; (c) the SIHL Series A Shares issued and cash distributed to the holders of the Old Series Notes if the SIHL Sale is consummated have an aggregate reorganization value of approximately $161 million (comprised of $101 million cash and $60 million for the SIHL Series A Shares); and (d) the PIRL Ordinary Shares and cash distributed to holders of Old Series Notes if the PIRL Spin-Off is effected have an aggregate reorganization value of approximately $161 million (comprised of $36 million cash and $125 million for the PIRL Ordinary Shares). There can be no assurance that the amount of Excess Cash at the Distribution Date will be $36 million. The amount of Excess Cash is expected to be at least $30 million. These reorganization values suggest the following aggregate reorganization values for the distributions to holders of Old Series Notes as of October 15, 1993: ESTIMATED REORGANIZATION VALUE OF AGGREGATE PLAN DISTRIBUTIONS TO HOLDERS OF OLD SERIES NOTES
PLAN SCENARIO ---------------------------- SIHL SALE PIRL SPIN-OFF ----------- --------------- (IN MILLIONS) Cash from SIHL Sale............................................... $ 65 $ -- Other Cash........................................................ 36 36 RIHF Mortgage Notes............................................... 117 117 RIHF Junior Mortgage Notes........................................ 31 31 RII Common Stock.................................................. 28 28 SIHL Series A Shares.............................................. 60 N/A PIRL Ordinary Shares.............................................. N/A 125 Total....................................................... $ 337 $ 337
The foregoing aggregate reorganization values suggest the following reorganization values for the distributions for each $1,000 of principal amount of Old Series Notes as of October 15, 1993: ESTIMATED REORGANIZATION VALUE OF PLAN DISTRIBUTIONS FOR EACH $1,000 PRINCIPAL AMOUNT OF OLD SERIES NOTES
PLAN SCENARIO -------------------------- SIHL SALE PIRL SPIN-OFF ----------- ------------- Cash from SIHL Sale............................................... $ 134.9 $ -- Other Cash........................................................ 74.7 74.7 RIHF Mortgage Notes............................................... 242.7 242.7 RIHF Junior Mortgage Notes........................................ 64.3 64.3 RII Common Stock.................................................. 58.1 58.1 SIHL Series A Shares.............................................. 124.4 N/A PIRL Ordinary Shares.............................................. N/A 259.3 Total....................................................... $ 699.1 $ 699.1
98 Such reorganization values further suggest that, although the holders of Old RII Common Stock are diluted under the Plan, such holders retain reorganization value in Reorganized RII equivalent to approximately $1.80 per share. The foregoing valuations are based on a number of assumptions, including a successful reorganization of RII's and GRI's businesses and finances in a timely manner, the achievement of the financial forecasts reflected herein, the availability of net operating loss tax carryforwards, the amount of available cash, current market conditions, and the Plan becoming effective in accordance with its terms and on a basis consistent with the estimates and other assumptions discussed herein. The amount of distributions to be made to the holders of the Old Series Notes is a result of months of negotiation by RII, Fidelity and TCW (on behalf of various funds and accounts managed severally by each of them). In addition, discussions were held with the Griffin Group regarding the Griffin Group's contractual relationship with the Company and with SIHL regarding the Paradise Island Purchase Agreement. The Company, Fidelity and TCW were advised throughout the negotiating process by their respective legal and financial advisers. The Company's legal and financial advisors are disclosed in this Information Statement/Prospectus. In preparing a range of the respective estimated reorganization enterprise values of RII, SIHL and PIRL and of the reorganization value of the distributions to holders of Old Series Notes, Bear Stearns: (i) received certain historical financial information of RII and GRI for recent years and interim periods; (ii) received certain internal financial and operating data of RII and GRI, including financial forecasts prepared in September 1993, provided by management for the Company's remaining operations after giving effect to the Restructuring; (iii) met with certain members of senior management of RII and GRI to discuss the Company's remaining operations after giving effect to the Restructuring and their future prospects; (iv) reviewed publicly available financial data and considered the market values of public companies which Bear Stearns deemed generally comparable to the operating businesses of RII and GRI; (v) considered certain economic and industry information relevant to the operating businesses; and (vi) reviewed certain analyses prepared by other firms retained by RII and GRI and conducted such other analyses as Bear Stearns deemed appropriate. Although Bear Stearns conducted a review and analysis of RII's and GRI's businesses, operating assets and liabilities and the business plan of the Company's remaining operations after giving effect to the Restructuring, Bear Stearns assumed and relied on the accuracy and completeness of all (a) financial and other information furnished to it by RII and GRI and by other firms retained by RII and GRI and (b) publicly available information. Neither Bear Stearns nor any of the other financial advisers to RII and GRI independently verified management's projections in connection with such valuation, and no independent evaluations or appraisals of RII and GRI's assets were sought or were obtained in connection therewith. Estimates of reorganization enterprise values and of the reorganization value of the RII Common Stock and the SIHL Series A Shares, the PIRL Ordinary Shares, the RIHF Mortgage Notes and the RIHF Junior Mortgage Notes do not purport to be appraisals or necessarily to reflect the values that may be realized if assets are sold. The estimate of the values of RII, SIHL, and PIRL prepared by Bear Stearns represents hypothetical going concern reorganization enterprise values of these entities as the continued owner and operator of their businesses and assets and assumes consummation of the Plan, and, in the case of SIHL, the SIHL Sale, and in the case of PIRL, the PIRL Spin-Off, each on terms as disclosed herein. Such estimate was developed solely for purposes of formulation and negotiation of a plan of reorganization and analysis of imputed relative recoveries to creditors thereunder. Such estimate reflects computations of the estimated reorganization enterprise value of RII, SIHL and PIRL through the application of various valuation techniques (which techniques Bear Stearns has concluded are reasonably applicable to these entities) and does not purport to reflect or constitute appraisals, liquidation values or estimates of the actual market value that may be realized through the sale of any securities to be issued pursuant to the Plan, which may be significantly different than the amount set forth herein. The value of an operating business is subject to uncertainties and contingencies which are difficult to predict, and will fluctuate with changes in factors 99 affecting the financial conditions and prospects of such a business. As a result, the estimate of the reorganization enterprise values of RII, SIHL and PIRL and the reorganization value of the RII Common Stock, the SIHL Series A Shares, the PIRL Ordinary Shares, the RIHF Mortgage Notes, and the RIHF Junior Mortgage Notes set forth herein are not necessarily indicative of actual outcomes, which may be significantly more or less favorable than those set forth therein. Actual market prices of securities at issuance will depend upon, among other things, prevailing interest rates, conditions in the financial markets, the anticipated initial securities holdings of prepetition creditors, some of which may prefer to liquidate their investment rather than hold it on a long-term basis, and other factors which generally influence the prices of securities. Actual market prices of such securities also may be affected by RII's and GRI's history in their chapter 11 cases or by other factors not possible to predict. See "Risk Factors" for a discussion of various other factors which could materially affect the value of the securities distributed pursuant to the Plan. In the course of its evaluation, Bear Stearns considered a number of valuation indicators in determining the reorganization enterprise value of the RII, SIHL, and PIRL and the reorganization value of their respective new securities. These included consideration of the agreement of SIHL to purchase the operations of the Paradise Island Business, comparable company analyses based upon publicly traded gaming companies, and comparable securities analysis. The estimated reorganization enterprise value of SIHL and PIRL is premised primarily on the implied value associated with the proposed SIHL Sale. In the event the SIHL Sale is not consummated, and depending on the reasons for such non-consummation, the estimated reorganization enterprise value of PIRL could be lower by a material amount. Depending on the results of RII's and GRI's operations, changes in the financial markets, or failure to consummate the SIHL Sale, it is possible that Bear Stearns' valuation advice will differ at the Confirmation Hearing from that disclosed herein. See "Risk Factors". Based on the foregoing reorganization enterprise value, the anticipated value of distributions under the Plan equals or exceeds, as to any impaired class, the liquidation value of distributions to the creditors of such class. To compare the anticipated value of the distributions under the Plan with the liquidation value of RII and GRI, see "The Plan -- Confirmation of the Plan -- Best Interests Test" and the Liquidation Analysis attached as Appendix B hereto. THE BONDHOLDERS SUPPORT AGREEMENT As a result of the negotiations described above with Fidelity and TCW, RII and GRI have entered into a letter agreement (the "Bondholders Support Agreement"), with SIHL, SIIL, Fidelity and TCW, which separately advise and manage various funds and accounts that held as of October 21, 1993 in the aggregate approximately $309,926,000 of the outstanding principal amount of the Old Series Notes, or approximately 64% of the outstanding Old Series Notes subject to the conditions contained in the Bondholders Support Agreement. Fidelity and TCW have agreed to continue to hold at least 50.1% of the Old Series Notes through the Voting Record Date (unless it occurs after January 10, 1994). Pursuant to the Bondholders Support Agreement and subject to the conditions set forth therein, Fidelity and TCW have agreed to submit Acceptances of the Plan with respect to all the outstanding principal amounts of Old Series Notes (and the related GRI Guaranty endorsed thereon) held by funds or accounts managed by them on the Voting Record Date. Fidelity and TCW have agreed to consent to the termination and release of the Old Security Documents in connection with the Restructuring and the Plan with respect to all the outstanding principal amounts of Old Series Notes (and the related GRI Guaranty endorsed thereon) held by the funds and accounts managed by them. Under the Bondholders Support Agreement, Fidelity and TCW are not obligated to support any plan other than the Plan. Fidelity and TCW severally have the right to terminate the Bondholders Support Agreement if the Plan, the SIHL Purchase Agreement, the RIHF Mortgage Note Indenture, the RIHF Junior Mortgage Note Indenture and certain other agreements are breached, waived, amended, modified, altered in any material respect or terminated without their prior written consent. These consents and 100 approval rights terminate as to Fidelity and TCW if the funds and accounts managed by either of them hold in the aggregate less than 20% of the Old Series Notes and terminate as to Fidelity or TCW to the extent either of them owns no Old Series Notes. OVERVIEW OF THE RESTRUCTURING GENERAL The purpose of the Restructuring is to effect the changes to the Company's capital structure that the Company believes are necessary to return to profitability and to consummate the SIHL Sale (or, if the SIHL Sale is not consummated on the Effective Date, to effect the PIRL Spin-Off). Management of the Company believes that the Restructuring will improve the Company's financial position and allow management to create long-term value for the creditors and the shareholders of the Company and strengthen the Company's position in the gaming industry. The Restructuring is designed to alleviate the problems caused by the Company's excessive debt service levels and will help assure the Company's long-term viability. There can be no assurance, however, that implementation of the Restructuring will result in the Company's return to profitability. Likewise, there can be no assurance that, if the SIHL Sale is not consummated on the Effective Date, PIRL's operations will be profitable once the PIRL Spin-Off is effected. The Restructuring will be implemented by the Plan. The terms of the Plan result primarily from an analysis of the Company's financial condition and operations conducted by RII and its financial advisers and from negotiations conducted by RII and its financial and legal advisers with Fidelity and TCW. RII considered a number of alternatives to the Restructuring, including liquidation, an out-of-court restructuring of the Old Series Notes, a refinancing of the Old Series Notes and the sale of RII's resorts and casinos. RII and its financial advisers concluded that liquidation was not as favorable to RII's creditors and equity interest holders as the Plan. The Company's discussions with Fidelity and TCW, representing funds and accounts that hold a very substantial portion of the outstanding Old Series Notes, led it to conclude that an out-of-court restructuring of the Old Series Notes was not a viable option. With respect to refinancing the Old Series Notes, the Company does not believe that there exists any source of refinancing for the principal amount of the Old Series Notes on terms acceptable to the Company. Also, the Company's experience in attempting to sell its Paradise Island Business led it to conclude that a sale of its resorts and casinos individually was not a viable means to realize the fair value of the Company's business and assets. FIDELITY AND TCW SEPARATELY ADVISE AND MANAGE VARIOUS FUNDS AND ACCOUNTS THAT AS OF OCTOBER 21, 1993 HELD IN THE AGGREGATE APPROXIMATELY $309,926,000 PRINCIPAL AMOUNT OF THE OLD SERIES NOTES, OR APPROXIMATELY 64% OF THE OUTSTANDING OLD SERIES NOTES. FIDELITY AND TCW HAVE AGREED TO CONTINUE TO HOLD AN AGGREGATE OF AT LEAST 50.1% OF THE OLD SERIES NOTES THROUGH THE VOTING RECORD DATE (PROVIDED THAT THE VOTING RECORD DATE IS ON OR BEFORE JANUARY 10, 1994), HAVE ENGAGED IN EXTENSIVE NEGOTIATIONS WITH RII AND GRI WITH RESPECT TO THE RESTRUCTURING, AND HAVE AGREED TO VOTE ALL OLD SERIES NOTES OWNED BY FUNDS AND ACCOUNTS MANAGED BY THEM AS OF THE VOTING RECORD DATE FOR ACCEPTANCE OF THE PLAN AND TO CONSENT TO THE TERMINATION AND RELEASE OF THE OLD SECURITY DOCUMENTS IN CONNECTION THEREWITH. MERV GRIFFIN, WHO HOLDS 4,398,115 SHARES OF RII COMMON STOCK, OR APPROXIMATELY 21.82% OF THE OUTSTANDING RII COMMON STOCK, HAS AGREED TO VOTE FOR ACCEPTANCE OF THE PLAN. THE HOLDERS OF 1,307,300 1990 STOCK OPTIONS ISSUED UNDER THE 1990 STOCK OPTION PLAN, OR APPROXIMATELY 74% OF THE OUTSTANDING 1990 STOCK OPTIONS, HAVE AGREED TO VOTE FOR ACCEPTANCE OF THE PLAN. RII HAS AGREED TO VOTE ITS INTERCOMPANY CLAIM AGAINST GRI AND THE GRI COMMON STOCK FOR ACCEPTANCE OF THE PLAN. THE BOARD OF DIRECTORS OF EACH OF RII AND GRI HAS UNANIMOUSLY APPROVED THE RESTRUCTURING, THE PLAN AND THE SOLICITATION AND RECOMMENDS THAT ALL IMPAIRED CREDITORS AND EQUITY INTEREST HOLDERS SUBMIT BALLOTS ACCEPTING THE PLAN. 101 THE PLAN. The Plan provides, among other things, that the holders of the Old Series Notes as of the Distribution Record Date, which will be the close of business in New York City on the Effective Date, will receive the following consideration on the relevant Distribution Date for each $1,000 of principal amount of Old Series Notes outstanding as of such date (and for any accrued interest thereon) (the aggregate principal amount of Old Series Notes outstanding as of October 15, 1993 was approximately $482,000,000): -- $259.38 principal amount of the New RIHF Mortgage Notes; -- one Unit comprised of $72.63 principal amount of the New RIHF Junior Mortgage Notes and .07263 share of RII Class B Common Stock; -- 35.33 shares of RII Common Stock; -- either (A) $134.88 in cash, plus interest on such amount at an annual rate of 7.5% from January 1, 1994 to the SIHL Closing Date, plus 4.15 SIHL Series A Shares, representing a pro rata share of the consideration received from the SIHL Sale, or (B) if the SIHL Sale is not consummated on the Effective Date, 10.375 PIRL Ordinary Shares pursuant to the PIRL Spin-Off; -- a pro rata share of Excess Cash, which pro rata share is projected to be a minimum of $62.25; -- the non-transferable right to receive a pro rata share of Net Reserved Cash and Net Plan Consummation Cash; and -- the non-transferable right to receive a pro rata share of payments from Deferred Cash, which pro rata share is projected to be a minimum of $5. See "Description of Litigation Trust Units".
If the SIHL Sale is consummated, assuming a reorganization enterprise value of approximately $225 million for RII and a reorganization enterprise value for SIHL of approximately $150 million, the estimated recovery for holders of Old Series Notes is projected to be approximately 70% of the principal amount of Old Series Notes outstanding on October 15, 1993. If the SIHL Sale is not consummated and the PIRL Spin-Off is effected, the estimated recovery for holders of Old Series Notes is projected to be approximately 70% of the principal amount of Old Series Notes outstanding on October 15, 1993, with an assumed reorganization enterprise value of approximately $225 million for RII and a reorganization enterprise value for PIRL of approximately $125 million. There can be no assurance that the projected enterprise values of RII under either the SIHL sale or of PIRL in the event of the PIRL Spin-Off will be realized. The SIHL Aggregate Cash Purchase Price, the New Debt Securities and the New Equity Securities will be distributed to the disbursing agent for distribution to the holders of Old Series Notes on the Effective Date. Payments of Net Reserved Cash will be made as soon as practicable after the Effective Date, but in no event later than 90 days after the Effective Date. Payments of Net Plan Consummation Cash will be made as soon as practicable but no later than 90 days after the Effective Date; provided, however, that if all Plan Expenses have not been paid by the 90th day after the Effective Date, RII and GRI may continue to hold back for an additional 60 days the portion of Net Plan Consummation Cash deemed by the Bankruptcy Court to be necessary to satisfy remaining Plan Expenses, after which time the remaining Net Plan Consummation Cash will be distributed, unless otherwise ordered by the Bankruptcy Court. Payments of Deferred Cash will be made within three business days after receipt by RII of the Litigation Trust Distributions in immediately available funds. Payments of Excess Cash will be made on the Effective Date or as soon thereafter as practicable, but in no event later than 20 days after the Effective Date. As part of the implementation of the Restructuring, Fidelity, which advises and manages various funds that hold Old Series Notes, will cause one or more of the funds it manages to enter into the RIHF Senior Facility which will allow RIHF to borrow up to $20,000,000 through the issuance of RIHF Senior Facility Notes. Any amount borrowed by RIHF under the RIHF Senior Facility will be loaned by RIHF to RIH, and possibly by RIH to RII, through intercompany transactions and will be 102 used for working capital and general corporate purposes. All principal payments on the RIHF Senior Facility Notes will be due July 15, 2002. Interest on the RIHF Senior Facility Notes will accrue at the rate of 11% per year and will be payable in cash, semi-annually on January 15 and July 15 of each year, commencing on the January 15 or July 15 next following the date of the initial borrowing under the RIHF Senior Facility. The RIHF Senior Facility will be available for a single borrowing during the one-year period from the Efffective Date, provided that the public resale of the RIHF Senior Facility Notes by the purchaser thereof upon a resale is registered, if required, under the Securities Act and the RIHF Senior Facility Note Indenture has been qualified under the TIA. The RIHF Senior Facility Notes will be secured by a lien on the RIHF Senior Facility Trust Estate. In addition, RIH will issue the RIH Senior Facility Guaranty that will guarantee the payment of principal of and interest on the RIHF Senior Facility Notes. The liens on the Resorts Casino Hotel securing the payment of the RIHF Senior Facility Notes and the RIH Senior Facility Guaranty will be senior to the liens securing payment of the New RIHF Mortgage Notes, the RIH Mortgage Guaranty, the New RIHF Junior Mortgage Notes and the RIH Junior Mortgage Guaranty. RII also will issue a guaranty of the payment of principal and interest on the RIHF Senior Facility Notes. The following transactions will be effected in connection with the Restructuring: (a) the holders on the Distribution Record Date of the Old Series Notes will receive the New Debt Securities, the New Equity Securities, Excess Cash and the right to payments from Net Reserved Cash, Net Plan Consummation Cash and Deferred Cash in accordance with the terms of the Plan; (b) (i) if the SIHL Sale is consummated on the Effective Date, the holders on the Distribution Record Date of the Old Series Notes will receive the SIHL Series A Shares and the SIHL Aggregate Cash Purchase Price in accordance with the terms of the Plan; or (ii) if the SIHL Sale is not consummated on or before the Effective Date, the holders on the Distribution Record Date of the Old Series Notes will receive the PIRL Ordinary Shares and, at the election of PIRL, the Interim Management Agreement will be executed; (c) the RIHF Senior Facility will be executed and delivered; (d) the Amended RII Certificate of Incorporation and the Amended RII By-Laws will be adopted; (e) the initial post-Restructuring directors will be appointed to RII's Board of Directors (including two Class B Directors); (f) the Griffin Warrants will be issued; (g) various intercompany reorganization transactions described on Schedule 6.3 to the Plan will be effected; (h) the 1990 Stock Option Plan will be terminated and the 1994 Stock Option Plan will be implemented; and (i) the Old Security Documents will be released and terminated. If sufficient Acceptances are received from the holders of Old Series Notes (including the related GRI Guaranty) and from the holders of RII Common Stock, such Acceptances will constitute approval of the 1994 Stock Option Plan by such holders for purposes of compliance with Rule 16b-3 promulgated under the Exchange Act. For information on the election of directors after the Effective Date, see "-- Post-Restructuring RII Board of Directors". If the Requisite Acceptances are not received by the Voting Deadline, RII and GRI will be forced to evaluate options then available to them. Pursuant to the Paradise Island Purchase Agreement, RII has committed, notwithstanding the failure to obtain the Requisite Acceptances, to continue to pursue confirmation of the Plan until the Paradise Island Purchase Agreement is terminated. This commitment could require RII to conduct a further solicitation with respect to the Plan until December 31, 1994. Because the Paradise Island Purchase Agreement can be terminated by SIHL if an RII Chapter 11 case is not commenced by February 15, 1994, RII might conduct such solicitation after filing a chapter 11 case. RII's failure to abide by the terms of the Paradise Island Purchase Agreement would, under certain circumstances, give rise to a claim by SIHL for breach of such agreement and/or entitle SIHL to reimbursement from the SIHL Buyer Expense Escrow. Moreover, such failure, if not approved by Fidelity and TCW, may relieve Fidelity and TCW of their obligations under the Bondholders Support Agreement. Other options available to RII and GRI if the Requisite Acceptances are not obtained include submission of a revised prepackaged plan of reorganization and filing for protection under the Bankruptcy Code without a preapproved or consensual plan of reorganization. If a bankruptcy proceeding were commenced without a preapproved plan, there is no assurance that a plan would be confirmed or that any recovery would be realized by the holders of the RII Common Stock and the 103 existing holders of 1990 Stock Options. In such event, the holders of the Old Series Notes might receive a substantially smaller recovery on their claims than under the Plan. See "Risk Factors -- Certain Consequences of Non-acceptance of the Plan". Confirmation and consummation of the Plan is subject to certain conditions, one of which cannot be waived by RII and GRI: the entry of a Confirmation Order which has not been stayed. There can be no assurance that such condition will be satisfied. As a practical matter, although the condition requiring the entry of an order declaring that, as of the Effective Date, the Old Security Documents shall be deemed released and terminated is waivable, the transactions contemplated by the Plan cannot be consummated if the Old Security Documents are not released and terminated. See "The Plan -- Conditions Precedent to Confirmation and Consummation of the Plan". POST-RESTRUCTURING RII BOARD OF DIRECTORS Pursuant to the Restructuring, the number of persons comprising the Board of Directors of RII will remain at six. Subject to receipt of any necessary qualification of directors from the Casino Control Commission the initial post-Restructuring Board of Directors of RII will consist of Merv Griffin, Thomas Gallagher, Jay Greene and William Fallon, and as Class B Directors, Vincent Naimoli and Charles Masson. After the Restructuring Date, the holders of RII's Common Stock, voting as a class, will be entitled to elect four directors of RII and the holders of RII Class B Common Stock, voting as a class, will be entitled to elect two Class B Directors of RII. The Board of Directors will be divided into three classes, and approximately one-third of the total number of directors will be elected each year. Pursuant to the Plan, on the Effective Date the initial post-Restructuring board of directors of RII will be composed of directors designated by RII. If the Class B Triggering Event should occur, the holders of the RII Class B Common Stock, voting as a class, would elect that number of additional Class B Directors as will constitute, from time to time, a majority of the entire RII Board of Directors. CERTAIN SIGNIFICANT EFFECTS OF THE RESTRUCTURING Implementation of the Restructuring would have important effects on the Company and on the current holders of the Old Series Notes, the RII Common Stock and the 1990 Stock Options and would result in a significant reduction of RII's financial obligations. Certain of the anticipated effects are described below. REDUCTION OF DEBT SERVICE OBLIGATIONS The Restructuring would have the effect of reducing and rescheduling RII's principal and interest payments. The Restructuring also would result in the elimination and modification of certain restrictive covenants now applicable to RII pursuant to the Old Series Indenture. Such modifications give the Company increased financial flexibility, including the ability to explore additional revenue generating operations. See "Summary -- Comparison of New RIHF Mortgage Notes and New RIHF Junior Mortgage Notes to Old Series Notes". The following table shows, at the dates and for the periods shown, on a pro forma basis, the impact of the Restructuring as it affects the replacement of the Old Series Notes with the New Debt Securities. It should be noted that the table excludes the Showboat Notes and capital leases as it is the Company's intention that such items will not be affected by the Restructuring. The pro forma data for the principal amount of the New Debt Securities at September 30, 1993 are based on the assumption that the Restructuring occurred on that date. The pro forma data regarding the stated interest calculation for the New Debt Securities for the fiscal year ended December 31, 1992, and the three quarters ended September 30, 1993, are based on the assumption that the Restructuring occurred on January 1, 1992.
NEW OLD DEBT SERIES NOTES SECURITIES -------------- -------------- (IN THOUSANDS) Principal amount outstanding at September 30, 1993 (1)............................ $ 448,572 $ 160,000 Stated interest calculation for the fiscal year ended December 31, 1992........... 50,686(2) 17,731 Stated interest calculation for the three quarters ended September 30, 1993....... 47,224(2) 13,298 - ------------------------ (1) Represents the principal amount of the Old Series Notes on a historical basis or the principal amount of the New Debt Securities on a pro forma basis, exclusive of unamortized discounts. At October 15, 1993, giving effect to the payment of PIK interest on that date, the principal amount outstanding was approximately $482,000,000.
104 (2) The calculation of the interest on the Old Series Notes was based on the stated interest rates with the principal amount increasing on April 15 and October 15 due to the issuance of additional Old Series Notes in lieu of paying cash interest. SIGNIFICANT DILUTION OF EQUITY INTERESTS If the Restructuring were implemented, 17,025,000 shares of RII Common Stock would be issued to holders of the Old Series Notes. Issuance of such number of shares of RII Common Stock would dilute significantly the equity interests of the existing holders of the RII Common Stock and the existing holders of the 1990 Stock Options. The following table shows the percentage of beneficial ownership of the RII Common Stock before and after consummation of the Restructuring by the holders of the securities listed below, based on the assumptions set forth in the notes thereto:
POST-RESTRUCTURING -------------------------------------------- ASSUMING OPTIONS NOT ASSUMING OPTIONS PRE-RESTRUCTURING EXERCISED EXERCISED ------------------ ----------------------- ------------------ SHARES % SHARES % SHARES % ---------- ------ ---------- ----------- ---------- ------ Holders of RII Common Stock (1)......... 20,157,234 92.0% 20,872,234 49.0% 20,872,234 44.7% Holders of Old Series Notes (2)......... 17,025,000 40.0 17,025,000 36.5 Griffin Warrants (3).................... 4,665,000 11.0 4,665,000 10.0 1990 Stock Options (4).................. 1,758,800 8.0 1,758,800 3.8 1994 Stock Options (5).................. 2,333,000 5.0 ---------- ------ ---------- ----- ---------- ------ 21,916,034 100.0% 42,562,234 100.0% 46,654,034 100.0% ---------- ------ ---------- ----- ---------- ------ ---------- ------ ---------- ----- ---------- ------ - ------------------------ (1) Pre-Restructuring amount represents shares of RII Common Stock outstanding on November 30, 1993. Post-Restructuring amount assumes 715,000 shares are issued to financial advisers in settlement of certain recapitalization costs. (2) Assumes holders of Old Series Notes are issued shares in an amount that would represent 40% of the shares of RII Common Stock outstanding assuming the Griffin Warrants are exercised. Such ownership will be subject to dilution by the exercise of the 1990 Stock Options outstanding as well as options to be granted under the 1994 Stock Option Plan. Assumes that all holders of Unsurrendered Public Debt Claims and of Old Series Notes timely comply with the provisions of the Plan and the Old Plan that govern entitlement to distributions. (3) Assumes the Griffin Warrants are granted and exercised. (4) Represents shares of RII Common Stock which may be issued upon exercise of the 1990 Stock Options outstanding on November 30, 1993; related percentages assume all such options are exercised. (5) The 1994 Stock Option Plan will allow for the granting of options to purchase up to 5% of the outstanding RII Common Stock; related percentage assumes all such options are granted and exercised.
THE PLAN The following summary of the material provisions of the Plan. A copy of the Plan is attached hereto as Appendix A. BRIEF EXPLANATION OF CHAPTER 11 Chapter 11 is the business reorganization chapter of the Bankruptcy Code. Under chapter 11 of the Bankruptcy Code, a debtor is authorized to reorganize its business for the benefit of its creditors and equity interest holders. In addition to permitting rehabilitation of the debtor, another goal of chapter 11 is to promote equality of treatment of creditors and equity interest holders of equal rank with respect to the distribution of a debtor's assets. In furtherance of these two goals, upon the filing of a petition for reorganization under chapter 11, section 362 of the Bankruptcy Code provides for an automatic stay of substantially all acts and proceedings against the debtor and its property, including all attempts to collect claims or enforce liens that arose prior to the commencement of the debtor's case under chapter 11. The consummation of a plan of reorganization is the principal objective of a chapter 11 reorganization case. A plan of reorganization sets forth the means for satisfying claims against, and interests 105 in, a debtor. Confirmation of a plan of reorganization by the bankruptcy court makes the plan binding upon the debtor, any issuer of securities under the plan, any person acquiring property under the plan and any creditor, equity security holder or general partner in the debtor. Confirmation of a plan discharges the debtor from any debt that arose prior to the date of confirmation of the plan and substitutes therefor the obligations specified under the confirmed plan. SOLICITATION OF ACCEPTANCES OF THE PLAN RII and GRI hereby solicit acceptances or rejections of the Plan from holders of impaired claims and interests under section 1126(b) of the Bankruptcy Code. Under section 1126(b) of the Bankruptcy Code, a holder of a claim or interest that has accepted or rejected a plan of reorganization before the commencement of a chapter 11 case will be deemed to have accepted or rejected such plan for purposes of confirmation of such plan under chapter 11 of the Bankruptcy Code if the solicitation is in compliance with any applicable non-bankruptcy law, rule or regulation governing the adequacy of disclosure in connection with the solicitation, or if there is not any such law, rule or regulation, such solicitation was made after disclosure of adequate information as defined in section 1125(a) of the Bankruptcy Code. RII and GRI believe that this Information Statement/Prospectus complies with the requirements of section 1126(b) of the Bankruptcy Code for purposes of soliciting acceptances or rejections of the Plan. If, by the Voting Deadline, the Requisite Acceptances have been received, RII and GRI currently intend to commence reorganization cases by filing petitions for relief under chapter 11 of the Bankruptcy Code and to use the Acceptances solicited pursuant to this Information Statement/Prospectus to seek confirmation of the Plan under chapter 11 of the Bankruptcy Code as promptly as practicable. Neither RII nor GRI intends to commence a case under chapter 11 of the Bankruptcy Code prior to the Voting Deadline, although it reserves the right to do so in its sole discretion. RII and GRI would only voluntarily commence a bankruptcy case prior to the Voting Deadline in the event of a material adverse change in the finances or operations of the Company or the commencement of collection or foreclosure actions with respect to the Old Series Notes or the collateral securing such Notes. Any party in interest, including any creditor, equity interest holder or indenture trustee, has standing to appear and be heard on any issue in the chapter 11 case. At or before the hearing on approval of this Information Statement/Prospectus, RII and GRI will seek an order of the Bankruptcy Court finding that (a) the Solicitation was in compliance with the Securities Act and the Exchange Act and the rules and regulations thereunder and, if applicable, the provisions of the Bankruptcy Code, and therefore, (b) the holders of claims and interests that have accepted or rejected the Plan pursuant to the Solicitation are deemed to have accepted or rejected the Plan for purposes of confirmation of the Plan under chapter 11 of the Bankruptcy Code. RII and GRI believe that they will have the best opportunity to confirm the Plan and accomplish the Restructuring if RII and GRI receive the Requisite Acceptances prior to the commencement of any bankruptcy cases. See "Confirmation of the Plan" for a discussion of the Requisite Acceptances. In addition, RII and GRI believe that the prior acceptance of the Plan would minimize disputes during a bankruptcy case concerning the reorganization of RII and GRI and would shorten the time required to complete the reorganization, reduce the expenses of the proceeding and minimize the disruption of RII's and GRI's business that could result from protracted and contested bankruptcy cases. IF RII AND GRI WERE FORCED TO COMMENCE BANKRUPTCY CASES PRIOR TO RECEIPT OF THE REQUISITE ACCEPTANCES, RII AND GRI BELIEVE THAT SUCH CASES COULD BE PROTRACTED, COSTLY AND DISRUPTIVE TO RII'S AND GRI'S BUSINESS AND, AS A RESULT, COULD JEOPARDIZE THE ACCOMPLISHMENT OF THE PLAN. PROPONENTS OF THE PLAN The Plan is proposed by RII, GRI, RIH, RIHF and PIRL. This joint proposal of the Plan has potential ramifications with respect to the securities law registration exemption contained in section 1145 of the Bankruptcy Code. For further discussion of these securities law issues, see "Applicability of Federal and Other Securities Laws to Resales of Securities -- Issuance of Securities Under the Plan". 106 VOTING ON THE PLAN Pursuant to the Bankruptcy Code, only classes of claims or interests that are "impaired" are entitled to vote on a plan. Generally speaking, a claim or interest is impaired under a plan of reorganization if the plan provides that such claim or interest will not be repaid in full or that the legal, equitable or contractual rights of the holder of such claim or interest are altered. Only claims or interests in the following classes are impaired under the Plan: RII Class 2 -- Claims of holders of Old Series Notes RII Class 7 -- Interests of holders of RII Common Stock RII Class 8 -- Interests of holders of the 1990 Stock Options GRI Class 2 -- Claims of holders of the GRI Guaranty GRI Class 4 -- Claims of RII, as the holder of the RII Intercompany Claim GRI Class 5 -- Interest of RII, as the holder of all GRI Common Stock
ALL OTHER CLASSES OF CLAIMS AND INTERESTS ARE UNIMPAIRED UNDER SECTION 1124 OF THE BANKRUPTCY CODE. HOLDERS OF CLAIMS OR INTERESTS IN THESE UNIMPAIRED CLASSES ARE DEEMED TO HAVE ACCEPTED THE PLAN PURSUANT TO SECTION 1126(F) OF THE CODE. HOWEVER, HOLDERS OF CLAIMS OR INTERESTS IN ANY CLASS, WHETHER IMPAIRED OR NOT, MAY OBJECT TO CONFIRMATION OF THE PLAN. FIDELITY AND TCW SEPARATELY ADVISE AND MANAGE VARIOUS FUNDS AND ACCOUNTS THAT AS OF OCTOBER 21, 1993 HELD IN THE AGGREGATE CLAIMS IN RII CLASS 2 OF APPROXIMATELY $309,926,000 PRINCIPAL AMOUNT OF THE OLD SERIES NOTES (AND RELATED CLAIMS IN GRI CLASS 2), OR APPROXIMATELY 64% OF THE OUTSTANDING OLD SERIES NOTES. FIDELITY AND TCW HAVE AGREED TO CONTINUE TO HOLD AN AGGREGATE OF AT LEAST 50.1% OF THE OLD SERIES NOTES THROUGH THE VOTING RECORD DATE (PROVIDED THAT THE VOTING RECORD DATE IS ON OR BEFORE JANUARY 10, 1994), HAVE ENGAGED IN EXTENSIVE NEGOTIATIONS WITH RII AND GRI IN RESPECT TO THE RESTRUCTURING AND HAVE AGREED TO VOTE ALL OLD SERIES NOTES OWNED BY FUNDS AND ACCOUNTS MANAGED BY THEM AS OF THE VOTING RECORD DATE FOR ACCEPTANCE OF THE PLAN AND TO CONSENT TO THE TERMINATION AND RELEASE OF THE OLD SECURITY DOCUMENTS IN CONNECTION THEREWITH. MERV GRIFFIN, WHO HOLDS INTERESTS IN RII CLASS 7 OF 4,398,115 SHARES OF RII COMMON STOCK, REPRESENTING APPROXIMATELY 21.82% OF THE OUTSTANDING RII COMMON STOCK, HAS AGREED TO VOTE FOR THE PLAN. THE HOLDERS OF 1,307,300 1990 STOCK OPTIONS (I.E., INTERESTS IN RII CLASS 8), OR APPROXIMATELY 74% OF THE OUTSTANDING 1990 STOCK OPTIONS, HAVE AGREED TO VOTE FOR THE PLAN. RII HAS AGREED TO VOTE THE RII INTERCOMPANY CLAIM AND ITS EQUITY INTEREST IN GRI FOR ACCEPTANCE OF THE PLAN. The Bankruptcy Code defines acceptance of a plan of reorganization by a class of claims as acceptance by holders of at least 66 2/3% in dollar amount and more than one-half in number of the Allowed Claims of that class that have actually been voted on the plan. The Bankruptcy Code defines acceptance of a plan of reorganization by a class of interests as acceptance by the holders of at least 66 2/3% in number of the Allowed Interests of that class that have actually been voted on the plan. Under the Bankruptcy Code, only those who vote to accept or to reject the Plan will be counted for purposes of determining acceptance or rejection of the Plan by any impaired class of claims or interests. Votes cast by holders of disputed Claims or Interests will not be counted unless the holders thereof, upon application to the Bankruptcy Court, obtain an order temporarily allowing such Claims for voting purposes only. See "-- Confirmation of the Plan". IF THE PLAN IS CONFIRMED BY THE BANKRUPTCY COURT, EACH HOLDER OF A CLAIM OR INTEREST IN A CLASS WILL RECEIVE THE SAME CONSIDERATION AS THE OTHER MEMBERS OF SUCH CLASS, WHETHER OR NOT SUCH HOLDER VOTED TO ACCEPT THE PLAN. MOREOVER, UPON CONFIRMATION, THE PLAN WOULD BE BINDING ON ALL CREDITORS AND EQUITY INTEREST HOLDERS OF RII AND GRI REGARDLESS OF WHETHER SUCH CREDITORS OR EQUITY INTEREST HOLDERS, OR THE CLASS OF WHICH THEY ARE MEMBERS, VOTED TO ACCEPT THE PLAN. 107 TREATMENT OF TRADE CREDITORS AND EMPLOYEES Since the Plan and the chapter 11 filings will relate only to RII and GRI and not to RII's operating subsidiaries or the casinos they operate, the claims of trade creditors and employees of such subsidiaries will not be affected by such filings. GRI does not have any employees and believes that it does not have any trade creditors. As a result of its being a holding company, RII has few trade creditors and employees. To the extent necessary, RII, upon commencement of its chapter 11 case, intends promptly to seek the authorization of the Bankruptcy Court to maintain flexibility to pay, prior to confirmation of the Plan, the prepetition claims of trade creditors. In addition, RII intends to seek the approval of the Bankruptcy Court to pay all accrued prepetition salaries and wages, expense reimbursements and severance, to permit affected employees to utilize their paid vacation time which accrued prior to the date of the filing of the prepackaged bankruptcy case (so long as they remain employees of RII) and to continue paying medical benefits under RII's health plan. There can be no assurance that such authorization will be obtained. Pursuant to the Plan, RII and GRI have agreed not to pay, and not to cause their subsidiaries to pay, any claim of a trade creditor or employee except in the ordinary course of business and consistent with past practice and to collect, and to cause their subsidiaries to collect, receivables in the ordinary course of business and consistent with past practice. On the Effective Date, RII Retained Cash rather than Plan Consummation Cash shall be used to pay any prepetition Allowed Claims or post-petition Allowed Administrative Claims of trade creditors and employees which, in the ordinary course of business and consistent with past practice, would not have been paid by the Effective Date. USE OF CASH FOR OPERATIONS To maintain RII's operations during its chapter 11 case, RII will need the ability to use its cash on hand on the Petition Date as well as funds received during the pendency of its case. The Bankruptcy Code provides that, to the extent any person has a security interest in any Cash Collateral (i) RII is prohibited from making any post-petition use of such Cash Collateral without obtaining Bankruptcy Court approval or the consent of such person, and (ii) such person is entitled to "adequate protection" of such security interest as a condition to the Bankruptcy Court's authorization of such use. RII does not believe that any person has a security interest in any cash that could be Cash Collateral. If any person asserts that cash which RII intends to use is cash collateral, as such term is defined in section 363 of the Bankruptcy Code (the "Cash Collateral"), RII will seek entry of an order authorizing RII to use such Cash Collateral subject to provision of appropriate adequate protection. The Bankruptcy Code generally defines "cash collateral" as cash, negotiable instruments, documents of title, securities, deposit accounts, or other cash equivalents in which both the debtor's estate and a third party have an interest. It includes the proceeds, products, rents, or profits of property subject to a security interest. The Cash Collateral Order will provide that RII will be authorized to use the Cash Collateral in accordance with the terms of the Cash Collateral Order. The terms of the Cash Collateral Order will be negotiated with any person objecting to the use of Cash Collateral. OTHER FIRST DAY ORDERS In addition to any orders relating to the payment of prepetition claims of trade creditors and employees, if any, and relating to the use of Cash Collateral, RII and GRI intend to seek certain first day orders, including the following (if necessary): (i) an order authorizing the retention of professionals (including accountants, attorneys and financial advisors) in connection with the chapter 11 cases; (ii) an order authorizing the retention of ordinary course professionals without the filing of individual retention applications and affidavits; (iii) an order authorizing RII and GRI to continue to provide certain services on behalf of their subsidiaries until confirmation of the Plan in exchange for certain fees or charges paid by such subsidiaries; (iv) an order authorizing RII and GRI (a) to continue their current cash management system, (b) to maintain prepetition bank accounts and (c) to continue use of existing business forms and existing books and records; (v) an order to permit RII and GRI to use their current internal financial records and to be relieved from the filing of certain forms and schedules 108 otherwise required by the "United States Trustee Operating Guidelines and Reporting Requirements" (the "Guidelines") to the extent such Guidelines are inconsistent with such current internal financial records; (vi) an order authorizing RII and GRI to continue their current investment guidelines and invest their available cash in their customary manner; (vii) an order fixing the dates for the hearings on approval of this Information Statement/Prospectus, the Solicitation and confirmation of the Plan; (viii) an order authorizing RII to borrow from its subsidiaries, if required, to pay operating expenses and provide working capital; (ix) such other orders that are typical in chapter 11 cases or that may be necessary for the preservation of the assets of RII and GRI or for confirmation of the Plan. The first day orders will be sought pursuant to accompanying applications and, if appropriate, memoranda of law. The foregoing list is subject to change depending upon the needs of RII and GRI in connection with their operations during the chapter 11 cases. Failure of the Bankruptcy Court to enter one or more of these orders, or a delay in doing so, could result in RII's and GRI's chapter 11 cases becoming protracted and could delay, perhaps materially, the hearing on, and the ultimate confirmation of, the Plan. PARADISE ISLAND INTERIM ORDER Pursuant to the Paradise Island Purchase Agreement, RII has agreed to request, within five days after the filing of its chapter 11 case (and if the Paradise Island Purchase Agreement has not been terminated), the entry of the "Paradise Island Interim Order". The Paradise Island Interim Order would approve certain provisions of the Paradise Island Purchase Agreement. Such provisions relate to (1) the establishment of a procedure for the consideration of competing bids for the Paradise Island Business and (2) the provision of certain reimbursements to SIHL if, through no fault of its own, SIHL is not the successful purchaser of the Paradise Island Business. If the Paradise Island Interim Order is entered, RII would be prohibited from considering an alternative proposal for the acquisition of the Paradise Island Business unless it constituted an Overbid Transaction (as defined in the Paradise Island Purchase Agreement). In general, an Overbid Transaction is an offer from a financially qualified third party which provides for consideration attributable to the entire Paradise Island Business having a fair market value of more than $130 million. The imputed value of the SIHL proposal is $125 million. In addition, pursuant to the Paradise Island Interim Order, RII would be responsible for up to $4 million of expense reimbursement to SIHL if it were not the successful purchaser of the Paradise Island Business. If, despite RII's best efforts, the Paradise Island Interim Order is not entered, the Paradise Island Purchase Agreement remains in full force and effect. See "Description of Paradise Island Purchase Agreement." To secure its reimbursement obligations described under the Paradise Island Purchase Agreement, RII deposited $4 million in the SIHL Buyer Expense Escrow with Citibank, N.A. for the benefit of SIHL. Any amount paid from such escrow after the Filing Date will be subject to the approval of the Bankruptcy Court as provided in the Paradise Island Interim Order. At the same time, SIHL deposited $5 million in the SIHL Escrow with Citibank, N.A. to secure its obligations to RII under the Paradise Island Purchase Agreement. Subject to the requirements of the Paradise Island Interim Order, RII and GRI may receive other bids for the Paradise Island Business during the pendency of RII's and GRI's chapter 11 cases. Such bids, if received, may lead to further proceedings before the Bankruptcy Court, including the conduct of an auction. If a bidder other than SIHL prevails at such an auction, the Plan may be modified, as may be necessary, to accommodate the particular requirements of the prevailing bidder. Any such modification will be subject to compliance with applicable bankruptcy laws and the approval of Fidelity and TCW (if the funds and accounts managed by either of them hold in the aggregate at least own 20% of the outstanding Old Series Notes). A new solicitation may be required as well. As indicated above, however, the Paradise Island Interim Order would impose significant restrictions upon the Company's ability to consider and ultimately accept alternative acquisition proposals for the Paradise Island Business other than the SIHL Sale. The Company cannot consider any 109 alternative acquisition proposal unless such proposal constitutes an "Overbid Transaction." Moreover, when considering whether to approve an "Overbid Transaction" from a competing bidder, the Bankruptcy Court will likely take into consideration that the Company is required, under the terms of the Paradise Island Purchase Agreement, to pay SIHL's out-of-pocket costs and expenses incurred in connection with the proposed SIHL Sale and adjust the competing bid accordingly. SUBSIDIARIES OF RII Other than GRI, RII currently does not intend to seek protection under the Bankruptcy Code for any of its subsidiaries. The commencement of a chapter 11 case by GRI will prevent any holder of the Old Series Notes from taking action against GRI under the terms of the GRI Guaranty. The Old Series Note Trustee has the right to realize upon the collateral of various RII subsidiaries pledged pursuant to the Old Security Documents to secure the Old Series Notes. If necessary, RII will seek an order of the Bankruptcy Court under section 105 of the Code enjoining any actions against such subsidiaries for such time as is necessary to consummate the Plan. There can be no assurance, however, that such an order would be obtained. If RII is unable to obtain relief from actions taken against such subsidiaries, RII may seek protection under the Bankruptcy Code for such subsidiaries. In such event, the business and financial condition of such subsidiary or subsidiaries would be adversely affected, the consummation of the Plan might be jeopardized and other bankruptcy filings might be necessary. In the Solicitation, RII and GRI are soliciting consents to the release of the Old Security Documents and, if sufficient consents are not obtained, intend to request the Bankruptcy Court to order the release of the Old Security Documents. The requisite vote necessary for the voluntary release of the Old Security Documents is at least 66 2/3 in aggregate principal amount of the outstanding Old Series Notes and the record holders of at least a majority in aggregate amount of each of the Old Series A Notes and the Old Series B Notes. A condition to confirmation of the Plan is the entry of an order of the Bankruptcy Court declaring that, as of the Effective Date, the Old Security Documents are deemed released and terminated. CLASSIFICATION AND TREATMENT OF CLAIMS AND INTERESTS IN GENERAL The Plan provides for the classification and treatment of claims and interests of RII's and GRI's creditors and equity interest holders allowed under section 502 of the Bankruptcy Code (each, as the case may be, an "Allowed Claim" or an "Allowed Interest"). An Allowed Claim or Allowed Interest is a claim or interest (i) listed by RII or GRI in schedules filed with the Bankruptcy Court and not designated as "contingent", "unliquidated" or "disputed", (ii) as to which a timely proof of claim or interest has been filed or deemed filed and which is not a disputed claim or interest, or (iii) which is otherwise allowed under the Plan or by a final order of the Bankruptcy Court. If an objection is made, the validity and amount of the claim or interest will be determined by the Bankruptcy Court. A holder of a claim or interest must file a proof of claim or interest with the Bankruptcy Court to assert any claim or interest not scheduled by RII or GRI or with respect to any scheduled claim or interest that is shown as "contingent", "unliquidated" or "disputed". Such a filing also is required by any person seeking to assert a claim or interest in an amount larger than the amount scheduled by RII or GRI or asserting a classification (I.E., secured, priority or unsecured) different from that which is shown in RII's and GRI's schedules. RII and GRI are required under section 1122 of the Bankruptcy Code to classify the claims and interests into classes that contain claims and interests that are substantially similar to the other claims or interests in such class. The Plan designates ten classes of claims and three classes of interests. These classes take into account the differing nature and priority under the Bankruptcy Code of the various claims and interests. 110 Although RII and GRI believe that they have classified all claims and interests in compliance with the provisions of section 1122 of the Bankruptcy Code, it is possible that, once chapter 11 proceedings have been commenced, a creditor or equity interest holder may challenge RII's or GRI's classification of claims or interests and the Bankruptcy Court may find that a different classification is required for the Plan to be confirmed. In such event, it is the current intention of RII and GRI to modify the Plan to provide for whatever reasonable classification might be required by the Bankruptcy Court for confirmation and to use the Acceptances received in the Solicitation, to the extent permitted by the Bankruptcy Court, to obtain the approval of the class or classes of which the accepting holder is ultimately deemed to be a member. Any such reclassification could adversely and materially affect the class in which such claim or interest was initially classified or any other class under the Plan by changing the composition of such class and the required vote of such class for approval of the Plan. Furthermore, a reclassification of claims or interests after approval of the Plan could necessitate the resolicitation of Acceptances, which would result in a delay in the consummation of the Restructuring and could increase the risk that the Restructuring will not be consummated. To the extent a reclassification of claims or interests after approval of the Plan adversely and materially changes the treatment of the claim of any creditor or the interest of any equity interest holder, such creditor or equity interest holder may no longer be bound by its Acceptance of the Plan and RII and GRI would be obliged to obtain the Acceptance of the class of which the creditor or equity interest holder is a member by the requisite votes. The need to obtain such Acceptance could result in a delay in the consummation of the Restructuring and could increase the risk that the Restructuring will not be consummated. SUMMARY OF DISTRIBUTIONS UNDER THE PLAN The following summarizes the Plan distributions on account of the claims against and interests in RII and GRI. Such summary does not purport to be complete and is subject, and is qualified in its entirety by reference, to the Plan. ADMINISTRATIVE CLAIMS -- An "Administrative Claim" is a claim for payment of an administrative expense of a kind specified in section 503(b) of the Bankruptcy Code and referred to in section 507(a)(1) of the Bankruptcy Code, including without limitation the actual and necessary costs and expenses incurred after the commencement of the chapter 11 cases of preserving the estate and operating the business of RII and GRI, including wages, salaries or commissions for services, compensation for legal and other services and reimbursement of expenses awarded under section 330(a) or 331 of the Bankruptcy Code, and all fees and charges assessed against the estate under chapter 123 of title 28, United States Code. If the Bankruptcy Court confirms the Plan within the time frame anticipated by RII and GRI , RII and GRI expect that the amount of Administrative Claims will be significantly less than if RII and GRI had commenced chapter 11 cases without prior receipt of the Requisite Acceptances. Assuming there is no significant litigation initiated or objections filed with respect to the Plan and the Plan is confirmed within 90 days after commencement of the chapter 11 cases, RII and GRI estimate that the aggregate allowed amount of unpaid Administrative Claims, including without limitation the Administrative Claims of Professional persons, will be approximately $[ ] as of the Effective Date. Administrative Claims include the fees and expenses of Fidelity, TCW and Chemical Bank, as successor indenture trustee for the Old Series Notes. Pursuant to the Plan, RII will compensate Chemical Bank, as the Old Series Indenture Trustee, for the reasonable fees and costs incurred by the Old Series Indenture Trustee (including the reasonable fees and expenses of its professionals) under the Old Series Indenture. This payment or payments will constitute full satisfaction of the Old Series Indenture Trustee's claims for compensation and reimbursement pursuant to the Old Series Indenture, including the claims secured by the liens granted to the indenture trustee pursuant to the Old Series Note Indenture (the "Indenture Trustee Charging Liens"). Similarly, under the Plan RII will consent to the compensation and reimbursement of Fidelity and TCW and their agents (including 111 legal counsel) for their reasonable fees and expenses incurred in connection with the chapter 11 cases. The fees and expenses of the Old Series Note Indenture Trustee, Fidelity and TCW and their agents (including legal counsel), are subject to the approval of the Bankruptcy Court. Pursuant to the Plan, Allowed Administrative Claims will be paid in cash in full on the Distribution Date (or, if later, the date on which any such Administrative Claim is allowed by a Final Order of the Bankruptcy Court), except to the extent any holder of an Allowed Administration Claim shall have agreed to different treatment thereof; provided, however, that (a) Administrative Claims of professional persons, the Indenture Trustee, Fidelity, TCW and their agents (including legal counsel) shall be paid within ten days after allowance by Final Order and (b) Administrative Claims representing liabilities incurred in the ordinary course of business by RII and GRI (including amounts owed to vendors and suppliers which have sold goods or furnished services to RII and GRI after the commencement of the chapter 11 cases) will be assumed and paid by RII and GRI in accordance with past practice and the terms and conditions of the particular transactions and any agreement relating thereto. PRIORITY TAX CLAIMS -- A "Priority Tax Claim" is a claim for an amount entitled to priority under section 507(a)(7) of the Bankruptcy Code. Each holder of a Priority Tax Claim shall be paid in full in an amount equal to the amount of such Allowed Claim on the Distribution Date such Priority Tax Claim becomes due and payable or, at the option of RII or GRI, shall be paid in deferred annual cash payments over a period not exceeding six years after the earlier of the Effective Date and the date of assessment of such claim including an interest component as required by the provisions of section 1129(a)(9)(C) of the Bankruptcy Code. Interest shall be payable quarterly in arrears at the rate of [_____]% per year. Any distributions of cash on account of Priority Tax Claims shall be paid from RII Retained Cash. RII and GRI anticipate that Priority Tax Claims, if any, will be minimal. RII CLASS 1 -- RII PRIORITY CLAIMS -- An "RII Priority Claim" is any claim against RII entitled to priority in accordance with section 507(a) of the Bankruptcy Code (other than Administrative Claims and Priority Tax Claims) including: (i) unsecured claims for accrued employee compensation earned within 90 days prior to the filing of the chapter 11 petition, to the extent of $2,000 per employee; and (ii) contributions to employee benefit plans arising from services rendered within 180 days prior to the filing of the chapter 11 petition, but only for such plans to the extent of (a) the number of employees covered by such plans multiplied by $2,000 less (b) the aggregate amount paid to such employees from the estate for wages, salaries or commissions. As mentioned previously, RII will seek an order approving the pre-Effective Date payment of RII Priority Claims. To the extent such an order is not entered or these Claims are not paid prior to the Effective Date, pursuant to the Plan each holder of an Allowed RII Class 1 Claim, at RII's option, shall receive such treatment as (i) will not alter the legal, equitable or contractual rights to which such Allowed RII Class 1 Claim entitles the holder thereof, or (ii) otherwise will render such Allowed RII Class 1 Claim unimpaired pursuant to section 1124(2) of the Bankruptcy Code. RII anticipates that RII Priority Claims will aggregate approximately $[______]. RII CLASS 1 IS UNIMPAIRED AND HOLDERS OF RII CLASS 1 CLAIMS ARE CONCLUSIVELY PRESUMED PURSUANT TO SECTION 1126(F) OF THE CODE TO HAVE ACCEPTED THE PLAN. RII CLASS 2 -- CLAIMS OF THE HOLDERS OF OLD SERIES NOTES -- RII Class 2 consists of the Claims of the holders of the Old Series Notes which claims are allowed for purposes of the Plan only in the aggregate outstanding principal amount of $482,000,000 at October 15, 1993 plus accrued and unpaid interest and certain costs and expenses of collection. Pursuant to the Plan, each holder on the Distribution Record Date of the Old Series Notes will receive on the relevant Distribution Date and on account of such holders' Allowed RII Class 2 Claims and Allowed GRI Class 2 Claims, for each $1,000 principal amount of such claim and all accrued and unpaid interest thereon: -- $259.38 principal amount of New RIHF Mortgage Notes;
112 -- one Unit comprised of $72.63 principal amount of New RIHF Junior Mortgage Notes and .07263 share of RII Class B Common Stock; -- 35.33 shares of RII Common Stock; -- either (A) $134.88 in cash, plus interest on such amount at an annual rate of 7.5% from January 1, 1994, to the SIHL Closing Date, plus 4.15 SIHL Series A Shares, representing a pro rata share of the consideration received from the SIHL Sale, or (B) if the SIHL Sale is not consummated on the Effective Date, 10.375 PIRL Ordinary Shares pursuant to the PIRL Spin-Off; -- a pro rata share of Excess Cash, which pro rata share is projected to be a minimum of $62.25; -- the non-transferable right to receive a pro rata share of Net Reserved Cash and Net Plan Consummation Cash; and -- the non-transferable right to receive a pro rata share of payments from Deferred Cash, which pro rata share is expected to be a minimum of $5. See "Description of Litigation Trust Units."
In addition to the foregoing distribution, RII will make the Caesars Payment on behalf of the holders of Old Series Notes. For a discussion of this payment, see "Description of the Caesars Payment." Any distribution under the Plan on account of such Allowed RII Class 2 Claim shall be deemed to have been applied first, to original issue price and then, to accrued and unpaid original issue discount. For a description of the New RIHF Mortgage Notes and the New RIHF Junior Mortgage Notes, see "Description of New RIHF Mortgage Notes" and "Description of New RIHF Junior Mortgage Notes". For a description of the RII Class B Common Stock, the RII Common Stock and the PIRL Ordinary Shares, see "Description of New Equity Securities". For a description of the Deferred Cash, see "Description of Deferred Cash" and "Description of Litigation Trust Units". For a description of Excess Cash, Plan Expenses, Net Reserved Cash and Net Plan Consummation Cash, see "Description of Net Reserved Cash", "Description of Excess Cash" and "Description of Net Plan Consummation Cash and Plan Expenses". THE DISTRIBUTION TO HOLDERS OF ALLOWED RII CLASS 2 CLAIMS IS PROVIDED ALSO IN CONSIDERATION FOR THEIR ALLOWED GRI CLASS 2 CLAIMS. FRACTIONAL SHARES OF THE NEW EQUITY SECURITIES WILL NOT BE DISTRIBUTED. NEW RIHF MORTGAGE NOTES AND NEW RIHF JUNIOR MORTGAGE NOTES WILL BE ISSUED ONLY IN DENOMINATIONS OF $1,000 OR INTEGRAL MULTIPLES THEREOF. PURSUANT TO THE PLAN, THE DISBURSING AGENT FOR THE HOLDERS OF OLD SERIES NOTES WILL AGGREGATE AND SELL ALL FRACTIONAL AMOUNTS OF NEW EQUITY SECURITIES AND NEW DEBT SECURITIES AND DISTRIBUTE THE NET PROCEEDS TO THE HOLDERS OF OLD SERIES NOTES ENTITLED THERETO. For information with respect to SIHL, the SIHL Sale, the Paradise Island Purchase Agreement and the SIHL Series A Shares, reference is made to the accompanying SIHL Prospectus relating to the SIHL Series A Shares. RII HAS SUPPLIED CERTAIN INFORMATION REGARDING THE PARADISE ISLAND BUSINESS (SUCH AS IS FOUND IN RII'S REPORTS FILED WITH THE COMMISSION), AS WELL AS CERTAIN INFORMATION CONCERNING THE RESTRUCTURING, TO SIHL SPECIFICALLY FOR ITS USE IN THE PREPARATION OF THE SIHL PROSPECTUS (AND THE RELATED REGISTRATION STATEMENT FILED BY SIHL WITH THE COMMISSION UNDER THE SECURITIES ACT). RII AND ITS ADVISERS DISCLAIM ANY RESPONSIBILITY FOR THE ACCURACY, COMPLETENESS, NATURE AND FORM OF PRESENTATION OF ANY INFORMATION CONTAINED IN THE SIHL PROSPECTUS (AND RELATED REGISTRATION STATEMENT), EXCEPT THAT RII HAS MADE IN THE PARADISE ISLAND PURCHASE AGREEMENT CERTAIN REPRESENTATIONS AND WARRANTIES TO SIHL AS TO THE ACCURACY OF THE INFORMATION SUPPLIED BY RII SPECIFICALLY FOR INCLUSION IN THE SIHL PROSPECTUS (AND RELATED REGISTRATION STATEMENT). RII CLASS 2 IS IMPAIRED AND THE HOLDERS OF RII CLASS 2 CLAIMS ARE ENTITLED TO VOTE ON THE PLAN. RII CLASS 3 -- CLAIMS UNDER THE SHOWBOAT NOTES -- RII Class 3 consists of the Claims of holders of the Showboat Notes. As of the Voting Record Date, the aggregate outstanding principal amount of the 113 Showboat Notes was $105,333,000 and such claim is deemed to be an Allowed Claim under the Plan. Pursuant to the Plan, each holder of the Showboat Notes will receive such treatment as (i) will not alter the legal, equitable and contractual rights to which such Allowed RII Class 3 Claim entitles the holder thereof or (ii) otherwise will render such Claim unimpaired pursuant to section 1124(2) of the Bankruptcy Code. To the extent not previously paid when due, interest shall be paid in cash on the Distribution Date (at the applicable, non-default contractual rate), together with any additional amount required to be paid to render the Showboat Note Claims unimpaired pursuant to section 1124(2) of the Bankruptcy Code. RII CLASS 3 IS UNIMPAIRED AND THE HOLDER OF RII CLASS 3 CLAIMS ARE CONCLUSIVELY PRESUMED PURSUANT TO SECTION 1126(F) OF THE CODE TO HAVE ACCEPTED THE PLAN. RII CLASS 4 -- MISCELLANEOUS SECURED CLAIMS -- RII Class 4 consists of each Claim secured by a security interest in or lien upon property of RII other than any RII Class 2 or RII Class 3 Claims, including without limitation claims secured by mortgages or trust deeds of real property, by mechanic's or materialmen's liens, by artisan's liens, or by miscellaneous personal property such as office furniture, telephone systems, copiers and mailing equipment. RII is not presently aware of any RII Class 4 Claims. Pursuant to the Plan, at the option of RII with respect to each Allowed Claim in RII Class 4, the Plan either (a) will not alter the legal, equitable or contractual rights to which such claim entitles the holder thereof, or (b) otherwise will render such claim unimpaired pursuant to section 1124(2) of the Bankruptcy Code; provided that in each case the Plan shall not alter the rights of the holder of such claim in any collateral securing such claim as of the Petition Date pursuant to the applicable security agreements and the liens thereunder shall be ratified and affirmed. To the extent not previously paid when due, interest shall be paid in cash on the Distribution Date (at the applicable, non-default contractual note), together with any additional amount required to be paid to render such Allowed RII Class 4 Claim unimpaired pursuant to section 1124 (2) of the Bankruptcy Code. RII CLASS 4 IS UNIMPAIRED AND HOLDERS OF RII CLASS 4 CLAIMS ARE CONCLUSIVELY PRESUMED PURSUANT TO SECTION 1126(F) OF THE CODE TO HAVE ACCEPTED THE PLAN. RII CLASS 5 -- GENERAL UNSECURED CLAIMS -- RII Class 5 consists of the Claims of all unsecured creditors not classified in any other RII Class above. RII Class 5 Claims generally consist of claims of employees (other than RII Priority Claims) and trade creditors for goods and services provided to RII prior to the Petition Date, other contract claims and damage claims, and any other general unsecured claims, such as litigation claims. RII estimates that after all objections to claims are resolved the ultimate amount of Allowed Claims included in RII Class 5 (exclusive of claims covered by insurance) will aggregate approximately $[ ]. THIS IS AN ESTIMATE REFLECTING THE COSTS AND UNCERTAINTIES OF LITIGATION. RII DOES NOT ADMIT THAT IT IS LIABLE IN ANY AMOUNT WITH RESPECT TO ANY DISPUTED CLAIMS. IN ADDITION, THERE CAN BE NO GUARANTY OR ASSURANCE THAT SUCH ESTIMATE WILL BE CORRECT AND, ACCORDINGLY, THERE IS A RISK THAT THE AMOUNT OF THE ALLOWED CLAIMS INCLUDED IN RII CLASS 5 WILL BE GREATER THAN THE AMOUNT ESTIMATED BY RII. RII intends to dispute certain of the claims which would otherwise be included in the RII Class 5 Claims, and certain of such claims are the subject of litigation. In this regard, RII believes that state and Federal environmental agencies may assert claims against RII related to alleged environmental hazards. RII intends to dispute any such claims, if asserted. Similarly, RII is, or prior to the Petition Date may become, a defendant in a number of pending or threatened legal proceedings arising in the ordinary course of business. RII may request the Bankruptcy Court to determine the allowed amount of any environmental or other claims. This allowance process may include proceedings for estimating such claims pursuant to section 502(c) of the Bankruptcy Code. The Company does not believe that any litigation or environmental claims of which it is presently aware will have a material adverse impact on the Company, the Plan or the Restructuring. 114 The claims asserted in certain of the pending or threatened legal proceedings are covered by insurance maintained by RII and to the extent any claims covered by insurance are upheld, it is anticipated that the major portion thereof would be paid by RII's insurance carriers. RII intends to (i) consent to a modification of the automatic stay provisions of section 362(a) of the Bankruptcy Code so as to permit the prosecution of claims covered by insurance solely to the extent of such coverage, or (ii) utilize a claims resolution procedure as may be implemented by the Bankruptcy Court. RII will seek an order approving the pre-Effective Date payment of RII Class 5 Claims of certain employees and trade creditors. To the extent such an order is not entered or RII Class 5 Claims are not paid prior to the Effective Date, at RII's option, each holder of an Allowed RII Class 5 Claim will receive such treatment as (i) will not alter the legal, equitable or contractual rights to which such claim entitles the holder thereof, or (ii) otherwise will render such claim unimpaired pursuant to section 1124(2) of the Bankruptcy Code. The practical effect of this treatment is that any allowed RII Class 5 Claim will be paid in the Effective Date or as soon thereafter as such RII Class 5 Claim, in the ordinary course of business and consistent with past practice and the agreements related thereto, would have been paid in the absence of RII's chapter 11 filing. RII CLASS 5 IS UNIMPAIRED AND HOLDERS OF RII CLASS 5 CLAIMS ARE CONCLUSIVELY PRESUMED PURSUANT TO SECTION 1126(F) OF THE BANKRUPTCY CODE TO HAVE ACCEPTED THE PLAN. RII CLASS 6 -- PARADISE SUBSIDIARY INTERCOMPANY CLAIMS -- RII Class 6 consists of the claims of certain of the Paradise Subsidiaries, specifically PIV and ISI, against RII. The aggregate amount of such claims as of September 30, 1993 was approximately $2,342,000. The Paradise Subsidiary Claims are intercompany debt obligations of RII. PIV and ISI shall retain unaltered the legal, equitable and contractual rights to which their Allowed RII Class 6 Claims entitle them. RII CLASS 6 IS UNIMPAIRED AND THE HOLDERS OF RII CLASS 6 CLAIMS ARE NOT ENTITLED TO VOTE ON THE PLAN. RII CLASS 7 -- INTERESTS OF THE HOLDERS OF RII COMMON STOCK -- RII Class 7 consists of the Interests of the holders of RII Common Stock. As of the Voting Record Date, there were [ ] shares of RII Common Stock outstanding. Pursuant to the Plan, each holder of RII Common Stock will retain its shares of RII Common Stock. As a result of the issuance under the Plan of (1) additional shares of RII Common Stock to the holders of RII Class 2 Claims (and related GRI Class 2 Claims), (2) the Griffin Warrants, (3) options to be issued under the 1994 Stock Option Plan and (4) shares of RII Class B Common Stock, the resulting ownership interest in RII represented by the currently outstanding shares of RII Common Stock will be substantially diluted. RII CLASS 7 IS IMPAIRED AND HOLDERS OF RII CLASS 7 INTERESTS ARE ENTITLED TO VOTE ON THE PLAN. RII CLASS 8 -- INTERESTS OF THE HOLDERS OF 1990 STOCK OPTIONS -- RII Class 8 consists of the Interests of the holders of 1990 Stock Options. As of the Voting Record Date, [ ] 1990 Stock Options were issued. Pursuant to the Plan, each holder of 1990 Stock Options will retain his or her options. As part of the Plan, the 1990 Stock Option Plan will be terminated and the exercise price for the outstanding 1990 Stock Options held by holders of Allowed RII Class 8 Interests shall thereafter remain fixed at the existing exercise price which was the exercise price at the time of grant. No further 1990 Stock Options will be issued and the 1994 Stock Option Plan will be implemented. If sufficient Acceptances are received from the holders of Old Series Notes and from the holders of RII Common Stock, such Acceptances will constitute approval of the 1994 Stock Option Plan by such holders for purposes of compliance with Rule 16b-3 promulgated under the Exchange Act. As a result of the issuance under the Plan of (1) additional shares of RII Common Stock to the holders of RII Class 2 Claims (and related GRI Class 2 Claims), (2) the Griffin Warrants, (3) options to be issued under the 1994 Stock Option Plan and (4) shares of RII Class B Common Stock, the resulting ownership interest in RII represented by the currently outstanding 1990 Stock Options will be substantially diluted. 115 RII CLASS 8 IS IMPAIRED AND HOLDERS OF RII CLASS 8 INTERESTS ARE ENTITLED TO VOTE ON THE PLAN. GRI CLASS 1 -- GRI PRIORITY CLAIMS -- A "GRI Priority Claim" is any claim against GRI entitled to priority in accordance with section 507(a) of the Bankruptcy Code (other than Administrative Claims and Priority Tax Claims) including: (i) unsecured claims for accrued employee compensation earned within 90 days prior to the filing of the chapter 11 petition, to the extent of $2,000 per employee; and (ii) contributions to employee benefit plans arising from services rendered within 180 days prior to the filing of the chapter 11 petition, but only for such plans to the extent of (a) the number of employees covered by such plans multiplied by $2,000 less (b) the aggregate amount paid to such employees from the estate for wages, salaries or commission. GRI will seek an order approving the pre-Effective Date payment of GRI Priority Claims. To the extent such an order is not entered or these Claims are not paid prior to the Effective Date, pursuant to the Plan each holder of an Allowed GRI Class 1 Claim shall, at GRI's option, receive such treatment as (i) will not alter the legal, equitable or contractual rights to which such Allowed GRI Class 1 entitled the holder thereof, or (ii) otherwise will render such Allowed GRI Class 1 Claim unimpaired pursuant to section 1124(2) of the Bankruptcy Code. GRI anticipates that GRI Priority Claims will aggregate approximately $[__________]. GRI CLASS 1 IS UNIMPAIRED AND HOLDERS OF GRI CLASS 1 CLAIMS ARE CONCLUSIVELY PRESUMED PURSUANT TO SECTION 1126(F) OF THE BANKRUPTCY CODE TO HAVE ACCEPTED THE PLAN. GRI CLASS 2 -- GRI GUARANTY CLAIMS -- GRI Class 2 consists of the Claims of the holders of Old Series Notes arising from GRI's guaranty of RII's obligations under the Old Series Notes pursuant to the GRI Guaranty. For the purposes of the Plan only, the GRI Guaranty Claims are Allowed in the aggregate principal amount of $ . The holders of GRI Class 2 Claims also hold RII Class 2 Claims. The distribution provided to holders of RII Class 2 Claims under the Plan constitutes the distribution provided under the Plan on account of GRI Class 2 Claims as well. GRI CLASS 2 IS IMPAIRED AND HOLDERS OF GRI CLASS 2 CLAIMS ARE ENTITLED TO VOTE ON THE PLAN. GRI CLASS 3 -- GENERAL UNSECURED CLAIM -- Pursuant to the Plan, at the option of GRI with respect to each Allowed Claim in GRI Class 3, the Plan either (i) will not alter the legal, equitable or contractual rights to which such claim entitles the holder thereof, or (ii) otherwise will render such claim unimpaired pursuant to section 1124(2) of the Bankruptcy Code. Because it is not an operating entity, GRI believes that minimal, if any, Class 3 Claims exist. GRI CLASS 3 IS UNIMPAIRED AND HOLDERS OF GRI CLASS 3 CLAIMS ARE CONCLUSIVELY PRESUMED PURSUANT TO SECTION 1126(F) OF THE BANKRUPTCY CODE TO HAVE ACCEPTED THE PLAN. GRI CLASS 4 -- RII INTERCOMPANY CLAIM -- GRI Class 4 consists of the RII Intercompany Claim in the amount of $40,196,000 as of September 30, 1993. The RII Intercompany Claim is the intercompany debt obligation of GRI to RII. Pursuant to the Plan, RII will contribute the RII Intercompany Claim to the capital of GRI. The RII Intercompany Claim is an impaired claim. GRI CLASS 4 IS IMPAIRED AND RII AS THE HOLDER OF THE RII CLASS 4 CLAIM IS ENTITLED TO VOTE ON THE PLAN. RII, AS THE HOLDER OF SUCH ALLOWED CLAIM, INTENDS TO VOTE IN FAVOR OF THE PLAN. GRI CLASS 5 -- INTEREST OF HOLDER OF GRI COMMON STOCK -- The GRI Class 5 Interest consists of the Interest of RII, as the sole holder of GRI Common Stock. As of the Voting Record Date, there were 1,000 shares of GRI Common Stock outstanding, all held by RII. Pursuant to the treatment provided under the Plan, the GRI Class 5 Interest is an impaired interest by virtue of the transfer of a substantial portion of GRI's assets pursuant to either the Paradise Island Purchase Agreement or the PIRL Standby Distribution Agreement, as the case may be. Pursuant to the Plan, RII as the holder of GRI Common Stock shall retain such Allowed Interest. GRI CLASS 5 IS IMPAIRED AND RII AS THE HOLDER OF THE GRI CLASS 5 INTEREST IS ENTITLED TO VOTE ON THE PLAN. RII INTENDS TO VOTE SUCH ALLOWED INTEREST IN FAVOR OF THE PLAN. 116 PAYMENTS IN THE ORDINARY COURSE. Pursuant to the Plan, RII and GRI have agreed: (i) not to pay, and not to permit their Subsidiaries to pay, any prepetition Allowed Claim or postpetition Allowed Administrative Claim, including claims of trade creditors, on or before the Effective Date, except in the ordinary course of business and consistent with past practice; and (ii) to continue to collect, and to cause their Subsidiaries to collect, receivables in the ordinary course of business and consistent with past practice. On the Effective Date, RII Retained Cash rather than Plan Consummation Cash shall be used to pay any prepetition Allowed Claims or post-petition Allowed Administrative Claims of trade creditors which, in the ordinary course of business and consistent with past practice, would not have been paid on or before the Effective Date. SUMMARY OF OTHER PROVISIONS OF THE PLAN CREDITORS' COMMITTEES The Bankruptcy Code sets forth the powers and duties of creditors' and equity interest holders' committees. After a petition is filed, the United States trustee (the "United States Trustee") is required to appoint a committee of holders of unsecured claims, and may appoint additional committees of creditors or equity interest holders as deemed appropriate to assure the adequate representation of creditors and equity interest holders in the proceeding. In the context of a prepackaged plan of reorganization, however, many of the services generally performed by such a committee already have been performed prior to the filing of the petition commencing the chapter 11 case. Because of the prepackaged nature of the Plan and the participation of Fidelity and TCW in the solicitation process, RII and GRI will request the United States Trustee not to appoint a separate creditors' committee. If any such committee is appointed by the United States Trustee pursuant to section 1103 of the Bankruptcy Code, such committee may hire advisers to such committee, consult with the debtor concerning administration of the case, conduct such investigations of the financial condition and operation of the debtor's business and the desirability of the continuance of such business, and perform such other services as are relevant to the formulation of the plan of reorganization. Committee members serve in a fiduciary capacity with respect to holders they represent. EXECUTORY CONTRACTS AND LEASES The Bankruptcy Code gives RII and GRI the power after the commencement of the chapter 11 cases, subject to the approval of the Bankruptcy Court, to assume or reject executory contracts and unexpired leases. Although not defined in the Bankruptcy Code, an "executory contract" is usually described as a contract under which material performance (other than the payment of money) remains due at the time of commencement of a bankruptcy case. The Plan provides for the assumption by RII and GRI of all executory contracts and unexpired leases that are not expressly rejected or subject to a motion to reject filed by RII and GRI on or before the Confirmation Date. However, RII and GRI may file motions to reject certain executory contracts or unexpired leases. Assumed executory contracts and unexpired leases will be reinstated and rendered unimpaired. In connection with the assumption of an executory contract or unexpired lease, RII or GRI, as the case may be, will cure monetary defaults and otherwise satisfy the requirements of section 365 of the Bankruptcy Code. Disputes regarding issues related to assumptions of an executory contract or unexpired lease will be resolved by the Bankruptcy Court on a case by case basis. If an executory contract or unexpired lease is rejected, the other party to the agreement may file a proof of claim with respect to a claim for damages by reason of the rejection. The Plan provides that a proof of claim with respect to any such claim must be filed within 30 days after the Confirmation Date, or within such shorter period as may be ordered by the Bankruptcy Court. Each such claim will constitute an RII Class 5 Claim, to the extent such claim is finally allowed by the Bankruptcy Court. DISCHARGE OF INDENTURE TRUSTEE AND RELEASE OF CHARGING LIENS Subsequent to the performance by the Old Series Indenture Trustee of its duties and obligations under the provisions of the Plan and the Confirmation Order, if any, and under the terms of the Old Series Indenture, the Old Series Indenture Trustee and its agents shall be relieved of all obligations 117 associated with the Old Series Indenture. Furthermore, on the Effective Date, the Old Series Indenture, except for purposes of making distributions under the Plan, will be deemed canceled, terminated, and of no further force or effect. Except as otherwise provided in the Plan, such cancellation of the Old Series Indenture will extinguish the rights and obligations of RII and the holders of the Old Series Notes under the Old Series Indenture and the rights of the Old Series Indenture Trustee to assert any Indenture Trustee charging lien against the distributions to the Holders of Old Series Notes for unpaid fees and expenses. Notwithstanding the foregoing, RII remains liable, subject to approval of the Bankruptcy Court, to pay the reasonable unpaid fees and expenses of the Old Series Indenture Trustee in accordance with other provisions of the Plan. On the Effective Date, all outstanding Old Series Notes will be canceled on the books of the RII and GRI and become settled and compromised solely as provided in the Plan in consideration for the right to participate in distributions under the Plan. The cancellation of the Old Series Indenture and surrender of the Old Series Notes will extinguish the right of any holder of Old Series Notes to commence any cause of action against any entity for unpaid principal and interest thereon. EXCULPATION PROVISION The Plan provides that none of the directors, officers, employees, agents, representatives, financial advisors, or attorneys of (i) RII and GRI, (ii) any subsidiary of RII and GRI, (iii) TCW, (iv) Fidelity or (v) the Old Series Indenture Trustee, and neither RII or GRI, any subsidiary, TCW, Fidelity nor the Old Series Indenture Trustee, shall have any liability for actions taken or omitted to be taken in good faith under or in connection with the Plan or in connection with the chapter 11 cases. CERTAIN INDEMNIFICATION OBLIGATIONS The Plan also provides that RII's and GRI's obligations to indemnify their current and former directors and officers pursuant to their respective certificates of incorporation, by-laws, applicable state law or agreements will survive confirmation of the Plan irrespective of whether indemnification is owed in connection with an event occurring before, on or after the Petition Date. An officer of the Company has been named as a defendant in an action filed in the United States Bankruptcy Court in the District of Nevada. Although the Company is not a defendant in the action, it intends to indemnify the officer. The complaint in this adversary proceeding alleges that the Company filed frivolous proofs of claim in the bankruptcy proceedings of Fred Lowenschuss. The complaint seeks unspecified compensatory damages and punitive damages for malicious prosecution and prosecution of a frivolous claim. For information concerning additional indemnity obligations of the Company, see "Management -- Executive Compensation -- Compensation Committee Interlocks and Insider Participation -- Indemnity Agreement". In addition, certain warranties and representations related to the Paradise Island Purchase Agreement or, if applicable, the PIRL Standby Distribution Agreement may survive consummation of the Plan. RII and GRI do not believe that any such warranties and representations will give rise to a claim against RII after the Effective Date. If the PIRL Spin-Off occurs, PIRL will assume and RII will be released from RII's obligations to reimburse SIHL for certain costs and expenses incurred in connection with the Paradise Island Purchase Agreement. PIRL will pledge assets, reasonably acceptable to SIHL, with a fair market value of $6 million to secure such obligation. RESERVES FOR DISPUTED CLAIMS AND DISPUTED INTERESTS RII will seek a determination from the Bankruptcy Court as a part of the hearing on the confirmation of the Plan that RII and GRI have the financial ability to meet their obligations under the Plan with respect to disputed claims or interests should such claims or interests be allowed, without the need for a reserve for such disputed claims or interests. The Bankruptcy Court nevertheless may require such a reserve. Moreover, the disbursing agreement relative to disbursements to holders of Old Series Notes will contain appropriate reserve provisions relative to Disputed Claims and unclaimed distributions. 118 PAYMENT OF PLAN EXPENSES Plan Expenses shall be paid from Plan Consummation Cash. Plan Expenses generally include all costs and expenses or other needs for cash to consummate and implement the Plan. These expenses would include all administrative and other claims (other than RII Class 2 and GRI Class 2 Claims) required to be paid in cash on the Distribution Date and fees and expenses of professionals and disbursing agents, including reasonable fees and expenses of professionals associated with litigating Disputed Claims (as defined in the Plan) or Disputed Interests and implementing and consummating the Plan. The expenses also would include any and all payments and costs attributable to either the SIHL Sale or the PIRL Spin-Off. Such costs and expenses could be substantial and could include any actual payments required to be made by RII or its subsidiaries for transfer taxes or federal alternative minimum taxes incurred as a result of the consummation of the transactions contemplated by the Paradise Island Purchase Agreement or, alternatively, the PIRL Standby Distribution Agreement and any costs and liabilities arising under applicable bulk transfer laws, reasonable fees and reasonable expenses of Professional Persons associated with litigating Disputed Claims or Disputed Interests and implementing and consummating the Plan. On the Effective Date, RII will estimate the amount of cash it reasonably believes will be necessary to pay Plan Expenses and will retain such amount as Plan Consummation Cash. RII will take reasonable efforts to pay all Plan Expenses as soon as practicable. Once all Plan Expenses have been paid, RII will distribute any Net Plan Consummation Cash, together with interest on Net Plan Consummation Cash at the average rate of return received by RII and its subsidiaries on invested cash from the Effective Date to but excluding the date of payment, to the disbursing agent for the holders of the Old Series Notes. If all Plan Expenses have not been paid within 90 days after the Effective Date, RII may retain for an additional 60 days such amount of Plan Consummation Cash as the Bankruptcy Court determines to be necessary to pay any remaining Plan Expenses, with an excess to be distributed to the disbursing agent for the holders of the Old Series Notes as Net Plan Consummation Cash. After such 60-day period, RII shall pay the remaining Plan Consummation Cash (together with interest thereon), if any, to the disbursing agent for the holders of the Old Series Notes, unless otherwise ordered by the Bankruptcy Court. UNCLAIMED DISTRIBUTIONS If any person entitled to receive cash or securities directly from RII under the Plan cannot be located within two years of the Effective Date, any such cash or securities and accrued interest or dividends thereon will become the property of and will be released to RII. Notwithstanding the foregoing, any SIHL Series A Shares, PIRL Ordinary Shares or cash, as the case may be, allocable to a holder of Old Series Notes that cannot be located will be redistributed to the holders who do claim their distributions in a timely manner. TREATMENT OF UNCLAIMED CONSIDERATION FROM OLD PLAN. As of the date hereof, the indenture trustee for the RIFI public debt continues to hold RIFI Release Cash which has not yet been exchanged for the RIFI Releases. Pursuant to the Old Plan, any undistributed RIFI Release Cash on September 17, 1995 is to be returned to Merv Griffin. Accordingly, the undistributed RIFI Release Cash is not treated under the Plan. As of the date hereof, Chemical Bank, on behalf of the holders of RII, RIFI and GRI public debt outstanding when the Old Chapter 11 Cases were filed, continues to hold the consideration, including Old Series A Notes, Old Series B Notes and Old RII Common Stock, payable under the Old Plan with respect to Unsurrendered Public Debt Claims. Any holder of an Unsurrendered Public Debt Claim who fails to comply, within the five-year time period to claim distributions under the Old Plan, with the provisions for the receipt of distributions under the Old Plan will not receive such distributions and, accordingly, will not be entitled to participate in the distributions under the Plan. On the other hand, compliance with the provisions for the receipt of distributions under the Old Plan will entitle a holder to participate in the distributions under the Plan if such holder complies, within the two-year time period to claim distributions under the Plan, with the provisions for the receipt of distributions 119 under the Plan. The distributions under the Plan that would have been paid to holders of Unsurrendered Public Debt Claims will be returned to and become the property of RII. Notwithstanding the foregoing, the Plan provides that SIHL Series A Shares or PIRL Ordinary Shares which are unclaimed will be redistributed to holders of Old Series Notes who do claim their distributions. To the extent that Old Plan Disputed Claims are allowed, the holders thereof will be entitled to the distributions set forth in the Old Plan. Subject to compliance with the provisions of the Plan and the Bankruptcy Code relative to allowance, such holders will then be entitled to participate in the distributions set forth in the Plan. The Old Plan Disputed Claims include without limitation claims asserted by Fred Lowenschuss and claims for approximately $6,600,000 by certain participants in the Officers Supplemental Plan. Litigation is sending with respect to these claims in the United States Bankruptcy Court for the District of New Jersey. The Company has negotiated a settlement related to the claims under the Officers Supplemental Plan. Pursuant to this settlement, which has not yet been approved by the United States Bankruptcy Court for the District of New Jersey, such claim would be treated as a $6.6 million "Class 3C" claim under the Old Plan and entitled to the following distribution: 155,623 shares of Old RII Common Stock and $2,318,003 Old Series B Notes (including Payment-In-Kind interest). Because the settlement is not yet evidenced by an executed stipulation approved by the bankruptcy court, the calculations contained in this Information Statement/Prospectus do not reflect the issuance of these additional shares or Old Series B Notes. If the settlement is approved, the recoveries projected herein to equity interest holders and holders of Old Series Notes will be diluted slightly. Similarly, if the claim of Dadras is allowed as an administrative claim in the Old Chapter 11 Case, it would be treated as an RII Class 5 Claim hereunder; if the claim of Dadras is allowed as a prepetition general unsecured Class 3C claim in the Old Chapter 11 Case, it would be entitled to receive the consideration applicable to such class of claims under the Old Plan. Because RII has disputed the claim of Dadras, the calculations contained in this Information Statement/Prospectus do not reflect allowance of the claim of Dadras. If such claim is allowed as a Class 3C claim under the Old Plan, the recoveries referenced herein to equity interest holders and holders of Old Series Notes would be diluted. PAYMENT OF POST-CONFIRMATION FEES AND EXPENSES After the Confirmation Date RII and GRI, in the ordinary course of business and without the necessity for any approval by the Bankruptcy Court, will pay as Plan Expenses the reasonable fees and expenses of professionals related to implementation and consummation of the Plan; provided, however, that no such fees and expenses will be paid except upon receipt by RII and GRI of a detailed written invoice, which invoice shall also be served upon the United States Trustee, Fidelity and TCW, from the professionals seeking fee and expense reimbursement; and provided further that any such party may, within ten days after receipt of an invoice for fees and expenses, request that the Bankruptcy Court determine any such request. PREFERENCE AND FRAUDULENT CONVEYANCE CLAIMS RII and GRI do not believe that there are material transactions that will give rise to preference claims or fraudulent conveyance claims by RII or GRI upon commencement of the chapter 11 cases. Material payments have been made only to secured creditors and to trade creditors in the ordinary course of business or financial affairs, none of which should give rise to preference claims or fraudulent conveyance claims. RII and GRI, however, have conducted no investigation into whether viable preference or fraudulent conveyance claims may exist. RII and GRI have no current intention to bring any such actions, and the Plan, in fact, provides that no such actions (other than such avoidance and recovery actions that have been or are permitted to be filed in connection with the Old Chapter 11 Cases) shall survive consummation of the Plan. In this regard, a fraudulent conveyance action against Fred Lowenschuss and related parties styled "Resorts International, Inc. v. Fred Lowenschuss, individually and as Trustee of Fred Lowenschuss, IRA, and Laurance Lowenschuss, IRA," is presently pending as Adv. No. 90-1005 in the 120 United States Bankruptcy Court for the District of New Jersey. This action, which seeks among other things the recovery of the merger consideration paid to Mr. Lowenschuss' pension plan, will survive consummation of the Plan and any proceeds received with respect thereto will become assets of RII. SUCCESSORS AND ASSIGNS The rights, benefits and obligations of any person named or referred to in the Plan will be binding upon, and will inure to the benefit of, the heir, executor, administrator, successor or assign of such person. CONFIRMATION OF THE PLAN CONFIRMATION REQUIREMENTS If the Requisite Acceptances are received, RII and GRI will seek to implement the Plan by commencing cases under chapter 11 of the Bankruptcy Code and will request that the Bankruptcy Court as promptly as practicable hold a confirmation hearing and a hearing to approve the Information Statement/Prospectus under section 1126(b) of the Bankruptcy Code. Parties in interest, including all holders of claims and interests, will receive notice of the date and time fixed by the Bankruptcy Court for the these hearings. Section 1128(b) of the Bankruptcy Code provides that any party in interest may object to confirmation of the Plan and approval of the Information Statement/Prospectus. The Bankruptcy Court also will establish procedures for the filing and service of objections to the adequacy of the Information Statement/Prospectus and to confirmation of the Plan. In order for the Plan to be confirmed, and regardless of whether all impaired classes of claims and interests vote to accept the Plan, the Code requires that the Bankruptcy Court determine that the Plan complies with the requirements of section 1129 of the Bankruptcy Code. Section 1129 of the Bankruptcy Code requires, among other things, that: (i) the Plan be accepted by the requisite votes of holders of impaired claims and interests, except to the extent that confirmation, despite lack of acceptance by an impaired class, is available under section 1129(b) of the Bankruptcy Code (see "Confirmation Without Acceptance by All Impaired Classes"); (ii) the Plan be feasible under section 1129(a)(ii) of the Bankruptcy Code (that is, there is a reasonable probability that RII and GRI will be able to perform their obligations under the Plan and continue to operate their businesses without further financial reorganization) (see "Feasibility of the Plan"); and (iii) the Plan meet the requirements of section 1129(a)(7) of the Bankruptcy Code, which requires that, with respect to each impaired class, each holder of a claim or interest either accepts the Plan or receives at least as much pursuant to the Plan as such holder would receive in liquidations of RII and GRI under chapter 7 of the Bankruptcy Code (see "Best Interests Test" and "Alternatives to Consummation of the Plan -- Liquidation Under Chapter 7"). Although RII and GRI believe that the Plan will meet such tests, as well as the other requirements of section 1129 of the Bankruptcy Code, there can be no assurance that the Bankruptcy Court will reach the same conclusion. Even if the Requisite Acceptances have been received prior to the commencement of the chapter 11 cases, the Bankruptcy Court may find that the holders of claims and interests have not accepted the Plan if the Bankruptcy Court finds that the Solicitation did not comply with all the applicable provisions of the Bankruptcy Code and the Bankruptcy Rules (including the requirement under section 1126(b) that the Solicitation comply with any applicable non-bankruptcy law, rule or regulation governing the adequacy of disclosure or that the Solicitation be made after disclosure of adequate information). In such an event, the Bankruptcy Court might order RII and GRI to resolicit Acceptances, and therefore, confirmation of the Plan would be delayed and possibly jeopardized. Although RII and GRI believe that the Solicitation complies with the applicable provisions of the Bankruptcy Code and the Bankruptcy Rules and that the Acceptances received will be accepted as votes for the Plan in chapter 11 cases by the Bankruptcy Court, there can be no assurance that the Bankruptcy Court would reach the same conclusion. 121 ACCEPTANCE OF THE PLAN Except as described under "Confirmation Without Acceptance by All Impaired Classes", the Bankruptcy Code generally requires that each impaired class of claims or interests accept a plan of reorganization as a condition to confirmation. Classes of claims or interests that are not "impaired" under a plan are deemed to have accepted the plan and are not entitled to vote. The Bankruptcy Code defines acceptance of a plan of reorganization by a class of claims as acceptance by holders of at least 66 2/3% in dollar amount and more than one-half in number of the Allowed Claims in that class, but for this purpose counts only those claims that have voted on the plan. The Bankruptcy Code defines acceptance of the plan of reorganization by a class of interests as acceptance by the holders of at least 66 2/3% in amount of the Allowed Interests in that class, but for this purpose counts only those interests that have been voted on the plan. Holders of claims or interests who fail to vote and holders of disputed claims or interests (which have not been temporarily allowed for voting purposes) who vote will not be counted to determine the acceptance or rejection of the Plan by any impaired class of claims or interests. FEASIBILITY OF THE PLAN Section 1129(a) of the Bankruptcy Code requires that, to confirm the Plan, the Bankruptcy Court must find that confirmation of the Plan will not likely be followed by the liquidation or the need for further financial reorganization of RII and GRI that is not provided for in the Plan (the "Feasibility Test"). For the Plan to meet the Feasibility Test, the Bankruptcy Court must find that RII and GRI will possess the resources and working capital necessary to meet their obligations under the Plan. RII and GRI have analyzed their ability to meet their obligations under the Plan. As part of this analysis, the Company has prepared forecasts of its financial performance for the five-year period ending December 31, 1998. These forecasts, and the significant assumptions on which they are based, are included in this Information Statement/Prospectus. See "The Restructuring -- Financial Forecasts for the Company". The forecasts indicate that the Company has sufficient cash to make all distributions required to be made on the applicable Distribution Date. Although the forecasts do not extend through the final maturity of the New Debt Securities, the Company believes it will have sufficient cash to meet, or the financial strength to refinance, its deferred obligations under the Plan, including payments with respect to the New Debt Securities. The Company believes, based on this analysis, that the Plan provides a feasible means of reorganization and operation from which there is a reasonable expectation that, subject to the risks disclosed in this Information Statement/Prospectus, the Company will be able to make all payments required to be made pursuant to the Plan. However, there can be no assurance that the Company will generate sufficient cash from operations to repay, when due, the principal amount of the New RIHF Mortgage Notes maturing in 2003 and the principal amount of the New RIHF Junior Mortgage Notes maturing in 2004. As a result, the Company may be required to refinance such amounts as they become due and payable. There can be no assurance that any such refinancing would be consummated or, if consummated, would be in an amount sufficient to repay such obligations, particularly in light of the Company's high level of debt. If the Company is unable to effectuate such refinancings or renewals in the ordinary course of business, it may be required to sell equity interests in the Company. The sale of additional equity interests in the Company could result in substantial dilution of the interests of the Company's existing equity holders. There can be no assurance that such sales would be consummated or, if consummated, would be in an amount sufficient to repay such obligations in full. The failure to raise sufficient amounts of capital from such sales ultimately could result in the Company's inability to meet its debt obligations, including its obligations under the New Debt Securities. Holders of the Old Series Notes are cautioned not to place undue reliance on the forecasts. See "Risk Factors -- Risks Relating to the Forecasts". Consummation of the transactions contemplated by the Plan requires the release and termination of the Old Security Documents. Absent such release, the Company will be unable to pledge the requisite collateral as security for the New Debt Securities. 122 BEST INTERESTS TEST With respect to each impaired class, confirmation of the Plan requires that each holder of a claim or interest either (a) accept the Plan or (b) receive or retain under the Plan property of a value as of the Effective Date that is not less than the value such holder would receive or retain if RII and GRI were liquidated under chapter 7 of the Bankruptcy Code (the "Best Interests Test"). To determine the value that holders of each impaired class of claims and interests would receive if RII and GRI were liquidated, the Bankruptcy Court must determine the dollar amount that would be generated from the liquidation of RII's and GRI's assets and properties in the context of chapter 7 liquidation cases. Secured claims and the costs and expenses of the liquidation case would be paid in full from the liquidation proceeds before the balance of those proceeds would be made available to pay prepetition unsecured claims and interests. In applying the Best Interests Test, it is possible that claims and interests in the chapter 7 cases may not be classified according to the classification provided in the Plan. In the absence of a contrary determination by the Bankruptcy Court, all general unsecured claims arising prior to the Petition Date would be treated as one class for purposes of determining the potential distribution of the liquidation proceeds resulting from RII's and GRI's chapter 7 cases. The distributions from the liquidation proceeds would be calculated ratably according to the amount of the claim held by each creditor holding a claim. Section 510(b) of the Bankruptcy Code also requires, among other things, that any claim for damages arising from the purchase or sale of a security of the debtor shall be subordinated to all claims or interests that are senior to or equal the claim or interest represented by such security (except that claims in respect of common stock have the same priority as common stock). After consideration of the effect that chapter 7 liquidations would have on the ultimate proceeds available for distribution to RII's and GRI's creditors and equity interest holders, including (i) increased costs and expenses of liquidation under chapter 7 arising from fees payable to a trustee in bankruptcy and professional advisers to such trustee, (ii) the erosion in value of assets in the context of the expeditious liquidation required under chapter 7 and the "forced sale" atmosphere that would prevail, (iii) the adverse effects on the salability of business segments that could result from the probable departure of key employees and the loss of guests, (iv) the costs attributable to the time value of money resulting from what is likely to be a more protracted proceeding than if the Plan is confirmed (because of the time required to liquidate the assets of RII and GRI, resolve claims and related litigation and prepare for distributions), and (v) the application of the rule of absolute priority to distributions under a chapter 7 liquidation, RII and GRI have determined that the Plan will provide each creditor and equity interest holder holding a claim or interest in an impaired class with a greater recovery than such creditor or equity interest holder would receive pursuant to liquidations of RII and GRI under chapter 7 of the Bankruptcy Code. This determination is evidenced by the Liquidation Analysis attached hereto as Appendix B. The Liquidation Analysis provides a summary of the liquidation values of the assets of RII and GRI aggregated in accordance with the Plan, all assuming a chapter 7 liquidation in which a trustee appointed by the Bankruptcy Court would liquidate the assets of RII's and GRI's estates within a six-month period beginning on October 15, 1993. The Company believes the Liquidation Analysis to be reasonably accurate. Reference should be made to Appendix B for a complete discussion and presentation of the Liquidation Analysis which was prepared by the management of the Company, together with the Company's financial advisor, Bear Stearns. In summary, however, the Liquidation Analysis indicates that, in a liquidation, the creditors and equity interest holders would likely receive the following distributions: 123
ESTIMATED NET PRESENT LIQUIDATION VALUE OF DISTRIBUTIONS TO CLASSES OF CREDITORS AND EQUITY SECURITY HOLDERS (AS OF OCTOBER 15, 1993) - ---------------------------------------------------------------------------------------------------------------- CLASS UNDER PLAN TYPE OF CHAPTER 7 CLAIM DISTRIBUTION - ------------------------------------ ------------------------------------ ------------------------------------ RII and GRI Class 1 Priority Claims 100% RII Class 2 Old Series Notes $485 per $1,000 claim (1) RII Class 3 Showboat Note Claim 100% RII Class 4 Miscellaneous Secured Claims 100% RII Class 5 General Unsecured Less than 100% (2) RII Class 6 Paradise Subsidiary Claims None (3) RII Class 7 and 8 Equity--Old RII Common None Stock and 1990 Stock Options GRI Class 2 GRI Guaranty Recovery implied in recovery of RII Class 2 GRI Class 3 General Unsecured Less than 100% GRI Class 4 RII Intercompany Claims Less than 100% (4) GRI Class 5 Equity None
(1)_ Recovery by RII Class 2 claimants may be reduced below that estimated here to the extent that RII Class 5 Claims share distributions with any RII Class 2 deficiency claims arising from any assets of RII which are not subject to the security interests benefitting the RII Class 2 Claims. (2)_ RII Class 5 will not be paid in full in a chapter 7 context, but will rank pari passu with any RII Class 2 deficiency claims and will obtain recoveries based upon the level of assets at RII which are not subject to the security interests benefitting the RII Class 2 Claims. (3)_ Because it is assumed that Paradise Island Resorts will be sold as a going concern free and clear of any intercompany claims, the Paradise Subsidiary Claims are not expected to receive any recovery. (4)_ GRI Class 4 Claims consist of a single claim which will be voted in favor of the Plan. These likely liquidation distributions compare unfavorably to the distributions that it is estimated would be received by such Classes of Creditors and Equity Security Holders under the Plan. See chart below and "The Restructuring -- Reorganization Values". Underlying the Liquidation Analysis are a number of estimates and assumptions (the most important of which are set forth in Appendix B) that, although considered reasonable by management, are inherently subject to significant economic and competitive uncertainties and contingencies beyond the control of the Company and management. The Liquidation Analysis also is based upon assumptions (the most important of which are set forth in Appendix B) with regard to liquidation decisions that are subject to change. Accordingly, there can be no assurance that the values reflected would be realized if RII and GRI were, in fact, to undergo such liquidation. The Liquidation Analysis assumes that the Resorts Casino Hotel and the Paradise Island Resorts would continue to operate during the pendency of a chapter 7 liquidation by RII and GRI. This assumption may be incorrect. For example, in the case of the Resorts Casino Hotel, there is a risk that a chapter 7 liquidation by RII and GRI would provide the Casino Control Commission with sufficient grounds to revoke or refuse to renew RIH's casino license. If this occurred, the Resorts Casino Hotel would cease to operate. The value of the Resorts Casino Hotel if sold in a non-operating mode would be substantially less than the value ascribed to such asset in the Liquidation Analysis and distributions to creditors would be reduced accordingly. 124 Moreover, it is possible, in the context of a chapter 7 liquidation of RII and GRI, that litigation with respect to various claims of RII and GRI against various affiliates of RII and GRI could make it difficult to continue to operate the Resorts Casino Hotel and the Paradise Island Business as going concerns. In such event, recoveries in a chapter 7 context could be significantly below those estimated above. A summary comparison of the estimated net present liquidation value of distributions to creditors in a chapter 7 liquidation of RII and GRI (assuming that the chapter 7 liquidation of RII and GRI does not cause the termination of operations of the Resorts Casino Hotel) or of the Paradise Island Resorts to the value of anticipated distributions to such creditors under the Plan is set forth in the following table:
COMPARISON OF ESTIMATED NET PRESENT LIQUIDATION VALUE TO VALUE OF ANTICIPATED DISTRIBUTIONS UNDER PLAN (AS OF OCTOBER 15, 1993) - ---------------------------------------------------------------------------------------------------------------- CLASS UNDER PLAN PROJECTED PLAN DISTRIBUTION CHAPTER 7 DISTRIBUTION - ------------------------------------ ------------------------------------ ------------------------------------ RII and GRI Class 1 100% 100% RII Class 2 and GRI Class 2 Combined $699 per $1,000 claim $485 per $1,000 claim RII Class 3 100% 100% RII Class 4 100% 100% RII Class 5 per claim dollar per claim dollar RII Class 6 per claim dollar per claim dollar RII Class 7 44.7% of equity in RII (fully None diluted basis) RII Class 8 3.8% of equity in RII (fully diluted None basis) GRI Class 2 Recovery implied in recovery of RII Recovery implied in recovery of RII Class 2 Class 2 GRI Class 3 100% Less than 100% GRI Class 4 None Not applicable GRI Class 5 100% of equity of None GRI
The procedures followed and the assumptions and qualifications made by Bear Stearns in connection with its analyses are described in the Liquidation Analysis set forth in Appendix B. There can be no assurance that such assumptions would be accepted by the Bankruptcy Court. CONFIRMATION WITHOUT ACCEPTANCE BY ALL IMPAIRED CLASSES If any impaired class or classes reject the Plan, section 1129 of the Bankruptcy Code provides that, so long as at least one impaired class has accepted the Plan (excluding the vote of insiders), the Bankruptcy Court may still confirm the Plan under section 1129(b). To obtain confirmation on such basis, RII and GRI must demonstrate to the Bankruptcy Court that the Plan "does not discriminate unfairly" and is "fair and equitable" with respect to any dissenting class. The "unfair discrimination" test generally requires that holders of a non-accepting class receive treatment under a plan that is economically equivalent to that given to other classes whose holders have the same legal priorities and that no class receives more than it is legally entitled to receive for its claims or equity interests. 125 The Bankruptcy Code establishes different "fair and equitable" tests for secured creditors, unsecured creditors and equity interest holders. The respective tests are as follows: (a) SECURED CREDITORS. Each impaired creditor in the rejecting class either (i) (A) retains its liens in the collateral securing such creditor's claim or in the proceeds thereof to the extent of the Allowed Amount of its secured claim and (B) receives deferred cash payments in at least the Allowed Amount of such secured claim with a present value at the Effective Date at least equal to such creditor's interest in its collateral or in the proceeds thereof, or (ii) realizes the indubitable equivalent of its allowed secured claim. (b) UNSECURED CREDITORS. Either (i) each impaired unsecured creditor of the rejecting class receives or retains under the plan property of a value equal to the amount of its Allowed Claim, or (ii) the holders of claims and interests that are junior to the claims of the dissenting class do not receive or retain any property under the plan. (c) EQUITY INTEREST HOLDERS. Either (i) each equity interest holder of the rejecting class receives or retains under the plan property of a value equal to the greater of (A) the fixed liquidation preference or redemption price, if any, of the equity interest it holds and (B) the value of such equity interest, or (ii) the holders of interests that are junior to such equity interest do not receive or retain any property under the plan. RII and GRI intend to seek to apply section 1129(b) of the Bankruptcy Code if the Plan is not accepted by the holders of RII Class 7 and 8 Interests, and believe that the Bankruptcy Court would confirm the Plan over the rejection of such holders. The Company believes the Plan does not unfairly discriminate against the holders of RII Class 7 and Class 8 Interests because no class of creditors will receive under the Plan more than it is legally entitled to receive. The Company believes the Plan is fair and equitable because there are no junior interest holders which receive or retain property under the Plan. RII and GRI will not seek to confirm the Plan over the rejection of the holders of RII Class 2 Claims and GRI Class 2 Claims. PARADISE ISLAND APPROVAL ORDER In connection with confirmation of the Plan, and assuming that the Paradise Island Purchase Agreement has not been terminated, RII will request the Bankruptcy Court to enter an order, which may be included as part of the Confirmation Order, approving the sale of the Paradise Island Business to SIHL pursuant to the terms of the Paradise Island Purchase Agreement (the "Paradise Approval Order"). Subject to the approval of the Bankruptcy Court, the Paradise Approval Order will contain detailed findings and conclusions relative to the SIHL Sale. CONDITIONS PRECEDENT TO CONFIRMATION AND CONSUMMATION OF THE PLAN CONDITIONS TO CONFIRMATION Confirmation of the Plan is subject to the following conditions: (i) the Confirmation Date shall occur no later than December 31, 1994; (ii) the Confirmation Order shall approve in all respects all of the provisions, terms and conditions of the Plan; (iii) the Confirmation Order shall provide for the confirmation of the Plan as to both RII and GRI; (iv) the Confirmation Order shall be acceptable in form and substance to RII, GRI, TCW, Fidelity and, to the extent provided in the Paradise Island Purchase Agreement, SIHL; (v) the Confirmation Order shall contain a finding that, except as expressly provided in the Plan, all of the property distributed under the Plan shall vest in the recipients thereof free and clear of all liens, claims, encumbrances and interests of any nature whatsoever and that consummation of the Plan shall not result in a voidable transfer with respect to either RII or GRI or any of their affiliates; and (vi) the entry of an order declaring that, as of the Effective Date, the Old Security Documents, under which the liens on the property securing the Old Series Notes were granted or created, shall be deemed released and terminated. Subject to the approval of Fidelity and TCW, so long as the funds and accounts managed by either of them hold in the aggregate at least 20% of the outstanding Old Series Notes, RII and GRI reserve the right to waive at any time, without notice, without leave of or order of the Bankruptcy Court, any condition to 126 confirmation of the Plan. As a practical matter, although the condition requiring the entry of an order declaring that, as of the Effective Date, the Old Security Documents shall be deemed released and terminated is waivable, the transactions contemplated by the Plan cannot be consummated if the Old Security Documents are not released and terminated. To effect such release, RII is soliciting the consents of the record holders of Old Series Notes pursuant to the terms of the Old Series Note Indenture to terminate and release the Old Security Documents (as defined in the Old Series Note Indenture) under which the liens on the property securing the Old Series Notes were granted or created. Such consents must be evidenced by such record holders separately from their vote on the Plan. The ballots for the holders of Old Series Notes permit holders to give or withhold such consent. Any executed ballot with respect to the Plan returned without an indication to withhold such consent will be deemed to give such consent. If sufficient consents are received from holders of Old Series Notes, RII and GRI will request the Bankruptcy Court to confirm release of the Old Security Documents, effective as of the Effective Date, by entry of an appropriate order. If insufficient consents are received from holders of Old Series Notes to effectuate a consensual termination and release of the Old Security Documents by the holders of Old Series Notes, RII and GRI intend to request the Bankruptcy Court to order the release of the Old Security Documents; however, there can be no assurance that such an order will be entered. CONDITIONS TO EFFECTIVE DATE The occurrence of the Effective Date of the Plan is subject to the following conditions: (i) the entry of the Confirmation Order which has not been stayed; (ii) the New RIHF Mortgage Indenture and the New RIHF Junior Mortgage Indenture shall have been qualified under the TIA; (iii) the securities to be issued under the New RIHF Mortgage Indenture and the New RIHF Junior Mortgage Indenture, as well as the RII Class B Common Stock and the RII Common Stock, and SIHL Series A Shares or PIRL Ordinary Shares, as the case may be, shall be registered under the Securities Act and accepted or admitted on a national securities exchange or the Nasdaq National Market; (iv) the Effective Date shall occur no later than January 31, 1995; (v) all required regulatory approvals shall have been obtained (including without limitation any regulatory approvals from the Casino Control Commission, the Bahamian Government and the U.S. Department of Transportation; (vi) all indentures, mortgages, security agreements and other agreements and instruments to be delivered under or necessary to effectuate the Plan, including without limitation the RIHF Senior Facility Note Purchase Agreement (as defined in the Plan), shall have been executed and delivered; (vii) either (a) the closing of the SIHL Sale shall have occurred or (b) the closing of the transactions necessary to effectuate the PIRL Spin-Off shall have occurred; and (viii) all outstanding amounts under the Griffin Group Note shall have been paid in full. Subject to the approval of Fidelity and TCW, so long as the funds and accounts managed by either of them hold in the aggregate at least 20% of the outstanding Old Series Notes, RII and GRI at any time, without notice, without leave of or order of the Bankruptcy Court, and without any formal action other than consummation of the Plan, may waive any condition precedent to consummation of the Plan, other than the condition that the Confirmation Order has been entered and not stayed. MODIFICATIONS OF THE PLAN Subject to the approval of Fidelity and TCW, so long as the funds and accounts managed by either of them hold in the aggregate at least 20% of the outstanding Old Series Notes, RII and GRI expressly reserve the right to modify, at any time and from time to time, the terms of the Plan in accordance with the provisions of section 1127 of the Bankruptcy Code, if, and to the extent that, RII and GRI determine that such modifications are necessary or desirable in order to complete the Restructuring. Under the Bankruptcy Rules, such modifications may be approved by the Bankruptcy Court at confirmation without resolicitation of the votes of the members of any class whose treatment is not adversely affected by such modification. RII and GRI will give holders of the claims and interests such notice of such modifications as may be required by applicable law. RII and GRI reserve the right to use Acceptances to confirm any modifications of the Plan to the extent permitted by law. In addition, RII and GRI reserve the right to use Acceptances received in the Solicitation to seek confirmation of the 127 Plan under any other circumstances, including a case commenced by the filing of involuntary petitions against RII and GRI under section 303 of the Bankruptcy Code. An "involuntary petition" involves the filing of a bankruptcy case against a debtor by creditors of the debtor without the debtor's consent. After the date on which the Plan has been confirmed by the Bankruptcy Court and the Confirmation Order has been entered by the clerk of the Bankruptcy Court (the "Confirmation Date"), RII and GRI may institute proceedings in the Bankruptcy Court to remedy any defects or omissions or reconcile any inconsistencies in the Plan or the Confirmation Order as may be necessary to carry out the purposes and intent of the Plan so long as the holders of claims and interests are not adversely affected and prior notice of such proceeding is served in accordance with Bankruptcy Rules 2002 and 9014. CONSENT RIGHTS OF FIDELITY AND TCW If, and only if, at any time prior to the Effective Date, the funds and accounts managed by Fidelity and TCW cease to beneficially own an aggregate of at least 20% of the aggregate principal amount of outstanding Old Series Notes, all the rights of consent, approval, acceptance or directions granted to Fidelity and TCW under the Plan, the Paradise Island Purchase Agreement, the PIRL Standby Distribution Agreement or any document relating to any of the foregoing, shall automatically cease to exist. Notwithstanding the foregoing, the failure of Fidelity and TCW beneficially to own an aggregate of at least 20% of the aggregate principal amount of outstanding Old Series Notes shall not limit or otherwise prejudice in any manner any rights which Fidelity and TCW may have under the Bankruptcy Code and the Bankruptcy Rules. In addition, if either the Fidelity-managed funds and accounts or the TCW-managed funds and accounts cease to beneficially own any Old Series Notes whatsoever (but the other retains an aggregate of at least 20% of the aggregate principal amount of outstanding Old Series Notes), then the obligations of RII and GRI to obtain consent will be extinguished solely as to Fidelity or TCW, as the case may be, without prejudice to the rights of the other. ALTERNATIVES TO CONSUMMATION OF THE PLAN The theoretical alternatives to consummation of the Plan include (i) withdrawal of the Plan, (ii) liquidation of RII and GRI under chapter 7 of the Bankruptcy Code and (iii) an alternative plan of reorganization or liquidation. WITHDRAWAL OF THE PLAN Subject to the approval of Fidelity and TCW, so long as the funds and accounts managed by either of them hold in the aggregate at least 20% of the outstanding principal amount of the Old Series Notes, RII and GRI reserve the right not to file the Plan, or, if they file the Plan, to withdraw the Plan at any time prior to confirmation, in which case the Plan will be deemed to be null and void. In such event, nothing contained in the Plan will be deemed to constitute a waiver or release of any claims by or against RII, GRI or any other person or to prejudice in any manner the rights of RII, GRI or any other person. Given the maturity of the Old Series Notes on April 15,1994, the Company does not believe that withdrawal of the Plan, in the absence of an alternative Plan of Reorganization, is a practical alternative. See "The Restructuring -- Background -- Operations Subsequent to the Old Plan." LIQUIDATION UNDER CHAPTER 7 If the Plan is not confirmed or consummated, the chapter 11 cases filed by RII and GRI may, but not necessarily will, be converted to cases under chapter 7 of the Bankruptcy Code in which a trustee or trustees would be appointed to liquidate the assets of RII and GRI for distribution to the creditors in accordance with priorities established by the Bankruptcy Code. Discussion of the effect that chapter 7 liquidations would have on the recovery of holders of impaired claims and interests is set forth above under the caption "The Plan-- Confirmation of the Plan -- Best Interests Test". RII and GRI believe that liquidation under chapter 7 would result in smaller distributions being made to creditors than those provided for in the Plan because of: (i) additional administrative expenses involved in the appointment of a trustee and attorneys and other professionals to assist such trustee; (ii) additional expenses and claims, 128 some of which would be entitled to priority, which would be generated during the liquidation and from the rejection of leases and other executory contracts in connection with the cessation of RII's operations; and (iii) the likelihood that the assets of RII and GRI would have to be sold or otherwise disposed of expeditiously and at lower prices than otherwise might be the case. For these same reasons and as a result of the distributional priorities applicable to Chapter 7 liquidation, RII and GRI believe that equity interest holders would receive no distribution under a chapter 7 liquidation. ALTERNATIVE PLAN OF REORGANIZATION If RII and GRI commence their chapter 11 cases, but the Plan is not confirmed, RII, GRI or any other party in interest could attempt to formulate a different plan. Such a plan might involve either reorganization and continuation of RII's and GRI's business or an orderly liquidation of their assets. In connection with the formulation and development of the Plan, RII and GRI and their financial advisors have explored various alternative plan structures. RII and GRI believe the Plan enables creditors and equity interest holders, including both the holders of Old Series Notes and of Old RII Common Stock, to realize greater value than would be realized under the alternatives which RII and GRI believe could be consensually implemented. On the other hand, an alternative reorganization plan could be formulated which would attempt to eliminate entirely the interests of equity interest holders. RII and GRI believe that this form of alternative plan would be vigorously contested by equity interest holders. The expense and delay associated with this dispute, coupled with its potential adverse impact on the operations of the Company and the morale of its employees, could substantially impair reorganization value. If such an alternative plan were confirmed, however, recoveries to holders of Old Series Notes might, but not necessarily would, be greater than those projected under the Plan and no recovery would be available to holders of Old RII Common Stock. In a liquidation under chapter 11, RII's and GRI's assets would be sold in an orderly fashion over a more extended period of time than in a liquidation under chapter 7, probably resulting in somewhat greater recoveries and distributions. Further, if a trustee were not appointed (which generally is the case under chapter 11), the expenses for professional fees most likely would be lower than in a chapter 7 case. Although preferable to a chapter 7 liquidation, RII and GRI believe that a liquidation under chapter 11 would not realize the full going-concern value of RII's and GRI's assets and, as it is likely to be a more protracted proceeding than the chapter 11 case in which confirmation of the Plan would be sought as described herein, would involve greater administrative expenses. Consequently, RII and GRI believe that a liquidation under chapter 11 is a much less attractive alternative to creditors and equity interest holders than the Plan because the Plan provides for a greater return to creditors and equity interest holders than would likely be realized in a chapter 11 liquidation. MEANS FOR IMPLEMENTATION OF THE PLAN ISSUANCE OF NEW DEBT SECURITIES AND THE NEW EQUITY SECURITIES The Company will have authorized and, on the Effective Date, will issue the New Debt Securities and the New Equity Securities as provided in the Plan. The New Debt Securities and the New Equity Securities to be issued pursuant to the Plan have been registered with the Commission pursuant to the Registration Statement of which this Information Statement/Prospectus is a part, filed by the Company under the Securities Act. See "Description of New RIHF Mortgage Notes", "Description of New RIHF Junior Mortgage Notes" and "Description of New Equity Securities". CASH DISTRIBUTIONS Pursuant to the Plan, RII proposes to make certain distributions to creditors in cash. Distributions of cash are computed by reference to certain defined terms related to cash. See the definitions of these terms (Available Cash, Excess Cash, RII Retained Cash, SIHL Target Adjusted Cash, Standby Target Adjusted Cash, Reserved Cash, Plan Consummation Cash) and the formulas embodied therein to evaluate the cash distributions under the Plan. For a description of Available Cash, Excess Cash and RII Retained Cash, see "Description of Excess Cash." For a description of SIHL Target Adjusted Cash, see "Description of Paradise Island Purchase Agreement". For a description of PIRL Target Adjusted 129 Cash, see "Description of PIRL Standby Distribution Agreement". For a description of Reserved Cash, see "Description of Net Reserved Cash". For a description of Plan Consummation Cash, see "Description of Net Plan Consummation Cash and Plan Expenses". DISTRIBUTIONS Distributions of securities and cash under the Plan may be made by RII or GRI, as the case may be. Alternatively, at the option of RII and GRI, one or more disbursing agents ("Disbursing Agent") may be designated and employed by RII and GRI to make such distributions. With respect to distributions to holders of Old Series Notes (and the related GRI Guaranty), a Disbursing Agent, which may be the Old Series Note Trustee, may be designated for such distributions. It is not expected that distributions to holders of Old Series Notes will be made by RII or GRI. All distributions to be made by a Disbursing Agent other than RII and GRI shall be made pursuant to a disbursing agreement approved by the Bankruptcy Court. Any such disbursing agreement relative to any distribution to a class of claims will be approved by the Bankruptcy Court and will provide for an appropriate reserve to be maintained by the Disbursing Agent relative to Disputed Claims as of the Distribution Date. No reserve will be required when RII or GRI act as the Disbursing Agent. DISTRIBUTION DATE The Distribution Date for any Claim that is an Allowed Claim on the Effective Date, will be the Effective Date or as soon thereafter as practicable, but in no event later than 20 days after the Effective Date. For any Claim that is a Disputed Claim on the Effective Date, the Distribution Date will be the date as soon as practicable, but in no event later than 30 days, after the date upon which such Claim becomes an Allowed Claim. Notwithstanding the foregoing, the Distribution Date with respect to distribution to the Disbursing Agent for holders of Old Series Notes is as follows: (a) for distribution of the SIHL Aggregate Cash Purchase Price, the New Debt Securities and the New Equity Securities, the Effective Date; (b) for payments of Net Reserved Cash, as soon as practicable after the Effective Date, but in no event later than 90 days after the Effective Date; (c) for payments of Net Plan Consummation Cash, as soon as practicable but no later than 90 days after the Effective Date; provided, however, that if all Plan Expenses have not been paid by the 90th day after the Effective Date, RII and GRI may continue to hold back for an additional 60 days the portion of Net Plan Consummation Cash deemed by the Bankruptcy Court to be necessary to satisfy remaining Plan Expenses, after which time, the remaining Net Plan Consummation Cash shall be distributed, unless otherwise ordered by the Bankruptcy Court; (d) for payments of Deferred Cash, within three business days after receipt by RII of the Litigation Trust Distributions in immediately available funds; and (e) for payments of Excess Cash, the Effective Date or as soon thereafter as practicable, but in no event later than 20 days after the Effective Date. ADDITIONAL DISTRIBUTION PROVISIONS DISTRIBUTIONS TO BE MADE TO HOLDERS AS OF THE DISTRIBUTION RECORD DATE. Only holders of record as of the Distribution Record Date will be entitled to receive the distributions provided under the Plan. As of the close of business on the Distribution Record Date, the respective transfer ledgers in respect of the Old Series Notes will be closed. RII, GRI and the Disbursing Agent, if any, will have no obligation to recognize any transfer of Old Series Notes occurring after the Distribution Record Date. RII, GRI and any such Disbursing Agent shall be entitled instead to recognize and, for purposes of making distributions under the Plan, deal only with those holders of record stated on the transfer ledgers maintained by the Registrar for the Old Series Notes as of the close of business on the Distribution Record Date. DISTRIBUTION TO HOLDERS OF OLD SERIES NOTES. On the Effective Date, all Old Series Notes will be settled and compromised in full by the treatment accorded to such claims in this Plan. Distributions to holders of Old Series Notes shall be delivered on the Distribution Date to the Disbursing Agent, if any, for the holders of Old Series Notes, which in turn will deliver the distributions to the holders of record of the Old Series Notes on the Distribution Record Date in accordance with the provisions of the Plan, 130 the Old Series Note Indenture and the applicable disbursing agreement, if any. For purposes of any distributions by RII and GRI to holders of Old Series Notes, the Disbursing Agent, if any, will be deemed to be the sole holder of all such Old Series Notes. PROCEDURES FOR DISTRIBUTION TO HOLDERS OF OLD SERIES PUBLIC DEBT CLAIMS. On the Distribution Date, the Disbursing Agent, if any, for the holders of Old Series Notes will receive from RII (or, in the case of SIHL Series A Shares and the SIHL Aggregate Cash Purchase Price, SIHL) as applicable (i) certificates representing New RIHF Mortgage Notes, New RIHF Junior Mortgage Notes, SIHL Series A Shares or PIRL Ordinary Shares, as the case may be, RII Common Stock, RII Class B Common Stock and (ii) cash. As soon as practicable, the Disbursing Agent, in accordance with the applicable disbursing agreement and the Plan, shall deliver such cash and certificates to the holders of Old Series Notes that have validly surrendered the Old Series Notes held by such holders. As a condition to receiving distributions provided for by the Plan in respect of the Old Series Notes, any holder of Old Series Notes shall be required to surrender such securities, accompanied by duly executed and completed letters of transmittal, to RII or the Disbursing Agent, as appropriate. All instruments so surrendered shall be canceled, marked "Compromised and Settled Only as Provided in the Plan of Reorganization for Resorts International, Inc. and GGRI, Inc." and delivered to RII. RII or the Disbursing Agent shall make distributions only to holders of Old Series Notes that have surrendered such instruments as herein provided. Except as otherwise provided in the Plan, no distribution shall be made to any holder of Old Series Notes that has not so surrendered such instruments held by it. Unless waived by the RII or the Disbursing Agent, any holder of a claim based upon an Old Series Note which has been lost, stolen, mutilated or destroyed shall, in lieu of surrendering such Old Series Note as provided in this section, deliver to RII or the Disbursing Agent, as appropriate, (i) satisfactory evidence of the loss, theft, mutilation or destruction of such instrument and (ii) such security or indemnity as may be reasonably required by RII and the Disbursing Agent, if any, to hold Reorganized RII and the Disbursing Agent harmless from any damages, liabilities, or costs incurred in treating such entity as a holder of such Old Series Notes. Thereafter, such entity shall be treated as the holder of Old Series Notes for all purposes of the Plan and shall, for all purposes under this Plan, be deemed to have surrendered the instrument representing such Old Series Notes. ANY HOLDER OF OLD SERIES NOTES WHO HAS NOT SURRENDERED THE CERTIFICATES REPRESENTING ITS OLD SERIES NOTES WITHIN TWO YEARS AFTER THE EFFECTIVE DATE SHALL HAVE ITS CLAIM BASED ON SUCH OLD SERIES NOTES DISALLOWED, SHALL RECEIVE NO DISTRIBUTIONS ON SUCH CLAIM UNDER THIS PLAN AND SHALL BE FOREVER BARRED FROM ASSERTING ANY CLAIM THEREON. In such case, the Disbursing Agent, if any, shall return to and be retained by RII (or, in the case of New RIHF Mortgage Notes and New RIHF Junior Mortgage Notes, RIHF) all certificates representing New RIHF Mortgage Notes, New RIHF Junior Mortgage Notes, SIHL Series A Shares or PIRL Ordinary Shares, as the case may be, RII Class B Common Stock, RII Common Stock and all cash allocable to such non-surrendering holders. All such certificates representing New RIHF Mortgage Notes, New RIHF Junior Mortgage Notes, RII Class B Common Stock, and RII Common Stock which are so returned to RII or, as applicable, RIHF shall be canceled. All cash and certificates representing SIHL Series A Shares or PIRL Ordinary Shares which are so returned to RII shall be redistributed as soon as practicable after the end of the 24-month after the Effective Date to the other holders of Old Series Notes as of the Distribution Record Date who previously surrendered their Old Series Notes. DELIVERY OF DISTRIBUTIONS. Subject to Bankruptcy Rule 9010, distributions to holders of Allowed Claims shall be made at the address of each such holder as set forth on the Schedules filed with the Bankruptcy Court unless superseded by the address as set forth on the proofs of claim filed by such holders (or at the last known addresses of such a holder if no proof of claim is filed or if RII and GRI have been notified in writing of a change of address), or in the case of holders of Old Series Notes, may be made at the addresses contained in the records of the Registrar, except as provided below. If any holder's distribution is returned as undeliverable, no further distributions to such holder shall be 131 made unless and until RII or the Disbursing Agent, if any, is notified of such holder's then current address, at which time all missed distributions shall be made to such holder without interest. Amounts in respect of undeliverable distributions made through a disbursing agent shall be returned to such Disbursing Agent making such distribution until such distributions are claimed. All claims for undeliverable distributions shall be made on or before the later of the second anniversary of the Effective Date and the date 90 days after such claim is allowed. After such date, all unclaimed property shall be returned to RII and GRI or their successors in accordance with the Plan and the claim of any holder with respect to such property shall be discharged and forever barred. FEES AND EXPENSES OF DISBURSING AGENTS Except as otherwise ordered by the Bankruptcy Court, the amount of any reasonable fees and expenses incurred by a disbursing agent, including but not limited to the Old Series Indenture Trustee, as the case may be, on or after the Confirmation Date (including without limitation tax related expenses) and any compensation and expense reimbursement claims (including reasonable fees and expenses of its agents) made by such Disbursing agent shall be paid as a Plan Expense by RII in accordance with the applicable disbursing agreement without further order of the Bankruptcy Court; provided, however, that the Bankruptcy Court will hear and determine any disputes in respect of such fees and expenses. AMENDMENTS TO RII'S CERTIFICATE OF INCORPORATION AND BY-LAWS Upon the consummation of the Restructuring and pursuant to the Plan, the Restated Certificate of Incorporation of RII will be amended to provide for: (i) an increase in the authorized number of shares of RII Common Stock; (ii) the authorization and issuance of the RII Class B Common Stock; (iii) the authorization of preferred stock; (iv) the election of two-thirds of the entire RII Board of Directors by the holders of RII Common Stock (or, following the occurrence of the Class B Triggering Event, one-half minus one of the entire RII Board of Directors); and (vi) the election of one-third of the entire RII Board of Directors by the holders of RII Class B Common Stock (or, following the occurrence of the Class B Triggering Event, a majority of the entire RII Board of Directors). The form of the Amended RII Certificate of Incorporation is attached as Appendix C. Upon consummation of the Restructuring and pursuant to the Plan, the By-laws of RII will be amended as necessary in connection with the Restructuring. The form of the Amended RII By-laws is attached as Appendix D. Pursuant to the Delaware General Corporation Law, the Amended RII Certificate of Incorporation and the Amended RII By-laws may be adopted upon confirmation of the Plan without further action by RII's directors or the holders of RII Common Stock. INTERIM MANAGEMENT AGREEMENT If the SIHL Sale is not consummated on the Effective Date, RII, at the election of PIRL, will enter into the Interim Management Agreement with PIRL to operate the Paradise Island Business. The Interim Management Agreement would have an initial term of one year and be renewable on a yearly basis thereafter. The annual management fee payable to the Company under the Interim Management Agreement would be 3% of gross revenues of the Paradise Island Business. PIRL may terminate the Interim Management Agreement for any reason upon 30 days' prior notice. In the event of such a termination, RII would be entitled to a termination fee of $1,000,000, in addition to a prorated portion of the unpaid balance of the annual management fee through the date of termination. MANAGEMENT AND MANAGEMENT COMPENSATION ARRANGEMENTS The Plan provides for the executive officers of RII and GRI immediately before confirmation of the Plan to continue to serve immediately after confirmation of the Plan in their respective capacities. Upon the Effective Date, the composition of the Board of Directors of RII and GRI will change. For a description of the method of selection of the Board of Directors of RII and other related matters, see "The Restructuring -- Overview of the Restructuring - -- Post-Restructuring RII Board of Directors". Subject to receipt of any necessary qualification of directors from the Casino Control Commission, the 132 initial post-Restructuring Board of Directors of RII and GRI will consist of Merv Griffin, Thomas Gallagher, Jay Greene and William Fallon and, as Class B Directors, Vincent Naimdi and Charles Masson. Prior to confirmation of the Plan, RII and GRI will disclose, in accordance with section 1129(a)(5) of the Bankruptcy Code, any additional information regarding (i) the identity of and affiliations of any individual proposed to serve, after confirmation of the Plan, as a director, officer or voting trustee of RII, GRI and the other proponents of the Plan, and (ii) the identity of any insider (as such term is defined in section 101 of the Bankruptcy Code) that will be employed and retained by RII, GRI and the other proponents of the Plan, and the nature of any compensation for such insider. All existing compensation arrangements with members of the Company's management will continue. Existing employment contracts with members of the Company's management are expected to be renewed in the ordinary course of business. For certain information regarding the current directors and executive officers of RII and a description of the employment agreements of certain insiders and their compensation, see "Management of RII". 1994 STOCK OPTION PLAN: DESCRIPTION AND FEDERAL TAX CONSEQUENCES DESCRIPTION GENERAL. In connection with the Plan, RII is proposing to adopt the 1994 Stock Option Plan to enable RII and its subsidiaries to attract, retain and motivate their directors, officers and key employees by providing for proprietary interests of such individuals in RII. If sufficient Acceptances are received from the holders of Claims entitled to receive RII Common Stock pursuant to the Plan (holders of Allowed RII Class 2 and GRI Class 2 Claims) and from the holders of RII Class 7 Interests, such Acceptances will constitute approval of the 1994 Stock Option Plan by such holders for purposes of compliance with Rule 16b-3 promulgated under the Exchange Act. The following description of the 1994 Stock Option Plan is qualified in its entirety by reference to the full text of the 1994 Stock Option Plan, which is contemplated to be in substantially the form thereof filed attached as Exhibit C to the Plan. The 1994 Stock Option Plan will be unfunded. The 1994 Stock Option Plan will be administered by a committee appointed by the Board of Directors of RII (the "Option Committee".) The Option Committee will consist solely of "disinterested" directors, as that term is defined for purposes of satisfying Rule 16b-3. Subject to the provisions of the 1994 Stock Option Plan, the Option Committee will have full and final authority to select the participants to whom awards will be granted thereunder, to grant such awards, and to determine the terms and conditions of such awards (including, subject to certain limitations, exercise price) and the number of shares to be issued pursuant thereto. Key employees, officers and directors of RII or any of its subsidiaries ("Eligible Participants") are eligible to be considered for the grant of awards under the 1994 Stock Option Plan. The maximum number of shares of RII Common Stock that may be issued pursuant to awards granted under the 1994 Stock Option Plan will be no more than 5% of the fully diluted shares of RII Common Stock outstanding on the Effective Date. For the market price of RII Common Stock, see "Market Prices of RII Common Stock". AWARDS. The proposed terms of the 1994 Stock Option Plan authorize the Option Committee to grant to Eligible Participants options to purchase RII Common Stock at not less than 100% of the fair market value of the stock at the date of the grant of the options. The fair market value of the stock as of a date shall be deemed to be the closing price of RII Common Stock on the date of grant of such option. The fair market value of RII Common Stock as of the Effective Date is at this point indeterminable. Any stock option granted to Eligible Participants under the 1994 Stock Option Plan may be a tax benefited incentive stock option (an "Incentive Option") (in which case it may be granted only to 133 employees and certain other restrictions will apply), or it may be a nonqualified stock option that is not tax benefited (in which case it may be issued to both employees, officers and directors, and few, if any, legal restrictions will apply). The proposed terms of the 1994 Stock Option Plan provide that all options immediately become fully exercisable upon a "change in control," as defined in the 1994 Stock Option Plan. In the event of a "change in control" or a merger in which RII is not the surviving entity, any unexercised options shall be replaced by the surviving corporation. The 1994 Stock Option Plan deems a "change in control" to have occurred if any corporation, person or group acquires a majority of RII's Common Stock or a majority of RII's outstanding voting securities, or if within a two-year period a majority of the RII Board of Directors is replaced by persons who were not directors at the beginning of such period and who were not nominated or ratified by at least two-thirds of the directors who were directors at the beginning of such two-year period. For purposes of the 1994 Stock Option Plan, the occurrence of the Class B Triggering Event will not constitute such a "change of control". No awards will be granted under the 1994 Stock Option Plan prior to the Effective Date. Subject to the express requirements under the 1994 Stock Option Plan, the terms of any and all awards granted to Eligible Participants will be determined by, and subject to the conditions imposed by the Option Committee, including provisions as to the exercisability, expiration, termination or forfeiture of options. Options granted under the 1994 Stock Option Plan to employees or officers of RII or its subsidiaries expire one year after an optionee's death, one year after the optionee's termination of employment because of disability, immediately upon termination of the optionee's employment for "good cause," as defined in the 1994 Stock Option Plan, and three months after an optionee's employment terminates for any other reason. Notwithstanding the foregoing, in all cases options expire ten years after the date of grant, or at such earlier time as the Option Committee may provide. Under the 1994 Stock Option Plan, ___________________ options may be granted to outside directors of RII or its subsidiaries. Options granted under the 1994 Stock Option Plan to outside directors expire one year after an optionee's death. Notwithstanding the foregoing, in all cases options granted to outside directors expire ten years after the date of grant, or at such earlier time as the Option Committee may provide. The exercise price of such option shall not be less than 100% of the fair market value of the underlying shares of RII Common Stock as of the date such options are granted. An award under the 1994 Stock Option Plan may permit the recipient to pay all or part of the purchase price of the shares issuable pursuant thereto, or to pay all or part of such recipient's tax withholding obligation with respect to such issuance, by delivering a sufficient amount of shares of stock of RII owned for at least six months (the fair market value thereof being calculated as of the date next preceding the date of issuance) or otherwise as the Option Committee may determine according to the terms and conditions of the 1994 Stock Option Plan. The 1994 Stock Option Plan authorizes the Option Committee to provide for arrangements under which brokers that are compensated by RII provide temporary financing to assist an optionee in paying the exercise price of an option, such financing to be paid off by the sale of shares issuable upon exercise of the option. No option right granted under the 1994 Stock Option Plan may be transferred other than by will or the laws of descent and distribution or, except as to Incentive Options, pursuant to a qualified domestic relations order (as defined in the Tax Code) and the award may be exercised during the recipient's lifetime only by the recipient or by his or her guardian or legal representative. The exercise price for such awards will be equal to (i) the fair market value per share (as determined according to the 1994 Stock Option Plan) of RII Common Stock at the time the options are awarded, or (ii) in the event that such award is an Incentive Option granted to a person who, at the time such option is granted, owns shares of RII, or any subsidiary corporation thereof, which possess 134 more than 10% of the total combined voting power of all classes of shares of capital stock of RII or of any subsidiary corporation of RII, 110% of the fair market value per share (as determined according to the 1994 Stock Option Plan) of RII Common Stock at the time such Incentive Option is awarded. Consequently, the value of any such awards is not yet determinable. Also, as noted below, given the vesting requirements of awards under the 1994 Stock Option Plan and the restrictions on transfer of any awards, the value of awards under the 1994 Stock Option Plan is not presently determinable, and would be speculative at best. For a description of awards under RII's 1990 Stock Option Plan, see "Management of RII -- Executive Compensation". AMENDMENT AND TERMINATION. Under the proposed terms of the 1994 Stock Option Plan, the Board of Directors of RII will be able to alter, amend, suspend or terminate the 1994 Stock Option Plan, provided that no such action shall alter or impair any option granted to the optionee pursuant to the 1994 Stock Option Plan without the optionee's consent. Except as provided in the 1994 Stock Option Plan, no amendment by the Board of Directors of RII, unless taken with the approval of the shareholders of RII, may: (1) materially increase the benefits accruing to participants under the 1994 Stock Option Plan; (2) materially increase the number of securities which may be issued under the 1994 Stock Option Plan (except for permitted adjustments pursuant to a "change of control" and certain dilutive events); (3) materially modify the requirements as to eligibility for participation in the 1994 Stock Option Plan; or (4) decrease the minimum exercise price of an Incentive Option. VESTING OF OPTIONS. Pursuant to the 1994 Stock Option Plan options shall vest, and the restrictions imposed thereon shall lapse, on the dates and in the amounts set forth in the particular stock option agreement between RII and the optionee. In the event of the death or termination due to disability or retirement of any employee holder of option awards, all options held by such employee on the date of such death or termination shall vest in full and become immediately exercisable. FEDERAL INCOME TAX TREATMENT The following is a brief description of the Federal income tax treatment which generally will apply to benefits or awards ("Awards") made under the 1994 Stock Option Plan, based on Federal income tax laws in effect on the date hereof. The exact Federal income tax treatment of Awards will depend on the specific nature of any such Award. BECAUSE THE FOLLOWING PROVIDES ONLY A BRIEF SUMMARY OF THE GENERAL FEDERAL INCOME TAX RULES, INDIVIDUALS SHOULD NOT RELY THEREON FOR INDIVIDUAL TAX ADVICE, AS EACH TAXPAYER SITUATION AND THE CONSEQUENCES OF ANY PARTICULAR TRANSACTION WILL VARY DEPENDING UPON THE SPECIFIC FACTS AND CIRCUMSTANCES INVOLVED. RATHER, EACH TAXPAYER IS ADVISED TO CONSULT WITH HIS OR HER OWN TAX ADVISOR FOR PARTICULAR FEDERAL, AS WELL AS STATE AND LOCAL INCOME AND ANY OTHER TAX ADVICE. INCENTIVE STOCK OPTIONS. Pursuant to the 1994 Stock Option Plan, participants may be granted options which are intended to qualify as Incentive Options under the provisions of section 422 of the Tax Code. Generally, the optionee is not taxed and RII is not entitled to a deduction on the grant or the exercise of an Incentive Option. However, if the optionee disposes of the shares acquired upon the exercise of an Incentive Option at any time within (i) one year after the date the shares are transferred to the optionee pursuant to the exercise of such Incentive Option or (ii) two years after the date of grant of such Incentive Option (a "disqualifying disposition"), the optionee will recognize ordinary income in an amount equal to the excess, if any, of the lesser of the amount realized on the date of such disposition or the fair market value of RII's stock on the date of exercise, over the exercise price of such 135 Incentive Option (with any remaining gain being taxed as a capital gain). In such an event, RII generally will be entitled to a deduction in an amount equal to the amount of ordinary income recognized by such optionee. If the optionee does not dispose of the option shares within the above described time limits, there will be no ordinary income recognized upon any subsequent sale or other disposition of the shares, but rather capital gain or loss will be recognized in an amount equal to the difference between the amount realized on the sale or disposition and the exercise price. RII will not be entitled to any deduction in this event. Finally, exercise of an Incentive Option may result in alternative minimum tax liability for the optionee. Any excess of the fair market value of the stock on the date the Incentive Option is exercised over the option exercise price will be included in the calculation of the optionee's alternative minimum taxable income, which may subject the optionee to the alternative minimum tax at a rate of up to 28%. The portion of any such alternative minimum tax attributable to the exercise of an incentive stock option can be credited against the optionee's regular tax liability in later years to the extent that in any such year the optionee's regular tax liability exceeds the alternative minimum tax. NONQUALIFIED STOCK OPTIONS. The grant of an option which does not qualify for treatment as an Incentive Option generally is not a taxable event for the optionee. However, upon exercise, the optionee generally will recognize ordinary income in an amount equal to the excess of the fair market value of the stock acquired upon exercise (determined as of the date of exercise) over the exercise price of such option, and RII will generally be entitled to a deduction equal to such amount. Upon the later disposition of the option shares acquired upon exercise, appreciation (or depreciation) after the date of exercise will be treated as capital gain (or loss) to the optionee and will have no tax effect as to RII. SPECIAL RULES FOR SECTION 16 INSIDERS. If a nonqualified option has been held for less than six months at the time of exercise, and the exercise price of the option is equal to or less than the fair market value of the acquired shares at the time of exercise, an officer or more than 10% shareholder of RII subject to the provisions of Section 16 of the Exchange Act (an "Insider") will not be taxed until the earlier of (i) the expiration of the six-month holding period beginning on the date of grant of the nonqualified option, or (ii) the sale of the acquired shares, at which time the Insider will recognize ordinary income in an amount equal to the excess, if any, of the then-fair market value of the acquired shares over the exercise price of the nonqualified option. Alternatively, pursuant to Section 83(b) of the Tax Code, the Insider may elect within 30 days after exercise of the nonqualified option to recognize ordinary income equal to the excess, if any, of the fair market value of the RII Common Stock on the date of exercise over the exercise price. The capital gains holding period for the acquired shares shall commence immediately following the date on which the optionee is required to recognize ordinary income, and any appreciation (or depreciation) realized following such date, will be taxed as a capital gain (or loss). MISCELLANEOUS. Special rules will apply in cases where the participant pays the exercise or purchase price of awards or applicable withholding tax obligations under the 1994 Stock Option Plan by delivering previously owned RII Common Stock or in the case of satisfying withholding obligations, by reducing the amount of shares or other property otherwise issuable pursuant to the award. The surrender (in the circumstances below) or withholding of such stock will be a taxable event, resulting in the recognition of gain or loss. Such gain will be taxable as ordinary income if the stock surrendered or withheld either (i) was acquired upon exercise of an Incentive Option and the surrender takes place within one year after the exercise or two years after the date of grant of the Incentive Option, or (ii) is both subject to a substantial risk of forfeiture and is not freely transferable for purpose of Tax Code Section 83, the market value of such stock is in excess of the amount paid for the stock and no election has been made under Tax Code Section 83(b). In addition, shares withheld on the exercise of a nonqualified option in order to pay tax withholding should result in tax on the withheld shares equal to the difference between the fair market value of the shares (on the date of exercise) and the exercise price. 136 Generally, RII will receive a deduction equal to, and will be required to withhold applicable taxes with respect to, any ordinary income recognized by a participant in connection with awards made under the 1994 Stock Option Plan. The 1994 Stock Option Plan is not a "qualified plan" within the meaning of Section 401(a) of the Tax Code and is not subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). Upon the accelerated exercisability of an option in connection with a change in ownership or control of RII, depending upon the individual circumstances of the recipient participant, certain amounts with respect to such awards may constitute "excess parachute payments" under the golden parachute provisions of the Tax Code. Pursuant to these provisions a participant will be subject to a 20% excise tax on any "excess parachute payment" and RII will be denied any deduction with respect to such excess parachute payment. GRIFFIN COMPENSATION ARRANGEMENTS In September 1990, Merv Griffin, Griffin Group and RII entered into the Old Griffin Services Agreement. Pursuant to the Old Griffin Services Agreement, Griffin Group granted the Company a non-exclusive license to use the name and likeness of Merv Griffin for purposes of advertising and promoting the Company's facilities and operations and Merv Griffin agreed to serve as Chairman of the Board of Directors of RII. In addition, Griffin Group agreed to provide to the Company the non-exclusive services of Merv Griffin, on a limited basis, to host or present shows in which he is a featured performer at the Company's facilities. Under the Old Griffin Services Agreement, the Company was not required to compensate the Griffin Group and the Company has not paid any compensation to the Griffin Group, or to Mr. Griffin directly, for Mr. Griffin's services to the Company under the Old Griffin Services Agreement. The term of the Old Griffin Services Agreement was for a period of two years, which expired on September 16, 1992. Pursuant to the New Griffin Services Agreement, which replaced the Old Griffin Services Agreement as of its expiration, RII and RIH were granted a non-exclusive license to use Merv Griffin's name and likeness for the purpose of advertising and promoting the Resorts Casino Hotel and the Paradise Island Business. Subject to the performance of their obligations, RII and RIH also were granted the non-exclusive services of Merv Griffin, as Chairman of the Board of Directors of RII and in other capacities, including without limitation spokesperson for RII and RIH. The New Griffin Services Agreement has a basic term of four years. Under certain circumstances however, the New Griffin Services Agreement could remain in force for up to an additional year. The Griffin Group was entitled to receive from RII or RIH $4,100,000 upon execution of the New Griffin Services Agreement as compensation for the first two years of services under the New Griffin Services Agreement. The Griffin Group was entitled to compensation in the amounts of $2,205,000 and $2,310,000 for the third and fourth years of such services, respectively. Additional prorated compensation also may be paid to the Griffin Group if the New Griffin Services Agreement continues in force longer than four years. RIH made the $4,100,000 payment for the first two years under the New Griffin Services Agreement in April 1993. Simultaneously, Merv Griffin made a partial prepayment of the Griffin Note in an equal amount to RII thereby reducing the principal amount of the Griffin Note to $7,523,333. RII then canceled the Griffin Note in exchange for the Griffin Group Note in the principal amount of $7,523,333. The Griffin Group Note is payable on demand and bears interest at the rate of 3% per year. The bank letter of credit securing the Griffin Note was released by RII. Merv Griffin has personally guaranteed payment of the Griffin Group Note. Under the New Griffin Services Agreement, RII and RIH have the right, at their option, to elect to satisfy any compensation obligation to the Griffin Group by reducing the outstanding amount of the Griffin Group Note. On September 17, 1993, RII made the $2,205,000 payment for the third year of the New Griffin Services Agreement by reducing the principal amount of the Griffin Group Note in an equal amount. 137 On or prior to the Effective Date, RII will pay $2,310,000 to the Griffin Group for the fourth year of the New Griffin Services Agreement also by reducing the principal amount of the Griffin Group Note in an equal amount. If for any reason the Griffin Group fails to fulfill its obligations under the New Griffin Services Agreement, it will be obligated to reimburse the Company for all amounts paid with respect to periods for which such obligations are not fulfilled. After payment of the $2,310,000 referenced above, but no later than the Effective Date, the Griffin Group will pay RII the balance of the Griffin Group Note (approximately $3,000,000). RII will distribute the proceeds of such payment to the holders of the Old Series Notes as part of Excess Cash. Payment in full of outstanding amounts under the Griffin Group Note is a condition to consummation of the Plan. The New Griffin Services Agreement also provides that, on the Effective Date, the Griffin Group will be granted the Griffin Warrants. Upon issuance, the Griffin Warrants will entitle the Griffin Group to purchase approximately 10% of the RII Common Stock on a fully diluted basis at a purchase price per share equal to the lesser of $1.875 and the average closing trading price for the 20 trading days following the Effective Date. Once issued, the Griffin Group may exercise the Griffin Warrants, subject to applicable securities laws, at any time prior to the fourth anniversary of the Effective Date. Finally, RII and RIH also will provide the Griffin Group and Merv Griffin with certain indemnification and insurance coverage and reimburse them for certain expenses incurred in connection with the performance under the New Griffin Services Agreement. Pursuant to the Restructuring, the New Griffin Services Agreement will remain in place. See "Description of Griffin Warrants". TRANSACTIONS RELATIVE TO SIHL SALE OR PIRL SPIN-OFF. On the Effective Date, the following will occur (amounts reflected are balances as of September 30, 1993; actual amounts to be effected will be balances as of the Effective Date): (1) GRI will assume the obligation of RIB to repay the intercompany debt owed by RIB to RIH ($50,000,000) plus accrued interest thereon and the intercompany debt owed by RIB to RII ($11,192,000). As a result of such assumptions, RIB will have no obligations to repay any inter-company debt. (2) If the SIHL Sale is consummated (or, with the consent of Fidelity and TCW (so long as the funds and accounts managed by them hold in the aggregate at least 20% of the outstanding Old Series Notes) if the PIRL Spin-Off is effected), GRI will distribute to its immediate parent, RII, all the outstanding capital stock of RIB that is owned by GRI. RIB is the holding company for the Paradise Island assets located in The Bahamas, which are held in the following corporations: IHC, PEL, PIB, PIL, PBI and PSS. As a result of such distribution, RIB will be a first-tier subsidiary of RII. (3) Either: (A) pursuant to the Paradise Island Purchase Agreement, in exchange for 2,000,000 SIHL Series A Shares, representing 40% of the capital stock of SIHL to be outstanding after the SIHL sale, and the SIHL Aggregate Cash Purchase Price, SIHL will purchase (i) from RII all the capital stock of RIB and (ii) directly or through its subsidiaries the RII Real Estate Assets and substantially all the assets of the U.S. Paradise Island Subsidiaries and will assume substantially all the non-intercompany liabilities relating to such assets; or (B) if the SIHL Sale is not consummated on the Effective Date, (i) RII will contribute all the capital stock of RIB to the capital of PIRL, which was formed as a first-tier subsidiary of RII to effect the PIRL Spin-Off, in exchange for PIRL Ordinary Shares (which, when added to the shares of PIRL Ordinary Shares owned by RII, shall equal all the issued and outstanding PIRL Ordinary Shares which are to be distributed to the holders of the Old Series Notes on the Distribution Date) and (ii) subsidiaries of PIRL will acquire the RII Real Estate Assets and substantially all the assets of the U.S. Paradise Island Subsidiaries and will assume substantially all the non-intercompany liabilities relating to such assets. 138 For a chart summarizing the ownership structure of RII, including RIB and its subsidiaries and the U.S. Paradise Island Subsidiaries, as of the date hereof and after giving effect to the Restructuring, see "Summary -- Pre-and Post-Restructuring Ownership Structures". ISSUANCE OF PROMISSORY NOTES BY RIH TO RIHF. In order to effect the issuance by RIH of the RIH Promissory Note and the RIH Junior Promissory Note, which promissory notes will be held by the Collateral Agent as security for payment of the New Debt Securities, the following will occur on the Effective Date (amounts reflected are balances as of September 30, 1993; actual amounts to be effected will be balances as of the Effective Date): (1) RIH will distribute the RIH Promissory Note and the RIH Junior Promissory Note, secured by the RIH Mortgage and the RIH Junior Mortgage, respectively, to RII in repayment of the intercompany debt owed to RII by RIH ($51,325,000) and as a distribution to its shareholder. (2) RII will exchange the RIH Promissory Note and the RIH Junior Promissory Note, together with the related RIH Mortgage and the RIH Junior Mortgage, for New RIHF Mortgage Notes and the New RIHF Junior Mortgage Notes to be issued by RIHF. (3) The holders of Old Series Notes will receive the New RIHF Mortgage Notes and the New RIHF Junior Mortgage Notes and RIHF will assign to the Collateral Agent the RIH Promissory Note, the RIH Junior Promissory Note, the RIH Mortgage and the RIH Junior Mortgage. (4) RII will contribute to GRI the intercompany obligation of GRI to RII ($51,388,000). (5) Upon termination and release of the RIH Pledge Agreement on the Effective Date, GRI will exchange with RIH the $325,000,000 of non-interest bearing RIH Notes for an amount of stock representing on a fully diluted basis 99.99% of the issued and outstanding common stock of RIH. SUBSIDIARY TRANSACTIONS. On the Effective Date, after the transactions described above have occurred, RII will contribute to the capital of GRI the remaining .01% of the issued and outstanding stock of RIH held by RII on the date hereof. RIH will then distribute to GRI, as a return of surplus, the intercompany debt owed by GRI to RIH ($50,000,000) plus accrued interest thereon. RIH will become a wholly owned first-tier subsidiary of GRI and an indirect subsidiary of RII. TGC Holdings, NPO and ESS will remain in place and will be unaffected by the Plan. NON-OPERATING REAL PROPERTY. The Company will continue its attempts to sell all the Non-Operating Real Property. However, there can be no assurance that any such sale will occur or, if such a sale does occur, as to the amount of proceeds therefrom. The Company does not expect to sell any portion of the Non-Operating Real Property prior to the consummation of the Plan. If any such sale were to occur prior to the consummation of the Plan, the proceeds would be distributed to holders of the Old Series Notes as a component of Excess Cash. The Non-Operating Real Property will not constitute collateral securing any of the New Debt Securities. DISPUTED CLAIMS OR INTERESTS RII and GRI, as well as any other party in interest, may object to the allowance of claims or interests filed with the Bankruptcy Court. Objections will be litigated to a final order in which all rights of appeal have been exhausted (a "Final Order"). However, RII and GRI may compromise and settle any objections to claims or interests, subject to the approval of the Bankruptcy Court, and may seek Bankruptcy Court estimation of disputed claims or interests pursuant to section 502(c) of the Bankruptcy Code. SURRENDER AND CANCELLATION OF INSTRUMENTS As a condition to receiving any distribution pursuant to the Plan, each holder of an Old Series Note (and the related GRI Guaranty) evidencing an RII Class 2 Claim and a GRI Class 2 Claim must surrender such Old Series Note (and the related GRI Guaranty) to RII or the Disbursing Agent, if any (or establish the unavailability thereof and provide an indemnity arrangement to the satisfaction of 139 RII or the Disbursing Agent, as the case may be), in all cases, in proper form for transfer. Any holder of such an RII Class 2 Claim and a GRI Class 2 Claim that fails to surrender such Old Series Note (and the related GRI Guaranty) within two years from the Effective Date will be deemed to have forfeited all rights, claims and interests and will not participate in any distributions under the Plan. On the Effective Date (a) all such Old Series Notes (and the related GRI Guaranty endorsed thereon) will be canceled, and (b) RII's and GRI's obligations under the Old Series Note Indenture, the Old Security Documents and related instruments and agreements will be terminated, canceled and discharged. FRACTIONAL INTERESTS AND ODD-LOT HOLDINGS Pursuant to the Plan, fractional shares of the New Equity Securities that would be distributable on the basis of the provisions of the Plan will not be issued or distributed. The New RIHF Mortgage Notes and the New RIHF Junior Mortgage Notes will be issued only in denominations of $1,000 and integral multiples thereof. As soon as practicable after the Effective Date, the disbursing agent for the holders of the Old Series Notes will aggregate and sell all fractional amounts of the New Equity Securities, the New RIHF Mortgage Notes and the New RIHF Junior Mortgage Notes at then prevailing prices and distribute the net proceeds to the security holders entitled thereto. No distribution of less than $25 in cash or less than five shares of RII Common Stock shall be made to any Holder of an Allowed Claim. Such undistributed amount will be retained by RII or GRI, as the case may be, and in the case of undistributed RII Common Stock, held as treasury shares. MANNER OF PAYMENTS UNDER THE PLAN At the option of RII, any cash payment to be made by RII pursuant to the Plan may be made by a check or wire transfer or as otherwise required or provided in applicable agreements, except that payments made to foreign trade creditors holding unsecured claims or to foreign governmental units holding Priority Tax Claims will be in such funds and by such means as are customary or as may be necessary in a particular foreign jurisdiction. Checks issued by RII in respect of Allowed Claims shall be null and void if not negotiated within six months after the date of issuance thereof. Any amounts paid to a Disbursing Agent in respect of such a check shall be promptly returned to RII by a Disbursing Agent. Requests for reissuance of any check shall be made directly to RII by the holder of the Allowed Claim with respect to which such check originally was issued. Any claim in respect of such a voided check shall be made on or before the later of the second anniversary of the Effective Date and 90 days after the six month period following the date of issuance of such check. After such date, all claims in respect of void checks shall be discharged and forever barred. EFFECTS OF PLAN CONFIRMATION VESTING OF ASSETS Except as provided in the Plan, on the Effective Date, all assets of RII's bankruptcy estate and GRI's bankruptcy estate shall vest in RII and GRI, respectively, as reorganized pursuant to the Plan, free and clear of all liens, claims, encumbrances and interests, except as provided by the Plan. The Plan contemplates that the rights in collateral of RII Class 3 and RII Class 4 claims existing at the time RII's and GRI's chapter 11 cases are commenced (as modified or supplemented by the order regarding the use of Cash Collateral will be preserved. DISCHARGE OF RII AND GRI Upon confirmation of the Plan, the Plan's provisions shall (i) bind all holders of claims and interests, whether or not they accept the Plan and (ii) except as otherwise provided in the Plan, discharge RII and GRI from any claim and any "debt" (as such term is defined in section 101(12) of the Bankruptcy Code) incurred before the Confirmation Date, and RII's and GRI's liability in respect thereof shall be extinguished completely, including without limitation any liability of a kind specified in section 502(g) of the Bankruptcy Code. In addition, except as otherwise provided in the Plan, confirmation of the Plan pursuant to the Confirmation Order acts as a discharge, effective as of the Confirmation Date, as to each creditor or equity interest holder in respect of any direct or indirect 140 right or claim or interest such creditor or equity interest holder had or may have had against or in respect of RII and GRI that arose at any time prior to the Confirmation Date, including without limitation all principal and interest, whether accrued before, on, or after the filing of the petitions commencing RII's and GRI's chapter 11 cases. RETENTION OF JURISDICTION Notwithstanding entry of the Confirmation Order or the occurrence of the Effective Date, the Plan provides for the retention of jurisdiction by the Bankruptcy Court over RII's and GRI's chapter 11 cases: (a) to determine the Allowed Amount of disputed claims; (b) to determine requests for payment of claims entitled to priority under section 507(a)(1) of the Bankruptcy Code, including compensation of and reimbursement of expenses of parties entitled thereto; (c) to resolve controversies and disputes regarding interpretation and implementation of the Plan; (d) to enter orders in aid of the Plan, including without limitation appropriate orders (which may include contempt or other sanctions) to protect RII or GRI; (e) to modify the Plan or remedy any apparent defect or omission in the Plan; (f) to determine any and all applications, claims, adversary proceedings and contested or litigated matters pending on the Confirmation Date or as timely filed pursuant to the Bankruptcy Code or an order of the Bankruptcy Court; (g) to allow, disallow, estimate, liquidate or determine any claim and to enter or enforce any order requiring the filing of any such claim before a particular date; (h) to determine any and all pending applications for the rejection or disaffirmance of executory contracts or leases, or for the assignment of assumed executory contracts and leases, and to hear, determine, and, if appropriate, liquidate, any and all claims arising therefrom; (i) to hear and determine any avoidance or recovery action not waived or released pursuant to the Plan and any action for determination of RII's and GRI's tax liability pursuant to section 505 of the Bankruptcy Code; (j) to enter a final decree closing the chapter 11 cases; and (k) to determine such other matters that may arise in connection with the chapter 11 cases, the Plan or the Confirmation Order. TERM OF INJUNCTIONS OR STAYS Unless otherwise provided in the Plan, all injunctions or stays provided for in RII's and GRI's chapter 11 cases pursuant to section 105 or 362 of the Bankruptcy Code or otherwise and in effect on the Confirmation Date shall remain in full force and effect until the Effective Date. The Confirmation Order shall provide that the distributions and transfers of property pursuant to the terms of the Plan are made free and clear of all claims (except as otherwise expressly provided in the Plan), and that upon the confirmation of the Plan, except as otherwise expressly provided in the Plan, all holders of claims will be permanently enjoined from and restrained against commencing or continuing any suit, action or proceeding or asserting against RII, GRI or their assets any claim, interest or cause of action based upon any claim or interest, which is based upon any act or omission, transaction or other activity of any kind or nature that occurred before the Confirmation Date. 141 THE SOLICITATION GENERAL RII and GRI, upon the terms and subject to the conditions set forth herein and in the voting instructions set forth in the Ballots and Master Ballots, are soliciting an Acceptance of the Plan from each entity that was a beneficial owner on the Voting Record Date of (a) any Old Series Notes (and the beneficiary of the related GRI Guaranty endorsed therein), (b) any RII Common Stock, (c) the GRI Common Stock, (d) the RII Intercompany Claim and (e) 1990 Stock Options. The term "beneficial owner" includes any person who has or shares, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise, the power to vote or direct the voting of a security, and/or dispose or direct the disposition of a security. A form of Ballot and, where appropriate, a form of Master Ballot, to be used for voting to accept or reject the Plan and, in the case of holders of Old Series Notes, for indicating consents to the termination and release of the Old Security Documents), together with a pre-addressed postage-paid envelope, has been provided with this Information Statement/Prospectus. The terms of the Solicitation are for the sole benefit of RII and GRI and may be asserted by RII and GRI regardless of the circumstances or may be waived by RII and GRI, in whole or in part, at any time and from time to time, in their sole discretion (subject to the approval of Fidelity and TCW, so long as the funds and accounts managed by them hold in the aggregate at least 20% of the outstanding Old Series Notes). Any determination by RII and GRI concerning the terms of the Solicitation will be final and binding upon all parties, subject only to approval of the Bankruptcy Court when required. PERSONS ENTITLED TO VOTE; VOTING RECORD DATE The following classes of claims and interests are impaired under the Plan and all holders of Allowed Claims or Interests in such classes as of the Voting Record Date are entitled to vote to accept or reject the Plan: RII Class 2 -- Claims of holders of Old Series Notes (use the gray Ballot) RII Class 7 -- Interests of holders of RII Common Stock (use the blue Ballot) RII Class 8 -- Interests of holders of 1990 Stock Options (use the green Ballot) GRI Class 2 -- Claims of holders of GRI Guaranty (use the gray Ballot) GRI Class 4 -- Claims of RII, as the holder of the RII Intercompany Claims GRI Class 5 -- Interest of RII, as the holder of all GRI Common Stock
Any holder of claims or interests in more than one class is required to vote separately with respect to each class in which such holder has claims or interests. Please use a separate Ballot of the appropriate form to vote each such class or interest. Although RII Class 2 Claims and GRI Class 2 Claims are to be voted on the same Ballot, holders of such Claims must use a separate Ballot for each series of Old Series Notes which they hold and for each account in which Old Series Notes are held. In addition, banks and brokerage firms must submit separate Master Ballots for each series of Old Series Notes for which they have beneficial owners. The Voting Record Date for voting on the Plan is the close of business in the City of New York, State of New York on January 10, 1994. To be entitled to vote to accept or reject the Plan, a holder of a RII Class 2 Claim, RII Class 7 Interest, RII Class 8 Interest, GRI Class 2 Claim, GRI Class 4 Claim or GRI Class 5 Interest must have been the beneficial owner of such claim or interest at the close of business on the Voting Record Date. It is important that all beneficial owners vote to accept or reject the Plan. Under the Bankruptcy Code, for purposes of determining whether the Requisite Acceptances have been received, only beneficial owners who vote will be counted. Each beneficial owner electing to vote on the Plan should (i) carefully read the voting instructions set forth in the applicable Ballot, (ii) complete the applicable Ballot, (iii) mark the Ballot to indicate his or her vote on the Plan, (iv) in the case of holders of Old Series Notes, indicate in the appropriate place on the Ballot whether he or she consents to the release of the Old Security Documents and (v) sign and return the Ballot in accordance with the instructions set forth thereon. ANY BALLOT THAT IS EXECUTED BY A BENEFICIAL OWNER AND DOES NOT INDICATE A REJECTION OF THE PLAN WILL BE DEEMED AN ACCEPTANCE OF THE PLAN. 142 VOTING DEADLINE; EXTENSIONS; MODIFICATIONS The Solicitation will expire at 5:00 p.m., New York City time, on the Voting Deadline. Except to the extent RII and GRI so determine or as permitted by the Bankruptcy Court, Ballots or Master Ballots that are received after the Voting Deadline will not be accepted or used by RII and GRI in connection with RII's or GRI's request for confirmation of the Plan (or any permitted modification thereof). RII and GRI expressly reserve the right, at any time or from time to time, to extend the Voting Deadline by giving oral or written notice to the Solicitation Agent of such extension. Any extension or expiration of the Voting Deadline will be followed as promptly as practicable by a public announcement made through the Dow Jones News Service. There can be no assurance that RII and GRI will exercise their right to extend the Voting Deadline. During any extension of the Voting Deadline, all Ballots and Master Ballots previously given will remain subject to all the terms and conditions of the Solicitation, including the withdrawal and revocation rights specified herein. RII and GRI expressly reserve the right to modify, at any time and from time to time, the terms of the Solicitation or the Plan (subject to compliance with the requirements of section 1127 of the Bankruptcy Code and to the approval of Fidelity and TCW, so long as the funds and accounts managed by them hold in the aggregate at least 20% of the outstanding Old Series Notes). If RII or GRI makes a material change in the terms of the Solicitation or the Plan or if it waives a material condition, RII and GRI will disseminate additional solicitation materials and will extend the Solicitation, in each case to the extent required by law. See "The Plan -- Conditions Precedent to Confirmation and Consummation of the Plan". AGREEMENTS UPON FURNISHING BALLOTS The delivery of a Ballot or Master Ballot by a holder in accordance with the procedures set forth below will constitute an agreement between such holder and RII and GRI to accept all the terms of, and conditions to, this Solicitation. PROCEDURE FOR VOTING ON THE PLAN GENERAL Under the Bankruptcy Code, for purposes of determining whether the sufficient Acceptances have been received with respect to the Old Series Notes (and the related GRI Guaranty), the RII Intercompany Claim, the RII Common Stock, the GRI Common Stock or 1990 Stock Options, only those beneficial owners of the Old Series Notes, the RII Common Stock or 1990 Stock Options as of the Voting Record Date who vote will be counted. It is therefore important that all such holders of the Old Series Notes, the RII Common Stock or 1990 Stock Options vote to accept or reject the Plan. Each beneficial owner electing to vote on the Plan should (i) carefully read the voting instructions set forth herein and in the applicable Ballot, (ii) complete the applicable Ballot, in accordance with the instructions set forth below, (iii) mark the Ballot to indicate his or her vote on the Plan, (iv) in the case of holders of Old Series Notes, indicate in the appropriate place on the Ballot whether he or she consents to the release of the Old Security Documents and (v) sign and return the Ballot in accordance with the instructions set forth thereon. ANY BALLOT THAT IS EXECUTED BY A HOLDER AND DOES NOT INDICATE A REJECTION OF THE PLAN WILL BE DEEMED AN ACCEPTANCE OF THE PLAN. RII and GRI intend to urge the Bankruptcy Court to count unmarked, but executed Ballots as deemed acceptances of the Plan and, in the case of Ballots from holders of Old Series Notes, consents to release and terminate the Old Security Documents. There can be no assurance, however, that the Bankruptcy Court will permit unmarked Ballots to be counted. Accordingly, RII and GRI urge all persons entitled to vote to both execute their Ballots and mark whether they accept or reject the Plan. ANY BALLOT THAT IS EXECUTED BY A HOLDER OF OLD SERIES NOTES BUT FAILS TO INDICATE WHETHER CONSENT TO RELEASE OF THE OLD SECURITY DOCUMENTS IS GIVEN OR WITHHELD SHALL BE DEEMED TO BE A CONSENT TO THE TERMINATION AND RELEASE OF THE OLD SECURITY DOCUMENTS. Failure by a beneficial owner to send a duly signed Ballot will be deemed not to be a vote regarding the Plan. 143 RII and GRI are providing copies of this Information Statement/Prospectus, Ballots and, where appropriate, Master Ballots, to all holders of record of the Old Series Notes (and the related GRI Guaranty endorsed thereon), the RII Common Stock and 1990 Stock Options on the Voting Record Date. Such holders may include brokerage firms, commercial banks, trust companies, or other nominees. If such entities do not hold for their own account, they should provide copies of this Information Statement/Prospectus and the appropriate Ballots to their customers and beneficial owners and follow the procedures described below. SOLICITATION AGENT Hill and Knowlton, Inc. will act as Solicitation Agent in connection with the Solicitation. Its telephone number is (212) 210-8850 (call collect). As part of its responsibilities as Solicitation Agent, Hill and Knowlton will tabulate all votes cast in connection with the Solicitation. All inquiries relating to the Solicitation should be directed to Hill and Knowlton. Requests for information or additional copies of this Information Statement/Prospectus or Ballots also should be directed to Hill and Knowlton. All deliveries to Hill and Knowlton in its capacity as Solicitation Agent should be directed to the address set forth on the back cover page of this Information Statement/Prospectus. BROKERAGE FIRMS, BANKS AND OTHER NOMINEES Each brokerage firm that is the registered holder of Old Series Notes (and the related GRI Guaranty) or RII Common Stock for a beneficial owner, or is a participant in a securities clearing agency and is authorized to vote in the name of such securities clearing agency pursuant to an omnibus proxy (as described below) and is acting for a beneficial owner, should vote on behalf of such beneficial owner by (i) distributing a copy of this Information Statement/Prospectus and all appropriate Ballot(s) and a self addressed, postage prepaid envelope to such beneficial owner, (ii) collecting a signed Ballot from each such beneficial owner, (iii) completing a Master Ballot by compiling the votes and other information from the Ballots collected, and (iv) transmitting such Master Ballot to the Solicitation Agent on or before the Voting Deadline. A proxy intermediary acting on behalf of a brokerage firm or bank may perform the procedures outlined in the preceding sentence on behalf of such brokerage firm. Each commercial bank or trust company that is the registered holder of Old Series Notes (and related GRI Guarantees) or RII Common Stock for a beneficial owner may arrange for such beneficial owner to vote by (i) executing all appropriate Ballot(s), and (ii) sending to such beneficial owner a copy of this Information Statement/Prospectus, such executed Ballot(s) and a stamped envelope addressed to the Solicitation Agent to be completed by such beneficial owner and returned to the Solicitation Agent or follow the procedures outlined in the previous paragraph. A beneficial owner of Old Series Notes (and beneficiary of the related GRI Guaranty) or RII Common Stock may receive multiple mailings containing Ballot(s), especially if such beneficial owner owns Old Series Notes or RII Common Stock through more than one broker or bank. Each beneficial owner should complete and return all Ballots received by it in the return envelope provided with each such Ballot. Each beneficial owner should indicate on each Ballot the names of all broker-dealers or other intermediaries or persons who are registered holders of Old Series Notes (and the related GRI Guaranty) or RII Common Stock on his behalf. Registered holders or nominees compiling Master Ballots should include all such account information on the Master Ballot. Any beneficial owner who has not received a Ballot should contact his brokerage firm or nominee, or the Solicitation Agent. BENEFICIAL OWNERS HOLDING THROUGH NOMINEES Any beneficial owner holding Old Series Notes (and the related GRI Guaranty) or RII Common Stock in "street name" through a brokerage firm, bank, trust company or other nominee must vote on the Plan by following the instructions set forth below: 1. complete and sign the Ballot (unless the Ballot has already been signed by the bank, trust company or other nominee); and 144 2. return the Ballot as promptly as possible to the addressee on the pre-addressed, stamped envelope enclosed with the Ballot. If no pre-addressed, postage paid envelope was enclosed, contact the Solicitation Agent for instructions. Any Ballot returned by a beneficial owner to a brokerage firm or proxy intermediary will not be counted until such brokerage firm or proxy intermediary properly completes and delivers to the Solicitation Agent a Master Ballot that reflects such vote. Therefore, you must return your Ballot to the brokerage firm or financial intermediary in sufficient time prior to the Voting Deadline to permit the nominee to complete and return a Master Ballot to the Solicitation Agent prior to the Voting Deadline. BENEFICIAL AND RECORD OWNERS Any beneficial owner of Old Series Notes (and the related GRI Guaranty) or RII Common Stock who also is the record owner of such Old Series Notes or RII Common Stock must vote on the Plan by following the instructions set forth below: 1. complete and sign the Ballot; and 2. mail the Ballot to the Solicitation Agent as promptly as possible using the pre-addressed, stamped envelope enclosed with the Ballot. If no pre-addressed, postage paid envelope was enclosed, contact the Solicitation Agent for instructions. SECURITIES CLEARING AGENCIES RII and GRI expect that each of the Depository Trust Company, The Midwest Securities Trust Company and The Philadelphia Depository Trust Company, as a nominee holder of Old Series Notes or RII Common Stock, will execute an omnibus proxy in favor of its respective participants. As a result of such omnibus proxies, each such participant will be authorized to vote the securities owned by it and held in the name of such securities clearing agencies. OTHER If a Ballot is signed by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, such person should indicate such capacity when signing and, if requested by RII or GRI, must submit proper evidence satisfactory to RII or GRI of authority to so act. Authorized signatories (E.G., custodians, trustees, etc.) should submit separate Ballots for each beneficial owner for whom they are voting. RII and GRI, in their sole discretion, may reject any Ballot or Master Ballot as invalid and, therefore, decline to utilize it in connection with seeking confirmation of the Plan by the Bankruptcy Court unless such Ballot or Master Ballot is properly completed and timely submitted to the Solicitation Agent on or prior to the Voting Deadline together with any other documents required by such Ballot or Master Ballot. IN NO CASE SHOULD A BALLOT OR MASTER BALLOT BE DELIVERED TO RII, GRI, OR THE TRUSTEE UNDER THE OLD SERIES NOTE INDENTURE. RII AND GRI ARE NOT AT THIS TIME REQUESTING THE DELIVERY OF, AND WILL NOT ACCEPT, CERTIFICATES REPRESENTING OLD SERIES NOTES. PROMPTLY AFTER THE EFFECTIVE DATE, RII WILL FURNISH ALL HOLDERS OF OLD SERIES NOTES WITH AN APPROPRIATE LETTER OF TRANSMITTAL TO BE USED TO REMIT OLD SERIES NOTES IN EXCHANGE FOR APPROPRIATE NEW DEBT SECURITIES, NEW EQUITY SECURITIES, EXCESS CASH, NET RESERVED CASH, IF ANY, NET PLAN CONSUMMATION CASH, IF ANY, AND DEFERRED CASH. THE EXISTING HOLDERS OF EQUITY INTERESTS WILL RETAIN THE CERTIFICATES REPRESENTING RII COMMON STOCK AND THE 1990 STOCK OPTIONS, AS THE CASE MAY BE. WAIVERS OF DEFECTS, IRREGULARITIES, ETC. Unless otherwise directed by the Bankruptcy Court, all questions as to the validity, form, eligibility (including time of receipt), acceptance, and revocation or withdrawal of Ballots or Master Ballots or Acceptances will be determined by RII and GRI, in their sole discretion, which determination will be final and binding. RII and GRI reserve the absolute right to contest the validity of any revocation or withdrawal. RII and GRI also reserve the right to reject any and all Ballots or Master Ballots not in proper form, the acceptance of which would, in the opinion of RII, GRI or their counsel, be unlawful. 145 RII and GRI further reserve the right to waive any defects or irregularities or conditions of delivery as to any particular Ballot or Master Ballot. The interpretation (including of the Ballot or Master Ballot and the respective instructions thereto) by RII and GRI, unless otherwise directed the Bankruptcy Court, will be final and binding on all parties. Unless waived, any defects or irregularities in connection with deliveries of Ballots or Master Ballots must be cured within such time as RII and GRI (or the Bankruptcy Court) determine. Neither RII nor GRI nor any other person will be under any duty to provide notification of defects or irregularities with respect to deliveries of, or notices of revocation or withdrawal of, Ballots or Master Ballots, nor will any of them incur any liability for failure to provide such notification. Unless otherwise directed by the Bankruptcy Court, delivery of such Ballots or Master Ballots will not be deemed to have been made until such irregularities have been cured or waived. Ballots or Master Ballots previously furnished (and as to which any irregularities have not theretofore been cured or waived) will be invalidated. CONSENTS TO TERMINATION AND RELEASE OF OLD SECURITY DOCUMENTS RII is also soliciting the consents of the record holders of Old Series Notes pursuant to the terms of the Old Series Note Indenture in order to terminate and release the Old Security Documents under which the liens on the property securing the Old Series Notes were granted or created. Such consents must be evidenced by such record holder separately from their vote on the Plan. The ballots for the holders of the Old Series Notes permit holders to give or withhold such consent. ANY EXECUTED BALLOT WITH RESPECT TO THE PLAN RETURNED WITHOUT AN INDICATION TO WITHHOLD SUCH CONSENT WILL BE DEEMED TO GIVE SUCH CONSENT. RII is soliciting these consents for the purposes of: (i) releasing the Resorts Casino Hotel from the lien of the Old Security Documents so that it may be encumbered to secure the RIHF Senior Facility Notes, the RIH Senior Facility Guaranty, the New RIHF Mortgage Notes, the RIH Mortgage Guaranty, the New RIHF Junior Mortgage Notes and the RIH Junior Mortgage Guaranty; (ii) effecting either the SIHL Sale or the PIRL Spin-Off; and (iii) releasing the Non-Operating Real Property from the liens of the Old Security Documents. Absent a release of the Old Security Documents through either consent or (if feasible) an appropriate Bankruptcy Court order, the transactions contemplated by the Plan cannot be consummated. In no event will the consents to release the Old Security Documents be used to effectuate the termination and release of the Old Security Documents in the absence of the confirmation and consummation of the Plan. If RII and GRI fail to receive the Requisite Acceptances, notwithstanding receipt of sufficient consents to release and terminate the Old Security Documents pursuant to the Old Series Note Indenture, such consents will only be used in the event that RII and GRI continue to pursue confirmation and consummation of the Plan. In the event that RII and GRI elect or are required to resolicit Acceptances of the Plan, however, they reserve the right not to resolicit with respect to the consents to release the Old Security Documents and to use consents received from the initial Solicitation. WITHDRAWAL; REVOCATION RIGHTS Ballots or Master Ballots previously delivered may be withdrawn or revoked at any time prior to the Voting Deadline by the beneficial owner on the Voting Record Date who completed the original Ballot or by the nominee who completed the Master Ballot on such beneficial owner's behalf, as the case may be. Only the person or nominee who submits a Ballot can withdraw or revoke that Ballot. A Ballot may be revoked or withdrawn either by submitting a superseding Ballot or by providing written notice to the Solicitation Agent. Neither RII nor GRI intends to commence a case under chapter 11 of the Bankruptcy Code prior to the Voting Deadline, although it reserves the right to do so in its sole discretion. After commencement of the chapter 11 cases, withdrawal or revocation may be effected only with the approval of the Bankruptcy Court. Acceptances or rejections may be withdrawn or revoked prior to commencement of the chapter 11 cases by complying with the following procedures: (a) a beneficial owner holding Old Series Notes or RII Common Stock in "street name" who returned his Ballot to a brokerage firm proxy intermediary or other nominee should deliver a written notice of withdrawal or revocation to such brokerage firm 146 proxy intermediary or other nominee, as the case may be; and (b) all other beneficial owners should deliver a written notice of withdrawal or revocation to the Solicitation Agent. To be effective, notice of revocation or withdrawal must: (i) be received on or before the Voting Deadline by the Solicitation Agent at its address specified on the back cover of this Information Statement/Prospectus; (ii) specify the name of the holder of the Old Series Notes or RII Common Stock whose vote on the Plan is being withdrawn or revoked; (iii) contain the description of the Old Series Notes (and related GRI Guarantees) or RII Common Stock or 1990 Stock Options as to which a vote on the Plan is withdrawn or revoked; and (iv) be signed by the holder of the Old Series Notes (and related GRI Guarantees) or RII Common Stock or 1990 Stock Options who executed the Ballot reflecting the vote being withdrawn or revoked, or by the nominee who executed the Master Ballot reflecting the vote being withdrawn or revoked, as applicable, in each case in the same manner as the original signature on the Ballot or Master Ballot, as the case may be. In addition to the foregoing information, in the case of a nominee that withdraws or revokes votes reflected on a Master Ballot, such nominee also must specify the customer account or sequence number(s) of the beneficial owner whose vote is being withdrawn or revoked. The foregoing procedures should also be followed with respect to a person entitled to vote on the Plan who wishes to change (rather than revoke or withdraw) its vote. TERMINATION Notwithstanding any provisions of the Solicitation, RII and GRI will not be required to accept any Ballot or Master Ballot and may terminate or amend the Solicitation at its option at any time on or after the date of the commencement of the Solicitation. FEES AND EXPENSES The expenses of soliciting Acceptances will be borne by RII (including the costs and expenses incurred by nominees in mailing this Information Statement/Prospectus, Master Ballots and Ballots to impaired creditors and equity interest holders). The principal solicitation is being made by mail; however, additional solicitations may be made by facsimile, telephone or in person by officers and regular employees of RII and its affiliates, who will not receive additional compensation therefor, and by Hill and Knowlton. Arrangements also may be made with brokerage houses and other custodians, nominees and fiduciaries to forward the material regarding the Solicitation to the beneficial owners of each of the Old Series Notes and the RII Common Stock. RII will reimburse such forwarding agents for reasonable out-of-pocket expenses incurred by them, but no compensation will be paid for their services. SOLICITATION AGENT Hill and Knowlton will act as Solicitation Agent in connection with the Solicitation. Its telephone number is (212) 210-8850 (call collect). All inquiries relating to the Solicitation should be directed to Hill and Knowlton at such telephone number. Requests for information or additional copies of this Information Statement/Prospectus or Ballots should be directed to Hill and Knowlton. All deliveries to Hill and Knowlton in its capacity as Solicitation Agent should be directed to the address set forth on the back cover page of this Information Statement/Prospectus. Hill and Knowlton will receive reasonable and customary compensation for services rendered in connection with the Solicitation, will be reimbursed for reasonable out-of-pocket expenses and will be indemnified against certain expenses in connection therewith. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT As of November 30, 1993, Merv Griffin, the Chairman of the Board, owned of record or beneficially 4,398,115 shares of RII Common Stock (approximately 21.82% of such class). Merv Griffin has informed RII that he will vote his RII Common Stock in favor of the Plan. As of November 30, 1993, there were 37 holders of 1990 Stock Options to purchase 1,758,800 shares of RII Common Stock. The holders of 1990 Stock Options to purchase 1,307,300 shares of RII 147 Common Stock (approximately 74% of such class), consisting of the Company's current management and David P. Hanlon, the former Chief Executive Officer of RII, have informed RII that they intend to vote their 1990 Stock Options in favor of the Plan. INTERESTS OF CERTAIN PERSONS IN THE RESTRUCTURING The following directors and officers of RII may have, to the extent indicated, an interest in the Restructuring. In April 1993, RII, RIH and the Griffin Group executed the New Griffin Services Agreement to be effective as of September 17, 1992, the termination date of the Old Griffin Services Agreement. Merv Griffin serves as a director and the Chairman of the Board of RII; the Griffin Group is a company controlled by Merv Griffin. The New Griffin Services Agreement will be assumed by RII and remain in place after the Effective Date. The New Griffin Services Agreement has a four-year term. Under certain circumstances, however, the New Griffin Services Agreement could remain in force up to an additional year. Pursuant to the New Griffin Services Agreement, Mr. Griffin and the Griffin Group will promote the operations of the Company in Atlantic City and The Bahamas. Fees have already been paid to the Griffin Group for the first three years of the term of the New Griffin Services Agreement. In conjunction with the negotiations among Fidelity, TCW and the Griffin Group relating to the Griffin Group's performance under the New Griffin Services Agreement, certain modifications to the New Griffin Services Agreement were negotiated. As a result of these modifications, the following will occur: (1) on or prior to the Effective Date, RII will pay $2,310,000 to the Griffin Group for the fourth year of the New Griffin Services Agreement by reducing the principal amount of the Griffin Group Note in an equal amount; (2) subsequent to such payment, but no later than the Effective Date, the Griffin Group will pay the balance of the Griffin Group Note (approximately $3.0 million) to RII; and (3) on the Distribution Date, RII will issue to the Griffin Group the Griffin Warrants to purchase 4,665,000 shares RII Common Stock, or approximately 10% of the RII Common Stock on a fully diluted basis. The Griffin Warrants will be exercisable on the Effective Date at an exercise price of the lesser of $1.875 and the average closing price of RII Common Stock for the 20 trading days following the Effective Date. In conjunction with the negotiations among Fidelity, TCW and the Griffin Group, the Griffin Group negotiated a reduction in the exercise price for the Griffin Warrants from the original exercise price set forth in the New Griffin Services Agreement. Mr. David Hanlon, the President and Chief Executive Officer of RII until October 31, 1993, owns fully vested 1990 Stock Options to purchase 1,094,800 shares of RII Common Stock (or 5.15% of the outstanding shares of the RII Common Stock assuming such options were exercised). Pursuant to the Hanlon Employment Agreement, Mr. Hanlon is entitled to $850,000 earned under the Hanlon Employment Agreement but not yet paid as of October 31, 1993. In addition, pursuant to the Hanlon Termination Agreement, Mr. Hanlon is entitled to receive a total of $2,648,656, consisting of the present value of future base salary under the Hanlon Employment Agreement as determined under the Hanlon Termination Agreement in the sum of $1,303,076 and $1,345,580 in respect of the performance bonuses for fiscal years ending 1994 and 1995 payable under the Hanlon Employment Agreement, half of which was paid on October 31, 1993 and half of which will be paid upon the earlier of (i) the acceptance of a reorganization or recapitalization of RII by the requisite number and amount of RII's creditors voting on such restructuring or reorganization and (ii) April 15, 1995. In addition, Mr. Hanlon will receive a bonus from RII in the amount of $325,000 in connection with the reorganization or recapitalization of RII, payable prior to any bankruptcy filing by RII. Finally, Mr. Hanlon will receive a bonus of $300,000 upon the disposition of the Paradise Island Business. Accordingly, Mr. Hanlon would receive a total of $625,000 in connection with the Restructuring. The payment to be made to Mr. Hanlon with respect to the disposition of the Paradise Island Business may be subject to the approval of the Bankruptcy Court. Mr. Alvarez, a director of RII, is also the Chairman of Alvarez & Marsal, a financial advisory firm which RII has retained to provide it with advice regarding the Restructuring. For a discussion of the interests of Alvarez & Marsal in the Restructuring, see "Agreement with Financial Advisors". 148 AGREEMENTS WITH FINANCIAL ADVISORS In October 1991, RII retained Bear Stearns as its financial advisor to assist it in the development and analysis of financial alternatives and the development of a long-term financial plan. In February 1992, RII's Board of Directors also authorized the retention of two other financial advisors, DLJ and Alvarez & Marsal, to provide additional advice. RII retained Bear Stearns pursuant to a letter agreement, amended as of July 1, 1993. Under the Bear Stearns letter agreement, RII paid Bear Stearns an initial cash fee of $150,000 and is obligated to pay Bear Stearns a monthly fee of $75,000. As of June 30, 1993, RII had paid Bear Stearns fees in an aggregate amount of $1,650,000. Pursuant to the terms of the Bear Stearns letter agreement, RII also has agreed to pay Bear Stearns a transaction fee, which will be payable upon the completion of the Restructuring. RII estimates that the transaction fee payable to Bear Stearns will be approximately $1,633,000. All monthly fees payable to Bear Stearns subsequent to July 1, 1993 are creditable against such transaction fee. RII also has agreed to reimburse Bear Stearns for certain out-of-pocket expenses, and to indemnify it against certain liabilities that might arise in connection with the Restructuring. RII's agreement with DLJ provided for RII to pay to DLJ an initial fee of $65,000 and 100,000 shares of RII Common Stock, and monthly fees of $50,000 and 35,000 shares of RII Common Stock commencing March 1, 1992. RII paid the initial cash fee and the cash portion of monthly fees through April 1993, at which time the agreement was terminated. No shares of RII Common Stock have yet been issued to DLJ pursuant to the agreement. RII also reimbursed DLJ for certain out-of-pocket expenses, and indemnified it against certain liabilities that might arise in connection with the Restructuring. RII engaged Alvarez & Marsal pursuant to a letter agreement, dated March 1, 1992, as amended on September 14, 1992. Under the Alvarez & Marsal letter agreement, RII paid Alvarez & Marsal monthly fees of $50,000 amounting to $300,000 as of September 1, 1992, at which time RII's payment of such fees was suspended. Pursuant to the terms of the Alvarez & Marsal letter agreement, RII also has agreed to pay Alvarez & Marsal a transaction fee of $250,000 and 125,000 shares of RII Common Stock upon receipt of Requisite Acceptances for the Restructuring. It is anticipated that this fee will be paid prior to the filing of RII's and GRI's bankruptcy cases. RII also has agreed to reimburse Alvarez & Marsal for its out-of-pocket expenses, and to indemnify it against certain liabilities that might arise in connection with the Restructuring. The total amount that has been paid to DLJ was $765,000, and DLJ is entitled to receive 590,000 shares of RII Common Stock. 149 CAPITALIZATION OF RII The following table sets forth the historical consolidated capitalization of RII and its subsidiaries at September 30, 1993, and RII's pro forma capitalization at such date after giving effect to the Restructuring.
SEPTEMBER 30, 1993 -------------------------- HISTORICAL PRO FORMA ------------ ------------ (IN THOUSANDS) Current maturities of long-term debt: Old Series A Notes (a)........................................................... $ 233,953 Old Series B Notes (a)........................................................... 195,336 Other............................................................................ 211 $ 81 ------------ ------------ Total current maturities....................................................... 429,500 81 ------------ ------------ Long-term debt: New RIHF Mortgage Notes (b)...................................................... 116,625 New RIHF Junior Mortgage Notes (c)............................................... 30,975 RIHF Senior Facility Notes (d)................................................... Showboat Notes (e)............................................................... 84,357 84,357 Other............................................................................ 184 15 ------------ ------------ Total long-term debt........................................................... 84,541 231,972 ------------ ------------ Shareholders' equity (deficit): RII Common Stock................................................................. 202 379 RII Class B Common Stock (f)..................................................... Capital in excess of par......................................................... 102,092 133,965 Accumulated deficit.............................................................. (166,926) (129,797) ------------ ------------ Total shareholders' equity (deficit)........................................... (64,632) 4,547 ------------ ------------ Total capitalization......................................................... $ 449,409 $ 236,600 ------------ ------------ ------------ ------------ - ------------------------ (a) See "Description of Old Series Notes". Historical amounts are net of unamortized discounts of $10,273,000 and $9,010,000 for the Old Series A Notes and the Old Series B Notes, respectively. (b) See "Description of New RIHF Mortgage Notes". Pro Forma balance is net of unamortized discount of $8,375,000. (c) See "Description of New RIHF Junior Mortgage Notes". Pro forma balance is net of unamortized discount of $4,025,000. (d) See "Description of RIHF Senior Facility Notes". Assumes no borrowings under the RIHF Senior Facility. (e) See "Description of Showboat Notes". Amounts are net of unamortized discount of $20,976,000. (f) See "Description of New Equity Securities -- Description of RII Class B Common Stock".
150 CAPITALIZATION OF PIRL The following table sets forth the historical combined capitalization at September 30, 1993, for RIB, consolidated with its subsidiaries, and the U.S. Paradise Island Subsidiaries. If the SIHL Sale is not consummated on the Effective Date, the PIRL Spin-Off will be effected. The pro forma capitalization of PIRL assumes the PIRL Spin-Off occurs. Because the PIRL Spin-Off will result in RIB becoming a subsidiary of PIRL and other subsidiaries of PIRL acquiring the assets and related liabilities of the U.S. Paradise Island Subsidiaries, the pro forma capitalization presented is for PIRL consolidated with its subsidiaries.
SEPTEMBER 30, 1993 ------------------------ HISTORICAL PRO FORMA ----------- ----------- (IN THOUSANDS) Short-term debt: Current maturities of long-term debt.................................................. $ 130 $ 130 Note payable to affiliate (a)......................................................... 50,000 -- ----------- ----------- 50,130 130 ----------- ----------- Long-term debt -- capitalized lease obligations......................................... 169 169 ----------- ----------- Shareholders' equity: Capital stock......................................................................... 33 50 Capital in excess of par.............................................................. 147,546 124,950 Retained earnings (accumulated deficit)............................................... (43,527) -- ----------- ----------- Total shareholders' equity.......................................................... 104,052 125,000 ----------- ----------- Total capitalization.............................................................. $ 154,351 $ 125,299 ----------- ----------- ----------- ----------- - ------------------------ (a) Note payable to RIH to be assumed by GRI as part of the Restructuring.
151 ACCOUNTING TREATMENT RII proposes to account for the Restructuring as required by Statement of Position 90-7 "Financial Reporting by Entities in Reorganization Under the Bankruptcy Code" ("SOP 90-7"). Pursuant to SOP 90-7, the New Debt Securities will be stated at the present values of amounts to be paid, determined at appropriate current interest rates. The difference between the carrying value of the Old Series Notes and the sum of the fair values of the items exchanged therefor (I.E., (i) Excess Cash, (ii) New RIHF Mortgage Notes, (iii) New RIHF Junior Mortgage Notes and RII Class B Common Stock Units, (iv) SIHL Series A Shares, the SIHL Aggregate Cash Purchase Price and non-transferable rights to receive payments from Net Reserved Cash (or if the SIHL Sale is not consummated on the Effective Date, PIRL Ordinary Shares), (v) RII Common Stock and (vi) non-transferable rights to receive payments from Net Plan Consummation Cash and Deferred Cash) will be recognized as an extraordinary item, along with the tax effects of the exchange. In addition, the difference between the carrying values and the fair values of the equity and/or assets transferred in clause (iv) above will be recognized in earnings from operations. 152 SELECTED HISTORICAL FINANCIAL DATA The selected historical financial information presented below for RII, RIH and the PIRL Group was derived from the consolidated financial statements of RII and RIH and the combined financial statements of the PIRL Group and should be read in conjunction with such consolidated or combined financial statements, the notes thereto and the other financial information included herein. Information presented at September 30, 1993 and for the three quarters ended September 30, 1992 and 1993 is derived from unaudited consolidated or combined financial statements of the respective entities. In the opinion of management, such unaudited financial statements include all adjustments (consisting solely of normal recurring adjustments) necessary for a fair presentation. The results for the three quarters ended September 30, 1993 are not necessarily indicative of the results to be expected for the year ending December 31, 1993. RESORTS INTERNATIONAL, INC. (IN THOUSANDS, EXCEPT PER SHARE DATA AND RATIOS)
FOR THE YEAR ENDED DECEMBER 31, ----------------------------------------------------------------------------------- FOR THE THREE 1988 1990 QUARTERS ENDED -------------------------- ---------------------- SEPTEMBER 30, OPERATING INFORMATION THROUGH FROM THROUGH FROM -------------------- (NOTE A) NOVEMBER 14 NOVEMBER 15 1989 AUGUST 31 SEPTEMBER 1 1991 1992 1992 1993 - ----------------------- ------------ ------------ --------- --------- ----------- --------- --------- --------- --------- Operating revenues (Note B).............. $ 407,145 $ 48,826 $ 451,254 $ 293,972 $ 129,591 $ 418,243 $ 436,934 $ 330,254 $ 337,858 ------------ ------------ --------- --------- ----------- --------- --------- --------- --------- ------------ ------------ --------- --------- ----------- --------- --------- --------- --------- Earnings (loss) from operations (Note B)... $ 30,907 $ (2,490) $ (7,850) $ 13,540 $ (1,214) $ 16,036 $ 21,502 $ 20,107 $ 20,680 Recapitalization costs (Note C).............. (7,291) (187,018) (2,848) (2,337) (4,879) Write-off of goodwill.............. (181,311) Net gain from purchases of subordinated debentures (Note D)... 4,149 Loss on sale of assets and termination fee (Note E).............. (335,690) Other income (deductions), net (Note F).............. (65,895) (15,262) (114,286) 1,884 (12,317) (58,438) (73,456) (54,993) (73,171) ------------ ------------ --------- --------- ----------- --------- --------- --------- --------- Loss before income taxes and extraordinary item.... (370,678) (17,752) (306,589) (171,594) (13,531) (42,402) (54,802) (37,223) (57,370) Income tax benefit (expense) (Note G).... 7,000 3,700 831 1,348 (1,000) ------------ ------------ --------- --------- ----------- --------- --------- --------- --------- Loss before extraordinary item.... (363,678) (17,752) (302,889) (171,594) (13,531) (41,571) (53,454) (37,223) (58,370) Extraordinary item (Note C).............. 429,809 ------------ ------------ --------- --------- ----------- --------- --------- --------- --------- Net earnings (loss).... $ (363,678) $ (17,752) $(302,889) $ 258,215 $ (13,531) $ (41,571) $ (53,454) $ (37,223) $ (58,370) ------------ ------------ --------- --------- ----------- --------- --------- --------- --------- ------------ ------------ --------- --------- ----------- --------- --------- --------- --------- Net loss per share (Note H).............. $ (.68) $ (2.07) $ (2.65) $ (1.85) $ (2.90) ----------- --------- --------- --------- --------- ----------- --------- --------- --------- --------- Ratio of earnings to fixed charges (Note I).............. -- -- -- -- -- -- -- -- -- ------------ ------------ --------- --------- ----------- --------- --------- --------- --------- ------------ ------------ --------- --------- ----------- --------- --------- --------- ---------
AT DECEMBER 31, ------------------------------------------------------ AT SEPTEMBER 30, BALANCE SHEET INFORMATION (NOTE A) 1988 1989 1990 1991 1992 1993 - -------------------------------------- ---------- --------- --------- --------- --------- ---------------- Total assets.......................... $1,034,578 $ 745,976 $ 568,746 $ 567,890 $ 568,950 $ 586,632 Current maturities of long-term debt (Note J)............................. 14,516 1,269 1,528 1,571 828 429,500 Long-term debt, excluding current maturities (Note J).................. 785,461 858,931 341,069 392,667 460,712 84,541 Shareholders' equity (deficit)........ 32,248 (260,641) 77,041 36,099 (17,262) (64,632)
153 NOTES TO RII SELECTED HISTORICAL FINANCIAL DATA NOTE A: Effective November 15, 1988 Griffco acquired RII through a series of transactions. These transactions were accounted for as a purchase, and according to an accounting practice known as "push-down" accounting, RII adjusted its net assets to reflect the amount of Griffco's investment in RII. In doing so, RII's consolidated assets and liabilities were adjusted to their estimated fair values. During 1989, the Old Debtors filed consents to involuntary petitions or filed voluntary petitions for relief under chapter 11 of the Bankruptcy Code. The effects of the bankruptcy proceedings reflected in the selected financial data for periods during which the Company operated subject to the jurisdiction of the New Jersey bankruptcy court are (i) the Company stopped accruing interest on its previously outstanding public debt issues in November and December 1989, (ii) the Company stopped amortizing debt issuance costs on the dates the respective interest accruals ceased and (iii) the Company included in long-term debt at December 31, 1989 sinking funds due in 1990 and accrued interest on public debt stayed in bankruptcy proceedings. Note 2 of Notes to Consolidated Financial Statements of RII describes another change in entity and related presentation resulting from the application of "fresh start" accounting in connection with the Company's emergence from bankruptcy proceedings in 1990. Changes in operations during the past five years include the following: operations of Trump Air ceased in November 1988. Amphibious airline operation was sold in December 1990; Security consulting service operations were sold in 1990 and 1991. NOTE B: Operating revenues for 1988 include the sales of various residential lots in The Bahamas for net proceeds of $1,520,000. Earnings from operations for 1988 include a net gain of $1,192,000 on those sales. Operating revenues for 1989 include the sales of various parcels of vacant land in Atlantic City and The Bahamas for net proceeds of $5,053,000. Earnings from operations for 1989 include a net loss of $317,000 on those sales. Operating revenues for 1990 include the sales of various parcels of vacant land in The Bahamas for net proceeds of $3,933,000. Earnings from operations for 1990 include gains of $247,000 on those sales. Operating revenues for 1992 include the sale of a residential lot in The Bahamas for net proceeds of $213,000. Earnings from operations for 1992 include a net loss of $17,000 on that sale. NOTE C: See Note 2 of Notes to Consolidated Financial Statements of RII for a discussion of these items in 1990. NOTE D: The 1989 net gain from purchases of subordinated debentures resulted from RII's purchases of $13,528,000 of its subordinated debentures to satisfy sinking fund requirements. NOTE E: Includes a provision for the loss of $275,000,000 on the sale to affiliates of Donald Trump of the Taj Mahal, the Steel Pier, certain helicopters and associated assets, certain real property adjacent to the Taj Mahal site and certain other assets. Also includes a provision of $60,690,000 for a fee to terminate the ten-year Comprehensive Services Agreement with the Trump Hotel Corporation. NOTE F: Includes interest income, interest expense net of capitalized interest, and amortization of debt discount and issuance costs. For the periods through November 14 and from November 15, 1988, $12,867,000 and $79,000, respectively, of interest was capitalized. In 1989 $99,000 of interest was capitalized. NOTE G: For the period through November 14, 1988 the Company had Federal and state net operating losses for financial reporting purposes. The tax benefit relating to these net operating losses for this period was recognized for financial reporting purposes by reducing the deferred tax liability. The Company adopted Statement of Financial Accounting Standards No. 96, "Accounting For Income 154 Taxes", ("SFAS 96") effective November 15, 1988. For the period from November 15, 1988 the Company also generated Federal and state net operating losses; however, pursuant to the accounting method prescribed in SFAS 96, no tax benefit was recorded for that period. For the year 1989 the Company had net operating losses for purposes of Federal and state income taxes. To the extent the carryforward of these net operating losses reduced the existing deferred tax liability, it resulted in a tax benefit for the year. The write-off of $181,311,000 of goodwill in 1989 was a non-deductible item for income tax purposes. See Note 13 of Notes to Consolidated Financial Statements of RII for discussion of income taxes for 1990, 1991 and 1992, and Note 17 for discussion of income taxes for the three quarters ended September 30, 1993. NOTE H: See Note 1 of Notes to Consolidated Financial Statements of RII for discussion of net loss per share of RII Common Stock. NOTE I: The ratios of earnings to fixed charges were computed by dividing earnings available for fixed charges (earnings before income taxes and extraordinary item, adjusted for interest expense, amortization of debt discount and expense and one-third of rent expense) by fixed charges. Fixed charges include interest expense, amortization of debt discount and expense, capitalized interest and one-third of rent expense. Earnings were insufficient to cover fixed charges by $383,545,000 for the period through November 14, 1988; $17,831,000 for the period from November 15, 1988; $306,688,000 for 1989; $171,594,000 for the period through August 31, 1990; $13,531,000 for the period from September 1, 1990; $42,402,000 for 1991; $54,802,000 for 1992; $37,223,000 for the three quarters ended September 30, 1992; and $57,370,000 for the three quarters ended September 30, 1993. NOTE J: Net of unamortized discounts. NOTE K: RII has not paid any dividends on its capital stock during the periods presented. 155 RESORTS INTERNATIONAL HOTEL, INC. (IN THOUSANDS, EXCEPT RATIOS)
FOR THE YEAR ENDED DECEMBER 31, ------------------------------------------------------------------------------------ FOR THE THREE 1988 1990 QUARTERS ENDED --------------------------- ---------------------- SEPTEMBER 30, OPERATING INFORMATION THROUGH FROM NOVEMBER THROUGH FROM -------------------- (NOTE A) NOVEMBER 14 15 1989 AUGUST 31 SEPTEMBER 1 1991 1992 1992 1993 - ----------------------- ------------ ------------- --------- --------- ----------- --------- --------- --------- --------- Operating revenues..... $ 246,716 $ 27,464 $ 255,054 $ 158,805 $ 76,216 $ 247,474 $ 262,740 $ 203,080 $ 208,814 ------------ ------------- --------- --------- ----------- --------- --------- --------- --------- ------------ ------------- --------- --------- ----------- --------- --------- --------- --------- Earnings (loss) from operations............ $ 20,985 $ 189 $ (7,286) $ 3,449 $ 2,304 $ 14,819 $ 21,049 $ 19,421 $ 15,805 Recapitalization costs (Note B).............. (2,430) (119,804) (874) (704) (1,580) Write-off of goodwill.............. (105,161) Termination fee (Note C).................... (35,690) Affiliated bad debt write-off (Note B).... (98,983) Other income (deductions), net (Note D).............. (30,080) (4,142) (37,565) 5,209 2,696 6,942 7,181 5,331 5,441 ------------ ------------- --------- --------- ----------- --------- --------- --------- --------- Earnings (loss) before income taxes and extraordinary item.... (44,785) (3,953) (152,442) (210,129) 5,000 21,761 27,356 24,048 19,666 Income tax benefit (expense) (Note E).... 1,600 3,400 (8,704) (10,942) (9,620) (400) ------------ ------------- --------- --------- ----------- --------- --------- --------- --------- Earnings (loss) before extraordinary item.... (44,785) (2,353) (149,042) (210,129) 5,000 13,057 16,414 14,428 19,266 Extraordinary item (Note B).............. (17,335) ------------ ------------- --------- --------- ----------- --------- --------- --------- --------- Net earnings (loss).... $ (44,785) $ (2,353) $(149,042) $(227,464) $ 5,000 $ 13,057 $ 16,414 $ 14,428 $ 19,266 ------------ ------------- --------- --------- ----------- --------- --------- --------- --------- ------------ ------------- --------- --------- ----------- --------- --------- --------- --------- Ratio of earnings to fixed charges (Note F).............. -- -- -- -- 14.2 15.5 21.5 24.3 23.3 ------------ ------------- --------- --------- ----------- --------- --------- --------- --------- ------------ ------------- --------- --------- ----------- --------- --------- --------- ---------
AT DECEMBER 31, ----------------------------------------------------- AT SEPTEMBER 30, BALANCE SHEET INFORMATION (NOTE A) 1988 1989 1990 1991 1992 1993 - -------------------------------------- --------- --------- --------- --------- --------- ---------------- Total assets.......................... $ 545,463 $ 414,608 $ 221,193 $ 235,235 $ 250,636 $ 275,351 Current maturities of notes payable to affiliate and other long-term debt... 770 482 1,044 958 643 325,081 Notes payable to affiliate and other long-term debt, excluding current maturities................... 325,000 356,953 326,787 326,539 325,904 15 Shareholder's equity (deficit)........ 142,677 (6,365) (193,829) (180,772) (164,358) (145,092)
156 NOTES TO RIH SELECTED HISTORICAL FINANCIAL DATA NOTE A: Effective with Griffco's purchase of RII on November 15, 1988, and according to an accounting practice known as "push-down" accounting, RIH adjusted its net assets to reflect its portion of the cost of Griffco's investment in RII. In doing so, RIH's assets and liabilities were adjusted to their estimated fair values. At the end of 1989, when the Old Debtors entered bankruptcy and stopped accruing interest on their public debt, RIH stopped accruing interest on its affiliated notes payable, the terms of which mirrored the terms of certain of the public debt. Also at that time RIH stopped amortizing related debt issuance costs. At December 31, 1989, accrued interest on RIH's affiliated notes payable is included in long-term, rather than current, liabilities. Note 2 of Notes to Consolidated Financial Statements of RIH describes another change in entity and related presentation resulting from the application of "fresh start" accounting in connection with RII's emergence from bankruptcy proceedings in 1990. NOTE B: See Note 2 of Notes to Consolidated Financial Statements of RIH for discussion of these items in 1990. NOTE C: Represents RIH's allocated portion of the fee paid to terminate the Comprehensive Services Agreement between RII and the Trump Hotel Corporation. NOTE D: Includes interest income, interest expense and amortization of debt discount and issuance costs. NOTE E: For the period through November 14, 1988, RIH had an agreement with RII whereby RIH provided for Federal and state income taxes using a combined rate of 40% except for material transactions which, under then existing tax laws, would be subject to a significantly different combined tax rate. Such transactions were separately tax effected using appropriate tax rates. Pursuant to this agreement, no tax benefits were allocated to RIH. For the period from November 15, 1988 and the year ended December 31, 1989, RIH accounted for income taxes under the liability method prescribed by SFAS 96. Also, effective November 15, 1988 RIH entered into a Tax Sharing Agreement among Griffco, RII and another subsidiary of RII, pursuant to which RIH was liable to Griffco for the amount of Federal income taxes calculated on a separate return basis, and the tax benefit for that period was calculated on that basis. See Note 11 of Notes to Consolidated Financial Statements of RIH herein for discussion of income taxes for 1990, 1991 and 1992, and Note 14 for discussion of income taxes for the three quarters ended September 30, 1993. NOTE F: The ratios of earnings to fixed charges were computed by dividing earnings available for fixed charges (earnings before income taxes and extraordinary item, adjusted for interest expense, amortization of debt discount and expense and one-third of rent expense) by fixed charges. Fixed charges include interest expense, amortization of debt discount and expense and one-third of rent expense. Earnings were insufficient to cover fixed charges by $44,785,000 for the period through November 14, 1988; $3,953,000 for the period from November 15, 1988; $152,442,000 for 1989; and $210,129,000 for the period through August 31, 1990. 157 PIRL GROUP (IN THOUSANDS)
FOR THE YEAR ENDED DECEMBER 31, -------------------------------------------------------------------------------------- 1988 1990 --------------------------- ------------------------- OPERATING INFORMATION THROUGH FROM THROUGH FROM (NOTE A) NOVEMBER 14 NOVEMBER 15 1989 AUGUST 31 SEPTEMBER 1 1991 1992 - ------------------------------ ------------ ------------ -------- ---------- ------------ -------- -------- Operating revenues (Note B)... $ 152,126 $ 20,117 $184,045 $ 129,413 $ 50,937 $163,216 $166,381 ------------ ------------ -------- ---------- ------------ -------- -------- ------------ ------------ -------- ---------- ------------ -------- -------- Earnings (loss) from operations (Note B).......... $ 15,286 $ (1,636) $ (1,828) $ 8,005 $ (6,163) $ (5,787) $ (5,667) Recapitalization costs (Note C)........................... (2,430) (41,270) (1,099) Affiliated bad debt write-off (Note C)..................... (2,251) Write-off of goodwill......... (76,151) Loss on sale of assets and termination fee (Note D)..... (25,537) Other income (deductions), net (Note E)..................... 618 (459) (4,142) (3,848) (2,092) (6,612) (6,491) ------------ ------------ -------- ---------- ------------ -------- -------- Net loss...................... $ (9,633) $ (2,095) $(84,551) $ (39,364) $ (8,255) $(12,399) $(13,257) ------------ ------------ -------- ---------- ------------ -------- -------- ------------ ------------ -------- ---------- ------------ -------- -------- FOR THE THREE QUARTERS ENDED SEPTEMBER 30, OPERATING INFORMATION ------------------ (NOTE A) 1992 1993 - ------------------------------ -------- -------- Operating revenues (Note B)... $121,329 $123,016 -------- -------- -------- -------- Earnings (loss) from operations (Note B).......... $ (5,944) $ (3,091) Recapitalization costs (Note C)........................... (929) (1,719) Affiliated bad debt write-off (Note C)..................... Write-off of goodwill......... Loss on sale of assets and termination fee (Note D)..... Other income (deductions), net (Note E)..................... (4,835) (4,806) -------- -------- Net loss...................... $(11,708) $ (9,616) -------- -------- -------- --------
AT DECEMBER 31, ----------------------------------------------------- AT SEPTEMBER 30, BALANCE SHEET INFORMATION (NOTE A) 1988 1989 1990 1991 1992 1993 - ---------------------------------------- --------- --------- --------- --------- --------- ---------------- Total assets............................ $ 382,710 $ 303,818 $ 252,066 $ 237,498 $ 227,676 $ 211,528 Long-term debt.......................... 319 671 1,153 457 269 169 Shareholders' equity.................... 271,494 186,943 139,324 126,925 113,668 104,052
NOTES TO PIRL GROUP SELECTED HISTORICAL FINANCIAL DATA NOTE A: Effective with Griffco's purchase of RII on November 15, 1988, and according to an accounting practice known as "push-down" accounting, the PIRL Group adjusted its net assets to reflect its portion of the cost of Griffco's investment in RII. In doing so, the PIRL Group's assets and liabilities were adjusted to their estimated fair values. Note 2 of Notes to Combined Financial Statements of PIRL Group describes another change in entity and related presentation resulting from the application of "fresh start" accounting in connection with RII's emergence from bankruptcy proceedings in 1990. Changes in operations during the past five years include the following: PIA's Dash 7 service commenced in March 1989 and PIA's amphibious airline operation was sold in December 1990. NOTE B: Operating revenues for 1988 include the sale of various residential lots in The Bahamas for net proceeds of $1,520,000. Earnings from operations for 1988 include a net gain of $1,192,000 on those sales. Operating revenues for 1989 include the sales of various parcels of vacant land in The Bahamas for net proceeds of $733,000. Earnings from operations for 1989 include a net gain of $668,000 on those sales. Operating revenues for 1990 include the sales of various parcels of vacant land in The Bahamas for net proceeds of $3,933,000. Earnings from operations for 1990 include gains of $247,000 on those sales. Operating revenues for 1992 include the sale of a residential lot in The Bahamas for net proceeds of $213,000. Earnings from operations for 1992 include a net loss of $17,000 on that sale. NOTE C: See Note 2 of Notes to Combined Financial Statements of PIRL Group for a discussion of these items in 1990. NOTE D: This includes $25,000,000 which represents PIRL Group's allocated portion of the fee paid to terminate the Comprehensive Services Agreement between RII and the Trump Hotel Corporation. NOTE E: Includes interest income and interest expense, net of capitalized interest. For the period from November 15, 1988, $79,000 of interest was capitalized. In 1989 $99,000 of interest was capitalized. 158 PRO FORMA FINANCIAL DATA Set forth below is certain unaudited pro forma financial information for RII, RIH and PIRL. The pro forma balance sheet information as of September 30, 1993 gives effect to the Restructuring as if it occurred on that date. The pro forma statements of operations information for the year ended December 31, 1992 and the three quarters ended September 30, 1993 gives effect to the Restructuring as if it occurred on January 1, 1992. However, the pro forma statements of operations information excludes the gains (losses) resulting from the Restructuring and the costs associated therewith. The unaudited pro forma information is not necessarily indicative of future results or what the respective entities' financial position or results of operations would actually have been had the transactions occurred on the dates indicated. Such information should not be used as a basis to project results for any future period. RIHF Pro forma financial statements are not presented for RIHF due to its recent incorporation and lack of activity to date. Pursuant to the Restructuring, RIHF is to have notes receivable from RIH (the RIH Promissory Note and the RIH Junior Promissory Note) in amounts equal to its notes payable balance for the New RIHF Mortgage Notes and the New RIHF Junior Mortgage Notes. Also, RIHF is to have interest income from the notes receivable from RIH in an amount equal to the interest expense on its notes payable. RIHF is not expected to have any other assets or liabilities or engage in any transactions subsequent to the Restructuring except to the extent that RIHF draws upon the RIHF Senior Facility. If RIHF does draw upon the RIHF Senior Facility, RIHF will have as assets notes receivable from RIH (the RIH Senior Facility Note) in amounts equal to its notes payable balance pursuant to the RIHF Senior Facility (the RIHF Senior Facility Notes), and have interest income from such notes receivable in an amount equal to the interest expense on its notes payable. 159 RESORTS INTERNATIONAL, INC. PRO FORMA CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1993 ----------------------------------------------------- PRO FORMA HISTORICAL ADJUSTMENTS PRO FORMA ----------- ----------------- ----------- (IN THOUSANDS) ASSETS Current assets: Cash and cash equivalents........................................... $ 71,026 $ 1,211(a) $ 20,000 3,008(b) (45,245)(c) (10,000)(e) Restricted cash equivalents......................................... 8,076 (1,211)(a) 1,372 (1,099)(c) (4,394)(d) Receivables, net.................................................... 13,961 (7,380)(c) 6,581 Note receivable from related party.................................. 2,310 (2,310)(b) 0 Inventories......................................................... 8,484 (7,020)(c) 1,464 Prepaid expenses.................................................... 13,492 2,310(b) 11,190 (3,406)(c) (1,206)(e) ----------- ----------------- ----------- Total current assets.............................................. 117,349 (76,742) 40,607 Note receivable from related party.................................... 3,008 (3,008)(b) 0 Property and equipment, net........................................... 454,055 (176,606)(c) 277,449 Deferred charges and other assets..................................... 12,220 (1,332)(c) 10,888 ----------- ----------------- ----------- $ 586,632 $ (257,688) $ 328,944 ----------- ----------------- ----------- ----------- ----------------- ----------- LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) Current liabilities: Current maturities of long-term debt, net........................... $ 429,500 $ (429,419)(c) $ 81 Accounts payable and accrued liabilities............................ 83,223 (40,471)(c) 38,344 (3,520)(d) (888)(e) ----------- ----------------- ----------- Total current liabilities......................................... 512,723 (474,298) 38,425 ----------- ----------------- ----------- Long-term debt, net................................................... 84,541 147,431(c) 231,972 ----------- ----------------- ----------- Deferred income taxes................................................. 54,000 54,000 ----------- ----------- Shareholders' equity (deficit): Common stock........................................................ 202 170(c) 379 7(e) Capital in excess of par............................................ 102,092 30,815(c) 133,965 1,058(e) Accumulated deficit................................................. (166,926) 49,386(c) (129,797) (874)(d) (11,383)(e) ----------- ----------------- ----------- Total shareholders' equity (deficit).............................. (64,632) 69,179 4,547 ----------- ----------------- ----------- $ 586,632 $ (257,688) $ 328,944 ----------- ----------------- ----------- ----------- ----------------- -----------
See Notes to Pro Forma Consolidated Balance Sheet of RII. 160 RESORTS INTERNATIONAL, INC. PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED FOR THE THREE QUARTERS ENDED DECEMBER 31, 1992 SEPTEMBER 30, 1993 ------------------------------------------ --------------------------------------------- PRO FORMA PRO FORMA HISTORICAL ADJUSTMENTS PRO FORMA HISTORICAL ADJUSTMENTS PRO FORMA ---------- ------------- ---------- ---------- ----------- ------------ (IN THOUSANDS, EXCEPT PER SHARE DATA AND RATIOS) Revenues: Casino............................ $ 299,900 $ (66,120)(f) $ 233,780 $ 236,488 $(48,685)(f) $187,803 Rooms............................. 39,001 (30,235)(f) 8,766 27,992 (22,622)(f) 5,370 Food and beverage................. 48,907 (32,851)(f) 16,056 35,933 (23,593)(f) 12,340 Other casino/hotel revenues....... 22,028 (17,890)(f) 4,138 17,713 (14,412)(f) 3,301 Other operating revenues.......... 19,072 (19,072)(f) 0 13,704 (13,704)(f) 0 Real estate related............... 8,026 (213)(f) 7,813 6,028 6,028 ---------- ------------- ---------- ---------- ----------- ------------ 436,934 (166,381) 270,553 337,858 (123,016) 214,842 ---------- ------------- ---------- ---------- ----------- ------------ Expenses: Casino............................ 176,119 (48,272)(f) 127,847 141,600 (36,587)(f) 105,013 Rooms............................. 11,799 (8,217)(f) 3,582 8,064 (5,562)(f) 2,502 Food and beverage................. 42,819 (25,161)(f) 17,658 31,332 (17,902)(f) 13,430 Other casino/hotel operating expenses......................... 64,654 (31,373)(f) 33,281 49,995 (24,247)(f) 25,748 Other operating expenses.......... 15,549 (15,549)(f) 0 11,122 (11,122)(f) 0 Selling, general and administrative................... 73,262 (26,806)(f) 46,456 53,835 (18,319)(f) 35,516 Provision for doubtful receivables...................... 4,047 (2,633)(f) 1,414 2,284 (1,748)(f) 536 Depreciation...................... 25,322 (13,792)(f) 11,530 20,942 (10,612)(f) 10,330 Real estate related............... 1,599 (230)(f) 1,369 1,114 1,114 Unallocated corporate expense..... 262 (15)(f) 1,806 (3,110) (8)(f) (1,822) 5,284(g) 3,596(g) (3,725)(h) (2,300)(h) ---------- ------------- ---------- ---------- ----------- ------------ 415,432 (170,489) 244,943 317,178 (124,811) 192,367 ---------- ------------- ---------- ---------- ----------- ------------ Earnings from operations............ 21,502 4,108 25,610 20,680 1,795 22,475 Other income (deductions): Interest income................... 4,969 6,391(f) 4,610 2,485 4,772(f) 2,194 (6,750)(i) (5,063)(i) Interest expense.................. (40,856) 100(f) (25,999) (38,336) 34(f) (19,550) 32,488(j) 32,050(j) (17,731)(k) (13,298)(k) Amortization of debt discount..... (37,569) 35,745(j) (2,553) (37,320) 35,811(j) (2,113) (729)(k) (604)(k) Recapitalization costs............ (2,848) 1,099(f) 0 (4,879) 1,719(f) 0 1,749(l) 3,160(l) ---------- ------------- ---------- ---------- ----------- ------------ Earnings (loss) before income taxes.............................. (54,802) 56,470 1,668 (57,370) 60,376 3,006 Income tax benefit (expense)........ 1,348 1,348 (1,000) (1,000) ---------- ------------- ---------- ---------- ----------- ------------ Net earnings (loss)................. $ (53,454) $ 56,470(m) $ 3,016 $ (58,370) $60,376(m) $ 2,006 ---------- ------------- ---------- ---------- ----------- ------------ ---------- ------------- ---------- ---------- ----------- ------------ Net earnings (loss) per share....... $ (2.65) $ .08 $ (2.90) $ .05 ---------- ---------- ---------- ------------ ---------- ---------- ---------- ------------ Weighted average number of shares outstanding........................ 20,146 37,886(n) 20,157 37,897(n) ---------- ---------- ---------- ------------ ---------- ---------- ---------- ------------ Ratio of earnings to fixed charges............................ -- 1.1 -- 1.1 ---------- ---------- ---------- ------------ ---------- ---------- ---------- ------------
See Notes to Pro Forma Consolidated Statements of Operations of RII. 161 RESORTS INTERNATIONAL, INC. NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET (a) Reflects the reclassification of the balance of the collateral account for the Old Series Notes from restricted cash equivalents to non-restricted cash and cash equivalents. (b) Reflects (i) prepayment of fees due Griffin Group through September 17, 1994 pursuant to the New Griffin Services Agreement by application of such amount as a reduction of the Griffin Group Note balance and (ii) collection of the remaining balance of the Griffin Group Note. (c) Reflects the exchange, net of related tax effects, of the Old Series Notes for the following: (i) $125,000,000 principal amount of New RIHF Mortgage Notes; (ii) $35,000,000 principal amount of New RIHF Junior Mortgage Notes, and 35,000 shares of RII Class B Common Stock to be issued therewith; (iii) Excess Cash; (iv) 17,025,000 shares of RII Common Stock, which will approximate 40% of the outstanding RII Common Stock after giving effect to the Restructuring, assuming the Griffin Warrants are exercised; and (v) either the SIHL Aggregate Cash Purchase Price and the SIHL Series A Shares or, if the SIHL Sale is not consummated on the Effective Date, the PIRL Ordinary Shares. As none of these items are reflected in the historical consolidated balance sheet of RII at September 30, 1993, the pro forma adjustments recording this component of the exchange reflect the elimination of balances of the PIRL Group, after adjustment of its working capital to $12,000,000, of which cash is a minimum of $5,000,000. The equity and/or assets of members of the PIRL Group are to be purchased by SIHL in the SIHL Sale, or transferred to PIRL through the PIRL Spin-Off. (d) Reflects payment of expenses of the Litigation Trust and distribution of its remaining restricted cash balance to holders of Old Series Notes. Also reflects elimination of liability for Litigation Trust obligations. (e) Reflects the write-off of prepaid recapitalization costs and settlement of other recapitalization costs through cash payments and the issuance of 715,000 shares of RII Common Stock, 590,000 of which were accrued for at September 30, 1993. 162 NOTES TO PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS (f) Reflects the elimination of operating results of PIRL Group. (g) Reflects the elimination of the management fee charged to PIRL Group by RII. Such fee is based on 3% of certain PIRL Group gross revenues. Assumes no fees earned by RII pursuant to the Interim Management Agreement. (h) Reflects the elimination of costs incurred by RII for services provided to the PIRL Group including accounting, data processing and other support services. (i) Reflects the elimination of interest income on RIH's $50,000,000 note receivable from RIB which is to be canceled pursuant to the terms of the Restructuring. (j) Reflects the elimination of interest expense and amortization of debt discount on the Old Series Notes. (k) Reflects interest expense and amortization of debt discount on the New RIHF Mortgage Notes and the New RIHF Junior Mortgage Notes. (l) Reflects the elimination of recapitalization costs incurred in connection with the Restructuring. (m) The pro forma adjustments (f) through (l) affecting RII's consolidated earnings do not include the gains (losses) resulting from the Restructuring and the costs associated therewith. Assuming the Restructuring was effective September 30, 1993, the operating loss on the Restructuring, which results from the difference between the carrying value of the PIRL Group and its fair value, would amount to approximately $65,000,000. For purposes of this computation, fair value was estimated based on the proposed terms of the SIHL Sale. Also assuming the Restructuring was effective on that date, the extraordinary gain on the Restructuring would amount to approximately $123,000,000. (n) Reflects (i) the issuance of 715,000 shares of RII Common Stock to financial advisers in settlement of certain recapitalization costs and (ii) the issuance of 17,025,000 shares of RII Common Stock to holders of the Old Series Notes, which will approximate 40% of the outstanding RII Common Stock after giving effect to the Restructuring, assuming the Griffin Warrants are exercised. 163 RESORTS INTERNATIONAL HOTEL, INC. PRO FORMA CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1993 --------------------------------------------- PRO FORMA HISTORICAL ADJUSTMENTS PRO FORMA ----------- ---------------- ----------- (IN THOUSANDS OF DOLLARS) ASSETS Current assets: Cash and cash equivalents........................................... $ 30,820 $ (15,820)(a) $ 15,000 Receivables, net.................................................... 5,682 5,682 Interest receivable from affiliate.................................. 2,813 (2,813)(b) -- Note receivable from affiliate...................................... 50,000 (50,000)(b) -- Inventories......................................................... 1,464 1,464 Prepaid expenses.................................................... 7,260 2,310(c) 9,570 ----------- ---------------- ----------- Total current assets.............................................. 98,039 (66,323) 31,716 Property and equipment, net........................................... 166,424 166,424 Deferred charges and other assets..................................... 10,888 10,888 ----------- ---------------- ----------- $ 275,351 $ (66,323) $ 209,028 ----------- ---------------- ----------- ----------- ---------------- ----------- LIABILITIES AND SHAREHOLDER'S EQUITY (DEFICIT) Current liabilities: Current maturities of long-term debt................................ $ 81 $ 81 Accounts payable and accrued liabilities............................ 24,622 24,622 Notes payable to affiliate -- RIH Notes............................. 325,000 $ (325,000)(d) -- Due to parent company............................................... 51,325 2,310(c) -- (53,635)(e) ----------- ---------------- ----------- Total current liabilities......................................... 401,028 (376,325) 24,703 ----------- ---------------- ----------- Notes payable to affiliate -- RIH Promissory Note and RIH Junior Promissory Note, net................................................. 147,600(e) 147,600 ---------------- ----------- Other long-term debt.................................................. 15 15 ----------- ----------- Deferred income taxes................................................. 19,400 19,400 ----------- ----------- Shareholder's equity (deficit): Common stock........................................................ 1,000(d) 1,000 Excess of liabilities over assets at August 31, 1990 reorganization..................................................... (198,829) (198,829) Capital in excess of par............................................ (15,820)(a) 215,139 (52,813)(b) 324,000(d) (40,228)(e) Retained earnings................................................... 53,737 (53,737)(e) -- ----------- ---------------- ----------- Total shareholder's equity (deficit).............................. (145,092) 162,402 17,310 ----------- ---------------- ----------- $ 275,351 $ (66,323) $ 209,028 ----------- ---------------- ----------- ----------- ---------------- -----------
See Notes to Pro Forma Consolidated Balance Sheet of RIH. 164 RESORTS INTERNATIONAL HOTEL, INC. PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED FOR THE THREE QUARTERS ENDED DECEMBER 31, 1992 SEPTEMBER 30, 1993 ----------------------------------------- ----------------------------------------- PRO FORMA PRO FORMA HISTORICAL ADJUSTMENTS PRO FORMA HISTORICAL ADJUSTMENTS PRO FORMA ----------- --------------- ----------- ----------- --------------- ----------- (IN THOUSANDS, EXCEPT RATIOS) Revenues: Casino.................. $ 233,780 $ 233,780 $ 187,803 $ 187,803 Rooms................... 8,766 8,766 5,370 5,370 Food and beverage....... 16,056 16,056 12,340 12,340 Other casino/hotel revenues............... 4,138 4,138 3,301 3,301 ----------- --------------- ----------- ----------- --------------- ----------- 262,740 262,740 208,814 208,814 ----------- --------------- ----------- ----------- --------------- ----------- Expenses: Casino.................. 127,847 127,847 105,013 105,013 Rooms................... 3,582 3,582 2,502 2,502 Food and beverage....... 17,658 17,658 13,430 13,430 Other casino/hotel operating expenses..... 33,281 33,281 25,748 25,748 Selling, general and administrative......... 46,507 46,507 35,516 35,516 Provision for doubtful receivables............ 1,414 1,414 536 536 Depreciation............ 11,402 11,402 10,264 10,264 ----------- --------------- ----------- ----------- --------------- ----------- 241,691 241,691 193,009 193,009 ----------- --------------- ----------- ----------- --------------- ----------- Earnings from operations............... 21,049 21,049 15,805 15,805 Other income (deductions): Interest income......... 7,576 $ (6,750)(f) 826 5,631 $ (5,063)(f) 568 Interest expense........ (395) (17,731)(g) (18,126) (190) (13,298)(g) (13,488) Amortization of debt discount............... (729)(g) (729) (604)(g) (604) Recapitalization costs.................. (874) 874(h) -- (1,580) 1,580(h) -- ----------- --------------- ----------- ----------- --------------- ----------- Earnings (loss) before income taxes............. 27,356 (24,336) 3,020 19,666 (17,385) 2,281 Income tax expense........ (10,942) 10,942(i) -- (400) (400) ----------- --------------- ----------- ----------- --------------- ----------- Net earnings (loss)....... $ 16,414 $ (13,394) $ 3,020 $ 19,266 $ (17,385) $ 1,881 ----------- --------------- ----------- ----------- --------------- ----------- ----------- --------------- ----------- ----------- --------------- ----------- Ratio of earnings to fixed charges.................. 21.5 1.2 23.3 1.2 ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
See Notes to Pro Forma Consolidated Statements of Operations of RIH. 165 RESORTS INTERNATIONAL HOTEL, INC. NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET (a) Reflects the distribution to GRI of cash not needed for current operations. GRI, in turn, is to distribute these funds to RII for its distribution of Excess Cash to holders of Old Series Notes. (b) Reflects (i) the assumption by GRI of RIB's note payable to RIH and accrued interest thereon and (ii) RIH's distribution to GRI of such note and accrued interest as a return of surplus. (c) Reflects prepayment of fees due Griffin Group through September 17, 1994 pursuant to the New Griffin Services Agreement by application of such amount as a reduction of the Griffin Group Note balance receivable by RII. (d) Reflects GRI's exchange of the RIH Notes for RIH's issuance to GRI of 999,900 shares of RIH common stock, which is to represent 99.99% of the issued and outstanding common stock of RIH. (e) Reflects the distribution to RII of the RIH Promissory Note and the RIH Junior Promissory Note in repayment of the intercompany debt owed to RII by RIH, with the balance being a return of surplus. NOTES TO PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS (f) Reflects the elimination of interest income on the note receivable from RIB, which note is to be distributed to GRI as a return of surplus. (g) Reflects interest expense and amortization of debt discount on the RIH Promissory Note and the RIH Junior Promissory Note. (h) Reflects the elimination of recapitalization costs incurred in connection with the Restructuring. (i) For the year ended December 31, 1992, reflects a change in method of accounting for income taxes, as RIH adopted Statement of Financial Accounting Standards No. 109 "Accounting for Income Taxes" ("SFAS 109") in the first quarter of 1993. See the "Income Tax Accounting" section of Note 14 of Notes to Consolidated Financial Statements of RIH. 166 (PIRL SPIN-OFF SCENARIO) P. I. RESORTS LIMITED PRO FORMA CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1993 --------------------------------------------------- PRO FORMA HISTORICAL ADJUSTMENTS PRO FORMA ----------- ---------------- ----------- (IN THOUSANDS) ASSETS Current assets: Cash and cash equivalents........................................... $ 12,870 $ (757)(a) $ 12,063 (50)(b) Restricted cash equivalents......................................... 1,099 1,099 Receivables, net.................................................... 7,380 7,380 Inventories......................................................... 7,020 7,020 Prepaid expenses.................................................... 5,221 (1,815)(a) 3,206 (200)(b) ----------- -------- ----------- Total current assets............................................ 33,590 (2,822) 30,768 Property and equipment, net........................................... 176,606 (64,590)(c) 112,016 Deferred charges and investment in joint venture...................... 1,332 (179)(c) 1,153 ----------- -------- ----------- $ 211,528 $ (67,591) $ 143,937 ----------- -------- ----------- ----------- -------- ----------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current maturities of long-term debt................................ $ 130 $ 130 Accounts payable and accrued liabilities............................ 18,688 $ (50)(b) 18,638 Due to parent company............................................... 35,676 (2,572)(a) -- (10,435)(d) (22,669)(e) Interest payable to affiliate....................................... 2,813 (2,813)(d) -- Note payable to affiliate........................................... 50,000 (50,000)(d) -- ----------- -------- ----------- Total current liabilities....................................... 107,307 (88,539) 18,768 ----------- -------- ----------- Long-term debt........................................................ 169 169 ----------- -------- ----------- Shareholders' equity: Capital stock: RIB and U.S. Paradise Island Subsidiaries combined................ 33 (33)(f) -- P. I. Resorts Limited............................................. 50(f) 50 ----------- -------- ----------- 33 17 50 Capital in excess of par............................................ 147,546 (64,769)(c) 124,950 22,669(e) (17)(f) 19,521(g) Retained earnings (accumulated deficit)............................. (43,527) (200)(b) -- 63,248(d) (19,521)(g) ----------- -------- ----------- Total shareholders' equity...................................... 104,052 20,948 125,000 ----------- -------- ----------- $ 211,528 $ (67,591) $ 143,937 ----------- -------- ----------- ----------- -------- -----------
See Notes to Pro Forma Consolidated Balance Sheet of PIRL. 167 P. I. RESORTS LIMITED (PIRL SPIN-OFF SCENARIO) PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED FOR THE THREE QUARTERS ENDED DECEMBER 31, 1992 SEPTEMBER 30, 1993 ------------------------------------------------ -------------------------------------------- PRO FORMA PRO FORMA HISTORICAL ADJUSTMENTS PRO FORMA HISTORICAL ADJUSTMENTS PRO FORMA ---------- ------------- ------------- ---------- ----------- ------------ (IN THOUSANDS, EXCEPT PER SHARE DATA) Revenues: Casino........................... $ 66,120 $ 66,120 $ 48,685 $ 48,685 Rooms............................ 30,235 30,235 22,622 22,622 Food and beverage................ 32,851 32,851 23,593 23,593 Other casino/hotel revenues...... 17,890 17,890 14,412 14,412 Other operating revenues......... 19,072 19,072 13,704 13,704 Real estate related.............. 213 213 ---------- ------------- ------------- ---------- ----------- ------------ 166,381 166,381 123,016 123,016 ---------- ------------- ------------- ---------- ----------- ------------ Expenses: Casino........................... 48,272 48,272 36,587 36,587 Rooms............................ 8,217 8,217 5,562 5,562 Food and beverage................ 25,161 25,161 17,902 17,902 Other casino/hotel operating expenses........................ 31,373 31,373 24,247 24,247 Other operating expenses......... 15,549 15,549 11,122 11,122 Selling, general and administrative.................. 21,537 $ 3,725(h) 25,262 14,731 $ 2,300(h) 17,031 Provision for doubtful receivables..................... 2,633 2,633 1,748 1,748 Depreciation..................... 13,792 (4,800)(i) 8,992 10,612 (3,700)(i) 6,912 Real estate related.............. 230 230 Management fee................... 5,284 (5,284)(j) 5,239 3,596 (3,596)(j) 3,886 5,239(k) 3,886(k) ---------- ------------- ------------- ---------- ----------- ------------ 172,048 (1,120) 170,928 126,107 (1,110) 124,997 ---------- ------------- ------------- ---------- ----------- ------------ Earnings (loss) from operations.... (5,667) 1,120 (4,547) (3,091) 1,110 (1,981) Other income (deductions): Interest income.................. 359 359 291 291 Interest expense................. (6,850) 6,750(l) (100) (5,097) 5,063(l) (34) Recapitalization costs........... (1,099) 1,099(m) -0- (1,719) 1,719(m) -0- ---------- ------------- ------------- ---------- ----------- ------------ Net loss........................... $ (13,257) $ 8,969 $ (4,288) $ (9,616) $ 7,892 $ (1,724) ---------- ------------- ------------- ---------- ----------- ------------ ---------- ------------- ------------- ---------- ----------- ------------ Net loss per share................. $ (.86)(n) $ (.34)(n) ------------- ------------ ------------- ------------ Weighted average number of shares outstanding....................... 5,000(n) 5,000(n) ------------- ------------ ------------- ------------
See Notes to Pro Forma Consolidated Statements of Operations of PIRL. 168 P. I. RESORTS LIMITED GENERAL NOTE TO PIRL PRO FORMA FINANCIAL STATEMENTS The historical financial information presented for PIRL is combined financial information of the PIRL Group as, for the historical periods presented, PIRL did not exist. The pro forma financial information presented for PIRL assumes the PIRL Spin-Off, rather than the SIHL Sale, occurs. Such information is presented on a consolidated basis as, pursuant to the PIRL Spin-Off, PIRL is to become the parent of RIB and other subsidiaries of PIRL are to acquire the assets and related liabilities of the U.S. Paradise Island Subsidiaries. The accounting principles, policies and estimates to be used in the preparation of PIRL consolidated financial statements will be the responsibility of PIRL's new management, which may or may not be the management of RII, who has prepared these pro forma consolidated financial statements. Thus, PIRL consolidated financial statements may be prepared on different bases utilizing different accounting treatments and estimates from those used in the preparation of these pro forma consolidated financial statements. NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET (a) Reflects the transfer to RII of prepaid insurance not related to PIRL Group. Also reflects the transfer of cash to RII in order to establish a working capital balance of $12,000,000, of which cash is a minimum of $5,000,000, at the time of the PIRL Spin-Off. (b) Reflects the payment of PIRL Group's accrued recapitalization costs and the write-off of PIRL Group's prepaid recapitalization costs. (c) For purposes of this presentation the equity of PIRL was valued at $125,000,000 based on the proposed terms of the SIHL Sale. (d) Reflects the assumption by GRI of (i) RIB's note payable to RIH and accrued interest thereon and (ii) RIB's remaining intercompany payables to RII. (e) Reflects the elimination of intercompany balances between RII and the U.S. Paradise Island Subsidiaries which are not to be purchased or assumed by PIRL's subsidiaries. (f) Reflects (i) the issuance of PIRL Ordinary Shares to RII in exchange for the capital stock of members of the PIRL Group and (ii) the consolidation of PIRL Group with PIRL. (g) Reflects adjustment of beginning retained earnings to zero. NOTES TO PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS (h) Reflects the costs incurred by RII for services provided to PIRL Group including accounting, data processing and other support services. These costs do not include any costs of RII executives or costs of corporate office functions such as treasury, financial reporting and tax services. (i) Reflects decrease in depreciation expense due to the basis adjustment of property and equipment. For purposes of this presentation it was assumed that depreciation expense would decrease by 35%, which approximates the percentage decrease in valuation of property and equipment. The depreciable lives of different categories of property and equipment may vary greatly. The actual decrease in depreciation expense may differ significantly from that presented here as it will depend on estimated fair values attributed to the individual components of property and equipment and the remaining depreciable lives assigned to those components by the new management of PIRL. (j) Reflects the elimination of the management fee charged to PIRL Group from RII. Such fee is based on 3% of certain gross revenues. 169 (k) Reflects management fees to RII pursuant to the Interim Management Agreement. For tax provision computations it was assumed that PIRL allocates a portion of such fees to its subsidiaries which operate in the U.S. (l) Reflects the elimination of interest expense on RIB's note payable to RIH which is to be assumed by GRI. (m) Reflects the elimination of recapitalization costs incurred in connection with the Restructuring. (n) Reflects the issuance of 5,000,000 PIRL Ordinary Shares to holders of the Old Series Notes. Net earnings (loss) per share data could differ significantly from those presented herein as appraisals, valuation procedures and estimates used as of the Effective Date may result in significantly different valuations and estimated remaining depreciable lines from those used in preparing this pro forma information. Also, this pro forma information assumes the PIRL Spin-Off, rather than the SIHL Sale, occurs. 170 MARKET PRICES OF OLD SERIES NOTES The Old Series Notes are listed and traded on the AMEX. The following table sets forth, for the periods indicated, the high and low trading price for each $100 principal amount of Old Series Notes on the AMEX.
OLD SERIES A NOTES OLD SERIES B NOTES ------------------ ------------------ FISCAL YEARS HIGH LOW HIGH LOW ------------------------- ------- ------- ------- ------- 1991: First Quarter.......... 48 7/8 34 54 35 Second Quarter......... 55 44 55 51 Third Quarter.......... 58 52 3/4 62 54 1/8 Fourth Quarter......... 62 56 63 3/4 57 1/2 1992: First Quarter.......... 76 58 75 58 3/4 Second Quarter......... 70 1/4 63 73 1/2 65 Third Quarter.......... 68 1/2 60 1/2 69 3/4 60 1/2 Fourth Quarter......... 62 50 1/2 63 49 1/2 1993: First Quarter.......... 68 56 1/2 67 3/4 55 Second Quarter......... 74 60 74 59 1/2 Third Quarter.......... 77 69 76 68 1/4 Fourth Quarter......... 72 66 72 64 1/2 1994: First Quarter (through January , 1994).......
On January 4, 1994, the last trading day prior to the date of this Information Statement/ Prospectus for which closing prices were available, the closing prices of the Old Series A Notes and the Old Series B Notes were 70.00 and 69.75, respectively. MARKET PRICES OF RII COMMON STOCK RII Common Stock is listed and traded on the AMEX. As of November 30, 1993, there were 20,157,234 shares of RII Common Stock outstanding and held of record by 2,003 holders. The following table sets forth, for the periods listed, the high and low trading prices per share of RII Common Stock on the AMEX.
FISCAL YEARS HIGH LOW ------------------------- ------- ------- 1991: First Quarter.......... 2 3/8 5/8 Second Quarter......... 2 1 3/8 Third Quarter.......... 2 1 1/2 Fourth Quarter......... 1 5/8 1 1992: First Quarter.......... 2 3/4 1 1/4 Second Quarter......... 2 3/8 1 Third Quarter.......... 1 1/4 3/4 Fourth Quarter......... 1 1/4 11/16 1993: First Quarter.......... 1 1/8 13/16 Second Quarter......... 3 7/8 13/16 Third Quarter.......... 2 3/4 1 9/16 Fourth Quarter......... 2 1/8 1 3/8 1994: First Quarter (through January , 1994).......
On January 4, 1994, the last trading day prior to the date of this Information Statement/ Prospectus, the closing price for RII Common Stock on the AMEX was $1.6875. No cash dividends on the RII Common Stock were paid during any of the periods listed above. 171 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Following is management's discussion and analysis of financial condition and results of operations ("M D & A") of the Company (comprised of RII and its subsidiaries), RIH, the Paradise Island Business (which, pursuant to the Restructuring, will become the operations of PIRL) and RIHF. The Company's Atlantic City casino/hotel segment and Resorts Casino Hotel are the operations and property of RIH. The Company's Paradise Island properties, the Paradise Island casino/hotel segment, the Paradise Island real estate related segment, and the Company's airline operations or airline segment all are components of the Paradise Island Business. For M D & A of RIH and the Paradise Island Business, the relevant portions of the Company's M D & A should be read in conjunction with the sections specifically designated as "RIH" or "Paradise Island Business", as appropriate. M D & A of RIHF, which entity did not exist in the historical periods discussed below, is limited to a prospective discussion specifically identified in "Financial Condition -- Liquidity". FINANCIAL CONDITION LIQUIDITY THE COMPANY. At September 30, 1993, the Company's current liabilities exceeded its current assets by $395,374,000 because the Old Series Notes, which are due April 15, 1994, are classified as current liabilities (due within one year). The Company's working capital at September 30, 1993 included unrestricted cash and equivalents of $71,026,000. A substantial amount of the unrestricted cash and equivalents currently is required for day-to-day operations, including approximately $15,000,000 of currency and coin on hand, which amount varies by days of the week, holidays and seasons, as well as approximately $15,000,000 of additional cash balances necessary to meet current working capital needs. The principal amount of the Old Series Notes is approximately $482,000,000. Assuming there are no principal retirements resulting from any asset sales, the interest obligation due on April 15, 1994 will approximate $36,000,000. This will result in a total obligation of approximately $518,000,000 at the maturity date. The Company's ability to pay the principal balance due on the Old Series Notes at maturity was premised on certain assumptions included in the Old Plan, the most significant of which were the Company's ability to sell the Paradise Island assets by December 31, 1991 at a price ranging from $250,000,000 to $300,000,000. Other assumptions included the Company's ability to generate substantial excess cash flow from its operations and the Company's ability to sell its non-operating real estate holdings in Atlantic City at acceptable prices. The recession in the United States, and more specifically in the northeast sector, the acute competition in Atlantic City and The Bahamas, the unexpected increase in competition in other jurisdictions, the unforeseen difficulty is selling the Paradise Island Business at the projected price, and the impact of the conflict in the Persian Gulf in early 1991 and its effect on transportation and tourism, all adversely affected the Company's ability to achieve the assumptions in the Old Plan. In addition, in late 1991 Carnival announced its plan to dispose of its Crystal Palace, the Company's principal competition in The Bahamas. In early 1992, a portion of the Crystal Palace complex, which Carnival had been leasing from HCB, was returned to HCB. Since that time as Carnival continued to operate the remainder of the Crystal Palace complex under the Crystal Palace name, it continued to seek a buyer for that property. In October 1993, Carnival announced that it had signed an agreement in principle to sell an 81% interest in such complex to a group of German investors. Although the Company did not discontinue its efforts to sell the Paradise Island assets, as the economy entered the recent recession, the events described above related to the Crystal Palace unfolded, and the Company experienced a very limited amount of interest by prospective purchasers of the Paradise Island assets, it became apparent that proceeds of the magnitude originally contemplated in 1990 would not be realizable prior to the maturity date of the Old Series Notes. The only 172 offer received by the Company prior to the proposed Restructuring for its Paradise Island assets was made in August 1991. That offer would have netted the Company approximately $150,000,000 if the transaction had been consummated. This amount was inadequate to retire sufficient Old Series Notes at par so as to permit the Company's then remaining Atlantic City operations to service the debt that would have remained outstanding. Subsequent discussions with the prospective purchaser did not lead to a definitive agreement, and the discussions terminated in early 1992. A sale of the Paradise Island assets in October 1991 for $250,000,000 and application of the proceeds to retire outstanding Old Series Notes would have reduced the amount of Old Series Notes outstanding at maturity by approximately $348,000,000. Additional reductions in principal amount of Old Series Notes outstanding at maturity could have been achieved if the Company had sold all or a portion of its non-operating real estate holdings in Atlantic City or if the Company's operations had generated substantial excess cash flow. The Old Plan assumed that $50,000,000 of such real estate assets would be sold and, for the first two years of the Old Plan, operations would generate approximately $5,800,000 more cash flow, net of capital expenditures, than was actually generated. For the years 1992 and 1993, the Old Plan assumed the cash flow generated by the Resorts Casino Hotel, net of capital expenditures, would be approximately $9 million more than currently projected. As the possibilities of a sale of the Paradise Island assets at other than a depressed price diminished, and the Company was unable to generate substantial excess cash flow from its operations, the principal amount of the Old Series Notes (originally $325,000,000) increased due to Old PIK Payments. Thus, it became evident that in order for the Company to reduce its debt to a level that could be supported by the cash flow reasonably anticipated on a continuing basis, it had to develop financial alternatives other than, or in conjunction with, a sale of its Paradise Island assets. The Company has been working with its financial advisers on developing and analyzing financial alternatives, as well as developing a long-term financial plan, since late 1991. The Paradise Island Purchase Agreement restricts the Company's ability to solicit or consider other offers for sale of the Paradise Island Business. Since obligations of approximately $518,000,000 under Old Series Notes will be due on April 15, 1994 and the Company currently does not have the means to repay them, management is unable to predict the future liquidity of the Company if the Restructuring is not accomplished by that date. If the Restructuring is accomplished, management believes that, although the Restructuring includes the disposition of the Paradise Island Business, the Restructuring will improve the Company's long-term liquidity and enhance its ability to meet its financial obligations as they become due since it will retain, after the Restructuring, $20,000,000 of cash, coin and currency. Although the Restructuring will result in a significant reduction in the Company's unrestricted cash and equivalents due to the distribution of Excess Cash to holders of Old Series Notes, the Company will have the $20,000,000 RIHF Senior Facility available for one year from the Effective Date, should the Company have unforeseen cash needs. The Company believes that the RIHF Senior Facility will serve as a safeguard if an emergency arises from current operations, or serve as a source of funds for a profitable investment opportunity. However, there can be no assurance that the Company will generate sufficient cash from operations to repay, when due, the principal amount of the New RIHF Mortgage Notes maturing in 2004 or the principal amount of the Showboat Notes maturing in 2000. As a result, the Company may be required to refinance such amounts as they become due and payable. There can be no assurance that any such refinancing would be consummated or, if consummated, would be in an amount sufficient to repay such obligations, particularly in light of the Company's high level of debt. If the Company is unable to effectuate such refinancings or renewals in the ordinary course of business, it may be required to sell equity interests in the Company. The sale of additional equity interests in the Company could result in substantial dilution of the interests of the Company's existing equity holders. There can be no assurance that such sales would be consummated or, if consummated, would be in an amount sufficient to repay such obligations in full. The failure to raise sufficient amounts of capital 173 from such sales could ultimately result in the Company's inability to meet its debt obligations, including its obligations under the New Debt Securities. Holders of the Old Series Notes are cautioned not to place undue reliance on the forecasts. See "Risk Factors -- Risks Relating to the Forecasts". RIH. At September 30, 1993 RIH's current liabilities exceeded its current assets by $302,989,000 because its notes payable to GRI in the amount of $325,000,000, which are due upon demand after April 15, 1994, are classified as current liabilities. RIH's working capital at September 30, 1993 included $30,820,000 of cash and equivalents. The day-to-day operations of RIH require approximately $10,000,000 of currency and coin on hand which amount varies by days of the week, holidays and seasons. Additional cash balances are necessary to meet current working capital needs. Pursuant to the Restructuring, the notes payable to GRI will be canceled. Also, RIH, through its affiliated notes payable to RIHF, will be the principal source of funds for servicing the New RIHF Mortgage Notes and the New RIHF Junior Mortgage Notes, as well as the RIHF Senior Facility Notes to the extent issued. Based on projected operating results, management believes that RIH's liquidity will continue to be satisfactory after the Restructuring; however, management can give no assurances as to RIH's future liquidity due to the possibility of unanticipated events and circumstances inherent in any projections. PARADISE ISLAND BUSINESS. At September 30, 1993 the current liabilities of the companies whose operations and properties compose the Paradise Island Business, on a combined basis, exceeded their combined current assets by $73,717,000. However, their combined current liabilities include a $50,000,000 demand note payable by RIB to RIH and $35,676,000 of advances from RII. At September 30, 1993 these companies, on a combined basis, had $12,870,000 of unrestricted cash and equivalents. The day-to-day operations of the Paradise Island Business require approximately $5,000,000 of currency and coin on hand which amount varies by days of the week, holidays and seasons. Thus, these companies' liquidity was satisfactory as long as RII advanced funds if and when needed, RII made no attempt to collect on its advances, and RIH did not demand payment of the note. As part of the Restructuring: (i) RIB's $50,000,000 demand note payable to RIH, the interest accrued thereon and advances from RII are to be assumed by GRI; (ii) the net intercompany liability from the U.S. Paradise Island Subsidiaries to RII will not be assumed by subsidiaries of SIHL, should the SIHL Sale occur, nor assumed by subsidiaries of PIRL, should the PIRL Spin-Off occur; and (iii) at the time the equity and assets and liabilities of members of the PIRL Group are transferred from the Company (through either the SIHL Sale or the PIRL Spin-Off), the group's collective working capital will amount to $12,000,000, of which at least $5,000,000 will be cash. Management of RII can make no representations concerning the liquidity of PIRL and the companies to become its subsidiaries on a prospective basis as they will no longer be affiliated with RII. RIHF. RIHF was formed for the purpose of issuing the New RIHF Mortgage Notes and the New RIHF Junior Mortgage Notes as part of the Restructuring, as well as the RIHF Senior Facility Notes to the extent issued. Also as part of the Restructuring, RIHF is to obtain notes receivable from RIH with terms that mirror the terms of the New Debt Securities and, to the extent issued, the RIHF Senior Facility Notes with the intent that RIH pay interest to RIHF on RIHF's interest payment dates so that RIHF will have cash available to make its interest payments on those dates. It is not anticipated that RIHF will have any other operations. CAPITAL EXPENDITURES AND OTHER USES OF FUNDS THE COMPANY. In recent years, capital expenditures have consistently been a significant use of financial resources. See capital additions by geographic and business segment in the table entitled "Identifiable Assets, Depreciation and Capital Additions" below. Pursuant to a capital expenditure 174 program developed by the Company in 1989, virtually all guest rooms and public areas at Resorts Casino Hotel have been refurbished. Also pursuant to this program, virtually all guest rooms in the Company's Paradise Island facilities were refurbished. Capital additions in 1990 for Resorts Casino Hotel amounted to $24,582,000 and included the completion of casino renovations which were started in 1989, certain infrastructure improvements and the refurbishment of approximately 150 guest rooms in the East Tower. In 1991, capital additions amounted to $22,734,000 as approximately 200 more guest rooms in the East Tower were refurbished and certain information systems were upgraded. In 1992, capital additions amounted to $15,548,000 and included the conversion of the parking garage from valet to self-parking, the construction of a covered walkway from the garage to the Resorts Casino Hotel, the continued renovation of guest rooms, the purchase of additional slot machines and improvements to the building's infrastructure. Capital additions in 1990 for the Paradise Island properties amounted to $9,324,000 and included refurbishment of guest rooms and the purchase and installation of 265 new slot machines as replacements for older models. In 1991, new carpeting was installed in the casino, a new casino management system was implemented and certain kitchen areas and additional guest rooms were renovated at a cost of $3,726,000. Capital additions for 1992 totalled $4,317,000, and included the installation of 37 new slot machines, expansion of the Paradise Island airport parking lot, upgrading existing computer equipment and restaurant renovations. The expenditures for both 1991 and 1992 were somewhat curtailed from those originally planned, in response to the operating performance of the Company's facilities on Paradise Island. During the first three quarters of 1993, the Company expended approximately $20,000,000 for capital improvements at Resorts Casino Hotel. The Company converted certain back-of-the-house space into an 8,000-square-foot simulcast facility, which houses eight betting windows and approximately 80 seats for simulcast betting operations, as well as 25 poker tables, various other table games and a full service bar. Also, certain casino renovations were completed, 280 slot machines were purchased, most of which will replace older models, and the new VIP slot and table player lounge, "Club Griffin", opened. In addition, guest room refurbishments continued and a new centralized mobile communications system was installed. In subsequent years recurring capital expenditures to keep existing facilities competitive can be expected to approximate $12,000,000 per year for the Resorts Casino Hotel. During the first three quarters of 1993, the Company expended approximately $3,000,000 on capital improvements at its facilities in The Bahamas. This included the purchase of 110 slot machines as replacements for older models as well as various maintenance projects. The Company continually monitors its capital expenditure plan and considers both the timing and the scope of certain projects to be flexible. Thus, economic developments and other factors may cause the Company to deviate from its present capital expenditure plans. Another significant use of funds in recent years has been recapitalization costs. Payments of legal, financial and other advisory fees and costs amounted to $5,585,000 in the first three quarters of 1993 and $2,460,000 in 1992 in contemplation of a possible restructuring of the Old Series Notes, and payments of $163,000, $2,954,000, $5,883,000 and $12,528,000 in the first three quarters of 1993 and the years 1992, 1991 and 1990, respectively, for costs associated with the Old Plan. RIH. Expenditures for capital improvements described above have been, by far, the largest use of funds for RIH for the periods discussed here. Recapitalization costs in 1990 and 1992 were another significant use of funds, as RIH pays RII its allocable portion (approximately one-third) of such costs as they are incurred. Other uses of RIH's funds are for CRDA deposits and bond purchases, as required by the New Jersey Casino Control Act, and repayments of advances from RII. PARADISE ISLAND BUSINESS. Expenditures for capital improvements noted above have consistently been a large use of funds for the Paradise Island Business during the periods discussed here. Recapitalization costs in 1990 and 1992 were another significant use of funds, as RIB pays RII its 175 allocable portion (approximately one-third) of such costs as they are incurred. In the period of 1990 through August 31, when these companies had more available cash, $14,878,000 was used to repay advances to RII and other affiliates. CAPITAL RESOURCES AND OTHER SOURCES OF FUNDS THE COMPANY. Since 1990, operations have been the most significant source of funds to the Company. In accordance with the Old Plan, in September 1990, RII received $12,345,000 cash from Merv Griffin as partial payment for the issuance of 4,400,000 shares of RII Common Stock. An additional $2,655,000 was received in October 1990 on behalf of certain holders of the Company's previously outstanding public debt in consideration for the issuance to them of an aggregate of 500,000 shares of RII Common Stock. The Griffin Group owes the Company $5,318,333 under the Griffin Group Note. The next payment required under the New Griffin Services Agreement ($2,310,000) is to be applied to reduce the balance due under the Griffin Group Note. The then remaining balance of the Griffin Group Note is to be collected by RII and distributed to holders of Old Series Notes as part of Excess Cash. As part of the Restructuring, the Company will have the $20,000,000 RIHF Senior Facility available for one year from the Effective Date for the Company's working capital and general corporate purposes. RIH. Since 1990 operations have been the most consistent significant source of funds for RIH. Advances from RII and affiliates have also been a source of funds in certain periods. PARADISE ISLAND BUSINESS. Since 1990 cash flows from operations have been adversely affected by a number of factors which are discussed below under "Results of Operations". During 1990 and 1991 sales of assets were a significant source of funds. These included assets previously used in PIA's amphibious airline operation ($6,652,000), parcels of land on Paradise Island ($3,979,000), and helicopters and other aircraft owned by ANTL which had been primarily used in the Company's Atlantic City casino/hotel operations ($2,736,000). RESULTS OF OPERATIONS GENERAL Included in the discussion below are comments on the Paradise Island Business which, pursuant to the Restructuring, is to be disposed of. The Paradise Island Business includes the casino/hotel on Paradise Island, The Bahamas, the real estate located on Paradise Island, The Bahamas and the Company's airline operations. 176 REVENUES
FOR THE YEAR ENDED DECEMBER 31, -------------------------------------------------- 1990 FOR THE THREE QUARTERS ------------------------ ENDED SEPTEMBER 30, THROUGH FROM ------------------------ AUGUST 31 SEPTEMBER 1 1991 1992 1992 1993 ----------- ----------- ----------- ----------- ----------- ----------- (IN THOUSANDS) Casino/hotel: Atlantic City, New Jersey: Casino....................................... $ 139,466 $ 66,259 $ 218,881 $ 233,780 $ 180,510 $ 187,803 Rooms........................................ 5,093 2,599 8,074 8,766 6,688 5,370 Food and beverage............................ 10,492 5,320 16,406 16,056 12,801 12,340 Other casino/hotel........................... 3,948 2,041 4,113 4,138 3,081 3,301 ----------- ----------- ----------- ----------- ----------- ----------- 158,999 76,219 247,474 262,740 203,080 208,814 ----------- ----------- ----------- ----------- ----------- ----------- Paradise Island, The Bahamas: Casino....................................... 43,321 19,940 61,003 66,120 44,171 48,685 Rooms........................................ 31,840 9,435 33,173 30,235 23,984 22,622 Food and beverage............................ 29,317 11,207 36,053 32,851 25,157 23,593 Other casino/hotel........................... 11,584 4,895 17,563 17,890 13,457 14,412 ----------- ----------- ----------- ----------- ----------- ----------- 116,062 45,477 147,792 147,096 106,769 109,312 ----------- ----------- ----------- ----------- ----------- ----------- Total casino/hotel......................... 275,061 121,696 395,266 409,836 309,849 318,126 ----------- ----------- ----------- ----------- ----------- ----------- Real estate related: Atlantic City, New Jersey...................... 4,759 2,426 7,542 7,813 5,845 6,028 Paradise Island, The Bahamas................... 3,721 212 213 213 ----------- ----------- ----------- ----------- ----------- ----------- 8,480 2,638 7,542 8,026 6,058 6,028 ----------- ----------- ----------- ----------- ----------- ----------- Airline.......................................... 11,071 6,083 18,234 22,483 16,841 16,618 Other segments................................... 1,183 27 97 162 124 109 Intersegment eliminations........................ (1,823) (853) (2,896) (3,573) (2,618) (3,023) ----------- ----------- ----------- ----------- ----------- ----------- Revenues from operations......................... $ 293,972 $ 129,591 $ 418,243 $ 436,934 $ 330,254 $ 337,858 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Note 2 of Notes to Consolidated Financial Statements of RII describes a change in entity and related presentation for periods presented. FIRST THREE QUARTERS 1993 COMPARED TO FIRST THREE QUARTERS 1992 CASINO/HOTEL -- ATLANTIC CITY, NEW JERSEY Casino revenues were up $7,293,000 for the first three quarters of 1993. This increase was due to slot win, poker revenue and simulcast commissions. Slot win increased as the effect of an increase in amounts wagered by patrons offset a decrease in the hold percentage (ratio of casino win to total amount wagered for slots or total amount of chips purchased for table games). The Company began offering poker and simulcast betting on June 28, 1993. Although total occupancy was relatively flat for the first three quarters of 1993 as compared to the same period of 1992, the number of complimentary rooms provided to casino patrons increased. The reduced occupancy from rooms sold resulted in lower room revenues and contributed to the decrease in food and beverage revenues. CASINO/HOTEL -- PARADISE ISLAND, THE BAHAMAS Casino revenues increased by $4,514,000 for the first three quarters of 1993. This improvement was due to increases in both slot win and table game win. The increased table game win resulted primarily from the effect of increased amounts wagered by patrons and, to a lesser extent, from an improved hold percentage. 177 Room revenues and food and beverage revenues were lower in the first three quarters of 1993 due to a reduction in occupancy. The Restructuring contemplates the disposition of the Company's Paradise Island assets and operations. REAL ESTATE RELATED The Paradise Island real estate related revenues in 1992 resulted from the sale of a residential lot on Paradise Island. AIRLINE Airline revenues decreased $223,000 for the first three quarters of 1993. This resulted as decreased revenues from contracted training, flight and maintenance work for non-affiliated parties more than offset a slight increase in passenger revenues. Though passenger revenues were up slightly for the first three quarters of 1993, competition for passenger revenues increased with the addition of a new air shuttle service between Miami and Nassau in March 1993. The Restructuring contemplates the disposition of the Company's airline operations. COMPARISON OF THE YEARS 1992, 1991 AND 1990 CASINO/HOTEL -- ATLANTIC CITY, NEW JERSEY Casino revenues from the Resorts Casino Hotel increased by $14,899,000 in 1992 and $13,156,000 in 1991. For both 1992 and 1991, the increase resulted primarily from increased slot revenues. The improvement in slot revenues resulted from increases in amounts wagered by patrons, while the slot hold percentage declined. This reflects management's decision to decrease the slot hold percentage in order to attract more slot players and encourage increased slot play per player as well as marketing programs which targeted slot players. In 1991 the Company's table game revenues were up slightly. In 1992 the Company's table game revenues declined as did the entire Atlantic City casino industry's. The Company's decline of 6.5% was greater than the industry's decline of 3.3% and can be attributed to a decrease in amounts wagered and, to a lesser extent, a decrease in the table game hold percentage. The Company is adjusting its marketing focus in an effort to recapture some of its lost market share in table revenues by increasing the use of star headliners and changing the revue show more frequently. Also affecting the comparison of gaming revenues between 1991 and 1990 is the fact that portions of the casino were closed for renovations during the first half of 1990. CASINO/HOTEL -- PARADISE ISLAND, THE BAHAMAS Revenues from the Company's Paradise Island casino/hotel operations decreased by $696,000 in 1992 and by $13,747,000 in 1991. In 1992, increased casino revenue was more than offset by decreased room revenue and food and beverage revenue. Casino revenue was up due to increases in both slot win and table game win. The increase in table game revenues reflected an increase in drop (amount of chips purchased), the favorable effect of which more than offset the impact of a decline in the table game hold percentage. The decrease in room revenue was due to reduced room rates and occupancy, net of complimentary rooms. The reduction in occupancy also had an adverse effect on food and beverage revenue. Total air arrivals to the Paradise -- New Providence Island area were down in 1992 by 10%, which management of the Company attributes to the continuing economic recession and reduced air service available. Air arrivals to this area were already down in 1991 as compared to the prior year due to factors noted below. In addition, the Company's competitors reduced room rates in 1992 and the Company, in an effort to maintain occupancy, did the same. In 1991, all facets of the Company's Paradise Island operations suffered due to the economic recession experienced during that year. Also, the tour and travel industry in general was significantly affected by the Persian Gulf conflict in early 1991. The impact of this on the Company's Bahamian operations was severe, as this occurred during the first quarter, which is typically the period when the Company realizes its highest revenues and earnings in The Bahamas, due to seasonal factors. 178 REAL ESTATE RELATED Atlantic City real estate related revenues in 1992, 1991 and 1990 represent rent from ACS pursuant to the Showboat Lease. Commencing July 1, 1990, such rent receipts were restricted for the payment of interest on the Showboat Notes. See Note 7 of Notes to Consolidated Financial Statements of RII. The Paradise Island real estate related revenues in 1992 resulted from the sale of a residential lot on Paradise Island. Substantially all the Paradise Island real estate related revenues for 1990 resulted from the sale of approximately seven acres of beach front property near the Company's Ocean Club Golf & Tennis Resort on Paradise Island. AIRLINE Airline revenues increased $4,249,000 in 1992 and $1,080,000 in 1991. The increase in 1992 was due primarily to an increase in number of passengers flown as other airlines ceased their flights or reduced the frequency of their flights to The Bahamas and the Company expanded its flight schedule. Also, 1992 includes revenues from contracted training, flight and maintenance work for non-affiliated parties. The increase in 1991 resulted from an increase in passengers flown due to reasons noted above as well as an increase in average fare. CONTRIBUTION TO CONSOLIDATED LOSS BEFORE INCOME TAXES AND EXTRAORDINARY ITEM
FOR THE YEAR ENDED DECEMBER 31, -------------------------------------------------- 1990 FOR THE THREE QUARTERS -------------------------- ENDED SEPTEMBER 30, THROUGH FROM ---------------------- AUGUST 31 SEPTEMBER 1 1991 1992 1992 1993 ------------ ------------ ---------- ---------- ---------- ---------- (IN THOUSANDS) Casino/hotel: Atlantic City, New Jersey.................. $ 4,179 $ 2,412 $ 14,817 $ 21,051 $ 19,421 $ 15,804 Paradise Island, The Bahamas*.............. 7,351 (6,166) (5,707) (5,592) (6,132) (2,974) ------------ ------------ ---------- ---------- ---------- ---------- 11,530 (3,754) 9,110 15,459 13,289 12,830 ------------ ------------ ---------- ---------- ---------- ---------- Real estate related: Atlantic City, New Jersey.................. 2,803 1,947 5,911 6,425 4,741 4,900 Paradise Island, The Bahamas............... 188 59 (17) (17) ------------ ------------ ---------- ---------- ---------- ---------- 2,991 2,006 5,911 6,408 4,724 4,900 ------------ ------------ ---------- ---------- ---------- ---------- Airline*..................................... 5 (4) 83 77 314 (14) Other segments............................... (68) (156) (148) (70) (53) (94) Unallocated corporate expense................ (918) 694 1,080 (372) 1,833 3,058 ------------ ------------ ---------- ---------- ---------- ---------- Earnings (loss) from operations.................................. 13,540 (1,214) 16,036 21,502 20,107 20,680 Other income (deductions): Interest income............................ 2,318 1,740 4,824 4,969 2,311 2,485 Interest expense........................... (434) (5,476) (31,157) (40,856) (30,795) (38,336) Amortization of debt discount.............. (8,581) (32,105) (37,569) (26,509) (37,320) Recapitalization costs..................... (187,018) (2,848) (2,337) (4,879) ------------ ------------ ---------- ---------- ---------- ---------- Loss before income taxes and extraordinary item........................................ $ (171,594) $ (13,531) $ (42,402) $ (54,802) $ (37,223) $ (57,370) ------------ ------------ ---------- ---------- ---------- ---------- ------------ ------------ ---------- ---------- ---------- ----------
* The Paradise Island casino/hotel segment subsidized the operation of PIA in the following amounts for the periods indicated: through August 31, 1990 -- $1,320,000; from September 1, 1990 -- $571,000; 1991 -- $760,000; and first three quarters of 1993 -- $813,000. - ------------------------ Note 2 of Notes to Consolidated Financial Statements of RII describes a change in entity and related presentation for periods presented. 179 FIRST THREE QUARTERS 1993 COMPARED TO FIRST THREE QUARTERS 1992 CASINO/HOTEL -- ATLANTIC CITY, NEW JERSEY Casino, hotel and related operating results decreased by $3,617,000 in the first three quarters of 1993 as increased revenues were offset by a net increase in operating expenses. For the first three quarters of 1993 the most significant increases in operating expenses were casino promotional costs ($4,800,000), payroll and related costs ($3,600,000), casino operating costs ($1,700,000), fees to the Griffin Group ($1,700,000) and depreciation ($1,600,000). The increase in casino promotional costs was due primarily to a new program which rewards slot players by giving cash back to patrons based on their level of play. Since the introduction of the "cash-back" program, the Company has reduced cash giveaways to bus patrons and through other promotional mailings. Payroll and related costs and casino operating costs increased due primarily to the increased staffing levels and other operating costs associated with the new simulcast and poker facility. The fees paid to the Griffin Group are for services rendered under the New Griffin Services Agreement described in Note 17 of Notes to Consolidated Financial Statements of RII. The most significant cost reductions were in the performance incentive bonus accrual ($2,900,000) and food and beverage costs ($1,200,000). For a discussion of competition in the Atlantic City casino/hotel industry see "Business of the Company -- Atlantic City -- Competition". CASINO/HOTEL -- PARADISE ISLAND, THE BAHAMAS Casino, hotel and related operating results improved by $3,158,000 for the first three quarters of 1993. This resulted from increased revenues and a net decrease in operating expenses. The most significant decrease in operating expenses was in payroll and related costs ($1,800,000) as staffing levels were reduced in response to lower occupancy. The most significant increases in costs were in gaming taxes and fees ($900,000) and in the subsidy of PIA ($813,000). Gaming taxes and fees increased relative to the increase in casino revenues. The subsidy of PIA, RII's subsidiary which provides air service between south Florida and the Company's Paradise Island Airport, increased as PIA's operating results declined. See "Airline" below. For a discussion of competition in The Bahamas see "Business of the Company - -- The Bahamas -- Competition". AIRLINE Airline operating results before the subsidy from the Paradise Island casino/hotel segment decreased by $1,141,000 for the first three quarters of 1993 as results of both the scheduled and charter flights and the contract work for non-affiliated parties were down ($600,000 and $500,000, respectively). A slight increase in flight revenues was more than offset by a net increase in operating, particularly maintenance, costs. The decrease in contract work largely resulted from a decline in revenues from such activity. OTHER INCOME (DEDUCTIONS) THE COMPANY. The increase in interest expense for the first three quarters of 1993 was due to the net effect of (i) increased principal amounts of debt outstanding, as the Company has issued additional Old Series Notes to satisfy its interest obligations on the Old Series Notes, (ii) an increase in the stated interest rate on the Old Series A Notes and (iii) changes in the market value of the Old Series Notes, as the Company records interest at the estimated market value of additional Old Series Notes to be issued in satisfaction of its interest obligations. Interest expense is expected to increase significantly in the next several months as, subsequent to October 15, 1993, the Company will be recording interest expense on the Old Series Notes at the stated rate in lieu of a discounted rate to reflect market value, as the Company's option to payment-in-kind ("PIK") interest is no longer available. Amortization of debt discounts increased primarily due to the additional discounts associated with Old Series Notes issued in satisfaction of interest obligations. 180 The Company's interest expense and amortization of debt discounts are expected to be significantly less after the Restructuring. RIH. RIH's interest income has been largely attributable to the $50,000,000 note receivable from RIB, which bears interest at 13.5% per year. This note is to be cancelled as part of the Restructuring. RIH's interest expense, in recent years, has been limited to minor amounts incurred on capitalized lease obligations. After the Restructuring RIH is to bear, indirectly, the interest on the New RIHF Mortgage Notes and the New RIHF Junior Mortgage Notes and, to the extent issued, the RIHF Senior Facility Notes, through notes payable to RIHF, the terms of which will mirror the terms of such debt of RIHF. COMPARISON OF THE YEARS 1992, 1991 AND 1990 CASINO/HOTEL -- ATLANTIC CITY, NEW JERSEY Casino, hotel and related operating results improved by $6,234,000 for 1992 and by $8,226,000 for 1991. For 1992 increased revenues discussed above were partially offset by a net increase in operating expenses. The most significant increases in operating expenses were payroll and related costs ($3,500,000), depreciation ($2,300,000), casino win tax ($1,400,000) and performance incentive bonuses ($1,200,000). The increase in payroll and related costs was due to increases in wages, payroll taxes and union benefits. For 1992 the most significant decrease in net operating expenses was the provision for doubtful receivables ($2,100,000). For 1991 increased revenues discussed above were partially offset by a net increase in operating expenses. The most significant increases in operating expenses were management fees ($2,500,000), performance incentive bonuses ($2,000,000), advertising ($1,400,000), provision for doubtful receivables ($1,400,000) and food and beverage ($1,300,000). The increase in management fees resulted from a change in the Company's method of allocating overhead expenses from corporate to the operating properties, which was effective September 1, 1990. The increase in advertising cost was primarily attributable to a new television campaign. The increase in food and beverage costs resulted primarily from increased patronage of the Beverly Hills Buffet. The Beverly Hills Buffet offers all you can eat for a price which is on average below the cost to the Company. This reflected the Company's change in marketing emphasis, whereby the Company targeted slot and mid-level players by featuring programs that provide attractive values in food, beverage and entertainment. For 1991 the most significant decreases in operating expenses were depreciation ($3,800,000) and entertainment ($2,700,000). The reduction in depreciation was due to the revaluation of the Company's assets in conjunction with the reorganization in 1990. The reduction in entertainment costs resulted from a shift in emphasis from headliner shows to a revue format in conjunction with the change in the targeted markets discussed above. CASINO/HOTEL -- PARADISE ISLAND, THE BAHAMAS Casino, hotel and related operating results improved by $115,000 for 1992 and decreased by $6,892,000 for 1991. For 1992 decreased revenues discussed above were more than offset by net decreased operating expenses. The most significant reductions in operating expenses were food, beverage and other direct costs ($1,000,000), depreciation ($800,000), payroll and related costs ($800,000) and the subsidy of PIA ($760,000). The reduced occupancy level and the reduction in number of visitors to the area contributed to an overall reduction in operating costs throughout the facility. The subsidy of PIA decreased as PIA's operating results improved. See "Airline." For 1992 the most significant increases in operating expenses were marketing and promotional costs ($1,400,000) and gaming taxes and fees ($1,000,000). The Company increased its marketing and promotional efforts over the prior year to attract a greater number of patrons to its facilities. 181 For 1991 decreased revenues discussed above were partially offset by a net decrease in operating expenses. The most significant reductions in operating expenses were payroll and related costs ($4,000,000), food, beverage and other direct costs ($1,900,000), casino promotional costs ($1,800,000) and a reduction in the subsidy of PIA ($1,131,000). Due to the factors discussed above, in early 1991 occupancy levels at the Company's Paradise Island properties were such that the Company implemented a cost containment program which included a reduction in room availability, reduced operating schedules of the casino and food and beverage outlets, and payroll reductions. By the summer of 1991, the Company's facilities returned to their normal operating schedules. The reduction in casino promotional costs is due primarily to increased efforts to monitor complimentaries given to casino customers. The subsidy of PIA decreased as PIA's operating results improved due to its previously noted increased revenues. The most significant increase in costs for 1991 was depreciation ($1,800,000). REAL ESTATE RELATED The comparison of earnings from Atlantic City real estate related activities is affected by increases in rental income under the Showboat Lease. The favorable results in 1991 also reflect the elimination of property tax expense on a tract of land which the Company had under option. Such option was terminated in 1990. The Paradise Island real estate related earnings represent the net loss in 1992 and the net gain in 1990 on the sales of Paradise Island properties mentioned above. AIRLINE Airline operating results before the subsidy from the Paradise Island casino/hotel segment increased by $754,000 in 1992 and by $1,213,000 in 1991. For 1992 the increase resulted primarily from the contract work for non-affiliated parties noted above. For 1991 the increase was primarily due to the increase in passenger revenues described above. UNALLOCATED CORPORATE EXPENSE Unallocated corporate expense increased by $1,452,000 in 1992 and decreased by $1,304,000 in 1991. Effective September 1, 1990, the Company changed its method of allocating certain overhead costs from corporate to certain operations. This new allocation method, based on a percentage of certain gross revenues, accounted for a favorable variance in unallocated corporate expense of $2,300,000 in 1991. This was partially offset by an increase in 1991 in the cost of directors and officers liability insurance ($900,000). In 1992, the Company recorded charges of approximately $2,900,000 in connection with the start-up, management and subsequent termination of an agreement to manage a casino located in Black Hawk, Colorado. The impact of this charge was partially offset by a reduction in certain corporate insurance costs ($600,000) and an increase in the amount of overhead expense allocated from corporate to certain operations ($600,000). OTHER INCOME (DEDUCTIONS) THE COMPANY. The Company did not accrue interest or amortize discounts on its previously outstanding public debt during 1990 while it was involved in bankruptcy proceedings. RII began accruing interest and amortizing discounts on its Old Series Notes and the Showboat Notes effective October 1, 1990, the initial distribution date of those securities. The increase in interest expense in 1992 was due to a combination of: (i) an increase in the stated interest rates of the Old Series Notes; (ii) increased principal amounts of debt outstanding, as RII has issued additional Old Series Notes to satisfy its interest obligations on the Old Series Notes; and (iii) changes in the market value of the Old Series Notes, as RII records interest at the estimated 182 market value of additional Old Series Notes to be issued in satisfaction of its interest obligations. Amortization of debt discounts increased primarily due to the additional discounts associated with Old Series Notes issued in satisfaction of interest obligations. Recapitalization costs in 1992 resulted from the Company's retention of financial advisers to assist in the development and analysis of financial alternatives which would enable the Company to reduce its future debt service requirements. For a description of recapitalization costs in 1990 see Note 2 of Notes to Consolidated Financial Statements of RII. RIH. For a description of recapitalization costs and the affiliated bad debt write-off in 1990, see Note 2 of Notes to Consolidated Financial Statements of RIH. PARADISE ISLAND BUSINESS. For a description of recapitalization costs and the affiliated bad debt write-off in 1990, see Note 2 of Notes to Combined Financial Statements of PIRL Group. INCOME TAXES THE COMPANY. See Note 13 of Notes to Consolidated Financial Statements of RII for an explanation of changes in the Company's effective income tax rate during the years 1990 through 1992 and the section on "Income Taxes" in Note 1 of Notes to Consolidated Financial Statements of RII for a discussion of the anticipated effects of the 1993 adoption of a new standard of accounting for income taxes. RIH. See Note 11 of Notes to Consolidated Financial Statements of RIH for a discussion of RIH's income tax expense for the years 1990 through 1992 and Note 14 for a discussion of the effects of the 1993 adoption of a new standard of accounting for income taxes. PARADISE ISLAND BUSINESS. See Note 10 of Notes to Combined Financial Statements of PIRL Group for a discussion of income tax accounting for the combined group and the section on "Income Taxes" in Note 1 of Notes to Combined Financial Statements of PIRL Group for a discussion of the anticipated effects of the 1993 adoption of a new standard of accounting for income taxes. 183 IDENTIFIABLE ASSETS, DEPRECIATION AND CAPITAL ADDITIONS (IN THOUSANDS)
IDENTIFIABLE ASSETS ------------------------------------------ LESS ACCUMULATED DEPRECIATION AND GROSS VALUATION ASSETS ALLOWANCES NET ASSETS DEPRECIATION ----------- ---------------- ----------- ------------- CAPITAL ADDITIONS ----------- FOR THE YEAR ENDED DECEMBER 31, 1992 DECEMBER 31, 1992 ------------------------------------------ -------------------------- Casino/hotel: Atlantic City, New Jersey..... $ 212,668 $ (26,644) $ 186,024 $ 11,392 $ 15,548 Paradise Island, The Bahamas.. 208,899 (33,899) 175,000 12,973 4,317 ----------- -------- ----------- ------------- ----------- 421,567 (60,543) 361,024 24,365 19,865 ----------- -------- ----------- ------------- ----------- Real estate related: Atlantic City, New Jersey..... 110,824 (68) 110,756 29 Paradise Island, The Bahamas.. 33,414 33,414 ----------- -------- ----------- ------------- ----------- 144,238 (68) 144,170 29 ----------- -------- ----------- ------------- ----------- Airline......................... 12,923 (1,995) 10,928 805 4 Other segments.................. 1,542 (34) 1,508 13 Corporate (A)................... 51,605 (285) 51,320 110 16 ----------- -------- ----------- ------------- ----------- $ 631,875 $ (62,925) $ 568,950 $ 25,322 $ 19,885 ----------- -------- ----------- ------------- ----------- ----------- -------- ----------- ------------- ----------- FOR THE YEAR ENDED DECEMBER 31, 1991 DECEMBER 31, 1991 ------------------------------------------ -------------------------- Casino/hotel: Atlantic City, New Jersey..... $ 196,022 $ (16,680) $ 179,342 $ 9,084 $ 22,734 Paradise Island, The Bahamas.. 207,924 (21,684) 186,240 13,782 3,726 ----------- -------- ----------- ------------- ----------- 403,946 (38,364) 365,582 22,866 26,460 ----------- -------- ----------- ------------- ----------- Real estate related: Atlantic City, New Jersey..... 112,900 (26) 112,874 19 Paradise Island, The Bahamas.. 33,400 33,400 ----------- -------- ----------- ------------- ----------- 146,300 (26) 146,274 19 ----------- -------- ----------- ------------- ----------- Airline......................... 12,934 (1,163) 11,771 809 280 Other segments.................. 1,549 (20) 1,529 14 Corporate (A)................... 42,909 (175) 42,734 106 10 ----------- -------- ----------- ------------- ----------- $ 607,638 $ (39,748) $ 567,890 $ 23,814 $ 26,750 ----------- -------- ----------- ------------- ----------- ----------- -------- ----------- ------------- -----------
FOR THE YEAR ENDED DECEMBER 31, 1990 ------------------------------------------------------ FROM THROUGH FROM THROUGH DECEMBER 31, 1990 SEPTEMBER 1 AUGUST 31 SEPTEMBER 1 AUGUST 31 ------------------------------------------ ------------- ----------- ------------- ----------- Casino/hotel: Atlantic City, New Jersey..... $ 173,527 $ (7,671) $ 165,856 $ 1,902 $ 10,772 $ 5,307 $ 19,275 Paradise Island, The Bahamas.. 198,825 (8,256) 190,569 3,878 8,153 4,320 5,004 ----------- -------- ----------- ------------- ----------- ------------- ----------- 372,352 (15,927) 356,425 5,780 18,925 9,627 24,279 ----------- -------- ----------- ------------- ----------- ------------- ----------- Real estate related: Atlantic City, New Jersey..... 113,376 (6) 113,370 6 151 Paradise Island, The Bahamas.. 34,075 34,075 ----------- -------- ----------- ------------- ----------- ------------- ----------- 147,451 (6) 147,445 6 151 ----------- -------- ----------- ------------- ----------- ------------- ----------- Airline......................... 11,568 (319) 11,249 370 746 35 56 Other segments.................. 2,067 (116) 1,951 8 91 Corporate (A)................... 51,744 (68) 51,676 68 134 1 86 ----------- -------- ----------- ------------- ----------- ------------- ----------- $ 585,182 $ (16,436) $ 568,746 $ 6,232 $ 20,047 $ 9,663 $ 24,421 ----------- -------- ----------- ------------- ----------- ------------- ----------- ----------- -------- ----------- ------------- ----------- ------------- ----------- - ------------------------------ (A) Includes cash equivalents, restricted cash equivalents not pledged for operations, and other corporate assets.
Note 2 of Notes to Consolidated Financial Statements of RII describes a change in entity and related presentation for periods presented. 184 BUSINESS OF THE COMPANY ATLANTIC CITY GAMING FACILITIES The Resorts Casino Hotel has a casino of approximately 60,000 square feet and a racetrack simulcast betting and poker area of approximately 8,000 square feet. In July 1993 these gaming areas contained 51 blackjack tables, 25 poker tables, 13 dice tables, 10 roulette tables, 4 baccarat tables, 2 pai gow poker tables, 1 big six wheel, 1 sic bo table, 1,859 slot machines and 8 betting windows for race book. As described below under "Capital Improvements", the casino and hotel facilities at the Resorts Casino Hotel have undergone extensive renovation and remodeling pursuant to a major capital improvements program. The Resorts Casino Hotel is owned and operated by RII's subsidiary, RIH. During 1992, the Company had a total gross win (the amount won before all costs and expenses, including taxes) from its Atlantic City casino of $233,780,000. This compares to total gross wins of $218,881,000 for 1991 and $205,725,000 for 1990. Casino gaming in Atlantic City is highly competitive and is strictly regulated under the Casino Control Act, which affects virtually all aspects of the Company's Atlantic City casino operations. See "Competition" and "Regulation and Gaming Taxes and Fees -- New Jersey" below. RESORT AND HOTEL FACILITIES The Resorts Casino Hotel commenced operations in May 1978 and was the first casino/hotel opened in Atlantic City. This was accomplished by the conversion of the former Haddon Hall Hotel, a classic hotel structure originally built in the early 1900's, into a casino/hotel. It is situated on approximately seven acres of land with approximately 310 feet of Boardwalk frontage overlooking the Atlantic Ocean. The Resorts Casino Hotel consists of two hotel towers, the 15-story East Tower and the nine-story North Tower. In addition to the casino facilities described above, the casino/hotel complex includes approximately 670 guest rooms and suites, the 1,400-seat Superstar Theatre, eight restaurants, three cocktail and entertainment lounges, an indoor swimming pool and health club, and retail stores. The complex also has approximately 50,000 square feet of convention facilities, including ten large meeting rooms and a 16,000-square-foot ballroom. During 1992, the Company added two floors to its multi-storied parking garage and converted it from a valet-parking facility into a self-parking facility which accommodates approximately 700 vehicles. This parking facility is connected to the Resorts Casino Hotel by a covered walkway. The Company believes that the conversion to self-parking and the remodeling of its garage encourages increased patronage and enhances the Company's competitive position. The Company continues to offer valet parking at nearby, uncovered leased lots that provide space for approximately 700 automobiles and has an additional leased lot which provides self-parking for approximately 100 cars. Consistent with industry practice, the Company reserves a portion of its hotel rooms and suites as complimentary accommodations for high-level casino wagerers. For 1992, 1991 and 1990 the average occupancy rates, including complimentary rooms which were primarily provided to casino patrons, were 93%, 90% and 84%, respectively. The average occupancy rate and weighted average daily room rental, excluding complimentary rooms, were 57% and $61, respectively, for 1992. This compares with 51% and $67, respectively, for 1991, and 55% and $66, respectively, for 1990. CAPITAL IMPROVEMENTS The Company has pursued a major capital improvements program since 1989 in order to compete more effectively in the Atlantic City market. During the first three quarters of 1993 the Company expended approximately $20,000,000 for capital improvements at the Resorts Casino Hotel. The Company converted certain back-of-the-house space into a simulcast facility, which houses eight betting windows and approximately 80 seats for simulcast betting operations, as well as 25 poker tables, various other table games and a full service bar. Also, certain casino renovations were completed, 280 slot machines were purchased, most of which will replace older models, and the new VIP 185 slot and table player lounge, "Club Griffin", opened. In addition, guest room refurbishments continued and a new centralized mobile communications system was installed. From 1989 through 1992 capital additions at Resorts Casino Hotel totalled approximately $80,000,000. Improvements included refurbishment of rooms in both the East Tower and the North Tower, casino renovations, purchase of new slot machines and gaming equipment, conversion of the parking garage to self-parking, restaurant remodeling and upgrading, renovation of public areas, installation of new computer equipment and management information systems, as well as improvements to the infrastructure such as elevators, air conditioning, and exterior renovations and painting. With the anticipated completion of the capital improvements program in 1993, management expects capital expenditures in 1994 to decline to approximately $12,000,000 which will be primarily for maintenance of existing facilities. EMPLOYEES During 1992, the Company had a maximum of approximately 3,700 employees located in Atlantic City. The Company believes that its employee relations are satisfactory. In Atlantic City, approximately 1,400 of the Company's employees are represented by unions. Of these employees, approximately 1,200 are represented by the Hotel Employees and Restaurant Employees International Union Local 54, whose contract expires in September 1994. There are several other union contracts covering Atlantic City union employees. In Atlantic City, all the Company's casino employees must be licensed under the Casino Control Act. Casino employees are subject to more stringent requirements than non-casino employees, including hotel employees who must be registered with the Casino Control Commission. Each casino employee must meet applicable standards pertaining to such matters as financial responsibility, good character, ability, casino training and experience, and New Jersey residency. MARKETING The Company continues to take advantage of the celebrity status of Merv Griffin, who is actively engaged in the marketing of the Resorts Casino Hotel. Mr. Griffin, who is Chairman of the Board of RII, is featured in television commercials and in print advertisements. Merv Griffin also produced live at Resorts Casino Hotel "Merv Griffin's New Year's Eve Special 1992" which was broadcast nationwide through approximately 240 stations. Mr. Griffin's continued participation in the operations and marketing of the Company is ensured by the New Griffin Services Agreement until at least September 1996. The Company's marketing strategy is designed to increase the attractiveness of the Resorts Casino Hotel to the mid and premium-level slot and table game players. For slot players, the Company has: (i) introduced a new "cash-back" program which rewards players with cash refunds or complimentaries based on their volume of play; (ii) expanded and upgraded "Hollywood Hills", its high-limit slot area; and (iii) opened a VIP slot and table player lounge, "Club Griffin". Also, in an effort to attract mid and premium table game players, the Company has established customer development teams to increase opportunities in this market area. The entertainment program has also been retargeted to attract the mid and premium players by increasing the use of star headliners and changing the revue show more frequently in 1993 than had been done in recent years. The revue that had been offered since January 1993 was replaced with a new revue that opened in September 1993. TRANSPORTATION FACILITIES The lack of an adequate transportation infrastructure in the Atlantic City area continues to negatively affect the industry's ability to attract patrons from outside a core geographic area. In 1989 the terminal at the Atlantic City International Airport (located approximately 12 miles from Atlantic City) was expanded to handle additional air carriers and large passenger jets, but scheduled service to that airport from major cities by national air carriers remains extremely limited. Also, in 1989 Amtrak express rail service to Atlantic City commenced from Philadelphia, New York, Washington and other major cities in the northeast. This was expected to improve access to Atlantic City and expand the 186 geographic size of the Atlantic City casino industry's marketing base. However, there has been no significant change in the industry's marketing base or in the principal means of transportation to Atlantic City, which continues to be automobile and bus. The resulting geographic limitations and traffic congestion have restricted Atlantic City's growth as a major destination resort. However, the Company understands that the South Jersey Transportation Authority has begun work on a comprehensive master plan for the future development of the airport which it expects to complete in 1994. The State of New Jersey acquired the airport terminal and surrounding property from Atlantic City in 1991. The Company continues to utilize day-trip bus programs. A non-exclusive easement enables the Resorts Casino Hotel to utilize a bus tunnel under the Taj Mahal, which connects Pennsylvania and Virginia Avenues, and a service road exit from the bus tunnel. This reduces congestion around the Pennsylvania Avenue bus entrance to the Resorts Casino Hotel. To comfortably accommodate its bus patrons, the Company has a waiting facility which is located indoors, adjacent to the casino, and offers various amenities. PROPOSED NEW CONVENTION CENTER In January 1992, the State of New Jersey enacted legislation that authorizes a financing plan for the construction of a new convention center to be located on a 30-acre site next to the Atlantic City train station at the base of the Atlantic City Expressway. The Company understands that the proposed convention center will have 500,000 square feet of exhibit space and an additional 104,200 square feet of meeting rooms. Construction of the new convention center began in early 1993 and it is anticipated that it will be completed within three years. The convention center has been reported to be part of a broader plan that includes additional expansion of the Atlantic City International Airport and other improvements in Atlantic City. Officials have commented upon the need for improved commercial air service into Atlantic City as a factor in the success of the new convention center. Although these developments are viewed as positive and favorable to the future prospects of the Atlantic City gaming industry, the Company, at this point, can make no representations as to whether, or to what extent, its operations may be improved by the completion of the proposed convention center and airport expansion projects. COMPETITION Competition in the Atlantic City casino/hotel industry is intense. Casino/hotels compete primarily on the basis of promotional allowances, entertainment, advertising, services provided to patrons, caliber of personnel, attractiveness of the hotel and casino areas and related amenities, and parking facilities. The Resorts Casino Hotel competes directly with 11 casino/hotels in Atlantic City which, in the aggregate, contain approximately 768,000 square feet of casino space, including simulcast betting and poker rooms, and 8,700 hotel rooms. The total amount of gaming area of these competing properties is expected to increase as the Showboat Casino has recently announced plans, although preliminary, for a sizable addition to its casino gaming floor. Also, several competitors are expected to add simulcasting rooms which are permitted to house poker and other authorized table games. Unlike casino gaming floor area, which is regulated based on the number of guest rooms at a particular property, the size of simulcasting rooms is not limited. The Resorts Casino Hotel is located at the eastern end of the Boardwalk adjacent to the Taj Mahal, which is next to the Showboat Casino. These three properties have a total of more than 2,400 hotel rooms and 277,000 square feet of gaming space in close proximity to each other. A 28-foot wide enclosed pedestrian bridge between the Resorts Casino Hotel and the Taj Mahal allows patrons of both hotels and guests for events being held at the Resorts Casino Hotel and at the Taj Mahal to move between the facilities without exposure to the weather. A similar enclosed pedestrian bridge connects the Showboat Casino to the Taj Mahal, allowing patrons to walk under cover among all three casino/ hotels. The remaining nine Atlantic City casino/hotels are located approximately one-half mile to one and one-half miles to the west on the Boardwalk or in the Marina area of Atlantic City. 187 All Atlantic City casino/hotels compete for customers with casino/hotels located in Nevada, and in certain foreign resort areas, including The Bahamas, particularly with respect to destination-oriented business, including conventions. The Las Vegas casino/hotel industry benefits from a favorable climate and nearby airport facilities that serve most major domestic carriers. Atlantic City casino/hotels also would compete with casinos located in other U.S. jurisdictions, particularly those close to New Jersey, which may adopt legislation approving casino gaming. Colorado, Illinois, Iowa, Louisiana, Mississippi, Missouri and South Dakota have legalized, and several other states and the District of Columbia are currently considering legalizing limited land-based and riverboat casino gaming. Additionally, certain gaming operations are conducted or have been proposed on federal Indian reservations in a number of states. In January 1993, a gaming casino on an Indian reservation located in Connecticut was authorized to operate slot machines. Previously, the casino, which opened in early 1991, was only authorized to conduct table gaming operations. In July 1993, the Oneida Indians opened a casino near Syracuse, New York. In October 1993 approval was granted for the construction of a high-stakes gambling casino in New York State on the St. Regis Mohawk reservation near the Canadian border, 50 miles southwest of Montreal. Under New York state law, poker and slot machines currently are not permitted. Due to the proximity to Atlantic City, the casinos in Connecticut and New York may have, to an indeterminate extent, an adverse effect on the Atlantic City casino industry. SEASONAL FACTORS The Company's business activities are strongly affected by seasonal factors that influence the New Jersey beach trade. Higher revenues and earnings are typically realized from the Company's Atlantic City operations during the middle third of the year. GAMING CREDIT POLICY Credit is extended to selected gaming customers primarily in order to compete with other casino/ hotels in Atlantic City which also extend credit to customers. Credit play represented 23% of table game volume at the Resorts Casino Hotel in 1992, 24% in 1991 and 26% in 1990. Gaming receivables, net of allowance for uncollectible amounts, were $4,503,000, $5,586,000 and $6,949,000 as of December 31, 1992, 1991 and 1990, respectively. The collectibility of gaming receivables has an effect on results of operations, and management believes that overall collections have been satisfactory. Atlantic City gaming debts are enforceable under the laws of New Jersey and certain other states, although it is not clear whether other states will honor this policy or enforce judgments rendered by the courts of New Jersey with respect to such debts. SHOWBOAT LEASE The Showboat Casino has approximately 515 guest rooms, a 60-lane bowling center, a 64,000-square-foot casino and a 15,000-square-foot simulcast betting and poker room. The Showboat Casino is situated on approximately ten acres which are owned by the Company and leased to ACS pursuant to the Showboat Lease, dated October 26, 1983, as amended, which is a 99-year net lease. The Showboat Lease provided for an initial annual rental, which commenced in March 1987, of $6,340,000, subject to future annual adjustment based upon changes in the consumer price index. The rental for the 1993 lease year is $8,118,000. The Showboat Notes issued by RII are First Mortgage Non-Recourse Pass-Through Notes due June 30, 2000, and are secured and serviced by the Showboat Lease. All lease payments thereunder are made to the indenture trustee for the Showboat Notes to meet the Company's interest obligations under those notes. See Note 11 of Notes to Consolidated Financial Statements of RII. The Showboat Lease provides that if, under New Jersey law, the Company is prohibited from acting as lessor, including any finding by the Casino Control Commission that the Company is unsuitable, the Company must appoint a trustee, acceptable to the Casino Control Commission, to act for the Company and collect all lease payments on the Company's behalf. In that event, the trustee also must proceed to sell all the Company's interest in the Showboat Lease and the leased property to a buyer qualified to act as lessor. The net proceeds of any such sale, together with any unremitted rentals, would be paid to the Company. Also, if the Company is no longer able to act as a lessor, as 188 aforesaid, ACS would have an option to acquire ownership of the ten acres leased from the Company. The option would be exercisable during a period of not more than three months. The purchase price would be an amount equal to the greater of $66,000,000 or the fair market value of the leased acreage, as defined, but in no event may the purchase price be more than 11 times the rent being paid by ACS in the year in which the option may become effective. If the fair market value is not ascertained within the time required by the Casino Control Commission, then the purchase price would be the lesser of $66,000,000 or 11 times the rent being paid by ACS in the year the option may become effective. In the event of any sale of the leased property under the circumstances described above, the disposition of the proceeds of such sale would be governed by the indenture for the Showboat Notes. Under New Jersey's Casino Control Act, both the Company and ACS, because of their lessor-lessee relationship, are jointly and severally liable for the acts of the other with respect to any violations of the Casino Control Act by the other. In order to limit the potential liability that could result from this provision, ACS, its parent, Ocean Showboat, Inc., and the Company have entered into an indemnity agreement pursuant to which they agree to indemnify each other from all liabilities and losses which may arise as a result of acts of the other party that violate the Casino Control Act. The Casino Control Commission could determine, however, that the party seeking indemnification is not entitled to, or is barred from, such indemnification. SECURITY CONTROLS Gaming at the Resorts Casino Hotel is conducted by personnel trained and supervised by the Company. Prior to employment in Atlantic City, all casino personnel must be licensed under the Casino Control Act. Security checks are made to determine, among other matters, that job applicants for key positions have had no criminal ties or associations. The Company employs extensive security and internal controls. Security at the Resorts Casino Hotel utilizes closed circuit video cameras to monitor the casino floor and money counting areas. The count of money from gaming is observed daily by state government representatives. OTHER PROPERTIES The Company owns the Non-Operating Real Property, including approximately 90 acres of land in Atlantic City at various sites which could be developed and are available for sale. This acreage primarily consists of vacant land in Great Island, Rum Point, the Marina Area and waterfront parcels in the inlet sections. See also "-- The Company's Properties -- Atlantic City -- Other Properties". THE BAHAMAS GENERAL The Company, through Bahamian subsidiaries, owns and operates a major destination resort on Paradise Island, The Bahamas. The Company's Paradise Island Resorts consist of three hotel complexes: (i) the Paradise Island Resort & Casino; (ii) the Ocean Club Golf & Tennis Resort; and (iii) the Paradise Paradise Beach Resort. The Paradise Island Resort & Casino includes two hotel towers totaling 1,186 guest rooms, the 30,000-square-foot Paradise Island casino and related facilities. The Ocean Club Golf & Tennis Resort is an exclusive 71-room hotel with premium room rates. The Paradise Paradise Beach Resort is a 100-room hotel complex that offers more moderately priced accommodations. The Company also owns and operates convention facilities, shops, restaurants, bars and lounges, tennis courts, swimming pools and an 18-hole golf course. It owns approximately six miles of beach and water frontage and other resort facilities on Paradise Island. Its holdings on Paradise Island, including undeveloped real estate, represent 564 acres, or almost 70%, of the acreage of the entire island. In addition, certain of the U.S. Paradise Island Subsidiaries provide support services for the Paradise Island Business. RRII provides reservation services to RIB's hotels and to PIA. PIVI is a wholesale tour company whose primary objective is the production of incremental tour revenues to 189 the Paradise Island Resorts. PIVI provides air inclusive packages primarily to Paradise Island for individual tourists, groups, conventions and casino patrons. ISI is a centralized purchasing company which obtains supplies for the Paradise Island Resorts. Since 1990, given the Company's intention to sell its Paradise Island assets and in light of the operating performance of those properties (see "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Results of Operations -- Casino/hotel -- Paradise Island, The Bahamas"), capital expenditures there were essentially limited to maintenance of existing facilities. Approximately $3,000,000 was expended for maintenance projects in 1993. No significant improvements to facilities are planned. Paradise Island is part of the Commonwealth of The Bahamas. It is situated immediately across Nassau Harbour, north of the capital city of Nassau, New Providence Island, and is connected to Nassau by a two-lane toll bridge and ferry boat service. The entire island is 5.5 miles in length, two-thirds of a mile wide at its widest point, and totals 826 acres. PARADISE ISLAND CASINO The Paradise Island casino is the center of the Paradise Island Resort & Casino complex. It is connected by arcades with shops to the 682-room Britannia Towers and the 504-room Paradise Towers. The one-story and part-mezzanine casino building situated between the two hotel towers contains nearly 165,000 square feet, including the 30,000-square-foot casino gaming area. It also houses several restaurants and bars; the Le Cabaret Theatre, which also serves meals, a central commissary, employee cafeteria, shops and casino offices. At July 31, 1993, the Paradise Island casino gaming area contained 58 blackjack tables, 10 dice tables, 10 roulette tables, 2 big six wheels, 2 baccarat tables and 799 slot machines. During 1992, the Company's Paradise Island casino had a total gross gaming win of $66,120,000, compared to $61,003,000 and $63,261,000 in 1991 and 1990, respectively. PARADISE ISLAND RESORT AND HOTEL FACILITIES The Company's resort and hotel facilities on Paradise Island include the Paradise Island Resort & Casino, the Ocean Club Golf & Tennis Resort and the Paradise Paradise Beach Resort, with a total of 1,357 guest rooms, suites and villas, 15 restaurants, 13 bars and lounges, 21 tennis courts, 4 swimming pools, an 18-hole golf course, approximately six miles of beach and water frontage, and other resort facilities and land holdings. The Paradise Island Resort & Casino is the largest hotel complex in The Bahamas. It includes a 1,186-room hotel and casino complex with two swimming pools, restaurants, lounges, tennis courts, convention facilities, ocean beach, shops and other resort facilities. This complex includes the 682-room Britannia Towers and the 504-room Paradise Towers. The total floor area of the two hotel towers, villas, casino and restaurants exceeds 1,000,000 square feet. The Ocean Club Golf & Tennis Resort is an exclusive, luxury resort facility geared toward the affluent visitor. The complex comprises 71 guest rooms including villas and cabanas, an 18-hole golf course, tennis courts, a swimming pool, ocean beach and dining and cocktail facilities. The Paradise Paradise Beach Resort includes 100 guest rooms, a restaurant, lounge, swimming pool and ocean beach. The complex attracts value-conscious tourists. Consistent with industry practice, the Company reserves a portion of its hotel rooms and suites as complimentary accommodations for high-level wagerers. During 1992, 1991 and 1990 the average occupancy rates, including complimentary rooms which were primarily provided to casino patrons, were 68%, 71% and 77%, respectively. The average occupancy rate and weighted average daily room rental, excluding complimentary rooms, were 54% and $108, respectively, for 1992. This compares with 58% and $111, respectively, for 1991, and 66% and $123, respectively, for 1990. 190 EMPLOYEES During 1992, the Company had a maximum of approximately 3,100 employees located in The Bahamas. The Company believes that its employee relations are satisfactory. In The Bahamas, approximately 1,900 of the Company's employees are represented by The Bahamas Catering and Allied Workers Union, whose contract expires in January 1995. In light of the downturn in business being experienced by hotels in the Paradise-New Providence Island area, the Company, along with other affected operators in that area, did not pay wage and pension increases scheduled for January 1993 as they were negotiating with the union for certain concessions under the contract. Since then the union filed claims against the employers and, after attempting to mediate the dispute, the Minister of Labour referred it to arbitrators. The dispute remains unsettled, negotiations among the parties continue and no work interruptions have been experienced. In The Bahamas, all casino employees also must be licensed and all non-Bahamian employees must apply for and receive work permits issued by the Government of The Bahamas. From time to time this requirement has created difficulties in hiring certain skilled non-Bahamian employees. These work permits are generally subject to renewal annually. MARKETING The Company's marketing strategy for the Paradise Island properties has recently increased its focus on the casino rather than primarily promoting the hotels and related amenities. Through direct mailings to those known to be casino players, both in the United States and abroad, and increased casino promotional activities, the Company hopes to attract more casino customers to Paradise Island. In addition, the Paradise Island complex has well-established ties with numerous tour and travel wholesalers, as well as many repeat patrons. Merv Griffin is involved in the development of marketing campaigns promoting the Paradise Island facilities. During December 1993, Merv Griffin hosted his fifth annual "Star Sports Spectacular" which featured celebrities from the entertainment and sports fields who participated with the Company's casino guests in golf and tennis tournaments. It is not expected that Merv Griffin will be associated with the Paradise Island Business subsequent to the Restructuring. See "-- Competition" for information regarding the Company's competitive position in The Bahamas. TRANSPORTATION FACILITIES AIRLINE TRANSPORTATION. Several major airlines provide regularly scheduled service to Nassau International Airport. In March 1993 Jet Shuttle began a new air shuttle service between Miami and Nassau, and in 1992 American Eagle initiated service to Nassau; however, in recent years overall air transportation to Nassau has been reduced significantly. This has resulted from the failure of certain major United States air carriers, financial difficulties experienced by Bahamasair, the national air carrier of The Bahamas, as well as the current state of the economy, particularly in the northeastern United States. The reduction in airline service to Nassau has adversely affected the Company's Paradise Island operations. Most patrons arriving by air use the Nassau International Airport. However, the Company also owns and operates a "STOL" airport facility, including a 3,000-foot runway, airport terminal and customs building, situated on 63 acres of land located at the southeast corner of Paradise Island. PIA, a subsidiary of RII, is currently the second largest passenger carrier to The Bahamas. PIA provides scheduled service between Paradise Island and Miami, Ft. Lauderdale and West Palm Beach, Florida, and offers a program of casino night flights to and from Ft. Lauderdale, Florida. PIA operates one Company-owned and four leased Dash 7 STOL aircraft. See "Airline Operations". CRUISE SHIPS. The Company believes that a significant portion of the cruise ship tourists currently docking at New Providence Island visit the Company's facilities on Paradise Island. The Bahamian government operates 11 cruise ship berths in Nassau Harbour. 191 COMPETITION The Company's Paradise Island facilities compete with other hotels and resorts on Paradise Island, elsewhere in The Bahamas, the southeastern United States, the Caribbean and Mexico, as well as with cruise ships serving these areas. As new hotels are constructed or new cruise ships are introduced into service in these areas, competition can be expected to increase. The Company's properties principally compete with a casino/hotel and resort complex on Cable Beach, New Providence Island, comprised of Carnival's Crystal Palace, with 860 guest rooms, a 33,500-square-foot casino, a show theater and other amenities, and the HCB-owned Radisson with 679 guest rooms. Carnival had operated the entire complex prior to February 1992, as until that time Carnival leased the property now known as the Radisson from HCB. In October 1993, Carnival announced that it had signed an agreement in principle to sell an 81% interest in the Crystal Palace complex to a group of German investors. This investor group has announced that it plans to increase the marketing of the Crystal Palace complex in Europe and will invest additional capital in the complex to establish it as a high-end resort destination. Although there can be no assurance that such sale will be completed, an upgraded Crystal Palace complex may adversely affect the Company's operations in The Bahamas. Carnival Air Lines, affiliated with Carnival, provides charter air service from the continental United States to Nassau International Airport. In addition to the Crystal Palace casino, the Bahamian government is obligated to facilitate the grant of a casino license to the operators of the Ramada Resort situated on the southwestern end of New Providence Island. The Bahamian government is also obligated to support a proposal for the operation of a slot casino at the Radisson resort on Cable Beach. There are a total of approximately 7,600 rooms for overnight guests on New Providence Island and Paradise Island combined. Of such rooms, approximately 3,100 are located in hotels on Paradise Island, including 1,357 in hotels owned and operated by the Company. In recent years the Company's Bahamian hotel and casino operations have experienced increased competition from the new, larger cruise ships which have begun serving this area as these cruise ships have effectively provided more available rooms. Also, the Company's Paradise Island casino competes with two casinos on Grand Bahama Island, with casinos located on Caribbean islands and, to a lesser extent, with Atlantic City and Las Vegas casino/hotels. Competition among hotels and resort properties is, in general, based upon: the attractiveness of the facilities and the relative convenience of available transportation to destinations; the presence of a casino; service; quality and price of rooms, food and beverages; convention facilities; and entertainment. The Company believes that its Paradise Island resort facilities, because of location, variety of hotels and restaurants, beaches, available sports activities and overall quality, compete strongly with other resort facilities. SEASONAL FACTORS The Company's business activities are strongly affected by seasonal factors that affect the Caribbean tourist trade. Higher revenues and earnings are typically realized from the Company's operations in The Bahamas during the first quarter of the year. CERTAIN ARRANGEMENTS WITH THE BAHAMIAN GOVERNMENT The Company, through certain of its Bahamian subsidiaries, and HCB have entered into various agreements, effective in 1978, pursuant to which the Paradise Island casino facility is leased to HCB, and PEL, an indirect subsidiary of RII, is retained by HCB to manage and operate the casino. These agreements, as subsequently amended, are referred to herein as the "Paradise Island Agreements". Under the Paradise Island Agreements, the casino facility is leased to HCB at an annual rental of $500,000 and PEL has an exclusive right to manage and operate the casino through December 31, 1997, subject to an annual finding of fitness. The lease of the casino facility was extended to December 31, 1997, by a 1988 letter agreement between RIB, an indirect Bahamian subsidiary of RII which, 192 with its subsidiaries, owns and operates the Company's Bahamian properties, and HCB. In consideration of the right to manage and operate the casino and to use the gaming facilities, PEL pays HCB an annual operating fee of $5,000,000 plus 15% of gross revenues from casino gaming in excess of $25,000,000. PEL also pays all gaming taxes. Pursuant to amendments of PEL's casino license, the Company, among other things, is required to: (i) continue its efforts to achieve a prompt sale of the Paradise Island Business to a purchaser satisfactory to the Government of The Bahamas and HCB; (ii) consult with HCB in advance with respect to material aspects of any contemplated disposition of the Paradise Island Business; (iii) provide quarterly reports to HCB describing the progress made by the Company in implementing plans for separating various functions relating to its Bahamian operations from the Company's non-Bahamian operations; (iv) provide to HCB various financial reports; and (v) reimburse the Government of The Bahamas and HCB for legal and advisory fees incurred by them relative to any restructuring of the Company. To date, the Company has complied with each of these requirements; it will continue to do so in the future. SECURITY CONTROLS Gaming at the Paradise Island casino is conducted by personnel trained and supervised by the Company. In The Bahamas all casino personnel must be cleared by the Bahamian Government. Security checks are made to determine, among other matters, that job applicants for key positions have had no criminal ties or associations. The Company employs extensive security and internal controls. Security at the Paradise Island casino utilizes closed circuit video cameras to monitor the casino floor and money counting areas. The count of money from gaming is closely observed daily by Bahamian government representatives. LAND AND OTHER ASSETS The Company, through Bahamian subsidiaries, owns 564 acres on Paradise Island. Approximately 219 acres of such land is not used in the Company's operations and is available for sale or joint venture. The Company has prepared a master plan for the island, which includes properties available for hotel, commercial, condominium and time-share land use. The Company also owns roads and other land improvements on Paradise Island and a water and sewage system which serves, at stated charges, substantially all facilities on Paradise Island. The water and sewage system presently is operating near full capacity and significant additional development on the island will require expansion of the system. A subsidiary of RIB also owns approximately 1,555 acres of undeveloped and 120 acres of partially developed land located on Little Hawksbill Creek, several miles from Freeport, Grand Bahama Island. See "-- The Company's Properties -- The Bahamas -- Other Properties". Approval by the Government of The Bahamas is required for foreign ownership of real property in The Bahamas. In addition, any foreign investment in The Bahamas requires exchange control approval by the Central Bank of The Bahamas. No sale of any property located in The Bahamas to non-Bahamian nationals may be completed until such governmental approvals are obtained. AIRLINE OPERATIONS The Company's airline operations are entirely conducted by PIA and are described under "-- The Bahamas -- Transportation Facilities". FOREIGN OPERATIONS A significant portion of the Company's operating assets are located in The Bahamas. See "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Revenues, - -- Contribution to Consolidated Loss Before Income Taxes and Extraordinary Item", and the table titled "Identifiable Assets, Depreciation and Capital Additions". The Company believes that its business experience in The Bahamas has been satisfactory. Changes in applicable taxes, duties, immigration policies, exchange control regulations, policies concerning investments, ownership and transfer of real estate, or legislation could adversely affect the Company. In August 1992 a new Prime 193 Minister was elected in The Bahamas. The former Prime Minister had been in office for 25 years. Management believes that the change in government will favorably impact the tourism industry in The Bahamas over the long term. From time to time, Bahamian subsidiaries of the Company have made, and in the future may make, legal political contributions in The Bahamas solely for general goodwill purposes without any understandings or agreements as to the receipt by the Company of any favors, privileges or other special treatment in its dealings with the Government of The Bahamas. REGULATION AND GAMING TAXES AND FEES NEW JERSEY GENERAL. The Company's operations in Atlantic City are subject to regulation under the Casino Control Act, which authorizes the establishment of casinos in Atlantic City, provides for licensing, regulation and taxation of casinos and created the Casino Control Commission and the Division of Gaming Enforcement. These bodies administer the Casino Control Act. In general, the provisions of the Casino Control Act concern: the ability, character and financial stability and integrity of casino operators, their officers, directors and employees and others financially interested in a casino; the nature and suitability of hotel and casino facilities, operating methods and conditions; and financial and accounting practices. Gaming operations are subject to a number of restrictions relating to the rules of games, number of games, credit play, size and facilities of hotel and casino operations, hours of operation, persons who may be employed, companies which may do business with casinos, the maintenance of accounting and cash control procedures, security and other aspects of the business. Significant regulatory changes in 1992 and 1993 included the approval by the Casino Control Commission of simulcast betting, poker and 24-hour gaming, as well as the adoption of guidelines to evaluate the financial stability of casino licensees. To establish evidence of financial stability, casino licensees must, among other things, demonstrate the ability to make necessary capital and maintenance expenditures and to adequately manage debts as they come due. CASINO LICENSE. A casino license initially is issued for a term of up to one year and must be renewed annually by action of the Casino Control Commission for the first two renewal periods succeeding the initial issuance of a casino license. Thereafter, a casino license is renewed for a period of up to two years, although the Casino Control Commission may reopen licensing hearings at any time. A license is not transferable and may be conditioned, revoked or suspended at any time upon proper action by the Casino Control Commission. The Casino Control Act also requires an operations certificate which, in effect, has a term coextensive with that of a casino license. On February 26, 1979, the Casino Control Commission granted a casino license to RIH for the operation of the Company's Atlantic City casino. In February 1992, RIH's license was renewed until February 26, 1994. RIH's renewed license is subject to several conditions, including: (i) the submission of additional monthly financial reports to the Casino Control Commission and the Division of Gaming Enforcement; (ii) monthly notification to such bodies of any significant deviation from certain financial forecasts and related information provided by the Company in connection with the 1992 renewal proceedings; (iii) monthly notification of any significant variance in operating results from the prior year; and (iv) quarterly reporting on its progress in the development of a financing plan regarding the Old Series Notes due in April 1994 and by June 30, 1993 submission of an outline of terms to satisfy that obligation. RESTRICTIONS ON OWNERSHIP OF EQUITY AND DEBT SECURITIES. The Casino Control Act imposes certain restrictions upon the ownership of securities issued by a corporation which holds a casino license or is a holding, intermediary or subsidiary company of a corporate licensee (collectively, "holding company"). Among other restrictions, the sale, assignment, transfer, pledge or other disposition of any security issued by a corporation which holds a casino license is conditional and shall be ineffective if disapproved by the Casino Control Commission. 194 Each holder of securities issued by RII or RIHF must be qualified by the Casino Control Commission, unless the qualification requirement is waived. The Casino Control Commission has the authority to waive the qualification requirement for any security holder who does not have the ability to control the issuer or elect one or more directors thereof. The Casino Control Act provides that anyone who holds 5% or more of the securities of a publicly traded holding company or affiliate, such as RII and RIHF, is presumed to have to qualify. In addition, the Casino Control Commission has the authority to waive the qualification requirement for an "institutional investor" (as defined in the Casino Control Act) who holds less than 10% of the equity securities of a publicly traded holding company of a casino licensee, such as RII, or holds less than 20% of the outstanding debt securities and less than 50% of any issue of debt securities issued by a publicly traded affiliate, such as RIHF, if the institutional investor holds the securities for investment purposes only and has no intention of influencing or affecting the affairs of the issuer and there is no reason to believe that the institutional investor may be found unqualified. If a security holder is required to qualify, the security holder must submit an application for qualification or dispose of its securities within certain time periods. An application for qualification must include a trust agreement whereby the security holder places its securities in trust with a trustee qualified by the Casino Control Commission. If the security holder is found qualified, the trust agreement will be terminated. If the security holder is not found qualified, the trust will become operative and the trustee will be empowered with all rights of ownership pertaining to such security holder's securities, including the right to sell the securities. In the event of such a sale, the former security holder will not be entitled to receive an amount in excess of the lesser of the actual costs at which the securities were acquired or the value of the securities at the time the trust became operative. The Company will apply for waiver of the qualification requirement for all security holders who appear to be eligible for same. If the Casino Control Commission finds that an individual owner or holder of any securities of a corporate licensee, its holding company or affiliate must be qualified and is not qualified under the Casino Control Act, the Casino Control Commission has the right to propose any necessary remedial action. In the case of corporate holding companies and affiliates whose securities are publicly traded, the Casino Control Commission may require divestiture of the security held by any disqualified holder who is required to be qualified under the Casino Control Act. In the event that entities or persons required to be qualified refuse or fail to qualify and fail to divest themselves of such security interest, the Casino Control Commission has the right to take any necessary action, including the revocation or suspension of the casino license. If any security holder of the licensee, its holding company or affiliate who is required to be qualified is found disqualified, it will be unlawful for the security holder to: (i) receive any dividends or interest upon any such securities; (ii) exercise, directly or through any trustee or nominee, any right conferred by such securities; or (iii) receive any remuneration in any form from the corporate licensee for services rendered or otherwise. The Restated Certificate of Incorporation of RII provides, and the Amended RII Certificate of Incorporation will provide, that all securities of RII and any of its subsidiaries are held subject to the condition that if the holder thereof is found to be disqualified by the Casino Control Commission pursuant to provisions of the Casino Control Act, then that holder must dispose of his or her interest in the securities. REMEDIES. In the event that it is determined that a licensee has violated the Casino Control Act, or if a security holder of the licensee required to be qualified is found disqualified but does not dispose of his securities in the licensee or holding company, under certain circumstances the licensee could be subject to fines or have its license suspended or revoked. The Casino Control Act permits the Casino Control Commission to appoint a conservator to operate the casino and hotel facility if a license is revoked, not renewed or suspended for a period in excess of 120 days. If a conservator is appointed, the suspended or former licensee is entitled to a "fair rate of return out of net earnings, if any, during the period of the conservatorship," taking into consideration what amounts to a fair rate of return in the casino or hotel industry. 195 Under certain circumstances, upon the revocation of a license or failure to renew, the conservator, after approval by the Casino Control Commission and consultation with the former licensee, may sell, assign, convey or otherwise dispose of all of the property of the casino/hotel. In such cases, the former licensee is entitled to a summary review of such proposed sale by the Casino Control Commission and creditors of the former licensee and other parties in interest are entitled to prior written notice of sale. LICENSE FEES, TAXES AND INVESTMENT OBLIGATIONS. The Casino Control Act provides for casino license renewal fees and other fees based upon the cost of maintaining control and regulatory activities, and various license fees for the various classes of employees. In addition, a licensee is subject annually to a tax of 8% of "gross revenue" (defined under the Casino Control Act as casino win, less provision for uncollectible accounts up to 4% of casino win) and license fees of $500 on each slot machine. The following table summarizes, for the periods shown, the fees and taxes assessed upon the Company by the Casino Control Commission.
FOR THE YEAR ---------------------------------------------- 1990 1991 1992 -------------- -------------- -------------- Gaming tax....................................................... $ 16,351,000 $ 17,384,000 $ 18,788,000 License, investigation, inspection and other fees................ 5,014,000 4,730,000 4,417,000 -------------- -------------- -------------- $ 21,365,000 $ 22,114,000 $ 23,205,000 -------------- -------------- -------------- -------------- -------------- --------------
The Casino Control Act, as originally adopted, required a licensee to make investments equal to 2% of the licensee's gross revenue (as defined under the Casino Control Act) (the "investment obligation") for each calendar year, commencing in 1979, in which such gross revenue exceeded its "cumulative investments" (as defined in the Casino Control Act). A licensee had five years from the end of each calendar year to satisfy this investment obligation or become liable for an "alternative tax" in the same amount. In 1984, the New Jersey legislature amended the Casino Control Act so that these provisions now apply only to investment obligations for the years 1979 through 1983. Certain issues have been raised concerning the satisfaction of the Company's investment obligations for the years 1979 through 1983. See Note 15 of Notes to Consolidated Financial Statements of RII for a discussion of these issues. Effective for 1984 and subsequent years, the amended Casino Control Act requires a licensee to satisfy its investment obligation by purchasing bonds to be issued by the Casino Reinvestment Development Authority (the "CRDA"), a public authority created under the Casino Control Act, or by making other investments authorized by the CRDA, in an amount equal to 1.25% of a licensee's gross revenue. If the investment obligation is not satisfied, then the licensee will be subject to an investment alternative tax of 2.5% of gross revenue. Licensees are required to make quarterly deposits with the CRDA against their current year investment obligations. The Company's investment obligations for the years 1992, 1991 and 1990 amounted to $2,930,000, $2,706,000 and $2,542,000, respectively, and have been satisfied by deposits made with the CRDA. At December 31, 1992, the Company held $4,873,000 face amount of bonds issued by the CRDA and had $9,921,000 on deposit with the CRDA. The CRDA bonds issued through 1992 have interest rates ranging from 5.8% to 7% and have repayment terms of between 41 and 50 years. THE BAHAMAS LICENSING. PEL is currently licensed to operate the Paradise Island casino under the Gaming Act of the Commonwealth of The Bahamas, which regulates the operation of casinos in The Bahamas. The Gaming Act established a "Gaming Board" which observes the count of all gaming receipts, prescribes accounting and control procedures and regulates personnel and security matters. Gaming licenses are renewable annually. The Gaming Board also is empowered to revoke or suspend any gaming license if a violation occurs. 196 PEL's gaming license is subject to a number of conditions relating to PEL's activities and operations. Under the casino license, PEL and its parent entities are required to observe certain operating requirements and to provide certain financial and other information to the Government of The Bahamas on a continuing basis. See "The Bahamas -- Certain Arrangements with The Bahamian Government". LICENSE FEES AND TAXES. Currently, the Gaming Act provides for an annual basic license fee of $200,000 plus a tax of 25% on all gaming win up to $10,000,000, 20% on the next $6,000,000 of win, 10% on the next $4,000,000 of win, and 5% on all win over $20,000,000, with a minimum tax of $2,000,000 payable each year on gaming win. The following table summarizes, for the periods shown, the taxes and fees paid or accrued by the Company under the Gaming Act and the Paradise Island Agreements.
FOR THE YEAR ---------------------------------------------- 1990 1991 1992 -------------- -------------- -------------- Gaming tax....................................................... $ 6,269,000 $ 6,153,000 $ 6,411,000 Basic license and operating fees................................. 10,957,000 10,610,000 11,382,000 -------------- -------------- -------------- $ 17,226,000 $ 16,763,000 $ 17,793,000 -------------- -------------- -------------- -------------- -------------- --------------
THE COMPANY'S PROPERTIES The Company's casino, resort hotel and related properties in Atlantic City and The Bahamas, together with certain other properties, described above are owned in fee, except for approximately 1.2 acres of the Resorts Casino Hotel site which are leased pursuant to ground leases expiring from 2056 through 2067. RII's office in North Miami, Florida, is located in a three-story building owned by RII. The Company's principal properties, including the Resorts Casino Hotel, the Paradise Island Resort & Casino, the Ocean Club Golf & Tennis Resort and the Paradise Paradise Beach Resort (but not the land underlying the Showboat Casino or the Showboat Lease), and, in each case, any additions or improvements to those properties, together with all related furniture, fixtures, machinery and equipment, directly or indirectly comprise the collateral securing the Old Series Notes. The Showboat Lease, including the land subject to the lease, secures the payment of the Showboat Notes. ATLANTIC CITY -- OTHER PROPERTIES The Company owns the Non-Operating Real Property in Atlantic City including various sites that could be developed and are available for sale. The Non-Operating Real Property consists primarily of vacant land in Great Island, Brigantine Island and the Marina Area, and waterfront parcels in the inlet section. In view of the generally depressed state of the commercial real estate market in Atlantic City and the condition of the economy generally, the Company does not anticipate any significant real estate activity in the foreseeable future. RII is the owner of real property located at Brigantine Boulevard on Brigantine Island that consists of approximately 40 acres ("Rum Point"), of which only approximately 17 acres can be developed because the remaining portions constitute wetlands areas and consequently are not available for development. Additional environmental and coastal restrictions apply to the development of Rum Point, though the Company currently is attempting to have the restrictions modified to permit development. RII owns in fee an approximately 552-acre parcel located in Atlantic City on Blackhorse Pike (the "Great Island Property"), of which approximately 500 acres are considered to be wetlands. In 1987, the Atlantic City Board of Education (the "Board of Education") acquired a 48-acre parcel of non-wetland property which was part of the Great Island Property owned by RII that originally comprised 600 acres. The acquisition was pursuant to eminent domain proceedings brought by the Board of Education. In 1987 RII received $5,382,500 of the total estimated compensation of $5,720,000 for the 48-acre parcel taken by the Board of Education. The difference of $337,500 was set aside for estimated 197 tidelands claims by the State of New Jersey. In December 1990, a jury decided that the value of the property was approximately $7,537,000. In 1992, RII received $1,817,000 of additional compensation plus interest thereon. RII is contesting the amount of compensation paid to it. ESS owns in fee an eight-acre parcel located in the marina area of Atlantic City immediately adjacent to the Harrah's Casino Hotel. The Company also owns in fee various individual parcels of property located in the area of Atlantic City known as the South Inlet which in the aggregate constitute approximately ten acres and a parcel of land in Atlantic City consisting of approximately seven acres and a warehouse thereon. The Company is the owner of various additional properties at scattered sites in Atlantic City. Principal among these is the so-called "Trans Expo" site, a 2.3-acre parcel located near the proposed convention center. THE BAHAMAS -- OTHER PROPERTIES The Company, through RIB, owns 564 acres on Paradise Island. RIB has prepared a land use master plan for the island. See "-- The Bahamas -- Land and Other Assets" for a description of the acreage available for development and/or sale and the preparation of a master plan for Paradise Island. The Company recently sold a .63 acre tract of land on Paradise Island. The Company does not anticipate any significant real estate sales on Paradise Island while it is seeking to implement the Restructuring. The Company, through a subsidiary of RIB, also owns approximately 1,555 acres of undeveloped and 120 acres of partially developed land located on Little Hawksbill Creek, several miles from Freeport, Grand Bahama Island. As previously indicated, approval by the Bahamian Government is required for foreign ownership of real property in The Bahamas. In addition, any foreign investment in The Bahamas requires exchange control approval by the Central Bank of The Bahamas. No sale of any property located in The Bahamas to non-Bahamian nationals may be completed until such governmental approvals are obtained. 198 MANAGEMENT OF RII DIRECTORS AND EXECUTIVE OFFICERS The directors of RII are:
NAME AGE DIRECTOR SINCE - ---------------------------------------- --- -------------- Merv Griffin 68 1988 Chairman of the Board of Directors Antonio C. Alvarez II 45 1990 Warren Cowan 72 1990 Thomas E. Gallagher 48 1993 Joseph G. Kordsmeier 54 1991 Paul C. Sheeline 72 1990
Pursuant to RII's Restated Certificate of Incorporation, the total number of directors is fixed at six. The Board of Directors is classified into three equal classes, Class I, Class II, and Class III, which have staggered terms ending at the annual shareholders' meetings scheduled to be held in 1994, 1995 and 1996, respectively, and thereafter at the third annual shareholders' meeting following each such meeting. Notwithstanding the foregoing, each director shall serve until his successor is elected and qualified or until his earlier death, resignation or removal. Messrs. Kordsmeier and Sheeline comprise Class I, Messrs. Alvarez and Gallagher comprise Class II, and Messrs. Griffin and Cowan comprise Class III. Upon completion of the Reorganization, the Board of Directors will consist of Messrs. Griffin, Gallagher, Greene and Fallon, and, as Class B directors, Masson and Namol: RIH's casino license from the Casino Control Commission requires that (i) at least two members of the Board of Directors of RII be independent, outside directors, and (ii) the audit committee of the Board of Directors consist entirely of independent, outside members of the Board of Directors. The audit committee of the Board of Directors of RII consists of two independent directors, Messrs. Kordsmeier and Sheeline. Messrs. Griffin, Sheeline and Gallagher are members of the Executive Committee of the Board of Directors of RII. The Executive Committee was formed in November 1993 and was authorized by the full Board of Directors to approve any action to be taken by RII other than those involving the Restructuring, affiliate transactions and other transactions out of the ordinary course of business of RII. The executive officers of RII are:
EXECUTIVE NAME AGE OFFICER SINCE - ---------------------------------------- --- -------------- Merv Griffin 68 1988 Chairman of the Board of Directors Christopher D. Whitney 49 1988 Office of the President, Executive Vice President, Chief of Staff, General Counsel and Secretary Matthew B. Kearney 53 1982 Office of the President, Executive Vice President -- Finance, Chief Financial Officer and Treasurer David G. Bowden 52 1979 Vice President -- Controller, Chief Accounting Officer, Assistant Secretary and Assistant Treasurer
The officers of RII serve at the pleasure of the Board of Directors of RII. 199 Pursuant to the Hanlon Termination Agreement, David P. Hanlon resigned as of October 31, 1993, from his positions as President, Chief Executive Officer and a director of RII. Pending completion of the Restructuring, RII will be managed by an Office of the President comprised of Mr. Whitney and Mr. Kearney. It is anticipated that RII's post-Restructuring board of directors will commence a search for a new Chief Executive Officer upon completion of the Restructuring. BUSINESS EXPERIENCE The principal occupations and business experience for the last five years or more of the directors and executive officers of RII are as follows: MERV GRIFFIN -- Chairman of the Board of RII since November 1988; Chairman of Griffco from its incorporation in May 1986 to September 1990; President of Griffco from September 1988 to September 1990; Chairman of Griffin Group since its incorporation in September 1988; Chairman of January Enterprises, Inc. ("January Enterprises") a television production and holding company doing business as Merv Griffin Enterprises, from 1964 to May 1986, and Chief Executive Officer since 1964; director of Hollywood Park Operating Company from 1987 to June 1991; television and radio producer since 1945. Merv Griffin created and produced the nationally syndicated television game shows, "Wheel of Fortune" and "Jeopardy". For 21 years, through 1986, Merv Griffin hosted "The Merv Griffin Show", a nationally syndicated talk show. In 1986, Merv Griffin sold January Enterprises to The Coca Cola Company, but he continues to act as Chief Executive Officer of January Enterprises, presently a wholly owned indirect subsidiary of Sony Pictures Entertainment, Inc. ANTONIO C. ALVAREZ II -- Chief Executive Officer of Phar-Mor Inc., a discount drugstore chain, since February 1993; President and Chief Operating Officer of Phar-Mor Inc. from September 1992 to February 1993; Chairman of Alvarez & Marsal, a financial advisory firm, since September 1983; Vice President and Controller of Norton Simon Inc. from December 1981 to September 1983; prior thereto, Partner, Coopers & Lybrand. WARREN COWAN -- Public relations consultant since July 1992; Chairman of Rogers & Cowan, Inc., a public relations firm, from 1986 until July 1992; President of Rogers & Cowan, Inc., from 1964 until 1986. THOMAS E. GALLAGHER -- President and Chief Executive Officer of the Griffin Group since April 1, 1992 and a director of Players International, Inc., a riverboat gaming company, since December 10, 1992. For the preceeding 15 years, Mr. Gallagher was a partner of the law firm of Gibson, Dunn & Crutcher. JOSEPH G. KORDSMEIER -- President and sole owner of Kordsmeier Company, consultants to the lodging industry, since 1982; Senior Vice President of Sales and Marketing Worldwide and other positions with Hyatt Hotels from 1972 to 1982; Mr. Kordsmeier also serves on the Advisory Board to Language Line, a division of AT&T. PAUL C. SHEELINE -- Chairman of Vale Petroleum Corporation from 1989 to 1991; Consultant to Intercontinental Hotels Corporation ("Intercontinental") from 1986 to June 1990; Chief Executive Officer of Intercontinental from 1971 to 1985. In addition, Mr. Sheeline through 1992 was Of Counsel to the Washington, D.C. law firm of Verner, Liipfert, Bernhard, McPherson and Hand. CHARLES MASSON -- President of McCloud Partners, a private advisory firm, since June 1, 1993; Director of Salomon Brothers Inc from 1991 through May 31, 1993; Vice President of Salomon Brothers Inc from 1983 through 1990. WILLIAM FALLON -- Senior Vice President of R.M. Bradley & Co. Inc., a real estate brokerage and management company, since 1988; Director of Massachusetts Certified Development Corporation, a small business development company, since 1987 to present. 200 VINCENT J. NAIMOLI -- Managing General Partner of the Tampa Bay Baseball Ownership Group, since [____]; Chairman, President and Chief Executive Officer of Anchor Industries International, Inc., an operating and holding company, since [____]; Chairman and Chief Executive Officer of Doehler-Jarvis Corporation since [____]; Chairman, President, Chief Executive Officer of Harvard Industries, Inc.; Chairman, President and Chief Executive Officer of Ladish Company, Inc. since [____]; director of Lincoln Foodservice Products, Inc. since [____]; director of Simplicity Pattern Company since [____]; prior thereto Chairman, President and Chief Executive Officer of Anchor Glass Container Corporation from 1983 through 1989. JAY M. GREEN -- Executive Vice President Finance and Administration and Treasurer of Culbro Corporation, a diversified consumer and industrial products company since 1988; Chairman of the Board of The Eli Witt Company, a Culbro subsidiary, since February 1993; prior to 1988, Vice President and Controller of Columbia Pictures Entertainment, Inc. CHRISTOPHER D. WHITNEY -- Office of the President of RII since November 1993; Executive Vice President of RII since December 1989; General Counsel to and Secretary of RII since February 1989; Chief of Staff of RII since December 1988; Senior Vice President of RII from December 1988 to December 1989; Senior Vice President, Law & Government and General Counsel of Harrah's East from November 1984 to December 1988; Vice President, General Counsel and Secretary of Harrah's, the western branch of Holiday's casino subsidiary located in Reno, Nevada, from June 1983 to November 1984; Vice President, General Counsel and Secretary of Perkins Restaurants, Inc., Holiday's restaurant group subsidiary then located in Minneapolis, Minnesota from November 1981 to June 1983; Vice President & Associate General Counsel (Litigation) of Holiday in Memphis, Tennessee from January 1979 to November 1981. MATTHEW B. KEARNEY -- Office of the President of RII since November 1993; Executive Vice President -- Finance of RII since September 1993; Chief Financial Officer of RII since 1982; Vice President -- Finance of RII from 1982 through September 1993. DAVID G. BOWDEN -- Vice President -- Controller and Chief Accounting Officer of RII since 1979. EXECUTIVE COMPENSATION The following table (hereinafter referred to as the "RII Summary Compensation Table") sets forth information concerning compensation earned by, paid to or awarded to RII's Chief Executive Officer and to each of the other executive officers of RII who were serving as executive officers at December 31, 1992, for services rendered in all capacities to RII and its subsidiaries.
LONG-TERM ANNUAL COMPENSATION COMPENSATION --------------------------------------- NUMBER OF ALL OTHER ANNUAL STOCK OPTIONS OTHER NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION GRANTED COMPENSATION (6) - ------------------------------------------- --------- --------- ------------- ------------- ------------- ----------------- David P. Hanlon 1992 $ 764,231 $1,206,435(1) $177,776(4) $ 36,738 President and Chief Executive Officer 1991 750,000 1,325,000(1) 1,097,433(5) 1990 750,000 1,287,857(1) 1,097,433(5) Christopher D. Whitney 1992 300,000 125,000(2) 14,592 Executive Vice President and Chief of 1991 283,269 150,000(2) 100,000 Staff 1990 250,000 275,000(3) Matthew B. Kearney 1992 275,000 125,000(2) 16,074 Vice President -- Finance and Chief 1991 266,635 125,000(2) 87,500 Financial Officer 1990 250,000 120,000(3) David G. Bowden 1992 135,000 40,000(2) 8,126 Vice President -- Controller and Chief 1991 131,654 35,000(2) 25,000 Accounting Officer 1990 125,000 45,000(3) - ------------------------------ (1) Includes special incentive bonus payments in satisfaction of a guaranteed bonus of $1,500,000 in connection with Mr. Hanlon's agreement to enter into employment with the Company. Such payments for 1992, 1991 and 1990 were $375,000, $375,000 and $750,000, respectively. Also includes performance bonuses for 1992, 1991 and 1990 of $831,435, $950,000 and $537,857, respectively.
201 (2) Performance bonus for year in which presented. (3) In addition to performance bonuses for 1990, amounts include special bonuses paid in connection with services related to the Company's reorganization of $175,000 for Mr. Whitney, $50,000 for Mr. Kearney and $25,000 for Mr. Bowden. (4) Includes $157,776 for legal fees and expenses incurred in connection with the preparation and negotiation of the Hanlon Employment Agreement. (5) The 1990 Stock Option Plan provides for the grant to Mr. Hanlon of options to purchase 5% of the shares of Common Stock Outstanding, which amount by its definition is subject to adjustment. The amount reflected here is based on Common Stock Outstanding at December 31, 1992. In 1990 the Company granted an option to Mr. Hanlon to purchase these shares at an exercise price of $4.00 per share. In 1991, with the approval of RII's shareholders, a new option was granted to Mr. Hanlon for the same number of shares at an exercise price of $1.875 per share and the option granted in 1990 was cancelled. (6) Includes the cost of group life and health insurance: Mr. Hanlon -- $18,074, Mr. Whitney -- $8,612, Mr. Kearney -- $10,441 and Mr. Bowden -- $5,329; the Company's contribution to a defined contribution group retirement plan: Mr. Hanlon -- $5,433, Mr. Whitney -- $5,980, Mr. Kearney -- $5,633 and Mr. Bowden -- $2,797; and the cost of additional disability insurance coverage: Mr. Hanlon -- $13,231.
See also "Employment Agreements; Termination of Employment and Change in Control Arrangements." No options were granted in 1992 to the executive officers named in the RII Summary Compensation Table. Accordingly, no "Option Grant Table" is presented herein. The following table sets forth information as of December 31, 1992, concerning the unexercised options held by those executive officers, none of whom exercised options in 1992. No options held by those executive officers were in-the-money at December 31, 1992. Options are "in-the-money" when the fair market value of underlying common stock exceeds the exercise price of the option. All options held by the named executives have an exercise price of $1.875 per share. The closing price of RII Common Stock on December 31, 1992, was $.875 per share.
NUMBER OF UNEXERCISED OPTIONS AT DECEMBER 31, 1992 -------------------------- NAME EXERCISABLE UNEXERCISABLE - ----------------------------------------------------------- ----------- ------------- David P. Hanlon............................................ 1,097,433 0 Christopher D. Whitney..................................... 66,666 33,334 Matthew B. Kearney......................................... 58,333 29,167 David G. Bowden............................................ 16,666 8,334
COMPENSATION OF DIRECTORS RII's non-employee directors are each entitled to receive $35,000 annually as compensation for serving as a director, $500 for each Board meeting attended and $500 for each committee meeting attended when such committee meeting is not held on the same day as a Board meeting or another committee meeting. No compensation was paid to Mr. Griffin or Mr. Hanlon for their services as directors of RII in 1992. Messrs. Alvarez, Cowan, Kordsmeier and Sheeline received $41,500, $41,500, $44,000 and $45,000, respectively, for their services as directors during 1992. Mr. Sheeline's compensation includes $1,000 for participation in a Board meeting of a subsidiary of RII. EMPLOYMENT AGREEMENTS; TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL ARRANGEMENTS DAVID P. HANLON. Pursuant to the Hanlon Termination Agreement, RII and Mr. Hanlon mutually agreed to the termination, as of October 31, 1993, of the Hanlon Employment Agreement. Pursuant to the Hanlon Employment Agreement, Mr. Hanlon is entitled to $850,000 earned pursuant to the Hanlon Employment Agreement but not yet paid as of October 31, 1993. In addition, pursuant to the Hanlon Termination Agreement, Mr. Hanlon is entitled to receive the present value of future base salary pursuant to the Hanlon Employment Agreement as determined under the Hanlon Termination Agreement in the sum of $1,303,076 and $1,345,580 in respect of the performance bonuses for fiscal years ending 1994 and 1995 payable under the Hanlon Employment Agreement, 202 half of which was paid on October 31, 1993 and half of which will be paid upon the earlier of (i) the acceptance of a reorganization or recapitalization of RII by the requisite number and amount of RII's creditors voting on such restructuring or reorganization and (ii) April 15, 1995. In addition, Mr. Hanlon will receive a bonus from RII in the amount of $325,000 in connection with the reorganization or recapitalization of RII, payable prior to any bankruptcy filing by RII. Finally, Mr. Hanlon will receive a bonus of $300,000 upon the disposition of the Paradise Island Business. Accordingly, Mr. Hanlon would receive a total of $625,000 in connection with the Restructuring. The payment to be made to Mr. Hanlon with respect to the disposition of the Paradise Island Business may be subject to the approval of the Bankruptcy Court. Mr. Hanlon is also entitled to participate in all of RII's benefit plans through and including September 16, 1995, unless Mr. Hanlon receives a comparable benefit in connection with subsequent employment. Mr. Hanlon will retain all previously granted 1990 Stock Options. CHRISTOPHER D. WHITNEY AND MATTHEW B. KEARNEY. The Company has employment agreements with Messrs. Whitney and Kearney, both dated as of May 3, 1991, which were extended to May 1995. The respective terms of employment will each renew automatically for another year unless either party to the agreement notifies the other that the term is not to be renewed. Mr. Whitney's agreement provides for an annual salary of $300,000 and Mr. Kearney's agreement was recently amended to provide for an annual salary of $300,000. If the Company terminates the executive's employment without cause, as defined, the executive will be entitled to receive base salary payments through the end of his term of employment. If such a termination of his employment follows a change in control, as defined, the executive will receive a lump-sum payment equal to the present value of such base salary payments. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION COMPENSATION COMMITTEE MEMBERS. Messrs. Alvarez, Griffin and Sheeline serve as members of the Compensation Committee of the Board of Directors of RII. Mr. Griffin also serves as an officer of RII. GRIFFIN SERVICES AGREEMENT. The Griffin Group, Merv Griffin and RII entered into the Old Griffin Services Agreement in September 1990. Pursuant to the Old Griffin Services Agreement, the Griffin Group granted the Company a non-exclusive license to use the name and likeness of Merv Griffin for purposes of advertising and promoting the Company's facilities and operations, and Merv Griffin agreed to serve as Chairman of the Board of Directors of RII. In addition, the Griffin Group agreed to provide to the Company the non-exclusive services of Merv Griffin, on a limited basis, to host or present shows in which he is a featured performer at the Company's facilities. Under the Old Griffin Services Agreement, the Company was not required to compensate the Griffin Group and the Company has not paid any compensation to the Griffin Group, or to Mr. Griffin directly, for Mr. Griffin's services to the Company under the Old Griffin Services Agreement. The term of the Old Griffin Services Agreement was for a period of two years, which expired on September 16, 1992. Pursuant to the New Griffin Services Agreement entered into in April 1993, but dated and effective as of September 17, 1992 to replace the Old Griffin Services Agreement as of its expiration, the Griffin Group granted RII and RIH a non-exclusive license to use the name and likeness of Merv Griffin, in certain advertising media and limited merchandising, for the sole purpose of advertising and promoting the Resorts Casino Hotel and the Paradise Island Business. In connection with such license, the Griffin Group will not grant any similar license to any casino/hotel located in either Atlantic City or The Bahamas during the term of the New Griffin Services Agreement, so long as RII and RIH own and/or operate casino and hotel facilities in such locations. It is not expected that Merv Griffin will be associated with the Paradise Island Business subsequent to the Restructuring. Pursuant to the New Griffin Services Agreement, the Griffin Group also agreed to provide to RII and RIH, for the term of the New Griffin Services Agreement, the non-exclusive services of Merv Griffin, subject to the performance by RII and RIH of its obligations under the New Griffin Services Agreement, as (i) Chairman of the Board of Directors of RII, (ii) host, producer, presenter and featured 203 performer relative to certain shows to be presented at the Resorts Casino Hotel, (iii) as consultant and marketing adviser, (iv) in certain capacities, as spokesperson for RII and RIH and (v) as participant in certain radio, television and print advertisements. The New Griffin Services Agreement will continue in force (unless earlier terminated under certain circumstances, including but not limited to a change in control of RII, the removal of Merv Griffin as Chairman of the Board of Directors of RII or a sale of the Resorts Casino Hotel) until the later of September 17, 1996, or the fourth anniversary of the effective date of any restructuring of RII's outstanding debt or any reorganization of RII under the Bankruptcy Code. If no such restructuring or reorganization has been consummated as of September 17, 1996, the New Griffin Services Agreement shall terminate as of that date. Additionally, in no event shall the New Griffin Services Agreement extend beyond September 17, 1997. Under the New Griffin Services Agreement, the Griffin Group was entitled to receive from RII and RIH $4,100,000 upon execution of such agreement, as compensation for the first two years of services. The New Griffin Services Agreement also provides for additional compensation to Griffin Group in the amounts of $2,205,000 and $2,310,000 for services during the third and fourth years, respectively, of the term of the New Griffin Services Agreement. Thereafter, should the New Griffin Services Agreement remain in force for another full year, RII and RIH will pay Griffin Group additional compensation in the amount of $2,425,000, or if the New Griffin Services Agreement remains in force for less than a full year, a prorated portion of such amount. RIH made the $4,100,000 payment for the first two years under the New Griffin Services Agreement in April 1993. Simultaneously, Merv Griffin made a partial payment of the Griffin Note in an equal amount to RII thereby reducing the principal amount of the Griffin Note to $7,523,333. RII then cancelled the Griffin Note. The Griffin Group Note in the principal amount of $7,523,333 was substituted therefor. On September 17, 1993, RII satisfied its obligation to make the $2,205,000 payment for the year ending September 16, 1995 by reducing the Griffin Group Note by that amount. The Griffin Group Note is payable on demand and bears interest at the rate of 3% per year. The bank letter of credit securing the Griffin Note was released by RII. Merv Griffin has personally guaranteed payment of the Griffin Group Note. On or before the Effective Date, RII will pay $2,310,000 to the Griffin Group for the fourth year of the New Griffin Services Agreement also by reducing the principal amount of the Griffin Group Note in an equal amount. Subsequent thereto, RII will receive payment of the balance of the Griffin Group Note (approximately $3,000,000) from the Griffin Group and will distribute the proceeds of such payment to the holders of the Old Series Notes as part of Excess Cash. Payment in full of the outstanding amounts under the Griffin Group Note is a condition to consummation of the Plan. Additionally, pursuant to the New Griffin Services Agreement, the Griffin Group will also receive, on the Effective Date, the Griffin Warrants. RII and RIH also have agreed to indemnify Merv Griffin and the Griffin Group for certain costs and liabilities arising in connection with the New Griffin Services Agreement or Merv Griffin's services, or the service of any employee of the Griffin Group, as a director or officer of RII or any subsidiary thereof. Pursuant to the New Griffin Services Agreement, RII and RIH have agreed to maintain for at least four years comprehensive public liability, personal injury and umbrella insurance coverage in specified amounts for both the Griffin Group and Merv Griffin, individually. RII and RIH also have agreed to reimburse the Griffin Group for certain expenses incurred by the Griffin Group and Merv Griffin in connection with the license and services agreed to under the New Griffin Services Agreement. If the Griffin Group fails to perform its obligations pursuant to the New Griffin Services Agreement, all unearned advance payments to the Griffin Group will be repaid to the Company. INDEMNITY AGREEMENT. RII agreed to indemnify Merv Griffin pursuant to an Indemnity Agreement (the "Indemnity Agreement"), executed on September 19, 1990, against any and all losses by reason of, arising from, in connection with, or relating to the Acquisition Claims (as defined in the Indemnity Agreement). The Acquisition Claims relate to all claims asserted against Mr. Griffin in 204 connection with the acquisition of RII by Griffco in November 1988, and all transactions consummated in connection therewith, including the sale of the Taj Mahal to certain affiliates of Donald J. Trump and the issuance of certain debt securities by GRI. RII also agreed to reimburse Mr. Griffin for any out-of-pocket expenses (including counsel fees) incurred by him in connection with the enforcement of, or preservation of any rights under, the Indemnity Agreement. INDEBTEDNESS OF MANAGEMENT. In September 1990, Merv Griffin, Chairman of the Board of RII, purchased 4,400,000 shares of RII Common Stock for which RII received $12,345,000 in cash and the $11,000,000 Griffin Note. The Griffin Note was secured by a letter of credit issued by a bank, bore interest at 8% per year and was due upon demand. As described above in "Griffin Services Agreements", in April 1993 Mr. Griffin made a partial payment on the Griffin Note, resulting in a remaining balance of $7,523,333. The Griffin Note was then canceled and the $7,523,333 Griffin Group Note, payable by the Griffin Group, a company controlled by Merv Griffin, was substituted therefor. The Griffin Group Note is payable on demand and bears interest at the rate of 3% per year. Merv Griffin has personally guaranteed payment of the Griffin Group Note. Further payments on the Griffin Group Note have been and will be made as described above in "Griffin Services Agreement". CANCELLATION OF RECEIVABLES. As part of the Old Plan, $50,000,000 of the Company's notes receivable from Griffco (formerly owned by Merv Griffin) were cancelled. In addition, $386,000 of receivables from Griffco were eliminated as a result of the merger of Griffco into a subsidiary of RII. OTHER SERVICES. The Company reimbursed the Griffin Group $400,000, $358,000, $396,000 and $181,000 for charter air services rendered in 1990, 1991, 1992 and to date in 1993, respectively, to Mr. Griffin as well as other directors and officers of RII for travel related to Company business. In 1991 and 1992 the Company did business with various subsidiaries of January Enterprises, of which Merv Griffin is Chief Executive Officer. In 1991 the Company paid $235,000 and provided certain facilities and personnel for the production of the "Ruckus Game Show" at Resorts Casino Hotel. Also in 1991, the Company provided facilities, labor and accommodations relative to the production of "Merv Griffin's 1991 New Year's Eve Special" which was broadcast live from Resorts Casino Hotel. In 1992 the Company agreed to pay $100,000 and provided certain facilities, labor and accommodations in connection with the production of the live television broadcast of "Merv Griffin's New Year's Eve Special 1992" from Resorts Casino Hotel. In 1993 the Company agreed to the same terms as in 1992 for the production of the live television broadcast of "Merv Griffin's New Year's Eve Special 1993". The Company received certain promotional considerations in connection with the television broadcast of these shows. The Company paid Alvarez & Marsal $2,145,000 and $241,000 in 1990 and 1991, respectively, for financial advisory services performed in connection with the Old Plan. Also, the Company paid Alvarez & Marsal $300,000 for financial advisory services rendered in 1992. In early 1992, RII entered into an agreement with Alvarez & Marsal pursuant to which it was to provide financial advisory services in connection with the development and analysis of financial alternatives available to the Company, and the development of a long-term financial plan. The agreement provided for monthly fees of $50,000 commencing on March 1, 1992, reimbursement of expenses, and, upon a financial restructuring, a fee of $250,000 and 125,000 shares of RII Common Stock. The agreement was amended to suspend monthly fees as of September 1, 1992, in connection with Mr. Alvarez's new position as an executive officer of Phar-Mor Inc. If the Requisite Acceptances are received prior to the filing of the Prepackaged Chapter 11 Cases (as defined in the Plan), the Company intends to pay Alvarez & Marsal its restructuring fee of $250,000 and 125,000 shares of RII Common Stock prior to such filing. If the Requisite Acceptances are not received prior to such filing, the Company anticipates that Alvarez & Marsal will file a claim against the Company for its restructuring fee contingent on consummation of the Restructuring. Mr. Alvarez, a shareholder of Alvarez & Marsal, has been a member of the Board of Directors of RII since September 1990. The Company retained Verner, Liipfert, Bernhard, McPherson and Hand during 1992 for certain legal services. Mr. Sheeline, who was "Of Counsel" at that time to such law firm, has been a director of RII since 1990. 205 MANAGEMENT OF RIHF DIRECTORS AND EXECUTIVE OFFICERS The directors of RIHF are:
DIRECTOR NAME AGE SINCE - ---------------------------------------- --- ------------ Christopher D. Whitney 49 1993 Matthew B. Kearney 53 1993
The executive officers of RIHF are:
EXECUTIVE OFFICER NAME AGE SINCE - ---------------------------------------- --- ------------ Christopher D. Whitney 49 1993 President Matthew B. Kearney 53 1993 Executive Vice President -- Finance and Chief Financial Officer
RIHF was recently incorporated and therefore had no compensation or other activity in 1992. See "Management of RII" for a description of the business experience and the compensation arrangements for Messrs. Whitney and Kearney. MANAGEMENT OF RIH DIRECTORS AND EXECUTIVE OFFICERS The directors of RIH are:
DIRECTOR NAME AGE SINCE - ---------------------------------------- ---- ------------ Christopher D. Whitney 49 1991 Matthew B. Kearney 53 1993
The executive officers of RIH are:
EXECUTIVE OFFICER NAME AGE SINCE - ---------------------------------------- ---- ------------ John P. Belisle 39 1991 Executive Vice President and Chief Operating Officer Christopher D. Whitney 49 1989 Executive Vice President, Chief of Staff and Secretary Matthew B. Kearney 53 1982 Vice President and Chief Financial Officer Kimberly A. Corrigan 36 1991 Vice President -- Hotel Operations Paul E. Patay 62 1989 Vice President -- Food and Beverage Michelle Perna 40 1988 Vice President -- Human Resources Anthony P. Rodio 35 1993 Vice President -- Finance
206 BUSINESS EXPERIENCE See "Management of RII -- Directors and Executive Officers -- Business Experience" above for information regarding Messrs. Whitney and Kearney. The principal occupations and business experience for the last five years or more of the directors and executive officers of RIH who do not also serve as directors or executive officers of RII are as follows: JOHN P. BELISLE -- Executive Vice President and Chief Operating Officer of RIH since November 1993; Senior Vice President -- Casino Operations of RIH from May 1993 to November 1993; Vice President -- Marketing of RIH from June 1991 to May 1993; Vice President -- Marketing of Trump Castle from January 1990 to June 1990; Vice President -- Marketing of RIH from September 1989 to January 1990; various other positions with RIH from December 1981 to September 1989. KIMBERLY A. CORRIGAN -- Vice President -- Hotel Operations of RIH since September 1991; Executive Director -- Hotel Operations of Taj Mahal from September 1990 to September 1991; Executive Director of Operations of Bally's Grand casino/hotel in Atlantic City, New Jersey from June 1986 to August 1989. PAUL E. PATAY -- Vice President -- Food and Beverage of RIH since April 1989; manager of food and beverage operations of RIH from December 1988 to April 1989; Vice President -- Food and Beverage of Trump Castle casino/hotel in Atlantic City from September 1985 to May 1988. MICHELLE PERNA -- Vice President -- Human Resources of RIH since November 1988; Manager -- Employee Relations and various other positions with Harrah's Marina from May 1980 to November 1988. ANTHONY P. RODIO -- Vice President -- Finance of RIH since September 1993; Director of Operational Accounting of RIH from October 1990 to September 1993; Casino Controller of Trump Plaza Hotel and Casino from August 1987 to October 1990. EXECUTIVE COMPENSATION The following table (hereinafter referred to as the "RIH Summary Compensation Table") sets forth information concerning compensation earned by, paid to or awarded to RIH's Chief Executive Officer and to each of the other four most highly compensated executive officers of RIH who were serving as executive officers at December 31, 1992 for services rendered in all capacities to RIH, RII and RII's other subsidiaries for the year ended December 31, 1992.
ANNUAL COMPENSATION ------------------------------------- OTHER ANNUAL ALL OTHER NAME AND PRINCIPAL POSITION SALARY BONUS COMPENSATION COMPENSATION (2) - ------------------------------------------------- ----------- --------- ------------- ---------------- David P. Hanlon (1) (1) (1) President and Chief Executive Officer(3) Christopher D. Whitney (1) (1) Executive Vice President Matthew B. Kearney (1) (1) Vice President and Chief Financial Officer John R. Spina $ 198,077 $ 97,568 $ 8,562 Executive Vice President and Chief Operating Officer(3) Earl Yanase $ 220,000 $ 53,068 $ 8,342 Vice President -- Casino Operations (3) - ------------------------ (1) Messrs. Hanlon, Whitney and Kearney were executive officers of RII at December 31, 1992. See "RII Summary Compensation Table" for information regarding their compensation.
207 (2) Includes the cost of group life and health insurance: Mr. Spina -- $5,299 and Mr. Yanase -- $5,634; employer's contribution to a defined contribution group retirement plan: Mr. Spina -- $3,263 and Mr. Yanase -- $2,708. (3) Messrs. Hanlon, Spina and Yanase served in these capacities through October 1993, November 1993 and July 1993, respectively.
Certain executives of RIH participate in RII's 1990 Stock Option Plan. Their options are to purchase shares of RII Common Stock. No options were granted in 1992 to the executive officers named in the RIH Summary Compensation Table. Accordingly, no Option Grant Table is presented herein. The following table sets forth information as of December 31, 1992, concerning the unexercised options held by those executive officers, none of whom exercised options in 1992. No options held by those executive officers were in-the-money at December 31, 1992. Options are "in-the-money" when the fair market value of underlying common stock exceeds the exercise price of the option. All options held by the named executives have an exercise price of $1.875 per share. The closing price of RII Common Stock on December 31, 1992 was $.875 per share.
NUMBER OF UNEXERCISED OPTIONS AT DECEMBER 31, 1992 ------------------------- NAME EXERCISABLE UNEXERCISABLE - --------------------------------------------------------------- ---------- ------------- David P. Hanlon................................................ (1) (1) Christopher D. Whitney......................................... (1) (1) Matthew B. Kearney............................................. (1) (1) John R. Spina.................................................. 23,333 11,667 Earl Yanase.................................................... 11,666 23,334 - ------------------------ (1) For information regarding fiscal year end option values for Messrs. Hanlon, Whitney and Kearney, see the table of unexercised options at December 31, 1992 under "Management of RII -- Executive Compensation".
COMPENSATION OF DIRECTORS The directors of RIH presently receive no compensation specifically for their services as directors. However, both directors of RIH serve as officers of RII and are compensated for such services. Also, Mr. Hanlon who served as a director during 1992, received no compensation specifically for his service as an RIH director. During 1992 he served as an officer of RII and was compensated for such service. EMPLOYMENT AGREEMENTS; TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL ARRANGEMENTS In connection with Mr. Spina's termination in November 1993, RIH paid Mr. Spina a lump sum cash settlement of $176,250. Messrs. Whitney and Kearney have employment agreements with RII. See "Management of RII -- Executive Compensation - -- Employment Agreements; Termination of Employment and Change in Control Arrangements". 208 MANAGEMENT OF PIRL DIRECTORS AND EXECUTIVE OFFICERS The directors of PIRL are:
DIRECTOR NAME AGE SINCE - ---------------------------------------- --- ------------ Christopher D. Whitney 49 1993 Matthew B. Kearney 53 1993
The executive officers of PIRL are:
EXECUTIVE OFFICER NAME AGE SINCE - ---------------------------------------- --- ------------ Christopher D. Whitney 49 1993 President Matthew B. Kearney 53 1993 Vice President -- Finance and Chief Financial Officer and Secretary
PIRL was recently incorporated and therefore had no compensation or other activity in 1992. See "Management of RII" for a description of the business experience and the compensation arrangements for Messrs. Whitney and Kearney. If the PIRL Spin-Off occurs, Messrs. Whitney and Kearney will resign as directors and officers of PIRL. Pursuant to the Plan, Fidelity and TCW will designate the initial directors and officers of PIRL for the period commencing on the Effective Date. 209 SECURITY OWNERSHIP As of November 30, 1993, there were 2,003 record holders of RII Common Stock. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS The following table sets forth certain information as to the beneficial ownership of RII Common Stock as of October 21, 1993, by persons known by RII to be holders of 5% or more of RII Common Stock, or expected to become holders of 5% or more of RII Common Stock when the Restructuring is effected. Information as to the number of shares beneficially owned has been furnished by the persons named in the table.
PRE-RESTRUCTURING POST-RESTRUCTURING ------------------------- ------------------------- SHARES SHARES PERCENT NAME AND ADDRESS OF BENEFICIALLY PERCENT BENEFICIALLY OF BENEFICIAL OWNER OWNED OF CLASS OWNED CLASS(3) ----------------------- ------------ --------- ------------ --------- Merv Griffin............................ 4,398,115 21.82% 9,063,115(2) 21.29% c/o The Griffin Group, Inc. 780 Third Avenue, Suite 1801 New York, NY 10017 David P. Hanlon......................... 1,094,800(1) 5.15% 1,094,800 2.81% c/o Resorts International, Inc. 1133 Boardwalk Atlantic City, NJ 08401 Certain funds and accounts managed by -- -- 6,714,941 17.72% Fidelity................................ Certain funds and accounts managed by -- -- 4,234,733 11.17% TCW..................................... - ------------------------ (1) Ownership represents shares issuable upon exercise of fully vested 1990 Stock Options issued pursuant to the 1990 Stock Option Plan. Related percentages shown give effect to the exercise of options for such shares. See Note (5) to RII Summary Compensation Table under "Management of RII -- Executive Compensation". (2) Assumes Griffin Warrants for 4,665,000 shares are issued. Related percentage gives effect to their exercise. (3) The percentages shown give effect to the issuance of 17,025,000 shares to the holders of the Old Series Notes and 715,000 shares to financial advisers in settlement of certain recapitalization costs.
210 SECURITY OWNERSHIP OF MANAGEMENT The following table sets forth certain information as to the beneficial ownership of RII Common Stock as of November 30, 1993, by each director, each executive officer named in the RII Summary Compensation Table and by all directors and executive officers as a group.
PRE-RESTRUCTURING POST-RESTRUCTURING ------------------------- ------------------------- AMOUNT AND AMOUNT AND NATURE OF NATURE OF SHARES SHARES PERCENT BENEFICIALLY PERCENT BENEFICIALLY OF NAME OF BENEFICIAL OWNER OWNED OF CLASS OWNED CLASS(5) - ---------------------------------------- ------------ --------- ------------ --------- Merv Griffin............................ 4,398,115 21.82% 9,063,115(3) 21.29% Antonio C. Alvarez II................... 5,000 .02% 5,000 .01% Warren Cowan............................ 5,000 .02% 5,000 .01% Thomas E. Gallagher..................... None None None None Joseph G. Kordsmeier.................... None None None None Paul C. Sheeline........................ 5,000 .02% 5,000 .01% Christopher D. Whitney.................. 100,000(1) .49% 100,000 .26% Matthew B. Kearney...................... 87,500(1) .43% 87,500 .23% David G. Bowden......................... 25,000(1) .12% 25,000 .07% Directors and officers as a group (nine persons)............................... 4,625,615(2) 22.71% 9,290,615(4) 21.72% - ------------------------ (1) Ownership represents shares issuable upon exercise of 1990 Stock Options. Related percentages shown give effect to the exercise of options for such shares. (2) Includes 212,500 shares which are issuable upon exercise of 1990 Stock Options. Related percentage shown gives effect to the exercise of options for such shares. (3) Includes 4,665,000 shares issuable upon exercise of the Griffin Warrants assuming that the Griffin Warrants are issued. Related percentage gives effect to their exercise. (4) Includes 212,500 shares which are issuable upon exercise of 1990 Stock Options and 4,665,000 shares issuable upon exercise of the Griffin Warrants. Related percentage shown gives effect to the exercise of all such stock options and the Griffin Warrants. (5) The percentages shown give effect to the issuance of 17,025,000 shares to the holders of the Old Series Notes and 715,000 shares to financial advisers in settlement of certain recapitalization costs.
CERTAIN TRANSACTIONS TRANSACTIONS WITH MANAGEMENT AND OTHERS Messrs. Alvarez, Griffin and Sheeline serve as members of the Compensation Committee of the Board of Directors of RII. Mr. Griffin also serves as an officer of RII. See "Management of RII -- Executive Compensation -- Compensation Committee Interlocks and Insider Participation" for more information relating to these directors. The Company paid Rogers & Cowan, Inc. $179,000, $147,000 and $128,000 for public relations services rendered in 1990, 1991 and 1992, respectively, on a non-exclusive basis for the Company's Atlantic City and Paradise Island properties. Mr. Cowan, who was the Chairman of the Board and a shareholder of Rogers & Cowan, Inc. until July 1992, has been a director of RII since September 1990. 211 DESCRIPTION OF NEW RIHF MORTGAGE NOTES The following is a summary of certain provisions of the New RIHF Mortgage Notes and the New RIHF Mortgage Note Indenture. Wherever particular provisions of the New RIHF Mortgage Note Indenture or New RIHF Mortgage Notes are referred to, such provisions are incorporated by reference herein. References to Sections or Articles refer to Sections or Articles of the New RIHF Mortgage Note Indenture. The definitions of certain terms used below are set forth in "Certain Definitions" below in this section. All other capitalized terms used in this section but not defined in this Information Statement/Prospectus have the meanings ascribed thereto in the New RIHF Mortgage Note Indenture and are incorporated by reference herein. GENERAL The New RIHF Mortgage Notes will be issued pursuant to the New RIHF Mortgage Note Indenture among RIHF, RIH and State Street Bank and Trust Company of Connecticut, National Association, as trustee (the "New RIHF Mortgage Note Trustee"). A copy of the New RIHF Mortgage Note Indenture is filed as an exhibit to the Registration Statement of which this Information Statement/Prospectus is a part. The terms of the New RIHF Mortgage Note Indenture also are governed by certain provisions of the TIA. The New RIHF Mortgage Notes will be secured senior subordinated obligations of RIHF in the aggregate principal amount of $125,000,000. The New RIHF Mortgage Notes will mature on September 15, 2003. INTEREST Interest on the New RIHF Mortgage Notes will accrue from the Effective Date at a rate of 11% per year. Interest is payable semi-annually on March 15 and September 15 in each year to holders of record at the close of business on the first day of the month in which the interest payment date occurs. RIHF is required to pay interest on overdue principal and, to the extent permitted by law, overdue interest at the rate of 14% per year. SINKING FUND REQUIREMENTS None. MANDATORY REDEMPTION In the event of an RIH Sale, all the New RIHF Mortgage Notes shall be redeemed by RIHF whether such RIH Sale occurs before, on or after the fifth anniversary of the Effective Date, at par together with interest, if any, accrued and unpaid thereon to the Redemption Date; provided, however, that such obligation of RIHF to redeem the New RIHF Mortgage Notes in the event of a proposed RIH Sale shall cease to exist if the Holders of not less than 66 2/3% in Outstanding Amount of the Outstanding New RIHF Mortgage Notes have consented to such proposed RIH Sale. (SECTION 3.12). OPTIONAL REDEMPTION The New RIHF Mortgage Notes are redeemable at any time in whole, or from time to time in part, on or after the fifth anniversary of the Effective Date at the election of RIHF, at a redemption price of 100% of their principal amount plus accrued interest to the Redemption Date. (SECTION 3.12). From and after any Redemption Date, if funds for the redemption of any New RIHF Mortgage Notes called for redemption shall have been made available, such New RIHF Mortgage Notes will cease to bear interest and the only right of the holders will be to receive payment of the Redemption Price and all interest accrued to such Redemption Date. (SECTION 13.06). The New RIHF Mortgage Note Indenture requires that notice of any redemption of any New RIHF Mortgage Notes be given to holders at their addresses, as shown in the register, not less than 30 nor more than 30 days prior to the Redemption Date. The notice of redemption must specify, among other things, the Redemption Date, the Redemption Price, the principal amount of New RIHF Mortgage Notes to be redeemed, and, if less than all outstanding New RIHF Mortgage Notes are to be redeemed, the identification (and, in the case of partial redemption, the respective principal amounts) 212 of the New RIHF Mortgage Notes to be redeemed and the place or places where the New RIHF Mortgage Notes to be redeemed are to be surrendered for payment of the Redemption Price. (SECTION 13.04). The New RIHF Mortgage Note Indenture provides that in the event of redemption of less than all the outstanding New RIHF Mortgage Notes, the particular New RIHF Mortgage Notes to be redeemed will be selected by the New RIHF Mortgage Note Trustee by a random, automated selection process or pro rata, as deemed appropriate by the New RIHF Mortgage Note Trustee. (SECTION 13.03). LIMITATION ON OPEN-MARKET PURCHASES See "-- Covenants -- Limitation on Certain Transactions". CASINO CONTROL ACT REGULATION The New RIHF Mortgage Notes are subject to the qualification, divestiture and redemption provisions under the Casino Control Act that are described in "Business of the Company -- Regulation and Gaming Taxes and Fees -- New Jersey". (SECTION 13.08). INTERCREDITOR AGREEMENT The RIHF Senior Facility Notes, the RIH Senior Facility Guaranty, the New RIHF Mortgage Notes, the RIH Mortgage Guaranty, the New RIHF Junior Mortgage Notes and the RIH Junior Mortgage Guaranty are all secured, in whole or in part, by the Resorts Casino Hotel. See "-- Collateral", "-- Guaranty", "Description of RIHF Senior Facility Notes -- Collateral", "Description of RIHF Senior Facility Notes -- Guaranty", "Description of New RIHF Junior Mortgage Notes -- Collateral" and "Description of New RIHF Junior Mortgage Notes -- Guaranty". RII, RIH, RIHF, the RIHF Senior Facility Trustee, the New RIHF Mortgage Note Trustee, the New RIHF Junior Mortgage Note Trustee and any other lender or lenders (or any trustee or agent acting on behalf of such lender or lenders) under the Junior Mortgage Facility or the Working Capital Facility will enter into an intercreditor agreement (the "Intercreditor Agreement"), relating to the administration, preservation and disposition of the Resorts Casino Hotel. The Intercreditor Agreement will provide that: (i) the liens securing payment of the RIHF Senior Facility Notes and the RIH Senior Facility Guaranty will be PARI PASSU with each other and senior to liens securing payment of the New RIHF Mortgage Notes, the RIH Mortgage Guaranty, the New RIHF Junior Mortgage Notes and the RIH Junior Mortgage Guaranty with respect to payment from proceeds realized upon any sale or other disposition of the Resorts Casino Hotel; and (ii) the liens securing payment of the New RIHF Mortgage Notes and the RIH Mortgage Guaranty will be PARI PASSU with each other, and senior to the liens securing payment of the New RIHF Junior Mortgage Notes and the RIH Junior Mortgage Guaranty, and junior to the liens securing payment of the RIHF Senior Facility Notes and the RIH Senior Facility Guaranty with respect to payment from proceeds realized upon any sale or other disposition of the Resorts Casino Hotel. COLLATERAL GENERAL The New RIHF Mortgage Notes are secured by the New RIHF Mortgage Trust Estate pursuant to the Mortgage Documents described below. (ARTICLE SIX). The "New RIHF Mortgage Trust Estate" consists of an assignment by RIHF to the New RIHF Mortgage Note Trustee for the benefit of the holders of the New RIHF Mortgage Notes, of (i) the RIH Promissory Note in the original aggregate principal amount of $125,000,000, payable in amounts and at times necessary to pay the principal of and interest on the New RIHF Mortgage Notes, and (ii) a lien on the RIH Property, consisting of RIH's fee and leasehold interests comprising the Resorts Casino Hotel, the contiguous parking garage and property, all additions or improvements constructed thereon, encumbered pursuant to the RIH Senior Mortgage between RIH, as mortgagor, and RIHF, as mortgagee, securing the payment of the RIH Promissory Note. 213 THE RIH SENIOR MORTGAGE The RIH Mortgage creates a mortgage lien and security interest (subject to the liens securing the RIHF Senior Facility Notes, the RIH Senior Facility Guaranty and any other secured Working Capital Facility) in the Resorts Casino Hotel. RIH is prohibited from obtaining the release of the Resorts Casino Hotel without the consent of each holder of the outstanding New RIHF Mortgage Notes, except as permitted by the provisions described under "-- Release and Substitution of Collateral". RELEASE AND SUBSTITUTION OF COLLATERAL No portion of the New RIHF Mortgage Trust Estate may be released without the consent of the Holders of not less than 66 2/3% in Outstanding Amount of the New RIHF Mortgage Notes then Outstanding. (SECTION 11.02). Section 2.02 of the RIH Mortgage provides that, unless an Event of Default shall have occurred and be continuing, RIH may sell or dispose of certain elements of the Resorts Casino Hotel which may have become obsolete or unfit for use or which are no longer necessary in the conduct of its businesses. The New RIHF Mortgage Trust Estate will be released upon satisfaction and discharge of RIHF's obligations under the New RIHF Mortgage Note Indenture. (SECTION 5.01). LIMITATIONS ON ABILITY TO REALIZE ON COLLATERAL GENERAL If there is an Event of Default under the New RIHF Mortgage Note Indenture or the RIH Mortgage, the RIHF Mortgage Note Trustee, subject to the requirements of the Casino Control Act, may enforce the rights and remedies arising under the RIH Mortgage. The net amount realized in any foreclosure sale for the benefit of holders of the New RIHF Mortgage Notes will be only that amount that exceeds all amounts then due and owing to creditors, if any, having senior security interests (including the holders of the RIHF Senior Facility Notes or the parties to any other secured Working Capital Facility) and certain costs, taxes and other items. CERTAIN REGULATORY CONSIDERATIONS In any foreclosure sale with respect to the Resorts Casino Hotel, the RIHF Mortgage Note Trustee could bid the amount of the outstanding New RIHF Mortgage Notes. The RIHF Mortgage Note Trustee would be required to comply with the applicable requirements of the Casino Control Act in any foreclosure sale, including obtaining a casino license. CERTAIN BANKRUPTCY CONSIDERATIONS In the event of the filing of a petition under the Bankruptcy Code for RIHF or RIH, applicable provisions of the Bankruptcy Code, including the automatic stay provisions of section 362 of the Bankruptcy Code, may operate to prevent the RIHF Mortgage Note Trustee, from taking action to realize on the New RIHF Mortgage Trust Estate if there is an Event of Default. GROUND LEASES A substantial portion of the North Tower of the Resorts Casino Hotel, a portion of the adjacent parking garage and a small portion of the casino/hotel are located on land that is owned by unrelated third parties and held by RIH under long-term ground leases. The ground leases do not provide certain mortgagee protections and, in the event of a default thereunder, the RIHF Mortgage Note Trustee may not have the right to cure any such default. However, the RIHF Mortgage Note Trustee has the right under the New RIHF Mortgage Note Indenture to tender defaulted ground lease payments to RIH and require RIH to transmit such funds to the respective ground lessor. If such default is not cured, the lessor under any ground lease may have the right to terminate the ground lease. The termination of any or all of such ground leases could result in the loss of portions of, or rights with respect to, the property subject to the terminated ground lease. 214 GUARANTY RIH will guarantee payment of principal of and interest on the New RIHF Mortgage Notes pursuant to the RIH Mortgage Guaranty. In addition, the RIH Mortgage Guaranty will be secured by the RIH Guaranty Mortgage. The RIH Guaranty Mortgage will encumber the Resorts Casino Hotel on a basis PARI PASSU with the RIH Mortgage. (ARTICLE FOUR) RANKING The RIH Mortgage will be PARI PASSU with the lien of the RIH Guaranty Mortgage and subordinated to the liens on the Resorts Casino Hotel securing payment of the RIHF Senior Facility Notes, the RIHF Senior Facility Guaranty and any other secured Working Capital Facility. (SECTION 4.03). The aggregate principal amount that may be outstanding under the RIHF Senior Facility and any other Working Capital Facility on and after the Effective Date is limited to $20,000,000. PAYMENTS OF NET PROCEEDS OF ASSET SALES None. CHANGE OF CONTROL See "-- Covenants -- Limitation on Consolidation, Merger, Conveyance, Transfer or Lease of Property and Assets." COVENANTS CORPORATE EXISTENCE Subject to the provisions described under "-- Limitations on Merger, Consolidation, Transfer or Lease of Property and Assets", the New RIHF Mortgage Note Indenture will provide that each of RIHF and RIH will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence and the corporate existence of each of its Subsidiaries in accordance with the respective organizational documents of RIHF, RIH and each such Subsidiary and the rights (charter and statutory), licenses, permits, approvals and governmental franchises of it and each of its Subsidiaries necessary to the conduct of its and their respective businesses, including, without limitation, all licenses, permits, approvals and franchises necessary to assure the continued operation of RIH's gaming operations at the Resorts Casino Hotel; PROVIDED, HOWEVER, that any direct or indirect wholly owned subsidiary of RIH may consolidate with, merge into or transfer or distribute all or part of its properties and assets to RIH or RIHF or as otherwise provided in Section 10.01 of the New RIHF Mortgage Note Indenture. (SECTION 12.04). LIMITATION ON DIVIDENDS AND RESTRICTED PAYMENTS The New RIHF Mortgage Note Indenture will provide that RIHF will not, directly or indirectly, make, or permit any Subsidiary of RIHF to make, any Restricted Payment. The New RIHF Mortgage Note Indenture also will provide that RIH will not, directly or indirectly make, or permit any Subsidiary of RIH to make, any Restricted Payment; PROVIDED, HOWEVER, that: (i) if RIH's Consolidated Interest Coverage Ratio, as certified to the New RIHF Mortgage Note Trustee by an Officers' Certificate, calculated at the time of the declaration of the dividend or distribution is equal to or exceeds two, then RIH may declare and pay cash dividends or make cash distributions in respect of any class of capital stock of RIH in an amount not to exceed in the aggregate with any other such cash dividends or distributions declared or made from and after the date of the New RIHF Mortgage Note Indenture, 50% of RIH's Consolidated Net Income from and after the Effective Date; and (ii) if (1) RIH's Consolidated Interest Coverage Ratio, as certified to the New RIHF Mortgage Note Trustee by an Officer's Certificate, calculated at the time of the declaration of the dividend or distribution is equal to or exceeds two, and (2) RIH has cash in excess of the amount required to pay interest on the New RIHF Mortgage Notes and the New RIHF Junior Mortgage Notes on the next Interest Payment Date plus $20,000,000, then RIH may declare and pay cash dividends or make cash distributions in respect of any class of capital stock of RIH in an amount not to exceed such excess cash amount. 215 The New RIHF Mortgage Note Indenture further will provide that RIHF and RIH will not, and will not permit any of their respective Subsidiaries to, create or otherwise cause or suffer to exist or become effective any encumbrance or restriction of any kind on the ability of any Subsidiary of RIH or RIHF: (i) to pay dividends or make any other distribution on the capital stock of such Subsidiary that is owned by RIH, RIHF or a wholly owned Subsidiary of RIHF or RIH, as applicable; (ii) to pay any Indebtedness owed by such Subsidiary to RIH, RIHF or any wholly owned Subsidiary of RIHF or RIH, as applicable; (iii) to make loans or advances to RIH, RIHF or any wholly owned Subsidiary of RIHF or RIH, as applicable; or (iv) to transfer any of its property or assets to RIHF, RIH or any wholly owned Subsidiary of RIHF or RII, as applicable, except (A) any restrictions existing on or prior to the date of the New RIHF Mortgage Note Indenture, or in connection with agreements in effect, or entered into, on the date of the New RIHF Mortgage Note Indenture, or any permitted amendments, renewals, refundings, refinancings or extensions thereof; PROVIDED, HOWEVER, that the terms and conditions of any such amendments, renewals, refundings, refinancings or extensions are no more restrictive with respect to the matters set forth in clauses (i) through (iv) of this paragraph than the agreements being amended, refunded, renewed, refinanced or extended; (B) any restrictions or encumbrances existing or arising pursuant to the terms of Indebtedness of a Person outstanding at the time such Person becomes a Subsidiary of RIHF or RIH and not incurred in connection with, or in contemplation of, such Person becoming a Subsidiary of RIHF or RIH or any permitted amendments, renewals, refinancings or extensions thereof; PROVIDED, HOWEVER, that the terms and conditions of any such amendments, renewals, refundings, refinancings or extensions are no more restrictive with respect to the matters set forth in clauses (i) through (iv) of this paragraph than the agreements being amended, renewed, refunded, refinanced or extended; (C) encumbrances or restrictions existing under or by reason of applicable law or regulation (including, without limitation, the Casino Control Act) or the New RIHF Mortgage Note Indenture; (D) customary provisions restricting assignment of contracts or subletting or assignment of any lease governing a leasehold interest of any Subsidiary of RIHF or RIH; or (E) net worth maintenance requirements imposed by any governmental authority. (SECTION 12.07). LIMITATION ON ADDITIONAL INDEBTEDNESS AND ISSUANCE OF NOTES The New RIHF Mortgage Note Indenture will provide that RIHF and RIH will not, and will not permit any of their respective Subsidiaries to, directly or indirectly, incur, issue, assume, guarantee or otherwise become directly or indirectly liable with respect to, including without limitation through any merger or consolidation to which RIHF, RIH or any of their respective Subsidiaries is a party or through any other acquisition of any such Subsidiary (collectively, "incur"), or have outstanding, any Indebtedness other than, without duplication, the following: (i) the New RIHF Mortgage Notes; (ii) Indebtedness represented by the Junior Mortgage Facility; (iii) Indebtedness represented by the Working Capital Facility; (iv) Indebtedness represented by Capitalized Lease Obligations in an amount not in excess of $5,000,000 in the aggregate at any time outstanding; (v) Indebtedness represented by F, F&E Financing Agreements in an amount not in excess of $10,000,000 in the aggregate at any time outstanding; (vi) unsecured Indebtedness in an amount not in excess of $5,000,000 in the aggregate at any time outstanding that is subordinated and junior to the New RIHF Junior Mortgage Notes at least to the extent set forth in the Subordination Provisions attached to the New RIHF Mortgage Note Indenture as Exhibit C and which Indebtedness does not have any requirements for amortization payments, mandatory redemption or sinking fund payments prior to the stated maturity of the New RIHF Junior Mortgage Notes and does not provide for the payment of interest in cash at any time when the most recent installment of interest on the New RIHF Junior Mortgage Notes was not paid in cash; 216 (vii) Non-Recourse Indebtedness in an amount not in excess of $25,000,000 in the aggregate at any time outstanding; (viii) After-Acquired Fee Mortgage Debt in an amount not in excess of $3,000,000 in the aggregate at any time outstanding; and (ix) Intercompany advances between RIH, RIHF or any of their direct or indirect Subsidiaries on the one hand, and RII, on the other hand, not in excess of $1,000,000 in the aggregate at any time outstanding. The New RIHF Mortgage Note Indenture also will provide that RIHF and RIH will not permit any of their respective Subsidiaries to issue (other than to RIHF, RIH or a direct or indirect wholly owned Subsidiary of RIHF or RIH) any capital stock which has voting rights or has a preference as to any distribution over its common stock. (SECTION 12.08). LIMITATION ON REPAYMENT OF SUBORDINATED INDEBTEDNESS The New RIHF Mortgage Note Indenture will provide that neither RIHF nor RIH will, and neither RIHF nor RIH will permit any Subsidiary to, directly or indirectly, purchase, redeem, defease (including, but not limited to, in substance or legal defeasance) or otherwise acquire or retire for value prior to the stated maturity of, or prior to any scheduled mandatory redemption or sinking fund payment with respect to (collectively, to "repay" or a "repayment"), the principal of any Indebtedness of RIHF, RIH or any Subsidiary of RIHF or RIH which is subordinated (whether pursuant to its terms or by operation of law) in right of payment to the New RIHF Mortgage Notes; PROVIDED, HOWEVER, that the provisions of this paragraph shall not apply with respect to the Indebtedness incurred pursuant to the Junior Mortgage Facility (it being agreed by RIH and RIHF that no modification, waiver, consent or amendment to the New RIHF Junior Mortgage Notes or the New RIHF Junior Mortgage Note Indenture shall permit the redemption of the New RIHF Junior Mortgage Notes prior to the fifth anniversary of the Effective Date unless the same shall have been approved by the holders of 66 2/3% in Outstanding Amount of the New RIHF Mortgage Notes then Outstanding). (SECTION 12.09). LIMITATION ON CERTAIN TRANSACTIONS The New RIHF Mortgage Note Indenture also will provide that each of RIHF and RIH will not, and will not permit any Subsidiary to, repurchase any New RIHF Mortgage Notes in the open market if an Event of Default shall have occurred and shall be continuing under the New RIHF Mortgage Note Indenture, under the New RIHF Junior Mortgage Note Indenture or under the RIHF Senior Facility Indenture. (SECTION 12.10). RESTRICTION OF ACTIVITIES The New RIHF Mortgage Note Indenture will provide that RIH will not, until the date that is 91 days after the payment in full by RIHF of the principal of (and interest, if any, on) all Outstanding New RIHF Mortgage Notes, engage in any business or investment activities other than those necessary for, incident to, connected with or arising out of acquiring, financing, owning and operating the Resorts Casino Hotel or additional hotels or casinos or related or ancillary businesses. The New RIHF Mortgage Note Indenture also will provide that neither RIHF nor RIH shall make any loans to any Affiliate or any other Person other than (i) Indebtedness of the type described in clause (ix) of the covenant described in "-- Limitation on Additional Indebtedness and Issuance of Notes", and (ii) loans to RII from the proceeds of the Indebtedness represented by the Working Capital Facility; PROVIDED, HOWEVER, that RIH shall have the right to make loans to employees of RIH actively involved in the operation of the Resorts Casino Hotel or to engage in credit transactions in the operation of the Resorts Casino Hotel, if such loans or credit transactions are in the ordinary course of business of operating a casino/hotel. 217 The New RIHF Mortgage Note Indenture further will provide that RIHF will not engage in any business (and shall not have any Subsidiaries) other than (i) to collect principal, interest (and any interest on overdue principal and interest) and other amounts under any intercompany notes or guaranties made to the order of or otherwise in favor of RIHF, (ii) to preserve its rights under the New RIHF Mortgage Note Indenture and the Mortgage Documents and otherwise to comply with its obligations thereunder and under the New RIHF Mortgage Notes, (iii) to do or cause to be done all things necessary or appropriate to protect the New RIHF Mortgage Trust Estate, (iv) to preserve its rights under the New RIHF Junior Mortgage Note Indenture and the Junior Mortgage Documents and otherwise to comply with its obligations thereunder and under the New RIHF Junior Mortgage Notes, (v) to issue the Indebtedness represented by any other Junior Mortgage Facility Notes, (vi) to issue Indebtedness represented by the Working Capital Facility; (vii) to preserve its rights under the Working Capital Facility and otherwise comply with its obligations under the Working Capital Facility, (viii) to incur any other Indebtedness permitted under this Indenture, (ix) to do all such acts and deeds necessary in connection with the Junior Mortgage Facility and the documents and instruments relating thereto and in connection with the Working Capital Facility and the documents and instruments relating thereto, (x) to declare, issue and pay dividends on, or make any redemptions or repurchases of, RIHF's capital stock as contemplated by its Certificate of Incorporation (to the extent permitted hereby) and otherwise to comply with and perform the provisions of its Certificate of Incorporation and By-laws, and (xi) to do such further acts and deeds to effectuate any of the matters listed in the foregoing clauses of this paragraph. (SECTION 12.11). LIMITATION ON SUBSIDIARIES CONSOLIDATED GROUP The New RIHF Mortgage Note Indenture will provide that RIHF and RIH will not have any Subsidiaries except the Subsidiaries existing on the date of the New RIHF Mortgage Note Indenture and Subsidiaries acquired by RIHF or RIH in transactions not prohibited by the other provisions of the New RIHF Mortgage Note Indenture which are and shall at all times be wholly owned (directly or indirectly) by RIHF or RIH. (SECTION 12.12). LIMITATIONS ON LIENS The New RIHF Mortgage Note Indenture will provide that neither RIHF nor RIH will create, incur, suffer to exist or permit to be created or incurred any mortgage, lien, charge or encumbrance on or pledge of the Mortgage Documents or any of the New RIHF Mortgage Trust Estate, other than (a) the lien of the Mortgage Documents and the Assignment Agreement, (b) liens on the New RIHF Mortgage Trust Estate in connection with Indebtedness permitted by clauses (i), (ii), (iii), (iv) or (v) of the first paragraph of the covenant described in "-- Limitation on Additional Indebtedness and Issuance of Notes", (c) other Permitted Encumbrances on the New RIHF Mortgage Trust Estate, and (d) a notice of intention or building contract filed by a mechanic, materialman or laborer under the New Jersey lien law. Without limiting the generality of the previous sentence, but notwithstanding the provisions of such sentence, RIH will not be deemed to have breached such provisions by virtue of the existence of liens for Impositions (as defined in the RIH Mortgage) or mechanics' liens so long as RIH is in good faith contesting the validity of such liens in accordance with the provisions of Section 5.09 of the RIH Senior Mortgage. (SECTION 12.13). COMPLIANCE WITH LAWS The New RIHF Mortgage Note Indenture will provide that each of RIHF and RIH will comply, and will cause each of its Subsidiaries to comply, with the Casino Control Act and all other applicable statutes (including, without limitation, ERISA), rules, regulations, orders and restrictions of the United States of America, states and municipalities, and of any governmental department, commission, board, regulatory authority, bureau, agency and instrumentality of the foregoing in respect of the conduct of its business and the ownership of its properties and assets, including without limitation the New RIHF Mortgage Trust Estate, except such as are being contested in good faith by appropriate proceedings in accordance with the Mortgage Documents (to the extent applicable) and except for 218 such noncompliances as will not in the aggregate have a material adverse effect on the business, properties, operations or financial condition of RIHF, RIH or their respective Subsidiaries. (SECTION 12.14). PAYMENT OF TAXES AND OTHER CLAIMS The New RIHF Mortgage Indenture will provide that RIHF or RIH 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 RIHF, RIH or any of their respective Subsidiaries or upon the New RIHF Mortgage Trust Estate or any portion thereof or upon the income, profits or property of RIHF, RIH or any of their respective Subsidiaries, and (b) all lawful claims for labor, materials and supplies which, if unpaid, will by law become a Lien upon the New RIHF Mortgage Trust Estate or upon any other property of RIHF, RIH or any of their respective Subsidiaries; PROVIDED, HOWEVER, that RIHF and RIH shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessments, charge or claim the amount, applicability or validity of which is being contested in good faith by appropriate proceedings in accordance with the Mortgage Documents (to the extent applicable) if adequate reserves therefor have been established in accordance with GAAP. (SECTION 12.15). MAINTENANCE OF PROPERTIES The New RIHF Mortgage Note Indenture further will provide that each of RIHF and RIH will cause the New RIHF Mortgage Trust Estate and all other properties (other than obsolete equipment) owned by or leased to it or any of its Subsidiaries, and used or useful in the conduct of its business or the business of RIHF, RIH or such Subsidiary to be maintained and kept in good condition, repair and working order, except for reasonable wear and use, and will cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as required by the Mortgage Documents or, to the extent not governed by the Mortgage Documents, as in the reasonable judgment of the Board of Directors of RIH may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times. (SECTION 12.16). INSURANCE The New RIHF Mortgage Note Indenture will provide that each of RIHF and RIH will maintain, and will cause each of its Subsidiaries to maintain, with financially sound and reputable insurers, appropriate insurance on each of their respective properties and businesses against liabilities, casualties, risks and contingencies of the type and in amounts required by the Mortgage Documents or, to the extent not governed by the Mortgage Documents, as customarily maintained by corporations and other entities engaged in the same or similar businesses and similarly situated; PROVIDED, HOWEVER, that any such insurer shall be qualified to do business in the jurisdiction where the insured property is located. (SECTION 12.17). WAIVER OR STAY, EXTENSION OR USURY LAWS The New RIHF Mortgage Note Indenture will provide that each of RIHF and RIH (to the extent that it may lawfully do so) will not, and will not cause or permit any of its Subsidiaries to, at any time insist upon, or plead, or in any manner whatsoever claim, and will resist any and all efforts to be compelled to take the benefit or advantage of, any stay or extension law or any usury law or other law that would prohibit or forgive RIHF or RIH from paying all or any portion of the principal of, or premium, if any, and interest on the New RIHF Mortgage Notes or the RIH Promissory Note or the Guaranty as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of the new RIHF Mortgage Note Indenture or the RIH Promissory Note or the Guaranty; and (to the extent that it may lawfully do so) RIHF and RIH hereby expressly waive all benefit of advantage or any such law, and covenant that they will not hinder, delay or impede the execution of any power granted to the New RIHF Mortgage Note Trustee in the New RIHF Mortgage Note Indenture and in the Mortgage Documents, but will suffer and permit the execution of every such power as though no such law had been enacted. (SECTION 12.18). 219 TRANSACTIONS WITH SHAREHOLDERS AND AFFILIATES The New RIHF Mortgage Note Indenture also will provide that each of RIHF and RIH will not, and will not permit any of its Subsidiaries to, directly or indirectly, enter into or permit to exist any transaction (including, without limitation, the purchase, sale, lease or exchange of any property or the rendering of any service) with any Affiliate of RIHF or RIH or with any Affiliate of any such Holder, unless (a) such transaction is upon fair and reasonable terms which are no less favorable to RIHF or such Subsidiary, as the case may be, than would be available in an arm's-length transaction with an unrelated person and (b) if over $250,000, such transaction is determined in the good faith judgment of a majority of the members of the Board of Directors of either (i) RII, so long as RII owns, directly or indirectly, a majority of the outstanding capital stock of RIH, directly or indirectly, or (ii) RIH, to be in the best interests of RIHF, RIH or such Subsidiary as applicable; PROVIDED, HOWEVER, that this provision shall not apply to (A) any agreements, documents, instruments or transactions entered into in connection with the RIHF Senior Facility Notes, (B) the New Griffin Services Agreement, (C) the RII Management Contract, or (D) the RII Tax Sharing Agreement. (SECTION 12.21). EVENTS OF DEFAULT The following events constitute "Events of Default" under the New RIHF Mortgage Note Indenture: (a) default in the payment of any interest upon any New RIHF Mortgage Note when such interest becomes due and payable and continuance of such default (the deposit with the New RIHF Mortgage Note Trustee of funds sufficient to make such interest payment in full being deemed to cure any such default) for a period of ten days; (b) default in the payment of all or any portion of the principal of any New RIHF Mortgage Note at its Maturity; (c) default in the performance or breach of any covenant of RIHF or RIH in the New RIHF Mortgage Note Indenture (other than a covenant a default in the performance or breach of which is elsewhere in this paragraph specifically dealt with), the Assignment Agreement or any of the Mortgage Documents and continuance of such default or breach for a period of 30 days (or such shorter or longer cure period, if any, as may be specified in respect of such default or breach in the Assignment Agreement or the applicable Mortgage Document, as the case may be), and (other than with respect to the covenants described in "Covenants -- Limitation on Dividends and Restricted Payments", "Covenants -- Limitation on Additional Indebtedness and Issuance of Notes", "Covenants -- Limitation on Repayment of Subordinated Indebtedness", "Covenants -- Limitation on Certain Transactions", "Covenants -- Restriction of Activities", "Covenants -- Limitation on Liens" and "Covenants -- Transactions with Stockholders and Affiliates") after there has been given (i) to RIHF by the New RIHF Mortgage Note Trustee, or (ii) to RIHF and the New RIHF Mortgage Note Trustee by the Holders of at least 25% in Outstanding Amount of the Outstanding New RIHF Mortgage Notes, a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default"; PROVIDED, HOWEVER, that, if such default or breach is of a covenant set forth in certain specified provisions of the New RIHF Mortgage Note Indenture, and if such default or breach is of such a nature that is curable but is not susceptible of being cured with due diligence within such 30-day period (or such shorter or longer cure period) (for reasons other than lack of funds), then, under certain circumstances, such period shall be extended for such further period of time (up to a maximum of 60 days) as may reasonably be required to cure such default or breach; (d) a proceeding or case shall be commenced, without the application or consent of RIHF or RIH, in any court of competent jurisdiction, seeking (i) its liquidation, reorganization, dissolution or winding-up, or the composition or readjustment or it debts, (ii) the appointment of a trustee, receiver, custodian, liquidator or the like of RIHF or RIH or of all or any substantial part of its assets, or (iii) similar relief in respect of RIHF or RIH under any law relating to 220 bankruptcy, insolvency, reorganization, winding-up, or composition or adjustment of debts, and such proceeding or case shall continue undismissed, or an order, judgment or decree approving or ordering any of the foregoing shall be entered and continue unstayed and in effect, for a period of 60 consecutive days; (e) other than the Case, the commencement by RIHF or RIH of a voluntary case under the Federal bankruptcy laws or any other applicable Federal or state law, or the consent or acquiescence by any of them to the filing of any such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee or sequestrator (or other similar official) of RIHF or RIH or any substantial part of any of their property, or the making by any of them of an assignment for the benefit of creditors, or the taking of action by RIHF or RIH in furtherance of any such action; (f) the revocation, suspension or involuntary loss of any Permit which results in the cessation of a substantial portion of the operations of the Resorts Casino Hotel for a period of more than 90 consecutive days; (g) (i) a default by RIHF, RIH or any of their Subsidiaries under any Indebtedness (other than the Working Capital Facility and the Junior Mortgage Facility), in an aggregate principal amount in excess of $5,000,000, which default results in the acceleration of the maturity of any such Indebtedness under the evidence of indebtedness, indenture or other instrument governing such Indebtedness; PROVIDED, HOWEVER, that, if such default under such evidence of indebtedness, indenture or other instrument shall be cured by the obligor, or be waived by the Holders of such Indebtedness, in each case as may be permitted by such evidence of indebtedness, indenture or other instrument and in each case resulting in rescission of such acceleration thereunder, then the Event of Default by reason of such default shall be deemed likewise to have been thereupon cured or waived; or (ii) a default by RIHF, RIH or any of the Subsidiaries under any Indebtedness represented by the Working Capital Facility, or the Junior Mortgage Facility, the effect of which default (after the expiration of any applicable notice or grace periods) is to permit the Holder or Holders of any such Indebtedness represented by the Working Capital Facility or the Junior Mortgage Note Indenture in an aggregate principal amount in excess of $5,000,000 (or a trustee or agent on behalf of such Holder or Holders) to cause the acceleration of the maturity of such Indebtedness represented by the Working Capital Facility or the Junior Mortgage Facility under the evidence of indebtedness, indenture or other instrument governing such Indebtedness; PROVIDED, HOWEVER, that if such default under such evidence of indebtedness, indenture or other instrument of shall be cured by the obligor, or be waived by the Holders of such evidence of indebtedness, indenture or other instrument (and, if such default resulted in the acceleration of the maturity of such indebtedness, such acceleration shall have been rescinded thereunder), then the Event of Default under the New RIHF Mortgage Note Indenture by reason of such default shall be deemed likewise to have been thereupon cured or waived; or (iii) the existence of a final judgment of a court of competent jurisdiction in an amount in excess of $3,000,000 against RIHF, RIH or the New RIHF Mortgage Trust Estate, which judgment has not been satisfied or otherwise provided for, for a period of 30 days (during which execution shall not be effectively stayed) following the date on which such judgment becomes a lien against the New RIHF Mortgage Trust Estate or any part thereof (unless the lawsuit in question was commenced without effective service of process upon either RIHF or RIH in which case such 30-day period shall not commence until RIHF or RIH receives notice of such final judgment); or (iv) the existence of a final judgment of a court of competent jurisdiction in an amount in excess of $15,000,000 against RIHF, RIH or the New RIHF Mortgage Trust Estate, which judgment has not been satisfied or otherwise provided for, for a period of 60 days (during which execution shall not be effectively stayed) following the date of such final judgment; or (v) the existence of a final judgment of a court of competent jurisdiction, regardless of amount, against RIHF, RIH or the New RIHF Mortgage Trust Estate, which judgment has 221 not been satisfied or otherwise provided for, for a period of 60 days (during which execution shall not be effectively stayed) following the date of such final judgment, if such judgment, by itself or upon recordation or other action of the judgment creditor, imposes or would impose a lien on the New RIHF Mortgage Trust Estate or any part thereof senior to the lien of the RIH Senior Mortgage; (h) default in the performance, or breach, of any covenant of RIHF or RIH in connection with the restrictions described under "--Limitation on Consolidation, Merger, Conveyance, Transfer or Lease of Property and Assets"; (i) the existence of a judgment of a court of competent jurisdiction in an amount in excess of $3,000,000 against RIH regarding the CRDA Dispute, which judgment has not been stayed, satisfied or otherwise provided for, for a period of 30 days (during which execution shall not be effectively stayed) (unless the lawsuit in question was commenced without effective service of process upon RIH in which case such 30-day period shall not commence until RIH receives notice of such final judgment); or (j) if RII fails to pay or discharge or cause to be paid or discharged, within 30 days before the same shall become delinquent, all taxes levied or imposed upon RII; PROVIDED, HOWEVER, that no Event of Default or Default shall be deemed to exist under the New RIHF Mortgage Note Indenture with respect to any tax liability not paid or discharged by RII if and to the extent that the amount, applicability or validity of such tax liability is being contested in good faith by appropriate proceedings if adequate reserves therefor have been established in accordance with GAAP; PROVIDED FURTHER, HOWEVER, that this paragraph shall not apply to amount due with respect to any period during which neither RIHF, RIH nor any of their Subsidiaries is included in RII's consolidated group for Federal income tax purposes. (SECTION 7.01). If an Event of Default (other than one referred to in clause (d) or (e) above) occurs and is continuing, then and in every such case the New RIHF Mortgage Note Trustee or the Holders of not less than 25% in Outstanding Amount of the New RIHF Mortgage Notes Outstanding may declare the Outstanding Amount of all the New RIHF Mortgage Notes to be due and payable immediately, by a notice in writing to RIHF (and to the New RIHF Mortgage Note Trustee, if given by any Noteholders), and upon any such declaration such Outstanding Amount shall become immediately due and payable. If an Event of Default referred to in clause (d) or (e) above occurs, then the Outstanding Amount of all the New RIHF Mortgage Notes shall automatically become immediately due and payable without presentment, demand, protest or other formalities of any kind, all of which are expressly waived by RIHF. (SECTION 7.02). At any time after such a declaration of acceleration has been made, but before any judgment or decree for payment of money due on any New RIHF Mortgage Notes has been obtained by the New RIHF Mortgage Note Trustee, the Holders of a majority in Outstanding Amount of the New RIHF Mortgage Notes may, by written notice to RIHF and the New RIHF Mortgage Note Trustee, rescind and annul such declaration and its consequences if: (a) RIHF has deposited with the New RIHF Mortgage Note Trustee a sum sufficient to pay (1) all overdue installments of interest on all New RIHF Mortgage Notes, (2) the principal of any New RIHF Mortgage Notes which have become due otherwise than by such declaration of acceleration and interest thereon at the rate or rates prescribed therefor in the New RIHF Mortgage Notes, and (3) all sums paid or advanced by the New RIHF Mortgage Note Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the New RIHF Mortgage Note Trustee, its agents and counsel; and (b) all Events of Default, other than the non-payment of the Outstanding Amount of the New RIHF Mortgage Notes which have become due solely by such declaration of acceleration, have been cured or have been waived as provided in the New RIHF Mortgage Note Indenture. No such rescission and annulment shall affect any subsequent default or impair any right to consequent thereon. (SECTION 7.02). 222 LIMITATION ON CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE OF PROPERTY AND ASSETS Neither RIHF nor RIH shall consolidate, combine or merge with or into any other Person or permit any other Person to consolidate, combine or merge with or into RIHF or RIH, as the case may be; and neither RIHF with respect to its assets nor RIH with respect to the New RIHF Mortgage Trust Estate shall sell, assign, convey or transfer its interest in such assets or the New RIHF Mortgage Trust Estate, as the case may be, substantially as an entirety (and notwithstanding anything to the contrary contained in the New RIHF Mortgage Note Indenture (including the proviso at the end of this sentence), but subject to the provisions of the RIH Senior Mortgage regarding dispositions of the New RIHF Mortgage Trust Estate, neither RIHF with respect to its assets nor RIH with respect to the New RIHF Mortgage Trust Estate may sell, assign, convey or transfer such assets or the New RIHF Mortgage Trust Estate, as the case may be, other than substantially as an entirety) to any other Person or group of Persons in one transaction or a series of related transactions, or permit any other Person or group of Persons to convey or transfer all or substantially all of its assets, subject to liabilities other than DE MINIMIS liabilities, to RIHF or RIH; and RIHF and RIH shall not transfer, convey, sell or otherwise dispose of to any other Person, or issue to any Person, any equity interest in RIHF or RIH, as the case may be (each such transaction referred to as a "Combination Transaction"); PROVIDED, HOWEVER, that (i) RIHF may engage in a Combination Transaction in which the only other party or parties is RIH or a direct or indirect wholly owned Subsidiary of RIHF or RIH, and (ii) RIHF or RIH may engage in any other Combination Transaction (either independently or at the same time as other Combination Transactions), subject to the following with respect to each such Combination Transaction: (a) immediately following such Combination Transaction, (1) RIH (or any successor entity) shall be eligible for and shall meet all relevant Legal Requirements, including holding all permits, required for the normal operation of the business of owning and operating the Resorts Casino Hotel, and (2) RIH (or any successor entity) shall be controlled by a Person that is, or shall retain to manage the Resorts Casino Hotel one or more Persons that are, experienced in the operation and management of casino/hotels; (b) in the event RIHF or RIH shall consolidate, combine or merge with or into another Person or sell, assign, convey or transfer its interest in its assets or in the New RIHF Mortgage Trust Estate, as the case may be, substantially as an entirety (but not less than substantially as an entirety) to another Person in one transaction or a series of related transactions, the entity which is formed by or survives such consolidation, combination or merger or the Person to which such assets or the New RIHF Mortgage Trust Estate are conveyed or transferred, (1) shall be organized and existing under the laws of the United States of America, any state thereof, or the District of Columbia; (2) shall expressly assume, by an indenture supplemental to the New RIHF Mortgage Note Indenture, executed and delivered to the New RIHF Mortgage Note Trustee, the performance and observance of every covenant, obligation and condition of the New RIHF Mortgage Note Indenture to be performed or observed by RIHF or RIH, whichever the case may be; (3) shall expressly assume, by an instrument executed and delivered to the New RIHF Mortgage Note Trustee, the performance of every covenant, obligation and condition of the Mortgage Documents and the Assignment Agreement to be performed by RIHF or RIH, whichever the case may be; (4) immediately after and giving effect to such transaction could incur at least $1.00 of additional Indebtedness under the covenant described in "Covenants -- Limitation on Additional Indebtedness and Issuance of Notes"; (c) immediately after giving effect to such transaction, no Event of Default, or Default under the New RIHF Mortgage Note Indenture or under the RIH Senior Mortgage, shall have occurred and be continuing; (d) such Combination Transaction shall be on such terms as shall not impair the lien and security and priority of the New RIHF Mortgage Note Indenture or of the Mortgage Documents or of the Assignment Agreement and the rights and powers of the New RIHF Mortgage Note Trustee and the Holders of the New RIHF Mortgage Notes thereunder; and (e) RIHF or RIH, as the case may be, shall have delivered to the New RIHF Mortgage Note Trustee an Officers' Certificate and an Opinion of Counsel, each of which shall state that such Combination Transaction and such supplemental indenture comply with the provisions of Article Ten of the New RIHF Mortgage Note Indenture and that all conditions precedent provided for in the New RIHF Mortgage Note Indenture relating to such transaction have been complied with. (SECTION 10.01). 223 Except as otherwise expressly permitted by the RIH Senior Mortgage and the New RIHF Mortgage Note Indenture, neither RIHF nor RIH shall sell, assign, lease, hypothecate, pledge, mortgage or otherwise transfer all or any part of the assets of RIHF or the New RIH Senior Mortgage Trust Estate or any interest therein (including, without limitation, any interest in the Ground Leases). Without limiting the generality of the foregoing, RIH shall not separate, or attempt to separate, its ownership of its interest in the Ground Leases from the ownership of the buildings constituting the Resorts Casino Hotel or any part thereof. (SECTION 10.04). The foregoing limitations on consolidation, merger, conveyance, transfer or lease of property and assets shall not apply in connection with an RIH Sale. (SECTION 10.5). DISCHARGE OF NEW RIHF MORTGAGE NOTE INDENTURE; DEFEASANCE RIHF may terminate substantially all obligations under the New RIHF Mortgage Note Indenture at any time by delivering all outstanding New RIHF Mortgage Notes to the New RIHF Mortgage Note Trustee for cancellation and paying any other sums payable under the New RIHF Mortgage Note Indenture. (ARTICLE FIVE). The New RIHF Mortgage Note Indenture also provides that the Company will be deemed to have paid and discharged the entire Indebtedness on the New RIHF Mortgage Notes and the provisions of the New RIHF Mortgage Note Indenture (except as to any surviving rights of transfer or exchange of New RIHF Mortgage Notes provided for in the New RIHF Mortgage Note Indenture or the New RIHF Mortgage Notes and any right to receive payments of principal and interest as provided in this paragraph), if: (1) RIHF irrevocably deposits in trust with the New RIHF Mortgage Note Trustee, pursuant to an irrevocable trust and security agreement in form and substance reasonably satisfactory to the New RIH Mortgage Note Trustee, U.S. Legal Tender or direct non-callable obligations of, or non-callable obligations guaranteed as to timely payment by, the United States of America for the payment of which obligation or guarantee the full faith and credit of the United States of America is pledged ("U.S. Government Obligations") maturing as to principal and interest in such amounts and at such times as are sufficient, without consideration of the reinvestment of such interest and after payment of all Federal, state and local taxes or other charges or assessments in respect thereof payable by the New RIHF Mortgage Note Trustee, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof (in form and substance reasonably satisfactory to the New RIHF Mortgage Note Trustee) delivered to the New RIHF Mortgage Note Trustee, to pay reasonable compensation to the New RIHF Mortgage Note Trustee under Section 8.07 of the New RIHF Mortgage Note Indenture and the principal of and interest on the outstanding New RIHF Mortgage Notes on the dates on which any such payments are due and payable in accordance with the terms of the New RIHF Mortgage Note Indenture and of the New RIHF Mortgage Notes; (2) such deposits will not cause the New RIHF Mortgage Note Trustee to have a conflicting interest as defined in and for purposes of the TIA; (3) such deposit will not result in a Default under the New RIHF Mortgage Note Indenture; (4) RIHF will deliver to the New RIHF Mortgage Note Trustee an Opinion of Counsel, or a private ruling of the Internal Revenue Service, in form and substance satisfactory to the New RIHF Mortgage Note Trustee, to the effect that Holders of the New RIHF Mortgage Notes will not recognize income, gain or loss for Federal income tax purposes as a result of such deposit and the defeasance contemplated hereby and will be subject to Federal income tax in the same amounts and in the same manner and at the same times as would have been the case if such deposit and defeasance had not occurred; (5) the deposit will not result in RIHF, the New RIHF Mortgage Note Trustee or the trust becoming or being deemed to be an "investment company" under the Investment Company Act of 1940, as amended; (6) the Holders shall have a perfected security interest under applicable law in the U.S. Legal Tender or U.S. Government Obligations deposited pursuant to clause (1) above; and (7) RIHF has delivered to the New RIHF Mortgage Note Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent specified herein relating to the defeasance contemplated by this paragraph have been complied with. 224 If all or any portion of the New RIHF Mortgage Notes are to be redeemed through such irrevocable trust, RIHF must make arrangements satisfactory to the New RIHF Mortgage Note Trustee, at the time of such deposit, for the giving of the notice of such redemption or redemptions by the New RIHF Mortgage Note Trustee in the name and at the expense of RIHF. The New RIHF Mortgage Note Trustee and each co-trustee and separate trustee, if any, then acting as such hereunder shall, at the expense of RIHF, execute and deliver a termination statement and such instruments of satisfaction and discharge as may be necessary and pay, assign, transfer and deliver to RIHF or upon Company Order all cash, securities and other personal property then held by it hereunder, other than pursuant to Section 14.01 of the New RIHF Mortgage Note Indenture. (SECTION 14.01). MODIFICATION OF INDENTURE From time to time, the parties to the New RIHF Mortgage Note Indenture, without the consent of the Holders of the New RIHF Mortgage Notes, may enter into one or more supplemental indentures for certain specified purposes, including curing ambiguities, defects or inconsistencies, provided such action does not adversely affect the rights of any Holder. (SECTION 11.01). Modifications, changes and amendments to the New RIHF Mortgage Note Indenture also may be made by the parties thereto with the consent of the Holders of not less than 66 2/3% in Outstanding Amount of the New RIHF Mortgage Notes then Outstanding, except that without the consent of the Holder of each New RIHF Mortgage Note affected, no such modification or alteration may (i) change the stated maturity of the principal of, or any installment of interest on, any New RIHF Mortgage Note, or reduce the principal amount thereof or the premium payable upon the redemption thereof, or change any Place of Payment where, or the coin or currency in which, any New RIHF Mortgage Note, or the interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the Stated Maturity thereof (or, in the case of redemption, on or after the Redemption Date), (ii) reduce the percentage in Outstanding Amount of the New RIHF Mortgage Notes, the consent of whose Holders is required for any amendment, supplement or waiver, (iii) modify or alter the provisions of the proviso of the definition of the term "Outstanding", (iv) modify any of the provisions described in this paragraph or, with certain exceptions, the provisions of the New RIHF Mortgage Note Indenture regarding waiver of default, or (v) permit the creation of any lien ranking prior to the lien of the RIH Senior Mortgage (except for such liens expressly permitted pursuant to the covenant described under "-- Covenants -- Limitations on Liens"). (SECTION 11.02). TRUSTEE The New RIHF Mortgage Note Trustee may require reasonable indemnity before exercising any of its rights or powers under the New RIHF Mortgage Note Indenture. (SECTION 8.03). REPORTS TO HOLDERS RIH will furnish or cause to be furnished to the New RIHF Mortgage Note Trustee, within 105 days after each fiscal year of RIH: (i) a copy of annual audited financial statements of RIH prepared in conformity with GAAP, accompanied by a report of Ernst & Young or of another firm of independent certified public accountants of recognized national standing selected by RIH (the "National Accountants"), together with a certificate from such National Accountants stating that their audit examination has included a review of the terms of the New RIHF Mortgage Note Indenture and that the National Accountants have not become aware of any Event of Default or that a Default has occurred and is continuing, and if they have become aware of any such Event of Default or Default, describing it; provided, however, that the National Accountants will not be liable to any Person for any failure to discover any Event of Default or Default in connection with such review; and (ii) a copy of annual unaudited financial statements of RIH, including notes to such financial statements and corresponding management's discussion and analysis, in form and substance and comparable to that which would be required to be filed with the Commission in an Annual Report on Form 10-K under the Exchange Act, prepared in the same manner as the audited financial statements referred to in clause (i) above, signed by a proper accounting officer of RIH. RIH contemporaneously with the 225 furnishing of such audited financial statements to the New RIHF Mortgage Note Trustee under clause (i) of this paragraph, RIH will mail copies of such audited financial statements to the Holders (which need not include the certificate referred to in clause (i) above). RIH also will furnish or cause to be furnished to the New RIHF Mortgage Note Trustee, within 60 days after each quarter of each fiscal year of RIH, except the final quarter of such fiscal year, a copy of unaudited financial statements of RIH prepared on a consistent basis with the audited financial statements referred to in clause (i) of the paragraph above, signed by a proper accounting officer of RIH and consisting of at least a balance sheet as at the close of such quarter and statements of operations and cash flow for such quarter and for the period from the beginning of such fiscal year to the close of such quarter, including notes to such financial statements and corresponding management's discussion and analysis, in form and substance comparable to that which would be required to be filed with the Commission in a Quarterly Report on Form 10-Q under the Exchange Act. RIH contemporaneously with the furnishing of such unaudited financial statements to the New RIHF Mortgage Note Trustee, RIH shall mail copies of such unaudited financial statements to the Holders (which need not be signed by a proper accounting officer of RIH). RIH will furnish or cause to be furnished to the New RIH Senior Mortgage Note Trustee, contemporaneously with the furnishing of a copy of the annual financial statements and of the quarterly financial statements referred to above, an Officers' Certificate dated the date of such annual financial statement or such quarterly financial statements to the effect that no Default or Event of Default has occurred and is continuing, or, if there is any such Default or Event of Default, describing it and the steps, if any, being taken to cure it. RIH will furnish or cause to be furnished to the New RIHF Mortgage Note Trustee, copies of each filing and report made by RIH or RIHF with the Commission pursuant to the reporting and filing requirements of Section 13 or 15(d) of the Exchange Act, within 15 days after RIH or RIHF, as applicable, is required to file the same. Pursuant to the New RIHF Mortgage Note Indenture, if RIH becomes exempt from the Commission reporting and filing requirements of Section 13 or 15(d) of the Exchange Act, RIH will prepare such periodic reports as it would otherwise have been required to file with the Commission and (i) at its own expense, cause all such periodic reports to be filed with the Commission, the New RIHF Mortgage Note Trustee and any exchange upon which the New RIHF Mortgage Notes then are listed, in each case on the date when such periodic report would have been required to be filed with the Commission under Section 13 or 15(d) of the Exchange Act, if either of such provisions were applicable, and (ii) keep copies of such periodic reports available at its office and promptly provide any Person who so requests with a copy of any such periodic report, at RIHF's expense. Each of RIHF and RIH shall comply with the provisions of Section 314(a) of the Trust Indenture Act. RIHF will deliver to the New RIHF Mortgage Note Trustee, promptly upon becoming aware of any Default or Event of Default (but in no event later than five business days thereafter) in the performance of any covenant or agreement of the Company contained in the New RIHF Mortgage Note Indenture or any of the Mortgage Documents, an Officers' Certificate specifying with particularity such event. (SECTION 12.06). CERTAIN DEFINITIONS "AFFILIATE" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person, and, with respect to any specified natural Person, any other Person having a relationship by blood, marriage or adoption not more remote than first cousin with such specified Person. For purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the 226 foregoing; PROVIDED, HOWEVER, that, except as may be required under the TIA, the term "Affiliate" shall not include, with respect to RIHF or RIH, any of Fidelity Management & Research Company, TCW Special Credits or funds or accounts managed or advised by either of them. "AFTER-ACQUIRED FEE MORTGAGE DEBT" means any Indebtedness secured by an After-Acquired Fee Mortgage. "AFTER-ACQUIRED FEE MORTGAGE" has the meaning stated in Section 2.07 of the RIH Mortgage. "ASSIGNMENT AGREEMENT" means the Assignment of Agreements dated as of the date of the New RIHF Mortgage Note Indenture, providing for the assignment of the RIH Promissory Note and other Mortgage Documents to the New RIHF Mortgage Note Trustee by RIHF, and acknowledgment thereof by RIH, a copy of which is attached to the New RIHF Mortgage Note Indenture as Exhibit B. "CAPITALIZED LEASE OBLIGATION" means, with respect to any Person, any lease of any property (whether real, personal or mixed) by such Person as lessee which, in conformity with GAAP consistently applied, is accounted for as a capitalized lease on the balance sheet of such Person. "CASE" means, collectively, the bankruptcy cases involving RII and GRI in the United States Bankruptcy Court for the District of Delaware. "CONSOLIDATED CASH FLOW" means, with respect to any Person for any period, an amount equal to the sum of (i) the consolidated net income (or loss) of such Person for such period determined in accordance with GAAP consistently applied, excluding interest income, interest expense and gains or losses from extraordinary or nonrecurring items, plus (ii) all amounts deducted in computing such consolidated net income (or loss) in respect of depreciation and amortization, plus (iii) non-cash charges arising from the reduction of CRDA Deposits to market value, minus (iv) taxes based upon or measured by income which are payable in cash, minus (v) CRDA Deposits. "CONSOLIDATED INTEREST CHARGES" means, with respect to any Person for any period, the consolidated interest expense (not including the non-cash amortization of discount on the original issuance of (a) the RIH Promissory Note, (b) any intercompany indebtedness of RIH issued in connection with Indebtedness represented by the Junior Mortgage Facility and (c) any intercompany indebtedness of RIH issued in connection with Indebtedness represented by the Working Capital Facility), whether payable in cash or in-kind (and with respect to RIH, including, without limitation, the interest paid or accrued (without duplication) on (i) the RIH Promissory Note, (ii) any intercompany indebtedness of RIH issued in connection with Indebtedness represented by the Junior Mortgage Facility and (iii) any intercompany indebtedness of RIH issued in connection with Indebtedness represented by the Working Capital Facility), without deduction for interest income (other than cash interest income received from RII in payment of its interest cost on any Working Capital Facility), in each case for such Person and its consolidated Subsidiaries for such period determined in accordance with GAAP consistently applied. "CONSOLIDATED INTEREST COVERAGE RATIO" shall mean, at any date of calculation thereof, the ratio of (a) Consolidated Cash Flow of RIH and its consolidated Subsidiaries for the immediately preceding four consecutive fiscal quarters to (b) Consolidated Interest Charges of RIH and its consolidated Subsidiaries for such period. "CONSOLIDATED NET INCOME" means, with respect to any Person for any period, an amount equal to consolidated net income (or loss) of such Person for such period determined in accordance with GAAP consistently applied, minus (a) Federal and state taxes based upon or measured by income which are payable in cash, plus (b) non-cash charges arising from Federal and state taxes based upon or measured by income. "CRDA DEPOSITS" means (a) the quarterly deposits made by RIH to the Casino Reinvestment Development Authority in an amount equal to 1.25% of RIH's gross revenue in order to satisfy its investment obligation pursuant to the Casino Control Act, and (b) the amounts invested in qualified investments in lieu of any of the quarterly deposits (or portion thereof) referred to in clause (a) above. 227 "CRDA DISPUTE" means the dispute existing on the date hereof between RIH and the New Jersey Casino Reinvestment Development Authority regarding CRDA Deposits and New Jersey Casino Reinvestment Authority Notes, which dispute involves an amount of approximately $30,000,000. "F, F&E FINANCING AGREEMENT" means a purchase money lien upon any Tangible Personal Property (as defined in the RIH Mortgage) and other items constituting Operating Assets (as defined in the RIH Mortgage), such as computer software, which are financed, purchased or leased by RIH, provided that, with certain exceptions, the principal amount of the indebtedness secured by such lien shall not exceed 85% of the cost to RIH of such property at the time of acquisition. "GUARANTY" means the guaranty contained in Article Four of the New RIHF Mortgage Note Indenture. "HOLDER" means a Person in whose name a New RIHF Mortgage Note is registered. "INDEBTEDNESS" means, as applied to any Person, without duplication, any indebtedness, exclusive of deferred taxes: (a) in respect of borrowed money (whether or not the recourse of the lender is to the whole of the assets of such Person or only to a portion thereof); (b) evidenced by bonds, notes, debentures or similar instruments or letters of credit; (c) representing the balance deferred and unpaid of the purchase price of any property, if and to the extent such indebtedness would appear as a liability upon a balance sheet of such Person prepared in accordance with GAAP (but excluding trade accounts payable arising in the ordinary course of business that are not overdue by more than 90 days or are being contested by such Person in good faith); (d) any Capitalized Lease Obligations (other than, with respect to RIH or RIHF, the Ground Leases) of such Person; and (e) Indebtedness of others guaranteed by such Person, including without limitation every obligation of such Person (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or to purchase (or to advance or supply funds for the purchase of) any security for the payment of such Indebtedness, (ii) to purchase property, securities or services for the purpose of assuring the holder of such Indebtedness of the payment of such Indebtedness, or (iii) to maintain working capital, equity capital or other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness; PROVIDED, HOWEVER, that the guaranty by any Person shall not include endorsements by such Person for collection or deposit, in either case in the ordinary course of business. The term "INDEBTEDNESS" does not include: (1) any of the types of indebtedness described in clauses (a) through (e) above (inclusive) owed by RIHF to RIH or any of their Subsidiaries, by RIH to RIHF or any of their Subsidiaries or by any such Subsidiary to RIH, RIHF or any other such Subsidiary (including without limitation the RIH Promissory Note and the RIH Junior Promissory Note); (2) the RIH Guaranty, the RIH Junior Mortgage Guaranty and any guaranty of a Working Capital Facility Guaranty; (3) matters relating to the CRDA Dispute, New Jersey Casino Reinvestment Development Authority Notes or the CRDA Deposits; and (4) any payments made by RIHF or RIH under the RII Management Agreement, the RII Tax Sharing Agreement or the Services Agreement. "JUNIOR MORTGAGE DOCUMENTS" means (a) the Junior Mortgage, the Junior Guaranty Mortgage, the RIH Junior Promissory Note, the Junior Assignment of Leases and Rents and any other security document to which either RIH or RIHF is a party relating to the New RIHF Junior Mortgage Notes, which is executed and delivered pursuant to or in connection with the Junior Mortgage, the Junior Guaranty Mortgage or the Junior Assignment Agreement, and (b) any mortgage, deed of trust, guaranty, promissory note, collateral assignment agreement, assignment of leases and rents, assignment of operating assets and any other security document to which either RIH or RIHF is a party relating to the Junior Mortgage Facility. "JUNIOR MORTGAGE FACILITY" means the New RIHF Junior Mortgage Notes and any secured or unsecured facility or facilities entered into by RIH or RIHF providing for the making of loans to RIH or RIHF on a revolving or term basis, or the issuance of notes, debentures or bonds by RIH or RIHF, as such agreement, indenture or instrument may be amended, supplemented or modified from time to time, or any refinancing thereof, in an aggregate principal amount up to $35,000,000 plus additional 228 notes, debentures or bonds issued in payment of interest accrued on outstanding notes, debentures or bonds; PROVIDED, HOWEVER, that the lender or lenders thereunder (or any trustee or agent acting on behalf of such lender or lenders) shall have executed an interecreditor agreement covering the matters set forth on Exhibit G to the New RIHF Mortgage Note Indenture. The liens, if any, securing the Junior Mortgage Facility shall be PARI PASSU with the lien of the RIH Junior Mortgage and the RIH Junior Guaranty Mortgage. The term "JUNIOR MORTGAGE FACILITY" does not include the RIH Junior Mortgage Guaranty. "MORTGAGE DOCUMENTS" means the RIH Mortgage, the RIH Guaranty Mortgage, the RIH Promissory Note, the Assignment of Leases and Rents and any other security document to which either RIH or RIHF is a party relating to the New RIHF Mortgage Notes, which is executed and delivered pursuant to or in connection with the RIH Mortgage, the RIH Guaranty Mortgage or the Assignment Agreement. "NON-RECOURSE INDEBTEDNESS" means indebtedness incurred in connection with the acquisition, purchase, improvement or development of property or assets (other than the New RIHF Mortgage Trust Estate) used by RIHF, RIH or any Subsidiary of RIH or RIHF to engage in the casino business, the hotel business or related or ancillary business or purpose and which is secured only by such assets and without recourse to RIH, RIHF or any Subsidiary of RIH or RIHF or the New RIHF Mortgage Trust Estate for such indebtedness. "OUTSTANDING" when used with respect to New RIHF Mortgage Notes means, as of the date of determination, all New RIHF Mortgage Notes theretofore authenticated and delivered under the New RIHF Mortgage Note Indenture, except: (a) New RIHF Mortgage Notes theretofore canceled by the New RIHF Mortgage Note Trustee or delivered to the Trustee for cancellation; (b) New RIHF Mortgage Notes for whose payment or redemption money in the necessary amount has been theretofore deposited with the New RIHF Mortgage Note Trustee or any Paying Agent in trust for the Holders of such New RIHF Mortgage Notes; (c) New RIHF Mortgage Notes in exchange for or in lieu of which other New RIHF Mortgage Notes have been authenticated and delivered under the New RIHF Mortgage Note Indenture; and (d) New RIHF Mortgage Notes alleged to have been destroyed, lost or stolen which have been paid as provided in Section 3.06 of the New RIHF Mortgage Note Indenture; PROVIDED, HOWEVER, that in determining whether the Holders of the requisite principal amount of New RIHF Mortgage Notes Outstanding have given any request, demand, authorization, direction, notice, consent or waiver hereunder, New RIHF Mortgage Notes owned by RIHF or any other obligor upon the New RIHF Mortgage Notes or any Affiliate of RIHF or of such other obligor shall be disregarded and deemed not to be Outstanding. In determining whether the New RIHF Mortgage Note Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only New RIHF Mortgage Notes which the New RIHF Mortgage Note Trustee actually knows to be so owned shall be so disregarded. "OUTSTANDING AMOUNT" of any Indebtedness at any time means the principal amount outstanding of such Indebtedness at such time. "RESTRICTED PAYMENT" means (a) any declaration or payment of any dividend or the making of any distribution to holders of capital stock of RIH or RIHF or any Subsidiary of RIH or RIHF in respect of such capital stock (other than to RIH or RIHF or a direct or indirect wholly owned Subsidiary of RIH or RIHF), (b) any purchase, redemption or other acquisition or retirement for value of any capital stock (or warrants, rights or options to acquire any capital stock or Indebtedness convertible into or exchangeable for any capital stock) of RIH or RIHF or any Subsidiary of RIH or RIHF (other than purchases, redemptions, acquisitions or retirement solely from RIH or RIHF or a direct or indirect 229 wholly owned Subsidiary of RIH or RIHF); PROVIDED, HOWEVER, that any such purchase, redemption or other acquisition or retirement that is required by the Casino Control Commission or under the Casino Control Act shall not constitute a Restricted Payment. The term "Restricted Payment" also shall not include any loan or advance to RII of all or any portion of the proceeds of the Indebtedness represented by the Working Capital Facility. "RIH SALE" means (a) a consolidation, combination or merger involving RIH and any other Person, (b) a sale, assignment, conveyance or transfer or RIH's interest in the New RIHF Mortgage Note Trust Estate, substantially as an entirety, to any other Person or group of Persons in one transaction or a series of related transactions, or (c) any transaction as a result of which RIH ceases to be a direct or indirect wholly owned Subsidiary of RII; PROVIDED, HOWEVER, that any of the transactions described in clauses (a), (b) and (c) above shall not constitute an RIH Sale if the other party or parties to the transaction consists of only one or more of the following Persons: RIHF or any wholly owned direct or indirect subsidiary of RIH or RIHF; PROVIDED FURTHER, HOWEVER, that notwithstanding any other provision of this definition, if the primary effect of any of the aforesaid transactions is the redemption of the New RIHF Mortgage Notes, then such transaction shall not be considered to be a RIH Sale. "RII MANAGEMENT CONTRACT" means the Interim Management Agreement. "RII TAX SHARING AGREEMENT" means the Tax Sharing Agreement between RII and RIH pursuant to which (i) RIH will not make any payments to RII or any other Affiliate in respect of taxes, other than to reimburse RII for any cash payments actually made by RII in respect of any Federal, state or local income or alternative minimum taxes arising from the earnings or operations of RIH; PROVIDED, HOWEVER, that RIH shall not be required to reimburse RII for cash payments in respect of Federal, state or local income or alternative minimum taxes that would not have been owed but for the reduction, if any, of the amount of the consolidated net operating loss carryforwards or consolidated current losses of the affiliated group of which RII is a common parent which resulted from the inclusion in the consolidated return filed for such group for any taxable year ending after the Effective Date of the income of any entity other than RIH, other than income directly attributable to the consummation of the Plan, including but not limited to the transfer of the stock of RIB and the assets of the U.S. Paradise Island Subsidiaries, and (ii) RIH will be entitled to any refund (plus the interest thereon) of any taxes for which RIH is required to reimburse RII. "SUBSIDIARY" of any Person means a corporation more than 50% of the outstanding voting stock of which is owned, directly or indirectly, by such Person or one or more Subsidiaries of such Person. "WORKING CAPITAL FACILITY" means the RIHF Senior Facility (and the RIHF Senior Facility Notes issued thereunder) and any other secured or unsecured facility or facilities entered into by RIH and/or RIHF providing for the making of working capital loans to RIH or RIHF (with RII as a guarantor thereunder) on a revolving or term basis, or the issuance of notes, debentures or bonds by RIH, RIHF or RII, as such agreement may be amended, supplemented or modified from time to time, or any refinancing thereof, in an aggregate principal amount up to $20,000,000; PROVIDED, HOWEVER, that the lender or lenders thereunder (or any trustee or agent acting on behalf of such lender or lenders) shall have executed an interecreditor agreement covering the matters set forth on Exhibit G to the New RIHF Mortgage Note Indenture. The liens, if any, securing the Working Capital Facility may be senior to the lien of the RIH Mortgage, the RIH Guaranty Mortgage, the RIH Junior Mortgage and the RIH Junior Guaranty Mortgage. The term "WORKING CAPITAL FACILITY" does not include the Working Capital Facility Guaranty. DESCRIPTION OF NEW RIHF JUNIOR MORTGAGE NOTES The following is a summary of certain provisions of the New RIHF Junior Mortgage Notes and the New RIHF Junior Mortgage Note Indenture. Wherever particular provisions of the New RIHF Junior Mortgage Note Indenture or New RIHF Junior Mortgage Notes are referred to, such provisions are incorporated by reference herein. References to Sections or Articles refer to Sections or 230 Articles of the New RIHF Junior Mortgage Note Indenture. The definition of certain terms used below are set forth in "Certain Definitions" below in this section. All other capitalized terms used in this section but not defined in this Information Statement/Prospectus have the meanings ascribed thereto in the New RIHF Junior Mortgage Note Indenture and are incorporated by reference herein. GENERAL The New RIHF Junior Mortgage Notes will be issued pursuant to the New RIHF Junior Mortgage Note Indenture among RIHF, RIH and U.S. Trust Company of California, N.A. (the "New RIHF Junior Mortgage Note Trustee"). A copy of the New RIHF Junior Mortgage Note Indenture is filed as an exhibit to the Registration Statement of which this Information Statement/Prospectus is a part. The terms of the New RIHF Junior Mortgage Note Indenture also are governed by certain provisions of the TIA. The New RIHF Junior Mortgage Notes will be secured obligations of RIHF in the aggregate principal amount of $35,000,000 plus the principal amount of New RIHF Junior Mortgage Notes that may be issued in payment of interest as described below. The New RIHF Junior Mortgage Notes will mature on December 15, 2004. INTEREST Interest on the New RIHF Junior Mortgage Notes will accrue from the Effective Date at a rate of 11.375% per year. Interest is payable semi-annually on June 15 and December 15 in each year to Holders of record at the close of business on the first day of the month in which the interest payment date occurs. RIHF is required to pay interest on overdue principal and, to the extent permitted by law, overdue interest at the rate of 14.375% per year. (SECTION 3.10). RIHF may pay all or any portion of interest accruing on the New RIHF Junior Mortgage Notes by issuing additional Units comprised of New RIHF Junior Mortgage Notes (valued, for purposes only of determining the principal amount of additional New RIHF Junior Mortgage Notes to be issued in respect of interest so paid, at 100% of their principal amount) and RII Class B Common Stock in lieu of cash in satisfaction of interest payments due, provided that on the interest payment date in question, Consolidated Cash Flow of RIH and its consolidated Subsidiaries for the most recently completed four fiscal quarters is less than $35,000,000. (SECTION 3.11). SINKING FUND REQUIREMENTS None. MANDATORY REDEMPTION In the event of an RIH Sale, all the New RIHF Junior Mortgage Notes shall be redeemed by RIHF whether such RIH Sale occurs before, on or after the fifth anniversary of the Effective Date, at par together with interest, if any, accrued and unpaid thereon to the Redemption Date; provided, however, that such obligation of RIHF to redeem the New RIHF Junior Mortgage Notes in the event of a proposed RIH Sale shall cease to exist if the Holders of not less than 66 2/3% in Outstanding Amount of the Outstanding New RIHF Junior Mortgage Notes have consented to such proposed RIH Sale. (SECTION 3.13). OPTIONAL REDEMPTION The New RIHF Junior Mortgage Notes are redeemable at any time in whole, or from time to time in part, on or after the fifth anniversary of the Effective Date at the election of RIHF, at a redemption price of 100% of their principal amount plus accrued interest to the Redemption Date. (SECTION 3.13). From and after any Redemption Date, if funds for the redemption of any New RIHF Junior Mortgage Notes called for redemption shall have been made available, such New RIHF Junior Mortgage Notes will cease to bear interest and the only right of the Holders will be to receive payment of the Redemption Price and all interest accrued to such Redemption Date. (SECTION 13.06). The New RIHF Junior Mortgage Note Indenture requires that notice of any redemption of any New RIHF Junior Mortgage Notes be given to Holders at their addresses, as shown in the register, not less than 30 nor more than 60 days prior to the Redemption Date. The notice of redemption must 231 specify, among other things, the Redemption Date, the Redemption Price, the principal amount of New RIHF Junior Mortgage Notes to be redeemed, and, if less than all outstanding New RIHF Junior Mortgage Notes are to be redeemed, the identification (and, in the case of partial redemption, the respective principal amounts) of the New RIHF Junior Mortgage Notes to be redeemed and the place or places where the New RIHF Junior Mortgage Notes to be redeemed are to be surrendered for payment of the Redemption Price. (SECTION 13.04). The New RIHF Junior Mortgage Note Indenture provides that in the event of redemption of less than all the outstanding New RIHF Junior Mortgage Notes, the particular New RIHF Junior Mortgage Notes to be redeemed will be selected by the New RIHF Junior Mortgage Note Trustee by a random, automated selection process or pro rata, as deemed appropriate by the Trustee. (SECTION 13.03). LIMITATION ON OPEN-MARKET PURCHASES The New RIHF Junior Mortgage Note Indenture provides that RIHF and RIH will not, and will not permit any of their respective Subsidiaries to, purchase or otherwise acquire (other than pursuant to a redemption described in Article Thirteen of the New RIHF Junior Mortgage Note Indenture) any New RIHF Junior Mortgage Notes unless all interest accrued on the New RIHF Junior Mortgage Notes and payable on the Interest Payment Date immediately preceding the date of such repurchase was paid solely in cash and not in Additional Notes. (SECTION 12.22). In addition, the New RIHF Junior Mortgage Note Indenture provides that RIHF and RIH will not, and will not permit any of their respective subsidiaries to, repurchase any New RIHF Junior Mortgage Notes in the open market if an Event of Default has occurred and is continuing under the New RIHF Junior Mortgage Note Indenture, the New RIHF Mortgage Note Indenture or the Senior Facility Note Indenture. (SECTION 12.09). CASINO CONTROL ACT REGULATION The New RIHF Junior Mortgage Notes are subject to the qualification, divestiture and redemption provisions under the Casino Control Act that are described in "Business of the Company -- Regulation and Gaming Taxes and Fees -- New Jersey". (SECTION 13.08). INTERCREDITOR AGREEMENT See "Description of New Senior Mortgage Notes -- Intercreditor Agreement". COLLATERAL GENERAL The New RIHF Junior Mortgage Notes are secured by the New RIHF Junior Mortgage Trust Estate pursuant to the Mortgage Documents described below. (ARTICLE SIX). The "New RIHF Junior Mortgage Trust Estate" consists of an assignment by RIHF to the Collateral Agent, on behalf of the New RIHF Junior Mortgage Note Trustee for the benefit of the Holders of the New RIHF Junior Mortgage Notes, of (i) the RIH Junior Promissory Note in the original aggregate principal amount of $35,000,000, payable in amounts and at times necessary to pay the principal of and interest on the New RIHF Junior Mortgage Notes, and (ii) a lien on Resorts Casino Hotel, consisting of RIH's fee and leasehold interests comprising the Resorts Casino Hotel, the contiguous parking garage and property, all additions or improvements constructed thereon, encumbered pursuant to the RIH Junior Mortgage between RIH, as mortgagor, and RIHF, as mortgagee, securing the payment of the RIH Junior Promissory Note. THE RIH JUNIOR MORTGAGE The RIH Junior Mortgage creates a mortgage lien and security interest (subject to the liens securing the RIHF Senior Facility Notes, the RIH Senior Facility Guaranty, any other secured Working Capital Facility, the RIH Mortgage and the RIH Senior Guaranty Mortgage securing the New RIHF Mortgage Notes) in the Resorts Casino Hotel. RIH is prohibited from obtaining the release of, or 232 granting any additional liens on, the Resorts Casino Hotel without the consent of each Holder of the outstanding New RIHF Junior Mortgage Notes, except as permitted by the provisions described under "-- Release and Substitution of Collateral". RELEASE AND SUBSTITUTION OF COLLATERAL No portion of the New RIHF Junior Mortgage Trust Estate may be released without the consent of the Holders of not less than 66 2/3% in Outstanding Amount of the New RIHF Junior Mortgage Notes then Outstanding. (SECTION 11.02). Section 2.02 of the RIH Junior Mortgage provides that RIH may, unless an Event of Default shall have occurred and be continuing, sell or dispose of certain elements of the Resorts Casino Hotel which may have become obsolete or unfit for use or which are no longer necessary in the conduct of its businesses. The New RIHF Junior Mortgage Trust Estate will be released upon satisfaction and discharge of RIHF's obligations under the New RIHF Junior Mortgage Note Indenture. (SECTION 5.01). LIMITATIONS ON ABILITY TO REALIZE ON COLLATERAL GENERAL If there is an Event of Default under the New RIHF Junior Mortgage Note Indenture or the RIH Junior Mortgage, the New RIHF Junior Mortgage Note Trustee, subject to the requirements of the Casino Control Act, may enforce the rights and remedies arising under the RIH Junior Mortgage. The net amount realized in any foreclosure sale for the benefit of Holders of the New RIHF Junior Mortgage Notes will be only that amount that exceeds all amounts then due and owing to creditors, if any, having senior security interests (including the Holders of the RIHF Senior Facility Notes, the parties to any other secured Working Capital Facility and the holders of the RIHF Mortgage Notes and the related New RIH Mortgage Guaranty) and certain costs, taxes and other items. CERTAIN REGULATORY CONSIDERATIONS In any foreclosure sale with respect to the Resorts Casino Hotel, the New RIHF Junior Mortgage Note Trustee could bid the amount of the outstanding New RIHF Junior Mortgage Notes. The New RIHF Junior Mortgage Note Trustee would be required to comply with the applicable requirements of the Casino Control Act in any foreclosure sale, including obtaining a casino license. CERTAIN BANKRUPTCY CONSIDERATIONS In the event of the filing of a petition under the Bankruptcy Code for RIHF or RIH, applicable provisions of the Bankruptcy Code, including the automatic stay provisions of section 362 of the Bankruptcy Code, may operate to prevent the New RIHF Junior Mortgage Note Trustee from taking action to realize on the New RIHF Junior Mortgage Trust Estate if there is an Event of Default. GROUND LEASES A substantial portion of the North Tower of the Resorts Casino Hotel, a portion of the adjacent parking garage and a small portion of the casino/hotel are located on land that is owned by unrelated third parties and held by RIH under long-term ground leases. The ground leases do not provide certain mortgagee protections and, in the event of a default thereunder, the New RIHF Junior Mortgage Note Trustee may not have the right to cure any such default. However, the New RIHF Junior Mortgage Note Trustee has the right under the New RIHF Junior Mortgage Note Indenture to tender defaulted ground lease payments to RIH and require RIH to transmit such funds to the respective ground lessor. If such default is not cured, the lessor under any ground lease may have the right to terminate the ground lease. The termination of any or all of such ground leases could result in the loss of portions of, or rights with respect to, the property subject to the terminated ground lease. GUARANTY RIH will guarantee payment of principal of and interest on the New RIHF Junior Mortgage Notes pursuant to the RIH Junior Mortgage Guaranty. In addition, the RIH Junior Mortgage Guaranty will be secured by the RIH Junior Guaranty Mortgage. The RIH Junior Guaranty Mortgage will encumber the Resorts Casino Hotel on a basis PARI PASSU with the RIH Junior Mortgage. (ARTICLE FOUR) 233 RANKING The RIH Junior Mortgage will be PARI PASSU with the lien of the RIH Junior Guaranty Mortgage and subordinated to the liens on the Resorts Casino Hotel securing payment of the RIHF Senior Facility Notes, the RIHF Senior Facility Guaranty, any other secured Working Capital Facility, the New RIHF Mortgage Notes and the RIH Mortgage Guaranty. (SECTION 4.03). The aggregate principal amount of senior debt that may be outstanding on and after the Effective Date is limited to $145,000,000. PAYMENTS OF NET PROCEEDS OF ASSET SALES None. CHANGE OF CONTROL See "-- Covenants -- Limitation on Consolidation, Merger, Conveyance, Transfer or Lease of Property and Assets." COVENANTS CORPORATE EXISTENCE Subject to the provisions described under "-- Limitations on Merger, Consolidation, Transfer or Lease of Property and Assets", the New RIHF Junior Mortgage Note Indenture will provide that each of RIHF and RIH will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence and the corporate existence of each of its Subsidiaries in accordance with the respective organizational documents of RIHF, RIH and each such Subsidiary and the rights (charter and statutory), licenses, permits, approvals and governmental franchises of it and each of its Subsidiaries necessary to the conduct of its and their respective businesses, including without limitation all licenses, permits, approvals and franchises necessary to assure the continued operation of RIH's gaming operations at the Resorts Casino Hotel; PROVIDED, HOWEVER, any direct or indirect wholly owned subsidiary of RIH may consolidate with, merge into or transfer or distribute all or part of its properties and assets to RIH or RIHF or as otherwise provided in Section 10.01 of the New RIHF Junior Mortgage Note Indenture. (SECTION 12.04). LIMITATION ON DIVIDENDS AND RESTRICTED PAYMENTS The New RIHF Junior Mortgage Note Indenture will provide that RIHF will not, directly or indirectly, make, or permit any Subsidiary of RIHF to make, any Restricted Payment. The New RIHF Junior Mortgage Note Indenture also will provide that RIH will not, directly or indirectly make, or permit any Subsidiary of RIH to make, any Restricted Payment; PROVIDED, HOWEVER, that: (i) if RIH's Consolidated Interest Coverage Ratio, as certified to the New RIHF Junior Mortgage Note Trustee by an Officers' Certificate, calculated at the time of the declaration of the dividend or distribution is equal to or exceeds two, then RIH may declare and pay cash dividends or make cash distributions in respect of any class of capital stock of RIH in an amount not to exceed in the aggregate with any other such cash dividends or distributions declared or made from and after the date hereof, 50% of RIH's Consolidated Net Income from and after the Effective Date; and (ii) if (1) RIH's Consolidated Interest Coverage Ratio, as certified to the New RIHF Junior Mortgage Note Trustee by an Officer's Certificate, calculated at the time of the declaration of the dividend or distribution is equal to or exceeds two; and (2) RIH has cash in excess of the amount required to pay interest on the New RIHF Junior Mortgage Notes and the New RIHF Mortgage Notes on the next Interest Payment Date plus $20,000,000, then RIH may declare and pay cash dividends or make cash distributions in respect of any class of capital stock of RIH in an amount not to exceed such excess cash amount. The New RIHF Junior Mortgage Note Indenture further will provide that RIHF and RIH will not, and will not permit any of their respective Subsidiaries to, create or otherwise cause or suffer to exist or become effective any encumbrance or restriction of any kind on the ability of any Subsidiary of RIH or RIHF: (i) to pay dividends or make any other distribution on the capital stock of such Subsidiary 234 that is owned by RIH, RIHF or a wholly owned Subsidiary of RIHF or RIH, as applicable; (ii) to pay any Indebtedness owed by such Subsidiary to RIH, RIHF or any wholly owned Subsidiary of RIHF or RIH, as applicable; (iii) to make loans or advances to RIH, RIHF or any wholly owned Subsidiary of RIHF or RIH, as applicable; or (iv) to transfer any of its property or assets to RIHF, RIH or any wholly owned Subsidiary of RIHF or RII, as applicable, except (A) any restrictions existing on or prior to the date of the New RIHF Junior Morgage Note Indenture, or in connection with agreements in effect, or entered into, on the date of the New RIHF Junior Mortgage Note Indenture, or any permitted amendments, renewals, refundings, refinancings or extensions thereof; PROVIDED, HOWEVER, that the terms and conditions of any such amendments, renewals, refundings, refinancings or extensions are no more restrictive with respect to the matters set forth in clauses (i) through (iv) of this paragraph than the agreements being amended, refunded, renewed, refinanced or extended; (B) any restrictions or encumbrances existing or arising pursuant to the terms of Indebtedness of a Person outstanding at the time such Person becomes a Subsidiary of RIHF or RIH and not incurred in connection with, or in contemplation of, such Person becoming a Subsidiary of RIHF or RIH or any permitted amendments, renewals, refinancings or extensions thereof; PROVIDED, HOWEVER, that the terms and conditions of any such amendments, renewals, refundings, refinancings or extensions are no more restrictive with respect to the matters set forth in clauses (i) through (iv) of this paragraph than the agreements being amended, renewed, refunded, refinanced or extended; (c) encumbrances or restrictions existing under or by reason of applicable law or regulation (including, without limitation, the Casino Control Act) or the New RIHF Junior Mortgage Note Indenture; (d) customary provisions restricting assignment of contracts or subletting or assignment of any lease governing a leasehold interest of any Subsidiary of RIHF or RIH; or (e) net worth maintenance requirements imposed by any governmental authority. (SECTION 12.07). LIMITATION ON ADDITIONAL INDEBTEDNESS AND ISSUANCE OF NOTES The New RIHF Junior Mortgage Indenture will provide that RIHF and RIH will not, and will not permit any of their respective Subsidiaries to, directly or indirectly, incur, issue, assume, guarantee or otherwise become directly or indirectly liable with respect to, including, without limitation, through any merger or consolidation to which RIHF, RIH or any of their respective Subsidiaries is a party or through any other acquisition of any such Subsidiary (collectively, "incur"), or have outstanding, any Indebtedness other than, without duplication, the following: (i) the New RIHF Junior Mortgage Notes and the New RIHF Mortgage Notes; (ii) Indebtedness represented by the Junior Mortgage Facility; (iii) Indebtedness represented by the Working Capital Facility; (iv) Indebtedness represented by Capitalized Lease Obligations in an amount not in excess of $5,000,000 in the aggregate at any time outstanding; (v) Indebtedness represented by F,F&E Financing Agreements in an amount not in excess of $10,000,000 in the aggregate at any time outstanding; (vi) unsecured Indebtedness in an amount not in excess of $5,000,000 in the aggregate at any time outstanding that is subordinated and junior to the New RIHF Junior Mortgage Notes at least to the extent set forth in the Subordination Provisions attached to the New RIHF Junior Mortgage Note Indenture as Exhibit C and which Indebtedness does not have any requirements for amortization payments, mandatory redemption or sinking fund payments prior to the stated maturity of the New RIHF Junior Mortgage Notes and does not provide for the payment of interest in cash at any time when the most recent installment of interest on the New RIHF Junior Mortgage Notes was not paid in cash; (vii) Non-Recourse Indebtedness in an amount not in excess of $25,000,000 in the aggregate at any time outstanding; and 235 (viii) After-Acquired Fee Mortgage Debt in an amount not in excess of $3,000,000 in the aggregate at any time outstanding; and (ix) Intercompany advances between RIH, RIHF or any of their direct or indirect Subsidiaries on the one hand, and RII, on the other hand, not in excess of $1,000,000 in the aggregate at any time outstanding. The New RIHF Junior Mortgage Note Indenture also will provide that RIHF and RIH will not permit any of their respective Subsidiaries to issue (other than to RIHF, RIH or a direct or indirect wholly owned Subsidiary of RIHF or RIH) any capital stock which has voting rights or has a preference as to any distribution over its common stock. (SECTION 12.08). LIMITATION ON REPAYMENT OF SUBORDINATED INDEBTEDNESS The New RIHF Junior Mortgage Note Indenture will provide that neither RIHF nor RIH will, and neither RIHF nor RIH will permit any Subsidiary to, directly or indirectly, purchase, redeem, defease (including, but not limited to, in substance or legal defeasance) or otherwise acquire or retire for value prior to the stated maturity of, or prior to any scheduled mandatory redemption or sinking fund payment with respect to (collectively, to "repay" or a "repayment"), the principal of any Indebtedness of RIHF, RIH or any Subsidiary of RIHF or RIH which is subordinated (whether pursuant to its terms or by operation of law) in right of payment to the New RIHF Junior Mortgage Notes. (SECTION 12.09). LIMITATION ON CERTAIN TRANSACTIONS The New RIHF Junior Mortgage Note Indenture also will provide that each of RIHF and RIH will not, and will not permit any Subsidiary to, repurchase any New RIHF Mortgage Notes in the open market if an Event of Default shall have occurred and shall be continuing under the New RIHF Mortgage Note Indenture, the New RIHF Junior Mortgage Note Indenture or under the RIHF Senior Facility Indenture. (SECTION 12.10). RESTRICTION OF ACTIVITIES The New RIHF Junior Mortgage Note Indenture will provide that RIH will not, until the date that is 91 days after the payment in full by RIHF of the principal of (and interest, if any, on) all Outstanding New RIHF Junior Mortgage Notes, engage in any business or investment activities other than those necessary for, incident to, connected with or arising out of acquiring, financing, owning and operating the Resorts Casino Hotel or additional hotels or casinos or related or ancillary businesses. The New RIHF Junior Mortgage Note Indenture also will provide that neither RIHF nor RIH will make any loans to any Affiliate or any other Person other than (i) Indebtedness of the type described in clause (ix) of the covenant described in "--Limitation on Additional Indebtedness and Issuance of Notes", and (ii) loans to RII from the proceeds of the Indebtedness represented by the Working Capital Facility; PROVIDED, HOWEVER, that RIH shall have the right to make loans to employees of RIH actively involved in the operation of the Resorts Casino Hotel or to engage in credit transactions in the operation of the Resorts Casino Hotel, if such loans or credit transactions are in the ordinary course of business of operating a casino/hotel. The New RIHF Junior Mortgage Note Indenture further will provide that RIHF will not engage in any business (and will not have any Subsidiaries) other than (i) to collect principal, interest (and any interest on overdue principal and interest) and other amounts under any intercompany notes or guaranties made to the order of or otherwise in favor of RIHF, (ii) to preserve its rights under the New RIHF Junior Mortgage Note Indenture and the Mortgage Documents and otherwise to comply with its obligations thereunder and under the New RIHF Junior Mortgage Notes, (iii) to do or cause to be done all things necessary or appropriate to protect the New RIHF Junior Mortgage Trust Estate, (iv) to preserve its rights under the New RIHF Mortgage Indenture and the Senior Mortgage Documents and otherwise to comply with its obligations thereunder and under the New RIHF Mortgage Notes, (v) to issue Indebtedness represented by the Working Capital Facility, (vi) to preserve its rights under the Working Capital Facility and otherwise comply with its obligations under the Working 236 Capital Facility, (vii) to incur any other Indebtedness permitted under the New RIHF Junior Mortgage Note Indenture, (viii) to do all such acts and deeds necessary in connection with the Junior Mortgage Facility and the documents and instruments relating thereto and the Working Capital Facility and the documents and instruments relating thereto, (ix) to declare, issue and pay dividends on, or make any redemptions or repurchases of, RIHF's capital stock as contemplated by its Certificate of Incorporation (to the extent permitted hereby) and otherwise to comply with and perform the provisions of its Certificate of Incorporation and By-laws, and (x) to do such further acts and deeds to effectuate any of the matters listed in the foregoing clauses of this paragraph. (SECTION 12.11). LIMITATION ON SUBSIDIARIES; CONSOLIDATED GROUP The New RIHF Junior Mortgage Note Indenture will provide that RIHF and RIH will not have any Subsidiaries except the Subsidiaries existing on the date of the New RIHF Junior Mortgage Note Indenture and Subsidiaries acquired by RIHF or RIH in transactions not prohibited by the other provisions of the New RIHF Junior Mortgage Note Indenture which are and shall at all times be wholly owned (directly or indirectly) by RIHF or RIH. (SECTION 12.12). LIMITATIONS ON LIENS The New RIHF Junior Mortgage Note Indenture will provide that neither RIHF nor RIH will create, incur, suffer to exist or permit to be created or incurred any mortgage, lien, charge or encumbrance on or pledge of the Mortgage Documents or any of the New RIHF Junior Mortgage Trust Estate, other than (a) the lien of the Mortgage Documents and the Assignment Agreement, (b) liens on the New RIHF Junior Mortgage Trust Estate in connection with Indebtedness permitted by clauses (i), (ii), (iii), (iv) or (v) of the first paragraph of the covenant described in "Limitation on Additional Indebtedness and Issuance of Notes", (c) other Permitted Encumbrances on the New RIHF Junior Mortgage Trust Estate, and (d) a notice of intention or building contract filed by a mechanic, materialman or laborer under the New Jersey lien law. Without limiting the generality of the previous sentence, but notwithstanding the provisions of such sentence, RIH shall not be deemed to have breached such provisions by virtue of the existence of liens for Impositions (as defined in the RIH Junior Mortgage) or mechanics' liens so long as RIH is in good faith contesting the validity of such liens in accordance with the provisions of Section 5.09 of the RIH Junior Mortgage. (SECTION 12.12). COMPLIANCE WITH LAWS The New RIHF Junior Mortgage Note Indenture will provide that each of RIHF and RIH will comply, and will cause each of its Subsidiaries to comply, with the Casino Control Act and all other applicable statutes (including, without limitation, ERISA), rules, regulations, orders and restrictions of the United States of America, states and municipalities, and of any governmental department, commission, board, regulatory authority, bureau, agency and instrumentality of the foregoing in respect of the conduct of its business and the ownership of its properties and assets, including, without limitation, the New RIHF Junior Mortgage Trust Estate, except such as are being contested in good faith by appropriate proceedings in accordance with the Mortgage Documents (to the extent applicable) and except for such noncompliances as will not in the aggregate have a material adverse effect on the business, properties, operations or financial condition of RIHF, RIH or their respective Subsidiaries. (SECTION 12.14). PAYMENT OF TAXES AND OTHER CLAIMS The New RIHF Junior Mortgage Note Indenture will provide that RIHF or RIH 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 RIHF, RIH or any of their respective Subsidiaries or upon the New RIHF Junior Mortgage Trust Estate or any portion thereof or upon the income, profits or property of RIHF, RIH or any of their respective Subsidiaries, and (b) all lawful claims for labor, materials and supplies which, if unpaid, will by law become a Lien upon the New RIHF Junior Mortgage Trust Estate or upon any other property of RIHF, RIH or any of their respective Subsidiaries; PROVIDED, HOWEVER, that RIHF and RIH shall not be required to pay or 237 discharge or cause to be paid or discharged any such tax, assessments, charge or claim the amount, applicability or validity of which is being contested in good faith by appropriate proceedings in accordance with the Mortgage Documents (to the extent applicable) if adequate reserves therefor have been established in accordance with GAAP. (SECTION 12.15). MAINTENANCE OF PROPERTIES The New RIHF Junior Mortgage Note Indenture further will provide that each of RIHF and RIH will cause the Trust Estate and all other properties (other than obsolete equipment) owned by or leased to it or any of its Subsidiaries, and used or useful in the conduct of its business or the business of RIHF, RIH or such Subsidiary to be maintained and kept in good condition, repair and working order, except for reasonable wear and use, and will cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as required by the Mortgage Documents or, to the extent not governed by the Mortgage Documents, as in the reasonable judgment of the Board of Directors of RII may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times. (SECTION 12.16). INSURANCE The New RIHF Junior Mortgage Note Indenture will provide that each of RIHF and RIH will maintain, and will cause each of its Subsidiaries to maintain, with financially sound and reputable insurers, appropriate insurance on each of their respective properties and businesses against liabilities, casualties, risks and contingencies of the type and in amounts required by the Mortgage Documents or, to the extent not governed by the Mortgage Documents, as customarily maintained by corporations and other entities engaged in the same or similar businesses and similarly situated; PROVIDED, HOWEVER, that any such insurer shall be qualified to do business in the jurisdiction where the insured property is located. (SECTION 12.17). WAIVER OF STAY, EXTENSION OR USURY LAWS The New RIHF Junior Mortgage Note Indenture will provide that each of RIHF and RIH (to the extent that it may lawfully do so) will not, and will not cause or permit any of its Subsidiaries to, at any time insist upon, or plead, or in any manner whatsoever claim, and will resist any and all efforts to be compelled to take the benefit or advantage of, any stay or extension law or any usury law or other law that would prohibit or forgive RIHF or RIH from paying all or any portion of the principal of, or premium, if any, and interest on the New RIHF Junior Mortgage Notes or the RIH Junior Promissory Note or the Guaranty as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of the New RIHF Junior Mortgage Note Indenture or the RIH Junior Promissory Note or the Guaranty; and (to the extent that it may lawfully do so) RIHF and RIH hereby expressly waive all benefit or advantage of any such law, and covenant that they will not hinder, delay or impede the execution of any power granted to the New RIHF Junior Mortgage Note Trustee herein and in the Mortgage Documents, but will suffer and permit the execution of every such power as though no such law had been enacted. (SECTION 12.18). TRANSACTIONS WITH SHAREHOLDERS AND AFFILIATES The New RIHF Junior Mortgage Note Indenture also will provide that each of RIHF and RIH will not, and will not permit any of its Subsidiaries to, directly or indirectly, enter into or permit to exist any transaction (including without limitation the purchase, sale, lease or exchange of any property or the rendering of any service) with any Affiliate of RIHF or RIH or with any Affiliate of any such holder, unless (a) such transaction is upon fair and reasonable terms which are no less favorable to RIHF or such Subsidiary, as the case may be, than would be available in an arm's-length transaction with an unrelated person and (b) if over $250,000, such transaction is determined in the good faith judgment of a majority of the members of the Board of Directors of either (i) RII, so long as RII owns directly or indirectly a majority of the outstanding capital stock of RIH, directly or indirectly, or (ii) RIH, to be in the best interests of RIHF, RIH or such Subsidiary as applicable; PROVIDED, HOWEVER, that this provision 238 shall not apply to (A) any agreements, documents, instruments or transactions entered into in connection with the RIHF Senior Facility Notes, (B) the Services Agreement, (C) the RII Management Contract, or (D) the RII Tax Sharing Agreement. (SECTION 12.21). EVENTS OF DEFAULT The following events constitute "Events of Default" under the New RIHF Junior Mortgage Note Indenture: (a) default in the payment of any interest upon any New RIHF Junior Mortgage Note when such interest becomes due and payable and continuance of such default (the deposit with the New RIHF Junior Mortgage Note Trustee of funds sufficient to make such interest payment in full being deemed to cure any such default) for a period of ten days; (b) default in the payment of all or any portion of the principal of any New RIHF Junior Mortgage Note at its Maturity; (c) default in the performance or breach, of any covenant of RIHF or RIH in the New RIHF Junior Mortgage Note Indenture (other than a covenant a default in the performance or breach of which is elsewhere in this paragraph specifically dealt with), the Assignment Agreement or any of the Mortgage Documents and continuance of such default or breach for a period of 30 days (or such shorter or longer cure period, if any, as may be specified in respect of such default or breach in the Assignment Agreement or the applicable Mortgage Document, as the case may be), and (other than with respect to the covenants described in "Covenants -- Limitation on Dividends and Restricted Payments", "Covenants -- Limitation on Additional Indebtedness and Issuance of Notes", "Covenants -- Limitation on Repayment of Subordinated Indebtedness", "Covenants -- Limitation on Certain Transactions", "Covenants -- Restriction of Activities", "Covenants -- Limitation on Liens" and "Covenants -- Transactions with Stockholders and Affiliates") after there has been given (i) to RIHF by the New RIHF Junior Mortgage Note Trustee, or (ii) to RIHF and the New RIHF Junior Mortgage Note Trustee by the Holders of at least 25% in Outstanding Amount of the Outstanding New RIHF Junior Mortgage Notes, a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default"; PROVIDED, HOWEVER, that, if such default or breach is of a covenant set forth in certain specified provisions of the New RIHF Junior Mortgage Note Indenture, and if such default or breach is of such a nature that is curable but is not susceptible of being cured with due diligence within such 30-day period (or such shorter or longer cure period) (for reasons other than lack of funds), then, under certain circumstances, such period shall be extended for such further period of time (up to a maximum of 60 days) as may reasonably be required to cure such default or breach; (d) a proceeding or case shall be commenced, without the application or consent of RIHF or RIH, in any court of competent jurisdiction, seeking (i) its liquidation, reorganization, dissolution or winding-up, or the composition or readjustment of its debts, (ii) the appointment of a trustee, receiver, custodian, liquidator or the like of RIHF or RIH or of all or any substantial part of its assets, or (iii) similar relief in respect of RIHF or RIH under any law relating to bankruptcy, insolvency, reorganization, winding-up, or composition or adjustment of debts, and such proceeding or case shall continue undismissed, or an order, judgment or decree approving or ordering any of the foregoing shall be entered and continue unstayed and in effect, for a period of 60 consecutive days; (e) other than the Case, the commencement by RIHF or RIH of a voluntary case under the federal bankruptcy laws or any other applicable federal or state law, or the consent or acquiescence by any of them to the filing of any such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee or sequestrator (or 239 other similar official) of RIHF or RIH or any substantial part of any of their property, or the making by any of them of an assignment for the benefit of creditors, or the taking of action by RIHF or RIH in furtherance of any such action; (f) the revocation, suspension or involuntary loss of any Permit which results in the cessation of a substantial portion of the operations of the Resorts Casino Hotel for a period of more than 90 consecutive days; (g) (i) a default by RIHF, RIH or any of their Subsidiaries under any Indebtedness (other than the Indebtedness represented by the Working Capital Facility and the Junior Mortgage Facility in an aggregate principal amount in excess of $5,000,000), which default results in the acceleration of the maturity of any such Indebtedness under the evidence of indebtedness, indenture or other instrument governing such Indebtedness; PROVIDED, HOWEVER, that, if such default under such evidence of indebtedness, indenture or other instrument shall be cured by the obligor, or be waived by the Holders of such Indebtedness, in each case as may be permitted by such evidence of indebtedness, indenture or other instrument and in each case resulting in rescission of such acceleration thereunder, then the Event of Default under the New RIHF Junior Note Indenture by reason of such default shall be deemed likewise to have been thereupon cured or waived; or (ii) a default by RIHF, RIH or any of the Subsidiaries under any Indebtedness represented by the Working Capital Facility or the Junior Mortgage Facility, the effect of which default (after the expiration of any applicable notice or grace periods) is to permit the Holder or Holders of any such Indebtedness represented by the Working Capital Facility or the Junior Mortgage Note Indenture in an aggregate principal amount in excess of $5,000,000 (or a trustee or agent on behalf of such Holder or Holders) to cause the acceleration of the maturity of such Indebtedness represented by the Working Capital Facility or the Junior Mortgage Facility under the evidence of indebtedness, indenture or other instrument governing such Indebtedness; provided, however, that if such default under such evidence of indebtedness, indenture or other instrument shall be cured by the obligor, or be waived by the Holders of such evidence of indebtedness, indenture or other instrument (and, if such default resulted in the acceleration of the maturity of such Indebtedness, such acceleration shall have been rescinded thereunder), then the Event of Default under the New RIHF Junior Mortgage Note Indenture by reason of such default shall be deemed likewise to have been thereupon cured or waived; or (iii) the existence of a final judgment of a court of competent jurisdiction in an amount in excess of $3,000,000 against RIHF, RIH or the New RIHF Junior Mortgage Trust Estate, which judgment has not been satisfied or otherwise provided for, for a period of 30 days (during which execution shall not be effectively stayed) following the date on which such judgment becomes a lien against the New RIHF Junior Mortgage Trust Estate or any part thereof (unless the lawsuit in question was commenced without effective service of process upon either RIHF or RIH in which case such 30-day period shall not commence until RIHF or RIH receives notice of such final judgment); or (iv) the existence of a final judgment of a court of competent jurisdiction in an amount in excess of $15,000,000 against RIHF, RIH or the New RIHF Junior Mortgage Trust Estate, which judgment has not been satisfied or otherwise provided for, for a period of 60 days (during which execution shall not be effectively stayed) following the date of such final judgment; or (v) the existence of a final judgment of a court of competent jurisdiction, regardless of amount, against RIHF, RIH or the New RIHF Junior Mortgage Trust Estate, which judgment has not been satisfied or otherwise provided for, for a period of 60 days (during which execution shall not be effectively stayed) following the date of such final judgment, if such judgment, by itself or upon recordation or other action of the judgment creditor, imposes or would impose a lien on the New RIHF Junior Mortgage Trust Estate or any part thereof senior to the lien of the RIH Junior Mortgage; 240 (h) default in the performance, or breach, of any covenant of RIHF or RIH in connection with the provisions described in "-- Limitation on Consolidation, Merger, Conveyance, Transfer or Lease of Property and Assets. (SECTION 7.01); (i) the existence of a judgment of a court of competent jurisdiction in an amount in excess of $3,000,000 against RIH regarding the CRDA Dispute, which judgment has not been stayed, satisfied or otherwise provided for, for a period of 30 days (during which execution shall not be effectively stayed) (unless the lawsuit in question was commenced without effective service of process upon RIH in which case such 30-day period shall not commence until RIH receives notice of such final judgement); or (j) if RII fails to pay or discharge or cause to be paid or discharged, within 30 days before the same shall become delinquent, all taxes levied or imposed upon RII; provided, however, that no Event of Default or Default will be deemed to exist under the New RIHF Junior Mortgage Note Indenture with respect to any tax liability not paid or discharged by RII if and to the extent that the amount, applicability or validity of such tax liability is being contested in good faith by appropriate proceedings if adequate reserves therefor have been established in accordance with GAAP; provided, further, however, that this paragraph shall not apply to amounts due with respect to any period during which neither RIHF, RIH nor any of their Subsidiaries is included in RII's consolidated group for Federal income tax purposes. If an Event of Default (other than one referred to in clause (d) or (e) above) occurs and is continuing, then and in every such case the New RIHF Junior Mortgage Note Trustee or the Holders of not less than 25% in Outstanding Amount of the New RIHF Junior Mortgage Notes Outstanding may declare the Outstanding Amount of all the New RIHF Junior Mortgage Notes to be due and payable immediately, by a notice in writing to RIHF (and to the New RIHF Junior Mortgage Note Trustee, if given by any Noteholders), and upon any such declaration such Outstanding Amount shall become immediately due and payable. If an Event of Default referred to in clause (d) or (e) above occurs, then the Outstanding Amount of all the New RIHF Junior Mortgage Notes shall automatically become immediately due and payable without presentment, demand, protest or other formalities of any kind, all of which are expressly waived by RIHF. (SECTION 7.02). At any time after such a declaration of acceleration has been made, but before any judgment or decree for payment of money due on any New RIHF Junior Mortgage Notes has been obtained by the New RIHF Junior Mortgage Note Trustee, the Holders of a majority in Outstanding Amount of the New RIHF Junior Mortgage Notes may, by written notice to RIHF and the New RIHF Junior Mortgage Note Trustee, rescind and annul such declaration and its consequences if: (a) RIHF has deposited with the New RIHF Junior Mortgage Note Trustee a sum sufficient to pay (1) all overdue installments of interest on all New RIHF Junior Mortgage Notes, (2) the principal of any New RIHF Junior Mortgage Notes which have become due otherwise than by such declaration of acceleration and interest thereon at the rate or rates prescribed therefor in the New RIHF Junior Mortgage Notes, and (3) all sums paid or advanced by the New RIHF Junior Mortgage Note Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the New RIHF Junior Mortgage Note Trustee, its agents and counsel; and (b) all Events of Default, other than the non-payment of the Outstanding Amount of the New RIHF Junior Mortgage Notes which have become due solely by such declaration of acceleration, have been cured or have been waived as provided in the New RIHF Junior Mortgage Note Indenture. No such rescission and annulment shall affect any subsequent default or impair any right consequent thereon. (SECTION 7.02). LIMITATION ON CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE OF PROPERTY AND ASSETS Neither RIHF nor RIH shall consolidate, combine or merge with or into any other Person or permit any other Person to consolidate, combine or merge with or into RIHF or RIH, as the case may be; and neither RIHF with respect to its assets nor RIH with respect to the New RIHF Junior Mortgage Trust Estate shall sell, assign, convey or transfer its interest in such assets or the New RIHF Junior Mortgage Trust Estate, as the case may be, substantially as an entirety (and notwithstanding 241 anything to the contrary contained in the New RIHF Junior Mortgage Note Indenture (including the proviso at the end of this sentence), but subject to the provisions of the RIH Junior Mortgage regarding dispositions of the New RIHF Junior Mortgage Trust Estate, neither RIHF with respect to its assets nor RIH with respect to the New RIHF Junior Mortgage Trust Estate may sell, assign, convey or transfer such assets or the new RIHF Junior Mortgage Trust Estate, as the case may be, other than substantially as an entirety) to any other Person or group of persons in one transaction or a series of related transactions, or permit any other Person or group of persons to convey or transfer all or substantially all of its assets, subject to liabilities other than DE MINIMIS liabilities, to RIHF or RIH; and RIHF and RIH shall not transfer, convey, sell or otherwise dispose of to any other Person, or issue to any Person, any equity interest in RIHF or RIH, as the case may be (each such transaction referred to as a "Combination Transaction"); PROVIDED, HOWEVER, that (i) RIHF may engage in a Combination Transaction in which the only other party or parties is RIH or a direct or indirect wholly owned Subsidiary of RIHF or RIH, and (ii) RIHF or RIH may engage in any other Combination Transaction (either independently or at the same time as other Combination Transactions), subject to the following with respect to each such Combination Transaction: (a) immediately following such Combination Transaction, (1) RIH (or any successor entity) shall be eligible for and shall meet all relevant Legal Requirements, including holding all permits, required for the normal operation of the business of owning and operating the Resorts Casino Hotel, and (2) RIH (or any successor entity) shall be controlled by a Person that is, or shall retain to manage the Resorts Casino Hotel one or more Persons that are, experienced in the operation and management of casino hotels; (b) in the event RIHF or RIH shall consolidate, combine or merge with or into another Person or sell, assign, convey or transfer its interest in its assets or in the New RIHF Junior Mortgage Trust Estate, as the case may be, substantially as an entirety (but not less than substantially as an entirety) to another Person in one transaction or a series of related transactions, the entity which is formed by or survives such consolidation, combination or merger or the Person to which such assets or the New RIHF Junior Mortgage Trust Estate are conveyed or transferred, (1) shall be organized and existing under the laws of the United States of America, any state thereof, or the District of Columbia; (2) shall expressly assume, by an indenture supplemental to the New RIHF Junior Mortgage Note Indenture, executed and delivered to the New RIHF Junior Mortgage Note Trustee, the performance and observance of every covenant, obligation and condition of the New RIHF Junior Mortgage Note Indenture to be performed or observed by RIHF or RIH, whichever the case may be; (3) shall expressly assume, by an instrument executed and delivered to the New RIHF Junior Mortgage Note Trustee, the performance of every covenant, obligation and condition of the Mortgage Documents and the Assignment Agreement to be performed by RIHF or RIH, whichever the case may be; (4) immediately after giving effect to such transaction could incur at least $1.00 of additional Indebtedness under the covenant described in "Covenants -- Limitation on Additional Indebtedness and Issuance of Notes"; (c) immediately after giving effect to such transaction, no Event of Default, or Default under the New RIHF Junior Mortgage Note Indenture or under the RIH Junior Mortgage, shall have occurred and be continuing; (d) such Combination Transaction shall be on such terms as shall not impair the lien and security and priority of the New RIHF Junior Mortgage Note Indenture or of the Mortgage Documents or of the Assignment Agreement and the rights and powers of the New RIHF Junior Mortgage Note Trustee and the Holders of the New RIHF Junior Mortgage Notes thereunder; and (e) RIHF or RIH, as the case may be, shall have delivered to the New RIHF Junior Mortgage Note Trustee an Officers' Certificate and an Opinion of Counsel, each of which shall state that such Combination Transaction and such supplemental indenture comply with the provisions of Article Ten of the New RIHF Junior Mortgage Note Indenture and that all conditions precedent provided for in the New RIHF Junior Mortgage Note Indenture relating to such transaction have been complied with. (SECTION 10.01). Except as otherwise expressly permitted by the RIH Junior Mortgage and the New RIHF Junior Mortgage Note Indenture, neither RIHF nor RIH shall sell, assign, lease, hypothecate, pledge, mortgage or otherwise transfer all or any part of the assets of RIHF or the New RIHF Junior Mortgage Trust Estate or any interest therein (including without limitation any interest in the Ground Leases). 242 Without limiting the generality of the foregoing, RIH shall not separate, or attempt to separate, its ownership of its interest in the Ground Leases from the ownership of the buildings constituting the Resorts Casino Hotel or any part thereof. (SECTION 10.04). The foregoing limitations on consolidation, merger, conveyance, transfer or lease of property and assets shall not apply in connection with an RIH Sale. (SECTION 10.05). DISCHARGE OF NEW RIHF JUNIOR MORTGAGE NOTE INDENTURE RIHF may terminate substantially all obligations under the New RIHF Junior Mortgage Note Indenture at any time by delivering all outstanding New RIHF Junior Mortgage Notes to the New RIHF Junior Mortgage Note Trustee for cancellation and paying any other sums payable under the New RIHF Junior Mortgage Note Indenture. (ARTICLE FIVE). MODIFICATION OF INDENTURE From time to time, the parties to the New RIHF Junior Mortgage Note Indenture, without the consent of the Holders of the New RIHF Junior Mortgage Notes, may enter into one or more supplemental indentures for certain specified purposes, including curing ambiguities, defects or inconsistencies, provided such action does not adversely affect the rights of any Holder. (SECTION 11.01). Modifications, changes and amendments to the New RIHF Junior Mortgage Note Indenture also may be made by the parties thereto with the consent of the Holders of not less than 66 2/3% in Outstanding Amount of the New RIHF Junior Mortgage Notes then Outstanding, except that without the consent of the Holder of each New RIHF Junior Mortgage Note affected, no such modification or alteration may (i) change the stated maturity of the principal of, or any installment of interest on, any New RIHF Junior Mortgage Note, or reduce the principal amount thereof or the premium payable upon the redemption thereof, or change any Place of Payment where, or the coin or currency in which, any New RIHF Junior Mortgage Note, or the interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the Stated Maturity thereof (or, in the case of redemption, on or after the Redemption Date), (ii) reduce the percentage in Outstanding amount of the New RIHF Junior Mortgage Notes, the consent of whose Holders is required for any amendment, supplement or waiver, (iii) modify or alter the provisions of the proviso of the definition of the term "Outstanding", (iv) modify any of the provisions described in this paragraph or, with certain exceptions, the provisions of the New RIH Junior Mortgage Note Indenture regarding waiver of default, or (v) permit the creation of any lien ranking prior to the lien of the Mortgage (except for such liens expressly permitted pursuant to the covenant described under "-- Covenants -- Limitations on Liens"). In addition, the Holders of 66 2/3% in aggregate principal amount of the New RIHF Mortgage Notes must consent to any amendment of the New RIHF Junior Mortgage Note Indenture allowing for the redemption of the New RIHF Junior Mortgage Notes prior to the fifth anniversary of the Effective Date unless such redemption is in connection with an RIH Sale. (SECTION 11.02). TRUSTEE The New RIHF Junior Mortgage Note Trustee may require reasonable indemnity before exercising any of its rights or powers under the New RIHF Junior Mortgage Note Indenture. (SECTION 8.05). REPORTS TO HOLDERS RIH will furnish or cause to be furnished to the New RIHF Junior Mortgage Note Trustee, within 105 days after each fiscal year of RIH: (i) a copy of annual audited financial statements of RIH prepared in conformity with GAAP, accompanied by a report of Ernst & Young or of another firm of independent certified public accountants of recognized national standing selected by RIH (the "National Accountants"), together with a certificate from such National Accountants stating that their audit examination has included a review of the terms of the New RIHF Junior Mortgage Note Indenture and that the National Accountants have not become aware of any Event of Default or that a Default has occurred and is continuing, and if they have become aware of any such Event of Default or Default, describing it; provided, however, that the National Accountants will not be liable to any Person for any failure to discover any Event of Default in connection with such review; and (ii) a copy 243 of annual unaudited financial statements of RIH, including notes to such financial statements and corresponding management's discussion and analysis, in form and substance comparable to that which would be required to be filed with the Commission in an Annual Report on Form 10-K under the Exchange Act, prepared in the same manner as the audited financial statements referred to in clause (i) above, signed by a proper accounting officer of RIH. RIH contemporaneously with the furnishing of such audited financial statements to the New RIHF Junior Mortgage Note Trustee under clause (i) of this paragraph, RIH will mail copies of such audited financial statements to the Holders (which need not include the certificate referred to in clause (i) above). RIH also will furnish or cause to be furnished to the New RIHF Junior Mortgage Note Trustee, within 60 days after each quarter of each fiscal year of RIH, except the final quarter of such fiscal year, a copy of unaudited financial statements of RIH prepared on a consistent basis with the audited financial statements referred to in clause (i) of the paragraph above, signed by a proper accounting officer of RIH and consisting of at least a balance sheet as at the close of such quarter and statements of operations and cash flow for such quarter and for the period from the beginning of such fiscal year to the close of such quarter, including notes to such financial statements and corresponding management's discussion and analysis, in form and substance comparable to that which would be required to be filed with the Commission in a Quarterly Report on Form 10-Q under the Exchange Act. RIH contemporaneously with the furnishing of such unaudited financial statements to the New RIHF Mortgage Note Trustee, RIH shall mail copies of such unaudited financial statements to the Holders (which need not be signed by a proper accounting officer of RIH). RIH will furnish or cause to be furnished to the New RIH Junior Mortgage Note Trustee, contemporaneously with the furnishing of a copy of the annual financial statements and of the quarterly financial statements referred to above, an Officers' Certificate dated the date of such annual financial statement or such quarterly financial statements to the effect that no Default or Event of Default has occurred and is continuing, or, if there is any such Default or Event of Default, describing it and the steps, if any, being taken to cure it. RIH will furnish or cause to be furnished to the New RIHF Junior Mortgage Note Trustee, copies of each filing and report made by RIH or RIHF with the Commission pursuant to the reporting and filing requirements of Section 13 or 15(d) or the Exchange Act, within 15 days after RIH or RIHF, as applicable, is required to file the same. Pursuant to the New RIHF Junior Mortgage Note Indenture, if RIH becomes exempt from the Commission reporting and filing requirements of Section 13 or 15(d) of the Exchange Act, RIH will prepare such periodic reports as it would otherwise have been required to file with the Commission and (i) at its own expense, cause all such periodic reports to be filed with the Commission, the New RIHF Junior Mortgage Note Trustee and any exchange upon which the New RIHF Junior Mortgage Notes then are listed, in each case on the date when such periodic report would have been required to be filed with the Commission under Section 13 or 15(d) of the Exchange Act, if either or such provisions were applicable, and (ii) keep copies of such periodic reports available at its office and promptly provide any Person who so requests with a copy of any such periodic report, at RIHF's expense. Each of RIHF and RIH shall comply with the provisions of Section 314(a) of the Trust Indenture Act. RIHF will deliver to the Trustee, promptly upon becoming aware of any Default or Event of Default (but in no event later than five business days thereafter) in the performance of any covenant or agreement of RIHF contained in the New RIHF Junior Mortgage Note Indenture or any of the Mortgage Documents, an Officers' Certificate specifying with particularity such event. (SECTION 12.06). CERTAIN DEFINITIONS "ADDITIONAL NEW RIHF JUNIOR MORTGAGE NOTES" means additional New RIHF Junior Mortgage Notes issued in payment of interest accrued on outstanding New RIHF Junior Mortgage Notes pursuant to Section 3.11 of the New RIHF Junior Mortgage Note Indenture. 244 "AFFILIATE" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person, and, with respect to any specified natural Person, any other Person having a relationship by blood, marriage or adoption not more remote than first cousin with such specified Person. For purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing; PROVIDED, HOWEVER, that, except as may be required under the TIA, the term "Affiliate" shall not include, with respect to RIHF or RIH, any of Fidelity Management & Research Company, TCW Special Credits or funds or accounts managed or advised by either of them. "AFTER-ACQUIRED FEE MORTGAGE DEBT" means any Indebtedness secured by an After-Acquired Fee Mortgage. "AFTER-ACQUIRED FEE MORTGAGE" has the meaning stated in Section 2.07 of the RIH Junior Mortgage. "ASSIGNMENT AGREEMENT" means the Assignment of Agreements providing for the assignment of the RIH Junior Promissory Note and other Mortgage Documents to the New RIHF Junior Mortgage Note Trustee by RIHF, and acknowledgment thereof by RIH, a copy of which is attached to the New RIHF Junior Mortgage Note Indenture as Exhibit B. "CAPITALIZED LEASE OBLIGATION" means, with respect to any Person, any lease of any property (whether real, personal or mixed) by such Person as lessee which, in conformity with GAAP consistently applied, is accounted for as a capitalized lease on the balance sheet of such Person. "CASE" means, collectively, the bankruptcy cases involving RII and GRI in the United States Bankruptcy Court for the District of Delaware. "CONSOLIDATED CASH FLOW' means, with respect to any Person for any period, an amount equal to the sum of (i) the consolidated net income (or loss) of such Person for such period determined in accordance with GAAP consistently applied, excluding interest income, interest expense and gains or losses from extraordinary or nonrecurring items, plus (ii) all amounts deducted in computing such consolidated net income (or loss) in respect of depreciation and amortization, plus (iii) non-cash charges arising from the reduction of CRDA Deposits to market value, minus (iv) taxes based upon or measured by income which are payable in cash, minus (v) CRDA Deposits. "CONSOLIDATED INTEREST CHARGES" means, with respect to any Person for any period, the consolidated interest expense (not including the non-cash amortization of discount on the original issuance of (a) the RIH Senior Promissory Note, (b) any intercompany indebtedness of RIH issued in connection with Indebtedness represented by the Junior Mortgage Facility and (c) any intercompany indebtedness of RIH issued in connection with Indebtedness represented by the Working Capital Facility), whether payable in cash or in-kind (and with respect to RIH, including, without limitation, the interest paid or accrued (without duplication) on (i) the RIH Promissory Note, (ii) any intercompany indebtedness of RIH issued in connection with Indebtedness represented by the Junior Mortgage Facility and (iii) any intercompany indebtedness of RIH issued in connection with Indebtedness represented by the Working Capital Facility), without deduction for interest income (other than cash interest income received from RII in payment of its interest cost on any Working Capital Facility), in each case for such Person and its consolidated Subsidiaries for such period determined in accordance with GAAP consistently applied. "CONSOLIDATED INTEREST COVERAGE RATIO" shall mean, at any date of calculation thereof, the ratio of (a) Consolidated Cash Flow of RIH and its consolidated Subsidiaries for the immediately preceding four consecutive fiscal quarters to (b) Consolidated Interest Charges of RIH and its consolidated Subsidiaries for such period. 245 "CONSOLIDATED NET INCOME" means, with respect to any Person for any period, an amount equal to consolidated net income (or loss) of such Person for such period determined in accordance with GAAP consistently applied, minus (a) federal and state taxes based upon or measured by income which are payable in cash, plus (b) non-cash charges arising from federal and state taxes based upon or measured by income. "CRDA DEPOSITS" means (a) the quarterly deposits made by RIH to the Casino Reinvestment Development Authority in an amount equal to 1.25% of RIH's gross revenue in order to satisfy its investment obligation pursuant to the Casino Control Act, and (b) the amounts invested in qualified investments in lieu of any of the quarterly deposits (or portion thereof) referred to in clause (a) above. "CRDA DISPUTE" means the dispute existing on the date hereof between RIH and the New Jersey Casino Reinvestment Development Authority regarding CRDA Deposits and New Jersey Casino Reinvestment Authority Notes, which dispute involves an amount of approximately $30,000,000. "DEFAULT" means the occurrence and continuance of an Event of Default or an event which, after notice or lapse of time or both, would become an Event of Default. "F, F&E FINANCING AGREEMENT" means a purchase money lien upon any Tangible Personal Property (as defined in the RIH Junior Mortgage) and other items constituting Operating Assets (as defined in the RIH Junior Mortgage), such as computer software, which are financed, purchased or leased by RIH, provided that, with certain exceptions, the principal amount of the indebtedness secured by such lien shall not exceed 85% of the cost to RIH of such property at the time of acquisition. "GUARANTY" means the guaranty contained in Article Four of the New RIHF Junior Mortgage Note Indenture. "HOLDER" means a Person in whose name a New RIHF Junior Mortgage Note is registered. "INDEBTEDNESS" means, as applied to any Person, without duplication, any indebtedness, exclusive of deferred taxes: (a) in respect of borrowed money (whether or not the recourse of the lender is to the whole of the assets of such Person or only to a portion thereof); (b) evidenced by bonds, notes, debentures or similar instruments or letters of credit; (c) representing the balance deferred and unpaid of the purchase price of any property, if and to the extent such indebtedness would appear as a liability upon a balance sheet of such Person prepared in accordance with GAAP (but excluding trade accounts payable arising in the ordinary course of business that are not overdue by more than 90 days or are being contested by such Person in good faith); (d) any Capitalized Lease Obligations (other than, with respect to RIH or RIHF, the Ground Leases) of such Person; and (e) Indebtedness of others guaranteed by such Person, including without limitation every obligation of such Person (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or to purchase (or to advance or supply funds for the purchase of) any security for the payment of such Indebtedness, (ii) to purchase property, securities or services for the purpose of assuring the Holder of such Indebtedness of the payment of such Indebtedness, or (iii) to maintain working capital, equity capital or other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness; PROVIDED, HOWEVER, that the guaranty by any Person shall not include endorsements by such Person for collection or deposit, in either case in the ordinary course of business. The term "INDEBTEDNESS" does not include: (1) any of the types of indebtedness described in clauses (a) through (e) above (inclusive) owed by RIHF to RIH or any of their Subsidiaries, by RIH to RIHF or any of their Subsidiaries or by any such Subsidiary to RIH, RIHF or any other such Subsidiary (including without limitation the RIH Promissory Note and the RIH Junior Promissory Note); (2) the RIH Mortgage Guaranty, the RIH Junior Mortgage Guaranty, and any guaranty of a Working Capital Facility Guaranty; (3) matters relating to the CRDA Dispute, New Jersey Casino Reinvestment Development Authority Notes or the CRDA Deposits; and (4) any payments made by RIHF or RIH under the RII Management Agreement, the RII Tax Sharing Agreement or the Services Agreement. 246 "JUNIOR MORTGAGE FACILITY" means the New RIHF Junior Mortgage Notes and any secured or unsecured facility or facilities entered into by RIH or RIHF providing for the making of loans to RIH or RIHF on a revolving or term basis, or the issuance of notes, debentures or bonds by RIH or RIHF, as such agreement, indenture or instrument may be amended, supplemented or modified from time to time, or any refinancing thereof, in an aggregate principal amount up to $35,000,000 plus additional notes, debentures or bonds issued in payment of interest accrued on outstanding notes, debentures or bonds; PROVIDED, HOWEVER, that the lender or lenders thereunder (or any trustee or agent acting on behalf of such lender or lenders) shall have executed an interecreditor agreement covering the matters set forth on Exhibit G to the New RIHF Junior Mortgage Note Indenture. The liens, if any, securing the Junior Mortgage Facility shall be PARI PASSU with the lien of the RIH Junior Mortgage and the RIH Junior Guaranty Mortgage. The term "Junior Mortgage Facility" does not include the RIH Junior Mortgage Guaranty. "MORTGAGE DOCUMENTS" means (a) the RIH Junior Mortgage, the RIH Junior Guaranty Mortgage, the RIH Junior Promissory Note, the Assignment of Leases and Rents and any other security document to which either RIH or RIHF is a party relating to the New RIHF Junior Mortgage Notes, which is executed and delivered pursuant to or in connection with the RIH Junior Mortgage, the RIH Junior Guaranty Mortgage or the Assignment Agreement, and (b) any mortgage, deed of trust, guaranty, promissory note, collateral assignment agreement, assignment of leases and rents, assignment of operating assets and any other security document to which either RIH or RIHF is a party relating to the Junior Mortgage Facility. "NON-RECOURSE INDEBTEDNESS" means indebtedness incurred in connection with the acquisition, purchase, improvement or development of property or assets (other than the New RIHF Junior Mortgage Trust Estate) used by RIHF, RIH or any Subsidiary of RIH or RIHF to engage in the casino business, the hotel business or related or ancillary business or purpose and which is secured only by such assets and without recourse to RIH, RIHF or any Subsidiary of RIH or RIHF or the New RIHF Junior Mortgage Trust Estate for such indebtedness. "OUTSTANDING" when used with respect to New RIHF Junior Mortgage Notes means, as of the date of determination, all New RIHF Junior Mortgage Notes theretofore authenticated and delivered under this Indenture, except: (a) New RIHF Junior Mortgage Notes theretofore canceled by the New RIHF Junior Mortgage Note Trustee or delivered to the New RIHF Junior Mortgage Note Trustee for cancellation; (b) New RIHF Junior Mortgage Notes for whose payment or redemption money in the necessary amount has been theretofore deposited with the New RIHF Junior Mortgage Note Trustee or any Paying Agent in trust for the Holders of such New RIHF Junior Mortgage Notes; (c) New RIHF Junior Mortgage Notes in exchange for or in lieu of which other New RIHF Junior Mortgage Notes have been authenticated and delivered under the New RIHF Junior Mortgage Note Indenture; and (d) New RIHF Junior Mortgage Notes alleged to have been destroyed, lost or stolen which have been paid as provided in Section 3.06 of the New RIHF Junior Mortgage Note Indenture; PROVIDED, HOWEVER, that in determining whether the Holders of the requisite principal amount of New RIHF Junior Mortgage Notes Outstanding have given any request, demand, authorization, direction, notice, consent or waiver hereunder, New RIHF Junior Mortgage Notes owned by RIHF or any other obligor upon the New RIHF Junior Mortgage Notes or any Affiliate of RIHF or of such other obligor shall be disregarded and deemed not to be Outstanding. In determining whether the New RIHF Junior Mortgage Note Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only New RIHF Junior Mortgage Notes which the New RIHF Junior Mortgage Note Trustee actually knows to be so owned shall be so disregarded. 247 "OUTSTANDING AMOUNT" of any Indebtedness at any time means the principal amount outstanding of such Indebtedness at such time. "RESTRICTED PAYMENT" means (a) any declaration or payment of any dividend or the making of any distribution to Holders of capital stock of RIH or RIHF or any Subsidiary of RIH or RIHF in respect of such capital stock (other than to RIH or RIHF or a direct or indirect wholly owned Subsidiary of RIH or RIHF), (b) any purchase, redemption or other acquisition or retirement for value of any capital stock (or warrants, rights or options to acquire any capital stock or Indebtedness convertible into or exchangeable for any capital stock) of RIH or RIHF or any Subsidiary of RIH or RIHF (other than purchases, redemptions, acquisitions or retirement solely from RIH or RIHF or a direct or indirect wholly owned Subsidiary of RIH or RIHF); PROVIDED, HOWEVER, that any such purchase, redemption or other acquisition or retirement that is required by the Casino Control Commission or under the Casino Control Act shall not constitute a Restricted Payment. The term "Restricted Payment" also shall not include any loan or advance to RII of all or any portion of the proceeds of the Indebtedness represented by the Working Capital Facility. "RIH SALE" means (a) a consolidation, combination or merger involving RIH and any other Person, (b) a sale, assignment, conveyance or transfer or RIH's interest in the New RIHF Junior Mortgage Note Trust Estate, substantially as an entirety, to any other Person or group of Persons in one transaction or a series of related transactions, or (c) any transaction as a result of which RIH ceases to be a direct or indirect wholly owned Subsidiary of RII; PROVIDED, HOWEVER, that any of the transactions described in clauses (a), (b) and (c) above shall not constitute an RIH Sale if the other party or parties to the transaction consists of only one or more of the following Persons: RIHF or any wholly owned direct or indirect subsidiary of RIH or RIHF; and PROVIDED, FURTHER, HOWEVER, that notwithstanding any other provision of this definition, if the primary effect of any of the aforesaid transactions is the redemption of the New RIHF Junior Mortgage Notes, then such transaction shall not be considered to be a RIH Sale. "RII MANAGEMENT CONTRACT means the Interim Management Agreement. "RII TAX SHARING AGREEMENT" means the Tax Sharing Agreement between RII and RIH pursuant to which (i) RIH will not make any payments to RII or any other Affiliate in respect of taxes, other than to reimburse RII for any cash payments actually made by RII in respect of any Federal, state or local income or alternative minimum taxes arising from the earnings or operations of RIH; PROVIDED, HOWEVER, that RIH shall not be required to reimburse RII for cash payments in respect of Federal, state or local income or alternative minimum taxes that would not have been owed but for the reduction, if any, of the amount of the consolidated net operating loss carryforwards or consolidated current losses of the affiliated group of which RII is a common parent which resulted from the inclusion in the consolidated return filed for such group for any taxable year ending after the Effective Date of the income of any entity other than RIH, other than income directly attributable to the consummation of the Plan, including but not limited to the transfer of the stock of RIB and the assets of the U.S. Paradise Island Subsidiaries, and (ii) RIH will be entitled to any refund (plus the interest thereon) of any taxes for which RIH is required to reimburse RII. "SENIOR MORTGAGE DOCUMENTS" means the Senior Mortgage, the Senior Guaranty Mortgage, the RIH Promissory Note, the Senior Assignment of Leases and Rents and any other security document to which either RIH or RIHF is a party relating to the New RIHF Mortgage Notes, which is executed and delivered pursuant to or in connection with the Senior Mortgage, the Senior Guaranty Mortgage or the Senior Assignment Agreement. "SUBSIDIARY" of any Person means a corporation more than 50% of the outstanding voting stock of which is owned, directly or indirectly, by such Person or one or more Subsidiaries of such Person. "WORKING CAPITAL FACILITY" means the RIHF Senior Facility (and the RIHF Senior Facility Notes issued thereunder) and any other secured or unsecured facility or facilities entered into by RIH and/or RIHF providing for the making of working capital loans to RIH or RIHF (with RII as a guarantor 248 thereunder) on a revolving or term basis, or the issuance of notes, debentures or bonds by RIH, RIHF or RII, as such agreement may be amended, supplemented or modified from time to time, or any refinancing thereof, in an aggregate principal amount up to $20,000,000; PROVIDED, HOWEVER, that the lender or lenders thereunder (or any trustee or agent acting on behalf of such lender or lenders) shall have executed an interecreditor agreement covering the matters set forth on Exhibit G to the New RIHF Junior Mortgage Note Indenture. The liens, if any, securing the Working Capital Facility may be senior to the lien of the RIH Junior Mortgage, the RIH Junior Guaranty Mortgage, the RIH Senior Mortgage and the RIH Senior Guaranty Mortgage. The term "Working Capital Facility" does not include the Working Capital Facility Guaranty. DESCRIPTION OF RIHF SENIOR FACILITY NOTES GENERAL The RIHF Senior Facility Notes, if issued, will be issued pursuant to the RIHF Senior Facility and the RIHF Senior Facility Note Indenture among RIHF, RIH, one or more funds managed by Fidelity and a trustee to be named prior to the Effective Date, (the "RIHF Senior Facility Trustee"). The RIHF Senior Facility Notes will be secured senior obligations of RIHF in the aggregate principal amount of $20,000,000. The RIHF Senior Facility Notes will mature on July 15, 2002. As part of the implementation of the Restructuring, Fidelity, which advises and manages various funds that hold Old Series Notes, will cause one or more of the funds it manages to enter into the RIHF Senior Facility which will allow RIHF to borrow up to $20,000,000 through the issuance of RIHF Senior Facility Notes. Any amount borrowed by RIHF under the RIHF Senior Facility will be loaned by RIHF to RIH, and possibly by RIH to RII, through intercompany transactions for working capital and general corporate purposes. Acceptances of the Plan by the holders of Old Series Notes and the entry of the Confirmation Order will constitute the approval of and consent by the holders of the Old Series Notes to the transfer to and use by RIH and RII of the proceeds from the RIHF Senior Facility Notes. The RIHF Senior Facility will be available for a single borrowing for a period of one year from the Effective Date, provided that the public resale of the RIHF Senior Facility Notes by purchasers upon a resale is registered, if required, under the Securities Act, and the RIHF Senior Facility Note Indenture has been qualified under the TIA, among other conditions. The RIHF Senior Facility Notes and the RIH Senior Facility Guaranty are not included among the securities registered under the Registration Statement, nor has the RIHF Senior Facility Note Indenture yet been qualified under the TIA. Any public offering of the RIHF Senior Facility Notes and RIH Senior Facility Guaranty will be made only by means of a prospectus pursuant to a separate registration statement to be filed by RIHF and RIH under the Securities Act. Information concerning the RIHF Senior Facility is included in this Information Statement/Prospectus because the RIHF Senior Facility is an integral part of the Restructuring and because execution of the RIHF Senior Facility Indenture and related documents and instruments is a condition precedent to the consummation of the Plan. INTEREST Interest on the RIHF Senior Facility Notes will accrue from and after their date of original issuance at a rate of 11% per year. Interest is payable semi-annually on January 15 and July 15 in each year to holders of record at the close of business on the first day of the month in which the interest payment date occurs. SINKING FUND REQUIREMENTS None. MANDATORY REDEMPTION Subject to negotiations among RIHF, RIH, RII and Fidelity. 249 OPTIONAL REDEMPTION The RIHF Senior Facility Notes will be redeemable at any time in whole, or from time to time in part, at the election of RIHF, at a redemption price of 103% of their principal amount plus accrued interest to the Redemption Date during the first three years after the issuance and at a redemption price of 100% of their principal amount plus accrued interest to the Redemption Date thereafter. LIMITATION ON OPEN-MARKET PURCHASES Subject to negotiations among RIHF, RIH, RII and Fidelity. CASINO CONTROL ACT REGULATION The RIHF Senior Facility Notes will be subject to the qualification, divestiture and redemption provisions under the Casino Control Act that are described in "Business of the Company -- Regulation and Gaming Taxes and Fees -- New Jersey". INTERCREDITOR AGREEMENT See "Description of New RIHF Mortgage Notes -- Intercreditor Agreement". COLLATERAL GENERAL The RIHF Senior Facility Notes will be secured by the RIHF Senior Facility Trust Estate pursuant to the Mortgage Documents described below. The "RIHF Senior Facility Trust Estate" will consist of an assignment by RIHF to the RIHF Senior Facility Trustee for the benefit of the holders of the RIHF Senior Facility Notes, of (i) one or more promissory notes (collectively, the "RIH Senior Facility Note") issued from time to time by RIH to RIHF not exceeding an aggregate principal amount of $20,000,000, payable in amounts and at times necessary to pay the principal of and interest on the RIHF Senior Facility Notes, and (ii) a lien on the Resorts Casino Hotel, consisting of RIH's fee and leasehold interests comprising the Resorts Casino Hotel, the contiguous parking garage and property, all additions or improvements constructed thereon, encumbered pursuant to an indenture of mortgage, an assignment of leases and rents and a security agreement (collectively, the "RIH Senior Facility Mortgage") between RIH, as mortgagor, and RIHF, as mortgagee, securing payment of the RIH Senior Facility Note. Additional collateral subject to negotiations among RIHF, RIH and Fidelity. THE RIH SENIOR FACILITY MORTGAGE The RIH Senior Facility Mortgage will create a senior mortgage lien and security interest in the Resorts Casino Hotel. RELEASE AND SUBSTITUTION OF COLLATERAL Subject to negotiations among RIHF, RIH, RII and Fidelity. LIMITATIONS ON ABILITY TO REALIZE ON COLLATERAL GENERAL If there is an Event of Default under the RIHF Senior Facility, the RIHF Senior Facility Note Indenture or the RIH Senior Facility Mortgage, the RIHF Senior Facility Trustee, subject to the requirements of the Casino Control Act, may enforce the rights and remedies arising under the RIH Senior Facility Mortgage. The net amount realized in any foreclosure sale for the benefit of holders of the RIHF Senior Facility Notes will be only that amount that exceeds all amounts then due and owing to creditors, if any, having senior security interests and certain costs, taxes and other items. 250 CERTAIN REGULATORY CONSIDERATIONS In any foreclosure sale with respect to the Resorts Casino Hotel, the RIHF Senior Facility Trustee could bid the amount of the outstanding RIHF Senior Facility Notes. The RIHF Senior Facility Trustee would be required to comply with the applicable requirements of the Casino Control Act in any foreclosure sale, including obtaining a casino license. CERTAIN BANKRUPTCY CONSIDERATIONS In the event of the filing of a petition under the Bankruptcy Code for RIHF or RIH, applicable provisions of the Bankruptcy Code, including the automatic stay provisions of section 362 of the Bankruptcy Code, may operate to prevent the RIHF Senior Facility Trustee from taking action to realize on the RIHF Senior Facility Trust Estate if there is an Event of Default. GROUND LEASES A substantial portion of the North Tower of the Resorts Casino Hotel, a portion of the adjacent parking garage and a small portion of the casino hotel are located on land that is owned by unrelated third parties and held by RIH under long-term ground leases. The ground leases do not provide certain mortgagee protections and, in the event of a default thereunder, the RIHF Senior Facility Trustee may not have the right to cure any such default. If such default is not cured, the lessor under any ground lease may have the right to terminate the ground lease. The termination of any or all of such ground leases could result in the loss of portions of, or rights with respect to, the property subject to the terminated ground lease. GUARANTY RIH and RII each will guaranty payment of principal of and interest on the RIHF Senior Facility Notes pursuant to the RIH Senior Facility Guaranty. Additional guarantors are subject to further negotiation. RANKING The RIHF Senior Facility Notes will be secured senior obligations of RIHF. The RIH Senior Facility Mortgage will be senior to the liens on the Resorts Casino Hotel securing payment of the New RIHF Mortgage Notes, the RIH Mortgage Guaranty, the New RIHF Junior Mortgage Notes and the RIH Junior Mortgage Guaranty. PAYMENT OF NET PROCEEDS FROM ASSET SALES None. CHANGE OF CONTROL Subject to negotiations among RIHF, RIH, RII and Fidelity. COVENANTS Subject to negotiations among RIHF, RIH, RII and Fidelity. EVENTS OF DEFAULT Subject to negotiations among RIHF, RIH, RII and Fidelity. LIMITATION ON MERGERS Subject to negotiations among RIHF, RIH, RII and Fidelity. DISCHARGE OF RIHF SENIOR FACILITY; DEFEASANCE Subject to negotiations among RIHF, RIH, RII and Fidelity. MODIFICATION OF RIHF SENIOR FACILITY Subject to negotiations among RIHF, RIH, RII and Fidelity. TRUSTEE The RIHF Senior Facility Note Trustee may require reasonable indemnity before exercising any of its rights or powers under the RIHF Senior Facility. REPORTS TO HOLDERS Subject to negotiations among RIHF, RIH, RII and Fidelity. 251 DESCRIPTION OF NEW EQUITY SECURITIES GENERAL RII is a Delaware corporation that, following the Restructuring, will have two classes of authorized and outstanding common stock. The RII Common Stock will be issued to the holders of the Old Series Notes as of the Effective Date pursuant to the Plan. The existing holders of RII Common Stock will continue to hold their existing shares of RII Common Stock. The RII Class B Common Stock will be issued as part of the Units to the holders of the Old Series Notes as of the Effective Date pursuant to the Plan and is essentially a non-participating stock that entitles its holders to elect the Class B Directors to the RII Board of Directors. THE RII CLASS B COMMON STOCK MAY NOT BE TRANSFERRED SEPARATELY FROM THE RELATED NEW RIHF JUNIOR MORTGAGE NOTES. All the outstanding shares of RII Common Stock are, and any shares of RII Common Stock and RII Class B Common Stock issued to the holders of Old Series Notes pursuant to the Plan will be, validly issued, fully paid and non-assessable. CASINO CONTROL ACT REGULATION The New Equity Securities are subject to the qualification, divestiture and redemption provisions under the Casino Control Act that are described in "Business of the Company -- Regulation and Gaming Taxes and Fees -- New Jersey". DESCRIPTION OF RII COMMON STOCK NUMBER OF SHARES. Up to 100,000,000 shares of RII Common Stock are authorized; 20,157,234 shares of RII Common Stock are outstanding as of November 30, 1993, and 17,025,000 shares of RII Common Stock will be issued as of the Distribution Date pursuant to the Plan (assuming all distributions to be made under the Plan are made on the Distribution Date and no options and warrants to purchase RII Common Stock have been exercised). DIVIDENDS. Holders of RII Common Stock are entitled to share ratably in such dividends as may be declared by RII's Board of Directors and paid by RII out of funds legally available therefor. REDEMPTION. The RII Common Stock is subject to redemption if a holder required to qualify under the Casino Control Act refuses or fails to so qualify and subsequently fails to divest itself of such RII Common Stock. LIQUIDATION RIGHTS. In the event of a dissolution, liquidation or winding up of RII, the holders of RII Common Stock are entitled to share ratably with the holders of RII Class B Common Stock in all assets remaining after payment of liabilities and liquidation preferences, if any, to the extent of the $.01 par value per share of each such class, with the balance of such proceeds payable pro rata to the holders of the RII Common Stock. ELECTION OF DIRECTORS. Holders of the RII Common Stock are entitled to elect two-thirds of the entire RII Board of Directors (or following the Class B Triggering Event in connection with the New RIHF Junior Mortgage Notes, one less than half of the entire RII Board of Directors). The directors are to be divided into three classes of directors serving staggered three-year terms. Upon redemption or cancellation of all the outstanding RII Class B Common Stock, holders of the RII Common Stock are entitled to elect the entire RII Board of Directors. The classified board provision could have the effect of making the removal of incumbent directors more difficult, and therefore of discouraging a third party from attempting to obtain control of RII, even though such attempt might be beneficial to RII and its stockholders. VOTING RIGHTS. The holders of RII Common Stock are entitled to one vote per share on all matters on which stockholders are entitled to vote, other than the election of directors by the holders of the RII Class B Common Stock. PREEMPTIVE RIGHTS. None. 252 DESCRIPTION OF RII CLASS B COMMON STOCK NUMBER OF SHARES. Up to 80,000 shares of RII Class B Common Stock are authorized; 35,000 shares of RII Class B Common Stock will be issued as of the Distribution Date pursuant to the Plan (assuming all distributions to be made under the Plan are made on the Distribution Date). Authorized and unissued shares of RII Class B Common Stock will be issued only as part of Units that are issuable if PIK payments are made with respect to the New RIHF Junior Mortgage Notes. DIVIDENDS. The holders of RII Class B Common Stock are not entitled to participate in any dividends which may be declared by RII's Board of Directors. REDEMPTION. Upon the redemption, or cancellation following the purchase thereof, of each $1,000 principal amount of New RIHF Junior Mortgage Notes, RII will redeem, at a price of $.01 per share, the share of RII Class B Common Stock issued as a Unit with each $1,000 principal amount of New RIHF Junior Mortgage Notes. The RII Class B Common Stock also is subject to redemption if a holder required to qualify under the Casino Control Act refuses or fails to so qualify and subsequently fails to divest itself of such RII Class B Common Stock. LIQUIDATION RIGHTS. In the event of a dissolution, liquidation or winding up of RII, the holders of RII Class B Common Stock are entitled to share ratably with the holders of the RII Common Stock in all assets remaining after payment of liabilities and liquidation preferences, if any, to the extent of the $.01 par value per share of each such class. RESTRICTIONS OF TRANSFER. Each share of RII Class B Common Stock will be issued as part of a Unit with each $1,000 principal amount of New RIHF Junior Mortgage Notes and may not be transferred separately from such New RIHF Junior Mortgage Note. ELECTION OF DIRECTORS. Holders of the RII Class B Common Stock are entitled to elect one-third of the entire RII Board of Directors (or following the Class B Triggering Event in connection with the New RIHF Junior Mortgage Notes, a majority of the entire RII Board of Directors). VOTING RIGHTS. The holders of RII Class B Common Stock are not entitled to any voting rights, except (i) in the election directors by the holders of the RII Class B Common Stock as described above, (ii) to the extent required under the Delaware General Corporation Law, and (iii) with respect to certain amendments to the Amended RII Certificate of Incorporation or the Amended RII By-laws that would affect the RII Class B Common Stock. PREEMPTIVE RIGHTS. None. DESCRIPTION OF PIRL ORDINARY SHARES The authorized capital stock of PIRL consists of 25,000,000 PIRL Ordinary Shares, par value $.01 per share, of which 5,000,000 shares will be issued as of the Distribution Date to the holders of Old Series Notes pursuant to the Plan, if the SIHL Sale is not consummated on or before the Effective Date (assuming all distributions to be made under the Plan are made on the Distribution Date). The holders of PIRL Ordinary Shares are entitled to one vote for each share held of record on all matters submitted to a vote of the stockholders, including the election of directors. Holders of PIRL Ordinary Shares are entitled to share ratably such dividends as may be declared by the Board of Directors of PIRL and paid by PIRL out of funds legally available therefor. In the event of a dissolution, liquidation, or winding up of PIRL, the holders of the PIRL Ordinary Shares are entitled to share ratably in all assets remaining after payment of liabilities and liquidation preferences, if any. Holders of PIRL Ordinary Shares have no preemptive, subscription, redemption or conversion rights. All the outstanding shares of PIRL Ordinary Shares are, and any shares issued to the holders of Old Series Notes pursuant to the Plan will be, validly issued, fully paid and non-assessable. See "Description of PIRL Standby Distribution". 253 DESCRIPTION OF PARADISE ISLAND PURCHASE AGREEMENT GENERAL The following is a summary of material portions of the Paradise Island Purchase Agreement, a copy of which has been filed as an exhibit to the Registration Statement of which this Prospectus is a part. Capitalized terms used and not otherwise defined herein will have meanings assigned to them in the Paradise Island Purchase Agreement. For the purposes of the Paradise Island Purchase Agreement, the following terms have the following meanings: "Adjusted Cash" means cash and cage cash. "Adjusted Current Assets" means Current Assets minus Adjusted Cash. "Adjusted Working Capital" means Adjusted Current Assets minus Current Liabilities. "Current Assets" means cash, cage cash, net receivables, prepaid expenses and inventory. "Current Liabilities" means accounts payable. "EBITDA Adjustment" means the earnings from operations appearing as a line item on the Closing Date Operations Statement PLUS depreciation PLUS the amount, if any, paid or accrued with respect to RII management fees to the extent such fees were deducted in computing earnings from operations (as hereinafter defined), PLUS any expenses in excess of $25,000 appearing on the Closing Date Operations Statement that are attributable to events occurring prior to January 1, 1994, LESS $275,000 per month for overhead relating to RII and the U.S. Paradise Island Subsidiaries (to be prorated for any portion of a month) LESS capital expenditures; provided that any item of capital expenditure in excess of $25,000 shall not be deducted if not approved in writing by SIHL. "Paradise Island Interim Order" means an order in form and substance reasonably satisfactory to SIHL and its counsel (i) approving the provisions of and authorizing the performance by RII of its obligations under the Paradise Island Purchase Agreement described below under "Additional Agreements -- No Solicitations of Transaction", "Additional Agreements -- SIHL Expense Reimbursement" and "Termination", (ii) providing that the Bankruptcy Court shall not permit consideration of or approve, so long as the Paradise Island Purchase Agreement has not been terminated, an Acquisition Proposal (as hereinafter defined) unless such Acquisition Proposal constitutes an Overbid Transaction, (iii) subject to applicable bankruptcy law and rules, approving an amount of SIHL Expense Reimbursement (as hereinafter defined) reasonably incurred by SIHL up to the date of the Paradise Island Interim Order, (iv) approving an escrow agreement among RII, SIHL and an escrow agent substantially in the form of Exhibit G to the Paradise Island Purchase Agreement (the "Escrow Agreement"), and (v) providing that the Paradise Island Interim Order cannot be amended or modified without the consent of Fidelity and TCW. Within five days after the filing of their chapter 11 cases, RII and GRI have agreed to request, and use their best efforts to obtain, the entry by the Bankruptcy Court of the Paradise Island Interim Order. "Material Adverse Effect" means any change in, or effect on, the Paradise Island Business that is materially adverse to the business, assets, results of operations or financial condition of the Paradise Island Business, excluding changes resulting from general economic conditions or economic conditions relating specifically to the gaming or hotel industry. "Overbid Transaction" means an Acquisition Proposal or a Post Termination Sale (as hereinafter defined) which provides for consideration attributable to, or in the case of transaction involving less than all of the Paradise Island Business, consideration that would result in, the entire Paradise Island Business having a fair market value, as determined by an investment banking firm of international standing selected by RII and reasonably acceptable to SIHL, in an amount in excess of $130,000,000. 254 "Paradise Island Assets" means all the assets, properties, goodwill, business and other rights of every kind and nature whatsoever, tangible or intangible, real, personal or mixed, and wherever located, used primarily in connection with or relating primarily to the Paradise Island Business, including without limitation any company name, receivables, rights under Contracts, Intellectual Property, property and assets used primarily in connection with or relating primarily to the Paradise Island Business acquired by RII or any affiliate or RII between October 11, 1993 and the SIHL Closing Date and has not sold, transferred or otherwise disposed of prior to the SIHL Closing Date in the ordinary course of business and in accordance with the terms hereof. "Paradise Island Business" means all the operations and properties conducted and owned by RII and its affiliates primarily in connection with or relating primarily to Paradise Island, The Bahamas, including without limitation the Paradise Island Properties, approximately 1,675 acres on Grand Bahamas Island, approximately 561 acres on Andros Island and other similarly related assets not currently used actively in the Paradise Island operations. "Purchase Price" means the SIHL Aggregate Cash Purchase Price plus 2,000,000 SIHL Series A Shares. "Target Adjusted Cash" means Adjusted Cash of $5 million. PURCHASE AND SALE OF THE SHARES AND THE U.S. PARADISE ISLAND ASSETS The Paradise Island Purchase Agreement provides that, upon terms and subject to the conditions set forth therein, SIHL will purchase, and RII will sell, 100% of the outstanding capital stock of RIB. In addition, certain U.S. and Bahamian subsidiaries of SIHL will purchase from the U.S. Paradise Island Subsidiaries and RII the U.S. Paradise Island Assets. As consideration for the transfer of the Shares and the U.S. Paradise Island Assets, SIHL shall cause on the Closing Date the Purchase Price to be delivered, on behalf of RII and the U.S. Paradise Island Subsidiaries, to the disbursing agent designated pursuant to the Plan for purposes of making distributions to holders of Old Series Notes. REPRESENTATIONS AND WARRANTIES RII REPRESENTATIONS AND WARRANTIES. The Paradise Island Purchase Agreement contains various customary representations and warranties by RII, including without limitation representations and warranties as to RII's organization and authority relative to the Paradise Island Purchase Agreement and the transactions contemplated thereby, compliance with certain laws and agreements, consents and required filings, organization and standing of RIB, its subsidiaries and the U.S. Paradise Island Subsidiaries, ownership of and title to the Shares, assets and real property, intellectual property rights, existing contracts, litigation, insurance, employee benefits, absence of undisclosed liabilities, accounts receivable, inventory, the absence since January 1, 1992, of certain events, the accuracy of financial statements relating to the Paradise Island Business, the equity interests in the subsidiaries of RIB, the accuracy of drafts of this Information Statement/Prospectus, the Plan and information supplied by RII for inclusion in the SIHL Prospectus and the Registration Statement related hereto, environmental and labor matters, transactions with affiliates and certain unlawful payments. WAIVER OF CERTAIN REPRESENTATIONS AND WARRANTIES. The Paradise Island Purchase Agreement provides that, except as set forth in the following paragraph, as of 11:59 p.m. on November 30, 1993, SIHL shall be deemed to have waived and released any and all of SIHL's claims, rights and remedies of any nature whatsoever (including without limitation SIHL's ability, if any, to seek damages or to terminate the Paradise Island Purchase Agreement) with respect to any inaccuracies in or breaches of representations or warranties of RII contained in the Paradise Island Purchase Agreement on account of any matter arising or occurring on or before November 30, 1993. Notwithstanding the foregoing paragraph, under the terms of the Paradise Island Purchase Agreement, SIHL does not waive (i) any claim, right, or remedy whatsoever (including without limitation SIHL's ability, if any, to seek damages or to terminate the Paradise Island Purchase Agreement) with respect to any breaches of representations and warranties relating to RII's organization, authorization to execute and perform the Paradise Island Purchase Agreement or ownership of 255 the Shares, (ii) any claim for damages relating to any breach of the representations and warranties related to information supplied by RII for use in this Prospectus or (iii) any claim, right, or remedy whatsoever (including without limitation SIHL's ability, if any, to seek damages or to terminate the Paradise Island Purchase Agreement) with respect to any inaccuracies in or breaches of the representations or warranties of RII contained in the Paradise Island Purchase Agreement on account of any matter arising or occurring on or before November 30, 1993 (x) which was known by RII or any of its Affiliates or which would have been known by RII or any of its Affiliates had they not been grossly negligent or (y) which was fraudulently or knowingly concealed from SIHL by RII or any of its Affiliates. SIHL REPRESENTATIONS AND WARRANTIES. The Paradise Island Purchase Agreement contains various customary representations and warranties by SIHL, including, without limitation, representations and warranties as to SIHL's organization and authority relative to the Paradise Island Purchase Agreement and the transactions contemplated thereby, compliance with certain laws and agreements, the accuracy of this Prospectus and the Registration Statement related thereto and information supplied by SIHL for inclusion in the Resorts Information Statement/Prospectus, authority to issue the Shares, the operations of SIHL since its incorporation, the capital structure of SIHL, the enforceability of a subscription agreement among SIIL and certain shareholders of SIIL (the "SIIL Subscription Agreement") and a subscription agreement between SIIL and SIHL (the "SIHL Subscription Agreement"). HANDLING OF CASH AND WORKING CAPITAL Within 45 days of the Closing Date, RII will deliver to SIHL an audited balance sheet for the Paradise Island Business as of the close of business on Closing Date (the "Closing Date Balance Sheet") and an audited statement of operations for the Paradise Island Business for the period beginning 12:01 a.m. on January 1, 1994, and ending at the end of business on the Closing Date (the "Closing Date Operations Statement"), accompanied by an opinion of Ernst & Young thereon to the effect such balance sheet and statement of operations present fairly in all material respects the financial position and results of operations of the Paradise Island Business at such date and for such period. The Paradise Island Purchase Agreement provides a mechanism pursuant to which SIHL could disagree with the Closing Date Balance Sheet or Closing Date Operation Statements. Any such disagreements would be settled through negotiations between SIHL and RII or by an independent Big Six accounting firm. SIHL and RII have agreed in the Paradise Island Purchase Agreement that if prior to 35 days after the Closing Date there has not been a resolution of the dispute (the "Union Contract Dispute") between RIB and The Bahamas Hotel Catering and Allied Workers Union (the "Union") with respect to amounts claimed by the Union to be owed by RIB through December 31, 1993, under the collective bargaining agreement dated as of January 7, 1990, between The Bahamas Hotel Employers Association and the Union, then RII and SIHL shall agree as to the amount they believe it would reasonably take to settle the Union Contract Dispute or, in absence of any agreement between RII and SIHL, such amount will be determined by Bahamian counsel selected jointly by RII and SIHL (the "Union Contract Dispute Amount"). The Union Contract Dispute Amount shall appear on the Closing Date Balance Sheet as a Current Liability and is currently estimated to be approximately $1,000,000. Any amounts owed by RIB pursuant to a resolution of the Union Contract Dispute after the Closing shall remain an obligation of RIB not RII. See "Business -- Employees". The Paradise Island Purchase Agreement provides that within three Business Days after the Closing Date, SIHL and RII shall jointly prepare a cash statement setting forth the amount of Adjusted Cash of the Paradise Island Business as of the Closing Date. If the Adjusted Cash of the Paradise Island Business shown on such cash statement is less than the Target Adjusted Cash, on the fourth Business Day after the Closing Date, RII shall pay to SIHL the difference in immediately available funds. If the Adjusted Working Capital of the Paradise Island Business plus the Adjusted Cash shown on the Closing Date Balance Sheet plus any amount paid to SIHL pursuant to the cash adjustment 256 described in the immediately preceding paragraph shall be greater than $12 million plus the EBITDA Adjustment, then SIHL shall pay to RII the difference in immediately available funds, together with interest on such amount at a rate of 7.5% per year from and including the Closing Date to but excluding the date of payment. If the Adjusted Working Capital of the Paradise Island Business plus the Adjusted Cash shown on the Closing Date Balance Sheet plus any amount paid to SIHL pursuant to the cash adjustment described in the immediately preceding paragraph shall be less than $12 million plus the EBITDA Adjustment, then RII shall pay to SIHL the difference in immediately available funds, together with interest on such amount at a rate of 7.5% per year from and including the Closing Date to but excluding the date of payment. RII COVENANTS RII has made various covenants in the Paradise Island Purchase Agreement. RII has agreed, until the Closing Date, to cause the Paradise Island Business to be conducted in the ordinary course consistent with past practice and make all reasonable efforts to preserve relationships with parties with whom the Paradise Island Business deals has agreed that, except as otherwise expressly permitted or contemplated by the Paradise Island Purchase Agreement, it shall not allow the Company or any U.S. Paradise Island Subsidiary to: (a) amend its organizational documents; (b) issue, sell, pledge, dispose of or encumber any shares of capital stock or any assets relating to the Paradise Island Business; (c) declare or pay any dividends or distributions, except certain dividends and distributions that in the good faith opinion of management would not cause the Paradise Island Business, as of the Closing Date, to have Adjusted Cash plus Adjusted Working Capital to be less than $12 million plus an estimate of the EBITDA Adjustment; (d) reclassify, redeem, purchase or otherwise acquire any of its capital stock; (e) acquire (by merger, consolidation or acquisition of stock or assets) any corporation, partnership or other business organization or division thereof; (f) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse the obligations of any person, or make loans or advances, except in the ordinary course of business and in a manner consistent with past practice; (g) enter into any Material Contract other than in the ordinary course of business and in a manner consistent with past practice; (h) increase compensation payable to any of its officers or employees, except increases in compensation of any officers or employees of the Paradise Island Business whose annual cash compensation does not exceed $100,000 in the ordinary course of business consistent with past practice; (i) establish, adopt, enter into or amend any Benefit Plan; (j) take any action other than in a manner consistent with past practice with respect to accounting policies or procedures; (k) make any material tax election, other than in the ordinary course of business and in a manner consistent with past practice, or (l) pay, discharge or satisfy any material claims, liabilities or obligations, other than in the ordinary course of business in a manner consistent with past practice and certain additional obligations. ADDITIONAL AGREEMENTS NO SOLICITATION OF TRANSACTIONS RII has agreed that neither it nor any of its Affiliates nor any officer, director, employee, agent (including without limitation any investment banker, financial advisor, attorney or accountant) or other representative of RII or any of its Affiliates shall, directly or indirectly, initiate any contact with, solicit, or encourage, negotiate or enter into any agreement with, any Third Party, or enter into or continue any discussions or negotiations with, or disclose directly or indirectly any information concerning the Paradise Island Business to any Third Party (other than SIHL) in connection with any possible proposal regarding the acquisition of any part of the Paradise Island Business (whether by merger, purchase of capital stock, purchase of assets, tender offer or otherwise) (each an "Acquisition Proposal"); PROVIDED, HOWEVER, (i) prior to the entry of the Paradise Island Interim Order by the Bankruptcy Court, RII may, to the extent required by the fiduciary obligations of the Board of Directors of RII, as determined in good faith by the Board of Directors based upon advice of outside counsel, (a) in response to an unsolicited request therefor, furnish information with respect to the Paradise Island Business (but specifically excluding SIHL or SIHL's plans with respect to the Paradise Island Business) to any person pursuant to a customary confidentiality agreement (as determined by 257 RII's independent counsel) and discuss such information (but not the terms of any Acquisition Proposal) with such person and (b) upon receipt by RII of an Acquisition Proposal, following delivery to SIHL of notice thereof, participate in negotiations regarding such Acquisition Proposal and (ii) after entry of the Paradise Island Interim Order by the Bankruptcy Court, RII may furnish information to, and cooperate with, a Third Party that RII reasonably believes is financially able to and interested in consummating an Overbid Transaction (a "Qualified Third Party"). The Paradise Island Purchase Agreement further provides that no Acquisition Proposal shall be considered, approved, adopted or recommended by the Board of Directors of RII, or presented by RII or its respective Board of Directors or management, to the stockholders of RII for vote or approval by written consent, and no meeting of stockholders shall be called or noticed for purposes of taking stockholder action with respect to any Acquisition Proposal. Notwithstanding the foregoing, the Paradise Island Purchase Agreement provides that in the exercise of its fiduciary duties the Board of Directors may consider, approve, adopt or recommend an Overbid Transaction with a Qualified Third Party or enter into an agreement with a Qualified Third Person with respect to such Overbid Transaction, in each case at any time after the third Business Day following SIHL's receipt of a written notice advising SIHL that RII has received an offer for an Overbid Transaction, specifying the material terms and conditions thereof and the Qualified Third Party making such offer. Notwithstanding anything to the contrary set forth above, (i) RII is not prohibited from supplying TCW and Fidelity with any information regarding the Paradise Island Business or engaging in discussions related to the PIRL Spin-Off, or in the event the SIHL Sale does not occur for any reason whatsoever, from effecting the PIRL Spin-Off, and (ii) RII is not prohibited from supplying the party identified prior to the date hereof by RII with respect to any Acquisition Proposal that by its terms shall not be effective until the Paradise Island Purchase Agreement is terminated in accordance with its terms; PROVIDED, HOWEVER, that while the Paradise Island Purchase Agreement is still in effect, RII shall not supply such party with any information regarding the Paradise Island Business that is not generally available to the public (unless required to do so by its fiduciary duties), and that before engaging in any discussions with such party, RII and RIB shall enter into a customary confidentiality agreement with such party, pursuant to which, among other things, such party agrees (x) not to have, directly or indirectly, any contact with the Government of The Bahamas or any employees or suppliers of the Paradise Island Business and (y) that it shall not make any public announcements of its discussion with RII, TCW or Fidelity, unless otherwise required by law. SUBSCRIPTION AGREEMENT. The Paradise Island Purchase Agreement provides that immediately prior to Closing, SIIL shall acquire from SIHL the Series B Ordinary Shares for $90 million plus interest at the rate of 7.5% per year on $65,000,000 from January 1, 1994 pursuant to the terms of the SIHL Subscription Agreement. PUT RIGHT.__Pursuant to the documents related to the Paradise Island Purchase Agreement, holders of Series A Shares will be entitled to sell, and require SIHL to purchase on the fifth anniversary of the SIHL Sale, each such Series A Share at a price equal to $35 (USD) per share (the "Put Right"). SIHL's parent, Sun International Investments Limited, will pledge its sixty percent (60%) equity interest in SIHL to secure SIHL's obligation to make such purchase. SIHL EXPENSE REIMBURSEMENT. To the extent and in the circumstances set forth below and provided that SIHL shall not have materially breached any of its obligations under the Paradise Island Purchase Agreement, RII shall reimburse SIHL for all of SIHL's reasonable out-of-pocket costs and expenses incurred since June 1, 1993, in connection with the preparation of SIHL's plans for the Paradise Island Business and the negotiation, execution, delivery and performance of SIHL's obligations under the Paradise Island Purchase Agreement and the other agreements related thereto, including without limitation reasonable out-of-pocket costs and expenses of investors of SIHL and its Affiliates relating to the transactions contemplated by the Paradise Island Purchase Agreement (the "SIHL Expense Reimbursement"): 258 (i) in the event that the Paradise Island Purchase Agreement is terminated as a result of the approval by the Bankruptcy Court of an Acquisition Proposal, then RII promptly upon such termination shall pay to SIHL the SIHL Expense Reimbursement up to $4 million; (ii) in the event that the Paradise Island Purchase Agreement is terminated by RII after November 30, 1993, as a result of a Force Majeure Event (as hereinafter defined) causing a loss in excess of $20 million, then RII promptly upon such termination shall pay to SIHL the SIHL Expense Reimbursement up to $4 million; (iii) in the event that the Paradise Island Purchase Agreement is terminated by SIHL after November 30, 1993, as a result of a Force Majeure Event causing a loss in excess of $20 million, then RII promptly upon such termination shall pay to SIHL the SIHL Expense Reimbursement up to $2 million; (iv) in the event that the Paradise Island Purchase Agreement is terminated as a result of RII's inability to deliver title to a material portion of the Paradise Island Assets, then RII promptly upon such termination shall pay to SIHL the SIHL Expense Reimbursement up to $3 million; (v) in the event that the Paradise Island Purchase Agreement is terminated after November 30, 1993, as a result of a breach of RII's covenant to operate the Paradise Island Business in the ordinary course, or after November 30, 1993, as a result of a Force Majeure Event causing a loss of less than $20 million, then RII promptly upon such termination shall pay to SIHL the SIHL Expense Reimbursement up to $2 million; (vi) in the event the Paradise Island Purchase Agreement is terminated by RII pursuant to any of the provisions of the Paradise Island Purchase Agreement or by SIHL as a result of the failure of the Closing to occur on or before June 30, 1994, and a sale of the Paradise Island Business or any portion thereof that would reasonably be expected to generate 50% or more of the revenues of the Paradise Island Business (whether by merger, purchase of capital stock, purchase of assets, tender offer or otherwise) is consummated within one year of such termination (a "Post Termination Sale"), then upon the consummation of such Post Termination Sale, RII, or if the PIRL Spin-Off shall have already occurred, PIRL shall pay to SIHL the SIHL Expense Reimbursement up to $4 million in the event such Post Termination Sale shall constitute an Overbid Transaction or up to $2 million in the event such Post Termination Sale is not an Overbid Transaction, in each case less any amounts previously paid to SIHL pursuant to subparagraphs (i), (ii), (iii), (iv) and (v) above; and (vii) in the event that the Paradise Island Purchase Agreement is terminated by SIHL pursuant to any of the provisions the Paradise Island Purchase Agreement and a Post Termination Sale which constitutes an Overbid Transaction occurs within one year of such termination, then upon the consummation of such Post Termination Sale, RII, or if the Spin-Off shall have already occurred, PIRL, shall pay to SIHL the SIHL Expense Reimbursement up to $4 million less any amounts previously paid to SIHL pursuant to subparagraphs (i), (ii), (iii), (iv) and (v) above. The Plan provides that if the PIRL Spin-Off occurs (i) the obligation to pay the SIHL Expense Reimbursement pursuant to paragraphs (vi) and (vii) above shall be an obligation of PIRL and not RII and (ii) prior to the consummation of the PIRL Spin-Off, PIRL shall enter into a security and pledge agreement with SIHL, pursuant to which PIRL shall pledge assets reasonably acceptable to SIHL and having a fair market value of $6 million to secure PIRL's obligation to pay the SIHL Expense Reimbursement, such security and pledge agreement to be in a form modeled after, and to have terms generally consistent with the tenor of those terms contained in, the Non-Recourse Guarantee and Pledge Agreement (as hereinafter defined). 259 ESCROW AGREEMENT. Pursuant to the Paradise Island Purchase Agreement, as of December 1, 1993, SIHL and RII executed and delivered an Escrow Agreement pursuant to which SIHL deposited with an independent third party escrow agent (the "Escrow Agent") $5 million ("SIHL's Escrowed Property") and RII deposited with the Escrow Agent $4 million ("RII's Escrowed Property"). SIHL's Escrowed Property secures the full and prompt payment and performance, when due, of its obligation under the Paradise Island Purchase Agreement up to and including the Closing. RII's Escrowed Property secures the full and prompt payment, when due, of RII's obligation to pay any SIHL Expense Reimbursement. The Escrow Agent is not authorized to release any property held by it unless it receives written instructions signed by both SIHL and RII or a court order directing the release of such property. The Escrow Agreement contains customary terms relating to the indemnification of the Escrow Agent. PREPACKAGED PLAN SOLICITATION. RII agreed to seek confirmation of the Plan by the Bankruptcy Court using the acceptances of the Reorganization Plan received by RII as a result of the solicitation being made pursuant to this Information Statement/Prospectus and further agreed not to consent to any amendment or supplement to, or modification of, the Plan that purports to change the terms or conditions of the transactions contemplated by the Paradise Island Purchase Agreement without the prior written consent of SIHL. REASONABLE BEST EFFORTS. Each party to the Paradise Island Purchase Agreement agreed to use its reasonable best efforts to satisfy its obligations under the Paradise Island Purchase Agreement and cause the Closing to occur. EMPLOYEE MATTERS. As of the Closing Date, SIHL shall (directly or through Bahamian subsidiaries) offer employment to each person employed by the U.S. Paradise Island Subsidiaries whose primary functions relate to the operation of the Paradise Island Business and certain other employees of RII (a "Paradise Employee"), except that SIHL may designate within 60 days from the date of the Paradise Island Purchase Agreement up to 40 Paradise Employees to whom it does not wish to offer employment (the "Excluded Employees"). SIHL shall not be required to offer employment to any Excluded Employee and RII has agreed that all obligations, including obligations under any Benefit Plan or similar employee benefits, to such Excluded Employees shall remain the responsibility solely of RII and not of SIHL after the Closing. Pursuant to the terms of the Paradise Island Purchase Agreement SIHL shall have no obligation to maintain, continue or assume obligations under any Benefit Plan of RII. The Paradise Island Purchase Agreement further provides that within 90 days from the date of the Paradise Island Purchase Agreement, SIHL shall determine whether it shall offer Paradise Employees who accept employment with SIHL a 401(k) plan. If SIHL determines to offer such a 401(k) plan, then as promptly as practical after the Closing Date, RII shall take all actions necessary to transfer to such new 401(k) plan the account balances in the Resorts Retirement Savings Plan of all Paradise Employees. CONDITIONS TO CLOSING The obligation of SIHL to purchase and pay for the RIB Capital Stock and the U.S. Paradise Island Assets and of RII to sell and deliver the RIB Capital Stock and the U.S. Paradise Island Assets, and the obligation of each of SIHL and RII to effect other the transactions to be effected by it under the Paradise Island Purchase Agreement will be subject to satisfaction or waiver, at or prior to the Closing Date, of the following conditions. SIHL CONDITIONS TO CLOSING. (a) (i) The representations and warranties of RII relating to its organization and authority to execute and perform its obligations under the Paradise Island Purchase Agreement and as to the good title to the RIB Capital Stock shall be true and correct in all respects, in each case when made and as of the Closing Date, (ii) RII shall not have failed to comply with certain covenants contained in the Paradise Island Purchase Agreement where such failures in the aggregate would have a Material Adverse Effect, (iii) RII shall have complied in all respects with its obligation to 260 extinguish or otherwise discharge all Indebtedness of RIB, (iv) each of the other agreements and covenants contained in the Paradise Island Purchase Agreement and in any certificate or agreement by RII delivered pursuant thereto to be performed or complied with by RII, at or before closing, shall have been duly performed or complied with in all material respects and (v) SIHL shall have received a certificate of RII, signed by a Vice President thereof, as to the fulfillment of the conditions set forth in the foregoing clauses (i), (ii), (iii) and (iv); (b) any waiting period (and any extension thereof) applicable to the consummation of the transactions contemplated thereby under the HSR Act shall have expired or been terminated; (c) the Confirmation Order shall have been entered by the Bankruptcy Court and the Effective Date shall have occurred, or there shall be no unsatisfied conditions to the occurrence of the Effective Date other than the closing, under the Paradise Island Purchase Agreement and such Confirmation Order shall be in full force and effect and shall not then be stayed, or the consummation of the transactions contemplated by the Paradise Island Purchase Agreement shall have been approved by another order of the Bankruptcy Court and such other order shall be in full force and effect and shall not then be stayed; (d) all Governmental Consents shall have been received; (e) there shall not be in effect any injunction or restraining order issued by a court of competent jurisdiction against the consummation of the sale and purchase of the RIB Capital Stock and the U.S. Paradise Island Assets pursuant to the Paradise Island Purchase Agreement; (f) no proceeding shall have been instituted or consented to by or against RIB or any U.S. Paradise Island Subsidiary seeking to adjudicate any of them a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief or composition of any of their debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of any order for relief or the appointment of a receiver, trustee, custodian or other similar official for any of them or any substantial part of any of their property, and such proceeding shall not have been dismissed or terminated within 60 days of the commencement thereof; (g) SIHL shall have received an opinion of counsel to RII, reasonably acceptable to SIHL and its counsel; (h) the Registration Rights Agreement shall have been executed and delivered by the parties thereto and shall be in full force and effect; (i) SIHL shall have received resignations and releases of all officers and directors of RIB who are not directly involved in the business and operations of RIB; and (j) certain agreements relating to the Old Series Notes shall not be in force and effect. RII CONDITIONS TO CLOSING. (a) The representations and warranties of SIHL contained in the Paradise Island Purchase Agreement and in any certificate or agreement of SIHL delivered pursuant thereto shall be true and correct in all respects and those not so in all material respects, (ii) each of the agreements and covenants contained in the Paradise Island Purchase Agreement and in any certificate or agreement of SIHL delivered pursuant thereto to be performed or complied with by SIHL, at or before the Closing, shall have been duly performed or complied with in all material respects and (iii) RII shall have received a certificate of SIHL, signed by a Vice President thereof as to the fulfillment of the conditions set forth in the foregoing clauses (i) and (ii); (b) any waiting period (and any extension thereof) applicable to the consummation of the transactions contemplated thereby under the HSR Act shall have expired or been terminated; (c) the Confirmation Order shall have been entered by the Bankruptcy Court and the Effective Date shall have occurred, or there shall be no unsatisfied conditions to the occurrence of the Effective Date other than the closing under the Paradise Island Purchase Agreement, and such Confirmation Order shall be in full force and effect and shall not then be stayed, or the consummation of the transactions contemplated by the Paradise Island Purchase Agreement shall have been approved by another order of the Bankruptcy Court and such other order shall be in full force and effect and shall not then be stayed; (d) all Governmental Consents shall have been received; (e) there shall not be in effect any injunction or restraining order issued by a court of competent jurisdiction against the consummation of the sale and purchase of the RIB Capital Stock and the U.S. Paradise Island Assets pursuant to the Paradise Island Purchase Agreement; (f) RII shall have received an opinion of counsel to SIHL, reasonably satisfactory to RII and its counsel; (g) no proceeding shall have been instituted or consented to by or against any of SIHL, SIIL or SIHL International Management (U.K.) Limited seeking to adjudicate any of them a bankrupt 261 or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief or composition of any of their debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of any order for relief or the appointment of a receiver, trustee, custodian or other similar official for any of them or any substantial part of any of their property; (h) shares of each of SIIL, SIHL International Management (U.K.) Limited and SIHL carrying a controlling interest exercisable at general meetings of SIIL, SIHL International Management (U.K.) Limited and SIHL shall be directly or indirectly beneficially owned by its current beneficial owners or any persons affiliated with such entities; (i) all conditions under the Management Agreement shall have been satisfied or waived; and (j) certain agreements relating to the Old Series Notes shall not be in force and effect. TERMINATION The Paradise Island Purchase Agreement may be terminated at any time prior to the Closing Date: (a) by mutual written consent of RII and SIHL at any time prior to entry of the Confirmation Order; (b) by SIHL or RII, if the closing thereunder shall not have occurred on or before June 30, 1994; (c) in the event an Acquisition Proposal is approved by the Bankruptcy Court the Paradise Island Purchase Agreement will automatically be deemed terminated; (d) by SIHL, if any event or development first occurring or arising after November 30, 1993, either alone or taken in the aggregate with other matters arising or occurring after November 30, 1993, shall have caused inaccuracies or breaches in the representations and warranties of RII contained in the Paradise Island Purchase Agreement to occur; (e) by SIHL, if it has become aware that RII will be unable to comply with the closing condition described in paragraph (a) of the section entitled "SIHL Conditions to Closing" and such inability to so comply is not reasonably capable of being cured by June 30, 1994, or by RII, if it has become aware that SIHL will be unable to comply with the closing condition described in paragraph (a) of the section entitled "-- RII Conditions to Closing" and such inability to so comply is not reasonably capable of being cured by June 30, 1994; (f) [by SIHL, on or prior to November 30, 1993, if SIHL reasonably shall determine, on or prior to such date and so notify RII, that (i) any of the representations and warranties of RII contained in the Paradise Island Purchase Agreement and qualified as to materiality shall not be true and correct in all respects or that those not so qualified shall not be true and correct in all material respects, in each case when made or on November 30, 1993 (except representations and warranties that are made as of a specific date, which need be true and correct only as of such date) or (ii) there is a reasonable likelihood that the Company's economic costs with respect to the Union Contract would be an amount which is materially different from the amount SIHL reasonably expects; PROVIDED, HOWEVER, RII shall have 10 Business Days from the date of notice from SIHL to cure such problems and if such problems are cured no termination shall occur; (g) by SIHL or RII, on or prior to November 30, 1993, if on or prior to such date SIHL has not entered into financing commitment letters with customary terms and conditions with a bank or group of banks for an amount of at least $67.5 million; (h) ] by SIHL within five Business Days (i) of becoming aware that RII has materially breached certain covenants contained in the Paradise Island Purchase Agreement or (ii) after February 15, 1994, if the Bankruptcy Cases shall not have been filed on or before such date; (i) by SIHL within five Business Days after notifying RII that it is in material breach of its covenant to provide SIHL access to the Paradise Island Properties and RII has not cured such breach; (j) by RII, if the reorganization of SIIL described in the Parent Subscription Agreement has not occurred prior to November 30, 1993; (k) by SIHL, if a Material Adverse Effect occurs as a result of any fire, flood, hurricane, accident, explosion or other calamity or casualty or any strike, labor disturbance, riot, act of God or public enemy, or the institution of condemnation proceedings affecting any material portion of the Real Property or Improvements (a "Force Majeure Event"); provided, however, that SIHL shall not have the right to terminate the Paradise Island Purchase Agreement in the event that the loss caused by a Force Majeure Event (including the present value of lost profits) is less than $20 million and there is adequate insurance to cover such loss, and provided further, however, that a strike or labor disturbance of the employees of the Paradise Island Business after November 30, 1993, shall not constitute a Force Majeure Event; (1) by SIHL or RII in the event a Force Majeure Event occurs and the loss related thereto (including the present value of lost profits) exceeds $20 million, regardless of 262 whether or not such loss is covered by adequate insurance; (m) by SIHL, if SIHL reasonably determines that RII will not be able to deliver good title free and clear of encumbrances, other than Permitted Encumbrances and those encumbrances arising from acts of SIHL or its Affiliates and other than applicable Transfer Taxes, to a material portion of the Paradise Island Business or the Shares by June 30, 1994; (n) by SIHL, on or prior to November 30, 1993, if SIHL reasonably determines that it will be unable to obtain consents to certain Material Contracts; (o) by SIHL, if as a result of a breach by RII of its covenant to operate the Paradise Island Business in the ordinary course, a Material Adverse Effect has occurred; and (p) by SIHL or RII, if on or before the close of business on December 1, 1993, the other party has not executed, delivered and performed its obligations under the Escrow Agreement. Failure to obtain the Paradise Island Interim Order, despite the best efforts of RII and GRI, is not a ground for termination of the Paradise Island Purchase Agreement. TRANSFER TAXES The Paradise Island Purchase Agreement provides that any sales and transfer taxes applicable to the conveyance and transfer of the Shares and the U.S. Paradise Island Assets shall be borne and paid 50% by SIHL and 50% by RII. The Bahamian Government has notified SIHL and RII that a transfer tax of $1.08 million is payable as a result of the transfer of the shares, and in accordance with provisions of the Paradise Island Purchase Agreement, such transfer tax will be paid 50% by RII and 50% by SIHL. AMENDMENT AND WAIVERS No amendment to the Paradise Island Purchase Agreement will be effective unless it is in writing signed by RII and SIHL and consented to by Fidelity and TCW. Any party may waive any provision of the Paradise Island Purchase Agreement or consent to any departure by any party therefrom; PROVIDED, HOWEVER, that no such waiver or consent by RII shall be valid unless consented to by Fidelity and TCW. INDEMNIFICATION INDEMNIFICATION BY RII. Pursuant to the term of the Paradise Island Purchase Agreement, until March 31, 1995, RII has agreed to indemnify and hold SIHL and its Affiliates harmless from all claims, damages, liabilities, liens, losses or other obligations ("Losses") arising out of or based upon or caused by the inaccuracy of the representations of RII contained in the Paradise Island Purchase Agreement relating to its organization and authority to execute and perform the Paradise Island Purchase Agreement, title to the RIB Capital Stock, and the accuracy of the information supplied by RII for inclusion in the SIHL Prospectus. In addition, RII has agreed to indemnify SIHL and its Affiliates for any Losses resulting from breaches of certain covenants of RII contained in the Paradise Island Purchase Agreement. INDEMNIFICATION BY SIHL. Pursuant to the terms of the Paradise Island Purchase Agreement, until March 31, 1995, SIHL has agreed to indemnify RII and its Affiliates for any Losses arising out of or based upon or caused by the inaccuracy of the representations of SIHL contained in the Paradise Island Purchase Agreement relating to its organization, capital structure and authority to execute and perform the Paradise Island Purchase Agreement and to issue the Shares, the accuracy of the information supplied by SIHL for inclusion in this Prospectus and the operation of SIHL since its organization. In addition, SIHL has agreed to indemnify RII and its Affiliates for any Losses resulting from breaches of certain covenants of SIHL contained in the Paradise Island Purchase Agreement. DESCRIPTION OF PIRL STANDBY DISTRIBUTION AGREEMENT GENERAL The following is a summary of material portions of the PIRL Standby Distribution Agreement, a copy of which has been filed as an exhibit to the Registration Statement of which this Information Statement/Prospectus is a part. Capitalized terms used and not otherwise defined herein will have meanings assigned to them in the PIRL Standby Distribution Agreement. 263 For the purposes of the PIRL Standby Distribution Agreement, the following terms have the following meanings: "Adjusted Cash" means cash and cage cash. "Adjusted Current Assets" means Current Assets minus Adjusted Cash. "Adjusted Working Capital" means Adjusted Current Assets minus Current Liabilities. "Current Assets" means cash, cage cash, net receivables, prepaid expenses and inventory. "Current Liabilities" means accounts payable. "EBITDA Adjustment" means the Earnings from Operations appearing as a line item on the Closing Date Operations Statements PLUS depreciation PLUS the amount, if any, paid or accrued with respect to RII management fees to the extent such fees were deducted in computing Earnings from Operations, PLUS any expenses in excess of $25,000 appearing on the Closing Date Operations Statement that are attributable to events occurring prior to January 1, 1994, LESS $275,000 per month for overhead relating to RII and the U.S. Paradise Island Subsidiaries (to be prorated for any portion of a month) LESS capital expenditures; provided that any item of capital expenditure in excess of $25,000 shall not be deducted if not approved in writing by SIHL. "Overbid Transaction" means an Acquisition Proposal or a Post Termination Sale (as hereinafter defined) which provides for consideration attributable to, or in the case of transaction involving less than all of the Paradise Island Business, consideration that would result in, the entire Paradise Island Business having a fair market value, as determined by an investment banking firm of international standing selected by RII and reasonably acceptable to SIHL in an amount in excess of $130,000,000. "Target Adjusted Cash" means Adjusted Cash of $5 million. PURCHASE AND SALE OF THE SHARES AND THE U.S. PARADISE ISLAND ASSETS The PIRL Standby Distribution Agreement provides that, upon terms and subject to the conditions set forth therein, PIRL will purchase, and RII or GRI will sell, 100% of the outstanding RIB Capital Stock. In addition, certain Bahamian subsidiaries of PIRL will purchase from the U.S. Paradise Island Subsidiaries and RII the U.S. Paradise Island Assets. As consideration for the transfer of the Paradise Island Shares, and the U.S. Paradise Island Assets, PIRL on the Closing Date shall cause the PIRL Ordinary Shares to be delivered, on behalf of RII and the U.S. Paradise Island Subsidiaries, to the Disbursing Agent designated pursuant to the Plan for purposes of making distributions to holders of Old Series Notes. RII REPRESENTATIONS AND WARRANTIES The PIRL Standby Distribution Agreement contains various customary representations and warranties by RII, including without limitation representations and warranties as to RII's organization and authority relative to the PIRL Standby Distribution Agreement and the transactions contemplated thereby, compliance with certain laws and agreements, consents and required filings, organization and standing of RIB, its subsidiaries and the U.S. Paradise Island Subsidiaries, ownership of and title to the Paradise Island Shares, assets and real property, employee benefits, absence of undisclosed liabilities, the absence since January 1, 1992, of certain events, the accuracy of financial statements relating to the Paradise Island Business and the equity interests in the subsidiaries of RIB. The PIRL Standby Distribution Agreement also contains various customary representations and warranties by RII regarding PIRL, including representations and warranties as to PIRL's organization and authority relative to the PIRL Standby Distribution Agreement and the transactions contemplated thereby, compliance with certain laws and agreements, authority to issue the PIRL Ordinary Shares, the operations of PIRL since its incorporation and the capital structure of PIRL. 264 HANDLING OF CASH AND WORKING CAPITAL Within 45 days of the Closing Date, RII will deliver to PIRL an audited balance sheet for the Paradise Island Business as of the close of business on the Closing Date (the "Closing Date Balance Sheet") and an audited statement of operations for the Paradise Island Business for the period beginning 12:01 a.m. on January 1, 1994, and ending at the end of business on the Closing Date (the "Closing Date Operations Statement"), accompanied by an opinion of Ernst & Young thereon to the effect that such balance sheet and statement of operations present fairly in all material respects the financial position and results of operations of the Paradise Island Business at such date and for such period. The PIRL Standby Distribution Agreement provides a mechanism pursuant to which PIRL could disagree with the Closing Date Balance Sheet or Closing Date Operation Statements. Any such disagreements would be settled through negotiations between PIRL and RII or by an independent "Big Six" accounting firm. PIRL and RII have agreed in the PIRL Standby Distribution Agreement that if prior to 35 days after the Closing Date there has not been a resolution of the dispute (the "Union Contract Dispute") between RIB and The Bahamas Hotel Catering and Allied Workers Union (the "Union") with respect to amounts claimed by the Union to be owed by RIB through December 31, 1993, under the collective bargaining agreement dated as of January 7, 1990, between The Bahamas Hotel Employers Association and the Union, then RII and PIRL shall agree as to the amount they believe it would reasonably take to settle the Union Contract Dispute or, in absence of any agreement between RII and PIRL, such amount will be determined by Bahamian counsel selected jointly by RII and PIRL (the "Union Contract Dispute Amount"). The Union Contract Dispute Amount shall appear on the Closing Date Balance Sheet as a Current Liability. The PIRL Standby Distribution Agreement provides that within three Business Days after the Closing Date, PIRL and RII shall jointly prepare a cash statement setting forth the amount of Adjusted Cash of the Paradise Island Business as of the Closing Date. If the Adjusted Cash of the Paradise Island Business shown on such cash statement is less than the Target Adjusted Cash, on the fourth Business Day after the Closing Date, RII shall pay to PIRL the difference in immediately available funds. If the Adjusted Working Capital of the Paradise Island Business plus any Adjusted Cash in excess of $5 million shown on the Closing Date Balance Sheet shall be greater than the Target Adjusted Working Capital plus the EBITDA Adjustment, then PIRL shall pay to RII the difference in immediately available funds, together with interest on such amount at an annual rate of 7.5% per year from and including the Closing Date to but excluding the date of payment. If the Adjusted Working Capital of the Paradise Island Business plus any Adjusted Cash in excess of $5 million shown on the Closing Date Balance Sheet shall be less than the Target Adjusted Working Capital plus the EBITDA Adjustment, then RII shall pay to PIRL the difference in immediately available funds, together with interest on such amount at a rate of 7.5% per year from and including the Closing Date to but excluding the date of payment. RII COVENANTS RII has made various covenants in the PIRL Standby Distribution Agreement. RII agreed, until the Closing Date, to cause the Paradise Island Business to be conducted in the ordinary course consistent with past practice and make all reasonable efforts to preserve relationships with parties with whom the Paradise Island Business deals, and has agreed that, except as otherwise expressly permitted or contemplated by the PIRL Standby Distribution Agreement it shall not allow RIB or any U.S. Paradise Island Subsidiary to: (a) amend its organizational documents; (b) issue, sell, pledge, dispose of or encumber any shares of capital stock or any assets relating to the Paradise Island Business; (c) declare or pay any dividends or distributions, except certain dividends and distributions that in the good faith opinion of management would not cause the Paradise Island Business, as of the Closing Date, to have Adjusted Cash plus Adjusted Working Capital to be less than $10 million plus an estimate of the EBITDA Adjustment; (d) reclassify, redeem, purchase or otherwise acquire any of its capital stock; (e) acquire (by merger, consolidation or acquisition of stock or assets) any corporation, 265 partnership or other business organization or division thereof; (f) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse the obligations of any person, or make loans or advances, except in the ordinary course of business and in a manner consistent with past practice; (g) enter into any Material Contract other than in the ordinary course of business and in a manner consistent with past practice; (h) increase compensation payable to any of its officers or employees, except increases in compensation of any officers or employees of the Paradise Island Business whose annual cash compensation does not exceed $100,000 in the ordinary course of business consistent with past practice; (i) establish, adopt, enter into or amend any Benefit Plan; (j) take any action other than in a manner consistent with past practice with respect to accounting policies or procedures; (k) make any material tax election, other than in the ordinary course of business and in a manner consistent with past practice, or (l) pay, discharge or satisfy any material claims, liabilities or obligations, other than in the ordinary course of business in a manner consistent with past practice and certain additional obligations. ADDITIONAL AGREEMENTS SIHL EXPENSE REIMBURSEMENT. To the extent and in the circumstances set forth in the Paradise Island Purchase Agreement and provided that SIHL shall not have materially breached any of its obligations under the Paradise Island Purchase Agreement, RII may be required to reimburse SIHL for certain of SIHL's reasonable out-of-pocket costs and expenses incurred since June 1, 1993, in connection with the preparation of SIHL's plans for the Paradise Island Business and the negotiation, execution, delivery and performance of SIHL's obligations under the Paradise Island Purchase Agreement. See "Description of Paradise Island Purchase Agreement -- Additional Agreements -- SIHL Expense Reimbursement". The Plan and the PIRL Standby Distribution Agreement provide that if the PIRL Spin-Off occurs, the obligation to pay the SIHL Expense Reimbursement shall be an obligation of PIRL (and not RII) pursuant to either of the circumstances described below: (1) In the event that the Paradise Island Purchase Agreement is terminated by RII pursuant to any of the provisions of the Paradise Island Purchase Agreement or by SIHL as a result of the failure of the closing thereunder to occur on or before June 30, 1994, and a sale of the Paradise Island Business or any portion thereof that would reasonably be expected to generate 50% or more of the revenues of the Paradise Island Business (whether by merger, purchase of capital stock, purchase of assets, tender offer or otherwise) is consummated within one year of such termination (a "Post Termination Sale"), then upon the consummation of such Post Termination Sale, RII or, if the PIRL Spin-Off shall have already occurred PIRL, shall pay to SIHL the SIHL Expense Reimbursement up to $4 million in the event such Post Termination Sale shall constitute an Overbid Transaction or up to $2 million in the event such Post Termination Sale is not an Overbid Transaction, in each case less any amounts previously paid to SIHL pursuant to subparagraphs (i), (ii), (iii), (iv) and (v) of Section 7.02 of the Paradise Island Purchase Agreement. (2) In the event that the Paradise Island Purchase Agreement is terminated by SIHL pursuant to any of the provisions the Paradise Island Purchase Agreement and a Post Termination Sale which constitutes an Overbid Transaction occurs within one year of such termination, then upon the consummation of such Post Termination Sale, RII, or if the PIRL Spin-Off shall have already occurred, PIRL, shall pay to SIHL the SIHL Expense Reimbursement up to $4 million less any amounts previously paid to SIHL pursuant to subparagraphs (i), (ii), (iii), (iv) and (v) of Section 7.02 of the Paradise Island Purchase Agreement. Prior to the consummation of the PIRL Spin-Off, PIRL shall enter into a security and pledge agreement with SIHL, pursuant to which PIRL shall pledge assets reasonably acceptable to SIHL and having a fair market value of $6 million to secure PIRL's obligation to pay the SIHL Expense Reimbursement. 266 SOLICITATION. RII has agreed to seek confirmation of the Plan by the Bankruptcy Court using the Acceptances of the Plan received by RII as a result of the Solicitation being made pursuant to this Information Statement/Prospectus and has further agreed not to consent to any amendment or supplement to, or modification of, the Plan that purports to change the terms or conditions of the transactions contemplated by the PIRL Standby Distribution Agreement without the prior written consent of Fidelity and TCW, so long as the funds and accounts managed by them hold in the aggregate at least 20% of the outstanding Old Series Notes. REASONABLE BEST EFFORTS. Each party to the PIRL Standby Distribution Agreement has agreed to use its reasonable best efforts to satisfy its obligations under the PIRL Standby Distribution Agreement and cause the Closing to occur. EMPLOYEE MATTERS. As of the Closing Date, PIRL shall (directly or though Bahamian subsidiaries) offer employment to each person employed by the U.S. Paradise Island Subsidiaries whose primary functions relate to the operation of the Paradise Island Business and certain other employees of RII (a "Paradise Employee"), except that PIRL may designate within 60 days from the date of the PIRL Standby Distribution Agreement up to 40 Paradise Employees to whom it does not wish to offer employment (the "Excluded Employees"). PIRL shall not be required to offer employment to any Excluded Employee and RII has agreed that all obligations, including obligations under any Benefit Plan or similar employee benefits, to such Excluded Employees shall remain the responsibility solely of RII and not of PIRL after the Closing. Pursuant to the terms of the PIRL Standby Distribution Agreement PIRL shall have no obligation to maintain, continue or assume obligations under any Benefit Plan of RII. The PIRL Standby Distribution Agreement further provides that within 90 days from the date of the PIRL Standby Distribution Agreement, PIRL shall determine whether it shall offer Paradise Employees who accept employment with PIRL a 401(k) plan. If PIRL determines to offer such a 401(k) plan, then as promptly as practical after the Closing Date, RII shall take all actions necessary to transfer to such new 401(k) plan the account balances in the Resorts Retirement Savings Plan of all Paradise Employees. CONDITIONS TO CLOSING The obligation of PIRL to purchase and pay for the Paradise Island Shares and the U.S. Paradise Island Assets and of RII to sell and deliver the Paradise Island Shares and the U.S. Paradise Island Assets, and the obligation of each of PIRL and RII to effect other transactions to be effected by it under the PIRL Standby Distribution Agreement will be subject to satisfaction or waiver, at or prior to the Closing Date, of the following conditions. PIRL CONDITIONS. (a) (i) The representations and warranties of RII relating to its organization and authority to execute and perform its obligations under the PIRL Standby Distribution Agreement and as to the good title to the Paradise Island Shares shall be true and correct in all respects, in each case when made and as of the Closing Date, (ii) RII shall not have failed to comply with certain covenants contained in the PIRL Standby Distribution Agreement where such failures in the aggregate would have a Material Adverse Effect, (iii) RII shall have complied in all respects with its obligation to extinguish or otherwise discharge all Indebtedness of RIB, (iv) each of the other agreements and covenants contained in the PIRL Standby Distribution Agreement and in any certificate or agreement by RII delivered pursuant thereto to be performed or complied with by RII, at or before closing, shall have been duly performed or complied with in all material respects and (v) PIRL shall have received a certificate of RII, signed by a Vice President thereof as to the fulfillment of the conditions set forth in the foregoing clauses (i), (ii), (iii) and (iv); (b) the Paradise Island Purchase Agreement shall have terminated; (c) any waiting period (and any extension thereof) applicable to the consummation of the transactions contemplated thereby under the HSR Act shall have expired or been terminated; (d) the Confirmation Order shall have been entered by the Bankruptcy Court and the Effective Date shall have occurred, or there shall be no unsatisfied conditions to the occurrence of the Effective Date other than the closing thereunder, and such Confirmation Order shall be in full 267 force and effect and shall not then be stayed; (e) all Governmental Consents shall have been received; (f) there shall not be in effect any injunction or restraining order issued by a court of competent jurisdiction against the consummation of the sale and purchase of the Paradise Island Shares and the assets of the U.S. Paradise Island Subsidiaries pursuant to the PIRL Standby Distribution Agreement; (g) no proceeding shall have been instituted or consented to by or against RIB or any U.S. Paradise Island Subsidiary seeking to adjudicate any of them a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief or composition of any of their debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of any order for relief or the appointment of a receiver, trustee, custodian or other similar official for any of them or any substantial part of any of their property, and such proceeding shall not have been dismissed or terminated within 60 days of the commencement thereof; (h) PIRL shall have received opinions of counsel to RII reasonably acceptable to PIRL and its counsel; (i) the Registration Rights Agreement shall have been executed and delivered by the parties thereto and shall be in full force and effect; (j) PIRL shall have received resignations and releases of all officers and directors of RIB who are not directly involved in the business and operations of RIB; and (k) certain agreements relating to the Old Series Notes shall not be in force and effect. RII CONDITIONS. (a) Any waiting period (and any extension thereof) applicable to the consummation of the transactions contemplated thereby under the HSR Act shall have expired or been terminated; (b) the Confirmation Order shall have been entered by the Bankruptcy Court and the Effective Date (as defined in the Plan) shall have occurred, or there shall be no unsatisfied conditions to the occurrence of the Effective Date other than the closing thereunder, and such Confirmation Order shall be in full force and effect and shall not then be stayed, or the consummation of the transactions contemplated by the PIRL Standby Distribution Agreement shall have been approved by another order of the Bankruptcy Court and such other order shall be in full force and effect and shall not then be stayed; (c) all Governmental Consents shall have been received; (d) there shall not be in effect any injunction or restraining order issued by a court of competent jurisdiction against the consummation of the sale and purchase of the Paradise Island Shares and the assets of the U.S. Paradise Island Subsidiaries pursuant to the PIRL Standby Distribution Agreement; and (f) the Paradise Island Purchase Agreement shall have been terminated. TERMINATION The PIRL Standby Distribution Agreement may be terminated at any time prior to the Closing Date: (a) by mutual written consent of RII and PIRL at any time prior to entry of the Confirmation Order; (b) in the event that a proposal for the sale of the Paradise Island Business by RII or GRI, other than pursuant to the PIRL Standby Distribution Agreement or the Paradise Island Purchase Agreement, is approved by the Bankruptcy Court (such termination to occur automatically); (c) by PIRL, if a Material Adverse Effect (as defined in the PIRL Standby Distribution Agreement) occurs as a result of any Force Majeure Event (as defined in the PIRL Standby Distribution Agreement), provided, however, that PIRL may not terminate the PIRL Standby Distribution Agreement if the loss caused by the Force Majeure Event (including the present value of lost profits) is less than $20,000,000 and there is adequate insurance to cover such loss; (d) by PIRL, if PIRL reasonably determines that RII will not be able to deliver good title free and clear of encumbrances, other than certain permitted encumbrances, to a material portion of the Paradise Island Business or 100% of the outstanding RIB Capital Stock by September 30, 1994; (e) by PIRL, if as a result of a breach of RII of its covenant to operate the Paradise Island Business in the ordinary course, a Material Adverse Effect has occurred; (f) by PIRL, if the Paradise Island Purchase Agreement is terminated by SIHL after November 30, 1993 on account of any matter arising or occurring on or before November 30, 1993 (i) which was known by RII or any of its Affiliates (as defined in the PIRL Standby Distribution Agreement) or which would have been known by RII or any of its Affiliates had they not been grossly negligent or (ii) which was fraudulently or knowingly concealed from SIHL by RII or any of its Affiliates; (g) by PIRL, if in Fidelity's and TCW's reasonable judgment (based on advice of legal counsel), the consummation of the transactions contemplated by the PIRL Standby Distribution Agreement could be 268 expected to result in the incurrence of any personal liabilities by the holders of PIRL's capital stock by virtue of their status as shareholders (excluding any losses resulting solely from a decline in the economic value of such capital stock); provided, however, that in the event of a good faith dispute concerning whether PIRL is entitled to terminate the PIRL Standby Distribution Agreement pursuant to the provisions described in this clause (g), the matter will be submitted to a court of competent jurisdiction for a final and binding determination; (h) by PIRL, if RII or any of its Affiliates propose or support before the Bankruptcy Court any proposal for the sale or disposition of the Paradise Island Business other than pursuant to the PIRL Standby Distribution Agreement or the Paradise Island Purchase Agreement; or (i) in the event that the sale of the Paradise Island Business by RII and the U.S. Paradise Island Subsidiaries to SIHL is consummated pursuant to the Paradise Island Purchase Agreement (such termination to occur automatically). TRANSFER TAXES The PIRL Standby Distribution Agreement provides that any sales and transfer taxes applicable to the conveyance and transfer of the Paradise Island Shares and the U.S. Paradise Island Assets shall be borne and paid 100% by RII. The Bahamian Government has notified PIRL and RII that a transfer tax of $1.08 million is payable as a result of the transfer of the Shares, and in accordance with provisions of the PIRL Standby Distribution Agreement, such transfer tax will be paid 100% by RII. AMENDMENT AND WAIVERS No amendment to the PIRL Standby Distribution Agreement will be effective unless it is in writing signed by RII and PIRL and consented to by Fidelity and TCW. Any party may waive any provision of the PIRL Standby Distribution Agreement or consent to any departure by any party therefrom; PROVIDED, HOWEVER, that no such waiver or consent by RII shall be valid unless consented to by Fidelity and TCW. INDEMNIFICATION INDEMNIFICATION BY RII. Pursuant to the term of the PIRL Standby Distribution Agreement, until March 31, 1995, RII has agreed to indemnify and hold PIRL and its Affiliates harmless from the claims, damages, liabilities, liens, losses or other obligations ("Losses") arising out of or based upon or caused by the inaccuracy of the representations of RII contained in the PIRL Standby Distribution Agreement relating to its organization and authority to execute and perform the PIRL Standby Distribution Agreement and title to the Paradise Island Shares. In addition, RII has agreed to indemnify SIHL and its Affiliates for any Losses resulting from breaches of certain covenants of RII contained in the PIRL Standby Distribution Agreement. INDEMNIFICATION BY PIRL. Pursuant to the terms of the Standby Distribution Agreement, until March 31, 1995, SIHL has agreed to indemnify RII and its Affiliates for any Losses arising out of or based upon or caused by the inaccuracy of the representations of PIRL contained in the Standby Distribution Agreement relating to its organization, capital structure and authority to execute and perform the Standby Distribution Agreement and to issue the Paradise Island Shares. In addition, SIHL has agreed to indemnify RII and its Affiliates for any Losses resulting from breaches of certain covenants of SIHL contained in the Standby Distribution Agreement. DESCRIPTION OF THE CAESARS PAYMENT On the Distribution Date, pursuant to the Plan, RII will distribute to Caesars World, Inc. the Caesars Payment, which is a cash payment in the amount of $400,000.00. This payment arises from a letter agreement, dated August 18, 1993, by and among Caesars World, Inc., Fidelity and TCW. In conjunction with efforts by Fidelity and TCW to identify potential permanent management for the Paradise Island Business in the event of the PIRL Spin-Off, TCW and Fidelity entered into the letter agreement with Caesars World, Inc. pursuant to which Caesars World, Inc. agreed to grant an option to the holders of Old Series Notes, exercisable until December 31, 1994 to cause Caesars World, Inc. to undertake good faith negotiations with PIRL of agreements under which a subsidiary of Caesars 269 World, Inc. would provide management services with respect to the Paradise Island Business, in the event the SIHL Sale is not consummated. In consideration for this option, Fidelity and TCW agreed to support the inclusion in the Plan of a provision for the payment by RII to Caesars World, Inc. of the sum of $400,000. In conjunction with their discussions and negotiations with Fidelity and TCW concerning the Restructuring and the Plan, and in light of Fidelity's and TCW's agreement to support the Plan, RII and GRI agreed to make the Caesars Payment on the Distribution Date if the Plan was consummated. DESCRIPTION OF DEFERRED CASH The rights to receive payments from Deferred Cash will be non-transferable, will be evidenced by the Plan and represent the right to receive payments resulting from distributions by the Litigation Trust from time to time after the Effective Date in respect of Litigation Trust Units owned by RII. No separate evidence will be issued in respect of the rights to receive payments from Deferred Cash. Each such right is an uncertificated, unsecured and unguaranteed obligation of RII to pay an amount to a holder of such right to the extent that RII receives such amount from the Litigation Trust. Such right does not have a definite term and is non-interest bearing. Distributions to RII in respect of the Litigation Trust Units received prior to the Effective Date will be treated as Available Cash and included in the calculation of Excess Cash. DESCRIPTION OF EXCESS CASH On the Effective Date, or as soon thereafter as practicable, but in no event later than 20 days after the Effective Date, pursuant to the Plan, RII will distribute Excess Cash to the disbursing agent for the holders of Old Series Notes. Excess Cash equals the Available Cash on the Effective Date minus the sum of (a) RII Retained Cash of $20 million, (b) the Target Adjusted Cash, (c) the Reserved Cash, (d) the Plan Consummation Cash, and (e) the Caesars Payment. Under the Plan, Available Cash is defined as all cash of RII and its subsidiaries on the Effective Date, including but not limited to cash deposited in depository accounts, cash on hand and cage cash, before giving effect to the SIHL Sale or PIRL Spin-Off, as the case may be, and the distributions under the Plan, but specifically excluding (a) any cash actually received by RII on or prior to the Effective Date, from Atlantic City Showboat, Inc., as tenant under the Showboat Lease, which has been escrowed by RII to pay its current obligations with respect to the Showboat Notes, (b) any restricted cash relating to the Litigation Trust and (c) any portion of the SIHL Aggregate Cash Purchase Price. Available Cash includes pre-Effective Date distributions to RII in respect of the Litigation Trust Units. Pursuant to the Plan, RII and GRI have agreed not to pay, and not to cause their subsidiaries to pay, any claim except in the ordinary course of business and consistent with past practice and to collect, and to cause their subsidiaries to collect, receivables in the ordinary course of business and consistent with past practice. On the Effective Date, RII Retained Cash rather than Plan Consummation Cash shall be used to pay any prepetition Allowed Claims or post-petition Allowed Administrative Claims which, in the ordinary course of business and consistent with past practice, would not have been paid by the Effective Date. DESCRIPTION OF LITIGATION TRUST UNITS Under the Old Plan, the Litigation Trust was created pursuant to the Litigation Trust Agreement dated September 17, 1990. Pursuant to the Litigation Trust Agreement, various assets of the Old Debtors were assigned to the Litigation Trust to be liquidated, and the proceeds thereof, less certain expenses provided for under the Old Plan, distributed by the Litigation Trustee for the benefit of certain creditors of the Old Debtors, the holders under the Old Plan of Allowed Class 3B Claims, Allowed RII Debenture Claims and Allowed Other Class 3C Claims (collectively, the "Trust Beneficiaries"). The Old Plan provided that the aggregate beneficial interests in the Litigation Trust were to 270 be divided into at least 10,000,000 Litigation Trust Units which were to be allocated by the Litigation Trustee to the Trust Beneficiaries as prescribed by the Old Plan. Each Litigation Trust Unit entitles its holder to a pro rata share of any distribution from the Litigation Trust. The assets assigned to the Litigation Trust were in the form of various claims and causes of action (the "Litigation Claims") held by the Old Debtors and certain of their affiliates against Donald J. Trump and affiliated entities (collectively, the "Trump Parties"). The Litigation Trustee assessed the viability of proposed litigation against the Trump Parties and explored settlement options on behalf of the Trust Beneficiaries. On May 28, 1991, the Litigation Trustee entered into an agreement with the Trump Parties, Merv Griffin and affiliated entities, and the Old Debtors and affiliated entities (the "Settlement Agreement") settling the Litigation Claims on behalf of the Trust Beneficiaries, subject to their approval. Such approval was solicited and received by July 15, 1991. Pursuant to the Settlement Agreement, the Trump Parties settled all Litigation Claims for $12,000,000. Furthermore, as required by the Old Plan, RII also was required to make available $5,000,000 to the Litigation Trust to be used to prosecute or otherwise liquidate the Litigation Claims which the Old Debtors had assigned to the Litigation Trust. In October 1990, this money was placed in a separate expense account held on behalf of RII in order to secure RII's obligation to fund the Litigation Trust's expenses. Under this funding arrangement, interest earned on the $5,000,000 belongs to RII. The balance of the funds remaining in the expense account, after the interest earned on the account is returned to RII and the reasonable expenses incurred by the Litigation Trust are paid in full, is available for distribution to the Trust Beneficiaries. Finally, pursuant to the Old Plan, the holders of 1,785,000 Litigation Trust Units had the right to require RII to purchase their Litigation Trust Units for approximately $3,880,000 in the aggregate if certain conditions were not met by September 17, 1991. The $3,880,000 was deposited with the Litigation Trustee in October 1990. Approximately 1,760,000 Litigation Trust Units were purchased in October 1991 for $3,831,000. Interest earned on such $3,880,000 was for the account of the Old Debtors. As of September 30, 1992, there were net trust funds in the Litigation Trust in the amount of $12,690,188. Additionally, expenses in the amount of $561,390 incurred by the Litigation Trustee had been paid from the $5,000,000 that RII had made available to liquidate the Litigation Claims. Having settled or otherwise definitively resolved the Litigation Claims and reduced same to cash proceeds being held in the Litigation Trust, the Litigation Trustee is now in a position to make the distributions of the Litigation Trust funds to the Trust Beneficiaries as required in the Old Plan. However, the Litigation Trustee has declined to make distributions until certain aspects of the tax treatment and allocation of such distribution are clarified. Prior to making any distributions to the Trust Beneficiaries, the Trustee has sought orders from the New Jersey bankruptcy court concerning the tax status of the Litigation Trust and the proper method of distributing the assets of the Litigation Trust. The tax status of the Litigation Trust is the subject of a stipulation which has been executed by all parties to this adversary proceeding, although an order in approving this stipulation has not yet been entered by the New Jersey bankruptcy court. Assuming the order with respect to the resolution of the tax proceeding is entered in January, 1994 as currently anticipated, the second order sought by the Trustee, concerning the method of distributing the assets of the Litigation Trust, has been resolved by a stipulation and order entered on July 13, 1993. Accordingly, the Trustee currently intends to distribute the full amount of the Trust assets in early 1994. DESCRIPTION OF NET RESERVED CASH On the Effective Date, pursuant to the Plan, RII will estimate Reserved Cash, I.E., the amount of cash RII reasonably estimates will be necessary to fund any adjustments required under either the Paradise Island Purchase Agreement or the PIRL Standby Distribution Agreement, as appropriate. 271 As soon as practicable after the Effective Date, but no later than 90 days after the Effective Date, RII will distribute Net Reserved Cash. To the extent that Reserved Cash exceeds the amount of cash actually required for such purposes, there will exist Net Reserved Cash to be distributed to the former holders of Old Series Notes. The rights to receive payments, if any, from Net Reserved Cash will be non-transferable and will be evidenced by the Plan. No separate evidence will be issued in respect of the rights to receive payments from Net Reserved Cash. Each right is an unsecured and unguaranteed obligation of RII to pay an amount to a holder of such right to the extent that there exists Net Reserved Cash. There can be no assurance of Net Reserved Cash and, as a result, no assurance of any payments from Net Reserved Cash. The right to receive Net Reserved Cash will bear interest thereon at the average rate of return received by RII and its subsidiaries on invested cash from the Effective Date to but excluding the Distribution Date. DESCRIPTION OF NET PLAN CONSUMMATION CASH AND PLAN EXPENSES On the Effective Date, pursuant to the Plan, RII will estimate Plan Consummation Cash, I.E., the amount of cash RII reasonably estimates will be necessary to pay Plan Expenses. Plan Expenses include administrative claims, the claims of RII Classes 1, 4, and 5 and GRI Classes 1 and 3 (whether or not such Claims are Disputed Claims) which by their terms are overdue on the Effective Date and the payment of which is incapable of being reinstated or deferred under the Bankruptcy Code, plus (i) any actual payments required to be made by RII or the RII Paradise Subsidiaries for transfer taxes or federal alternative minimum taxes incurred solely as a result of the consummation of the transactions contemplated by the Paradise Island Purchase Agreement or, alternatively, the PIRL Standby Distribution Agreement (after giving effect to all available deductions or credits allowed to the affiliated group of which RII is the common parent for the taxable year in which such transaction occurs), and for costs and liabilities pursuant to section 6.10 of the Paradise Island Purchase Agreement or, alternatively, section 5.09 of the PIRL Standby Distribution Agreement, (ii) costs or expenses incurred in connection with the implementation and consummation of the Plan for (a) amounts payable to the Disbursing Agent under the Plan as provided in section 6.11.9 hereof, (b) the reasonable fees and reasonable expenses of professionals associated with litigating Disputed Claims or Disputed Interests and implementing and consummating the Plan. As soon as practicable after the Effective Date, but no later than 90 days after the Effective Date, RII will determine the amount of cash actually required for such purposes. To the extent that Plan Consummation Cash exceeds the amount of cash actually required for such purposes, there will exist Net Plan Consummation Cash to be distributed to the former holders of Old Series Notes. Pursuant to the Plan, RII and GRI have agreed not to pay, and not to cause their subsidiaries to pay, any claim except in the ordinary course of business and consistent with past practice and to collect, and to cause their subsidiaries to collect, receivables in the ordinary course of business and consistent with past practice. On the Effective Date, RII Retained Cash rather than Plan Consummation Cash shall be used to pay any prepetition Allowed Claims or post-petition Allowed Administrative Claims which, in the ordinary course of business and consistent with past practice, would not have been paid by the Effective Date. The rights to receive payments, if any, from Net Plan Consummation Cash will be non-transferable and will be evidenced by the Plan. No separate evidence will be issued in respect of the rights to receive payments from Net Plan Consummation Cash. Each right is an unsecured and unguaranteed obligation of RII to pay an amount to a holder of such right to the extent that there exists Net Plan Consummation Cash. There can be no assurance of Net Plan Consummation Cash and, as a result, no assurance of any payments from Net Plan Consummation Cash. The right to receive Net Plan Consummation Cash will bear interest thereon at the average rate of return received by RII and its subsidiaries on invested cash from the Effective Date to but excluding the Distribution Date. 272 DESCRIPTION OF GRIFFIN WARRANTS GENERAL The form of the Griffin Warrants has been filed as an exhibit to the Registration Statement. See "Available Information". EXERCISE OF GRIFFIN WARRANTS Upon issuance, the Griffin Warrants will entitle the holder thereof to purchase approximately 10% of the RII Common Stock on a fully diluted basis at a purchase price per share equal to the Griffin Warrant Exercise Price (as defined below). Once issued, the holder may exercise the Griffin Warrants, subject to applicable securities laws, at any time prior to the fourth anniversary of the Effective Date. The "Griffin Warrant Exercise Price" shall be the lesser of (i) the average market price of RII Common Stock for the 20 trading days following the Effective Date and (ii) $1.875. If the holder exercises the Griffin Warrants for less than all the shares of RII Common Stock purchasable thereunder, RII will issue to such holder a RII warrant certificate evidencing the remaining amount of shares of RII Common Stock purchasable upon further exercise of the Griffin Warrants. Payment of the purchase price upon the exercise of the Griffin Warrants may be made in cash or by certified or official bank or bank cashier's check. ADJUSTMENTS Capitalized terms used under this caption and not otherwise defined in this Information Statement/Prospectus have the meanings ascribed thereto under "-- Certain Definitions" below. The number of shares of RII Common Stock covered by the Griffin Warrants are subject to adjustment under certain events, including: (i) the distribution of additional shares of RII Common Stock to all holders of RII Common Stock, the subdivision of shares of RII Common Stock and the combination of shares of RII Common Stock into a smaller number of shares of RII Common Stock (ii) the distribution to holders of Common Stock of any Indebtedness (other than Convertible Securities), shares of capital stock (other than Convertible Securities or Additional Shares of Common Stock) or any other securities or property (other than cash) or any warrant or other right to subscribe for or purchase any Indebtedness (other than Convertible Securities); (iii) the issuance or sale of any Additional Shares of Common Stock for a consideration per share less than the Current Warrant Price per share of Common Stock; (iv) the distribution or issuance or sale of warrants or other rights to subscribe for or purchase any Additional Shares of Common Stock or any Convertible Securities, whether or not the rights to exercise, exchange or convert thereunder are immediately exercisable, if the consideration per share for which Additional Shares of Common Stock at any time thereafter may be issuable pursuant to the terms of such warrants or other rights or such Convertible Securities is less than the Current Warrant Price per share of Common Stock; and (v) the distribution or issuance or sale of any Convertible Securities, whether or not the rights to exchange or convert thereunder are immediately exercisable, if the consideration per share for which Additional Shares of Common Stock at any time thereafter may be issuable pursuant to the terms of such Convertible Securities is less than the Current Warrant Price per share of Common Stock. RII is not required to issue fractional shares of RII Common Stock. If RII consolidates with or merges with and into another entity or sells or transfers substantially all its assets, the holders of Griffin Warrants will be entitled to receive, upon the exercise of the Griffin Warrants, the securities or property to which the holder of the shares of RII Common Stock or other securities then deliverable upon the exercise of the Griffin Warrants would have been entitled upon such consolidation, merger or sale. 273 LIMITATION ON RIGHT TO VOTE OR RECEIVE DIVIDENDS No holder of the Griffin Warrants, as such, will be entitled to any rights as a shareholder of the RII, including the right to vote or to receive dividends or other distributions with respect to the shares of RII Common Stock, until such holder has properly exercised the Griffin Warrants in accordance with their terms. CERTAIN DEFINITIONS "Additional Shares of Common Stock" means all shares of Common Stock issued subsequent to the Effective Date other than (A) shares issued upon exercise of the Griffin Warrants and (B) any shares of Common Stock issued upon exercise of any 1990 Stock Option or any option issued under the 1994 Stock Option Plan. "Capitalized Lease" means, with respect to any Person, any lease or any other agreement with respect to the use of property that, in accordance with GAAP, should be capitalized on the lessee's or user's balance sheet. "Capitalized Lease Obligation" of any Person means, as of any date as of which the amount thereof is to be determined, the amount of the liability capitalized in respect of a Capitalized Lease of such Person. "Common Stock" means RII Common Stock, par value $.01 per share, as constituted on the Distribution Date and any capital stock into which such common stock thereafter may be changed on one or more occasions as a result of a stock split, stock dividend or combination or reclassification of shares, or through a merger, consolidation, reorganization or recapitalization, or by any other means, and in addition to such RII Common Stock also includes capital stock of RII of any other class that is not preferred as to dividends or assets over any other class of capital stock of RII and that is not subject to redemption; provided that the shares of Common Stock receivable upon exercise of the Warrants shall include only shares designated as RII Common Stock on the Effective Date. "Convertible Securities" means Indebtedness, shares of stock or other securities that, with or without payment of additional consideration in cash or property, are convertible into or exchangeable for Additional Shares of Common Stock, either immediately or upon the arrival of a specified date or the happening of a specified event. "Current Warrant Price" per share of Common Stock, as of any date, means the amount equal to the quotient resulting from dividing the Exercise Price per Stock Unit in effect on such date by the number of shares (including any fractional share) of Common Stock comprising a Stock Unit on such date. "Current Market Value" of a share of Common Stock means, for each trading day: (A) the daily average of the high and low sale prices for Common Stock as reported on the American Stock Exchange, or if no such sale takes place on any such trading day the daily average of the high and low bid quotations for the Common Stock on the American Stock Exchange; (B) if the Common Stock is not listed on the American Stock Exchange, the daily average of the high and low sale prices for the Common Stock as reported on the principal national securities exchange on which the Common Stock is listed, or if no such sale takes place on any such trading day the daily average of the high and low bid quotations on such exchange; (C) if the Common Stock is not listed on any national securities exchange, the daily average of the high and low sale prices in the over-the-counter market as reported on the NASDAQ/National Market System, or if no such sale takes place on any such trading day the daily average of the high and low bid quotations as so reported; or (D) if no such quotations are available, the fair market value as determined in good faith by the Board of Directors of RII. "GAAP" means United States generally accepted accounting principles. "Indebtedness" of any Person means, as of any date as of which the amount thereof is to be determined, (i) all obligations of such Person that, in accordance with GAAP, would be classified on a balance sheet of such Person as debt or indebtedness, including all obligations of such Person in 274 respect of borrowed money or evidenced by bonds, debentures, notes or other evidence of indebtedness, and (ii) in addition (A) all obligations that are secured by any Lien existing on property owned by such Person whether or not the obligations secured thereby shall have been assumed by such Person, (B) all Capitalized Lease Obligations of such Person, (C) all obligations of such Person to purchase any materials, supplies or other property, or to obtain the services of any Person, if the relevant contract or other related document requires that payment for such materials, supplies or other property, or for such services, shall be made regardless of whether or not delivery of such materials, supplies or other property is ever made or tendered or such services are ever performed or tendered, (D) all obligations of such Person to advance or supply funds to, or to purchase property or services from, any other Person in order to maintain the working capital, net worth or any other balance sheet condition of such other Person or to pay debts, dividends or expenses of such other Person or to assure such other Person or any third party against any liability or loss and (E) guarantees, endorsements and other contingent obligations, direct or indirect, on the part of such Person (other than endorsement of negotiable instruments for collection in the ordinary course of business) for the payment, discharge or satisfaction of Indebtedness of others to pay the same or to the owners of such Indebtedness of others of the character described above, including any agreement, contingent or otherwise, to (x) purchase such Indebtedness of others, (y) purchase or sell property or services primarily to permit the debtor in respect of such Indebtedness of others to pay the same or the owner of such Indebtedness of others to avoid loss or (z) supply funds to or invest in any such debtor. "Lien" means: (i) any interest in property (whether real, personal or mixed and whether tangible or intangible) that secures an obligation owed to, or a claim by, a Person other than the owner of such property, whether such interest is based on the common law, statute or contract, including without limitation any such interest arising from a Capitalized Lease, arising from a mortgage, charge, pledge, security agreement, conditional sale or trust receipt, arising by way of the right of set-off, or deposit in trust, or arising from a lease, consignment or bailment given for security purposes; (ii) any encumbrances upon such property that does not secure such an obligation; and (iii) any exception to or defect in the title to or ownership interest in such property, including without limitation reservations, rights of entry, possibilities of reverter, encroachments, easements, right of way, restrictive covenants, leases, licenses and profits a prendre. "Person" includes an individual, a corporation, an association, a partnership, a trust or estate, a government and any agency or political subdivision thereof or any other entity. "Stock Unit" means one share of Common Stock until the occurrence of any adjustment specified in the antidilution section of the Griffin Warrants and thereafter means such other number of shares of Common Stock as may result from any one or more of such adjustments. DESCRIPTION OF OLD SERIES NOTES The Old Series Notes were issued pursuant to the Old Series Note Indenture dated as of September 14, 1990, between RII and Chemical Bank (successor to Manufacturers Hanover Trust Company), the Old Series Note Trustee. A copy of the Old Series Note Indenture is filed as an exhibit to the Registration Statement of which this Information Statement/Prospectus is a part. The terms of the Old Series Note Indenture also are governed by certain provisions contained in the Trust Indenture Act of 1939, as amended. Wherever particular provisions of the Old Series Note Indenture or Old Series Notes are referred to, such provisions are incorporated by reference herein. Capitalized terms used in this section but not defined in this Information Statement/Prospectus or in the Plan have the meanings ascribed thereto in the Old Series Note Indenture and are incorporated by reference herein. References to Sections or Articles refer to Sections or Articles of the Old Series Note Indenture and references to Paragraphs refer to Paragraphs of the respective Old Series Notes. 275 CERTAIN TERMS OF THE OLD SERIES A NOTES GENERAL The Old Series A Notes are secured obligations of RII, guaranteed as to payment of principal and interest by GRI pursuant to the GRI Guaranty and limited to $187,500,000 in aggregate principal amount plus the principal amount of Old Series A Notes that may be issued in payment of interest as described below. As of November 30, 1993, approximately [ ____________] in aggregate principal amount of Old Series A Notes were outstanding. The Old Series A Notes mature on April 15, 1994. SINKING FUND REQUIREMENTS None. INTEREST The Old Series A Notes paid interest at a rate of 6% per year from April 11, 1990 until April 15, 1991. The interest rate on the Old Series A Notes increased to 9% on April 15, 1991, to 12% on April 15, 1992, and to 15% on April 15, 1993. Interest is payable semi-annually on April 15 and October 15 in each year to holders of record at the close of business on the first day of the month in which the interest payment date occurs. RII is required to pay interest on overdue principal and, to the extent permitted by law, overdue interest at the then current rate applicable to the Old Series A Notes plus 2% per year. RII may pay all or any portion of interest accruing on the Old Series A Notes by issuing additional Old Series A Notes (valued, for purposes only of determining the principal amount of additional Old Series A Notes to issue in respect of interest so paid, at 100% of their principal amount) in lieu of cash in satisfaction of interest payments due. Interest on the Old Series A Notes may be paid in cash only if interest on the Old Series B Notes is concurrently paid in cash in the same proportion of the total interest due. To date, RII has made all interest payments on the Old Series A Notes by issuing additional Old Series A Notes. CERTAIN TERMS OF THE OLD SERIES B NOTES GENERAL The Old Series B Notes are secured obligations of RII, limited in aggregate principal amount to the sum of (a) $137,500,000, plus (b) the principal amount of Old Series B Notes that were issued in respect of certain general unsecured claims under the Old Plan, approximately [$4,300,000], plus (c) the principal amount of Old Series B Notes that are issued in payment of interest as described below. As of November 30, 1993, approximately [____________] in aggregate principal amount of Old Series B Notes were outstanding. The Old Series B Notes mature on April 15, 1994. SINKING FUND REQUIREMENTS None. INTEREST The Old Series B Notes paid interest at a rate of 11% per annum from May 8, 1990 until April 15, 1991. Thereafter the interest rate on the Old Series B Notes is 15% per year until maturity. Interest is payable semi-annually on April 15 and October 15 in each year to holders of record at the close of business on the first day of the month in which the interest payment date occurs. RII is required to pay interest on overdue principal and, to the extent permitted by law, overdue interest at the then current rate applicable to the Old Series B Notes plus 2% per year. RII may pay all or any portion of interest accruing on the Old Series B Notes by issuing additional Old Series B Notes (valued, for purposes only of determining the principal amount of additional Old Series B Notes to issue in respect of interest so paid, at 100% of their principal amount) in lieu of cash in satisfaction of interest payments due. Interest on the Old Series B Notes may be paid in cash only if interest on the Old Series A Notes is concurrently paid in cash in the same proportion of the total interest due. To date, RII has made all interest payments on the Old Series B Notes by issuing additional Old Series B Notes. 276 MANDATORY REDEMPTION If RII or any of its subsidiaries sells any of their assets listed in a schedule to the Old Series Note Indenture, any other real property or the capital stock of any such subsidiary, the Cash Proceeds from such sale are required to be deposited into the Collateral Account, a custodial account maintained by the Old Series Note Trustee for the benefit of the holders of the Old Series Notes, immediately upon receipt thereof (except Cash Proceeds from the disposition of assets in the ordinary course or in connection with any sale of all or substantially all the assets of RII). If, as a result of any such deposit, the balance in the Collateral Account exceeds $15,000,000, RII is required to redeem the Old Series Notes with the entire balance in the Collateral Account at 100% of the principal amount thereof plus accrued and unpaid interest to the date of redemption. The Old Series Note Indenture requires that any such redemption be made of both the Old Series A Notes and the Old Series B Notes, pro rata according to the respective principal amounts of the Old Series Notes of each series then outstanding. (ARTICLE THREE AND PARAGRAPH 5). OPTIONAL REDEMPTION The Old Series Notes are not entitled to any sinking fund. The Old Series Notes are redeemable at any time in whole, or from time to time in part, at the election of RII, at a redemption price of 100% of their principal amount plus accrued interest to the Redemption Date. The Old Series Note Indenture requires that any such redemption be made of both the Old Series A Notes and the Old Series B Notes, pro rata according to the respective principal amounts of the Old series Notes of each series then outstanding. (SECTION 3.02). From and after any Redemption Date, if funds for the redemption of any Old Series Notes called for redemption shall have been made available on such Redemption Date, such Old Series Notes will cease to bear interest and the only right of the holders will be to receive payment of the Redemption Price and all interest accrued to such Redemption Date. (SECTION 3.05 AND PARAGRAPH 5). The Old Series Note Indenture requires that notice of any optional redemption of any Old Series Notes be given to holders at their addresses, as shown in the register, not more than 60 nor less than 30 days prior to the Redemption Date. The notice of redemption must specify, among other things, the Redemption Date, the Paying Agent and, in the case of a partial redemption, the aggregate principal amount of the Old Series A Notes and the Old Series B Notes to be redeemed and the aggregate principal amount of the Old Series A Notes and the Old Series B Notes that will be outstanding after such partial redemption. (SECTION 3.03). LIMITATION ON OPEN-MARKET PURCHASES See "-- Restrictive Covenants". CASINO CONTROL ACT REGULATION The Old Series Notes are subject to the qualification, divestiture and redemption provisions under the Casino Control Act that are described in "Business of the Company -- Regulation and Gaming Taxes and Fees -- New Jersey". (SECTION 3.07; PARAGRAPH 6). PUT OPTION UPON CHANGE OF CONTROL Each holder of Old Series Notes has the right (the "Change of Control Put Option") to require RII to purchase such holder's Old Series Notes upon the occurrence of one or more of the following (unless, in the case of clauses (i) and (ii) below, RII calls all the Old Series Notes for redemption in connection therewith pursuant to the terms of the Old Series Note Indenture): (i) the consolidation or merger of RII with or into another entity in which RII is not the surviving corporation; (ii) the sale of all or substantially all the assets of RII, provided that a sale of the stock or substantially all the assets of either RIB or RIH (but not both) will not constitute such a sale; (iii) the percentage of the total issued and outstanding voting stock held by Merv Griffin and his affiliates falls below 15%, other than as a result of issuance by RII of additional shares of voting stock; or (iv) any person or "group" (as 277 defined in Rule 13d-5 promulgated under the Exchange Act), other than Merv Griffin, any of his affiliates or any group of which he or any such affiliate is a member, acquires 50% or more of the total issued and outstanding voting stock. (SECTION 5.16). Within 30 business days after any such event, RII is required to give notice thereof to the holders of the Old Series Notes at their addresses shown in the register. The notice must specify the nature of the event giving rise to the right to have the Old Series Notes repurchased, a repurchase date not more than 40 nor less than 30 days after the date of the notice and the instructions a holder of the Old Series Notes must follow in order to have its Old Series Notes repurchased. The repurchase price is 100% of the principal amount of the Old Series Notes repurchased plus accrued and unpaid interest to the date of repurchase. (SECTION 5.16). To the extent applicable, RII will be required to comply with Rule 13e-4 under the Exchange Act and any other applicable provisions of federal and state securities laws in connection with any repurchase of the Old Series Notes pursuant to the Change of Control Put Option. The Change of Control Put Option may in certain circumstances make more difficult or discourage a takeover of RII, and, thus, the removal of incumbent management. COLLATERAL GENERAL The Old Series Notes are secured by the Collateral pursuant to the Old Security Documents described below. The Old Series A Notes and the Old Series B Notes rank PARI PASSU with respect to amounts realized upon the sale or other disposition of the Collateral. (ARTICLE FOUR). The Collateral consists of: (i) The RII Property, consisting of RII's fee and leasehold interests in substantially all of its real properties, additions or all improvements constructed thereon (other than the Showboat Lease and the real property that is subject to the Showboat Lease), pursuant to the RII Mortgage between RII and the Old Series Note Trustee; (ii) The Resorts Casino Hotel,consisting of RIH's fee and leasehold interests comprising the Resorts Casino Hotel, the contiguous parking garage and property, all additions or improvements constructed thereon (other than certain new facilities such as the proposed new parking garage) and all furniture, fixtures, machinery, equipment, inventory and accounts of RIH related thereto, encumbered pursuant to the RIH Mortgage between RIH and the Old Series Note Trustee; (iii) all of the outstanding capital stock of RIH and GRI and all of RII's other direct and indirect domestic subsidiaries pledged by RII to the Old Series Note Trustee pursuant to the Resorts Pledge Agreement between RII and the Old Series Note Trustee; (iv) the RIH Notes in the aggregate principal amount of $325,000,000, pledged by GRI to the Old Series Note Trustee pursuant to the RIH Pledge Agreement between GRI and the Old Series Note Trustee; (v) 66% of the outstanding RIB Stock, pledged by GRI to the Old Series Note Trustee pursuant to the GRI Pledge Agreement between GRI and the Old Series Note Trustee; and (vi) the RIB Note, the RIB Subsidiary Guaranty Agreements and the RIB Mortgage (each as defined hereafter) pledged by RIH to the Old Series Note Trustee pursuant to the RIB Collateral Assignment Agreement between RIH and the Old Series Note Trustee. THE RII MORTGAGE AND THE RIH MORTGAGE The RII Mortgage and the RIH Mortgage create a first priority mortgage lien and security interest (subject to certain permitted liens) in the RII Property and the Resorts Casino Hotel, respectively. RII and RIH are prohibited from obtaining the release of, or granting any additional liens on, the RII Property and the Resorts Casino Hotel, respectively, without the consent of the holders of at least two- 278 thirds in principal amount of the Old Series A Notes and the Old Series B Notes, voting together as a single class, and a majority of each class voting separately, except as permitted by the provisions described under the captions "-- Negative Pledge Covenant" and "-- Release and Substitution of Collateral" below. RII, RIH AND GRI PLEDGE AGREEMENTS The RII, RIH and GRI Pledge Agreements collectively create a security interest in all of the outstanding capital stock of RIH, GRI and all of RII's other direct and indirect domestic subsidiaries and in 66% of the outstanding voting stock of RIB. Unless an Event of Default under the Old Series Note Indenture has occurred and is continuing, RII, RIH and GRI will be entitled to exercise full voting rights of, and may receive any dividends declared on, the pledged shares. In addition, the RIH Pledge Agreement creates a security interest in the RIH Notes, which, as amended, evidence the borrowing by RIH from GRI of the proceeds from the issuance by GRI of the Old GRI Notes. THE RIB COLLATERAL The RIB Collateral includes a promissory note (the "RIB Note") issued by RIB to RIH to evidence the borrowing by RIB from RIH of $50,000,000 of the proceeds of the loan to RIH made by GRI out of the proceeds of sale of the Reset Notes. The RIB Note was assigned by RIH to the Old Series Note Trustee as collateral. The RIB Note is guaranteed by three subsidiaries of RIB (collectively, the "RIB Subsidiary Guarantors") and such guarantees (the "RIB Subsidiary Guaranty Agreements") are secured by first priority mortgages and liens evidenced by indentures of mortgage (collectively, the "RIB Mortgage"). The RIB Subsidiary Guaranty Agreements and the RIB Mortgage also were assigned by RIH to the Old Series Note Trustee as collateral. The RIB Mortgage encumbers the interests of RIB and the RIB Subsidiary Guarantors in the Paradise Island Resort & Casino, the Ocean Club, the Paradise Paradise Beach Resort, all additions or improvements constructed thereon and all furniture, furnishings, fixtures, machinery and equipment and other personal property forming a part thereof or used in connection therewith (the "RIB Property"). The RIB Mortgage does not encumber the golf course, certain undeveloped land owned by such subsidiaries and certain other properties not used in connection with the hotel operations on Paradise Island. See "Business of the Company -- The Bahamas" for a description of the RIB Property. NEGATIVE PLEDGE COVENANT RII and its subsidiaries, including RIH, GRI, RIB and the RIB Subsidiary Guarantors, are prohibited from granting any additional liens, other than certain permitted liens, on any of their respective assets without the consent of the holders of at least two-thirds in principal amount of the Old Series A Notes and the Old Series B Notes, voting together as a single class (which must include the holders of at least a majority in aggregate principal outstanding of each such series). (SECTION 5.12). RELEASE AND SUBSTITUTION OF COLLATERAL Subject to certain provisions of the Old Series Note Indenture, real property Collateral (other than real property constituting all or a portion of the Resorts Casino Hotel or the RIB Casino Hotel) may be released upon substitution of other real property Collateral or cash collateral with a fair value, or in an amount, equal to the fair value of the real property Collateral released. Cash Collateral may be released for redemptions of Old Series Notes. Collateral may be released in connection with sales of assets by RII or its subsidiaries, provided that the cash proceeds from sales of certain specified assets are deposited into a separate account which proceeds shall, when the balance in such account equals $15,000,000, be used to redeem Old Series Notes. See "-- Mandatory Redemption" above. Collateral may be released upon request of RIH, GRI or RIB, as the case may be, if the holders of at least two-thirds in aggregate principal amount of the Old Series A Notes and the Old Series B Notes, voting together as a single class (which must include the holders of at least a majority in aggregate outstanding principal amount of each such series), consent to such release in writing. In addition, Collateral sold, assigned, transferred, licensed or otherwise disposed of in the ordinary course of the business or 279 abandoned because it is no longer necessary or desirable in, and is not material to, the conduct of the business will be released, subject, in certain cases, to receipt by the Old Series Note Trustee of certain reports and to limitations on the fair value of property so released. All Collateral will be released upon satisfaction and discharge of RII's obligations under the Old Series Note Indenture. (ARTICLE FOUR). LIMITATIONS ON ABILITY TO REALIZE ON COLLATERAL GENERAL If there is an Event of Default under the Old Series Note Indenture or the Old Security Documents, the Old Series Note Trustee, subject to the requirements of the Casino Control Act and the Gaming Act, may enforce the rights and remedies arising under the Old Security Documents. The net amount realized in any foreclosure sale for the benefit of holders of the Old Series Notes will be only that amount that exceeds all amounts then due and owing to creditors, if any, having senior security interests and certain costs, taxes and other items. CERTAIN REGULATORY CONSIDERATIONS In any foreclosure sale with respect to the Resorts Casino Hotel, the Old Series Note Trustee could bid the amount of the outstanding Old Series Notes. In the case of a foreclosure under the RIB Mortgage, the Old Series Note Trustee could not bid on the RIB Property unless the foreclosure sale is being conducted by leave or order of a Bahamas court and the court has granted leave to bid, in which event the Old Series Note Trustee could bid the amount outstanding under the RIB Note. The Old Series Note Trustee would be required to comply with the applicable requirements of the Casino Control Act (including obtaining a casino license) and Gaming Act in any foreclosure sale. CERTAIN BANKRUPTCY CONSIDERATIONS In the event of the filing of a petition under the Bankruptcy Code for RIH, applicable provisions of the Bankruptcy Code, including the automatic stay provisions of section 362 of the Bankruptcy Code, may operate to prevent the Old Series Note Trustee from taking action to realize on the Collateral if there is an Event of Default. GROUND LEASES A substantial portion of the North Tower of the Resorts Casino Hotel, a portion of the adjacent parking garage and a small portion of the casino hotel are located on land that is owned by unrelated third parties and held by RIH under long-term ground leases. The ground leases do not provide certain mortgagee protections and, in the event of a default thereunder, the Old Series Note Trustee may not have the right to cure any such default. However, the Old Series Note Trustee has the right under the Old Series Note Indenture to tender defaulted ground lease payments to RIH and require RIH to transmit such funds to the respective ground lessor. If such default is not cured, the lessor under any ground lease may have the right to terminate the ground lease. The termination of any or all of such ground leases could result in the loss of portions of, or rights with respect to, the property subject to the terminated ground lease. ENFORCEABILITY OF JUDGMENTS WITH RESPECT TO BAHAMAS ASSETS Since substantially all the assets of RIB and its subsidiaries are outside the United States, any judgment obtained in the United States, including judgments with respect to the payment of principal on the Old Series Notes or with respect to the RIB Note or the RIB Mortgage, might not be collectible within the United States with respect to such foreign assets. In connection with the Acquisition and the issuance and sale of the GRI Notes, RII was informed by Bahamas counsel, Dupuch & Turnquest, that (i) foreign (including United States) judgments for liquidated amounts in civil matters, obtained against RII, GRI or RIB after due trial before a court of competent jurisdiction and which are final and 280 conclusive as to the issues in contention are actionable in Bahamian courts and are impeachable only upon the grounds of fraud, public policy and natural justice, and (ii) there are no other factors under Bahamian law which would defeat an action brought on the basis of such a judgment of a United States court under the Old Series Note Indenture, the Old Series Notes or the RIB Mortgage. GUARANTY GRI guarantees payment of principal and interest of the Old Series Notes pursuant to the GRI Guaranty. GRI's assets consist principally of the RIH Notes and the capital stock of RIB. RIB and its subsidiaries own the Paradise Island properties, including the Paradise Island Resort & Casino, the Ocean Club Golf & Tennis Resort and the Paradise Paradise Beach Resort, and all related furniture, fixtures, machinery and equipment. The RIH Notes and such Paradise Island properties, including all additions or improvements to such properties, directly or indirectly, comprise part of the Collateral securing the Old Series Notes. The Collateral also includes the lien on the Resorts Casino Hotel, owned by RIH, together with all additions or improvements thereto. RANKING The Old Series Notes are senior secured obligations of RII. PAYMENT OF NET PROCEEDS OF ASSET SALES See "-- Mandatory Redemption". RESTRICTIVE COVENANTS The Old Series Note Indenture contains certain restrictive covenants on the part of RII, including without limitation restrictions (subject to certain exceptions) on: (i) the payment of cash dividends or redemptions of capital stock by RII (other than as required by the Casino Control Act); (ii) the repurchase (other than as required by the Casino Control Act) of any Old Series Notes other than at par unless all interest due on the Old Series Notes on the immediately preceding interest payment date was paid in cash and the funds used for the repurchase are not the proceeds of asset sales that are required to be deposited in the Collateral Account and that have not been so deposited; (iii) the incurrence of additional indebtedness for borrowed money, with exceptions for (A) certain purchase money financing not to exceed $15,000,000 in aggregate principal amount at any time outstanding, (B) financing to develop certain property in The Bahamas to fulfill RIB's obligation to the Bahamian Government to construct at least 150 first-class hotel rooms or (after satisfaction of such obligation) otherwise, not to exceed $20,000,000 in aggregate principal amount at any time outstanding, and (C) after the sale of the Paradise Island Business and application of such sale proceeds to prepay the Old Series Notes such that the aggregate principal amount of the Old Series Notes remaining outstanding does not exceed $75,000,000, financing for the construction of new hotel facilities, including a parking garage to serve the Resorts Casino Hotel in Atlantic City, not to exceed $75,000,000 in aggregate principal amount at any time outstanding; (iv) transactions with affiliates, with exceptions for transactions that RII's Board of Directors determines to be on terms as favorable as could be obtained from a non-affiliated party, certain transactions in regard to acquisition of and financing for new hotel facilities, and contribution by RII or any of its subsidiaries of undeveloped land to joint ventures, provided that neither RII nor any of its subsidiaries may enter into any of the foregoing transactions in excess of $10,000,000 without a fairness opinion of an independent financial adviser; (vi) mergers and consolidations with entities other than affiliates of RII; and (vii) the ability of RII and its subsidiaries to sell their respective assets. The Old Series Note Indenture also requires RII, at all times after December 31, 1990, to maintain a Tangible Net Worth equal to at least $50,000,000. (ARTICLE FIVE). EVENTS OF DEFAULT The following events constitute "Events of Default" under the Old Series Note Indenture: (i) failure to pay principal of the Old Series A Notes or the Old Series B Notes when due, whether at maturity, upon redemption, by declaration, or otherwise; (ii) failure to make any interest payment on the Old Series A Notes or the Old Series B Notes when due and continuation of such default for a 281 period of 30 days; (iii) failure on the part of RII to observe or perform any other covenant or agreement contained in the Old Series Note Indenture if such failure continues unremedied for 30 days after written notice given by the Old Series Note Trustee or the holders of at least 25% in aggregate principal amount of the Old Series Notes then outstanding (except in the case of default with respect to the maintenance of corporate existence, restrictions on asset sales and mergers and consolidations, which shall constitute Events of Default without notice or passage of time); (iv) failure on the part of RII or any of its subsidiaries to perform any of its obligations under any Old Security Document to which it is a party (in certain cases where such failure continues unremedied for a period of time after written notice given by the Old Series Note Trustee or holders of 25% in aggregate principal amount of the Old Series Notes then outstanding); (v) certain events involving the subsequent bankruptcy, insolvency, receivership or reorganization of RII, RIH, GRI or RIB; (vi) any default under any other Indebtedness of RII, RIH or RIB (other than certain intercompany indebtedness and the Showboat Notes) in excess (together with other Indebtedness the maturity of which is so accelerated) of $10,000,000 in principal amount if such default permits the holders thereof to cause such Indebtedness to become due prior to its stated maturity and such holders have caused such Indebtedness to become due prior thereto and have not rescinded or annulled such action; (vii) the entry of one or more final judgments, no longer subject to appeal and not covered by insurance, against RII, RIH, GRI or RIB involving aggregate uninsured liability exceeding $10,000,000, if such judgment remains undischarged or unstayed for a period of 45 days; and (viii) any revocation, suspension or loss of any gaming license which results in the cessation of business at the Resorts Casino Hotel or the Paradise Island Casino for a period of more than 45 consecutive days. (SECTION 7.01). If an Event of Default (other than an Event of Default resulting from bankruptcy, insolvency, receivership or reorganization) shall have occurred and be continuing, the Old Series Note Trustee or the holders of not less than 40% in aggregate principal amount of the Old Series Notes then outstanding may declare immediately due and payable all unpaid principal and interest accrued and unpaid on the Old Series Notes. In case an Event of Default resulting from certain events of bankruptcy, insolvency, receivership or reorganization shall occur, all unpaid principal and interest accrued and unpaid shall be due and payable immediately, without any declaration or other act on the part of the Old Series Note Trustee or the holders of the Old Series Notes. Subject to certain conditions, the holders of a majority in aggregate principal amount of the Old Series Notes then outstanding may rescind a declaration if all Events of Default are remedied. In certain cases the holders of two-thirds in aggregate principal amount of the Old Series Notes then outstanding (which must include holders of at least a majority in aggregate principal amount outstanding of each series) may waive any past Default and its consequences, except a default in the payment of principal of or interest on any Old Series Notes. (SECTION 7.02). LIMITATION ON MERGERS RII, without the consent of the holders of the Old Series Notes, may consolidate with or merge into any other entity or convey, transfer or lease all or substantially all its properties and assets to any person, provided that: (1) the entity formed by such consolidation or into which RII is merged or the person which acquires by conveyance or transfer, or which leases, the properties and assets of RII is a corporation, partnership or trust, organized and existing under the laws of the United States of America, any State thereof or the District of Columbia; (2) the successor entity shall expressly assume, by a supplemental indenture executed and delivered to the Old Series Note Trustee, in form satisfactory to the Old Series Note Trustee, the performance of every covenant of the Old Series Notes, the Old Series Note Indenture and the Old Security Documents on the part of RII to be performed or observed; (3) immediately before and immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing; and (4) RII or the successor entity shall have a Tangible Net Worth (immediately after giving effect to such transaction and the assumption contemplated by clause (2) above) equal to or greater than RII's Tangible Net Worth immediately preceding 282 such transaction. (SECTION 6.01). Upon compliance with these provisions by a successor entity, RII would be relieved of its obligations under the Old Series Notes and the Old Series Note Indenture. (SECTION 6.02). DISCHARGE OF OLD SERIES NOTE INDENTURE; DEFEASANCE RII may terminate substantially all obligations under the Old Series Note Indenture at any time by delivering all outstanding Old Series Notes to the Old Series Note Trustee for cancellation and paying any other sums payable under the Old Series Note Indenture. (SECTION 9.02). The Indenture also provides that RII may elect to defease and be discharged from any and all obligations with respect to the Old Series Notes and that the provisions of the Old Series Note Indenture will no longer be in effect with respect to the Old Series Notes (except for certain obligations, including the obligations to register the transfer or exchange of the Old Series Notes, to replace temporary or mutilated, destroyed, lost or stolen Old Series Notes, to maintain an office or agency in respect of Old Series Notes and to hold funds for payment in trust). Such defeasance will take effect only upon the deposit with the Old Series Note Trustee, in trust for such purpose, of money and/or U.S. Government Obligations that, through the payment of principal and interest in accordance with their terms, will provide money, in an amount sufficient to pay the principal of and interest on the Old Series Notes on the date such payments are due in accordance with the terms of the Old Series Notes. Such a trust may be established with respect to the Old Series Notes only upon satisfaction of certain conditions specified in the Old Series Note Indenture. (ARTICLE NINE). MODIFICATION OF INDENTURE The Old Series Note Indenture and any Old Security Document may be amended or supplemented by RII or the party to such Old Security Document, the Old Series Note Trustee and the holders of not less than two-thirds in aggregate principal amount of the Old Series Notes then outstanding (which must include holders of at least a majority in aggregate principal amount outstanding of each of the Old Series A Notes and the Old Series B Notes), except that without the consent of the holder of each Old Series A Note and Old Series B Note affected, no such modification or alteration may (i) change the stated maturity of such Note, reduce the principal amount of such Note, reduce the rate or extend the time of payment of interest on such Note, (ii) modify any redemption provision of such Note in a manner that would adversely affect the holder of such Note, (iii) waive a default in the payment of principal of, or interest on, such Note, or (iv) reduce the aggregate principal amount of the Old Series Notes with respect to which the consent of the holders is required for an amendment or supplement to, or a waiver of any provision of, the Old Series Note Indenture. (ARTICLE TEN). TRUSTEE Chemical Bank (successor to Manufacturers Hanover Trust Company) is the Old Series Note Trustee. Upon the occurrence of an Event of Default (other than resulting from bankruptcy, insolvency, receivership or reorganization) the Old Series Note Trustee or the holders of not less than 40% in aggregate principal amount of the Old Series Notes then outstanding may accelerate their Notes. The Old Series Note Trustee may require reasonable indemnity before exercising any of its rights or powers under the Old Series Note Indenture. REPORTS TO HOLDERS RII will furnish the holders of Old Series Notes and the Old Series Note Trustee with annual reports containing audited financial statements and quarterly reports containing unaudited financial statements. (SECTION 8.06). DESCRIPTION OF SHOWBOAT NOTES The Showboat Notes were issued by RII pursuant to the Showboat Indenture dated as of September 14, 1990, between RII and Bank of New York, as trustee (the "Showboat Note Trustee"). A copy of 283 the Showboat Indenture is filed as an exhibit to the Registration Statement of which this Information Statement/Prospectus is a part. The terms of the Showboat Indenture also are governed by certain provisions contained in the TIA. Wherever particular provisions of the Showboat Notes and Showboat Indenture are referred to, such provisions are incorporated by reference herein. Capitalized terms used in this section but not defined in this Information Statement/Prospectus or in the Plan have the meanings ascribed thereto in the Showboat Indenture and are incorporated by reference herein. References to Sections and Articles refer to Sections and Articles of the Showboat Indenture and references to Paragraphs refer to Paragraphs of the Showboat Notes. GENERAL The Showboat Notes are secured, nonrecourse notes, limited in aggregate principal amount to the sum of $105,333,000. As of November 30, 1993, $105,333,000 in aggregate principal amount of Showboat Notes were outstanding. The Showboat Notes will mature on June 30, 2000. The principal of and interest on the Showboat Notes are payable at the office of the Showboat Note Trustee in New York, New York or at other offices or agencies maintained for that purpose. Payment of interest may be made by check mailed to the address of the person entitled thereto as shown on the register. Registration of the Showboat Notes is transferable at an office or agency of the registrar, upon surrender of such Showboat Notes duly endorsed or accompanied by a written instrument of transfer in form satisfactory to RII duly executed by the holder thereof or his attorney duly authorized in writing. No service charge will be made for any such registration of transfer or exchange, but RII may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. The registrar will not be required to register the transfer of or exchange Showboat Notes or portions thereof called for redemption. RII initially appointed the Showboat Note Trustee as Paying Agent and Registrar. RII at any time may terminate the appointment of any Paying Agent or Registrar and appoint additional or other Paying Agents and Registrars. RII initially will designate the corporate trust office of the Showboat Note Trustee in New York, New York as the office at which Showboat Notes may be presented and surrendered. Notice of such termination or appointment and of any change in the office through which any Paying Agent or Registrar will act will be given to the Showboat Note Trustee. Until all the Showboat Notes have been delivered to the Showboat Note Trustee for cancellation, however, RII is required to maintain offices or agencies where Showboat Notes may be presented for payment and transfer. INTEREST Interest on the Showboat Notes consists of a pass-through (subject to certain adjustments) of the lease payments actually received by RII or the Showboat Note Trustee under the Showboat Lease. For a description of certain terms of the Showboat Lease, see "-- Collateral" below. Interest is payable based upon lease payments received under the Showboat Lease with respect to periods commencing on or after July 1, 1990. Interest is payable semi-annually on January 15 and July 15 in each year to holders of record of the Showboat Notes at the close of business on the first day of the month in which the interest payment date occurs. RII's obligation with respect to interest on the Showboat Notes is only to pay to the holders of the Showboat Notes those lease payments which are actually received by RII or the Showboat Note Trustee under the Showboat Lease. In the event of a default in the payment of such lease payments by the lessee under the Showboat Lease, the Showboat Note Trustee and the holders of Showboat Notes will have no recourse against RII but will have recourse, after a 30-day grace period following such default, against the collateral described below if such default is not cured by the lessee under the Showboat Lease or RII. OPTIONAL REDEMPTION The Showboat Notes are not entitled to any sinking fund. 284 The Showboat Notes are redeemable at any time in whole, or from time to time in part, at the election of RII, at a redemption price of 100% of the principal amount redeemed plus interest to the date of such redemption (based on lease payments actually received to the redemption date and, if the redemption date is not during the first five business days of a calendar month, the amount of rent accrued under the Showboat Lease but not yet paid in respect of the calendar month in which the redemption date occurs). From and after any redemption date, if funds for the redemption of any Showboat Notes called for redemption shall have been made available for redemption on such redemption date, such Showboat Notes will cease to bear interest and the only right of the holders will be to receive payment of the redemption price and all interest to such redemption date. (SECTION 3.05 AND PARAGRAPH 5). The Showboat Note Indenture requires that notice of any option redemption of any Showboat Notes be given to holders at their addresses, as shown in the register, not more than 60 nor less than 30 days prior to the redemption date. The notice of redemption must specify, among other things, the redemption date, the Paying Agent and, in the case of a partial redemption, the aggregate principal amount of Showboat Notes to be redeemed and the aggregate principal amount of Showboat Notes that will be outstanding after such partial redemption. CASINO CONTROL ACT REGULATION The Showboat Notes are subject to the qualification, divestiture and redemption provisions under the Casino Control Act that are described in "Business of the Company -- Regulation and Gaming Taxes and Fees -- New Jersey". COLLATERAL The Showboat Notes are secured by a mortgage encumbering the 10.44 acre site which has been leased to ACS (the "Showboat Property"), by a collateral assignment of the Showboat Lease (together, such site and the Showboat Lease are referred to as the "Showboat Mortgage") and by a pledge of any proceeds of the sale of the Showboat Mortgage. The Showboat Indenture and the Showboat Mortgage provide that, so long as any of the Showboat Notes are outstanding, lease payments will be made by the lessee under the Showboat Lease directly to the Showboat Note Trustee. The Showboat Notes are issued without recourse to RII. Accordingly, in the event of a default by RII under the terms of the Showboat Indenture, the sole recourse available to the Showboat Note Trustee and holders of Showboat Notes will be to proceed against the Showboat Collateral. The Showboat Lease expires on December 15, 2082. Lease payments are paid in equal monthly installments on the first day of each month. The annual rental for the lease year ending March 31, 1994 is $8,118,000. The lease payment is increased annually as of April 1, based on the changes in the consumer price index from the previous year. Under the terms of the Showboat Lease, ACS is required to pay all real estate taxes and other expenses related to its use of the Showboat Property. The permitted use of the Showboat Property is that of a first-class hotel casino and related facilities. If such use becomes illegal, however, the Showboat Property may be used for any lawful purpose consistent with the urban renewal plan for Atlantic City then in existence. ACS is required to maintain comprehensive general liability insurance (not less than $1,000,000 combined single limit) and umbrella excess liability insurance (not less than $200,000,000 combined single limit), all with RII named as an additional insured. ACS has agreed to indemnify RII to the full limit of any claims in excess of the insurance coverage provided. ACS may transfer its interest in the Showboat Property or sublet the Showboat Property with RII's written consent so long as any transferee agrees to assume and be bound by all the obligations of the Showboat Lease. No consent by RII is required if ACS transfers its interest to a leasehold mortgagee or to an affiliate of ACS or if a sublease involves less than five percent of the gross square footage of the Showboat Property. Under the terms of the Showboat Lease, RII is required, prior to making an offer to any other parties, to offer to ACS the opportunity to acquire the Showboat Property. 285 The Showboat Lease provides that an assignment of the Showboat Property and the Showboat Lease as collateral (such as contemplated by the Showboat Indenture) does not trigger any right of first offer in favor of ACS. Moreover, Resorts does not believe that a foreclosure on the Showboat Collateral by the Showboat Note Trustee in the event of a default under the Showboat Indenture would trigger such right of first offer. Any subsequent sale by the Showboat Note Trustee might be subject to a right of first offer in favor of ACS. Any sale of the Showboat Property (as well as the ability of the Showboat Note Trustee to take title thereto) also would require the approval of the Casino Control Commission, and the necessity of such approval may affect both the timing of such sale as well as the ultimate price to be obtained. If RII were for any reason prohibited under New Jersey law from acting as lessor under the Showboat Lease, including prohibition due to a finding by the Casino Control Commission that RII is unsuitable to own a casino property, the Showboat Lease would require RII to appoint a trustee acceptable to Casino Control Commission to act for RII and collect all lease payments on RII's behalf. The trustee would be required to sell RII's interest in the Showboat Lease and the leased property to a buyer qualified to act as lessor. The net proceeds of any such sale, together with any unremitted lease payments to the date of sale, would be paid to RII, which would in turn remit such proceeds to the Showboat Note Trustee. If RII were no longer able to act as a lessor, ACS would have the right to purchase the underlying land leased from RII. The purchase price would be an amount equal to the greater of $66,000,000 and the fair market value of the leased acreage, but no more than 11 times the rent then being paid by ACS. If the fair market value is not ascertained within the time required by the Casino Control Commission, then the purchase price would be the lesser of $66,000,000 and 11 times the rent being paid by ACS in the year the option would become effective. If the Showboat Note Trustee takes title to the Showboat Collateral and becomes the lessor under the Showboat Lease, it similarly will be subject to the foregoing regulatory provisions. In the event of the filing of a petition under the Bankruptcy Code for RII, applicable provisions of the Bankruptcy Code, including the automatic stay provisions of section 362 of the Bankruptcy Code, may operate to prevent the Showboat Note Trustee from taking action to realize on the Showboat Collateral if there is an Event of Default. CERTAIN COVENANTS Set forth below is a description of certain covenants by RII in favor of the holders of the Showboat Notes. TRANSFER OF SHOWBOAT COLLATERAL; LIENS The Showboat Indenture provides that RII may sell, assign, transfer or otherwise dispose of, or create, suffer or permit to be created or exist any Lien (other than certain permitted liens) on, the Showboat Collateral or any part thereof only if concurrently therewith or prior thereto all outstanding Showboat Notes are redeemed. (SECTIONS 5.10 AND 5.11). PERFORMANCE OF COVENANTS UNDER THE SHOWBOAT LEASE RII promptly will perform and observe all the terms, covenants and conditions required to be performed and observed by RII as landlord under the Showboat Lease. RII promptly will notify the Showboat Note Trustee, in writing, of the receipt by RII of a notice from ACS asserting or claiming a default by RII under the Showboat Lease. (SECTION 5.09). NOTIFICATION OF DEFAULTS BY ACS UNDER THE SHOWBOAT LEASE AND EXERCISE OF REMEDIES BY RII RII will notify the Showboat Note Trustee, in writing, promptly following the expiration of any applicable grace period for which provision is made in the Showboat Lease, of any default by ACS in the performance or observance of any of the terms, covenants or conditions on the part of ACS to be performed or observed under the Showboat Lease. Similarly, the Showboat Note Trustee will notify 286 RII, in writing, promptly if the Showboat Note Trustee fails to receive from ACS, when due, any payment required of ACS under the Showboat Lease. In the event of any such default, RII diligently will proceed to enforce its rights under the Showboat Lease. (SECTION 5.09). TERMINATION OR MODIFICATION OF THE SHOWBOAT LEASE RII will not consent to or cause any termination of, amendment to or waiver of any provision of the Showboat Lease that would materially and adversely affect the interests of the Showboat Note Trustee or the holders of the Showboat Notes under the Showboat Note Indenture and the Showboat Mortgage without the prior written consent of the Showboat Note Trustee, which consent is not to be withheld if the holders of at least two-thirds in aggregate principal amount of the outstanding Showboat Notes give their consent. EVENTS OF DEFAULT The following events constitute "Events of Default" under the Showboat Indenture: (i) failure to pay principal of the Showboat Notes when due, whether at maturity, upon redemption, by declaration or otherwise; (ii) at any time that lease payments under the Showboat Lease are not made directly to the Showboat Note Trustee, failure by RII to pay interest on the Showboat Notes when due and such Default continues for 30 days; (iii) failure by the lessee under the Showboat Lease to make any lease payment due under the Showboat Lease if such failure continues for 30 days; (iv) failure on the part of RII to observe or perform any other covenant or agreement contained in the Showboat Indenture or the Showboat Mortgage if such failure continues unremedied for 30 days after written notice given by the Showboat Note Trustee or the holders of at least 25% in aggregate principal amount of the Showboat Notes then outstanding; and (v) certain events of bankruptcy, insolvency, receivership or reorganization of RII. If an Event of Default (other than an Event of Default resulting from bankruptcy, insolvency, receivership or reorganization) has occurred and is continuing, the Showboat Note Trustee or the holders of not less than 40% in aggregate principal amount of the Showboat Notes then outstanding may declare immediately due and payable all unpaid principal and interest accrued and unpaid on the Showboat Notes then outstanding. If an Event of Default resulting from certain events of bankruptcy, insolvency, receivership or reorganization occurs, all unpaid principal and interest accrued and unpaid shall be due and payable immediately, without any declaration or other act on the part of the Showboat Note Trustee or any of the holders of the Showboat Notes. Subject to certain conditions, the holders of a majority in aggregate principal amount of the Showboat Notes then outstanding may waive any past Event of Default and its consequences, except a default in the payment of principal of or interest on any of the Showboat Notes. MODIFICATION OF INDENTURE The terms of the Showboat Indenture governing modifications and amendments thereto are substantially similar to the corresponding provisions of the Old Series Note Indenture. See "Description of the Old Series Notes -- Modification of Indenture". REPORTS TO HOLDERS RII will furnish the holders of Showboat Notes and the Showboat Note Trustee with annual reports containing audited financial statements and quarterly reports containing unaudited financial statements. LIMITATION ON MERGERS RII, without the consent of the holders of the Showboat Notes, may consolidate with or merge into any other entity or convey, transfer or lease all or substantially all its properties and assets to any person, provided that: (1) the entity formed by such consolidation or into which RII is merged or the person which acquires by conveyance or transfer, or which leases, the properties and assets of RII is a corporation, partnership or trust, organized and existing under the laws of the United States of America, any State thereof or the District of Columbia; (2) the successor entity shall expressly assume, 287 by a supplemental indenture executed and delivered to the Showboat Note Trustee, in form satisfactory to the Showboat Note Trustee, the performance of every covenant of the Showboat Notes, the Showboat Note Indenture and the Security Documents (as defined in the Showboat Indenture) on the part of RII to be performed or observed; (3) immediately before and immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing; and (4) RII or the successor entity shall have a net worth, determined in accordance with generally accepted accounting principles, not less than RII's net worth immediately preceding such transaction. (SECTION 6.01). Upon compliance with these provisions by a successor entity, RII would be relieved of its obligations under the Showboat Notes and the Showboat Note Indenture. (SECTION 6.02). DISCHARGE OF SHOWBOAT NOTE INDENTURE; DEFEASANCE RII may terminate substantially all obligations under the Showboat Note Indenture at any time by delivering all outstanding Showboat Notes to the Showboat Note Trustee for cancellation and paying any other sums payable under the Showboat Note Indenture. (SECTION 10.02). The Indenture also provides that RII may elect to defease and be discharged from any and all obligations with respect to the Showboat Notes and that the provisions of the Showboat Note Indenture will no longer be in effect with respect to the Showboat Notes (except for certain obligations, including the obligations to register the transfer or exchange of the Showboat Notes, to replace temporary or mutilated, destroyed, lost or stolen Showboat Notes, to maintain an office or agency in respect of Showboat Notes and to hold funds for payment in trust). Such defeasance will take effect only upon the deposit with the Showboat Note Trustee, in trust for such purpose, of money and/or U.S. Government Obligations that, through the payment of principal and interest in accordance with their terms, will provide money, in an amount sufficient to pay the principal of and interest on the Showboat Notes on the date such payments are due in accordance with the terms of the Showboat Notes. Such a trust may be established with respect to the Showboat Notes only upon satisfaction of certain conditions specified in the Showboat Note Indenture. (ARTICLE TEN). CERTAIN FEDERAL INCOME TAX CONSIDERATIONS The following discussion describes all the material Federal income tax consequences of the Restructuring to the Company and to the holders of Old Series Notes and, to the extent it relates to matters of law and subject to the qualifications, limitations and assumptions stated herein, constitutes the opinion of Gibson, Dunn and Crutcher, counsel to the Company. The following discussion does not include all matters that may be relevant to any particular holder in light of such holder's particular facts and circumstances. Certain holders, including financial institutions, broker-dealers, tax-exempt entities, insurance companies, foreign persons and stockholders who acquired their stock through the exercise of an employee stock option or otherwise as compensation, may be subject to special rules not discussed below. The discussion assumes that holders hold their Old Series Notes as "capital assets" (generally property held for investment) within the meaning of Section 1221 of the Tax Code, and will hold the RII Common Stock, the SIHL Series A Shares (or if the SIHL Sale is not consummated on the Effective Date, the PIRL Ordinary Shares), New RIHF Mortgage Notes, Units comprised of New RIHF Junior Mortgage Notes and RII Class B Common Stock, and rights to receive payments from Deferred Cash received in exchange therefor as capital assets. The discussion is based upon the provisions of the Tax Code, final, temporary and proposed U.S. Treasury regulations promulgated thereunder, and administrative and judicial interpretations thereof, all as in effect as of the date hereof and all of which are subject to change (possibly on a retroactive basis) by legislation, administrative action or judicial decision. There can be no assurance that the Service will not challenge one or more of the tax consequences of the Restructuring described herein. Moreover, due to the lack of definitive judicial or administrative authority, substantial uncertainties exist with respect to many of the tax consequences of the Plan described herein. 288 The transactions to be undertaken pursuant to the Plan present numerous issues of law and of fact as to which there is no controlling authority under current law. Due to the lack of definitive judicial or administrative authority, substantial uncertainties exist with respect to many of the tax consequences described herein and as to which counsel is unable to render an unqualified legal opinion. The principal Federal income tax issues as to which counsel is unable to render an unqualified legal opinion are as follows: 1. whether the New Debt Securities will be treated as indebtedness of RIH or RIHF; 2. classification of the New Debt Securities as debt rather than equity; 3. whether or not the exchange of the Old Series Notes for the RII Class B Common Stock and the RII Common Stock will be treated as pursuant to a recapitalization as such term is defined in Section 368(a)(1)(E) of the Tax Code; 4. the treatment of the New Debt Securities under the rules relating to original issue discount; 5. consequences of the rights to receive payments from Deferred Cash, Net Reserved Cash and Net Plan Consummation Cash; 6. whether the exchange of the Old Series Notes for the RII Common Stock will qualify for the stock-for-debt exception from the recognition of COD income; and 7. whether an ownership change within the meaning of Section 382 of the Tax Code will occur in connection with the Exchange, and, if such an ownership change were to occur, whether the "bankruptcy exception" contained in Section 382(1)(5) of the Tax Code will apply. Counsel believes that it is more likely than not that the New RIHF Mortgage Notes will be treated as debt for Federal income tax purposes, as discussed below. In each of the other above described instances, Counsel believes that there is substantial authority for the positions that the Company intends to take, as more fully described below. However, because of factual uncertainties and the lack of controlling judicial or regulatory authority, all as described more fully below, Counsel is unable to opine that such positions are more likely than not to be upheld if they are litigated. The substantial authority standard is an objective standard involving an analysis of the law and the application of the law to the relevant facts, and is less stringent than the more likely than not standard. There is substantial authority for the tax treatment of an item only if the weight of the authority supporting the treatment is substantial in relation to the weight of authority supporting contrary treatment, taking all relevant authorities into account. There may be substantial authority for more than one position. Except as specifically discussed below (see "Tax Consequences to the Company - -- Net Operating Loss Carryovers and Limitations," relating to the effect of the transfer of the RIB stock on the NOLs of the Company), no rulings from the Service have been or will be requested with respect to any of the tax issues discussed herein. Moreover, as noted in the discussion, certain of the issues material to the income tax consequences of certain transactions are inherently factual in nature, and other issues involve areas of the law that are ambiguous or with respect to which legal authority is lacking and as to which Counsel only is able to offer limited guidance. Accordingly, there can be no assurances that the Service will not challenge one or more of the tax consequences of the Restructuring described herein. In addition, Counsel is unable to provide any opinion with respect to the Bahamian tax consequences as they relate to PIRL and the receipt of dividends paid on PIRL Ordinary Shares. THE FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN ARE COMPLEX, AND, AS DESCRIBED BELOW, THERE IS UNCERTAINTY WITH RESPECT TO THE TAX TREATMENT OF CERTAIN ASPECTS OF THE PLAN. THIS SUMMARY DOES NOT PURPORT TO DEAL WITH ALL ASPECTS OF FEDERAL, STATE, LOCAL OR FOREIGN INCOME TAXATION THAT MAY BE RELEVANT TO AN INVESTOR'S DECISIONS WITH RESPECT TO THE RESTRUCTURING. THE FEDERAL INCOME TAX DISCUSSION AND OPINIONS SET FORTH IN THIS SECTION "CERTAIN FEDERAL INCOME TAX CONSIDERATIONS" ARE BASED UPON THE PROVISIONS OF THE TAX CODE, REGULATIONS, PROPOSED REGULATIONS, RULINGS AND JUDICIAL DECISIONS NOW IN EFFECT, ALL OF WHICH ARE SUBJECT TO CHANGE. ANY SUCH CHANGES MAY BE APPLIED 289 RETROACTIVELY IN A MANNER THAT COULD ADVERSELY AFFECT INVESTORS. EACH INVESTOR SHOULD CONSULT WITH ITS OWN TAX ADVISER CONCERNING THE SPECIFIC TAX CONSEQUENCE TO SUCH INVESTOR OF THE PLAN, INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL, FOREIGN OR OTHER TAX LAWS BEFORE VOTING ON THE PLAN. TREATMENT OF NEW DEBT SECURITIES AS DEBT OF RIH FOR FEDERAL INCOME TAX PURPOSES Whether the formal, or nominal, obligor of any given instrument will be treated as the obligor of the instrument for Federal income tax purposes depends upon all of the facts and circumstances, and no single characteristic or factor is determinative. Among the factors examined in determining the identity of the true obligor for Federal income tax purposes where another party guarantees or otherwise provides credit support to the nominal obligor are the economic independence and substance of the obligor and ability of the nominal obligor to service interest and principal on the debt from its own cash flows. Where the nominal obligor exists solely to be the nominal issuer of the instrument and the instrument is "mirrored" by an instrument with virtually identical terms issued by a related party, the Service will closely scrutinize the reality of the nominal obligor's "obligation." In addition, there is substantial authority in the law for the position that, where a person issues debt to a third party pursuant to a disclosed nominee arrangement with a related person, the debt can be deemed to be indebtedness of the related person for Federal income tax purposes, provided that certain formalities are observed. With respect to the New Debt Securities, a conclusion that RIHF rather than RIH is the true obligor for Federal income tax purposes would disregard totally the economic substance of the transaction and would elevate "empty forms" over substance, something that the courts generally have not done. Counsel does note, however, that generally a validly formed and maintained corporate entity will not be ignored for federal income tax purposes and the courts have held taxpayers to strict standards when such taxpayers have sought to disregard the form of transactions chosen by them. Accordingly, although the issue is not free from doubt, based on the foregoing factors, the issuance of the RIH Senior Mortgage and the RIH Junior Mortgage to support the New Debt Securities, the identical terms (when combined with the RIH Mortgages) of the RIH Promissory Note and the New RIHF Mortgage Notes, and of the RIH Junior Promissory Note and the New RIHF Junior Mortgage Notes, the existence of the Nominee Agreement between RIHF and RIH and the fact that at all times the assets of RIH will be the ultimate and only source of payment on the New Debt Securities, the Company intends to take the position for Federal income tax purposes that the New Debt Securities are to be treated as obligations of RIH for Federal income tax purposes, and the following discussion assumes such treatment. If, however, the IRS were to treat RIHF, the formal obligor of the New Debt Securities, as the obligor for Federal income tax purposes, such treatment should not materially adversely affect the treatment of the New RIHF Mortgage Notes or the New RIHF Junior Mortgage Notes as debt for Federal income tax purposes as discussed below (see "-- Classification of New Debt Securities as Debt Rather than Equity"). CLASSIFICATION OF NEW DEBT SECURITIES AS DEBT RATHER THAN EQUITY Whether an instrument constitutes debt or equity for Federal income tax purposes is an inherently factual question, and no single characteristic is determinative. Although courts have used a number of factors to determine the characterization of an instrument as debt or equity, each situation is different and must be decided based upon its own set of facts. The following thirteen factors recently have been analyzed by the Tax Court in determining the characterization of an instrument: (1) the name given to the instrument; (2) the presence or absence of a fixed maturity date; (3) the source of principal repayments; (4) the right to enforce payments; (5) the participation in management as a result of the advances; (6) the status of the advances in relation to advances made by other corporate creditors; (7) the intent of the parties; (8) the "thinness" of the company's capital structure; (9) the identity of interest between creditors and stockholders; (10) the source of interest payments; (11) the ability of the corporation to obtain credit from outside sources; (12) the use to which advances were put; and (13) the failure of the debtor to repay on the due date. Based upon an analysis of the above factors and the applicable legal authorities, it is more likely than not that the New RIHF Mortgage Notes will be treated as debt, and there is substantial authority 290 that the Old Series Notes and the New RIHF Junior Mortgage Notes will be treated as debt obligations for Federal income tax purposes, and the following discussion assumes such treatment in both such cases. Due to the factual nature of the determination as to the treatment of instruments such as the Old Series Notes or the New Debt Securities, however, there can be no assurance that in any of such cases the Service would not challenge such treatment, or that a court would not sustain such a challenge. If it were determined that any of the New Debt Securities constitute equity for Federal income tax purposes, then (a) payments of interest on such New Debt Securities would not be deductible by the Company and could be taxed as dividend income to the holders; (b) payments of principal on such New Debt Securities would be treated as redemption distributions under Section 302 of the Tax Code, which could result in either gain or dividend income to the holders; and (c) certain corporate holders may be entitled to a dividends-received deduction with respect to payments of principal or interest that are taxed as dividends. Such determination also could affect the amount, timing and character of income, gain or loss to be recognized by a holder as a result of the Exchange, or in the future. The loss of the interest deduction with respect to all or a portion of the New Debt Securities also would increase the Company's taxable income, resulting in a greater utilization of the Company's NOL Carryovers and, ultimately, potentially substantially increasing the Company's Federal income tax liability sooner than currently anticipated. Except where expressly noted to the contrary, the following discussion assumes that, at the time of the Exchange, the Old Series Notes and the New Debt Securities will be treated as debt obligations, and, in the case of the New Debt Securities, debt obligations of RIH, for Federal income tax purposes. EXCHANGE OF OLD SERIES NOTES As discussed below, Counsel believes that there is substantial authority that the Old Series Notes will not be treated as "securities" within the meaning of the Tax Code provisions governing reorganizations. Accordingly, the Company intends to take the position that the receipt of RII Class B Common Stock and RII Common Stock (including fractional shares and/or odd-lot holdings of RII Class B Common Stock and RII Common Stock deemed to have been received by a holder) in exchange for Old Series Notes pursuant to the Plan will not be treated as the receipt of such stock pursuant to a recapitalization as such term is defined in Tax Code Section 368(a)(1)(E). In order for a holder to avoid the recognition of gain or loss in connection with a recapitalization as defined in Section 368(a)(1)(E) of the Tax Code, such holder must exchange stock or securities for stock or securities. Whether a debt instrument constitutes a "security" depends on an overall evaluation of the nature of the debt instrument, with the term of the debt instrument usually regarded as the most important factor. Under present law, debt instruments with a term of five years or less generally have not been treated by the Service or the courts as securities, whereas debt instruments with a term of ten years or more generally have been treated as securities. Therefore, because the stated term of the Old Series Notes is less than five years, Counsel believes that the Old Series Notes will not be treated as "securities" for Federal income tax purposes. Accordingly, because no stock or "securities" will be surrendered, gain (or loss) will be recognized by a holder of Old Series Notes as a result of the Restructuring to the extent such holder's basis for his Old Series Notes exchanged is less than (or greater than) the sum of the respective fair market values (which should be equal to the "issue price", determined as discussed below) (see " -- OID With Respect to the New Debt Securities") of the New Debt Securities, and the aggregate fair market values of the RII Class B Common Stock, the RII Common Stock, the SIHL Series A Shares and the SIHL Aggregate Cash Purchase Price (or if the SIHL Sale is not consummated on the Effective Date, the PIRL Ordinary Shares), Excess Cash and rights to receive payments from Net Reserved Cash, if any, Net Plan Consummation Cash, if any, and Deferred Cash received in exchange for such Old Series Notes (except to the extent that the amount realized is attributable to accrued interest not previously included in income, which amount will be taxed as ordinary income). Any gain or loss recognized by a holder will be long-term capital gain or loss if the holding period with respect to the Old Series Notes exceeds one year, and otherwise will be short-term capital gain or 291 loss. The ability of a holder to use long-term capital losses to offset income other than capital gains is subject to significant limitations. Currently, the maximum tax rate with respect to long-term capital gains realized by an individual is 28%, and the maximum tax rate on ordinary income is 39.6%. A holder's aggregate basis in the New RIHF Junior Mortgage Notes and the RII Class B Common Stock (allocated between them in accordance with their respective, relative fair market values), and its respective bases in the New RIHF Senior Mortgage Notes, the RII Common Stock, the SIHL Series A Shares (or, if the SIHL Sale is not consummated on the Effective Date, the PIRL Ordinary Shares) and, although the issue is not free from doubt, the Net Reserved Cash and the Net Plan Consummation Cash, will be equal to their respective fair market values. A holder's basis in the right to receive payments from Deferred Cash will be equal to the "issue price" of such right (see "-- Consequences of the Rights to Receive Payments from Deferred Cash" below). The holding period with respect to each instrument will commence on the day after the Exchange. Although the Company intends to take the position that the Exchange will not be treated as a recapitalization as defined in Section 368(a)(1)(E) of the Tax Code, if the Exchange were so treated as a recapitalization no loss would be recognized by any holder of the Old Series Notes, and gain, if any, would be recognized only to the extent that a holder receives "boot" (I.E. cash and property other than stock or securities of the Company) in the Exchange that is not deemed to be in payment of accrued interest. Any such gain would be long-term capital gain if the holding period with respect to the Old Series Notes exceeds one year, and otherwise would be short-term capital gain. In general, a holder's tax basis in the RII Common Stock and the RII Class B Common Stock received pursuant to the Exchange would equal the holder's adjusted tax basis in the Old Debt Securities surrendered in the Exchange decreased by the value of property other than the RII Common Stock and the RII Class B Common Stock received, and increased by the gain, if any, recognized as a result of the Exchange, and a holder's holding period in the RII Common Stock and the RII Class B Common Stock would include its holding period for the Old Debt Securities surrendered in the Exchange. In general, a holder's tax basis and holding period in the property other than the RII Common Stock and the RII Class B Common Stock received in the Exchange would be determined as discussed in the preceding paragraph. EACH INVESTOR SHOULD CONSULT WITH ITS OWN TAX ADVISER CONCERNING THE SPECIFIC TAX CONSEQUENCES IN THE EVENT THAT THE EXCHANGE IS TREATED AS A RECAPITALIZATION. OID WITH RESPECT TO THE NEW DEBT SECURITIES On December 21, 1992, the Service issued proposed regulations (the "New Proposed Regulations") relating to the determination and treatment of OID with respect to debt instruments. The New Proposed Regulations revised certain, and withdrew certain other, proposed regulations relating to OID issued on April 8, 1986 and subsequently amended in 1989 and 1991 (the "Old Proposed Regulations"). The New Proposed Regulations (and, to the extent not withdrawn, the Old Regulations) constitute "authority" for purposes of the substantial understatement penalty provisions of Tax Code Section 6662. Therefore, the discussion below is based upon the New Proposed Regulations (and, to the extent not withdrawn, the Old Regulations). Both the Old and the New Proposed Regulations are vague in many respects, however, and do not address certain issues. Further, there can be no assurance that the final U.S. Treasury regulations or further clarification from the Service will not differ materially from the New Proposed Regulations (and, to the extent not withdrawn, the Old Regulations). Accordingly, the ultimate federal income tax treatment of the New Debt Securities may differ from that described below. In general, subject to a DE MINIMIS rule, a debt obligation will be treated as being issued with OID if there exists a difference between the "stated redemption price at maturity" of the instrument and such instrument's "issue price." The stated redemption price at maturity of a debt obligation is the aggregate of all payments due to the holder under such debt obligation at or prior to its maturity date, other than interest that is actually and unconditionally payable at a single fixed (or a qualified floating) rate (or a permitted combination of the two) at least annually (qualified stated periodic interest payments or "QSIPs"). 292 Interest is payable at a single fixed rate only if the rate appropriately takes into account the length of the interval between payments. QSIPs are included in income at the time they are accrued or received, in accordance with the holder's usual method of accounting for Federal income tax purposes. Pursuant to Section 1273(a)(3) of the Tax Code and the New Proposed Regulations promulgated thereunder, if the OID with respect to an obligation is less than .25% of the obligation's stated redemption price at maturity multiplied by the number of complete years from the issue date to the maturity date, the amount of OID with respect to such obligation is considered to be zero. Under the New Proposed Regulations, the determination of the "issue price" of a debt obligation will depend, in part, on whether such obligation, or the property for which the debt obligation is exchanged, is treated as "traded on an established market" at any time during the 60 day period ending 30 days after the Effective Date (the "Trading Testing Period"). If the debt obligation is listed on an established exchange, or such obligations are otherwise "traded on an established market," the "issue price" of the debt obligations will be the fair market value of such obligations as of the issue date (I.E. the trading price). If the debt obligation is not treated as "traded on an established market" because at no time during the Trading Testing Period is such obligation (i) listed on certain national securities exchanges or interdealer quotation systems registered under the Exchange Act or certain specified foreign exchanges, (ii) traded on certain boards of trade or interbank markets, (iii) reported in a "quotation medium" disseminating either recent price quotations of identified brokers and dealers or actual prices of recent sales transactions, or (iv) subject to readily available price quotations from dealers and brokers, then the "issue price" will equal the fair market value, as of the Effective Date, of the portion of the property deemed to be exchanged therefor (assuming such property is publicly traded). In the case of the New RIHF Mortgage Notes, interest will be payable in cash on a semi-annual basis, commencing on the March 15 or September 15 next following the Effective Date. Such semi-annual interest payments on the New RIHF Mortgage Notes should qualify as QSIPs. Therefore, assuming the New Proposed Regulations are adopted as "final" regulations, and assuming further that the New RIHF Mortgage Notes are, as expected by the Company, listed on the AMEX, whether the New RIHF Mortgage Notes will be treated as being issued with OID will depend upon whether the trading price of such Notes is less than, equal to, or in excess of, the stated redemption price at maturity of such Notes. Moreover, the New RIHF Mortgage Notes will be treated as issued with OID only if their "issue price" is less than their face amount by more than the statutory DE MINIMIS amount. Thus, assuming that the maturity date of the New RIHF Mortgage Notes is nine years from their issue date, the New RIHF Mortgage Notes will be treated as issued without OID if their "issue price" exceeds 97.75% of their stated redemption price at maturity. However, in the case of the New RIHF Junior Mortgage Notes, interest is payable on a semi-annual basis commencing on the June 15 or December 15 next following the Effective Date either in cash, or, under certain circumstances, in kind. Because interest on such Notes may, under certain circumstances, be paid through the issuance of additional Payment-In-Kind notes and the rate of interest of such Payment-In-Kind notes will be the same as the rate of interest on the New RIHF Junior Mortgage Notes, the Company intends to take the position that none of the interest payments on the New RIHF Junior Mortgage Notes will qualify as QSIPs, and such Notes, therefore, will be treated as issued with OID without regard to the initial trading price of such Notes. Although the issue is not free from doubt, the Company also intends to take the position that the provisions of Section 1273(c)(2) of the Tax Code (relating to debt instruments issued as part of an "investment unit") do not apply in determining the issue price of the New Debt Securities. Although the Exchange involves the transfer of the New Debt Securities as well as other property to the holders of the Old Series Notes, such exchange is between RII and the holders, and not between RIHF and such holders. Therefore, at the time of issuance, the New Debt Securities should not be treated as having been issued as part of an investment unit for purposes of Section 1273(c)(2) of the Tax Code. If, however, the provisions of Section 1273(c)(2) of the Tax Code were held to apply to any of the New Debt Securities, under the New Proposed Regulations the issue price of an investment unit is to be allocated between (or among) the unit's components based on their relative fair market values. Unlike the Old Proposed Regulations, the New Proposed Regulations do not provide specific allocation rules; 293 however, the issuer's allocation of the issue price of the investment unit is binding on all holders of the investment unit except for a holder who explicitly discloses (on such holder's Federal income tax return for the year in which the investment unit is acquired) that such holder's allocation of the issue price of the investment unit is different from the issuer's allocation. (Because the Company intends to take the position that none of the New Debt Securities should be treated as having been issued as part of an investment unit for purposes of Section 1273(c)(2) of the Tax Code and calculate and report OID with respect to the New Debt Securities accordingly, a holder wishing to take a different position should consult such holder's own tax advisor.) CONSEQUENCES IF THE NEW DEBT SECURITIES ARE ISSUED WITH OID If a New Debt Security is issued with OID, a holder, subject to the adjustments discussed below, must include in gross income for Federal income tax purposes the sum of the daily portions of OID for each day during the taxable year or portion thereof during which the holder holds the New Debt Security, whether or not the holder actually receives a payment relating to OID in such year. The daily portion is determined by allocating to each day of the relevant "accrual period" a pro rata portion of an amount equal to (a) the product of (i) the "adjusted issue price" of the New Debt Security at the beginning of each accrual period, multiplied by (ii) the yield to maturity of the New Debt Security (determined by semi-annual compounding) less (b) the sum of any QSIPs during the accrual period. The "adjusted issue price" of a New Debt Security at the beginning of any accrual period is its issue price increased by all accrued OID for prior accrual periods and decreased by the amount of any payment previously made on the New Debt Security other than a QSIP. The accrual period for a New Debt Security (except for any initial short period) is each six-month period which ends on the day in each calendar year corresponding to the maturity date of the New Debt Security or the date six months before such maturity date. Therefore, prospective holders of the New Debt Securities should be aware that a holder will be required to include OID in income as such OID accrues, regardless of the holder's method of accounting and regardless of when such holder receives cash payments relating to the OID. A holder's tax basis in a New Debt Security will be increased by the amount of OID included in the holder's income and reduced by the amount of all interest payments on the New Debt Security that are not QSIPs. Under the New Proposed Regulations, the issuance of Payment-In-Kind notes in lieu of a cash payment does not constitute payment. (As discussed in the preceding paragraphs, a cash payment (other than a payment that is QSIP) is not treated as interest but rather reduces the adjusted issue price of the instrument). Accordingly, the Company intends to treat, for Federal income tax purposes, the issuance of any Payment-In-Kind notes in lieu of a cash payment of interest as not constituting a payment of interest with respect to the New RIHF Junior Mortgage Notes. Moreover, since each holder of a New RIHF Junior Mortgage Note will recognize, as ordinary income, through the accrual of OID, the full amount of interest with respect to the New RIHF Junior Mortgage Notes (as well as with respect to any Payment-In-Kind notes issued in payment of interest with respect to such Notes), such holder generally should not also recognize additional ordinary income upon receipt of a Payment-In-Kind note or a cash payment of stated interest. Further, the New Proposed Regulations would treat a New RIHF Junior Mortgage Note and any additional debt instrument issued with respect thereto as part of the same debt issue. Accordingly, the adjusted basis and adjusted issue price of a New RIHF Junior Mortgage Note would be allocated between such instruments and any additional debt instruments received with respect thereto, based on their respective principal amounts. The New Proposed Regulations treat payments made with respect to Payment-In-Kind notes as payments made on the original debt instrument. A subsequent purchaser of a New Debt Security issued with OID who purchases the note at a cost less than the remaining stated redemption price at maturity but greater than its adjusted issue price immediately before such purchase (a purchase at an "acquisition premium") also will be required to include in gross income the sum of the daily portions of OID on that New Debt Security. In computing the daily portions of OID for such a purchaser, however, the daily portion is reduced by the amount that would be the daily portion for such day (computed in accordance with the rules set forth above) multiplied by a fraction, the numerator of which is the amount, if any, by which the holder's basis in 294 the New Debt Security on the date of receipt exceeds the Adjusted Issue Price of the New Debt Security at that time, and the denominator of which is the sum of the daily portions for that New Debt Security for all days beginning on the date after the purchase date and ending on the maturity date. A purchaser of a New Debt Security who purchases the New Debt Security at a cost greater than its remaining stated redemption price at maturity will be considered to have purchased the New Debt Security at a premium, and may elect to amortize such premium under a constant yield method. The Tax Code provides that amortizable premium will be treated (except as provided in U.S. Treasury Regulations) as an offset to interest income for all purposes rather than as a separate interest deduction item. The Company will be required to furnish annually to the IRS and to each U.S. holder information regarding the amount of OID attributable to that year. CONSEQUENCES OF THE RIGHTS TO RECEIVE PAYMENTS FROM DEFERRED CASH As noted above, the Company expects to receive a distribution of its share of the assets of the Litigation Trust early in 1994. See "Description of Litigation Trust Units." If the Company receives such a distribution, no amount will be paid in respect of Deferred Cash, and the distribution will be included in Excess Cash. The following discussion assumes that amounts remain to be distributed in respect of Deferred Cash on the Distribution Date. As part of the Old Proposed Regulations, the Service issued proposed regulations under Section 1275 of the Tax Code relating to contingent debt instruments (the "Proposed Contingent Debt Regulations"). In January 1993, the Service filed with the Federal Register a new set of proposed regulations dealing with contingent debt instruments (the "Pending Contingent Debt Regulations") that would withdraw the Proposed Contingent Debt Regulations. However, the Pending Contingent Debt Regulations were withdrawn by executive order and currently have no force and effect. The Proposed Contingent Debt Regulations constitute "authority" for purposes of the substantial understatement penalty provisions of Tax Code Section 6662. Therefore, the discussion below is based upon the Proposed Contingent Debt Regulations. Both the Proposed Contingent Debt Regulations and the Pending Contingent Debt Regulations are vague in many respects, however, and do not address certain issues. Further, there can be no assurance that the final U.S. Treasury regulations or further clarification from the Service will not differ materially from the Proposed Contingent Debt Regulations. Accordingly, the ultimate Federal income tax treatment of the Deferred Cash may differ from that described below. The Company intends to take the position that the rights to receive payments from Deferred Cash constitute valid indebtedness for federal income tax purposes and that, under the Proposed Contingent Debt Regulations, the payments made by RII in respect of such rights are contingent payments. Under such Regulations, a holder of a right to receive payments of Deferred Cash will not recognize interest income with respect to the right until such time as a payment is made by RII in respect of the right or the holder disposes of the right. Any payments made by RII to a holder of a right to receive payments of Deferred Cash other than a payment made at the maturity date of such right, are treated as interest income to the extent of "interest deemed accrued" with respect to the right for the current and all prior accrual periods, and principal to the extent of the balance of the payment amount. For this purpose, "interest deemed accrued" during an accrual period is the "adjusted issue price" of the right multiplied by the Federal long-term rate. The "adjusted issue price" of the right is the "issue price" of the right, plus the cumulative amount of interest deemed accrued as of the date of the determination of the adjusted issue price. The "issue price" of a right to receive payments from Deferred Cash is equal to the excess, if any, of the fair market value of the Old Debt Securities as of the issue date of such right (I.E., the trading price of the Old Debt Securities on such date) over the sum of the respective fair market values, as of such date, of (i) the New RIHF Junior Mortgage Notes, (ii) the RII Class B Common Stock, (iii) the New RIHF Mortgage Notes, (iv) the RII Common Stock, (iv) the SIHL Series A Shares and the SIHL Aggregate Cash Purchase Price (or, if the SIHL Sale is not consummated on the Effective Date, the PIRL Ordinary Shares), and (v) the Excess Cash. 295 Upon the maturity of a right to receive payments from Deferred Cash, if the "outstanding principal amount" (which is defined as the issue price of the right reduced by any prior payments treated as principal under the preceding paragraph) of the right exceeds the final payment, the entire amount of the final payment is treated as principal. Conversely, if the final payment exceeds the "outstanding principal amount," the payment is treated as principal to the extent of such outstanding principal balance and interest income to the extent of the excess. CONSEQUENCES OF RIGHTS TO RECEIVE PAYMENTS FROM NET RESERVED CASH AND NET PLAN CONSUMMATION CASH Whether any amount ultimately is paid in respect of the Net Reserved Cash and the Net Plan Consummation Cash is contingent upon the occurrence of future events, which may or may not occur. Although there is substantial authority for the position that the right to receive payments from the Net Reserved Cash and the Net Plan Consummation Cash likely are susceptible to valuation and, consequently, a holder of Old Series Notes will be treated as receiving an amount pursuant to the Exchange equal to the respective fair market values of the right to receive payments from the Net Reserved Cash and the Net Plan Consummation Cash, because the amount of Reserved Cash and Plan Consummation Cash is based upon an estimate of amounts required to be expended by the Company, the Company intends to take the position that the right to receive payments from the Net Reserved Cash and the Net Plan Consummation Cash will be treated as having a zero value. Under this position, any amount ultimately realized with respect to either the right to receive payments from the Net Reserved Cash or the Net Plan Consummation Cash would result in gain at the time such amount is realized. Alternatively, it also is possible that, if a holder or the IRS were to take the position that it is impossible to value the right to receive payments from the Net Reserved Cash and the Net Plan Consummation Cash at the time of the Exchange, and such position is sustained, with respect to such holder the entire Exchange would be treated as an open transaction in making the determination of the amount of gain or loss, if any, realized by the holder with respect to the Exchange. Thus, such holder would not recognize any gain (except to the extent the sum of the respective fair market values of the New Debt Securities, and the aggregate fair market values of the RII Class B Common Stock, the RII Common Stock, the SIHL Series A Shares and the SIHL Aggregate Cash Purchase Price (or if the SIHL Sale is not consummated on the Effective Date, the PIRL Ordinary Shares), Excess Cash and the right to receive payments from Deferred Cash received pursuant to the Exchange exceeds such holder's basis in the Old Series Notes) or loss with respect to the Old Debt Securities until all amounts payable under the Net Reserved Cash and the Net Plan Consummation Cash have been received or the right to receive such amounts has been fixed. CONSEQUENCES OF HOLDING THE RII COMMON STOCK AND THE RII CLASS B COMMON STOCK Distributions, if any, made on the RII Common Stock and the RII Class B Common Stock will, to the extent of the current or accumulated earnings and profits of RII be treated as a dividend for Federal income tax purposes and be taxable as ordinary income. Corporate holders receiving such distributions may, however, be eligible for a dividends received deduction. A distribution not treated as a dividend first will reduce a holder's tax basis in the stock with respect to which the distribution is received and the remainder, if any, will be treated as proceeds received on the sale of such stock. CONSEQUENCES OF HOLDING THE PIRL ORDINARY SHARES For purposes of the following discussion, a "United States Holder" means an individual, citizen or resident of the United States, a corporation organized under the laws of the United States or of any state or political subdivision thereof, any partner in a partnership only to the extent that the partnership's income is subject to United States federal income tax or an estate or trust the income of which is includible in gross income for United States Federal income tax purposes regardless of its source. The following discussion also assumes that no United States Holder will own (directly, indirectly or by attribution) at any time 10% or more of the total combined voting power of PIRL. 296 Dividends with respect to the PIRL Ordinary Shares paid to United States Holders will be treated as dividend income for U.S. Federal income tax purposes to the extent of PIRL's undistributed current or accumulated earnings and profits as computed for U.S. Federal income tax purposes. Such dividends generally will not be eligible for the dividends received deduction generally available for United States corporations. RII believes that PIRL is not a "passive foreign investment company" ("PFIC"), a "foreign personal holding company" ("FPHC") or a "controlled foreign corporation" ("CFC") for United States Federal income tax purposes, and RII does not expect PIRL to become a PFIC, a FPHC or a CFC. If PIRL were, or were to become, a PFIC, a FPHC or a CFC, some or all United States Holders would be required to include in their taxable income certain undistributed amounts of PIRL's income, or, in certain circumstances, to pay an interest charge together with tax calculated at maximum rates on certain "excess distributions" defined as including gain on the sale of stock. EACH INVESTOR WHO IS A UNITED STATES HOLDER SHOULD CONSULT WITH ITS OWN TAX ADVISOR CONCERNING THE SPECIFIC TAX CONSEQUENCES IN THE EVENT THAT PIRL IS OR BECOMES A PFIC, FPHC OR CFC. Any United States person who owns 5% or more (determined on the basis of value) of the stock of PIRL may be required to file Internal Revenue Service Form 5471 with respect to PIRL and its non-U.S. subsidiaries to report certain acquisitions or dispositions of the stock of PIRL. Annual filings of Form 5471 would be required from any United States person owning 50% (by vote or by value) or more of the stock of PIRL, or if PIRL were a FPHC or a CFC, from certain United States persons owning 10% or more of the stock of PIRL. CERTAIN BAHAMIAN TAX CONSIDERATIONS In the opinion of Harry B. Sands & Company, special Bahamian counsel to the Company, the following is a general summary of certain Bahamian tax matters as they relate to PIRL and the receipt of dividends paid on PIRL Ordinary Shares. The discussion is not exhaustive and is based on the laws of The Bahamas currently in effect. The Bahamas does not impose any income, capital gains or withholding taxes. Accordingly, PIRL will not be subject to income tax in The Bahamas, and dividends paid with respect to the PIRL Ordinary Shares to United States Holders will not be subject to withholding tax by The Bahamas. SALE, EXCHANGE OR REDEMPTION Upon the sale, exchange or redemption of a New Debt Security, RII Class B Common Stock, RII Common Stock, a right to receive payments from Net Reserved Cash or Net Plan Consummation Cash, or, if issued, PIRL Ordinary Shares for cash, a holder generally will recognize gain or loss in an amount equal to the difference between the amount of cash received and the holder's adjusted basis in such property (except to the extent that (i) the amount realized is attributable to accrued interest or dividends not previously included in income, which amount will be taxed as ordinary income, or (ii) in the case of a redemption of RII Common Stock, RII Class B Common Stock or PIRL Ordinary Shares, the holder disposes of less than all of such holder's stock, in which case the redemption proceeds may be treated as a dividend, which, if so treated, will be taxed as ordinary income). Assuming that the holder holds the property as a capital asset, such gain or loss will be capital gain or loss, except (in the case of a New Debt Security) to the extent of any accrued market discount (see "-- Market Discount" below), and will be long-term capital gain or loss if the property has been held for more than one year at the time of the sale or exchange, or redemption. In addition, it is possible that the redemption provisions of the New Debt Security might be considered to be evidence of an intention on the part of the Company at the time of the issuance of the New Debt Security to call the New Debt Security before maturity within the meaning of Section 1271(a)(2)(A) of the Tax Code. In that event, any gain realized by a holder on a sale, exchange, or a redemption of a New Debt Security prior to maturity (other than a holder who purchased a New Debt Security at a price which exceeds the stated redemption price at maturity of the New Debt Security) 297 would be considered ordinary income to the extent of the amount of OID, if any, not previously includible in the gross income of any holder. RIHF has no present intention to call the New Debt Securities prior to maturity. With regard to the sale, exchange or redemption for cash of a right to receive payments from Deferred Cash, the Company believes that a holder generally will recognize gain or loss in an amount equal to the difference between the amount of cash received and the holder's adjusted basis in the right. Assuming that the holder holds the property as a capital asset, any such loss will be capital loss, and will be long-term capital loss if the property has been held for more than one year at the time of the sale, exchange or redemption. However, the Proposed Contingent Debt Regulations do not address the character of any gain recognized by a holder of a right to receive payments of Deferred Cash upon the sale or exchange of the right (other than a payment made upon the maturity of the right; see "-- Consequences of the Rights to Receive Payments from Deferred Cash" above). Thus, it is unclear under current law whether any amount received by the holder in connection with the sale or exchange of the right (other than a payment made upon the maturity of the right) that is in excess of the holder's adjusted basis would be treated as capital gain or as interest income. Under the Pending Contingent Debt Regulations (which, as noted above, currently have no force or effect), however, any gain on the sale or exchange of the right would be treated an interest income. MARKET DISCOUNT A holder of a New Debt Security generally will be required to treat any gain recognized on the sale, exchange, redemption or other disposition of the New Debt Security as ordinary income to the extent of any accrued market discount. The market discount rules also provide that a holder who acquires a New Debt Security at a market discount may be required to defer a portion of any interest expense that may otherwise be deductible on any indebtedness incurred or maintained to purchase or carry such New Debt Security until the holder disposes of the New Debt Security in a taxable transaction. "Market discount" can be defined generally as the excess of the stated redemption price at maturity of a New Debt Security (adjusted to exclude any unaccrued OID) over the tax basis of the New Debt Security in the hands of the holder immediately after its acquisition. In addition, under a DE MINIMIS exception, the amount of market discount is considered to be zero if it is less than the product of .25% of the stated redemption price of the New Debt Security at maturity (possibly adjusted to exclude unaccrued OID) multiplied by the number of complete years from acquisition to maturity. Market discount generally will accrue ratably during the period from the date of acquisition to the maturity date of the New Debt Security, unless the holder elects to accrue such discount on the basis of the constant yield method. A holder of a New Debt Security acquired at a market discount may elect to include the market discount in income as interest as it accrues, in which case the foregoing rules would not apply. This election would apply to all New Debt Securities with market discount acquired by the electing holder on or after the first day of the first taxable year to which the election applies. The election may be revoked only with the consent of the Service. TAX CONSEQUENCES TO THE COMPANY CANCELLATION OF INDEBTEDNESS. If a taxpayer satisfies its outstanding debt obligations for less than its principal amount (or, if the debt obligation was issued with OID, its adjusted issue price), such taxpayer generally realizes COD income for federal income tax purposes. In the case of an Exchange such as that contemplated by the Plan, where outstanding indebtedness is canceled in exchange for newly issued indebtedness (E.G., the New Debt Securities) and other property (E.G., the RII Common Stock, the RII Class B Common Stock and the PIRL Ordinary Shares), the amount of such COD income is, in general, equal to the excess of the adjusted issue price (including accrued but unpaid interest) of the indebtedness satisfied over the sum of the fair market value of the new debt obligations and the fair market value of the other property issued therefor. 298 Section 108(a) of the Tax Code provides an exception to the recognition of COD income for taxpayers who are insolvent (to the extent of the insolvency) or who are debtors in a bankruptcy proceeding under the Bankruptcy Code at the time of discharge. Instead of requiring the recognition of income, Section 108(b) of the Tax Code provides that certain tax losses and credits of a taxpayer, including any NOL carryovers, must be reduced by the amount of the taxpayer's COD income that is excluded under Section 108(a) of the Tax Code. To the extent that the amount excluded exceeds these tax attributes, the taxpayer's tax basis in its property will be reduced by the amount of such excluded COD income, except that such reduction is limited to the excess of the aggregate tax bases of the property held by the debtor over the aggregate liabilities of the taxpayer immediately after the transaction. No income is realized, and no reduction of tax attributes is required, however, to the extent that debt is discharged by issuing stock qualifying under a special exception applicable to certain stock-for-debt exchanges, provided that such stock-for-debt exchange occurs on or before December 31, 1994. The following discussion assumes that the Exchange will occur on or before December 31, 1994. The stock-for-debt exception will be available to RII in an exchange with a particular holder of Old Series Notes only if (a) the RII Class B Common Stock and the RII Common Stock issued to the holder is not "nominal or token", and (b) the ratio of the aggregate value of the RII Common Stock and the RII Class B Common Stock received by the holder to the amount of such holder's Old Series Notes exchanged for such stock is not less than 50% of a similar ratio computed for all such holders participating in the Restructuring. While there are legal uncertainties involved, assuming that all holders of Old Series Notes receiving RII Common Stock receive the same consideration for their Notes as part of the Exchange, RII intends to take the position that the RII Common Stock issued in the Restructuring to holders of Old Series Notes will qualify for the stock-for-debt exception and that no reduction of its tax attributes will be required with respect to the Old Series Notes deemed exchanged for RII Common Stock. (Because the RII Class B Common Stock is not separately tradable from the New RIHF Junior Mortgage Notes, it may be viewed as having a fixed redemption date or being subject to a right of redemption. Accordingly, the RII Class B Common Stock is at a substantial risk of being "disqualified stock" and such RII Class B Common Stock has not been included as stock for purposes of determining whether the exchange qualifies for the stock-for-debt exception.) There can be no assurance, however, that the Service would not challenge the availability, in total or in part, of the stock-for-debt exception. If the Service were to determine that the stock-for-debt transaction did not qualify for the stock-for-debt exception described above, to the extent that the sum of (a) the value of the New Equity Securities, (b) Excess Cash, (c) the issue price of the rights to receive payments from Deferred Cash (see "-- Consequences of the Rights to Receive Payments from Deferred Cash"), (d) the issue price of the New Debt Securities (see "-- Original Issue Discount With Respect to New Debt Securities"), and (e) if the SIHL Sale is consummated on the Effective Date, the value of SIHL Series A Shares and the SIHL Aggregate Cash Purchase Price, is less than the adjusted issue price of the Old Series Notes, RII will realize (but not recognize) COD income equal to such difference. Such income will be excluded from RII's gross income under Section 108(a) of the Tax Code, but RII will be required to reduce its tax attributes by such amount as discussed above. CREATION AND DISTRIBUTION OF PIRL. The distribution by GRI to RII of 100% of the stock of RIB will be a taxable distribution. GRI will recognize gain upon such distribution equal to the difference between the fair market value of such RIB stock and GRI's basis therefor. RII's basis in the stock of RIB will be equal to the fair market value of such stock. The gain recognized by GRI (the "RIB Gain") will be deferred, in accordance with the U.S. Treasury Regulations promulgated under Section 1502 of the Tax Code, until the earlier of (i) GRI's ceasing to be a member of the RII Group, (ii) the cessation of the RII Group, or (iii) the day no member of the RII Group owns the stock of RIB (any of (i), (ii), or (iii), a "Restoration Event"). Upon the occurrence of a Restoration Event, GRI will include in its gross income the amount of the RIB Gain. Pursuant to a ruling letter issued by the Service in connection with certain transactions 299 effected as part of the Old Plan (the "1990 Letter Ruling"), the RIB Gain will be treated as a "built-in" gain for purposes of loss limitation provisions of Section 382 of the Tax Code (see discussion below). Consequently, to the extent that the RII Group's losses for tax purposes for the year which includes the Effective Date are not sufficient to offset the RIB Gain, NOL carryovers from taxable years ending on or before September 30, 1990 will be available to be used to offset such gain, notwithstanding the fact that such NOL carryovers are otherwise subject to a Section 382 annual limitation. To the extent that the RIB Gain is offset by NOL carryovers, such gain will be subject to the alternative minimum tax, at an effective rate of 2 percent. In accordance with the Plan, RII will be under a binding obligation to effect the SIHL Sale, or, if the SIHL Sale is not consummated on the Effective Date, to distribute 100% of the stock of PIRL to the holders of the Old Series Notes on the Effective Date. Because RII will not be in control of PIRL within the meaning of Section 368(c) of the Tax Code, RII's contribution of the stock of RIB to PIRL will be a taxable transaction. However, because such transactions will occur immediately after GRI's distribution of the stock of RIB to RII in a taxable transaction, no additional gain or loss should be recognized upon either the contribution or the SIHL Sale. If the SIHL Sale is consummated on the Effective Date, the U.S. Paradise Island Subsidiaries will recognize gain (or loss) on the sale of such subsidiaries' assets to the SIHL subsidiaries equal to the difference between the amount of consideration allocated to such assets and such selling subsidiaries' basis in the assets sold. If the SIHL Sale is not consummated, because the U.S. Paradise Island Subsidiaries will not be in control of the PIRL subsidiaries within the meaning of Section 368(c) of the Tax Code, each Paradise Island Subsidiary will recognize gain (or loss) upon the contribution of such subsidiaries' assets to subsidiaries of PIRL to the extent the fair market value of the assets of each such corporation exceeds (or is less than) RII's basis therefor. In the event the SIHL Sale is not consummated on the Effective Date, RII's basis in the stock of PIRL received in exchange for the stock of RIB, the RII Real Estate Assets and the assets of the U.S. Paradise Island Subsidiaries will equal the fair market value of such stock. Accordingly, because such PIRL Ordinary Shares will be distributed to the holders of the Old Series Notes immediately after RII acquires it, no additional gain or loss should be recognized by RII with respect to the PIRL stock upon its distribution to the holders of the Old Series Notes. NET OPERATING LOSS CARRYOVERS AND LIMITATIONS. After giving effect to the recognition of gain with respect to the transactions resulting in the distribution of the stock of RIB to the holders of the Old Series Notes (but prior to any reduction of NOLs as discussed below), RII and its subsidiaries expect to have substantial consolidated NOL carryforwards, totaling approximately $140,000,000, from their taxable year ended December 31, 1992 and prior taxable years beginning after September 30, 1990, plus unutilized unrestricted NOLs from taxable years ending on or before September 30, 1990 of approximately $18 million, resulting in a total amount of unrestricted NOLs of approximately $158 million. In addition, RII and its subsidiaries have approximately $464,000,000 of NOL carryforwards from prior taxable years ending on or before September 30, 1990, which NOLs are subject to an annual limitation on use as a result of the ownership change that occurred in connection with the Old Plan. Moreover, because the RIB Gain is, as described above, a "built-in gain" for purposes of Section 382 of the Tax Code, and will be recognized within five years of the date of the change in control caused by the Old Plan, the RIB Gain will be a "recognized built-in gain" for purposes of Section 382 of the Tax Code. A corporation, such as RII, that has (i) a recognized built-in gain in a year and (ii) NOL carryovers that are subject to an annual limitation under Section 382 of the Tax Code increases the amount of its annual limitation for such year by the amount of the recognized built-in gain. If the annual limitation amount is not used fully (for example, because of current losses), such amount is carried forward and added to the next year's annual limitation amount. Consequently, to the extent that the RII Group's losses for tax purposes for the year which includes the Effective Date (I.E., "current year losses") are used to offset the RIB Gain, an equal amount of RII's pre-change NOL carryovers will, in effect, become free of their Section 382 limitation and be available for RII's unlimited use in subsequent periods (until their expiration). 300 The Company intends to take the position that the Exchange that will occur in connection with the Plan, when combined with prior transfers of the stock of the Company, will result in the Company undergoing an "ownership change" within the meaning of Section 382 of the Tax Code. Section 382 provides that, following an ownership change with respect to a "loss corporation" such as the Company, unless the Bankruptcy Exception (described below) applies, the amount of post-ownership change annual taxable income of the loss corporation that can be offset by the loss corporation's pre-ownership change NOL carryovers generally cannot exceed an amount equal to the value of the equity of the loss corporation immediately after the ownership change (subject to various adjustments) multiplied by a prescribed long-term tax exempt rate (5.27% for November 1993) (the "Annual Limitation"). An exception (the "Bankruptcy Exception") to the general rules imposing a limitation on the ability to utilize losses after an ownership change is set forth in Section 382(1)(5) of the Tax Code. The Bankruptcy Exception applies if, immediately after an ownership change, shareholders and qualified creditors of the old loss corporation (E.G., the Company) own at least 50% of the stock of the new loss corporation (E.G., the Company post-Restructuring). Qualified creditors include creditors who held their claim at least 18 months before the filing of the chapter 11 case (or, if claims are held by the public, certain public creditors), and ordinary course of business trade creditors. If the Bankruptcy Exception applies (and no election is made by the loss corporation for such exception not to apply), the amount of pre-change NOL carryovers of the old loss corporation that may be carried to a post-change year are required to be reduced by the amount of the deductions for interest (including OID) paid or accrued on the indebtedness which was converted into stock pursuant to the chapter 11 case during (i) any taxable year ending during the three-year period preceding the taxable year in which the ownership change occurs or (ii) the portion of the taxable year ending on the change date, but only to the extent that such deductions generated an NOL for such year or other period. In addition, if the Bankruptcy Exception applies (and no election is made for it not to apply), 50% of the amount of unrecognized COD income (excluding COD income arising from the discharge of any indebtedness for interest described in the preceding sentence) that would have been applied to reduce the tax attributes of the Company but for the operation of the stock-for-debt exception must be applied to reduce such attributes. See "-- Cancellation of Indebtedness". Moreover, if the Bankruptcy Exception applies (and no election is made for such exception not to apply), and a second ownership change occurs within a two-year period, the Annual Limitation following the second ownership change will be zero. Based on its analysis of the transactions that will occur on the Effective Date and on information available to the Company with respect to the identity of the holders of the Old Debt Securities, the Company intends to take the position that the Bankruptcy Exception will apply to the ownership change that the Company believes will occur as a result of the Exchange that will occur in connection with the Restructuring. Moreover, assuming the Bankruptcy Exception does apply, the Company does not intend to elect for it not to apply. Accordingly, the Company believes that it will have in excess of $194,700,000 in NOLs available (after taking into account the reductions described above) not subject to an Annual Limitation, plus an additional $388,500,000 of NOLs that are subject to an Annual Limitation as a result of the ownership change that occurred in connection with the Old Plan. In addition, because certain transfers of the Old Debt Securities may adversely affect the availability of the Bankruptcy Exception in connection with the Restructuring, RII, with the consent of TCW and Fidelity, may request the Bankruptcy Court to enter into an order to enjoin certain transfers while the bankruptcy case is pending if the Company, TCW and Fidelity determine that such an order is necessary or appropriate in order to preserve the unrestricted availability of the NOLs available to the Company. Because the Company believes that an ownership change will occur in connection with the Plan, if the Bankruptcy Exception (described above) were not to apply, the use of the Company's NOL carryovers by the Company after the exchange would be subject to the Annual Limitation. The 301 Company estimates that, based on the current long-term tax exempt rate and the value of the Company (taking into account the discharge of indebtedness pursuant to the Plan), the Annual Limitation for the years following the Effective Date would be approximately $3.7 million. No restrictions on transferability are being imposed with respect to the RII Common Stock in connection with the Plan. Accordingly, if an ownership change is determined not to have occurred in connection with the Plan, the Company's NOL carryovers likely would become subject to the Annual Limitation as a result of transfers of RII Common Stock after the Effective Date, at which time the Bankruptcy Exception would not be available. POTENTIAL APPLICATION OF HIGH YIELD DEBT OBLIGATION RULES As noted above, the New RIHF Junior Mortgage Notes will be, and the New RIHF Mortgage Notes may be, issued with original issue discount for Federal income tax purposes. Under the "AHYDO" rules contained in Sections 163(e) and (i) of the Tax Code, if a debt obligation with a term of more than five years has "significant" OID, and has a yield to maturity of five percentage points or more in excess of a specified rate (generally the U. S. Treasury note rate for instruments of similar maturities), interest deductions with respect to OID accruing on such instrument may be deferred until such OID is paid in cash, or, if the yield to maturity exceeds six percentage points above the specified rate, the deduction for such excess may be denied completely and the OID may be treated as dividend income, rather than interest income, to the holder (provided the issuer has adequate earnings and profits to support such a dividend). The New RIHF Junior Mortgage Notes will be issued with significant OID. Accordingly, depending on interest rates in effect on the Effective Date, it is possible that the AHYDO rules will apply to accruals of OID on the New RIHF Junior Mortgage Notes. BACKUP WITHHOLDING Under the Tax Code, a holder of a New Debt Security may be subject, under certain circumstances, to "backup withholding" at a rate of 31% with respect to payments in respect of interest and OID thereon or the gross proceeds from the disposition thereof. This withholding generally applies only if the holder (i) fails to furnish his or her social security or other taxpayer identification number ("TIN"), (ii) furnishes an incorrect TIN, (iii) is notified by the Service that he or she has failed to report properly payments of interest and dividends and the Service has notified the Company that he or she is subject to backup withholding, or (iv) fails, under certain circumstances, to provide a certified statement, signed under penalty of perjury, that the TIN provided is its correct number and that it is not subject to backup withholding. Any amount withheld from a payment to a holder under the backup withholding rules does not constitute additional tax, and is allowable as a credit against such holder's Federal income tax liability, provided that the required information is furnished to the Service. Holders of New Debt Securities should consult their tax advisers as to their qualification for exemption from backup withholding and the procedure for obtaining such an exemption. APPLICABILITY OF FEDERAL AND OTHER SECURITIES LAWS TO RESALES OF SECURITIES Holders of the Old Series Notes will receive the New Debt Securities and the New Equity Securities under the Plan. Section 1145 of the Bankruptcy Code creates certain exemptions from the registration and licensing requirements of federal and state securities laws with respect to the distribution of securities pursuant to a plan of reorganization as well as resales of the securities by certain recipients thereof. The discussion set forth below does not cover the SIHL Series A Shares. FOR INFORMATION WITH RESPECT TO SIHL, THE SIHL SALE, THE PARADISE ISLAND PURCHASE AGREEMENT AND THE SIHL SERIES A SHARES, REFERENCE IS MADE TO THE ACCOMPANYING SIHL PROSPECTUS RELATING TO THE SIHL SERIES A SHARES. RII HAS SUPPLIED CERTAIN INFORMATION REGARDING THE PARADISE ISLAND BUSINESS (SUCH AS IS FOUND IN RII'S REPORTS FILED WITH THE COMMISSION), AS WELL AS CERTAIN INFORMATION CONCERNING THE RESTRUCTURING, TO SIHL SPECIFICALLY FOR ITS USE IN THE PREPARATION OF THE SIHL PROSPECTUS (AND THE RELATED REGISTRATION STATEMENT FILED BY SIHL WITH THE COMMISSION UNDER THE SECURITIES ACT). RII AND 302 ITS ADVISERS DISCLAIM ANY RESPONSIBILITY FOR THE ACCURACY, COMPLETENESS, NATURE AND FORM OF PRESENTATION OF ANY INFORMATION CONTAINED IN THE SIHL PROSPECTUS (AND RELATED REGISTRATION STATEMENT), EXCEPT THAT RII HAS MADE IN THE PARADISE ISLAND PURCHASE AGREEMENT CERTAIN REPRESENTATIONS AND WARRANTIES TO SIHL AS TO THE ACCURACY OF THE INFORMATION SUPPLIED BY RII SPECIFICALLY FOR INCLUSION IN THE SUN PROSPECTUS (AND RELATED REGISTRATION STATEMENT). ISSUANCE OF SECURITIES UNDER THE PLAN Section 1145 of the Bankruptcy Code exempts the issuance of securities under a plan of reorganization from registration under the Securities Act, and under state securities laws if three principal requirements are satisfied: (i) the securities must be issued "under a plan" of reorganization by the debtor or its successors under a plan or an affiliate participating in a joint plan of reorganization with the debtor; (ii) the recipients of the securities must hold a claim against the debtor, an interest in the debtor or a claim for an administrative expense against the debtor; and (iii) the securities must be issued entirely in exchange for the recipient's claim against or interest in the debtor, or "principally" in such exchange and "partly" for cash or property. Although the Company believes that the issuance of the New Debt Securities and the New Equity Securities under the Plan satisfies the requirements of section 1145(a) of the Bankruptcy Code and, therefore, would be exempt from registration under federal and state securities laws, under certain circumstances subsequent transfers of the New Debt Securities and the New Equity Securities may be subject to registration requirements under such securities laws. TRANSFERS OF SECURITIES The New Debt Securities and the New Equity Securities to be issued pursuant to the Plan may be freely transferred by most recipients thereof, and all resales and subsequent transactions in the New Debt Securities and the New Equity Securities are exempt from registration under federal and state securities laws, unless the holder is an "underwriter" with respect to such securities. Section 1145(b) of the Bankruptcy Code defines four types of "underwriters": (i) persons who purchase a claim against, an interest in, or a claim for administrative expense against the debtor with a view to distributing any security received or to be received in exchange for such a claim or interest; (ii) persons who offer to sell securities offered or sold under the plan for the holders of such securities; (iii) persons who offer to buy such securities from the holders of such securities, if the offer to buy is (a) with a view to distributing such securities, and (b) made under an agreement made in connection with the plan, with the consummation of the plan or with the offer or sale of securities under the plan; and (iv) a person who is an "issuer" with respect to the securities, as the term "issuer" is defined in section 2(11) of the Securities Act. Under section 2(11) of the Securities Act, an "issuer" includes any person directly or indirectly controlling or controlled by the issuer, or any person under direct or indirect common control with the issuer. Any person, or group of persons who act in concert, who receives a substantial amount of securities pursuant to the Plan may be deemed to be an "issuer" and therefore an "underwriter" under the foregoing definition. To the extent that persons deemed to be "underwriters" receive the New Debt Securities and the New Equity Securities pursuant to the Plan, resales by such persons would not be exempted by section 1145 of the Bankruptcy Code from registration under the Securities Act or other applicable law. Persons deemed to be underwriters under section 1145, however, may be able to sell the New Debt Securities and the New Equity Securities without registration subject to the provisions of Rule 144 under the Securities Act, subject to the availability to the public of current information regarding the 303 issuer and to volume limitations and certain other conditions. A person deemed to be an "underwriter" under section 1145 of the Bankruptcy Code may be an "affiliate" for purposes of Rule 144 of the Securities Act. While there is no clear test for determining "affiliate" status and such determination depends on all the facts and circumstances, directors, executive officers and holders of 10% or more of a RII's voting stock or PIRI's voting stock, among others, might under certain circumstances be deemed "affiliates". Whether or not any particular person would be deemed to be an "underwriter" or an "affiliate" with respect to the New Debt Securities and the New Equity Securities to be issued pursuant to the Plan would depend upon various facts and circumstances applicable to that person. Accordingly, the Company expresses no view as to whether any person would be an "underwriter" or an "affiliate" with respect to the New Debt Securities and the New Equity Securities to be issued pursuant to the Plan. GIVEN THE COMPLEX, SUBJECTIVE NATURE OF THE QUESTION OF WHETHER A PARTICULAR PERSON MAY BE AN UNDERWRITER OR AN AFFILIATE, THE COMPANY MAKES NO REPRESENTATIONS CONCERNING THE RIGHT OF ANY PERSON TO TRADE IN THE NEW DEBT SECURITIES AND THE NEW EQUITY SECURITIES TO BE DISTRIBUTED PURSUANT TO THE PLAN. THE COMPANY RECOMMENDS THAT POTENTIAL RECIPIENTS OF SECURITIES CONSULT THEIR OWN COUNSEL CONCERNING WHETHER THEY MAY FREELY TRADE SUCH SECURITIES. CERTAIN TRANSACTIONS BY STOCKBROKERS Under section 1145(a)(4) of the Bankruptcy Code, stockbrokers are required to deliver a copy of the Information Statement/Prospectus (and supplements hereto, if any, if ordered by the Bankruptcy Court) at or before the time of delivery of the New Debt Securities and the New Equity Securities issued under the Plan to their customers for the first 40 days after the Effective Date. This requirement specifically applies to trading and other aftermarket transactions in the New Debt Securities and the New Equity Securities. SHARES ELIGIBLE FOR FUTURE SALE After consummation of the Restructuring pursuant to the Plan, there will be approximately 46,654,034 shares of RII Common Stock outstanding on a fully diluted basis, and (if the SIHL Sale is not consummated on the Effective Date) 5,000,000 shares of PIRL Ordinary Shares outstanding (assuming all distributions to be made under the Plan are made on the Distribution Date). As noted above, all the shares of RII Common Stock and (if the SIHL Sale is not consummated on the Effective Date) PIRL Ordinary Shares to be issued pursuant to the Plan will be freely transferable and will not be subject to further registration under the Securities Act, unless the holder is an "underwriter" under section 1145 of the Bankruptcy Code and/or an affiliate for purposes of Rule 144 of the Securities Act. No precise predictions can be made of the effect, if any, that market sales of shares or the availability of shares for sale will have on the market prices of RII Common Stock or (if the SIHL Sale is not consummated on the Effective Date) PIRL Ordinary Shares prevailing from time to time. Nevertheless, sales of substantial amounts of RII Common Stock or (if the SIHL Sale is not consummated on the Effective Date) PIRL Ordinary Shares in the public market could adversely affect the prevailing market prices of RII Common Stock or (if the SIHL Sale is not consummated on the Effective Date) PIRL Ordinary Shares and could impair RII's or (if the SIHL Sale is not consummated on the Effective Date) PIRL's ability to raise capital at that time through the sale of its equity securities. LEGAL MATTERS The validity of the New Debt Securities and the New Equity Securities under New Jersey law will be passed upon for the Company by Ravin, Sarasohn, Cook, Baumgarten, Fisch & Baime. Certain 304 matters governed by the laws of the Commonwealth of The Bahamas will be passed upon for the Company by Harry B. Sands & Company. Certain legal matters in connection with the Restructuring will be passed upon for the Company by Gibson, Dunn & Crutcher. EXPERTS The consolidated financial statements and schedules of Resorts International, Inc., Resorts International Hotel, Inc., and the combined financial statements and schedules of PIRL Group at December 31, 1992 and 1991, and for each of the three years in the period ended December 31, 1992, and the balance sheets of Resorts International Hotel Financing, Inc. at September 30, 1993 and P.I. Resorts Limited at October 15, 1993 appearing in this Prospectus and Registration Statement have been audited by Ernst & Young, independent auditors, as set forth in their reports thereon appearing elsewhere herein and in the Registration Statement, and are included in reliance upon such reports given upon the authority of such firm as experts in accounting and auditing. 305 INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
PAGE --------- FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS OF RESORTS INTERNATIONAL, INC.: Report of Independent Auditors............................................................................. F-3 Consolidated Balance Sheets at December 31, 1991 and 1992 and September 30, 1993 (unaudited)............... F-4 Consolidated Statements of Operations for the periods January 1, 1990 through August 31, 1990 and September 1, 1990 through December 31, 1990, the years ended December 31, 1991 and 1992, and the three quarters ended September 30, 1992 and 1993 (unaudited)............................................................. F-5 Consolidated Statements of Cash Flows for the periods January 1, 1990 through August 31, 1990 and September 1, 1990 through December 31, 1990, the years ended December 31, 1991 and 1992, and the three quarters ended September 30, 1992 and 1993 (unaudited)............................................................. F-6 Consolidated Statements of Changes in Shareholders' Equity (Deficit) for the periods January 1, 1990 through August 31, 1990 and September 1, 1990 through December 31, 1990, the years ended December 31, 1991 and 1992, and the three quarters ended September 30, 1993 (unaudited)..................................... F-7 Notes to Consolidated Financial Statements................................................................. F-8 CONSOLIDATED FINANCIAL STATEMENTS OF RESORTS INTERNATIONAL HOTEL, INC.: Report of Independent Auditors............................................................................. F-28 Consolidated Balance Sheets at December 31, 1991 and 1992 and September 30, 1993 (unaudited)............... F-29 Consolidated Statements of Operations for the periods January 1, 1990 through August 31, 1990 and September 1, 1990 through December 31, 1990, the years ended December 31, 1991 and 1992, and the three quarters ended September 30, 1992 and 1993 (unaudited)............................................................. F-30 Consolidated Statements of Cash Flows for the periods January 1, 1990 through August 31, 1990 and September 1, 1990 through December 31, 1990, the years ended December 31, 1991 and 1992, and the three quarters ended September 30, 1992 and 1993 (unaudited)............................................................. F-31 Consolidated Statements of Changes in Shareholder's Deficit for the periods January 1, 1990 through August 31, 1990 and September 1, 1990 through December 31, 1990, the years ended December 31, 1991 and 1992, and the three quarters ended September 30, 1993 (unaudited)................................................... F-32 Notes to Consolidated Financial Statements................................................................. F-33 FINANCIAL STATEMENT OF RESORTS INTERNATIONAL HOTEL FINANCING, INC.: Report of Independent Auditors............................................................................. F-44 Balance Sheet at September 30, 1993........................................................................ F-45 Notes to Balance Sheet..................................................................................... F-46 FINANCIAL STATEMENT OF P. I. RESORTS LIMITED: Report of Independent Auditors............................................................................. F-48 Balance Sheet at October 15, 1993.......................................................................... F-49 Notes to Balance Sheet..................................................................................... F-50
F-1
PAGE --------- COMBINED FINANCIAL STATEMENTS OF RESORTS INTERNATIONAL (BAHAMAS) 1984 LIMITED, CONSOLIDATED WITH ITS SUBSIDIARIES; RESORTS INTERNATIONAL DISBURSEMENT, INC.; PARADISE ISLAND VACATIONS, INC.; RESORTS REPRESENTATION INTERNATIONAL, INC.; INTERNATIONAL SUPPLIERS, INC.; PARADISE ISLAND AIRLINES, INC.; AND ANTL, INC. (the "PIRL GROUP"): Report of Independent Auditors............................................................................. F-51 Combined Balance Sheets at December 31, 1991 and 1992, and September 30, 1993 (unaudited).................. F-52 Combined Statements of Operations for the periods January 1, 1990 through August 31, 1990 and September 1, 1990 through December 31, 1990, the years ended December 31, 1991 and 1992, and the three quarters ended September 30, 1992 and 1993 (unaudited)................................................................... F-53 Combined Statements of Cash Flows for the periods January 1, 1990 through August 31, 1990 and September 1, 1990 through December 31, 1990, the years ended December 31, 1991 and 1992, and the three quarters ended September 30, 1992 and 1993 (unaudited)................................................................... F-54 Combined Statements of Changes in Shareholders' Equity for the periods January 1, 1990 through August 31, 1990 and September 1, 1990 through December 31, 1990, the years ended December 31, 1991 and 1992, and the three quarters ended September 30, 1993 (unaudited)....................................................... F-55 Notes to Combined Financial Statements..................................................................... F-56 SUPPLEMENTARY DATA Consolidated Selected Quarterly Financial Data for Resorts International, Inc. (unaudited)................. F-66 Consolidated Selected Quarterly Financial Data for Resorts International Hotel, Inc. (unaudited)........... F-67 Combined Selected Quarterly Financial Data for PIRL Group (unaudited)...................................... F-68
F-2 REPORT OF INDEPENDENT AUDITORS The Board of Directors and Shareholders Resorts International, Inc. We have audited the accompanying consolidated balance sheets of Resorts International, Inc. as of December 31, 1992 and 1991, and the related consolidated statements of operations, changes in shareholders' equity (deficit), and cash flows for each of the three years in the period ended December 31, 1992. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. As explained in Notes 7 and 15, until the Old Series Notes become due and payable in April 1994, the Company may satisfy its interest obligations on the Old Series Notes by issuing additional Old Series Notes. As a result, the Company expects to have the ability to meet its cash obligations until the Old Series Notes become due and payable in April 1994. The Company's ability to pay the Old Series Notes at maturity was premised upon the contemplated sale of the Company's operations on Paradise Island and of its non-operating real estate holdings in Atlantic City generating sufficient proceeds to reduce the obligation under the Old Series Notes to a level that, if refinanced at maturity in April 1994, could be serviced by cash flow from the remaining operations. It presently appears unlikely the proceeds from a possible sale of these operations will provide a reduction of principal to this level. Consequently, the Company is reviewing other financial alternatives. One such alternative is described in Note 17. However, specific terms and conditions have not been finalized. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Resorts International, Inc. at December 31, 1992 and 1991, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 1992, in conformity with generally accepted accounting principles. ERNST & YOUNG Philadelphia, Pennsylvania February 19, 1993 except for Note 17, as to which the date is December 29, 1993 F-3 RESORTS INTERNATIONAL, INC. CONSOLIDATED BALANCE SHEETS (IN THOUSANDS OF DOLLARS, EXCEPT PAR VALUE)
DECEMBER 31, ------------------------- SEPTEMBER 30, 1991 1992 1993 ----------- ------------ ------------- (UNAUDITED) ASSETS Current assets: Cash (including cash equivalents of $23,721, $36,344 and $53,753)..... $ 41,618 $ 56,818 $ 71,026 Restricted cash equivalents........................................... 11,561 10,069 8,076 Receivables, net...................................................... 32,226 25,457 13,961 Note receivable from related party.................................... 2,310 Inventories........................................................... 8,465 8,531 8,484 Prepaid expenses...................................................... 7,405 7,062 13,492 ----------- ------------ ------------- Total current assets................................................ 101,275 107,937 117,349 ----------- ------------ ------------- Note receivable from related party...................................... 3,008 ------------- Property and equipment: Land and land rights, including land held for investment, development and resale........................................................... 246,520 243,900 243,557 Land improvements and utilities....................................... 21,942 22,519 22,606 Hotels and other buildings............................................ 157,312 170,250 179,609 Furniture, machinery and equipment.................................... 60,700 67,693 77,272 Construction in progress.............................................. 2,796 1,215 6,174 ----------- ------------ ------------- 489,270 505,577 529,218 Less accumulated depreciation......................................... (29,870) (54,761) (75,163) ----------- ------------ ------------- Net property and equipment.......................................... 459,400 450,816 454,055 Deferred charges and other assets....................................... 7,215 10,197 12,220 ----------- ------------ ------------- $ 567,890 $ 568,950 $ 586,632 ----------- ------------ ------------- ----------- ------------ ------------- LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) Current liabilities: Current maturities of long-term debt, net of unamortized discount..... $ 1,571 $ 828 $ 429,500 Accounts payable and accrued liabilities.............................. 84,553 71,672 83,223 ----------- ------------ ------------- Total current liabilities........................................... 86,124 72,500 512,723 ----------- ------------ ------------- Long-term debt, net of unamortized discount............................. 392,667 460,712 84,541 ----------- ------------ ------------- Deferred income taxes................................................... 53,000 53,000 54,000 ----------- ------------ ------------- Commitments and contingencies (Note 15) Shareholders' equity (deficit): RII Common Stock -- 20,138,688, 20,157,234 and 20,157,234 shares outstanding -- $.01 par value........................................ 201 202 202 Capital in excess of par.............................................. 102,000 102,092 102,092 Accumulated deficit................................................... (55,102) (108,556) (166,926) ----------- ------------ ------------- 47,099 (6,262) (64,632) Note receivable from shareholder...................................... (11,000) (11,000) ----------- ------------ ------------- Total shareholders' equity (deficit)................................ 36,099 (17,262) (64,632) ----------- ------------ ------------- $ 567,890 $ 568,950 $ 586,632 ----------- ------------ ------------- ----------- ------------ -------------
See Notes to Consolidated Financial Statements of RII. F-4 RESORTS INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA)
FOR THE YEAR ENDED DECEMBER 31, ------------------------------------------------ 1990 FOR THE THREE QUARTERS ------------------------ ENDED SEPTEMBER 30, THROUGH FROM ---------------------- AUGUST 31 SEPTEMBER 1 1991 1992 1992 1993 ----------- ----------- ---------- ---------- ---------- ---------- (UNAUDITED) Revenues: Casino.......................... $ 182,787 $ 86,199 $ 279,884 $ 299,900 $ 224,681 $ 236,488 Rooms........................... 36,933 12,034 41,247 39,001 30,672 27,992 Food and beverage............... 39,809 16,527 52,459 48,907 37,958 35,933 Other casino/hotel revenues..... 15,532 6,936 21,676 22,028 16,538 17,713 Other operating revenues........ 10,431 5,257 15,435 19,072 14,347 13,704 Real estate related............. 8,480 2,638 7,542 8,026 6,058 6,028 ----------- ----------- ---------- ---------- ---------- ---------- 293,972 129,591 418,243 436,934 330,254 337,858 ----------- ----------- ---------- ---------- ---------- ---------- Expenses: Casino.......................... 116,763 53,441 166,133 176,119 131,838 141,600 Rooms........................... 8,403 4,343 12,112 11,799 8,949 8,064 Food and beverage............... 32,219 15,824 45,508 42,819 32,883 31,332 Other casino/hotel operating expenses....................... 41,373 21,424 64,054 64,654 48,502 49,995 Other operating expenses........ 8,411 4,345 12,055 15,549 11,564 11,122 Selling, general and administrative................. 43,570 23,642 71,732 73,262 55,192 53,835 Provision for doubtful receivables.................... 3,530 1,692 6,373 4,047 2,803 2,284 Depreciation.................... 20,047 6,232 23,814 25,322 19,011 20,942 Real estate related............. 5,338 625 1,612 1,599 1,320 1,114 Unallocated corporate expense... 778 (763) (1,186) 262 (1,915) (3,110) ----------- ----------- ---------- ---------- ---------- ---------- 280,432 130,805 402,207 415,432 310,147 317,178 ----------- ----------- ---------- ---------- ---------- ---------- Earnings (loss) from operations... 13,540 (1,214) 16,036 21,502 20,107 20,680 Other income (deductions): Interest income................. 2,318 1,740 4,824 4,969 2,311 2,485 Interest expense................ (434) (5,476) (31,157) (40,856) (30,795) (38,336) Amortization of debt discount... (8,581) (32,105) (37,569) (26,509) (37,320) Recapitalization costs.......... (187,018) (2,848) (2,337) (4,879) ----------- ----------- ---------- ---------- ---------- ---------- Loss before income taxes and extraordinary item............... (171,594) (13,531) (42,402) (54,802) (37,223) (57,370) Income tax benefit (expense)...... 831 1,348 (1,000) ----------- ----------- ---------- ---------- ---------- ---------- Loss before extraordinary item.... (171,594) (13,531) (41,571) (53,454) (37,223) (58,370) Extraordinary item and related income tax benefit -- gain on exchange of debt................. 429,809 ----------- ----------- ---------- ---------- ---------- ---------- Net earnings (loss)............... $ 258,215 $ (13,531) $ (41,571) $ (53,454) $ (37,223) $ (58,370) ----------- ----------- ---------- ---------- ---------- ---------- ----------- ----------- ---------- ---------- ---------- ---------- Net loss per share of RII Common Stock............................ $ (.68 ) $ (2.07) $ (2.65) $ (1.85) $ (2.90) ----------- ---------- ---------- ---------- ---------- ----------- ---------- ---------- ---------- ---------- Weighted average number of shares outstanding...................... 20,000 20,092 20,146 20,143 20,157 ----------- ---------- ---------- ---------- ---------- ----------- ---------- ---------- ---------- ----------
See Notes to Consolidated Financial Statements of RII. Note 2 describes a change in entity and related presentation for periods presented. F-5 RESORTS INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS OF DOLLARS)
FOR THE YEAR ENDED DECEMBER 31, -------------------------------------------- FOR THE THREE 1990 QUARTERS ENDED ---------------------- SEPTEMBER 30, THROUGH FROM -------------------- AUGUST 31 SEPTEMBER 1 1991 1992 1992 1993 --------- ----------- --------- --------- --------- --------- (UNAUDITED) Cash flows from operating activities: Cash received from customers........... $ 285,238 $ 127,256 $ 411,456 $ 432,212 $ 332,529 $ 343,738 Cash paid to suppliers and employees... (256,474) (122,113) (378,312) (390,012) (293,074) (297,057) --------- ----------- --------- --------- --------- --------- Cash flow from operations before interest and income taxes........... 28,764 5,143 33,144 42,200 39,455 46,681 Interest received...................... 2,337 1,467 4,014 5,211 2,775 3,149 Interest paid.......................... (486) (284) (9,228) (8,463) (8,277) (8,338) Income taxes refunded (paid), net...... (86) (7) 729 1,484 166 317 --------- ----------- --------- --------- --------- --------- Net cash provided by operating activities.......................... 30,529 6,319 28,659 40,432 34,119 41,809 --------- ----------- --------- --------- --------- --------- Cash flows from investing activities: Payments for property and equipment.... (22,054) (7,833) (25,587) (19,832) (18,380) (23,876) Proceeds from sales of property and equipment............................. 5,272 6,757 147 213 213 Proceeds from prior year sales of property and equipment................ 1,676 2,484 CRDA deposits and bond purchases....... (1,816) (739) (2,689) (2,871) (2,024) (2,121) Proceeds from sales of short-term money market securities with maturities greater than three months............. 2,083 2,083 1,377 Purchases of short-term money market securities with maturities greater than three months..................... (1,200) (1,768) (1,768) (492) --------- ----------- --------- --------- --------- --------- Net cash used in investing activities.......................... (19,798) (1,815) (26,453) (19,691) (19,876) (25,112) --------- ----------- --------- --------- --------- --------- Cash flows from financing activities: Proceeds from issuance of RII Common Stock................................. 15,000 Collection on note receivable from shareholder........................... 3,477 Payments of recapitalization costs..... (7,024) (5,504) (5,883) (5,414) (4,181) (5,748) Repayments of non-public debt.......... (2,507) (1,570) (2,064) (1,619) (1,358) (2,211) --------- ----------- --------- --------- --------- --------- Net cash provided by (used in) financing activities................ (9,531) 7,926 (7,947) (7,033) (5,539) (4,482) --------- ----------- --------- --------- --------- --------- Net increase (decrease) in cash and cash equivalents............................. 1,200 12,430 (5,741) 13,708 8,704 12,215 Cash and cash equivalents at beginning of period.................................. 45,290 46,490 58,920 53,179 53,179 66,887 --------- ----------- --------- --------- --------- --------- Cash and cash equivalents at end of period.................................. $ 46,490 $ 58,920 $ 53,179 $ 66,887 $ 61,883 $ 79,102 --------- ----------- --------- --------- --------- --------- --------- ----------- --------- --------- --------- ---------
See Notes to Consolidated Financial Statements of RII. Note 2 describes a change in entity and related presentation for periods presented. F-6 RESORTS INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT) (IN THOUSANDS OF DOLLARS)
CAPITAL STOCK ----------------------------------------- CAPITAL IN RII COMMON EXCESS OF ACCUMULATED NOTES STOCK CLASS A CLASS B PAR DEFICIT RECEIVABLE --------------- ----------- ----------- ---------- ------------ ---------- Balance at December 31, 1989............ $ 160 $ 713 $ 109,127 $ (320,641) $ (50,000) Net income for period through August 31, 1990................................... 258,215 Effects of reorganization: Elimination of accumulated deficit.... (62,426) 62,426 Cancellation of loan to Griffco Resorts Holding, Inc................. (50,000) 50,000 Cancellation of Class A and Class B shares............................... (160) (713) 873 Issuance of RII Common Stock.......... $ 200 103,798 (11,000) ----- ----------- ----------- ---------- ------------ ---------- Balance at August 31, 1990.............. 200 -0- -0- 101,372 -0- (11,000) Net loss for period from September 1, 1990................................... (13,531) ----- ----------- ----------- ---------- ------------ ---------- Balance at December 31, 1990............ 200 -0- -0- 101,372 (13,531) (11,000) Settlement of Other Class 3C Claims..... 1 594 Stock awards............................ 34 Net loss for year 1991.................. (41,571) ----- ----------- ----------- ---------- ------------ ---------- Balance at December 31, 1991............ 201 -0- -0- 102,000 (55,102) (11,000) Settlement of Other Class 3C Claims..... 1 92 Net loss for year 1992.................. (53,454) ----- ----------- ----------- ---------- ------------ ---------- Balance at December 31, 1992............ 202 -0- -0- 102,092 (108,556) (11,000) Collection on note receivable........... 3,477 Cancellation of note receivable......... 7,523 Net loss for three quarters ended September 30, 1993 (unaudited)......... (58,370) ----- ----------- ----------- ---------- ------------ ---------- Balance at September 30, 1993 (unaudited)............................ $ 202 $ -0- $ -0- $ 102,092 $ (166,926) $ -0- ----- ----------- ----------- ---------- ------------ ---------- ----- ----------- ----------- ---------- ------------ ----------
See Notes to Consolidated Financial Statements of RII. Note 2 describes a change in entity and related presentation for periods presented. F-7 RESORTS INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Financial statements and footnote data with respect to September 30, 1993 and the three quarters ended September 30, 1992 and 1993 are unaudited. In the opinion of management, such unaudited financial statements include all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation, in accordance with generally accepted accounting principles. PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of Resorts International, Inc. ("RII") and all significant subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation. The accounts of foreign subsidiaries are maintained in U.S. dollars. The term "Company" as used herein includes RII and/or one or more of its subsidiaries, as the context may require. REVENUE RECOGNITION The Company records as revenue the win from casino gaming activities which represents the difference between amounts wagered and amounts won by patrons. Revenues from hotel and related services and from theatre ticket sales are recognized at the time the related service is performed. COMPLIMENTARY SERVICES The Statements of Operations reflect each category of operating revenues excluding the retail value of complimentary services provided to casino patrons without charge. The rooms, food and beverage, and other casino/hotel operations departments allocate a percentage of their total operating expenses to the casino department for complimentary services provided to casino patrons. These allocations do not necessarily represent the incremental cost of providing such complimentary services to casino patrons. Amounts allocated to the casino department from the other operating departments were as follows:
1990 ---------------------- THROUGH FROM AUGUST 31 SEPTEMBER 1 1991 1992 --------- ----------- --------- --------- (IN THOUSANDS OF DOLLARS) Rooms........................................ $ 2,749 $ 1,200 $ 3,563 $ 3,738 Food and beverage............................ 11,780 6,325 19,254 20,805 Other casino/hotel operations................ 5,587 1,946 5,839 6,408 --------- ----------- --------- --------- Total allocated to casino................ $ 20,116 $ 9,471 $ 28,656 $ 30,951 --------- ----------- --------- --------- --------- ----------- --------- ---------
CASH EQUIVALENTS The Company considers all of its short-term money market securities purchased with maturities of three months or less to be cash equivalents. The carrying value of cash equivalents approximates fair value due to the short maturity of these instruments. INVENTORIES Inventories of provisions, supplies and spare parts are carried at the lower of cost (first-in, first-out) or market. PROPERTY AND EQUIPMENT Property and equipment are depreciated over their estimated useful lives using the straight-line method for financial reporting purposes. F-8 RESORTS INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) CASINO REINVESTMENT DEVELOPMENT AUTHORITY ("CRDA") OBLIGATIONS Under the New Jersey Casino Control Act ("Casino Control Act"), the Company is obligated to purchase CRDA bonds, which will bear a below-market interest rate, or make an alternative qualifying investment. The Company charges to expense an estimated discount related to CRDA investment obligations as of the date the obligation arises based on fair market interest rates of similar quality bonds in existence as of that date. On the date the Company actually purchases the CRDA bond, the estimated discount previously recorded is adjusted to reflect the actual terms of the bonds issued and the then existing fair market interest rate for similar quality bonds. The discount on CRDA bonds purchased is amortized to interest income over the life of the bonds using the effective interest rate method. INTEREST ACCRUAL ON SENIOR SECURED REDEEMABLE NOTES DUE APRIL 15, 1994 ("OLD SERIES NOTES") When RII elects to issue additional Old Series Notes to satisfy its interest obligation on such notes, for financial statement purposes interest is accrued at the estimated market value of the Old Series Notes to be issued. The discount resulting from the difference between face value and estimated market value of the additional notes decreases interest expense of the current period and is amortized to expense over the remaining life of the issue. INCOME TAXES RII and all of its domestic subsidiaries file consolidated U.S. federal income tax returns. The Company accounts for income taxes under the liability method prescribed by Statement of Financial Accounting Standards No. 96, "Accounting for Income Taxes", ("SFAS 96"). Under this method, the deferred tax liability is determined based on the difference between the financial reporting and tax bases of assets and liabilities and enacted tax rates which will be in effect for the years in which the differences are expected to reverse. The deferred tax liability is reduced by cumulative tax credits and losses being carried forward for tax purposes, subject to applicable limitations. In February 1992, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes", ("SFAS 109"). SFAS 109 supersedes SFAS 96 but retains the liability method of accounting for income taxes. One of the principal differences of SFAS 109 from SFAS 96 is that in measuring deferred tax assets future taxable income may be considered in evaluating the likelihood of utilizing net operating loss or tax credit carryforwards. Adoption of SFAS 109 is required for fiscal years beginning after December 15, 1992. Upon adoption, the principles of SFAS 109 may be applied retroactively through restatement of previously issued financial statements, or on a prospective basis. The Company will adopt SFAS 109 for fiscal 1993 and anticipates no significant impact on the Company's consolidated financial statements. There are no income taxes in The Bahamas and the income of RII's subsidiaries in The Bahamas is generally not subject to U.S. federal income taxation until it is distributed to a U.S. parent. Deferred federal income taxes are provided on the undistributed earnings of Bahamian subsidiaries. PER SHARE DATA For the period through August 31, 1990 there was a sole shareholder of RII. Accordingly, no per share data is disclosed for that period. For the periods from September 1, 1990 per share data was computed using the weighted average number of shares of common stock outstanding during those periods. NOTE 2 -- REORGANIZATION In November 1989 certain creditors of RII and its former subsidiary, Resorts International Financing, Inc. ("RIFI"), filed involuntary petitions for relief under chapter 11 of the United States F-9 RESORTS INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 2 -- REORGANIZATION (CONTINUED) Bankruptcy Code. In December 1989 RII and RIFI filed consents to the involuntary petitions and Griffin Resorts Inc. ("GRI"), a subsidiary of RII, and Griffin Resorts Holding Inc. ("GRH"), another former subsidiary of RII, filed voluntary petitions for relief under chapter 11 (collectively, the "Old Chapter 11 Cases"). RII, RIFI, GRI and GRH (the "Old Debtors") filed the Second Amended Joint Plan of Reorganization dated as of May 31, 1990 (the "Old Plan"), which was confirmed by the New Jersey bankruptcy court in August 1990. On September 17, 1990 (the "Old Effective Date"), all conditions to the effectiveness of the Old Plan were either met or waived and the Old Plan became effective. Pursuant to the Old Plan, the previously outstanding public debt issued by RII, RIFI and GRI (the "Old Debt Securities") was cancelled, the Old Debtors were discharged from all other claims arising prior to the commencement of the Old Chapter 11 Cases and all previously outstanding shares of stock of RII were cancelled. In exchange for the Old Debt Securities, RII issued new debt securities consisting of $187,500,000 principal amount of Series A Senior Secured Redeemable Notes due April 15, 1994 ("Old Series A Notes"), $137,500,000 principal amount of Series B Senior Secured Redeemable Notes due April 15, 1994 ("Old Series B Notes"), and $105,333,000 principal amount of First Mortgage Non-Recourse Pass-Through Notes due June 30, 2000 ("Showboat Notes") and 15,100,000 shares of new common stock of RII ("RII Common Stock"). The Old Series A Notes and the Old Series B Notes are referred to collectively as the "Old Series Notes". See Note 7 for a description of the Old Series Notes and Showboat Notes and the collateral therefor. Further, pursuant to the Old Plan, Merv Griffin acquired 4,400,000 shares of RII Common Stock for which the Company received $12,345,000 in cash and an $11,000,000 promissory note secured by a letter of credit issued by a bank. See Note 8. In addition, pursuant to the Old Plan, in exchange for the tendering of voluntary releases by holders of Old Debt Securities issued by GRI, Merv Griffin paid to such tendering holders ("Electing GRI Noteholders") the sum of $2,655,000 which amount was required to be used by such persons to fund the purchase of an additional 500,000 shares of RII Common Stock to be distributed pro rata to the Electing GRI Noteholders. Additionally, pursuant to the Old Plan, Merv Griffin was released by the Old Debtors and their affiliates from all claims arising prior to the commencement of the Old Chapter 11 Cases and Merv Griffin waived certain claims he asserted against the Old Debtors. Further, Merv Griffin entered into a contract with RII pursuant to which, for the two years ended September 16, 1992, RII was granted a non-exclusive license to use his name and likeness to promote its facilities and operations and Merv Griffin agreed to act as Chairman of the Board of RII and to provide certain other services without compensation, subject to certain conditions relating principally to the continuation of his control of the Company. The Old Plan further provided for the establishment of a litigation trust ("the Litigation Trust") to pursue, for the benefit of unsecured creditors of the Old Debtors, all claims the Old Debtors or certain of their affiliates may have against Donald Trump, the former Chairman of the Board and controlling shareholder of RII, and certain of his affiliates. In October 1990, the Company funded the Litigation Trust by depositing with the trustee under the Litigation Trust (the "Litigation Trustee") the sum of $5,000,000 which sum is used to cover expenses of the Litigation Trustee in pursuing such claims, with any unused balance of such amount to be distributed to the beneficiaries of the Litigation Trust. Pursuant to the Old Plan, RII had an additional obligation to repurchase certain beneficial interests in the Litigation Trust in an amount up to $3,880,000 if certain conditions were not met by September 17, 1991. The $3,880,000 was deposited with the Litigation Trustee in October 1990 and the repurchase was made in October 1991. F-10 RESORTS INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 2 -- REORGANIZATION (CONTINUED) On October 1, 1990 (the "Initial Distribution Date"), among other things, (i) the indentures governing the Old Debt Securities were cancelled and of no further force and effect, (ii) the distributions of RII Common Stock and the Old Series Notes and Showboat Notes provided for under the Old Plan were commenced, and (iii) Merv Griffin was issued certificates representing 4,400,000 shares of RII Common Stock and, in addition to the $12,345,000 in cash delivered to RII on the Old Effective Date, Merv Griffin delivered to RII the promissory note in the amount of $11,000,000. FRESH START ACCOUNTING The Company accounted for the reorganization using "fresh start" accounting. Accordingly, all assets and liabilities were restated to reflect their estimated fair values and the accumulated deficit was eliminated. Although the confirmation date was August 28, 1990, the Company recorded the effects of the reorganization as of August 31, 1990. The financial information contained herein relating to RII's 1990 Consolidated Statements of Operations and Cash Flows is presented separately for the periods "Through August 31" and "From September 1" due to the new basis of accounting which resulted from the application of fresh start accounting. The exchange of securities in connection with the reorganization resulted in a gain of $421,611,000 which, together with the related deferred income tax benefit of $8,198,000, has been reported as an extraordinary item. The revaluation of the Company's other assets and liabilities as of August 31, 1990, which was based on independent appraisals, discounted cash flows, evaluations, estimations, and other studies, resulted in a net loss of $153,219,000, with the following components:
(IN THOUSANDS OF DOLLARS) Decrease in working capital......................................... $ 3,565 Decrease in property and equipment.................................. 153,132 Decrease in deferred charges and other assets....................... 1,230 Decrease in deferred tax liability.................................. (4,708) ---------- $ 153,219 ---------- ----------
The loss on revaluation is included in recapitalization costs in 1990 in the accompanying Consolidated Statements of Operations along with (i) the accrual of approximately $9,030,000 of potential liabilities associated with the funding of the Litigation Trust described above, of which $8,880,000 was deposited with the Litigation Trustee, and (ii) legal and financial advisory fees and other costs associated with the reorganization amounting to $24,769,000. The accumulated deficit at August 31, 1990 of $62,426,000, which included the effects of the reorganization, was reclassified to capital in excess of par. Also, $50,000,000 of notes receivable from Griffco Resorts Holding, Inc. ("Griffco"), which were cancelled as part of the Old Plan, were reclassified to capital in excess of par. Griffco was owned by Merv Griffin and was RII's parent from November 15, 1988 to immediately prior to the Old Effective Date, at which time Griffco merged into a subsidiary of RII. The Company began accruing interest and amortizing discounts on the Old Series Notes and the Showboat Notes on the Initial Distribution Date. F-11 RESORTS INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 2 -- REORGANIZATION (CONTINUED) BANKRUPTCY ACCOUNTING For the period ended August 31, 1990, during which the Company operated subject to the jurisdiction of the New Jersey bankruptcy court, the Company did not accrue interest or amortize debt issuance costs on Old Debt Securities. NOTE 3 -- REVERSE REPURCHASE AGREEMENTS Cash equivalents and restricted cash equivalents at December 31, 1992 included reverse repurchase agreements (federal government securities purchased under agreements to resell those securities) with the institutions listed in the following table under which the Company had not taken delivery of the underlying securities. These agreements matured January 4, 1993 except for $615,000 with City National Bank of Florida which matured January 29, 1993.
(IN THOUSANDS OF DOLLARS) Prudential Securities, Inc.......................................... $ 26,621 City National Bank of Florida....................................... $ 6,893 Summit Trust Company................................................ $ 4,969 National Westminster Bank NJ........................................ $ 4,945 First Fidelity Bank N.A., South Jersey.............................. $ 2,185 Bear, Stearns & Co. Inc............................................. $ 1,809
NOTE 4 -- RESTRICTED CASH EQUIVALENTS Components of restricted cash equivalents at December 31 were as follows:
1991 1992 --------- --------- (IN THOUSANDS OF DOLLARS) Amount, including interest earned, on deposit with Litigation Trustee............................................................ $ 5,233 $ 4,969 Showboat Lease payments and interest earned thereon held by trustee (see Note 11)...................................................... 3,216 3,303 Collateral account for Old Series Notes............................. 1,139 1,183 Cash equivalents securing letters of credit and other guarantees.... 273 614 Escrow for legal settlement......................................... 1,700 --------- --------- $ 11,561 $ 10,069 --------- --------- --------- ---------
F-12 RESORTS INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 5 -- RECEIVABLES Components of receivables at December 31 were as follows:
1991 1992 --------- --------- (IN THOUSANDS OF DOLLARS) Gaming.............................................................. $ 22,707 $ 19,476 Less allowance for doubtful accounts.............................. (8,169) (6,952) --------- --------- 14,538 12,524 --------- --------- Non-gaming: Hotel and related................................................. 6,764 5,850 Interest on note receivable from Merv Griffin..................... 1,154 927 Bahamian duty refunds receivable.................................. 3,766 719 Refundable state income taxes..................................... 436 499 Contracts and notes............................................... 213 211 Other............................................................. 7,064 5,939 --------- --------- 19,397 14,145 Less allowance for doubtful accounts.............................. (1,709) (1,212) --------- --------- 17,688 12,933 --------- --------- $ 32,226 $ 25,457 --------- --------- --------- ---------
NOTE 6 -- ACCOUNTS PAYABLE AND ACCRUED LIABILITIES Components of accounts payable and accrued liabilities at December 31 were as follows:
1991 1992 --------- --------- (IN THOUSANDS OF DOLLARS) Accrued payroll and related taxes and benefits...................... $ 15,364 $ 16,178 Accrued interest.................................................... 8,700 9,928 Accrued gaming taxes, fees and related assessments.................. 12,271 8,166 Customer deposits and unearned revenues............................. 11,291 7,976 Trade payables...................................................... 8,923 6,701 Litigation Trust and related expenses............................... 4,768 4,327 Accrued costs of recapitalization................................... 4,613 2,372 Progressive slot liability.......................................... 3,616 877 Other accrued liabilities........................................... 15,007 15,147 --------- --------- $ 84,553 $ 71,672 --------- --------- --------- ---------
F-13 RESORTS INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 7 -- LONG-TERM DEBT The carrying value and fair value by component of long-term debt at December 31 were as follows:
1991 1992 ------------------------ ------------------------ CARRYING FAIR CARRYING FAIR VALUE VALUE VALUE VALUE ----------- ----------- ----------- ----------- (IN THOUSANDS OF DOLLARS) Old Series A Notes due 1994............... $ 208,021 $ 120,652 $ 230,410 $ 131,334 Less unamortized discount............... (38,874) (24,636) ----------- ----------- 169,147 205,774 ----------- ----------- Old Series B Notes due 1994............... 164,525 98,715 190,182 107,453 Less unamortized discount............... (24,025) (19,265) ----------- ----------- 140,500 170,917 ----------- ----------- Showboat Notes due 2000................... 105,333 76,893 105,333 88,480 Less unamortized discount............... (24,309) (22,485) ----------- ----------- 81,024 82,848 Capitalized leases........................ 3,567 3,567 2,001 2,001 ----------- ----------- ----------- ----------- 394,238 299,827 461,540 329,268 Less due within one year................ (1,571) (1,571) (828) (828) ----------- ----------- ----------- ----------- $ 392,667 $ 298,256 $ 460,712 $ 328,440 ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
The fair value presented above for the Company's long-term debt is based on December 31 closing market prices for publicly traded debt and carrying value for capitalized leases, as capitalized leases are not considered material to the total. The Old Series Notes are guaranteed as to payment of principal and interest by GRI, the subsidiary of RII which, through its Bahamian subsidiaries, owns and operates the Company's Bahamian properties, and are secured by the collateral described below. The Old Series A Notes and the Old Series B Notes will rank pari passu with respect to amounts realized upon any sale or other disposition of the collateral. The collateral consists of: (i) RII's fee and leasehold interests in substantially all of its real properties other than the 99-year net lease of a 10 acre site underlying the Showboat Hotel and Casino in Atlantic City (the "Showboat Lease") and the real property that is subject to the Showboat Lease; (ii) the fee and leasehold interests in the real and personal property of Merv Griffin's Resorts Casino Hotel (the "Resorts Casino Hotel") and the contiguous parking garage which interests are owned by Resorts International Hotel, Inc. ("RIH"), a subsidiary of RII; (iii) all of the outstanding capital stock of RIH and GRI and all of RII's other direct and indirect domestic subsidiaries; (iv) promissory notes made by RIH in the aggregate principal amount of $325,000,000; (v) 66% of the outstanding voting stock and 100% of the non-voting stock of Resorts International (Bahamas) 1984 Limited ("RIB"), the Bahamian subsidiary of GRI which together with its subsidiaries owns and operates the Company's Bahamian properties; and F-14 RESORTS INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 7 -- LONG-TERM DEBT (CONTINUED) (vi) a $50,000,000 promissory note made by RIB and guarantees thereof by certain of RIB's subsidiaries. The collateral described above consists of substantially all of the assets of the Company other than the Showboat Lease and the real property that is subject to the Showboat Lease. The Old Series Notes bear interest as follows:
OLD SERIES A OLD SERIES B ------------ ------------ April 11, 1990 through April 15, 1991............................. 6% May 8, 1990 through April 15, 1991................................ 11% Year ended April 15, 1992......................................... 9% 15% Year ending April 15, 1993........................................ 12% 15% Year ending April 15, 1994........................................ 15% 15%
The Company considered such cost through the Initial Distribution Date to be a cost of the exchange. Interest on the Old Series Notes is payable semi-annually on April 15 and October 15 in each year. RII may pay all or any portion of interest accruing on Old Series A Notes by issuing additional Old Series A Notes, and may pay all or any portion of interest accruing on Old Series B Notes by issuing additional Old Series B Notes (payment in kind or "Old PIK Payments"). Interest on each of the Old Series Notes may be paid in cash only if interest is concurrently paid in cash on both series in proportion to the total interest due. On each interest payment date through October 15, 1992, the Company elected to satisfy its interest obligations by issuing additional Old Series Notes. The cumulative principal amounts of Old Series A and Old Series B Notes issued to satisfy such interest obligations were $42,910,000 and $51,432,000, respectively. The interest accrued on the Old Series Notes subsequent to October 15, 1992 was calculated as though additional Old Series Notes will be issued to satisfy RII's interest obligation on April 15, 1993. The indenture for the Old Series Notes contains certain restrictive covenants on the part of RII, including restrictions on (i) the payment of cash dividends or redemptions of capital stock by RII; (ii) the repurchase of any Old Series Notes other than at par, unless certain conditions are met; (iii) the incurrence of additional indebtedness, with certain exceptions; (iv) mergers and consolidations with entities other than affiliates of RII; and (v) the ability of RII and its subsidiaries to sell their assets. The indenture for the Old Series Notes also requires RII to maintain a consolidated tangible net worth equal to at least $50,000,000. Consolidated tangible net worth is defined as consolidated shareholders' equity (deficit) adjusted for, among other things, cumulative amortization of debt discounts. The indenture for the Old Series Notes also gives each holder of Old Series Notes the right to require RII to repurchase such holder's notes at 100% of the principal amount plus accrued interest in the event of a change in control, as defined. Such change in control includes, among other events, (i) any person or group not including Merv Griffin or his affiliates acquiring RII Common Stock constituting 50% or more of the total voting power of RII and (ii) Merv Griffin and his affiliates no longer being the beneficial owners of RII Common Stock constituting more than 15% of the voting power of RII, other than as a result of the issuance and sale by RII of additional shares of such RII Common Stock. The Old Plan provided for the issuance of additional Old Series B Notes in settlement of certain other claims against the Old Debtors which were outstanding as of the date the Company filed for relief under chapter 11 ("Other Class 3C Claims"). An additional $1,250,000 principal amount of Old F-15 RESORTS INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 7 -- LONG-TERM DEBT (CONTINUED) Series B Notes were issued through December 31, 1992 in settlement of such claims which had been accrued for previously. Additional Old Series B Notes are expected to be issued in the future in settlement of Other Class 3C Claims. The Showboat Notes are non-recourse notes secured by a mortgage encumbering the real property which is subject to the Showboat Lease, by a collateral assignment of the Showboat Lease, and by a pledge of any proceeds of the sale of such mortgage and collateral assignment. Interest on the Showboat Notes commenced on July 1, 1990 and consists of a pass-through (subject to certain adjustments) of the lease payments received under the Showboat Lease. The Company considered such cost through the Initial Distribution Date to be a cost of the exchange. See Note 11 for a description of the Showboat Lease. Interest is payable semi-annually on January 15 and July 15. The weighted average effective interest rates on RII's publicly held debt at December 31, 1992 were as follows: Old Series A Notes -- 25.0%; Old Series B Notes -- 25.4%; and Showboat Notes -- 11.1%. Minimum principal payments of long-term debt outstanding as of December 31, 1992, for the five years thereafter are as follows: 1993 -- $828,000; 1994 -- $421,469,000; 1995 -- $258,000; 1996 -- $38,000; 1997 -- None. If the Company continues to satisfy interest obligations on the Old Series Notes by issuing additional Old Series Notes, and if no Old Series Notes are retired from proceeds of asset sales, the total obligation at maturity in 1994 will amount to approximately $519,000,000. See Note 15. NOTE 8 -- SHAREHOLDERS' EQUITY (DEFICIT) Pursuant to the Old Plan described in Note 2, all previously issued and outstanding equity securities were cancelled and 50,000,000 shares of RII Common Stock were authorized. On October 1, 1990, the Initial Distribution Date, 20,000,000 shares of RII Common Stock were issued. The Old Plan calls for issuance of additional shares of RII Common Stock in settlement of Other Class 3C Claims. An additional 137,234 shares of RII Common Stock were issued through December 31, 1992 in settlement of such claims. Additional shares are expected to be issued in the future in settlement of Other Class 3C Claims. On June 21, 1991, the Company awarded 5,000 shares of RII Common Stock to each of the four members of the Board of Directors serving as of that date other than Merv Griffin, Chairman of RII, and David P. Hanlon, President and Chief Executive Officer of RII. These 20,000 shares were issued on August 15, 1991. Under the terms of the Old Plan, in September 1990 RII received $12,345,000 in cash and an $11,000,000 promissory note from Merv Griffin (the "Griffin Note") for the shares purchased by him. The promissory note is secured by a letter of credit issued by a bank. The note bears interest at the rate of 8% per annum and is payable on demand. NOTE 9 -- STOCK OPTION PLAN As of September 17, 1990, the Company established the Resorts International, Inc. Senior Management Stock Option Plan (the "1990 Stock Option Plan"). The 1990 Stock Option Plan authorizes the grant of stock options to members of the Company's management. The number of shares which may be granted under the 1990 Stock Option Plan may not exceed ten percent (10%) of the shares of Common Stock Outstanding, as defined in the 1990 Stock Option Plan, subject to adjustment. Pursuant to the 1990 Stock Option Plan, options to purchase up to five percent (5%) of F-16 RESORTS INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 9 -- STOCK OPTION PLAN (CONTINUED) the shares of Common Stock Outstanding may be granted to Mr. Hanlon; the remaining options may be granted to other eligible employees at the discretion of a committee appointed by the Board of Directors of RII. Pursuant to the 1990 Stock Option Plan, the Company granted an option to Mr. Hanlon to purchase five percent of the Common Stock Outstanding at an exercise price of $1.875 per share, the fair market value on the date of grant. Having met certain performance and other criteria, the option was fully exercisable at December 31, 1992. In addition to Mr. Hanlon's option, options to purchase the following shares of RII Common Stock were outstanding at December 31, 1992:
EXERCISE OPTIONS OPTIONS PRICE OUTSTANDING EXERCISABLE - --------- ----------- ----------- $ 1.875 684,000 437,326 $ 1.75 30,000 ----------- ----------- 714,000 437,326 ----------- ----------- ----------- -----------
No options had been exercised as of December 31, 1992. NOTE 10 -- RELATED PARTY TRANSACTIONS TRANSACTIONS WITH MERV GRIFFIN See Note 2 for a description of the impact of the Old Plan on Merv Griffin's ownership interest and contractual relationship with the Company through September 16, 1992. The Company is currently engaged in discussions with Mr. Griffin's representatives concerning the terms and conditions of a potential new license and services agreement between the Company and The Griffin Group, Inc. (the "Griffin Group"), a corporation owned by Mr. Griffin. The Company anticipates that any new agreement would provide for the continued services of Mr. Griffin, would be effective as of September 17, 1992, and would provide for compensation payments over a period of several years. Although at this time no definitive agreement has been reached, in 1992 the Company accrued $521,000 for the period from September 17 through December 31, 1992 in anticipation of a new agreement. See Note 8 for a description of RII's note receivable from Merv Griffin. The Company reimbursed the Griffin Group $400,000, $358,000 and $211,000 for charter air services related to Company business rendered in 1990, 1991 and 1992, respectively. In 1991 and 1992 the Company did business with various subsidiaries of January Enterprises, Inc., of which Merv Griffin is Chief Executive Officer. In 1991 the Company paid $235,000 and provided certain facilities and personnel for the production of the "Ruckus Game Show" at Resorts Casino Hotel. Also in 1991, the Company provided facilities, labor and accommodations relative to the production of "Merv Griffin's 1991 New Year's Eve Special" which was broadcast live from Resorts Casino Hotel. In 1992 the Company agreed to pay $100,000 and provided certain facilities, labor and accommodations in connection with the production of the live television broadcast of "Merv Griffin's New Year's Eve Special 1992" from Resorts Casino Hotel. The Company received certain promotional considerations in connection with the television broadcast of these shows. LOANS TO GRIFFCO On November 17, 1988 the Company loaned $50,000,000 to Griffco, under two non-interest bearing, demand notes. As part of the Old Plan, these notes were cancelled as of the Old Effective Date. F-17 RESORTS INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 10 -- RELATED PARTY TRANSACTIONS (CONTINUED) OTHER Antonio C. Alvarez II, a shareholder of Alvarez & Marsal, Inc., has been a member of the Board of Directors of RII since September 1990. The Company paid Alvarez & Marsal, Inc. $2,145,000, $241,000 and $300,000 for financial advisory services rendered in 1990, 1991 and 1992, respectively. Warren Cowan, who was Chairman of Rogers & Cowan, Inc. until July 1992, has been a member of the Board of Directors of RII since September 1990. The Company paid Rogers & Cowan, Inc. $179,000, $147,000 and $128,000 for public relations services rendered for the Company's Atlantic City and Paradise Island properties in 1990, 1991 and 1992, respectively. NOTE 11 -- SHOWBOAT LEASE The Company leases to a subsidiary ("ACS") of Showboat, Inc., a resort and casino operator, approximately 10 acres of land adjacent to the Boardwalk in Atlantic City. Under the 99-year net lease, lease payments are payable in equal monthly installments on the first day of each month. The annual lease payment for the lease year ending March 31, 1993, is $7,875,000. The lease payment is to be adjusted annually, as of April 1, for changes in the consumer price index. Pursuant to the lease agreement, the Company is unable to transfer its interest in the lease, other than to an affiliate, without giving ACS the opportunity to purchase such interest at terms no less favorable than agreed to by any other party. As described in Note 7, the Showboat Notes are secured by a mortgage encumbering the real property which is subject to the Showboat Lease, by a collateral assignment of the Showboat Lease, and by a pledge of any proceeds of the sale of such mortgage and collateral assignment. Since July 1, 1990, lease payments under the Showboat Lease are required to be passed-through to holders of the Showboat Notes. NOTE 12 -- RETIREMENT PLANS RII and certain of its subsidiaries participate in a defined contribution plan covering substantially all of their non-union, full-time employees. The Company makes contributions to this plan based on a percentage of eligible employee contributions. Total pension expense for this plan was $553,000, $740,000 and $767,000 in 1990, 1991 and 1992, respectively. In 1991 the Company recorded a gain of $344,000 resulting from the settlement of a defined benefit plan (the "Retirement Plan") which was terminated in 1989. Net periodic pension income for the Retirement Plan for 1990 and 1991 amounted to $156,000 and $121,000, respectively. The total net pension expense, exclusive of the previously noted settlement gain, for RII's and its subsidiaries' single-employer pension plans amounted to $397,000, $619,000 and $767,000 for 1990, 1991 and 1992, respectively. In addition to the plans described above, union and certain other employees of several subsidiary companies are covered by multi-employer defined benefit pension plans to which subsidiaries make contributions. Such contributions totaled $2,764,000, $2,404,000 and $1,403,000 in 1990, 1991 and 1992, respectively. NOTE 13 -- INCOME TAXES As a result of the application of fresh start accounting in 1990, the Company's consolidated assets and liabilities were adjusted to their estimated fair values for financial statement purposes. Such revaluation is not permitted for income tax return purposes. The resulting basis differences account for substantially all of the deferred tax liability in the accompanying Consolidated Balance Sheets. F-18 RESORTS INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 13 -- INCOME TAXES (CONTINUED) No tax provision was recorded for the two periods of 1990 due to the generation of net operating losses for federal and state income tax purposes. The gain on exchange of debt was not taxable. A deferred tax benefit resulted from the elimination of basis differences on the Old Debt Securities, and is included in the extraordinary item. During 1991 the Company received a federal income tax refund of $831,000. The refund related to the carryback of certain 1983 credits to 1980 and was issued when the examination of the Company's 1983 tax return was waived. Such amount was recorded as a federal income tax benefit in 1991. During 1992 the Company received federal income tax refunds of $1,348,000 when the audit of the Company's 1981 and 1982 tax returns was completed. Such amount was recorded as a federal income tax benefit in 1992. Net operating losses were generated for federal tax purposes in 1991 and 1992, so no federal tax provision was recorded in those years to offset benefits noted above. No state tax provision was recorded in those years due to the utilization of state net operating loss carryforwards in states where the Company generated taxable income. The effective income tax rate on the loss before income taxes and extraordinary item varies from the statutory federal income tax rate as a result of the following factors:
1990 ------------------------- THROUGH FROM AUGUST 31 SEPTEMBER 1 1991 1992 ---------- ------------ -------- -------- Statutory federal income tax rate................ (34.0)% (34.0)% (34.0)% (34.0)% Net operating losses for which no tax benefit was recognized.............. 32.7% 33.6% 33.4% 33.6% Income taxes refunded.... (2.0)% (2.5)% Other.................... 1.3% .4% .6% .4% ----- ----- -------- -------- Effective tax expense (benefit) rate.......... 0 % 0 % (2.0)% (2.5)% ----- ----- -------- -------- ----- ----- -------- --------
Effective with the reorganization, the Company provided deferred taxes on the unremitted earnings of its Bahamian subsidiaries by allowing for the sale of the Bahamian assets at their restated value in the SFAS 96 computations. It is the intention of the Company to sell its Bahamian assets (see Note 15). The Company anticipates that taxes on any such sale will be offset by net operating loss carryforwards under the provisions of the Internal Revenue Code for gains existing as of the date of change in ownership. For both federal tax and financial reporting purposes, the Company had net operating loss carryforwards of approximately $622,000,000 at December 31, 1992. Of this amount, approximately $140,000,000 is not limited as to use and expires from 2005 through 2007. Due to the change in ownership of RII resulting from the reorganization, the balance of the tax loss carryforward which expires from 1999 through 2005 is limited in its availability to offset future taxable income of the Company. Though otherwise limited, such loss carryforwards would be available to offset gains on sales of assets owned at the date of change in ownership of the Company which are sold within five years of that date. At December 31, 1992 RII and its subsidiaries had significant net operating loss carryforwards in New Jersey, which expire from 1993 to 1999, and in Florida, which expire from 1994 to 2007. Also, for both federal tax and financial reporting purposes, the Company had tax credit carryforwards of $2,800,000 at December 31, 1992 which expire from 1998 through 2007. F-19 RESORTS INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 13 -- INCOME TAXES (CONTINUED) The source of loss before income taxes and extraordinary item was as follows:
1990 ------------------------- THROUGH FROM AUGUST 31 SEPTEMBER 1 1991 1992 ------------ ----------- ---------- ---------- (IN THOUSANDS OF DOLLARS) U.S. source loss......................... $ (133,865) $ (5,439) $ (30,095) $ (41,526) Foreign source loss...................... (37,729) (8,092) (12,307) (13,276) ------------ ----------- ---------- ---------- Loss before income taxes and extraordinary item...................... $ (171,594) $ (13,531) $ (42,402) $ (54,802) ------------ ----------- ---------- ---------- ------------ ----------- ---------- ----------
F-20 RESORTS INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 14 -- STATEMENTS OF CASH FLOWS Supplemental disclosures required by Statement of Financial Accounting Standards No. 95 "Statement of Cash Flows" are presented below.
FOR THE YEAR ENDED DECEMBER 31, FOR THE THREE -------------------------------------------- QUARTERS 1990 ENDED SEPTEMBER 30, ---------------------- THROUGH FROM -------------------- AUGUST 31 SEPTEMBER 1 1991 1992 1992 1993 --------- ----------- --------- --------- --------- --------- (IN THOUSANDS OF DOLLARS) (UNAUDITED) Reconciliation of net earnings (loss) to net cash provided by operating activities: Net earnings (loss).............................. $ 258,215 $ (13,531) $ (41,571) $ (53,454) $ (37,223) $ (58,370) Adjustments to reconcile net earnings (loss) to net cash provided by operating activities: Depreciation................................... 20,047 6,232 23,814 25,322 19,011 20,942 Amortization (principally debt discounts)...... 438 8,683 32,415 37,565 26,507 37,349 Interest expense settled by issuance of long-term debt................................ 765 19,584 31,165 15,445 16,787 Provision for doubtful receivables............. 3,530 1,692 6,373 4,047 2,803 2,284 Provision for discount on CRDA obligations..... 993 504 1,574 1,451 1,117 1,196 Deferred tax provision......................... 1,000 Recapitalization costs......................... 187,018 2,848 2,337 4,879 Stock awards................................... 34 Extraordinary item -- gain on exchange of debt.......................................... (429,809) Net (gain) loss on sales of property and equipment..................................... (878) (59) 533 113 17 Net (increase) decrease in accounts receivable.................................... 1,430 (2,582) (9,719) 2,744 9,487 8,177 Net (increase) decrease in inventories and prepaids...................................... (3,492) 1,278 (433) 429 (3,315) (3,297) Net (increase) decrease in deferred charges and other assets.................................. 1,090 109 296 (1,499) (1,379) (439) Net increase (decrease) in accounts payable and accrued liabilities........................... (8,053) 3,228 (4,241) (10,299) (688) 11,301 --------- ----------- --------- --------- --------- --------- Net cash provided by operating activities...... $ 30,529 $ 6,319 $ 28,659 $ 40,432 $ 34,119 $ 41,809 --------- ----------- --------- --------- --------- --------- --------- ----------- --------- --------- --------- --------- Non-cash investing and financing transactions: Issuance of RII Common Stock for receivable...... $ 26,000 Issuance of long-term debt (at estimated market value) in satisfaction of Old Plan obligations..................................... $ 9,290 Other Class 3C Claims settled for RII Common Stock and Old Series B Notes.................... $ 1,448 $ 227 $ 227 Reduction in long-term debt resulting from exchange........................................ $ 536,277 Exchange of note receivable from shareholder for note receivable from Griffin Group.............. $ 7,523 Reduction in note receivable from Griffin Group applied to prepaid services..................... $ 2,205 Increase in liabilities for additions to property and equipment and other assets.................. $ 3,473 $ 1,505 $ 1,180 $ 112 $ 242 $ 843 Reclassifications to deposits and other assets from receivables and property and equipment..... $ 675 $ 674 $ 337 $ 450 Receivables from sale of property................ $ 1,185 $ 491
F-21 RESORTS INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 15 -- COMMITMENTS AND CONTINGENCIES INTENTION TO SELL PARADISE ISLAND ASSETS Since the Company's announcement in 1990 of its intention to sell its Paradise Island assets, including its operations and properties, there has not been substantial interest on the part of prospective purchasers. In August 1991 the Company received an offer for its Paradise Island assets which would have netted the Company approximately $150,000,000, if the transaction had been consummated. However, the Company considers that offer to be terminated and continues to solicit offers. The price that was offered in 1991 was far below the Company's expectations in 1990, when the sale of its Paradise Island assets became an integral part of the Company's Business Plan, and is well below an amount that would be adequate to retire sufficient Old Series Notes at par so as to permit the Company's then remaining Atlantic City operations to service the balance of the debt outstanding after such a sale. For this reason, prior to or contemporaneously with completion of a sale of the Paradise Island assets for such a depressed price, the Company would be required to accomplish in one or more related transactions significant further reductions in its debt service requirements. In the absence of further reductions, the Company does not expect that it would be able to accept a price for its Paradise Island assets in the range that was offered. See "Servicing of Old Series Notes" below. Pursuant to the indenture governing the Old Series Notes, in the event of any sale of its Paradise Island assets, (i) the Company is required to deliver to the indenture trustee an opinion of an independent financial adviser that the sales price is not less than the fair market value of the property being sold; (ii) not less than 85% of the aggregate sales price must be paid in cash immediately upon closing and the balance in promissory notes with terms acceptable to the Company's Board of Directors; and (iii) all cash proceeds (and cash proceeds of non-cash proceeds) must be deposited in a collateral account and thereafter used to redeem the Old Series Notes pro rata at par. However, these conditions to a sale can be waived if holders of at least two-thirds in aggregate principal amount of the outstanding Old Series Notes and holders of at least the majority in aggregate principal amount of each Series have consented in writing. In connection with the approval of the acquisition of RII by Griffco in November 1988 by the relevant Bahamian governmental authorities, RII granted to The Hotel Corporation of The Bahamas ("HCB"), a corporation owned by the Government of The Bahamas, a right of first refusal in respect of any sale of its principal Bahamian subsidiary for a five year period ending November 15, 1993. Such right is exercisable for a period of ninety days following written notice from RII to HCB setting forth the terms of a proposed sale. Any sale of the Company's Paradise Island assets will be dependent upon receipt of necessary authorizations or waivers from Bahamian governmental authorities. For information as to revenues and contribution to consolidated loss before income taxes and extraordinary item of these operations, see the segment tables included in "Management's Discussion and Analysis of Financial Condition and Results of Operations." Amounts reported for the Paradise Island segment of such tables include the operations of certain domestic subsidiaries which provide support services to the Paradise Island properties, which may or may not be included in any sale that may be consummated. SERVICING OF OLD SERIES NOTES If interest obligations on the Old Series Notes continue to be satisfied by Old PIK Payments, and assuming there are no principal retirements resulting from a sale of the Paradise Island assets or any other assets, the April 15, 1993 interest obligation would approximate $28,000,000, the October 15, 1993 interest obligation would approximate $34,000,000 and the final interest obligation would approximate $36,000,000. These increases would result in a total obligation of approximately $519,000,000 at the maturity date, April 15, 1994. F-22 RESORTS INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 15 -- COMMITMENTS AND CONTINGENCIES (CONTINUED) Although, due to Old PIK Payments, the Company is able to service the Old Series Notes in the near term, in the longer term it must reduce its debt to a level that can be supported by the cash flow reasonably anticipated on a continuing basis. The depressed market for asset sales makes it unlikely that their proceeds would provide a reduction of principal to a level capable of being serviced by remaining operations. However, failure to achieve such sales results in an increasing amount of principal outstanding due to Old PIK Payments, which amount raises substantial uncertainties regarding sources of repayment or refinancing at maturity in April 1994. The Company is continuing to pursue a business strategy that combines an effort to improve the profitability of both its Atlantic City and Paradise Island operations together with continued efforts to consummate a sale of the Paradise Island assets at as high a price as can be reasonably achieved. However, it is evident that the Company must attempt to develop financial alternatives other than, or in conjunction with, a sale of its Paradise Island assets. Thus, the Company is utilizing financial advisers to assist it in the development and analysis of financial alternatives as well as the development of a long-term financial plan. In this connection, management of the Company, with the assistance of its financial advisers, has been engaged in discussions with representatives of the principal holders of the Old Series Notes in an effort to reach an agreement as to the terms of a possible restructuring of the Old Series Notes. Although no definitive agreement has yet been reached, it is anticipated that any restructuring would involve an exchange of the Old Series Notes for a combination of cash, new debt, certain operating assets and equity in the remaining Company. The Company's objective in such a recapitalization would be to reduce its outstanding debt sufficiently so that it may be serviced from the Company's continuing operations, while allowing for certain additional borrowings for capital improvements, working capital and possible expansion. The specific terms and conditions, and other details, of any restructuring would, of course, be set forth in definitive agreements, indentures and other documents. At this time, no representation can be made as to whether, when or on what terms any such restructuring, or other financial alternative, may be proposed or effected. CRDA The Casino Control Act, as originally adopted, required a licensee to make investments equal to 2% of the licensee's net casino win (as defined under the Casino Control Act) (the "investment obligation") for each calendar year, commencing in 1979, in which such net casino win exceeded its "cumulative investments" (as defined in the Casino Control Act). A licensee had five years from the end of each calendar year to satisfy this investment obligation or become liable for an "alternative tax" in the same amount. In 1984 the New Jersey legislature amended the Casino Control Act so that these provisions now apply only to investment obligations for the years 1979 through 1983. Effective for 1984 and subsequent years, the amended Casino Control Act requires a licensee to satisfy its investment obligation by purchasing bonds to be issued by the CRDA, or by making other investments authorized by the CRDA, in an amount equal to 1.25% of a licensee's net casino win. If the investment obligation is not satisfied, then the licensee will be subject to an investment alternative tax of 2.5% of net casino win. Since 1985, a licensee has been required to make quarterly deposits with the CRDA against its current year investment obligation. F-23 RESORTS INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 15 -- COMMITMENTS AND CONTINGENCIES (CONTINUED) An analysis of RIH's investment obligations under the Casino Control Act and RIH's means of settlement since 1979 follows:
1979-1983 1984-1992 TOTAL ---------- ---------- ---------- (IN THOUSAND OF DOLLARS) Investment obligations...................................................... $ (21,637) $ (26,118) $ (47,755) Means of settlement: Housing related investments under audit................................... 13,104 13,104 Housing related investments previously approved........................... 1,000 1,000 CRDA deposits/bond purchases.............................................. 7,533 25,454 32,987 ---------- ---------- ---------- Remaining investment obligation at December 31, 1992, which was deposited in January 1993............................................................... $ -0- $ (664) $ (664) ---------- ---------- ---------- ---------- ---------- ----------
With regard to the housing related investments under audit, in January 1988 the CRDA notified the Company of its interpretation as to the periods of time during which expenditures could be made to satisfy investment obligations. CRDA's interpretation differs from RIH's and if found to be correct would decrease the amount of RIH's qualifying expenditures by approximately $5,000,000 to $6,000,000. RIH believes that its interpretation is correct and intends to contest this issue. RIH also received a letter dated November 9, 1989, from the State of New Jersey Department of the Treasury (the "Treasury") stating that the housing related investments made by RIH were not sufficient to meet its investment obligation for the years 1979 through 1983. The letter also stated that alternative tax in the amount of $21,637,000 was due for those years, in addition to penalties and interest thereon which amounted to $12,514,000 as of the date of the letter. As set forth in the table above, the Company believes that $8,533,000 of such obligations have been settled; $7,533,000 in cash and $1,000,000 by previously approved housing related investments. Also, the Company has received an audit report issued by an agency acting on behalf of the Treasury identifying qualifying credits from housing related investments of $10,165,000. This leaves a total of $2,939,000 of housing related investments under audit in question. The Company has notified the Treasury that it takes exception to the Treasury's computation of amounts due. Further, the Company believes that the $2,939,000 of housing related investments in question will be found, under further audit, to have been satisfied. Although these matters have been dormant for some time, the Company's counsel was recently contacted by the Treasury and expects an update of the status of these matters in the near future. If the CRDA's interpretation as to the periods of time during which qualifying expenditures can be made is found to be correct, or if the Treasury's issue is determined adversely, RIH could be required to pay the relevant amount in cash to the CRDA. In the opinion of management, based upon advice of counsel, the aggregate liability, if any, arising from these issues will not have a material adverse effect on the accompanying consolidated financial statements. As reflected in the table above, through December 31, 1992, RIH had made CRDA deposits/bond purchases totalling $32,987,000. However, in August 1989 RIH donated $12,048,000 to the CRDA in exchange for which RIH was relieved of its obligation to purchase CRDA bonds of $18,193,000. Because RIH already had the $18,193,000 for bond purchases on deposit with the CRDA, the difference between this amount and the amount of the donation, or $6,145,000, was refunded to RIH in August 1989. Thus, at December 31, 1992, RIH had a remaining balance of $4,873,000 face value of bonds issued by the CRDA and had $9,921,000 on deposit with the CRDA. These bonds and deposits, net of an estimated discount charged to expense to reflect the below-market interest rate payable on the bonds, were recorded as other assets in the Company's Consolidated Balance Sheets. F-24 RESORTS INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 15 -- COMMITMENTS AND CONTINGENCIES (CONTINUED) RIH records charges to expense to reflect the below-market interest rate payable on the bonds it may have to purchase to fulfill its investment obligation at the date the obligation arises. The charges in 1990, 1991 and 1992 for discounts on obligations arising in those years were $1,497,000, $1,574,000 and $1,451,000, respectively. LITIGATION RII and certain of its subsidiaries are defendants in certain litigation. In the opinion of management, based upon advice of counsel, the aggregate liability, if any, arising from such litigation will not have a material adverse effect on the accompanying consolidated financial statements. NOTE 16 -- GEOGRAPHIC AND BUSINESS SEGMENT INFORMATION Schedules of geographic and business segment information relating to (i) revenues, (ii) contribution to consolidated loss before income taxes and extraordinary item and (iii) identifiable assets, depreciation and capital additions are included in "Management's Discussion and Analysis of Financial Condition and Results of Operations". NOTE 17 -- SUBSEQUENT EVENTS RESTRUCTURING In April 1993 RII reached an agreement in principle with two representatives (the "Representatives") of major holders of its Old Series Notes as to terms of a restructuring of Old Series Notes. Such restructuring was to include the exchange of the Old Series Notes for, among other things, cash, new debt, an equity interest in RII and 100% of the equity of RII's Bahamian subsidiaries, Paradise Island Airlines, Inc. ("PIA") and certain domestic subsidiaries which support the Bahamian operations (PIA and these other domestic subsidiaries are hereinafter referred to as the "U.S. Paradise Island Subsidiaries"). Since that time, management of the Company has been cooperating with the Representatives in negotiating the possible sale to a third party (the "Purchaser") of a majority of the equity of RII's Bahamian subsidiaries and the assets and related liabilities of the U.S. Paradise Island Subsidiaries. Further negotiations among the Company, the Purchaser and the Representatives have led to the currently proposed restructuring which contemplates, among other things, the exchange of the Old Series Notes for the following: (a) the Company's excess cash, as defined, presently estimated to be not less than $30,000,000, (b) $125,000,000 principal amount of nine-year, 11% mortgage notes to be issued by a subsidiary of RII and to be secured by a mortgage on the Resorts Casino Hotel and guaranteed by RIH, (c) $35,000,000 principal amount of ten-year, 11.375%, junior mortgage notes to be issued by a subsidiary of RII and to be secured by a junior mortgage on the Resorts Casino Hotel and guaranteed by RIH, (d) shares of RII Common Stock in an amount representing approximately 40% of the total outstanding shares, and (e) either (i) $65,000,000 cash and 40% of the equity of a company formed by the Purchaser to purchase 100% of the equity of RII's Bahamian subsidiaries and, through subsidiaries, the assets and related liabilities of the U.S. Paradise Island Subsidiaries or, if that purchase is not consummated, (ii) 100% of the equity of a holding company formed to own 100% of the equity of RII's Bahamian subsidiaries and, through subsidiaries, the assets and related liabilities of the U.S. Paradise Island Subsidiaries. F-25 RESORTS INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 17 -- SUBSEQUENT EVENTS (CONTINUED) Before any restructuring can be completed, specific terms and conditions must be finalized and set forth in definitive agreements, indentures and other documents. Also, any restructuring must be approved by various governmental agencies, and the proposed restructuring will require certain shareholder and creditor approvals, as well as confirmation by the Bankruptcy Court. The Company cannot provide any assurances as to whether or when the proposed restructuring will be effected, or that the restructuring will be on terms similar to those described above. NON-COMPLIANCE WITH INDENTURE FOR OLD SERIES NOTES As of October 31, 1993 the Company's consolidated tangible net worth (see Note 7) was below $50,000,000, the balance which the indenture for the Old Series Notes requires the Company to maintain. The Old Series Note Trustee on January 3, 1994, furnished a notice of default to the Company stating that if such Default were not cured within 30 days of receipt it would become an Event of Default under the Old Series Note Indenture. RELATED PARTY TRANSACTIONS In April 1993, RII, RIH and Griffin Group, entered into a license and services agreement (the "New Griffin Services Agreement") effective as of September 17, 1992, upon the expiration of the previous license and services agreement. Pursuant to the New Griffin Services Agreement, Griffin Group granted RII and RIH a non-exclusive license to use the name and likeness of Merv Griffin to advertise and promote the Company's facilities and operations. Also pursuant to the New Griffin Services Agreement, Mr. Griffin is to provide certain services to the Company, including serving as Chairman of the Board of RII and as a host, producer and featured performer in various shows to be presented in Resorts Casino Hotel, and furnishing marketing and consulting services. The New Griffin Services Agreement is to continue until the later of September 17, 1996 or the fourth anniversary of the consummation of a Reorganization (as defined, which would include a restructuring such as that discussed under "Restructuring" above) of RII; but in no event shall the term extend beyond September 17, 1997. If a Reorganization has not been consummated by September 17, 1996, then the New Griffin Services Agreement shall terminate on that date. The New Griffin Services Agreement provides for earlier termination under certain circumstances including, among others, a change of control (as defined) of the Company and Mr. Griffin ceasing to serve as Chairman of the Board of RII. The New Griffin Services Agreement provides for compensation to Griffin Group in the amount of $2,000,000 for the year ended September 16, 1993, and in specified amounts for each of the following years, which increase at approximately 5% per year. In accordance with the New Griffin Services Agreement, upon signing, the Company paid Griffin Group $4,100,000, representing compensation for the first two years. Thereafter, the New Griffin Services Agreement calls for annual payments on September 17, each representing a prepayment for the year ending two years hence. In lieu of paying in cash, at the Company's option, it may satisfy its obligation to make any of the payments required under the New Griffin Services Agreement by reducing the amount of the note receivable from Griffin Group (the "Griffin Group Note") described below. In September 1993 the Company notified Griffin Group that it would satisfy its obligation to make the $2,205,000 payment for the year ending September 16, 1995 by reducing the Griffin Group Note by that amount. In the event of an early termination of the New Griffin Services Agreement, and depending on the circumstances of such early termination, all or a portion of the compensation paid to Griffin Group in respect of the period subsequent to the date of termination may be required to be repaid to the Company. The New Griffin Services Agreement also provides for the issuance to Griffin Group, on the effective date of a Reorganization of RII, of warrants (the "Griffin Warrants") to purchase 10% of the F-26 RESORTS INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 17 -- SUBSEQUENT EVENTS (CONTINUED) common stock of the reorganized entity. In connection with the events described in "Restructuring" above, RII's Board of Directors subsequently approved certain revisions to the exercise price of the Griffin Warrants. The Griffin Warrants, as amended, are to be exercisable at the lesser of (i) the average market price of RII's common stock for the 20 trading days following the effective date of a Reorganization and (ii) $1.875. The Company agreed to indemnify, defend and hold harmless Griffin Group and Mr. Griffin against certain claims, losses and costs, and to maintain certain insurance coverage with Mr. Griffin and Griffin Group as named insureds. In conjunction with the New Griffin Services Agreement, Mr. Griffin made a partial payment of $4,100,000 on his note payable to RII, the Griffin Note. The Griffin Note, which was issued in 1990, had an outstanding balance of $11,623,333 at September 17, 1992 comprised of the original principal amount of $11,000,000 and accrued interest of $623,333. After applying Mr. Griffin's payment, the remaining balance on the Griffin Note was $7,523,333. In accordance with the New Griffin Services Agreement, the Griffin Note was then cancelled and a new note from Griffin Group, the Griffin Group Note, in the amount of $7,523,333 was substituted therefor. As noted above, in September 1993 the balance of this note was reduced to $5,318,333. The Griffin Group Note, which is unconditionally guaranteed as to principal and interest by Mr. Griffin, due on demand and bears interest at the rate of 3% per annum, comprises the note receivable from related party reflected on the accompanying Consolidated Balance Sheet as of September 30, 1993. INCOME TAX ACCOUNTING Effective January 1, 1993, the Company adopted SFAS 109. There was no effect on the accompanying Consolidated Statement of Operations for the three quarters ended September 30, 1993, nor was there a cumulative effect of adopting SFAS 109. In August 1993 tax law changes were enacted which resulted in an increase in the Company's federal income tax rate. The increase resulted in a $1,000,000 increase in the Company's deferred income tax liability and a deferred income tax provision of the same amount. F-27 REPORT OF INDEPENDENT AUDITORS The Board of Directors and Shareholders of Resorts International, Inc. Resorts International Hotel, Inc. We have audited the accompanying consolidated balance sheets of Resorts International Hotel, Inc. as of December 31, 1992 and 1991, and the related consolidated statements of operations, changes in shareholder's deficit, and cash flows for each of the three years in the period ended December 31, 1992. Resorts International Hotel, Inc. ("RIH") is a wholly owned subsidiary of Resorts International, Inc. ("RII"). These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. As noted above, RIH is a wholly owned subsidiary of RII and, as disclosed in the financial statements and related notes, has extensive intercompany relationships and transactions with RII and its affiliates. RII has significant debt which becomes due and payable in April 1994. Through April 1994, RII may satisfy its interest obligations on this debt with the issuance of additional debt. RII's ability to pay this debt at maturity was premised upon the contemplated sale of RII's operations on Paradise Island and of its non-operating real estate holdings in Atlantic City generating sufficient proceeds to reduce the obligations under this debt to a level that, if refinanced at maturity in April 1994, could be serviced by cash flow from the remaining operations. It presently appears unlikely the proceeds from a possible sale of these operations will provide a reduction of principal to this level. Consequently, RII is reviewing other financial alternatives. One such alternative is described in Note 14. However, specific terms and conditions have not been finalized. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of RIH at December 31, 1992 and 1991, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 1992, in conformity with generally accepted accounting principles. ERNST & YOUNG Philadelphia, Pennsylvania February 19, 1993 except for Note 14, as to which the date is December 29, 1993 F-28 RESORTS INTERNATIONAL HOTEL, INC. CONSOLIDATED BALANCE SHEETS (IN THOUSANDS OF DOLLARS, EXCEPT PAR VALUE)
DECEMBER 31, ------------------------ 1991 1992 ---------- ---------- SEPTEMBER 30, 1993 ------------- (UNAUDITED) ASSETS Current assets: Cash (including cash equivalents of $4,769, $9,728 and $18,792)....................... $ 16,886 $ 22,643 $ 30,820 Receivables, net........................... 6,474 5,406 5,682 Interest receivable from affiliate......... 1,125 4,500 2,813 Note receivable from affiliate............. 50,000 50,000 50,000 Inventories................................ 1,469 1,542 1,464 Prepaid expenses........................... 1,528 1,862 7,260 ---------- ---------- ------------- Total current assets..................... 77,482 85,953 98,039 Property and equipment, net of accumulated depreciation.............................. 151,551 155,689 166,424 Deferred charges and other assets.......... 6,202 8,994 10,888 ---------- ---------- ------------- $ 235,235 $ 250,636 $ 275,351 ---------- ---------- ------------- ---------- ---------- ------------- LIABILITIES AND SHAREHOLDER'S DEFICIT Current liabilities: Current maturities of long-term debt....... $ 958 $ 643 $ 81 Accounts payable and accrued liabilities... 27,718 26,073 24,622 Notes payable to affiliate................. 325,000 Due to parent company...................... 60,792 62,374 51,325 ---------- ---------- ------------- Total current liabilities................ 89,468 89,090 401,028 ---------- ---------- ------------- Notes payable to affiliate................... 325,000 325,000 ---------- ---------- Other long-term debt......................... 1,539 904 15 ---------- ---------- ------------- Deferred income taxes........................ 19,400 ------------- Commitments and contingencies (Notes 7 and 13) Shareholder's deficit: Common stock -- $1 par value, 100 shares issued and outstanding Excess of liabilities over assets at August 31, 1990 reorganization................... (198,829) (198,829) (198,829) Retained earnings.......................... 18,057 34,471 53,737 ---------- ---------- ------------- Total shareholder's deficit.............. (180,772) (164,358) (145,092) ---------- ---------- ------------- $ 235,235 $ 250,636 $ 275,351 ---------- ---------- ------------- ---------- ---------- -------------
See Notes to Consolidated Financial Statements of RIH. F-29 RESORTS INTERNATIONAL HOTEL, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS OF DOLLARS)
FOR THE YEAR ENDED DECEMBER 31, ---------------------------------------------------- 1990 FOR THE THREE QUARTERS -------------------------- ENDED SEPTEMBER 30, THROUGH FROM ------------------------ AUGUST 31 SEPTEMBER 1 1991 1992 1992 1993 ------------ ------------ ----------- ----------- ----------- ----------- (UNAUDITED) Revenues: Casino......................... $ 139,466 $ 66,259 $ 218,881 $ 233,780 $ 180,510 $ 187,803 Rooms.......................... 5,093 2,599 8,074 8,766 6,688 5,370 Food and beverage.............. 10,492 5,320 16,406 16,056 12,801 12,340 Other casino/hotel revenues.... 3,754 2,038 4,113 4,138 3,081 3,301 ------------ ------------ ----------- ----------- ----------- ----------- 158,805 76,216 247,474 262,740 203,080 208,814 ------------ ------------ ----------- ----------- ----------- ----------- Expenses: Casino......................... 85,473 39,532 123,523 127,847 97,226 105,013 Rooms.......................... 1,974 1,213 3,367 3,582 2,681 2,502 Food and beverage.............. 10,614 6,216 17,679 17,658 13,802 13,430 Other casino/hotel operating expenses...................... 19,713 10,566 31,499 33,281 25,045 25,748 Selling, general and administrative................ 24,675 13,582 44,023 46,507 35,441 35,516 Provision for doubtful receivables................... 1,307 801 3,480 1,414 839 536 Depreciation................... 10,720 1,902 9,084 11,402 8,625 10,264 Real estate related............ 880 100 ------------ ------------ ----------- ----------- ----------- ----------- 155,356 73,912 232,655 241,691 183,659 193,009 ------------ ------------ ----------- ----------- ----------- ----------- Earnings from operations......... 3,449 2,304 14,819 21,049 19,421 15,805 Other income (deductions): Interest income................ 5,515 2,832 7,505 7,576 5,648 5,631 Interest expense............... (306) (136) (563) (395) (317) (190) Recapitalization costs......... (119,804) (874) (704) (1,580) Affiliated bad debt write- off........................... (98,983) ------------ ------------ ----------- ----------- ----------- ----------- Earnings (loss) before income taxes and extraordinary item.... (210,129) 5,000 21,761 27,356 24,048 19,666 Income tax expense............... (8,704) (10,942) (9,620) (400) ------------ ------------ ----------- ----------- ----------- ----------- Earnings (loss) before extraordinary item.............. (210,129) 5,000 13,057 16,414 14,428 19,266 Extraordinary item............... (17,335) ------------ ------------ ----------- ----------- ----------- ----------- Net earnings (loss).............. $ (227,464) $ 5,000 $ 13,057 $ 16,414 $ 14,428 $ 19,266 ------------ ------------ ----------- ----------- ----------- ----------- ------------ ------------ ----------- ----------- ----------- -----------
See Notes to Consolidated Financial Statements of RIH. Note 2 describes a change in entity and related presentation for periods presented. F-30 RESORTS INTERNATIONAL HOTEL, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS OF DOLLARS)
FOR THE YEAR ENDED DECEMBER 31, ------------------------------------------------------ 1990 FOR THE THREE QUARTERS -------------------------- ENDED SEPTEMBER 30, THROUGH FROM -------------------------- AUGUST 31 SEPTEMBER 1 1991 1992 1992 1993 ------------ ------------ ------------ ------------ ------------ ------------ (UNAUDITED) Cash flows from operating activities: Cash received from customers......... $ 155,935 $ 74,485 $ 244,825 $ 261,462 $ 201,624 $ 208,297 Cash paid to suppliers and employees........................... (144,100) (70,291) (216,805) (229,911) (175,444) (189,019) ------------ ------------ ------------ ------------ ------------ ------------ Cash flow from operations before interest and income taxes......... 11,835 4,194 28,020 31,551 26,180 19,278 Interest received.................... 4,361 3,966 7,526 4,204 3,951 7,289 Interest paid........................ (318) (136) (563) (395) (317) (190) Income taxes paid to parent.......... (8,704) (10,942) (9,620) ------------ ------------ ------------ ------------ ------------ ------------ Net cash provided by operating activities........................ 15,878 8,024 26,279 24,418 20,194 26,377 ------------ ------------ ------------ ------------ ------------ ------------ Cash flows from investing activities: Payments for property and equipment........................... (17,454) (4,326) (21,570) (15,495) (14,996) (20,394) Proceeds from sale of property and equipment........................... 67 CRDA deposits and bond purchases..... (1,816) (739) (2,689) (2,871) (2,024) (2,121) ------------ ------------ ------------ ------------ ------------ ------------ Net cash used in investing activities........................ (19,270) (5,065) (24,192) (18,366) (17,020) (22,515) ------------ ------------ ------------ ------------ ------------ ------------ Cash flows from financing activities: Advances from (repayments to) parent company and affiliates.............. 38,136 (20,286) 2,200 1,582 4,456 7,951 Recapitalization costs paid to parent.............................. (11,216) (874) (704) (1,580) Debt repayments...................... (1,844) (1,302) (1,498) (1,003) (889) (2,056) ------------ ------------ ------------ ------------ ------------ ------------ Net cash provided by (used in) financing activities.............. 25,076 (21,588) 702 (295) 2,863 4,315 ------------ ------------ ------------ ------------ ------------ ------------ Net increase (decrease) in cash and cash equivalents...................... 21,684 (18,629) 2,789 5,757 6,037 8,177 Cash and cash equivalents at beginning of period............................. 11,042 32,726 14,097 16,886 16,886 22,643 ------------ ------------ ------------ ------------ ------------ ------------ Cash and cash equivalents at end of period................................ $ 32,726 $ 14,097 $ 16,886 $ 22,643 $ 22,923 $ 30,820 ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
See Notes to Consolidated Financial Statements of RIH. Note 2 describes a change in entity and related presentation for periods presented. F-31 RESORTS INTERNATIONAL HOTEL, INC. CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER'S DEFICIT (IN THOUSANDS OF DOLLARS)
NOTE EXCESS OF RECEIVABLE LIABILITIES RETAINED FROM GRIFFCO CAPITAL IN OVER ASSETS EARNINGS RESORTS EXCESS OF AT (ACCUMULATED HOLDING, PAR REORGANIZATION DEFICIT) INC. ------------ ------------- ------------ ------------ Balance at December 31, 1989............................ $ 180,030 $ (151,395) $ (35,000) Net loss for period through August 31, 1990............. (227,464) Effects of reorganization: Elimination of accumulated deficit.................... (180,030) $ (198,829) 378,859 Cancellation of note receivable from Griffco Resorts Holding, Inc......................................... 35,000 ------------ ------------- ------------ ------------ Balance at August 31, 1990.............................. -0- (198,829) -0- -0- Net earnings for period from September 1, 1990.......... 5,000 ------------ ------------- ------------ ------------ Balance at December 31, 1990............................ -0- (198,829) 5,000 -0- Net earnings for year 1991.............................. 13,057 ------------ ------------- ------------ ------------ Balance at December 31, 1991............................ -0- (198,829) 18,057 -0- Net earnings for year 1992.............................. 16,414 ------------ ------------- ------------ ------------ Balance at December 31, 1992............................ -0- (198,829) 34,471 -0- Net earnings for three quarters ended September 30, 1993 (unaudited)............................................ 19,266 ------------ ------------- ------------ ------------ Balance at September 30, 1993 (unaudited)............... $ -0- $ (198,829) $ 53,737 $ -0- ------------ ------------- ------------ ------------ ------------ ------------- ------------ ------------
See Notes to Consolidated Financial Statements of RIH. Note 2 describes a change in entity and related presentation for periods presented. F-32 RESORTS INTERNATIONAL HOTEL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Resorts International Hotel, Inc. ("RIH"), a wholly owned subsidiary of Resorts International, Inc. ("RII"), owns and operates Merv Griffin's Resorts Casino Hotel ("Resorts Casino Hotel"), a casino/hotel complex located in Atlantic City, New Jersey. Financial statements and footnote data with respect to September 30, 1993 and the three quarters ended September 30, 1992 and 1993 are unaudited. In the opinion of management, such unaudited financial statements include all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation, in accordance with generally accepted accounting principles. PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of RIH and its subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. REVENUE RECOGNITION RIH records as revenue the win from gaming activities which represents the difference between amounts wagered and amounts won by patrons. Revenues from hotel and related services and from theatre ticket sales are recognized at the time the related service is performed. COMPLIMENTARY SERVICES The Consolidated Statements of Operations reflect each category of operating revenues excluding the retail value of complimentary services provided to casino patrons without charge. The rooms, food and beverage, and other casino/hotel operations departments allocate a percentage of their total operating expenses to the casino department for complimentary services provided to casino patrons. These allocations do not necessarily represent the incremental cost of providing such complimentary services to casino patrons. Amounts allocated to the casino department from the other operating departments were as follows for the years ended December 31:
1990 ------------------------ THROUGH FROM AUGUST 31 SEPTEMBER 1 1991 1992 --------- ------------- --------- --------- (IN THOUSANDS OF DOLLARS) Rooms....................................... $ 2,264 $ 1,019 $ 2,949 $ 3,010 Food and beverage........................... 9,447 5,203 15,963 16,709 Other casino/hotel operations............... 5,495 1,914 5,699 6,174 --------- ------------- --------- --------- Total allocated to casino................. $ 17,206 $ 8,136 $ 24,611 $ 25,893 --------- ------------- --------- --------- --------- ------------- --------- ---------
CASH EQUIVALENTS RIH considers all of its short-term money market securities purchased with maturities of three months or less to be cash equivalents. The carrying value of cash equivalents approximates fair value due to the short maturity of these instruments. INVENTORIES Inventories of provisions, supplies and spare parts are carried at the lower of cost (first-in, first-out) or market. PROPERTY AND EQUIPMENT Property and equipment are depreciated over their estimated useful lives using the straight-line method for financial reporting purposes. F-33 RESORTS INTERNATIONAL HOTEL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) CASINO REINVESTMENT DEVELOPMENT AUTHORITY ("CRDA") OBLIGATIONS Under the New Jersey Casino Control Act ("Casino Control Act"), RIH is obligated to purchase CRDA bonds, which will bear a below-market interest rate, or make an alternative qualifying investment. RIH charges to expense an estimated discount related to CRDA investment obligations as of the date the obligation arises based on fair market interest rates of similar quality bonds in existence as of that date. On the date RIH actually purchases the CRDA bond, the estimated discount previously recorded is adjusted to reflect the actual terms of the bonds issued and the then existing fair market interest rate for similar quality bonds. The discount on CRDA bonds purchased is amortized to interest income over the life of the bonds using the effective interest rate method. INCOME TAXES RIH and RII's other domestic subsidiaries file consolidated U.S. federal income tax returns with RII. In 1990, RIH provided income taxes based on the liability method prescribed in Statement of Financial Accounting Standards No. 96, "Accounting For Income Taxes" ("SFAS 96"). Under this method, the deferred tax liability is determined based on the difference between the financial reporting and tax bases of assets and liabilities and enacted tax rates which will be in effect for the years in which the differences are expected to reverse. The deferred tax liability is reduced by cumulative tax credits and losses being carried forward for tax purposes, subject to applicable limitations. Prior to the reorganization in 1990, RIH's deferred tax liability was transferred to RII. Commencing in 1991, RIH agreed with RII to provide for federal and state income taxes using a combined rate of 40%. Material transactions which would be subject to combined tax rates that are significantly different from the 40% rate are to be separately tax effected. The resulting liability is settled on a current basis. NOTE 2 -- BASIS OF PRESENTATION During 1989, RII and certain of its subsidiaries (the "Old Debtors") filed voluntary petitions or consented to involuntary petitions for relief under chapter 11 of the United States Bankruptcy Code. The Old Debtors filed the Second Amended Joint Plan of Reorganization dated as of May 31, 1990 (the "Old Plan") which was confirmed by the New Jersey bankruptcy court in August 1990. On September 17, 1990 (the "Old Effective Date"), all conditions to effectiveness of the Old Plan were either met or waived and the Old Plan became effective. Under the Old Plan, all previously outstanding debt securities of the Old Debtors were cancelled and exchanged for new debt and equity securities of RII. Also pursuant to the Old Plan, all previously outstanding shares of stock of RII were cancelled. As a result of these and other transactions prescribed in the Old Plan, Merv Griffin, who prior to the reorganization indirectly owned 100% of RII, owned 22% of RII as of October 1, 1990, the initial distribution date of the new securities. RII accounted for the reorganization using "fresh start" accounting. Accordingly, all assets and liabilities of RII and its subsidiaries were restated to reflect their estimated fair values and the accumulated deficit was eliminated. Although the confirmation date was August 28, 1990, RIH recorded the effects of the reorganization as of August 31, 1990. In 1990, RIH recorded a charge from the write-off of the remaining balance of $17,335,000 of deferred debt issuance costs related to certain debt securities of the Old Debtors that were cancelled pursuant to the Old Plan. This write-off was reported as an extraordinary item. RIH also recorded affiliated bad debt write-offs of $98,983,000 in 1990 composed of $63,983,000, the net amount of intercompany receivables from the Old Debtors cancelled pursuant to the Old Plan, F-34 RESORTS INTERNATIONAL HOTEL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 2 -- BASIS OF PRESENTATION (CONTINUED) and a $35,000,000 note receivable from Griffco Resorts Holding, Inc. ("Griffco"), a company that prior to the Old Effective Date was owned by Merv Griffin and was RII's parent, which was also cancelled pursuant to the Old Plan. The revaluation of RIH's other assets and liabilities, which was based on independent appraisals, discounted cash flows, evaluations, estimations and other studies, resulted in a net loss of $108,588,000, with the following components:
(IN THOUSANDS OF DOLLARS) Decrease in working capital......................................... $ 8,355 Decrease in property and equipment.................................. 99,849 Decrease in deferred charges and other assets....................... 384 ---------- $ 108,588 ---------- ----------
The loss on revaluation was included in recapitalization costs in 1990 in the accompanying Consolidated Statements of Operations along with RIH's allocated portion (approximately one-third) of legal and financial advisory fees and other costs associated with the reorganization amounting to $11,216,000. The accumulated deficit at August 31, 1990 of $378,859,000, which included the effects of the reorganization, was eliminated. This deficit was first reclassified to offset the balance of capital in excess of par, with the remainder recorded as excess of liabilities over assets at reorganization. The financial information contained herein relating to RIH's 1990 Consolidated Statements of Operations and Cash Flows is presented separately for the periods "Through August 31" and "From September 1" due to the new basis of accounting which resulted from the application of fresh start accounting. BANKRUPTCY ACCOUNTING For the period ended August 31, 1990, during which RII operated subject to the jurisdiction of the New Jersey bankruptcy court, RIH did not accrue interest on its notes payable to affiliate or amortize debt issuance costs on public debt outstanding prior to the Old Effective Date of the Old Plan. NOTE 3 -- RECEIVABLES Components of receivables at December 31 were as follows:
1991 1992 --------- --------- (IN THOUSANDS OF DOLLARS) Gaming.............................................................. $ 10,912 $ 8,703 Less allowance for doubtful accounts.............................. (5,326) (4,200) --------- --------- 5,586 4,503 --------- --------- Non-gaming: Hotel and related................................................. 566 450 Other............................................................. 649 501 --------- --------- 1,215 951 Less allowance for doubtful accounts.............................. (327) (48) --------- --------- 888 903 --------- --------- $ 6,474 $ 5,406 --------- --------- --------- ---------
F-35 RESORTS INTERNATIONAL HOTEL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 4 -- NOTE RECEIVABLE FROM AFFILIATE In 1988, RIH loaned $50,000,000 pursuant to a pre-arranged back-to-back loan to Resorts International (Bahamas) 1984 Limited ("RIB"), an indirect wholly owned subsidiary of RII, in exchange for a promissory note (the "RIB Note"). Such note is payable on demand and bears interest at 13 1/2% per annum, with interest payments due each May 1 and November 1. The note is guaranteed by certain of RIB's subsidiaries. The guarantees are secured by mortgages on the Paradise Island Resort & Casino, the Ocean Club Golf & Tennis Resort, and the Paradise Paradise Beach Resort on Paradise Island in The Bahamas, and all furniture, machinery and equipment used in connection therewith. The RIB Note and the mortgages securing payment thereof have been assigned as part of the collateral for the Senior Secured Redeemable Notes due April 15, 1994 (the "Old Series Notes") issued by RII pursuant to the Old Plan. See Note 7. NOTE 5 -- PROPERTY AND EQUIPMENT Components of property and equipment at December 31 were as follows:
1991 1992 ----------- ----------- (IN THOUSANDS OF DOLLARS) Land and land rights................................................ $ 53,250 $ 53,250 Land improvements................................................... 97 130 Hotel and other buildings........................................... 80,718 93,235 Furniture, machinery and equipment.................................. 26,665 31,168 Construction in progress............................................ 1,848 326 ----------- ----------- 162,578 178,109 Less accumulated depreciation..................................... (11,027) (22,420) ----------- ----------- $ 151,551 $ 155,689 ----------- ----------- ----------- -----------
Substantially all of RIH's property and equipment has been pledged as collateral for the Old Series Notes issued by RII pursuant to the Old Plan. See Note 7. NOTE 6 -- ACCOUNTS PAYABLE AND ACCRUED LIABILITIES Components of accounts payable and accrued liabilities at December 31 were as follows:
1991 1992 --------- --------- (IN THOUSANDS OF DOLLARS) Accrued payroll and related taxes and benefits...................... $ 9,332 $ 10,530 Accrued gaming taxes, fees and related assessments.................. 6,493 6,556 Customer deposits and unearned revenues............................. 2,520 2,294 Trade payables...................................................... 2,338 1,528 Insurance reserves.................................................. 1,301 1,272 Progressive slot liability.......................................... 3,147 315 Other accrued liabilities........................................... 2,587 3,578 --------- --------- $ 27,718 $ 26,073 --------- --------- --------- ---------
NOTE 7 -- NOTES PAYABLE TO AFFILIATE In 1988, Griffin Resorts Inc. ("GRI"), a subsidiary of RII, issued $325,000,000 principal amount of publicly traded notes. GRI loaned the proceeds of such notes to RIH in exchange for (i) two promissory notes payable to GRI (the "RIH-GRI Notes"); (ii) a senior mortgage on the Resorts Casino Hotel and the other properties owned by RIH, and a first priority security interest in the personal property of RIH; and (iii) the assignment of the RIB Note for $50,000,000 and mortgage securing such note (see Note 4). F-36 RESORTS INTERNATIONAL HOTEL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 7 -- NOTES PAYABLE TO AFFILIATE (CONTINUED) In 1990, the terms of the RIH-GRI Notes were modified and such amended notes were pledged as collateral for the Old Series Notes issued by RII. In 1992, the notes were further amended (the "Second Amended RIH-GRI Notes"). The sole purpose of the Second Amended RIH-GRI Notes is to collateralize RII's Old Series Notes. The Second Amended RIH-GRI Notes are payable on demand after April 15, 1994 and are non-interest bearing, but the principal due upon demand by GRI accretes according to a schedule. As of April 15, 1994, the principal amount of the notes would accrete to $446,150,000. However, GRI and RIH have entered into an intercompany agreement whereby GRI will not require payment of the amount in excess of the original $325,000,000 principal amount of the notes unless GRI is instructed to do so by the indenture trustee or other collateral pledgee of the Old Series Notes. At December 31, 1992 the accretion in principal amount of these notes in excess of $325,000,000 amounted to $73,290,000. The Second Amended RIH-GRI Notes and the RIB Note described in Note 4 relate to intercompany loans which were not anticipated to be repaid in the ordinary course of business. Also, RII is contemplating a restructuring of the Old Series Notes, which may also affect these and other intercompany relationships among RII's subsidiaries; however, the terms and effects of any possible restructuring are uncertain at this time. Thus, it is not practicable to estimate the fair value of RIH's intercompany notes without incurring excessive costs. RIH's assets were restated to their estimated fair values at August 31, 1990. See Note 5 for a summary of RIH's property and equipment balances. The indentures for RII's Old Series Notes restrict RIH from the incurrence of additional indebtedness, with certain exceptions. NOTE 8 -- OTHER LONG-TERM DEBT Other long-term debt consists of capitalized lease obligations under which RIH is the lessee of computer equipment, slot machines and printing equipment. These leases expire in various years through 1996 and bear interest rates from 8.5% to 33.3%. F-37 RESORTS INTERNATIONAL HOTEL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 9 -- RELATED PARTY TRANSACTIONS RIH recorded the following income and expenses from RII and other affiliates:
1990 ------------------------ THROUGH FROM AUGUST 31 SEPTEMBER 1 1991 1992 ----------- ----------- --------- --------- (IN THOUSANDS OF DOLLARS) Income -- Resorts International (Bahamas) 1984 Limited Interest...................................... $ 4,500 $ 2,250 $ 6,750 $ 6,750 ----------- ----------- --------- --------- ----------- ----------- --------- --------- Expenses: Resorts International, Inc. Parent services fee......................... $ 3,200 $ 2,455 $ 8,154 $ 8,629 Property rentals............................ 229 108 325 325 Steeplechase Transport and Parking, Inc. Parking fees................................ 1,118 Trams Atlantic Limousine fees.............................. 376 Other......................................... 189 ----------- ----------- --------- --------- $ 5,112 $ 2,563 $ 8,479 $ 8,954 ----------- ----------- --------- --------- ----------- ----------- --------- ---------
For periods through August 31, 1990, RII charged RIH for services provided based on an allocation of corporate overhead costs incurred by RII. Effective with the reorganization, RII began charging RIH a fee of three (3) percent of gross revenues for such services. Also, recapitalization costs reflected on the Consolidated Statements of Operations include charges of $11,216,000 for 1990 and $874,000 for 1992 representing RIH's allocated portion (approximately one-third) of RII's consolidated recapitalization costs. In addition to the above, charges for insurance cost are allocated to RIH based on relative amounts of operating revenue, payroll, property value, or other appropriate measures. Also, see Note 2 for discussion of the write-off of certain affiliated receivables in 1990. NOTE 10 -- RETIREMENT PLANS RIH has a defined contribution plan (the "Savings Plan"), in which substantially all non-union employees are eligible to participate. Employees of certain other affiliated companies are also eligible to participate in the Savings Plan. Under the Savings Plan, eligible participating employees may contribute up to a total of 4% of their annual cash compensation as a basic contribution and may also elect to contribute up to an additional 10% as a voluntary contribution. RIH and other subsidiaries of RII contribute an amount equal to 50% of their employees' basic contributions and, on a discretionary basis, may make additional contributions. RIH's contributions under the Savings Plan were approximately $492,000, $654,000 and $665,000 in 1990, 1991 and 1992, respectively. Union employees are covered by various multi-employer pension plans to which contributions are made by RIH and other unrelated employers. Contributions by RIH were approximately $661,000, $745,000 and $827,000 in 1990, 1991 and 1992, respectively. NOTE 11 -- INCOME TAXES No tax provision was recorded for the two periods of 1990 due to the generation of additional net operating losses for federal and state income tax purposes during the period through August 31 which were sufficient to offset taxable income generated during the period from September 1. F-38 RESORTS INTERNATIONAL HOTEL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 11 -- INCOME TAXES (CONTINUED) The effective income tax rate on the earnings (loss) before income taxes and extraordinary item varies from the statutory federal income tax rate as a result of the following factors:
1990 -------------------------- THROUGH FROM AUGUST 31 SEPTEMBER 1 ---------- ------------ Statutory federal income tax rate (benefit)....... (34.0%) 34.0% Net operating losses utilized..................... (34.1%) Net operating losses for which no tax benefit was recognized....................................... 17.5% Affiliated bad debt write-off..................... 16.0% Other, net........................................ 0.5% 0.1% ----- ----- 0.0% 0.0% ----- ----- ----- -----
As described in Note 1, commencing in 1991 RIH agreed with RII to provide for federal and state income taxes at a combined rate of 40%. For the years 1991 and 1992 this resulted in income tax expense of $8,704,000 and $10,942,000, respectively. For federal tax purposes RIH had net operating loss carryforwards of approximately $188,000,000 at December 31, 1992, which expire in 2003 through 2005. These loss carryforwards were produced in periods prior to the change in ownership of the consolidated group of which RIH is a part; therefore, these loss carryforwards are limited in their availability to offset future taxable income. For state tax purposes RIH had net operating loss carryforwards of approximately $170,000,000 at December 31, 1992, which expire in 1994 through 1997. F-39 RESORTS INTERNATIONAL HOTEL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 12 -- STATEMENTS OF CASH FLOWS Supplemental disclosure required by Statement of Financial Accounting Standards No. 95, "Statement of Cash Flows" is presented below for the periods indicated.
FOR THE YEAR ENDED DECEMBER 31, ---------------------------------------------- FOR THE THREE 1990 QUARTERS ENDED ------------------------ SEPTEMBER 30, THROUGH FROM -------------------- AUGUST 31 SEPTEMBER 1 1991 1992 1992 1993 --------- ------------- --------- --------- --------- --------- (UNAUDITED) (IN THOUSANDS OF DOLLARS) Reconciliation of net earnings (loss) to net cash provided by operating activities: Net earnings (loss).................................. $(227,464) $ 5,000 $ 13,057 $ 16,414 $ 14,428 $ 19,266 Adjustments to reconcile net earnings (loss) to net cash provided by operating activities: Extraordinary item -- loss on exchange of debt..... 17,335 Recapitalization costs............................. 119,804 874 704 1,580 Deferred tax provision............................. 400 Affiliated bad debt write-off...................... 98,983 Depreciation and amortization...................... 10,956 1,905 9,084 11,398 8,625 10,264 Provision for doubtful receivables................. 1,307 801 3,480 1,414 839 536 Net loss on sale of property....................... 268 8 Provision for discount on CRDA obligations......... 993 504 1,574 1,451 1,117 1,196 Net (increase) decrease in accounts receivable..... (2,115) 44 (2,199) (346) (266) (812) Net (increase) decrease in interest receivable from affiliate......................................... (1,125) 1,125 (3,375) (1,688) 1,687 Net (increase) decrease in inventories and prepaid expenses.......................................... (2,946) 1,439 1,724 (580) (1,208) (5,320) Net (increase) decrease in deferred charges and other assets...................................... 449 75 189 (1,309) (1,146) (731) Net decrease in accounts payable and accrued liabilities....................................... (299) (2,869) (898) (1,531) (1,211) (1,689) --------- ------------- --------- --------- --------- --------- Net cash provided by operating activities............ $ 15,878 $ 8,024 $ 26,279 $ 24,418 $ 20,194 $ 26,377 --------- ------------- --------- --------- --------- --------- --------- ------------- --------- --------- --------- --------- Non-cash investing and financing transactions: Increase in liabilities for additions to property and equipment and other assets.......................... $ 2,960 $ 912 $ 1,180 $ 112 $ 242 $ 843 --------- ------------- --------- --------- --------- --------- --------- ------------- --------- --------- --------- ---------
NOTE 13 -- COMMITMENTS AND CONTINGENCIES CRDA The Casino Control Act, as originally adopted, required a licensee to make investments equal to 2% of the licensee's net casino win (as defined under the Casino Control Act) (the "investment obligation") for each calendar year, commencing in 1979, in which such net casino win exceeded its "cumulative investments" (as defined in the Casino Control Act). A licensee had five years from the end of each calendar year to satisfy this investment obligation or become liable for an "alternative tax" in the same amount. In 1984 the New Jersey legislature amended the Casino Control Act so that these provisions now apply only to investment obligations for the years 1979 through 1983. Effective for 1984 and subsequent years, the amended Casino Control Act requires a licensee to satisfy its investment obligation by purchasing bonds to be issued by the CRDA, or by making other investments authorized by the CRDA, in an amount equal to 1.25% of a licensee's net casino win. If the investment obligation is not satisfied, then the licensee will be subject to an investment alternative tax of 2.5% of net casino win. Since 1985, a licensee has been required to make quarterly deposits with the CRDA against its current year investment obligation. F-40 RESORTS INTERNATIONAL HOTEL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 13 -- COMMITMENTS AND CONTINGENCIES (CONTINUED) An analysis of RIH's investment obligations under the Casino Control Act and RIH's means of settlement since 1979 follows:
1979-1983 1984-1992 TOTAL ---------- ---------- ---------- (IN THOUSANDS OF DOLLARS) Investment obligations...................................................... $ (21,637) $ (26,118) $ (47,755) Means of settlement: Housing related investments under audit................................... 13,104 13,104 Housing related investments previously approved........................... 1,000 1,000 CRDA deposits/bond purchases.............................................. 7,533 25,454 32,987 ---------- ---------- ---------- Remaining investment obligation at December 31, 1992, which was deposited in January 1993............................................................... $ -0- $ (664) $ (664) ---------- ---------- ---------- ---------- ---------- ----------
With regard to the housing related investments under audit, in January 1988 the CRDA notified RIH of its interpretation as to the periods of time during which expenditures could be made to satisfy investment obligations. CRDA's interpretation differs from RIH's and if found to be correct would decrease the amount of RIH's qualifying expenditures by approximately $5,000,000 to $6,000,000. RIH believes that its interpretation is correct and intends to contest this issue. RIH also received a letter dated November 9, 1989, from the State of New Jersey Department of the Treasury (the "Treasury") stating that the housing related investments made by RIH were not sufficient to meet its investment obligation for the years 1979 through 1983. The letter also stated that alternative tax in the amount of $21,637,000 was due for those years, in addition to penalties and interest thereon which amounted to $12,514,000 as of the date of the letter. As set forth in the table above, RIH believes that $8,533,000 of such obligations have been settled; $7,533,000 in cash and $1,000,000 by previously approved housing related investments. Also, RIH has received an audit report issued by an agency acting on behalf of the Treasury identifying qualifying credits from housing related investments of $10,165,000. This leaves a total of $2,939,000 of housing related investments under audit in question. RIH has notified the Treasury that it takes exception to the Treasury's computation of amounts due. Further, RIH believes that the $2,939,000 of housing related investments in question will be found, under further audit, to have been satisfied. Although these matters have been dormant for some time, the Company's counsel was recently contacted by the Treasury and expects an update of the status of these matters in the near future. If the CRDA's interpretation as to the periods of time during which qualifying expenditures can be made is found to be correct, or if the Treasury's issue is determined adversely, RIH could be required to pay the relevant amount in cash to the CRDA. In the opinion of management, based upon advice of counsel, the aggregate liability, if any, arising from these issues will not have a material adverse effect on the accompanying consolidated financial statements. As reflected in the table above, through December 31, 1992, RIH had made CRDA deposits/bond purchases totalling $32,987,000. However, in August 1989 RIH donated $12,048,000 to the CRDA in exchange for which RIH was relieved of its obligation to purchase CRDA bonds of $18,193,000. Because RIH already had the $18,193,000 for bond purchases on deposit with the CRDA, the difference between this amount and the amount of the donation, or $6,145,000, was refunded to RIH in August 1989. Thus, at December 31, 1992, RIH had a remaining balance of $4,873,000 face value of bonds issued by the CRDA and had $9,921,000 on deposit with the CRDA. These bonds and deposits, net of an estimated discount charged to expense to reflect the below-market interest rate payable on the bonds, were recorded as other assets in RIH's Consolidated Balance Sheets. F-41 RESORTS INTERNATIONAL HOTEL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 13 -- COMMITMENTS AND CONTINGENCIES (CONTINUED) RIH records charges to expense to reflect the below-market interest rate payable on the bonds it may have to purchase to fulfill its investment obligation at the date the obligation arises. The charges in 1990, 1991 and 1992 for discounts on obligations arising in those years were $1,497,000, $1,574,000 and $1,451,000, respectively. LITIGATION RIH is a defendant in certain litigation. In the opinion of management, and based upon advice of counsel, the aggregate liability, if any, arising from such litigation will not have a material adverse effect on the accompanying consolidated financial statements. NOTE 14 -- SUBSEQUENT EVENTS RII RESTRUCTURING In April 1993 RII reached an agreement in principle with two representatives (the "Representatives") of major holders of its Old Series Notes as to terms of a restructuring of Old Series Notes. Such restructuring was to include the exchange of the Old Series Notes for, among other things, cash, new debt, an equity interest in RII and 100% of the equity of RII's Bahamian subsidiaries, Paradise Island Airlines, Inc. ("PIA") and certain domestic subsidiaries which support the Bahamian operations (PIA and these other domestic subsidiaries are hereinafter referred to as the "U.S. Paradise Island Subsidiaries"). Since that time, management of RII has been cooperating with the Representatives in negotiating the possible sale to a third party (the "Purchaser") of a majority of the equity of RII's Bahamian subsidiaries and the assets and related liabilities of the U.S. Paradise Island Subsidiaries. Further negotiations among RII, the Purchaser and the Representatives have led to the currently proposed restructuring which contemplates, among other things, the exchange of the Old Series Notes for the following: (a) excess cash, as defined, of RII consolidated with its subsidiaries, (b) $125,000,000 principal amount of nine-year, 11% mortgage notes to be issued by a subsidiary of RII and to be secured by a mortgage on the Resorts Casino Hotel and guaranteed by RIH, (c) $35,000,000 principal amount of ten-year, 11.375%, junior mortgage notes to be issued by a subsidiary of RII and to be secured by a junior mortgage on the Resorts Casino Hotel and guaranteed by RIH, (d) shares of common stock of RII in an amount representing approximately 40% of the total outstanding shares, and (e) either (i) $65,000,000 cash and 40% of the equity of a company formed by the Purchaser to purchase 100% of the equity of RII's Bahamian subsidiaries and, through subsidiaries, the assets and related liabilities of the U.S. Paradise Island Subsidiaries or, if that purchase is not consummated, (ii) 100% of the equity of a holding company formed to own 100% of the equity of RII's Bahamian subsidiaries and, through subsidiaries, the assets and related liabilities of the U.S. Paradise Island Subsidiaries. Before any restructuring can be completed, specific terms and conditions must be finalized and set forth in definitive agreements, indentures and other documents. Also, any restructuring must be approved by various governmental agencies, and the proposed restructuring will require certain shareholder and creditor approvals, as well as confirmation by the Bankruptcy Court. RII cannot provide any assurances as to whether or when the proposed restructuring will be effected, or that the restructuring will be on terms similar to those described above. F-42 RESORTS INTERNATIONAL HOTEL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 14 -- SUBSEQUENT EVENTS (CONTINUED) RELATED PARTY TRANSACTIONS In April 1993, RII, RIH and The Griffin Group, Inc. (the "Griffin Group"), a corporation owned by Merv Griffin, Chairman of the Board of RII, entered into a license and services agreement (the "New Griffin Services Agreement") effective as of September 17, 1992, upon the expiration of the previous license and services agreement. Pursuant to the New Griffin Services Agreement, Griffin Group granted RII and RIH a non-exclusive license to use the name and likeness of Merv Griffin to advertise and promote the facilities and operations of RII and its subsidiaries. Also pursuant to the New Griffin Services Agreement, Mr. Griffin is to provide certain services to RII and RIH, including serving as Chairman of the Board of RII and as a host, producer and featured performer in various shows to be presented in Resorts Casino Hotel, and furnishing marketing and consulting services. The New Griffin Services Agreement is to continue until the later of September 17, 1996 or the fourth anniversary of the consummation of a Reorganization (as defined, which would include a restructuring such as that discussed under "RII Restructuring" above) of RII; but in no event shall the term extend beyond September 17, 1997. If a Reorganization has not been consummated by September 17, 1996, then the New Griffin Services Agreement shall terminate on that date. The New Griffin Services Agreement provides for earlier termination under certain circumstances including, among others, a change of control (as defined) of RII and RIH and Mr. Griffin ceasing to serve as Chairman of the Board of RII. The New Griffin Services Agreement provides for compensation to Griffin Group in the amount of $2,000,000 for the year ended September 16, 1993, and in specified amounts for each of the following years, which increase at approximately 5% per year. In accordance with the New Griffin Services Agreement, upon signing, RIH paid Griffin Group $4,100,000, representing compensation for the first two years. Thereafter, the New Griffin Services Agreement calls for annual payments on September 17, each representing a prepayment for the year ending two years hence. In the event of an early termination of the New Griffin Services Agreement, and depending on the circumstances of such early termination, all or a portion of the compensation paid to Griffin Group in respect of the period subsequent to the date of termination may be required to be repaid to RII and RIH. RII and RIH agreed to indemnify, defend and hold harmless Griffin Group and Mr. Griffin against certain claims, losses and costs, and to maintain certain insurance coverage with Mr. Griffin and Griffin Group as named insureds. INCOME TAX ACCOUNTING Effective January 1, 1993 RIH adopted Statement of Financial Accounting Standards No. 109 ("SFAS 109"), "Accounting for Income Taxes," which supersedes SFAS 96 but retains the liability method of accounting for income taxes. Although RIH is a member of a consolidated group for federal income tax purposes, RIH will be applying SFAS 109 on a separate return basis for financial reporting purposes. Effective with the adoption of SFAS 109, RIH will no longer be providing for federal and state income taxes at the combined rate of 40%, and settling such liability on a current basis, as had been its practice under an agreement with RII. Also, in connection with the adoption of SFAS 109, RIH's deferred income tax liability was transferred to RIH from RII. This liability results primarily from basis differences on property and equipment, which were restated to their estimated fair values in 1990 for financial reporting purposes, while such revaluation was not permitted for income tax return purposes. In August 1993 tax law changes were enacted which resulted in an increase in RIH's federal income tax rate. The increase resulted in a $400,000 increase in RIH's deferred income tax liability and a deferred income tax provision of the same amount. F-43 REPORT OF INDEPENDENT AUDITORS The Board of Directors and Shareholders of Resorts International, Inc. Resorts International Hotel Financing, Inc. We have audited the accompanying balance sheet of Resorts International Hotel Financing, Inc. ("RIHF") as of September 30, 1993. RIHF, a company formed by Resorts International, Inc. ("RII"), was organized for the purpose of issuing public debt securities in connection with a plan of reorganization of RII. RIHF is a wholly owned subsidiary of RII. This balance sheet is the responsibility of RIHF's management. Our responsibility is to express an opinion on this balance sheet based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the balance sheet is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the balance sheet. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall balance sheet presentation. We believe that our audit of the balance sheet provides a reasonable basis for our opinion. In our opinion, the balance sheet referred to above presents fairly, in all material respects, the financial position of RIHF at September 30, 1993, in conformity with generally accepted accounting principles. ERNST & YOUNG Philadelphia, Pennsylvania December 29, 1993 F-44 RESORTS INTERNATIONAL HOTEL FINANCING, INC. BALANCE SHEET ASSETS
SEPTEMBER 30, 1993 --------------------- Due from RII.................................................................................. $ 10 --- --- SHAREHOLDER'S EQUITY Shareholder's equity -- Capital in excess of par.............................................. $ 10 --- ---
See Notes to Balance Sheet of RIHF. F-45 RESORTS INTERNATIONAL HOTEL FINANCING, INC. NOTES TO BALANCE SHEET NOTE 1 -- ORGANIZATION AND OPERATIONS Resorts International Hotel Financing, Inc. ("RIHF") was incorporated under the laws of the State of Delaware in June 1993 and has had no operations to date. RIHF, a wholly owned subsidiary of Resorts International, Inc. ("RII"), was organized for the purpose of issuing public debt securities in connection with a plan of reorganization of RII. RIHF is authorized to issue 1,000 shares with a par value of $.01 per share. No shares were issued as of the date of the accompanying Balance Sheet; however, RII purchased one share for $10 in October 1993. NOTE 2 -- PROPOSED ISSUANCE OF NOTES In April 1993 RII reached an agreement in principle with two representatives (the "Representatives") of major holders of its Senior Secured Redeemable Notes due April 15, 1994 (the "Old Series Notes") as to terms of a restructuring of Old Series Notes. Such restructuring was to include the exchange of the Old Series Notes for, among other things, cash, new debt, an equity interest in RII and 100% of the equity of RII's Bahamian subsidiaries, Paradise Island Airlines, Inc. ("PIA") and certain domestic subsidiaries which support the Bahamian operations (PIA and these other domestic subsidiaries are hereinafter referred to as the "U.S. Paradise Island Subsidiaries"). Since that time, management of RII has been cooperating with the Representatives in negotiating the possible sale to a third party (the "Purchaser") of a majority of the equity of RII's Bahamian subsidiaries and the assets and related liabilities of the U.S. Paradise Island Subsidiaries. Further negotiations among RII, the Purchaser and the Representatives have led to the currently proposed restructuring which contemplates, among other things, the exchange of the Old Series Notes for the following: (a) excess cash, as defined, of RII consolidated with its subsidiaries, (b) $125,000,000 principal amount of nine-year, 11% mortgage notes to be issued by RIHF and to be secured by a mortgage on Merv Griffin's Resorts Casino Hotel in Atlantic City (the "Resorts Casino Hotel") and guaranteed by Resorts International Hotel, Inc. ("RIH"), RII's subsidiary that owns and operates Resorts Casino Hotel, (c) $35,000,000 principal amount of ten-year, 11.375%, junior mortgage notes to be issued by RIHF and to be secured by a junior mortgage on the Resorts Casino Hotel and guaranteed by RIH, (d) shares of common stock of RII in an amount representing approximately 40% of the total outstanding shares, and (e) either (i) $65,000,000 cash and 40% of the equity of a company formed by the Purchaser to purchase 100% of the equity of RII's Bahamian subsidiaries and, through subsidiaries, the assets and related liabilities of the U.S. Paradise Island Subsidiaries or, if that purchase is not consummated, (ii) 100% of the equity of a holding company formed to own 100% of the equity of RII's Bahamian subsidiaries and, through subsidiaries, the assets and related liabilities of the U.S. Paradise Island Subsidiaries. The proposed restructuring also contemplates that RIHF will have a senior prime loan (the "RIHF Senior Facility") of up to $20,000,000 available for drawdown for twelve months following the restructuring. Such RIHF Senior Facility would be secured by a first priority lien on Resorts Casino Hotel and would be senior to both the senior mortgage notes and the junior mortgage notes. This loan would bear interest at 11% from drawdown and mature eight years from that date. In connection with the proposed restructuring, it is also anticipated that RIHF will obtain notes receivable from RIH with terms that mirror RIHF's debt so that RIHF will be able to service its debt. F-46 RESORTS INTERNATIONAL HOTEL FINANCING, INC. NOTES TO BALANCE SHEET (CONTINUED) NOTE 2 -- PROPOSED ISSUANCE OF NOTES (CONTINUED) Before any restructuring can be completed, specific terms and conditions must be finalized and set forth in definitive agreements, indentures and other documents. Also, any restructuring must be approved by various governmental agencies, and the proposed restructuring will require certain shareholder and creditor approvals, as well as confirmation by the Bankruptcy Court. RII cannot provide any assurances as to whether or when the proposed restructuring will be effected, or that the restructuring will be on terms similar to those described above. F-47 REPORT OF INDEPENDENT AUDITORS The Board of Directors and Shareholders of Resorts International, Inc. P. I. Resorts Limited We have audited the accompanying balance sheet of P. I. Resorts Limited ("PIRL") as of October 15, 1993. PIRL, a wholly owned subsidiary of Resorts International, Inc. ("RII"), was organized for the purpose of effecting a transfer of ownership of certain of RII's subsidiaries to certain of RII's creditors in connection with a plan of reorganization of RII. This balance sheet is the responsibility of PIRL's management. Our responsibility is to express an opinion on this balance sheet based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the balance sheet is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the balance sheet. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall balance sheet presentation. We believe that our audit of the balance sheet provides a reasonable basis for our opinion. In our opinion, the balance sheet referred to above presents fairly, in all material respects, the financial position of PIRL at October 15, 1993, in conformity with generally accepted accounting principles. ERNST & YOUNG Philadelphia, Pennsylvania December 29, 1993 F-48 P. I. RESORTS LIMITED BALANCE SHEET ASSETS
OCTOBER 15, 1993 ----------------- Due from parent.................................................................................. $ 0.02 ----- ----- SHAREHOLDER'S EQUITY Shareholder's equity -- Capital stock: Ordinary -- $.01 par value; 25,000,000 shares authorized; 2 shares issued and outstanding...... $ 0.02 Preference -- $.01 par value; 10,000,000 shares authorized; none issued and outstanding........ ----- $ 0.02 ----- -----
See Notes to Balance Sheet of PIRL. F-49 P. I. RESORTS LIMITED NOTES TO BALANCE SHEET NOTE 1 -- ORGANIZATION AND OPERATIONS P. I. Resorts Limited ("PIRL") was incorporated under the laws of the Commonwealth of The Bahamas in October 1993 and has had no operations to date. PIRL, a wholly owned subsidiary of Resorts International, Inc. ("RII"), was organized for the purpose of effecting a transfer of ownership of certain of RII's subsidiaries to certain of RII's creditors in connection with a plan of reorganization of RII. NOTE 2 -- PROPOSED TRANSACTIONS In April 1993 RII reached an agreement in principle with two representatives (the "Representatives") of major holders of its Senior Secured Redeemable Notes due April 15, 1994 (the "Old Series Notes") as to terms of a restructuring of Old Series Notes. Such restructuring was to include the exchange of the Old Series Notes for, among other things, cash, new debt, an equity interest in RII and 100% of the equity of RII's Bahamian subsidiaries, Paradise Island Airlines, Inc. ("PIA") and certain domestic subsidiaries which support the Bahamian operations (PIA and these other domestic subsidiaries are hereinafter referred to as the "U.S. Paradise Island Subsidiaries"). Since that time, management of RII has been cooperating with the Representatives in negotiating the possible sale to a third party (the "Purchaser") of a majority of the equity of RII's Bahamian subsidiaries and the assets and related liabilities of the U.S. Paradise Island Subsidiaries. Further negotiations among RII, the Purchaser and the Representatives have led to the currently proposed restructuring which contemplates, among other things, the exchange of the Old Series Notes for the following: (a) excess cash, as defined, of RII consolidated with its subsidiaries, (b) $125,000,000 principal amount of nine-year, 11% mortgage notes to be issued by a subsidiary of RII and to be secured by a mortgage on Merv Griffin's Resorts Casino Hotel in Atlantic City (the "Resorts Casino Hotel") and guaranteed by Resorts International Hotel, Inc. ("RIH"), RII's subsidiary that owns and operates Resorts Casino Hotel, (c) $35,000,000 principal amount of ten-year, 11.375%, junior mortgage notes to be issued by a subsidiary of RII and to be secured by a junior mortgage on the Resorts Casino Hotel and guaranteed by RIH, (d) shares of common stock of RII in an amount representing approximately 40% of the total outstanding shares, and (e) either (i) $65,000,000 cash and 40% of the equity of a company formed by the Purchaser to purchase 100% of the equity of RII's Bahamian subsidiaries and, through subsidiaries, the assets and related liabilities of the U.S. Paradise Island Subsidiaries or, if that purchase is not consummated, (ii) 100% of the equity of RII's Bahamian subsidiaries and the assets and related liabilities of the U.S. Paradise Island Subsidiaries. In connection with such an exchange including alternative (ii) of (e) above it is anticipated that all of the equity of RII's Bahamian subsidiaries will be transferred to PIRL, the assets and liabilities of the U.S. Paradise Island Subsidiaries will be transferred to subsidiaries of PIRL (none of which currently exist), and PIRL's ordinary shares will be distributed to holders of Old Series Notes. Before any restructuring can be completed, specific terms and conditions must be finalized and set forth in definitive agreements, indentures and other documents. Also, any restructuring must be approved by various governmental agencies, and the proposed restructuring will require certain shareholder and creditor approvals, as well as confirmation by the Bankruptcy Court. RII cannot provide any assurance as to whether or when the proposed restructuring will be effected, or that the restructuring will be on terms similar to those described above. F-50 REPORT OF INDEPENDENT AUDITORS The Board of Directors and Shareholders of Resorts International, Inc. PIRL Group We have audited the accompanying combined balance sheets of PIRL Group as of December 31, 1992 and 1991, and the related combined statements of operations, changes in shareholders' equity, and cash flows for each of the three years in the period ended December 31, 1992. These financial statements are the responsibility of the PIRL Group's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. PIRL Group, as disclosed in the financial statements and related notes, has extensive intercompany relationships and transactions with Resorts International, Inc. ("RII") and its affiliates. RII has significant debt which becomes due and payable in April 1994. Through April 1994, RII may satisfy its interest obligations on this debt with the issuance of additional debt. RII's ability to pay this debt at maturity was premised upon the contemplated sale of RII's operations on Paradise Island and of its non-operating real estate holdings in Atlantic City generating sufficient proceeds to reduce the obligations under this debt to a level that, if refinanced at maturity in April 1994, could be serviced by cash flow from the remaining operations. It presently appears unlikely the proceeds from a possible sale of these operations will provide a reduction of principal to this level. Consequently, RII is reviewing other financial alternatives. One such alternative is described in Note 13. However, specific terms and conditions have not been finalized. In our opinion, the financial statements referred to above present fairly, in all material respects, the combined financial position of PIRL Group at December 31, 1992 and 1991, and the combined results of its operations and its cash flows for each of the three years in the period ended December 31, 1992, in conformity with generally accepted accounting principles. ERNST & YOUNG Philadelphia, Pennsylvania April 23, 1993 except for Note 13, as to which the date is December 29, 1993 F-51 PIRL GROUP COMBINED BALANCE SHEETS (IN THOUSANDS OF DOLLARS)
DECEMBER 31, ------------------- 1991 1992 -------- -------- SEPTEMBER 30, 1993 ------------- (UNAUDITED) ASSETS Current assets: Cash (including cash equivalents of $1,983, $4,674 and $7,657)........................ $ 7,727 $ 12,200 $ 12,870 Restricted cash equivalents................ 236 601 1,099 Receivables, net........................... 22,215 18,013 7,380 Inventories................................ 6,996 6,989 7,020 Prepaid expenses........................... 5,376 4,870 5,221 -------- -------- ------------- Total current assets..................... 42,550 42,673 33,590 Property and equipment, net of accumulated depreciation................................ 194,195 184,058 176,606 Deferred charges and other assets............ 753 945 1,332 -------- -------- ------------- $237,498 $227,676 $ 211,528 -------- -------- ------------- -------- -------- ------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current maturities of long-term debt....... $ 613 $ 185 $ 130 Accounts payable and accrued liabilities... 26,957 18,440 18,688 Due to parent company...................... 31,421 40,614 35,676 Interest payable to affiliate.............. 1,125 4,500 2,813 Note payable to affiliate.................. 50,000 50,000 50,000 -------- -------- ------------- Total current liabilities................ 110,116 113,739 107,307 -------- -------- ------------- Long-term debt............................... 457 269 169 -------- -------- ------------- Commitments and contingencies (Note 13) Shareholders' equity: Capital stock -- shares issued and outstanding: Resorts International (Bahamas) 1984 Limited: Class A -- 500 shares.................. 1 1 1 Class B -- 400 shares.................. 1 1 1 Class C -- 900 shares.................. 3 3 3 Resorts International Disbursement, Inc. -- 100 shares........................... Paradise Island Vacations, Inc. -- 1,000 shares.................................. 1 1 1 Resorts Representation International, Inc. -- 100 shares...................... International Suppliers, Inc. -- 100 shares.................................. Paradise Island Airlines, Inc. -- 10 shares.................................. 26 26 26 ANTL, Inc. -- 100 shares................. 1 1 1 -------- -------- ------------- 33 33 33 Capital in excess of par................... 147,546 147,546 147,546 Accumulated deficit........................ (20,654) (33,911) (43,527 ) -------- -------- ------------- Total shareholders' equity............... 126,925 113,668 104,052 -------- -------- ------------- $237,498 $227,676 $ 211,528 -------- -------- ------------- -------- -------- -------------
See Notes to Combined Financial Statements of PIRL Group. F-52 PIRL GROUP COMBINED STATEMENTS OF OPERATIONS (IN THOUSANDS OF DOLLARS)
FOR THE YEAR ENDED DECEMBER 31, --------------------------------------------------- 1990 FOR THE THREE QUARTERS ------------------------- ENDED SEPTEMBER 30, THROUGH FROM ------------------------ AUGUST 31 SEPTEMBER 1 1991 1992 1992 1993 ----------- ------------ ----------- ----------- ----------- ----------- (UNAUDITED) Revenues: Casino.......................... $ 43,321 $ 19,940 $ 61,003 $ 66,120 $ 44,171 $ 48,685 Rooms........................... 31,840 9,435 33,173 30,235 23,984 22,622 Food and beverage............... 29,317 11,207 36,053 32,851 25,157 23,593 Other casino/hotel revenues..... 11,584 4,895 17,563 17,890 13,457 14,412 Other operating revenues........ 9,630 5,248 15,424 19,072 14,347 13,704 Real estate related............. 3,721 212 213 213 ----------- ------------ ----------- ----------- ----------- ----------- 129,413 50,937 163,216 166,381 121,329 123,016 ----------- ------------ ----------- ----------- ----------- ----------- Expenses: Casino.......................... 31,293 13,896 42,610 48,272 34,612 36,587 Rooms........................... 6,429 3,130 8,745 8,217 6,268 5,562 Food and beverage............... 21,605 9,608 27,829 25,161 19,081 17,902 Other casino/hotel operating expenses....................... 21,681 10,859 32,555 31,373 23,457 24,247 Other operating expenses........ 7,203 4,230 12,055 15,549 11,564 11,122 Selling, general and administrative................. 18,502 10,079 27,711 26,821 19,809 18,327 Provision for doubtful receivables.................... 2,199 891 2,893 2,633 1,964 1,748 Depreciation.................... 8,963 4,254 14,605 13,792 10,288 10,612 Real estate related............. 3,533 153 230 230 ----------- ------------ ----------- ----------- ----------- ----------- 121,408 57,100 169,003 172,048 127,273 126,107 ----------- ------------ ----------- ----------- ----------- ----------- Earnings (loss) from operations... 8,005 (6,163) (5,787) (5,667) (5,944) (3,091) Other income (deductions): Interest income................. 698 208 407 359 310 291 Interest expense................ (4,546) (2,300) (7,019) (6,850) (5,145) (5,097) Recapitalization costs.......... (41,270) (1,099) (929) (1,719) Affiliated bad debt write-off... (2,251) ----------- ------------ ----------- ----------- ----------- ----------- Net loss.......................... $ (39,364) $ (8,255) $ (12,399) $ (13,257) $ (11,708) $ (9,616) ----------- ------------ ----------- ----------- ----------- ----------- ----------- ------------ ----------- ----------- ----------- -----------
See Notes to Combined Financial Statements of PIRL Group. Note 2 describes a change in entity and related presentation for periods presented. F-53 PIRL GROUP COMBINED STATEMENTS OF CASH FLOWS (IN THOUSANDS OF DOLLARS)
FOR THE YEAR ENDED DECEMBER 31, ------------------------------------------------------ 1990 FOR THE THREE QUARTERS -------------------------- ENDED SEPTEMBER 30, THROUGH FROM -------------------------- AUGUST 31 SEPTEMBER 1 1991 1992 1992 1993 ------------ ------------ ------------ ------------ ------------ ------------ (UNAUDITED) Cash flows from operating activities: Cash received from customers.............. $ 123,270 $ 43,497 $ 158,653 $ 163,083 $ 125,183 $ 129,410 Cash paid to suppliers and employees...... (111,194) (44,861) (155,828) (157,615) (116,306) (112,214) ------------ ------------ ------------ ------------ ------------ ------------ Cash flow from operations before interest............................... 12,076 (1,364) 2,825 5,468 8,877 17,196 Interest received......................... 701 208 408 358 309 291 Interest paid............................. (3,439) (3,425) (7,015) (3,473) (3,456) (6,782) ------------ ------------ ------------ ------------ ------------ ------------ Net cash provided by (used in) operating activities............................. 9,338 (4,581) (3,782) 2,353 5,730 10,705 ------------ ------------ ------------ ------------ ------------ ------------ Cash flows from investing activities: Payments for property and equipment....... (4,564) (3,593) (4,007) (4,321) (3,365) (3,460) Proceeds from sales of property and equipment................................ 5,272 6,419 147 213 213 Proceeds from prior year sales of property and equipment............................ 1,676 Proceeds from sale of short-term money market security with maturity greater than three months........................ 883 883 1,377 Purchase of short-term money market security with maturity greater than three months................................... (1,768) (1,768) (492) ------------ ------------ ------------ ------------ ------------ ------------ Net cash provided by (used in) investing activities............................. 708 2,826 (2,184) (4,993) (4,037) (2,575) ------------ ------------ ------------ ------------ ------------ ------------ Cash flows from financing activities: Advances from (repayments to) affiliates............................... (14,878) 8,774 (1,676) 9,193 (1,912) (4,938) Recapitalization costs, including payments to parent................................ (8,356) (1,099) (929) (1,869) Debt repayments........................... (646) (166) (566) (616) (469) (155) ------------ ------------ ------------ ------------ ------------ ------------ Net cash provided by (used in) financing activities............................. (23,880) 8,608 (2,242) 7,478 (3,310) (6,962) ------------ ------------ ------------ ------------ ------------ ------------ Net increase (decrease) in cash and cash equivalents................................ (13,834) 6,853 (8,208) 4,838 (1,617) 1,168 Cash and cash equivalents at beginning of period..................................... 23,152 9,318 16,171 7,963 7,963 12,801 ------------ ------------ ------------ ------------ ------------ ------------ Cash and cash equivalents at end of period..................................... $ 9,318 $ 16,171 $ 7,963 $ 12,801 $ 6,346 $ 13,969 ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
See Notes to Combined Financial Statements of PIRL Group. Note 2 describes a change in entity and related presentation for periods presented. F-54 PIRL GROUP COMBINED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
CAPITAL STOCK ---------------------------------------------------------------------------- RIB ---------------------------- CLASS A CLASS B CLASS C RIDI PIVI RRII ISI PIA ANTL -------- -------- -------- ------ ------ ------ ------ ------ ------ (IN THOUSANDS OF DOLLARS) Shares authorized....................... 500 400 900 100 5,000 5,000 1,000 10 100 --- --- --- ------ ------ ------ ------ ------ ------ --- --- --- ------ ------ ------ ------ ------ ------ Balance at December 31, 1989............ $ 1 $ 1 $ 3 $ 1 $ 26 $ 1 Net loss for period through August 31, 1990................................... Effect of reorganization: Elimination of accumulated deficit.... --- --- --- ------ ------ ------ Balance at August 31, 1990.............. 1 1 3 1 26 1 Net loss for period from September 1, 1990................................... --- --- --- ------ ------ ------ Balance at December 31, 1990............ 1 1 3 1 26 1 Net loss for year 1991.................. --- --- --- ------ ------ ------ Balance at December 31, 1991............ 1 1 3 1 26 1 Net loss for year 1992.................. --- --- --- ------ ------ ------ Balance at December 31, 1992............ 1 1 3 1 26 1 Net loss for three quarters ended September 30, 1993 (unaudited)......... --- --- --- ------ ------ ------ Balance at September 30, 1993 (unaudited)............................ $ 1 $ 1 $ 3 $ 1 $ 26 $ 1 --- --- --- ------ ------ ------ --- --- --- ------ ------ ------ CAPITAL IN EXCESS ACCUMULATED OF PAR DEFICIT ---------- ------------ Shares authorized....................... Balance at December 31, 1989............ $ 273,555 $ (86,645 ) Net loss for period through August 31, 1990................................... (39,364 ) Effect of reorganization: Elimination of accumulated deficit.... (126,009) 126,009 ---------- ------------ Balance at August 31, 1990.............. 147,546 -0- Net loss for period from September 1, 1990................................... (8,255 ) ---------- ------------ Balance at December 31, 1990............ 147,546 (8,255 ) Net loss for year 1991.................. (12,399 ) ---------- ------------ Balance at December 31, 1991............ 147,546 (20,654 ) Net loss for year 1992.................. (13,257 ) ---------- ------------ Balance at December 31, 1992............ 147,546 (33,911 ) Net loss for three quarters ended September 30, 1993 (unaudited)......... (9,616 ) ---------- ------------ Balance at September 30, 1993 (unaudited)............................ $ 147,546 $ (43,527 ) ---------- ------------ ---------- ------------
See Notes to Combined Financial Statements of PIRL Group. Note 2 describes a change in entity and related presentation for periods presented. F-55 PIRL GROUP NOTES TO COMBINED FINANCIAL STATEMENTS NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Resorts International (Bahamas) 1984 Limited ("RIB") is a wholly owned subsidiary of Griffin Resorts Inc. ("GRI"). GRI, Paradise Island Airlines, Inc. ("PIA"), ANTL, Inc. ("ANTL"), Paradise Island Vacations, Inc. ("PIVI"), Resorts Representation International, Inc. ("RRII"), International Suppliers, Inc. ("ISI") and Resorts International Disbursement, Inc. ("RIDI") are wholly owned subsidiaries of Resorts International, Inc. ("RII"). The term "RIB" as used herein includes RIB and/ or one or more of its subsidiaries, all of which are wholly owned, as the context may require. The term "PIRL Group" includes all companies included in the combined group described below under "Principles of Combination". RIB, through its subsidiaries, owns and operates the Paradise Island Resort & Casino, the Ocean Club Golf & Tennis Resort, the Paradise Paradise Beach Resort, a golf course, a utility plant, a short takeoff and landing ("STOL") airport facility and other improvements on Paradise Island, The Bahamas. Subsidiaries of RIB also own land available for sale or development on Paradise Island and Grand Bahama Island. PIA provides airline transportation between Paradise Island and Miami, Fort Lauderdale, West Palm Beach and Orlando, Florida; offers a program of casino night flights to and from Fort Lauderdale, Florida; and provides scheduled service between Fort Lauderdale and Marsh Harbor and Treasure Cay in The Abacos. PIA operates five Dash 7 STOL aircraft, four of which are leased from third parties and one of which is owned by ANTL. PIVI and RRII provide travel reservations and wholesale tour services. ISI provides purchasing services and RIDI provides disbursement services to affiliated companies. Financial statements and footnote data with respect to September 30, 1993 and the three quarters ended September 30, 1992 and 1993 are unaudited. In the opinion of management, such unaudited financial statements include all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation, in accordance with generally accepted accounting principles. PRINCIPLES OF COMBINATION Negotiations among RII, two representatives (the "Representatives") of major holders of a certain issue of RII's debt and an unrelated third party (the "Purchaser") have led to terms of the currently proposed restructuring of that debt outlined in Note 13. Such terms include the disposition by RII, through one of two alternatives, of 100% of the equity of RII's Bahamian subsidiaries and the assets and liabilities of PIA, ANTL, PIVI, RRII, ISI, and RIDI. The combined financial statements were prepared in anticipation of this restructuring and include the accounts of RIB and its subsidiaries on a consolidated basis combined with the accounts of PIA, ANTL, PIVI, RRII, ISI and RIDI. All significant intercompany transactions and balances have been eliminated in the consolidation and the combination. RIB and its subsidiaries are incorporated under the laws of The Bahamas. PIA, ANTL, PIVI, RRII, ISI and RIDI are incorporated in the United States and are hereinafter referred to as the "U.S. Paradise Island Subsidiaries." The accounts of the Bahamian companies are maintained in U.S. dollars. REVENUE RECOGNITION The PIRL Group records as revenue the win from casino gaming activities which represents the difference between amounts wagered and amounts won by patrons. Revenues from hotel and related services and from theatre ticket sales are recognized at the time the related service is performed. Revenue from airline operations are recognized when the transportation or other service is provided. F-56 PIRL GROUP NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) COMPLIMENTARY SERVICES The Combined Statements of Operations reflect each category of operating revenues excluding the retail value of complimentary services provided to casino patrons without charge. The rooms, food and beverage, and other casino/hotel operations departments allocate a percentage of their total operating expenses to the casino department for complimentary services provided to casino patrons. These allocations do not necessarily represent the incremental cost of providing such complimentary services to casino patrons. Amounts allocated to the casino department from the other operating departments were as follows:
1990 ------------------------ THROUGH FROM AUGUST 31 SEPTEMBER 1 1991 1992 ----------- ----------- --------- --------- (IN THOUSANDS OF DOLLARS) Rooms........................................... $ 485 $ 181 $ 614 $ 728 Food and beverage............................... 2,333 1,122 3,291 4,096 Other casino/hotel operations................... 92 32 140 234 ----------- ----------- --------- --------- Total allocated to casino..................... $ 2,910 $ 1,335 $ 4,045 $ 5,058 ----------- ----------- --------- --------- ----------- ----------- --------- ---------
CASH EQUIVALENTS The PIRL Group considers all of its short-term money market securities purchased with maturities of three months or less to be cash equivalents. Restricted cash equivalents are cash equivalents securing letters of credit and other guarantees. The carrying value of cash equivalents approximates fair value due to the short maturity of these instruments. INVENTORIES Inventories of provisions, supplies and spare parts are carried at the lower of cost (first-in, first-out) or market. PROPERTY AND EQUIPMENT Property and equipment are depreciated over their estimated useful lives using the straight-line method for financial reporting purposes. INCOME TAXES The U.S. Paradise Island Subsidiaries file consolidated U.S. federal income tax returns with RII and its other U.S. subsidiaries. The companies in the PIRL Group account for income taxes under the liability method prescribed by Statement of Financial Accounting Standards No. 96, "Accounting for Income Taxes" ("SFAS 96"). Under this method, the deferred tax liability is determined based on the difference between the financial reporting and tax bases of assets and liabilities and enacted tax rates which will be in effect for the years in which the differences are expected to reverse. The deferred tax liability is reduced by cumulative tax credits and losses being carried forward for tax purposes, subject to applicable limitations. In February 1992, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes," ("SFAS 109"). SFAS 109 supersedes SFAS 96 but retains the liability method of accounting for income taxes. The companies composing the PIRL Group will adopt SFAS 109 for fiscal 1993 and anticipate no significant impact on the PIRL Group's combined financial statements. F-57 PIRL GROUP NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) There are no income taxes in The Bahamas and RIB's income is generally not subject to U.S. federal income taxation until it is distributed to a U.S. parent. Therefore, no taxes are provided in the accompanying combined financial statements relative to RIB's earnings. NOTE 2 -- BASIS OF PRESENTATION During 1989, RII and certain of its subsidiaries (the "Old Debtors"), none of which are in the PIRL Group, filed voluntary petitions or consented to involuntary petitions for relief under chapter 11 of the United States Bankruptcy Code. The Old Debtors filed the Second Amended Joint Plan of Reorganization dated as of May 31, 1990 (the "Old Plan") which was confirmed by the New Jersey bankruptcy court in August 1990. On September 17, 1990 (the "Old Effective Date"), all conditions to effectiveness of the Old Plan were either met or waived and the Old Plan became effective. Under the Old Plan, all previously outstanding debt securities of the Old Debtors were cancelled and exchanged for new debt and equity securities of RII. Also pursuant to the Old Plan, all previously outstanding shares of stock of RII were cancelled. As a result of these and other transactions prescribed in the Old Plan, Merv Griffin, who prior to the reorganization indirectly owned 100% of RII, owned 22% of RII as of October 1, 1990, the initial distribution date of the new securities. RII accounted for the reorganization using "fresh start" accounting. Accordingly, all assets and liabilities of RII and its subsidiaries were restated to reflect their estimated fair values and the accumulated deficit was eliminated. Although the confirmation date was August 28, 1990, the PIRL Group recorded the effects of the reorganization as of August 31, 1990. In 1990, the PIRL Group recorded affiliated bad debt write-offs of $2,251,000, the net amount of intercompany receivables from the Old Debtors cancelled pursuant to the Old Plan. The revaluation of the PIRL Group's other assets and liabilities, which was based on independent appraisals, discounted cash flows, evaluations, estimations and other studies, resulted in a net loss of $29,904,000, with the following components:
(IN THOUSANDS OF DOLLARS) ------------------------ Decrease in working capital................................................... $ 3,416 Decrease in property and equipment............................................ 26,413 Decrease in deferred charges and other assets................................. 75 -------- $ 29,904 -------- --------
The loss on revaluation was included in recapitalization costs in 1990 in the accompanying Combined Statements of Operations along with PIRL Group's allocated portion (approximately one-third) of legal and financial advisory fees and other costs associated with the reorganization amounting to $11,366,000. The accumulated deficit at August 31, 1990 of $126,009,000 which included the effects of the reorganization was reclassified to capital in excess of par. The financial information contained herein relating to the PIRL Group's 1990 Combined Statements of Operations and Cash Flows is presented separately for the periods "Through August 31" and "From September 1" due to the new basis of accounting which resulted from the application of fresh start accounting. F-58 PIRL GROUP NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) NOTE 3 -- RECEIVABLES Components of receivables at December 31 were as follows:
1991 1992 --------- --------- (IN THOUSANDS OF DOLLARS) Gaming.............................................................. $ 11,795 $ 10,773 Less allowance for doubtful accounts.............................. (2,843) (2,752) --------- --------- 8,952 8,021 --------- --------- Non-gaming: Hotel and related................................................. 6,198 5,400 Bahamian duty refunds receivable.................................. 3,766 719 Other............................................................. 4,681 5,037 --------- --------- 14,645 11,156 Less allowance for doubtful accounts.............................. (1,382) (1,164) --------- --------- 13,263 9,992 --------- --------- $ 22,215 $ 18,013 --------- --------- --------- ---------
NOTE 4 -- PROPERTY AND EQUIPMENT Components of property and equipment at December 31 were as follows:
1991 1992 ----------- ----------- (IN THOUSANDS OF DOLLARS) Land and land rights, including land held for investment, development and resale.......................................... $ 80,385 $ 80,249 Land improvements and utilities.................................. 21,845 22,389 Hotels and other buildings....................................... 75,927 76,348 Furniture, machinery and equipment............................... 33,732 36,196 Construction in progress......................................... 948 889 ----------- ----------- 212,837 216,071 Less accumulated depreciation.................................. (18,642) (32,013) ----------- ----------- $ 194,195 $ 184,058 ----------- ----------- ----------- -----------
Substantially all of the PIRL Group's property and equipment has been pledged as collateral for the Senior Secured Redeemable Notes due April 15, 1994 (the "Old Series Notes") issued by RII. NOTE 5 -- ACCOUNTS PAYABLE AND ACCRUED LIABILITIES Components of accounts payable and accrued liabilities at December 31 were as follows:
1991 1992 --------- --------- (IN THOUSANDS OF DOLLARS) Accrued payroll and related taxes and benefits........................ $ 2,128 $ 2,154 Accrued gaming taxes, fees and related assessments.................... 5,778 1,610 Customer deposits and unearned revenues............................... 8,583 5,682 Trade payables........................................................ 6,138 5,026 Progressive slot liability............................................ 469 562 Other accrued liabilities............................................. 3,861 3,406 --------- --------- $ 26,957 $ 18,440 --------- --------- --------- ---------
F-59 PIRL GROUP NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) NOTE 6 -- NOTE PAYABLE TO AFFILIATE In 1988, Resorts International Hotel, Inc. ("RIH"), a wholly owned subsidiary of RII, loaned $50,000,000 to RIB pursuant to a pre-arranged back-to-back loan in exchange for a promissory note. Such note is payable on demand and bears interest at 13 1/2% per annum, with interest payments due each May 1 and November 1. The note is guaranteed by certain of RIB's subsidiaries. The guarantees are secured by mortgages on the Paradise Island Resort & Casino, the Ocean Club Golf & Tennis Resort, and the Paradise Paradise Beach Resort on Paradise Island in The Bahamas, and all furniture, machinery and equipment used in connection therewith. The promissory note and the mortgages securing payment thereof have been assigned as part of the collateral for the Old Series Notes. It was not anticipated that this intercompany promissory note payable be repaid in the ordinary course of business. Also, RII is contemplating a restructuring of the Old Series Notes, which may also affect this and other intercompany relationships among RII's subsidiaries; however, the terms and effects of any possible restructuring are uncertain at this time. Thus, it is not practicable to estimate the fair value of this intercompany note without incurring excessive costs. NOTE 7 -- LONG-TERM DEBT The long-term debt consists of capitalized lease obligations under which the PIRL Group is the lessee of computer and other equipment. These leases expire in 1993 and 1995 and bear interest rates from 9.7% to 10.75%. NOTE 8 -- RELATED PARTY TRANSACTIONS The PIRL Group recorded the following income and expense from RII and other affiliates:
1990 ------------------------ THROUGH FROM AUGUST 31 SEPTEMBER 1 1991 1992 ----------- ----------- --------- --------- (IN THOUSANDS OF DOLLARS) Income -- RIH -- Charter flights................................. $ 151 ----------- ----------- Expenses: RII -- Parent services fee..................................... $ 3,560 $ 1,587 $ 5,126 $ 5,284 -- Building rental.......................................... 29 15 44 44 RIH -- Interest expense........................................ 4,500 2,250 6,750 6,750 ----------- ----------- --------- --------- $ 8,089 $ 3,852 $ 11,920 $ 12,078 ----------- ----------- --------- --------- ----------- ----------- --------- ---------
For periods through August 31, 1990, RII charged the PIRL Group for services provided based on an allocation of corporate overhead costs incurred by RII. Effective with the reorganization, RII began charging the PIRL Group a fee of three (3) percent of certain gross revenues for such services. This three percent parent services fee compensates RII for accounting, data processing and other support services which RII incurs on behalf of the PIRL Group's operations (estimated to amount to $1,100,000, $3,900,000 and $3,700,000 for the period from September 1, 1990 and the years 1991 and 1992, respectively), as well as a portion of the costs of RII executives and certain corporate office functions not directly related to the PIRL Group operations. Also, recapitalization costs reflected on the Combined Statements of Operations include charges of $11,366,000 for 1990 and $1,099,000 for 1992 representing the PIRL Group's allocated portion (approximately one-third) of RII's consolidated recapitalization costs. In addition to the above, charges for insurance cost are allocated to the PIRL Group based on relative amounts of operating revenue, payroll, property value, or other appropriate measures. Also, see Note 2 for discussion of the write-off of certain affiliated receivables in 1990. F-60 PIRL GROUP NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) NOTE 9 -- RETIREMENT PLANS Certain of the U.S. Paradise Island Subsidiaries participate in a defined contribution plan covering substantially all of their full-time employees. The companies make contributions to this plan based on a percentage of eligible employee contributions. Total pension expense for this plan was $44,000, $35,000 and $47,000 in 1990, 1991 and 1992, respectively. In addition to the plan described above, union and certain other employees of Bahamian companies included in the PIRL Group are covered by multi-employer defined benefit pension plans to which the companies make contributions. Such contributions totalled $2,074,000, $1,659,000 and $576,000 in 1990, 1991 and 1992, respectively. NOTE 10 -- INCOME TAXES No tax provision was recorded for 1990, 1991 and 1992 due to either the generation of net operating losses or application of net operating loss carryforwards for federal and state income tax purposes by the U.S. Paradise Island Subsidiaries. The source of net loss was as follows:
1990 ----------------------- THROUGH FROM AUGUST 31 SEPTEMBER 1 1991 1992 ---------- ----------- ---------- ---------- (IN THOUSANDS OF DOLLARS) U.S. source earnings (loss)................................... $ (791) $ (163) $ 167 $ 19 Foreign source loss........................................... (38,573) (8,092) (12,566) (13,276) ---------- ----------- ---------- ---------- Net loss...................................................... $ (39,364) $ (8,255) $ (12,399) $ (13,257) ---------- ----------- ---------- ---------- ---------- ----------- ---------- ----------
Due to the availability of net operating loss carryforwards and/or tax bases of assets exceeding the financial reporting bases, through December 31, 1992, no deferred tax liability was required for any of the U.S. Paradise Island Subsidiaries. RIB has no deferred tax liability as there is no income tax in The Bahamas and RIB is generally not subject to U.S. federal income taxation on its income. F-61 PIRL GROUP NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) NOTE 11 -- STATEMENTS OF CASH FLOWS Supplemental disclosures required by Statement of Financial Accounting Standards No. 95 "Statement of Cash Flows" are presented below.
FOR THE YEAR ENDED DECEMBER 31, ------------------------------------------------ FOR THE THREE 1990 QUARTERS ENDED ------------------------ SEPTEMBER 30, THROUGH FROM --------------------- AUGUST 31 SEPTEMBER 1 1991 1992 1992 1993 ---------- ------------ ---------- ---------- ---------- --------- (UNAUDITED) (IN THOUSANDS OF DOLLARS) Reconciliation of net loss to net cash provided by (used in) operating activities: Net loss................................. $ (39,364) $ (8,255) $ (12,399) $ (13,257) $ (11,708) $ (9,616) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Recapitalization costs................. 41,270 1,099 929 1,719 Affiliated bad debt write-off.......... 2,251 Depreciation and amortization.......... 9,160 4,354 14,914 13,792 10,288 10,643 Provision for doubtful receivables..... 2,199 891 2,893 2,633 1,964 1,748 Net (gain) loss on sales of property and equipment......................... (855) (55) 132 116 17 Net (increase) decrease in accounts receivable............................ 3,635 (2,744) (7,287) 2,791 8,764 7,850 Net (increase) decrease in inventories and prepaids.......................... (1,420) (504) (2,064) 513 (908) (182) Net (increase) decrease in deferred charges and other assets.............. (25) (27) (44) (192) (191) 32 Net increase (decrease) in accounts payable and accrued liabilities....... (8,638) 2,884 73 (8,517) (5,113) 198 Net increase (decrease) in interest payable to affiliate.................. 1,125 (1,125) 3,375 1,688 (1,687) ---------- ------------ ---------- ---------- ---------- --------- Net cash provided by (used in) operating activities.................. $ 9,338 $ (4,581) $ (3,782) $ 2,353 $ 5,730 $ 10,705 ---------- ------------ ---------- ---------- ---------- --------- ---------- ------------ ---------- ---------- ---------- --------- Non-cash investing and financing transactions: Increase in liabilities for additions to property and equipment.................. $ 513 $ 593 Reclassifications to deposits and other assets from receivables and property and equipment............................... $ 675 $ 674 $ 337 $ 450 Receivables from sale of property........ $ 1,185 $ 491
F-62 PIRL GROUP NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) NOTE 12 -- GEOGRAPHIC AND BUSINESS SEGMENT INFORMATION Geographic and business segment information for the PIRL Group is as follows:
FOR THE YEAR ENDED DECEMBER 31, --------------------------------------------------- 1990 ------------------------- THROUGH FROM AUGUST 31 SEPTEMBER 1 1991 1992 ----------- ------------ ----------- ----------- (IN THOUSANDS OF DOLLARS) Revenues Paradise Island, The Bahamas: Casino/hotel: Casino.................................................. $ 43,321 $ 19,940 $ 61,003 $ 66,120 Rooms................................................... 31,840 9,435 33,173 30,235 Food and beverage....................................... 29,317 11,207 36,053 32,851 Other casino/hotel...................................... 11,584 4,895 17,563 17,890 ----------- ------------ ----------- ----------- Total casino/hotel.................................... 116,062 45,477 147,792 147,096 Real estate related....................................... 3,721 212 213 ----------- ------------ ----------- ----------- 119,783 45,689 147,792 147,309 Airline..................................................... 11,071 6,083 18,234 22,483 Other....................................................... 191 18 86 162 Intersegment eliminations................................... (1,632) (853) (2,896) (3,573) ----------- ------------ ----------- ----------- Revenues from operations.................................. $ 129,413 $ 50,937 $ 163,216 $ 166,381 ----------- ------------ ----------- ----------- ----------- ------------ ----------- ----------- Contribution to Combined Loss Paradise Island, The Bahamas: Casino/hotel*............................................. $ 7,370 $ (6,166) $ (5,707) $ (5,592) Real estate related....................................... 188 59 (17) ----------- ------------ ----------- ----------- 7,558 (6,107) (5,707) (5,609) Airline*.................................................... 5 (4) 83 77 Other....................................................... 442 (52) (163) (135) ----------- ------------ ----------- ----------- Earnings (loss) from operations............................. 8,005 (6,163) (5,787) (5,667) Other income (deductions): Interest income........................................... 698 208 407 359 Interest expense.......................................... (4,546) (2,300) (7,019) (6,850) Recapitalization costs.................................... (41,270) (1,099) Affiliated bad debt write-off............................. (2,251) ----------- ------------ ----------- ----------- Net loss................................................ $ (39,364) $ (8,255) $ (12,399) $ (13,257) ----------- ------------ ----------- ----------- ----------- ------------ ----------- -----------
- ------------------------ *The Paradise Island casino/hotel segment subsidized the operation of PIA in the amount of $1,320,000, $571,000 and $760,000 for the two periods presented for 1990 and the year 1991, respectively. The Paradise Island casino/hotel segment did not subsidize the operation of PIA in 1992. F-63 PIRL GROUP NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) NOTE 12 -- GEOGRAPHIC AND BUSINESS SEGMENT INFORMATION (CONTINUED) Identifiable Assets, Depreciation and Capital Additions (In Thousands of Dollars)
IDENTIFIABLE ASSETS ------------------------------------------- LESS ACCUMULATED DEPRECIATION AND VALUATION GROSS ASSETS ALLOWANCES NET ASSETS DEPRECIATION ------------ ---------------- ---------- ------------ CAPITAL ADDITIONS --------- FOR THE YEAR ENDED DECEMBER 31, 1992 DECEMBER 31, 1992 ------------------------------------------- ------------------------ Paradise Island, The Bahamas: Casino/hotel........... $ 208,899 $ (33,899) $ 175,000 $ 12,973 $ 4,317 Real estate related.... 33,414 33,414 ------------ -------- ---------- ------------ --------- 242,313 (33,899) 208,414 12,973 4,317 Airline.................. 12,923 (1,995) 10,928 805 4 Other.................... 1,542 (34) 1,508 13 Corporate (A)............ 6,827 (1) 6,826 1 ------------ -------- ---------- ------------ --------- $ 263,605 $ (35,929) $ 227,676 $ 13,792 $ 4,321 ------------ -------- ---------- ------------ --------- ------------ -------- ---------- ------------ --------- FOR THE YEAR ENDED DECEMBER 31, 1991 DECEMBER 31, 1991 ------------------------------------------- ------------------------ Paradise Island, The Bahamas: Casino/hotel........... $ 207,924 $ (21,684) $ 186,240 $ 13,782 $ 3,726 Real estate related.... 33,400 33,400 ------------ -------- ---------- ------------ --------- 241,324 (21,684) 219,640 13,782 3,726 Airline.................. 11,734 (1,163) 10,571 809 280 Other.................... 1,545 (20) 1,525 14 1 Corporate (A)............ 5,762 5,762 ------------ -------- ---------- ------------ --------- $ 260,365 $ (22,867) $ 237,498 $ 14,605 $ 4,007 ------------ -------- ---------- ------------ --------- ------------ -------- ---------- ------------ ---------
DECEMBER 31, 1990 ---------------------------------------------- Paradise Island, The Bahamas: Casino/hotel.......................... $ 198,825 $ (8,256) $ 190,569 Real estate related................... 34,075 34,075 ------------- ------- ---------- 232,900 (8,256) 224,644 Airline................................. 11,568 (319) 11,249 Other................................... 1,747 (42) 1,705 Corporate (A)........................... 14,468 14,468 ------------- ------- ---------- $ 260,683 $ (8,617) $ 252,066 ------------- ------- ---------- ------------- ------- ---------- FOR THE YEAR ENDED DECEMBER 31, 1990 ---------------------------------------------- THROUGH FROM THROUGH FROM AUGUST 31 SEPTEMBER 1 AUGUST 31 SEPTEMBER 1 --------- ----------- --------- ----------- Paradise Island, The Bahamas: Casino/hotel.......................... $ 8,133 $ 3,878 $ 5,020 $ 4,320 Real estate related................... --------- ----------- --------- ----------- 8,133 3,878 5,020 4,320 Airline................................. 746 370 56 35 Other................................... 84 6 Corporate (A)........................... --------- ----------- --------- ----------- $ 8,963 $ 4,254 $ 5,076 $ 4,355 --------- ----------- --------- ----------- --------- ----------- --------- ----------- - ------------------------ (A) Includes cash equivalents and other corporate assets.
NOTE 13 -- COMMITMENTS AND CONTINGENCIES DISPOSITION OF PIRL GROUP In April 1993 RII reached an agreement in principle with the Representatives of major holders of its Old Series Notes as to terms of a restructuring of Old Series Notes. Such restructuring was to include the exchange of the Old Series Notes for, among other things, cash, new debt, an equity interest in RII and 100% of the equity of the members of the PIRL Group. Since that time, management of RII has been cooperating with the Representatives in negotiating the possible sale to the Purchaser of a majority of the equity of RII's Bahamian subsidiaries and the assets and related liabilities of the U.S. Paradise Island Subsidiaries. F-64 PIRL GROUP NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) NOTE 13 -- COMMITMENTS AND CONTINGENCIES (CONTINUED) Further negotiations among RII, the Purchaser and the Representatives have led to the currently proposed restructuring which contemplates, among other things, the exchange of the Old Series Notes for the following: (a) excess cash, as defined, of RII consolidated with its subsidiaries, (b) $125,000,000 principal amount of nine-year, 11% mortgage notes to be issued by a subsidiary of RII and to be secured by a mortgage on Merv Griffin's Resorts Casino Hotel in Atlantic City (the "Resorts Casino Hotel") and guaranteed by RIH, (c) $35,000,000 principal amount of ten-year, 11.375%, junior mortgage notes to be issued by a subsidiary of RII and to be secured by a junior mortgage on the Resorts Casino Hotel and guaranteed by RIH, (d) shares of common stock of RII in an amount representing approximately 40% of the total outstanding shares, and (e) either (i) $65,000,000 cash and 40% of the equity of a company formed by the Purchaser to purchase 100% of the equity of RII's Bahamian subsidiaries and, through subsidiaries, the assets and related liabilities of the U.S. Paradise Island Subsidiaries or, if that purchase is not consummated, (ii) 100% of the equity of a holding company formed to own 100% of the equity of RII's Bahamian subsidiaries and, through subsidiaries, the assets and related liabilities of the U.S. Paradise Island Subsidiaries. The proposed restructuring also contemplates that RIB's $50,000,000 note payable to RIH (see Note 6) will be assumed by GRI, thus, relieving RIB of its obligation thereunder. Before any restructuring can be completed, specific terms and conditions must be finalized and set forth in definitive agreements, indentures and other documents. Also, any restructuring must be approved by various governmental agencies, and the proposed restructuring will require certain shareholder and creditor approvals, as well as confirmation by the Bankruptcy Court. RII cannot provide any assurances as to whether or when the proposed restructuring will be effected, or that the restructuring will be on terms similar to those described above. UNION NEGOTIATIONS Approximately 1,900 of PIRL Group's Bahamian employees are members of The Bahamas Catering and Allied Workers Union (the "Union"), whose contract expires in January 1995. In light of the downturn in business being experienced by hotels in the Paradise-New Providence Island area, PIRL Group, along with other affected operators in that area, did not pay wage and pension increases scheduled for January 1993 as they were negotiating with the Union for certain concessions under the contract. Since then the Union filed claims against the employers and, after attempting to mediate the dispute, the Minister of Labour referred it to arbitrators. The dispute remains unsettled and negotiations among the parties continue. The accompanying combined financial statements do not reflect any accrual for unpaid wage and pension increases; however, the estimated liability for such increases may amount to approximately $750,000 for the first three quarters of 1993. LITIGATION Members of the PIRL Group are defendants in certain litigation. In the opinion of management, based upon advice of counsel, the aggregate liability, if any, arising from such litigation will not have a material adverse effect on the accompanying combined financial statements. F-65 RESORTS INTERNATIONAL, INC. CONSOLIDATED SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) (IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA) The table below reflects selected quarterly financial data for the years 1991 and 1992 and the first three quarters of 1993.
1991 1992 ------------------------------------------ ------------------------------------------ FOR THE QUARTER FIRST SECOND THIRD FOURTH FIRST SECOND THIRD FOURTH - ------------------------------ --------- --------- --------- --------- --------- --------- --------- --------- Operating revenues............ $ 101,429 $ 106,438 $ 113,005 $ 97,371 $ 111,631 $ 106,246 $ 112,377 $ 106,680 --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- Earnings (loss) from operations................... $ 2,893 $ 5,042 $ 11,516 $ (3,415) $ 5,789 $ 4,847 $ 9,471 $ 1,395 Recapitalization costs........ (300) (1,043) (994) (511) Other income (deductions), net (A)...................... (13,586) (13,834) (15,356) (15,662) (18,501) (18,748) (17,744) (18,463) --------- --------- --------- --------- --------- --------- --------- --------- Loss before income taxes...... (10,693) (8,792) (3,840) (19,077) (13,012) (14,944) (9,267) (17,579) Income tax benefit (expense).. 831 1,348 --------- --------- --------- --------- --------- --------- --------- --------- Net loss...................... $ (10,693) $ (8,792) $ (3,840) $ (18,246) $ (13,012) $ (14,944) $ (9,267) $ (16,231) --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- Net loss per share of RII Common Stock................. $ (.53) $ (.44) $ (.19) $ (.91) $ (.65) $ (.74) $ (.46) $ (.80) --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 1993 ------------------------------- FOR THE QUARTER FIRST SECOND THIRD - ------------------------------ --------- --------- --------- Operating revenues............ $ 114,154 $ 106,697 $ 117,007 --------- --------- --------- --------- --------- --------- Earnings (loss) from operations................... $ 9,106 $ 1,791 $ 9,783 Recapitalization costs........ (593) (1,156) (3,130) Other income (deductions), net (A)...................... (21,411) (26,003) (25,757) --------- --------- --------- Loss before income taxes...... (12,898) (25,368) (19,104) Income tax benefit (expense).. (1,000) --------- --------- --------- Net loss...................... $ (12,898) $ (25,368) $ (20,104) --------- --------- --------- --------- --------- --------- Net loss per share of RII Common Stock................. $ (.64) $ (1.26) $ (1.00) --------- --------- --------- --------- --------- --------- - ------------------------------ (A) Includes interest income, interest expense and amortization of debt discount.
F-66 RESORTS INTERNATIONAL HOTEL, INC. CONSOLIDATED SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) (IN THOUSANDS OF DOLLARS) The table below reflects selected quarterly financial data for the years 1991 and 1992 and the first three quarters of 1993.
1991 1992 ------------------------------------------ ------------------------------------------ FOR THE QUARTER FIRST SECOND THIRD FOURTH FIRST SECOND THIRD FOURTH - ------------------------------------- --------- --------- --------- --------- --------- --------- --------- --------- Operating revenues................... $ 53,732 $ 64,682 $ 73,294 $ 55,766 $ 61,587 $ 65,907 $ 75,586 $ 59,660 --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- Earnings (loss) from operations...... $ (1,103) $ 4,210 $ 12,109 $ (397) $ 2,159 $ 5,287 $ 11,975 $ 1,628 Recapitalization costs............... (75) (335) (294) (170) Other income (deductions), net (A)... 1,778 1,746 1,693 1,725 1,735 1,754 1,842 1,850 --------- --------- --------- --------- --------- --------- --------- --------- Earnings before income taxes......... 675 5,956 13,802 1,328 3,819 6,706 13,523 3,308 Income tax expense................... (2,653) (5,521) (530) (1,529) (2,681) (5,410) (1,322) --------- --------- --------- --------- --------- --------- --------- --------- Net earnings......................... $ 675 $ 3,303 $ 8,281 $ 798 $ 2,290 $ 4,025 $ 8,113 $ 1,986 --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 1993 ------------------------------- FOR THE QUARTER FIRST SECOND THIRD - ------------------------------------- --------- --------- --------- Operating revenues................... $ 60,336 $ 67,678 $ 80,800 --------- --------- --------- --------- --------- --------- Earnings (loss) from operations...... $ 2,444 $ 2,565 $ 10,796 Recapitalization costs............... (198) (317) (1,065) Other income (deductions), net (A)... 1,796 1,763 1,882 --------- --------- --------- Earnings before income taxes......... 4,042 4,011 11,613 Income tax expense................... (400) --------- --------- --------- Net earnings......................... $ 4,042 $ 4,011 $ 11,213 --------- --------- --------- --------- --------- --------- - ------------------------------ (A) Includes interest income and interest expense.
F-67 PIRL GROUP COMBINED SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) (IN THOUSANDS OF DOLLARS) The table below reflects selected quarterly financial data for the years 1991 and 1992 and the first three quarters of 1993.
1991 1992 ------------------------------------------ ------------------------------------------ FOR THE QUARTER FIRST SECOND THIRD FOURTH FIRST SECOND THIRD FOURTH - ------------------------------------- --------- --------- --------- --------- --------- --------- --------- --------- Operating revenues................... $ 45,878 $ 39,850 $ 37,793 $ 39,695 $ 48,136 $ 38,370 $ 34,823 $ 45,052 --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- Earnings (loss) from operations...... $ 2,262 $ (758) $ (2,931) $ (4,360) $ 1,336 $ (2,443) $ (4,837) $ 277 Recapitalization costs............... (150) (348) (431) (170) Other income (deductions), net (A)... (1,658) (1,623) (1,661) (1,670) (1,598) (1,597) (1,640) (1,656) --------- --------- --------- --------- --------- --------- --------- --------- Net earnings (loss).................. $ 604 $ (2,381) $ (4,592) $ (6,030) $ (412) $ (4,388) $ (6,908) $ (1,549) --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- --------- 1993 ------------------------------- FOR THE QUARTER FIRST SECOND THIRD - ------------------------------------- --------- --------- --------- Operating revenues................... $ 51,849 $ 36,989 $ 34,178 --------- --------- --------- --------- --------- --------- Earnings (loss) from operations...... $ 4,063 $ (3,230) $ (3,924) Recapitalization costs............... (198) (517) (1,004) Other income (deductions), net (A)... (1,594) (1,617) (1,595) --------- --------- --------- Net earnings (loss).................. $ 2,271 $ (5,364) $ (6,523) --------- --------- --------- --------- --------- --------- - ------------------------------ (A) Includes interest income and interest expense.
F-68 APPENDIX A PLAN OF REORGANIZATION UNITED STATES BANKRUPTCY COURT DISTRICT OF DELAWARE IN RE CASE NOS. RESORTS INTERNATIONAL, INC., A AND DELAWARE CORPORATION, AND GGRI, INC., A DELAWARE CORPORATION, FORMERLY JOINTLY ADMINISTERED KNOWN AS GRIFFIN RESORTS, INC., UNDER CASE NO. DEBTORS. CHAPTER 11
JOINT PLAN OF REORGANIZATION PROPOSED BY RESORTS INTERNATIONAL, INC., GGRI, INC., RESORTS INTERNATIONAL HOTEL, INC., RESORTS INTERNATIONAL HOTEL FINANCING, INC. AND P.I. RESORTS LIMITED DATED AS OF ____________, 1994 MICHAEL A. ROSENTHAL, ESQ. KEITH D. ROSS, ESQ. GIBSON, DUNN & CRUTCHER 200 Park Avenue New York, New York 10166 (212) 351-4000 Attorneys for RESORTS INTERNATIONAL, INC. and GGRI, INC., Debtors and Debtors in Possession and RESORTS INTERNATIONAL HOTEL, INC., RESORTS INTERNATIONAL HOTEL FINANCING, INC. and P.I. RESORTS LIMITED A-2 JOINT PLAN OF REORGANIZATION FOR RESORTS INTERNATIONAL, INC. AND GGRI, INC. TABLE OF CONTENTS
PAGE ----------- ARTICLE I DEFINITIONS AND INTERPRETATION 1 1.1 Definitions............................................................ 1 1.1.1 1990 Stock Option Plan...................................... 1 1.1.2 1990 Stock Options.......................................... 1 1.1.3 1994 Stock Option Plan...................................... 1 1.1.4 Administrative Claim........................................ 2 1.1.5 Affiliate................................................... 2 1.1.6 Allowed, Allowed Claim or Allowed Interest.................. 2 1.1.7 Alternative Closing......................................... 2 1.1.8 Alternative Closing Date.................................... 2 1.1.9 Amended RII Bylaws.......................................... 2 1.1.10 Amended RII Certificate of Incorporation.................... 2 1.1.11 Available Cash.............................................. 2 1.1.12 Bahamian Government......................................... 2 1.1.13 Bankruptcy Code............................................. 2 1.1.14 Bankruptcy Court............................................ 3 1.1.15 Bankruptcy Rules............................................ 3 1.1.16 Business Day................................................ 3 1.1.17 Caesars Payment............................................. 3 1.1.18 Cash........................................................ 3 1.1.19 CCC......................................................... 3 1.1.20 Claim....................................................... 3 1.1.21 Class....................................................... 3 1.1.22 Confirmation................................................ 3 1.1.23 Confirmation Date........................................... 3 1.1.24 Confirmation Hearing........................................ 3 1.1.25 Confirmation Order.......................................... 3 1.1.26 Contingent Claim............................................ 3 1.1.27 Creditor.................................................... 3 1.1.28 Debtors..................................................... 3 1.1.29 Deferred Cash............................................... 3 1.1.30 Disallowed Claim or Disallowed Interest..................... 3 1.1.31 Disbursing Agent............................................ 3 1.1.32 Disbursing Agreement........................................ 4 1.1.33 Disputed Claim or Disputed Interest......................... 4 1.1.34 Distribution Date........................................... 4 1.1.35 Distribution Record Date.................................... 4 1.1.36 Effective Date.............................................. 4 1.1.37 Encumbrances................................................ 4 1.1.38 Entity...................................................... 5
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PAGE ----------- 1.1.39 Estate...................................................... 5 1.1.40 Excess Cash................................................. 5 1.1.41 Fidelity.................................................... 5 1.1.42 Final Order................................................. 5 1.1.43 GRH......................................................... 5 1.1.44 GRI......................................................... 5 1.1.45 GRI Bylaws.................................................. 1.1.46 GRI Certificate of Incorporation............................ 1.1.47 GRI Common Stock............................................ 5 1.1.48 GRI Guaranty Claims......................................... 5 1.1.49 Griffin Group Note.......................................... 5 1.1.50 Griffin Group Note Proceeds................................. 5 1.1.51 Griffin Warrants............................................ 5 1.1.52 Holder...................................................... 5 1.1.53 Indenture Trustee Charging Liens............................ 6 1.1.54 Interest.................................................... 6 1.1.55 Lien........................................................ 6 1.1.56 Litigation Trust............................................ 6 1.1.57 Litigation Trust Units...................................... 6 1.1.58 National Securities Exchange................................ 6 1.1.59 Net Plan Consummation Cash.................................. 6 1.1.60 Net SIHL Reserved Cash...................................... 6 1.1.61 Net Standby Reserved Cash................................... 6 1.1.62 New Debt Securities......................................... 6 1.1.63 New Equity Securities....................................... 6 1.1.64 New Indentures.............................................. 6 1.1.65 New RIHF Indenture Trustees................................. 6 1.1.66 New RIHF Junior Indenture Trustee........................... 6 1.1.67 New RIHF Junior Mortgage Indenture.......................... 7 1.1.68 New RIHF Junior Mortgage Notes.............................. 7 1.1.69 New RIHF Indenture Trustee.................................. 7 1.1.70 New RIHF Mortgage Indenture................................. 7 1.1.71 New RIHF Mortgage Notes..................................... 7 1.1.72 New RII Common Stock........................................ 7 1.1.73 Old Chapter 11 Cases........................................ 7 1.1.74 Old Debtors................................................. 7 1.1.75 Old Plan.................................................... 7 1.1.76 Old RII Common Stock........................................ 7 1.1.77 Old Security Documents...................................... 7 1.1.78 Old Series Note Indenture................................... 7 1.1.79 Old Series Indenture Trustee................................ 8 1.1.80 Old Series Note Claims...................................... 8 1.1.81 Old Series Notes............................................ 8 1.1.82 Old Series Public Debt Claims............................... 8 1.1.83 Paradise Island Approval Order.............................. 8 1.1.84 Paradise Island Assets...................................... 8 1.1.85 Paradise Island Purchase Agreement.......................... 8 1.1.86 Paradise Island Shares...................................... 8 1.1.87 Paradise Subsidiary Claims.................................. 8 1.1.88 Payments-In-Kind............................................ 8 1.1.89 Petition Date............................................... 8
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PAGE ----------- 1.1.90 PIRL........................................................ 8 1.1.91 PIRL Aggregate Purchase Price............................... 8 1.1.92 PIRL Articles............................................... 8 1.1.93 PIRL Ordinary Shares........................................ 8 1.1.94 PIRL Spin-Off............................................... 8 1.1.95 PIRL Standby Distribution Agreement......................... 9 1.1.96 PIRL Subsidiaries........................................... 9 1.1.97 PIRL Subsidiaries Certificates of Incorporation............. 9 1.1.98 Plan........................................................ 9 1.1.99 Plan Consummation Cash...................................... 9 1.1.100 Plan Documents.............................................. 9 1.1.101 Plan Expenses............................................... 9 1.1.102 Plan Securities............................................. 9 1.1.103 Prepackaged Chapter 11 Cases................................ 9 1.1.104 Priority Claim.............................................. 9 1.1.105 Priority Tax Claim.......................................... 10 1.1.106 Pro Rata Share.............................................. 10 1.1.107 Professional Persons........................................ 10 1.1.108 Proponents.................................................. 10 1.1.109 Registrar................................................... 10 1.1.110 Registration Statement...................................... 10 1.1.111 Reorganized Debtors......................................... 10 1.1.112 Reorganized GRI............................................. 10 1.1.113 Reorganized RII............................................. 10 1.1.114 Reorganized RII Common Stock................................ 10 1.1.115 Restructuring Transactions.................................. 10 1.1.116 Retiree..................................................... 10 1.1.117 Retiree Administrative Claim................................ 10 1.1.118 Retiree Benefit Plans....................................... 10 1.1.119 RIB......................................................... 10 1.1.120 RIH......................................................... 10 1.1.121 RIHF........................................................ 10 1.1.122 RIHF Senior Facility........................................ 10 1.1.123 RIHF Senior Facility Indenture.............................. 10 1.1.124 RIHF Senior Facility Notes.................................. 11 1.1.125 RIHF Senior Facility Term Sheet............................. 11 1.1.126 RII......................................................... 11 1.1.127 RII Bylaws.................................................. 1.1.128 RII Certificate of Incorporation............................ 1.1.129 RII Class B Common Stock.................................... 11 1.1.130 RII Intercompany Claim...................................... 11 1.1.131 RII Paradise Assets......................................... 11 1.1.132 RII Paradise Subsidiaries................................... 11 1.1.133 RII Real Estate Assets...................................... 11 1.1.134 RII Retained Cash........................................... 11 1.1.135 Secured Claim............................................... 11 1.1.136 Showboat Note Claim......................................... 11 1.1.137 Showboat Notes.............................................. 11 1.1.138 Showboat Notes Indenture.................................... 12 1.1.139 SIHL........................................................ 12 1.1.140 SIHL Aggregate Cash Purchase Price.......................... 12
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PAGE ----------- 1.1.141 SIHL Aggregate Purchase Price............................... 12 1.1.142 SIHL Articles............................................... 12 1.1.143 SIHL Buyer Expense Escrow................................... 12 1.1.144 SIHL Closing................................................ 12 1.1.145 SIHL Closing Date........................................... 12 1.1.146 SIHL Escrow................................................. 12 1.1.147 SIHL Escrow Agreement....................................... 12 1.1.148 SIHL Management Agreement................................... 12 1.1.149 SIHL Put Rights............................................. 12 1.1.150 SIHL Reserved Cash.......................................... 12 1.1.151 SIHL Series A Shares........................................ 12 1.1.152 SIHL Subsidiaries........................................... 13 1.1.153 SIHL Target Adjusted Cash................................... 13 1.1.154 Standby Management Agreement................................ 13 1.1.155 Standby Reserved Cash....................................... 13 1.1.156 Standby Target Adjusted Cash................................ 13 1.1.157 Subsidiaries................................................ 13 1.1.158 TCW......................................................... 13 1.1.159 Unsecured Claim............................................. 13 1.2 Interpretation and Rules of Construction............................... 13 1.3 Other Terms............................................................ 13 1.4 Headings............................................................... 13 1.5 Incorporation of Exhibits.............................................. 13 ARTICLE II CLASSIFICATION OF CLAIMS AND INTERESTS 14 2.1 Claims and Equity Interests Classified................................. 14 2.2 Administrative Claims and Priority Tax Claims.......................... 14 2.3 Claims Against and Equity Interests in RII............................. 14 2.3.1 RII Class 1 Claims.......................................... 14 2.3.2 RII Class 2 Claims.......................................... 14 2.3.3 RII Class 3 Claims.......................................... 14 2.3.4 RII Class 4 Claims.......................................... 14 2.3.5 RII Class 5 Claims.......................................... 14 2.3.6 RII Class 6 Claims.......................................... 14 2.3.7 RII Class 7 Interests....................................... 14 2.3.8 RII Class 8 Interests....................................... 14 2.4 Claims Against and Equity Interests in GRI............................. 14 2.4.1 GRI Class 1 Claims.......................................... 14 2.4.2 GRI Class 2 Claims.......................................... 14 2.4.3 GRI Class 3 Claims.......................................... 14 2.4.4 GRI Class 4 Claims.......................................... 14 2.4.5 GRI Class 5 Interests....................................... 14 ARTICLE III IDENTIFICATION OF IMPAIRED CLASSES OF CLAIMS AND EQUITY INTERESTS 14 3.1 Unimpaired Classes of Claims........................................... 14 3.2 Impaired Classes of Claims and Equity Interests........................ 14 3.3 Impairment Controversies............................................... 15 ARTICLE IV TREATMENT OF ADMINISTRATIVE AND PRIORITY TAX CLAIMS 15 4.1 Payment of Administrative Claims....................................... 15 4.1.1 Treatment of Retiree Administrative Claims.................. 15 4.2 Claim of Old Series Indenture Trustee.................................. 15
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PAGE ----------- 4.3 Claims of Fidelity and TCW............................................. 15 4.4 Payment of Priority Tax Claims......................................... 15 ARTICLE V TREATMENT OF CLAIMS AND INTERESTS 16 5.1 Claims Against and Equity Interests in RII............................. 16 5.1.1 RII Class 1................................................. 16 5.1.2 RII Class 2................................................. 16 5.1.3 RII Class 3................................................. 17 5.1.4 RII Class 4................................................. 17 5.1.5 RII Class 5................................................. 17 5.1.6 RII Class 6................................................. 17 5.1.7 RII Class 7................................................. 17 5.1.8 RII Class 8................................................. 17 5.2 Claims Against and Equity Interests in GRI............................. 18 5.2.1 GRI Class 1................................................. 18 5.2.2 GRI Class 2................................................. 18 5.2.3 GRI Class 3................................................. 18 5.2.4 GRI Class 4................................................. 18 5.2.5 GRI Class 5................................................. 18 5.3 No Prepayment of Unimpaired Claims..................................... 18 5.4 Accrual and Payment of Post-Petition Interest and Fees................. 18 5.5 Satisfaction of Claims and Interests................................... 19 ARTICLE VI MEANS FOR EXECUTION OF THE PLAN 19 6.1 Sale of Paradise Island Assets to SIHL................................. 19 6.2 Standby Distribution of Paradise Island Assets......................... 19 6.2.1 Alternative Paradise Island Restructuring Transactions...... 19 6.2.2 PIRL Board of Directors..................................... 19 6.2.3 PIRL Obligations under the Paradise Island Purchase Agreement................................................... 19 6.3 General Implementation Matters......................................... 20 6.3.1 Other Restructuring Transactions............................ 20 6.3.2 General Corporate Matters................................... 20 6.4 Reorganized RII........................................................ 20 6.4.1 Reconstituted Board of Directors of RII..................... 20 6.4.2 Officers of RII............................................. 20 6.5 Reorganized GRI........................................................ 20 6.5.1 Board of Directors of GRI................................... 20 6.5.2 Officers of GRI............................................. 20 6.6 Approval of 1994 Stock Option Plan..................................... 21 6.7 Corporate Action....................................................... 21 6.8 Sources of Cash for Plan Distribution.................................. 21 6.9 SIHL Reserved Cash, Standby Reserved Cash and Plan Consummation Cash... 21 6.10 New Indentures......................................................... 21 6.11 Distributions.......................................................... 21 6.11.1 Generally................................................... 21 6.11.2 Service of Old Series Indenture Trustee..................... 22 6.11.3 Distribution to be Made to Holders as of the Distribution Record Date................................................. 22 6.11.4 Distribution To Holders of Old Series Public Debt Claims.... 22
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PAGE ----------- 6.11.5 Procedures for Distribution to Holders of Old Series Public Debt Claims................................................. 22 6.11.6 Means of Cash Payment....................................... 23 6.11.7 Calculation of Distribution Amounts of Securities........... 23 6.11.8 Delivery of Distributions................................... 24 6.11.9 Fees and Expenses of Disbursing Agents...................... 24 6.11.10 Time Bar to Cash Payments................................... 24 6.12 Vesting of Property of RII............................................. 24 6.13 Vesting of Property of GRI............................................. 24 6.14 Maintenance of Causes of Action........................................ 24 6.15 Assumption of Liabilities.............................................. 25 6.16 RIHF Senior Facility................................................... 25 6.17 Use of RIHF Senior Facility Funds...................................... 25 ARTICLE VII ACCEPTANCE OR REJECTION OF THE PLAN 25 7.1 Classes Entitled to Vote 25 7.2 Class Acceptance Requirement........................................... 25 7.3 Cramdown............................................................... 25 ARTICLE VIII PROCEDURES FOR RESOLVING AND TREATING DISPUTED CLAIMS 26 8.1 Objection Deadline..................................................... 26 8.2 Responsibility for Objection to Disputed Claims........................ 26 8.3 Prosecution of Objections.............................................. 26 8.4 No Distributions Pending Allowance..................................... 26 8.5 Distributions After Allowance.......................................... 26 8.6 Treatment of Contingent Claims......................................... 26 8.7 Estimation of Claims................................................... 26 ARTICLE IX EXECUTORY CONTRACTS 27 9.1 General Treatment...................................................... 27 9.2 Bar to Rejection Damages............................................... 27 9.3 Cure of Defaults for Executory Contracts and Unexpired Leases.......... 27 ARTICLE X RIGHTS AND OBLIGATIONS OF THE DISBURSING AGENT 27 10.1 Exculpation............................................................ 27 10.2 Powers of the Disbursing Agent......................................... 28 10.3 Duties of the Disbursing Agent......................................... 28 ARTICLE XI CONDITIONS PRECEDENT TO CONFIRMATION AND EFFECTIVE DATE 28 11.1 Conditions Precedent to Confirmation of the Plan....................... 28 11.2 Conditions to Effective Date........................................... 29 11.3 Waiver of Conditions................................................... 29 ARTICLE XII EFFECTS OF CONFIRMATION AND EFFECTIVENESS OF PLAN 29 12.1 Discharge of Claims.................................................... 29 12.2 Discharge of Debtors................................................... 29 12.3 Injunction............................................................. 30 12.4 Survival of Indemnification Claims and Obligations..................... 30 12.5 Exculpations and Limitation of Liability............................... 30 12.6 Satisfaction of Intercompany Claims.................................... 30 ARTICLE XIII RETENTION OF JURISDICTION 30 13.1 Scope of Jurisdiction.................................................. 30 13.2 Failure of the Bankruptcy Court to Exercise Jurisdiction............... 31
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PAGE ----------- ARTICLE XIV MISCELLANEOUS PROVISIONS 31 14.1 Compliance with Tax Requirements....................................... 31 14.2 Compliance with All Applicable Laws.................................... 31 14.3 Cancellation of Old Series Note Indenture.............................. 32 14.4 Discharge of Old Series Indenture Trustee.............................. 32 14.5 Payment of Statutory Fees.............................................. 32 14.6 Post-Confirmation Date Fees and Expenses of Professional Persons....... 32 14.7 Binding Effect......................................................... 32 14.8 Governing Law.......................................................... 32 14.9 Filing of Additional Documents......................................... 33 14.10 Amendments and Modifications........................................... 33 14.11 Revocation............................................................. 33 14.12 Severability........................................................... 33 14.13 Notices................................................................ 33 14.14 De Minimis Distributions............................................... 33 14.15 Consent Rights of Fidelity and TCW..................................... 33 SCHEDULES Schedule 6.1 SIHL Related Restructuring Transactions.............................. 36 Schedule 6.2 PIRL Related Restructuring Transactions.............................. 37 Schedule 6.3 Other Restructuring Transactions..................................... 38 EXHIBITS Exhibit A Paradise Island Purchase Agreement Exhibit B PIRL Standby Distribution Agreement Exhibit C 1994 Stock Option Plan Exhibit D RIHF Senior Facility Term Sheet
vii UNITED STATES BANKRUPTCY COURT DISTRICT OF DELAWARE IN RE CASE NOS. RESORTS INTERNATIONAL, INC., A AND DELAWARE CORPORATION, AND GGRI, INC., A DELAWARE CORPORATION, FORMERLY JOINTLY ADMINISTERED KNOWN AS GRIFFIN RESORTS, INC., UNDER CASE NO. DEBTORS. CHAPTER 11
JOINT PLAN OF REORGANIZATION PROPOSED BY RESORTS INTERNATIONAL, INC., GGRI, INC., RESORTS INTERNATIONAL HOTEL, INC., RESORTS INTERNATIONAL HOTEL FINANCING, INC., AND P.I. RESORTS LIMITED DATED AS OF ____________, 1994 Resorts International, Inc. ("RII") and GGRI, Inc., formerly known as Griffin Resorts, Inc. ("GRI"), as debtors and debtors in possession (hereinafter collectively, the "Debtors"), and Resorts International Hotel, Inc. ("RIH"), Resorts International Hotel Financing, Inc. ("RIHF"), and P. I. Resorts Limited ("PIRL"), non-debtor affiliates of the Debtors, propose the following joint plan of reorganization (the "Plan") pursuant to chapter 11 of title 11 of the United States Code (the "Bankruptcy Code"). ARTICLE I DEFINITIONS AND INTERPRETATION 1.1 DEFINITIONS. All capitalized terms used herein and not otherwise defined shall have the respective meanings set forth below. 1.1.1 "1990 STOCK OPTION PLAN" shall mean the RII Senior Management Stock Option Plan, dated as of September 17, 1990, created for the benefit of certain senior management employees of RII pursuant to and in conjunction with the consummation of the Old Plan. 1.1.2 "1990 STOCK OPTIONS" shall mean the options to purchase shares of Old RII Common Stock granted pursuant to the 1990 Stock Option Plan. 1.1.3 "1994 STOCK OPTION PLAN" shall mean the new RII Senior Management Stock Option Plan pursuant to which, in conjunction with the Plan, options to purchase Reorganized RII Common Stock shall be offered, in the discretion of the board of directors of Reorganized RII, to certain officers, directors and key employees of Reorganized RII and its Subsidiaries. The 1994 Stock Option Plan shall be in substantially the form attached hereto as Exhibit C, and shall provide for the issuance of options to purchase not more than five percent (5%) of the total number of shares of issued and outstanding Reorganized RII Common Stock on the Effective Date, assuming the exercise of the Griffin Warrants, which options shall be exercisable at no less than the average closing trading price of Reorganized RII Common Stock during the twenty (20) day period following the date of issuance of such options. The final form of the 1994 Stock Option Plan shall be filed as a Plan Document. 1 1.1.4 "ADMINISTRATIVE CLAIM" shall mean a Claim or portion of a Claim which is a cost or expense of administration of the Debtors' estates allowed under sections 503(b) or 507(b) of the Bankruptcy Code that is entitled to priority under section 507(a)(1) of the Bankruptcy Code, including but not limited to (i) any actual and necessary costs and expenses of preserving the Debtors' estates and operating the Debtors' businesses, (ii) the fees and expenses of Professional Persons in such amounts as are allowed by Final Order under section 330 of the Bankruptcy Code, (iii) the fees and expenses (including the fees and expenses of their Professional Persons) of the Old Series Indenture Trustee, Fidelity and TCW incurred in connection with the Prepackaged Chapter 11 Cases and the negotiation, documentation, implementation and consummation of the transactions contemplated by the Plan in such amounts as determined and awarded by Final Order of the Bankruptcy Court and (iv) any fees or charges assessed against the Debtors' estates under section 1930 of title 28 of the United States Code. 1.1.5 "AFFILIATE" shall mean any Entity that is an "affiliate" of a Debtor within the meaning of section 101(2) of the Bankruptcy Code. 1.1.6 "ALLOWED", "ALLOWED CLAIM" OR "ALLOWED INTEREST" shall mean, with reference to any Claim or Interest (i) any Claim against or Interest in any Debtor, proof of which was filed within the applicable period of limitation fixed by the Bankruptcy Court in accordance with Bankruptcy Rule 3003(c)(3), which is not a Disputed Claim or Disputed Interest, (ii) if no proof of claim or interest was so filed, any Claim against or Interest in any Debtor which has been listed by such Debtor in its chapter 11 schedules, as such schedules may be amended from time to time in accordance with Bankruptcy Rule 1009, as liquidated in amount and not disputed or contingent, or (iii) any Claim allowed hereunder or by Final Order. An Allowed Claim or Allowed Interest does not include any Claim or Interest or portion thereof which is a Disallowed Claim or Disallowed Interest or which has been subsequently withdrawn, disallowed, released or waived by the Holder thereof or pursuant to a Final Order. 1.1.7 "ALTERNATIVE CLOSING" shall mean the closing under the PIRL Standby Distribution Agreement. 1.1.8 "ALTERNATIVE CLOSING DATE" shall mean the date on which the Alternative Closing occurs. 1.1.9 "AMENDED RII BYLAWS" shall mean the Amended and Restated By-Laws of Reorganized RII substantially in the form attached as Appendix D to the Registration Statement. The final form of the Amended RII Bylaws shall be filed as a Plan Document. 1.1.10 "AMENDED RII CERTIFICATE OF INCORPORATION" shall mean the Amended and Restated Certificate of Incorporation of Reorganized RII substantially in the form attached as Appendix C to the Registration Statement. The final form of the Amended RII Certificate of Incorporation shall be filed as a Plan Document. 1.1.11 "AVAILABLE CASH" shall mean all Cash of the Debtors and their Subsidiaries on the Effective Date, before giving effect to the SIHL Closing or the Alternative Closing, as the case may be, and the distributions under the Plan, and shall include, among other things, the SIHL Buyer Expense Escrow, the SIHL Escrow and the Griffin Group Note Proceeds, but shall specifically exclude (i) any Cash actually received by RII on or prior to the Effective Date, from Atlantic City Showboat, Inc. as tenant under the Showboat Lease, which has been escrowed by RII to pay its current obligations with respect to the Showboat Notes, (ii) any restricted Cash held by RII on behalf of the beneficiaries of the Litigation Trust, (iii) the proceeds of the November 1993 sale of the .63 acre tract of land on Paradise Island, The Bahamas which shall be distributed on the SIHL Closing Date in accordance with the Paradise Island Purchase Agreement or, alternatively, on the Standby Distribution Date in accordance with the PIRL Standby Distribution Agreement and (iv) any portion of the SIHL Aggregate Cash Purchase Price. 1.1.12 "BAHAMIAN GOVERNMENT" shall mean and be the collective reference to The Commonwealth of The Bahamas and any governmental units or subdivisions thereof. 1.1.13 "BANKRUPTCY CODE" shall mean the Bankruptcy Reform Act of 1978, as amended, codified at title 11 of the United States Code as the same may from time to time be in effect and as applicable to the Prepackaged Chapter 11 Cases. 2 1.1.14 "BANKRUPTCY COURT" shall mean the United States Bankruptcy Court for the District of Delaware or, to the extent of any withdrawal of the reference made pursuant to 28 U.S.C. Section 157, the United States District Court for the District of Delaware. 1.1.15 "BANKRUPTCY RULES" shall mean the Federal Rules of Bankruptcy Procedure, as promulgated by the United States Supreme Court pursuant to 28 U.S.C. Section 2075 and, to the extent not inconsistent, the local rules of the Bankruptcy Court, as amended from time to time. 1.1.16 "BUSINESS DAY" shall mean any day other than a Saturday, a Sunday or any other day on which commercial banks in the City of New York, State of New York are required or authorized to close. 1.1.17 "CAESARS PAYMENT" shall mean the Cash payment in the amount of $400,000.00 to be made to Caesars World, Inc. on the Distribution Date pursuant to that certain letter agreement, dated August 18, 1993, by and among Caesars World, Inc., Fidelity and TCW. 1.1.18 "CASH" shall mean legal tender of the United States of America or cash equivalents, including but not limited to Cash deposited in depository accounts, Cash on hand and cage Cash. 1.1.19 "CCC" shall mean the New Jersey Casino Control Commission. 1.1.20 "CLAIM" shall mean (1) any right to payment from either of the Debtors, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured or (2) any right to an equitable remedy for breach of performance if such breach gives rise to a right of payment from any of the Debtors, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured, or unsecured. 1.1.21 "CLASS" shall mean a category or group of Holders of Claims or Interests as designated in Article II herein pursuant to section 1123(a)(1) of the Bankruptcy Code. 1.1.22 "CONFIRMATION" shall mean entry of the Confirmation Order. 1.1.23 "CONFIRMATION DATE" shall mean the date upon which the Confirmation Order is entered on the docket by the Clerk of the Bankruptcy Court, within the meaning of Bankruptcy Rules 5003 and 9021. 1.1.24 "CONFIRMATION HEARING" shall mean the hearing held by the Bankruptcy Court on the confirmation of the Plan pursuant to section 1128 of the Bankruptcy Code, as it may be adjourned or continued from time to time. 1.1.25 "CONFIRMATION ORDER" shall mean the order of the Bankruptcy Court confirming the Plan pursuant to section 1129 of the Bankruptcy Code. 1.1.26 "CONTINGENT CLAIM" shall mean a Claim that is contingent or unliquidated. 1.1.27 "CREDITOR" shall mean any Entity that holds a Claim against either RII or GRI (i) that arose at the time of or before the order for relief concerning the Debtors or (ii) of a kind specified in sections 502(g), 502(h) or 502(i) of the Bankruptcy Code. 1.1.28 "DEBTORS" shall mean RII and GRI, collectively, as debtors and debtors in possession. 1.1.29 "DEFERRED CASH" shall mean the aggregate amount of Cash received by Reorganized RII or any of its Subsidiaries from time to time after the Effective Date in respect of the Litigation Trust Units. 1.1.30 "DISALLOWED CLAIM" OR "DISALLOWED INTEREST" shall mean an alleged Claim against or Interest in RII or GRI, or any portion thereof, that has been disallowed by Final Order. 1.1.31 "DISBURSING AGENT" shall mean any Entity designated by the Debtors (and, with respect to the distributions to Holders of Old Series Public Debt Claims only, acceptable to Fidelity and TCW) and approved by the Bankruptcy Court to make distributions required under the Plan which may include, without limitation, Reorganized RII or Reorganized GRI, the Old Series Indenture Trustee or any financial institution of recognized standing. 1.1.32 "DISBURSING AGREEMENT" shall mean, with respect to any Disbursing Agent (other than Reorganized RII or Reorganized GRI), the agreement referenced in Article VI of the Plan which shall 3 govern the rights and obligations of such Disbursing Agent. Each Disbursing Agreement will be filed as a Plan Document, be subject to the approval of the Bankruptcy Court and, with respect to the distributions to Holders of Old Series Public Debt Claims, be in substantially the form approved by the Debtors, TCW and Fidelity. 1.1.33 "DISPUTED CLAIM" OR "DISPUTED INTEREST" shall mean a Claim against or Interest in GRI or RII, to the extent that a proof of claim or interest has been filed or deemed filed under applicable law, (i) as to which an objection has been or may be timely filed and which objection, if so filed, has not been withdrawn or denied by Final Order and (ii) which Claim or Interest is not a Disallowed Claim or a Disallowed Interest. If any portion of a Claim or Interest is disputed, then the entire Claim or Interest shall be a Disputed Claim or Disputed Interest, as the case may be. Prior to the time that an objection has been or may be timely filed, for the purposes of the Plan, a Claim or Interest shall be considered a Disputed Claim or Disputed Interest, as the case may be, if the amount of the Claim or Interest specified in the proof of claim or interest exceeds the amount of the Claim or Interest scheduled by the Debtors as other than disputed, contingent or unliquidated. Until such time as a Contingent Claim becomes fixed and absolute by Final Order, such Claim shall be treated as a Disputed Claim for all purposes, including those related to estimations, allocations, payments and distributions of Cash, Plan Securities and other property under the Plan. 1.1.34 "DISTRIBUTION DATE" shall mean, (A) for any Claim or Interest that is an Allowed Claim or Allowed Interest on the Effective Date, the Effective Date or as soon thereafter as practicable, but in no event later than twenty (20) days after the Effective Date, and (B) for any Claim or Interest that is a Disputed Claim or Disputed Interest on the Effective Date, the date as soon as practicable, but in no event later than thirty (30) days, after the date upon which such Claim or Interest becomes an Allowed Claim or Allowed Interest. Notwithstanding the foregoing, the Distribution Date with respect to distribution to the Disbursing Agent for Holders of Old Series Public Debt Claims shall be as follows: (i) for the SIHL Aggregate Cash Purchase Price and Plan Securities, the Distribution Date shall be the Effective Date, (ii) for Net SIHL Reserved Cash, or Net Standby Reserved Cash, as the case may be, the Distribution Date shall be as soon as practicable after the Effective Date, but in no event later than ninety (90) days after the Effective Date, (iii) for Net Plan Consummation Cash, the Distribution Date shall be as set forth in section 5.1.2 of the Plan, (iv) for Deferred Cash, the Distribution Date shall be as soon as practicable, but in no event later than three (3) Business Days after the receipt by Reorganized RII of immediately available funds giving rise to the Deferred Cash and (v) for Excess Cash, the Distribution Date shall be as soon as practicable after the Effective Date, but in no event later than twenty (20) days after the Effective Date; provided, however, that the Disbursing Agent for Holders of Old Series Public Debt Claims shall be required to make distributions of the SIHL Aggregate Cash Purchase Price, Plan Securities, Net SIHL Reserved Cash or Net Standby Reserved Cash, Net Plan Consummation Cash, Deferred Cash and Excess Cash as provided in section 6.11.4 of the Plan. 1.1.35 "DISTRIBUTION RECORD DATE" shall mean the close of business in the City of New York, State of New York on the Effective Date. 1.1.36 "EFFECTIVE DATE" shall mean the later of (i) the first Business Day on which no stay of the Confirmation Order is in effect and that is ten (10) days (as calculated in accordance with Bankruptcy Rule 9006(a)) after the Confirmation Date and (ii) the date on which each of the conditions precedent set forth in section 11.2 hereof have been either satisfied or waived in accordance with section 11.3 hereof. 1.1.37 "ENCUMBRANCES" shall mean any Lien, imperfection of title, claim, encumbrance, security interest, option, charge or restriction of any kind. 1.1.38 "ENTITY" shall mean an individual, a corporation, a partnership, an association, a joint stock company, a joint venture, an estate, a trust, an unincorporated organization, a government or any subdivision thereof or any other entity. 1.1.39 "ESTATE" shall mean, with respect to each Debtor, the estate of the Debtor created by section 541 of the Bankruptcy Code upon the commencement of the Debtors' Prepackaged Chapter 11 Cases. 4 1.1.40 "EXCESS CASH" shall mean the Available Cash on the Effective Date minus the sum of (i) RII Retained Cash, (ii) the SIHL Target Adjusted Cash or, if applicable, the Standby Target Adjusted Cash, (iii) the SIHL Reserved Cash or, if applicable, the Standby Reserved Cash, (iv) the Plan Consummation Cash and (v) the Caesars Payment. 1.1.41 "FIDELITY" shall mean Fidelity Management and Research Company, in its capacity as investment advisor to various funds which hold Old Series Notes. 1.1.42 "FINAL ORDER" shall mean an order of the Bankruptcy Court (i) as to which the time to appeal, petition for certiorari or move for reargument or rehearing has expired and as to which no timely appeal, petition for certiorari or other proceedings for reargument or rehearing shall then be pending, or (ii) if a timely appeal, writ of certiorari, reargument or rehearing thereof has been sought, which shall have been affirmed by the highest court to which such order was appealed, or certiorari shall have been denied or reargument or rehearing shall have been denied or resulted in no modification of such order, and the time to take any further appeal, petition for certiorari or move for reargument or rehearing shall have expired; provided, however, that the possibility that a motion under Rule 59 or Rule 60 of the Federal Rules of Civil Procedure, or any analogous rule under the Bankruptcy Rules, may be filed with respect to such order shall not cause such order not to be a Final Order. 1.1.43 "GRH" shall mean Griffin Resorts Holding, Inc., a Delaware corporation. 1.1.44 "GRI" shall mean GGRI, Inc., a Delaware corporation, formerly known as Griffin Resorts, Inc. 1.1.45 "GRI BYLAWS" shall mean the certain Bylaws of GRI in force on the day immediately preceding the Petition Date. 1.1.46 "GRI CERTIFICATE OF INCORPORATION" shall mean that certain Certificate of Incorporation of GRI filed with the Secretary of State of the State of Delaware on July 8, 1988, as amended from time to time. 1.1.47 "GRI COMMON STOCK" shall mean the authorized common stock, par value $.01 per share, of GRI issued and outstanding on the Petition Date. 1.1.48 "GRI GUARANTY CLAIMS" shall mean the Claims arising from GRI's guaranty of RII's obligations with respect to the Old Series Notes, which Claims shall be Allowed, for the purposes of the Plan, in the aggregate, at the face amount of the Old Series Notes outstanding together with the amount of the accrued and unpaid interest thereon and any other costs and expenses of collection, other than the claims which are governed by section 4.2 of the Plan. 1.1.49 "GRIFFIN GROUP NOTE" shall mean that certain promissory note, dated September 17, 1992, in the original principal amount of $7,523,333 made by The Griffin Group, Inc. and payable to RII. 1.1.50 "GRIFFIN GROUP NOTE PROCEEDS" shall mean the aggregate amount of principal and interest owing under the Griffin Group Note on the earlier of the date such note is repaid or the Effective Date (after offsetting, on the date that such note is paid in full, $2,310,000 in fees owed to The Griffin Group, Inc. under that certain License and Services Agreement, dated as of September 17, 1992, by and among RII, RIH, The Griffin Group, Inc. and Merv Griffin), which amount shall be paid to RII by The Griffin Group, Inc. on or before the Effective Date. 1.1.51 "GRIFFIN WARRANTS" shall mean the warrants issued on the Distribution Date by Reorganized RII to The Griffin Group, Inc., pursuant to that certain agreement between RII and The Griffin Group, Inc., dated as of September 17, 1992, as amended, and substantially in the form attached as Exhibit to the Registration Statement, which warrants shall be exercisable to purchase 4,665,000 shares of Reorganized RII Common Stock at the lesser of $1.875 and the average closing trading price of Reorganized RII Common Stock during the twenty (20) day period following the Effective Date. The final form of the Griffin Warrants shall be filed as a Plan Document. 1.1.52 "HOLDER" shall mean an Entity holding a Claim or Interest. 5 1.1.53 "INDENTURE TRUSTEE CHARGING LIENS" shall mean any Lien or other priority in payment available to the Old Series Indenture Trustee pursuant to the Old Series Note Indenture against distributions made to Holders of Allowed Old Series Note Claims for payment of any fees, costs or disbursements incurred by such Old Series Indenture Trustee. 1.1.54 "INTEREST" shall mean an equity security interest in either of the Debtors within the meaning of section 101(16) of the Bankruptcy Code. 1.1.55 "LIEN" shall mean any charge against or interest in property to secure payment of a debt or performance of an obligation. 1.1.56 "LITIGATION TRUST" shall mean the trust established pursuant to the Old Plan to pursue, for the benefit of the Old Debtors and certain of their creditors, all claims the Old Debtors or certain of their affiliates may have against Donald J. Trump and certain of his affiliates. 1.1.57 "LITIGATION TRUST UNITS" shall mean those units evidencing RII's beneficial interest in the Litigation Trust. 1.1.58 "NATIONAL SECURITIES EXCHANGE" shall mean any exchange registered pursuant to section 6(a) of the Securities Exchange Act of 1934, as amended, including the New York Stock Exchange, the American Stock Exchange and the National Association of Securities Dealers Automated Quotation System. 1.1.59 "NET PLAN CONSUMMATION CASH" shall mean the aggregate amount of Plan Consummation Cash held by RII and its Subsidiaries on the date when the Plan Expenses have been satisfied, together with interest on Net Plan Consummation Cash from and including the Effective Date to but excluding the date of payment at the average rate of return received by RII on invested Cash. 1.1.60 "NET SIHL RESERVED CASH" shall mean the aggregate amount of SIHL Reserved Cash held by RII and its Subsidiaries on the earlier of (i) the date when all adjustments as set forth in section 2.05(c) of the Paradise Island Purchase Agreement have been made, or (ii) the ninetieth day following the Effective Date, together with interest on Net SIHL Reserved Cash from and including the Effective Date to but excluding the date of payment at the average rate of return received by RII and its Subsidiaries on invested Cash. 1.1.61 "NET STANDBY RESERVED CASH" shall mean the aggregate amount of Standby Reserved Cash held by RII and its Subsidiaries on the earlier of (i) the date when all adjustments as set forth in section 2.05(c) of the PIRL Standby Distribution Agreement have been made, or (ii) the ninetieth day following the Effective Date, together with interest on Net Standby Reserved Cash from and including the Effective Date to but excluding the date of payment at the average rate of return received by RII and its Subsidiaries on invested Cash. 1.1.62 "NEW DEBT SECURITIES" shall mean, collectively, the New RIHF Mortgage Notes, the New RIHF Junior Mortgage Notes and, if issued on the Effective Date, the RIHF Senior Facility Notes. 1.1.63 "NEW EQUITY SECURITIES" shall mean, collectively, the shares of New RII Common Stock, RII Class B Common Stock and either the SIHL Series A Shares or the PIRL Ordinary Shares, as the case may be, to be issued pursuant to the Plan. 1.1.64 "NEW INDENTURES" shall mean, collectively, the New RIHF Mortgage Indenture and the New RIHF Junior Mortgage Indenture and, if the New RIHF Senior Facility Notes are issued on the Effective Date, the RIHF Senior Facility Indenture. 1.1.65 "NEW RIHF INDENTURE TRUSTEES" shall mean, collectively, the New RIHF Junior Indenture Trustee, the New RIHF Indenture Trustee and, if applicable, the trustee designated in the RIHF Senior Facility Indenture. 1.1.66 "NEW RIHF JUNIOR INDENTURE TRUSTEE" shall mean U.S. Trust Company of California, N.A., as trustee under the New RIHF Junior Mortgage Indenture. 6 1.1.67 "NEW RIHF JUNIOR MORTGAGE INDENTURE" shall mean that certain Indenture, dated as of the Effective Date, between RIHF, as issuer, RIH, as guarantor and U.S. Trust Company of California, N.A., as trustee, substantially in the form attached as Exhibit to the Registration Statement, pursuant to which the New RIHF Junior Mortgage Notes will be issued. The final form of the New RIHF Junior Mortgage Indenture shall be filed as a Plan Document. 1.1.68 "NEW RIHF JUNIOR MORTGAGE NOTES" shall mean the 11.375% Junior Mortgage Notes due 2004 of RIHF, substantially in the form described in the New RIHF Junior Mortgage Indenture, in the aggregate principal amount of $35,000,000 to be issued by RIHF pursuant to the New RIHF Junior Mortgage Indenture to Holders of Old Series Public Debt Claims, as provided in Article V of this Plan. 1.1.69 "NEW RIHF INDENTURE TRUSTEE" shall mean State Street Bank and Trust Company of Connecticut, N.A., as trustee under the New RIHF Mortgage Indenture. 1.1.70 "NEW RIHF MORTGAGE INDENTURE" shall mean that certain Indenture, dated as of the Effective Date, between RIHF, as issuer, RIH, as guarantor, and State Street Bank and Trust Company of Connecticut, N.A., as trustee, substantially in the form attached as Exhibit to the Registration Statement, pursuant to which the New RIHF Mortgage Notes will be issued. The final form of the New RIHF Mortgage Indenture shall be filed as a Plan Document. 1.1.71 "NEW RIHF MORTGAGE NOTES" shall mean the 11% Mortgage Notes due 2003, substantially in the form described in the New RIHF Mortgage Indenture, in the aggregate principal amount of $125,000,000 to be issued by RIHF pursuant to the New RIHF Mortgage Indenture to Holders of Old Series Public Debt Claims, as provided in Article V of this Plan. 1.1.72 "NEW RII COMMON STOCK" shall mean, collectively, the [ ]shares of common stock, par value $.01 per share, of Reorganized RII to be issued to the Holders of Old Series Public Debt Claims under the Plan which, upon issuance, shall constitute 40% of the total number of shares of issued and outstanding Reorganized RII Common Stock, assuming the exercise of the Griffin Warrants, and after giving effect to all distributions to be made under the Plan, but subject to dilution solely as a result of the exercise of outstanding 1990 Stock Options and the issuance and exercise of options under the 1994 Stock Option Plan. 1.1.73 "OLD CHAPTER 11 CASES" shall mean collectively the cases resulting from the involuntary petitions for relief under chapter 11 of the Bankruptcy Code filed against RII and Resorts International Financing, Inc. on November 12, 1989, and the voluntary petitions for relief under chapter 11 of the Bankruptcy Code filed by GRH and GRI on December 22, 1989. 1.1.74 "OLD DEBTORS" shall mean collectively RII, Resorts International Financing, Inc., GRI and GRH in their capacity as debtors in the Old Chapter 11 Cases. 1.1.75 "OLD PLAN" shall mean the Second Amended Joint Plan of Reorganization dated as of May 31, 1990, for the Old Debtors, which Old Plan was confirmed by the United States Bankruptcy Court for the District of New Jersey in August 1990. 1.1.76 "OLD RII COMMON STOCK" shall mean the authorized common stock, par value $.01 per share, of RII issued and outstanding on the Petition Date. 1.1.77 "OLD SECURITY DOCUMENTS" shall mean collectively the RIH Mortgage, the RIH Security Agreement, the RIH Pledge Agreement, the RIH Notes Pledge Agreement, the RIB Note, the RIB Subsidiary Guaranty Agreements, the RIB Mortgage, the RIB Collateral Assignment Agreement and the RIB Stock Pledge Agreement (each as defined in the Old Series Note Indenture). 1.1.78 "OLD SERIES NOTE INDENTURE" shall mean that certain Indenture, dated as of September 14, 1990, between RII, as issuer, and the Old Series Indenture Trustee pursuant to which the Old Series Notes in an aggregate principal amount of $325,000,000 were issued by RII under the Old Plan. 1.1.79 "OLD SERIES INDENTURE TRUSTEE" shall mean Chemical Bank as successor to Manufacturers Hanover Trust Company, as trustee under the Old Series Note Indenture. 7 1.1.80 "OLD SERIES NOTE CLAIMS" shall mean the Claims against RII arising from the indebtedness evidenced by the Old Series Notes, which Claims shall be Allowed, for the purposes of the Plan, in the aggregate, at the face amount of the Old Series Notes outstanding together with the amount of the accrued and unpaid interest thereon and any other costs and expenses of collection, other than the claims which are governed by section 4.2 of the Plan. 1.1.81 "OLD SERIES NOTES" shall mean collectively RII's Series A Senior Secured Redeemable Notes due 1994 and RII's Series B Senior Secured Redeemable Notes due 1994. 1.1.82 "OLD SERIES PUBLIC DEBT CLAIMS" shall mean Old Series Note Claims and GRI Guaranty Claims, collectively. 1.1.83 "PARADISE ISLAND APPROVAL ORDER" shall mean that order, which may be the Confirmation Order, approving the sale of the Paradise Island Assets to SIHL pursuant to the Paradise Island Purchase Agreement. 1.1.84 "PARADISE ISLAND ASSETS" shall mean the Paradise Island Shares, RII Paradise Assets, including without limitation the proceeds plus accrued interest thereon of the November 1993 sale of the .63 acre tract of land on Paradise Island, The Bahamas, and RII Real Estate Assets sold pursuant to the Paradise Island Purchase Agreement, which comprise substantially all of the Paradise Island properties and assets owned by RII and its Affiliates. 1.1.85 "PARADISE ISLAND PURCHASE AGREEMENT" shall mean that certain Purchase Agreement, dated as of October 11, 1993, by and between RII and SIHL, including all exhibits and schedules thereto, relating to the sale of the Paradise Island Assets, as amended by those certain letter agreements dated as of November 30, 1993. A copy of the Paradise Island Purchase Agreement, as amended, is attached hereto as Exhibit A. 1.1.86 "PARADISE ISLAND SHARES" shall have the meaning ascribed to the term "Shares" in the Paradise Island Purchase Agreement and the PIRL Standby Distribution Agreement. 1.1.87 "PARADISE SUBSIDIARY CLAIMS" shall mean the Claims held by any of the RII Paradise Subsidiaries against RII. 1.1.88 "PAYMENTS-IN-KIND" shall mean the distribution(s) to holders of New RIHF Junior Mortgage Notes of additional New RIHF Junior Mortgage Notes and RII Class B Common Stock in lieu of cash interest payments due to such holders under the New RIHF Junior Mortgage Indenture. 1.1.89 "PETITION DATE" shall mean the date on which the Debtors filed their petitions for relief commencing the Prepackaged Chapter 11 Cases. 1.1.90 "PIRL" shall mean P.I. Resorts Limited, a Bahamian corporation and a Subsidiary of RII, which has been formed by RII to effect the PIRL Spin-Off. 1.1.91 "PIRL AGGREGATE PURCHASE PRICE" shall mean the Aggregate Purchase Price as defined in the PIRL Standby Distribution Agreement. 1.1.92 "PIRL ARTICLES" shall mean the Articles of Association for PIRL, substantially in the form attached as Exhibit to the Registration Statement. The final form of the PIRL Articles shall be filed as a Plan Document. 1.1.93 "PIRL ORDINARY SHARES" shall mean the estimated five million ordinary shares, par value $.01 (U.S.) per share, of PIRL issued under the PIRL Articles which, upon issuance to the Holders of Old Series Public Debt Claims under the Plan, shall constitute 100% of the issued and outstanding shares of PIRL. 1.1.94 "PIRL SPIN-OFF" shall mean the transactions contemplated by the PIRL Standby Distribution Agreement. 8 1.1.95 "PIRL STANDBY DISTRIBUTION AGREEMENT" shall mean that certain Standby Distribution Agreement, dated as of October __, 1993, between RII and PIRL, relating to the PIRL Spin-Off, as amended by that certain letter agreement dated as of December __, 1993. A copy of the PIRL Standby Distribution Agreement, as amended, is attached hereto as Exhibit B. 1.1.96 "PIRL SUBSIDIARIES" shall mean the direct or indirect wholly-owned subsidiaries of PIRL to be formed by PIRL to receive the RII Paradise Assets from the RII Paradise Subsidiaries and the RII Real Estate Assets from RII pursuant to the PIRL Standby Distribution Agreement. 1.1.97 "PIRL SUBSIDIARIES CERTIFICATES OF INCORPORATION" shall mean the Certificates of Incorporation for the PIRL Subsidiaries, each of which shall be substantially in the form attached as Exhibits to the Registration Statement. The final forms of the PIRL Subsidiaries Certificates of Incorporation shall be filed as Plan Documents. 1.1.98 "PLAN" shall mean this Joint Plan of Reorganization proposed by RII, GRI, RIH, RIHF and PIRL, including the schedules and exhibits hereto, as well as the Plan Documents, each of which shall constitute provisions of this Joint Plan of Reorganization as if fully set forth herein, as the same may be amended, modified or supplemented from time to time by any duly authorized amendment or modification to the extent permitted herein and by the Bankruptcy Rules, which Plan will be filed with the Bankruptcy Court within five (5) days after the Petition Date. 1.1.99 "PLAN CONSUMMATION CASH" shall mean Available Cash which, on the Effective Date, Reorganized RII reasonably estimates is necessary to pay Plan Expenses. 1.1.100 "PLAN DOCUMENTS" shall mean the documents that aid in effectuating the Plan certain of which are specifically identified as such herein, the final forms of which are subject to the review and approval of Fidelity and TCW and will be filed with the Bankruptcy Court no later than ten (10) Business Days prior to commencement of the Confirmation Hearing. 1.1.101 "PLAN EXPENSES" shall mean that portion of the unpaid Administrative Claims (other than Administrative Claims of Professional Persons, Fidelity, TCW and the Old Series Indenture Trustee) and RII Classes 1, 4 and 5 and GRI Classes 1 and 3 Claims (whether or not such Claims are Disputed Claims) which, apart from the filing of the Prepackaged Chapter 11 Cases, would in the ordinary course of business and consistent with past practice have been paid on or before the Effective Date plus (i) any actual payments required to be made by RII or the RII Paradise Subsidiaries for transfer taxes or federal alternative minimum taxes incurred solely as a result of the consummation of the transactions contemplated by the Paradise Island Purchase Agreement or, alternatively, the PIRL Standby Distribution Agreement (after giving effect to all available deductions or credits allowed to the affiliated group of which RII is the common parent for the taxable year in which such transaction occurs), and for costs and liabilities pursuant to section 6.10 of the Paradise Island Purchase Agreement or, alternatively, section 5.09 of the PIRL Standby Distribution Agreement, (ii) the Administrative Claims of Professional Persons, Fidelity, TCW and the Old Series Indenture Trustee and (iii) costs or expenses incurred in connection with the implementation and consummation of the Plan for (a) amounts payable to the Disbursing Agent under the Plan as provided in section 6.11.9 hereof and (b) the reasonable post-Confirmation Date fees and expenses of Professional Persons, Fidelity, TCW and the Old Series Indenture Trustee associated with litigating Disputed Claims or Disputed Interests and implementing and consummating the Plan. 1.1.102 "PLAN SECURITIES" shall mean, collectively, the New Debt Securities and the New Equity Securities. 1.1.103 "PREPACKAGED CHAPTER 11 CASES" shall mean the voluntary cases to be commenced by RII and GRI under chapter 11 of the Bankruptcy Code on the Petition Date. 1.1.104 "PRIORITY CLAIM" shall mean a Claim which is entitled to priority treatment under sections 507(a)(3), (4), (5), (6) or (8) of the Bankruptcy Code. 9 1.1.105 "PRIORITY TAX CLAIM" shall mean any Claim of a governmental unit specified in section 507(a)(7) of the Bankruptcy Code. 1.1.106 "PRO RATA SHARE" shall mean with reference to any distribution on account of any Allowed Claim in any particular class of Claims, a distribution equal in amount to the ratio (expressed as a percentage) that the amount of such Allowed Claim bears at the time of such distribution to the aggregate amount of all Claims in such class of Claims, including Disputed Claims, but not including Disallowed Claims. 1.1.107 "PROFESSIONAL PERSONS" shall mean (i) those professionals retained in the Prepackaged Chapter 11 Cases pursuant to an order of the Bankruptcy Court in accordance with sections 327 and 1103 of the Bankruptcy Code, (ii) all professionals rendering services on behalf of Fidelity or TCW and (iii) all professionals seeking compensation or reimbursement of expenses pursuant to section 503(b)(4) of the Bankruptcy Code. 1.1.108 "PROPONENTS" shall mean, collectively, the Debtors, RIHF, RIH and PIRL. 1.1.109 "REGISTRAR" shall mean , in its capacity as registrar under the Old Series Note Indenture of transfers and exchanges of Old Series Notes. 1.1.110 "REGISTRATION STATEMENT" shall mean that certain registration statement of RII, RIHF, RIH and PIRL on Form S-4 filed with the Securities and Exchange Commission, in accordance with the Securities Act of 1933, on October 25, 1993, as such Registration Statement may be amended, supplemented, or modified from time to time prior to the date on which it shall become effective, including but not limited to the Information Statement/Prospectus contained therein and the exhibits attached thereto. 1.1.111 "REORGANIZED DEBTORS" shall mean Reorganized RII and Reorganized GRI. 1.1.112 "REORGANIZED GRI" shall mean GRI, as reorganized on and after the Effective Date. 1.1.113 "REORGANIZED RII" shall mean RII, as reorganized on and after the Effective Date. 1.1.114 "REORGANIZED RII COMMON STOCK" shall mean the common stock of Reorganized RII which shall be outstanding on or after the Effective Date, including the Old RII Common Stock, the New RII Common Stock, common stock of Reorganized RII to be issued in connection with the 1990 Stock Option Plan or the 1994 Stock Option Plan, and any common stock of Reorganized RII which may be issued upon the issuance and exercise of the Griffin Warrants. 1.1.115 "RESTRUCTURING TRANSACTIONS" shall mean, collectively, the transactions described in Schedules 6.1, 6.2 and 6.3 hereof. 1.1.116__"RETIREE" shall mean a person who retired from employment with the Debtors before the Petition Date and was and continues to be eligible for medical, death, and/or insurance benefits provided in the Retiree Benefit Plans as required by section 1114 of the Bankruptcy Code. 1.1.117__"RETIREE ADMINISTRATIVE CLAIM" shall mean the Claim of a Retiree under the Retiree Benefit Plans, to the extent such Claim is entitled to treatment as an Administrative Claim. 1.1.118__"RETIREE BENEFIT PLANS" shall mean any plan or policy of the Debtors in full force and effect as of the Petition Date pursuant to which medical, death, and/or insurance benefits are provided to Retirees, as any such plan or policy may have been modified during the pendency of the Prepackaged Chapter 11 Cases. 1.1.119 "RIB" shall mean Resorts International (Bahamas) 1984 Limited, a Bahamian corporation which on the Petition Date was a Subsidiary of RII. 1.1.120 "RIH" shall mean Resorts International Hotel, Inc., a New Jersey corporation which on the Petition Date was a Subsidiary of RII. 10 1.1.121 "RIHF" shall mean Resorts International Hotel Financing, Inc., a Delaware corporation which on the Petition Date was a Subsidiary of RII. 1.1.122 "RIHF SENIOR FACILITY" shall mean that certain senior secured note facility which will allow RIHF to borrow up to $20,000,000 in aggregate principal amount for working capital and other purposes as permitted pursuant to the RIHF Senior Facility Indenture. 1.1.123 "RIHF SENIOR FACILITY INDENTURE" shall mean that certain Indenture, dated as of the Effective Date, to be entered into between RIHF, as issuer, RIH, RII and such other Entities as may become parties thereto from time to time, as guarantors, and the designated trustee for the RIHF Senior Facility Indenture, substantially in the form attached as Exhibit to the Registration Statement and containing those terms set forth on the RIHF Senior Facility Term Sheet and such other terms as the parties thereto shall agree, pursuant to which the RIHF Senior Facility Notes may be issued. The final form of the RIHF Senior Facility Indenture shall be filed as a Plan Document. 1.1.124 "RIHF SENIOR FACILITY NOTES" shall mean the 11% secured notes due 2002, substantially in the form described in the RIHF Senior Facility Indenture, in the aggregate principal amount not to exceed $20,000,000 which may be issued by RIHF under the RIHF Senior Facility Indenture. 1.1.125 "RIHF SENIOR FACILITY TERM SHEET" shall mean that certain term sheet setting forth the material terms and conditions of the RIHF Senior Facility. The RIHF Senior Facility Term Sheet is attached hereto as Exhibit D. 1.1.126 "RII" shall mean Resorts International, Inc., a Delaware corporation. 1.1.127 "RII BYLAWS" shall mean the certain Bylaws of RII in force on the day immediately preceding the Petition Date. 1.1.128 "RII CERTIFICATE OF INCORPORATION" shall mean that certain Certificate of Incorporation of RII filed with the Secretary of State of the State of Delaware on October 24, 1958, as amended from time to time. 1.1.129 "RII CLASS B COMMON STOCK" shall mean the [ ] shares of Class B common stock, par value $.01 per share, of Reorganized RII issued to the Holders of Old Series Public Debt Claims pursuant to the terms of the Plan and the New RIHF Junior Mortgage Indenture, which shall not be independently transferable except in connection with the New RIHF Junior Mortgage Notes to which they relate and shall at all times equal 100% of the issued and outstanding shares of RII Class B Common Stock. 1.1.130 "RII INTERCOMPANY CLAIM" shall mean the Claim of RII against GRI. 1.1.131 "RII PARADISE ASSETS" shall have the meaning ascribed to that term in the Paradise Island Purchase Agreement and the PIRL Standby Distribution Agreement and shall include without limitation the proceeds plus accrued interest thereon of the November 1993 sale of the .63 acre tract of land on Paradise Island, The Bahamas. 1.1.132 "RII PARADISE SUBSIDIARIES" shall mean, collectively, (i) ANTL, Inc., a Florida corporation and a Subsidiary of RII, (ii) International Supplies, Inc., a Florida corporation and a Subsidiary of RII, (iii) Paradise Island Airlines, Inc., a Florida corporation and a Subsidiary of RII, (iv) Paradise Island Vacations, Inc., a Florida corporation and a Subsidiary of RII, (v) Resorts International Disbursement, Inc., a Florida corporation and a Subsidiary of RII and (vi) Resorts Representation International, Inc., a Florida corporation and a Subsidiary of RII. 1.1.133 "RII REAL ESTATE ASSETS" shall have the meaning ascribed to that term in the Paradise Island Purchase Agreement and the PIRL Standby Distribution Agreement. 1.1.134 "RII RETAINED CASH" shall mean $20 million of Available Cash to be retained by Reorganized RII and its Subsidiaries, in the aggregate, as of the Effective Date. 11 1.1.135 "SECURED CLAIM" shall mean a Claim that is secured by a Lien on property in which the Estate has an interest or that is subject to setoff under section 553 of the Bankruptcy Code, to the extent of the value of the Claim Holder's interest in the Estate's interest in such property or to the extent of the amount subject to setoff, as applicable, as determined pursuant to section 506(a) of the Bankruptcy Code; provided, however, that this definition of Secured Claim shall not include an Old Series Note Claim, GRI Guaranty Claim or Showboat Note Claim. 1.1.136 "SHOWBOAT NOTE CLAIM" shall mean a Claim arising from the indebtedness evidenced by the Showboat Notes. The Showboat Note Claims shall be Allowed, for the purposes of the Plan, in the aggregate, at the face amount of the Showboat Notes outstanding together with the amount of the accrued and unpaid interest thereon. 1.1.137 "SHOWBOAT NOTES" shall mean RII's First Mortgage Non-Recourse Pass-Through Notes due 2000 issued under the Showboat Notes Indenture. 1.1.138 "SHOWBOAT NOTES INDENTURE" shall mean that certain Indenture, dated as of September 14, 1990, between RII, as issuer, and Bank of New York, as trustee, pursuant to which the Showboat Notes in an aggregate principal amount of $105,333,000 were issued by RII. 1.1.139 "SIHL" shall mean Sun International Hotels Limited, a Bahamian corporation, and the buyer of the Paradise Island Assets under the Paradise Island Purchase Agreement. 1.1.140 "SIHL AGGREGATE CASH PURCHASE PRICE" shall mean the Cash portion of the SIHL Aggregate Purchase Price, plus interest on such amount at the Applicable Rate (as defined in the Paradise Island Purchase Agreement) from and including January 1, 1994, to but excluding the SIHL Closing Date, payable in full to the Disbursing Agent for the Holders of Allowed Old Series Public Debt Claims upon the consummation of the sale of the Paradise Island Assets in accordance with the Paradise Island Purchase Agreement. 1.1.141 "SIHL AGGREGATE PURCHASE PRICE" shall mean the Aggregate Purchase Price as defined in the Paradise Island Purchase Agreement. 1.1.142 "SIHL ARTICLES" shall mean the Articles of Association for SIHL in the form attached as Exhibit A to the Paradise Island Purchase Agreement. 1.1.143 "SIHL BUYER EXPENSE ESCROW" shall mean the U.S. $4,000,000.00 placed in escrow by RII pursuant to the SIHL Escrow Agreement to fund, if necessary, any obligations of RII with respect to the Buyer Expense Reimbursement (as defined in the Paradise Island Purchase Agreement) as set forth in section 7.02 of the Paradise Island Purchase Agreement, including interest earned on such escrowed funds. 1.1.144 "SIHL CLOSING" shall mean the closing under the Paradise Island Purchase Agreement. 1.1.145 "SIHL CLOSING DATE" shall mean the date on which the SIHL Closing occurs. 1.1.146 "SIHL ESCROW" shall mean the U.S. $5,000,000.00 placed in escrow by SIHL for the benefit of RII pursuant to the SIHL Escrow Agreement, including interest earned on such escrowed funds. 1.1.147 "SIHL ESCROW AGREEMENT" shall mean that certain Escrow Agreement dated as of December , 1993 by and between RII, SIHL and , as escrow agent, a copy of which is attached as Exhibit G to the Paradise Island Purchase Agreement. The final form of the SIHL Escrow Agreement shall be filed as a plan document. 1.1.148 "SIHL MANAGEMENT AGREEMENT" shall mean that certain Management Agreement, dated as of October 11, 1993, among SIHL and Sun International Management (U.K.) Ltd., relating to the management and operation of the Paradise Island Business after the SIHL Closing Date, the form of which is attached as Exhibit C to the Paradise Island Purchase Agreement. The final form of the SIHL Management Agreement shall be filed as a plan document. 12 1.1.149 "SIHL PUT RIGHTS" shall mean the rights under the SIHL Articles of holders of SIHL Series A Shares distributed under the Plan to put all or any portion of such Shares to SIHL and to receive from SIHL, on or before the fifth anniversary of the SIHL Closing Date, consideration equal to $35 (U.S.) per share (assuming the issuance of two million shares of SIHL Series A Shares), as may be adjusted for any consolidation or division of the SIHL Series A Shares or other similar alteration to the SIHL Series A Shares after the date of adoption of the SIHL Articles. 1.1.150 "SIHL RESERVED CASH" shall mean that portion of Available Cash which, on the Effective Date, Reorganized RII reasonably estimates will be required to fund adjustments as set forth in section 2.05(c) of the Paradise Island Purchase Agreement, plus any amounts paid by SIHL to RII after the SIHL Closing Date pursuant to section 2.05 of the Paradise Island Purchase Agreement, plus any interest paid by SIHL in connection therewith. 1.1.151 "SIHL SERIES A SHARES" shall mean the Series A Ordinary Shares, par value $.01 per share, of SIHL issued under the SIHL Articles, which, upon distribution to the Holders of Old Series Public Debt Claims under the Plan, shall constitute 40% of the capital stock of SIHL. 1.1.152 "SIHL SUBSIDIARIES" shall mean direct or indirect wholly-owned subsidiaries of SIHL to be formed by SIHL to receive the RII Paradise Assets and the RII Real Estate Assets from RII and the RII Paradise Subsidiaries pursuant to the Paradise Island Purchase Agreement. 1.1.153 "SIHL TARGET ADJUSTED CASH" shall mean $5 million of Available Cash which constitutes Target Adjusted Cash as defined in the Paradise Island Purchase Agreement. 1.1.154 "STANDBY MANAGEMENT AGREEMENT" shall mean that certain management agreement between Reorganized RII and PIRL for the interim management of the Paradise Island Assets upon consummation of the PIRL Spin-Off substantially in the form attached as Exhibit D to the PIRL Standby Distribution Agreement. The final form of the Standby Management Agreement shall be filed as a Plan Document. 1.1.155 "STANDBY RESERVED CASH" shall mean that portion of Available Cash which, on the Effective Date, Reorganized RII reasonably estimates will be required to fund the adjustments set forth in section 2.05(c) of the PIRL Standby Distribution Agreement, plus any Cash paid by PIRL to RII after the Alternative Closing Date pursuant to section 2.05 of the PIRL Standby Distribution Agreement. 1.1.156 "STANDBY TARGET ADJUSTED CASH" shall mean $5 million of Available Cash which constitutes Target Adjusted Cash as defined in the PIRL Standby Distribution Agreement. 1.1.157 "SUBSIDIARIES" shall mean any and all Entities of which 50% or more of the outstanding capital stock or other stock or other equity having ordinary voting power to elect a majority of the board of directors or other managers of such Entity is owned directly or indirectly by either of the Debtors. 1.1.158 "TCW" shall mean TCW Special Credits, in its capacity as investment advisor to various funds which hold Old Series Notes. 1.1.159 "UNSECURED CLAIM" shall mean any Claim against either of the Debtors that is not a Showboat Note Claim, an Old Series Public Debt Claim, the RII Intercompany Claim, or a Paradise Subsidiary Claim, Secured Claim, Priority Claim, Priority Tax Claim or Administrative Claim. 1.2 INTERPRETATION AND RULES OF CONSTRUCTION. Unless otherwise specified, all section, article, schedule and exhibit references in the Plan are to the respective section in, article of, or schedule or exhibit to, the Plan, as the same may be amended, waived, or modified from time to time. The rules of construction contained in section 102 of the Bankruptcy Code shall apply to the construction of the Plan. 1.3 OTHER TERMS. The words "herein," "hereof," "hereto," "hereunder," and others of similar import refer to the Plan as a whole and not to any particular section, subsection, or clause contained in the Plan. A capitalized term used herein that is not defined herein shall have the meaning ascribed to that term, if any, in the Bankruptcy Code or Bankruptcy Rules. 13 1.4 HEADINGS. Headings are used in the Plan for convenience of reference only, and shall not constitute a part of the Plan for any other purpose. Headings shall not limit or otherwise affect the provisions of the Plan. 1.5 INCORPORATION OF EXHIBITS. Each Schedule and Exhibit to the Plan annexed hereto and each of the Plan Documents and Exhibits attached to the Registration Statement is incorporated into and is a part of the Plan as if set forth in full herein. ARTICLE II CLASSIFICATION OF CLAIMS AND INTERESTS 2.1 CLAIMS AND EQUITY INTERESTS CLASSIFIED. For purposes of voting on and making distributions under the Plan, all Claims (except for Administrative Claims and Priority Tax Claims) and all Interests shall be classified as set forth in sections 2.3 and 2.4 of the Plan. 2.2 ADMINISTRATIVE CLAIMS AND PRIORITY TAX CLAIMS. As provided in section 1123(a)(1) of the Bankruptcy Code, Administrative Claims and Priority Tax Claims against the Debtors shall not be classified for purposes of voting on or receiving distributions under the Plan. Rather, all such Claims shall be treated separately as unclassified Claims on the terms set forth in Article IV of the Plan. 2.3 CLAIMS AGAINST AND EQUITY INTERESTS IN RII. 2.3.1 RII CLASS 1 CLAIMS. RII Class 1 consists of all Priority Claims against RII. 2.3.2 RII CLASS 2 CLAIMS. RII Class 2 consists of all Old Series Note Claims. 2.3.3 RII CLASS 3 CLAIMS. RII Class 3 consists of all Showboat Note Claims. 2.3.4 RII CLASS 4 CLAIMS. RII Class 4 consists of all Secured Claims against RII other than Old Series Note Claims and Showboat Note Claims. For purposes of the Plan, each such Secured Claim shall be deemed a separate subclass for voting and distribution. 2.3.5 RII CLASS 5 CLAIMS. RII Class 5 consists of all Unsecured Claims against RII. 2.3.6 RII CLASS 6 CLAIMS. RII Class 6 consists of all Paradise Subsidiary Claims against RII. 2.3.7 RII CLASS 7 INTERESTS. RII Class 7 consists of all Interests of Holders of the Old RII Common Stock. 2.3.8 RII CLASS 8 INTERESTS. RII Class 8 consists of all Interests of Holders of 1990 Stock Options. 2.4 CLAIMS AGAINST AND EQUITY INTERESTS IN GRI. 2.4.1 GRI CLASS 1 CLAIMS. GRI Class 1 consists of all Priority Claims against GRI. 2.4.2 GRI CLASS 2 CLAIMS. GRI Class 2 consists of all GRI Guaranty Claims. 2.4.3 GRI CLASS 3 CLAIMS. GRI Class 3 consists of all Unsecured Claims against GRI. 2.4.4 GRI CLASS 4 CLAIMS. GRI Class 4 consists of the RII Intercompany Claim. 2.4.5 GRI CLASS 5 INTERESTS. GRI Class 5 consists of the Interest in GRI held by RII, as the Holder of all of the issued and outstanding GRI Common Stock. ARTICLE III IDENTIFICATION OF IMPAIRED CLASSES OF CLAIMS AND EQUITY INTERESTS 3.1 UNIMPAIRED CLASSES OF CLAIMS. With the exception of the impaired classes specified in section 3.2 of the Plan, all classes of Claims are unimpaired under the Plan. 14 3.2. IMPAIRED CLASSES OF CLAIMS AND EQUITY INTERESTS. RII Class 2 Claims, GRI Class 2 Claims, the GRI Class 4 Claim, RII Class 7 Interests, RII Class 8 Interests, and GRI Class 5 Interests are impaired under the Plan. 3.3. IMPAIRMENT CONTROVERSIES. If a controversy arises as to whether any Claim or Interest, or any class of Claims or class of Interests, is impaired under the Plan, the Bankruptcy Court shall, after notice and a hearing, determine such controversy. ARTICLE IV TREATMENT OF ADMINISTRATIVE AND PRIORITY TAX CLAIMS 4.1 PAYMENT OF ADMINISTRATIVE CLAIMS. Subject to the provisions of sections 330 and 331 of the Bankruptcy Code, each Holder of an Allowed Administrative Claim against either of the Debtors shall receive on the Distribution Date from the Debtor liable for such claim, in full satisfaction of such Allowed Administrative Claim, Cash equal to the amount of such Allowed Claim, unless such holder shall have agreed to different treatment of such Claim; PROVIDED, HOWEVER, that Allowed Administrative Claims representing obligations incurred in the ordinary course of business or otherwise assumed by either of the Debtors pursuant to the Plan will be paid or performed by such Debtor in accordance with the terms and conditions of each agreement relating thereto and consistent with past practice. Notwithstanding the foregoing, all Administrative Claims of Professional Persons incurred prior to the Confirmation Date shall be paid in full, in cash, as soon as reasonably practicable, but in no event later than ten days after such Claim is Allowed by a Final Order and all Administrative Claims of Professional Persons incurred after the Confirmation Date shall be paid as provided in section 14.6 hereof. 4.1.1 TREATMENT OF RETIREE ADMINISTRATIVE CLAIMS. Holders of Retiree Administrative Claims shall continue to receive benefits provided for by the terms and conditions of the Retiree Benefit Plans to the extent required by section 1129(a)(13) of the Bankruptcy Code. 4.2 CLAIM OF OLD SERIES INDENTURE TRUSTEE. The Proponents consent to the compensation and reimbursement of the Old Series Indenture Trustee and its agents (including Professional Persons) for their reasonable fees and expenses incurred in the Prepackaged Chapter 11 Cases. The Proponents acknowledge that the Old Series Indenture Trustee has made and will continue to make a "substantial contribution" to these cases as that term is used in section 503(b) of the Bankruptcy Code, and Reorganized RII shall compensate the Old Series Indenture Trustee, subject to approval of the Bankruptcy Court upon application made therefor by the Old Series Indenture Trustee, for the reasonable fees and costs incurred by the Old Series Indenture Trustee (including the reasonable fees and expenses of its Professional Persons) under the Old Series Note Indenture. This payment or payments will constitute full satisfaction of the Old Series Indenture Trustee's Claims for compensation and reimbursement pursuant to the Old Series Note Indenture, including the Claims secured by the Indenture Trustee Charging Liens. 4.3 CLAIMS OF FIDELITY AND TCW. The Proponents consent to the compensation and reimbursement of Fidelity and TCW and their agents (including Professional Persons) for their reasonable fees and expenses incurred on or after the Petition Date (including the reasonable fees and expenses of their Professional Persons) incurred in connection with the Prepackaged Chapter 11 Cases, including but not limited to the negotiation and preparation of the Plan, the Plan Documents and the implementation and effectuation of the transactions contemplated thereby and the conduct or commission of an audit in accordance with section 5.3 of the Plan. Subject to the approval of the Bankruptcy Court, such fees and expenses shall be paid in full, in Cash, as soon as practicable but in no event no later than ten days after such Claims are Allowed by a Final Order. The Proponents acknowledge that Fidelity and TCW have made and will continue to make a "substantial contribution" to these cases as that term is used in section 503(b) of the Bankruptcy Code. 15 4.4 PAYMENT OF PRIORITY TAX CLAIMS. Unless otherwise agreed between the Holder of a Priority Tax Claim and the Debtor liable on such Claim, in accordance with section 1129(a)(9)(c) of the Bankruptcy Code, each Holder of an Allowed Priority Tax Claim shall be distributed, from the Debtor liable on such Claim and at the option of such Debtor, either (a) Cash, in the full amount of such Allowed Priority Tax Claim, on the later of the Distribution Date and the date such Claim becomes due and payable or (b) deferred payments of Cash in the full amount of such Allowed Priority Tax Claim, payable in equal annual principal installments beginning on the first anniversary of the Effective Date and ending on the earlier of the sixth anniversary of the Effective Date and the sixth anniversary of the date of the assessment of such Claim, together with interest (payable quarterly in arrears) on the unpaid balance of such Allowed Priority Tax Claim at an annual rate equal to [ ]; provided, however, that notwithstanding any other provision of this Plan, any distributions of Cash on account of Priority Tax Claims under subsection (a) or (b) hereinabove shall be funded from RII Retained Cash. The amount of any Allowed Priority Tax Claim for which the time for filing a return, if required, under applicable law or under any authorized extension thereof, has not expired on or prior to the Effective Date, and the rights of the Holder of such Claim, if any, to payment in respect thereof shall (a) be determined in the manner in which the amount of such Claim and the rights of the Holder of such Claim would have been resolved or adjudicated if the Prepackaged Chapter 11 Cases had not been commenced, (b) survive the Effective Date and consummation of the Plan as if the Prepackaged Chapter 11 Cases had not been commenced, and (c) not be discharged pursuant to section 1141 of the Bankruptcy Code. In accordance with section 1124 of the Bankruptcy Code, the Plan shall leave unaltered the legal, equitable, and contractual rights of the Holders of Priority Tax Claims referred to in the immediately preceding sentence. ARTICLE V TREATMENT OF CLAIMS AND INTERESTS 5.1 CLAIMS AGAINST AND EQUITY INTERESTS IN RII. 5.1.1 RII CLASS 1. RII Class 1 Claims are unimpaired. At RII's option, each Holder of an Allowed Priority Claim under sections 507(a)(3), (4), (5), (6) or (8) of the Bankruptcy Code shall retain unaltered the legal, equitable and contractual rights to which such Allowed Priority Claim entitles the Holder thereof or will be treated in accordance with section 1124(2) of the Bankruptcy Code. 5.1.2 RII CLASS 2. RII Class 2 Claims are impaired. The Old Series Note Claims shall be Allowed, for the purposes of voting on and receiving distributions under the Plan, in the aggregate, at the face amount of the Old Series Notes outstanding on the Petition Date, together with the amount of the accrued and unpaid interest thereon and any other costs and expenses of collection, other than the claims which are governed by section 4.2 of the Plan. Each Holder of record of an RII Class 2 Claim on the Distribution Record Date (as reflected in the register maintained by the Registrar) shall receive on the Distribution Date on account of its Old Series Public Debt Claims, its Pro Rata Share of (i) $125,000,000 aggregate principal amount of New RIHF Mortgage Notes, (ii) $35,000,000 aggregate principal amount of New RIHF Junior Mortgage Notes, (iii) the RII Class B Common Stock, (iv) the SIHL Series A Shares and the SIHL Aggregate Cash Purchase Price received on the SIHL Closing Date in connection with the Paradise Island Purchase Agreement (or, alternatively, if the SIHL Closing does not occur and the Alternative Closing occurs, the PIRL Ordinary Shares), (v) the New RII Common Stock, and (vi) Excess Cash. Additionally, each Holder of record of RII Class 2 Claims on the Distribution Record Date (as reflected in the register maintained by the Registrar) shall receive on the Distribution Date, on account of its Old Series Public Debt Claims, its Pro Rata Share of Net SIHL Reserved Cash (or Net Standby Reserved Cash, as the case may be), Net Plan Consummation Cash, and the Deferred Cash. Finally, on the Distribution Date, RII shall make the Caesars Payment. The Distribution Date with respect to distribution to the Disbursing Agent for Holders of Old Series Public Debt Claims of Net Plan Consummation Cash shall be as soon as practicable but no later than 90 days after the Effective Date; provided, however, that if all Plan Expenses have not been 16 paid by the ninetieth day after the Effective Date, the Debtors may continue to hold back for an additional sixty (60) days the portion of Net Plan Consummation Cash deemed by the Bankruptcy Court to be necessary to satisfy remaining Plan Expenses. After such sixty (60) day period, the 17 remaining Plan Consummation Cash shall be distributed, unless otherwise ordered by the Bankruptcy Court. Notwithstanding the foregoing, if the amount of Net Plan Consummation Cash to be distributed by the Reorganized Debtors is less than $100,000.00, the Reorganized Debtors shall not be required to make such distribution and shall retain the amount of such Net Plan Consummation Cash until the aggregate amount of Cash to be distributed to the Holders of Old Series Public Debt Claims under this section 5.1.2 exceeds $100,000.00. No Holder of an Old Series Public Debt Claim shall receive a distribution hereunder that would require the issuance of a New RIHF Mortgage Note or a New RIHF Junior Mortgage Note in a principal amount other than a principal amount of $1,000 or an integral multiple thereof. Additionally, no fractional shares of New Equity Securities will be issued. The Disbursing Agent, as soon as practicable after the Effective Date, shall aggregate and sell all fractional amounts of New Equity Securities, New RIHF Mortgage Notes and New RIHF Junior Mortgage Notes at then-prevailing prices and distribute the net proceeds to the Holders of Old Series Public Debt Claims entitled to such proceeds. 5.1.3 RII CLASS 3. RII Class 3 Claims are unimpaired. At RII's option, each Holder of an Allowed RII Class 3 Claim shall retain unaltered the legal, equitable and contractual rights to which such Allowed RII Class 3 Claim entitles the Holder thereof or will be treated in accordance with section 1124(2) of the Bankruptcy Code. Each Holder of an Allowed RII Class 3 Claim will also receive on the Distribution Date any amounts payable pursuant to section 5.4 of the Plan. 5.1.4 RII CLASS 4. RII Class 4 Claims are unimpaired. At RII's option, each Holder of an Allowed RII Class 4 Claim shall retain unaltered the legal, equitable and contractual rights to which such Allowed RII Class 4 Claim entitles the holder thereof or will be treated in accordance with section 1124(2) of the Bankruptcy Code. Each Holder of an Allowed RII Class 4 Claim will also receive on the Distribution Date any amounts payable pursuant to section 5.4 of the Plan. 5.1.5 RII CLASS 5. RII Class 5 Claims are unimpaired. At RII's option, each Holder of an Allowed RII Class 5 Claim shall retain unaltered the legal, equitable and contractual rights to which such Allowed RII Class 5 Claim entitles the Holder thereof or will be treated in accordance with section 1124(2) of the Bankruptcy Code. 5.1.6 RII CLASS 6. RII Class 6 Claims are unimpaired. At RII's option, each Holder of an Allowed RII Class 6 Claim shall retain unaltered the legal, equitable and contractual rights to which such Allowed RII Class 6 Claim entitles the Holder thereof or will be treated in accordance with section 1124(2) of the Bankruptcy Code. 5.1.7 RII CLASS 7. RII Class 7 Interests are impaired. On the Effective Date, each Holder of an Allowed RII Class 7 Interest shall retain the shares of Old RII Common Stock held by such Holder. The Interests held by the Holders of Allowed RII Class 7 Interests shall be diluted on the Effective Date by the issuance of New RII Common Stock, the options to be issued under the 1994 Stock Option Plan and, with respect to voting rights only, RII Class B Common Stock as provided herein. 5.1.8 RII CLASS 8. RII Class 8 Interests are impaired. On the Effective Date, each Holder of an Allowed RII Class 8 Interest shall retain the 1990 Stock Options held by such Holders. The Interests held by the Holders of Allowed RII Class 8 Interests shall be diluted on the Effective Date by the issuance of New RII Common Stock, the options to be issued under the 1994 Stock Option Plan, and, with respect to voting rights only, RII Class B Common Stock as provided herein. The 1990 Stock Option Plan shall terminate on the Effective Date and the exercise price for the 1990 Stock Options held by Holders of Allowed RII Class 8 Interests shall thereafter remain fixed at the exercise price at the time of the grant thereof and shall not be altered. 18 5.2 CLAIMS AGAINST AND EQUITY INTERESTS IN GRI. 5.2.1 GRI CLASS 1. GRI Class 1 Claims are unimpaired. At GRI's option, each Holder of an Allowed Priority Claim under sections 507(a)(3), (4), (5), (6) or (8) of the Bankruptcy Code shall retain unaltered the legal, equitable and contractual rights to which such Allowed Priority Claim entitles the Holder thereof or will be treated in accordance with section 1124(2) of the Bankruptcy Code. 5.2.2 GRI CLASS 2. GRI Class 2 Claims are impaired. The GRI Guaranty Claim shall be Allowed, for purposes of voting on and receiving distributions under this Plan only, in the aggregate, at the face amount of the Old Series Notes outstanding on the Petition Date, together with the amount of the accrued and unpaid interest thereon and any other costs and expenses of collection, other than the claims which are governed by section 4.2 of the Plan. Each Holder of record of a GRI Class 2 Claim on the Distribution Record Date (as reflected in the register maintained by the Registrar) shall receive on account of such GRI Class 2 Claim the consideration provided to Holders of RII Class 2 Claims under section 5.1.2 of the Plan. The distributions made to Holders of GRI Class 2 Claims shall be in full satisfaction, release and discharge of any and all liabilities and other obligations of GRI to such Holders on account of GRI Guaranty Claims. 5.2.3 GRI CLASS 3. GRI Class 3 Claims are unimpaired. At GRI's option, each holder of an Allowed GRI Class 3 Claim shall retain unaltered the legal, equitable and contractual rights to which such claim entitles the Holder thereof or will be treated in accordance with section 1124(2) of the Bankruptcy Code. 5.2.4 GRI CLASS 4. GRI Class 4 Claims are impaired. On the Effective Date, RII, the Holder of the GRI Class 4 Claim, will contribute to GRI the intercompany obligation of GRI to RII and will be treated in accordance with the implementation of the Restructuring Transactions. 5.2.5 GRI CLASS 5. GRI Class 5 Interests are impaired. On the Effective Date, RII, the Holder of GRI Class 5 Interests, will retain the shares of GRI Common Stock which it then holds and will be treated in accordance with the implementation of the Restructuring Transactions. 5.3 NO PREPAYMENT OF UNIMPAIRED CLAIMS. Notwithstanding any other provision in this Plan, the Debtors shall not, and shall not permit their Subsidiaries to, pay any pre-petition Allowed Claims or post-petition Allowed Administrative Claims on or before the Effective Date, except in the ordinary course of business and consistent with past practice, and shall continue to collect receivables in the ordinary course of business and consistent with past practice. In addition, neither shall the Debtors permit their Subsidiaries to pay an obligation of such Subsidiaries on or before the Effective Date except in the ordinary course of business and consistent with past practice or to collect receivables other than in the ordinary course of business and consistent with past practice. Subject to the foregoing, after the Effective Date, RII Retained Cash rather than Plan Consummation Cash shall be used to pay pre-petition Allowed Claims or post-petition Allowed Administrative Claims which, in the ordinary course of business and consistent with past practice, would not have been paid by the Effective Date. Fidelity and TCW shall have the right to conduct and commission an audit of the books and records of the Debtors and their Subsidiaries to insure their compliance with the foregoing. The fees and expenses attributable to any such audit shall be satisfied in accordance with section 4.3 of the Plan. With respect to any debts, liabilities or other obligations, the payment terms of which have been accelerated as a result of the occurrence of a default, the Debtors shall reinstate the maturities of such debts, liabilities or other obligations in accordance with section 1124(2) of the Bankruptcy Code and shall pay out of Plan Consummation Cash only that portion of such debts, liabilities or other obligations which, in the ordinary course of business and consistent with past practice, would have been paid on or before the Effective Date. Nothing herein contained shall prohibit or shall be deemed to prohibit the Debtors from making any payments, or causing their Subsidiaries to make any payments, required by any provision of the Paradise Island Purchase Agreement or the PIRL Standby Distribution Agreement. 5.4 ACCRUAL AND PAYMENT OF POST-PETITION INTEREST AND FEES. Interest on the Showboat Notes and Allowed RII Class 4 Claims shall continue to accrue through the Effective 19 Date at the applicable, non-default contractual rate. To the extent not previously paid when due or otherwise provided for under the Plan, such interest shall be paid in Cash on the Distribution Date, together with any additional amounts required to be paid in order to render such Claims unimpaired pursuant to section 1124(2) of the Bankruptcy Code. 5.5 SATISFACTION OF CLAIMS AND INTERESTS. The treatment of, and consideration to be received by, Holders of Allowed Claims and Allowed Interests pursuant to this Article V of the Plan will be in full satisfaction, release and discharge of their respective Claims against or Interests in the Debtors. ARTICLE VI MEANS FOR EXECUTION OF THE PLAN 6.1 SALE OF PARADISE ISLAND ASSETS TO SIHL. Provided the Paradise Island Purchase Agreement shall not have been previously terminated in accordance with its terms, RII shall take all actions necessary or appropriate to the performance of its duties and obligations thereunder and to implement the terms of and to effectuate the transactions contemplated by the Paradise Island Purchase Agreement. If the SIHL Closing occurs on or prior to the Effective Date, the transactions set forth on Schedule 6.1 hereto or substantially similar transactions shall be effected on or before the SIHL Closing Date. To the extent that any provision in the Plan relating to the sale of the Paradise Island Assets to SIHL or any provision in Schedule 6.1 is inconsistent with the Paradise Island Purchase Agreement, the Paradise Island Purchase Agreement shall control. 6.2 STANDBY DISTRIBUTION OF PARADISE ISLAND ASSETS. The following provisions of this section 6.2 shall apply in the event of the Alternative Closing. 6.2.1 ALTERNATIVE PARADISE ISLAND RESTRUCTURING TRANSACTIONS. If the Paradise Island Purchase Agreement shall have been terminated in accordance with its terms prior to the SIHL Closing Date and the conditions to the consummation of the PIRL Standby Distribution Agreement shall have been satisfied or waived in accordance with the terms thereof, the transactions set forth on Schedule 6.2 hereto or substantially similar transactions shall be effected on or prior to the Alternative Closing Date. If TCW and Fidelity shall reasonably determine that it is necessary and appropriate to extend the Alternative Closing Date, then the Alternative Closing shall be extended for a reasonable period not to exceed thirty (30) days after the later of (i) the date on which all conditions to the consummation of the Alternative Closing set forth in the PIRL Standby Distribution Agreement shall have been satisfied and (ii) the date on which the Paradise Island Purchase Agreement shall have been terminated in accordance with its terms. To the extent that any provision in the Plan relating to the PIRL Spin-Off or any provision in Schedule 6.2 is inconsistent with the PIRL Standby Distribution Agreement, the PIRL Standby Distribution Agreement shall control. 6.2.2 PIRL BOARD OF DIRECTORS. The classification and composition of the board of directors of PIRL shall be in accordance with the PIRL Articles. The initial members of the board of directors and officers of PIRL are or shall be stated in the Registration Statement or such other filing as may be made by the Debtors, with the consent of Fidelity and TCW, with the Bankruptcy Court within ten (10) days prior to the Confirmation Hearing. 6.2.3 PIRL OBLIGATIONS UNDER THE PARADISE ISLAND PURCHASE AGREEMENT. If the Paradise Island Purchase Agreement shall have been terminated in accordance with its terms prior to the SIHL Closing Date and the conditions to the consummation of the PIRL Standby Distribution Agreement shall have been satisfied or waived in accordance with the terms of thereof, (i) on the Alternative Closing Date, the obligations of RII pursuant to section 7.02(a)(vi) and (vii) of the Paradise Island Purchase Agreement shall become obligations of PIRL, and (ii) prior to the Alternative Closing Date, RII shall cause PIRL to enter into a security and pledge agreement with SIHL, pursuant to which 20 PIRL shall pledge assets reasonably acceptable to SIHL and having a fair market value of $6 million to secure PIRL's obligations under section 7.02(a)(vi) and (vii) of the Paradise Island Purchase Agreement. 6.3 GENERAL IMPLEMENTATION MATTERS. 6.3.1 OTHER RESTRUCTURING TRANSACTIONS. On the Effective Date, each of the restructuring transactions set forth on Schedule 6.3 hereto or substantially similar transactions shall be effected in the manner in which scheduled to occur. 6.3.2 GENERAL CORPORATE MATTERS. Reorganized RII and Reorganized GRI shall take such action as is necessary under the laws of the State of Delaware, federal law and other applicable law to effect the terms and provisions of the Plan. On the Effective Date, Reorganized RII shall file the Amended RII Certificate of Incorporation with the Secretary of the State of Delaware in accordance with sections 102 and 103 of the Delaware General Corporation Law. The Amended RII Certificate of Incorporation shall contain appropriate provisions consistent with the Plan and other Plan Documents (i) governing the issuance of the New RII Common Stock and the RII Class B Common Stock, (ii) prohibiting the issuance of non-voting shares as required by section 1123(a)(6) of the Bankruptcy Code and (iii) implementing such other matters as the Debtors believe are necessary and appropriate to effectuate the terms and conditions of this Plan. 6.4 REORGANIZED RII. 6.4.1 RECONSTITUTED BOARD OF DIRECTORS OF RII. After the Effective Date, the Board of Directors of Reorganized RII shall remain at six (6) members. Subject to qualification by the CCC, the initial Board of Directors of Reorganized RII shall consist of Mervyn E. Griffin, Thomas E. Gallagher, Jay Green, Charles Masson, Vince Naimoli and William Fallon. If a vacancy among the initial members of the Board of Directors of Reorganized RII arises, such vacancy shall be filled in accordance the Amended RII Certificate of Incorporation and Amended RII Bylaws. As specified more particularly in the Amended RII Certificate of Incorporation and Amended RII Bylaws, commencing with the first annual meeting of Reorganized RII's stockholders after the Effective Date, (i) the holders of the Reorganized RII Common Stock, voting as a class, will elect four directors of Reorganized RII and (ii) the holders of the RII Class B Common Stock, voting as a class, will elect two Class B directors of Reorganized RII. As set forth in the Amended RII Certificate of Incorporation, under certain conditions relating to Payments-in Kind in respect of the New RIHF Junior Mortgage Notes, the Holders of the RII Class B Common Stock, voting as a class, shall have the right to convene a meeting of stockholders and elect four additional Class B Directors. 6.4.2 OFFICERS OF RII. The corporate officers of RII shall serve as the initial officers of Reorganized RII on the Effective Date. The selection of officers of Reorganized RII after the Effective Date shall be as provided in the Amended RII Certificate of Incorporation and Amended RII Bylaws. 6.5 REORGANIZED GRI. 6.5.1 BOARD OF DIRECTORS OF GRI. On the Effective Date, the Board of Directors of Reorganized GRI shall consist of the members of the Board of Directors of GRI immediately prior to the Effective Date. The individuals designated to serve on the Board of Directors of Reorganized GRI immediately following the Effective Date shall be identified in a writing filed with the Bankruptcy Court at least ten (10) days prior to the Confirmation Hearing. If a vacancy among the initial members of the Board of Directors of Reorganized GRI arises, such vacancy shall be filled in accordance with applicable law and the GRI's certificate of incorporation and bylaws. 6.5.2 OFFICERS OF GRI. The corporate officers of GRI shall serve as the initial officers of Reorganized GRI on the Effective Date. The selection of officers of Reorganized GRI after the Effective Date shall be as provided in GRI's certificate of incorporation and bylaws. 6.6 APPROVAL OF 1994 STOCK OPTION PLAN. The 1994 Stock Option Plan for certain officers, directors and key employees of Reorganized RII shall be implemented on the Effective Date. 21 The 1994 Stock Option Plan shall be substantially in the form attached hereto as Exhibit C. The Plan and the Registration Statement shall be deemed a solicitation to the Holders of the Old RII Common Stock and to the Holders of the Old Series Notes as prospective Holders of Reorganized RII Common Stock for approval of the 1994 Stock Option Plan, and the approval of the Plan by such Holders shall constitute stockholder approval of the 1994 Stock Option Plan for purposes of Rule 16b-3 under the Securities Exchange Act of 1934. 6.7 CORPORATE ACTION. Except as specifically provided in the Plan, the adoption of the Amended RII Certificate of Incorporation or similar constituent documents, the amendment of the bylaws for Reorganized RII, the selection of directors and officers for the Reorganized Debtors, the distribution of Cash, issuance and distribution of the Plan Securities and the adoption, execution and delivery of all contracts, instruments, indentures and other agreements related to any of the foregoing, and the other matters provided for under the Plan involving corporate action to be taken by or required of the Reorganized Debtors shall be deemed to have occurred and be effective as provided herein, and shall be authorized and approved in all respects without any requirement of further action by stockholders or directors of the Debtors or the Reorganized Debtors, except to the extent the consent of Fidelity and TCW is required by the Plan or any of the Plan Documents, or any exhibits thereto. 6.8 SOURCES OF CASH FOR PLAN DISTRIBUTION. All Cash necessary for the Reorganized Debtors to make payments pursuant to the Plan on the Distribution Date shall be obtained from Available Cash, the operations of the Debtors or the Reorganized Debtors and their Subsidiaries, post-Effective Date borrowings under the RIHF Senior Facility, or in the case of Old Series Public Debt Claims only, the SIHL Aggregate Cash Purchase Price. The Reorganized Debtors may also make such payments on the Distribution Date using Available Cash received from their Subsidiaries through the Reorganized Debtors' consolidated cash management system and from advances or dividends from such Subsidiaries in the ordinary course. 6.9 SIHL RESERVED CASH, STANDBY RESERVED CASH AND PLAN CONSUMMATION CASH. On the Effective Date, the Reorganized Debtors shall estimate the amount of SIHL Reserved Cash or Standby Reserved Cash, as the case may be, and Plan Consummation Cash. As soon as practicable, but in no event later than ninety (90) days after the Effective Date, the Reorganized Debtors shall determine the exact amount available to distribute as Net SIHL Reserved Cash or Net Standby Reserved Cash, as the case may be, and Net Plan Consummation Cash and make such distributions to the Holders of Old Series Public Debt Claims in accordance with sections 5.1.2 above and 6.11.4 below. 6.10 NEW INDENTURES. On the Effective Date, RIHF, RIH and the respective New RIHF Indenture Trustees shall enter into the New RIHF Mortgage Note Indenture and the New RIHF Junior Mortgage Note Indenture which shall be in the form attached as exhibits to the Registration Statement and qualified on or before the Effective Date under the Trust Indenture Act of 1939 with the Securities and Exchange Commission. 6.11 DISTRIBUTIONS. 6.11.1 GENERALLY. All distributions required hereunder to Holders of Allowed Claims shall be made by a Disbursing Agent pursuant to a Disbursing Agreement, provided however, that no Disbursing Agreement shall be required if Reorganized RII or Reorganized GRI make such distributions. The Disbursing Agreement relative to any distribution to a Class of Claims or Interests shall provide for an appropriate reserve to be maintained by the Disbursing Agent (other than Reorganized RII or Reorganized GRI) relative to Disputed Claims or Disputed Interests as of the Distribution Date and to Old Series Notes and Old RII Common Stock not distributed pursuant to the Old Plan because of failure to comply with section 7.5(b) thereof. 6.11.2 SERVICE OF OLD SERIES INDENTURE TRUSTEE. The Debtors, with the consent of Fidelity and TCW, will designate a Disbursing Agent for purposes of effecting distributions to Holders of Old Series 22 Public Debt Claims pursuant to this Article VI. The Old Series Indenture Trustee may be such Disbursing Agent. In any such event (except where the context otherwise requires), any reference in this Article VI to "Disbursing Agent" shall instead be deemed to refer to the Old Series Indenture Trustee. In the event that the Old Series Indenture Trustee is designated (and approved by the Bankruptcy Court) as the Disbursing Agent with respect to the Old Series Notes, the Old Series Indenture Trustee shall enter into a Disbursing Agreement specifying the terms and conditions under which the Old Series Indenture Trustee is to make distributions to Holders of Old Series Public Debt Claims under the Plan. 6.11.3 DISTRIBUTIONS TO BE MADE TO HOLDERS AS OF THE DISTRIBUTION RECORD DATE. Only Holders of record as of the Distribution Record Date shall be entitled to receive the distributions provided under the Plan. As of the close of business on the Distribution Record Date, the respective transfer ledgers in respect of the Old Series Notes shall be closed. The Debtors and the Disbursing Agent, and their agents, shall have no obligation to recognize any transfer of Old Series Notes occurring after the Distribution Record Date. The Debtors and the Disbursing Agent, and their agents, shall be entitled instead to recognize and, for purposes of making distributions under the Plan, deal only with those Holders of record stated on the transfer ledgers maintained by the Registrar for the Old Series Notes as of the close of business on the Distribution Record Date. 6.11.4 DISTRIBUTION TO HOLDERS OF OLD SERIES PUBLIC DEBT CLAIMS. On the Effective Date, all Old Series Public Debt Claims shall be settled and compromised in full by the treatment accorded to such Claims in this Plan. Distributions to Holders of Old Series Public Debt Claims shall be delivered on the Distribution Date to the Disbursing Agent, which shall, in turn, deliver the distributions to the Holders of record of the Old Series Public Debt Claims on the Distribution Record Date in accordance with the provisions of the Plan, the Old Series Note Indenture and the Disbursing Agreement. For purposes of any distributions by the Debtors to Holders of Old Series Public Debt Claims, the Disbursing Agent shall be deemed to be the sole holder of all such Old Series Public Debt Claims. The Disbursing Agreement relative to the distribution to the Holders of Old Series Public Debt Claims shall provide that the Disbursing Agent shall distribute to any Holder that has complied with the requirements of 6.11.5(b) or (c) below such Holder's Pro Rata Share of the SIHL Aggregate Cash Purchase Price, Plan Securities, Net SIHL Reserved Cash or Net Standby Reserved Cash, as the case may be, Net Plan Consummation Cash and Deferred Cash. The Disbursing Agreement shall further provide that distributions of a Holder's Pro Rata Share of the SIHL Aggregate Cash Purchase Price, Plan Securities, Net SIHL Reserved Cash or Net Standby Reserved Cash, as the case may be, Net Plan Consummation Cash and Deferred Cash shall be made by the Disbursing Agent as soon as practicable after compliance by such Holder with the requirements of 6.11.5(b) or (c) below; provided, however, that the Disbursing Agent shall only be required to make distributions of the Net SIHL Reserved Cash or Net Standby Reserved Cash, as the case may be, Net Plan Consummation Cash and Deferred Cash (i) from time to time when the aggregate amount of such Cash to be distributed exceeds $1 million and (ii) upon receipt of the final distribution to be made on account of Net SIHL Reserved Cash or Net Standby Reserved Cash, as the case may be, Net Plan Consummation Cash and Deferred Cash regardless of the amount of such Cash then held. 6.11.5 PROCEDURES FOR DISTRIBUTION TO HOLDERS OF OLD SERIES PUBLIC DEBT CLAIMS. (a) On the Distribution Date, the Disbursing Agent shall receive from Reorganized RII (or, in the case of SIHL Series A Shares and the SIHL Aggregate Cash Purchase Price, SIHL) as applicable (i) certificates representing New RIHF Mortgage Notes, New RIHF Junior Mortgage Notes, SIHL Series A Shares or PIRL Ordinary Shares, as the case may be, New RII Common Stock, RII Class B Common Stock and (ii) Cash. As soon as practicable, the Disbursing Agent, in accordance with the Disbursing Agreement and this Plan, shall deliver such Cash and certificates to the Holders of Old Public Debt Claims that have validly surrendered the Old Series Notes held by such Holders. (b) As a condition to receiving distributions provided for by the Plan in respect of the Old Series Notes, any Holder of an Old Series Public Debt Claim shall be required to surrender such securities, 23 accompanied by duly executed and completed letters of transmittal, to the Disbursing Agent. All instruments surrendered to the Disbursing Agent shall be canceled, marked "Compromised and Settled Only as Provided in the Plan of Reorganization for Resorts International, Inc. and GGRI, Inc." and delivered to Reorganized RII. The Disbursing Agent shall make distributions only to Holders of Old Series Notes that have surrendered such instruments as herein provided. Except as provided in section 6.11.5(c), no distribution shall be made to any Holder of an Old Series Note that has not so surrendered such instruments held by it. (c) Unless waived by the Disbursing Agent, any Holder of an Old Series Public Debt Claim based upon an Old Series Note which has been lost, stolen, mutilated or destroyed shall, in lieu of surrendering such Old Series Note as provided in this section, deliver to the Disbursing Agent (i) evidence satisfactory to the Disbursing Agent of the loss, theft, mutilation or destruction of such instrument and (ii) such security or indemnity as may be reasonably required by Reorganized RII and the Disbursing Agent to hold Reorganized RII and the Disbursing Agent harmless from any damages, liabilities, or costs incurred in treating such Entity as a Holder of such Old Series Public Debt Claim. Thereafter, such Entity shall be treated as the Holder of an Old Series Public Debt Claim for all purposes of the Plan and shall, for all purposes under this Plan, be deemed to have surrendered the instrument representing such Old Series Public Debt Claim. (d) Any Holder of an Old Series Public Debt Claim who shall not have surrendered or be deemed to have surrendered the certificates representing its Old Series Note within twenty-four (24) months after the Effective Date shall have its Claim based on such Old Series Note disallowed, shall receive no distributions on such Claim under this Plan and shall be forever barred from asserting any claim thereon. In such case, the Disbursing Agent shall return to Reorganized RII (or, in the case of New RIHF Mortgage Notes and New RIHF Junior Mortgage Notes, RIHF), and Reorganized RII or RIHF, as may be applicable, shall retain all certificates representing New RIHF Mortgage Notes, New RIHF Junior Mortgage Notes, SIHL Series A Shares or PIRL Ordinary Shares, as the case may be, RII Class B Common Stock, New RII Common Stock and all Cash allocable to such non-surrendering Holders. All such certificates representing New RIHF Mortgage Notes, New RIHF Junior Mortgage Notes, RII Class B Common Stock, and New RII Common Stock which are so returned to Reorganized RII or, as applicable, RIHF shall be canceled. All Cash and certificates representing SIHL Series A Shares or PIRL Ordinary Shares which are so returned to Reorganized RII shall be redistributed as soon as practicable after the end of the twenty-fourth month after the Effective Date to the other Holders of Old Series Public Debt Claims as of the Distribution Record Date who previously surrendered their Old Series Notes. 6.11.6 MEANS OF CASH PAYMENT. Cash payments made pursuant to the Plan shall be in U.S. funds, by check drawn on a domestic bank, or, at Reorganized RII's or Reorganized GRI's option, by wire transfer from a domestic bank, except that payments made to foreign trade creditors holding Unsecured Claims or to foreign governmental units holding Priority Tax Claims shall be in such funds and by such means as are customary or as may be necessary in a particular foreign jurisdiction. 6.11.7 CALCULATION OF DISTRIBUTION AMOUNTS OF SECURITIES. No fractional shares of New RII Common Stock, RII Class B Common Stock or SIHL Series A Shares or PIRL Ordinary Shares, as the case may be, shall be issued or distributed. The Disbursing Agent, as soon as practicable after the Effective Date and pursuant to the Disbursing Agreement, shall aggregate and sell all fractional amounts of such securities at then prevailing prices and distribute the net proceeds to the Holders of Old Series Public Debt Claims entitled to such proceeds. New RIHF Mortgage Notes and New RIHF Junior Mortgage Notes will be issued in denominations of $1,000. The Disbursing Agent, as soon as practicable after the Effective Date, shall aggregate and sell all fractional amounts of New RIHF Mortgage Notes and New RIHF Junior Mortgage Notes at then prevailing prices and distribute the net proceeds to the Holders of Old Series Public Debt Claims entitled to such proceeds. 6.11.8 DELIVERY OF DISTRIBUTIONS. Subject to Bankruptcy Rule 9010, distributions to Holders of Allowed Claims shall be made at the address of each such Holder as set forth on the Schedules filed 24 with the Bankruptcy Court unless superseded by the address as set forth on the proofs of Claim or proofs of Interest filed by such Holders (or at the last known addresses of such a Holder if no proof of Claim or proof of Interest is filed or if the Debtors have been notified in writing of a change of address), or in the case of Holders of Old Series Public Debt Claims, may be made at the addresses contained in the records of the Registrar, except as provided below. If any Holder's distribution is returned as undeliverable, no further distributions to such Holder shall be made unless and until Reorganized RII or the Disbursing Agent is notified of such Holder's then current address, at which time all missed distributions shall be made to such Holder without interest. Amounts in respect of undeliverable distributions made through the Disbursing Agent shall be returned to the Disbursing Agent making such distribution until such distributions are claimed. All Claims for undeliverable distributions shall be made on or before the later of the second anniversary of the Effective Date and the date ninety (90) days after such Claim is Allowed. After such date, all unclaimed property shall be returned to the Reorganized Debtors or their successors in accordance with section 6.11.5 of the Plan and the Claim of any Holder with respect to such property shall be discharged and forever barred. 6.11.9 FEES AND EXPENSES OF DISBURSING AGENTS. Except as otherwise ordered by the Bankruptcy Court, the amount of any reasonable fees and expenses incurred by a Disbursing Agent, including but not limited to the Old Series Indenture Trustee, as the case may be, on or after the Confirmation Date (including, but not limited to, tax related expenses) and any compensation and expense reimbursement claims (including reasonable fees and expenses of its agents) made by such Disbursing Agent shall be paid as a Plan Expense by Reorganized RII in accordance with the applicable Disbursing Agreement without further order of the Bankruptcy Court; provided, however, that the Bankruptcy Court will hear and determine any disputes in respect of such fees and expenses. 6.11.10 TIME BAR TO CASH PAYMENTS. Checks issued by Reorganized RII or Reorganized GRI in respect of Allowed Claims shall be null and void if not negotiated within six (6) months after the date of issuance thereof. Any amounts paid to the Disbursing Agent in respect of such a check shall be promptly returned to Reorganized RII or Reorganized GRI by the Disbursing Agent. Requests for reissuance of any check shall be made directly to Reorganized RII or Reorganized GRI by the Holder of the Allowed Claim with respect to which such check originally was issued. Any claim in respect of such a voided check shall be made on or before the later of the second anniversary of the Effective Date and ninety (90) days after the six month period following the date of issuance of such check. After such date, all claims in respect of void checks shall be discharged and forever barred. 6.12 VESTING OF PROPERTY OF RII. Except as otherwise provided in the Plan or the Confirmation Order, upon the Effective Date all property of RII's estate, wherever situated, shall vest in Reorganized RII and shall be retained by Reorganized RII or distributed to Creditors as provided in the Plan. Upon the Effective Date, all property of RII's estate, whether retained by Reorganized RII or distributed to Creditors, shall be free and clear of all Claims, Liens, Encumbrances and interests, except the Claims, Liens, Encumbrances and interests of Creditors expressly provided for in the Plan. 6.13 VESTING OF PROPERTY OF GRI. Except as otherwise provided in the Plan or the Confirmation Order, upon the Effective Date all property of GRI's estate, wherever situated, shall vest in Reorganized GRI and shall be retained by Reorganized GRI or distributed to Creditors as provided in the Plan. Upon the Effective Date, all property of GRI's estate, whether retained by Reorganized GRI or distributed to Creditors, shall be free and clear of all Claims, Liens, Encumbrances and interests, except the Claims, Liens, encumbrances and interests of Creditors expressly provided for in the Plan. 6.14 MAINTENANCE OF CAUSES OF ACTION. Neither the Debtors nor the Reorganized Debtors shall commence and/or prosecute any avoidance or recovery actions under sections 544, 545, 547, 548, 549, 550, 551 and 553 of the Bankruptcy Code other than such avoidance or recovery actions that have been or are permitted to be filed in connection with the Old Chapter 11 Cases. On the 25 Effective Date, all avoidance or recovery causes of action other than such avoidance or recovery actions that have been or are permitted to be filed in connection with the Old Chapter 11 Cases shall be deemed waived and released. 6.15 ASSUMPTION OF LIABILITIES. The liability for and obligation to make the distributions required under the Plan shall be assumed by Reorganized RII and Reorganized GRI, which shall have the liability for, and obligation to make, all distributions of Cash, Plan Securities or other instruments to be issued by Reorganized RII and Reorganized GRI under the Plan. 6.16 RIHF SENIOR FACILITY. RIHF, RIH, RII, one or more funds managed by Fidelity and such other Entities as may become parties thereto from time to time shall make reasonable efforts to enter into, on or before the Effective Date, the RIHF Senior Facility, the material terms of which are set forth in the RIHF Senior Facility Term Sheet attached hereto as Exhibit D. 6.17 USE OF RIHF SENIOR FACILITY FUNDS. Pursuant to the terms of the RIHF Senior Facility to be entered in between RIHF, RIH, RII, one or more funds managed by Fidelity and such other Entities as may become parties thereto from time to time in conjunction with the consummation of the Plan, (i) RIHF shall be the obligor thereunder, (ii) RIH, RII and such other Entities as may become parties thereto from time to time shall be joint guarantors thereon, (iii) RIHF shall be permitted to borrow any amounts advanced thereunder, (iv) RIHF will lend the proceeds borrowed thereunder to RIH, and (v) RIH may, but shall not be required to, lend all or any part of the proceeds borrowed from RIHF under the RIHF Senior Facility to RII, and in such cases (as described in (iv) and (v) above) such funds shall be used by RIH and RII for the purposes set forth in the RIHF Senior Facility Indenture. Acceptance of the Plan by the Class of Holders of Old Series Public Debt Claims and the entry of the Confirmation Order shall constitute the approval of and consent by the Holders of Old Series Public Debt Claims to the transfer to and use by RIH and RII of such RIHF Senior Facility funds. ARTICLE VII ACCEPTANCE OR REJECTION OF THE PLAN 7.1 CLASSES ENTITLED TO VOTE. Each Holder of an Allowed Claim or Allowed Interest in an impaired Class of Claims against or Interests in either Debtor including any Holder of an RII Class 2 Claim, RII Class 7 Interest, RII Class 8 Interests, GRI Class 2 Claim, GRI Class 4 Claim and GRI Class 5 Interests, shall be entitled to vote separately to accept or reject the Plan. Each Holder of a Claim in an unimpaired class of Claims, including RII Class 1, RII Class 3, RII Class 4, RII Class 5, RII Class 6, GRI Class 1 and GRI Class 3, shall be deemed to have accepted the Plan pursuant to section 1126(f) of the Bankruptcy Code. 7.2 CLASS ACCEPTANCE REQUIREMENT. An impaired Class of Claims shall have accepted the Plan if (i) the Holders (other than any Holder designated under section 1126(e) of the Bankruptcy Code) of at least two-thirds in amount of the Allowed Claims actually voting in such Class have voted to accept the Plan and (ii) the Holders (other than any Holder designated under section 1126(e) of the Bankruptcy Code) of more than one-half in number of the Allowed Claims actually voting in such Class have voted to accept the Plan. An impaired Class of Interests shall have accepted the plan if the Holders (other than any Holder designated under section 1126(e) of the Bankruptcy Code) of at least two-thirds in amount of the Allowed Interests actually voting in such Class have voted to accept the Plan. 7.3 CRAMDOWN. If any impaired Class of Claims or Interests shall fail to accept the Plan with the requisite statutory majorities in accordance with section 1126(c) of the Bankruptcy Code, the Debtors reserve the right to (i) request that the Bankruptcy Court confirm the Plan in accordance with section 1129(b) of the Bankruptcy Code and/or (ii) modify the Plan in accordance with section 14.10 of the Plan. 26 ARTICLE VIII PROCEDURES FOR RESOLVING AND TREATING DISPUTED CLAIMS 8.1 OBJECTION DEADLINE. As soon as practicable, but in no event later than sixty days after the Effective Date, objections to Disputed Claims shall be filed with the Bankruptcy Court and served upon the Holders of each of the Disputed Claims. 8.2 RESPONSIBILITY FOR OBJECTION TO DISPUTED CLAIMS. Reorganized RII and Reorganized GRI shall have the exclusive responsibility for objecting to the allowance of Disputed Claims following the Effective Date, the entire cost of which, including any fees and expenses of counsel and other Professional Persons, shall be paid by Reorganized RII and Reorganized GRI from Plan Consummation Cash during the ninety (90) days following the Effective Date, and, except to the extent otherwise agreed by Fidelity and TCW and ordered by the Bankruptcy Court, from RII Retained Cash thereafter. 8.3 PROSECUTION OF OBJECTIONS. On and after the Effective Date, except as the Bankruptcy Court may otherwise order, the filing, litigation, settlement, or withdrawal of all objections shall be the responsibility of Reorganized RII and Reorganized GRI. 8.4 NO DISTRIBUTIONS PENDING ALLOWANCE. Notwithstanding any other provision of the Plan, no payments or distributions shall be made with respect to a Disputed Claim unless and until all objections to such Disputed Claim have been determined by Final Order. 8.5 DISTRIBUTIONS AFTER ALLOWANCE. Payments and distributions from Reorganized RII or Reorganized GRI to each Holder of a Disputed Claim, to the extent that it ultimately becomes an Allowed Claim, shall be made in accordance with the provisions of the Plan governing the Class of Claims to which the Disputed Claim belongs. As soon as practicable after the date the order or judgment of the Bankruptcy Court allowing such Claim becomes a Final Order, but in no event later than thirty (30) days after such Claim becomes an Allowed Claim, any Cash or other consideration that would have been distributed in respect of the Disputed Claim had it been an Allowed Claim at the Effective Date shall be distributed, without interest, to the Holder of such Claim. 8.6 TREATMENT OF CONTINGENT CLAIMS. Until such time as a Contingent Claim becomes fixed and absolute, such Claim shall be treated as a Disputed Claim for purposes related to estimates, allocations and distributions under the Plan. 8.7 ESTIMATION OF CLAIMS. The Debtors or the Reorganized Debtors may, at any time, request that the Bankruptcy Court estimate any Contingent Claim pursuant to section 502(c) of the Bankruptcy Code regardless of whether the Debtors or the Reorganized Debtors have previously objected to such Claim or whether the Bankruptcy Court has ruled on any such objection, and the Bankruptcy Court will retain jurisdiction to estimate any Claim at any time during litigation concerning any objection to any Claim, including during the pendency of any appeal relating to any such objection. In the event that the Bankruptcy Court estimates any Contingent Claim, that estimated amount will constitute either the allowed amount of such Claim or a maximum limitation on such Claim, as determined by the Bankruptcy Court. If the estimated amount constitutes a maximum limitation on such Claim, the Debtors or the Reorganized Debtors may elect to pursue any supplemental proceedings to object to any ultimate payment on such Claim. All of the aforementioned Claims objection, estimation and resolution procedures are cumulative and not necessarily exclusive of one another. Claims may be estimated and subsequently compromised, settled, withdrawn or resolved by any mechanism approved by the Bankruptcy Court. 27 ARTICLE IX EXECUTORY CONTRACTS 9.1 GENERAL TREATMENT. All executory contracts and unexpired leases of RII shall be assumed by Reorganized RII and all executory contracts and unexpired leases of GRI shall be assumed by Reorganized GRI upon entry of the Confirmation Order unless specifically rejected by order entered prior to the Confirmation Order or unless a motion to reject any such executory contract or unexpired lease is pending before the Bankruptcy Court on the Confirmation Date. 9.2 BAR TO REJECTION DAMAGES. If the rejection of an executory contract or unexpired lease by the Debtors results in damages to the other party or parties to such contract or lease, a Claim for such damages, if not previously evidenced by a filed proof of Claim or barred by a Final Order, shall be forever barred and shall not be enforceable against the Debtors or the Reorganized Debtors, or their properties or agents, successors, or assigns, unless a proof of Claim relating thereto is filed with the Bankruptcy Court within thirty (30) days after the Confirmation Date, or within such shorter period as ordered by the Bankruptcy Court. 9.3 CURE OF DEFAULTS FOR EXECUTORY CONTRACTS AND UNEXPIRED LEASES. Each executory contract and unexpired lease to be assumed pursuant to the Plan shall be reinstated and rendered unimpaired in accordance with sections 1124(2) and 365(b)(1) of the Bankruptcy Code. In connection therewith, the Debtor obligated on each such contract and lease to be assumed pursuant to the Plan shall cure any monetary default (other than of the kind specified in section 365(b)(2) of the Bankruptcy Code), by payment of the default amount in Cash on the Distribution Date or on such other terms as the parties to such executory contract or unexpired lease may otherwise agree, compensate, or provide adequate assurance that the applicable Debtor will promptly compensate, parties other than the Debtor to such contract or lease for any actual pecuniary loss to such parties resulting from such default and provide adequate assurance of future performance under such contract or lease. In the event of a dispute regarding: (i) the amount of any cure payments, (ii) the ability of Reorganized RII or Reorganized GRI or any of their assignees to provide "adequate assurance of future performance" (within the meaning of section 365 of the Bankruptcy Code) under the contract or lease to be assumed, or (iii) any other matter pertaining to assumption, the cure payments or performance required by section 365(b)(1) of the Bankruptcy Code shall be made following the entry of a Final Order resolving the dispute and approving the assumption. ARTICLE X RIGHTS AND OBLIGATIONS OF THE DISBURSING AGENT 10.1 EXCULPATION. The Disbursing Agent, from and after the Effective Date, is hereby exculpated by all Entities, Holders of Claims or Interests, and parties in interest receiving distributions or retaining property under the Plan, from any and all claims, causes of action, and other assertions of liability (including breach of fiduciary duty) arising out of the Disbursing Agent's discharge of the powers and duties conferred upon it by the Plan or any order of the Bankruptcy Court entered pursuant to or in furtherance of the Plan, or applicable law, except solely for actions or omissions arising out of the Disbursing Agent's gross negligence or willful misconduct and except as may otherwise be provided in the Disbursing Agreement. No Holder of a Claim or an Interest, or representative thereof, shall have or pursue any claim or cause of action (i) against the Disbursing Agent for making payments in accordance with the Plan, or for implementing the provisions of the Plan, or (ii) against any Holder of a Claim or Interest for receiving or retaining payments or other distributions as provided for by the Plan. 28 10.2 POWERS OF THE DISBURSING AGENT. Pursuant to the terms and provisions of the Disbursing Agreement, the Disbursing Agent shall be empowered to (i) take all steps and execute all instruments and documents necessary to effectuate the Plan; (ii) make distributions contemplated by the Plan; (iii) comply with the Plan and the obligations thereunder; (iv) employ, retain, or replace professionals to represent it with respect to the fulfillment of its responsibilities under the Plan, the Disbursing Agreement and/or the Old Series Note Indenture, as applicable; and (v) exercise such other powers as may be vested in the Disbursing Agent pursuant to order of the Bankruptcy Court or pursuant to the Plan, or as necessary and proper to carry out the provisions of the Plan. 10.3 DUTIES OF THE DISBURSING AGENT. Pursuant to and subject to the terms and provisions of (and except as may otherwise be provided in) the Disbursing Agreement, the Disbursing Agent shall have the duties of: (a) carrying out the provisions of the Plan, which shall include taking or not taking any action which the Disbursing Agent deems to be in furtherance of the Plan, including, from the date of the Disbursing Agent's appointment, making payments and conveyances and effecting other transfers necessary in furtherance of the Plan; (b) managing property to be distributed in a manner designed to effectuate the Plan; (c) making quarterly and other periodic reports regarding the distributions to be made to the Holders of Claims; and (d) complying with all tax withholding and reporting requirements imposed on it by any governmental unit. The duties of the Disbursing Agent set forth in this section 10.3 shall not relieve the Debtors of their duties and obligations under the Plan and applicable law. ARTICLE XI CONDITIONS PRECEDENT TO CONFIRMATION AND EFFECTIVE DATE 11.1 CONDITIONS PRECEDENT TO CONFIRMATION OF THE PLAN. Confirmation of the Plan will not occur unless all of the following conditions precedent have been satisfied or waived: 11.1.1 The Confirmation Date shall occur no later than December 31, 1994. 11.1.2 The Confirmation Order shall approve in all respects all of the provisions, terms, and conditions of the Plan. 11.1.3 The Confirmation Order shall provide for the confirmation of the Plan as to both RII and GRI. 11.1.4 The Confirmation Order shall be acceptable in form and substance to the Debtors, TCW, Fidelity and, to the extent provided in the Paradise Island Purchase Agreement, SIHL. 11.1.5 The Confirmation Order shall contain a finding, supported by evidence adduced by the Debtors at the Confirmation Hearing, that, except as expressly provided in the Plan, all of the property distributed under the Plan shall vest in the recipients thereof free and clear of all Liens, claims, Encumbrances and interests of any nature whatsoever except as permitted by the Plan and that consummation of the Plan shall not result in a fraudulent transfer with respect to either of the Debtors or any of their Affiliates. 11.1.6 The entry of a Bankruptcy Court order, which may be the Confirmation Order, declaring that, as of the Effective Date, the Old Security Documents under which the Liens on the property securing the Old Series Notes were granted or created shall be deemed released and terminated. 29 11.2 CONDITIONS TO EFFECTIVE DATE. The Effective Date of the Plan will not occur unless all of the following conditions precedent have been satisfied or waived: 11.2.1 The Confirmation Order shall have been duly entered and not be stayed. 11.2.2 The New RIHF Mortgage Indenture and New RIHF Junior Mortgage Indenture shall have been qualified under the Trust Indenture Act of 1939 and the securities to be issued thereunder as well as the RII Class B Common Stock, New RII Common Stock, and SIHL Series A Shares or PIRL Ordinary Shares, as the case may be, shall be registered under the Securities Act and accepted or admitted on a National Securities Exchange. 11.2.3 The Effective Date shall occur no later than January 31, 1995. 11.2.4 All required regulatory approvals shall have been obtained (including without limitation any regulatory approvals from the CCC, the Bahamian Government and the U.S. Department of Transportation). 11.2.5 All indentures, mortgages, security agreements and other agreements and instruments to be delivered under or necessary to effectuate the Plan, including without limitation the RIHF Senior Facility Indenture, shall have been executed and delivered. 11.2.6 Either (a) the conditions to the SIHL Closing under the Paradise Island Purchase Agreement shall have been satisfied or waived in accordance with the terms thereof and the Paradise Island Approval Order shall have been entered and the SIHL Closing shall have occurred, or (b) the Paradise Island Purchase Agreement shall have terminated in accordance with its terms, the conditions to the consummation of the PIRL Spin-Off pursuant to the PIRL Standby Distribution Agreement shall have been satisfied or waived in accordance with the terms thereof and the Alternative Closing shall have occurred. 11.2.7 The Griffin Group Note Proceeds shall have been received, in full, by RII. 11.3 WAIVER OF CONDITIONS. Except for the condition contained in section 11.2.1 above, the Debtors, with the consent of Fidelity and TCW, may waive any condition or any portion of any condition set forth in this Article XI, at any time without notice and without leave of or order of the Bankruptcy Court. ARTICLE XII EFFECTS OF CONFIRMATION AND EFFECTIVENESS OF PLAN 12.1 DISCHARGE OF CLAIMS. Except as otherwise provided herein or in the Confirmation Order, the rights afforded in the Plan and the payments and distributions to be made hereunder shall discharge all existing debts and Claims of any kind, nature, or description whatsoever against the Debtors, any of their assets or properties or any property dealt with under the Plan to the extent permitted by section 1141 of the Bankruptcy Code; upon the Effective Date, all existing Claims against the Debtors shall be, and shall be deemed to be discharged; and all Holders of Claims and Interests shall be precluded from asserting against the Debtors, any of their assets or properties, or any property dealt with under the Plan any other or further Claim based upon any act or omission, transaction, or other activity of any kind or nature that occurred prior to the Confirmation Date, whether or not such Holder filed a proof of Claim. 12.2 DISCHARGE OF DEBTORS. Any consideration distributed under the Plan shall be in exchange for and in complete satisfaction, discharge, and release of all Claims of any nature whatsoever against the Debtors or any of their assets or properties; and, except as otherwise provided herein, upon the Effective Date, the Debtors shall be deemed discharged and released to the extent permitted by section 1141 of the Bankruptcy Code from any and all Claims, including but not limited to demands 30 and liabilities that arose before the Confirmation Date, and all debts of the kind specified in section 502(g), 502(h), or 502(i) of the Bankruptcy Code, whether or not (i) a proof of Claim based upon such debt is filed or deemed filed under section 501 of the Bankruptcy Code; (ii) a Claim based upon such debt is Allowed under section 502 of the Bankruptcy Code; or (iii) the Holder of a Claim based upon such debt has accepted the Plan. Except as provided herein and therein, the Confirmation Order shall be a judicial determination of discharge of all liabilities of the Debtors. As provided in section 524 of the Bankruptcy Code, such discharge shall void any judgment against the Debtors at any time obtained to the extent it relates to a Claim discharged, and operates as an injunction against the prosecution of any action against the Debtors, or the Debtors' property, to the extent it relates to a Claim discharged. 12.3 INJUNCTION. Except as provided herein or in the Confirmation Order, from and after the Effective Date, all Holders of Claims against either of the Debtors' estates are permanently restrained and enjoined from continuing, or taking any act, to enforce any Claim against Reorganized RII and Reorganized GRI; PROVIDED, HOWEVER, that each Holder of a Claim may continue to prosecute its proof of claim in the Bankruptcy Court or such other court to which the matter may be referred, and all Holders of Claims shall be entitled to enforce their rights under the Plan. 12.4__SURVIVAL OF INDEMNIFICATION CLAIMS AND OBLIGATIONS.__Notwithstanding any other provision of this Plan, all obligations of the Debtors for indemnification of current and former officers and directors, and all claims of such officers and directors related thereto, under the RII or GRI Certificates of Incorporation or Bylaws or other applicable law or agreements shall expressly survive confirmation of the Plan and be binding on and enforceable against Reorganized RII or Reorganized GRI, as may be applicable, irrespective of whether indemnification is owed in connection with an event occurring before, on or after the Petition Date. 12.5 EXCULPATIONS AND LIMITATION OF LIABILITY. Notwithstanding any other provisions of this Plan, none of the directors, officers, employees, agents, representatives, financial advisors, or attorneys of (i) the Debtors, (ii) any subsidiary of the Debtors, (iii) TCW, (iv) Fidelity, or (v) the Old Series Indenture Trustee, and neither the Debtors, any subsidiary of the Debtors, TCW, Fidelity nor the Old Series Indenture Trustee, shall have any liability for actions taken or omitted to be taken in good faith under or in connection with this Plan or in connection with the Prepackaged Chapter 11 Cases. 12.6 SATISFACTION OF INTERCOMPANY CLAIMS. On the Effective Date and after giving effect to the Restructuring Transactions, neither RIHF nor RIH nor any of their respective Subsidiaries will have any liability or indebtedness to any then present or former Subsidiary or Affiliate of RII other than to RIH, RIHF or their own respective Subsidiaries. ARTICLE XIII RETENTION OF JURISDICTION 13.1 SCOPE OF JURISDICTION. Pursuant to sections 1334 and 157 of title 28 of the United States Code, from and after the Confirmation Date, the Bankruptcy Court shall retain and have jurisdiction of all matters arising in, arising under, and related to the Reorganization Cases and the Plan pursuant to, and for the purposes of, sections 105(a) and 1142 of the Bankruptcy Code and for, among other things, the following purposes: (a) To hear and determine any and all objections to the allowance of Claims or actions to equitably subordinate Claims or any controversy as to the classification of Claims; (b) To hear and determine any and all adversary proceedings, applications or litigated matters pending on the Effective Date or brought after the Effective Date; 31 (c) To hear and determine any and all applications for substantial contribution and for compensation and reimbursement of expenses filed by Professional Persons; (d) To hear and determine Claims arising from the rejection of executory contracts or unexpired leases; (e) To hear and determine, pursuant to the provisions of section 505 of the Bankruptcy Code, all issues related to the liability of the Debtors for any tax incurred prior to the Effective Date; (f) To enable Reorganized RII and Reorganized GRI to commence and prosecute any and all proceedings relating to claims or causes of action which arose prior to the Effective Date or to recover any transfers, assets, properties or damages to which RII or GRI may be entitled under applicable provisions of the Bankruptcy Code and which are not waived and released pursuant to section 6.14 hereof; (g) To liquidate any Disputed or Contingent Claim; (h) To enforce the provisions of the Plan and to determine any and all disputes arising under the Plan; (i) To enter and implement such orders as may be appropriate in the event Confirmation is for any reason stayed, reversed, revoked, modified or vacated; (j) To modify any provision of the Plan to the extent permitted by the Bankruptcy Code and to correct any defect, cure any omission or reconcile any inconsistency in the Plan or the Confirmation Order as may be necessary to carry out the purposes and intent of the Plan; and (k) To enter such orders as may be necessary or appropriate in furtherance of consummation and implementation of the Plan. 13.2 FAILURE OF THE BANKRUPTCY COURT TO EXERCISE JURISDICTION. If the Bankruptcy Court abstains from exercising, or declines to exercise, jurisdiction or is otherwise without jurisdiction over any matter arising in, arising under, or related to the Reorganization Cases, including the matters set forth in section 13.1 of the Plan, this Article XIII shall have no effect upon and shall not control, prohibit, or limit the exercise of jurisdiction by any other court having jurisdiction with respect to such matter. ARTICLE XIV MISCELLANEOUS PROVISIONS 14.1 COMPLIANCE WITH TAX REQUIREMENTS. In connection with the Plan, RII, GRI, and the Disbursing Agent shall comply with all withholding and reporting requirements imposed by federal, state, local and foreign taxing authorities, and all distributions hereunder shall be subject to such withholding and reporting requirements. Creditors may be required to provide certain tax information as a condition to receipt of distributions pursuant to the Plan. 14.2 COMPLIANCE WITH ALL APPLICABLE LAWS. If notified by any governmental authority that it is in violation of any applicable law, rule, regulation, or order of such governmental authority relating to its businesses, the Debtors, Reorganized RII or Reorganized GRI, as the case may be, shall comply with such law, rule, regulation, or order; provided, however, that nothing contained herein shall require such compliance by the Debtors, Reorganized RII or Reorganized GRI, as the case may be, where the legality or applicability of any such requirement is being contested in good faith in appropriate proceedings by the Debtors, Reorganized RII or Reorganized GRI, as the case may be, and, if appropriate, for which an adequate reserve has been set aside on the books of the Debtors, Reorganized RII or Reorganized GRI, as the case may be. 32 14.3 CANCELLATION OF OLD SERIES NOTE INDENTURE. On the Effective Date, the Old Series Note Indenture shall, except for purposes of making distributions under the Plan, be deemed canceled, terminated, and of no further force or effect. Except as otherwise provided in the Plan, such cancellation of the Old Series Note Indenture shall extinguish the rights and obligations of RII and the Holders of the Old Series Notes under the Old Series Note Indenture and the rights of the Old Series Note Indenture Trustee to assert any Indenture Trustee Charging Lien against the distributions to the Holders of Old Series Public Debt Claims for unpaid fees and expenses. Notwithstanding the foregoing, RII shall be obligated to pay the unpaid fees and expenses of the Old Series Indenture Trustee in accordance with the provisions of section 4.2 of the Plan. On the Effective Date, all outstanding Old Series Notes shall be canceled on the books of the Debtors and become settled and compromised solely as provided herein in consideration for the right to participate in distributions hereunder. The cancellation of the Old Series Note Indenture and surrender of instruments pursuant to section 6.11.5 of the Plan shall extinguish the right of any Holder of Old Series Notes to commence any cause of action against any Entity for unpaid principal and interest thereon. The Old Series Notes shall not be canceled other than pursuant to section 6.11.5 of the Plan and, until such cancellation, such Old Series Notes shall be evidence of the entitlement of the Holder thereof to receive distributions pursuant to the Plan. 14.4 DISCHARGE OF OLD SERIES INDENTURE TRUSTEE. Subsequent to the performance of the Old Series Indenture Trustee or its agents of its or their duties and obligations under the provisions of the Plan and the Confirmation Order, if any, and under the terms of the Old Series Note Indenture, the Old Series Indenture Trustee and its agents shall be relieved of all obligations associated with the Old Series Note Indenture. 14.5 PAYMENT OF STATUTORY FEES. All fees payable pursuant to section 1930 of title 28 of the United States Code, as determined by the Bankruptcy Court at the Confirmation Hearing, shall be paid on or before the Effective Date. 14.6 POST-CONFIRMATION DATE FEES AND EXPENSES OF PROFESSIONAL PERSONS. After the Confirmation Date, the Debtors and, after the Effective Date, the Reorganized Debtors shall, in the ordinary course of business and without the necessity for any approval by the Bankruptcy Court, pay as Plan Expenses the reasonable fees and reasonable expenses of the Professional Persons employed by the Debtors and the Reorganized Debtors related to implementation and consummation of the Plan; provided, however, that no such fees and expenses shall be paid except upon receipt by the Debtors or the Reorganized Debtors, as may be applicable, of a detailed written invoice, which invoice shall also be served upon the United States Trustee, Fidelity and TCW, from the Professional Person seeking fee and expense reimbursement and provided, further, however, that any such party may, within ten (10) days after receipt of an invoice for fees and expenses, request that the Bankruptcy Court determine any such request. 14.7 BINDING EFFECT. The Plan shall be binding upon and inure to the benefit of the Debtors, the Holders of Claims, the Holders of Interests, and their respective successors and assigns; provided, however, that if the Plan is not confirmed, the Plan shall be deemed null and void and nothing contained herein shall be deemed (i) to constitute a waiver or release of any Claims by the Debtors or any other Entity, (ii) to prejudice in any manner the rights of the Debtors or any other Entity, or (iii) to constitute any admission by the Debtors or any other Entity. 14.8 GOVERNING LAW. Unless a rule of law or procedure is supplied by federal law (including the Bankruptcy Code and the Bankruptcy Rules) or the Delaware General Corporation Law or the law of the jurisdiction of organization of any entity formed or to be formed pursuant to the Plan, the internal laws of the State of New York shall govern the construction and implementation of the Plan and any agreements, documents, and instruments executed in connection with the Plan or the Reorganization Cases, except as may otherwise be provided in such agreements, documents, and instruments. 33 14.9 FILING OF ADDITIONAL DOCUMENTS. On or before the conclusion of the Confirmation Hearing, the Debtors shall file with the Bankruptcy Court such agreements and other documents as may be necessary or appropriate to effectuate and further evidence the terms and conditions of the Plan. 14.10 AMENDMENTS AND MODIFICATIONS. The Debtors may, in accordance with section 1127(a) of the Bankruptcy Code and subject to the approval of the Fidelity and TCW, amend or modify this Plan prior to the entry of the Confirmation Order. After the entry of the Confirmation Order, the Debtors may, in accordance with section 1127(b) of the Bankruptcy Code and subject to the approval of Fidelity and TCW, amend or modify this Plan, or remedy any defect or omission or reconcile any inconsistency in this Plan in such manner as may be necessary to carry out the purpose and intent of this Plan. 14.11 REVOCATION. The Debtors reserve the right, subject to the consent of Fidelity and TCW, to revoke and withdraw this Plan prior to Confirmation. If the Debtors revoke or withdraw the Plan pursuant to this section 14.11, then the Plan shall be deemed null and void and, in such event, nothing contained herein shall be deemed to constitute a waiver or release of any Claims by or against the Debtors or any Entity in any further proceedings involving the Debtors. 14.12 SEVERABILITY. Should any provision in the Plan be determined to be unenforceable, such determination shall in no way limit or affect the enforceability and operative effect of any other provisions of the Plan. 14.13 NOTICES. All notices, requests, or demands for payments provided for in the Plan shall be in writing and shall be deemed to have been given when personally delivered by hand, or deposited in any general or branch post office of the United States postal service, or received by telex or telecopier; PROVIDED, HOWEVER that the Old Series Indenture Trustee shall give any required notices to the Holders of Old Series Notes in accordance with the terms of the Old Series Note Indenture. Notices, requests and demands for payments shall be addressed and sent, postage prepaid, or delivered as follows: (A) in the case of notices, requests, or demands for payments to Debtors or Reorganized RII or Reorganized GRI, at 1133 Boardwalk, Atlantic City, New Jersey 08401, Attn: Christopher D. Whitney, and at any other address designated by Debtors, Reorganized RII or Reorganized GRI by notice to each Holder of an Allowed Claim or Interest, with copies to: Gibson, Dunn & Crutcher, 1717 Main Street, Suite 5400, Dallas, Texas 75201, Attn: Michael A. Rosenthal, Esq., (B) in the case of notices to Holders of Claims or Interests, at the last known address according to RII's or Reorganized RII's books and records, or at any other address designated by a Holder of a Claim or Interest, by notice to RII or Reorganized RII; PROVIDED, HOWEVER, any notice of change of address shall be effective only upon receipt. In addition, all notices to the Holders of Allowed Old Series Public Debt Claims shall also be given to the Old Series Indenture Trustee as follows: ____________________________________________________________; and (C) in the case of notices to Fidelity and TCW, at the offices of Weil, Gotshal & Manges, 767 Fifth Avenue, New York, New York 10153, Attn: Bruce R. Zirinsky, Esq. and at any other address designated by Fidelity and TCW. 14.14 DE MINIMIS DISTRIBUTIONS. No distribution of less than twenty-five dollars ($25) in Cash or less than five (5) shares of New RII Common Stock shall be made to any Holder of an Allowed Claim. Such undistributed amount will be retained by Reorganized RII or Reorganized GRI, as the case may be, and in the case of undistributed New RII Common Stock, held as treasury shares. 14.15 CONSENT RIGHTS OF FIDELITY AND TCW. If, and only if, at any time prior to the Effective Date, Fidelity and TCW shall cease to beneficially own an aggregate of at least twenty percent (20%) of the aggregate principal amount of outstanding of Old Series Notes, all the rights of 34 consent, approval, acceptance or directions granted to Fidelity and TCW under the Plan shall thereupon automatically cease to exist; provided, however, that nothing in this section 14.15 of the Plan shall limit or otherwise prejudice in any manner any rights which Fidelity and TCW may have under the Bankruptcy Code and the Bankruptcy Rules. In addition, if either of TCW and Fidelity shall cease to beneficially own any Old Series Notes whatsoever (but the other retains an aggregate of at least twenty percent (20%) of the aggregate principal amount of outstanding Old Series Notes), then the obligations of the Debtors to obtain consent shall be extinguished solely as to the person ceasing to own any such Old Series Notes, without prejudice to the rights of the other hereunder. 35 DATED: NEW YORK, NEW YORK AS OF ___________, 1994 Respectfully submitted, RESORTS INTERNATIONAL, INC. By ___________________________________ Christopher D. Whitney, Executive Vice President GGRI, INC. By ___________________________________ Christopher D. Whitney, Executive Vice President RESORTS INTERNATIONAL HOTEL, INC. By ___________________________________ Christopher D. Whitney, Executive Vice President RESORTS INTERNATIONAL HOTEL FINANCING, INC. By ___________________________________ Christopher D. Whitney, Executive Vice President P. I. RESORTS LIMITED By ___________________________________ Christopher D. Whitney, Executive Vice President OF COUNSEL: MICHAEL A. ROSENTHAL, ESQ. KEITH D. ROSS, ESQ. GIBSON, DUNN & CRUTCHER 200 Park Avenue New York, New York 10166 (212) 351-4000 Attorneys for RESORTS INTERNATIONAL, INC. and GGRI, INC. Debtors and Debtors in Possession and RESORTS INTERNATIONAL HOTEL, INC., RESORTS INTERNATIONAL HOTEL FINANCING, INC. AND P. I. RESORTS LIMITED 36 SCHEDULE 6.1(1) SIHL RELATED RESTRUCTURING TRANSACTIONS: The following transactions shall be effected on or prior to the SIHL Closing Date: 1. GRI shall assume the obligation of RIB to repay the intercompany debt owed by RIB to RIH ($50,000,000) plus accrued interest thereon, and the intercompany debt owed by RIB to RII (which as of September 30, 1993 was $11,192,000). As a result of such assumptions, RIB will have no obligations to repay any intercompany debt. 2. The transactions contemplated to occur on or before the SIHL Closing Date in the Parent Subscription Agreement and Buyer Subscription Agreement shall have occurred. 3. The following transactions shall be effected on the SIHL Closing Date: a. GRI will distribute to its immediate parent, RII, the RIB Shares that are owned by GRI. b. In accordance with the terms of the Paradise Island Purchase Agreement, in exchange for 2,000,000 SIHL Series A Shares and the SIHL Aggregate Cash Purchase Price, (i) SIHL will purchase from RII all of the RIB Shares free and clear of all Encumbrances, other than those Encumbrances arising from acts of SIHL or its Affiliates and other than any applicable Transfer Taxes, and (ii) directly or through subsidiaries of SIHL will purchase the RII Real Estate Assets and all right, title and interest of each RII Paradise Subsidiary in the RII Paradise Assets, free and clear of all Encumbrances, other than Permitted Encumbrances, those Encumbrances arising from acts of SIHL or its Affiliates and any applicable Transfer Taxes. c. In accordance with the terms of the Paradise Island Purchase Agreement, SIHL shall cause (or if SIHL shall fail to so cause, Parent, pursuant to the Parent Purchase Guaranty, shall cause) the SIHL Aggregate Cash Purchase Price and the SIHL Series A Shares to be delivered to the Disbursing Agent for distribution to Holders of Old Series Public Debt Claims pursuant to sections 5.1.2, 5.2.2 and 6.11 of the Plan. d. In accordance with the terms of the Paradise Island Purchase Agreement, RII shall and shall cause the RII Paradise Subsidiaries to deliver to the Buyer Subsidiaries such specific assignments, bills of sale, endorsements, deeds and other good and sufficient instruments of conveyance and transfer, in form and substance reasonably satisfactory to SIHL and its counsel, as shall be effective to vest in the Buyer Subsidiaries title to all the RII Paradise Assets and the RII Real Estate Assets. e. In accordance with the terms of the Paradise Island Purchase Agreement, SIHL shall cause designated Buyer Subsidiaries to severally assume the Assumed Liabilities and shall cause each designated Buyer Subsidiary to execute an Assumption Agreement relating to the Assumed Liabilities assumed by such designated Buyer Subsidiary. f. SIHL shall file the SIHL Articles with the Commonwealth of The Bahamas and such SIHL Articles shall be in full force and effect. g. Parent and shall execute and deliver the Non-Recourse Guarantee and such Non-Recourse Guarantee shall be in full force and effect. h. SIHL, Fidelity and TCW shall execute and deliver the Registration Rights Agreement and such Registration Rights Agreement shall be in full force and effect. i. Each suspensive condition contained in Article 17 of the Management Agreement shall have been satisfied or waived by each party authorized to waive such condition thereunder. j. The Management Agreement and the Heads of Agreement shall be in full force and effect. - ------------------------ (1) Each capitalized term in this Schedule 6.1, not otherwise defined in Article I of the Plan, shall have the meaning ascribed to such term in the Paradise Island Purchase Agreement. 37 SCHEDULE 6.2(2) PIRL RELATED RESTRUCTURING TRANSACTIONS: The following transactions shall be effected on or prior to the Alternative Closing Date: 1. GRI shall assume the obligation of RIB to repay the intercompany debt owed by RIB to RIH ($50,000,000), plus accrued interest thereon, and the intercompany debt owed by RIB to RII (which as of September 30, 1993 was $11,192,000). As a result of such assumptions, RIB will have no obligations to repay any intercompany debt. 2. RII shall cause PIRL to form the PIRL Subsidiaries and to file the PIRL Subsidiaries Certificates of Incorporation with the Commonwealth of the Bahamas. 3. The following transactions shall be effected on the Alternative Closing Date: a. GRI will distribute to RII the RIB Shares owned by GRI. b. In accordance with the terms of the PIRL Standby Distribution Agreement, (i) RII will contribute all of the RIB Shares then directly owned by RII to the capital of PIRL in exchange for PIRL Ordinary Shares (which, when added to the PIRL Ordinary Shares already owned by RII shall equal all of the issued and outstanding PIRL Ordinary Shares which are to be distributed to the Holders of Old Series Notes on the Distribution Date) free and clear of all Encumbrances except as otherwise provided in the PIRL Standby Distribution Agreement and (ii) subsidiaries of PIRL designated by PIRL, with the consent of Fidelity and TCW, will acquire all right, title and interest of RII in the RII Real Estate Assets and all right, title and interest of each RII Paradise Subsidiary in the RII Paradise Assets, free and clear of all Encumbrances except as otherwise provided in the PIRL Standby Distribution Agreement. c. In accordance with the terms of the PIRL Standby Distribution Agreement, PIRL shall cause the PIRL Ordinary Shares to be delivered to the Disbursing Agent for distribution to Holders of Old Series Public Debt Claims pursuant to sections 5.1.2, 5.2.2 and 6.11 of the Plan. d. In accordance with the terms of the PIRL Standby Distribution Agreement, RII shall and shall cause the RII Paradise Subsidiaries to deliver to the PIRL Subsidiaries such specific assignments, bills of sale, endorsements, deeds and other good and sufficient instruments of conveyance and transfer, in a form reasonably satisfactory to TCW, Fidelity and RII, and their counsel, as shall be effective to vest in the PIRL Subsidiaries title to all the RII Paradise Assets and the RII Real Estate Assets. e. In accordance with the terms of the Purchase Agreement, PIRL shall cause designated PIRL Subsidiaries to severally assume the Assumed Liabilities and shall cause each designated PIRL Subsidiary to execute an Assumption Agreement relating to the Assumed Liabilities assumed by such designated PIRL Subsidiary. f. PIRL shall file the PIRL Articles with the Commonwealth of The Bahamas and such PIRL Articles shall be in full force and effect. g. PIRL, Fidelity and TCW shall execute and deliver the Registration Rights Agreement and such Registration Rights Agreement shall be in full force and effect. h. Each of the suspensive conditions in Article of the Standby Management Agreement shall have been satisfied or waived by each party authorized to waive such condition thereunder and the Standby Management Agreement shall be in full force and effect. - ------------------------ (2) Each capitalized term in this Schedule 6.2, not otherwise defined in Article I of the Plan, shall have the meaning ascribed to such term in the PIRL Standby Distribution Agreement. 38 SCHEDULE 6.3 (3) OTHER RESTRUCTURING TRANSACTIONS: The following transactions shall be effected on the Effective Date in the order set forth below: 1. RIHF, RIH, RII and the New RIHF Indenture Trustees, as may be appropriate, shall execute the operative documents relative to the New RIHF Mortgage Indenture and the New RIHF Junior Mortgage Indenture. 2. RII shall issue 17,025,000 shares of New RII Common Stock and 35,000 shares of RII Class B Common Stock. 3. RIH will distribute the RIH Promissory Note and the RIH Junior Promissory Note, secured by the RIH Mortgage and the RIH Junior Mortgage, respectively, to RII in repayment of the intercompany debt owed to RII by RIH (which as of September 30, 1993 was $51,325,000) and as a distribution to RII as a shareholder of RIH. 4. RII will exchange the RIH Promissory Note and the RIH Junior Promissory Note, together with the related RIH Mortgage, RIH Assignment of Leases and Rents, RIH Assignment of Operating Assets, RIH Junior Mortgage, RIH Junior Assignment of Leases and Rents, and RIH Junior Assignment of Operating Assets, for the New RIHF Mortgage Notes and the New RIHF Junior Mortgage Notes to be issued by RIHF. 5. RII will deliver the New RIHF Mortgage Notes, the New RIHF Junior Mortgage Notes and an appropriate number of shares of New RII Common Stock and the RII Class B Common Stock to the Disbursing Agent for distribution to Holders of Old Series Public Debt Claims in accordance with the Plan, and RIHF will assign to the Collateral Agent on behalf of the New RIHF Indenture Trustee and the New RIHF Junior Indenture Trustee, as may be appropriate, the RIH Promissory Note, the RIH Junior Promissory Note, the RIH Mortgage and the RIH Junior Mortgage. 6. RII will contribute to GRI the intercompany obligation of GRI to RII (which as of September 30, 1993 was $51,388,000). 7. Upon termination and release of the RIH Pledge Agreement, GRI will exchange with RIH the $325,000,000 of non-interest bearing RIH Notes for an amount of stock representing, on a fully diluted basis, ninety-nine and ninety-nine one-hundredths percent (99.99%) of the issued and outstanding common stock of RIH. 8. RII will contribute to the capital of GRI the remaining one-hundredth percent (.01%) of the issued and outstanding stock of RIH held by RII prior to the Effective Date. RIH will become a wholly-owned first-tier subsidiary of GRI and an indirect subsidiary of RII. RIH will then distribute to GRI, as a return of surplus, the intercompany debt of $50,000,000 plus accrued interest thereon assumed by GRI pursuant either to paragraph 1 of Schedule 6.1 hereof or paragraph 1 of Schedule 6.2 hereof. 9. RIHF, as issuer, RIH, RII and such other Entities as may become parties thereto from time to time, as guarantors, and , as trustee, shall execute the operative documents relative to the RIHF Senior Facility Indenture. 10. To secure its obligations under the RIHF Senior Facility Notes, RIHF, pursuant to the RIHF Senior Facility Assignment of Agreements, shall assign the RIH Senior Facility Note, RIH Senior Facility Mortgage, RIH Senior Facility Assignment of Leases and Rents, and RIH Senior Facility Assignment of Operating Assets to the Collateral Agent on behalf of the RIHF Senior Facility Trustee. 11. To secure its guaranty of the RIHF Senior Facility Notes, RIH will execute and deliver the RIH Senior Facility First Mortgage, RIH Senior Facility First Assignment of Leases and Rents, and RIH Senior Facility First Assignment of Operating Assets to the Collateral Agent on behalf of the RIHF Senior Facility Trustee. - ------------------------ (3) Each capitalized term in this Schedule 6.3, not otherwise defined in Article I of the Plan, shall have the meaning ascribed to such term in the Registration Statement. 39 APPENDIX B LIQUIDATION ANALYSIS APPENDIX B RESORTS INTERNATIONAL, INC. AND GGRI, INC. NOTES TO ESTIMATED LIQUIDATION VALUE AS OF DECEMBER 31, 1993 PRINCIPAL ASSETS OF THE DEBTORS 1. The principal assets of RII, other than GRI, and those associated with the Showboat Casino consist of (i) RIH, which owns Resort's casino gaming, resort and hotel facilities and operations in Atlantic City, elsewhere herein defined as the Resorts Casino Hotel, (ii) certain real estate related to RII's Paradise Island business, elsewhere herein defined as the RII Real Estate Assets, (iii) the U.S. Paradise Island Subsidiaries, (iv) Atlantic City undeveloped real estate, (v) cash, and (vi) obligations of various direct and indirect subsidiaries. RII has pledged all of the capital stock of RIH, GRI and all RII's other direct and indirect subsidiaries to secure its obligations under the Old Series Notes. Additionally, RII has pledged the Resorts Casino Hotel, the RII Real Estate Assets and the Atlantic City undeveloped real estate to secure such obligations. 2. The principal assets of GRI consist of (i) RIB which owns Resort's casino gaming, resort and hotel facilities and operations and associated real estate in the Bahamas, elsewhere defined herein as the Paradise Island Resorts and (ii) the RIH Notes. GRI has guaranteed the Old Series Notes. The RIH Notes and 66% of the capital stock of RIB have been pledged by GRI to secure the GRI Guaranty. KEY ASSUMPTIONS In estimating the liquidation values of their assets, the Debtors have made the following assumptions: 1. Liquidation would occur under the direction of a court appointed trustee in the context of a chapter 7 case. 2. The trustee would complete the sale of all of the Debtors' assets within six months beginning October 15, 1993. 3. Distributions by the chapter 7 trustee would not be made to creditors until April 15, 1994 when the sale of the assets is complete. 4. The Resorts Casino Hotel and the Paradise Island Resorts will be liquidated as going concerns. 5. In a chapter 7 liquidation, the going concern values of the Resorts Casino Hotel and the Paradise Island Resorts would be discounted by potential acquirors by an adjustment factor attributable to the limited time given to sell the component businesses, the limited representations and warranties provided by the trustee in a chapter 7 liquidation, and such other factors and uncertainties which are likely to give interested purchasers negotiating leverage and may therefore reduce the potentially realizable value of these assets. Among these factors and uncertainties is the possibility that a protracted sale process and/or potential litigation arising in the context of a Chapter 7 case could make it difficult to continue to operate the Resorts Casino Hotel and the Paradise Island Resorts as going concerns. 6. The adjustment factor impacting the sale of the Resorts Casino Hotel and the Paradise Island Resorts would be a discount of approximately 35% and 40%, respectively, from the estimated going concern value of these operations. B-2 7. A loss of casino licenses or a significant disruption in the operations could cause the adjustment factor to be higher than the approximately 35% and 40% assumed in the liquidation analysis for the Resorts Casino Hotel and Paradise Island, respectively. 8. Atlantic City undeveloped real estate is assumed to be sold for $3.3 million which reflects a discount of approximately 35% from what might be realized over a period of several years time due to the continuing low level of activity in the Atlantic City real estate market. 9. Excess cash on hand as of April 15, 1994 is estimated to be approximately $ million and includes cash estimated to be accumulated through continuing earnings up until that time. 10. The present value as of October 15, 1993 of the proceeds of asset sales and the amount of excess cash expected to be on hand on April 15, 1994 is determined using an annual discount rate of 15%. 11. Total liquidation expenses will be $14.1 million, including those of the trustee, investment bankers retained to sell the Resorts Casino Hotel and the Paradise Island Resorts, and legal counsel. Such liquidation expenses include, but are not limited to the following: trustee expenses -- $8.0 million, investment banking fees of $2.2 million and legal and other expenses of $4.0 million. 12. In a liquidation, the RIH Notes provide no equity value to GRI because the RIH Notes are pledged to collateralize the Old Series Notes. 13. In a liquidation, the common equity of RIB owned by GRI provides no equity value to GRI in view of (i) the pledge of 66% of such common equity to secure the Old Series Notes and (ii) the GRI Guaranty. B-3 RESORTS INTERNATIONAL, INC. AND GRI, INC. ESTIMATED LIQUIDATION VALUE OF KEY OPERATING ASSETS AND CASH AS OF OCTOBER 15, 1993 ($ MILLIONS)
ESTIMATED ESTIMATED NET PRESENT VALUE LIQUIDATION OF LIQUIDATION ASSET PROCEEDS PROCEEDS - -------------------------------------------------------------------------- ----------- ----------------- Cash...................................................................... $ 43.3 $ 40.4 Resorts Casino Hotel...................................................... 143.2 133.5 Atlantic City Undeveloped Real Estate..................................... 3.3 3.0 Paradise Island Resorts................................................... 75.0 69.9 Other..................................................................... 0.3 0.3 ----------- ------- Total................................................................. $ 265.0 $ 247.1 ESTIMATED LIQUIDATION EXPENSES Trustee Expenses.......................................................... 3.0% 8.0 7.4 Investment Banking Fees................................................... 1.0% 2.2 2.0 Legal & Other Expenses.................................................... 1.5% 4.0 3.7 -- ----------- Total................................................................. 14.1 13.2 ----------- ------- Total Net Proceeds........................................................ $ 250.9 $ 234.0 ----------- ------- ----------- -------
ESTIMATED PRESENT VALUE ESTIMATED OF IMPUTED CLAIM ESTIMATED LIQUIDATION IMPUTED AMOUNT LIQUIDATION IMPUTED DISTRIBUTION NPV CLASS UNDER PLAN TYPE OF CH. 7 CLAIM @ 10/15/93 DISTRIBUTION RECOVERY @ 10/15/93 RECOVERY - ------------------------- ------------------------- ----------- ----------- ----------- ----------- ----------- RII Class 1.............. Priority Claims $ 14.1 $ 14.1 100.0% $ N/A N/A RII Class 2.............. Old Series Notes (1) 482.0 250.9 52.1 % 234.0 48.5 % RII Class 3.............. Showboat Note Secured Claim UNIMPAIRED RII Class 4.............. Misc. Secured Claims UNIMPAIRED RII Class 5.............. Gen. Unsecured-- Trade & Other (2) LESS THAN 100% RECOVERY RII Class 6.............. Paradise Subsidiary Claim (3) NONE RII Class 7 and 8........ Equity--Old RII Common Stock & Options N/A None N/A None N/A
B-4
ESTIMATED PRESENT VALUE ESTIMATED OF IMPUTED CLAIM ESTIMATED LIQUIDATION IMPUTED AMOUNT LIQUIDATION IMPUTED DISTRIBUTION NPV CLASS UNDER PLAN TYPE OF CH. 7 CLAIM @ 10/15/93 DISTRIBUTION RECOVERY @ 10/15/93 RECOVERY - ------------------------- ------------------------- ----------- ----------- ----------- ----------- ----------- GRI Class 2.............. Gen. Unsecured-- GRI Guaranty RECOVERY IMPLIED IN RECOVERY OF RII CLASS 2 GRI Class 3.............. Gen. Unsecured-- Trade & Other None N/A None N/A GRI Class 4.............. Gen. Unsecured-- Intercompany (4) NOT APPLICABLE GRI Class 5.............. Equity N/A None N/A None N/A
- ------------------------ (1) Recovery by RII Class 2 claimants may be reduced below that estimated here to the extent that RII Class 5 Claims share distributions with any RII Class 2 deficiency claims arising from any assets of RII which are not subject to the security interests benefitting the RII Class 2 Claims. (2) RII Class 5 Claims will not be paid in full in a chapter 7 context, but will rank pari passu with any RII Class 2 deficiency claims and will obtain recoveries based upon the level of assets at RII which are not subject to the security interests benefitting the RII Class 2 Claims. (3) Because it is assumed that Paradise Island Resorts will be sold as a going concern free and clear of any intercompany claims, the Paradise Subsidiary Claims are not expected to receive any recovery. (4) The GRI Class 4 Claim consists of a single claim which will be voted in favor of the Plan.
B-5 APPENDIX C AMENDED RII CERTIFICATE OF INCORPORATION AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF RESORTS INTERNATIONAL, INC. We, Christopher D. Whitney, Executive Vice President and Secretary, and Matthew B. Kearney, Executive Vice President and Treasurer, of Resorts International, Inc., a corporation existing under the laws of the State of Delaware (the "Corporation"), do hereby certify that: ONE: The name of the Corporation is "Resorts International, Inc.", which was formed under the name "Mary Carter Paint Co.". TWO: The original Certificate of Incorporation of the Corporation was filed in the office of the Secretary of State of the State of Delaware on the 24th day of October, 1958. THREE: Provision for the making of this Amended and Restated Certificate of Incorporation is contained in an order of the United States Bankruptcy Court for the District of Delaware (the "Court") in In Re Resorts International, Inc., et al. Case Nos. [________]. FOUR: This Amended and Restated Certificate of Incorporation has been duly executed and acknowledged by the officers of the Corporation so designated in such order of the Court in accordance with Sections 242, 245 and 303 of the General Corporation Law of the State of Delaware. FIVE: The text of the Certificate of Incorporation of the Corporation is hereby amended and restated, in its entirety, to read as follows: ARTICLE I NAME The name of the Corporation is "Resorts International, Inc.". ARTICLE II ADDRESS The address of the Corporation's registered office in the State of Delaware is 229 South State Street, City of Dover, County of Kent, and the name of its registered agent at such address is United States Corporation Company. ARTICLE III PURPOSE The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. ARTICLE IV CAPITALIZATION A. AUTHORIZATION; TRANSFER RESTRICTIONS. The total number of shares of capital stock of all classifications which the Corporation shall have authority to issue is [________], consisting of (i) [________] shares of Preferred Stock, par value $.01 per share (the "Preferred Stock"), and (ii) [________] shares of common stock, consisting of [________] shares of Common Stock, par value $.01 per share (the "Common Stock"), and [________] shares of Class B Common Stock, par value $.01 per share (the "Class B Stock", and collectively with the Common Stock, the "RII Common Stock"). Each share of Class B Stock shall be issued in connection with and upon the issuance of each $1,000 in principal amount of Junior Notes (as defined in Article IX hereof), whether upon original issuance of the Junior Notes or upon surrender for transfer or exchange of any outstanding Junior Notes or pursuant to the interest payment provisions thereof, and may not be transferred separately from such principal amount of Junior Notes. The shares of Preferred Stock may be issued from time to time in one or more series. The Board of Directors hereby is vested with authority from time to time to issue the Preferred Stock as Preferred Stock of any series. In connection with the creation of each such series of Preferred Stock, the Board of Directors hereby is vested with authority to fix by resolution or resolutions the designations and the powers, preferences and relative, participating, optional or other special rights, and qualifications, limitations or restrictions thereof, of such series, to the full extent now or hereafter permitted by the laws of the State of Delaware, including without limitation the dividend rate, conversion or exchange rights, redemption price and liquidating preference of any series of Preferred Stock, and to fix the number of shares constituting any such series, and to increase or decrease the number of shares of any such series (but not below the number of shares thereof outstanding); PROVIDED, HOWEVER, that no shares of Preferred Stock may be designated or issued with any rights to vote together with the holders of the Class B Stock for any purpose. In case the number of shares of any such series shall be so decreased, the shares constituting such decrease shall resume the status which they had prior to the adoption of the resolution or resolutions originally fixing the number of shares of such series. B. VOTING AND QUORUM. 1. Each holder of RII Common Stock entitled to vote shall have one vote for each share thereof held. Except for the election of Class B Directors (as defined in Article IX hereof), the holders of the Common Stock shall be entitled to vote on all matters on which stockholders are entitled to vote. Except as may be prescribed by Delaware law, the holders of the Class B Stock shall not be entitled to vote on any matter except that the holders of the Class B Stock are entitled to vote separately as a class on the following matters: (a) the election of Class B Directors; (b) to the extent required under Delaware law, any amendment to the last sentence of the first paragraph of Paragraph A of Article IV hereof; the proviso in the second paragraph of Paragraph A of Article IV hereof; Paragraphs B(1), C(2), D or E of Article IV hereof; Paragraphs A, B(3), B(4), B(6) or E(2) of Article VII hereof; or Paragraph A of Article IX hereof; (c) any amendment to the last sentence of Section 3 of Article II of the By-Laws of the Corporation; (d) any amendment to the second sentence of Section 7 of Article III of the By-laws of the Corporation; or (e) any amendment to the last sentence of Section 8 of Article III of the By-Laws of the Corporation. 2. At any meeting of the stockholders of the Corporation at which the holders of any class of RII Common Stock are entitled to vote, the presence, in person or by proxy, of the holders of a majority of the outstanding shares of such class shall constitute a quorum of the class entitled to vote of such class. No action may be taken by any class of RII Common Stock at a meeting at which a quorum of such class is not present, except a vote to adjourn such meeting. C. DIVIDENDS. 1. The Board of Directors of the Corporation may cause dividends to be paid to the holders of shares of Common Stock from time to time out of funds legally available therefor. When and as dividends are declared, they may be payable in cash, in property or in shares of Common Stock. 2. Holders of Class B Stock are not entitled to the payment of dividends, except that in the event of an interest payment on the Junior Notes which is paid in Additional Junior Notes (as defined in Article IX hereof), holders shall be entitled to, and there shall be declared and paid, a stock dividend such that one share of Class B Stock shall be issued in respect of each $1,000 in principal amount of Additional Junior Notes. D. MANDATORY REDEMPTION OF CLASS B STOCK. Upon the payment in full of any Junior Note, or the redemption, or cancellation following purchase thereof, of each $1,000 principal amount of Junior Notes, the Corporation shall redeem the share of Class B Stock issued in respect of such Junior Note at a redemption price of $.01 per share (adjusted to reflect stock splits and stock combinations since the original date of issuance). E. LIQUIDATION. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation, the holders of RII Common Stock then outstanding shall be C-3 entitled to receive ratably, in accordance with the number of shares held by each holder, out of the assets of the Corporation legally available for distribution to its stockholders, $.01 per share (adjusted to reflect stock splits and stock combinations since the original date of issuance). After the payment in full of the amount described in the immediately preceding sentence to the holders of RII Common Stock, the holders of Common Stock shall be entitled to share ratably, in accordance with the number of shares held by each holder, in all the remaining assets of the Corporation available for distribution and the holders of Class B Stock shall not be entitled to share in the distribution of such remaining assets. F. NO NONVOTING STOCK. No nonvoting equity securities of the Corporation shall be issued. This provision is included in this Amended and Restated Certificate of Incorporation in compliance with section 1123 of the United States Bankruptcy Code, 11 U.S.C. Section 1123, and shall have no further force and effect beyond that required by said section and for so long as said section is in effect and applicable to the Corporation. ARTICLE V INDEMNIFICATION A. ELIMINATION OF CERTAIN LIABILITY OF DIRECTORS. A director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director except for liability (i) for any breach of the director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived an improper personal benefit. If the Delaware General Corporation Law is amended after the Effective Date (as defined in Article IX hereof) to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the Delaware General Corporation Law, as so amended. Any repeal or modification of this Section by the stockholders of the Corporation shall be prospective only and shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification. B. ACTIONS, SUITS OR PROCEEDINGS OTHER THAN BY OR IN THE RIGHT OF THE CORPORATION. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that he is or was or has agreed to become a director or officer of the Corporation, or is or was serving or has agreed to serve at the request of the Corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, or by reason of any action alleged to have been taken or omitted in such capacity, against costs, charges, expenses (including attorneys fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or on his behalf in connection with such action, suit or proceeding and any appeal therefrom, if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation. The termination of any action, suit or proceeding by judgment, order, settlement, conviction or upon a plea of NOLO CONTENDERE or its equivalent shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Corporation. C. ACTIONS OR SUITS BY OR IN THE RIGHT OF THE CORPORATION. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he is or was or has agreed to become a director or officer of the Corporation, or is or was serving or has agreed to serve at the request of the Corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, or by reason of any action C-4 alleged to have been taken or omitted in such capacity, against costs, charges and expenses (including attorneys' fees) actually and reasonably incurred by him or on his behalf in connection with the defense or settlement of such action or suit and any appeal therefrom, if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Court of Chancery of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of such liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such costs, charges and expenses which the Court of Chancery or such other court shall deem proper. D. INDEMNIFICATION FOR COSTS, CHARGES AND EXPENSES OF SUCCESSFUL PARTY. Notwithstanding the other provisions of this Article V, to the extent that a director or officer of the Corporation has been successful on the merits or otherwise, including, without limitation, the dismissal of an action without prejudice, in defense of any action, suit or proceeding referred to in Sections A and B of this Article V, or in defense of any claim, issue or matter therein, he shall be indemnified against all costs, charges and expenses (including attorneys' fees) actually and reasonably incurred by him or on his behalf in connection therewith. E. DETERMINATION OF RIGHT TO INDEMNIFICATION. Any indemnification under Sections A and B of this Article V (unless ordered by a court) shall be paid by the Corporation unless a determination is made (i) by a majority of the members of the Board of Directors who were not parties to such action, suit or proceeding even if less than a quorum, or (ii) if such a majority of the disinterested members of the Board of Directors so direct, by independent legal counsel in a written opinion, or (iii) by the stockholders, that indemnification of the director or officer is not proper in the circumstances because he has not met the applicable standard of conduct set forth in Sections A and B of this Article V. F. ADVANCE OF COSTS, CHARGES AND EXPENSES. Costs, charges and expenses (including attorneys' fees) incurred by a person referred to in Sections A and B of this Article V in defending any civil, criminal, administrative or investigative action, suit or proceeding shall be paid by the Corporation in advance of the final disposition of such action, suit or proceeding; PROVIDED, HOWEVER, that the payment of such costs, charges and expenses (including attorneys' fees) incurred by a director or officer in advance of the final disposition of such action, suit or proceeding shall be made only upon receipt of an undertaking by or on behalf of the director or officer to repay all amounts so advanced in the event that it shall ultimately be determined that such director or officer is not entitled to be indemnified by the Corporation as authorized in this Article V. Such costs, charges and expenses (including attorneys' fees) incurred by other employees and agents may be so paid upon such terms and conditions, if any, as the majority of the Board of Directors deems appropriate. The majority of the Board of Directors may, in the manner set forth above, and upon approval of such director, officer, employer, employee or agent of the Corporation, authorize the Corporation's counsel to represent such person, in any action, suit or proceeding, whether or not the Corporation is a party to such action, suit or proceeding. G. PROCEDURE FOR INDEMNIFICATION. Any indemnification under Sections B, C and D, or advance of costs, charges and expenses (including attorneys' fees) under Section F of this Article V, shall be made promptly, and in any event within 60 days, upon the written request of the director or officer. The right to indemnification or advances as granted by this Article V shall be enforceable by the director or officer in any court of competent jurisdiction, if the Corporation denies such request, in whole or in part, or if no disposition thereof is made within 60 days. Such person's costs and expenses (including attorneys' fees) incurred in connection with successfully establishing his right to indemnification, in whole or in part, in any such action shall also be indemnified by the Corporation. It shall be a defense to any such action that the claimant has not met the standard of conduct set forth in Sections B or C of this Article V, but the burden of proving such defense shall be on the Corporation. Neither the failure of the Corporation (including its Board of Directors, its independent legal counsel and its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he has met the applicable C-5 standard of conduct set forth in Sections B or C of this Article V, nor the fact that there has been an actual determination by the Corporation (including its Board of Directors, its independent legal counsel and its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct. H. OTHER RIGHTS; CONTINUATION OF RIGHT TO INDEMNIFICATION. The indemnification provided by this Article V shall not be deemed exclusive of any other rights to which any director, officer, employee or agent seeking indemnification may be entitled under any law (common or statutory), agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding office or while employed by or acting as agent for the Corporation, and shall continue as to a person who has ceased to be a director, officer, employee or agent, and shall inure to the benefit of the estate, heirs, executors and administrators of such person. All rights to indemnification under this Article V shall be deemed to be a contract between the Corporation and each director, officer, employee or agent of the Corporation who serves or served in such capacity at any time while this Article V is in effect. Any repeal or modification of this Article V or any repeal or modification of relevant provisions of the General Corporation Law of the State of Delaware or any other applicable laws shall not in any way diminish any rights to indemnification of such director, officer, employee or agent or the obligations of the Corporation arising hereunder. This Article V shall be binding upon any successor corporation to this Corporation, whether by way of acquisition, merger, consolidation or otherwise. I. INSURANCE. The Corporation shall purchase and maintain insurance on behalf of any person who is or was or has agreed to become a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him or on his behalf in any such capacity, or arising out of his status as such, whether or not the corporation would have the power to indemnify him against such liability under the provisions of this Article V, PROVIDED, HOWEVER, that such insurance is available on reasonable and acceptable terms, which determination shall be made by a vote of a majority of the Board of Directors. J. SAVINGS CLAUSE. If this Article V or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation (i) shall nevertheless indemnify each director and officer of the Corporation, and (ii) may nevertheless indemnify each employee and agent of the Corporation, as to costs, charges and expenses (including attorneys' fees), judgments, fine and amounts paid in settlement with respect to any action, suit or proceeding, whether civil, criminal, administrative or investigative, including an action by or in the right of the Corporation, to the full extent permitted by any applicable portion of this Article V that shall not have been invalidated and to the full extent permitted by applicable law. K. SUBSEQUENT AMENDMENT. No amendment, modification or repeal of this Article V shall affect or impair in any way the rights of any director or officer of the Corporation to indemnification under the provisions hereof with respect to any action, suit or proceeding arising out of, or relating to, any actions, transactions or facts occurring prior to the final adoption of such amendment, termination or appeal. L. SUBSEQUENT LEGISLATION. If the General Corporation Law of the State of Delaware is amended to further expand the indemnification permitted to directors, officers, employees or agents of the Corporation, then the Corporation shall indemnify such persons to the fullest extent permitted by the General Corporation Law of the State of Delaware, as so amended. C-6 ARTICLE VI NEW JERSEY CASINO CONTROL ACT This Certificate of Incorporation shall be subject to the New Jersey Casino Control Act, N.J.S.A. 5:1 ET SEQ., and the rules and regulations of the New Jersey Casino Control Commission (the "Commission") as they currently exist or as they hereinafter may be amended (the "Act"), including without limitation the following: A. The securities of the Corporation shall always be subject to redemption by the Corporation, by action of the Board of Directors, if, in the judgment of the Board of Directors, such action should be taken, pursuant to Section 151(b) of the General Corporation Law of Delaware or any other applicable provision of law, to the extent necessary to prevent the loss or secure the reinstatement of any government-issued license or franchise held by the Corporation or any Subsidiary (as defined in Paragraph E of this Article VI) to conduct any portion of the business of the Corporation or such Subsidiary, which license or franchise is conditioned upon some or all of the holders of the Corporation's securities possessing prescribed qualifications. In the event a holder of the Corporation's securities is found not to possess such prescribed qualifications by the Commission pursuant to the Act (a "Disqualified Holder"), such Disqualified Holder shall indemnify the Corporation for any and all direct or indirect costs, including attorneys' fees, incurred by the Corporation as a a result of such holder's continuing ownership or failure to divest promptly. B. Except as is otherwise expressly provided in instruments containing the terms of the Corporation's securities, which instruments have been approved by the Commission, so long as the Corporation shall remain a publicly traded holding company as defined in the Act, in accordance with N.J.S.A. 5:12-82(d)(7) and (9), all securities of the Corporation shall be held subject to the condition that if a holder thereof is found to be a Disqualified Holder, such holder shall dispose of his interest in the Corporation within 120 days following the Corporation's receipt of notice (the "Notice Date") of the holder's disqualification. Promptly following its receipt of notice from the Commission that a holder of securities of the Corporation has been found disqualified, the Corporation shall either deliver such written notice personally to the Disqualified Holder, mail it to such Disqualified Holder at the address shown on the Corporation's books and records, or use any other reasonable means. Failure of the Corporation to provide notice to a Disqualified Holder after making reasonable efforts to do so shall not preclude the Corporation from exercising its rights. If any Disqualified Holder fails to dispose of his securities within 120 days following receipt by the Corporation of notice that such holder has been found disqualified, the Corporation may redeem such securities at the lesser of (i) the lowest closing sale price of such securities between the Notice Date and the date 120 days after the Notice Date, or (ii) such holder's original purchase price. C. If the Corporation shall become, and so long as it shall remain, a privately-held holding company as defined in the Act, in accordance with N.J.S.A. 5:12-82(d)(7), (8) and (10), the Commission shall have the right of prior approval with regard to transfers of securities, shares, and other interests in the Corporation and the Corporation shall have the absolute right to redeem at the market price or purchase price, whichever is the lesser, any security, share or other interest in the Corporation in accordance with the Act. D. So long as the Corporation shall remain a holding company as defined in the Act, in accordance with N.J.S.A. 5:12-105(e), commencing on the date the Commission serves notice on the Corporation that a security holder has been found disqualified, it shall be unlawful for the Disqualified Holder to (i) receive any dividends or interest upon any such securities of the Corporation held by such holder; (ii) exercise, directly or through any trustee or nominee, any right conferred by such securities; or (iii) receive any remuneration in any form, for services rendered or otherwise, from any subsidiary of the Corporation that holds a casino license. C-7 E. For purpose of this Article VI, the term "Subsidiary" shall be defined in accordance with N.J.S.A. 5:12-47. ARTICLE VII BOARD OF DIRECTORS A. NUMBER AND DESIGNATIONS OF DIRECTORS. Until such time as a Class B Triggering Event (as defined in Article IX hereof) shall have occurred, the number of directors which shall constitute the Board as of the Effective Date (as defined in Article IX hereof) shall be six, consisting of four Common Stock Directors (as defined in Article IX hereof) and two Class B Directors (but subject to Paragraph F below). After the Effective Date, the number of directors which shall constitute the whole Board may be increased or decreased to such other number as from time to time shall be fixed by resolution of the Board; PROVIDED, HOWEVER, that at all times the number of Class B Directors prior to the occurrence of a Class B Triggering Event shall be one-third (rounded up to the nearest whole number) of the number of directors which constitutes the entire Board (but subject to Paragraph F below). Upon the occurrence of a Class B Triggering Event, the number of directors which shall constitute the Board shall be increased, with such vacancies created thereby filled by the vote of a majority of the Class B Directors then in office, such that the number of Class B Directors equals a majority of the number of directors which constitutes the entire Board after giving effect to the creation of such vacancies (but subject to Paragraph F below). B. ELECTION OF DIRECTORS. 1. Election of directors need not be by written ballot unless the By-Laws so provide. 2. The Board of Directors shall be divided into three classes: Class I, Class II, and Class III. Such Classes shall be as nearly equal in number of directors as possible. Each director shall serve for a term ending at the third annual stockholders' meeting following the annual meeting at which such director was elected; PROVIDED, HOWEVER, that the directors first appointed to Class I shall serve for a term ending at the annual meeting to be held in 1995, the directors first appointed to Class II shall serve for a term ending at the annual meeting to be held in 1996, and the directors first appointed to Class III shall serve for a term ending at the annual meeting to be held in 1997. Notwithstanding any of the foregoing provisions of this Article VII and subject to Paragraph F below, each director shall serve until his successor is elected and qualified or until his earlier death, resignation or removal. 3. At each annual meeting of stockholders (which shall be held on such date as shall be determined pursuant to the By-Laws of the Corporation), or at any duly called special meeting of stockholders, the Common Stock Directors to be elected shall be elected by the holders of the Common Stock voting as a separate class and the Class B Director(s) to be elected shall be elected by the holders of the Class B Stock voting as a separate class. 4. At each annual election, the directors chosen to succeed those whose terms then expire shall be identified as being of the same Class as the directors they succeed, unless, by reason of any intervening changes in the authorized number of directors, the Board of Directors shall designate one or more directorships whose term then expires as directorships of another Class in order to more nearly achieve equality in the number of directors among the Classes. When the directors fill a vacancy resulting from the death, resignation or removal of a director in accordance with Paragraph F below, the director chosen to fill that vacancy shall be of the same Class as the director he succeeds. 5. Notwithstanding the rule that the three Classes shall be as nearly equal in number of directors as possible, in the event of any change in the authorized number of directors, each Common Stock Director and each Class B Director then continuing to serve as such will nevertheless continue as a director of the Class of which such director is a member until the expiration of his current term or his earlier death, resignation or removal. C-8 C. EFFECTIVE DATE BOARD. As of the Effective Date, the Board of Directors of the Corporation shall be reconstituted to consist of the following persons in the Classes and of the designations indicated:
DIRECTOR CLASS DESIGNATION - ---------------------------------------------------- --------- ---------------------------------------------------- [] I Common Stock Director [] I Class B Director [] II Common Stock Director [] II Class B Director [] III Common Stock Director [] III Common Stock Director
D. REMOVAL OF DIRECTORS. Subject to Paragraph F below, any director, may be removed from office at any time, but only (i) for cause, and (ii) by the affirmative vote of the holders of 80% of the voting power of all the shares of the class of stock which elected such director. E. FILLING OF VACANCIES. 1. Any vacancy among the Common Stock Directors, occurring from any cause whatsoever, may be filled by a majority of the remaining Common Stock Directors, even if such remaining Common Stock Directors do not constitute a quorum; PROVIDED, HOWEVER, that the holders of the Common Stock removing any Common Stock Director may at the same meeting fill the vacancy caused by such removal; PROVIDED FURTHER, HOWEVER, that if the remaining Common Stock Directors fail to fill any such vacancy, the holders of the Common Stock entitled to vote thereon may fill such vacancy at any special meeting of stockholders called for that purpose. Any person elected or appointed to fill a vacancy shall hold office, subject to the right of removal as herein before provided, until the next election for such Class of directors and until his successor is elected and qualifies. 2. Subject to Paragraph F below, any vacancy among the Class B Directors, occurring from any cause whatsoever (including (i) as a result of an increase in the number of directors which shall constitute the entire Board, or (ii) as a result of the occurrence of a Class B Triggering Event), may be filled only by a majority of the remaining Class B Directors, even if such remaining Class B Directors do not constitute a quorum; PROVIDED, HOWEVER, that the holders of the Class B Stock removing any Class B Director may at the same meeting fill the vacancy caused by such removal; PROVIDED FURTHER, HOWEVER, that if the remaining Class B Directors fail to fill any such vacancy, the holders of the Class B Stock entitled to vote thereon may fill such vacancy at any special meeting of stockholders called for that purpose. Any person elected or appointed to fill a vacancy shall hold office, subject to the right of removal as herein before provided, until the next election for such Class of directors and until his successor is elected and qualifies. F. FINAL PAYMENT DATE. After the Final Payment Date (as defined in Article IX hereof), (i) all the Class B Directors then in office shall resign and if such Class B Directors fail to resign, a majority of the Common Stock Directors shall be entitled to remove, without cause, such Class B Directors then in office, and (ii) the number of directors constituting the Board shall be decreased to four directors, who shall be elected by the holders of Common Stock. ARTICLE VIII AMENDMENT OF CERTIFICATE OF INCORPORATION AND BY-LAWS A. In addition to any affirmative vote required by applicable law, any alteration, amendment, repeal or rescission of any provision of this Amended and Restated Certificate of Incorporation must be approved by a majority of the directors of the Corporation then in office and by the affirmative vote of the holders of a majority of the outstanding shares of the Common Stock. C-9 B. Except as provided in Paragraph B(1) of Article IV hereof, the Board of Directors shall have the power without the assent or vote of the stockholders to make, alter, amend, change, add to or repeal the By-Laws of the Corporation. ARTICLE IX DEFINITIONS A. As used in this Amended and Restated Certificate of Incorporation, the following terms shall have the meanings indicated below: "Additional Junior Notes" shall mean Junior Notes issued by RIHF in payment of interest on outstanding Junior Notes, in accordance with the terms of the Junior Notes and the New RIHF Second Mortgage Junior Note Indenture. "Class B Directors" shall mean the directors of the Corporation elected by the holders of the Class B Stock. "Class B Triggering Event" shall mean either (i) the payment on any Interest Payment Date by RIHF of interest on the Junior Notes in the form of Additional Junior Notes or (ii) the failure on any Interest Payment Date by RIHF to pay interest in full on the Junior Mortgage Notes, if, in either case, on any prior six Interest Payment Dates (whether consecutive or non-consecutive), interest on the Junior Notes either has been paid in Additional Junior Notes or has not been paid in full. "Final Payment Date" means the date on which all the Junior Notes are retired, redeemed or paid in full. "Interest Payment Date" shall mean each date on which interest is due and payable on the Junior Notes, in accordance with the New RIHF Second Mortgage Junior Note Indenture. "Junior Notes" shall mean the 11.375% Junior Mortgage Junior Notes due 2004 of RIHF, including the Additional Junior Notes. "New RIHF Second Mortgage Junior Note Indenture" shall mean the Indenture dated as of [_________], 1994, between RIHF and The Chase Manhattan Bank (National Association), as Trustee, under which the Junior Notes have been or will be issued. "RIHF" shall mean Resorts International Hotel Finance, Inc., a Delaware Corporation. B. As used in this Amended and Restated Certificate of Incorporation, the following terms shall have the meanings indicated below: "Common Stock Directors" shall mean the directors of the Corporation elected by the holders of the Common Stock. "Effective Date" shall mean [_________], 1994. "Plan" shall mean the Plan of Reorganization of the Corporation, dated [_________], 1994. C-10 IN WITNESS WHEREOF, the undersigned have signed this Certificate of Incorporation, under penalties of perjury, and caused the corporate seal of the Corporation to be hereunto affixed this __ day of ________, 1994. By: __________________________________ Christopher D. Whitney EXECUTIVE VICE PRESIDENT AND SECRETARY BY: __________________________________ Matthew B. Kearney EXECUTIVE VICE PRESIDENT AND TREASURER [Corporate Seal] Attest: By: __________________________________ Christopher D. Whitney SECRETARY C-11 APPENDIX D AMENDED RII BY-LAWS AMENDED AND RESTATED BY-LAWS OF RESORTS INTERNATIONAL, INC. ARTICLE I OFFICES SECTION 1. PRINCIPAL OFFICE. The principal office of Resorts International, Inc. (the "Corporation") in the State of Delaware shall be established and maintained at the office of the United States Corporation Company in the City of Dover, County of Kent, and said corporation shall be the resident agent of this Corporation in charge thereof. SECTION 2. OTHER OFFICES. The Corporation may also have an office or offices and keep the books and records of the Corporation, except as may otherwise be required by the laws of the State of Delaware, at such other place or places either within or without the State of Delaware as the Board of Directors of the Corporation (the "Board") may from time to time determine or the business of the Corporation may require. ARTICLE II MEETINGS OF STOCKHOLDERS SECTION 1. PLACE OF MEETINGS. All meetings of the stockholders shall be held at such place, within or without the State of Delaware, as may from time to time be fixed by the Board or as shall be specified or fixed in the respective notices or waivers of notice thereof. SECTION 2. ANNUAL MEETINGS. The annual meeting of the stockholders of the Corporation for the election of directors and for the transaction of such other business as may properly come before the meeting shall be held on a date and at a time and place as designated by resolution of the Board of Directors of the Corporation. SECTION 3. SPECIAL MEETINGS. Special meetings of the stockholders, unless otherwise provided by law, may be called at any time by the Chairman of the Board or by a majority of the Board of Directors. Special meetings of the holders of Class B Common Stock (as such term is defined in the Certificate of Incorporation) may be called at any time by the Chairman of the Board or by a majority of the Class B Directors (as such term is defined in the Certificate of Incorporation). SECTION 4. NOTICE OF MEETINGS. Except as otherwise expressly required by law or the Certificate of Incorporation of the Corporation, written notice stating the place and time of the meeting and, in the case of a special meeting, the purpose or purposes of such meeting, shall be given by the Secretary to each stockholder entitled to vote thereat at the last known post office address not less than ten nor more than sixty days prior to the date of meeting. No business other than that stated in the notice shall be transacted at any special meeting. Notice of any meeting of stockholders shall not be required to be given to any stockholder who shall attend such meeting in person or by proxy; and if any stockholder shall, in person or by attorney thereunto duly authorized, in writing or by telegraph, cable or wireless, waive notice of any meeting, whether before or after such meeting be held, the notice thereof need not be given to him. Notice of any adjourned meeting of stockholders need not be given except as provided in SECTION 7 of this ARTICLE II. SECTION 5. LIST OF STOCKHOLDERS. It shall be the duty of the Secretary or other officer who shall have charge of the stock ledger of the Corporation, either directly or through a transfer agent appointed by the Board, to prepare and make, at least 10 days before every election of directors, a complete list of the stockholders entitled to vote at said election, arranged in alphabetical order and D-1 showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open for said 10 days to the examination of any stockholder in the place where said election is to be held and shall be produced and kept at the time and place of the election for the whole time thereof, and subject to the inspection of any stockholder who may be present. The original or a duplicate stock ledger shall be the only evidence as to who are the stockholders entitled to examine such list or the books of the Corporation or to vote in person or by proxy at such election. SECTION 6. QUORUM. At any meeting of the stockholders of the Corporation, the presence, in person or by proxy, of stockholders then entitled to cast a majority in number of votes upon a question to be considered at the meeting shall constitute a quorum for the consideration of such question. SECTION 7. ADJOURNMENTS. In the absence of a quorum at any annual or special meeting of stockholders, a majority in interest of those present in person or by proxy and entitled to vote may adjourn the meeting from time to time without further notice, other than by announcement at the meeting at which such adjournment shall be taken, until a quorum shall be present; provided, however, that if an adjournment is for more than thirty days, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote. At any such adjourned meeting at which a quorum may be present any business may be transacted which might have been transacted at the meeting as originally called. SECTION 8. ORDER OF BUSINESS. The order of business at all meetings of the stockholders shall be as determined by the chairman of the meeting, but the order of business to be followed at any meeting at which a quorum shall be present may be changed by a vote of the stockholders present in person or by proxy at the meeting and holding a majority of the shares entitled to vote thereat. SECTION 9. VOTING. Except as otherwise provided by the General Corporation Law of the State of Delaware or in the Certificate of Incorporation, each stockholder shall at each meeting of the stockholders be entitled to one vote in person or by proxy for each share entitled to be voted thereat and held by him and registered in his name on the books of the Corporation: (a) On such date as may be fixed pursuant to SECTION 3 of ARTICLE VI of these By-Laws as the record date for the determination of stockholders entitled to notice of and to vote at such meeting; or (b) In the event that no record date shall have been so fixed, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders hall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. Shares of stock belonging to the Corporation shall not be voted directly or indirectly. Persons holding stock having voting power in a fiduciary capacity shall be entitled to vote the shares so held, and persons whose stock having voting power is pledged shall be entitled to vote, unless in the transfer by the pledgor on the books of the Corporation he shall have expressly empowered the pledgee to vote thereon, in which case only the pledgee, or his proxy, may represent such stock and vote thereon. Any vote on stock may be given at any meeting of the stockholders by the stockholder entitled thereto in person or by his proxy appointed by an instrument in writing, subscribed by such stockholder or by his attorney thereunto duly authorized and delivered to the secretary of the meeting; provided, however, that no proxy shall be voted on after three years from its date, unless said proxy provides for a longer period. At all meetings of the stockholders all matters, except those the manner of deciding upon which is otherwise expressly regulated by statute or by the Certificate of Incorporation or by these By-Laws, shall be decided by the vote of the stockholders holding a majority of the shares present in person or by proxy and entitled to vote on such matters. Unless demanded by a stockholder present in person or by proxy at such meeting and entitled to vote thereat or determined by the chairman of the meeting to be advisable, the vote on any matter need not be by written ballot. SECTION 10. INSPECTORS OF ELECTION OR JUDGES. Before, or at, each meeting of the stockholders at which a vote by ballot is to be taken, the Board, or the chairman of such meeting, shall appoint two D-2 Inspectors of Election or judges to act thereat. Each Inspector of Election or Judge so appointed shall first subscribe an oath or affirmation faithfully to execute the duties of an Inspector of Election or Judge at such meeting with strict impartiality and according to the best of his ability. Such Inspectors of Election or Judges shall take charge of the ballot at such meeting and after the balloting thereat on any question shall count the ballots cast thereon and shall make a report in writing to the secretary of such meeting of the results thereof. The Inspectors of Election or Judges need not be stockholders; and any officer or director may be an Inspector of Election or Judge on any question other than a vote for or against his election to any position with the Corporation or on any other question in which he may be directly interested. ARTICLE III DIRECTORS SECTION 1. GENERAL POWERS. The Board shall manage the business and affairs of the Corporation and may exercise all such authority and powers of the Corporation and do all such lawful acts and things as are not by law, the Certificate of Incorporation or these By-Laws directed or required to be exercised or done by the stockholders. SECTION 2. NUMBER, QUALIFICATION AND TERM OF OFFICE. The number of directors of the Corporation shall be as set forth in the Certificate of Incorporation. Directors need not be stockholders. The Certificate of Incorporation of the Corporation provides for a classified Board, wherein each director shall serve for a term as provided therein. The Certificate of Incorporation also provides for two designations of directors, elected by the holders of the Common Stock and the Class B Stock (as such terms are defined in the Certificate of Incorporation), respectively. SECTION 3. ELECTION OF DIRECTORS. At each meeting of the stockholders for the election of a director or directors, the person or persons receiving the greater number of votes, up to the number of directors then to be elected, cast by the stockholders present in person or by proxy and entitled to vote for such director or directors shall be the director or directors elected by such stockholders. The election of directors is subject to any provisions contained in the Certificate of Incorporation relating thereto, including any provisions for a classified Board and any provisions relating to the election of Common Stock Directors (as such term is defined in the Certificate of Incorporation) and Class B Directors, respectively. SECTION 4. QUORUM. At all meetings of the Board the presence of a majority of the whole Board shall be necessary to constitute a quorum for the transaction of business at such meeting. Any act of a majority present at a meeting at which there is a quorum shall be the act of the Board, except as may be otherwise specifically provided by statute or by the Certificate of Incorporation or by these By-Laws. In the absence of a quorum, a majority of the directors present may adjourn any meeting from time to time until a quorum shall be present. At any adjourned meeting at which a quorum is present, any business may be transacted which might have been transacted at the meeting as originally called. Notice of any adjourned meeting need not be given. SECTION 5. PLACE OF MEETING. The Board may hold its meetings at such place or places within or without the State of Delaware as it may from time to time by resolution determine or as shall be fixed or specified in the respective notices or waivers of notice thereof. Members of the Board, or any committee thereof, may participate in a meeting of such Board or committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear and communicate with each other. SECTION 6. REGULAR MEETINGS. Regular meetings of the Board may be held without notice at such places and times as may be fixed from time to time by resolution of the Board. SECTION 7. SPECIAL MEETINGS. Special meetings of the Board may be called by the Chairman of the Board. Special meetings of the Class B Directors with respect to matters to be determined by the D-3 Class B Directors only may be called by any Class B Director. At least twenty-four hours' written or telegraphic notice of each special meeting shall be given to each director. The notice of any meeting, or any waiver thereof, need not state the purpose or purposes of such meeting. SECTION 8. ACTION BY CONSENT. Any action required or permitted to be taken at any meeting of the Board or of any committee thereof may be taken without a meeting, if prior to such action a written consent thereto is signed by all members of the Board or all members of such committee, as the case may be, and such written consent is filed with the minutes of proceedings of the Board or committee. Any action required or permitted to be taken at any meeting of the Class B Directors may be taken without a meeting, if prior to such action a written consent thereto is signed by all Class B Directors, and such written consent is filed with the minutes of proceedings of the Board. SECTION 9. RESIGNATIONS; REMOVAL. Any director may resign at any time by giving written notice to the Chairman of the Board or the Secretary. Such resignation shall take effect at the time specified therein or, if no time is specified, upon receipt of such notice. The acceptance of a resignation shall not be necessary to make it effective. Directors may only be removed in accordance with the Certificate of Incorporation. SECTION 10. VACANCIES. A vacancy in the Board caused by death, resignation or removal may only be filled in accordance with the Certificate of Incorporation. Each director so chosen to fill a vacancy shall, unless otherwise provided or as provided in the Certificate of Incorporation, hold office until his successor shall have been elected and shall qualify or until he shall resign or shall have been removed. SECTION 11. COMPENSATION. Each director, in consideration of his or her serving as such, shall be entitled to receive from the Corporation such amount per annum or such fees for attendance at directors' meetings, or both, as the Board shall from time to time determine, together with reimbursement for the reasonable expenses incurred by him in connection with the performance of his duties. Each director who shall serve as a member of the Executive Committee or any other committee of the Board in consideration of his serving as such, shall be entitled to such additional amount per annum or such fees for attendance at committee meetings, or both, as the Board shall from time to time determine. Nothing herein contained shall be construed to preclude any director from serving the Corporation in any other capacity and receiving proper compensation therefor. ARTICLE IV COMMITTEES SECTION 1. DESIGNATION AND POWERS OF COMMITTEES. The Board may, by resolution or resolutions passed by a majority of the whole Board, designate two or more of its members to constitute an Executive Committee, which, during the intervals between the meetings of the Board, shall have, and may exercise, all the powers of the Board in the management of the business, affairs, and property of the Corporation, to the extent permitted by Delaware law. The Board, by resolution passed by a majority of the whole Board, may designate members of the Board to constitute other committees, including an Audit Committee and a Compensation Committee, which shall consist of such numbers of directors and shall have, and may exercise, such powers as the Board may determine and specify in the respective resolutions appointing them, to the extent permitted by Delaware law. The Board shall have power at any time to change the members of the Executive Committee or any such other committee, to fill vacancies and to discharge the Executive Committee or any such other committee. D-4 ARTICLE V OFFICERS SECTION 1. ELECTION AND NUMBER. The principal officers of the Corporation shall be a Chairman of the Board, a President, one or more Vice Presidents, a Treasurer and a Secretary, all of whom shall be chosen by the Board, and such other officers as may be appointed in accordance with the provisions of SECTION 3 of this ARTICLE V. One person may hold the office and perform the duties of any two or more of said officers other than those of President and Secretary. SECTION 2. TERM OF OFFICE AND QUALIFICATIONS. Each officer, except such as may be appointed in accordance with the provisions of SECTION 3 of this ARTICLE V, shall hold office until the next annual election of officers and until his successor shall have been chosen and shall qualify or until his death or until he shall have resigned or until he shall have been removed in the manner provided in SECTION 4 of this ARTICLE V. SECTION 3. APPOINTIVE OFFICERS. The Chairman of the Board or the Board may from time to time appoint such other officers as they may deem necessary, including one or more Assistant Treasurers, one or more Assistant Secretaries and such other agents and employees of the Corporation as they may deem proper. Such officers and agents and employees shall hold office for such period, have such authority and perform such duties, subject to the control of the Board, as the Chairman of the Board or the Board may from time to time prescribe. SECTION 4. REMOVAL. Any elected officer may be removed, either with or without cause, at any time, by the vote of a majority of the whole Board at any meeting of the Board, and any appointive officer may be removed, either with or without cause, at any time by the Chairman of the Board. SECTION 5. RESIGNATIONS. Any officer may resign at any time by giving written notice to the Board or to the President or to the Secretary. Such resignation shall take effect upon receipt of such notice or at any later time specified therein: and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. SECTION 6. VACANCIES. A vacancy in any office because of death, resignation, removal or any other cause shall be filled for the unexpired portion of the term in the manner prescribed in SECTIONS 2 and 3 of this ARTICLE V for election or appointment, respectively, to such office. SECTION 7. CHAIRMAN OF THE BOARD. The Chairman of the Board if present shall preside at all meetings of stockholders and at all meetings of the Board and shall have such other powers and duties as from time to time may be assigned to him by the Board or these By-Laws. SECTION 8. PRESIDENT. The President shall be the chief executive officer of the Corporation, and shall have general supervision over the business of the Corporation, subject to the control of the Board. In general, he shall perform all duties incident to the office of President and have such other powers and duties as from time to time may be assigned to him by the Board. SECTION 9. VICE PRESIDENT. Each Vice President shall have such powers and shall perform such duties as from time to time may be assigned to him by the Board. The Board may elect, or designate, one or more of the Vice Presidents as an Executive Vice President. At the request of the President, or in the case of his absence or inability to act, the Executive Vice President or, if there shall be more than one Executive Vice President, an Executive Vice President designated by the Board, or if the Board shall have not have elected or designated an Executive Vice President then one of the Vice Presidents who shall be designated for the purpose by the Board, shall perform the duties of the President, and, when so acting, shall have all the powers of the President. SECTION 10. SECRETARY. The Secretary shall keep or cause to be kept in books provided for this purpose the minutes of all meetings of the stockholders and of the Board; shall see that all notices are duly given in accordance with the provisions of these By-Laws and as required by law; shall be the D-5 custodian of the seal of the Corporation and shall affix the seal or cause it to be affixed to all certificates of stock of the Corporations and to all documents the execution of which on behalf of the Corporation under its seal shall be duly authorized in accordance with the provisions of these By-Laws; shall have charge of the stock records of the Corporation; shall see that all reports, statements and other documents required by law are properly kept and filed; may sign, with any other proper officer of the Corporation thereunto authorized, certificates for stock of the Corporation; and, in general, shall perform all the duties incident to the office of Secretary, and such other duties as from time to time may be assigned to him by the Board. SECTION 11. ASSISTANT SECRETARIES. The Assistant Secretaries shall have such powers and duties as from time to time may be assigned to them by the Board. At the request of the Secretary or in case of his absence or inability to act, any Assistant Secretary may act in his place. SECTION 12. TREASURER. The Treasurer shall have charge and custody of, and be responsible for, all funds, securities, evidences of indebtedness and other valuable documents of the Corporation; shall deposit all such funds in the name of the Corporation in such banks or other depositaries as shall be selected by the Board; shall receive, and give or cause to be given receipts and acquittances for, moneys paid in on account of the Corporation and shall pay out of the funds on hand all just debts of the Corporation of whatever nature upon maturity of the same; shall enter or cause to be entered in books of the Corporation to be kept for that purpose full and accurate accounts of all moneys received and paid out on account of the Corporation, and whenever required by the Board, shall render a statement of his cash accounts; shall keep or cause to be kept such other books as will show the true record of the expenses, losses, gains, asset and liabilities of the Corporation; and in general shall perform all duties incident to the office of Treasurer and such other duties as from time to time may be assigned to him by the Board. SECTION 13. ASSISTANT TREASURERS. The Assistant Treasurers shall have such powers and duties as from time to time may be assigned to them by the Board. At the request of the Treasurer, or in case of his absence or inability to act, any Assistant Treasurer may act in his place. SECTION 14. SALARIES. The salaries of the elective officers and any appointive officers of the Corporation shall be fixed from time to time by the Board. An officer shall not be prevented from receiving such salary by reason of the fact that he is also a director of the Corporation or a member of any committee contemplated by the By-Laws. ARTICLE VI CAPITAL STOCK SECTION 1. CERTIFICATE FOR STOCK. Every holder of shares of stock shall be entitled to have a certificate, in such form as the Board shall prescribe, certifying the number and class of shares of stock of the Corporation owned by him. Each such certificate shall be signed in the name of the Corporation by the President or a Vice President and the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary; PROVIDED, HOWEVER, that where such certificate is signed by a transfer agent or an assistant transfer agent or by a transfer clerk acting on behalf of the Corporation and a registrar, the signature of any such officer may be a facsimile. SECTION 2. TRANSFER OF SHARES. The shares of stock of the Corporation shall be transferable only upon its books by the registered holders thereof or by their duly authorized attorneys or legal representatives, and upon such transfer the old certificates shall be surrendered to the Corporation by the delivery thereof to the Secretary or to such other person as the Board may designate, by whom such old certificates shall be cancelled and new certificates shall thereupon be issued. A record shall be made of each transfer. Each share of Class B Stock shall be issued in connection with and upon the issuance of each $1,000 in principal amount of Junior Notes (as such term is defined in the Certificate of Incorporation), and may not be transferred separately from such principal amount of Junior Notes. D-6 SECTION 3. FIXING DATE FOR DETERMINATION OF STOCKHOLDERS OF RECORD. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors and which record date: (1) in the case of determination of stockholders entitled to vote at any meeting of stockholders of adjournment thereof, shall not be more than sixty nor less than ten days before the date of such meeting; (2) in the case of determination of stockholders entitled to express consent to corporate action in writing without a meeting, shall not be more than ten days from the date upon which the resolution fixing the record date is adopted by the Board of Directors; and (3) in the case of any other action shall not be more than sixty days prior to such other action. If no record date is fixed: (1) the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held; (2) the record date for determining stockholders entitled to express consent to corporate action in writing without a meeting when no prior action of the Board of Directors is required by law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation in accordance with applicable law, or, if prior action by the Board of Directors is required by law, shall be at the close of business on the day on which the Board of Directors adopts the resolution taking such prior action; and (3) the record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. SECTION 4. LOST OR DESTROYED CERTIFICATES. The Board may determine the conditions upon which a new certificate of stock will be issued in place of a certificate which is alleged to have been lost or destroyed, and may, in its discretion, require the owner of such certificate or his legal representative to give bond, with sufficient surety to the Corporation to indemnify it against any and all losses or claims which may arise by reason of the issue of a new certificate in the place of the one so lost or destroyed. ARTICLE VII CORPORATE SEAL The seal of the Corporation shall be in the form of a circle and shall bear the full name of the Corporation, the year of its incorporation and the words "CORPORATE SEAL DELAWARE". ARTICLE VIII SIGNATURES All checks, bonds, notes, contracts, agreements or other obligations or instruments of the Corporation shall be signed by such officer or officers as the Board may from time to time designate. ARTICLE IX MISCELLANEOUS PROVISIONS SECTION 1. WAIVER OF NOTICE. Whenever any notice whatever is required to be given by these By-Laws or by statute, the person entitled thereto may in person, or in the case of a stockholder by his D-7 attorney thereunto duly authorized, waive such notice in writing (including telegraph, cable, radio or wireless), whether before or after the meeting or other matter with respect of which such notice is to be given, and in such event such notice need not be given to such person and such waiver shall be equivalent to such notice, and any action to be taken after such notice or after the lapse of a prescribed period of time may be taken without such notice and without the lapse of any period of time. SECTION 2. EMPLOYMENT CONTRACTS. No contract of employment shall be entered into for or on behalf of the Corporation for a period of more than one year without prior approval of the Board. ARTICLE X AMENDMENTS Except as otherwise may be provided herein or in the Certificate of Incorporation, these By-Laws, or any of them, may be amended, modified or repealed, or new By-Laws may be adopted, either by vote of a majority of the directors present at any annual, regular or special meeting, or by a vote constituting a majority in number of the votes cast by stockholders present in person or represented by proxy and entitled to vote at any annual or special meeting. D-8 RESORTS INTERNATIONAL, INC. IMPORTANT Any holder of Old Series Notes, RII Common Stock or 1990 Stock Options who wishes to vote with respect to the Plan should complete and sign the applicable Ballot or Master Ballot in accordance with the instructions set forth in this Information Statement/Prospectus and return such Ballot or Master Ballot in accordance with the instructions set forth thereon. See "Solicitation -- Procedures for Voting on the Plan". SOLICITATION AGENT: Hill and Knowlton By Hand Delivery or Overnight Courier: By Mail: Hill and Knowlton Hill and Knowlton Ballot Tabulation Department P.O. Box 5508 420 Lexington Avenue, 12th Floor Grand Central Station New York, New York 10017 New York, New York 10163-5503
BY FACSIMILE: (212) 682-3289 TELEPHONE: (212) 210-8850 ADDITIONAL COPIES Requests for additional copies of this Information Statement/Prospectus should be directed to the Solicitation Agent. You also may contact your local broker, dealer, commercial bank or trust company for assistance concerning the Solicitation. PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS RII and RIHF are Delaware corporations. Section 145 ("Section 145") of the Delaware General Corporation Law ("DGCL") provides a Delaware corporation with broad powers to indemnify its officers and directors in certain circumstances. Additionally, Section 102(a)(7) of the DGCL permits Delaware corporations to include a provision in their certificates of incorporation eliminating or limiting the personal liability of a director to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, provided that such provisions shall not eliminate or limit the liability of a director (i) for any breach of faith or that involve intentional misconduct or a knowing violation of law, (iii) for unlawful payment of dividends or other unlawful distributions, or (iv) for any transactions from which the director derived an improper personal benefit. RII. As permitted under the DGCL, Article Fifth of RII's Restated Certificate of Incorporation ("Article Fifth") provides that: (1) A director of RII shall not be personally liable to RII or its shareholders for monetary damages for breach of fiduciary duty as a director except for liability (i) for any breach of the director's duty of loyalty to RII or its shareholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL, or (iv) for any transaction from which the director derived an improper personal benefit. If the DGCL is amended after approval by the shareholders of this Article Fifth to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of RII shall be eliminated or limited to the fullest extent permitted by the DGCL, as so amended. Any repeal or modification of this Section by the shareholders of RII shall be prospective only and shall not adversely affect any right or protection of a director of RII existing at the time of such repeal or modification. (2) RII shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal administrative or investigative (other than an action by or in the right of RII) by reason of the fact that he is or was or has agreed to become a director or officer of RII, or is or was serving or has agreed to serve at the request of RII as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, or by reason of any action alleged to have been taken or omitted in such capacity, against costs, charges, expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or on his behalf in connection with such action, suit or proceeding and any appeal therefrom, if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of RII. The termination of any action, suit or proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of RII. (3) RII shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of RII to procure a judgment in its favor by reason of the fact that he is or was or has agreed to become a director or officer of RII, or is or was serving or has agreed to serve at the request of RII as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, or by reason of any action alleged to have been taken or omitted in such capacity, against costs, charges and expenses (including attorneys' fees) actually and reasonably incurred by him or on his behalf in connection with the defense or settlement of such action or suit and any appeal therefrom, if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of RII II-1 except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to RII unless and only to the extent that the Court of Chancery of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of such liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such costs, charges and expenses which the Court of Chancery or such other court shall deem proper. (4) Notwithstanding the other provisions of Article Fifth, to the extent that a director or officer of RII has been successful on the merits or otherwise, including, without limitation, the dismissal of an action without prejudice, in defense of any action, suit or proceeding referred to in Sections 1 and 2 above, or in defense of any claim, issue or matter therein, he shall be indemnified against all costs, charges and expenses (including attorneys' fees) actually and reasonably incurred by him or on his behalf in connection therewith. (5) Any indemnification under Sections 1 and 2 above (unless ordered by a court), shall be paid by RII unless a determination is made (i) by a majority of the members of the Board of Directors who were not parties to such action, suit or proceeding even if less than a quorum, or (ii) if such a majority of the disinterested members of the Board of Directors so direct, by independent legal counsel in a written opinion, or (iii) by the stockholders, that indemnification of the director or officer is not proper in the circumstances because he has not met the applicable standard of conduct set forth in Sections 1 and 2 of Article Fifth. (6) Costs, charges and expenses (including attorneys' fees) incurred by a person referred to in Sections 1 and 2 above in defending any civil, criminal, administrative or investigative action, suit or proceeding shall be paid by RII in advance of the final disposition of such action, suit or proceeding, PROVIDED, HOWEVER, that the payment of such costs, charges and expenses (including attorneys' fees) incurred by a director or officer in his capacity as a director or officer (and not in any other capacity in which service was or is rendered by such person while a director or officer) in advance of the final disposition of such action, suit or proceeding shall be made only upon receipt of an undertaking by or on behalf of the director or officer to repay all amounts so advanced in the event that it shall ultimately be determined that such director or officer is not entitled to be indemnified by RII as authorized in Article Fifth. Such costs, charges and expenses (including attorneys' fees) incurred by other employees and agents may be so paid upon such terms and conditions, if any, as the majority of the Board of Directors deems appropriate. The majority of the Board of Directors may, in the manner set forth above, and upon approval of such director, officer, employer, employee or agent of RII, authorize RII's counsel to represent such person, in any action, suit or proceeding, whether or not RII is a party to such action, suit or proceeding. (7) The indemnification provided by Article Fifth shall not be deemed exclusive of any other rights to which any director, officer, employee or agent seeking indemnification may be entitled under any law (common or statutory), agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and so as to action in another capacity while holding office or while employed by or acting as agent for RII, and shall continue as to a person who has ceased to be a director, officer, employee or agent, and shall inure to the benefit of the estate, heirs, executors and administrators of such person. All rights to indemnification under Article Fifth shall be deemed to be a contract between RII and each director, officer, employee or agent of RII who serves or served in such capacity at any time while Article Fifth is in effect. Any repeal or modification of Article Fifth or any repeal or modification of relevant provisions of the DGCL or any other applicable laws shall not in any way diminish any rights to indemnification of such director, officer, employee or agent or the obligations of RII arising hereunder. Article Fifth shall be binding upon any successor corporation of this Company, whether by way of acquisition, merger, consolidation or otherwise. (8) RII shall purchase and maintain insurance on behalf of any person who is or was or has agreed to become a director, officer, employee or agent of RII, or is or was serving at the request of II-2 RII as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him or on his behalf in any such capacity, or arising out of his status as such, whether or not the corporation would have the power to indemnify him against such liability under the provisions of Article Fifth; PROVIDED, HOWEVER, that such insurance is available on acceptable terms, which determination shall be made by a vote of a majority of the Board of Directors. RIHF. As permitted under DGCL, Article IX of RIHF's By-laws ("Article Ninth") provides that: (1) RIHF shall indemnify any person who shall be or shall have been a party or shall be threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of RIHF) by reason of the fact that he shall be or shall have been a director, officer, employee or agent of RIHF, or shall be or shall have been serving at the request of RIHF as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he shall have acted in good faith and in a manner he reasonably shall have believed to be in or not opposed to the best interests of RIHF, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct shall have been unlawful. The termination of any action, suit or proceedings by judgment, order, settlement, conviction or upon a plea of NOLO CONTENDERE or its equivalent, shall not, of itself, create a presumption that the person shall not have acted in good faith and in a manner which he reasonably shall have believed to be in or not opposed to the best interests of RIHF, and, with respect to any criminal action or proceeding, that he shall have had reasonable cause to believe that his conduct shall have been unlawful. (2) RIHF shall indemnify any person who shall be or shall have been a party or shall be threatened to be made a party to any threatened, pending or completed action or suit by or in the right of RIHF to procure a judgment in its favor by reason of the fact that he shall be or shall have been a director, officer, employee or agent of RIHF, or shall be or shall have been serving at the request of RIHF as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he shall have acted in good faith and in a manner he reasonably shall have believed to be in or not opposed to the best interests of RIHF, except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to RIHF unless and only to the extent that the court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person shall be fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper. (3) Any indemnification under Section 1 or 2 above (unless ordered by a court) shall be made by RIHF only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent shall be proper in the circumstances because he shall have met the applicable standard of conduct set forth in Section 1 or 2 above. Such determination shall be made (i) by the Board by a majority vote of a quorum consisting of directors who shall not have been parties to such action, suit or proceeding, (ii) if such a quorum shall not be obtainable, or, even if obtainable, if a quorum of disinterested directors shall so direct, by independent legal counsel in a written opinion, or (iii) by the stockholders. (4) Notwithstanding the other provisions of Article Ninth, to the extent that a director, officer, employee or agent of RIHF shall be successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Section 1 or 2 above, or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith. II-3 (5) Expenses (including attorneys' fees) incurred by an officer or director in defending any civil, criminal, administrative or investigative action, suit or proceeding may be paid by RIHF in advance of the final disposition of such action, suit or proceeding as authorized by the Board in the specific case upon receipt of an undertaking by or on behalf of such officer or director to repay such amount if it shall ultimately be determined that he shall not be entitled to be indemnified by RIHF as authorized in this Article. Such expenses (including attorneys' fees) incurred by other employees and agents may be so paid upon such terms and conditions, if any, as the Board deems appropriate. (6) The indemnification provided by Article Ninth shall not be deemed exclusive of any other rights to which a person seeking indemnification may be entitled by law or under any agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. (7) Upon resolution passed by the Board, RIHF may purchase and maintain insurance on behalf of any person who shall be or shall have been a director, officer, employee or agent of RIHF, or shall be or shall have been serving at the request of RIHF as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not RIHF would have the power to indemnify him against such liability under the provisions of Article Ninth. PIRL. PIRL is a Bahamian corporation. Sections 18 through 22 of the Companies Act, 1992 of the Laws of the Commonwealth of The Bahamas ("the Companies Act") provides a Bahamian corporation with board powers to indemnify its officers and directors in certain circumstances. PIRL. As permitted under the Companies Act, Article 75 through 82 of PIRL's Articles of Association provide that: 1. PIRL shall, subject to the provisions of Paragraph 5 below, indemnify to the fullest extent permitted by the Companies Act any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative and whether external or internal to PIRL by reason of the fact that he is or was a director or officer of PIRL, or is or was serving at the request of PIRL as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such suit, action or proceeding if he acted in good faith and in a manner which he reasonably believed to be in, or not opposed to, the best interests of PIRL, and, with respect to any criminal action or proceeding, had no reasonable cause to believe that his conduct was unlawful. 2. Subject to Paragraph 5 below, expenses incurred by a director or officer in defending a civil or criminal action, suit or proceeding shall be paid by PIRL in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of the director or officer to repay such amount if it shall ultimately be determined that he is not entitled under Paragraph [ ] to be indemnified by PIRL in respect of such expenses. 3. The board shall from time to time cause PIRL to purchase and maintain insurance from reputable insurance carriers on behalf of any person who is or was a director or officer of PIRL, or is or was serving at the request of PIRL as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such with reasonable limits and subject to reasonable and customary deductibles, for so long as such insurance is available form such carriers. II-4 4. PIRL's indemnification under Paragraph 2 above of any person who is or was a director or officer of PIRL, or is or was serving, at the request of PIRL as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, shall be reduced by amounts such person receives as indemnification (i) under any policy of insurance purchased and maintained on his behalf by PIRL. (ii) from such other corporation, partnership, joint venture, trust or other enterprise, or (iii) under any other applicable indemnification provision. 5. (a) It shall be a condition of PIRL's obligation to indemnify or advance expenses under Paragraphs 1 and 2 above that the person asserting, or proposing to assert, the right to be indemnified, promptly after receipt of notice of commencement of any action, suit or proceeding in respect of which a claim for indemnification is or is to be made against PIRL notify PIRL of the commencement of such action, suit or proceeding, including therewith a copy of all papers served and the name of counsel retained or to be retained by such person in connection with such action, suit or proceeding, and thereafter to keep PIRL timely and fully apprised of all developments and proceedings in connection with such action, suit or proceeding or as PIRL shall request; and the fees and expenses of any counsel retained by a person asserting, or proposing to assert, the right to be indemnified under Paragraph 1 above shall be at the expense of such person unless the counsel retained shall have been approved by PIRL in writing, which approval shall not be unreasonably withheld. (b) If a claim for indemnification or advancement of expenses under Paragraph 1 and 2 above is not paid in full by PIRL within forty five (45) days after a written claim there for has been received by PIRL, the claimant may at any time thereafter bring suit against PIRL to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled to be paid also the expense of prosecuting such claim. 6. To the fullest extent permitted by the Companies Act as it exists on the date hereof or as it may hereafter be amended, no director or officer of PIRL shall be liable to PIRL or its members for monetary or other damages for breach of fiduciary duty as a director or officer. 7. The provisions of Paragraphs 1 and 6 above shall continue as to, and for the benefit of, a person who has ceased to be a director or officer and shall inure to the benefit of the heirs, executors and administrators of such a person. 8. No amendment to or repeal of the provisions of Paragraphs 1 through 6 above shall apply to or have any effect on the eligibility for, or entitlement to, indemnification, advancement of expenses and the other rights provided by, or granted pursuant to, Paragraphs 1 through 6 above for or with respect to any acts or omissions of any director or officer occurring prior to any such amendment or repeal. RIH. RIH is a New Jersey corporation. Section 14A:3-5 of the New Jersey Business Corporation Act ("NJBCA") grants a corporation broad powers to indemnify officers and directors of the corporation, in certain situations. As permitted under the NJBCA, Article VIII of RIH's By-Laws provides that RIH shall indemnify each present and future director and officer of the corporation against, and each such director and officer shall be entitled without further act on his part to indemnity from RIH for, all expenses (including the amount of judgments and the amount of reasonable settlements made with a view to the curtailment of costs of litigation, other than amounts paid to RIH itself) reasonably incurred by him in connection with or arising out of any action, suit or proceeding in which he may be involved by reason of his being or having been a director or officer of the corporation which he serves as a director or officer at the request of RIH, whether or not he continues to be such director or officer at the time of incurring such expenses; provided, however, that such indemnity shall not include any expenses incurred by any such director or officer (a) in respect of matters as to which he shall be finally adjudged in any such action, suit or proceeding to have been derelict in the performance of his duties as such director or officer or (b) in respect of any matter in which any settlement is effected, to any amount in excess of the amount of expenses which might reasonably have been incurred by such director or officer in conducting such litigation to a final conclusion; provided, further, that in no event II-5 shall anything herein contained be so construed as to protect, or to authorize the corporation to indemnify, such director, or officer against any liability to RIH or to its security holders to which he would otherwise be subject by reason of his willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office as such director or officer. The foregoing right of indemnification shall inure to the benefit of the heirs, executors or administrators of each such director or officer and shall be in addition to all other right to which such director or officer may be entitled as a matter of law. ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES A. EXHIBITS
EXHIBIT NUMBERS EXHIBIT PAGE - ----------- ---------------------------------------------------------------------------------------------- --------- 2.01 Plan of Reorganization. (Incorporated by reference to Appendix A of the Information Statement/Prospectus included in this Registration Statement.)............................... 3.01 Form of proposed Amended and Restated Certificate of Incorporation of RII. (Incorporated by reference to Appendix C of the Information Statement/Prospectus included in this Registration Statement.).................................................................................. 3.02 Form of proposed Amended and Restated By-Laws of RII. (Incorporated by reference to Appendix D of the Information Statement/Prospectus included in this Registration Statement.)............ 3.03 Restated Certificate of Incorporation of RII. (Incorporated by reference to Exhibit (3)(a) to RII's Form 10-K Annual Report for the fiscal year ended December 31, 1990, in File No. 1-4748.)..................................................................................... 3.04 By-laws, as amended, of RII. (Incorporated by reference to Exhibit (4)(d) to RII's Form 10-Q Quarterly Report for the quarter ended September 30, 1990, in File No. 1-4748.).............. 3.05 Certificate of Incorporation of RIH*.......................................................... 3.06 By-laws of RIH*...............................................................................
3.07 Certificate of Incorporation of RIHF*....................................... 3.08 By-laws of RIHF............................................................. 3.09 Amended and Restated Articles of Association of PIRL........................ 4.01 See Exhibits 3.01 and 3.02 as to the rights of holders of RII Common Stock and RII Class B Common Stock after giving effect to the Restructuring...... 4.02 See Exhibits 3.03 and 3.04 as to the rights of holders of RII Common Stock prior to giving effect to the Restructuring................................ 4.03 See Exhibit 3.09 as to the rights of holders of PIRL Common Stock........... 4.04 Form of Indenture among RIHF, as issuer, RIH, as guarantor, and State Street Bank and Trust Company of Connecticut, National Association, as trustee, with respect to RIHF 11% Mortgage Notes due 2003........................... 4.05 Form of Indenture between RIHF, as issuer, RIH, as guarantor, and U.S. Trust Company of California, N.A., as trustee, with respect to RIHF 11.375% Junior Mortgage Notes due 2004............................................. 4.06 Indenture dated as of September 14, 1990, between RII and Chemical Bank (successor to Manufacturers Hanover Trust Company), as Trustee, with respect to RII's Senior Secured Redeemable Notes due April 15, 1994, with Exhibits as executed. (Incorporated by reference to Exhibit (4)(a)(1) to RII's Form 10-Q Quarterly Report for the quarter ended September 30, 1990, in File No. 1-4748.)....................................................... 4.07 Amended and Restated RIH $200,000,000 Senior Note. (Incorporated by reference to Exhibit (4)(a)(2) to RII's 10-Q Quarterly Report for the quarter ended September 30, 1990, in File No. 1-4748.)..................... 4.08 Amended and Restated RIH $125,000,000 Senior Note. (Incorporated by reference to Exhibit to RII's 10-Q Quarterly Report for the quarter ended September 30, 1990, in File No. 1-4748.)...................................
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EXHIBIT NUMBERS EXHIBIT PAGE - --------- ---------------------------------------------------------------------------- --------- 4.09 RII Pledge Agreement. (Incorporated by reference to Exhibit Q to RII's Form 8-A Registration Statement dated July 19, 1990, in File No. 1-4748.).......................................... 4.10 Assignment of Leases and Rents, RII as Assignor. (Incorporated by reference to Exhibit U to RII's Form 8-A Registration Statement dated July 19, 1990, in File No. 1-4748.).............. 4.11 RIB $50,000,000 Promissory Note to RIH. (Incorporated by reference to Exhibit V to RII's Form 8-A Registration Statement dated July 19, 1990, in File No. 1-4748.)......................... 4.12 Indenture of Mortgage from Paradise Island Limited. (Incorporated by reference to Exhibit W to RII's Form 8-A Registration Statement dated July 19, 1990, in File No. 1-4748.).............. 4.13 Indenture of Mortgage from Paradise Beach Inn Limited. (Incorporated by reference to Exhibit X to RII's Form 8-A Registration Statement dated July 19, 1990, in File No. 1-4748.)........... 4.14 Guaranty by Paradise Beach Inn Limited. (Incorporated by reference to Exhibit Z to RII's Form 8-A Registration Statement dated July 19, 1990, in File No. 1-4748.)......................... 4.15 Indenture of Mortgage from Island Hotel Company Limited. (Incorporated by reference to Exhibit AA to RII's Form 8-A Registration Statement dated July 19, 1990, in File No. 1-4748.)........ 4.16 Guaranty by Island Hotel Company Limited (Incorporated by reference to Exhibit BB to RII's Form 8-A Registration Statement dated July 19, 1990, in File No. 1-4748.).................... 4.17 RIB Collateral Assignment Agreement among RIH, GRI, RIB, Paradise Island Limited, Island Hotel Company Limited, Paradise Beach Inn Limited and the Bank of New York. (Incorporated by reference to Exhibit CC to RII's Form 8-A Registration Statement dated July 19, 1990, in File No. 1-4748.)................................................................................. 4.18 RII Security Agreement. (Incorporated by reference to Exhibit P to RII's Form 8-A Registration Statement dated July 19, 1990, in File No. 1-4748.).......................................... 4.19 Indenture dated as of September 14, 1990, between RII and The Bank of New York as Trustee, with respect to RII's Mortgage Non-Recourse Pass-Through Notes due June 30, 2000, with Exhibits as executed. (Incorporated by reference to Exhibit (4)(b) to RII's 10-Q Quarterly Report for the quarter ended September 30, 1990, in File No. 1-4748.)........................
4.20 Resorts International, Inc. Senior Management 1990 Stock Option Plan. (Incorporated by reference to Exhibit 8.5 to Exhibit 35 to RII's Form 8 Amendment No. 1 to it's 8-K Current Report dated August 30, 1990, in File No. 1-4748.)............................................................... 4.21 Griffin Group Warrant**..................................................... 4.22 Form of Mortgage between RIH and State Street Bank and Trust Company of Connecticut, National Association, securing Guaranty of RIHF Mortgage Notes...................................................................... 4.23 Form of Mortgage between RIH and RIHF, securing RIH Promissory Note......... 4.24 Form of Assignment of Agreements made by RIHF, as Assignor, to State Street Bank and Trust Company of Connecticut, National Association, as Assignee, regarding RIH Promissory Note.............................................. 4.25 Form of Assignment of Leases and Rents made by RIH, as Assignor, to RIHF, as Assignee, regarding RIH Promissory Note.................................... 4.26 Form of Assignment of Leases and Rents made by RIH, as Assignor, to State Street Bank and Trust Company of Connecticut, National Association, as Assignee, regarding Guaranty of RIHF Mortgage Notes........................ 4.27 Form of Assignment of Operating Assets made by RIH, as Assignor, to RIHF, as Assignee, regarding RIH Junior Promissory Note............................. 4.28 Form of Assignment of Operating Assets made by RIH, as Assignor, to State Street Bank and Trust Company of Connecticut, National Association, as Assignee, regarding Guaranty of RIHF Mortgage Notes........................ 4.29 Form of Mortgage between RIH and U.S. Trust Company of California, N.A., securing Guaranty of RIHF Junior Mortgage Notes............................
- ------------------------ _* Previously filed. ** To be filed by amendment. II-7
EXHIBIT NUMBERS EXHIBIT PAGE - --------- ---------------------------------------------------------------------------- --------- 4.30 Form of Mortgage between RIH and RIHF, securing RIH Junior Promissory Note.................... 4.31 Form of Assignment of Agreements made by RIHF, as Assignor, to, U.S. Trust Company of California, N.A., as Assignee, regarding RIH Junior Promissory Note.......................... 4.32 Form of Assignment of Leases and Rents made by RIH, as Assignor, to RIHF, as Assignee, regarding RIH Junior Promissory Note......................................................... 4.33 Form of Assignment of Leases and Rents made by RIH, as Assignor, to U.S. Trust Company of California, N.A., as Assignee, regarding Guaranty of RIHF Junior Mortgage Notes.............. 4.34 Form of Assignment of Operating Assets made by RIH, as Assignor, to RIHF, as Assignee, regarding RIH Promissory Note................................................................ 4.35 Form of Assignment of Operating Assets made by RIH, as Assignor, to U.S. Trust Company of California, N.A., as Assignee, regarding the Guaranty of the RIHF Junior Mortgage Notes...... 4.36 Form of Amended and Restated $125,000,000 RIH Promissory Note (Incorporated by reference to Exhibit A to Exhibit 4.04 hereto)............................................................ 4.37 Form of Amended and Restated $35,000,000 RIH Junior Promissory Note (Incorporated by reference to Exhibit A to Exhibit 4.05)................................................................ 5.01 Opinion of Gibson, Dunn & Crutcher*........................................................... 5.02 Opinion of Ravin, Sarasohn, Cook, Baumgarten, Fisch & Baime**.................................
5.03 Opinion of Harry B. Sands & Co.*............................................ 8.01 Opinion of Gibson, Dunn & Crutcher regarding tax matters**.................. 10.01 Form of Interim Management Agreement between PIRL and RII (Incorporated by referrence to Exhibit D to Exhibit 10.59)*................................. 10.02 [Not used].................................................................. 10.03 Agreement, dated May 23, 1978, between The Hotel Corporation of The Bahamas ("HCB") and Paradise Enterprises Limited. (Incorporated by reference to Exhibit (10)(b)(i) to RII's 10-K Annual Report for the fiscal year ended December 31, 1988, in File No. 1-4748.).................................... 10.04 Letter, dated July 2, 1985, from HCB to the RII amending Exhibit 10.03 hereto. (Incorporated by reference to exhibit to RII's Form 8-K Current Report dated July 9, 1985, in File No. 1-4748.)............................ 10.05 Agreement, dated May 23, 1978, between HCB and Paradise Realty Limited (now RIB). (Incorporated by reference to Exhibit 10.01 to GRI's Form S-1 Registration Statement filed July 13, 1988, in File No. 33-23063.)......... 10.06 Letter, dated September 26, 1988, from HCB to RIB extending Exhibit (10)(a)(3) hereto. (Incorporated by reference to Exhibit (10(b)(iv) to RII's 10-K Annual Report for the fiscal year ended December 31, 1988, in File No. 1-4748.).......................................................... 10.07 Supplement, dated February 21, 1990, to license granted March 30, 1978 to Paradise Enterprises Limited. (Incorporated by reference to Exhibit (10)(b)(v) to RII's 10-K Annual Report for the fiscal year ended December 31, 1989, in File No. 1-4748.)............................................. 10.08(a) Supplement, dated September 7, 1990, to license granted March 30, 1978 to Paradise Enterprises Limited. (Incorporated by reference to Exhibit 10(a)(6) to RII's 10-K Annual Report for the fiscal year ended December 31, 1988, in File No. 1-4748.)................................................. 10.08(b) Supplement, dated January 15, 1991, to license granted March 30, 1978 to Paradise Enterprises Limited. (Incorporated by reference to Exhibit 10(b)(7) to RII's 10-K Annual Report for the fiscal year ended December 31, 1990, in File No. 1-4748.) 10.09 Supplement, dated February 13, 1992, to license granted March 30, 1978 to Paradise Enterprises Limited. (Incorporated by reference to Exhibit 10(a)(8) to RII's 10-K Annual Report for the fiscal year ended December 31, 1992, in File No. 1-4748.).................................................
- ------------------------ _* Previously filed. ** To be filed by amendment. II-8
EXHIBIT NUMBERS EXHIBIT PAGE - --------- ---------------------------------------------------------------------------- --------- 10.10 Supplement, dated December 30, 1992, to license granted March 30, 1978 to Paradise Enterprises Limited. (Incorporated by reference to Exhibit 10(a)(9) to RII's 10-K Annual Report for the fiscal year ended December 31, 1992, in File No. 1-4748.).................................... 10.11 Lease Agreement, dated October 26, 1983, between RII and Ocean Showboat, Inc. (Incorporated by reference to Exhibit (10)(c)(i) to RII's 10-K Annual Report for the fiscal year ended December 31, 1986, in File No. 1-4748.)...................................................... 10.12 First Amendment, dated January 15, 1985, to Lease Agreement, dated October 26, 1983, between RII and Atlantic City Showboat, Inc. (assignee from affiliate -- Ocean Showboat, Inc.). (Incorporated by reference to Exhibit (10)(c)(ii) to RII's 10-K Annual Report for the fiscal year ended December 31, 1984, in File No. 1-4748.)........................................... 10.13 Second and Third Amendments, dated July 5 and October 28, 1985, respectively, to Lease Agreement, dated October 26, 1983, between RII and Atlantic City Showboat, Inc. (Incorporated by reference to Exhibit (10)(c)(iii) to RII's 10-K Annual Report for the fiscal year ended December 31, 1985, in File No. 1-4748.)...................................................... 10.14 Restated Third Amendment, dated August 28, 1986, to Lease Agreement, dated October 26, 1983, between RII and Atlantic City Showboat, Inc. (Incorporated by reference to Exhibit (10)(c)(iv) to RII's 10-K Annual Report for the fiscal year ended December 31, 1986, in File No. 1-4748.)................................................................................. 10.15 Fourth Amendment, dated December 16, 1986, to Lease Agreement, dated October 26, 1983, between RII and Atlantic City Showboat, Inc. (Incorporated by reference to Exhibit (10)(c)(v) to RII's 10-K Annual Report for the fiscal year ended December 31, 1986, in File No. 1-4748.)...
10.16 Fifth Amendment, dated February 1987, to Lease Agreement, dated October 26, 1983, between RII and Atlantic City Showboat, Inc. (Incorporated by reference to Exhibit (10)(c)(vi) to RII's 10-K Annual Report for the fiscal year ended December 31, 1986, in File No. 1-4748.)......................... 10.17 Seventh Amendment, dated October 18, 1988, to Lease Agreement, dated Octo- ber 26, 1983, between RII and Atlantic City Showboat, Inc. (Incorporated by reference to Exhibit (10)(c)(viii) to RII's 10-K Annual Report for the fiscal year ended December 31, 1988, in File No. 1-4748.).................. 10.18 RII Executive Health Plan (Incorporated by reference to Exhibit 10(c)(1) to RII's 10-K Annual Report for the fiscal year ended December 31, 1992, in File No. 1-4748.).......................................................... 10.19 Resorts Retirement Savings Plan. (Incorporated by reference to Exhibit (10)(c)(2) to RII's 10-K Annual Report for the fiscal year ended December 31, 1991, in File No. 1-4748.)............................................. 10.20 Employment Agreement, dated as of September 17, 1990, between RII and David P. Hanlon. (Incorporated by reference to Exhibit 9.3A to Exhibit 35 to the Form 8 Amendment dated November 16, 1990, to RII's 8-K Current Report dated August 30, 1990, in File No. 1-4748.)...................................... 10.21 Employment Agreement, dated May 3, 1991, between the RII and Christopher D. Whitney. (Incorporated by reference to Exhibit (10(d)(2) to RII's 10-K Annual Report for the fiscal year ended December 31, 1991, in File No. 1-4748.)................................................................... 10.22 Amendment to Employment Agreement, dated as of December 3, 1992, between RII and Christopher D. Whitney*................................................ 10.23 Employment Agreement, dated May 3, 1991, between RII and Matthew B. Kearney. (Incorporated by reference to Exhibit (10)(d)(3) to RII's 10-K Annual Report for the fiscal year ended December 31, 1991, in File No. 1-4748.)... 10.24 Amendment to Employment Agreement, dated December 3, 1992, between RII and Matthew B. Kearney*........................................................ 10.25 Second Amendment to Employment Agreement, dated September 24, 1993, between RII and Matthew B. Kearney*................................................ 10.26 Employment Agreement, dated as of September 17, 1992, between RII and David P. Hanlon. (Incorporated by reference to Exhibit 10(d)(4) to RII's 10-K Annual Report for the fiscal year ended December 31, 1992, in File No. 1-4748.)...................................................................
- ------------------------ * Previously filed. II-9
EXHIBIT NUMBERS EXHIBIT PAGE - --------- ---------------------------------------------------------------------------- --------- 10.27 Termination Agreement, dated as of September 27, 1993, between RII and David P. Hanlon*....... 10.28 Stock Option Agreement, dated as of May 3, 1991, between RII and David P. Hanlon. (Incorporated by reference to Exhibit (10)(e)(1) to RII's 10-K Annual Report for the fiscal year ended December 31, 1991, in File No. 1-4748.)........................................... 10.29 Stock Option Agreement, dated as of May 3, 1991, between RII and Christopher D. Whitney. (Incorporated by reference to Exhibit (10)(e)(2) to RII's 10-K Annual Report for the fiscal year ended December 31, 1991, in File No. 1-4748.)........................................... 10.30 Stock Option Agreement, dated as of May 3, 1991, between RII and Matthew B. Kearney. (Incorporated by reference to Exhibit (10)(e)(5) to RII's 10-K Annual Report for the fiscal year ended December 31, 1991, in File No. 1-4748.)........................................... 10.31 Stock Option Agreement, dated as of May 3, 1991, between RII and David G. Bowden. (Incorporated by reference to Exhibit (10)(e)(5) to RII's 10-K Annual Report for the fiscal year ended December 31, 1991, in File No. 1-4748.)........................................... 10.32 Stock Option Agreement, dated as of May 3, 1991, between RII and Thomas F. O'Donnell. (Incorporated by reference to Exhibit (10)(e)(6) to RII's 10-K Annual Report for the fiscal year ended December 31, 1991, in File No. 1-4748.)........................................... 10.33 Amendment No. 1, dated as of September 17, 1992, to Exhibit 10.30 (Incorporated by reference to Exhibit 10(e)(6) to RII's 10-K Annual Report for the fiscal year ended December 31, 1992, in File No. 1-4748).......................................................................... 10.34(a) License and Services Agreement, dated as of September 17, 1992, among the Griffin Group, RII and RIH*..................................................................................... 10.34(b) Amendment to License and Services Agreement, dated as of September 17, 1992 among the Griffin Group Inc., RII and RIH**....................................................................
10.35 License and Services Agreement, dated as of September 17, 1990, among Merv Griffin, the Griffin Group and RII. (Incorporated by reference to Exhibit 1.46 to Exhibit 35 to the Form 8 Amendment dated November 16, 1990, to the registrant's 8-K Current Report dated August 30, 1990, in File No. 1-4748.)................................................................... 10.36 Litigation Trust Agreement, dated as of September 17, 1990, among RII, RIFI, GRH, and GRI. (Incorporated by reference to Exhibit 1.46 to Exhibit 35 to the Form 8 Amendment dated November 16, 1990, to the registrant's 8-K Current Report dated August 30, 1990, in File No. 1-4748.)................. 10.37(a) Promissory Note, dated September 28, 1990, between Merv Griffin and RII. (Incorporated by reference to Exhibit 9.1B to Exhibit 35 to the Form 8 Amendment dated November 16, 1990, to the registrant's 8-K Current Report dated August 30, 1990, in File No. 1-4748.)................................ 10.37(b) Griffin Group Note. (Incorporated by reference to Exhibit 1 to Exhibit 10.34(a) to this Registration Statement.).................................. 10.37(c) Guaranty dated September 17, 1992 by Mervyn E. Griffin in favor of RII (Incorporated by reference to Exhibit 2 to Exhibit 10.34(a) to this Registration Statement.)................................................... 10.38 Letter of Credit, dated October 1, 1990, by Morgan Guaranty Trust Company of New York. (Incorporated by reference to Exhibit 9.1B to Exhibit 35 to the Form 8 Amendment dated November 16, 1990, to RII's 8-K Current Report dated August 30, 1990, in File No. 1-4748.)...................................... 10.39 Letters extending the termination date of Exhibit 10.38 (Incorporated by reference to Exhibit 10(i)(2) to RRI's 10-K Annual Report for the fiscal year ended December 31, 1992 in File No. 1-4748............................ 10.40 Indemnity Agreement, executed on September 19, 1990, between Merv Griffin and RII. (Incorporated by reference to Exhibit 9.6 to Exhibit 35 to the Form 8 Amendment dated November 16, 1990, to the registrant's 8-K Current Report dated August 30, 1990, in File No. 1-4748.)......................... 10.41 Hotel Corporation of The Bahamas Right of First Refusal. (Incorporated by reference to Exhibit (10)(n) to RII's 10-K Annual Report for the fiscal year ended December 31, 1988, in File No. 1-4748.).........................
- ------------------------ _* Previously filed. ** To be filed by amendment. II-10
EXHIBIT NUMBERS EXHIBIT PAGE - --------- ---------------------------------------------------------------------------- --------- 10.42 Service contract between Rogers & Cowan, Inc. and RII, effective July 1, 1991. (Incorporated by reference to Exhibit (10)(m) to RII's 10-K Annual Report for the fiscal year ended December 31, 1988, in File No. 1-4748.)...................................................... 10.43 Consulting agreement between Alvarez & Marsal, Inc. and RII, effective March 1, 1992 (Incorporated by reference to Exhibit 10(m)(i) to RII's 10-K Annual Report for the fiscal year ended December 31, 1992, in File No. 1-4748)............................................ 10.44 Amendment, dated September 14, 1992, to the consulting agreement between Alvarez & Marsal, Inc. and RII (Incorporated by reference to Exhibit 10(m)(2) to RII's 10-K Annual Report for the fiscal year ended December 31, 1992, in File No. 1-4748)................................. 10.45 Form of Ballot for Allowed Claims of Holders of Series A Notes and GRI Guaranty............... 10.46 Form of Ballot for Allowed Interests of Holders of RII Common Stock........................... 10.47 Form of Ballot for Allowed Interests of Holders of 1990 Stock Options......................... 10.48 Form of Master Ballot for Allowed Interests of Holders of RII Common Stock.................... 10.49 Form of Master Ballot for Allowed Claims of Holders of Series A Notes and GRI Guaranty........
10.50 Form of Ballot for Allowed Interests of Holders of Series B Notes and GRI Guaranty................................................................... 10.51 Form of Master Ballot for Allowed Claims of Holders of Series B Notes and GRI Guaranty............................................................... 10.52 Bondholders Support Agreement dated October 11, 1993 among RII, GRI, Sun International Investments, Ltd., Sun International Hotels Limited, TCW Special Credits and Fidelity Management and Research Company, concerning bondholders support*....................................................... 10.53 Letter Agreement dated October 11, 1993 among Fidelity Management and Re- search Company, TCW Special Credits, RII and Sun International Hotels Limited concerning consent rights of holders of Old Series Notes*.......... 10.54 Revised term Sheet for 11.0% Senior Secured Loan due 2002 with RIHF as issuer..................................................................... 10.55 Paradise Island Purchase Agreement dated October 11, 1993 between RII and Sun International Hotels Limited, with Exhibits and Schedules*............. 10.56 Letter Agreement dated October 19, 1993 among RII, Fidelity Management, TCW Special Credits, Sun International Hotels Limited, Sun International Investments Ltd. and GGRI regarding GGRI, Inc.*............................ 10.57 Stock Subscription Agreement dated October 11, 1993 between Sun International Investments Limited and Sun International Hotels Limited*.... 10.58 Letter Agreement dated October 15, 1993, among RII, Fidelity Management, TCW Special Credits and Sun International Hotels Limited regarding P.I. Resorts Limited*................................................................... 10.59 PIRL Standby Distribution Agreement dated October 15, 1993 between RII and PIRL....................................................................... 10.60 Letter Agreement between RII and PIRL concerning airline support services*.................................................................. 10.61 Letter Agreement concerning appointment of agent for service of process pursuant to the Standby Distribution Agreement*............................ 10.62 Letter Agreement concerning appointment of agent for service of process pursuant to this Registration Statement.................................... 10.63 Letter Agreement dated July 1, 1993 between RII and Bear Stearns & Co. Inc. for retention of services.................................................. 12.01 RII Computation of Ratio of Earnings to Fixed Charges....................... 12.02 RIH Computation of Ratio of Earnings to Fixed Charges.......................
- ------------------------ * Previously filed. II-11
EXHIBIT NUMBERS EXHIBIT PAGE - --------- ---------------------------------------------------------------------------- --------- 12.03 RII Computation of Pro Forma Ratio of Earnings to Fixed Charges............................... 12.04 RIH Computation of Pro Forma Ratio of Earnings to Fixed Charges............................... 21.01 List of the Subsidiaries of the Registrants*.................................................. 23.01 Consent of Ernst & Young...................................................................... 23.02 Consent of Gibson, Dunn & Crutcher (Incorporated by reference to exhibit 5.02)................ 23.03 Consent of Ravin, Sarasohn, Cook, Baumgarten, Fisch & Baime (Incorporated by reference to exhibit 5.02)................................................................................ 23.04 Consent of Harry B. Sands & Co. (Incorporated by reference to exhibit 5.03)................... 25.01 Statement of eligibility on Form T-1 of State Street Bank and Trust Company of Connecticut, National Association, as trustee under the New RIHF Mortgage Notes Indenture*................ 25.02 Statement of eligibility on Form T-1 of U.S. Trust Company of California, N.A., as trustee under the New RIHF Junior Mortgage Notes Indenture*..........................................
B. FINANCIAL STATEMENT SCHEDULES FINANCIAL STATEMENT SCHEDULES FOR RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES Report of Independent Auditors.......................................................... II-14 Schedule II -- Amounts Receivable from Related Parties....................... II-15 Schedule V -- Property and Equipment........................................ II-16 Schedule VI -- Accumulated Depreciation of Property and Equipment............ II-17 Schedule VIII -- Valuation Accounts............................................ II-18 Schedule X -- Supplementary Statements of Operations Information............ II-19
FINANCIAL STATEMENT SCHEDULES FOR RESORTS INTERNATIONAL HOTEL, INC. AND SUBSIDIARIES Report of Independent Auditors.......................................................... II-20 Schedule II -- Amounts Receivable from Related Parties....................... II-21 Schedule IV -- Indebtedness to Related Parties............................... II-22 Schedule V -- Property and Equipment........................................ II-23
Schedule VI -- Accumulated Depreciation of Property and Equipment............ II-24 Schedule VIII -- Valuation Accounts............................................ II-25 Schedule X -- Supplementary Statements of Operations Information............ II-26
FINANCIAL STATEMENT SCHEDULES FOR PIRL GROUP Report of Independent Auditors.......................................................... II-27 Schedule II -- Amounts Receivable from Related Parties....................... II-28 Schedule V -- Property and Equipment........................................ II-29 Schedule VI -- Accumulated Depreciation of Property and Equipment............ II-30 Schedule VIII -- Valuation Accounts............................................ II-31 Schedule X -- Supplementary Statements of Operations Information............ II-32
Financial statement schedules not included have been omitted because they are either not applicable or the required information is shown in the consolidated or combined financial statements, as applicable, or notes thereto. ITEM 22. UNDERTAKINGS (1) The undersigned registrants hereby undertake as follows: that prior to any public reoffering of the securities registered hereunder through use of a prospectus which is a part of this registration statement, by any person or party who is deemed to be an underwriter within the meaning of II-12 Rule 145(c), the issuer undertakes that such reoffering prospectus will contain the information called for in the applicable registration form with respect to reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form. (2) The registrants undertake that every prospectus (i) that is filed pursuant to paragraph (1) immediately preceding, or (ii) that purports to meet the requirements of section 10(a)(3) of the Act and is used in connection with an offering of securities subject to Rule 415, will be filed as a part of an amendment to the registration statement and will not be used until such amendment is effective, and that, for purposes of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial BONA FIDE offering thereof. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrants pursuant to the foregoing provisions, the registrants have been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrants of expenses incurred or paid by a director, officer or controlling person of the registrants in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. The undersigned registrants hereby undertake to respond to requests for information that is incorporated by reference into the prospectus pursuant to Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request. The undersigned registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective. II-13 REPORT OF INDEPENDENT AUDITORS ON FINANCIAL STATEMENT SCHEDULES The Board of Directors and Shareholders Resorts International, Inc. We have audited the consolidated financial statements of Resorts International, Inc. as of December 31, 1992 and 1991, and for each of the three years in the period ended December 31, 1992, and have issued our report thereon dated February 19, 1993 except for Note 17, as to which the date is December 29, 1993, included elsewhere in this Registration Statement. Our audits also included the financial statement schedules listed in Item 21B of this Registration Statement. These schedules are the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, the financial statement schedules referred to above, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein. ERNST & YOUNG Philadelphia, Pennsylvania February 19, 1993 II-14 SCHEDULE II RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES AMOUNTS RECEIVABLE FROM RELATED PARTIES (IN THOUSANDS OF DOLLARS)
BALANCE AT END OF BALANCE AT AMOUNTS PERIOD BEGINNING WRITTEN ---------------------- OF PERIOD ADDITIONS OFF CURRENT NOT CURRENT ----------- --------- ---------- --------- ----------- For the year ended December 31, 1992: Merv Griffin (A).................................. $ 11,000 $ 11,000 For the year ended December 31, 1991: Merv Griffin (A).................................. $ 11,000 $ 11,000 For the period September 1, 1990 through December 31, 1990: Merv Griffin (A).................................. $ 11,000 $ 11,000 For the period January 1, 1990 through August 31, 1990: Merv Griffin (A).................................. $ 11,000 $ 11,000 Griffco (B)....................................... $ 50,000 $ (50,000) $ -0- Griffco (C)....................................... $ 386 $ (386) $ -0- - ------------------------ (A) Pursuant to the Old Plan, the Company received cash and this promissory note from Merv Griffin for the purchase of RII Common Stock. This note is due on demand after September 17, 1991 and bears interest at the rate of 8% per annum. The effect of this transaction was recorded at August 31, 1990. (B) On November 17, 1988 the Company loaned $50,000,000 to Griffco under two non-interest bearing demand notes. Effective August 31, 1990, these notes were cancelled as part of the Old Plan. (C) This represented the net effect of expenditures made by the Company on behalf of Griffco, expenditures made by Griffco on behalf of the Company, and cash transfers made between the parties to settle the resulting differences. This amount was eliminated as a result of the merger of Griffco into a subsidiary of RII.
Note 2 of Notes to Consolidated Financial Statements of RII describes a change in entity and related presentation for periods presented. II-15 SCHEDULE V RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES PROPERTY AND EQUIPMENT (IN THOUSANDS OF DOLLARS)
BALANCE AT BEGINNING BASIS ACCUMULATED BALANCE AT OF ADDITIONS RETIREMENTS ADJUSTMENT DEPRECIATION END OF PERIOD AT COST OR SALES (D) RECLASS (D) OTHER PERIOD -------- --------- ----------- ---------- ----------- ------------ ---------- For the year ended December 31, 1992: Land and land rights............. $246,520 $ (136) $ (2,484)(A) $ 243,900 Land improvements and utilities....................... 21,942 $ 240 (94) 431(B) 22,519 Hotels and other buildings....... 157,312 3,892 (8) 9,084(B) 170,250 (30)(C) Furniture, machinery and equipment....................... 60,700 4,315 (451) 3,436(B) 67,693 (307)(C) Construction in progress......... 2,796 11,438 (12,951)(B) 1,215 (68)(C) -------- --------- ----------- ------------ ---------- $489,270 $ 19,885 $ (689) $ (2,889) $ 505,577 -------- --------- ----------- ------------ ---------- -------- --------- ----------- ------------ ---------- For the year ended December 31, 1991: Land and land rights............. $246,610 $ (90) $ 246,520 Land improvements and utilities....................... 21,467 $ 15 $ 460(B) 21,942 Hotels and other buildings....... 146,309 4,382 (486) 7,129(B) 157,312 (22)(C) Furniture, machinery and equipment....................... 43,224 8,190 (206) 10,144(B) 60,700 (652)(C) Construction in progress......... 6,366 14,163 (17,733)(B) 2,796 -------- --------- ----------- ------------ ---------- $463,976 $ 26,750 $ (782) $ (674) $ 489,270 -------- --------- ----------- ------------ ---------- -------- --------- ----------- ------------ ---------- For the period September 1, 1990 through December 31, 1990: Land and land rights............. $247,409 $ (124) $ (675)(C) $ 246,610 Land improvements and utilities....................... 21,790 (337) 14(B) 21,467 Hotels and other buildings....... 143,266 $ 1,620 (218) 1,731(B) 146,309 (90)(C) Furniture, machinery and equipment....................... 35,836 2,320 (4,535) 9,722(B) 43,224 (119)(C) Construction in progress......... 12,110 5,723 (11,467)(B) 6,366 -------- --------- ----------- ------------ ---------- $460,411 $ 9,663 $ (5,214) $ (884) $ 463,976 -------- --------- ----------- ------------ ---------- -------- --------- ----------- ------------ ---------- For the period January 1, 1990 through August 31, 1990: Land and land rights............. $276,989 $ (3,532) $ (26,037) $ (11) $ 247,409 Land improvements and utilities....................... 27,657 (2,705) (3,205) $ 43(B) 21,790 Hotels and other buildings....... 247,329 $ 7,481 (97,937) (20,141) 6,588(B) 143,266 (54)(C) Furniture, machinery and equipment....................... 77,395 6,759 (2,599) (23,248) (28,609) 6,766(B) 35,836 (628)(C) Construction in progress......... 18,531 10,181 (3,205) (13,397)(B) 12,110 -------- --------- ----------- ---------- ----------- ------------ ---------- $647,901 $ 24,421 $ (6,131) $ (153,132) $ (51,966) $ (682) $ 460,411 -------- --------- ----------- ---------- ----------- ------------ ---------- -------- --------- ----------- ---------- ----------- ------------ ---------- - ------------------------ (A) Basis adjustment. (B) Transfer of completed projects out of construction in progress. (C) Reclassification out of property and equipment. (D) In accordance with fresh start accounting, accumulated depreciation was reclassified to property and equipment, and net property and equipment was restated to its estimated fair value as of August 31, 1990.
Note 2 of Notes to Consolidated Financial Statements of RII describes a change in entity and related presentation for periods presented. II-16 SCHEDULE VI RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES ACCUMULATED DEPRECIATION OF PROPERTY AND EQUIPMENT (IN THOUSANDS OF DOLLARS)
RECLASS TO BALANCE AT ADDITIONS PROPERTY AND BALANCE AT BEGINNING CHARGED TO RETIREMENTS EQUIPMENT END OF OF PERIOD EXPENSE OR SALES (A) PERIOD ---------- ---------- ----------- ------------ ---------- For the year ended December 31, 1992: Land improvements and utilities....... $ 2,746 $ 1,797 $ 4,543 Hotels and other buildings............ 11,448 9,271 20,719 Furniture, machinery and equipment.... 15,676 14,254 $ (431) 29,499 ---------- ---------- ----------- ---------- $ 29,870 $ 25,322 $ (431) $ 54,761 ---------- ---------- ----------- ---------- ---------- ---------- ----------- ---------- For the year ended December 31, 1991: Land improvements and utilities....... $ 651 $ 2,095 $ 2,746 Hotels and other buildings............ 2,561 8,898 $ (11) 11,448 Furniture, machinery and equipment.... 2,946 12,821 (91) 15,676 ---------- ---------- ----------- ---------- $ 6,158 $ 23,814 $ (102) $ 29,870 ---------- ---------- ----------- ---------- ---------- ---------- ----------- ---------- For the period September 1, 1990 through December 31, 1990: Land improvements and utilities....... $ 662 $ (11) $ 651 Hotels and other buildings............ 2,568 (7) 2,561 Furniture, machinery and equipment.... 3,002 (56) 2,946 ---------- ---------- ----------- ---------- $ -0- $ 6,232 $ (74) $ 6,158 ---------- ---------- ----------- ---------- ---------- ---------- ----------- ---------- For the period January 1, 1990 through August 31, 1990: Land rights........................... $ 11 $ (11) Land improvements and utilities....... 2,230 $ 975 (3,205) Hotels and other buildings............ 12,530 7,611 (20,141) Furniture, machinery and equipment.... 18,144 11,461 $ (996) (28,609) ---------- ---------- ----------- ------------ ---------- $ 32,915 $ 20,047 $ (996) $ (51,966) $ -0- ---------- ---------- ----------- ------------ ---------- ---------- ---------- ----------- ------------ ---------- - ------------------------ (A) In accordance with fresh start accounting, accumulated depreciation at August 31, 1990 was reclassified to property and equipment.
Note 2 of Notes to Consolidated Financial Statements of RII describes a change in entity and related presentation for periods presented. II-17 SCHEDULE VIII RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES VALUATION ACCOUNTS (IN THOUSANDS OF DOLLARS)
ADDITIONS BALANCE AT CHARGED TO BALANCE AT BEGINNING COSTS AND END OF OF PERIOD EXPENSES DEDUCTIONS (A) OTHER (B) PERIOD ----------- ----------- -------------- ----------- ----------- For the year ended December 31, 1992: Allowance for doubtful receivables: Gaming........................................ $ 8,169 $ 3,098 $ (4,315) $ 6,952 Other......................................... 1,709 949 (1,446) 1,212 ----------- ----------- ------- ----------- $ 9,878 $ 4,047 $ (5,761) $ 8,164 ----------- ----------- ------- ----------- ----------- ----------- ------- ----------- For the year ended December 31, 1991: Allowance for doubtful receivables: Gaming........................................ $ 8,397 $ 5,397 $ (5,625) $ 8,169 Other......................................... 1,881 976 (1,148) 1,709 ----------- ----------- ------- ----------- $ 10,278 $ 6,373 $ (6,773) $ 9,878 ----------- ----------- ------- ----------- ----------- ----------- ------- ----------- For the period September 1, 1990 through December 31, 1990: Allowance for doubtful receivables: Gaming........................................ $ 9,834 $ 1,289 $ (2,726) $ 8,397 Other......................................... 2,483 403 (1,005) 1,881 ----------- ----------- ------- ----------- $ 12,317 $ 1,692 $ (3,731) $ 10,278 ----------- ----------- ------- ----------- ----------- ----------- ------- ----------- For the period January 1, 1990 through August 31, 1990: Allowance for doubtful receivables: Gaming........................................ $ 8,136 $ 2,646 $ (2,059) $ 1,111 $ 9,834 Other......................................... 1,383 884 (625) 841 2,483 ----------- ----------- ------- ----------- ----------- $ 9,519 $ 3,530 $ (2,684) $ 1,952 $ 12,317 ----------- ----------- ------- ----------- ----------- ----------- ----------- ------- ----------- ----------- - ------------------------ (A) Write-off of uncollectible accounts, net of recoveries. (B) Adjustment in connection with the revaluation of the Company's assets and liabilities as of August 31, 1990.
Note 2 of Notes to Consolidated Financial Statements of RII describes a change in entity and related presentation for periods presented. II-18 SCHEDULE X RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES SUPPLEMENTARY STATEMENTS OF OPERATIONS INFORMATION (IN THOUSANDS OF DOLLARS)
FOR THE YEAR ENDED DECEMBER 31, -------------------------------------------- 1990 ---------------------- THROUGH FROM AUGUST 31 SEPTEMBER 1 1991 1992 --------- ----------- --------- --------- Maintenance and repairs.......................................... $ 11,709 $ 6,007 $ 18,845 $ 20,843 Gaming taxes..................................................... $ 16,977 $ 6,463 $ 24,376 $ 26,053 Property taxes................................................... $ 4,950 $ 2,842 $ 9,193 $ 9,279 Advertising...................................................... $ 6,081 $ 4,570 $ 12,438 $ 11,019
Note 2 of Notes to Consolidated Financial Statements of RII describes a change in entity and related presentation for periods presented. II-19 REPORT OF INDEPENDENT AUDITORS ON FINANCIAL STATEMENT SCHEDULES The Board of Directors and Shareholders of Resorts International, Inc. Resorts International Hotel, Inc. We have audited the consolidated financial statements of Resorts International Hotel, Inc. as of December 31, 1992 and 1991, and for each of the three years in the period ended December 31, 1992, and have issued our report thereon dated February 19, 1993 except for Note 14, as to which the date is December 29, 1993, included elsewhere in this Registration Statement. Our audits also included the financial statement schedules listed in Item 21B of this Registration Statement. These schedules are the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, the financial statement schedules referred to above, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein. ERNST & YOUNG Philadelphia, Pennsylvania February 19, 1993 II-20 SCHEDULE II RESORTS INTERNATIONAL HOTEL, INC. AND SUBSIDIARIES AMOUNTS RECEIVABLE FROM RELATED PARTIES (IN THOUSANDS OF DOLLARS)
BALANCE AT AMOUNTS BALANCE AT END BEGINNING WRITTEN OF PERIOD -- OF PERIOD ADDITIONS OFF CURRENT ----------- --------- ---------- ---------------- For the year ended December 31, 1992: RIB (A).................................................. $ 50,000 $ 50,000 For the year ended December 31, 1991: RIB (A).................................................. $ 50,000 $ 50,000 For the period September 1, 1990 through December 31, 1990: RIB (A).................................................. $ 50,000 $ 50,000 For the period January 1, 1990 through August 31, 1990: RIB (A).................................................. $ 50,000 $ 50,000 Griffco (B).............................................. $ 35,000 $ (35,000) $ -0- - ------------------------ (A) In 1988 RIH loaned $50,000,000 to RIB, an indirect, wholly owned subsidiary of RII, in exchange for a promissory note. Such note is payable on demand and bears interest at 13 1/2% per annum. Interest is payable semi-annually on May 1 and November 1 of each year. (B) In 1988 RIH loaned $35,000,000 to Griffco, RII's then parent. Such note was payable on demand and non-interest bearing. Effective August 31, 1990 this note was cancelled as part of the Old Plan.
Note 2 of Notes to Consolidated Financial Statements of RIH describes a change in entity and related presentation for periods presented. II-21 SCHEDULE IV RESORTS INTERNATIONAL HOTEL, INC. AND SUBSIDIARIES INDEBTEDNESS TO RELATED PARTIES (IN THOUSANDS OF DOLLARS)
BALANCE AT BALANCE AT BEGINNING END OF OF PERIOD ADDITIONS DEDUCTIONS PERIOD ----------- --------- --------------- ----------- For the year ended December 31, 1992: GRI..................................................... $ 325,000 $ 325,000 For the year ended December 31, 1991: GRI..................................................... $ 325,000 $ 325,000 For the period September 1, 1990 through December 31, 1990: GRI..................................................... $ 325,000 $ 325,000 For the period January 1, 1990 through August 31, 1990: GRI..................................................... $ 355,231 $ (30,231)(A) $ 325,000 - ------------------------ (A) Interest receivable was reclassified to long-term debt at the end of 1989 as the terms of these notes mirrored the terms of GRI's public indebtedness, and there was a moratorium on the payment of interest on GRI's public indebtedness during the period GRI was involved in bank- ruptcy proceedings. This interest was written off as of the Old Effective Date of the Old Plan.
Note 2 of Notes to Consolidated Financial Statements of RIH describes a change in entity and related presentation for periods presented. II-22 SCHEDULE V RESORTS INTERNATIONAL HOTEL, INC. AND SUBSIDIARIES PROPERTY AND EQUIPMENT (IN THOUSANDS OF DOLLARS)
BALANCE AT BEGINNING ACCUMULATED BALANCE AT OF ADDITIONS RETIREMENTS BASIS DEPRECIATION END OF PERIOD AT COST OR SALES ADJUSTMENT(B) RECLASS(B) OTHER(A) PERIOD -------- --------- ----------- ------------- ----------- -------- ---------- For the year ended December 31, 1992: Land and land rights............. $53,250 $ 53,250 Land improvements................ 97 $ 33 130 Hotel and other buildings........ 80,718 3,794 $ (8) $ 8,731 93,235 Furniture, machinery and equipment....................... 26,665 4,203 (9) 309 31,168 Construction in progress......... 1,848 7,518 (9,040) 326 -------- --------- ----------- -------- ---------- $162,578 $ 15,548 $ (17) $ -0- $ 178,109 -------- --------- ----------- -------- ---------- -------- --------- ----------- -------- ---------- For the year ended December 31, 1991: Land and land rights............. $53,250 $ 53,250 Land improvements................ 82 $ 15 97 Hotel and other buildings........ 70,643 4,356 $ (346) $ 6,065 80,718 Furniture, machinery and equipment....................... 14,135 8,175 4,355 26,665 Construction in progress......... 2,080 10,188 (10,420) 1,848 -------- --------- ----------- -------- ---------- $140,190 $ 22,734 $ (346) $ -0- $ 162,578 -------- --------- ----------- -------- ---------- -------- --------- ----------- -------- ---------- For the period September 1, 1990 through December 31, 1990: Land and land rights............. $53,250 $ 53,250 Land improvements................ 82 82 Hotel and other buildings........ 67,890 $ 1,620 $ (40) $ 1,173 70,643 Furniture, machinery and equipment....................... 11,828 2,317 (78) 68 14,135 Construction in progress......... 1,950 1,371 (1,241) 2,080 -------- --------- ----------- -------- ---------- $135,000 $ 5,308 $ (118) $ -0- $ 140,190 -------- --------- ----------- -------- ---------- -------- --------- ----------- -------- ---------- For the period January 1, 1990 through August 31, 1990: Land and land rights............. $54,607 $ (1,346) $ (11) $ 53,250 Land improvements................ 2,086 (1,804) (211) $ 11 82 Hotel and other buildings........ 141,915 $ 7,481 (77,180) (9,977) 5,651 67,890 Furniture, machinery and equipment....................... 39,140 6,742 $ (520) (19,519) (15,616) 1,601 11,828 Construction in progress......... 4,108 5,105 (7,263) 1,950 -------- --------- ----------- ------------- ----------- -------- ---------- $241,856 $ 19,328 $ (520) $ (99,849) $ (25,815) $ -0- $ 135,000 -------- --------- ----------- ------------- ----------- -------- ---------- -------- --------- ----------- ------------- ----------- -------- ---------- - ------------------------ (A) Transfer of completed projects out of construction in progress. (B) In accordance with fresh start accounting, accumulated depreciation was reclassified to property and equipment, and net property and equipment was restated to its estimated fair value as of August 31, 1990.
Note 2 of Notes to Consolidated Financial Statements of RIH describes a change in entity and related presentation for periods presented. II-23 SCHEDULE VI RESORTS INTERNATIONAL HOTEL, INC. AND SUBSIDIARIES ACCUMULATED DEPRECIATION OF PROPERTY AND EQUIPMENT (IN THOUSANDS OF DOLLARS)
ADDITIONS BALANCE AT CHARGED RECLASS TO BALANCE AT BEGINNING TO RETIREMENTS PROPERTY AND END OF OF PERIOD EXPENSE OR SALES OTHER EQUIPMENT(A) PERIOD ---------- --------- ----------- ----- ------------- ---------- For the year ended December 31, 1992: Land improvements................ $ 11 $ 13 $ 24 Hotel and other buildings........ 5,059 4,636 9,695 Furniture, machinery and equipment....................... 5,957 6,753 $ (9) 12,701 ---------- --------- ----------- ---------- $ 11,027 $ 11,402 $ (9) $ 22,420 ---------- --------- ----------- ---------- ---------- --------- ----------- ---------- For the year ended December 31, 1991: Land improvements................ $ 3 $ 8 $ 11 Hotel and other buildings........ 1,021 4,049 $ (11) 5,059 Furniture, machinery and equipment....................... 930 5,027 5,957 ---------- --------- ----------- ---------- $ 1,954 $ 9,084 $ (11) $ 11,027 ---------- --------- ----------- ---------- ---------- --------- ----------- ---------- For the period September 1, 1990 through December 31, 1990: Land improvements................ $ 3 $ 3 Hotel and other buildings........ 1,001 $ 20 1,021 Furniture, machinery and equipment....................... 898 $ (37) 69 930 ---------- --------- ----------- ----- ---------- $ -0- $ 1,902 $ (37) $ 89 $ 1,954 ---------- --------- ----------- ----- ---------- ---------- --------- ----------- ----- ---------- For the period January 1, 1990 through August 31, 1990: Land rights...................... $ 11 $ (11) Land improvements................ 139 $ 72 (211) Hotel and other buildings........ 6,079 3,898 (9,977) Furniture, machinery and equipment....................... 9,196 6,750 $ (330) (15,616) ---------- --------- ----------- ------------- ---------- $ 15,425 $ 10,720 $ (330) $ (25,815) $ -0- ---------- --------- ----------- ------------- ---------- ---------- --------- ----------- ------------- ---------- - ------------------------ (A) In accordance with fresh start accounting, accumulated depreciation at August 31, 1990 was reclassified to property and equipment.
Note 2 of Notes to Consolidated Financial Statements of RIH describes a change in entity and related presentation for periods presented. II-24 SCHEDULE VIII RESORTS INTERNATIONAL HOTEL, INC. AND SUBSIDIARIES VALUATION ACCOUNTS (IN THOUSANDS OF DOLLARS)
ADDITIONS BALANCE AT CHARGED TO BALANCE AT BEGINNING COSTS AND END OF OF PERIOD EXPENSES DEDUCTIONS (A) OTHER (B) PERIOD ----------- ----------- -------------- ----------- ----------- For the year ended December 31, 1992: Allowance for doubtful receivables: Gaming......................................... $ 5,326 $ 1,334 $ (2,460) $ 4,200 Other.......................................... 327 80 (359) 48 ----------- ----------- ------- ----------- $ 5,653 $ 1,414 $ (2,819) $ 4,248 ----------- ----------- ------- ----------- ----------- ----------- ------- ----------- For the year ended December 31, 1991: Allowance for doubtful receivables: Gaming......................................... $ 5,496 $ 3,328 $ (3,498) $ 5,326 Other.......................................... 221 152 (46) 327 ----------- ----------- ------- ----------- $ 5,717 $ 3,480 $ (3,544) $ 5,653 ----------- ----------- ------- ----------- ----------- ----------- ------- ----------- For the period September 1, 1990 through December 31, 1990: Allowance for doubtful receivables: Gaming......................................... $ 5,642 $ 688 $ (834) $ 5,496 Other.......................................... 197 113 (89) 221 ----------- ----------- ------- ----------- $ 5,839 $ 801 $ (923) $ 5,717 ----------- ----------- ------- ----------- ----------- ----------- ------- ----------- For the period January 1, 1990 through August 31, 1990: Allowance for doubtful receivables: Gaming......................................... $ 4,814 $ 1,165 $ (812) $ 475 $ 5,642 Other.......................................... 101 142 (148) 102 197 ----------- ----------- ------- ----- ----------- $ 4,915 $ 1,307 $ (960) $ 577 $ 5,839 ----------- ----------- ------- ----- ----------- ----------- ----------- ------- ----- ----------- - ------------------------ (A) Write-off of uncollectible accounts, net of recoveries. (B) Adjustment in connection with the revaluation of RIH's assets and liabilities as of August 31, 1990.
Note 2 of Notes to Consolidated Financial Statements of RIH describes a change in entity and related presentation for periods presented. II-25 SCHEDULE X RESORTS INTERNATIONAL HOTEL, INC. AND SUBSIDIARIES SUPPLEMENTARY STATEMENTS OF OPERATIONS INFORMATION (IN THOUSANDS OF DOLLARS)
FOR THE YEAR ENDED DECEMBER 31, -------------------------------------------- 1990 ---------------------- THROUGH FROM AUGUST 31 SEPTEMBER 1 1991 1992 --------- ----------- --------- --------- Maintenance and repairs.......................................... $ 5,205 $ 2,692 $ 8,585 $ 9,480 Gaming taxes..................................................... $ 11,706 $ 5,465 $ 18,223 $ 19,642 Property taxes................................................... $ 3,866 $ 1,972 $ 5,966 $ 6,113 Advertising...................................................... $ 3,637 $ 2,222 $ 8,031 $ 6,986
Note 2 of Notes to Consolidated Financial Statements of RIH describes a change in entity and related presentation for periods presented. II-26 REPORT OF INDEPENDENT AUDITORS ON FINANCIAL STATEMENT SCHEDULES The Board of Directors and Shareholders of Resorts International, Inc. PIRL Group We have audited the combined financial statements of PIRL Group as of December 31, 1992 and 1991, and for each of the three years in the period ended December 31, 1992, and have issued our report thereon dated April 23, 1993 except for Note 13, as to which the date is December 29, 1993, included elsewhere in this Registration Statement. Our audits also included the financial statement schedules listed in Item 21B of this Registration Statement. These schedules are the responsibility of PIRL Group's management. Our responsibility is to express an opinion based on our audits. In our opinion, the financial statement schedules referred to above, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein. ERNST & YOUNG Philadelphia, Pennsylvania April 23, 1993 II-27 SCHEDULE II PIRL GROUP AMOUNTS RECEIVABLE FROM RELATED PARTIES (IN THOUSANDS OF DOLLARS)
DEDUCTIONS BALANCE AT BALANCE AT -------------------------- END OF PERIOD BEGINNING AMOUNTS AMOUNTS -------------------------- OF PERIOD ADDITIONS COLLECTED WRITTEN OFF CURRENT NOT CURRENT ----------- ------------- ----------- ------------- ----------- ------------- For the year ended December 31, 1992: George R. Myers (A)........................ $ 83 $ 19 $ (102) -0- -0- For the year ended December 31, 1991: George R. Myers (A)........................ $ 41 $ 42 $ 83 George R. Myers (B)........................ $ 298 $ (250) $ (48) -0- -0- For the period September 1, 1990 through December 31, 1990: George R. Myers (A)........................ $ 41 $ 41 George R. Myers (B)........................ $ 298 $ 38 $ 260 For the period January 1, 1990 through August 31, 1990: George R. Myers (B)........................ $ 323 $ (25) $ 38 $ 260 - ------------------------ (A) This represents purchases and/or advances made on behalf of Mr. Myers, President of RIB through December 1991, in connection with the construction of his home on Paradise Island. This receivable was offset against amounts payable to Mr. Myers in conjunction with his termination settlement in 1992. (B) This receivable resulted from the sale of property on Paradise Island in 1987 to a corporation controlled by Mr. Myers. This receivable was secured by a mortgage on the property. $125,000 of the original receivable of $350,000 was to be repaid based on employment service credit at the rate of $25,000 per year for five years beginning in 1988. The remainder of the receivable originally bore interest at the rate of 10% per annum and required monthly payments; however, in 1988 the Company agreed to suspend principal and interest payments and negotiate new terms. Of the balance outstanding at January 1, 1990, $225,000 was repaid in cash and $50,000 was repaid in employment service credits.
Note 2 of Notes to Combined Financial Statements of PIRL Group describes a change in entity and related presentation for periods presented. II-28 SCHEDULE V PIRL GROUP PROPERTY AND EQUIPMENT (IN THOUSANDS OF DOLLARS)
BALANCE AT BASIS ACCUMULATED BALANCE AT BEGINNING ADDITIONS RETIREMENTS ADJUSTMENT DEPRECIATION END OF OF PERIOD AT COST OR SALES (D) RECLASS (D) OTHER PERIOD ---------- --------- ----------- ----------- ------------ ------------ ---------- For the year ended December 31, 1992: Land and land rights............. $ 80,385 $ (136) $ 80,249 Land improvements and utilities....................... 21,845 $ 207 (94) $ 431(A) 22,389 Hotels and other buildings....... 75,927 98 353(A) 76,348 (30)(B) Furniture, machinery and equipment....................... 33,732 96 (442) 3,117(A) 36,196 (307)(B) Construction in progress......... 948 3,920 (3,901)(A) 889 (68)(B) (10)(C) ---------- --------- ----------- ------------ ---------- $ 212,837 $ 4,321 $ (672) $ (415) $ 216,071 ---------- --------- ----------- ------------ ---------- ---------- --------- ----------- ------------ ---------- For the year ended December 31, 1991: Land and land rights............. $ 80,385 $ 80,385 Land improvements and utilities....................... 21,385 $ 460(A) 21,845 Hotels and other buildings....... 74,999 $ 26 $ (140) 1,064(A) 75,927 (22)(B) Furniture, machinery and equipment....................... 28,817 6 (200) 5,761(A) 33,732 (652)(B) Construction in progress......... 4,286 3,975 (7,285)(A) 948 (28)(C) ---------- --------- ----------- ------------ ---------- $ 209,872 $ 4,007 $ (340) $ (702) $ 212,837 ---------- --------- ----------- ------------ ---------- ---------- --------- ----------- ------------ ---------- For the period September 1, 1990 through December 31, 1990: Land and land rights............. $ 81,150 $ (90) $ (675)(B) $ 80,385 Land improvements and utilities....................... 21,708 (337) 14(A) 21,385 Hotels and other buildings....... 74,647 (116) 558(A) 74,999 (90)(B) Furniture, machinery and equipment....................... 22,874 $ 3 (3,590) 9,649(A) 28,817 (119)(B) Construction in progress......... 10,160 4,352 (10,221)(A) 4,286 (5)(C) ---------- --------- ----------- ------------ ---------- $ 210,539 $ 4,355 $ (4,133) $ (889) $ 209,872 ---------- --------- ----------- ------------ ---------- ---------- --------- ----------- ------------ ---------- For the period January 1, 1990 through August 31, 1990: Land and land rights............. $ 85,043 $ (3,532) $ (361) $ 81,150 Land improvements and utilities....................... 25,571 (901) $ (2,994) $ 32(A) 21,708 Hotels and other buildings....... 101,586 (18,189) (9,633) 937(A) 74,647 (54)(B) Furniture, machinery and equipment....................... 36,671 (1,811) (3,757) (12,724) 5,122(A) 22,874 (628)(B) 1(C) Construction in progress......... 14,423 $ 5,076 (3,205) (6,091)(A) 10,160 (43)(C) ---------- --------- ----------- ----------- ------------ ------------ ---------- $ 263,294 $ 5,076 $ (5,343) $ (26,413) $ (25,351) $ (724) $ 210,539 ---------- --------- ----------- ----------- ------------ ------------ ---------- ---------- --------- ----------- ----------- ------------ ------------ ---------- - ---------------------------------- (A) Transfer of completed projects out of construction in progress. (B) Reclassification out of property and equipment. (C) Transfers (to) from affiliates. (D) In accordance with fresh start accounting, accumulated depreciation was reclassified to property and equipment, and net property and equipment was restated to its estimated fair value as of August 31, 1990.
Note 2 of Notes to Combined Financial Statements of PIRL Group describes a change in entity and related presentation for periods presented. II-29 SCHEDULE VI PIRL GROUP ACCUMULATED DEPRECIATION OF PROPERTY AND EQUIPMENT (IN THOUSANDS OF DOLLARS)
ADDITIONS BALANCE AT CHARGED RECLASS TO BALANCE AT BEGINNING TO RETIREMENTS PROPERTY AND END OF OF PERIOD EXPENSE OR SALES EQUIPMENT (A) PERIOD ----------- --------- ------------- ------------- ----------- For the year ended December 31, 1992: Land improvements and utilities................ $ 2,735 $ 1,784 $ 4,519 Hotels and other buildings..................... 6,332 4,595 10,927 Furniture, machinery and equipment............. 9,575 7,413 $ (421) 16,567 ----------- --------- ------ ----------- $ 18,642 $ 13,792 $ (421) $ 32,013 ----------- --------- ------ ----------- ----------- --------- ------ ----------- For the year ended December 31, 1991: Land improvements and utilities................ $ 648 $ 2,087 $ 2,735 Hotels and other buildings..................... 1,524 4,808 6,332 Furniture, machinery and equipment............. 1,954 7,710 $ (89) 9,575 ----------- --------- ------ ----------- $ 4,126 $ 14,605 $ (89) $ 18,642 ----------- --------- ------ ----------- ----------- --------- ------ ----------- For the period September 1, 1990 through December 31, 1990: Land improvements and utilities................ $ 659 $ (11) $ 648 Hotels and other buildings..................... 1,531 (7) 1,524 Furniture, machinery and equipment............. 2,064 (110) 1,954 ----------- --------- ------ ----------- $ -0- $ 4,254 $ (128) $ 4,126 ----------- --------- ------ ----------- ----------- --------- ------ ----------- For the period January 1, 1990 through August 31, 1990: Land improvements and utilities................ $ 2,091 $ 903 $ (2,994) Hotels and other buildings..................... 6,114 3,519 (9,633) Furniture, machinery and equipment............. 8,649 4,541 $ (466) (12,724) ----------- --------- ------ ------------- ----------- $ 16,854 $ 8,963 $ (466) $ (25,351) $ -0- ----------- --------- ------ ------------- ----------- ----------- --------- ------ ------------- ----------- - ------------------------ (A) In accordance with fresh start accounting, accumulated depreciation at August 31, 1990 was reclassified to property and equipment.
Note 2 of Notes to Combined Financial Statements of PIRL Group describes a change in entity and related presentation for periods presented. II-30 SCHEDULE VIII PIRL GROUP VALUATION ACCOUNTS (IN THOUSANDS OF DOLLARS)
ADDITIONS BALANCE AT CHARGED TO BALANCE AT BEGINNING COSTS AND END OF OF PERIOD EXPENSES DEDUCTIONS (A) OTHER (B) PERIOD ----------- ----------- -------------- ----------- ----------- For the year ended December 31, 1992: Allowance for doubtful receivables: Gaming........................................ $ 2,843 $ 1,764 $ (1,855) $ 2,752 Other......................................... 1,382 869 (1,087) 1,164 ----------- ----------- ------- ----------- $ 4,225 $ 2,633 $ (2,942) $ 3,916 ----------- ----------- ------- ----------- ----------- ----------- ------- ----------- For the year ended December 31, 1991: Allowance for doubtful receivables: Gaming........................................ $ 2,901 $ 2,069 $ (2,127) $ 2,843 Other......................................... 1,590 824 (1,032) 1,382 ----------- ----------- ------- ----------- $ 4,491 $ 2,893 $ (3,159) $ 4,225 ----------- ----------- ------- ----------- ----------- ----------- ------- ----------- For the period September 1, 1990 through December 31, 1990: Allowance for doubtful receivables: Gaming........................................ $ 4,192 $ 601 $ (1,892) $ 2,901 Other......................................... 2,104 290 (804) 1,590 ----------- ----------- ------- ----------- $ 6,296 $ 891 $ (2,696) $ 4,491 ----------- ----------- ------- ----------- ----------- ----------- ------- ----------- For the period January 1, 1990 through August 31, 1990: Allowance for doubtful receivables: Gaming........................................ $ 3,322 $ 1,481 $ (1,247) $ 636 $ 4,192 Other......................................... 1,240 718 (593) 739 2,104 ----------- ----------- ------- ----------- ----------- $ 4,562 $ 2,199 $ (1,840) $ 1,375 $ 6,296 ----------- ----------- ------- ----------- ----------- ----------- ----------- ------- ----------- ----------- - ------------------------ (A) Write-off of uncollectible accounts, net of recoveries. (B) Adjustment in connection with the revaluation of PIRL Group's assets and liabilities as of August 31, 1990.
Note 2 of Notes to Combined Financial Statements of PIRL Group describes a change in entity and related presentation for periods presented. II-31 SCHEDULE X PIRL GROUP SUPPLEMENTARY STATEMENTS OF OPERATIONS INFORMATION (IN THOUSANDS OF DOLLARS)
FOR THE YEAR ENDED DECEMBER 31, ---------------------------------------------- 1990 ------------------------ THROUGH FROM AUGUST 31 SEPTEMBER 1 1991 1992 ----------- ----------- --------- --------- Maintenance and repairs............................................ $ 6,371 $ 3,261 $ 9,946 $ 11,156 Gaming taxes....................................................... $ 5,271 $ 998 $ 6,153 $ 6,411 Property taxes..................................................... $ 134 $ 429 $ 1,732 $ 1,670 Advertising........................................................ $ 2,444 $ 2,348 $ 4,407 $ 4,033
Note 2 of Notes to Combined Financial Statements of PIRL Group describes a change in entity and related presentation for periods presented. II-32 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrants have duly caused this Amendment to the registration statement to be signed on their behalf by the undersigned, thereunto duly authorized, in the City of Atlantic City, State of New Jersey, on , 199 . RESORTS INTERNATIONAL, INC. By ___________________________________ Christopher D. Whitney Executive Vice President and Chief of Staff RESORTS INTERNATIONAL HOTEL, INC. By ___________________________________ Christopher D. Whitney Executive Vice President and Chief of Staff RESORTS INTERNATIONAL HOTEL FINANCING, INC. By ___________________________________ Christopher D. Whitney President P. I. RESORTS LIMITED By ___________________________________ Christopher D. Whitney President Pursuant to the requirements of the Securities Act of 1933, this Amendment to the registration statement has been signed by the following persons in the capacities indicated on , 199 . RESORTS INTERNATIONAL, INC. By Merv Griffin Chairman of the Board By Antonio C. Alvarez II Director By Warren Cowan Director
II-33 By Thomas E. Gallagher Director By Joseph G. Kordsmeier Director By Paul C. Sheeline Director Executive Vice President and By Chief of Staff (Principal Christopher D. Whitney Executive Officer) Executive Vice President -- By Finance and Chief Financial Matthew B. Kearney Officer (Principal Executive and Financial Officer) Vice President -- Controller, By Chief Accounting Officer and David G. Bowden Assistant Secretary (Principal Accounting Officer)
RESORTS INTERNATIONAL HOTEL FINANCING, INC. By Director and President Christopher D. Whitney (Principal Executive Officer) Director, Executive Vice President -- Finance and Chief By Financial Officer (Principal Matthew B. Kearney Financial and Accounting Officer)
RESORTS INTERNATIONAL HOTEL, INC. Director, Executive Vice By President and Chief of Staff Christopher D. Whitney (Principal Executive Officer) Director, Executive Vice President and Chief Financial By Officer (Principal Executive, Matthew B. Kearney Financial and Accounting Officer)
II-34 P. I. RESORTS LIMITED By Director and President Christopher D. Whitney (Principal Executive Officer) Director, Vice President -- By Finance and Chief Financial Matthew B. Kearney Officer (Principal Financial and Accounting Officer)
II-35 EXHIBIT INDEX
EXHIBIT NUMBERS EXHIBIT PAGE - ----------- ---------------------------------------------------------------------------------------------- --------- 2.01 Plan of Reorganization. (Incorporated by reference to Appendix A of the Information Statement/Prospectus included in this Registration Statement.)............................... 3.01 Form of proposed Amended and Restated Certificate of Incorporation of RII. (Incorporated by reference to Appendix C of the Information Statement/Prospectus included in this Registration Statement.).................................................................................. 3.02 Form of proposed Amended and Restated By-Laws of RII. (Incorporated by reference to Appendix D of the Information Statement/Prospectus included in this Registration Statement.)............ 3.03 Restated Certificate of Incorporation of RII. (Incorporated by reference to Exhibit (3)(a) to RII's Form 10-K Annual Report for the fiscal year ended December 31, 1990, in File No. 1-4748.)..................................................................................... 3.04 By-laws, as amended, of RII. (Incorporated by reference to Exhibit (4)(d) to RII's Form 10-Q Quarterly Report for the quarter ended September 30, 1990, in File No. 1-4748.).............. 3.05 Certificate of Incorporation of RIH*.......................................................... 3.06 By-laws of RIH*...............................................................................
3.07 Certificate of Incorporation of RIHF*....................................... 3.08 By-laws of RIHF............................................................. 3.09 Amended and Restated Articles of Association of PIRL........................ 4.01 See Exhibits 3.01 and 3.02 as to the rights of holders of RII Common Stock and RII Class B Common Stock after giving effect to the Restructuring...... 4.02 See Exhibits 3.03 and 3.04 as to the rights of holders of RII Common Stock prior to giving effect to the Restructuring................................ 4.03 See Exhibit 3.09 as to the rights of holders of PIRL Common Stock........... 4.04 Form of Indenture among RIHF, as issuer, RIH, as guarantor, and State Street Bank and Trust Company of Connecticut, National Association, as trustee, with respect to RIHF 11% Mortgage Notes due 2003........................... 4.05 Form of Indenture between RIHF, as issuer, RIH, as guarantor, and U.S. Trust Company of California, N.A., as trustee, with respect to RIHF 11.375% Junior Mortgage Notes due 2004............................................. 4.06 Indenture dated as of September 14, 1990, between RII and Chemical Bank (successor to Manufacturers Hanover Trust Company), as Trustee, with respect to RII's Senior Secured Redeemable Notes due April 15, 1994, with Exhibits as executed. (Incorporated by reference to Exhibit (4)(a)(1) to RII's Form 10-Q Quarterly Report for the quarter ended September 30, 1990, in File No. 1-4748.)....................................................... 4.07 Amended and Restated RIH $200,000,000 Senior Note. (Incorporated by reference to Exhibit (4)(a)(2) to RII's 10-Q Quarterly Report for the quarter ended September 30, 1990, in File No. 1-4748.)..................... 4.08 Amended and Restated RIH $125,000,000 Senior Note. (Incorporated by reference to Exhibit to RII's 10-Q Quarterly Report for the quarter ended September 30, 1990, in File No. 1-4748.)................................... 4.09 RII Pledge Agreement. (Incorporated by reference to Exhibit Q to RII's Form 8-A Registration Statement dated July 19, 1990, in File No. 1-4748.)....... 4.10 Assignment of Leases and Rents, RII as Assignor. (Incorporated by reference to Exhibit U to RII's Form 8-A Registration Statement dated July 19, 1990, in File No. 1-4748.)....................................................... 4.11 RIB $50,000,000 Promissory Note to RIH. (Incorporated by reference to Exhibit V to RII's Form 8-A Registration Statement dated July 19, 1990, in File No. 1-4748.).......................................................... 4.12 Indenture of Mortgage from Paradise Island Limited. (Incorporated by reference to Exhibit W to RII's Form 8-A Registration Statement dated July 19, 1990, in File No. 1-4748.)............................................. 4.13 Indenture of Mortgage from Paradise Beach Inn Limited. (Incorporated by reference to Exhibit X to RII's Form 8-A Registration Statement dated July 19, 1990, in File No. 1-4748.).............................................
- ------------------------ * Previously filed.
EXHIBIT NUMBERS EXHIBIT PAGE - --------- ---------------------------------------------------------------------------- --------- 4.14 Guaranty by Paradise Beach Inn Limited. (Incorporated by reference to Exhibit Z to RII's Form 8-A Registration Statement dated July 19, 1990, in File No. 1-4748.)......................... 4.15 Indenture of Mortgage from Island Hotel Company Limited. (Incorporated by reference to Exhibit AA to RII's Form 8-A Registration Statement dated July 19, 1990, in File No. 1-4748.)........ 4.16 Guaranty by Island Hotel Company Limited (Incorporated by reference to Exhibit BB to RII's Form 8-A Registration Statement dated July 19, 1990, in File No. 1-4748.).................... 4.17 RIB Collateral Assignment Agreement among RIH, GRI, RIB, Paradise Island Limited, Island Hotel Company Limited, Paradise Beach Inn Limited and the Bank of New York. (Incorporated by reference to Exhibit CC to RII's Form 8-A Registration Statement dated July 19, 1990, in File No. 1-4748.)................................................................................. 4.18 RII Security Agreement. (Incorporated by reference to Exhibit P to RII's Form 8-A Registration Statement dated July 19, 1990, in File No. 1-4748.).......................................... 4.19 Indenture dated as of September 14, 1990, between RII and The Bank of New York as Trustee, with respect to RII's Mortgage Non-Recourse Pass-Through Notes due June 30, 2000, with Exhibits as executed. (Incorporated by reference to Exhibit (4)(b) to RII's 10-Q Quarterly Report for the quarter ended September 30, 1990, in File No. 1-4748.)........................
4.20 Resorts International, Inc. Senior Management 1990 Stock Option Plan. (Incorporated by reference to Exhibit 8.5 to Exhibit 35 to RII's Form 8 Amendment No. 1 to it's 8-K Current Report dated August 30, 1990, in File No. 1-4748.)............................................................... 4.21 Griffin Group Warrant**..................................................... 4.22 Form of Mortgage between RIH and State Street Bank and Trust Company of Connecticut, National Association, securing Guaranty of RIHF Mortgage Notes...................................................................... 4.23 Form of Mortgage between RIH and RIHF, securing RIH Promissory Note......... 4.24 Form of Assignment of Agreements made by RIHF, as Assignor, to State Street Bank and Trust Company of Connecticut, National Association, as Assignee, regarding RIH Promissory Note.............................................. 4.25 Form of Assignment of Leases and Rents made by RIH, as Assignor, to RIHF, as Assignee, regarding RIH Promissory Note.................................... 4.26 Form of Assignment of Leases and Rents made by RIH, as Assignor, to State Street Bank and Trust Company of Connecticut, National Association, as Assignee, regarding Guaranty of RIHF Mortgage Notes........................ 4.27 Form of Assignment of Operating Assets made by RIH, as Assignor, to RIHF, as Assignee, regarding RIH Junior Promissory Note............................. 4.28 Form of Assignment of Operating Assets made by RIH, as Assignor, to State Street Bank and Trust Company of Connecticut, National Association, as Assignee, regarding Guaranty of RIHF Mortgage Notes........................ 4.29 Form of Mortgage between RIH and U.S. Trust Company of California, N.A., securing Guaranty of RIHF Junior Mortgage Notes............................ 4.30 Form of Mortgage between RIH and RIHF, securing RIH Junior Promissory Note.. 4.31 Form of Assignment of Agreements made by RIHF, as Assignor, to, U.S. Trust Company of California, N.A., as Assignee, regarding RIH Junior Promissory Note....................................................................... 4.32 Form of Assignment of Leases and Rents made by RIH, as Assignor, to RIHF, as Assignee, regarding RIH Junior Promissory Note............................. 4.33 Form of Assignment of Leases and Rents made by RIH, as Assignor, to U.S. Trust Company of California, N.A., as Assignee, regarding Guaranty of RIHF Junior Mortgage Notes...................................................... 4.34 Form of Assignment of Operating Assets made by RIH, as Assignor, to RIHF, as Assignee, regarding RIH Promissory Note.................................... 4.35 Form of Assignment of Operating Assets made by RIH, as Assignor, to U.S. Trust Company of California, N.A., as Assignee, regarding the Guaranty of the RIHF Junior Mortgage Notes............................................. 4.36 Form of Amended and Restated $125,000,000 RIH Promissory Note (Incorporated by reference to Exhibit A to Exhibit 4.04 hereto)..........................
- ------------------------ _* Previously filed. ** To be filed by amendment.
EXHIBIT NUMBERS EXHIBIT PAGE - --------- ---------------------------------------------------------------------------- --------- 4.37 Form of Amended and Restated $35,000,000 RIH Junior Promissory Note (Incorporated by reference to Exhibit A to Exhibit 4.05)................................................................ 5.01 Opinion of Gibson, Dunn & Crutcher*........................................................... 5.02 Opinion of Ravin, Sarasohn, Cook, Baumgarten, Fisch & Baime**.................................
5.03 Opinion of Harry B. Sands & Co.*............................................ 8.01 Opinion of Gibson, Dunn & Crutcher regarding tax matters**.................. 10.01 Form of Interim Management Agreement between PIRL and RII (Incorporated by referrence to Exhibit D to Exhibit 10.59)*................................. 10.02 [Not used].................................................................. 10.03 Agreement, dated May 23, 1978, between The Hotel Corporation of The Bahamas ("HCB") and Paradise Enterprises Limited. (Incorporated by reference to Exhibit (10)(b)(i) to RII's 10-K Annual Report for the fiscal year ended December 31, 1988, in File No. 1-4748.).................................... 10.04 Letter, dated July 2, 1985, from HCB to the RII amending Exhibit 10.03 hereto. (Incorporated by reference to exhibit to RII's Form 8-K Current Report dated July 9, 1985, in File No. 1-4748.)............................ 10.05 Agreement, dated May 23, 1978, between HCB and Paradise Realty Limited (now RIB). (Incorporated by reference to Exhibit 10.01 to GRI's Form S-1 Registration Statement filed July 13, 1988, in File No. 33-23063.)......... 10.06 Letter, dated September 26, 1988, from HCB to RIB extending Exhibit (10)(a)(3) hereto. (Incorporated by reference to Exhibit (10(b)(iv) to RII's 10-K Annual Report for the fiscal year ended December 31, 1988, in File No. 1-4748.).......................................................... 10.07 Supplement, dated February 21, 1990, to license granted March 30, 1978 to Paradise Enterprises Limited. (Incorporated by reference to Exhibit (10)(b)(v) to RII's 10-K Annual Report for the fiscal year ended December 31, 1989, in File No. 1-4748.)............................................. 10.08(a) Supplement, dated September 7, 1990, to license granted March 30, 1978 to Paradise Enterprises Limited. (Incorporated by reference to Exhibit 10(a)(6) to RII's 10-K Annual Report for the fiscal year ended December 31, 1988, in File No. 1-4748.)................................................. 10.08(b) Supplement, dated January 15, 1991, to license granted March 30, 1978 to Paradise Enterprises Limited. (Incorporated by reference to Exhibit 10(b)(7) to RII's 10-K Annual Report for the fiscal year ended December 31, 1990, in File No. 1-4748.) 10.09 Supplement, dated February 13, 1992, to license granted March 30, 1978 to Paradise Enterprises Limited. (Incorporated by reference to Exhibit 10(a)(8) to RII's 10-K Annual Report for the fiscal year ended December 31, 1992, in File No. 1-4748.)................................................. 10.10 Supplement, dated December 30, 1992, to license granted March 30, 1978 to Paradise Enterprises Limited. (Incorporated by reference to Exhibit 10(a)(9) to RII's 10-K Annual Report for the fiscal year ended December 31, 1992, in File No. 1-4748.)................................................. 10.11 Lease Agreement, dated October 26, 1983, between RII and Ocean Showboat, Inc. (Incorporated by reference to Exhibit (10)(c)(i) to RII's 10-K Annual Report for the fiscal year ended December 31, 1986, in File No. 1-4748.)... 10.12 First Amendment, dated January 15, 1985, to Lease Agreement, dated October 26, 1983, between RII and Atlantic City Showboat, Inc. (assignee from affiliate -- Ocean Showboat, Inc.). (Incorporated by reference to Exhibit (10)(c)(ii) to RII's 10-K Annual Report for the fiscal year ended December 31, 1984, in File No. 1-4748.)............................................. 10.13 Second and Third Amendments, dated July 5 and October 28, 1985, respectively, to Lease Agreement, dated October 26, 1983, between RII and Atlantic City Showboat, Inc. (Incorporated by reference to Exhibit (10)(c)(iii) to RII's 10-K Annual Report for the fiscal year ended December 31, 1985, in File No. 1-4748.)............................................. 10.14 Restated Third Amendment, dated August 28, 1986, to Lease Agreement, dated October 26, 1983, between RII and Atlantic City Showboat, Inc. (Incorporated by reference to Exhibit (10)(c)(iv) to RII's 10-K Annual Report for the fiscal year ended December 31, 1986, in File No. 1-4748.)...
- ------------------------ _* Previously filed. ** To be filed by amendment.
EXHIBIT NUMBERS EXHIBIT PAGE - --------- ---------------------------------------------------------------------------- --------- 10.15 Fourth Amendment, dated December 16, 1986, to Lease Agreement, dated October 26, 1983, between RII and Atlantic City Showboat, Inc. (Incorporated by reference to Exhibit (10)(c)(v) to RII's 10-K Annual Report for the fiscal year ended December 31, 1986, in File No. 1-4748.)...
10.16 Fifth Amendment, dated February 1987, to Lease Agreement, dated October 26, 1983, between RII and Atlantic City Showboat, Inc. (Incorporated by reference to Exhibit (10)(c)(vi) to RII's 10-K Annual Report for the fiscal year ended December 31, 1986, in File No. 1-4748.)......................... 10.17 Seventh Amendment, dated October 18, 1988, to Lease Agreement, dated Octo- ber 26, 1983, between RII and Atlantic City Showboat, Inc. (Incorporated by reference to Exhibit (10)(c)(viii) to RII's 10-K Annual Report for the fiscal year ended December 31, 1988, in File No. 1-4748.).................. 10.18 RII Executive Health Plan (Incorporated by reference to Exhibit 10(c)(1) to RII's 10-K Annual Report for the fiscal year ended December 31, 1992, in File No. 1-4748.).......................................................... 10.19 Resorts Retirement Savings Plan. (Incorporated by reference to Exhibit (10)(c)(2) to RII's 10-K Annual Report for the fiscal year ended December 31, 1991, in File No. 1-4748.)............................................. 10.20 Employment Agreement, dated as of September 17, 1990, between RII and David P. Hanlon. (Incorporated by reference to Exhibit 9.3A to Exhibit 35 to the Form 8 Amendment dated November 16, 1990, to RII's 8-K Current Report dated August 30, 1990, in File No. 1-4748.)...................................... 10.21 Employment Agreement, dated May 3, 1991, between the RII and Christopher D. Whitney. (Incorporated by reference to Exhibit (10(d)(2) to RII's 10-K Annual Report for the fiscal year ended December 31, 1991, in File No. 1-4748.)................................................................... 10.22 Amendment to Employment Agreement, dated as of December 3, 1992, between RII and Christopher D. Whitney*................................................ 10.23 Employment Agreement, dated May 3, 1991, between RII and Matthew B. Kearney. (Incorporated by reference to Exhibit (10)(d)(3) to RII's 10-K Annual Report for the fiscal year ended December 31, 1991, in File No. 1-4748.)... 10.24 Amendment to Employment Agreement, dated December 3, 1992, between RII and Matthew B. Kearney*........................................................ 10.25 Second Amendment to Employment Agreement, dated September 24, 1993, between RII and Matthew B. Kearney*................................................ 10.26 Employment Agreement, dated as of September 17, 1992, between RII and David P. Hanlon. (Incorporated by reference to Exhibit 10(d)(4) to RII's 10-K Annual Report for the fiscal year ended December 31, 1992, in File No. 1-4748.)................................................................... 10.27 Termination Agreement, dated as of September 27, 1993, between RII and David P. Hanlon*................................................................. 10.28 Stock Option Agreement, dated as of May 3, 1991, between RII and David P. Hanlon. (Incorporated by reference to Exhibit (10)(e)(1) to RII's 10-K Annual Report for the fiscal year ended December 31, 1991, in File No. 1-4748.)................................................................... 10.29 Stock Option Agreement, dated as of May 3, 1991, between RII and Christopher D. Whitney. (Incorporated by reference to Exhibit (10)(e)(2) to RII's 10-K Annual Report for the fiscal year ended December 31, 1991, in File No. 1-4748.)................................................................... 10.30 Stock Option Agreement, dated as of May 3, 1991, between RII and Matthew B. Kearney. (Incorporated by reference to Exhibit (10)(e)(5) to RII's 10-K Annual Report for the fiscal year ended December 31, 1991, in File No. 1-4748.)................................................................... 10.31 Stock Option Agreement, dated as of May 3, 1991, between RII and David G. Bowden. (Incorporated by reference to Exhibit (10)(e)(5) to RII's 10-K Annual Report for the fiscal year ended December 31, 1991, in File No. 1-4748.)...................................................................
- ------------------------ * Previously filed.
EXHIBIT NUMBERS EXHIBIT PAGE - --------- ---------------------------------------------------------------------------- --------- 10.32 Stock Option Agreement, dated as of May 3, 1991, between RII and Thomas F. O'Donnell. (Incorporated by reference to Exhibit (10)(e)(6) to RII's 10-K Annual Report for the fiscal year ended December 31, 1991, in File No. 1-4748.)........................................... 10.33 Amendment No. 1, dated as of September 17, 1992, to Exhibit 10.30 (Incorporated by reference to Exhibit 10(e)(6) to RII's 10-K Annual Report for the fiscal year ended December 31, 1992, in File No. 1-4748).......................................................................... 10.34(a) License and Services Agreement, dated as of September 17, 1992, among the Griffin Group, RII and RIH*..................................................................................... 10.34(b) Amendment to License and Services Agreement, dated as of September 17, 1992 among the Griffin Group Inc., RII and RIH**....................................................................
10.35 License and Services Agreement, dated as of September 17, 1990, among Merv Griffin, the Griffin Group and RII. (Incorporated by reference to Exhibit 1.46 to Exhibit 35 to the Form 8 Amendment dated November 16, 1990, to the registrant's 8-K Current Report dated August 30, 1990, in File No. 1-4748.)................................................................... 10.36 Litigation Trust Agreement, dated as of September 17, 1990, among RII, RIFI, GRH, and GRI. (Incorporated by reference to Exhibit 1.46 to Exhibit 35 to the Form 8 Amendment dated November 16, 1990, to the registrant's 8-K Current Report dated August 30, 1990, in File No. 1-4748.)................. 10.37(a) Promissory Note, dated September 28, 1990, between Merv Griffin and RII. (Incorporated by reference to Exhibit 9.1B to Exhibit 35 to the Form 8 Amendment dated November 16, 1990, to the registrant's 8-K Current Report dated August 30, 1990, in File No. 1-4748.)................................ 10.37(b) Griffin Group Note. (Incorporated by reference to Exhibit 1 to Exhibit 10.34(a) to this Registration Statement.).................................. 10.37(c) Guaranty dated September 17, 1992 by Mervyn E. Griffin in favor of RII (Incorporated by reference to Exhibit 2 to Exhibit 10.34(a) to this Registration Statement.)................................................... 10.38 Letter of Credit, dated October 1, 1990, by Morgan Guaranty Trust Company of New York. (Incorporated by reference to Exhibit 9.1B to Exhibit 35 to the Form 8 Amendment dated November 16, 1990, to RII's 8-K Current Report dated August 30, 1990, in File No. 1-4748.)...................................... 10.39 Letters extending the termination date of Exhibit 10.38 (Incorporated by reference to Exhibit 10(i)(2) to RRI's 10-K Annual Report for the fiscal year ended December 31, 1992 in File No. 1-4748............................ 10.40 Indemnity Agreement, executed on September 19, 1990, between Merv Griffin and RII. (Incorporated by reference to Exhibit 9.6 to Exhibit 35 to the Form 8 Amendment dated November 16, 1990, to the registrant's 8-K Current Report dated August 30, 1990, in File No. 1-4748.)......................... 10.41 Hotel Corporation of The Bahamas Right of First Refusal. (Incorporated by reference to Exhibit (10)(n) to RII's 10-K Annual Report for the fiscal year ended December 31, 1988, in File No. 1-4748.)......................... 10.42 Service contract between Rogers & Cowan, Inc. and RII, effective July 1, 1991. (Incorporated by reference to Exhibit (10)(m) to RII's 10-K Annual Report for the fiscal year ended December 31, 1988, in File No. 1-4748.)... 10.43 Consulting agreement between Alvarez & Marsal, Inc. and RII, effective March 1, 1992 (Incorporated by reference to Exhibit 10(m)(i) to RII's 10-K Annual Report for the fiscal year ended December 31, 1992, in File No. 1-4748).... 10.44 Amendment, dated September 14, 1992, to the consulting agreement between Alvarez & Marsal, Inc. and RII (Incorporated by reference to Exhibit 10(m)(2) to RII's 10-K Annual Report for the fiscal year ended December 31, 1992, in File No. 1-4748).................................................. 10.45 Form of Ballot for Allowed Claims of Holders of Series A Notes and GRI Guaranty...................................................................
- ------------------------ _* Previously filed. ** To be filed by amendment.
EXHIBIT NUMBERS EXHIBIT PAGE - --------- ---------------------------------------------------------------------------- --------- 10.46 Form of Ballot for Allowed Interests of Holders of RII Common Stock........................... 10.47 Form of Ballot for Allowed Interests of Holders of 1990 Stock Options......................... 10.48 Form of Master Ballot for Allowed Interests of Holders of RII Common Stock.................... 10.49 Form of Master Ballot for Allowed Claims of Holders of Series A Notes and GRI Guaranty........
10.50 Form of Ballot for Allowed Interests of Holders of Series B Notes and GRI Guaranty................................................................... 10.51 Form of Master Ballot for Allowed Claims of Holders of Series B Notes and GRI Guaranty............................................................... 10.52 Bondholders Support Agreement dated October 11, 1993 among RII, GRI, Sun International Investments, Ltd., Sun International Hotels Limited, TCW Special Credits and Fidelity Management and Research Company, concerning bondholders support*....................................................... 10.53 Letter Agreement dated October 11, 1993 among Fidelity Management and Re- search Company, TCW Special Credits, RII and Sun International Hotels Limited concerning consent rights of holders of Old Series Notes*.......... 10.54 Revised term Sheet for 11.0% Senior Secured Loan due 2002 with RIHF as issuer..................................................................... 10.55 Paradise Island Purchase Agreement dated October 11, 1993 between RII and Sun International Hotels Limited, with Exhibits and Schedules*............. 10.56 Letter Agreement dated October 19, 1993 among RII, Fidelity Management, TCW Special Credits, Sun International Hotels Limited, Sun International Investments Ltd. and GGRI regarding GGRI, Inc.*............................ 10.57 Stock Subscription Agreement dated October 11, 1993 between Sun International Investments Limited and Sun International Hotels Limited*.... 10.58 Letter Agreement dated October 15, 1993, among RII, Fidelity Management, TCW Special Credits and Sun International Hotels Limited regarding P.I. Resorts Limited*................................................................... 10.59 PIRL Standby Distribution Agreement dated October 15, 1993 between RII and PIRL....................................................................... 10.60 Letter Agreement between RII and PIRL concerning airline support services*.................................................................. 10.61 Letter Agreement concerning appointment of agent for service of process pursuant to the Standby Distribution Agreement*............................ 10.62 Letter Agreement concerning appointment of agent for service of process pursuant to this Registration Statement.................................... 10.63 Letter Agreement dated July 1, 1993 between RII and Bear Stearns & Co. Inc. for retention of services.................................................. 12.01 RII Computation of Ratio of Earnings to Fixed Charges....................... 12.02 RIH Computation of Ratio of Earnings to Fixed Charges....................... 12.03 RII Computation of Pro Forma Ratio of Earnings to Fixed Charges............. 12.04 RIH Computation of Pro Forma Ratio of Earnings to Fixed Charges............. 21.01 List of the Subsidiaries of the Registrants*................................ 23.01 Consent of Ernst & Young....................................................
23.02 Consent of Gibson, Dunn & Crutcher (Incorporated by reference to exhibit 5.02)...................................................................... 23.03 Consent of Ravin, Sarasohn, Cook, Baumgarten, Fisch & Baime (Incorporated by reference to exhibit 5.02)................................................. 23.04 Consent of Harry B. Sands & Co. (Incorporated by reference to exhibit 5.03)...................................................................... 25.01 Statement of eligibility on Form T-1 of State Street Bank and Trust Company of Connecticut, National Association, as trustee under the New RIHF Mortgage Notes Indenture*.................................................. 25.02 Statement of eligibility on Form T-1 of U.S. Trust Company of California, N.A., as trustee under the New RIHF Junior Mortgage Notes Indenture*.......
- ------------------------ * Previously filed. EXHIBIT A PARADISE ISLAND PURCHASE AGREEMENT Execution Copy - ------------------------------------------------------------ PURCHASE AGREEMENT between RESORTS INTERNATIONAL, INC. and SUN INTERNATIONAL HOTELS LIMITED ---------------------------------------- Dated as of October 11, 1993 ---------------------------------------- Purchase of Stock of Resorts International (Bahamas) 1984 Limited, and certain assets of RII and RII Paradise Subsidiaries - ------------------------------------------------------------ TABLE OF CONTENTS Page ---- ARTICLE I DEFINITIONS SECTION 1.01. Definitions. . . . . . . . . . . . . . . . 2 ARTICLE II PURCHASE AND SALE OF THE SHARES AND THE RII PARADISE ASSETS SECTION 2.01. Transfer of the Shares . . . . . . . . . . 2 SECTION 2.02. Purchase and Sale of the Shares, the RII Real Estate Assets and the RII Paradise Assets. . . . . . . . . 2 SECTION 2.03. Delivery of Certificates and Other Instruments of Transfer. . . . . . . . . 2 SECTION 2.04. Aggregate Purchase Price . . . . . . . . . 3 SECTION 2.05. Preparation of the Closing Date Balance Sheet and Operations Statement; Adjustments . . . . . . . . . 3 SECTION 2.06. Closing. . . . . . . . . . . . . . . . . . 6 SECTION 2.07. Third-Party Consents . . . . . . . . . . . 6 SECTION 2.08. Further Assurances . . . . . . . . . . . . 6 SECTION 2.09 Power of Attorney, etc.. . . . . . . . . . 7 ARTICLE III ASSUMPTION OF CERTAIN LIABILITIES SECTION 3.01. Assumed Liabilities. . . . . . . . . . . . 8 SECTION 3.02. Liabilities Not Assumed. . . . . . . . . . 8 SECTION 3.03. No Successor . . . . . . . . . . . . . . . 8 SECTION 3.04. Indemnification. . . . . . . . . . . . . . 9 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF RII SECTION 4.01. Organization and Good Standing . . . . . .10 SECTION 4.02. Authorization. . . . . . . . . . . . . . .10 2 Page ---- SECTION 4.03. No Conflict; Required Filings and Consents . . . . . . . . . . . . . .11 SECTION 4.04. Capital Stock of the Company and Subsidiaries . . . . . . . . . . . .12 SECTION 4.05. Financial Statements . . . . . . . . . . .13 SECTION 4.06. Absence of Undisclosed Liabilities and Liens. . . . . . . . . . . . . . . .13 SECTION 4.07. Real Property and Improvements . . . . . .14 SECTION 4.08. Personal Property. . . . . . . . . . . . .15 SECTION 4.09. Intellectual Property . . . . . . . . . .16 SECTION 4.10. Litigation . . . . . . . . . . . . . . . .16 SECTION 4.11. Insurance . . . . . . . . . . . . . . . .17 SECTION 4.12. United States Benefit Plans. . . . . . . .17 SECTION 4.12A. Bahamas Benefit Plans . . . . . . . . . .19 SECTION 4.13. Absence of Changes of Events . . . . . . .21 SECTION 4.14. Compliance with Applicable Environmental Laws . . . . . . . . . . .21 SECTION 4.15. Compliance with Laws; Licenses and Permits. . . . . . . . . . . . . . .23 SECTION 4.16. The Shares; Entire Business. . . . . . . .23 SECTION 4.17. Contracts. . . . . . . . . . . . . . . . .24 SECTION 4.18. Inventory. . . . . . . . . . . . . . . . .24 SECTION 4.19. Receivables; Payables. . . . . . . . . . .25 SECTION 4.20. Employees. . . . . . . . . . . . . . . . .25 SECTION 4.21. Tax Returns and Payments . . . . . . . . .26 SECTION 4.22. Brokers. . . . . . . . . . . . . . . . . .27 SECTION 4.23. Transactions with Affiliates . . . . . . .27 SECTION 4.24. Payments . . . . . . . . . . . . . . . . .27 SECTION 4.25. Buyer Registration Statement; Buyer Prospectus . . . . . . . . . . . .28 ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER SECTION 5.01. Organization and Good Standing . . . . . .29 SECTION 5.02. Authorization. . . . . . . . . . . . . . .29 SECTION 5.03. No Conflict; Required Filings and Consents . . . . . . . . . . . . . .30 SECTION 5.04. Reorganization Plan Solicitation Documents. . . . . . . . . . . . . . . .30 SECTION 5.05. Brokers. . . . . . . . . . . . . . . . . .31 SECTION 5.06. Buyer Series A Shares. . . . . . . . . . .31 SECTION 5.07. Buyer Registration Statement; Buyer Prospectus . . . . . . . . . . . .31 SECTION 5.08. Operation of Buyer . . . . . . . . . . . .32 SECTION 5.09. Capital Structure of Buyer . . . . . . . .32 3 Page ---- SECTION 5.10. Subscription Agreements. . . . . . . . . .33 ARTICLE VI ADDITIONAL AGREEMENTS SECTION 6.01. Conduct of Paradise Island Business Pending the Closing. . . . . . . . . . .33 SECTION 6.02. Securities Laws. . . . . . . . . . . . . .36 SECTION 6.03. Documents and Motions to Be Filed by RII and GRI. . . . . . . . . . . . . . .36 SECTION 6.04. Reorganization Proceedings . . . . . . . .37 SECTION 6.05. Access to Information; Confidentiality . .38 SECTION 6.06. Notification of Certain Matters. . . . . .38 SECTION 6.07. Further Action; Reasonable Efforts . . . .39 SECTION 6.08. Public Announcements . . . . . . . . . . .39 SECTION 6.09. Employee Benefit Matters . . . . . . . . .39 SECTION 6.10. Bulk Transfer Laws . . . . . . . . . . . .41 SECTION 6.11. Intercompany Accounts, Contracts, Guaranties and Indebtedness. . . . . . .41 SECTION 6.12. Reorganization Plan Solicitation Documents. . . . . . . . . . . . . . . .42 SECTION 6.13. Reorganization Proceedings . . . . . . . .42 SECTION 6.14. Waiver of Certain Representations and Warranties . . . . . . . . . . . . .43 SECTION 6.15. Certain Obligations of Buyer . . . . . . .43 SECTION 6.16. Bank Facility. . . . . . . . . . . . . . .44 SECTION 6.17. Airline Governmental Consents. . . . . . .44 SECTION 6.18. Comfort Letter . . . . . . . . . . . . . .45 SECTION 6.19. Escrow Agreement . . . . . . . . . . . . .45 SECTION 6.20 Insurance Proceeds . . . . . . . . . . . .45 ARTICLE VII NO SHOP; BUYER'S FEES SECTION 7.01. No Shop. . . . . . . . . . . . . . . . . .45 SECTION 7.02. Buyer Expense Reimbursement. . . . . . . .47 SECTION 7.03. Attorneys' Fees. . . . . . . . . . . . . .48 SECTION 7.04. Transfer Taxes . . . . . . . . . . . . . .48 4 Page ---- ARTICLE VIII CONDITIONS TO THE CLOSING SECTION 8.01. Conditions to Obligations of Buyer . . . .49 SECTION 8.02. Conditions to Obligations of RII . . . . .51 ARTICLE IX SURVIVAL AND INDEMNIFICATION SECTION 9.01. Survival of Representations. . . . . . . .52 SECTION 9.02. Indemnification by RII . . . . . . . . . .53 SECTION 9.03. Indemnification by Buyer . . . . . . . . .53 SECTION 9.04. Notice, etc. . . . . . . . . . . . . . . .54 SECTION 9.05. Reimbursement of Costs . . . . . . . . . .54 SECTION 9.06. Time Limitations . . . . . . . . . . . . .55 SECTION 9.07. Sole and Exclusive Remedy. . . . . . . . .55 ARTICLE X TERMINATION, AMENDMENT AND WAIVER SECTION 10.01. Termination. . . . . . . . . . . . . . . .55 SECTION 10.02. Rights of Termination. . . . . . . . . . .57 SECTION 10.03. Effect of Termination. . . . . . . . . . .57 SECTION 10.04. Waiver, Exercise of Rights . . . . . . . .57 SECTION 10.05. Amendments . . . . . . . . . . . . . . . .58 ARTICLE XI GENERAL PROVISIONS SECTION 11.01. Notices. . . . . . . . . . . . . . . . . .58 SECTION 11.02. Entire Agreement; Assignment . . . . . . .60 SECTION 11.03. Parties in Interest. . . . . . . . . . . .60 SECTION 11.04. GOVERNING LAW. . . . . . . . . . . . . . .60 SECTION 11.05. Headings . . . . . . . . . . . . . . . . .60 SECTION 11.06. Counterparts . . . . . . . . . . . . . . .61 SECTION 11.07. Specific Performance . . . . . . . . . . .61 SECTION 11.08. JURISDICTION . . . . . . . . . . . . . . .61 SECTION 11.09. Approvals; Knowledge . . . . . . . . . . .61 SECTION 11.10. Parent Guaranty. . . . . . . . . . . . . .62 5 Page ---- EXHIBITS Exhibit A Form of Articles of Association of Buyer Exhibit B Form of Registration Rights Agreement Exhibit C Form of Management Agreement Exhibit D Form of Non-Recourse Guaranty and Pledge Agreement Exhibit E Form of Commitment Letter Exhibit F Form of Comfort Letter Exhibit G Form of Escrow Agreement Exhibit H Form of Parent Guarantee Exhibit I Buyer Subscription Agreement SCHEDULES Schedule 2.04 Purchase Price Allocation Schedule 3.01 Assumed Liabilities Schedule 4.01 Qualification Schedule 4.04 Subsidiaries and Equity Ownership Schedule 4.05 Paradise Island Financial Statements Schedule 4.06(a) Liabilities and Indebtedness to be Discharged Schedule 4.06(b) Liabilities and Indebtedness to Stay with Company Schedule 4.07 Real Property Schedule 4.08 Personal Property Schedule 4.09 Intellectual Property Schedule 4.10 Litigation Schedule 4.11 Insurance Schedule 4.12 Benefit Plans Schedule 4.12A Bahamas Benefit Plans Schedule 4.14 Environmental Matters Schedule 4.16(a) Agreements Affecting the Shares Schedule 4.16(b) Shared Facilities/Contracts Schedule 4.17 Material Contracts Schedule 4.18 Inventory Schedule 4.19 Receivables/Payables Schedule 4.20 Employee Claims/Stoppages Schedule 4.21 Tax Matters Schedule 4.22 RII Brokers Schedule 4.23 Affiliate Transactions Schedule 5.05 Buyer Brokers Schedule 5.08 Parent Expenses Schedule 6.09 Certain RII Employees Schedule 6.09(a) Paradise Employees Schedule 6.09(c) Certain Officers and Directors Schedule 10.01(n) Material Contract Consents PURCHASE AGREEMENT PURCHASE AGREEMENT dated as of October 11, 1993 (this "Agreement"), between RESORTS INTERNATIONAL, INC., a Delaware corporation ("RII"), and SUN INTERNATIONAL HOTELS LIMITED, a Bahamian corporation ("Buyer"). WHEREAS, Buyer desires to acquire the Shares from RII, and RII desires to sell the Shares to Buyer on the terms and conditions set forth herein (such purchase, the "Stock Acquisition"); WHEREAS, in connection with the Stock Acquisition, Buyer desires to cause the Buyer Subsidiaries to acquire the RII Paradise Assets from the RII Paradise Subsidiaries and the RII Real Estate Assets from RII, and RII desires to sell the RII Real Estate Assets, and to cause the RII Paradise Subsidiaries to sell the RII Paradise Assets, to the Buyer Subsidiaries on the terms and conditions set forth herein (such purchase, the "Asset Acquisition"); WHEREAS, in connection with the Stock Acquisition and the Asset Acquisition, RII and GRI will file the Reorganization Plan with the Bankruptcy Court, providing, inter alia, under certain terms and conditions to be set forth in the Reorganization Plan, for the (i) sale of the Shares to Buyer, (ii) sale of the RII Paradise Assets and the RII Real Estate Assets to the Buyer Subsidiaries, (iii) distribution to holders of the Old Series Notes of RII (as defined in the Reorganization Plan) of RII of the Aggregate Cash Purchase Price and the Buyer Series A Shares paid by Buyer and the Buyer Subsidiaries for the Shares and the RII Paradise Assets and the RII Real Estate Assets and (iv) the other distributions to holders of the Old Series Notes of RII to be made pursuant to the Reorganization Plan; WHEREAS, the respective Boards of Directors of Buyer and RII deem it advisable and in the best interests of such corporations that the Stock Acquisition and Asset Acquisition occur upon the terms and subject to the condi- tions set forth herein; NOW, THEREFORE, in consideration of the premises and the mutual covenants, agreements, representations and warranties herein contained, and subject to the conditions 2 hereinafter set forth, and for the purpose of prescribing the terms and conditions of the Stock Acquisition and Asset Acquisition, the parties hereto agree as follows: ARTICLE I DEFINITIONS SECTION 1.01. DEFINITIONS. Capitalized terms used but not defined herein shall have the meanings set forth in Appendix A. ARTICLE II PURCHASE AND SALE OF THE SHARES AND THE RII PARADISE ASSETS SECTION 2.01. TRANSFER OF THE SHARES. Prior to Closing, RII shall cause GRI to transfer the Shares to RII in a transaction reasonably acceptable to Buyer and its counsel. SECTION 2.02. PURCHASE AND SALE OF THE SHARES, THE RII REAL ESTATE ASSETS AND THE RII PARADISE ASSETS. On the terms and subject to the conditions of this Agreement, on the Closing Date (a) RII agrees to sell, transfer and deliver to Buyer, and Buyer agrees to purchase and accept from RII, the Shares, free and clear of all Encumbrances, other than those Encumbrances arising from acts of Buyer or its Affiliates and other than any applicable Transfer Taxes, and (b) RII shall, and shall cause each RII Paradise Subsidiary to, sell, convey, assign, transfer and deliver to a Buyer Subsidiary designated by Buyer, and Buyer shall cause each such Buyer Subsidiary to purchase and accept from RII and each such RII Paradise Subsidiary, all right, title and interest of RII in the RII Real Estate Assets and all right, title and interest of each such RII Paradise Subsidiary in the RII Paradise Assets, free and clear of all Encumbrances except Permitted Encumbrances and those Encumbrances arising from acts of Buyer or its Affiliates and other than any applicable Transfer Taxes. SECTION 2.03. DELIVERY OF CERTIFICATES AND OTHER INSTRUMENTS OF TRANSFER. On the Closing Date (a) RII shall deliver to Buyer certificates representing the Shares together with stock powers executed in blank and (b) RII 3 shall, and shall cause the RII Paradise Subsidiaries to, deliver to the Buyer Subsidiaries such specific assignments, bills of sale (to be in a form reasonably satisfactory to Buyer and RII), endorsements, deeds and other good and sufficient instruments of conveyance and transfer, in form and substance reasonably satisfactory to Buyer and its counsel, as shall be effective to vest in the Buyer Subsidiaries title to all the RII Paradise Assets and the RII Real Estate Assets. All right, title and interest of RII in the RII Real Estate Assets and of the RII Paradise Subsidiaries in the RII Paradise Assets shall pass and delivery of the RII Real Estate Assets and the RII Paradise Assets shall take place in such location or locations as Buyer and RII shall determine. SECTION 2.04. AGGREGATE PURCHASE PRICE. As full consideration for the transfer of the Shares and the RII Real Estate Assets and the RII Paradise Assets, Buyer shall cause on the Closing Date (a) the Aggregate Purchase Price to be delivered, on behalf of RII and the RII Paradise Sub- sidiaries, to the disbursing agent designated pursuant to the Reorganization Plan or pursuant to an order of the Bankruptcy Court for purposes of making distributions thereunder to holders of the Old Series Notes of RII (as defined in the Reorganization Plan) and (b) the Buyer Subsidiaries to assume the Assumed Liabilities in accordance with Article III hereof. The Aggregate Purchase Price shall be allocated as set forth on Schedule 2.04. SECTION 2.05 PREPARATION OF THE CLOSING DATE BAL- ANCE SHEET AND OPERATIONS STATEMENT; ADJUSTMENTS. (a) Within 45 days after the Closing Date, RII shall cause to be prepared, in accordance with the books and records of account of the Paradise Island Business and a physical inventory, and shall deliver, an audited balance sheet for the Paradise Island Business as of the Closing Date (the "Preliminary Closing Date Balance Sheet") and an audited statement of operations for the Paradise Island Business for the period beginning at 12:01 a.m. on January 1, 1994, and ending at the close of business on the Closing Date (the "Preliminary Closing Date Operations Statement"), accompanied by an opinion of Ernst & Young thereon to the effect that such balance sheet and statement of operations present fairly in all material respects the financial position and results of operation of the Paradise Island Business at such date and for such period in conformity with GAAP and the preparation of the June 30 Balance Sheet and the statement of operations for the six months ending 4 June 30, 1993. Representatives of Buyer's auditors, Arthur Andersen & Co., shall be entitled to review the scope of the audit in advance thereof as well as the work of Ernst & Young as it progresses and all drafts of the Preliminary Closing Date Balance Sheet and the Preliminary Closing Date Operations Statement. Within 10 days after the delivery to Buyer of the Preliminary Closing Date Balance Sheet and the Preliminary Closing Date Operations Statement, Buyer shall notify RII if it disagrees in any respect with such Pre- liminary Closing Date Balance Sheet or Preliminary Closing Date Operations Statement. If Buyer does disagree, Buyer and RII shall promptly attempt to settle such disagreement. If Buyer and RII are unable to resolve such disagreement within 7 days after such notice, such disagreement shall be referred to the Accounting Arbitrator for a determination, which shall be final and binding on the parties hereto for all purposes of this Agreement. The fees of the Accounting Arbitrator shall be allocated between Buyer and RII by the Accounting Arbitrator based on its good faith view as to which party's positions were more reasonable. The Pre- liminary Closing Date Balance Sheet and Preliminary Closing Date Operations Statement as agreed to by the parties or as adjusted pursuant to the determination of the Accounting Arbitrator are herein referred to as the "Closing Date Bal- ance Sheet" and the "Closing Date Operations Statement". Buyer and RII agree that if prior to 35 days after the Closing Date there has not been a resolution of the dispute (the "Union Contract Dispute") between the Company and The Bahamas Hotel Catering and Allied Workers Union (the "Union") with respect to amounts claimed by the Union to be owed by the Company through December 31, 1993, under the collective bargaining agreement dated as of January 7, 1990, between The Bahamas Hotel Employers Association and the Union, then RII and Buyer shall agree as to the amount they believe it would reasonably take to settle the Union Contract Dispute (the "Union Contract Dispute Amount"). If Buyer and Seller are unable to agree on the Union Contract Dispute Amount by the 40th after the Closing Date, then the Union Contract Arbitrator shall determine such amount prior to the sixtieth day after the Closing Date, and such determination shall be final and binding on the parties hereto. The Union Contract Dispute Amount, as agreed to by the parties or determined by the Union Contract Arbitrator, shall appear on the Preliminary Closing Date Balance Sheet and the Closing Date Balance Sheet as a Current Liability. Prior to the Closing Date, RII shall, as between the parties, control the resolution of the Union Contract Dispute; PROVIDED, HOWEVER, it shall consult with Buyer with 5 respect thereto and allow a representative of Buyer to be present when reasonable in all material negotiations in connection therewith. (b) Within three Business Days after the Closing Date, Buyer and RII shall jointly prepare a cash statement setting forth the amount of Adjusted Cash of the Paradise Island Business as of the Closing Date. If the Adjusted Cash of the Paradise Island Business shown on such cash statement shall be less than the Target Adjusted Cash, on the fourth Business Day after the Closing Date RII shall pay to Buyer the difference in immediately available funds. (c) If the Adjusted Working Capital of the Paradise Island Business plus any Adjusted Cash in excess of $5 million shown on the Closing Date Balance Sheet shall be greater than the Target Adjusted Working Capital plus the EBITDA Adjustment, on the Adjustment Date (as defined below) Buyer shall pay to RII the difference in immediately available funds, together with interest on such amount at the Applicable Rate from and including the Closing Date to but excluding the Adjustment Date. If the Adjusted Working Capital of the Paradise Island Business plus any Adjusted Cash in excess of $5 million shown on the Closing Date Balance Sheet shall be less than the Target Adjusted Working Capital plus the EBITDA Adjustment, on the Adjustment Date RII shall pay to Buyer the difference in immediately available funds, together with interest on such amount at the Applicable Rate from and including the Closing Date to but excluding the Adjustment Date. For purposes of the foregoing, "Adjustment Date" shall mean (i) if Buyer does not disagree in any respect with the Preliminary Closing Date Balance Sheet, the 10th day following Buyer's receipt of the Preliminary Closing Balance Sheet or (ii) if Buyer shall disagree in any respect with the Preliminary Closing Balance Sheet, the third Business Day following either the resolution of such disagreement by the parties or a final determination by the Accounting Arbitrator in accordance with Section 2.05(a). SECTION 2.06. CLOSING. The Closing of the trans- actions contemplated by this Agreement shall take place at the offices of Gibson Dunn & Crutcher, 200 Park Avenue, New York, NY, on a date to be agreed upon by RII and Buyer, as promptly as practicable following the satisfaction or waiver of all of the conditions set forth in Article VIII hereof, but in no event later than 10 Business Days there- after. 6 SECTION 2.07. THIRD-PARTY CONSENTS. To the extent that any Contract relating to the RII Paradise Assets to be assumed by a Buyer Subsidiary for which assignment to such Buyer Subsidiary is provided for herein is not assign- able without the consent of another party (a "Non-Assignable Contract"), this Agreement shall not constitute an assignment or an attempted assignment thereof if such assignment or attempted assignment would constitute a breach thereof. RII and Buyer agree to use their best efforts (without the payment of money) to obtain the consent of such other party to the assignment of any such Contract to the relevant Buyer Subsidiary in all cases in which such consent is or may be required for such assignment. If any such consent shall not be obtained, RII agrees to cooperate with Buyer in any reasonable arrangement (at the cost and for the account of such Buyer Subsidiary) designed to provide for the relevant Buyer Subsidiary the benefits intended to be assigned to such Buyer Subsidiary under the relevant Contract, including enforcement of any and all rights of the relevant RII Paradise Subsidiary against the other party thereto arising out of the breach or cancellation thereof by such other party or otherwise. If and to the extent that such arrangement cannot be made, except as provided in the next sentence, neither Buyer nor any Buyer Subsidiary shall have any obligation with respect to any such Contract. If PIA is unable to assign to a designated Buyer Subsidiary the Ft. Lauderdale Ground Space Lease (Hangar) with Broward County, Florida (the "Hangar Lease"), or is otherwise unable to arrange for such designated Buyer Subsidiary to obtain the benefits of the Hangar Lease, then (i) PIA shall use its reasonable best efforts to sub-lease the Hangar Lease and (ii) Buyer and PIA shall each be responsible for 50% of the obligations of lessee under the Hangar Lease and shall each be entitled to receive 50% of the proceeds relating to any sublease of the Hangar Lease. SECTION 2.08. FURTHER ASSURANCES. (a) From and after the Closing, upon request of Buyer, RII shall, and shall cause any of its Affiliates formerly owning an interest in the Paradise Island Assets to, execute, acknowledge and deliver all such further acts, assurances, deeds, assignments, transfers, conveyances and other instruments and papers as may be reasonably required to sell, assign, transfer, convey and deliver (at Buyer's expense, unless otherwise provided in this Agreement) to and vest in Buyer, the Company or its Subsidiaries or the Buyer Subsidiaries, as the case may be, and more fully protect their respective right, title and interest in and employment 7 of, the Shares and all the Paradise Island Assets and the RII Real Estate Assets and as otherwise may be appropriate to carry out the transactions contemplated in this Agreement. (b) From and after the Closing, upon request of RII, Buyer shall, and shall cause any of the Buyer Subsidiaries, Parent or any Subsidiaries of Buyer or Parent to, execute, acknowledge and deliver all such further acts, assurances, assumptions and other instruments and papers as may be reasonably required (i) in respect of the assumption by the Buyer Subsidiaries of the Assumed Liabilities, and (ii) as otherwise may be appropriate to carry out the transactions contemplated in this Agreement. SECTION 2.09. POWER OF ATTORNEY, ETC. (a) Effective on the Closing Date, RII shall cause each RII Paradise Subsidiary to constitute and appoint, and will cause any Affiliate owning an interest in any RII Paradise Assets to constitute and appoint, the applicable Buyer Subsidiary designated by Buyer and its successors, legal representatives and assigns, the true and lawful attorneys of such RII Paradise Subsidiary and such Affiliates, with full power of substitution, in the name of such RII Paradise Subsidiary and such Affiliates, but on behalf of and for the benefit of such Buyer Subsidiary and its successors, legal representatives and assigns, and at the expense of such Buyer Subsidiary: (i) to demand and receive from time to time any and all of the RII Paradise Assets and to make endorsements and give receipts and releases for and in respect of the same and any part thereof; (ii) to institute, prosecute, compromise and settle any and all proceedings at law, in equity or otherwise that any Buyer Subsidiary and its successors, legal representatives or assigns may deem proper in order to collect, assert or enforce any claim, right or title of any kind in or to the RII Paradise Assets; (iii) to defend or compromise any or all actions, suits or proceedings in respect of any of the RII Paradise Assets; and (iv) to do all such acts and things in relation to the matters set forth in the preceding clauses (i) through (iii) as each such Buyer Subsidiary and its successors, legal representatives or assigns shall deem desirable. RII hereby agrees that the appointment to be hereby made and the powers to be hereby granted are coupled with an interest and are and shall be irrevocable by it in any manner or for any reason. RII shall cause each RII Paradise Subsidiary to deliver to the applicable Buyer Subsidiary designated by Buyer at Closing an acknowledged power of attorney to the 8 foregoing effect executed by each such RII Paradise Subsidiary and any Affiliate selling any of the Paradise Island Assets. Buyer agrees to indemnify and hold RII and its Affiliates harmless from and against any Losses resulting from Buyer's improper use of the power of attorney described in this Section 2.09(a). (b) Effective upon the Closing Date Buyer and the Buyer Subsidiaries shall have the right to receive and open all mail, packages and other communications which relate to the Paradise Island Business addressed to any of the RII Paradise Subsidiaries. RII agrees promptly to deliver to Buyer and the Buyer Subsidiaries any mail, packages or other communications received directly or indirectly by RII or any of its Affiliates that relate to the Paradise Island Business. Buyer and the Buyer Subsidiaries shall have the right and authority to collect, for its own account, all receivables and other items which shall be transferred or are intended to be transferred to Buyer and the Buyer Subsidiaries as provided in this Agreement, and to endorse with the name of RII or any of its Affiliates any checks or drafts received on account of any such receivables or other items, and RII shall promptly transfer or deliver, or cause its Affiliates to transfer or deliver, to Buyer and the Buyer Subsidiaries any cash or other property received directly or indirectly by RII or any of its Affiliates in respect of such receivables or other items including any amounts payable as interest. Buyer and the Buyer Subsidiaries shall promptly deliver to RII packages and other communications received by them which relate to RII or any of its Affiliates but do not relate to the Paradise Island Business. ARTICLE III ASSUMPTION OF CERTAIN LIABILITIES SECTION 3.01. ASSUMED LIABILITIES. Buyer shall cause designated Buyer Subsidiaries to severally assume on the Closing Date the Assumed Liabilities, and shall cause each designated Buyer Subsidiary to execute an Assumption Agreement relating to the Assumed Liabilities assumed by such designated Buyer Subsidiary. SECTION 3.02. LIABILITIES NOT ASSUMED. Except for the Assumed Liabilities and as provided in Section 3.04, neither Buyer nor any Buyer Subsidiary, pursuant to this 9 Agreement or the Assumption Agreements or otherwise, assumes, agrees to perform, pay, discharge or indemnify RII or any of its Affiliates against, or otherwise agrees to have any responsibility for, any liabilities or obligations of RII, GRI or any RII Paradise Subsidiary, fixed, contingent or otherwise, known or unknown, relating to or arising out of the RII Paradise Assets, whether arising prior to, on or after the Closing. SECTION 3.03. NO SUCCESSOR. It is expressly understood that the parties intend that neither the Buyer nor any Buyer Subsidiary shall be considered a successor to any RII Paradise Subsidiary and that neither Buyer nor any Buyer Subsidiary shall have any liability except as other- wise provided in this Agreement or the Assumption Agree- ments. Without limiting the generality of the foregoing, neither Buyer nor any Buyer Subsidiary, pursuant to this Agreement, the Assumption Agreements or otherwise, assumes (a) any liability for or obligation with respect to (i) any Indebtedness of RII or its Affiliates or (ii) any Taxes relating to RII or its Affiliates (except Assumed Taxes), (b) any liabilities or obligations owed to RII or any of its Affiliates (except for liabilities owed to RII or any of its Affiliates under this Agreement or any agreements, certificates or other instruments delivered by Buyer or the Buyer Subsidiaries pursuant to this Agreement) or (c) any liabilities that do not constitute Assumed Liabilities. SECTION 3.04. INDEMNIFICATION. (a) From and after the Closing Date, RII and the RII Paradise Subsidiar- ies shall indemnify Buyer, the Buyer Subsidiaries and their respective Affiliates (each a "Buyer Indemnified Party") against, and hold them harmless from, any Losses with respect to the ownership, use or operation of the RII Paradise Assets prior to the Closing Date (other than the Assumed Liabilities), which any Buyer Indemnified Party may be requested to pay, perform or discharge at any time. No Buyer Indemnified Party shall be entitled to indemnification under this Section 3.04(a) until the date on which the aggregate amount of the claims made by Buyer Indemnified Parties is at least equal to $25,000, at which time claims may be asserted by any Buyer Indemnified Party against the indemnifying parties regardless of amount. (b) From and after the Closing Date, Buyer and the Buyer Subsidiaries shall indemnify RII, the RII Paradise Subsidiaries and their respective Affiliates (each an "RII Indemnified Party") against, and hold them harmless from, 10 any Losses with respect to (i) the Assumed Liabilities, (ii) the ownership, use or operation of the RII Paradise Assets on or after the Closing Date, and (iii) any liability or obligation of the Company or any of its Subsidiaries (fixed, contingent or otherwise, known or unknown (except to the extent such liability or obligation was incurred after the date of this Agreement and in breach of Section 6.01)), which any RII Indemnified Party may be requested to pay, perform or discharge at any time. No RII Indemnified Party shall be entitled to indemnification under this Section 3.04(b) until the date on which the aggregate amount of the claims made by RII Indemnified Parties is at least equal to $25,000, at which time claims may be asserted by any RII Indemnified Party against the indemnifying parties regardless of the amount. (c) The provisions of Section 9.04 and 9.05 shall apply to any indemnification under this Section 3.04. (d) The indemnification obligations of the applicable parties under this Section 3.04 shall constitute the sole and exclusive remedies of the applicable Buyer Indemnified Parties and RII Indemnified Parties, as the case may be, with respect to the matters described in this Section 3.04. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF RII RII represents and warrants to Buyer as follows: SECTION 4.01. ORGANIZATION AND GOOD STANDING. Each of RII, the Company, each Subsidiary of the Company and each RII Paradise Subsidiary is a corporation duly organ- ized, validly existing and in good standing under the laws of the jurisdiction of its organization. The Company, each Subsidiary of the Company and each RII Paradise Subsidiary is duly qualified to do business in each jurisdiction in which the ownership, leasing or operation of its assets or the conduct of the Paradise Island Business requires such qualification, except where the failure so to qualify would not have a Material Adverse Effect. Each jurisdiction in which each of the Company, any Subsidiary of the Company or any RII Paradise Subsidiary is so qualified is set forth in Schedule 4.01. 11 SECTION 4.02. AUTHORIZATION. RII has all necessary corporate power and authority to execute and deliver this Agreement and to perform its obligations here- under. The execution and delivery of this Agreement by RII and the sale of the Shares by RII and the sale of the RII Paradise Assets by the RII Paradise Subsidiaries have been duly and validly authorized by all corporate action on the part of RII and the RII Paradise Subsidiaries, and no other corporate proceedings or shareholder actions (other than the Reorganization Solicitation) on the part of RII or the RII Paradise Subsidiaries are necessary to authorize this Agreement or the sale of the Shares and the RII Paradise Assets. This Agreement has been duly and validly executed and delivered by RII and, assuming the due authorization, execution and delivery by Buyer, this Agreement constitutes the legal, valid and binding obligation of RII, enforceable against RII in accordance with its terms (subject as to enforcement to applicable bankruptcy, reorganization, insolvency, fraudulent transfer and moratorium and similar laws from time to time in effect affecting creditors' rights generally and to legal and equitable limitations on availability of specific performance and other equitable remedies). SECTION 4.03. NO CONFLICT; REQUIRED FILINGS AND CONSENTS. (a) The execution and delivery of this Agreement by RII does not, and the performance of this Agreement by RII will not, (i) conflict with or violate the articles of incorporation or by-laws or equivalent organizational docu- ments of RII, GRI, the Company, any Subsidiary of the Com- pany or any RII Paradise Subsidiary, (ii) conflict with or violate any law, rule, regulation, order, judgment or decree applicable to RII, GRI, the Company, any Subsidiary of the Company or any RII Paradise Subsidiary or by which any of the Paradise Island Assets is bound or affected or (iii) other than breaches or defaults which would be cured or discharged by reason of the effectiveness of the Reorganization Plan, result in any breach of or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, or result in the creation of any Encumbrance on any of the Paradise Island Assets pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which RII, GRI, the Company, any Subsidiary of the Company or any RII Paradise Subsidiary is a party or by which RII, GRI, the Company, any Subsidiary of 12 the Company or any RII Paradise Subsidiary or any of the Paradise Island Assets is bound or affected, except, in the case of this clause (iii) and clause (ii) above, for any such breaches, defaults or other occurrences which would not, individually or in the aggregate, have a Material Adverse Effect. (b) The execution and delivery of this Agreement by RII does not, and the performance of this Agreement by RII will not, require any consent, approval, authorization or permit of, or filing with or notification to, any Governmental Authority except for (i) the Confirmation Order and any other notices, motions or approvals required by the Bankruptcy Court or the Bankruptcy Code and the rules thereunder, (ii) the filing by Buyer and RII of premerger notification with the Federal Trade Commission and the Anti- trust Division of the United States Department of Justice under the HSR Act, (iii) consents and approvals contemplated by the Heads of Agreement or any approvals for exchange controls required to be received from the Exchange Control Department of the Central Bank of The Bahamas ("Exchange Control Approval"), (iv) consents of the New Jersey Casino Control Commission and under the New Jersey Casino Control Act, (v) filings required by the Securities Act, the Exchange Act and relevant state "blue sky" laws, (vi) approval by the U.S. Department of Transportation and the U.S. Federal Aviation Administration ("Airline Governmental Consents") and (vii) where failure to obtain such consents, approvals, authorizations or permits, or to make such filings or notifications, would not prevent or materially delay consummation of the transactions contemplated hereby, or otherwise prevent RII from performing its obligations under this Agreement. The consents, applications and approvals listed in clauses (iii), (iv) and (v) above shall be hereinafter referred to as the "Governmental Consents." SECTION 4.04. CAPITAL STOCK OF THE COMPANY AND SUBSIDIARIES. The authorized capital stock of the Company consists of 500 shares of Class A Common Stock, B$2.86 par value per share, 400 shares of Class B Common Stock, B$2.86 par value per share, and 900 shares of Non-Voting Class C Common Stock, B$2.86 par value per share, of which 500 shares of Class A Common Stock, 400 shares of Class B Common Stock and 900 shares of Class C Common Stock, constituting the Shares, are duly authorized and validly issued and outstanding, fully paid and nonassessable. As of the date hereof, GRI is the registered holder of the Shares. 13 In accordance with Section 2.01, RII shall become the registered holder of the Shares prior to Closing. The Shares have not been issued in violation of, and are not subject to, any preemptive or subscription rights. Except as set forth above, there are no shares of capital stock or other equity securities of the Company outstanding. Except as set forth in Schedule 4.04, there are no outstanding warrants, options, agreements, convertible or exchangeable securities or other commitments (other than this Agreement) pursuant to which RII or any of its Affiliates is or may become obligated to issue, sell, purchase, return or redeem any shares of capital stock or other securities of the Company or any Subsidiary of the Company, and there are not any equity securities of the Company or any Subsidiary of the Company reserved for issuance for any purpose. Schedule 4.04 sets forth a list of all the Subsidiaries of the Company. Except for Encumbrances disclosed in Schedule 4.04, which Encumbrances shall be released upon Closing, the Company directly has good and valid title to all the outstanding shares of capital stock of each Subsidiary of the Company, free and clear of Encumbrances, and all such shares are duly authorized and validly issued and outstanding, fully paid and nonassessable. Except as disclosed in Schedule 4.04, the Company does not directly or indirectly own any capital stock of or other equity interests in any corporation, partnership or other entity. SECTION 4.05. FINANCIAL STATEMENTS. The Paradise Island Financial Statements are the financial statements of the Paradise Island Business. The Paradise Island Financial Statements, true, correct and complete copies of which are set forth on Schedule 4.05, (a) are in accordance with the books of account and records of the Paradise Island Business, (b) are fair presentations in all material respects of the financial position and results of operations of the Paradise Island Business as of the dates and for the periods indicated and (c) were prepared in conformity with GAAP applied on a consistent basis throughout the periods covered thereby. SECTION 4.06. ABSENCE OF UNDISCLOSED LIABILITIES AND LIENS. At June 30, 1993, and at the date of this Agreement and the Closing Date, neither the Company nor any Subsidiary of the Company did, does or will have any indebtedness, obligation or liability (including any liability for Taxes), absolute or contingent required to be reflected on or adequately provided for in a balance sheet prepared in accordance with GAAP and consistent with past 14 practice, which is not reflected in or adequately provided for in the June 30 Balance Sheet, except for liabilities or obligations incurred in the ordinary course since June 30, 1993, consistent with past practice and not in violation of this Agreement. Except as disclosed on Schedules 4.06(a) and 4.06(b), neither the Company nor any Subsidiary of the Company is or will be directly or indirectly liable upon or with respect to (by discount, repurchase agreement or other- wise) or obligated in any other way to provide funds in respect of, or to guarantee or assume, any debt, obligation or dividend of any person except endorsements in the ordinary course of business in connection with the deposit of items for collection. Except for Indebtedness disclosed on Schedule 4.06(a), which shall be extinguished upon the Closing, and Indebtedness described on Schedule 4.06(b), neither the Company nor any of its Subsidiaries has any Indebtedness. SECTION 4.07. REAL PROPERTY AND IMPROVEMENTS. Schedule 4.07 contains a complete list, by deed reference or otherwise, of all real property and interests in real property (the "Real Property") (a) owned or leased by the Company or any Subsidiary of the Company, (b) owned by RII in the State of Florida and used in connection with the Paradise Island Business (the "RII Real Estate Assets") or (c) owned or leased by any RII Paradise Subsidiary in connection with the Paradise Island Business. The Paradise Island Business does not use any material real property not listed on Schedule 4.07. Except as set forth on Schedule 4.07, RII, the Company, a Subsidiary of the Company or a RII Paradise Subsidiary has good and marketable title in fee simple to the Real Property listed on Schedule 4.07 as being owned by them, in each case free and clear of all liens (including liens for Taxes), mortgages, security interests, charges, claims, leases, survey exceptions, options, rights of first refusal or first offer, easements, restrictions, rights-of-way or other encumbrances of any nature whatsoever, except for Permitted Encumbrances or encumbrances described on Schedule 4.07. The buildings, facilities, and other improvements located on the Real Property (the "Improvements") are, and as of the Closing will be, in operating condition and fit for operation in the usual course of business, ordinary wear and tear excepted. The uses for which the Improvements are zoned do not materially restrict, or in any material manner impair, the use of the Improvements for purposes of the Paradise Island Business and to the knowledge of RII the construction of the Improvements complied at the time thereof in all material 15 respects with all applicable building and zoning codes, deed restrictions, ordinances and rules, or appropriate variances therefrom were obtained. The Company, a Subsidiary of the Company or a RII Paradise Subsidiary, is the lessee of each of the leasehold estates listed in Schedule 4.07 as being leased by any of them, and, except as set forth in Schedule 4.07, are in possession of each of the premises so leased and have marketable title to each of such leasehold estates. Except as set forth in Schedule 4.07 and for Permitted Encumbrances, there exists no asserted claim (including any lien for Taxes) which is adverse to the rights of the Company, any Subsidiary of the Company or any RII Paradise Subsidiary in any such leasehold estate. Except as disclosed on Schedule 4.07, each such lease pursuant to which such leasehold estate is granted is valid without any material default thereunder by the lessee. Such leases are the only leases of real property to which RII or any of its Affiliates are parties pertaining to the Paradise Island Business. Each lease pursuant to which a leasehold estate is granted to any RII Paradise Subsidiary may be assigned to the corresponding Buyer Subsidiary without any restriction or required consent or other approval, except as provided in Schedule 4.07. Except as disclosed in Sched- ule 4.07, there is no pending, or, to the knowledge of RII or any of its Affiliates, threatened, condemnation, eminent domain or similar proceeding with respect to the Real Property or the Improvements. True, complete and correct copies of the deeds, title insurance policies, surveys, parcel maps, mortgages, agreements, leases and other documents granting or relating to the ownership or leasing of the Real Property and the Improvements that are in the possession of RII or its Affiliates have been delivered to Buyer. SECTION 4.08. PERSONAL PROPERTY. All machinery, equipment and other tangible personal property (the "Personal Property") (a) owned, leased or used by the Company or any Subsidiary of the Company or (b) owned, leased or used by any RII Paradise Subsidiary in connection with the Paradise Island Business is in operating condition and fit for operation in the usual course of business, ordinary wear and tear excepted. Except as disclosed in Schedule 4.08, the Company, any Subsidiary of the Company or any RII Paradise Subsidiary has and will have on the Closing Date good title to the Personal Property reflected in the June 30 Balance Sheet as being owned by them, free and clear of Encumbrances, except for Permitted Encumbrances. The Company, any Subsidiary of the Company or any RII Paradise 16 Subsidiary is the lessee of all the leasehold estates pertaining to Personal Property granted by the leases reflected in the June 30 Balance Sheet and their possession thereof has not been disturbed, nor has any claim been asserted against them (including any liens for Taxes) adverse to their rights in such leasehold estates. Each such lease or agreement pursuant to which any RII Paradise Subsidiary leases any material Personal Property may be assigned to the corresponding Buyer Subsidiary without any restriction or required consent or other approval, except as provided in Schedule 4.08. SECTION 4.09. INTELLECTUAL PROPERTY. (a) Sched- ule 4.09 lists all Intellectual Property. (b) Except as disclosed on Schedule 4.09, the Intellectual Property is owned by the Company, a Subsidiary of the Company or a RII Paradise Subsidiary free and clear of any Encumbrances, and (if required) has been or will be duly registered or registration applied for, where applicable, with the necessary jurisdictions. Except as disclosed on Schedule 4.09, neither RII nor any of its Affiliates has received any notice from, and neither RII nor any of its Affiliates has knowledge of, any other person challenging or questioning the right of the Company, any Subsidiary of the Company or any RII Paradise Subsidiary to use any Intellectual Property. (c) The Intellectual Property constitutes all of the patents, trademarks, trade names, service marks, service names, brand names, copyrights and similar intellectual property rights used in the conduct of the Paradise Island Business, other than Excluded Assets. (d) Except as disclosed in Schedule 4.09, neither RII nor any of its Affiliates has received any written notice alleging any infringement or improper use of any patent, right, invention, copyright, trademark, service mark, trade secret, trade right or trade name of any other person or entity, registered or unregistered, and no claim is pending, has been made or, to the knowledge of RII or any of its Affiliates, is threatened to such effect which, if true, would have, alone or in the aggregate, a Material Adverse Effect. SECTION 4.10. LITIGATION. Disclosed on Sched- ule 4.10 is a list as of the date of this Agreement of all pending and, to the knowledge of RII or any of its 17 Affiliates, threatened Material Cases. Except as disclosed on Schedule 4.10, there are no pending or, to the knowledge of RII or any of its Affiliates, threatened Material Cases which are not covered by insurance (subject to customary deductibles). None of the Company, any of its Subsidiaries or any RII Paradise Subsidiary with respect to the RII Paradise Assets is in default under any judgment, order or decree of any Governmental Authority applicable to it or any of its respective properties, assets, operations or business which default would have a Material Adverse Effect. SECTION 4.11. INSURANCE. Disclosed on Schedule 4.11 is a true and correct list as of the date of this Agreement of all insurance policies held by RII, the Company, any of its Subsidiaries or any RII Paradise Subsidiary with respect to the RII Paradise Assets, including, without limitation, policies of fire, life, theft, product and public liability, property damage, other casualty, workers' compensation, property and liability insurance. Schedule 4.11 indicates as of the date of this Agreement, in respect of each such policy, the type of coverage, the name of the insured, the insurer, the premium, all deductibles, the expiration date and the amount of the coverage thereof. All such policies are in full force and effect and none of RII or any of its Affiliates has received notice in respect of any such policy regarding the termination thereof, proposing to change the terms thereof in any material respect or claiming material defects or deficiencies or requiring the performance of any material repairs, replacements, alterations or other work in respect of the property insured thereunder. SECTION 4.12. UNITED STATES BENEFIT PLANS. (a) Schedule 4.12 contains a list and brief description of each "employee pension benefit plan" (as defined in Section 3(2) of ERISA, hereinafter a "Pension Plan"), "employee welfare benefit plan" (as defined in Section 3(1) of ERISA, hereinafter a "Welfare Plan") and each material bonus, stock option, stock purchase, incentive compensation, deferred or executive compensation plan or arrangement or other employee fringe benefit plan maintained, contributed to or required to be maintained or contributed to by RII or an RII Paradise Subsidiary for the benefit of any current or former employee of any RII Paradise Subsidiary or their beneficiaries (all of the foregoing being herein called "Benefit Plans"). RII has delivered or made available to Buyer true, complete and correct copies of (1) each Benefit Plan (or, in the case of any material unwritten Benefit 18 Plans, descriptions thereof), (2) the most recent annual report (Form 5500 Series) filed with the Internal Revenue Service with respect to any Benefit Plan (if any such report was filed), (3) the most recent summary plan description for each Benefit Plan for which such a summary plan description exists, (4) each trust agreement and insurance or annuity contract funding any Benefit Plan and (5) other similar information in its control regarding any Benefit Plan, upon the reasonable request of Buyer. Except as disclosed in Schedule 4.12, each Benefit Plan is maintained or contributed to by RII or an RII Paradise Subsidiary for the benefit of their employees and not the employees of the Company or its Subsidiaries, and neither the Company nor any of its Subsidiaries maintains, contributes to, or has any obligations or liabilities with respect to, a Benefit Plan. (b) Except as disclosed in Schedule 4.12, all contributions to the Benefit Plans that were required to be made by RII or an RII Paradise Subsidiary in accordance with the Benefit Plans have been timely made. (c) Except as disclosed in Schedule 4.12, any Benefit Plan that is a Pension Plan, other than a multiemployer plan as defined in Section 4001(a)(3) of ERISA, has received a determination letter from the Internal Revenue Service to the effect that such Pension Plan is qualified and exempt from Federal income taxes under Sections 401(a) and 501(a), respectively, of the Code, and no such determination letter has been revoked nor, to the knowledge of RII or any RII Paradise Subsidiary, has revocation been threatened, nor has any such Pension Plan been amended since the date of its most recent determination letter or application therefor in any respect that might reasonably be expected to adversely affect its qualification. (d) Schedule 4.12 contains a list and brief description of each Pension Plan subject to Title IV of ERISA maintained, contributed to or required to be maintained or contributed to by an ERISA Affiliate (an "RII Affiliate Pension Plan"). RII has furnished or made available to Buyer the most recent actuarial report or valuation, if any, with respect to each such RII Affiliate Pension Plan. (e) Each RII Affiliate Pension Plan has paid all premiums when due to the PBGC, and no ERISA Affiliate has 19 incurred any material liability to any such RII Affiliate Pension Plan or to the PBGC. (f) Except as disclosed on Schedule 4.12, no ERISA Affiliate has incurred any withdrawal liability, within the meaning of Section 4201 of ERISA, which liability has not been fully paid as of the date hereof, or announced an intention to withdraw, but not yet completed such with- drawal, from any multiemployer plan. (g) Except as disclosed in Schedule 4.12, no ERISA Affiliate has engaged in a transaction described in Section 4069 of ERISA that could subject the Company or any of its Subsidiaries to material liability at any time after the date hereof. (h) With respect to each Welfare Plan that is a "group health plan" (as such term is defined in Section 5000(b)(1) of the Code), RII and the RII Paradise Subsidiaries comply in all material respects with the applicable requirements of Section 4980B(f) of the Code. SECTION 4.12A. BAHAMAS BENEFIT PLANS. (a) Schedule 4.12A contains a list and a brief description of all non-governmental pension funds or plans, retirement savings plans, retirement income funds, employee profit sharing plans, deferred profit sharing plans, trust funds, insurance plans, bonuses, deferred compensation, incentive or other material compensation plans or arrangements and other material employee fringe benefit plans maintained or contributed to by the Company or any of its Subsidiaries for the benefit of current or former employees of the Paradise Island Business (all the foregoing being herein called "Bahamas Benefit Plans"). RII has delivered or made available to Buyer true, correct and complete copies of (1) each Bahamas Benefit Plan (or in the case of any unwritten Bahamas Benefit Plans, descriptions thereof), (2) the most recent summary plan description for each Bahamas Benefit Plan for which a summary plan description has been prepared and (3) each trust agreement or other funding arrangement relating to any Bahamas Benefit Plan. Except as disclosed in Schedule 4.12A, each Bahamas Benefit Plan that is not maintained pursuant to a collective bargaining agreement is maintained or established solely under, and regulated solely by, the laws of The Bahamas. (b) Each Bahamas Benefit Plan that is not maintained pursuant to a collective bargaining agreement has 20 been administered in all material respects in accordance with its terms. With respect to all Bahamas Benefit Plans, the Company and its Subsidiaries are in compliance in all material respects with any applicable laws, regulations or provisions contained in any applicable collective bargaining agreement as such agreement may have been duly amended or modified. Except as disclosed in Schedule 4.12A, there are no investigations by any governmental agency or other claims (except claims for benefits payable in the normal operation of the Bahamas Benefit Plans), suits or proceedings against or involving any Bahamas Benefit Plan that is not maintained pursuant to a collective bargaining agreement or asserting any rights or claims to benefits under any such Bahamas Benefit Plan that could give rise to any material liability, and, to the knowledge of RII, the Company or its Subsidiaries, there are not any facts that could give rise to any material liability in the event of any such investigation, claim, suit or proceeding. (c) Neither the Company nor any of its Subsidiaries has any obligation to create any additional Bahamas Benefit Plans or any similar arrangements, or to make contributions or to increase future contributions to any Bahamas Benefit Plan other than those obligations contained in the Bahamas Benefit Plan documents or in any related participation agreement and in any applicable collective bargaining agreement provided to Buyer. (d) RII has provided or made available to Buyer the most recent actuarial report or valuation (if any) with respect to each Bahamas Benefit Plan. The information supplied by RII, the Company and its Subsidiaries for use in preparing those reports or valuations was complete and accurate in all material respects and neither RII, the Company nor any of its Subsidiaries have reason to believe that the information provided by all other contributing employers for use in, or the conclusions expressed in, those reports or valuations are inaccurate in any material respect. (e) None of the Company or any of its Subsidiaries has any current or projected liability or contingent obligation, under any Bahamas Benefit Plan in respect of medical or other benefits (l) for retired or former employees of the Company or any of its Subsidiaries or any predecessor thereof or (2) for current employees of the Company or any of its Subsidiaries or any predecessor 21 thereof in the event of the termination or retirement of any current employee. (f) No employee or former employee of the Company or any of its Subsidiaries, or any beneficiary thereof, will become entitled as a result of the transactions contemplated hereby (1) to any additional material benefits, acceleration of the time of payment or vesting of benefits, bonus, retirement, severance, job security or similar benefit or any enhanced benefit under any Bahamas Benefit Plan or (2) any non-material benefits otherwise described in clause (1) that, when aggregated together, are material. (g) The Company and its Subsidiaries have timely made all contributions required to be made under applicable law to the Bahamian National Insurance Board (the "NIB"), and neither the Company nor any of its Subsidiaries has any liability, or is aware of any facts that might give rise to liability, to the NIB or any current or former employee with respect to such contributions. (h) No RII Paradise Subsidiary has any obligation, formal or informal, to provide any material employee benefits to any employee of the Company or its Subsidiaries. Neither the Company nor any of its Subsidiaries has any obligation, formal or informal, to provide any employee benefits to any person who is not an employee of the Company or its Subsidiaries or any beneficiary thereof. SECTION 4.13. ABSENCE OF CHANGES OF EVENTS. Since June 30, 1993, the Paradise Island Business has been conducted only in the ordinary course, consistent with past practice and the provisions of Section 6.01, and no Material Adverse Effect has occurred. SECTION 4.14. COMPLIANCE WITH APPLICABLE ENVIRON- MENTAL LAWS. Except as disclosed in Schedule 4.14 or except where a Material Adverse Effect would not occur as a result thereof: (a) The Company, each of its Subsidiaries and each RII Paradise Subsidiary and the operation of the Paradise Island Business is in compliance in all material respects with all applicable Environmental Laws. (b) Neither RII nor any of its Affiliates has received any written communication from a Governmental 22 Authority that alleges that the Company, any of its Subsidiaries or any RII Paradise Subsidiary is not in compliance, in any material respect, with any applicable Environmental Law. (c) To the knowledge of RII, none of the operations or properties of the Paradise Island Business is the subject of foreign, federal, state or local investigation respecting (i) Environmental Laws, (ii) Remedial Action or (iii) any Environmental Claim arising from a release of any Hazardous Substance into the environment. (d) The Company, its Subsidiaries and the RII Paradise Subsidiaries have filed all notices required to be filed under all applicable Environmental Laws indicating past or present treatment, storage or disposal of a Hazardous Substance. (e) The Company, each of its Subsidiaries and each RII Paradise Subsidiary has filed all notices required to be filed under all Environmental Laws reporting a spill or release of a Hazardous Substance into the environment. (f) To the knowledge of RII or any of its Affiliates, none of the Company, any of its Subsidiaries or any RII Paradise Subsidiary has any liabilities in connection with any Hazardous Substance. (g) To the knowledge of RII or any of its Affiliates, there are no underground nonpropane storage tanks or polychlorinated biphenyls on any Real Property. (h) None of the Company, any of its Subsidiaries or any RII Paradise Subsidiary is subject to any judicial, administrative or arbitral actions, suits, proceedings, or governmental proceedings alleging the violation of any Environmental Law or Environment Permit. (i) To the knowledge of RII or any of its Affiliates, none of the Company, any of its Subsidiaries or any RII Paradise Subsidiary, as a result of its respective past and current operations, has caused or permitted any Hazardous Substances to remain or be disposed of in violation of applicable Environmental Laws, either on or under any Real Property or on any real property not permitted to accept, store or dispose of such Hazardous Substances. 23 SECTION 4.15. COMPLIANCE WITH LAWS; LICENSES AND PERMITS. The Paradise Island Business is being conducted in compliance in all material respects with all laws, ordi- nances, regulations, licensing requirements, rules, decrees, awards or orders, including, without limitation, any thereof relating to wages, hours, hiring, promotions, working condi- tions, use and occupancy of the Improvements, nondiscrim- ination, health, safety, trade regulation, antitrust, war- ranties and control of foreign exchange, except where fail- ure to so comply would not have a Material Adverse Effect. The Company, its Subsidiaries and RII Paradise Subsidiaries have all governmental licenses and permits and other govern- mental authorizations and approvals required for the opera- tion of the Paradise Island Business and the use of the Paradise Island Assets. All governmental licenses and per- mits held by such parties are valid and in full force and effect and there are not pending, or, to the knowledge of RII, threatened, any proceedings which could result in the termination or impairment of any such governmental license or permit. SECTION 4.16. THE SHARES; ENTIRE BUSINESS. (a) As of the Closing Date RII will directly have good and valid title to the Shares, free and clear of any Encumbrances. Assuming Buyer has the requisite power and authority to be the lawful owner of the Shares and The Bahamas Exchange Control Approval has been received, upon delivery to Buyer at the Closing of certificates representing the Shares, duly endorsed by RII for transfer to Buyer, and upon payment of the Aggregate Purchase Price as provided in Section 2.04 and payment of any applicable Transfer Taxes, good and valid title to the Shares will pass to Buyer, free and clear of any Encumbrances other than those arising from acts of Buyer or its Affiliates. Except for the agreements set forth in Schedule 4.16(a), the Shares are not subject to any voting trust agreement or other contract, agreement, arrangement, commitment or under- standing, including any such agreement, arrangement, commitment or understanding restricting or otherwise relating to the voting, dividend rights or disposition of the Shares, other than this Agreement and any exchange control approvals that may be required in connection with the disposition of the Shares by the letter to be issued to Buyer in connection with the Exchange Control Approval. (b) RII, the Company, its Subsidiaries and the RII Paradise Subsidiaries own, lease or license all the Paradise Island Assets. The sale of the Shares by RII to 24 Buyer and the sale of the RII Paradise Assets and the RII Real Estate Assets by RII and the RII Paradise Subsidiaries to the Buyer Subsidiaries pursuant to this Agreement will effectively convey to the Buyer and the Buyer Subsidiaries the entire Paradise Island Business and all of the Paradise Island Assets. Except as set forth on Schedule 4.16(b), there are no shared facilities or Contracts which are used in connection with, or otherwise related to, the Paradise Island Business and with other operations of RII or any of its Affiliates. SECTION 4.17. CONTRACTS. Set forth on Schedule 4.17 is a true and correct list as of the date of this Agreement of each Material Contract. True and correct copies of all Material Contracts have been made available to Buyer. Each Material Contract is valid and binding on, in full force and effect with respect to, and is enforceable by, RII, the Company, one of its Subsidiaries or one of the RII Paradise Subsidiaries in accordance with its terms (subject as to enforcement to applicable bankruptcy, reorganization, insolvency, fraudulent transfer and moratorium and similar laws from time to time in effect affecting creditors' rights generally and to legal and equitable limitations on availability of specific performance and other equitable remedies). Except as described on Schedule 4.17, each of RII, the Company, its Subsidiaries and each RII Paradise Subsidiary has performed all material obligations required to be performed by it to date under the Material Contracts and is not (with or without the lapse of time or the giving of notice, or both) in breach or default in any material respect thereunder and, to the knowledge of RII or any of its Affiliates, no other party to any of the Material Contracts is (with or without the lapse of time or the giving of notice, or both) in breach or default in any material respect thereunder. The Material Contracts of the RII Paradise Subsidiaries may be assigned to the Buyer Subsidiaries without any restriction or required consent or other approval, except as provided in Schedule 4.17. SECTION 4.18. INVENTORY. Except to the extent of the reserves therefor reflected in the June 30 Balance Sheet or as disclosed on Schedule 4.18, inventory reflected in the June 30 Balance Sheet and all inventory existing as of September 30, 1993, are of good, usable and merchantable quality. Such inventory does not include any obsolete or discontinued items or quantities in excess of the require- ments of the Paradise Island Business in the ordinary course 25 of business, except as reserved for on the June 30 Balance Sheet or similar reserves with respect to inventories acquired after June 30, 1993, which reserves are consistent with past practice. All inventory reflected on the Paradise Island Financial Statements was valued at the lower of cost or market on a first-in, first-out basis in accordance with GAAP. SECTION 4.19. RECEIVABLES; PAYABLES. (a) Except as set forth on Schedule 4.19, all the receivables reflected in the June 30 Balance Sheet and all receivables existing as of September 30, 1993, to be reflected on a balance sheet dated as of September 30, 1993 (i) represent bona fide indebtedness, (ii) arose in the ordinary course of business, (iii) are subject to no prior assignment, claim, lien or security interest (including any lien for Taxes) and (iv) to the knowledge of RII or any of its Affiliates are collectible in full when due in the ordinary course of business, subject to no defenses, setoffs or counterclaims, except to the extent of the reserves therefor reflected in the June 30 Balance Sheet, or similar reserves with respect to receivables generated after June 30, 1993. (b) Except as set forth on Schedule 4.19, all trade payables and accrued liabilities reflected in the June 30 Balance Sheet and all trade payables and accrued liabilities existing as of September 30, 1993, to be reflected on a balance sheet dated September 30, 1993, were incurred in the ordinary course of the Paradise Island Business and were correctly classified as current, and all payment terms were in accord with consistent past practice and normal industry practice. SECTION 4.20. EMPLOYEES. Except as set forth on Schedule 4.20, there are no current or, to the knowledge of RII or any of its Affiliates, threatened work stoppages by any of the managers or the employees of the Company, any of its Subsidiaries or any RII Paradise Subsidiaries with respect to the RII Paradise Assets. There are no current or, to the knowledge of RII or any of its Affiliates, threatened work stoppages by any other persons which would, as of the Closing Date, have a Material Adverse Effect. Except to the extent provided for in the Paradise Island Financial Statements as of the dates thereof or as disclosed in Schedule 4.20, there was no material liability arising out of claims made or suits brought (including, without limitation, workers' compensation claims and claims or suits for contribution to, or indemnification of, third parties, 26 occupational health and safety, environmental, consumer protection or equal employment matters) for injury, sick- ness, disease, death or termination of employment of any person to the extent attributable to an event occurring or a state of facts existing prior to the Closing Date. SECTION 4.21. TAX RETURNS AND PAYMENTS. (a) None of the Taxpayers is required to pay any Taxes or file or provide to its shareholders any returns, forms or reports (other than information provided to RII or any of its Subsidiaries for the purpose of enabling RII or such Subsidiary to file returns or reports required to be filed by RII or such Subsidiary) with respect to any Taxes in any jurisdiction other than The Bahamas. None of the Taxpayers is jointly or severally liable for any Taxes, or liabilities relating to Taxes, of any person, corporation or entity other than itself or another Taxpayer. (b) The Taxpayers have filed or caused to be filed, all Tax returns, declarations, forms and reports and all information returns and statements required to be filed by any taxing authority of any jurisdiction (collectively, "Returns"). All such Returns were filed in a timely fashion. The foregoing Returns correctly and accurately reflected in all material respects the facts with respect to which such Returns were filed, the Taxes due for the taxable periods covered by such Returns and any other information required to be shown thereon. Each Taxpayer has timely paid, or will timely pay, in full all Taxes imposed on it which are due and payable for each period ending before the Closing Date. No tax liens have been filed and no claims are being asserted against the Taxpayers with respect to any Taxes, except as set forth on Schedule 4.21. Except as set forth on Schedule 4.21, there are no outstanding agreements or waivers extending the statutory period of limitations applicable to any Return required to be filed with respect to any Taxpayer, and no Taxpayer, nor any affiliated group of which any Taxpayer is or has been a member, has requested any extension of time within which any Return, which Return has not yet been filed. (c) Each of the RII Paradise Subsidiaries has paid in full or will timely pay in full all Taxes relating to the ownership or operation of the Paradise Island Assets other than the Transfer Taxes. None of the Paradise Island Assets prior to the Closing Date is subject to a lease made pursuant to Section 168(f)(8) of the Internal Revenue Code of 1954, as amended and in effect immediately prior to the 27 enactment of the Tax Reform Act of 1986. Neither the Company nor any of the RII Paradise Subsidiaries is a "United States real property holding corporation" within the meaning of Section 897 of the Code. (d) Neither RII nor any of the RII Paradise Subsidiaries is a "foreign person" within the meaning of Section 1445 of the Code. SECTION 4.22. BROKERS. No broker, finder or investment banker, other than those specified on Sched- ule 4.22, is entitled to any brokerage, finder's or other fee or commission in connection with the transactions contemplated hereby based upon arrangements made by and on behalf of RII. SECTION 4.23. TRANSACTIONS WITH AFFILIATES. Since January 1, 1993, except as disclosed in Schedule 4.23, none of the Company, any Subsidiary of the Company or any RII Paradise Subsidiary has purchased, acquired or leased any material property or material services from, or sold, transferred or leased any material property or material services to, or lent or advanced any money to, or borrowed any money from, or guaranteed or otherwise become liable for any indebtedness or other obligations of, or acquired any capital stock, obligations or securities of, or made any management, consulting or similar fee arrangement with, any officer, director or employee of RII or any of its Affiliates. SECTION 4.24. PAYMENTS. Neither RII nor any of its Affiliates nor any officer, agent or employee thereof nor, to the knowledge of RII, any distributor or licensee thereof nor any other person acting on behalf of RII or any of its Affiliates, directly or indirectly, has, during the past five years, on behalf of or with respect to RII or any of its Affiliates, (1) made any unlawful domestic or foreign political contributions, (2) made any payment or provided services which were not legal to make or provide or which RII or any of its Affiliates or any such officer, employee or other person should have known were not legal for the payee or the recipient of such services to receive, (3) received any payment or any services which were not legal to receive or which RII or any of its Affiliates or any such officer, employee or other person should have known were not legal for the payor or the provider of such services to make or provide, or (4) had any transactions or 28 payments which are not recorded in its accounting books and records or disclosed in its financial statements. SECTION 4.25. BUYER REGISTRATION STATEMENT; BUYER PROSPECTUS. (a) The information to be supplied in writing by RII to Buyer specifically for use in the latest draft Buyer Registration Statement and draft Buyer Prospectus available on November 30, 1993, will not as of November 30, 1993, contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. RII agrees that on November 30, 1993, it shall deliver a letter to Buyer attaching thereto such latest drafts of the Buyer Registration Statement and Buyer Prospectus and acknowledging therein the material supplied in writing by it to Buyer specifically for use in such latest drafts of the Buyer Registration Statement and Buyer Prospectus. (b) The information to be supplied in writing by RII to Buyer specifically for use in the Buyer Registration Statement and the Buyer Prospectus therein will not (i) at the time the Buyer Prospectus is first distributed pursuant to the Reorganization Plan, (ii) at the time the Buyer Registration Statement becomes effective, (iii) on the date of the Bankruptcy Court's hearing with respect to the Disclosure Statement, (iv) on the date of the confirmation of the Reorganization Plan by the Bankruptcy Court or (v) at the Closing, contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. RII agrees that on each date referred to in clauses (i), (ii), (iii) and (iv) above, it shall deliver a letter to Buyer attaching thereto the Buyer Registration Statement and Buyer Prospectus in effect on such date and acknowledging therein the material supplied in writing by it to Buyer specifically for use in such Buyer Registration Statement or Buyer Prospectus. (c) Notwithstanding the foregoing, RII makes no representation or warranty with respect to any information included in the draft Buyer Registration Statement and the draft Buyer Prospectus referred to in Section 4.25(a) or in the Buyer Registration Statement or the Buyer Prospectus referred to in Section 4.25(b) that is not supplied in writing by RII to Buyer specifically for use therein. If, at any time prior to the Closing Date, any event relating to 29 RII or any of its Affiliates, officers or directors actually is discovered by RII or any of its Affiliates which is required to be set forth in a supplement to the Buyer Prospectus, RII shall promptly inform Buyer and assist Buyer in preparing, filing with (and, if required, having approved by) the SEC and the Bankruptcy Court and disseminating any such supplements. ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER Buyer represents and warrants to RII and GRI that: SECTION 5.01. ORGANIZATION AND GOOD STANDING. Buyer is a corporation duly organized, validly existing and in good standing under the laws of the Commonwealth of The Bahamas. Buyer has made available to RII an accurate and complete copy of its current memorandum of association and articles of association. Attached hereto as Exhibit A are Articles of Association of Buyer, which Articles of Association Buyer will cause to be filed without change on or before the Closing Date, and on the Closing Date such Articles of Association shall be in full force and effect and shall supersede any previous Articles of Association. SECTION 5.02. AUTHORIZATION. Buyer has all necessary corporate power and authority to execute and deliver this Agreement and to perform its obligations here- under. The execution and delivery of this Agreement by Buyer and the purchase of the Shares by Buyer have been, and the purchase of the RII Paradise Assets by the Buyer Subsidiaries will be at Closing, duly and validly authorized by all necessary corporate action on the part of Buyer and the Buyer Subsidiaries and no other corporate proceedings or shareholder actions on the part of Buyer or the Buyer Subsidiaries are or will be necessary to authorize this Agreement or to purchase the Shares and the RII Paradise Assets. This Agreement has been duly and validly executed and delivered by Buyer and, assuming the due authorization, execution and delivery by RII, constitutes the legal, valid and binding obligation of Buyer, enforceable against Buyer in accordance with its terms (subject as to enforcement to applicable bankruptcy, reorganization, insolvency, fraudulent transfer and moratorium and similar laws from time to time in effect affecting creditors' rights generally 30 and to legal and equitable limitations on availability of specific performance and other equitable remedies). SECTION 5.03. NO CONFLICT; REQUIRED FILINGS AND CONSENTS. (a) The execution and delivery of this Agreement by Buyer does not, and the performance of this Agreement by Buyer will not, (i) conflict with or violate the memorandum of association or articles of association or equivalent organizational documents of Buyer or any Buyer Subsidiary, (ii) conflict with or violate any law, rule, regulation, order, judgment or decree applicable to Buyer or any Buyer Subsidiary or by which any of them or their properties is bound or affected or (iii) result in any breach of or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, or result in the creation of any Encumbrance on any of the property or assets of Buyer or any Buyer Subsidiary pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which Buyer or any Buyer Subsidiary is a party or by which any of them or their properties is bound or affected, except, in the case of this clause (iii) and clause (ii) above, for any such breaches, defaults or other occurrences which would not, individually or in the aggregate, have a material adverse effect on the business, operations, properties (including intangible properties), condition (financial or otherwise), assets or liabilities of Buyer or any Buyer Subsidiary. (b) The execution and delivery of this Agreement by Buyer does not, and the performance of this Agreement by Buyer will not, require any consent, approval, authorization or permit of, or filing with or notification to, any Governmental Authority except for (i) the Confirmation Order, (ii) required filings under the HSR Act, (iii) the Airline Governmental Consents, (iv) the Governmental Consents and (v) where failure to obtain such consents, approvals, authorizations or permits, or to make such filings or notifications, would not prevent or materially delay consummation of the transactions contemplated hereby, or otherwise prevent Buyer from performing its obligations under this Agreement. SECTION 5.04. REORGANIZATION PLAN SOLICITATION DOCUMENTS. The information to be supplied in writing by Buyer to RII specifically for use in the Registration 31 Statement and the Disclosure Statement will not (i) at the time the Disclosure Statement is first mailed, (ii) at the time the Registration Statement becomes effective, (iii) on the date of the Bankruptcy Court's hearing with respect to the Disclosure Statement, (iv) on the date of confirmation of the Reorganization Plan by the Bankruptcy Court or (v) at the Closing, contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. Buyer agrees that on each date referred to in clauses (i), (ii), (iii) and (iv) above, it shall deliver a letter to RII attaching thereto the Registration Statement and Disclosure Statement in effect on such date and acknowledging therein the material supplied in writing by it to RII specifically for use in such Registration Statement and Disclosure Statement. Notwithstanding the foregoing, Buyer makes no representation or warranty with respect to any information included in the Registration Statement or the Disclosure Statement that is not supplied in writing by Buyer to RII specifically for use therein. If, at any time prior to the Closing Date, any event relating to Buyer or any of its Affiliates, officers or directors actually is discovered by Buyer or any of its Affiliates which is required by the Bankruptcy Court to be set forth in a supplement to the Disclosure Statement, Buyer will promptly inform RII and cooperate with RII in pre- paring, filing with (and, if required, having approved by) the SEC and the Bankruptcy Court and disseminating any such supplements. SECTION 5.05. BROKERS. No broker, finder or investment banker, other than those specified on Sched- ule 5.05, is entitled to any brokerage, finder's or other fee or commission in connection with the transaction contemplated hereby based upon arrangements made by and on behalf of Buyer. SECTION 5.06. BUYER SERIES A SHARES. The Buyer Series A Shares have been duly authorized and, upon issuance and delivery in accordance with the terms of this Agreement, will be validly issued, fully paid and nonassessable. SECTION 5.07. BUYER REGISTRATION STATEMENT; BUYER PROSPECTUS. Each of the Buyer Registration Statement and the Buyer Prospectus shall not (i) at the time the Buyer Prospectus is first distributed pursuant to the Reorganiza- tion Plan, (ii) at the time the Buyer Registration Statement 32 becomes effective, (iii) on the date of the Bankruptcy Court's hearing with respect to the Disclosure Statement, (iv) on the date of the confirmation of the Reorganization Plan by the Bankruptcy Court or (v) at the Closing, contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. Notwithstanding the foregoing, Buyer makes no representation or warranty with respect to any information included in the Buyer Registration Statement or the Buyer Prospectus that was supplied by RII to Buyer specifically for use therein. If, at any time prior to the Closing Date, any event relating to Buyer or any of its Affiliates, officers or directors should be discovered by Buyer or any of its Affiliates which is required to be set forth in a supplement to the Buyer Prospectus, Buyer will prepare, file with (and, if required, use its best efforts to have approved by) the SEC, the Bankruptcy Court and the appropriate authorities of the government of The Bahamas and disseminate any such supplements. The Buyer Registration Statement and the Buyer Prospectus did, or shall, as the case may be, comply as to form in all material respects with the requirements of the Securities Act, and all other laws, rules, regulations, decrees and orders promulgated thereunder. SECTION 5.08. OPERATION OF BUYER. Since its inception Buyer has not engaged, and prior to Closing it shall not engage, in any activity or business other than those relating to the implementation of this Agreement, preparation relating thereto and preparation for the implementation of the plans for the Paradise Island Business contemplated in the Buyer Registration Statement. Following the Closing, Buyer will promptly reimburse Parent for (i) all reasonable costs and expenses relating to architecture matters, the Buyer Prospectus and Buyer Registration Statement and bank financing incurred by Parent for the benefit of Buyer as and when incurred or which have already been incurred and (ii) all other reasonable costs and expenses, up to an aggregate maximum amount of $2 million, incurred by Parent for the benefit of Buyer as and when incurred or which have already been incurred, including without limitation the costs and expenses set forth on Schedule 5.08, unless otherwise specifically excluded on such Schedule. Except for Indebtedness contemplated by this Agreement, Buyer has no Indebtedness. 33 SECTION 5.09. CAPITAL STRUCTURE OF BUYER. The authorized capital stock of Buyer consists of 3,000,000 Ordinary Shares, of which two shares, constituting all the issued and outstanding shares (the "Buyer Shares"), are duly authorized and validly issued and outstanding, fully paid and nonassessable. Parent is the registered holder of the Buyer Shares. The Buyer Shares have not been issued in violation of, and are not subject to, any preemptive or subscription rights. Except as set forth above, there are no shares of capital stock or other equity securities of Buyer outstanding. There are no outstanding warrants, options, agreements, convertible or exchangeable securities or other commitments (other than those contemplated by this Agreement) pursuant to which Buyer is or may become obligated to issue, sell, purchase, return or redeem any of its shares of capital stock or other securities and there are not any equity securities of Buyer reserved for issuance for any purpose. As of the Closing, Buyer will directly have good and valid title to all the outstanding shares of capital stock of each Buyer Subsidiary, free and clear of Encumbrances, and all such shares will have been duly authorized and validly issued and outstanding, fully paid and nonassessable. Buyer does not directly or indirectly own any capital stock of or any other equity interests in any corporation, partnership or other entity. SECTION 5.10. SUBSCRIPTION AGREEMENTS. Each of (i) the Subscription Agreement dated as of the date hereof relating to the subscription of shares of Parent (the "Parent Subscription Agreement"), and (ii) the Subscription Agreement dated as of the date hereof between Parent and Buyer, a copy of which is attached hereto as Exhibit I (as in effect as of the date hereof, the "Buyer Subscription Agreement"), has been executed and delivered by the parties thereto, is valid and binding on, in full force and effect with respect thereto and is enforceable by the parties thereto in accordance with its terms (subject as to enforcement to applicable bankruptcy, reorganization, insolvency, fraudulent transfer and moratorium and similar laws from time to time in effect affecting creditors' rights generally and to legal and equitable limitations on availability of specific performance and other equitable remedies). 34 ARTICLE VI ADDITIONAL AGREEMENTS SECTION 6.01. CONDUCT OF PARADISE ISLAND BUSINESS PENDING THE CLOSING. Except as contemplated by this Agree- ment, RII covenants and agrees that, during the period between the date of this Agreement and through and including the Closing Date, unless Buyer shall otherwise agree in writing, the Paradise Island Business shall be conducted only in the ordinary course of business and in a manner con- sistent with past practice; and RII and each of its Affili- ates, subject to the applicable provisions of the Bankruptcy Code, shall use its reasonable efforts (without expense outside of the ordinary course of business) to preserve sub- stantially intact the business organization of the Paradise Island Business, to keep available the services of the present officers, employees and consultants of the Paradise Island Business and to preserve the present relationships of the Paradise Island Business with customers, suppliers and other persons with which the Paradise Island Business has significant business relations; PROVIDED that RII shall not be required to make, or cause any of its Affiliates to make, any additional payments or enter into or amend any contractual arrangements or understandings to satisfy the foregoing obligation other than in the ordinary course of business consistent with past practice. By way of amplification and not limitation, except as contemplated by this Agreement (including without limitation Section 6.11), none of the Company or any of its Subsidiaries or any RII Paradise Subsidiary shall, during the period between the date of this Agreement and through and including the Closing Date, directly or indirectly do, or propose or commit to do, any of the following, except with the prior written consent of Buyer: (a) amend or otherwise change its Articles of Association or Memorandum of Association or charter or By-Laws; (b) issue, sell, pledge, dispose of or encumber, or authorize the issuance, sale, pledge, disposition or encumbrance of, (A) any shares of capital stock of any class, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of capital stock, or any other ownership interest, of the Company or any of its Subsidiaries or (B) any Paradise Island Assets, except for sales in the ordinary course 35 of business and in a manner consistent with past practice; (c) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock, other than dividends or other distributions of cash if, in the good faith belief of management of RII, such distributions will not cause the Paradise Island Business to have, as of the Closing Date, Adjusted Working Capital materially less than the Target Adjusted Working Capital plus a good faith estimate of the EBITDA Adjustment or Adjusted Cash materially less than Targeted Adjusted Cash; (d) reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock; (e) (i) acquire (by merger, consolidation or acquisition of stock or assets) any corporation, partnership or other business organization or division thereof; (ii) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse or otherwise as an accommodation become responsible for, the obligations of any person, or make any loans or advance, except in the ordinary course of business and in a manner consistent with past practice; (iii) enter into any Material Contract other than in the ordinary course of business and in a manner con- sistent with past practice; or (iv) enter into or amend any contract, agreement, commitment or arrangement with respect to any of the matters set forth in this Sec- tion 6.01(e); (f) increase the compensation payable or to become payable to any of its officers or employees, except as may be required by the terms of existing Benefit Plans, Bahamas Benefit Plans, collective bargaining agreements or individual employment contracts and except for increases in salary or wages of any officers or employees of the Paradise Island Business whose annual cash compensation does not exceed $100,000 in the ordinary course of business and in a manner consistent with past practices, or grant any severance or termination pay (except with respect to any Excluded Employee) or enter into any employment, consulting or severance agreement with any present or former 36 director, officer or other employee of the Paradise Island Business other than, in the case of severance agreements with any officer or employee whose annual cash compensation does not exceed $100,000, in the ordinary course of business and in a manner consistent with past practice, or amend (except as may be required by law), establish, adopt, enter into any collective bargaining, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any directors, officers or employees; (g) take any action other than in a manner consistent with past practice (none of which actions shall be unreasonable or unusual) with respect to accounting policies or procedures; (h) make any material tax election, other than in the ordinary course of business and in a manner consistent with past practice, or settle or compromise any liability for Taxes in excess of $100,000 (this paragraph (h) shall only apply to the Company and its Subsidiaries); or (i) pay, discharge or satisfy any material claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than (i) the payment, discharge or satisfaction in the ordinary course of business of liabilities reflected or reserved against in the Paradise Island Financial Statements or incurred in the ordinary course of business and in a manner consistent with past practice, and (ii) the payment, discharge or satisfaction of any intercompany Indebtedness; PROVIDED, HOWEVER, such intercompany transactions would not cause the Paradise Island Business to have, as of the Closing Date, Adjusted Working Capital materially less than the Targeted Adjusted Working Capital plus a good faith estimate of the EBITDA Adjustment, or Adjusted Cash materially less than Targeted Adjusted Cash. SECTION 6.02. SECURITIES LAWS. Each of RII and Buyer shall make all filings under the Securities Act and the Exchange Act necessitated by the provisions of this Agreement. Buyer shall cause the Buyer Series A Shares to be registered under the Exchange Act and authorized for 37 quotation on the NASDAQ National Market System. Buyer shall use its reasonable best efforts to file the Buyer Registration Statement with the SEC as soon as possible. SECTION 6.03. DOCUMENTS AND MOTIONS TO BE FILED BY RII AND GRI. (a) Promptly upon completion of the Reorganization Plan Solicitation, and in no event later than February 15, 1994, RII and GRI shall commence the Bankruptcy Cases. Notwithstanding anything to the contrary, RII and GRI shall not be under any obligation to commence the Bankruptcy Cases unless and until RII and GRI shall have received in the Reorganization Plan Solicitation the requisite number of acceptances from impaired creditors and the requisite number of consents to terminate the Old Security Documents (as defined in the Reorganization Plan). (b) Promptly upon the commencement of the Bankruptcy Cases, and in no event later than five Business Days thereafter, RII and GRI shall (i) file the Disclosure Statement and the Reorganization Plan and the certification of votes for acceptance or rejection of the Reorganization Plan with the Bankruptcy Court and (ii) seek from the Bankruptcy Court and take all steps necessary to obtain a hearing at the earliest practicable date for approval of the Disclosure Statement and confirmation of the Reorganization Plan. (c) RII shall file, not later than five Business Days after the Bankruptcy Date, the Interim Motion with the Bankruptcy Court and use its best efforts to cause the Bankruptcy Court to enter the Interim Order. (d) RII shall use its reasonable best efforts to file the Registration Statement with the SEC as soon as possible. SECTION 6.04. REORGANIZATION PROCEEDINGS. (a) (i) RII shall, and shall cause GRI to, seek confirmation of the Reorganization Plan by the Bankruptcy Court using the acceptances of the Reorganization Plan received by RII and GRI pursuant to the Reorganization Plan Solicitation, (ii) RII shall, and shall cause GRI to, comply in all material respects with the Bankruptcy Code and all other laws, rules, regulations, decrees and orders promulgated thereunder in connection with obtaining confirmation of the Reorganization Plan, (iii) RII shall, and shall cause GRI to, use its best efforts to obtain, and shall, and shall cause GRI to, refrain from knowingly taking 38 any action that would be likely to prevent, materially impede or result in the revocation of, (A) the entry by the Bankruptcy Court of the Confirmation Order and (B) the vesting upon the date on which the Reorganization Plan shall become effective of (y) the property of each of RII and GRI in the reorganized entities and (z) the property dealt with by the Reorganization Plan in the recipients thereof under the Reorganization Plan, in each case free and clear of all claims and interests of creditors and equity security holders except as provided in and in accordance with the Reorganization Plan and (iv) RII shall not, and shall cause GRI not to, consent to any amendment or supplement to, or modification of, the Reorganization Plan or the Disclosure Statement that purports to change in any material respect the terms or conditions of the transactions contemplated by this Agreement without the prior written consent of Buyer. (b) Buyer shall use its best efforts to assist RII and GRI in performance of their obligations under Section 6.04(a). SECTION 6.05. ACCESS TO INFORMATION; CONFIDENTI- ALITY. (a) From the date hereof to the Closing Date, RII shall, and shall cause its Affiliates, officers, directors, employees, auditors and other agents to, (i) afford the officers, employees, auditors and other agents of Buyer reasonable access at all reasonable times to its officers, employees, agents, properties, offices, plants and other facilities and to all books and records, and shall furnish Buyer with all financial, operating and other data and information with respect to the Paradise Island Business as Buyer, through its officers, employees or agents, or such financing sources may reasonably request and (ii) furnish, and cause the officers and employees of RII and its Affiliates to furnish, to Buyer and its authorized representatives such additional financial and operating data and other information regarding the Paradise Island Assets and the Paradise Island Business as Buyer shall from time to time reasonably request including, without limitation, all monthly or other interim financial and operating reports relating to the Paradise Island Business prepared by or for officers of RII and its Affiliates. Without limiting the foregoing, RII agrees to provide representatives of Buyer with offices in Paradise Island and Miami and such representatives shall be given adequate prior notice (if time permits) of and allowed to attend all material meetings of RII and its Subsidiaries relating to the Paradise Island Business. 39 (b) The confidentiality agreement dated August 11, 1993, between RII and Parent shall continue in full force and effect until the Closing and shall survive the termination of this Agreement in the event that no Closing occurs and the benefits thereof shall be assigned to PIRI upon the Spin-off. SECTION 6.06. NOTIFICATION OF CERTAIN MATTERS. RII shall give prompt notice to Buyer, and Buyer shall give prompt notice to RII, of (i) the occurrence or non- occurrence of any event the occurrence or non-occurrence of which would be likely to cause a representation or warranty contained in this Agreement to be untrue or inaccurate in any material respect and (ii) any failure of RII or Buyer, as the case may be, to comply with or satisfy in any material respect any covenant, condition or agreement to be complied with or satisfied by it hereunder; PROVIDED, HOW- EVER, that the delivery of any notice pursuant to this Section 6.06 shall not limit, increase, or otherwise affect the remedies available hereunder to the party receiving such notice. SECTION 6.07. FURTHER ACTION; REASONABLE EFFORTS. Upon the terms and subject to the conditions hereof, each of the parties hereto shall use all reasonable best efforts (without undue expense) to take or cause to be taken all appropriate action and to do or cause to be done all things reasonably necessary, proper or advisable under applicable laws and regulations to consummate and make effective the transactions contemplated hereby and by the Reorganization Plan, including, without limitation, using all reasonable efforts to obtain all licenses, permits, consents, approvals, authorizations, qualifications and orders of Governmental Authorities and parties to Material Contracts as are necessary for the consummation of the transactions contemplated hereby and by the Reorganization Plan and to fulfill the conditions to the Closing. SECTION 6.08. PUBLIC ANNOUNCEMENTS. Buyer and RII shall consult with each other before issuing any press release or otherwise making any public statements with respect to the transactions contemplated hereby and by the Reorganization Plan and shall not issue any such press release or make any such public statement prior to such consultation, except as may be required by law or any listing agreement with a national securities exchange. 40 SECTION 6.09. EMPLOYEE BENEFIT MATTERS. (a) As of the Closing Date, Buyer shall cause the Buyer Subsidiaries to offer employment to each person employed by the RII Paradise Subsidiaries whose primary functions relate to the operation of the Paradise Island Business and each person set forth on Schedule 6.09 (a "Paradise Employee"), except that Buyer may designate in writing within 60 days from the date of this Agreement up to 40 Paradise Employees to whom it does not wish to offer employment (the "Excluded Employees"). Schedule 6.09(a) generally describes severance benefits for Paradise Employees and sets forth a list of each Paradise Employee and the salary as of the date hereof and the employment commencement date of each such Paradise Employee. The Buyer Subsidiaries shall not be required to offer employment to any Excluded Employee and RII hereby agrees that all obligations, including obligations under any Benefit Plan or similar employee benefits, to such Excluded Employees shall remain the responsibility solely of RII. RII shall cooperate with and assist Buyer in any reasonable manner in hiring Paradise Employees (other than any Excluded Employees). Buyer agrees that, for a period of one year from the Closing Date, Buyer will not, without the written consent of RII, employ any Excluded Employees, as consultants or otherwise. Any Paradise Employee who becomes an employee of Buyer or the Buyer Subsidiaries shall be referred to herein as a "Continuing Employee". (b) Buyer shall have no obligation to maintain or assume obligations under any Benefit Plan, or to provide any employee benefits, other than the obligations contained in this subsection. Within 90 days from the date of this Agreement, Buyer shall determine whether it shall offer Continuing Employees a 401(k) plan. If Buyer determines to offer Continuing Employees a 401(k) plan, then on or prior to the Closing, Buyer shall sponsor, or cause one or more of its Affiliates to sponsor, a plan (the "Successor Plan") that is qualified under Section 401 of the Code, under which there is established a trust (the "Successor Trust") that is exempt under Section 501 of the Code, to which the following transfers shall be made. As promptly as practical after the Closing Date, RII shall take all actions necessary to transfer to the Successor Trust the account balances in the Resorts Retirement Savings Plan (the "Savings Plan") of all Continuing Employees. Such transfers shall be made solely in cash or, where applicable, in cash plus any loan from an account to a Continuing Employee that satisfies the requirements of ERISA and the Code. The transfer of the account balances referred to above shall take place upon 41 receipt by RII of either (x) a copy of a favorable determination letter or letters from the IRS that the Successor Plan is qualified under Section 401 of the Code and the Successor Trust is exempt from taxation under Section 501 of the Code or (y) an opinion of counsel to Buyer, on which to RII is entitled to rely and which is reasonably satisfactory to RII, that the Successor Plan is qualified under Section 401 of the Code and the Successor Trust is exempt from taxation under Section 501 of the Code. (c) Schedule 6.09(c) sets forth a list of the officers and directors of the Company or any of its Subsidiaries who are not directly involved in the business and operations of the Company and its Subsidiaries. On the Closing Date, RII shall cause to be delivered to Buyer duly signed (i) resignations (with respect to their entire association with or employment by the Company or any of its Subsidiaries) effective as of the Closing Date of all such officers and directors and (ii) releases of such officers and directors releasing the Company and its Subsidiaries of all obligations and liabilities relating to such resignations. (d) RII and Buyer agree to cooperate in making all appropriate filings and taking all appropriate actions required to implement this Section 6.09. SECTION 6.10. BULK TRANSFER LAWS. RII shall cause each RII Paradise Subsidiary to comply in all material respects with the provisions of any so-called Bulk Transfer Law of all states of the United States in which any of the RII Paradise Assets subject to any such Bulk Transfer Law are located in connection with the sale of the RII Subsidiary Assets to the Buyer Subsidiaries. RII represents and warrants to Buyer that the list of creditors to be provided by RII pursuant to such Bulk Transfer Laws will, to RII's knowledge, contain the names and business addresses of all creditors of the RII Paradise Subsidiaries, with the amounts of credit listed when known, and also the names of all persons who are known to RII to assert claims against any RII Paradise Subsidiary even though such claims are disputed, and that such list will be true, correct and complete in all material respects and will comply in all material respects with such Bulk Transfer Laws. As promptly as practicable after the Closing, RII shall pay and discharge when known all amounts so listed (other than Assumed Liabilities and claims disputed in good faith). 42 SECTION 6.11. INTERCOMPANY ACCOUNTS, CONTRACTS, GUARANTIES AND INDEBTEDNESS. On or prior to the Closing Date, the net amount of all Indebtedness between RII and any of its Affiliates (other than the Company and any Subsidiary of the Company), on the one hand, and the Company and any Subsidiary of the Company, on the other hand, shall be cancelled or contributed to the capital of the relevant entity. On or prior to the Closing Date, RII shall cause the Company and each Subsidiary of the Company not to have any Indebtedness, except for Indebtedness disclosed on Schedule 4.06(b). On or prior to the Closing Date, RII shall terminate or cause to be terminated all Contracts between and among RII and its Affiliates and any of the Company, the Subsidiaries of the Company and the RII Paradise Subsidiaries (to the extent such Contracts relate to the Paradise Island Business), and shall cancel or cause to be cancelled all guarantees and security interests given by the Company, the Subsidiaries of the Company or the RII Paradise Subsidiaries on behalf of RII or any of its Affiliates. On or prior to the Closing Date, RII shall cancel or cause to be cancelled (a) all liens held by RII or any of its Affiliates on any of the Paradise Island Assets and (b) all liens held by the Company or any of its Subsidiaries on any of the assets of RII or any of its Affiliates (other than the Paradise Island Assets) and (c) all liens on any of the Paradise Island Assets relating to Indebtedness, except any such liens disclosed on Schedule 4.06(b). SECTION 6.12. REORGANIZATION PLAN SOLICITATION DOCUMENTS. RII shall use its reasonable best efforts to prepare each of the Registration Statement and the Dis- closure Statement so that they shall not (i) at the time the Disclosure Statement is first mailed, (ii) at the time the Registration Statement becomes effective, (iii) on the date of the Bankruptcy Court's hearing with respect to the Disclosure Statement, (iv) on the date of the confirmation of the Reorganization Plan by the Bankruptcy Court or (v) at the Closing, contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. Notwithstanding the foregoing, RII makes no such covenant with respect to any information included in the Registration Statement or the Disclosure Statement that was supplied by Buyer or any holder of notes issued by RII (or any representative of such holder) to RII specifically for use therein. If, at any time prior to the Closing Date, any event relating to RII or 43 any of its Affiliates, officers or directors should be dis- covered by RII or any of its Affiliates which is required by the Bankruptcy Court to be set forth in a supplement to the Disclosure Statement, RII will prepare, file with (and, if required, use its best efforts to have approved by) the SEC and the Bankruptcy Court and disseminate any such supplements. RII shall use its reasonable best efforts to ensure that the Registration Statement and the Disclosure Statement did, or shall, as the case may be, comply as to form in all material respects with the requirements of the Securities Act, the Exchange Act and the Bankruptcy Code and all other laws, rules, regulations, decrees and orders promulgated thereunder. SECTION 6.13. REORGANIZATION PROCEEDINGS. Neither RII nor GRI will knowingly take any action, or fail to take any action, which could reasonably be expected to prevent, materially impede or result in the revocation of the confirmation of the Reorganization Plan (as provided in Section 1144 of the Bankruptcy Code). SECTION 6.14. WAIVER OF CERTAIN REPRESENTATIONS AND WARRANTIES. (a) Except as provided in Section 6.14(b), as of 11:59 p.m. on November 30, 1993, Buyer shall be deemed to have waived and released any and all of Buyer's claims, rights and remedies of any nature whatsoever (including without limitation Buyer's ability, if any, to seek damages or to terminate this Agreement) with respect to any inaccuracies in or breaches of representations or warranties of RII contained herein on account of any matter arising or occurring on or before November 30, 1993. (b) Notwithstanding Section 6.14(a), Buyer does not waive (i) any claim, right, or remedy whatsoever (including without limitation Buyer's ability, if any, to seek damages or to terminate this Agreement) with respect to any breaches of representations and warranties contained in Sections 4.01, 4.02 and 4.16(a), (ii) any claim for damages relating to any breach of the representations and warranties contained in Section 4.25 or (iii) any claim, right, or remedy whatsoever (including without limitation Buyer's ability, if any, to seek damages or to terminate this Agreement) with respect to any inaccuracies in or breaches of the representations or warranties of RII contained herein on account of any matter arising or occurring on or before November 30, 1993 (x) which was known by RII or any of its Affiliates or which would have been known by RII or any of its Affiliates had they not been grossly negligent or (y) 44 which was fraudulently or knowingly concealed from Buyer by RII or any of its Affiliates; PROVIDED, HOWEVER, that as of 11:59 p.m. on November 30, 1993, Buyer shall be deemed to waive all rights otherwise reserved in this Section 6.14(b) with respect to any matter which was known to Buyer or any of its Affiliates on or before November 30, 1993. (c) As of the later of 11:59 p.m. on November 30, 1993, or, with respect to breaches by RII of Section 6.01 that Buyer or any of its Affiliates first became aware of between November 25, 1993, and November 30, 1993, five Business Days after Buyer or any of its Affiliates became aware of such breach, Buyer shall be deemed to have waived its right to terminate this Agreement (but not its right to seek damages) for any breaches by RII of Section 6.01 that were known to Buyer or would have been known to Buyer or any of its Affiliates had they not been grossly negligent. SECTION 6.15. CERTAIN OBLIGATIONS OF BUYER. (a) Prior to or at the Closing, Buyer shall, and shall use its best efforts to cause its relevant Affiliates to, execute and deliver, and shall take all actions and perform all material obligations required to be taken or performed by it or its Affiliates at or prior to the Closing under, (i) the Heads of Agreement dated August 18, 1993, among Buyer, Parent and the Government of The Bahamas (and Buyer shall use its best efforts to cause such Heads of Agreement to remain in full force and effect as of the Closing Date), (ii) the Registration Rights Agreement, in the form attached hereto as Exhibit B, (iii) the Articles of Association of Buyer, (iv) the Management Agreement, in the form attached hereto as Exhibit C, and (v) the Non-Recourse Guaranty and Pledge Agreement, in the form attached hereto as Exhibit D. (b) Buyer covenants that upon the Closing, the Buyer Subscription Agreement shall be consummated in accordance with its terms. (c) Promptly upon Closing, Buyer shall cause the Articles of Association of the Company and the Subsidiaries of the Company to be amended so that they are consistent with the Articles of Association of Buyer, such amendments to be reasonably acceptable to the independent directors of Buyer. SECTION 6.16. BANK FACILITY. Buyer shall use its reasonable best efforts to enter into a definitive loan agreement with a bank or group of banks for the provision to 45 it of a principal amount of at least $75 million (the "Bank Facility") substantially on the terms of the commitment letter attached hereto as Exhibit E. SECTION 6.17. AIRLINE GOVERNMENTAL CONSENTS. In the event the Airline Governmental Consents are not obtained before the Closing Date, RII and Buyer agree that until the earlier of the date such Airline Governmental Consents are obtained and one year after the Closing Date, RII and Buyer will enter into a service agreement pursuant to which RII or a Subsidiary of RII will, through PIA, operate scheduled air service equivalent to that currently operated by PIA, such scheduled air service to be operated for the account of Buyer. Such service agreement will be mutually agreed upon by RII and Buyer and shall generally provide that Buyer will receive all revenues generated by PIA in its provision of that scheduled air service operated for the account of the Buyer. Such service agreement shall further provide that Buyer will be responsible for all expenses related to such scheduled air service. RII will be responsible for procuring all other services for the airline, including flight crews, maintenance and catering services, and will receive a commercially reasonable fee for its participation in such arrangement. In addition, Buyer would indemnify RII and its Subsidiaries against any losses and liabilities arising from its participation in such lease arrangement other than losses or liabilities arising from the gross negligence or willful misconduct of the indemnified party. This Agreement may not be terminated and, assuming RII has otherwise used its reasonable best efforts (without the payment of money) to assist Buyer in obtaining the Airline Governmental Consents, a breach of this Agreement shall not be deemed to have occurred as a result of a failure to obtain the Airline Governmental Consents or because RII is prohibited by any governmental agency from complying with this Section 6.17. This Agreement may not be terminated nor shall a condition to Closing fail to be satisfied as a result of RII and Buyer failing to enter into the service agreement referred to above. SECTION 6.18. COMFORT LETTER. RII shall cause Ernst & Young to deliver to Buyer a comfort letter dated a date not more than five Business days before November 30, 1993, which comfort letter shall be in the form of Exhibit F. SECTION 6.19. ESCROW AGREEMENT. (a) On or before December 1, 1993, each of Buyer and RII shall execute and 46 deliver the Escrow Agreement substantially in the form attached hereto as Exhibit G, and each of Buyer and RII agrees to perform its obligations thereunder. (b) Buyer and RII agree that in the event the Closing is to occur, they shall execute and deliver to the Escrow Agent under the Escrow Agreement written instructions directing the Escrow Agent to deliver (i) RII's Escrowed Property (as defined in the Escrow Agreement) to RII and (ii) Buyer's Escrowed Property (as defined in the Escrow Agreement) as directed by Buyer. (c) Buyer and RII agree that if the Bankruptcy Court does not permit RII's Escrowed Property to be held pursuant to the Escrow Agreement, then RII and Buyer shall promptly execute and deliver to the Escrow Agent written instructions directing the Escrow Agent to deliver (i) $4 million of Buyer's Escrowed Property, plus applicable interest that has accrued with respect to such $4 million, as directed by Buyer and (ii) RII's Escrowed Property, plus applicable interest that has accrued with the respect thereto to the extent not included in RII's Escrowed Property to RII. SECTION 6.20. INSURANCE PROCEEDS. If any of the Paradise Island Assets are destroyed or damaged or taken in condemnation, the insurance proceeds or condemnation award with respect thereto shall be a Paradise Island Asset. At the Closing, RII shall pay to Buyer any such insurance proceeds or condemnation awards received by RII on or prior to the Closing and shall assign to or assert for the benefit of Buyer all of its rights against any insurance companies, governmental entities and others with respect to such damage, destruction or condemnation. If and to the extent that there is available insurance under policies maintained by RII or its Subsidiaries in respect of any Assumed Liability, except for any such insurance proceeds with respect to which the insured is directly or indirectly self-insured or has agreed to indemnify the insurer, RII shall cause such insurance to be applied toward the payment of such Assumed Liability. 47 ARTICLE VII NO SHOP; BUYER'S FEES SECTION 7.01. NO SHOP. (a) Neither RII nor any of its Affiliates nor any officer, director, employee, agent (including without limitation, any investment bankers, financial advisor, attorney or accountant) or other repre- sentative of RII or any of its Affiliates shall, directly or indirectly, initiate any contact with, solicit, or encour- age, negotiate or enter into any agreement with, any Third Party, or enter into or continue any discussions or negotia- tions with, or disclose directly or indirectly any informa- tion concerning the Paradise Island Business to any Third Party in connection with any possible proposal regarding the acquisition of any part of the Paradise Island Business (whether by merger, purchase of capital stock, purchase of assets, tender offer or otherwise) (each an "Acquisition Proposal"); PROVIDED, HOWEVER, (i) prior to the entry of the Interim Order, RII may, to the extent required by the fiduciary obligations of the Board of Directors of RII, as determined in good faith by the Board of Directors based upon advice of outside counsel, (A) in response to an unsolicited request therefor, furnish information with respect to the Paradise Island Business (but specifically excluding Buyer or Buyer's plans with respect to the Paradise Island Business) to any person pursuant to a customary confidentiality agreement (as determined by RII's independent counsel) and discuss such information (but not the terms of any Acquisition Proposal) with such person and (B) upon receipt by RII of an Acquisition Proposal, following delivery to Buyer of the notice required pursuant to Section 7.01(b), participate in discussions and negotiations regarding such Acquisition Proposal and (ii) after entry of the Interim Order, RII may furnish information to, and cooperate with Qualified Third Parties (as defined below) with regard to information relating to the Paradise Island Business (but specifically excluding information regarding Buyer or regarding Buyer's plans with respect to the Paradise Island Business) to a Third Party, which Third Party RII reasonably believes is financially able to and interested in consummating an Overbid Transaction (a "Qualified Third Party"). Without limiting the foregoing, it is understood that any violation of the restrictions set forth in the provisions above by any executive officer of RII or any of its Affiliates or any investment banker or attorney of RII or any of its Affiliates, whether or not such person is purporting to act 48 on behalf of RII or any of its Affiliates or otherwise, shall be deemed to be a breach of this Section 7.01(a) by RII. Notwithstanding anything to the contrary in this Section 7.01, RII may furnish to any person, including without limitation any Third Party, copies of any filings made by RII or any of its Subsidiaries with the SEC or the New Jersey Casino Control Commission. (b) In the event that RII shall directly or indirectly receive any offer, proposal or inquiry regarding an Acquisition Proposal, RII shall within two Business Days notify Buyer of such proposal, offer or inquiry and shall, in any such notice to Buyer, indicate in reasonable detail the identity of the offeror and the terms and conditions of any proposal, inquiry or offer. RII agrees not to modify, or release any Third Party from any confidentiality or standstill agreement to which RII is a party (exclusive of those in which RII is the recipient rather than the provider of confidential information). (c) No Acquisition Proposal shall be considered, approved, adopted or recommended by the Board of Directors of RII, or presented by RII or its Board of Directors, to the stockholders of RII for vote or approval by written consent, and no meeting of stockholders of RII shall be called or noticed for purposes of taking stockholder action with respect to any Acquisition Proposal. Notwithstanding the foregoing, in the exercise of its fiduciary duties the Board of Directors may consider, approve, adopt or recommend an Overbid Transaction with a Qualified Third Party, enter into an agreement with a Qualified Third Party with respect to such Overbid Transaction, or present such Overbid Transaction to the stockholders of RII for vote or approval by written consent, in each case at any time after the third Business Day following Buyer's receipt of a written notice advising Buyer that RII has received an offer for an Overbid Transaction, specifying the material terms and conditions thereof and the Qualified Third Party making such offer. Nothing contained herein shall prohibit RII from complying with Rule 14e-2(a) of the Exchange Act. (d) Notwithstanding anything to the contrary contained in this Section 7.01, (i) the provisions of this Section 7.01 shall not apply to any sale or other disposition of any Paradise Island Asset in the ordinary course of business and in a manner consistent with past practice, (ii) RII is not prohibited from supplying TCW and 49 Fidelity with any information regarding the Paradise Island Business or engaging in discussions or in negotiating the terms of the Spin-off (as hereinafter defined) with TCW or Fidelity and entering into a standby distribution agreement and related documents with PIRI (as hereinafter defined) in connection therewith or, if the Closing shall not have occurred on the Effective Date (as defined in the Reorganization Plan) for any reason whatsoever, from effecting the Spin-off, and (iii) RII is not prohibited from supplying the party identified prior to the date hereof by RII (the "Identified Third Party") with respect to any Acquisition Proposal that by its terms shall not be effective until this Agreement is terminated in accordance with its terms; PROVIDED, HOWEVER, that while this Agreement is still in effect, RII shall not supply the Identified Third Party with any information regarding the Paradise Island Business that is not generally available to the public (unless required to do so by its fiduciary duties), and that before engaging in any discussions with the Identified Third Party, RII and the Company shall enter into a customary confidentiality agreement with the Identified Third Party, pursuant to which, among other things, the Identified Third Party agrees (x) not to, directly or indirectly, have any contact with the Government of The Bahamas or any employees or suppliers of the Paradise Island Business and (y) that it shall not make any public announcements of its discussion with RII, TCW or Fidelity, unless otherwise required by law. SECTION 7.02. BUYER EXPENSE REIMBURSEMENT. (a) To the extent and in the circumstances set forth below and provided that Buyer shall not have breached any of its obligations hereunder qualified by materiality and shall not have materially breached any of its obligations hereunder not so qualified, RII shall reimburse Buyer for all of Buyer's reasonable out-of-pocket costs and expenses incurred since June 1, 1993, in connection with the preparation of Buyer's plans for the Paradise Island Business and the negotiation, execution, delivery and performance of Buyer's obligations under this Agreement and the other agreements related hereto, including, without limitation, reasonable out-of-pocket costs and expenses of investors of Buyer and its Affiliates relating to the transactions contemplated by this Agreement (the "Buyer Expense Reimbursement"): (i) in the event that this Agreement is terminated pursuant to Section 10.01(c) [approval by the 50 Bankruptcy Court of an Acquisition Proposal], then RII shall promptly upon such termination pay to Buyer the Buyer Expense Reimbursement up to $4 million; (ii) in the event that this Agreement is terminated by RII after November 30, 1993, pursuant to Section 10.01(l) [Force Majeure Event in excess of $20m], then RII shall promptly upon such termination pay to Buyer the Buyer Expense Reimbursement up to $4 million; (iii) in the event that this Agreement is terminated by Buyer after November 30, 1993, pursuant to Section 10.01(b) [Force Majeure Event in excess of $20m], then RII shall promptly upon such termination pay to Buyer the Buyer Expense Reimbursement up to $2 million; (iv) in the event that this Agreement is terminated pursuant to Section 10.01(m) [RII can not deliver title], then RII shall promptly upon such termination pay to Buyer the Buyer Expense Reimbursement up to $3 million; (v) in the event that this Agreement is terminated after November 30, 1993 (or such later date with respect to circumstances where the five Business Day period referred to in Section 6.14(c) would apply) pursuant to Section 10.01(o) [breach or ordinary course covenant] or after November 30, 1993, pursuant to Section 10.01(k) [Force Majeure Event less than $20m and no adequate insurance], then RII shall promptly upon such termination pay to Buyer the Buyer Expense Reimbursement up to $2 million; (vi) in the event that this Agreement is terminated by RII pursuant to any of the provisions of Section 10.01 or by Buyer pursuant to Section 10.01(b) and a sale of the Paradise Island Business or any portion thereof that would reasonably be expected to generate 50% or more of the revenues of the Paradise Island Business (whether by merger, purchase of capital stock, purchase of assets, tender offer or otherwise) is consummated within one year of such termination (a "Post Termination Sale"), then upon the consummation of such Post Termination Sale, RII, or if the spin-off described in the Registration Statement (the "Spin- off") shall have already occurred, Paradise Island 51 Resorts Limited ("PIRI") shall pay to Buyer the Buyer Expense Reimbursement up to $4 million in the event such Post Termination Sale shall constitute an Overbid Transaction or up to $2 million in the event such Post Termination Sale is not an Overbid Transaction, in each case less any amounts previously paid to Buyer pursuant to subparagraphs (i), (ii), (iii), (iv) and (v) above; and (vii) in the event that this Agreement is terminated by Buyer pursuant to any of the provisions of Section 10.01 and a Post Termination Sale which constitutes an Overbid Transaction occurs within one year of such termination, then upon the consummation of such Post Termination Sale, RII, or if the Spin-off shall have already occurred, PIRI, shall pay to Buyer the Buyer Expense Reimbursement up to $4 million less any amounts previously paid to Buyer pursuant to subparagraphs (i), (ii), (iii), (iv) and (v) above. (b) RII and Buyer agree that the Reorganization Plan will provide that if the Spin-off occurs (i) the obligation to pay the Buyer Expense Reimbursement pursuant to Sections 7.02(a)(vi) and (vii) of this Agreement shall be an obligation of PIRI and not RII and (ii) prior to the consummation of the Spin-off PIRI shall enter into a security and pledge agreement with Buyer, pursuant to which PIRI shall pledge assets reasonably acceptable to Buyer and having a fair market value of $6 million to secure PIRI's obligation to pay the Buyer Expense Reimbursement, such security and pledge agreement to be in a form modeled after, and to have terms generally consistent with the tenor of those terms contained in, the Non-Recourse Guarantee and Pledge Agreement. In the event the Spin-off is to occur, Buyer and RII agree that RII's Escrowed Property (as defined in the Escrow Agreement) shall not be released until PIRI has entered into such security and pledge agreement. (c) RII and Buyer agree and acknowledge, and the Reorganization Plan will provide, that (i) the Spin-off itself as contemplated by the Reorganization Plan shall not constitute a Post Termination Sale and (ii) after the Spin- off, the acquisition of shares of PIRI capital stock by any person (as such term is used in Section 13(d) and 14(d)(2) of the Exchange Act) in a transaction or series of related transactions occurring within one year of the termination of this Agreement that results in such person beneficially 52 owning in excess of 50% of PIRI's outstanding capital stock shall be deemed a Post Termination Sale. (d) RII shall include in the Interim Motion a request for approval of all Buyer Expense Reimbursement items incurred up to and including the date of such Interim Motion and shall support Buyer's fee application with respect to reasonable Buyer Expense Reimbursement items incurred after the entry of the Interim Order. (e) Upon entry of the Interim Order, from and after the Bankruptcy Date, until any obligation of RII to pay the Buyer Expense Reimbursement is fully and indefeasibly discharged, Buyer shall be entitled to an administrative claim pursuant to Section 503(b) and 507(a)(1) of the Bankruptcy Code in the amount of the Buyer Expense Reimbursement. (f) Upon payment by RII to Buyer of Buyer Expense Reimbursement pursuant to this Section 7.02, Buyer shall deliver to RII the results of its due diligence investigation. (g) RII and Buyer agree, and in the event of the Spin-off, PIRI will agree, that if Buyer is entitled to the Buyer Expense Reimbursement, the amount thereof shall be finally determined by Arthur Andersen & Co., subject to the overall limitations contained in this Section 7.02 and, if applicable, to the approval of the Bankruptcy Court. (h) Notwithstanding anything contained herein to the contrary, if RII has complied with its obligation under this Section 7.02, after the consummation of the Spin-off and upon the assumption by PIRI of the obligation to pay the Buyer Expense Reimbursement pursuant to Sections 7.02(a)(vi) and (vii), and the execution by PIRI of the security and pledge agreement referred to in Section 7.02(b), RII shall not have any obligation with respect to the Buyer Expense Reimbursement. SECTION 7.03. ATTORNEYS' FEES. In any action by any party to enforce the terms of this Agreement, the prevailing party shall be entitled to receive reimbursement of all of its reasonable attorneys' fees and expenses incurred in such action. Upon entry of the Interim Order, from and after the Bankruptcy Date, any obligation of RII to pay such fees and expenses shall constitute an administrative claim pursuant to Section 503(b) and 53 507(a)(1) of the Bankruptcy Code. The obligation of either party hereto under this Section 7.03 is not subject to any amount limitation nor can such obligation be set-off against or credited towards other payments payable under this Agreement. SECTION 7.04. TRANSFER TAXES. Any sales, transfer (including any real property transfer) and other Taxes (excluding gross or net income taxes), including without limitation any documentary stamp tax, and any filing, recording or other fees applicable to the conveyance and transfer pursuant to the provisions of this Agreement of the Company and the Paradise Island Assets (collectively, the "Transfer Taxes"), shall be borne and paid 50% by Buyer and 50% by RII. The provisions of this Section shall survive the Closing of this Agreement. RII and Buyer agree to use reasonable best efforts to minimize as much as possible any Transfer Taxes. ARTICLE VIII CONDITIONS TO THE CLOSING SECTION 8.01. CONDITIONS TO OBLIGATIONS OF BUYER. The obligations of Buyer to effect the Closing shall be subject to the prior fulfillment of each of the following conditions: (a) REPRESENTATIONS AND WARRANTIES; AGREEMENTS AND COVENANTS. (i) Each of the representations and warranties of RII contained in Sections 4.01, 4.02 and 4.16(a) of this Agreement shall be true and correct in all respects, in each case when made and as of the Closing Date, (ii) RII shall not have failed to comply with the covenants in Sections 6.01 (unless compliance therewith was waived by Buyer in accordance with Section 6.14(c)), 6.08, 6.09 and 6.10, where such failures in the aggregate would have a Material Adverse Effect, (iii) RII shall have complied in all respects with the covenants contained in Section 6.11, (iv) except with respect to the covenants listed in Section 10.01(h) and Section 10.01(i), each of the other agreements and covenants contained in this Agreement and in any certificate or agreement by RII delivered pursuant hereto to be performed or complied with by RII, at or before Closing, shall have been duly performed or complied with in all material respects; PROVIDED, HOWEVER, that a breach of Section 6.06 would not constitute a failure of a condition 54 hereunder if the representation, warranty or covenant in question would not have resulted in a failure of a condition hereunder and (v) Buyer shall have received a certificate of RII, signed by a Vice President thereof as to the fulfillment of the conditions set forth in the foregoing clauses (i), (ii), (iii) and (iv). (b) HSR ACT. Any waiting period (and any extension thereof) applicable to the consummation of the transactions contemplated hereby under the HSR Act shall have expired or been terminated. (c) CONFIRMATION OF THE REORGANIZATION PLAN AND ENTRY OF THE CONFIRMATION ORDER; CONSUMMATION OF THE REORGANIZATION PLAN. The Confirmation Order shall have been entered by the Bankruptcy Court and the Effective Date (as defined in the Reorganization Plan) shall have occurred, or there shall be no unsatisfied conditions to the occurrence of the Effective Date other than the Closing, and such Confirmation Order shall be in full force and effect and shall not then be stayed, or the consummation of the Acquisitions shall have been approved by another order of the Bankruptcy Court and such other order shall be in full force and effect and shall not then be stayed. (d) CONSENTS. All Governmental Consents shall have been received on or prior to the Closing Date. (e) LITIGATION. There shall not be in effect any injunction or restraining order issued by a court of competent jurisdiction against the consummation of the sale and purchase of the Shares and the RII Paradise Assets pursuant to this Agreement. (f) BANKRUPTCY; INSOLVENCY; ETC. No proceeding shall have been instituted or consented to by or against any of the Company, any of its Subsidiaries or any RII Paradise Subsidiary seeking to adjudicate any of them a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief or composition of any of their debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of any order for relief or the appointment of a receiver, trustee, custodian or other similar official for any of them or any substantial part of any of their property, and such proceeding shall not have been dismissed or terminated within 60 days of the commencement thereof. 55 (g) OPINION. Buyer shall have received an opinion of Gibson, Dunn & Crutcher, counsel to RII, reasonably acceptable to Buyer and its counsel. (h) REGISTRATION RIGHTS AGREEMENT. The Registration Rights Agreement shall have been executed and delivered by the parties thereto and shall be in full force and effect. (i) RESIGNATIONS. Buyer shall have received resignations and releases of all officers and directors of the Company and its Subsidiaries who are not directly involved in the business and operations of the Company and its Subsidiaries in accordance with Section 6.09(c). (j) SECURITY DOCUMENTS. The agreements listed in Schedule 4.16 shall not be in force and effect. SECTION 8.02. CONDITIONS TO OBLIGATIONS OF RII. The obligations of RII to effect the Closing shall be subject to the prior fulfillment of each of the following conditions: (a) REPRESENTATIONS AND WARRANTIES; AGREEMENTS AND COVENANTS. (i) Each of the representations and warranties of Buyer contained in this Agreement and in any certificate or agreement of Buyer delivered pursuant hereto qualified as to materiality shall be true and correct in all respects and those not so qualified shall be true and correct in all material respects, in each case when made and as of the Closing Date (except representations and warranties that are made as of a specific date need be true and correct only as of such date), (ii) each of the agreements and covenants contained in this Agreement and in any certificate or agreement of Buyer delivered pursuant hereto to be performed or complied with by Buyer, at or before the Closing, shall have been duly performed or complied with in all material respects and (iii) RII shall have received a certificate of Buyer, signed by a Vice President thereof as to the fulfillment of the conditions set forth in the foregoing clauses (i) and (ii). (b) HSR ACT. Any waiting period (and any extension thereof) applicable to the consummation of the transactions contemplated hereby under the HSR Act shall have expired or been terminated. 56 (c) CONFIRMATION OF THE REORGANIZATION PLAN AND ENTRY OF THE CONFIRMATION ORDER; CONSUMMATION OF THE REORGANIZATION PLAN. The Confirmation Order shall have been entered by the Bankruptcy Court and the Effective Date (as defined in the Reorganization Plan) shall have occurred, or there shall be no unsatisfied conditions to the occurrence of the Effective Date other than the Closing, and such Confirmation Order shall be in full force and effect and shall not then be stayed, or the consummation of the Acquisition shall have been approved by another order of the Bankruptcy Court and such other order shall be in full force and effect and shall not then be stayed. (d) CONSENTS. All Governmental Consents shall have been received on or prior to the Closing Date. (e) NO INJUNCTIONS. There shall not be in effect any injunction or restraining order issued by a court of competent jurisdiction against the consummation of the sale and purchase of the Shares and the RII Paradise Assets pursuant to this Agreement. (f) OPINION. RII shall have received an opinion of Cravath, Swaine & Moore, counsel to Buyer reasonably satisfactory to RII and its counsel. (g) BANKRUPTCY; INSOLVENCY; ETC. No proceeding shall have been instituted or consented to by or against any of Buyer, Parent or Sun International Management Limited seeking to adjudicate any of them a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief or composition of any of their debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of any order for relief or the appointment of a receiver, trustee, custodian or other similar official for any of them or any substantial part of any of their property. (h) NO CHANGE IN CONTROL. Shares of each of Parent, Sun International Management Limited and Buyer carrying a controlling interest exercisable at general meetings of Parent, Sun International Management (U.K.) Limited and Buyer shall be directly or indirectly beneficially owned by its current beneficial owners or any persons affiliated with such entities. 57 (i) MANAGEMENT AGREEMENT. All conditions under the Management Agreement shall have been satisfied by the Manager thereunder or waived by Buyer. (j) SECURITY DOCUMENTS. The agreements listed in Schedule 4.16 shall not be in force and effect. ARTICLE IX SURVIVAL AND INDEMNIFICATION SECTION 9.01. SURVIVAL OF REPRESENTATIONS. The representations and warranties set forth in Sections 4.01, 4.02, 4.16(a), 4.22, 4.25, 5.01, 5.02, 5.05, 5.06, 5.07, 5.08 and 5.09 (the "Surviving Representations"), and the covenants and agreements contained in this Agreement (except the covenants contained in Sections 6.12 and 6.13 which shall not survive the Closing), and the covenants and agreements contained in any agreements, certificates or other instruments delivered pursuant to this Agreement, shall survive the Closing and shall remain in full force and effect, regardless of any investigation made by or on behalf of any party, but subject to all limitations and other provisions contained in this Agreement or any agreements, certificates or other instruments delivered pursuant to this Agreement. All representations and warranties contained in this Agreement and in any agreements, certificates or other instruments delivered pursuant hereto (other than the Surviving Representations) shall not survive the Closing and shall not remain in full force and effect. SECTION 9.02. INDEMNIFICATION BY RII. Subject to the other provisions of this Article IX, RII hereby agrees to indemnify and hold Buyer and its Affiliates harmless from and against any and all claims, damages, liabilities, liens, losses or other obligations whatsoever, together with reasonable costs and expenses, including reasonable fees and disbursements of counsel and expenses of investigation (collectively, "Losses"), arising out of, based upon or caused by the inaccuracy of any representation or the breach of any warranty of RII contained in Sections 4.01, 4.02, 4.16(a), 4.22 and 4.25 of this Agreement. SECTION 9.03. INDEMNIFICATION BY BUYER. Subject to the other provisions of this Article IX, Buyer hereby agrees to indemnify and hold RII and its Affiliates harmless from and against any and all Losses arising out of, based 58 upon or caused by the inaccuracy of any representation or the breach of any warranty of Buyer that is a Surviving Representation. SECTION 9.04. NOTICE, ETC. Each indemnified party agrees to give the indemnifying party prompt written notice of any action, claim, demand, discovery of fact, proceeding or suit (collectively, "Claims") for which such indemnified party intends to assert a right to indemnification under this Agreement; PROVIDED, HOWEVER, that failure to give such notification shall not affect the indemnified party's entitlement to indemnification hereunder except to the extent that the indemnifying party shall have been actually prejudiced as a result of such failure. The indemnifying party shall have the sole right to defend, settle or otherwise dispose of any Claim, on such terms as the indemnifying party, in its sole discretion, shall deem appropriate; PROVIDED, HOWEVER, that (i) the indemnified party may participate in the defense of any claim pursuant to which the indemnified party could become subject to injunctive or other equitable relief or the business of the indemnified party could be materially and adversely affected in any manner (such participation in the defense of any claim to be at the indemnified party's expense unless the use of separate counsel arises by reason of a material conflict of interest between the indemnifying party and the indemnified party in connection with the defense of such claim) and (ii) the indemnifying party shall obtain the written consent of the indemnified party, which shall not be unreasonably withheld or delayed, prior to ceasing to defend, settling or otherwise disposing of any such Claim, or taking any course of action or omitting to take a permitted course of action with respect thereto, if as a result thereof the indemnified party would become subject to injunctive or other equitable relief. SECTION 9.05. REIMBURSEMENT OF COSTS. The costs and expenses, including reasonable fees and disbursements of counsel and expenses of investigation, incurred by any indemnified party in connection with any claim for which the indemnified party is entitled to indemnification hereunder shall be reimbursed on a quarterly basis by the indemnifying party. SECTION 9.06. TIME LIMITATIONS. Notwithstanding anything to the contrary contained herein, each party's obligation to indemnify or otherwise hold harmless the other party and its Affiliates for any Loss arising out of, based 59 upon or caused by the inaccuracy or breach of any Surviving Representation shall terminate at 11:59 New York City time, on March 31, 1995, PROVIDED, HOWEVER, that claims pending on or asserted prior to such date may continue to be asserted and shall be indemnified against. SECTION 9.07. SOLE AND EXCLUSIVE REMEDY. The indemnification obligations of the applicable parties under Sections 9.02 and 9.03 hereof shall constitute the sole and exclusive remedies of the applicable indemnified parties with respect to the matters described in Sections 9.02 and 9.03, respectively. ARTICLE X TERMINATION, AMENDMENT AND WAIVER SECTION 10.01. TERMINATION. This Agreement may be terminated at any time prior to the Closing Date, notwithstanding the fact that votes may have been received pursuant to the Reorganization Plan Solicitation: (a) by mutual written consent of RII and Buyer at any time prior to entry of the Confirmation Order; (b) by Buyer or RII, if the Closing shall not have occurred on or before June 30, 1994; (c) in the event an Acquisition Proposal is approved by the Bankruptcy Court this Agreement will automatically be deemed terminated without the necessity of providing written notice notwithstanding any provision to the contrary herein; (d) by Buyer, if any event or development first occurring or arising after November 30, 1993, either alone or taken in the aggregate with other matters arising or occurring after November 30, 1993, shall have caused inaccuracies or breaches in the representations and warranties of RII contained herein to occur, except the representations contained in Section 4.13, and such inaccuracies or breaches would have a Material Adverse Effect; (e) by Buyer, if it has become aware that RII will be unable to comply with Section 8.01(a) hereof and such inability to so comply is not reasonably capable 60 of being cured by June 30, 1994, or by RII, if it has become aware that Buyer will be unable to comply with Section 8.02(a) hereof and such inability to so comply is not reasonably capable of being cured by June 30, 1994; (f) by Buyer, on or prior to November 30, 1993, if Buyer reasonably shall determine, on or prior to such date and so notify RII, that (i) any of the representations and warranties of RII contained in this Agreement and qualified as to materiality shall not be true and correct in all respects or that those not so qualified shall not be true and correct in all material respects, in each case when made or on November 30, 1993 (except representations and warranties that are made as of a specific date, which need be true and correct only as of such date) or (ii) there is a reasonable likelihood that the Company's economic costs with respect to the Union Contract would be an amount which is materially different from the amount Buyer expects; PROVIDED, HOWEVER, RII shall have 10 Business Days from the date of notice from Buyer to cure such problems and if such problems are cured no termination shall occur; (g) by Buyer or RII, on or prior to November 30, 1993, if on or prior to such date Buyer has not entered into financing commitment letters with customary terms and conditions with a bank or group of banks for an amount of at least $67.5 million; (h) by Buyer within five Business Days (i) of becoming aware that RII has materially breached the covenants contained in Sections 6.02, 6.03, 6.04, 6.12, 6.13 and 7.01 or (ii) after February 15, 1994, if the Bankruptcy Cases shall not have been filed on or before such date; (i) by Buyer within five Business Days after notifying RII that it is in material breach of the covenants contained in Section 6.05 and RII has not cured such breach; (j) by RII, if the reorganization of Parent described in the Parent Subscription Agreement has not occurred prior to November 30, 1993; 61 (k) by Buyer, if a Material Adverse Effect occurs as a result of any fire, flood, hurricane, accident, explosion or other calamity or casualty or any strike, labor disturbance, riot, act of God or public enemy, or the institution of condemnation proceedings affecting any material portion of the Real Property or Improvements (a "Force Majeure Event"); PROVIDED, HOWEVER, that Buyer shall not have the right to terminate this Agreement in the event that the loss caused by a Force Majeure Event (including the present value of lost profits) is less than $20 million and there is adequate insurance to cover such loss, and PROVIDED, FURTHER, HOWEVER, that a strike or labor disturbance of the employees of the Paradise Island Business after November 30, 1993, shall not constitute a Force Majeure Event; (l) by Buyer or RII in the event a Force Majeure Event occurs and the loss related thereto (including the present value of lost profits) exceeds $20 million, regardless of whether or not such loss is covered by adequate insurance; (m) by Buyer, if Buyer reasonably determines that RII will not be able to deliver good title free and clear of encumbrances, other than Permitted Encumbrances and those Encumbrances arising from acts of Buyer or its Affiliates and other than applicable Transfer Taxes, to a material portion of the Paradise Island Business or the Shares by June 30, 1994; (n) by Buyer, on or prior to November 30, 1993, if Buyer reasonably determines that it will be unable to obtain consents to the Material Contracts set forth on Schedule 10.01(n); (o) by Buyer, if as a result of a breach by RII of its covenant to operate the Paradise Island Business in the ordinary course contained in Section 6.01, a Material Adverse Effect has occurred; PROVIDED, HOWEVER, Buyer shall not have the right to terminate this Agreement pursuant to this paragraph (o) if it has waived such termination right pursuant to Section 6.14(c); and (p) by Buyer or RII, if on or before the close of business on December 1, 1993, the other party has not 62 executed, delivered and performed its obligations under the Escrow Agreement. SECTION 10.02. RIGHTS OF TERMINATION. Subject to the provisions of Section 11.09, the right of termination hereunder may be exercised by Buyer or RII, as the case may be, only by giving written notice, signed on behalf of such party by its duly authorized officer to the other party; PROVIDED, HOWEVER, any exercise of such right of termination by RII shall not be valid unless it shall have been approved in writing by Fidelity and TCW. Notwithstanding anything herein that is to the contrary, if the Closing shall not have occurred on or prior to December 31, 1994, the right of RII to terminate this Agreement after such date shall not require the approval of Fidelity or TCW. SECTION 10.03. EFFECT OF TERMINATION. In the event of the termination of this Agreement pursuant to Section 10.01, this Agreement shall forthwith become void and have no effect, but no such termination shall prejudice any party's rights and remedies against the other for breaches of obligations under this Agreement, including, without limitation, Buyer's right, if any, to payment of the Buyer Expense Reimbursement. Notwithstanding anything herein that may be to the contrary, if this Agreement is terminated pursuant to Section 10.01(c) and RII has not breached any of its obligations hereunder, Buyer shall not have any rights or remedies against RII or any of its Affiliates under this Agreement or otherwise other than Buyer's right, if any, to payment of the Buyer Expense Reimbursement. SECTION 10.04. WAIVER, EXERCISE OF RIGHTS. Subject to the provisions of Section 11.09, at any time prior to the Closing Date, any party hereto may (a) extend the time for the performance of any of the obligations or other acts of the other party hereto, (b) waive any inaccuracies in the representations and warranties contained herein or in any document delivered pursuant hereto and (c) waive compliance with any of the agreements or conditions contained herein; PROVIDED, HOWEVER, that no such extension or waiver by RII, and no such exercise of any other rights of RII hereunder which would materially and adversely affect the rights of the holders of the Old Series Notes in the transactions contemplated hereby, shall be valid unless Fidelity and TCW shall have consented thereto. Any such extension or waiver shall be valid if set forth in an instrument in writing signed by the party to be bound 63 thereby. Except as otherwise provided in Section 6.14, the failure of any party to assert any of its rights hereunder shall not constitute a waiver of any such rights. SECTION 10.05. AMENDMENTS. Subject to the provisions of Section 11.09, the parties hereto may, by written agreement signed by such parties, modify any of the covenants or agreements or extend the time for any performance of any of the obligations contained in this Agreement or any document delivered pursuant to this Agreement; PROVIDED, HOWEVER, that no such amendment on behalf of RII shall be valid unless Fidelity and TCW shall have consented thereto. ARTICLE XI GENERAL PROVISIONS SECTION 11.01. NOTICES. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by cable, telecopy, telegram or telex or by registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the following addresses (or at such other address for a party as shall be specified by like notice): if to Buyer: c/o Sun International Management (U.K.) Ltd. Gravel Hill, Badgemore House Henley-On-Thames Oxfordshire RG9 4NR, United Kingdom Attention: Mr. Howard B. Kernzer in each case, with copies to: Cravath, Swaine & Moore 825 Eighth Avenue New York, NY 10019 Attention: James M. Edwards, Esq. 64 Fidelity Management and Research Company 82 Devonshire Street Boston, MA 02109 Attention: Judy Mencher, Esq. Trust Company of the West 865 South Figueroa Street Los Angeles, CA 90017 Attention: Mr. Bruce A. Karsh Weil, Gotshal & Manges 767 Fifth Avenue New York, NY 10153 Attention: Bruce R. Zirinsky, Esq. if to RII: Resorts International, Inc. 1133 Boardwalk Atlantic City, NJ 08401 Attention: Christopher D. Whitney, Esq. with copies to: Gibson, Dunn & Crutcher 200 Park Avenue New York, NY 10166 Attention: Steven R. Finley, Esq. Fidelity Management and Research Company 82 Devonshire Street Boston, MA 02109 Attention: Judy Mencher, Esq. Trust Company of the West 865 South Figueroa Street Los Angeles, CA 90017 Attention: Mr. Bruce A. Karsh Weil, Gotshal & Manges 767 Fifth Avenue New York, NY 10153 Attention: Bruce R. Zirinsky, Esq. 65 SECTION 11.02. ENTIRE AGREEMENT; ASSIGNMENT. This Agreement constitutes the entire agreement among the parties with respect to the subject matter hereof and supersedes all prior agreements and undertakings, both written and oral, among the parties with respect to the subject matter hereof. This Agreement shall not be assigned by operation of law or otherwise, except that Buyer may assign all or any of its rights and obligations hereunder to any wholly owned Subsidiary of Buyer upon the execution of a written instrument whereby such assignee agrees to assume all of the assignor's obligations hereunder and be bound by all the terms and conditions of this Agreement; PROVIDED, that no such assignment shall relieve the assigning party of its obligations hereunder if such assignee does not perform such obligations. This Agreement may not be amended or modified or any provisions hereof waived without the consent of Fidelity and TCW. SECTION 11.03. PARTIES IN INTEREST. This Agreement shall be binding upon and inure solely to the benefit of each party hereto, and, except to the extent that the consent or approval of TCW or Fidelity may be required hereunder, nothing in this Agreement, express or implied, is intended to or shall confer upon any other person any rights, benefits or remedies of any nature whatsoever under or by reason of this Agreement. SECTION 11.04. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICTS OF LAW THEREOF. SECTION 11.05. HEADINGS. The descriptive headings contained in this Agreement are included for convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement. SECTION 11.06. COUNTERPARTS. This Agreement may be executed in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. SECTION 11.07. SPECIFIC PERFORMANCE. The parties hereto agree that irreparable damage would occur in the event any of the provisions of this Agreement were not to be 66 performed in accordance with the terms hereof and that the parties shall be entitled to specific performance of the terms hereof, in addition to any other remedy at law or equity. SECTION 11.08. JURISDICTION. THE PARTIES HEREBY WAIVE ANY OBJECTION THEY MAY HAVE TO PERSONAL JURISDICTION AND VENUE IN THE U.S. DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND, WHERE NO DIVERSITY OR OTHER SUBJECT MATTER JURISDICTION EXISTS IN SUCH U.S. DISTRICT COURT, THE PARTIES WAIVE SUCH OBJECTIONS IN ANY COURT OF THE STATE OF NEW YORK LOCATED IN THE COUNTY OF NEW YORK, AS TO LITIGATION RELATING TO THIS AGREEMENT. BUYER HEREBY IRREVOCABLY APPOINTS AND DESIGNATES AS ITS LAWFUL AGENT AND ATTORNEY FOR RECEIPT AND SERVICE OF PROCESS IN ANY ACTION ARISING OR TAKEN HEREUNDER BY RII THE LAW FIRM OF CRAVATH, SWAINE & MOORE, 825 EIGHTH AVENUE, NEW YORK, NEW YORK 10019. SECTION 11.09. APPROVALS; KNOWLEDGE. For the purpose of this Agreement (including the Schedules and appendices hereto), unless the context otherwise expressly requires, (i) whenever a document or matter is subject to the "approval", "consent", "satisfaction" or "acceptance" (including any variations of such terms) of any party to this Agreement or of Fidelity or TCW, such person shall not unreasonably withhold or delay its approval, consent, satisfaction or acceptance of such document or matter; provided, however, that the foregoing is without prejudice to RII's right to seek approval, consent, satisfaction or acceptance of any documents or matters from the Bankruptcy Court (in Fidelity's and TCW's stead) upon a showing by RII, and a finding by the Bankruptcy Court, that any approval, consent, satisfaction or acceptance is being unreasonably withheld by Fidelity or TCW; and (ii) "knowledge" with respect to any person (other than an individual) shall mean the knowledge of an executive officer, director, partner, executor or trustee of such person. 67 SECTION 11.10. PARENT GUARANTY. On the date of this Agreement, Buyer shall cause Parent to deliver its guaranty of the obligations of Buyer and Buyer Subsidiaries hereunder, such guaranty to be in substantially the form of Exhibit H. IN WITNESS WHEREOF, Buyer and RII have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized. RESORTS INTERNATIONAL, INC. By: /s/ David P. Hanlon ____________________________ Name: David P. Hanlon Title: Pres. CEO SUN INTERNATIONAL HOTELS LIMITED By: /s/ Solomon Kerzner By:____________________________ Name: Solomon Kerzner Title: Chairman Appendix A DEFINITIONS "ACCOUNTING ARBITRATOR" means Price Waterhouse, or another "Big 6" firm of independent certified public accountants mutually acceptable to RII and Buyer. "ACQUISITION PROPOSAL" shall have the meaning set forth in Section 7.01(a). "ACQUISITIONS" means the Stock Acquisition and the Asset Acquisition. "ADJUSTED CASH" means cash and cage cash. "ADJUSTED CURRENT ASSETS" means Current Assets minus Adjusted Cash. "ADJUSTED WORKING CAPITAL" means Adjusted Current Assets minus Current Liabilities. "ADJUSTMENT DATE" shall have the meaning set forth in Section 2.05(b). "AFFILIATE" means, with respect to any person, (a) any person controlling, controlled by or under common control with such person, (b) any person owning or controlling 10% or more of the outstanding voting interests of such person, (c) any executive officer, director or partner of any such person or (d) any person who is an officer, director, partner, trustee or holder of 10% or more of the voting interest of any person described in clauses (a) through (c) of this sentence. For the purposes of the foregoing definition, the term "CONTROLS", "IS CONTROLLED BY" or "IS UNDER COMMON CONTROL WITH" means possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract or otherwise. The term "PERSON" will be interpreted broadly to include, without limitation, any corporation, company, association, partnership, entity or individual. "AFFILIATE" with respect to RII or Buyer shall not include Fidelity or TCW, or any funds or accounts managed or advised by either Fidelity or TCW or any other creditors of RII. "AGGREGATE CASH PURCHASE PRICE" means the cash portion of the Aggregate Purchase Price, equal to $65 million plus interest on such amount at the Applicable 2 Rate from and including January 1, 1994 to and excluding the Closing Date payable by Buyer and the Buyer Subsidiaries for the Shares and the RII Paradise Assets in accordance with Section 2.03. "AGGREGATE PURCHASE PRICE" means the Aggregate Cash Purchase Price plus the Buyer Series A Shares payable by Buyer and the Buyer Subsidiaries for the Shares and the RII Paradise Assets in accordance with Section 2.03. "AGREEMENT" has the meaning assigned to that term in the introductory paragraph. "ANTL" means ANTL, Inc., a Florida corporation and a direct or indirect wholly owned subsidiary of RII. "APPLICABLE RATE" shall mean the rate per annum (computed on the basis of a year of 365 days) equal to 7.5%. "ASSET ACQUISITION" has the meaning set forth in the second WHEREAS clause. "ASSUMED LIABILITIES" shall have the meaning set forth on Schedule 3.01. "ASSUMED TAXES" shall have the meaning set forth on Schedule 3.01. "ASSUMPTION AGREEMENTS" means the Assumption Agreements dated as of the Closing Date to be in a form reasonably satisfactory to Buyer and RII, pursuant to which each Buyer Subsidiary shall assume the Assumed Liabilities of RII (in the case of the RII Real Estate Assets) and the Assumed Liabilities of its corresponding RII Paradise Subsidiary. "BAHAMAS BENEFIT PLANS" shall have the meaning set forth in Section 4.12A(a). "BAHAMAS EXCHANGE CONTROL APPROVAL" shall have the meaning set forth in Section 4.03(b). "BANK FACILITY" shall have the meaning set forth in Section 6.16. "BANKRUPTCY CASES" means the cases to be commenced under Chapter 11 of the Bankruptcy Code by RII and GRI. 3 "BANKRUPTCY CODE" means Title 11 of the United States Code, as amended. "BANKRUPTCY COURT" means the United States Bankruptcy Court for the District of Delaware or New Jersey, having jurisdiction over the Bankruptcy Cases. "BANKRUPTCY DATE" means the date on which the Bankruptcy Cases are commenced. "BENEFIT PLANS" shall have the meaning set forth in Section 4.12(a). "BUSINESS DAY" means a day of the year in which banks are not required or authorized to close in the Commonwealth of The Bahamas or New York City. "BUYER" has the meaning assigned to that term in the introductory paragraph. "BUYER EXPENSE REIMBURSEMENT" shall have the meaning set forth in Section 7.02(a). "BUYER INDEMNIFIED PARTY" shall have the meaning set forth in Section 3.04. "BUYER PROSPECTUS" means the prospectus included in the Buyer Registration Statement. "BUYER REGISTRATION STATEMENT" means the registration statement of Buyer with respect to the Buyer Series A Shares on Form F-1 filed or to be filed with the SEC, together with any pre- or post-effective amendments thereto. "BUYER SERIES A SHARES" means such number of Series A Ordinary Shares, par value $.01 per share, of Buyer, that at the Closing Date, after giving effect to the Closing, shall constitute 40% of the capital stock of Buyer. "BUYER SHARES" shall have the meaning set forth in Section 5.09. "BUYER SUBSIDIARIES" means direct or indirect wholly owned Subsidiaries of Buyer to be formed to buy the RII Paradise Assets from the RII Paradise Subsidiaries and the RII Real Estate Assets from RII. 4 "CLOSING" means the Closing of the purchase and sale of the Shares and the RII Paradise Assets. "CLOSING DATE" means the date on which the Closing occurs. "CLOSING DATE BALANCE SHEET" shall have the meaning set forth in Section 2.05(a). "CLOSING DATE OPERATIONS STATEMENT" shall have the meaning set forth in Section 2.05(a). "CODE" means the Internal Revenue Code of 1986, as amended. "COMPANY" means Resorts International (Bahamas) 1984 Limited, a Bahamian corporation. "CONFIRMATION ORDER" means an order of the Bankruptcy Court confirming the Reorganization Plan and approving performance by RII of this Agreement, in form and substance, with respect to matters relating to the Paradise Island Business, satisfactory to Buyer. "CONTRACTS" shall mean leases, rental agreements, insurance policies, sales orders, collective bargaining agreements, union contracts, licenses, agreements, permits, purchase orders, registered user agreements, commitments and any and all other contracts or binding arrangements (including, without limitation, capital commitments and arrangements with respect to construction in progress), whether written or oral, express or implied. "CONTINUING EMPLOYEES" shall have the meaning set forth in Section 6.09(a). "CURRENT ASSETS" means cash, cage cash, net receivables, prepaid expenses, and inventory. "CURRENT LIABILITIES" means accounts payable, accrued liabilities and the current portion of the capital lease obligations relating to the mini bars used in the Paradise Island Business. "DISCLOSURE STATEMENT" means the information statement/prospectus included in the Registration Statement and presented to the Bankruptcy Court for approval pursuant 5 to Section 1125 of the Bankruptcy Code, as the same may be supplemented or amended. "EBITDA ADJUSTMENT" means the Earnings from Operations appearing as a line item on the Closing Date Operations Statement PLUS depreciation PLUS the amount, if any, paid or accrued with respect to RII management fees to the extent such fees were deducted in computing Earnings from Operations, PLUS any expenses in excess of $25,000 appearing on the Closing Date Operations Statement that are attributable to events occurring prior to January 1, 1994, LESS $275,000 per month for overhead relating to RII and the RII Paradise Subsidiaries (to be prorated for any portion of a month) LESS capital expenditures; provided that any item of capital expenditure in excess of $25,000 shall not be deducted if not approved in writing by Buyer. "ENCUMBRANCE" means any lien, imperfection of title, claim, encumbrance, security interest, option, charge or restriction of any kind. "ENVIRONMENTAL CLAIM" means any notice of violation, action, claim, lien, demand or order or direction by any Governmental Authority or any person for personal injury (including sickness, disease or death), tangible or intangible property damage, damage to the environment, nuisance, pollution, contamination or other adverse effects on the environment, or for fines or penalties resulting from or based upon (a) the existence, or the continuation of the existence, of an Environmental Release (including, without limitation, sudden or nonsudden accidental or non-accidental Environmental Release) of, or exposure to, any Hazardous Substance or other chemical, material, pollutant, contaminant, odor, or other Environmental Release in, into or onto the environment (including, without limitation, the air, soil, surface water or groundwater) at, in, by, from or related to the property or any activities conducted thereon; (b) the environmental aspects of the transportation, storage, treatment or disposal of Hazardous Substances in connection with the Company's or any Subsidiary's operations; or (c) the violation, or alleged violation, of any Environmental Laws, orders or Environmental Permits of or from any Governmental Authority relating to environmental matters connected with the property. "ENVIRONMENTAL LAW" means any applicable foreign, federal, state or local law (including common law), statute, 6 code, ordinance, rule or regulation concerning Environmental Releases into any part of the natural environment, or activities that might result in damage to the natural environment, or relating to the environment and/or protecting or improving the quality of the natural environment or protecting public and employee health and safety, including in the case of the United States, but not limited to, the Comprehensive Environmental Response, Compensation, and Liability Act (42 U.S.C. Sections 9601 ET SEQ.), the Hazardous Materials Transportation Act (49 U.S.C. Sections 1801 ET SEQ.), the Resource Conservation and Recovery Act (42 U.S.C. Sections 6901 ET SEQ.), the Clean Water Act (33 U.S.C. Sections 1251 ET SEQ.), the Clean Air Act (33 U.S.C. Sections 2601 ET SEQ.), the Toxic Substances Control Act (15 U.S.C. Section Section 2601 ET SEQ.), the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. Sections 136 ET SEQ.) and the Occupational Safety and Health Act (29 U.S.C. Sections 651 ET SEQ.), as such laws have been amended or supplemented, and the regulations promulgated pursuant thereto, and any and all analogous state or local statutes. "ENVIRONMENTAL LIEN" means any Encumbrance in favor of any Governmental Authority for Environmental Claims and/or Remedial Actions. "ENVIRONMENTAL PERMIT" means any permit, approval, authorization, license, variance, registration or permission required under any applicable Environmental Laws. "ENVIRONMENTAL RELEASE" means any release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching, or migration into the indoor or outdoor environment, or into or out of any Property, including the movement of any Hazardous Substances or other materials through or in the air, soil, surface water, groundwater or property. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended. "ERISA AFFILIATE" means any person or entity that, together with the Company, is treated as a single employer under Section 414(b), (c) or (m) of the Code. "EXCLUDED ASSETS" means: (i) the corporate records of the RII Paradise Subsidiaries; (ii) any tax refunds relating to any of the RII Paradise Subsidiaries; (iii) the names "Resorts", "Merv Griffin" and "Griffin", any 7 variation thereof, any right to the use thereof and any trademark, trade name, service mark and similar intellectual property rights used in connection therewith; (iv) the Non-Assignable Contracts for which consents to assignment thereof to the Buyer Subsidiaries have not been obtained as of the Closing Date; (v) assets and properties (including financial, personnel and other books, records and data) owned or held by RII or any of its Affiliates which do not relate primarily to the Paradise Island Business and which relate to the business of RII and its Affiliates other than the Paradise Island Business; and (vi) intercompany receivables. "EXCLUDED EMPLOYEE" shall have the meaning set forth in Section 6.09(a). "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended. "FIDELITY" means Fidelity Management and Research Company. "GAAP" means generally accepted accounting principles in the United States of America as in effect on the date of this Agreement, or with respect to financial statements prepared as of a date prior to this Agreement, as in effect on the date such financial statements were prepared. "GOVERNMENTAL AUTHORITY" means any government or governmental or regulatory body thereof, or any political subdivision thereof, whether foreign, federal, state or local, or any agency, commission, instrumentality or authority thereof, or any court or arbitrator. "GOVERNMENTAL CONSENTS" shall have the meaning set forth in Section 4.03(b). "GRI" means GRI, Inc., a Delaware corporation and a direct or indirect wholly owned Subsidiary of RII and formerly known as Griffin Resorts, Inc. "HAZARDOUS SUBSTANCES" mean any substance, material or waste which is regulated by any local Governmental Authority, Governmental Authority in the jurisdictions in which the Paradise Island Business operates, or the United States, including, without limitation, any material or substance which is defined as a 8 "hazardous waste," "hazardous material," "hazardous substance," "extremely hazardous waste" or "restricted hazardous waste," "subject waste," "contaminant," "toxic waste" or "toxic substance" under any provision of Environmental Law, including, but not limited to, petroleum products, asbestos and polychlorinated biphenyls. "HEADS OF AGREEMENT" means the Heads of Agreement dated August 18, 1993, among Parent, Buyer and the Commonwealth of The Bahamas. "HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. "INDEBTEDNESS" means, with respect to any person, any liability or obligation of such person (whether incurred by such person directly or by assumption or otherwise and whether outstanding on the date of execution of this Agreement or thereafter created, incurred or assumed) (a) for money borrowed, (b) arising under guarantees by such person of indebtedness for money borrowed by any other person, (c) for purchase money indebtedness evidenced by notes, lease-purchase agreements or similar instruments for the payment of which such person is responsible or liable, by guarantees or otherwise, (d) under any agreement to lease, or lease of, any real or personal property which is required to be capitalized in accordance with GAAP or (e) arising under modifications, renewals, extensions or refundings of any such liability or obligation. "INTELLECTUAL PROPERTY" means all patents, trademarks, trade names, service marks, copyrights and similar intellectual property rights used in the conduct of the Paradise Island Business, but specifically excluding the Excluded Assets. "INTERIM MOTION" means a motion filed with the Bankruptcy Court by RII to enter the Interim Order. "INTERIM ORDER" means an order in form and substance reasonably satisfactory to Buyer and its counsel (i) approving the provisions of and authorizing the performance by RII of its obligations under Sections 6.05, 7.01, 7.02 and 7.03 and Article X, (ii) providing that the Bankruptcy Court shall not permit consideration of or approve, so long as this Agreement has not been terminated, an Acquisition Proposal unless such Acquisition Proposal constitutes an Overbid Transaction, (iii) subject to 9 applicable Bankruptcy law and rules approving under the terms and conditions set forth in Section 7.02, an amount of Buyer Expense Reimbursement reasonably incurred by Buyer up to the date of the Interim Order, (iv) approving the Escrow Agreement and (v) providing that such Interim order cannot be amended or modified without the consent of Fidelity and TCW. "IRS" means the Unites States Internal Revenue Service. "ISI" means International Suppliers, Inc., a Florida corporation and a direct or indirect wholly owned subsidiary of RII. "JUNE 30 BALANCE SHEET" means the unaudited combined balance sheet of the Paradise Island Business as of June 30, 1993, as set forth in Schedule 4.05. "LOSSES" shall have the meaning set forth in Section 9.02. "MATERIAL ADVERSE EFFECT" means any change in, or effect on, the Paradise Island Business that is materially adverse to the business, assets, results of operations or financial condition of the Paradise Island Business, excluding changes resulting from general economic conditions or economic conditions relating specifically to the gaming or hotel industry. "MATERIAL CASES" means all lawsuits, claims, proceedings or investigations by or against or affecting (i) the Company or any of its Subsidiaries, (ii) any RII Paradise Subsidiaries with respect to the RII Paradise Assets, (iii) any of the Paradise Island Assets or (iv) the Paradise Island Business, in each case as to which there is a reasonable likelihood of adverse determination and which would, if determined in a manner adverse to the Company, any of its Subsidiaries or any RII Paradise Subsidiary with respect to the RII Paradise Assets, individually or in the aggregate, result in a monetary judgment in excess of $100,000 or which would otherwise materially limit the ability of the Company, its Subsidiaries and the RII Paradise Subsidiaries to conduct the Paradise Island Business. "MATERIAL CONTRACT", means any Contract relating to the Paradise Island Business (a) which has an aggregate 10 future liability in excess of $100,000, or (b) which is not terminable by notice of not more than 60 days for a cost of less than $50,000. "NON-ASSIGNABLE CONTRACT" shall have the meaning set forth in Section 2.07. "OVERBID TRANSACTION" means an Acquisition Proposal or a Post Termination Sale which provides for consideration attributable to, or in the case of transaction involving less than all of the Paradise Island Business, consideration that would result in, the entire Paradise Island Business having a fair market value, as determined by an investment banking firm of international standing selected by RII and reasonably acceptable to Buyer, in an amount in excess of $130,000,000. "PARADISE EMPLOYEE" shall have the meaning set forth in Section 6.09(a). "PARADISE ISLAND ASSETS" means all the assets, properties, goodwill, business and other rights of every kind and nature whatsoever, tangible or intangible, real, personal or mixed, and wherever located, used primarily in connection with or relating primarily to the Paradise Island Business, including, without limitation, any company name, receivables, rights under Contracts, Intellectual Property, investments, business and goodwill, and including all property and assets used primarily in connection with or relating primarily to the Paradise Island Business acquired by RII or any Affiliate of RII between the date of this Agreement and the Closing Date and not sold, transferred or otherwise disposed of prior to the Closing Date in the ordinary course of business and in accordance with the terms hereof. The Paradise Island Assets include the RII Real Estate Assets. The Paradise Island Assets shall not include any of the Excluded Assets or cash, except to the extent provided in Section 2.05. "PARADISE ISLAND BUSINESS" means all the operations and properties conducted and owned by RII and its Affiliates relating primarily to Paradise Island, the Bahamas and as described in the Registration Statement, including, without limitation, the Paradise Island Resort & Casino, Ocean Club Golf & Tennis Resort, Paradise Paradise Beach Resort, and approximately 219 acres of land on Paradise Island not used in the Company's operations, approximately 1675 acres on Grand Bahama Island , 11 approximately 561 acres on Andros Island and other similarly related assets not currently used actively in the Paradise Island operations, but excluding any business relating to Excluded Assets. "PARADISE ISLAND FINANCIAL STATEMENTS" means with respect to the Paradise Island Business (i) the audited combined statements of operations for the fiscal years ending December 31, 1990, December 31, 1991, and December 31, 1992, and the unaudited combined statements of operations for the six months ending June 30, 1993, and 1992 and (ii) the audited combined balance sheets as of December 31, 1991, and December 31, 1992, and the unaudited combined balance sheet as of June 30, 1993, copies of which are included in Schedule 4.05. "PARENT" means Sun International Investments Limited, a British Virgin Islands corporation and parent of Buyer. "PARENT SUBSCRIPTION AGREEMENT" shall have the meaning set forth in Section 5.10. "PBGC" means the Pension Benefit Guaranty Corporation. "PERMITTED ENCUMBRANCES" means Encumbrances incurred by the Company, its Subsidiaries or the RII Paradise Subsidiaries in connection with (a) mechanics', carriers', workmen's, repairmen's or other like liens arising or incurred in the ordinary course of business, liens arising under purchase price conditional sales contracts and equipment leases with third parties entered into in the ordinary course of business, (b) liens for taxes not yet due or which are being contested in good faith by appropriate proceedings, (c) liens imposed by law securing obligations which are not overdue, or, if due, are being contested in good faith by appropriate proceedings, (d) liens upon leases and contracts included in the Paradise Island Assets or upon property subject to such leases and contracts granted by lessors or parties to such leases or contracts other than RII or any of its Affiliates (e) assessments, servitudes and rights-of-way of record or in actual or apparent use or restrictive covenants for any approved subdivision, and (f) other Encumbrances, if any, which other Encumbrances do not, individually or in the aggregate, materially impair the continued use and operation of the assets to which they relate in the Paradise Island 12 Business, as presently conducted or, in the case of material assets, do not materially detract from the value of such assets. "PIA" means Paradise Island Airlines, Inc., a Florida corporation and a direct or indirect wholly owned subsidiary of RII. "PIV" means Paradise Island Vacations, Inc., a Florida corporation and a direct or indirect wholly owned subsidiary of RII. "POST TERMINATION SALE" shall have the meaning set forth in Section 7.02. "PRELIMINARY CLOSING DATE BALANCE SHEET" has the meaning set forth in Section 2.05(a). "PRELIMINARY CLOSING DATE OPERATIONS STATEMENT" shall have the meaning set forth in Section 2.05(a). "QUALIFIED THIRD PARTY" shall have the meaning set forth in Section 7.01(a). "REAL PROPERTY" shall have the meaning set forth in Section 4.07. "REGISTRATION STATEMENT" means the registration statement of RII and certain of its Subsidiaries on Form S-4 filed or to be filed with the SEC, together with any pre- or post-effective amendments thereto. "REMEDIAL ACTION" means all actions, including, without limitation, any capital expenditures, required or voluntarily undertaken to (a) clean up, remove, treat, or in any other way address any Hazardous Substance or other material in the indoor or outdoor environment; (b) prevent the release or threat of release, or minimize the further release of any Hazardous Substance or other material so it does not migrate or endanger or threaten to endanger public health or welfare of the indoor or outdoor environment; (c) perform pre-remedial studies and investigations or post- remedial monitoring and care; or (d) bring the properties into compliance with all applicable Environmental Laws and Environmental Permits. 13 "REORGANIZATION PLAN" means the joint plan of reorganization substantially in the form approved by Fidelity and TCW, and with respect to matters relating to the Paradise Island Business, approved by Buyer, and attached to the Disclosure Statement to be filed by RII and GRI with the Bankruptcy Court on the Bankruptcy Date, which shall include as exhibits thereto, INTER ALIA, this Agreement. "REORGANIZATION PLAN SOLICITATION" means the RII's and GRI's solicitation of acceptances of the Reorganization Plan pursuant to Section 1126(b) of the Bankruptcy Code. "RIDI" means Resorts International Disbursement, Inc., a Florida corporation and a direct or indirect wholly owned subsidiary of RII. "RII INDEMNIFIED PARTY" shall have the meaning set forth in Section 3.04. "RII" has the meaning assigned to that term in the introductory paragraph. "RII PARADISE ASSETS" means all the assets, properties, goodwill, business and other rights of every kind and nature whatsoever, tangible or intangible, real, personal or mixed, and wherever located, owned by the RII Paradise Subsidiaries and used primarily in connection with or relating primarily to the Paradise Island Business, including, without limitation, any company name, receivables, rights under Contracts, Intellectual Property, investments, business and goodwill, and including all property and assets used primarily in connection with or relating primarily to the Paradise Island Business acquired by the RII Paradise Subsidiaries between the date of this Agreement and the Closing Date and not sold, transferred or otherwise disposed of prior to the Closing Date in the ordinary course of business and in accordance with the terms hereof. RII Paradise Assets include the RII Real Estate Assets. RII Paradise Assets shall not include any of the Excluded Assets or cash, except to the extent provided in Section 2.05. "RII PARADISE SUBSIDIARIES" means RIDI, PIV, RRII, ISI, PIA and ANTL. "RII REAL ESTATE ASSETS" shall have the meaning set forth in Section 4.07(a). 14 "RRII" means Resorts Representation International, Inc., a Florida corporation and a direct or indirect wholly owned subsidiary of RII. "SEC" means the United States Securities and Exchange Commission. "SECURITIES ACT" means the Securities Act of 1933, as amended. "SHARES" means 500 shares of Class A Common Stock, B$2.86 par value per share, 400 shares of Class B Common Stock, B$2.86 par value per share, and 900 shares of Non- Voting Class C Common Stock, B$2.86 par value per share of the Company, such shares constituting all of the issued and outstanding shares of capital stock of the Company. "STOCK ACQUISITION" has the meaning set forth in the first WHEREAS clause. "SUBSIDIARY" of a person means any corporation or other entity of which 50% or more of the outstanding capital stock or other equity having ordinary voting power to elect a majority of the board of directors or other managers of such corporation (irrespective of whether at the time capital stock of any other class or classes of such corporation will or might have voting power upon the occurrence of any contingency) or other entity is at that time directly or indirectly owned 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. "TARGET ADJUSTED CASH" means Adjusted Cash of $5,000,000. "TARGET ADJUSTED WORKING CAPITAL" means Adjusted Working Capital of $5,000,000. "TAXES" means all federal, state, local and foreign taxes and assessments, including all interest, penalties and additions to tax imposed with respect to such amounts, imposed by any taxing authority, domestic or foreign. "TAXPAYERS" shall mean the Company and its Subsidiaries and any predecessor thereof. "TCW" means TCW Special Credits. 15 "THIRD PARTY" means any corporation, partnership, person or other entity or group other than Buyer or RII. "TRANSFER TAXES" has the meaning set forth in Section 7.04. "UNION" shall have the meaning set forth in Section 2.05(a). "UNION CONTRACT ARBITRATOR" shall mean Keith M. Duncombe of Harry B. Sands & Company. "UNION CONTRACT DISPUTE" shall have the meaning set forth in Section 2.05(a). "UNION CONTRACT DISPUTE AMOUNT" shall have the meaning set forth in Section 2.05(a). - ------------------------------------------------------------ EXHIBITS /s/ DAVID P. HANLON ------------------- to the R.I.I. PURCHASE AGREEMENT /s/ SOLOMON KERZNER ------------------- between Buyer RESORTS INTERNATIONAL, INC. and SUN INTERNATIONAL HOTELS LIMITED ------------------------------------- Dated as of October 11, 1993 ------------------------------------- Purchase of Stock of Resorts International (Bahamas) 1984 Limited, and certain assets of RII and RII Paradise Subsidiaries - ------------------------------------------------------------ EXHIBIT A SUN INTERNATIONAL HOTELS LIMITED NEW ARTICLES OF ASSOCIATION (ADOPTED ON ____________) PRELIMINARY AND CONSTRUCTION 1. The regulations contained in the First Schedule to the Companies Act shall not apply to the Company. 2. (1) In these Articles, except where the subject or context otherwise requires: "Articles" means the articles of association of the Company on the date hereof as the same may be amended from time to time; the "board" means the directors or any of them acting as the board of directors of the Company; "Closing Date" shall mean the date the Company acquires the Paradise Island assets of Resorts International, Inc.; "Commonwealth" means the Commonwealth of The Bahamas; "Companies Act" means the Companies Act 1992 including any modification or re-enactment thereof for the time being in force; "Company" means Sun International Hotels Limited, the company to which these Articles apply. "director" means a director of the Company; "dollar" or "$" means the lawful currency of the United States of America; "holder" means, in relation to any shares, the member whose name is entered in the register of members as the holder of such shares; 2 "Ordinary Shares" means the Series A Ordinary Shares and the Series B Ordinary Shares; "Preference Shares" means the Preference Shares of $0.01 each of the Company having the rights set forth in these Articles; "secretary" means the secretary of the Company and includes a joint, assistant, deputy or temporary secretary and any other person appointed to perform the duties of the secretary; "Series A Ordinary Shares" means the Series A Ordinary Shares of $0.01 each of the Company having the rights set forth in these Articles; "Series A Put" means the put option in respect of the Series A Ordinary Shares set forth in Articles 19 and 21; "Series A Put Termination Date" means the date when the Company shall have satisfied and discharged all of its obligations under Articles 19 and 21; "Series B Ordinary Shares" means the Series B Ordinary Shares of $0.01 each of the Company having the rights set forth in these Articles; and "shares" means shares in the Company including the Ordinary Shares and the Preference Shares. (2) The following terms are defined in the Article indicated: Term Article ---- ------- "Company Notice" 19 "Independent Director" 49 "Pledge Agreement" 16 "Purchase Date" 19 "Purchase Price" 19 "Put Notice" 20 "Restricted Transactions" 68 "Tendered Shares" 21 (3) Save as aforesaid or as otherwise defined herein any words or expressions defined in the Companies Act (but excluding any modification thereof not in force at the 3 date of adoption of these Articles) shall, if not inconsistent with the subject or the context, bear the same meaning in these Articles. (4) For the purposes of these Articles, references to writing include references to any visible substitute for writing and to anything partly in one form and partly in another form; words denoting the singular number include the plural number and vice versa; words denoting the masculine gender include the feminine gender and vice versa; and references to persons include references to bodies corporate. 3. In addition to the registered office of the Company in the Commonwealth, which shall be at such place as the directors shall from time to time appoint, the Company may have an office for the transaction of business at any other place, and meetings of the Company or of the directors may be held either within or without the Commonwealth at such place as the directors may determine. SHARES 4. The authorized share capital of the Company at the date of adoption of these Articles is $350,000 divided into 25,000,000 Ordinary Shares of $0.01 each and 10,000,000 Preference Shares of $0.01 each. The Ordinary Shares are, at the date of adoption of these Articles, divided into 15,000,000 Series A Ordinary Shares and 10,000,000 Series B Ordinary Shares having, in each case, the rights set forth in these Articles. Subject to Article 68(e) and 68(h), so long as Article 68 is in effect, the Preference Shares may be issued by the Directors from time to time in one or more Series having such rights as the board may by resolution determine. All the shares of the Company shall be in registered form, shall be fully paid for at the time of issuance and shall be nonassessable. 5. Without prejudice to any special rights previously conferred on the holders of existing shares in the Company, and subject to Article 68(e) and 68(h), so long as Article 68 is in effect, any Preference Shares in the Company may be issued with such preferred, deferred or other special rights or such restrictions, whether in regard to dividend, voting, return of share capital or otherwise, as the board may from time to time by resolution determine. Preference Shares may be voting, non-voting or voting only for specific purposes or in specific circumstances; 4 PROVIDED, HOWEVER that the Company shall be prohibited from issuing any non-voting Preference Shares which are not entitled to elect at least one director of the Company in the specific case where an event of default in the payment of dividends has occurred and is continuing with respect to such shares. For purposes of Article 68, so long as it is in effect, non-voting Preference Shares and Preference Shares voting only to elect one or more directors in the case of a default in payment of dividends thereon shall be deemed non-voting Preference Shares and all others shall be deemed voting Preference Shares. 6. Where at any time the share capital is divided into different classes or series of shares, the rights attached to any class or series (unless otherwise provided by the terms of issue of the shares of that class or series) may only be varied or abrogated with the sanction of a resolution of the board and either (i) the consent in writing of the holders of a majority in nominal value of the issued shares of the class or series or (ii) the sanction of a resolution of members holding shares of that class or series passed at a separate general meeting of the holders of the shares of that class or series. CERTIFICATES 7. Every person whose name is entered as a member in the register of members shall, without payment, be entitled to a certificate under the common seal of the Company specifying the share or shares held by him, provided that in respect of a share or shares held jointly by several persons the Company shall not be bound to issue more than one certificate, and delivery of a certificate for a share to one of several joint holders shall be sufficient delivery to all. 8. A share certificate defaced, lost or destroyed may be renewed or replaced on payment of such fee, if any, as may be prescribed, and on such terms, if any, as to evidence and indemnity as the directors think fit. PURCHASE OF SHARES 9. Subject to and in accordance with the provisions of the Companies Act and without prejudice to any relevant special rights attached to any class or series of shares, the Company may, with the agreement of the holders of the relevant shares, purchase any of its own shares of 5 any class or series (including redeemable shares) at any price (whether at par or above or below par), and any shares to be so purchased may be selected by the Company in any manner whatsoever. TRANSFER AND TRANSMISSION OF SHARES 10. Subject to Article 11, the instrument of transfer of any share in the Company shall be executed by the transferor (or its duly authorized agent), and the transferor shall be deemed to remain the holder of the share until the name of the transferee is entered in the register of members in respect thereof. 11. Shares in the Company shall be transferred in any usual or common form. The transfer agent for the Company or the Company's board may determine if a form of transfer is usual or common in the case of any question or dispute concerning a transfer. 12. The board may: (a) decline to register a transfer of shares unless the instrument of transfer is accompanied by the certificate or certificates of the shares to which it relates, and such other evidence as the board may reasonably require to show the right of the transferor to make the transfer; and (b) suspend the registration of transfers during the fourteen days immediately preceding the ordinary general meeting in each year. 13. The executors or administrators of a deceased sole holder of a share shall be the only persons recognized by the Company as having any title to the share. In the case of a share registered in the names of two or more holders, the survivors or the executors or administrators of the deceased survivor shall be the only persons recognized by the Company as having any title to the share. 14. Any person becoming entitled to a share in consequence of the death or bankruptcy of a member shall, upon such evidence being produced as may from time to time be required by the board, have the right, either to be 6 registered as a member in respect of the share or, instead of being registered himself, to make such transfer of the share as the deceased or bankrupt person could have made; but the directors shall, in either case, have the same right to decline or suspend registration as they would have had in the case of a transfer of the share by the deceased or bankrupt person before the death or bankruptcy. 15. A person becoming entitled to a share by reason of the death or bankruptcy of the holder shall be entitled to the same dividends and other advantages to which he would be entitled if he were the registered holder of the share, except that he shall not, before being registered as a member in respect of the share, be entitled in respect of it to exercise any right conferred by membership in relation to meetings of the Company. SPECIAL RESTRICTION ON THE VOTING OF SERIES A ORDINARY SHARES BY SUN INTERNATIONAL INVESTMENTS LIMITED PRIOR TO THE SERIES A PUT TERMINATION DATE 16. In the event that Sun International Investments Limited or any of its affiliates from time to time acquires Series A Ordinary Shares, then at all times prior to the Series A Put Termination Date, neither Sun International Investments Limited nor any such affiliate will be entitled to vote such Series A Ordinary Shares for the election of Independent Directors (and any votes cast in violation of this restriction shall not be counted) unless Sun International Investments Limited and its affiliates then own 50% or more of the then outstanding Series A Ordinary Shares. In the event that prior to the Series A Put Termination Date Sun International Investments Limited and its affiliates own 50% or more of the then outstanding Series A Ordinary Shares, they shall be entitled to vote such shares to elect one Independent Director (or, if the total number of Independent Directors is greater than two, they shall be entitled to vote such shares to elect not more than 50% of the Independent Directors). ALTERATION OF CAPITAL 17. The Company may, by a resolution of the holders of Ordinary Shares, increase the share capital by such sum to be divided into shares of such amount as the resolution shall prescribe. 7 18. The Company may, by resolution of the board (and the holders of the Ordinary Shares, if and to the extent required by the Companies Act): (a) consolidate and divide its share capital into shares of larger amount than its existing shares; (b) subdivide its existing shares, or any of them or divide the whole or any part of its share capital into shares of smaller amount than is fixed by the Articles; or (c) reduce its share capital in any manner and with and subject to any incident authorized and consent required by law. SERIES A PUT 19. Subject to the proviso in the first sentence of Article 21 hereof, not earlier than one hundred but not later than ninety days prior to the fifth anniversary of the Closing Date, or such later date as may be required by the proviso in the first sentence of Article 21 hereof (the "Purchase Date") the Company shall give written notice (the "Company Notice") to the holders of the Series A Ordinary Shares (and for information to the holder of the Series B Ordinary Shares) that the Series A Put is then exercisable in accordance with the provisions of these Articles and stating the Purchase Price (as defined below) payable on exercise of the Series A Put. The Company Notice shall constitute an offer by the Company to purchase on the Purchase Date all or any outstanding Series A Ordinary Shares properly tendered to it, for a consideration per Series A Ordinary Share of $35 [if 2,000,000 Series A Ordinary Shares are originally issued], adjusted so as to avoid any reduction in the rights or interests of the holders of such Series A Ordinary Shares as a result of any consolidation or division of the Series A Ordinary Shares pursuant to Article 18 or other similar alteration to the Series A Ordinary Shares after the date of adoption of these Articles (as so adjusted from time to time, the "Purchase Price"). 20. Each holder of Series A Ordinary Shares may, but shall not be obligated to, accept the offer contained in the Company Notice, by tendering to the Company not later than two business days prior to the Purchase Date a notice 8 in writing (the "Put Notice") signed by the holder of the Series A Ordinary Shares indicating the number of Series A Ordinary Shares in respect of which it is exercising the Series A Put (which may be all or any portion of such holder's shares) together with the certificates relating thereto. A Put Notice may be withdrawn (in whole or in part) by delivery to the Company of written notice to that effect signed by the holder of the Series A Ordinary Shares the subject of the Put Notice not later than two business days prior to the Purchase Date. 21. The Purchase Price in respect of Series A Ordinary Shares properly tendered in accordance with Article 20 and not withdrawn (the "Tendered Shares") shall be paid to the holders thereof by the Company on or before the Purchase Date provided that the Company shall have no liability under the Series A Put to make any payment to the extent that such payment could not be made in compliance with the Companies Act, and in particular Section 44(2) thereof, and in such event, this obligation shall be deferred until such time as it may be satisfied in accordance with the Companies Act. Tendered Shares so purchased shall immediately be cancelled. The Company may discharge its obligations in full to the holders of Series A Ordinary Shares by depositing with a reputable bank, trust company or other financial institution having minimum capital and surplus of at least $100,000,000, as agent for the holders of the Series A Ordinary Shares (the "Distribution Agent") an amount in cash sufficient to pay the Purchase Price for the Series A Ordinary Shares so properly tendered and not withdrawn and by instructing the Distribution Agent to make payment of the Purchase Price promptly to such holders. In the event that the Company is unable to purchase the Tendered Shares on the Purchase Date by reason of Section 44(2) (or any other provision) of the Companies Act, such unpurchased Tendered Shares may nonetheless be purchased at the Purchase Price from holders delivering a Put Notice by Sun International Investment Limited or any of its affiliates. 22. During the period commencing on the date of the Company Notice and ending on the Series A Put Termination Date the Company shall not issue any Series A Ordinary Shares. 23. Immediately following the Series A Put Termination Date, each of the Series B Ordinary Shares shall automatically and without further action be converted into, 9 and re-classified as, one Series A Ordinary Share and the provisions of Articles 16, 19 to 22, 49 (first sentence only), 51 and 68 shall cease to have any force or effect. 24. On and following the Series A Put Termination Date each holder of Series B Ordinary Shares shall, on tendering their share certificates in respect of their Series B Ordinary Shares, be entitled to receive, without payment, a new certificate under the common seal of the Company representing an equal number of Series A Ordinary Shares. GENERAL MEETINGS 25. The statutory general meeting of the Company shall be held within the period required by Section 70 of the Companies Act. 26. (1) A general meeting shall be held once in every year at such time (not being more than fifteen months after the holding of the last preceding general meeting) and at such place as may be prescribed by the board. (2) In default of a general meeting so held, a general meeting shall be held in the month next following and may be convened by any two or more members holding Ordinary Shares carrying at least one-tenth of the votes of all members entitled to vote at general meetings, in the same manner as nearly as possible as that in which meetings are to be convened by the board and any such meeting shall be held at such place as the members convening the meeting may designate in the notice thereof. 27. The above-mentioned general meetings shall be called annual general meetings; all other general meetings shall be called extraordinary. 28. The board may, whenever it thinks fit, convene an extraordinary general meeting, and extraordinary general meetings shall also be convened by the board on the requisition, in accordance with Section 71 of the Companies Act, of members of the Company holding not less than one-tenth of the paid-up capital of the Company, or, in default, may be convened by such requisitionists, as provided by Section 71(3) of the Companies Act. 10 PROCEEDINGS AT GENERAL MEETINGS 29. (1) Thirty-days' notice at the least (exclusive of the day on which the notice is served or deemed to be served, but inclusive of the day for which notice is given) specifying the place, the day and the hour of meeting and, in case of special business, the general nature of that business, shall be given in the manner hereinafter mentioned, or in such other manner, if any, as may be prescribed by the Company in general meeting, to such persons as are under the Articles entitled to receive such notices from the Company. (2) Every notice convening a general meeting shall include a statement having reasonable prominence that a member entitled to attend and vote is entitled to appoint a proxy to attend and vote instead of him, and that a proxy need not also be a member. 30. All business shall be deemed special that is transacted at an extraordinary meeting, as shall all business that is transacted at an ordinary meeting with the exception of (i) sanctioning a dividend, (ii) the consideration of the accounts, balance-sheets and the ordinary report of the directors and auditors, (iii) election of directors and other officers in the place of those retiring by rotation and (iv) the fixing of the remuneration of the auditors. 31. No business shall be transacted by any general meeting unless a quorum of members is present at the time when the meeting proceeds to business; save as herein otherwise provided, members present in person or by proxy holding at least a majority of each series then outstanding of Ordinary Shares shall be a quorum. 32. Where within half an hour from the time appointed for the meeting a quorum is not present, the meeting, if convened upon the requisition of members, shall be dissolved; in any other case it shall stand adjourned to the same day in the next week, at the same time and place and where at the adjourned meeting a quorum is not present within half an hour from the time appointed for the meeting, the members present shall be a quorum. 33. The chairman, if any, of the board shall preside as chairman at every general meeting of the Company. 11 34. Where there is no such chairman or at any meeting he is not present within fifteen minutes after the time appointed for holding the meeting or at which he is unwilling to act as chairman, the directors in office prior to such meeting who are present shall choose some one of their number to be chairman. 35. (1) The chairman may, with the consent of any meeting (on a class-by-class basis) at which a quorum is present (and shall if so directed by the meeting), adjourn the meeting from time to time and from place to place, but no business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place. (2) When a meeting is adjourned for ten days or more, notice of the adjourned meeting shall be given as in the case of any original meeting. (3) Save as aforesaid, it shall not be necessary to give any notice of an adjournment or of the business to be transacted at an adjourned meeting. 36. At any general meeting a resolution put to the vote of the meeting shall be decided on a voice call or show of hands, unless a poll is (before or on the declaration of the result of the show of hands) demanded by at least two members present in person or by proxy holding Ordinary Shares carrying at least one-tenth of the votes of all members entitled to vote at the meeting or by the chairman and unless a poll is so demanded, a declaration by the chairman that a resolution has, on a voice call or show of hands, been carried or carried unanimously or by a particular majority or lost, and an entry to that effect in the book of the proceedings of the Company, shall be conclusive evidence of the fact, without proof of the number or proportion of the votes recorded in favor of or against that resolution. 37. If a poll is duly demanded it shall be taken in such manner as the chairman directs, and the result of the poll shall be deemed to be the resolution of the meeting at which the poll was demanded. 38. The demand for a poll may, before the poll is taken, be withdrawn but only with the consent of the chairman and a demand so withdrawn shall not be taken to 12 have invalidated the result of the voice call or show of hands taking place before the demand was made. VOTES OF MEMBERS 39. Subject to the provisions of Article 16, every member shall have one vote for each Ordinary Share of which he is the holder. Voting rights of Preference Shares (if any) shall be as specified in accordance with Article 5. 40. In the case of joint holders the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders; and for this purpose seniority shall be determined by the order in which the names stand in the register of members. 41. A member of unsound mind, or in respect of whom an order has been made by any court having jurisdiction with respect to persons of unsound mind, may vote, whether on a voice call, show of hands or on a poll, by his committee or other person in the nature of a committee appointed by that court. PROXIES 42. (1) The instrument appointing a proxy shall be in writing under the hand of the appointer or his attorney duly authorized in writing or, if the appointer is a corporation, either under the common seal or under the hand of an officer or attorney so authorized. (2) An instrument appointing a proxy may be in the following form or in any other form which the board may approve: "I of being a member of Sun International Hotels Limited, hereby appoint of as my proxy to vote for me and on my behalf at the general meeting of the Company to be held on the day of and at any adjournment thereof." Signed this day of . 13 43. The instrument appointing a proxy and the power of attorney or other authority, if any, under which it is signed or a certified copy of that power or authority shall be deposited at the registered office of the Company not less than forty-eight hours before the holding of the meeting at which the person named in the instrument proposes to vote, or shall be delivered in person to the secretary of the Company at such meeting or such person or persons as may be designated by the secretary of the Company at such meeting, and in default the instrument of proxy shall not be treated as valid. 44. A vote given in accordance with the terms of an instrument of proxy shall be valid notwithstanding the previous death or insanity of the principal or revocation of the instrument of proxy, or the authority under which the instrument of proxy was executed, or transfer of the shares in respect of which the vote is given, provided no intimation in writing of the death, insanity, revocation or transfer shall have been received at the registered office of the Company before the meeting or adjourned meeting at which the instrument or proxy is used. CORPORATE REPRESENTATIVES 45. Any body corporate which is a member of the Company may by resolution of its directors or other governing body or by authority to be given under seal or under the hand of an officer duly authorized by it authorize such person as it thinks fit to act as its representative at any meeting of the Company or at any separate meeting of the holders of any class or series of shares and such authority may be general or in respect of specific meetings. A person so authorized shall be entitled to exercise the same power on behalf of the grantor of the authority as the grantor could exercise if it were an individual member of the Company and the grantor shall for the purposes of these Articles be deemed to be present in person at any such meeting if a person so authorized is present at it. CLASS MEETINGS SERIES MEETINGS 46. All provisions of these Articles relating to general meetings of the Company shall apply mutatis mutandis to every separate meeting of the holders of any class or series of shares in the capital of the Company. 14 DIRECTORS 47. Unless otherwise determined by a resolution of the members (and, prior to the Series A Put Termination Date, by a resolution of the holders of the Series A Ordinary Shares at a separate general meeting), the number of the directors shall be five. 48. Subject to the provisions of Articles 49 to 52 the directors shall be appointed and may be removed in accordance with the Companies Act. 49. (1) Of the five directors holding office immediately following the Closing Date, two shall have been nominated by the persons entitled to nominate such directors under the Joint Plan of Reorganization Proposed by Resorts International, Inc. and certain of its affiliates. (2) During the period following the Closing Date and ending on the Series A Put Termination Date, each of the directors nominated by the holders of the Series A Ordinary Shares and each of their successors from time to time (the "Independent Directors") shall be exclusively entitled prior to each general meeting at which their appointment terminates, to nominate themselves or any other person to serve as a director and if at any time during such period any vacancy exists among the Independent Directors the right to nominate the person to fill such vacancy shall be exclusively that of the remaining Independent Director or, if no such director remains in office, the board after having consulted with, and to the extent permitted by applicable law following the recommendation of, the three holders of Series A Ordinary Shares believed in good faith by the board to be the holders of the greatest number of Series A Ordinary Shares then outstanding. (3) During the period following the Closing Date and ending on the Series A Put Termination Date, the holders of the Series B Ordinary Shares shall be exclusively entitled prior to each general meeting at which the appointment of any director other than an Independent Director terminates, to nominate a person to serve as director in succession to each such retiring director, and if at any time during such period any vacancy exists among the directors nominated by the holders of the Series B Ordinary Shares, such holders shall have the exclusive right to fill such vacancy. 15 (4) After the Series A Put Termination Date in respect of all the directors (and prior to such date in respect of any director if the persons entitled to nominate such director in accordance with Articles 49(2) and 49(3) fail to do so), the board may make such nominations as it shall, in its discretion, determine. After the Series A Put Termination Date, holders of Ordinary Shares may propose candidates for nomination to the board in accordance with such procedures and terms as the board shall in its discretion determine, subject to such procedures being in accordance with applicable laws, rules and regulations including rules or regulations of any stock exchange or quotation system on which the Company's shares are listed or quoted. 50. (1) It shall be presumed that it is in the best interests of the Company to allow directors to participate in meetings of the board or of committees thereof by telephonic communication as set forth in Article 65 and, accordingly, it shall be a term of appointment of each director that he irrevocably consents to the holding of such meetings in the manner set forth in Article 65 (such consents to be obtained, in the case of the directors referred to in Article 49(1), no later than the Closing Date). (2) No person shall be eligible to serve as an Independent Director unless the board has determined that such person satisfies the criteria of Section 85 of the Companies Act and the criteria of any applicable requirement of any stock exchange or quotation system on which the Company's shares are listed or quoted for the appointment of independent directors. 51. In exercising their duties and responsibilities as directors, the Independent Directors shall, INTER ALIA, recognize the fact that the Series A Put is an integral part of the Company's value, and the preservation of the value of the rights created by the Series A Put for the holders of the Series A Ordinary Shares shall be deemed to be a matter in the Company's best interests. Actions requiring the separate consent or approval of the Independent Directors shall be deemed authorized if given by 50% or more of the Independent Directors (or such greater number as shall be required, if any, by the Companies Act or by any stock exchange or quotation system on which the Company's shares are listed or quoted), except in the case of approvals contemplated by 16 Article 68(c), which shall be deemed authorized if given by a majority of the Independent Directors. 52. The directors of the Company holding office immediately following the Closing Date shall hold office until the date of the annual general meeting to be held in 1997. At the annual general meeting held in 1997 and at each subsequent annual general meeting, directors shall be appointed by resolution of the holders of Ordinary Shares in accordance with these Articles (including provisions as to nomination) and any director so appointed (and any director appointed to fill a vacancy in the directors prior to the next annual general meeting) shall hold office until the date of the next annual general meeting of the Company, or if later the date his successor shall be duly elected and qualified. EXECUTIVE DIRECTORS 53. The board may appoint one or more of its body to be the holder of any one or more executive office (except that of auditor) under the Company and may enter into an agreement or arrangement with any director for his employment by the Company or for the provision by him of any services outside the scope of the ordinary duties of a director. Any such appointment, agreement or arrangement may be made upon such terms, including terms as to remuneration, as the board determines, and any remuneration which is so determined may be in addition to or in lieu of any ordinary remuneration as a director. The board may revoke or vary any such appointment but without prejudice to any rights or claims which the person whose appointment is revoked or varied may have against the Company by reason thereof. 54. Any appointment of a director to an executive office shall terminate if he ceases to be a director but without prejudice to any rights or claims which he may have against the Company by reason of the termination of such appointment. A director appointed to an executive office shall not ipso facto cease to be a director if his appointment to such executive office terminates. 55. The emoluments of any director holding executive office for his services as such shall be determined by the board, and may be of any description, and (without limiting the generality of the foregoing) may include admission to or continuance of membership of any 17 scheme (including any share acquisition scheme) or fund instituted or established or financed or contributed to by the Company for the provision of pensions, life assurance or other benefits for employees or their dependents, or the payment of a pension or other benefits to him or his dependents on or after retirement or death, apart from membership of any such scheme or fund. POWERS AND DUTIES OF THE BOARD 56. The business of the Company shall be managed by the board, which may exercise all such powers of the Company as are not, by the Companies Act or by these Articles, required to be exercised by the Company in general or extraordinary meeting, subject nevertheless to these Articles (including in particular Article 68 for so long as it is in effect) and to the Companies Act. PROCEEDINGS OF DIRECTORS 57. (1) The directors may meet together for the dispatch of business, adjourn and otherwise regulate their meetings, as they think fit. (2) Subject to Article 68 for so long as it is in effect, questions arising at any meeting shall be decided by a majority of votes. (3) A director may, and the secretary on the requisition of a director shall, at any time summon a meeting of the directors. Directors shall be given reasonable notice (which, except in the case of emergencies, shall be not less than three business days) of the time and place appointed for such meeting of the directors, which notice may be waived by any or all directors at any time before or after such meeting. 58. The quorum necessary for the transaction of the business of the directors may be fixed by the directors and unless so fixed shall be three. 59. The continuing directors may act notwithstanding any vacancy in their body, but, if and so long as their number is reduced below the number fixed by or pursuant to the Articles as the necessary quorum of directors, the continuing directors may act for the purpose of summoning a general meeting of the Company, but for no other purpose. 18 60. The directors may elect a chairman of their meetings and determine the period for which he is to hold office; but if no such chairman is elected or if at any meeting the chairman is not present within five minutes after the time appointed for holding the same, the directors present may choose one of their number to be chairman of the meeting. 61. Subject to Article 68, the directors may delegate any of their powers to committees consisting of such members of the Company or members of their body as they think fit provided that at least one Independent Director shall be appointed as a member of each committee unless all Independent Directors elect to decline such appointment; any committee so formed shall in the exercise of the powers so delegated conform to any regulations that may be imposed on them by the directors; provided, however, that no committee shall be permitted to take any action restricted pursuant to Article 68 hereof other than in strict compliance with such Article 68. 62. A committee may elect a chairman of their meetings; if no such chairman is elected or if at any meeting the chairman is not present within five minutes after the time appointed for holding the same, the members present may choose one of their number to be chairman of the meeting. 63. (1) A committee shall meet and adjourn as determined by the board and otherwise as they think proper. (2) Subject to Article 68 for so long as it is in effect, questions arising at any meeting shall be determined by a majority of votes of the members present. 64. Subject to Article 68 for so long as it is in effect, a resolution in writing signed by a simple majority of the directors entitled to vote on that resolution at a meeting of the board or of the members of an existing committee of the board with authority to consider and act on the matter (not being less than the number of directors required to form a quorum of the board) shall be as valid and effectual as if it had been passed at a meeting of the board or (as the case may be) a committee of the board duly convened and held and for this purpose a resolution may consist of several documents to the same effect, each signed by one or more directors. 19 65. A meeting of the board or of a committee of the board may, if all the directors consent, consist of a conference between directors who are not all in one place, but of whom each is able (directly or by telephonic communication) to speak to each of the others, and to be heard and recognized by each of the others. A director taking part in such a conference shall be deemed to be present in person at the meeting and shall be entitled to vote or be counted in a quorum accordingly. Such a meeting shall be deemed to take place where the largest group of those participating in the conference is assembled, or, if there is no such group, where the chairman of the meeting then is. The word MEETING in these Articles shall be construed accordingly. 66. The board shall cause minutes to be made in books provided for the purpose: (a) of all appointments of officers made by the board; (b) of the names of the directors, members or others present at each meeting of the directors and of any committee of the directors; and (c) of all resolutions and proceedings at all meetings of the Company and of the board and of committees of the board. POWERS OF ATTORNEY 67. The board may from time to time and at any time by power of attorney appoint any company, firm or person or body of persons, whether nominated directly or indirectly by the board, to be the attorney or attorneys of the Company for such purposes and with such powers, authorities and discretion (not exceeding those vested in or exercisable by the board under these Articles) and for such period and subject to such conditions as they may think fit, and any such powers of attorney may contain such provisions for the protection and convenience of persons dealing with any such attorney as the board may think fit and may also authorize any such attorney to delegate all or any of the powers, authorities and discretion vested in him. 20 RESTRICTED TRANSACTIONS 68. At all times after the Closing Date and the nomination of Independent Directors pursuant to Article 49 and until the Series A Put Termination Date, the following actions ("Restricted Transactions") shall not be taken without the separate approval of the Independent Directors: (a) any amendment to these Articles or the Memorandum of Association of the Company, the articles association or the Memorandum of Association of any subsidiary of the Company or to the arrangements provided for in Section 14.2 of the Heads of Agreement dated August 18, 1993, with Sun International Investments Limited and the Government of the Commonwealth of The Bahamas if such amendment could reasonably be expected to have an adverse effect on the Series A Put or the rights of the holders of Series A Ordinary Shares; (b) any merger or consolidation involving the Company or any sale, lease or other direct or indirect disposition of all or substantially all of the assets of the Company and its subsidiaries in a transaction or series of related transactions that could reasonably be expected to have an adverse effect on the Series A Put or the rights of the holders of Series A Ordinary Shares (and, in the case of any merger or consolidation that would result in the holders of Series A Ordinary Shares no longer having an interest in the Company (or the resulting entity, successor or acquiror), it shall be a condition to the consummation of such transaction that the Company shall have obtained at its own expense an opinion rendered by an internationally recognized investment banking firm selected by the Independent Directors and engaged by the Company, to the effect that such transaction is fair to the holders of the Series A Ordinary Shares); (c) any material transaction with Sun International Investments Limited or any affiliate of Sun International Investments Limited, including without limitation arrangements (or any material amendment thereto) with any such affiliate for management of the properties of the Company or its subsidiaries and including any material amendment to or material waiver under the Management Agreement to be entered into between the Company and Sun International Management Ltd. on or prior to the Closing Date or any determination as to whether to continue such 21 Agreement in effect if such agreement becomes terminable by the Company thereunder; (d) any declaration or payment of dividends or other distributions on or with respect to the Ordinary Shares during any fiscal quarter of the Company (i) in cash if in an amount exceeding, in the aggregate with any other dividends since the Closing Date, one-half of the Company's cumulative, aggregate, consolidated net income since the Closing Date, plus the amount of all depreciation, amortization, and other non-cash charges deducted therefrom during such period and minus the amount of all ordinary course capital expenditures other than expenditures in respect of improvements, upgrading or construction of or relating to properties of the Company or its subsidiaries during such period or (ii) in property other than cash if such property, in the aggregate, has a fair market value in excess of $100,000; (e) any incurrence or assumption of liability (by way of guaranty or otherwise) for indebtedness for borrowed money or any issuance of non-voting Preference Shares if as a result thereof the aggregate principal amount of all interest-bearing indebtedness for borrowed money of the Company together with the greater of the redemption price, liquidation value or nominal value of all Preference Shares then outstanding or proposed to be issued would at such time exceed $150,000,000 plus an amount equal to (i) the cumulated consolidated net income, net of any consolidated loss, of the Company plus (ii) the net proceeds to the Company or its subsidiaries of any offering of equity securities of the Company or its subsidiaries, minus (iii) the aggregate amount of all dividends paid on shares other than Preference Shares by the Company in cash or other property, in each case since the date of the Company's incorporation through the date of the incurrence or assumption of such indebtedness or the issuance of such Preference Shares; (f) any filing or approval for filing or undertaking any bankruptcy, reorganization, recapitalization, liquidation or dissolution of the Company; (g) any issuance of Series A Ordinary Shares other than Series A Ordinary Shares issued fully paid at a cash price per share of not less than the greater of (i) the then prevailing Purchase Price (as defined in Article 19) or (ii) the Market Price prevailing on the date of such 22 issuance less customary amounts, not to exceed 3% of the then prevailing Market Price, in respect of underwriting discounts or other reductions (and, in addition to the foregoing restrictions, no Series A Ordinary Shares shall be issued without the prior written consent of the holders of a majority of the then outstanding Series B Ordinary Shares). For the purposes of this Article 68(g), "Market Price" means, for any given day, the last reported per share sale price (or, if no sale price is reported, the average of the bid and ask prices or, if more than one in either case, the average of the closing bid and closing ask prices) on such day of the Series A Ordinary Shares as quoted on the National Association of Securities Dealers Automated Quotation System or, if not so quoted, on the New York Stock Exchange or, in the event Series A Ordinary Shares are not listed on the New York Stock Exchange, such other national or regional securities exchange upon which the Series A Ordinary Shares are listed, or, if the Series A Ordinary Shares are not listed on a national or regional securities exchange, as quoted by the National Quotation Bureau Incorporated. In the absence of one or more such quotations, the Company shall be entitled to determine the Market Price on the basis of such quotations as it may in its reasonable opinion consider appropriate; (h) any issuance of Series B Ordinary Shares or voting Preference Shares (and, in addition to the foregoing restriction, no Series B Ordinary Shares or voting Preference Shares shall be issued without the prior written consent of the holders of a majority of the then outstanding Series B Ordinary Shares); (i) any repurchase by the Company or any of its subsidiaries of Series B Ordinary Shares; or (j) any consent or approval of action proposed to be taken by any of the subsidiaries of the Company if: (i) such proposed action is of a type substantially the same as any of the actions described in paragraphs (a) through and including (i) above and (ii) the articles of association or equivalent charter documents of such subsidiaries provide that the adoption of such proposed action requires the consent or approval, authorization or approval of the shareholders of such subsidiaries. Notwithstanding anything to the contrary contained herein or elsewhere, so long as the foregoing provisions in paragraphs (a) through (j) above remain in effect, it shall 23 be a requirement that the Company terminate the Management Agreement with Sun International Management Ltd. referred to in paragraph (c) above if and when such Agreement becomes terminable by the Company in accordance with its terms unless a majority of the Independent Directors support a determination by the board to continue such Agreement in effect. THE SEAL 69. The seal of the Company shall not be affixed to any instrument except by the authority of a resolution of the directors, and in the presence of at least two directors and of the secretary or such other person as the directors may appoint for the purpose; and those two directors and secretary or other person as aforesaid shall sign every instrument to which the seal of the Company is so affixed in their presence. The Company is hereby authorized to adopt and use an official seal in accordance with the provisions of Section 26 of the Companies Act. DIVIDENDS AND RESERVE 70. Subject to Article 68, the board may from time to time declare and pay to the members of the Company such quarterly dividends as appear to the directors to be justified by the profits of the Company. 71. No dividend shall be paid otherwise than out of profits or surplus available for the purpose in accordance with the Companies Act. 72. The directors may, before recommending any dividend, set aside out of the profits of the Company such sums as they think proper as a reserve or reserves which shall, at the discretion of the directors, be applicable for meeting contingencies or for equalizing dividends or for any other purpose to which the profits of the Company may be properly applied, and pending such application may, at the like discretion, either be employed in the business of the Company or be invested in such investments (other than shares of the Company), as the directors may from time to time think fit. 73. Where several persons are registered as joint holders of any share any one of them may give effectual receipts for any dividend payable on the share. 24 74. No dividend shall bear interest against the Company. ACCOUNTS 75. The directors shall cause true accounts to be kept: (a) of the sums of money received and expended by the Company and the matter in respect of which such receipt and expenditure takes place; and (b) of the assets and liabilities of the Company. 76. The books of account shall be kept at the registered office of the Company or at such other place or places as the directors think fit and shall always be open to the inspection of the directors. 77. The directors shall from time to time determine whether and to what extent and at what times and places and under what conditions or regulations the accounts and books of the Company or any of them shall be open to the inspection of members not being directors, and no member (not being a director) shall have any right of inspecting any account or book or document of the Company except as conferred by statute or authorized by the directors or by the Company in general meeting. 78. Once at least in every year the directors shall lay before the Company in general meeting a profit and loss account for the period since the preceding account or (in the case of the first account) since the incorporation of the Company, made up to a date not more than six months before such meeting. 79. (1) A balance-sheet shall be made out in every year and laid before the Company in general meeting made up to a date not more than six months before such meeting. (2) The balance-sheet shall be accompanied by a report of the board as to the state of the Company's affairs and the amount which they recommend to be paid by way of dividend and the amount, if any, which they propose to carry to a reserve fund. 25 80. A copy of the balance-sheet and report shall, seven days previous to the meeting, be sent to the persons entitled to receive notices of general meetings in the manner in which notices are to be given hereunder. NOTICES 81. (1) A notice may be given by the Company to any member either personally or by sending it by post to him to his registered address. (2) Where a notice is sent by post, service of the notice shall be deemed to be effected by properly addressing, pre-paying and posting a letter (by air-mail if to an address outside the country from which it is sent) containing the notice and, unless the contrary is proved, to have been effected three days after posting (or seven days if sent to an address outside the country from which it is sent). 82. A notice may be given by the Company to the joint holders of a share by giving the notice to the joint holder named first in the register in respect of the share. 83. A notice may be given by the Company to the persons entitled to a share in consequence of the death or bankruptcy of a member by sending it through the post in a pre-paid letter addressed to them by name or by the title of representatives of the deceased, or trustees of the bankrupt, or by any like description, at the address, if any, supplied for the purpose by the persons claiming to be so entitled, or (until such an address has been so supplied) by giving the notice in any manner in which the same might have been given if the death or bankruptcy has not occurred. 84. Notice of every general meeting shall be given in some manner hereinbefore authorized to the members of the Company, including any person entitled to a share in consequence of the death or bankruptcy of a member, who, but for his death or bankruptcy, would be entitled to receive notice of the meeting and to every director. No other persons shall be entitled to receive notices of general meetings. INDEMNITY 85. The Company shall, subject to the provisions of Article 89, indemnify to the fullest extent permitted by 26 the Companies Act any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative and whether external or internal to the Company by reason of the fact that he is or was a director or officer of the Company, or is or was serving at the request of the Company as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such suit, action or proceeding if he acted in good faith and in a manner which he reasonably believed to be in, or not opposed to, the best interests of the Company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe that his conduct was unlawful. 86. Subject to Article 89, expenses incurred by a director or officer in defending a civil or criminal action, suit or proceeding shall be paid by the Company in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of the director or officer to repay such amount if it shall ultimately be determined that he is not entitled under Article 86 to be indemnified by the Company in respect of such expenses. 87. The board shall from time to time cause the Company to purchase and maintain insurance from reputable insurance carriers on behalf of any person who is or was a director or officer of the Company, or is or was serving at the request of the Company as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such with reasonable limits and subject to reasonable and customary deductibles, for so long as such insurance is available from such carriers. 88. The Company's indemnification under Article 86 of any person who is or was a director or officer of the Company, or is or was serving, at the request of the Company as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, shall be reduced by amounts such person receives as indemnification (i) under any policy of insurance purchased and maintained on his behalf by the Company, (ii) from such 27 other corporation, partnership, joint venture, trust or other enterprise, or (ii) under any other applicable indemnification provision. 89. (a) It shall be a condition of the Company's obligation to indemnify or advance expenses under Articles 85 and 86 that the person asserting, or proposing to assert, the right to be indemnified, promptly after receipt of notice of commencement of any action, suit or proceeding in respect of which a claim for indemnification is or is to be made against the Company notify the Company of the commencement of such action, suit or proceeding, including therewith a copy of all papers served and the name of counsel retained or to be retained by such person in connection with such action, suit or proceeding, and thereafter to keep the Company timely and fully apprised of all developments and proceedings in connection with such action, suit or proceeding or as the Company shall request; and the fees and expenses of any counsel retained by a person asserting, or proposing to assert, the right to be indemnified under Article 85 shall be at the expense of such person unless the counsel retained shall have been approved by the Company in writing, which approval shall not be unreasonably withheld. (b) If a claim for indemnification or advancement of expenses under Articles 85 and 86 is not paid in full by the Company within forty five (45) days after a written claim therefor has been received by the Company, the claimant may at any time thereafter bring suit against the Company to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled to be paid also the expenses of prosecuting such claim. 90. To the fullest extent permitted by the Companies Act as it exists on the date hereof or as it may hereafter be amended, no director or officer of the Company shall be liable to the Company or its members for monetary or other damages for breach of fiduciary duty as a director or officer. 91. The provisions of Articles 85 to 90 shall continue as to, and for the benefit of, a person who has ceased to be a director or officer and shall inure to the benefit of the heirs, executors and administrators of such a person. 28 92. No amendment to or repeal of the provisions of Articles 85 to 91 shall apply to or have any effect on the eligibility for, or entitlement to, indemnification, advancement of expenses and the other rights provided by, or granted pursuant to, Articles 85 to 91 for or with respect to any acts or omissions of any director or officer occurring prior to any such amendment or repeal. EXHIBIT B - ----------------------------------------------------------- - ----------------------------------------------------------- REGISTRATION RIGHTS AGREEMENT among SUN INTERNATIONAL HOTELS LIMITED, FIDELITY MANAGEMENT & RESEARCH COMPANY and TCW SPECIAL CREDITS Dated as of , 199[3] - ----------------------------------------------------------- - ----------------------------------------------------------- TABLE OF CONTENTS PAGE SECTION 1. SECURITIES SUBJECT TO THIS AGREEMENT; REPRESENTATIONS AND COVENANTS OF FIDELITY AND TCW WITH RESPECT TO THE REGISTRABLE SECURITIES . . . . . . . . . . . . . . . . . 1 SECTION 2. PIGGYBACK REGISTRATION AND DEMAND REGISTRATION . . . . . . . . . . . . . . . . 2 (a) Piggback Registration . . . . . . . . . 2 (b) Demand Registration Rights . . . . . . 3 SECTION 3. HOLDBACK AGREEMENT . . . . . . . . . . . . . 5 (a) Restrictions on Public Sale by Holders of Registrable Securities . . . . . . . . . . . . . . 5 (b) Restrictions on Public Sale by the Company . . . . . . . . . . . . . . 5 SECTION 4. REGISTRATION PROCEDURES . . . . . . . . . . 6 SECTION 5. REGISTRATION EXPENSES . . . . . . . . . . . 9 SECTION 6. INDEMNIFICATION CONTRIBUTION . . . . . . . . 10 (a) Indemnification by the Company . . . . . . . . . . . . . . . . 10 (b) Indemnification by Holders of Registrable Securities . . . . . . . . 11 (c) Conduct of Indemnification Proceedings . . . . . . . . . . . . . . 11 (d) Contribution . . . . . . . . . . . . . 12 SECTION 7. PARTICIATION IN UNDERWRITTEN REGISTRATIONS . . . . . . . . . . . . . . . 13 SECTION 8. MISCELLANEOUS . . . . . . . . . . . . . . . 13 (a) Remedies . . . . . . . . . . . . . . . 13 (b) Notices . . . . . . . . . . . . . . . . 14 (c) Successors and Assigns . . . . . . . . 15 (d) Counterparts . . . . . . . . . . . . . 15 (e) Headings . . . . . . . . . . . . . . . 15 (f) Governing Law . . . . . . . . . . . . . 15 (g) Severability . . . . . . . . . . . . . 15 (h) Entire Agreement . . . . . . . . . . . 15 This REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and entered into as of , 199[3], among SUN INTERNATIONAL HOTELS LIMITED, a Bahamian domestic corporation (the "Company"), FIDELITY MANAGEMENT & RESEARCH COMPANY, a Massachusetts corporation, on behalf of various funds that it manages which own Series A Ordinary Shares ("Shares") of the Company ("Fidelity") and TCW SPECIAL CREDITS, a California general partnership, on behalf of various funds and accounts which own Shares of the Company ("TCW"). The parties hereby agree as follows: SECTION 1. SECURITIES SUBJECT TO THIS AGREEMENT; REPRESENTATIONS AND COVENANTS OF FIDELITY AND TCW WITH RESPECT TO THE REGISTRABLE SECURITIES. (a) The term "Registrable Securities" means the Shares of the Company received by Fidelity and TCW on the date hereof (and any securities from time to time received from the Company in exchange therefor or as a result of dividends, splits, or similar actions with respect to Registrable Securities). Any Registrable Securities which are Transferred (as defined below) by a holder of Registrable Securities, other than Registrable Securities that are Transferred among holders of Registrable Securities, shall cease to be Registrable Securities (even if they are later reacquired by a holder of Registrable Securities (other than Fidelity or TCW)) unless such Transfer occurs in a single transaction Transferring to a single buyer not less than 10% of the Shares of the Company issued on the date hereof. In addition, Shares of the Company from time to time acquired by Fidelity or TCW after the date hereof (other than shares issued in connection with dividends, splits or similar actions which, by virtue of the first sentence of this paragraph will continue to be Registrable Securities) (the "After-Acquired Shares") shall become and thereafter shall be deemed to be Registrable Securities; PROVIDED, HOWEVER, that such After- Acquired Shares shall cease to be Registrable Securities if Transferred, no matter what the circumstances, unless such Transfer is to Fidelity or TCW. The term "Ordinary Shares" means all Shares of the Company and Series B Ordinary Shares of the Company. (b) Each of Fidelity and TCW hereby represents and warrants that it presently intends to hold its 2 Registrable Securities for investment purposes only and not currently with a view to the distribution of such securities in a transaction requiring registration under the Securities Acts (as hereinafter defined), provided that decisions as to the disposition of its Registrable Securities shall at all times be within its exclusive control. (c) Each holder from time to time of Registrable Securities covenants and agrees that it will not, directly or indirectly, offer, transfer, sell, assign, pledge, hypothecate or otherwise dispose of (collectively "Transfer") any of its Registrable Securities except in compliance with or pursuant to an exemption under the Securities Act of 1933, as amended, all applicable state securities laws and all rules and regulations promulgated thereunder (collectively, the "Securities Acts"). SECTION 2. PIGGYBACK REGISTRATION AND DEMAND REGISTRATION. (a) PIGGYBACK REGISTRATION. If at any time the Company proposes to file a registration statement under the Securities Act of 1933 with respect to any Shares of the Company (other than registration statements filed in connection with mergers, acquisitions, dividend reinvestment plans, stock option or other employee benefit plans, exchange offers or offerings of securities solely to the Company's existing stockholders), then the Company shall in each case give written notice of such proposed filing to Fidelity and TCW, and any other holders of Registrable Securities known to the Company, at least 20 days before the anticipated filing date, and such notice shall offer holders of Registrable Securities the opportunity to register such number of shares of Registrable Securities as each such holder may request. The Company shall use its best efforts to cause the managing underwriter or underwriters of any proposed underwritten offering of Shares of the Company to permit the holders of Registrable Securities to include some or all of their shares in the registration for such offering on the same terms and conditions as the shares to be registered by the Company to be included therein, provided that the Company shall have received a written request from such holders of Registrable Securities not less than 10 days before the anticipated filing date specifying the number of Shares of the Company they wish to include in such offering. Notwithstanding the foregoing, if the managing underwriter or underwriters of such offering delivers a written opinion to the holders of Registrable Securities that the total amount of securities which they intend to include in such offering would adversely affect the success of such 3 offering, then the amount of securities to be offered for the accounts of holders of Registrable Securities shall be (i) reduced (pro rata among such holders (to the extent they each shall have requested, in accordance with the foregoing, inclusion in such offering) on the basis of the relative number of shares of Registrable Securities so requested by them to be included) to the extent necessary to reduce the total amount of Shares of the Company to be included in such offering to the amount recommended by such managing underwriter or (ii) excluded in their entirety if so recommended by such managing underwriter. In connection with a piggyback registration, the Company will pay all Registration Expenses (as defined in Section 5 hereof). (b) DEMAND REGISTRATION RIGHTS. (i) RIGHT TO DEMAND. At any time after December 31, 1994, the holders of the Registrable Securities holding Registrable Securities constituting not less than 7.5% of the then outstanding Ordinary Shares may make written requests to the Company (each, a "Demand") for registration with the SEC in accordance with the applicable provisions of the Securities Acts of all or part of their Registrable Securities (a "Demand Registration"); PROVIDED, HOWEVER, that Registrable Securities constituting at least 10% of the then outstanding Ordinary Shares, or such lesser number of Registrable Securities (but not less than 5% of the then outstanding Ordinary Shares) with a market value in excess of $15,000,000 must be included in the Demand Registration; and PROVIDED FURTHER, HOWEVER, that such Demand Registration shall be made only in connection with a widely distributed underwritten public offering of the Registrable Securities included in the Demand Registration, through a co-manager (if so selected by the holders) and underwriters selected by such holders of Registrable Securities and all reasonably acceptable to the Company (with the lead underwriter being selected by the Company). The lead underwriter selected by the Company shall agree to use its best efforts to cause the underwriting group to take all customary actions to effectively market the Registrable Securities included in the Demand Registration, including without limitation organizing and participating in "road shows" and other presentations for potential purchasers. The Company also agrees to participate in "road shows" and to take an active role in effectively marketing the Registrable Securities. Any Demand made by the holders of the Registrable Securities pursuant to this Section 2(b)(i) shall specify the aggregate amount of the Registrable Securities to be registered. 4 (ii) EFFECTIVE REGISTRATION. The Company agrees to use its best efforts to file as soon as reasonably practicable after such Demand, the Demand Registration and agrees to use its best efforts to have such Demand Registration declared effective as soon as reasonably practicable after such filing. The Company further agrees, if necessary, to supplement or amend any Demand Registration, as required by the registration form used, by the instructions applicable to such registration form or by the relevant provisions of the Securities Acts, and the Company agrees to furnish to the holders of the Registrable Securities copies of any such supplement or amendment prior to its being used and/or filed with the SEC. The Company agrees to pay all Registration Expenses (as hereinafter defined) in connection with each Demand Registration, whether or not it becomes effective. (iii) NUMBER OF DEMAND REGISTRATIONS. The holders of the Registrable Securities together shall be entitled to two Demand Registrations in total (if the conditions specified in Section 2(b)(i) are satisfied). The Company shall not be deemed to have effected a Demand Registration unless and until such Demand Registration is declared effective; PROVIDED, HOWEVER, that if a Demand Registration does not become effective after the Company has substantially prepared and has filed, or is in a position to file, a registration statement with respect thereto because of the refusal to proceed by the holders of the Registrable Securities, then such Demand Registration shall be deemed to have been effected by the Company unless the Company is reimbursed in full for all its actual, out-of-pocket costs incurred in connection with the Demand and the Company's response thereto. (iv) DELAY OF REGISTRATION. The Company may post- pone, for a single period not to exceed three months, the filing or the effectiveness of a registration statement for a Demand Registration if the Company determines in good faith that such Demand Registration might reasonably be expected to have a material adverse effect on any proposal or plan by the Company or any of its Subsidiaries to engage in any acquisition of assets or any merger, consolidation, tender offer or similar transaction; PROVIDED, HOWEVER, that in such event the holders of Registrable Securities request- ing such Demand Registration will be entitled to withdraw such request and, if such request is withdrawn, such Demand 5 Registration will not constitute a Demand Registration here- under. (v) SELECTION OF COUNSEL. The holders of the Registrable Securities to be included in any Demand Registration shall select one counsel reasonably acceptable to the Company to represent their interests in connection with such offering. The expenses of such counsel to the holders shall be borne by the Company. SECTION 3. HOLDBACK AGREEMENT. (a) RESTRICTIONS ON PUBLIC SALE BY HOLDERS OF REGISTRABLE SECURITIES. To the extent not inconsistent with applicable law and to the extent requested in good faith and in writing by the underwriters as being reasonably necessary to complete the proposed sale of securities by the Company, each holder of Registrable Securities agrees not to effect any public sale or distribution, or any private placement or other sales, of its Registrable Securities or any other Shares of the Company or securities convertible into or exchangeable or exercisable for Shares of the Company, including a sale not required to be registered under the Securities Acts or pursuant to Rule 144 or any other exemption under the Securities Acts, during the five Business Days prior to, and during the 60-day period beginning on, the date on which a registration statement filed by the Company for the registration of securities owned by, or then being issued by, the Company is first declared effective (except as part of such registration) and agrees to deliver from time to time a separate written undertaking to the Company and the underwriters, if applicable, with respect to the foregoing upon request. (b) RESTRICTIONS ON PUBLIC SALE BY THE COMPANY. The Company agrees not to effect any public sale or distribution, or any private placement or other sales, of any Ordinary Shares of the Company, or any securities convertible into or exchangeable or exercisable for such securities, during the five Business Days prior to, and during the 60-day period beginning on, the date on which the registration statement for a Demand Registration is first declared effective (except as part of such registration or pursuant to any merger, acquisition, dividend reinvestment plan or stock option or other employee benefit plan) and agrees to deliver from time to time a separate written undertaking to the holders of Registrable Securities included in the registration statement and the underwriters with respect to the foregoing upon request. 6 SECTION 4. REGISTRATION PROCEDURES. Whenever the holders of the Registrable Securities have requested that Registrable Securities be registered pursuant to Section 2(b) of this Agreement, the Company will use its best efforts to effect the registration of such Registrable Securities in accordance with the intended method of disposition requested as quickly as practicable and, in connection with any such request, the Company will as expeditiously as possible: (a) prepare and file with the SEC a registration statement which includes such Registrable Securities and use its best efforts to cause such registration statement to become effective; (b) prepare and file with the SEC such amendments and posteffective amendments to the registration state- ment as may be necessary to keep the registration statement effective for at least 90 days (or such shorter period which will terminate when all Regis- trable Securities covered by such registration state- ment have been sold) and comply with the provisions of the Securities Acts applicable to it with respect to the disposition of all Shares of the Company covered by such registration statement during such period; (c) furnish to any seller of Registrable Securities without charge, at least one signed copy of the registration statement and any posteffective amendment thereto, as soon as such documents become available to the Company, and such number of conformed copies thereof and such number of copies of the prospectus (including any preliminary prospectus) and any amendments or supplements thereto, and any documents incorporated by reference therein, as such seller may reasonably request as soon as such documents become available to the Company in order to facilitate the disposition of the Registrable Securities being sold by such seller (it being understood that the Company consents to the use of the prospectus and any amendment or supplement thereto by each seller of such Registrable Securities in connection with the offering and sale of the Registrable Securities covered by the prospectus or any amendment or supplement thereto); (d) on or prior to the date on which the registra- tion statement is declared effective, or thereafter, if necessary, use its best efforts to register or qualify 7 the Registrable Securities under such other securities or blue sky laws of such jurisdictions as the sellers reasonably request and do any and all other acts and things which may be reasonably necessary or advisable to enable each seller to consummate the disposition in such jurisdictions of such Registrable Securities owned by such seller; PROVIDED, HOWEVER, that the Company shall not be required to (i) qualify generally to do business in any jurisdiction where it would not other- wise be required to qualify but for this paragraph, (ii) subject themselves to general taxation in any such jurisdiction or (iii) consent to general service of process in such jurisdiction for purposes of actions arising other than out of such registration statement; (e) use their best efforts to cause the Registrable Securities covered by such registration statement to be registered with or approved by such other governmental agencies or authorities as may be necessary by virtue of the business and operations of the Company to enable the sellers to consummate the disposition of such Registrable Securities; (f) notify each seller of Registrable Securities at any time while the registration statement is required to be effective under paragraph (b) above of the happening of any event which results in the prospectus included in such registration statement containing an untrue statement of a material fact or omitting to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and the Company will prepare a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus will not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading; (g) enter into customary agreements and make such representations and warranties to the underwriters and sellers of Registrable Securities as in form, substance and scope are customarily made by issuers to underwriters in primary underwritten offerings and take such other actions as are reasonably required in order to expedite or facilitate the disposition of such Registrable Securities; 8 (h) make available for inspection during regular business hours by any seller of Registrable Securities and any attorney, accountant or other agent retained by any such seller and the underwriters and their attorneys and agents (collectively, the "Inspectors"), all financial and other records, corporate documents, books and records, questionnaires, agreements, properties of the Company and other information (collectively, the "Records"), as shall be reasonably requested to enable them to exercise "due diligence," and cause the Company's officers, directors and employees to supply all information reasonably requested by any such Inspector in connection with the registration statement. Sellers of Registrable Securities hereunder agree that Records and other information which the Company determines in good faith to be confidential, and of which determination the Inspectors and sellers are so notified, shall not be disclosed by the Inspectors or sellers unless (i) the disclosure of such Records is necessary to avoid or correct a misstatement or omission in the registration statement or (ii) the release of such Records is required in any seller's reasonable judgment to assert a "due diligence" defense to any claim that a seller knew or should have known of a misstatement or omission in the registration statement (whether or not such claim has been asserted in a court of law) or (iii) pursuant to a subpoena, court order or regulatory or agency request; (i) use its best efforts to obtain an opinion or opinions from counsel for the Company, and an auditor's "comfort" letter from the independent auditors of the Company, in customary form; (j) otherwise use its best efforts to comply with all applicable rules and regulations of the SEC, and make available to their security holders, as soon as reasonably practicable, earnings statements which need not be audited, covering a period of twelve months, beginning within three months after the effective date of the registration statement, which earnings statements shall satisfy the provisions of Section 11(a) of the Securities Act of 1933; (k) notify each seller of Registrable Securities of any stop order or other suspension of effectiveness of the registration statement; 9 (l) make every reasonable effort to obtain the withdrawal of any order suspending the effectiveness of the registration statement at the earliest possible moment; (m) use its best efforts to cause the Registrable Securities to be listed on NASDAQ or any other national securities exchange on which a listing for Shares of the Company is maintained; (n) cooperate with the holders of Registrable Securities being registered and their counsel in connection with any filings required to be made with the National Association of Securities Dealers, Inc. (the "NASD"); and (o) cooperate with the sellers of Registrable Securities to facilitate the timely preparation and delivery of certificates representing securities to be sold under the registration statement (which certificates shall be in DTC-eligible form) and enable such securities to be in such denominations and registered in such names as such sellers may request. The Company may require each seller of Registrable Securities as to which any registration is being effected to furnish to the Company information regarding the distribution of such securities and such other information relating to the seller and its ownership of Registrable Securities as the Company may from time to time reasonably request for inclusion in the registration statement. Each holder of Registrable Securities agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 4(f) hereof, such holder will forthwith discontinue disposition of Registrable Securities pursuant to the registration statement covering such Registrable Securities until such holder's receipt of the copies of the supplemented or amended prospectus contemplated by Section 4(f) hereof and, if so directed by the Company, such holder will deliver to the Company (at the expense of the Company), all copies, other than permanent file copies then in such holder's possession of the prospectus covering such Registrable Securities current at the time of receipt of such notice. SECTION 5. REGISTRATION EXPENSES. All expenses incident to the Company's performance of or compliance with 10 Section 2 of this Agreement including, without limitation, all registration and filing fees, all fees and expenses associated with filings required to be made with the NASD as may be required by the rules and regulations of the NASD, fees and expenses of compliance with state securities or blue sky laws (including fees and disbursements of counsel in connection with blue sky qualifications of the Registrable Securities), messenger and delivery expenses, internal expenses (including, without limitation, all salaries and expenses of their officers and employees performing legal or accounting duties), printing costs, fees and expenses of counsel for the Company and its independent certified public accountants (including the expenses of any special audit required by or incident to such performance), securities acts liability insurance (if the Company elects to obtain such insurance), fees and expenses of counsel for the selling shareholders under Section 2(b)(v) above and the fees and expenses of any special experts retained by the Company in connection with such registration (all such expenses being herein called "Registration Expenses") shall be borne by the Company; PROVIDED, HOWEVER, that in no event shall Registration Expenses include any underwriting discounts, commissions or fees attributable to the sale of the Registrable Securities. SECTION 6. INDEMNIFICATION; CONTRIBUTION. (a) INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify, to the full extent permitted by law, each holder of Registrable Securities, its officers, directors, partners, employees and agents and each person or entity that controls such holder (within the meaning of the Securities Act of 1993), and any investment advisor thereof or agent therefor against all losses, claims, damages, liabilities and expenses (including reasonable costs of investigation and legal expenses) arising out of or based upon any untrue or alleged untrue statement of a material fact contained in any registration statement or prospectus or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of a prospectus, in light of the circumstances under which they are made) not misleading, except insofar as the same arise out of or are based upon any information with respect to such holder furnished in writing to the Company by such holder. The Company will also indemnify any selling brokers, dealer managers and similar securities industry professionals participating in the distribution and their officers and directors and each person who controls such persons or 11 entities (within the meaning of the Securities Act of 1933) to the same extent as provided above with respect to the indemnification of the holders of Registrable Securities. (b) INDEMNIFICATION BY HOLDERS OF REGISTRABLE SECURITIES. In connection with any registration statement in which a holder of Registrable Securities is participating, each such holder will furnish to the Company, in writing, such information and affidavits with respect to such holder as the Company reasonably requests for use in connection with such registration statement or any prospectus included therein and agrees to indemnify, to the extent permitted by law, the Company, its directors, officers, employees and agents and each person or entity that controls the Company (within the meaning of the Securities Act of 1933), and any investment advisor thereof or agent therefor against any losses, claims, damages, liabilities and expenses (including reasonable costs of investigation and legal expenses) arising out of or based upon any untrue or alleged untrue statement of a material fact contained in the registration statement or prospectus or any omission or alleged omission to state therein a material fact required to be stated or necessary to make the statements therein (in the case of a prospectus, in the light of the circumstances under which they were made) not misleading, to the extent, but only to the extent, that such untrue statement or omission is contained in or should have been contained in any information or affidavit with respect to such holder so furnished in writing by such holder expressly for inclusion in such registration statement. (c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. Any person or entity entitled to indemnification hereunder agrees to give prompt written notice to the indemnifying party after the receipt by such person or entity of any written notice of the commencement of any action, suit or proceeding against such person or entity or investigation thereof for which such person or entity will claim indemnification or contribution pursuant to this Agreement and, unless in the reasonable judgment of such indemnified party a conflict of interest exists between such indemnified party and the indemnifying party with respect to such claim, permit the indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to such indemnified party. If the indemnifying party is not entitled to, or elects not to, assume the defense of a claim, it will not be obligated to pay the fees and expenses of more than one lead counsel with respect to such claim, 12 (plus local counsel fees, if required) unless in the reasonable judgment of counsel to such indemnified party a conflict of interest exists between such indemnified party and any other of such indemnified parties with respect to such claim, in which event the indemnifying party shall be obligated to pay the fees and expenses of such additional counsel or counsels. The indemnifying party will not be subject to any liability for any settlement made without its consent, which consent shall not be unreasonably withheld. (d) CONTRIBUTION. If the indemnification provided for in this Section 6 from the indemnifying party is unavailable to an indemnified party hereunder in respect of any losses, claims, damages, liabilities or expenses referred to therein by reason other than that set forth in the exception at the end of the first sentence of Section 6(a) hereof, then the indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities or expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying party and indemnified parties in connection with the actions or inactions which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative fault of such indemnifying party and indemnified parties shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, has been made by, or relates to information supplied by, such indemnifying party or indemnified parties, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such action. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in Section 6(c), any legal or other fees or expenses reasonably incurred by such party in connection with any investigation or proceeding. The parties hereto agree that it would not be just and equitable if contribution pursuant to this paragraph were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. 13 If indemnification is available under this Section 6, the indemnifying parties shall indemnify each indemnified party to the full extent provided in Sections 6(a) and (b) without regard to the relative fault of said indemnifying party or indemnified party or any other equitable consideration provided for in this Section 6. In the event that any provision of an indemnification clause in an underwriting agreement executed by or on behalf of a holder of Registrable Securities differs from a provision in this Section 6, such provision in the underwriting agreement shall determine such holder's rights in respect thereof. SECTION 7. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. No holder of Registrable Securities and no person or entity retained by or affiliated with any such holder (each, a "Participant") may participate in any registration hereunder unless such Participant (a) agrees to sell its securities (if any) on the basis provided in any underwriting arrangements approved by the Company in accordance with the terms of this Agreement, (b) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required by the Company or under the terms of such underwriting arrangements and (c) agrees to pay such Participant's pro rata portion of all underwriting discounts, commissions and fees (to the extent applicable). SECTION 8. MISCELLANEOUS. (a) REMEDIES. Each party hereto, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Agreement. Each party agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach of the provisions of this Agreement and hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate. 14 (b) NOTICES. All notices and other communications provided for or permitted hereunder shall be made by telecopy (followed by registered first-class mail or overnight courier delivery of a hard-copy), by overnight courier or by hand-delivery: (i) if to the Company, at: c/o Sun International Management (U.K.) Limited Gravel Hill, Badgemore House Henley-on-Thames Oxfordshire RG9 4NR United Kingdom Attention: Mr. Howard B. Kerzner Telecopy: 011 44 491 576 526 With a copy to: Cravath, Swaine & Moore Worldwide Plaza 825 Eighth Avenue New York, New York 10019 Attention: James M. Edwards, Esq. Telecopy: (212) 474-3700 (ii) if to Fidelity, at: 82 Devonshire Street Boston, Massachusetts 02109 Attention: Judy Mencher, Esq. Telecopy: (617) 570-7688 With a copy to: Weil, Gotshal & Manges 767 Fifth Avenue New York, New York 10153 Attention: Robert M. Gervis, Esq. Telecopy: (212) 310-8007; and (iii) if to TCW, at 865 South Figueroa Street Los Angeles, California 90017 Attention: Mr. Bruce A. Karsh Telecopy: (213) 244-0549 15 With a copy to: Weil, Gotshal & Manges 767 Fifth Avenue New York, New York 10153 Attention: Robert M. Gervis, Esq. Telecopy: (212) 310-8007 (c) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties hereto; PROVIDED, HOWEVER, that the rights provided to the holders of Registrable Securities in Section 2 of this Agreement shall be exercisable only by holders of Registrable Securities as determined in accordance with Section 1 of this Agreement and shall terminate on the date that they shall cease to own in aggregate Registrable Securities constituting at least 5% of the then outstanding Ordinary Shares. (d) COUNTERPARTS. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. (e) HEADINGS. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. (f) GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and to be performed wholly within the State. (g) SEVERABILITY. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstances, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be in any way impaired thereby. (h) ENTIRE AGREEMENT. This Agreement is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, warranties or undertakings, other 16 than those set forth or referred to herein. This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. SUN INTERNATIONAL HOTELS LIMITED, by __________________________ Name: Title: FIDELITY MANAGEMENT & RESEARCH COMPANY, on behalf of various funds that it manages which own Shares of the Company, by __________________________ Name: Title: TCW SPECIAL CREDITS, on behalf of various funds and accounts which own Shares of the Company, by TCW ASSET MANAGEMENT CO., its Managing Partner, by _______________________ Name: Title: by _______________________ Name: Title: EXHIBIT C MANAGEMENT AGREEMENT -------------------- This Agreement, dated this ___ day of October 1993 between: SUN INTERNATIONAL HOTELS LIMITED (hereinafter called "Owner"), a company incorporated under the laws of the Commonwealth of The Bahamas and having its Registered Office in the City of Nassau in the Island of New Providence, one of the Islands in the said Commonwealth and SUN INTERNATIONAL MANAGEMENT LIMITED (hereinafter called "Manager"), a company incorporated under the laws of the British Virgin Islands and having its Registered Office in Road Town, Tortola, British Virgin Islands TABLE OF CONTENTS ----------------- ARTICLE PAGE - ------- ---- 1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . 3 2 Appointment. . . . . . . . . . . . . . . . . . . . . . . . . 7 3 Term of Agreement. . . . . . . . . . . . . . . . . . . . . . 8 4 Project management . . . . . . . . . . . . . . . . . . . . . 9 4.1 Periodic development projects . . . . . . . . . . . . . 9 4.2 Manager's project management services . . . . . . . . . 10 4.3 Manager's fee for project management. . . . . . . . . . 12 5 Manager's management of Owner's businesses . . . . . . . . . 14 6 Entrenched provisions. . . . . . . . . . . . . . . . . . . . 18 2 ARTICLE PAGE - ------- ---- 7 Management fee and reimbursables . . . . . . . . . . . . . . 20 7.1 Basic fee . . . . . . . . . . . . . . . . . . . . . . . 20 7.2 Incentive fee . . . . . . . . . . . . . . . . . . . . . 21 7.3 Reimbursement of costs and expenses . . . . . . . . . . 22 7.4 Payments. . . . . . . . . . . . . . . . . . . . . . . . 24 8 Insurance to be maintained by Owner. . . . . . . . . . . . . 24 9 Damage and destruction . . . . . . . . . . . . . . . . . . . 26 10 Alterations and improvements . . . . . . . . . . . . . . . . 26 11 Trade name . . . . . . . . . . . . . . . . . . . . . . . . . 27 12 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . 28 13 Indemnification. . . . . . . . . . . . . . . . . . . . . . . 29 14 Arbitration. . . . . . . . . . . . . . . . . . . . . . . . . 31 15 Termination. . . . . . . . . . . . . . . . . . . . . . . . . 31 16 Force Majeure. . . . . . . . . . . . . . . . . . . . . . . . 36 17 Suspensive conditions. . . . . . . . . . . . . . . . . . . . 36 18 Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . 37 18.1 Interest. . . . . . . . . . . . . . . . . . . . . . . . 37 18.2 Funding of Owner accounts . . . . . . . . . . . . . . . 38 18.3 Manager's right to request instructions . . . . . . . . 38 18.4 No third party beneficiary. . . . . . . . . . . . . . . 39 18.5 Independent contractor. . . . . . . . . . . . . . . . . 39 18.6 Restrictions as to employees. . . . . . . . . . . . . . 40 18.7 Conflicts . . . . . . . . . . . . . . . . . . . . . . . 40 18.8 Notices . . . . . . . . . . . . . . . . . . . . . . . . 42 18.9 Applicable law. . . . . . . . . . . . . . . . . . . . . 42 18.10 Sole record . . . . . . . . . . . . . . . . . . . . . . 43 18.11 Indulgence - no waiver. . . . . . . . . . . . . . . . . 43 18.12 Severability. . . . . . . . . . . . . . . . . . . . . . 43 18.13 Interpretation. . . . . . . . . . . . . . . . . . . . . 43 3 Recitals - -------- Whereas Owner, through a number of subsidiaries, will upon the completion of certain previously announced transactions conduct a range of businesses in the leisure, resort and related industries on Paradise Island in the Commonwealth of The Bahamas and in the State of Florida in the United States of America, as more fully described in Article 1; Whereas Owner intends to operate the businesses referred to above and to upgrade and refurbish existing facilities forming part of such businesses and to add new facilities to some or all of such businesses by way of periodic development projects and to develop new businesses; Whereas Manager has the expertise and is willing to manage the operations of the businesses referred to above and to perform project management services for the periodic upgrading and refurbishment of and additions to the facilities of such businesses and for new businesses; Whereas Owner and Manager wish to enter into an agreement for such operating management and project management services; Now therefore the parties hereto covenant and agree as hereinafter set out. 1 DEFINITIONS Unless inconsistent with the context, the following terms shall have the meanings assigned to them hereunder, and substantive provisions herein included shall form part of this Agreement. When used herein, the words "include", "includes" and "including" shall be deemed to be followed by the words "without limitation", whether or not they are in fact followed by such words - 4 1.1 "RIB" - Resorts International (Bahamas) 1984 Limited; 1.2 "the Owner Group" - Owner and its subsidiaries, including RIB and RIB's subsidiaries, as reflected on the Schedule of Proposed Corporate Structure appended hereto as Annexure "A" and all other subsidiaries of Owner which may from time to time be incorporated, acquired or otherwise added to the Owner Group; 1.3 Owner's "businesses" for purposes of this agreement - the conduct from time to time by Owner, through members of the Owner Group, through the Manager or otherwise, of any businesses, including those which are described more fully below or in the Schedule appended hereto as Annexure "B" - (a) "the resorts", being, as the context requires, each of or the collectivity of resorts presently known as Paradise Island Resort & Casino (including the casino thereat), Ocean Club Golf & Tennis Resort, Paradise Island Beach Resort as well as the Paradise Island Golf Club, together with all ancilliary and other facilities to and of these resorts and golf club, both existing and to be added thereto or to any other business conducted by any member of the Owner Group anywhere on the "resort property", being the entire property on Paradise Island to which one or more of the members of the Owner Group holds valid and lawful title or a valid leasehold interest; (b) "PIA", being Paradise Island Airlines (or its successors), including the administration and operation of this airline by means of its owned and leased aircraft from time to time and the 5 maintaining of aircraft hangarage facilities at Fort Lauderdale in the State of Florida; (c) International Suppliers, Inc. (or its successors), which provides centralized purchasing services for the Owner Group from the aforesaid aircraft hangarage facilities at Fort Lauderdale; (d) Paradise Island International Airport, including a runway, seaplane ramp and terminal building; (e) Resorts Representation International, Inc. (or its successors), which renders reservation services to PIA, the resorts and other hotels not affiliated to the Owner Group; (f) Paradise Island Vacations, Inc. (or its successors), being a wholesale tour company which markets and sells holiday packages to a range of destinations, including the resorts; (g) a utility company on Paradise Island, which supplies potable water and treated water to the resorts and other inhabitants of Paradise Island; (h) other properties including apartments for employee housing, two warehouses, undeveloped and partially developed land on various islands in the Commonwealth of The Bahamas and a headquarters building in North Miami in the State of Florida accommodating a variety of administrative and related functions pertaining to the Owner Group; 6 (i) all other businesses of members of the Owner Group conducted as at the date of signature of this agreement as well as such other businesses as may be commenced and conducted by any member of the Owner Group during the term of this Agreement. Without limitation to the generality of the aforegoing, the provisions of this Agreement shall also apply to the establishment and operation of any business which a member of the Owner Group may conduct on Athol Island or any other island in the Commonwealth of The Bahamas, at any time during the term of this Agreement; 1.4 "casino" - the existing casino which forms part of Paradise Island Resort & Casino, as well as any future casino business to be conducted which is duly established, licensed and operated in accordance with the rules and regulations of any regulatory authority, including the rules and regulations prescribed by the provisions of the Lotteries and Gaming Act of the Commonwealth of The Bahamas or any statutory modification or re-enactment thereof and of any regulations made thereunder; 1.5 "GAAP" - United States generally accepted accounting principles. In the case of the calculation of "gross revenues", the United States generally accepted accounting principles applied (where more than one accounting treatment is acceptable) shall include the principles set forth in the AICPA Accounting and Auditing Guide for Casinos; 1.6 "gross revenues" - the aggregate gross revenues of the Owner Group from the conduct of Owner's businesses, computed in accordance with GAAP; 7 1.7 "gross operating profit" - the aggregate net income of the Owner Group from the conduct of Owner's businesses, computed in accordance with GAAP, after adding back all interest, finance charges (or the financing component of capitalized lease expenses), taxes (other than casino fees and casino taxes), amortization, depreciation and other non-cash charges or expenses, as well as the incentive fee to be paid to Manager pursuant to Article 7.2, in each case to the extent deducted when determining net income for such period, but excluding any extraordinary or abnormal profit and loss items for such period; 1.8 "financial year" - each of Owner's financial years, which shall be each year reckoned from each 1 January to 31 December; 1.9 "commencement date" of this agreement - the date on which the suspensive conditions set forth in Article 17.1 shall be satisfied. 2 APPOINTMENT 2.1 Owner appoints and engages Manager, which accepts such appointment and engagement, to serve Owner as its exclusive agent in the performance of the management, direction, control and general conduct of Owner's businesses and in the performance of the management of the periodic refurbishment and upgrading of and the additions to the properties, facilities and amenities relating to any of Owner's businesses from time to time, subject to the terms and conditions herein contained. 2.2 Owner recognizes that Manager is part of an international organization and that the services to be performed by Manager hereunder may be performed by 8 Manager at such locations as manager may reasonably determine, which need not be in the Commonwealth of The Bahamas or in the State of Florida. 3 TERM OF AGREEMENT 3.1 This agreement shall commence on the commencement date defined in Article 1.9. 3.2 This agreement shall initially endure for ten (10) years, reckoned from the commencement date. 3.3 Manager shall have the right to extend the term of this Agreement on two occasions for successive periods of ten (10) years each, provided that - (a) Manager is not in default pursuant to Article 15.1(a) below at the time that such renewal is to commence; (b) Manager is not in default pursuant to Article 15.1 below at the time that such renewal is to commence and while Owner, as a result of any applicable law, rule or regulation, is unable to terminate this Agreement; (c) the term shall have been extended for all prior renewal periods (if any); and (d) Manager shall have given Owner no less than twelve (12) months' prior written notice of its election to exercise its right to renew the term of this Agreement. 9 4 PROJECT MANAGEMENT 4.1 PERIODIC DEVELOPMENT PROJECTS (a) Owner shall from time to time, of its own volition or in response to recommendations by Manager, but in any event subject to the prior written approval of Owner's board of directors, decide upon development projects to be undertaken, at the cost of Owner for its own benefit or for the benefit of the member concerned of the Owner Group, for the refurbishment, upgrading, expansion and/or additions to the facilities and/or amenities of identified aspects of Owner's businesses from time to time. Such development projects shall be undertaken substantially in accordance with the plans, specifications, budgets and timetables therefor to be prepared by Owner's architects and other professional consultants, and in conformity with all applicable laws, ordinances and governmental regulations. (b) Owner shall engage and retain at its expense, or procure that the relevant member of the Owner Group engages and retains at that member's expense, subject to prior agreement with Manager, such architects, contractors and such engineers, designers, decorators, landscapers, environmental conservationists and other specialists and professional consultants as Owner and Manager may consider necessary or desirable in regard to the development project in question. (c) Owner shall bear and pay, or procure that the relevant member of the Owner Group bears and pays, the costs of all materials, equipment 10 machinery, furniture, furnishings, fixtures, fittings, decor and other facilities or items and anything else required for the development project in question, as may be recommended by Manager. 4.2 MANAGER'S PROJECT MANAGEMENT SERVICES (a) Manager shall, as the exclusive agent for Owner for such purposes, perform the project management services which are appropriate according to the nature of each development project. (b) During the course of any development project, Manager shall procure the rendering of such project management services as it may consider appropriate or relevant for the development project in question, which may, for example, comprise some of or any combination of the following - (i) the development of schematic plans, review of final sets of architectural plans and specifications; (ii) assistance with and advice regarding interior design, including the theme treatment and functional layout of facilities, advice regarding layout plans, elevations, color schemes, and specifications for carpeting, furniture, fabrics, decor and suchlike; (iii) assistance with and advice regarding the theme treatment and functional layout of casinos and other gaming areas, equipment, 11 layout of equipment, lighting, surveillance and various cash facilities; (iv) assistance with and advice regarding recommended standards for water treatment, heating, ventilation, air conditioning, plumbing and drainage and sewage disposal, electrical power supplies and distribution, elevators and escalators and telephone and public address systems; (v) assistance with and advice regarding recommended lighting requirements and lighting plans and specifications for the business in question; (vi) the approval of all material contracts and sub-contracts to be entered into and the approval of all progress payments pursuant thereto; (vii) on-site inspection and supervision of work in progress; (viii) assistance with and advice regarding the approval and hiring of non-Bahamian employees of contractors and sub- contractors who perform work on a development project in The Bahamas; (ix) assistance with and advice regarding the obtaining of relevant governmental approvals. 12 4.3 MANAGER'S FEE FOR PROJECT MANAGEMENT (a) As consideration for the performance of the project management services to be rendered and/or procured by Manager pursuant to the terms of Article 4.2, Owner shall pay to Manager a project management fee equal to two-and-a-half percent (2.5%) of the aggregate cost to Owner and/or the relevant member of the Owner Group, of the development, establishment, upgrading, refurbishment, augmentation, addition to and generally bringing into operation as contemplated by the terms of Articles 4.1 and 4.2, of each and every development project undertaken by Owner and/or a member of the Owner Group, including, without limiting the generality of the aforegoing, the costs of all fees charged by architects, contractors and other professional consultants and specialists, pre-opening expenses (being all staff costs and running expenses of, and marketing, advertising and launch costs attributable to the aspect of the Owner's business which is the subject of the development project in question, until the opening or commissioning or the general bringing into operation thereof), and the cost of all furnishings, equipment, machinery, fixtures, fittings and anything else contemplated in Articles 4.1 and 4.2. (b) The project management fee for each development project referred to in Article 4.3(a) above shall be paid to Manager in United States Dollars, free of bank commission or other deductions, other than deductions in respect of withholding or income taxes, at such place(s) as Manager may designate from time to time - 13 (i) as to thirty percent (30%) thereof, upon the commencement of work on site in respect of each development project; (ii) as to forty percent (40%) thereof, mid-way through the scheduled program of each development project; and (iii) as to the remaining thirty percent (30%) thereof, upon beneficial occupation by the relevant member of the Owner Group of the development in question. (c) Until the final amount of the cost of each development project will have been determined, all payments to be made in terms of this Article 4.3 shall be based on the latest estimate of that cost then available to the parties, and, where that estimate changes from time to time, the next succeeding payment to be made in terms of this Article 4.3 shall include any adjustment necessary to account for that change. (d) In addition to the project management fee referred to in Article 4.3(a) above, Owner shall pay all reasonable travelling and reasonable out-of-pocket expenses of Manager which are directly attributable to the performance of Manager's duties in terms of Article 4.2. These expenses shall be paid by Owner to Manager within thirty (30) days of the periodic rendition of an account therefor by Manager, duly supported by vouchers and other relevant back-up documentation. 14 5 MANAGER'S MANAGEMENT OF OWNER'S BUSINESS 5.1 Manager shall, subject to the terms hereof (including Article 6.2), define, alter and vary from time to time the policies and procedures to be observed in the conduct of Owner's businesses, which shall encompass all administrative, accounting, budgeting, marketing, personnel, operational and other practices and procedures to be observed and applied in relation to the operation of each of Owner's businesses. 5.2 Subject only to the provisions of Article 5.1 and any express limitation or qualification referred to in Article 6, Manager as exclusive agent for Owner for such purposes shall provide the management, administration, control and conduct of each of Owner's businesses and to that end Manager shall utilise its resources and skills and is hereby authorised and empowered to supervise, monitor, approve or otherwise oversee, or to procure the supervision, monitoring or approval, as the case may be, of the following - (a) the selection and appointment of a chief executive officer for one or more of the resorts, other senior executives, general managers, other managers and heads of departments of one or more of the resorts and of the other businesses of owner, all of whom shall be employed on a full-time basis by and for the account of Owner, as may be considered necessary from time to time; (b) the determination of the terms of service and the remuneration payable to all members of personnel of Owner's businesses, including all perquisites of employment; 15 (c) to the extent that Owner controls the conduct of such negotiations, the conduct of negotiations with trade unions with which any of Owner's businesses have an association and, with the prior approval of Owner, the entering into of agreements with such trade unions; (d) the conduct of the centralized purchasing of necessary provisions and supplies for the resorts and other members of the Owner Group; (e) the retention and periodic renewal, as applicable, of authorities and licences required in connection with the conduct of Owner's businesses; (f) the administration of such functions as are usually carried out by managers, secretaries and accountants of a business enterprise similar to that which is conducted by Owner's businesses; (g) the procurement of furniture, fixtures, equipment and operating supplies, and of such services and other merchandise as may be required for the proper operation and maintenance of the business of the resorts and of the other members of the Owner Group; (h) the improvement, extension and development of Owner's businesses; (i) the completion and submission of returns and the compliance with other formalities required by any applicable laws, rules or regulations pertaining to gaming tax, real property taxes, business license fees and, if applicable in The Bahamas in the future, income tax legislation, and any other 16 legislation applicable to Owner and the Owner Group; (j) assistance with the taking out and maintenance of all insurances to be obtained and maintained by Owner pursuant to the terms of Article 8 and authorised in terms of Article 6.2(f), and the rendering of advice to the board of directors of Owner with reference to the terms, cost and availability of such insurance and the selection of an insurance consultant or expert if requested by the board of directors of Owner; (k) the planning and execution of all major advertising and promotional campaigns for Owner's businesses; (l) the establishment and obtaining of prescribed approvals of casino operating procedures, as well as the determination of the type and number of casino games, the layout of the facilities for those games, the type and mix of slot machines for casinos, and the types and mix of progressive jackpots to be available on slot machines in any casino; (m) the determination and establishment of tariffs, prices and rates for the facilities to be offered by the various elements of Owner's businesses; (n) the establishment and maintenance of accounting and other appropriate managerial systems for the control and administration of existing, new or augmented elements of Owner's businesses; and 17 (o) generally, the doing or procurement of whatever else may be necessary to carry out Manager's mandate as described in this Agreement. 5.3 Manager shall furthermore supervise and monitor or procure the supervision and monitoring of the maintenance of standard, planning, budgeting, accounting and reporting systems for Owner's businesses, and the proper and efficient operation of all such systems, in order that - (a) proper books of account and records are kept as required by law and good management accounting and secretarial practices; (b) a preliminary operating plan and budget for each of Owner's businesses for each of Owner's financial years shall be prepared and submitted to the board of directors of Owner not later than thirty (30) days before the commencement of each financial year; (c) quarterly unaudited financial statements in respect of Owner's businesses shall be prepared and circulated to the board of directors of Owner not later than six (6) weeks after the end of the quarter to which they relate; (d) Owner's annual audited financial statements are prepared in accordance with GAAP and completed and submitted to the board of directors of Owner for approval not later than ninety (90) days after the end of each of its financial years; (e) all books of account and other records shall be available for inspection by or on behalf of any of Owner's directors. 18 5.4 Manager shall cause or procure that all plant, equipment and other fixed assets of the Owner Group be maintained at the sole cost of Owner in good order and repair, subject to and as augmented by the terms of Article 10, and shall cause or procure that such repairs, refurbishments, maintenance or renewals thereof are undertaken as may be required in order that the same shall remain fully operational and in compliance with the standards observed by Manager in the conduct of Owner's businesses according to first class standards. 5.5 Manager shall from time to time procure recommendations and proposals (including price quotations) at the expense of Owner, to the extent available in the marketplace, from insurance companies and brokers for the development and maintenance of an insurance package for Owner consistent with the terms of Article 8, which recommendations and proposals shall be submitted from time to time to the board of directors of Owner for consideration and implementation in accordance with Article 8. 6 ENTRENCHED PROVISIONS 6.1 Notwithstanding anything to the contrary contained in this Agreement, Manager shall not administer or procure the administration of any affairs of any member of the Owner Group which are by the laws of the Commonwealth of The Bahamas or the articles of association of any member of the Owner Group specifically designated to be the sole prerogative of Owner's board of directors (including, without limitation, those matters requiring the separate approval of the Independent Directors, as defined in Owner's articles of association, pursuant to article 68 thereof but only for so long as such matters 19 require such approval under the terms of that article) and, without limiting the generality thereof, Manager shall not, on behalf of or as agent for any member of the Owner Group, engage in, agree to perform or undertake any of the acts, procedures or matters referred to in Article 6.2, except under the approval of, and in terms of any such approval by, Owner's board of directors including, as and to the extent applicable, the separate approval of the Independent Directors as referred to above. 6.2 The acts, procedures and matters referred to in Article 6.1 are the following - (a) the establishment and opening of new lines of business for any member of the Owner Group; (b) the purchase or sale or hiring or letting of immovable property which is material in relation to the affairs of any of Owner's businesses; (c) the incurring of borrowings not provided for in any budget approved by the board of directors of Owner for the time being in force; (d) the issue and entering into of guarantees or suretyships of whatsoever nature, and the acceptance of any accommodation bills of exchange, except in the ordinary course of Manager's mandate to procure the management of Owner's businesses; (e) the pledging, mortgaging, hypothecating or encumbering of any material assets of any member of the Owner Group; 20 (f) the approval of type(s) and manner of insurance to be entered into by Owner and/or members of the Owner Group pursuant to Article 8. 7 MANAGEMENT FEE AND REIMBURSABLES Owner shall pay to Manager, as remuneration for the operating management services rendered under this Agreement, the amounts set out in this Article 7 in respect to each of Owner's financial years during the term of this Agreement, or proportionately in respect of a fraction of such a financial year. 7.1 BASIC FEE (a) Owner shall pay to Manager a basic fee equal to three percent (3%) of the gross revenues; PROVIDED, HOWEVER, that for so long as an entity other than Manager shall be responsible for the operation and management of PIA (if at all), the term "gross revenues" shall not include revenues arising out of or associated with the operation(s) of PIA. (b) The basic fee shall be calculated by reference to the annual audited financial statements of Owner, but shall be paid at quarterly intervals within forty five (45) days after the end of the quarter in respect of which the same is payable. The payment in respect of the final quarter shall be made within fourteen (14) days of the completion, signature and certification of Owner's annual financial statements for that financial year. Each payment to be made in respect of the first three quarters shall be computed on a cumulative basis by reference to the quarterly management accounts for the preceding quarter, and on 21 completion, signature and certification of Owner's annual financial statements for that financial year the basic fee for the whole of that year shall be computed and - (i) the amount by which the basic fee so computed exceeds the three quarterly payments on account thereof in terms of the aforegoing shall be paid by Owner to Manager; or (ii) the amount by which the basic fee so computed falls short of the three quarterly payments on account thereof in terms of the aforegoing shall be paid by Manager to Owner. 7.2 INCENTIVE FEE (a) Owner shall pay to Manager, in addition to the basic fee, an incentive fee equal to ten percent (10%) of the gross operating profit; PROVIDED, HOWEVER, that for so long as an entity other than Manager shall be responsible for the operation and management of PIA (if at all), the term "gross operating profit" shall not include profits arising out of or associated with the operation(s) of PIA. (b) The incentive fee shall be calculated by reference to the annual audited financial statements of Owner, but shall be paid at quarterly intervals, within forty five (45) days after the end of the quarter in respect of which the same is payable. The payment in respect of the final quarter shall be made within fourteen (14) days of the completion, signature and 22 certification of Owner's annual financial statements for that financial year. Each such payment at the end of the first three quarters shall be computed on a cumulative basis by reference to the quarterly management accounts for the preceding quarter, and on completion, signature and certification of Owner's annual financial statements for that financial year the incentive fee for the whole of that year shall be computed and - (i) the amount by which the incentive fee so computed exceeds the three quarterly payments on account thereof in terms of the aforegoing shall be paid by Owner to Manager; or (ii) the amount by which the incentive fee so computed falls short of the three quarterly payments on account thereof in terms of the aforegoing shall be paid by Manager to Owner. 7.3 REIMBURSEMENT OF COSTS AND EXPENSES Owner shall bear and accordingly reimburse Manager, by the due date of an invoice or within thirty (30) days of receiving Manager's invoice and relevant supporting documentation, if no due date is specified, for all reasonable costs and expenses incurred by Manager for Owner's account under the provisions of this Agreement. For the avoidance of doubt, the parties hereby agree that it is their intention that Owner will not be liable under this Article 7.3 to reimburse Manager for general overheads of Manager or for employee costs of Manager which are attributable to the general supervisory and other functions of 23 Manager enumerated under Article 4 or Article 5. By way of example, the costs and expenses to be reimbursed under this Article 7.3 shall include, but not be limited, to the following - (a) the salaries and wages and other payroll costs and moving and related expenses, without any profit or premium, of employees of Manager attributable to any periods during which they are seconded to the employment of any of Owner's businesses; (b) reasonable travel and reasonable out-of-pocket expenses directly attributable to the carrying out by Manager of its management services in terms of this agreement and incurred by, among others, Manager's management executives, food and beverage executives, gaming executives, design and construction executives and other specialist executive personnel; and (c) the costs, or a fair and reasonable apportionment of the costs, or a fair and reasonable contribution to the costs, of international sales offices, central reservations offices, public relations, international marketing and advertising effected or utilised for the benefit of any of Owner's businesses, but only to the extent that the member in question of the Owner Group does not itself have such resources and facilities. Manager shall provide Owner with a schedule setting forth in reasonable detail the basis upon which costs at any time exceeding Five Hundred U. S. Dollars (US$500) claimed under this Article 7.3(c) have been apportioned. 24 7.4 PAYMENTS All payments by Owner to Manager in terms of this Article 7 shall be made in United States Dollars, free of bank commission or other deductions, other than deductions in respect of withholding or income taxes, and be remitted to such place(s) as Manager may designate from time to time. 8 INSURANCE TO BE MAINTAINED BY OWNER 8.1 Owner shall at its expense at all times during the period of any development project, procure and maintain, as may be applicable under the development project in question, adequate third party liability and property insurance protecting both Manager and Owner and/or the member concerned of the Owner Group against loss or damage arising in connection with the preparation, construction, refurbishment, upgrading, furnishing and equipping of any of Owner's businesses, including that of contractors, sub-contractors and suchlike in the performance of all construction and related agreements entered into in respect of the development project in question. 8.2 Owner shall furthermore at its expense at all times during the term of this Agreement maintain adequate insurance to cover the full replacement cost of the fixed assets of each of Owner's businesses (subject to reasonable deductible amounts) against loss or damage to such fixed assets from (to the extent available on terms and conditions commensurate with and reasonable in light of the nature of the risk) fire, explosion, aircraft, water apparatus, flood, earthquake, boiler and machinery breakdown and such other perils considered necessary or practical by Owner in fully protecting such fixed assets, as well as the following 25 insurances, if available on terms and conditions commensurate with and reasonable in light of the nature of the risk - (a) third party liability, elevator liability insurance and such other insurance against theft of or damage to guests' or patrons' or customers' property in such amounts as Owner shall deem necessary; (b) workmen's compensation, employer's liability or such other insurance as may be applicable at Bahamian law or the law of the State of Florida or which Owner shall deem advisable; (c) such other insurance as Owner shall deem necessary in the protection of other assets, business interruption or other liabilities wherever asserted, determined or incurred, arising from the operation of the Owner's businesses. 8.3 All insurances referred to in Articles 8.1 and 8.2 shall note the interest of Manager as an "additional insured" and shall contain both severability of interests and cross liability clauses and a waiver of the insurers' rights of subrogation in favour of Manager and Owner. 8.4 Owner shall be responsible in all respects for the adequacy of the insurance selected and obtained and compliance with this Article 8, notwithstanding any advice or recommendations received from or through Manager with respect to such insurances. Owner acknowledges that Manager's expertise does not extend to insurance matters and that Owner is responsible for all decisions taken in the area of insurance, with the 26 advice and guidance of independent insurance consultants or experts, if Owner deems third party assistance to be advisable. 9 DAMAGE AND DESTRUCTION If any aspect of the infrastructure of any of Owner's businesses or any portion thereof shall be damaged or destroyed at any time or times during the term of this Agreement by fire or any casualty risk or otherwise, Owner, if it elects to repair, rebuild or replace the same, shall, at its own cost and expense and with due diligence, repair, rebuild or replace the same so that after such repairing, rebuilding or replacing, the facilities in question shall be substantially the same as prior to such damage or destruction. 10 ALTERATIONS AND IMPROVEMENTS 10.1 Manager shall have the right to procure that, from time to time, such renewals, replacements, alterations, additions or improvements are effected to the resorts or to any of the other of Owner's businesses, which are customarily made in the operation of first class international resorts or a first class operation of any of the other of Owner's businesses. The costs of such customary renewals, replacements, alterations, additions or improvements shall be charged directly to current expenses or shall be capitalized in the books of account of the relevant member of the Owner Group, in accordance with GAAP. 10.2 If renewals, replacements, alterations, additions or improvements as referred to in Article 10.1 will involve or result in a fundamental change of the business concerned, or would in accordance with the terms of Article 10.1 be capitalized, Manager will 27 submit or procure the submission of a budget and plan for the proposed renewals, replacements, alterations, additions or improvements to Owner for Owner's prior approval as regards the budget cost in question and such approval shall not unreasonably be withheld; provided that Owner shall reply to the submission within thirty (30) days of its receipt and, if not forthcoming, such consent shall, unless the matters which are the subject of the submission would then require the separate approval of the Independent Directors, as defined in Owner's articles of association, pursuant to article 68 thereof, be presumed. 11 TRADE NAME 11.1 The parties acknowledge that any one or more of the resorts and any of the other businesses of Owner may in due course be marketed and operated under the "Sun International" name and banner, and that the name "Sun International" is or will be the exclusive property of Manager and/or any member of its group of companies worldwide. Upon the expiry or earlier termination of this Agreement for any reason, Owner shall as promptly as practicable change its corporate name or trade name so as to exclude, and generally cease using, the "Sun International" name or any other trade name or intellectual property developed, licensed or owned by Manager. 11.2 No right or remedy of Owner for any default of Manager nor any provision of this Agreement shall confer upon Owner or any transferee, assignee or successor of Owner, or any person claiming by or through Owner, the right to use the name "Sun International" either independently or in conjunction with any other word(s) in the use or operation of any of Owner's businesses. 28 12 ASSIGNMENT 12.1 Manager shall be entitled at any time, without the consent of Owner (or if such consent is an inalienable right under any provision of applicable law, then Owner shall grant such consent) - (a) to cede, assign and delegate its rights and obligations under this Agreement to any company which controls, is controlled by or is under common control with Manager and which will agree in writing to be bound to the provisions of this Agreement; and/or (b) to assign its right, conditionally or otherwise, to receive payments hereunder. 12.2 Except as set forth in Article 12.1, Manager shall not cede, assign or delegate its rights or obligations under this Agreement without the prior written consent of Owner's board of directors (and, so long as such assignment would require such approval under the terms of article 68 of Owner's articles of association, the separate approval of the Independent Directors as provided for therein), which consent shall not unreasonably be withheld and any such cession, assignment, delegation or other transfer made in violation of this Article 12.2 shall be void and of no further force or effect. 12.3 Owner shall not cede, assign or delegate its rights or obligations under this Agreement without the prior written consent of Manager, which consent shall not unreasonably be withheld and any such cession, assignment, delegation or other transfer made in violation of this Article 12.3 shall be void and of no further force or effect. 29 12.4 The terms and conditions of this Agreement shall be binding upon and enure to the benefit of the third party(ies) to which either Manager or Owner may validly cede, assign and delegate their respective rights and obligations in terms of Articles 12.1, 12.2 and 12.3. 13 INDEMNIFICATION 13.1 Owner shall indemnify, save, and defend, at Owner's sole cost and expense, and hold harmless, Manager and its officers, directors, agents, employees, representatives, shareholders and affiliates (collectively - "Owner Indemnitees"), from and against the full amount of any and all Section 13.1 Losses, excluding Losses to the extent caused by an Owner Indemnitee's wilful, wanton or criminal misconduct, gross negligence or fraud, but including Section 13.1 Losses arising out of the negligence or strict liability of any Owner Indemnitee. The term "Section 13.1 Losses" shall mean any and all liabilities, claims, suits, administrative proceedings, losses, damages or costs of any nature whatsoever, which may be asserted against or incurred by an Owner Indemnitee arising from, or relating to the performance of any act or the failure to perform any act pursuant to or arising from or in connection with this Agreement and shall include reasonable expenses of defense including, without limitation, reasonable attorneys' fees; PROVIDED, HOWEVER, that "Section 13.1 Losses" shall not include consequential losses or liabilities. 13.2 Manager shall indemnify, save and defend, at Manager's sole cost and expense, and hold harmless, Owner, the members of the Owner Group and their respective officers, directors, agents, employees, representatives, shareholders and affiliates 30 (collectively - "Manager Indemnitees"), from and against all Section 13.2 Losses to the extent caused by an Owner Indemnitee's breach of this Agreement or wilful, wanton or criminal misconduct, gross negligence or fraud. The term "Section 13.2 Losses" shall mean any and all liabilities, claims, suits, administrative proceedings, losses, damages or costs of any nature whatsoever, which may be asserted against or incurred by a Manager Indemnitee arising from, or relating to the performance of any act or the failure to perform any act pursuant to or arising from or in connection with this Agreement and shall include reasonable expenses of defense including, without limitation, reasonable attorneys' fees; PROVIDED, HOWEVER, that "Section 13.2 Losses" shall not include consequential losses or liabilities. Save as provided above in this Article 13.2, Manager shall have no liability hereunder to Owner for damages or other amounts in connection with this Agreement. 13.3 Except as expressly provided in this Agreement, neither party makes any warranties or guarantees to the other, either express or implied, with respect to the subject matter of this Agreement, and both parties disclaim and waive any implied warranties or warranties imposed by law. 13.4 The parties agree that the waivers and disclaimers of liability, indemnities, releases from liability, and limitations on liability expressed in this Article 13 shall survive the expiry or earlier termination for any reason of this Agreement and shall apply whether in contract, equity, tort or otherwise, even in the event of the fault, negligence, including sole negligence, strict liability, or breach of Manager or an Owner Indemnitee or a Manager Indemnitee. 31 14 ARBITRATION All disputes related to or arising from this Agreement shall be finally settled under the Rules of Conciliation and Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in accordance with the said rules. English law shall be applied. The place of arbitration shall be London, England and the language used shall be English. Any award rendered by the arbitrator or arbitrators shall be final and binding in any court of competent jurisdiction and application may be made to such court for a judicial acceptance of the award and an order of enforcement, as the case may be. 15 TERMINATION 15.1 Notwithstanding anything to the contrary herein contained, Owner may terminate this Agreement if - (a) for a period of thirty (30) days (or such longer period as may be reasonable, having regard to the nature of the default and the prevailing circumstances but not in any event to exceed sixty (60) days) after written notice has been served on it and without reasonable cause, Manager neglects, omits, refuses or fails to discharge or diligently take action to discharge any of its material obligations hereunder, whether through the operation of law or otherwise, provided that this right of termination shall not apply or be available if such failure to discharge such obligations is cured prior to termination or if such right of termination is not exercised within ninety (90) days after it first becomes available; or 32 (b) prior to the fifth anniversary of the commencement date, an "unapproved change in control" of Manager shall have occurred, provided that this right of termination shall only be available for and shall expire ninety (90) days after the date on which such change in control is deemed to have occurred (or the date on which termination first becomes available if later than the date of such event). For purposes of this paragraph, a "change of control" of Manager shall be deemed to have occurred if Manager is no longer (i) owned 50.1% or more by Sun International Investments Limited and (ii) under the control, directly or indirectly, of any one or more of the shareholders of Sun International Investments Limited on the date of the fulfilment of the conditions set out in Article 17.1 (being World Leisure Group Limited, Royale Resorts Holdings Limited and Caledonia Investments plc), their respective affiliates or any group acting in concert with one or more of such shareholders or their affiliates. "Control" in such circumstances means the effective power to direct or cause the direction of the management, policies or operations of the Manager, whether through the ownership of voting securities, by contract or otherwise and, without limiting the generality of the foregoing, shall be deemed to be possessed and exercised for purposes of this Agreement by any person, entity or group holding 50% or more of the voting securities or interests of the entity in question or 50% or more in value of the equity securities or interests of the entity in question. "Acting in concert" in such circumstances has the meaning generally applied in cases where the City Code on Takeovers and Mergers is applicable in the United Kingdom or 33 the Securities and Exchange Act of 1934 is applicable in the United States. A "change of control" is "unapproved" for purposes of this paragraph if the board of directors of Owner does not approve such change in control prior to the date on which such change in control is deemed to have occurred (which approval requirement for the board of directors of Owner shall be deemed to include a separate approval requirement for the Independent Directors (as defined) if and for so long as such separate approval is required under the terms of article 68 of Owner's articles of association), such approval not to be unreasonably withheld at all times after the third anniversary of the commencement date; or (c) any person employed by or retained and under the control of Manager shall be convicted of a felony in connection with the performance of duties for the benefit of Owner required to be performed by Manager hereunder and Manager shall not have used its best efforts to dismiss such person or take other appropriate disciplinary action (subject to applicable laws and any advice of counsel taken) within thirty (30) days thereafter (such period to be extended to the extent necessary or appropriate if the requirement for the taking of appropriate disciplinary action by Manager is suspended pursuant to the proviso above by reason of the application of applicable laws or pursuant to any advice of counsel taken), provided that this right of termination shall only be available for and shall expire ninety (90) days after the date on which the thirty (30) day period referred to above has finished running (or the date on which termination first becomes available if later than the date of such event); or 34 (d) any of the shares in the capital of Owner constituting the Pledged Collateral under the non-recourse guarantee and share pledge agreement dated on or before the commencement date between Sun International Investments Limited and the collateral agent named therein ("the Collateral Agent") shall have been foreclosed upon in accordance with the terms of such agreement, provided that this right of termination shall only be available for and shall expire ninety (90) days after the date of any such foreclosure (or the date on which termination first becomes available if later than the date of such event). 15.2 Notwithstanding anything to the contrary herein contained, Manager may terminate this Agreement if - (a) for a period of thirty (30) days (or such longer period as may be reasonable, having regard to the nature of the default and the prevailing circumstances but not in any event to exceed sixty (60) days) after written notice has been served on it and without reasonable cause, Owner neglects, omits, refuses or fails to discharge or diligently take action to discharge any of its material obligations hereunder, whether through the operation of law or otherwise, provided that this right of termination shall not apply or be available if such failure to discharge such obligations is cured prior to termination, or if such right of termination is not exercised within ninety (90) days after if first becomes available; or (b) any of the shares in the capital of Owner constituting the Pledged Collateral under the non-recourse guarantee and share pledge agreement 35 dated on or before the commencement date between Sun International Investments Limited and the Collateral Agent shall have been foreclosed upon in accordance with the terms of such agreement, provided that this right of termination shall only be available for and shall expire ninety (90) days after the date of any such foreclosure (or the date on which termination first becomes available if later than the date of such event); or (c) a material portion of Owner's businesses is sold, transferred, damaged, destroyed or otherwise disposed of (and, in the case of damage or destruction, not repaired, rebuilt or replaced in accordance with Article 9.1 within one hundred and twenty (120) days after the date of the event giving rise to such damage or destruction (or such longer period of time as shall be reasonable to permit such repair, rebuilding or replacement that was promptly undertaken to be completed)). 15.3 The rights granted in Articles 15.1 and 15.2 shall be in addition to any and all rights and remedies for breach of contract granted by the laws as designated by Article 18.9, subject, however, to the provisions of Article 13; PROVIDED, HOWEVER, that in the event of a breach of this Agreement by Owner or Manager, the parties hereby waive any and all claims either may have for consequential losses or damages resulting from such breach. 15.4 Notwithstanding the aforegoing, neither party shall be deemed to be in default under this Agreement if a bona fide dispute with respect to any of the aforegoing events of default has arisen between the parties and such dispute has been submitted to arbitration. 36 15.5 Except in the case of a termination by Manager pursuant to Article 15.2(a), if this Agreement is terminated pursuant to Articles 15.1 or 15.2, Owner shall have the right to elect, by written notice delivered to Manager within three (3) business days after the date on which Manager first gives notice of its election to terminate this Agreement, to continue this Agreement in force for a transitional period reasonably sufficient to allow Owner to retain an alternative manager; and Owner and Manager shall agree on reasonable compensation for Manager for such transitional period. 16 FORCE MAJEURE If by reason of war, terrorism, explosion, bombing, revolution, riots, civil commotion, strikes, lockout, inability to obtain labor or materials, fire, flood, storm, earthquake, hurricanes, tornado, drought or other acts or elements, accident, government restrictions or appropriation or other causes, whether like or unlike the aforegoing, beyond the reasonable control of either party hereto, such party is unable to perform in whole or in part its obligations under this Agreement, then such party shall be relieved of those obligations to the extent it is so unable to perform and such inability to perform so caused shall not make such party liable to the other. 17 SUSPENSIVE CONDITIONS 17.1 The coming into force of this Agreement shall be subject to the fulfilment of the conditions that - (a) Owner successfully closes the transaction in terms of which it will acquire RIB and certain other assets according to the terms of the 37 relevant acquisition agreement(s) (the "Purchase Agreement"); and (b) Sun International Investments Limited, incorporated in the British Virgin Islands, successfully acquires no less than a sixty percent (60%) shareholding in Owner, according to the terms of the underlying agreement(s). 17.2 Should either of the conditions in Article 17.1 not be fulfilled on or before the earlier of (i) the Closing Date (as defined in the Purchase Agreement) or (ii) the termination of the Purchase Agreement in accordance with its terms, then, notwithstanding the terms of Article 16 - (a) this agreement shall be capable of cancellation by either party on written notice to the other party and thereafter be of no further force or effect; and (b) neither party shall have any claim against the other arising from such cancellation of this Agreement. 18 MISCELLANEOUS 18.1 INTEREST Owner shall be liable for and shall pay interest to Manager on all overdue payments to Manager in terms of this Agreement, including late payments arising from the terms of Articles 15.4 or 16, or for any other reason whatsoever, unless, at the time the relevant payment was due, Sun International Investments Limited owned shares in Owner carrying a majority of the votes exercisable at general meetings of Owner and Owner had 38 sufficient funds to make such payment and, after making such payment, Owner would not be in breach of any applicable law or any provision of its articles of associations or the terms of any agreements to which it is a party. Such interest shall be calculated at the ruling interest rate on overdraft loans from time to time of Manager's bankers in The Bahamas or in London and in the event of varying interest rates applying, the ruling interest rate from time to time on overdraft loans of Manager's bankers in London shall be utilised for purposes of the interest calculation in question. Such interest rate shall be conclusively determined by a certificate of any manager (whose appointment it shall not be necessary to prove) of the aforesaid bankers in question. Owner shall furthermore be liable for and shall pay all legal costs, including collection costs and commissions, incurred by Manager in enforcing its rights hereunder. 18.2 FUNDING OF OWNER ACCOUNTS Notwithstanding anything to the contrary in this Agreement contained, Manager shall not be obligated to perform its duties and shall be excused from its obligations and responsibilities hereunder to the extent that funds to be provided by Owner are not available to allow Manager to perform such duties pursuant to the provisions of this Agreement. 18.3 MANAGER'S RIGHT TO REQUEST INSTRUCTIONS At any time, Manager may, if it reasonably deems it to be necessary or appropriate, request written instructions from Owner within a reasonable period prior to the necessity for taking action with respect to any matter contemplated by this Agreement, and may 39 defer action thereon pending receipt of such written instructions. Owner shall promptly respond to any such request for written instructions, after consulting with its board of directors, including the Independent Directors thereof so long as Article 68 of Owner's articles of association is in effect, in cases where such consultation is appropriate. Actions taken by Manager, its officers, employees and representatives in accordance with the written instructions of Owner, or failures to act by such persons pending the receipt of such written instructions, shall be deemed to be proper conduct within the scope of Manager's authority under this Agreement. 18.4 NO THIRD PARTY BENEFICIARY This Agreement is for the benefit of, and may be enforced only by, Owner and Manager and their respective permitted assignees, and any other parties indemnified under the provisions of Article 13 hereof, and is not for the benefit of, and may not be enforced by, any other third party. 18.5 INDEPENDENT CONTRACTOR Manager shall be an independent contractor with respect to the performance of its duties hereunder. Neither Manager nor its employees or other agents employed in the performance of such duties shall be deemed to be agents, partners, joint venturers, representatives or employees of Owner, except to the extent of the agency expressly created under this Agreement. 40 18.6 RESTRICTIONS AS TO EMPLOYEES Upon the expiry or earlier termination for any reason of this Agreement, Owner shall not employ or seek to hire any employee of Manager, without first obtaining the consent of Manager, and Manager shall not employ or seek to hire any employee of Owner (other than employees seconded or transferred to Owner from the international organization which is comprised of Manager and its affiliates) without first obtaining the consent of Owner, for a period of two (2) years following such expiry or earlier termination of this Agreement. 18.7 CONFLICTS (a) Except as set forth in paragraph (b) below, nothing contained in this Agreement shall be construed so as to restrict or prevent, in any manner, Manager from engaging in any other businesses or investments during the term of this Agreement, including, without limitation, any similar or competitive casino or resort operations to those of Owner, anywhere in the world. Owner acknowledges that Manager and/or its affiliates operate and/or manage other casinos and resorts presently and may in the future operate and/or manage additional casinos and resorts in different areas of the world, including, without limitation, the Caribbean or elsewhere in North America and that marketing efforts may cross over into the same markets and with respect to the same potential customer base. Manager, in the course of performing its functions under this Agreement, may refer customers of any of Owner's businesses and other parties to other facilities operated and/or 41 managed by affiliates of Manager to utilize gaming, entertainment, leisure and other amenities, without payment of any fees to Owner. Owner consents to such activities and agrees that such activities will not constitute a conflict of interest. (b) Notwithstanding paragraph (a) above, Manager agrees that at all times from the commencement date through the fifth anniversary of the commencement date, neither it, Sun International Investments Limited, World Leisure Group nor any other entity controlled, directly or indirectly, by or under common control with World Leisure Group will - (i) own or manage a casino on Paradise Island, Athol Island or New Providence Island in The Bahamas which does not constitute part of Owner's business; (ii) invest more than $90 000 000 (U.S.) in any hotel or casino operation located wholly in The Bahamas which does not constitute part of Owner's business (it being agreed and understood that except as set forth in clause (iii) below, investments in hotel or casino operations outside The Bahamas or partly inside and partly outside The Bahamas are not restricted); or (iii) invest in any hotel or casino operation, which does not constitute part of Owner's business, from which more than a third of the gross revenues to be derived from such operation during the first year is expected to come from The Bahamas if the amount 42 invested by them in such hotel or casino operation that is reasonably allocable (based on expected gross revenues) to the hotels and casinos in The Bahamas exceeds $90 000 000 (U.S.). In addition to the restriction set forth in clauses (ii) and (iii) of this paragraph (b), it is agreed that prior to the third anniversary of the commencement date the ceiling on investment for purposes of clauses (ii) and (iii) above shall be $45 000 000 (U.S.) rather than $90 000 000 (U.S.). 18.8 NOTICES All notices, requests, approvals, demands and other communications by either party to the other pursuant to this Agreement shall be in writing and be deemed to have been duly given and to be effective five (5) business days after being mailed by registered/certified pre-paid airmail, or on the first business day after the delivery thereof or the transmission thereof by facsimile, to either party at its address set out on the first page hereof or to such other address as the parties may designate from time to time by similar notice. 18.9 APPLICABLE LAW This Agreement shall be construed, interpreted and applied in accordance with, and then governed by, English law. 43 18.10 SOLE RECORD This document constitutes the sole record of the Agreement between the parties concerning the subject matter thereof. No addition or variation to, or agreed cancellation of this Agreement shall be of any force or effect unless in writing and signed by the parties. 18.11 INDULGENCE - NO WAIVER No indulgence by either party ("the grantor") to the other ("the grantee") shall constitute a waiver by the grantor, except in the instance and to the extent given, nor preclude the grantor from exercising any rights against the grantee arising before or after the grant of such indulgence. 18.12 SEVERABILITY Any provision of this Agreement which may for any reason be held to be unlawful or invalid shall be severable from the remaining provisions of this agreement, which shall remain of full force and effect. 18.13 INTERPRETATION The Table of Contents and captions to the Articles shall not be used in the interpretation of this Agreement. Unless the context indicates a contrary intention, an expression which denotes any gender shall include the other genders, a natural person shall include an artificial person and vice versa and the singular shall include the plural and vice versa. Signatures overleaf ..../ 44 SIGNED AT_______________________ ON _________________________________1993 Witnesses for : SUN INTERNATIONAL HOTELS LIMITED 1 ______________________________ 2 ______________________________ _____________________________________ who warrants the authority hereto SIGNED AT_______________________ ON _________________________________1993 Witnesses for : SUN INTERNATIONAL MANAGEMENT LIMITED 1 ______________________________ 2 ______________________________ _____________________________________ who warrants the authority hereto EXHIBIT D NON-RECOURSE GUARANTEE AND SHARE PLEDGE AGREEMENT NON-RECOURSE GUARANTEE AND SHARE PLEDGE AGREEMENT (the "AGREEMENT") dated as of , 199[3] between SUN INTERNATIONAL INVESTMENTS LIMITED, a British Virgin Islands corporation, (the "PLEDGOR") and [ ], a [ ] corporation, as Collateral Agent for and representative of (in such capacity herein called the "COLLATERAL AGENT") the holders from time to time (the "SECURED PARTIES") of the Series A Ordinary Shares of Sun International Hotels Limited and each of their respective successors and assigns. Except as otherwise defined herein, terms used in this Agreement and defined in the Articles of Association of Sun International Hotels Limited in force at the date hereof (the "ARTICLES OF ASSOCIATION") shall have the meanings assigned to them in the Articles of Association. WHEREAS, the Pledgor and the Secured Parties are at the date hereof the registered and/or beneficial owners of the whole of the issued share capital of Sun International Hotels Limited. Pursuant to Articles 19 and 21 of the Articles of Association, the Secured Parties have certain put rights against Sun International Hotels Limited in respect of the Series A Ordinary Shares owned by them (the "SERIES A PUT"); and WHEREAS, in connection with its investment in Sun International Hotels Limited and for consideration, the receipt and sufficiency of which is hereby acknowledged, the Pledgor desires to guarantee (on a non-recourse basis) the obligations of Sun International Hotels Limited under the Series A Put (the "GUARANTEED OBLIGATIONS") and to grant to the Collateral Agent as security therefor, an interest in the Pledged Collateral (as defined below) on the terms set forth herein. 2 NOW THEREFORE, the parties hereto agree as follows: 1. NON-RECOURSE GUARANTEE. (a) The Pledgor hereby guarantees the due and punctual payment when and as due of the Guaranteed Obligations provided that the sole remedy of the Collateral Agent and of the Secured Parties in respect of the guarantee and all other provisions (including without limitation all representations, warranties and covenants of Pledgor) contained herein shall be to enforce the security interest granted hereunder and that, save to the extent set forth in this proviso, the Pledgor shall have no liability or obligation in respect of the guarantee, the Guaranteed Obligations or any other provisions whether express or implied, contained herein or otherwise relating directly or indirectly to the subject matter of this Agreement. (b) In the event and to the extent that Sun International Hotels Limited is prohibited, pursuant to Section 44(2) or any other provision of the Companies Act, from making payment of the Purchase Price in respect of any Tendered Shares, the Pledgor promptly shall purchase all remaining Tendered Shares not paid for by Sun International Hotels Limited on the Purchase Date by reason of such prohibition. Such purchase shall be made by way of payment on the Purchase Date to the Distribution Agent of the Purchase Price for the remaining Tendered Shares; PROVIDED, HOWEVER, that in the event that all such Tendered Shares are not purchased by the Pledgor, neither the Collateral Agent nor the Secured Parties shall have any rights to enforce such purchase obligation, sue for damages or pursue any other remedy against the Pledgor in respect of such purchase obligation (it being agreed and understood that the sole consequence of any failure by the Pledgor to purchase the remaining Tendered Shares is as set forth in the next sentence of this paragraph). If and to the extent the Pledgor fails to purchase all remaining Tendered Shares, there shall be deemed an immediate default in payment by Sun International Hotels Limited of Guaranteed Obligations in an amount equal to the aggregate Purchase Price of the Tendered Shares not so purchased. The Collateral Agent and the Secured Parties shall have all the rights set forth herein in respect of such deemed default that they would have in the case of a normal default in payment of Guaranteed Obligations hereunder, including without limitation the remedies in Section 8, and all such rights shall be subject to the same limitations set forth herein with respect to 3 rights of the Collateral Agent and the Secured Parties upon default, including without limitation those set forth in paragraph (a) above and those set forth in Section 26. 2. SECURITY INTEREST. The Pledgor hereby grants to the Collateral Agent for the benefit of the Secured Parties a valid, perfected first-priority security interest in all of the Pledgor's right, title and interest in (i) the Series B Ordinary Shares of Sun International Hotels Limited details of which are set forth on Schedule I hereto and certificates representing the same (the "OWNED SHARES"), (ii) all additional Series B Ordinary Shares or other securities of Sun International Hotels Limited, from time to time acquired by the Pledgor pursuant to Article 18 of the Articles of Association in respect of the Owned Shares and certificates representing the same and (iii) subject to Section 6 of this Agreement, all dividends or other proceeds (whether in cash or otherwise) from time to time received, receivable or otherwise distributed in respect of such Owned Shares and such additional shares (all such Owned Shares and additional shares being the "PLEDGED SHARES" and together with such dividends and proceeds being the "PLEDGED COLLATERAL"), as security for the prompt payment and performance when due of the Guaranteed Obligations. 3. [Intentionally omitted. Old Section 3 and related provisions to be reintroduced and negotiated if the circumstances that made their omission possible change]. 4. DELIVERY OF CERTIFICATES. All certificates representing or evidencing Pledged Shares, immediately upon delivery thereof to the Pledgor, shall be delivered to and held by the Collateral Agent pursuant to this Agreement and shall be in suitable form for transfer, and shall be accompanied by duly executed instruments of transfer or assignments in blank. 5. REPRESENTATIONS AND WARRANTIES. The Pledgor hereby represents and warrants to the Collateral Agent for the benefit of the Secured Parties (without recourse except to the extent expressly provided for by way of enforcement of the security interest granted hereunder as set forth in Section 1 of this Agreement) as follows: (a) the Pledgor is the registered and beneficial owner of the Pledged Collateral free and clear of any lien, encumbrance or security interest except for the security interest created by this Agreement; 4 (b) the Pledgor has full corporate power and authority and legal right to execute, deliver and perform this Agreement and to own and to grant a security interest in the Pledged Collateral pursuant to this Agreement; (c) no consent of any other party and no consent, authorization, approval, or other action by, and no notice to or filing with any other person is required for the grant by the Pledgor of a security interest in the Pledged Collateral pursuant to this Agreement or for the execution, delivery or performance of this Agreement by the Pledgor; (d) all of the Pledged Shares have been duly authorized and validly issued and are fully paid and non-assessable; (e) the grant by the Pledgor of a security interest in the Pledged Shares as specified in this Agreement creates a valid, perfected first-priority security interest; (f) this Agreement has been duly authorized, executed and delivered by Pledgor and constitutes a legal, valid and binding obligation of Pledgor enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, or other similar laws affecting the rights of creditors generally or by the application of general equity principles; and (g) neither the pledge of the Pledged Collateral pursuant to this Agreement, the execution, delivery or performance of this Agreement by Pledgor nor the exercise by the Collateral Agent of the voting, foreclosure or other rights provided for in this Agreement which become available to the Collateral Agent following the occurrence and during the continuance of a breach of this Agreement (i) conflict with or result in a breach under the charter documents or any material contractual undertaking of Pledgor or (ii) conflict with or result in a violation of any of the laws of the jurisdiction of incorporation of Pledgor that are applicable to Pledgor. 5 The representations and warranties set forth in this Section 5 shall survive the execution and delivery of this Agreement. 6. VOTING RIGHTS; DIVIDENDS; ETC. Unless Sun International Hotels Limited is in breach of payment in respect of the Guaranteed Obligations and such breach is continuing, the Pledgor shall be entitled, free and clear of the security interest granted by this Agreement, (i) to exercise any and all voting and consensual or other rights pertaining to the Pledged Collateral, (ii) to receive and retain, and to utilize any and all dividends and other proceeds (other than dividends in additional securities of Sun International Hotels Limited, which shall constitute a portion of the Pledged Shares) from time to time received, receivable or otherwise distributed in respect of the Pledged Collateral and (iii) to receive all notices and other documents and, except as otherwise expressly provided in this Agreement, enjoy all other rights attaching to or arising in connection with the Pledged Collateral. For purposes of this Agreement, a breach in payment by Sun International Hotels Limited in respect of the Guaranteed Obligations shall be deemed to include the failure of Sun International Hotels Limited to honor the Series A Put on the fifth anniversary of the Closing Date (the "Purchase Date") by reason of it never having sent the Company Notice to holders of the Series A Ordinary Shares prior to the Purchase Date. 7. COVENANTS. The Pledgor covenants and agrees (without recourse except to the extent expressly provided for by way of enforcement of the security interest granted hereunder as set forth in Section 1 of this Agreement) that during the currency of this Agreement: (a) Pledgor will not (i) create or permit to exist any lien, encumbrance or security interest upon or with respect to the Pledged Collateral, except for the security interest created by this Agreement or (ii) transfer or purport to transfer any of its right, title and interest in the Pledged Collateral unless the transferee has first delivered to the Collateral Agent an undertaking in a form reasonably satisfactory to it agreeing to be bound by this Agreement as if it were the Pledgor named herein. (b) Pledgor will, at its expense, promptly execute, acknowledge and deliver all such instruments 6 and take all such action as the Collateral Agent from time to time may request in order to ensure to the Collateral Agent the benefits of the liens in and to the Pledged Collateral intended to be created by this Agreement, including the filing of any necessary Uniform Commercial Code financing statements, to the extent, if any, applicable, which may be filed by the Collateral Agent with or without the signature of Pledgor, and Pledgor will cooperate with the Collateral Agent, at Pledgor's expense, in obtaining all necessary approvals and making all necessary filings under federal or state law in connection with such liens or any sale or transfer of the Pledged Collateral. (c) Pledgor has and will defend the title to the Pledged Collateral and the liens of the Collateral Agent thereon against the claim of any third party and will maintain and preserve such liens until the Guaranteed Obligations have been paid in full or the Collateral Agent shall have enforced its remedies under Section 8 of this Agreement. (d) Pledgor will, upon obtaining any additional shares of capital stock of Sun International Hotels Limited in the circumstances specified in Section 2(ii) of this Agreement, promptly (and in any event within three (3) Business Days) deliver to the Collateral Agent a Pledge Amendment, duly executed by Pledgor (a "Pledge Amendment"), in respect of the additional Pledged Shares which are to be pledged pursuant to this Agreement. Pledgor hereby authorizes the Collateral Agent to attach each Pledge Amendment to this Agreement and agrees that all Pledged Shares listed on any Pledge Amendment delivered to the Collateral Agent shall for all purposes hereunder be considered Pledged Collateral. (e) All certificates representing Pledged Shares shall bear the following legend: "The shares represented by this certificate have been pledged pursuant to that certain Non- Recourse Guarantee and Share Pledge Agreement, dated _______, 1994, made by Sun International Investments Limited for the benefit of certain Secured Parties identified therein (the "Pledge Agreement") and may not be sold, hypothecated, 7 assigned or transferred except in accordance with the terms of such Pledge Agreement." (f) To the extent Pledgor has the authority or right to prevent such action, it will not allow Sun International Hotels Limited to issue new Series B Ordinary Shares except in accordance with Article 68 of the Articles of Association. 8. REMEDIES UPON DEFAULT; PROCEEDS GUARANTEED. If Sun International Hotels Limited is in breach of payment in respect of the Guaranteed Obligations and such breach is continuing: (a) the directors of Sun International Hotels Limited nominated by the Pledgor or any transferee of Pledged Shares (other than the Collateral Agent and/or the Secured Parties) pursuant to Article 49 of the Articles of Association shall cease to be entitled to vote at meetings of the board or committees thereof although they shall be entitled to notice of such meetings and to attend and speak thereat for so long as they continue to serve as directors; (b) all rights of the Pledgor to exercise voting, consensual and other rights pertaining to the Pledged Collateral shall cease and such rights shall be vested in the Collateral Agent which shall have the sole right to exercise such rights on behalf of the Secured Parties; (c) all rights of the Pledgor to receive the dividends and other proceeds which it would otherwise be entitled to receive and retain and to enjoy all other rights attaching to or arising in connection with the Pledged Collateral shall cease and all such rights shall thereupon become vested in the Collateral Agent who shall have the sole right to receive and hold such dividends and proceeds and to enjoy such other rights on behalf of the Secured Parties; (d) the Collateral Agent may from time to time exercise in respect of the Pledged Collateral the rights and remedies available to it under law, and may in its sole discretion sell the Pledged Collateral or any part thereof in one or more parcels at public or private sale for cash or otherwise at such prices as the Collateral Agent, having been so advised by an 8 international investment bank of good standing, may in its reasonable opinion deem commercially reasonable and, notwithstanding any other provision of this Agreement, the Collateral Agent may bid for and purchase all or any part of the Pledged Collateral at any sale thereof by offsetting against the purchase price the amount of its claim in respect of the Guaranteed Obligations, without accountability to Pledgor (except to the extent of surplus money received as provided in Article Third of Section 8(e) hereof). Pledgor hereby waives, to the extent permitted by applicable law, notice and judicial hearing in connection with the Collateral Agent's sale and disposition of the Pledged Collateral, including without limitation, any and all prior notice and hearing for any prejudgment remedy or remedies and any such right which Pledgor would otherwise have under the United States Constitution or any applicable federal or state statute; and (e) any cash held by the Collateral Agent as Pledged Collateral, and all cash proceeds received by the Collateral Agent, (all such cash being "PROCEEDS") in respect of the sale of, collection from, or other realization upon all or any part of the Pledged Collateral shall be allocated and paid promptly and from time to time by the Collateral Agent: FIRST, to the payment of the reasonable costs and expenses of such sale, collection or other realization; SECOND, subject to Section 9, to the payment of the Guaranteed Obligations then due so that each Secured Party shall receive an amount equal to the product of (i) the total amount available for payment under this clause second and (ii) a fraction, the numerator of which is the total amount of Guaranteed Obligations then due to such Secured Party and the denominator of which is the total amount of all such Guaranteed Obligations; and THIRD, to whosoever may be lawfully entitled to receive the same, any surplus then remaining from such Proceeds. 9 (f) If, at any time when the Collateral Agent in its sole discretion determines, following the occurrence and during the continuance of a breach of the Guaranteed Obligations, that, in connection with any actual or contemplated exercise of its rights (when permitted under this Section 8) to sell the whole or any part of the Pledged Collateral hereunder, it is necessary or advisable to effect a public registration of all or part of the Pledged Collateral pursuant to the Securities Act of 1933, as amended (or any similar statute then in effect) (the "Act"), Pledgor shall, in any expeditious manner, and to the extent Pledgor has authority or the right to, cause Sun International Hotels Limited to and if Pledgor cannot cause Sun International Hotels Limited to, then Pledgor must cooperate with Sun International Hotels Limited to: (i) Prepare and file with the Securities and Exchange Commission (the "Commission") a registration statement with respect to the Pledged Collateral and use its best efforts to cause such registration statement to become and remain effective. (ii) Prepare and file with the commission such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective and to comply with the provisions of the Act with respect to the sale or other disposition of the Pledged Collateral covered by such registration statement whenever the Collateral Agent shall desire to sell or otherwise dispose of the Pledged Collateral. (iii) Furnish to the Collateral Agent such numbers of copies of a prospectus and a preliminary prospectus, in conformity with the requirements of the Act, and such other documents as the Collateral Agent may request in order to facilitate the public sale or other disposition of the Pledged Collateral by the Collateral Agent. (iv) Use its best efforts to register or qualify the Pledged Collateral covered by such registration statement under such other securities or blue sky laws of such jurisdictions within the United States and Puerto Rico as the Collateral 10 Agent shall request, and do such other reasonable acts and things as may be required of it to enable the Collateral Agent to consummate the public sale or other disposition in such jurisdictions of the Pledged Collateral by the Collateral Agent. (v) Furnish, at the request of the Collateral Agent, on the date that the Pledged Collateral is delivered to the underwriters for sale pursuant to such registration or, if the security is not being sold through underwriters, on the date that the registration statement with respect to such Pledged Collateral becomes effective, (A) an opinion, dated such date, of the independent counsel representing such registrant for the purposes of such registration, addressed to the underwriters, if any, and to the Collateral Agent, in customary form and covering matters of the type customarily covered in such legal opinions; and (B) a comfort letter, dated such date, from the independent certified public accountants of such registrant, addressed to the underwriters, if any, and to the Collateral Agent, in a customary form and covering matters of the type customarily covered by such comfort letters and as the underwriters or the Collateral Agent shall reasonably request. The opinion of counsel referred to above shall additionally cover such other legal matters with respect to the registration in respect of which such opinion is being given as the Collateral Agent may reasonably request. The letter referred to above from the independent certified public accountants shall additionally cover such other financial matters (including information as to the period ending not more than five (5) Business Days prior to the date of such letter) with respect to the registration in respect of which such letter is being given as the Collateral Agent may reasonably request. (vi) 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, but not later than 18 months after the effective date of the registration statement, an earnings statement covering the period of at least 12 months beginning with the first full 11 month after the effective date of such registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Act. (vii) Use its best efforts to cause the Pledged Shares covered by such registration statement to be registered with or approved by such other governmental agencies or authorities as may be necessary by virtue of the business and operations of Sun International Hotels Limited to enable the Collateral Agent to consummate the disposition of such Pledged Shares. (viii) Notify the Collateral Agent at any time while the registration statement is required to be effective hereunder of the happening of any event which results in the prospectus included in such registration statement containing an untrue statement of a material fact or omitting to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and prepare a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such Pledged Shares, such prospectus will not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading. (ix) Enter into customary agreements and make such representations and warranties to the underwriters and the Collateral Agent as in form, substance and scope are customarily made by issuers to underwriters in primary underwritten offerings and take such other actions as are reasonably required in order to expedite or facilitate the disposition of such Pledged Shares. (x) Make available for inspection during regular business hours by the Collateral Agent and any attorney, accountant or other agent retained by the Collateral Agent and the underwriters and their attorneys and agents (collectively, the "Inspectors"), all financial and other records, corporate documents, books and records, questionnaires, agreements, properties of Sun 12 International Hotels Limited and other information (collectively, the "Records"), as shall be reasonably requested to enable them to exercise "due diligence," and cause the Company's officers, directors and employees to supply all information reasonably requested by any such Inspector in connection with the registration statement. (xi) Notify the Collateral Agent of any stop order or other suspension of effectiveness of the registration statement. (xii) Make every reasonable effort to obtain the withdrawal of any order suspending the effectiveness of the registration statement at the earliest possible moment. (xiii) Use its best efforts to cause the Pledged Shares to be listed on NASDAQ or any other national securities exchange on which a listing for shares of capital stock of Sun International Hotels Limited is maintained. (xiv) Cooperate with the Collateral Agent and its counsel in connection with any filings required to be made with the National Association of Securities Dealers, Inc. (the "NASD"). (xv) Cooperate with the Collateral Agent to facilitate the timely preparation and delivery of certificates representing securities to be sold under the registration statement (which certificates shall be in DTC-eligible form) and enable such securities to be in such denominations and registered in such names as the Collateral Agent may request. (g) If, at any time when the Collateral Agent shall determine to exercise its right to sell the whole or any part of the Pledged Collateral hereunder, such Pledged Collateral or the part thereof to be sold shall not, for any reason whatsoever, be effectively registered under the Act, the Collateral Agent may, in its discretion (subject only to applicable requirements of law), sell such Pledged Collateral or part thereof by private sale in such manner and under such circumstances as the Collateral Agent may deem necessary or advisable, but subject to the other 13 requirements of this Section 8, and shall not be required to effect such registration or to cause the same to be effected. Without limiting the generality of the foregoing, in any such event the Collateral Agent in its discretion (a) may, in accordance with applicable securities laws, proceed to make such private sale notwithstanding that a registration statement for the purpose of registering such Pledged Collateral or part thereof could be or shall have been filed under said Act (or similar statute), (b) may approach and negotiate with a single possible purchaser to effect such sale, and (c) may restrict such sale to a purchaser who will represent and agree that such purchaser is purchasing for its own account, for investment and not with a view to the distribution or sale of such Pledged Collateral or part thereof. In addition to a private sale as provided above in this Section 8, if any of the Pledged Collateral shall not be freely distributable to the public without registration under the Act (or similar statute) at the time of any proposed sale pursuant to this Section 8, then the Collateral Agent shall not be required to effect such registration or cause the same to be effected but, in its discretion (subject only to applicable requirements of law), may require that any sale hereunder (including a sale at auction) be conducted subject to restrictions (i) as to the financial sophistication and ability of any person permitted to bid or purchase at any such sale, (ii) as to the content of legends to be placed upon any certificates representing the Pledged Collateral sold in such sale, including restrictions on future transfer thereof, (iii) as to the representations required to be made by each person bidding or purchasing at such sale relating to that person's access to financial information about Sun International Hotels Limited and such person's intentions as to the holding of the Pledged Collateral so sold for investment, for its own account, and not with a view to the distribution thereof, and (iv) as to such other matters as the Collateral Agent may, in its discretion, deem necessary or appropriate in order that such sale (notwithstanding any failure so to register) may be effected in compliance with the Bankruptcy Code and other laws affecting the enforcement of creditors' rights and the Act and all applicable state securities laws. 14 (h) Pledgor acknowledges that notwithstanding the legal availability of a private sale or a sale subject to the restrictions described above in paragraph (g), the Collateral Agent may, in its discretion, elect to register any or all the Pledged Collateral under the Act (and any applicable state securities law) in accordance with its rights hereunder. Pledgor, however, recognizes that the Collateral Agent may be unable to effect a public sale of any or all the Pledged Collateral and may be compelled to resort to one or more private sales thereof. Pledgor also acknowledges that any such private sale may result in prices and other terms less favorable to the seller than if such sale were a public sale and, notwithstanding such circumstances, agrees that any such private sale shall be deemed to have been made in a commercially reasonable manner. The Collateral Agent shall be under no obligation to delay a sale of any of the Pledged Collateral for the period of time necessary to permit the registrant to register such securities for public sale under the Act, or under applicable state securities laws, even if Pledgor would agree to do so. (i) Pledgor agrees that following the occurrence and during the continuance of a breach in payment in respect of the Guaranteed Obligations or hereunder it will not at any time plead, claim or take the benefit of any appraisal, valuation, stay, extension, moratorium or redemption law now or hereafter in force in order to prevent or delay the enforcement of this Agreement, or the absolute sale of the whole or any part of the Pledged Collateral or the possession thereof by any purchaser at any sale hereunder, and Pledgor waives the benefit of all such laws to the extent it lawfully may do so. Pledgor agrees that it will not interfere with any right, power and remedy of the Collateral Agent provided for in this Agreement or now or hereafter existing at law or in equity or by statute or otherwise, or the exercise or beginning of the exercise by the Collateral Agent of any one or more of such rights, powers or remedies. No failure or delay on the part of the Collateral Agent to exercise any such right, power or remedy and no notice or demand which may be given to or made upon Pledgor by the Collateral Agent with respect to any such remedies shall operate as a waiver thereof, or limit or impair the Collateral Agent's right to take any action or to 15 exercise any power or remedy hereunder, without notice or demand, or prejudice its rights as against Pledgor in any respect. (j) Pledgor further agrees that a breach of any of the covenants contained in this Section 8 will cause irreparable injury to the Collateral Agent, that the Collateral Agent has no adequate remedy at law in respect of such breach and, as a consequence, agrees that each and every covenant contained in this Section 8 shall be specifically enforceable against Pledgor, and Pledgor hereby waives and agrees not to assert any defenses against an action for specific performance of such covenants except for a defense that the Guaranteed Obligations are not then due and payable in accordance with the Articles of Association or a defense that payment in respect thereof has already been made. 9. TRANSFERS UPON PAYMENT. No Proceeds shall be paid to any Secured Party pursuant to clause Second of Section 8(e) unless the Secured Party has delivered to Sun International Hotels Limited a duly executed and valid instrument of transfer in favor of Sun International Hotels Limited in respect of the Series A Ordinary Shares held by that Secured Party. Any Secured Party that complies with the Articles of Association, Sun International Hotels Limited's instructions sent to each Secured Party in connection with the exercise of the Series A Put and any provisions of law applicable directly or indirectly to such exercise (including the rules or regulations of any securities exchange or quotation system on which Sun International Hotels Limited's shares are listed or quoted) shall be deemed to have satisfied the requirements of the preceding sentence. Immediately following the payment to any Secured Party of Proceeds pursuant to clause Second of Section 8(e), Sun International Hotels Limited shall register the transfer to Sun International Hotels Limited of that number of the Series A Ordinary Shares held by each such Secured Party that equals the number resulting from dividing the amount of Proceeds actually paid to the relevant Secured Party by the Purchase Price (as defined in the Articles of Association). Each Secured Party shall receive a new certificate representing the number of shares of Series A Ordinary Shares (which may include fractional shares if necessary) not paid for pursuant to Section 8(e), if any, and in such case Pledgor's subrogation and other rights against Sun International Hotels Limited shall be 16 limited to the amount of Proceeds actually paid to the Secured Parties. 10. FURTHER ASSURANCES. The Pledgor agrees that at any time and from time to time, at the expense of the Pledgor, the Pledgor will promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary or that the Collateral Agent may reasonably request, in order to perfect and protect any security interest granted or purported to be granted hereby or to enable the Collateral Agent to exercise and enforce its rights and remedies hereunder with respect to any Pledged Collateral. 11. NO RELEASE. Subject to Section 1 of this Agreement, nothing set forth in this Agreement shall relieve the Pledgor from the performance of any term, covenant, condition or agreement on the part of the Pledgor to be performed or observed under or in respect of any of the Pledged Collateral or impose any obligation on the Collateral Agent or any Secured Party to perform or observe any such term, covenant, condition or agreement. 12. CERTAIN WAIVERS. Pledgor hereby waives notice of acceptance of this Agreement, and also presentment, demand, protest and notice of dishonor of any and all of the Guaranteed Obligations, and promptness in commencing suit against any party hereto or liable hereon, and in giving any notice to or of making any claim or demand hereunder upon Pledgor. No act or omission of any kind on the Collateral Agent's part shall in any event affect or impair this Agreement. 13. REINSTATEMENT. This Agreement shall remain in full force and effect and continue to be effective should any petition be filed by or against Pledgor for liquidation or reorganization, should Pledgor become insolvent or make an assignment for the benefit of creditors or should a receiver or trustee be appointed for all or any significant part of Pledgor's assets, and shall continue to be effective or be reinstated, as the case may be, if at any time payment and performance of the Guaranteed Obligations, or any part thereof, is, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by any obligee of the Guaranteed Obligations, whether as a "voidable preference", "fraudulent conveyance", or otherwise, all as though such payment or performance had not been made. In the event that any payment, or any part 17 thereof, is rescinded, reduced, restored or returned, the Guaranteed Obligations shall be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned. 14. TERMINATION. Subject to Section 13 of this Agreement, when all Guaranteed Obligations have been paid in full, this Agreement and the non-recourse guarantee and security interest granted hereunder shall, without further action, automatically terminate and the Collateral Agent and the Secured Parties shall from time to time deliver to the Pledgor such releases in respect of the Pledged Collateral as it may reasonably request. 15. COLLATERAL AGENT APPOINTED ATTORNEY. The Pledgor hereby appoints the Collateral Agent its attorney and, in the case of the rights specified in Section 6 and in Section 8(b), its proxy, with full authority in the place and stead of the Pledgor and in the name of the Pledgor or otherwise, from time to time in the Collateral Agent's discretion to take any action and to execute any instrument which the Collateral Agent may deem necessary or advisable to accomplish the purposes of this Agreement subject to the rights of the Pledgor hereunder. The appointment effected hereby is coupled with an interest and is irrevocable by the Pledgor. 16. COLLATERAL AGENT MAY PERFORM. If the Pledgor fails to perform any agreement contained herein within such reasonable period as may be specified in a written request to do so from the Collateral Agent, the Collateral Agent may itself perform, or cause performance of, such agreement. No delay on the Collateral Agent's part in exercising any power or right hereunder, and no notice or demand which may be given to or made upon Pledgor by the Collateral Agent with respect to any power or right hereunder, shall constitute a waiver thereof, or limit or impair the Collateral Agent's right to take any action or to exercise any power or right hereunder, without notice or demand, or prejudice the Collateral Agent's rights as against Pledgor in any respect. 17. EXPENSES. The Pledgor hereby agrees upon demand to pay to the Collateral Agent the amount of any and all reasonable expenses including, without limitation, the reasonable fees and expenses of its counsel and of any experts and agents, which the Collateral Agent may reasonably incur in connection with the administration of this Agreement except where such expenses result solely from 18 the gross negligence or wilful misconduct of the Collateral Agent. 18. AMENDMENTS. This Agreement may not be amended, modified or waived except with the written consent of the Pledgor and the Collateral Agent. The approval of holders holding not less than a majority of the outstanding Series A Ordinary Shares shall be required for any amendment to this Agreement that would result in a material reduction in (i) the Pledged Collateral being subject to the lien granted herein in favor of the Collateral Agent or (ii) the Secured Parties' rights in and to the Pledged Collateral pledged hereunder. 19. NOTICES. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by cable, telecopy, telegram or telex or by registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the following addresses (or at such other address for a party as shall be specified by like notice): if to Pledgor: c/o Sun International Management (U.K.) Limited Gravel Hill, Badgemore House Henley-on-Thames Oxfordshire RG9 4NR United Kingdom Attention: Mr. Howard B. Kerzner Telecopy: 011 44 491 576 526 with a copy to: James M. Edwards, Esq. Cravath, Swaine & Moore 825 Eighth Avenue New York, NY 10019 Telecopy: (212) 474-3700 19 if to the Collateral Agent: [ ] [ ] [ ] Attention: [ ] Telecopy: [ ] with copies to: [ ] [ ] [ ] Attention: [ ] Telecopy: [ ] Robert M. Gervis, Esq. Weil, Gotshal & Manges 767 Fifth Avenue New York, NY 10153 Telecopy: (212) 310-8007 20. GOVERNING LAW. This Agreement shall be governed by, and construed in accordance with the laws of the State of New York. 21. SUBMISSION TO JURISDICTION. (a) Any legal action or proceeding with respect to this Agreement may be brought in the United States District Court for the Southern District of New York (or, if such court does not have jurisdiction, the courts of the State of New York sitting in the Borough of Manhattan), and, by execution and delivery of this Agreement, the Pledgor hereby accepts for itself and in respect of its property, generally and unconditionally, the jurisdiction of the aforesaid courts. The Pledgor hereby irrevocably waives any objection, including, without limitation, any objection to the laying of venue or based on the grounds of FORUM NON CONVENIENS, which it may now or hereafter have to the bringing of any such action or proceeding in such respective jurisdictions and consents to the granting of such legal or equitable relief as is deemed appropriate by the court. (b) The Pledgor irrevocably consents to the service of process of any of the aforesaid courts in any such action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to the Pledgor at its address provided herein or to the Pledgor at 20 the address of its duly-appointed domestic agent for service of process, such service to become effective 30 days after such mailing. (c) The Pledgor hereby irrevocably appoints and designates as its lawful agent and attorney for receipt and service of process in any action arising or taken hereunder by the Collateral Agent the law firm of Cravath, Swaine & Moore, 825 Eighth Avenue, New York, New York 10019 (Attn: James M. Edwards, Esq.). 22. SEVERABILITY OF PROVISIONS. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or affecting the validity or enforceability of such provision in any other jurisdiction. 23. HEADINGS. Section headings used in this Agreement are for convenience of reference only and shall not affect the construction of this Agreement. 24. EXECUTION IN COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which counterparts, when so executed and delivered, shall be deemed to be an original and all of which counterparts, taken together, shall constitute one and the same Agreement. 25. LIMITATION ON COLLATERAL AGENT'S LIABILITY. Neither the Collateral Agent nor any of its respective officers, directors, employees, agents or counsel shall be liable for any action lawfully taken or omitted to be taken by it or them hereunder or in connection herewith, except for its or their own gross negligence or wilful misconduct. 26. LIMITATION ON PLEDGOR'S LIABILITY. Notwithstanding anything to the contrary contained herein and without limiting the generality of Section 1 of this Agreement, Pledgor shall not have any liability whatsoever under the guarantee contained herein, in respect of any breach or non-performance by Sun International Hotels Limited of its obligations in respect of the Series A Put or in respect of any breach or non-performance of any representation, warranty, covenant, agreement, obligation or otherwise of Pledgor under this Agreement, except and only to the extent of the proceeds realized by the Collateral Agent and the Secured Parties following the enforcement of 21 the security interest in the Pledged Collateral pursuant Section 8 of this Agreement. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their representatives hereunto duly authorized as of the date first above written. SUN INTERNATIONAL INVESTMENTS LIMITED by ________________________ Name: Title: [Collateral Agent] by _______________________ Name: Title: Schedule I to the Share Pledge Agreement THE OWNED SHARES Series Share Share of Certificate Number of Issuer Shares No(s) Shares - ------ ----- ----------- --------- [ ] [ ] Sun International Series B Hotels Limited Ordinary Shares EXHIBIT E The Bank of Nova Scotia P.O. Box N-7518 Nassau, Bahamas A.C. Allen Vice President Bahamas August 13, 1993 Sun International Hotels Limited c/o Lazard, Freres and Company One Rockefeller Plaza New York, N.Y. 10020 Attn: Mr. Sol Kerzner - ---------------------- Dear Sirs: Re: Sun International/Acquisition of Paradise Island Operations of Resorts International ------------------------------------------ We refer to the Lazard, Freres and Company Financing Package of July 2, 1993 and our ongoing discussions on the related US$75 million capital expenditure facility. The Bank of Nova Scotia is pleased to advise we are prepared to attempt on a best efforts basis to arrange this US$75 million loan on your behalf. We are also pleased to confirm our commitment to a US$30 million participation (or such lesser amount that may be needed to complete the transaction and with the right to sell down both at our option and subject to a minimum participation of US$15,000,000) in this loan as Lead/Agent Bank on the terms and conditions outlined in the attached Term Sheet. Please note this offer is subject to formal agreement setting out fully the terms and conditions of the proposed loan in accordance with (inter alia) the attached term sheet. Our Arrangement Fee on this transaction will be US$100,000 plus 1% of any commitment obtained outside the existing Banks looking at the transaction (listing attached). Please note the latter 1% fee would only be payable if we are required to go to Banks other than those listed to raise the full $75 million. We also record our discussions on the 1.25% Facility Fee and confirm our agreement that a 1% fee will be offered to the other lenders in the transaction with the balance to be retained by ourselves. We also confirm our other arrangements for our roles as Lead/Agent Bank, specifically: - - All Bank accounts for the Borrower and all of its subsidiaries or affiliates located in the Bahamas (including VISA, Mastercard, American Express and other credit cards sales slips) are to be maintained with the Bank of Nova Scotia. - - The Borrower or any of its subsidiaries or affiliates are not to enter into any leases or agreements with banks (other than The Bank of Nova Scotia) for the operation of bank branches or automatic banking machines (ABM's) on Paradise Island, Bahamas without giving The Bank of Nova Scotia right of first refusal for establishing such facilities. Should you wish us to pursue the above course of action on your behalf, we ask that you provide your authorization by signing the enclosed copy of this letter and returning it to the attention of the undersigned together with a cheque for half of the Arrangement Fee by August 27, 1993. We look forward to hearing from you in due course and working towards completion of this transaction. The offer herein contained is subject to formal contract which we would use our best efforts to complete with you by September 30, 1993. Very truly yours, /s/ A.C. Allen for Vice President, Bahamas Acknowledged and accepted this day of August, 1993. Sun International Paradise Island Acquisition - Proposed Participant Banks Royal Bank Credit Suisse Nedbank Barclays Bank ING Bank ABSA Bank CIBC Royal Bank of Scotland UBS Swiss Bank Henry Ansbacher BORROWER: Resorts International (Bahamas) 1984 Limited, an existing Bahamian corporation established as a holding company for the Bahamian operations of Resorts International. AGENT BANK: The Bank of Nova Scotia (the "Agent"). LENDERS: A group of banks acceptable to the Agent and the Borrower. Agent's portion of loan US$30,000,000 or such lesser amount to a minimum of US$15,000,000 that may be needed to complete the transaction. LOAN AMOUNT: US$75,000,000 (the "Loan"). USE OF PROCEEDS: To assist with the financing of a $100,000,000 renovation, reconstruction and expansion program to be undertaken as part of the acquisition of a 60% interest in the Bahamian operations of Resorts International. Program to commence in 1994 and is expected to be completed in 1995. LOAN AVAILMENT: Two year draw down period subject to completion of Conditions Precedent and required Security as outlined below. With the exception of the final availment drawings are to be in amounts of not less than $US1,000,000. INTEREST RATE: 30, 60, 90 or 180 day LIBOR plus 2.5% per annum or the Agent's New York Prime as established from time to time plus 2.5% per annum. Interest rate periods on LIBOR loans and LIBOR/Prime Interest basis to be at the Borrower's option. Interest to be paid on LIBOR rollover dates or quarterly, whichever is earlier. FEES: Facility Fee:1.25% flat. Standby Fee: .5% per annum from closing on the undrawn portion of the Loan. Agent Fees: .125% on draws and US$50,000 per annum thereafter. REPAYMENT: Two year draw down period with payments to commence 30 months from closing. 10 consecutive semi-annual payments to be made as follows: Years 1,2 None scheduled. Years 3,4 US$4,687,500 semi-annually. Years 5,6,7 US$9,375,000 semi-annually. Prepayments in multiples of US$1,000,000 are allowed on any LIBOR funding rollover date without penalty, and at any other time subject to any costs incurred by the Lenders in so doing. SECURITY: 1. Formal Loan Agreement collateralized by a Debenture incorporating a first mortgage over all freehold and leasehold property and a first charge over all other assets of the Borrower and its direct and indirect Bahamian and US subsidiaries with cross guarantees and collateralization as necessary to capture all assets. 2. The Agent agrees to subrogate up to US$3,000,000 of its security interest in Current Assets (as defined under generally accepted accounting principles excluding cash and any real property but including Accounts Receivable and Inventory) so as to allow the Borrower to arrange a working capital facility if necessary. In addition, the Agent agrees providers of interest rate swaps or other interest rate hedging instruments specific to the Loan and acceptable to the Agent will have the right to be secured pari passu with the Agent. The above are subject to the Agent having a right of first refusal on the working capital facility and any swap/hedging mechanisms. 3. Guarantee in form and substance acceptable to the Agent in the amount of US$75,000,000 from Sun International Hotels Limited (the Borrower's immediate parent company) supported by a pledge of 100% of the Borrower's shares. TERMS AND CONDITIONS: CONDITIONS PRECEDENT: 1. The loan will not be disbursed until the Sun Group completes their purchase of a 60% interest in the Paradise Island operations of Resorts International at an approximate cost of US$75,000,000 (cash transaction, final amount subject to confirmation and acceptance by the Agent). 2. Acquisition structure and all supporting agreements including Shareholders' Agreement (re: the above purchase) and all Management Agreements for the construction and operation of the Paradise Island properties are to be reviewed by and be acceptable to the Agent. 3. Financial position of the Borrower and its' affiliates to be certified by independent auditors and to be consistent with the pro-forma Balance Sheet provided to the Agent. 4. All required Government permits, Central Bank and Planning Board approvals are to be in place. 5. Construction contract(s) in form and substance acceptable to the Agent to be obtained from recognized contractor(s) acceptable to the Agent. Such contracts are to be on a fixed price basis to the extent feasible. 6. An architectural or quantity surveyor firm approved by the Agent is to be retained to supervise construction and provide construction draw certifications and reports to the Agent. Costs for the Borrower. 7. The contractors are to provide a final detailed construction budget for this project in a format acceptable to the Agent, along with the architect's opinion that the construction can be completed within the estimated costs and the time projected by the contractors. 9. The contractor(s) is to obtain a Performance Bond in an amount reasonably acceptable to the Agent with an insurance company acceptable to the Agent. 10. Shareholder's cash equity (US$25,000,000) for the construction is to be injected up-front and prior to any disbursement under the Loan (subject to certification acceptable to the Agent). GENERAL CONDITIONS DURING AND AFTER AVAILMENT: 1. All drawdowns for construction advances will only be made against architect's certificates and/or invoices (in the case of soft costs) in a form acceptable to the Agent and a budget analysis must be provided for each advance with the architect's opinion on the adequacy of the budget and time remaining for completion. 2. All mortgage and other legal documentation is to be prepared by the Agent's lawyers and legal costs and out-of-pocket expenses will be for the account of the Borrower and will be charged to the Borrower's account on receipt. 3. Change orders resulting in net increases in costs over amounts provided in the construction budget in excess of $US300,000 individually or US$3,000,000 collectively will require the approval of the Agent. This condition to be acknowledged and accepted by the contractor(s) in writing. 4. Any cost overruns in construction, new equipment purchases or other aspects of the project are to be covered by the Borrower or from the resources of Sun International Hotels Limited (to be covered by formal Letter of Undertaking). 5. Non construction Management fees in excess of actual cash costs (estimated at US$4-5,000,000 per annum) to be subordinated to Debt Service on the Loan. 6. Capital Expenditures in excess of US$5,000,000 per annum in 1994 and 1995 and US$12,000,000 thereafter shall require the written approval of the Agent (exclusive of the US$100,000,000 program under this Loan). 7. Further encumbrances other than those noted above (Security #2) over any assets of the Borrower and its parent and the subsidiaries of either of them will require the prior written consent of the Agent. 8. Sales of assets outside the ordinary course of business in excess of US$500,000 individually or in excess of US$2,000,000 per annum will require the prior written consent of the Agent. 9. Changes in ownership of the Borrower and its subsidiaries and changes in controlling ownership of Sun International Hotels Limited will require the prior written consent of the Agent. 10. All Perils and Public Liability insurance coverage at levels acceptable to the Agent is to be maintained and the Agent is to be noted as loss payee on behalf of the Lenders. 11. Cash Flow Coverage is to be maintained at a level of at least 2.0:1 in 1995, 2.5:1 in 1996 and 3.0:1 thereafter (annual testing). Cash Flow Coverage is to be defined as the ratio of earnings before interest depreciation and taxes less Agent approved Capital Expenditures to total net interest expense. 12. Tangible Net Worth of the Borrower as evidenced by its audited consolidated financial statements to be not less than US$100,000,000 in years 1 and 2 and not less than US$150,000,000 thereafter (amounts subject to confirmation upon completion of Arthur Anderson review). 13. Reporting requirements: Monthly - Architect's job certifications/Progress Reports during construction period. - Interim in-house financial statements including cash flow report and comparison to Budget. Annually - Audited financial statements within 120 days of year-end. - Annual budgets as required to be provided under the Management Agreement. 14. A Loan Agreement is to be established and agreed between the parties which incorporates the above conditions together with standard Representations and Warranties and Events of Default (including, but not limited to non payment of sums due, material breach of terms and bankruptcy/insolvency of the Borrower or its subsidiaries) subject to reasonable cure periods, and other conditions required by the Agent for a Loan of this nature. The detailed provisions of the Loan Agreement will incorporate reasonableness and materiality into the obligations of the parties and the other provisions included in the Agreement. 15. Governing law is to be that of the Commonwealth of the Bahamas. EXHIBIT F [Letterhead of Ernst & Young] [ ], 1993 Paradise Island --------------- Dear Sirs, We have performed the procedures requested by you, as described below, with respect to the Purchase Agreement (the "Purchase Agreement") dated August [ ], 1993, among Resorts International, Inc. ("RII") a Delaware corporation and Sun International Hotels Limited ("Sun") a Bahamian corporation. The Purchase Agreement provides for the Stock Acquisition and the Asset Acquisition (in each case as defined in the Purchase Agreement and, together, the "Acquisitions"). This letter is solely to assist Sun with the proposed Acquisition and is not to be used for any other purpose. The procedures that we performed, and our findings are summarized as follows: 1. We are independent certified public accountants with respect to (RII and the RII Paradise Subsidiaries) under the standards of the American Institute of Certified Public Accountants (Code of Professional Ethics Rule 101 and related interpretations). 2. We have audited the combined statements of operations in respect of the Paradise Island Business for the three fiscal years ending December 31, 1992, and the combined balance sheets in respect of the Paradise Island Business as of December 31, 1990, December 31, 1991 and December 31, 1992. These financial statements and our report with respect thereto dated [ ] are included as Exhibit A to this letter. We have not audited any financial statements as of any date or for any period subsequent to December 31, 1992. Therefore, save as set forth in this letter, we are unable to and do not express any opinion on any unaudited interim financial statements as of any date or for any period subsequent to December 31, 1992. 3. For the purposes of this letter we have read the 1993 minutes of meetings of the shareholders and the boards of directors of RII and each of the RII Paradise Subsidiaries as set forth in the minute books of those companies as at the date hereof, officials of RII and of the RII Paradise Subsidiaries having advised us that the minutes of all such meetings through that data were set forth therein. In addition, with respect to the six month period ended June 30, 1993, we have: (a) read the unaudited combined statement of operations in respect of the Paradise Island Business for the fiscal quarters ending March 31, 1993 and June 30, 1993 and the unaudited combined balance sheets in respect of the Paradise Island Business as of March 31, 1993 and June 30, 1993. These financial statements are included as Exhibit B to this letter; and (b) made inquiries of certain officials of RII and the RII Paradise Subsidiaries who have responsibility for financial and accounting matters regarding whether the unaudited financial statements referred to in paragraph (a) have been prepared on a basis consistent with that of the audited financial statements referred to in paragraph 2. 4. With respect to the monthly periods ended July 31, August 31 and September 30, 1993 we have: (a) read the unaudited combined statement of operations in respect of the Paradise Island Business for each of the calendar months ending July 31, August 31, and September 30, 1993 and the unaudited balance sheets in respect of the Paradise Island Business as of July 31, August 31 and September 30, 1993. These financial statements are included as Exhibit C to this letter; and (b) made inquiries of certain officials of RII and the RII Paradise Subsidiaries who have responsibility for financial and accounting matters regarding whether the unaudited financial statements referred to in paragraph (a) have been prepared on a basis consistent with that of the audited financial statements referred to in paragraph 2. 5. Nothing came in our attention as a result of the foregoing procedures in paragraphs 3 or 4 above that caused us to believe that: (a) the unaudited combined financial statements referred to in Paragraphs 3(a) and 4(a) are not in conformity with GAAP applied on a consistent basis throughout the period covered or were not prepared on a basis consistent with that of the audited financial statements referred to in paragraph 2 [except for ]; or (b) at each of June 30, July 31, August 31 and September 30, 1993 (i) there was any decrease in net current assets or in fixed assets other than normal depreciation or increases in long-term liabilities or contingencies as compared with amounts shown in the December 31, 1992 audited balance sheet or (ii) there were any decreases, as compared with the corresponding period in the preceding year, in the amount of operating revenues or income [except for ]. 6. Officials of RII and RII paradise Subsidiaries have advised us that no financial statements as of any date or for any period subsequent to [September 30,] 1993, are available; accordingly, the procedures carried out by us with respect to changes in financial statement items after [September 30,] 1993, have, of necessity, been even more limited than those with respect to the periods ending [September 30,] 1993. We have made inquiries of certain officials of RII and the RII Paradise Subsidiaries who have responsibility for financial and accounting matters regarding whether: (a) there was any decrease as at [ ], 1993, in net current assets or in fixed assets other than normal depreciation or increases in long-term liabilities or contingencies as compared with amounts shown on the [September 30,] 1993, unaudited combined balance sheet; (b) for the period from [September 30,] 1993 to [ ], 1993, there were any decreases, as compared with the corresponding period in the preceding year, in the amount of operating revenues or income; or (c) there were any liabilities or obligations incurred since [September 30,] 1993, other than liabilities and obligations incurred in the ordinary course of business consistent with past practice, not shown or adequately provided for in the [September 30,] 1993 unaudited combined balance sheet. 7. On the basis of the procedures referred to in paragraph 6 and our reading of the minutes as described in paragraph 3, nothing came to our attention that caused us to believe that there was any such change or decrease, or any such liabilities or obligations, as is mentioned in paragraph 6 except for [ ]. Very truly yours, Sun International Hotels Limited [ ] EXHIBIT G ESCROW AGREEMENT ESCROW AGREEMENT, dated as of December __, 1993, by and among Resorts International, Inc., a Delaware corporation ("RII"), Sun International Hotels Limited, a Bahamian domestic corporation ("Buyer") and ________________ (the "Escrow Agent"). Capitalized terms used herein and not defined are used as defined in the Purchase Agreement referred to below. W I T N E S E T H: - - - - - - - - - WHEREAS, RII and Buyer have entered into a Purchase Agreement, dated as of the date hereof (the "Purchase Agreement"), whereby Buyer will acquire the Shares and certain Buyer Subsidiaries will acquire the RII Paradise Assets pursuant to the terms of the Purchase Agreement; WHEREAS, the Buyer has agreed to secure Buyer's obligations under the Purchase Agreement by the delivery into escrow of Buyer's Escrowed Property, as described below; WHEREAS, RII has agreed to secure its obligations to pay Buyer Expense Reimbursement to Buyer as provided in the Purchase Agreement by the delivery into escrow of RII's Escrowed Property, as described below; and WHEREAS, the Escrow Agent is willing to serve as escrow agent and hold the Escrowed Property (as hereinafter defined) in accordance with the terms and conditions hereof. NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: 1. Buyer hereby agrees to transfer to the Escrow Agent on December 1, 1993 cash or immediately available funds in the amount of Five Million Dollars (US $5,000,000) ("Buyer's Escrowed Property"), and RII hereby agrees to transfer to the Escrow Agent on December 1, 1993 cash or immediately available funds in the amount of Four Million Dollars (US $4,000,000) ("RII's Escrowed Property", and together with Buyer's Escrowed Property, the "Escrowed Property"), unless the Purchase Agreement shall have been terminated by Buyer or RII at or prior to 11:59 p.m. on November 30, 1993. The Escrow Agent shall not be liable or responsible for the collection of the proceeds of any check payable or endorsed to the Escrow Agent hereunder. 2. The Escrow Agent shall deposit the Escrowed Property in direct obligations of, or obligations guaranteed by, the United States of America, or certificates of deposit or interest bearing accounts of any bank or trust company, incorporated under the laws of the United States of America or any state, which has combined capital and surplus of not less than $100,000,000, all as selected by the Escrow Agent in its sole discretion. Any interest earned on the Escrowed Property shall be apportioned among the Buyer's Escrowed Property and RII's Escrowed Property in proportion to their percentage of the Escrowed Property, and such interest shall be deemed to be included in the definition of each of Buyer's Escrowed Property and RII's Escrowed Property, respectively. 3. Buyer hereby grants to RII a security interest in the Buyer's Escrowed Property to secure the full and prompt payment and performance, when due, of Buyer's obligations under the Purchase Agreement up to and including the Closing, including without limitation, Buyer's obligation to pay, when due, the Aggregate Purchase Price. 4. RII hereby grants to Buyer a security interest in RII's Escrowed Property to secure the full and prompt payment, when due, of RII's obligation to pay to Buyer any Buyer Expense Reimbursement which Buyer shall be entitled to receive under the Purchase Agreement. 5. (a) The Escrow Agent shall hold the Escrowed Property and shall only release the Escrowed Property as follows: (i) promptly upon receipt of, and in accordance with, written instructions signed by both Buyer and RII; or (ii) promptly upon receipt of, and in accordance with, an order or judgment (which shall not have been stayed) of a court of competent jurisdiction directing the Escrow Agent as to the disposition of the Escrowed Property. (b) It is understood that Buyer's Escrowed Property merely secures the performance and payment of the obligations of Buyer that are described above, that RII's Escrowed Property merely secures the performance and payment of the obligations of RII that are described above and that this Agreement in no way prejudices or alters any party's rights or remedies against any other party for breaches of such obligations. (c) RII agrees that any funds released to it under or upon the termination of this Escrow Agreement, regardless of whether such funds represent a payment out of Buyer's Escrowed Property or a return of any portion of RII's Escrowed Property, shall (i) be included in the calculation of "Excess Cash," as such term is defined in the Reorganization Plan (as defined in the Purchase Agreement), and (ii) used solely and exclusively for distribution to the holders of RII's Senior Secured Redeemable Notes, Series A and Series B pursuant to the Reorganization Plan. 6. The Escrow Agent shall be entitled to rely upon, and shall be fully protected from all liability, loss, cost, damage or expense in acting or omitting to act pursuant to, any instruction, order, judgment, certification, affidavit, demand, notice, opinion, instrument or other writing delivered to it hereunder without being required to determine the authenticity of such document, the correctness of any fact stated therein, the propriety of the service thereof or the capacity, identity or authority of any party purporting to sign or deliver such document unless grossly negligent. 7. The duties of the Escrow Agent are only as herein specifically provided, and are purely ministerial in nature. The Escrow Agent shall neither be responsible for, or under, nor chargeable with knowledge of, the terms and conditions of any other agreement, instrument or document in connection herewith, including, without limitation, the Purchase Agreement, and shall be required to act in respect of the Escrowed Property only as provided in this Agreement. This Agreement sets forth all the obligations of the Escrow Agent with respect to any and all matters pertinent to the escrow contemplated hereunder and no additional obligations of the Escrow Agent shall be implied from the terms of this Agreement or any other agreement. The Escrow Agent shall incur no liability in connection with the discharge of its obligations under this Agreement or otherwise in connection therewith, except such liability as may arise from the gross negligence or willful misconduct of the Escrow Agent. 8. The Escrow Agent may consult with counsel of its choice and shall not be liable for any action taken or omitted to be taken by the Escrow Agent in good faith in accordance with the advice of such counsel. 9. The Escrow Agent shall not be bound by any modification, cancellation or rescission of this Agreement unless in writing and signed by the Escrow Agent. 10. The Escrow Agent shall have no tax reporting duties with respect to the Escrowed Property or income thereon, such duties being the responsibility of the party or parties which receive, or have the right to receive, any taxable income hereunder. Buyer, in all events, will receive all income from the Buyer's Escrowed Property for all tax purposes, be the tax owner of the Buyer's Escrowed Property for all tax purposes, and shall pay all tax on the income thereon; and RII, in all events, will receive all income from RII's Escrowed Property for all tax purposes, be the tax owner of RII's Escrowed Property for all tax purposes, and shall pay all tax on the income thereon. Notwithstanding the foregoing, the Escrow Agent has the authority to comply with the provisions of Section 468B(g) of the Internal Revenue Code of 1986, as amended, and any regulations promulgated thereunder. Such authority shall include, without limitation, (a) the filing of tax returns (including information returns) with respect to the Escrowed Property or income thereon, (b) the payment of any tax, interest or penalties imposed thereon, (c) the withholding of any amounts which are required to be withheld and (d) the payment over of such withheld amounts to the appropriate taxing authority. The parties to this Agreement, other than the Escrow Agent, shall provide the Escrow Agent with all information necessary to enable the Escrow Agent to comply with the foregoing. The Escrow Agent may withdraw from the Escrowed Property amounts necessary to pay all applicable income or withholding taxes (together with any and all interest and penalties thereon) that are required to be paid. 11. The Escrow Agent is acting only as a stakeholder with respect to the Escrowed Property. If any dispute arises as to whether the Escrow Agent is obligated to deliver all or any portion of the Escrowed Property or as to whom all or any portion of the Escrowed Property is to be delivered or the amount thereof, the Escrow Agent shall not be required to make any delivery, but in such event the Escrow Agent may hold the Escrowed Property (or the disputed portion thereof) until receipt by the Escrow Agent of instructions in writing, signed by all parties which have, or claim to have, an interest in the Escrowed Property, directing the disposition of the Escrowed Property (or the disputed portion thereof), or in the absence of such authorization, the Escrow Agent may hold the Escrowed Property (or the disputed portion thereof) until receipt of a certified copy of a final judgment of a court of competent jurisdiction providing for the disposition of such Escrowed Property. The Escrow Agent may require, as a condition to the disposition of the Escrowed Property (or the disputed portion thereof) pursuant to written instructions, indemnification and/or opinions of counsel, in form and substance satisfactory to the Escrow Agent, from each party providing such instructions. If such written instructions, indemnification and opinions are not received, or proceedings for such determination are not commenced, within thirty (30) days after receipt by the Escrow Agent of notice of any such dispute and diligently continued, or if the Escrow Agent is uncertain as to which party or parties are entitled to all or any portion of the Escrowed Property, the Escrow Agent may either (a) hold the Escrowed Property (or the disputed portion thereof) until receipt of (i) such written instructions and indemnification or (ii) a certified copy of a final judgment of a court of competent jurisdiction providing for the disposition of the Escrowed Property (or the disputed portion thereof), or (b) deposit the Escrowed Property (or the disputed portion thereof) in the registry of a court of competent jurisdiction; provided, however, that notwithstanding the foregoing, the Escrow Agent may, but shall not be required to, institute legal proceedings of any kind. 12. Buyer and RII jointly and severally agree to reimburse the Escrow Agent on demand for, and to indemnify and hold the Escrow Agent harmless against and with respect to, any and all losses, liabilities, damages, or expenses (including, without limitation, reasonable attorneys' fees and expenses) that the Escrow Agent may suffer or incur in connection with the entering into of this Agreement and performance of its obligations under this Agreement or otherwise in connection herewith, except to the extent any such loss, liability, damage or expense arises from the gross negligence or willful misconduct of the Escrow Agent. Without in any way limiting the foregoing, the Escrow Agent shall be reimbursed for the cost of all reasonable legal fees and costs incurred by it in acting as the Escrow Agent hereunder. The Escrow Agent shall have the right at any time and from time to time to charge, and reimburse itself from, the Escrowed Property for all amounts to which it is entitled pursuant this Agreement, such charges to be made pro rata between the Buyer's Escrowed Property and RII's Escrowed Property in accordance with the amounts thereof as of the date hereof. 13. The Escrow Agent and any successor escrow agent may at any time resign as such by delivering the Escrowed Property to either (a) any successor escrow agent designated by Buyer and RII in writing, or (b) any court having competent jurisdiction. Upon its resignation and delivery of the Escrowed Property as set forth in this paragraph, the Escrow Agent shall be discharged of and from any and all further obligations arising in connection with the escrow contemplated by this Agreement. 14. This Agreement shall inure to the benefit of, and be binding upon, the parties hereto and their respective successors and assigns. Nothing in this Agreement, express or implied, shall give to anyone, other than the parties hereto and their respective permitted successors and assigns, any benefit, or any legal or equitable right, remedy or claim, under or in respect of this Agreement or the escrow contemplated hereby. 15. Any notice authorized or required to be given to a party hereto pursuant to this Agreement shall be deemed to have been given when hand-delivered, sent by telefax or established overnight courier (including but not limited to DHL or Federal Express), or when mailed by United States certified or registered mail, postage prepaid, return receipt requested, to the address set forth under such party's name on the signature page of this Agreement. Any party may change such address by giving notice thereof in writing to the other parties hereto in the same manner as set forth above. 16. (a) Any legal action or proceeding with respect to this Agreement or any document related thereto may be brought in the United States District Court for the Southern District of New York (or, if such court does not have jurisdiction, the courts of the State of New York sitting in the Borough of Manhattan), and, by execution and delivery of this Agreement, each of the parties hereby accepts for itself and in respect of its property, generally and unconditionally, the jurisdiction of the aforesaid courts. Each of the parties hereby irrevocably waives any objection, including, without limitation, any objection to the laying of venue or based on the grounds of FORUM NON CONVENIENS, which it may now or hereafter have to the bringing of any such action or proceeding in such respective jurisdictions and consents to the granting of such legal or equitable relief as is deemed appropriate by the court. (b) Each of the parties irrevocably consents to the service of process of any of the aforesaid courts in any such action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to the address provided herein or in the Purchase Agreement or, in the case of Buyer, to the address of its duly-appointed domestic agent for service and receipt of process, such service to become effective upon receipt. (c) Buyer hereby irrevocably appoints and designates as its lawful agent and attorney for receipt and service of process in any action arising or taken hereunder by the Escrow Agent or RII the law firm of Cravath, Swaine & Moore, 825 Eighth Avenue, New York, New York 10019. (d) This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York, without giving effect to the conflicts of laws provisions thereof. 17. TO THE FULL EXTENT PERMITTED BY LAW, EACH OF THE PARTIES HERETO HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY PARTY HERETO. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE ESCROW AGENT ENTERING INTO THIS AGREEMENT. 18. This Agreement may be executed in any number of separate counterparts, each of which shall, collectively and separately, constitute one agreement. 19. All pronouns and any variations thereof shall be deemed to refer to the masculine, feminine or neuter, singular or plural, as the identity of the parties hereto taken within context may require. 20. The rights of the Escrow Agent contained in this Agreement, including without limitation the right to indemnification, shall survive the resignation of the Escrow Agent and the termination of the escrow contemplated hereunder. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first written above. RESORTS INTERNATIONAL, INC. By:___________________________________ Name: Title: 1133 Boardwalk Atlantic City, N.J. 08401 Attn: Christopher D. Whitney, Esq. SUN INTERNATIONAL HOTELS LIMITED By:___________________________________ Name: Title: c/o Cravath, Swaine & Moore 825 Eighth Avenue New York, N.Y. 10019 Attn: James M. Edwards, Esq. [NAME OF ESCROW AGENT] By:___________________________________ Name: Title: [address to be supplied] EXHIBIT H GUARANTY GUARANTY, dated October __, 1993, made by SUN INTERNATIONAL INVESTMENTS LIMITED, a British Virgin Islands company (the "Guarantor), in favor of the Guarantied Party referred to below. W I T N E S S E T H: - - - - - - - - - - WHEREAS, Sun International Hotels Limited, a Bahamian domestic company (the "Buyer"), has entered into a Purchase Agreement, dated as of October __, 1993, with Resorts International, Inc. ("Seller") (said Agreement, as it may be amended or otherwise modified from time to time, being the "Purchase Agreement", and capitalized terms not defined herein but defined therein being used herein as therein defined); and WHEREAS, the Guarantor owns beneficially and of record 100% of the capital stock of the Buyer; and WHEREAS, it is a condition precedent under the Purchase Agreement to the obligations of Seller under the Purchase Agreement that the Guarantor shall have executed and delivered this Guaranty; and WHEREAS, the Seller is herein referred to from time to time as the "Guarantied Party"; NOW, THEREFORE, in consideration of the premises and to induce the Seller to enter into the Purchase Agreement, the Guarantor hereby agrees as follows: SECTION 1. GUARANTY. The Guarantor hereby unconditionally and irrevocably guarantees the full and prompt performance or payment when due of the obligations of Buyer under the Purchase Agreement (the "Obligations"), whether now or hereafter existing or arising, and any and all expenses (including, without limitation, counsel fees and expenses) incurred by the Guarantied Party in enforcing any rights under this Guaranty. This Guaranty is an absolute guaranty of payment and performance and not a guaranty of collection. SECTION 2. GUARANTY ABSOLUTE. The Guarantor guaranties that the Obligations will be performed or paid strictly in accordance with the terms of the Purchase Agreement and the other documents contemplated thereby, regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of the Guarantied Party with respect thereto. The liability of the Guarantor under this Guaranty shall be absolute and unconditional irrespective of: (i) any lack of validity or enforceability of any provision of the Purchase Agreement or any other agreement or instrument relating to the Purchase Agreement, or avoidance or subordination of any of the Obligations; (ii) any change in the time, manner or place of payment of, or in any other term of, or any increase in the amount of, all or any of the Obligations, or any other amendment or waiver of any term of, or any consent to departure from any requirement of, the Purchase Agreement or any other document contemplated thereby; (iii) any release or amendment or waiver of any term of any other guaranty of, or any consent to departure from any requirement of any other guaranty of, all or any of the Obligations; (iv) the absence of any attempt to collect any Obligations due from the Buyer or from any other guarantor or any other action to enforce the same or the election of any remedy by the Guarantied Party; (v) any waiver, consent, extension, forbearance or granting of any indulgence by the Guarantied Party with respect to any provision of the Purchase Agreement or any document contemplated thereby; (vi) the commencement by the Guarantied Party or Buyer of any case or proceeding in bankruptcy; (vii) the election by the Guarantied Party in any proceeding under chapter 11 of the Bankruptcy Code of the application of section 1111(b)(2) of the Bankruptcy Code or similar rules, provisions or laws of any foreign jurisdiction; (viii) any borrowing or grant of a security interest by the Buyer, as debtor-in-possession, under section 364 of the Bankruptcy Code or similar rules, provisions or laws of any foreign jurisdiction; G-2 (ix) the disallowance of all or any portion of the claims of the Guarantied Party for payment of any of the Obligations, under section 502 of the Bankruptcy Code or similar rules, provisions or laws of any foreign jurisdiction; or (x) any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a purchaser of stock or assets or a guarantor. SECTION 3. WAIVER. (a) The Guarantor hereby (i) waives (A) promptness, diligence, presentment, notice of acceptance and any and all other notices with respect to any of the Obligations or this Guaranty, (B) any requirement that the Guarantied Party protect, secure, perfect or insure any security interest in or other lien on any property subject thereto or exhaust any right or take any action against the Buyer or any other person, (C) the filing of any claim with a court in the event of receivership or bankruptcy of the Buyer, including, without limitation, any such similar claim filed in any foreign jurisdiction, (D) protest or notice with respect to nonpayment of all or any of the Obligations, (E) the benefit of any statute of limitation, (F) all demands whatsoever (and any requirement that same be made on the Buyer as a condition precedent to the Guarantor's obligations hereunder); and (ii) covenants and agrees that this Guaranty will not be discharged except by complete performance of the Obligations and any other obligations of the Guarantor contained herein. (b) If, in the exercise of any of its rights and remedies, the Guarantied Party shall forfeit any of its rights or remedies, including, without limitation, its right to enter a deficiency judgment against the Buyer or any other person, whether because of any applicable law pertaining to "election of remedies" or the like, the Guarantor hereby consents to such action by the Guarantied Party and waives any claim based upon such action. Any election of remedies which results in the denial or impairment of the right of the Guarantied Party to seek a deficiency judgment against the Buyer shall not impair the obligation of the Guarantor to pay the full amount of the Obligations or any other obligation of the Guarantor contained herein. (c) The Guarantor agrees that notwithstanding the foregoing and without limiting the generality of the foregoing if, after the occurrence of any event giving rise G-3 to a claim by Seller against Buyer under the Purchase Agreement, the Guarantied Party is prevented by applicable law from exercising its rights to enforce or exercise any right or remedy with respect to the Obligations, the Guarantor agrees to pay to Seller, upon demand therefor, the amount that would otherwise have been due and payable had such rights and remedies been permitted to be exercised by the Guarantied Party. (d) The Guarantor consents and agrees that the Guarantied Party shall be under no obligation to marshall any assets in favor of the Guarantor or otherwise in connection with obtaining payment of any or all of the Obligations from any person or source. SECTION 4. NO SUBROGATION, ETC. The Guarantor waives and relinquishes any and all rights which it may acquire by way of subrogation, contribution or reimbursement by reason of this Guaranty or by any payment made hereunder. SECTION 5. REPRESENTATIONS AND WARRANTIES. The Guarantor hereby represents and warrants to the Guarantied Party as follows: (a) The Guarantor is a company duly organized, validly existing and in good standing under the laws of the British Virgin Islands. (b) The execution, delivery and performance by the Guarantor of this Guaranty: (i) are within its corporate powers; (ii) have been duly authorized by all necessary corporate action, including, without limitation, the consent of shareholders where required; and (iii) do not and will not (A) contravene its articles of association or other comparable governing documents, (B) violate any other applicable laws or other legal requirements, or any order or decree of any Governmental Authority or arbitrator, (C) conflict with or result in the breach of, or constitute a default under, or result in or permit the termination or acceleration of, any of its obligations under any contracts, (D) result in the creation or imposition of any lien upon any of its property or (E) require the consent, authorization by, or approval of, or notice G-4 to, or filing or registration with, any Governmental Authority or any other person. (c) This Guaranty has been duly executed and delivered by the Guarantor and is the legal, valid and binding obligation of the Guarantor enforceable against it in accordance with its terms. (d) There are no pending or, to the knowledge of the Guarantor, threatened actions, investigations or proceedings affecting the Guarantor or any of its subsidiaries before any Governmental Authority or arbitrator other than those that in the aggregate, if adversely determined, would have no material adverse effect on the business, operations, properties, condition (financial or otherwise), assets or liabilities of Guarantor (a "Material Adverse Effect"). The performance by the Guarantor under this Guaranty is not restrained or enjoined (either temporarily, preliminarily or permanently) and no conditions have been imposed, or have been threatened to be imposed, by any Governmental Authority or arbitrator that in the aggregate would have a Material Adverse Effect or a material adverse effect on the Guarantor's ability to timely perform its obligations hereunder. SECTION 6. AMENDMENTS, ETC. No amendment or waiver of any provision of this Guaranty nor consent to any departure by the Guarantor herefrom shall in any event be effective unless the same shall be in writing, approved by Fidelity Management & Research Co. (on behalf of various funds managed by it) and TCW Special Credits (on behalf of various funds and accounts managed by it) and signed by the Seller, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. SECTION 7. ADDRESSES FOR NOTICES. All notices and other communications provided for hereunder shall be in writing (including telegraphic, telex, telecopy or cable communication) and mailed, telegraphed, telexed, telecopied, cabled or delivered by hand, if to the Guarantor, addressed to it at the address of such Guarantor specified on the signature pages hereof or at the address of its agent for receipt and service of process set forth in Section 12 hereof (in either case with a copy to Sun International Investments Limited, Gravel Hill, Badgemore House, Henley- on-Thames, Oxfordshire RG9 4NR, United Kingdom), if to the Guarantied Party, addressed to it at the address of the G-5 Guarantied Party specified in the Purchase Agreement, or, as to each party, at such other address as shall be designated by such party in a written notice to each other party complying as to delivery with the terms of this Section. All such notices and other communications shall, when mailed, telegraphed, telexed, telecopied, cabled or delivered, be effective when received or when delivered by hand to the addressee or its agent, as the case may be. SECTION 8. NO WAIVER; REMEDIES. (a) No failure on the part of the Guarantied Party to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law or the Purchase Agreement. (b) Failure by the Guarantied Party at any time or times hereafter to require strict performance by the Buyer, the Guarantor or any other person of any of the provisions, warranties, terms or conditions contained in the Purchase Agreement or any other document contemplated thereby now or at any time or times hereafter executed by the Buyer, the Guarantor or such other Person and delivered to the Guarantied Party shall not waive, affect or diminish any right of the Guarantied Party at any time or times hereafter to demand strict performance thereof, and such right shall not be deemed to have been modified or waived by any course of conduct or knowledge of the Guarantied Party or any agent, officer, employee of the Guarantied Party. (c) No waiver by the Guarantied Party of any default shall operate as a waiver of any other default or the same default on a future occasion, and no action by the Guarantied Party permitted hereunder shall in any way affect or impair any of the rights of the Guarantied Party or the obligations of the Guarantor under this Guaranty or under the Purchase Agreement or any other document contemplated thereby. Any determination by a court of competent jurisdiction of the amount constituting any of the Obligations shall be conclusive and binding on the Guarantor irrespective of whether the Guarantor was a party to the suit or action in which such determination was made; PROVIDED, HOWEVER, that if the Buyer timely shall have appealed any such determination and shall have obtained a stay of execution pending such appeal, then such determination shall not be binding on the Guarantor during G-6 the pendency of such appeal (but shall become binding upon the Guarantor upon the final resolution of such appeal). SECTION 9. CONTINUING GUARANTY. This Guaranty is a continuing guaranty and shall (i) remain in full force and effect until indefeasible performance or payment in full of the Obligations and all other amounts payable under this Guaranty, (ii) be binding upon the Guarantor, its successors and permitted assigns, and (iii) inure to the benefit of and be enforceable by the Guarantied Party and its successors, transferees, and assigns. SECTION 10. REINSTATEMENT; TERMINATION. (a) This Guaranty shall remain in full force and effect and continue to be effective should any petition be filed by or against Buyer for liquidation or reorganization, should Buyer become insolvent or make an assignment for the benefit of creditors or should a receiver or trustee be appointed for all or any significant part of Buyer's assets, and shall, to the fullest extent permitted by law, continue to be effective or be reinstated, as the case may be, if at any time payment and performance of the Obligations, or any part thereof, is, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by any obligee of the Obligations or such part thereof, whether as a "voidable preference", "fraudulent transfer", or otherwise, all as though such payment or performance had not been made. In the event that any payment, or any part thereof, is rescinded, reduced, restored or returned, the Obligations shall, to the fullest extent permitted by law, be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned. (b) Subject to paragraph (a) above, this Guaranty shall terminate, and all representations, warranties, covenants, undertakings, agreements and obligations of Guarantor hereunder shall be deemed satisfied in full, at the time when Buyer shall have performed (or Seller shall have waived performance of) all of Buyer's material obligations under the Purchase Agreement to be performed by Buyer on or before the Closing Date, including but not limited to the delivery of the Aggregate Purchase Price to Seller and the due, valid and proper execution by Buyer of all agreements contemplated by the Purchase Agreement to which Buyer is a party. G-7 SECTION 11. GOVERNING LAW. This guaranty shall be governed by, and construed and interpreted in accordance with, the internal law of the State of New York, without giving effect to the conflicts of law provisions thereof. Wherever possible, each provision of this Guaranty shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Guaranty shall be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity and without invalidating the remaining provisions of this Guaranty. SECTION 12. SUBMISSION TO JURISDICTION; JURY TRIAL. (a) Any legal action or proceeding with respect to this Guaranty or any document related thereto may be brought in the United States District Court for the Southern District of New York (or, if such court does not have jurisdiction, the courts of the State of New York sitting in the Borough of Manhattan), and, by execution and delivery of this Guaranty, the Guarantor hereby accepts for itself and in respect of its property, generally and unconditionally, the jurisdiction of the aforesaid courts. The Guarantor hereby irrevocably waives any objection, including, without limitation, any objection to the laying of venue or based on the grounds of FORUM NON CONVENIENS, which it may now or hereafter have to the bringing of any such action or proceeding in such respective jurisdictions and consents to the granting of such legal or equitable relief as is deemed appropriate by the court. (b) The Guarantor irrevocably consents to the service of process of any of the aforesaid courts in any such action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to the Guarantor at its address provided herein or to the Guarantor at the address of its duly-appointed domestic agent for service of process, such service to become effective 30 days after such mailing. (c) Nothing contained in this Section 12 shall affect the right of the Guarantied Party to serve process in any other manner permitted by law or commence legal proceedings or otherwise proceed against the Guarantor or any of the Guarantor's property in any other jurisdiction. (d) The Guarantor waives any right it may have to trial by jury in respect of any litigation based on, arising out of, under or in connection with this Guaranty or any G-8 other document executed in connection with the transactions contemplated hereby, or any course of conduct, course of dealing, verbal or written statement or other action of the Guarantied Party. (e) The Guarantor hereby irrevocably appoints and designates as its lawful agent and attorney for receipt and service of process in any action arising or taken hereunder by the Guarantied Party the law firm of Cravath, Swaine & Moore, 825 Eighth Avenue, New York, New York 10019 (Attn: James M. Edwards, Esq.). SECTION 13. TITLES. The Section titles contained in this Guaranty are and shall be without substantive meaning or content of any kind whatsoever and are not a part of this Guaranty. SECTION 14. ASSIGNMENT. This Guaranty and the Guarantor's obligations hereunder may not be assigned by the Guarantor to any person without the prior written consent of the Guarantied Party, and any such purported assignment without such consent shall be null and void and of no force or effect. SECTION 15. EXECUTION IN COUNTERPARTS. This Guaranty may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same Guaranty. SECTION 16. MISCELLANEOUS. All references herein to the Buyer or to the Guarantor shall include their respective successors and permitted assigns, including, without limitation, a receiver, trustee or debtor-in- possession of or for the Buyer or the Guarantor. All references to the singular shall be deemed to include the plural where the context so requires. G-9 IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly executed and delivered by its duly authorized officer on the date first above written. SUN INTERNATIONAL INVESTMENTS LIMITED By:_________________________ Title: Sun International Investments Limited c/o Cravath, Swaine & Moore 825 Eighth Avenue New York, NY 10019 Acknowledged: RESORTS INTERNATIONAL, INC. By:_________________________ Title: G-10 Exhibit I EXECUTION COPY STOCK SUBSCRIPTION AGREEMENT dated as of October 11, 1993, between SUN INTERNATIONAL INVESTMENTS (U.K.) LIMITED, a British Virgin Islands company (the "Subscriber"), and SUN INTERNATIONAL HOTELS LIMITED, a Bahamian corporation (the "Corporation"). 1. Subject to the condition that the Corporation's obligation to consummate the transactions contemplated by the Purchase Agreement dated as of October 11, 1993, between the Corporation and Resorts International, Inc. (the "Purchase Agreement") has become unconditional and the Closing thereunder is to proceed, and in consideration of the payment to the Corporation on or before the Closing Date (as defined in the Purchase Agreement) of $90,000,000, the Subscriber subscribes for and offers to purchase, and the Corporation hereby accepts such offer and agrees to issue to the Subscriber, such number of the Corporation's Series B Ordinary Shares, of $0.01 each, so that immediately after giving effect to the Closing such number Series B Ordinary Shares shall constitute 60% of the Corporation's outstanding capital stock. 2. The Corporation represents and warrants that such shares when issued, will be validly issued, fully paid and nonassessable. 3. The Corporation agrees to reimburse Parent for certain fees and expenses as set forth in Section 5.08 of the Purchase Agreement. 4. The Corporation agrees that if, in accordance with the terms of the Purchase Agreement or the Escrow Agreement (as defined in the Purchase Agreement), Buyer is to give written instructions with respect to the release of Buyer's Escrowed Property (as defined in the Escrow Agreement), then such instructions will provide that such distributions will be made directly to the holders of the Escrow Loan Notes (as defined in the Parent Subscription Agreement, which in turn is defined in the Purchase Agreement). IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date hereof. SUN INTERNATIONAL HOTELS LIMITED, by: __________________________ Name: Title: SUN INTERNATIONAL INVESTMENTS (U.K.) LIMITED, by: __________________________ Name: Title: SCHEDULES FOR PURCHASE AGREEMENT between RESORTS INTERNATIONAL, INC. and SUN INTERNATIONAL HOTELS LIMITED Dated as of October 11, 1993 Unless otherwise defined in the Schedules all capitalized terms used herein shall have the meanings ascribed to them in the Purchase Agreement. Matters reflected in these Schedules are not necessarily limited to matters required by the Purchase Agreement to be reflected in the Schedules. Such additional matters are set forth for informational purposes and do not necessarily include other matters of a similar nature. The annexes hereto form an integral part of this Schedule and are incorporated by reference for all purposes as if set forth fully herein. Nothing in these Schedules is intended to broaden the scope of any representation or warranty of RII contained in the Purchase Agreement or to create any covenant on the part of RII. The Company is sometimes referred to in these Schedules as "RIB". Schedule 2.04 ALLOCATION OF AGGREGATE PURCHASE PRICE
PROPERTY PURCHASE PRICE -------- -------------- ($000) Shares of the Company $120,000 RII Real Estate Assets and RII Paradise Assets (exclusive of any cash and working capital included therein) $ 5,000 ------- $125,000
Schedule 3.01 ASSUMED LIABILITIES The designated Buyer Subsidiaries, as of the Closing Date, shall assume severally from: (A) RII all liabilities and obligations relating to the RII Real Estate Assets; and (B) the RII Paradise Subsidiaries all liabilities and obligations of such RII Paradise Subsidiaries to the extent relating to the conduct of the Paradise Island Business or use of the Paradise Island Assets, including without limitation those liabilities and obligations which are (i) properly included in the June 30 Balance Sheet (but specifically excluding all Indebtedness and amounts due to Affiliates of RII) (ii) incurred in the usual, regular and ordinary course of the Paradise Island Business since the June 30 Balance Sheet, except to the extent such liabilities or obligations were incurred after the date of the Purchase Agreement and in breach of Section 6.01 thereof, (iii) related to Material Contracts of such RII Paradise Subsidiaries set forth on Schedule 4.17 and such other Contracts of such RII Paradise Subsidiaries that relate primarily to the Paradise Island Business, were entered into the ordinary course of business and do not appear on Schedule 4.17 because they are too small to qualify as a Material Contract (specifically excluding, however, liabilities relating to Non-Assignable Contracts for which consents to assignment thereof to the designated Buyer Subsidiaries have not been obtained as of the Closing Date), (iv) related to the Hangar Lease as provided in Section 2.07 of the Purchase Agreement and (v) with respect to Taxes, only those Taxes which are incurred or accrued after the Closing Date ("Assumed Taxes") and not any Taxes based on or measured by net income, receipts or revenues. Notwithstanding anything to contrary in this Schedule 3.01, neither Buyer nor any Buyer Subsidiary is assuming any liability or obligation related to any Benefit Plans (as defined in Section 4.12). Schedule 4.01 QUALIFICATIONS I. Neither the Company, any Subsidiary of the Company, nor any RII Paradise Subsidiary has any existing foreign qualifications. II. Resorts International (Bahamas) 1984 Limited was incorporated in The Bahamas. The Company's Subsidiaries were incorporated in The Bahamas: 1. Bahamas Developers Limited ("BDL") 2. Island Hotel Company Limited ("IHC") 3. Paradise Beach Inn, Limited ("PBI") 4. Paradise Enterprises Limited ("PEL") 5. Paradise Island Bridge Management Company Limited ("PIBM") 6. Paradise Island Limited ("PIL") 7. Paradise Security Services Limited ("PSSL") 8. Paradise Club Limited ("PCL") III. The RII Paradise Subsidiaries were incorporated in the State of Florida: 1. ANTL, Inc. ("ANTL") 2. International Suppliers, Inc. ("ISI") 3. Paradise Island Airlines, Inc. ("PIA") 4. Resorts International Disbursement, Inc. ("RIDI") 5. Resorts Representation International, Inc. ("RRII") 6. Paradise Island Vacations, Inc. ("PIVI") Schedule 4.04 CAPITAL STOCK OF THE COMPANY AND SUBSIDIARIES
--------------------------------------------------------------------------- I. Percentage of Outstanding Name of Subsidiary of the Address where Stock Held By Company Incorporated the Company --------------------------------------------------------------------------- Bahamas Developers Limited Bahamas 100% --------------------------------------------------------------------------- Island Hotel Company Limited Bahamas 100% --------------------------------------------------------------------------- Paradise Beach Inn, Limited Bahamas (1) --------------------------------------------------------------------------- Paradise Enterprises Limited Bahamas 100% --------------------------------------------------------------------------- Paradise Island Bridge Management Company Limited Bahamas 100% --------------------------------------------------------------------------- Paradise Island Limited Bahamas 100% --------------------------------------------------------------------------- Paradise Security Services Limited Bahamas 100% --------------------------------------------------------------------------- Paradise Club Limited Bahamas 100% --------------------------------------------------------------------------- (1) 100% owned by Paradise Island Limited
II. ENCUMBRANCES, ETC. Collateral for the Old Series Notes includes 66% of the outstanding voting stock and 100% of the outstanding non-voting stock of RIB. Reference is made to the agreements and instruments listed under paragraph IX of Schedule 4.17 and said paragraph IX hereby is incorporated by reference in this Schedule 4.04. III. HCB RIGHT OF FIRST REFUSAL Reference is made to the agreements and instruments listed under paragraph III of Schedule 4.17 and said paragraph III hereby is incorporated by reference in this Schedule 4.04. IV. INVESTMENTS Paradise Island Limited owns a 15% equity interest in High Point Development Company Limited. Reference is made to the agreements and instruments listed under paragraph VII of Schedule 4.17 and said paragraph VII hereby is incorporated by reference in this Schedule 4.04. Schedule 4.05 PARADISE ISLAND FINANCIAL STATEMENTS Combined financial statements of Resorts International (Bahamas) 1984 Limited, consolidated with its subsidiaries; Resorts International Disbursement, Inc.; Paradise Island Vacations, Inc.; Resorts Representation International, Inc.; International Suppliers, Inc.; Paradise Island Airlines, Inc. and ANTL, Inc. (the "PIRI Group"). A. Audited combined balance sheets, at December 1991 and 1992; and the unaudited combined balance sheet at June 30, 1993. See S-4 B. Audited combined statements of operations, cash flows, and statements of changes in shareholder's equity for the periods January 1, 1990, through August 31, 1990, and September 1, 1990, through December 31, 1990, the years ended December 31, 1991, and 1992; and the unaudited combined statements of operations for the half ended June 30, 1993. See S-4 Schedule 4.06(a) INDEBTEDNESS TO BE DISCHARGED I. LETTERS OF CREDIT As of July 31, 1993 A. PIA-LOC #004/70045 for Paradise Island Airlines- US Treasury Bills at BNS for Dash 7 lease. $ 498,663 B. PIA-LOC's for leases at MIA (#10192), WPB (#10253), ORL (#10275) Airports and Airlines Reporting Corporation (#10278) and Ages-Aircraft (#10309): a. Miami $120,000 b. WPBeach $ 50,000 c. Orlando $ 4,500 d. ARC $106,000 e. AGES $250,000 530,500 -------- C. RIDI-LOC (#10229) for Paradise Island Vacations. 70,000 D. BANK AMOUNT EXPIRATION IN FAVOR OF 1. BNS $498,663 08-19-93 Concord Asset Management, Inc. 2a. CNB $120,000 03-03-94 Metropolitan Dade County Aviation 2b. CNB $ 50,000 12-15-93 Palm Beach County Dept. of Airports 2c. CNB $ 4,500 11-01-93 Greater Orlando Aviation Authority 2d. CNB $106,000 11-08-93 Airlines Reporting Corporation 2e. CNB $250,000 12-10-93 Ages-Aircraft Sales & Leasing 3. CNB $ 13,626 12-07-93 Northwestern National Insurance Co. 4. Bank of New York monthly Certificate of Deposit. 5. CNB $ 70,000 09-09-93 Airlines Reporting Corporation 6. Summit Trust Daily Repurchase Agreements. 7. Chemical Bank GE Capital Corp. Commercial Paper. II. INTERCOMPANY INDEBTEDNESS GRI will assume the obligation of RIB to repay the inter-company debt owed by RIB to RIH in the amount of $50,000,000 plus any accrued interest thereon and the inter-company debt owed by RIB to RII in the amount of $9,101,000. Schedule 4.06(b) INDEBTEDNESS TO STAY WITH THE COMPANY OR TO BE ASSUMED BY THE BUYER SUBSIDIARIES I. Servisystems Capitalized Lease: Balance as of June 30, 1993 equaled $331,000, with a final payment date of November 15, 1995. Schedule 4.07 REAL PROPERTY I. THE COMPANY The Company, through its Subsidiaries, owns the properties described in the annex to this Schedule 4.07. Real property encumbrances with respect to these properties include the following items: A. Indenture of Mortgage dated November 14, 1988 between PBIL and the Company. B. Indenture of Mortgage dated as of November 14, 1988 between PIL and the Company. C. Indenture of Mortgage dated as of November 14, 1988 between IHCL and the Company. D. RIB Collateral Assignment Agreement between RIH, RIB, and PIL, IHCL, PBIL and MHTC. E. Casino leased from RIB to HCB under Lease Agreement dated May 23, 1978. F. Landing Rights Agreement for Paradise Island airstrip between PIL and [Chalks] dated December 31, 1990. G. Lease Agreement dated August 31, 1990 between Island Ranger Helitours Limited and PIL for use of Old Chalk's ramp. H. Lease between PIL and Shell Bahamas Limited dated December 5, 1989 for Paradise Island Shell gas station. II. RII A. RII owns the property located at 915 N.E. 125th Street, North Miami, Florida. B. RII leases the 5th floor of the Concord Centre Building located at 2875 N.E. 191st Street, North Miami, Florida under Lease Agreement, dated March 1, 1993, with Concord Centre, Ltd. Assignment of the lease needs consent of the landlord. C. RII leases part of the property located at 901 N.E. 125th Street, North Miami, Florida under Lease Agreement, dated June 1, 1983, and amendment thereof, dated June 22, 1992, with 901 Building. Assignment of the lease needs consent of the landlord. III. PIA PIA leases the following properties: A. Fort Lauderdale Airport Terminal Counter and Gate Space under Lease Agreement, dated February 25, 1993, with Broward County, Florida. Assignment of the lease needs consent of the landlord. B. Land situated at Fort Lauderdale-Hollywood International Airport under Lease Agreement, dated May 31, 1993, with Broward County, Florida. Assignment of the lease needs consent of the landlord. C. Month to month lease agreement number x-178 between Dade County, Florida, and PIA, for baggage and terminal space at Miami International Airport. No assignment or subleases allowed. D. Lease agreement dated October 1, 1990 between USAir, Inc. and PIA for ground handling agreement at West Palm Beach Airport, West Palm Beach Florida. No assignment by either party without written consent of either party. IV. VARIOUS INTERCOMPANY LEASES A. One year renewable lease for office and warehouse facility located at 1550 S.W. 43rd Street, Fort Lauderdale under Lease Agreement dated December 20, 1991 between PIA as Lessor and ISI as Lessee. Lessee shall not sublet or assign without the written consent or the Lessor, not to be unreasonably withheld. B. Airport facility ("Airport") located on the southeast corner of Paradise Island and related office space and counterspace in the the Airport, under Lease Agreement dated December 20, 1991, expiration 2003 between PIL as Lessor and PIA as Lessee. Lease may not be assigned without written consent of Lessor. V. MISCELLANEOUS A. Reference is made to the agreements and instruments listed in Schedule 4.17 and said Schedule 4.17 is hereby incorporated by reference in this Schedule 4.07 ANNEX TO SCHEDULE 4.07 Annex A to this Schedule includes a map of Paradise Island and a map of Andros Island showing the location of the plots described herein. A copy of the maps may be viewed at the offices of Resorts International (Bahamas) 1984 Limited, in Nassau, The Bahamas. [MAP] SCHEDULE OF NON-OPERATING LAND OWNED ON P.I. @ 12/31/92
Parcel Description Acres Book Basis - -------- --------------------------------------- ------- ------------ West of Paradise Lake and Canal: 6 Beach land east of H.I. 13.00 1,916,000 Saratoga Area and Inside Land: 7 Parcels F-H-I-J 9.81 1,086,000 9 Interior land 45.21 2,500,000 9ABC Optioned to Club Land*or 2.48 462,000 15A North of shipyard 0.92 149,000 Harbor Frontage: 12 West of Chalk's airdock 8.00 1,163,000 14 Industrial land 4.61 595,000 Oceanfront - East of Paradise Lake: 19 Hartford Beach 23.43 10,710,000 Center Island: 30 Shopping center area 7.60 1,896,397 27 Future hotel site 3.68 1,337,000 34 Inland land 6/93 conveyed 1.5 ($300,000) to High Point 20.41 2,295,000 36 Inland land 16.87 1,248,000 East of Lot 8: 53 Cabbage and Lucayan beaches 19.19 3,988,000 54 Arawak beach 41.17 3,422,000 ------- ------------ PIL "Admin" land acct - Non Op 216.38 33,067,397 (4) ======= ============ Harbor Frontage - P.I. Colony: 39 Block 1, Lot 6 0.81 45A Block 6, Lot 5 0.52 ------- ------------ Total P.I. Colony - Non Op 1.33 196,214 (5) ======= ============ TOTAL NON-OP ACRES OWNED ON P.I. (FROM ABOVE) 217.71 33,263,611 (3) TOTAL OPERAT ACRES OWNED ON P.I. (FROM RIGHT) 344.69 45,608,000 ------- ------------ TOTAL ACREAGE OWNED PARADISE ISLAND 562.40 78,871,611 ======= ============ ________________________________________________________________________________ RECONCILE TO TOTAL LAND - RIB GROUP: TOTAL ACREAGE OWNED ON P.I. FROM ABOVE 78,871,611 PIL - FREEPORT 1,000 (3) PIL - SAN ANDROS 100,000 (3) BDL 1,275,883 ------------ TOTAL LAND OWNED BY RIB GROUP PER 10-K F/A @ 12/31/92 80,248,494 (1) ============ TOTAL ORIGINAL ACREAGE PER MAP: (LAND OWNED BY COMPANY) 722.31 DEEMED CONVEYED THROUGH 6/30/93 -159.91 ------------ TOTAL ACREAGE OWNED PARADISE ISLAND @ 6/30/93 562.40 ============
SCHEDULE OF OPERATING LAND OWNED ON P.I. @ 12/31/92
Parcel Description Acres Book Basis - -------- --------------------------------------- ------- ------------ West of Paradise Lake and Canal: 3 Parking lot 1.05 263,000 Saratoga Area and Inside Land: 8 Casurina apartments 1.20 180,000 28 Norton house 0.65 130,000 Harbor Frontage: 11 Paradise landing 0.50 100,000 13 Chalk airdock 2.65 464,000 15 Shipyard 1.93 270,000 16 Warehouse and maintenance 4.15 726,000 Oceanfront - East of Paradise Lake: 17 North of Britannia Beach 10.72 5,360,000 20 Ocean Club 10.67 5,869,000 20A Ocean beach house 2.40 1,320,000 38A Utility area 2.52 1,134,000 Center Island: 23 Martinique, Boathouse, parking 2.27 1,022,000 24 Casino 3.97 1,787,000 26 Casino parking 2.95 959,000 32 Electric substation 0.17 0 36A Villa, tennis, versalles 11.13 2,226,000 37-38 Utility area 20.15 2,519,000 Harbor Frontage 29 Bridge end site 0.92 0 43 Cloister 1.34 469,000 51 Block 5 Back lot 0.63 221,000 East of Lot 8: 52 Golf course 137.53 4,814,000 55-56-57 Airport 63.00 6,300,000 Paradise Island Colony: 42 Myers house 0.65 195,000 ------- ------------ (3) TOTAL PIL OPERATING LAND 283.15 36,328,000 &(4) ======= ============ Paradise Paradise Beach Inn 1-4-5 TOTAL PBI OPERATING LAND 9.69 2,665,000 (2) ======= ============ 18 Paradise Towers 8.72 4,360,000 22 Britannia Towers 5.01 2,255,000 ------- ------------ TOTAL IHC OPERATING LAND 13.73 6,615,000 (2) ======= ============ ROADS & LAKES* 38.12 ======= ============ TOTAL OPERATING ACRES OWNED ON P.I. 344.69 45,608,000 ======= ============ *DGB'S MAP SHOWS ORIGINAL TOTAL ROADS/LAKES ACREAGE OWNED TO BE 68.18. IT IS ASSUMED THAT SOME OF THESE ACRES ARE INCLUDED IN AMERICAN APPRAISAL'S BREAKDOWN BY PARCELS OF THE OPERATING ACRES OWNED ON P.I.-BECAUSE WE KNOW THAT TOTAL ORIG. ACRES OWNED IS 722.31 (PER THE MAP) AND 158.41 ACRES HAVE BEEN SOLD THRU 12/92, LEAVING 563.90 ACRES STILL OWNED. THUS, ONLY 38.12 ACRES ARE NOT ACCOUNTED FOR IN AMERICAN APPRAISAL'S REPORT (REMAINING ROADS/LAKES). (1) TIES TO TOTAL LAND OWNED BY RIB GROUP PER 10-K F/A @ 12/31/92. (2) TIES TO TOTAL LAND OWNED BY PBI AND IHC PER 10-K F/A @ 12/31/92. (3) SUM OF THESE TIE TO TOTAL LAND OWNED BY PIL PER 10-K F/A @ 12/31/92. PIL OPERAT ON P.I. 36,328,000 PIL NON-OP ON P.I. 33,263,611 PIL FREEPORT 1,000 PIL SAN ANDROS 100,000 ----------- 69,692,611 =========== (4) SUM OF THESE TIE TO TOTAL PIL "ADMINISTRATIVE" LAND ACCT. @ 12/31/92. PIL OPERAT ON P.I. 36,328,000 PIL NON-OP ON P.I. OTH THAN COLONY 33,067,397 ----------- 69,395,397 =========== (5) TIES TO SUM OF ACCTS 115-810 AND 115-812 ON PIL, PI COLONY ACCOUNTS @ 12/31/92.
PLAN SHOWING FOUR TRACTS OF LAND, Totalling 1,010(plus/minus) Acres [MAP] SITUATE " SAN ANDROS " IN THE ISLAND OF North Andros - Bahamas Schedule 4.08 EXCEPTION TO TITLE OF PERSONAL PROPERTY I. Lease of a De Havilland DHC-6-300 aircraft, Serial Number 454, under Lease Agreement dated April 16, 1993 with The Ages Group, A Limited Partnership, provides that lessee shall not assign, delegate, transfer, mortgage or novate any of its rights or obligations under this Lease Agreement. Written consent of the lessor is required for subleasing. No assignment permitted. II. Lease of a De Havilland DHC-7-102 aircraft, Serial Number 69, under Lease Agreement dated April 16, 1993 with The Ages Group, A Limited Partnership, provides that lessee shall not assign, delegate, transfer, mortgage or novate any of its rights or obligations under this Lease Agreement. Written consent of the lessor is required for subleasing. No assignment permitted. III. Lease of a De Havilland DHC-7-102 aircraft, Serial Number 058, under Lease Agreement dated November 19, 1992 with Ages-Aircraft Sales & Leasing, A Limited Partnership, provides that lessee shall not assign, delegate, transfer, mortgage or novate any of its rights or obligations under this Lease Agreement. Written consent of the lessor is required for subleasing. No assignment permitted. IV. Lease of a De Havilland DHC-7 aircraft, Serial Number 103, under Lease Agreement dated February 10, 1989 with Aviation Enterprises 1987, Inc. and Avinves Leasing Corp. provides that lessee shall not assign this Lease Agreement. Written consent of the lessor is required for subleasing (not to be unreasonably withheld). No assignment permitted. V. Lease of a De Havilland DHC-7 aircraft, Serial Number 80, under Lease Agreement dated January 17, 1989 with Aviation Enterprises 1987, Inc. and Avinves Leasing Corp. provides that lessee shall not assign this Lease Agreement. Written consent of the lessor is required for subleasing (not to be unreasonably withheld). No assignment permitted. Schedule 4.09 INTELLECTUAL PROPERTY TRADEMARKS AND REGISTRATIONS - ---------------------------------------------------------------------- Chick Charnie I Chick Charnie II Chick Charnie III Chick Charnie IV Super Vacations The Little Island With Everything Paradise Island Express Club Paradise Schedule 4.10 LITIGATION I. Gustavo Ruiz has brought a personal injury claim against Stephen Cross, Dennis Cross, RII, RIH, the Company, PIL and PBI for injuries arising from a boating accident which allegedly occurred on May 6, 1992. The writ of summons was amended on October 30, 1992. II. Hans Peter Kugler, Erika Kugler and Paradise Harbour Ltd. have brought a suit against PIA to enjoin certain flights into and out of Paradise Island International Airport on nuisance grounds. III. The Bahamas Hotel Catering and Allied Workers Union has filed arbitration claims against all members of the Bahamas Hotel Employers' Association, which includes the Company, for refusing to implement wage and pension contribution increases agreed to in a collective bargaining agreement. On March 19, 1993, the Minister of Labour referred the dispute to arbitrators. The Company has not accrued any liability for the unpaid wage and pension contribution increases. IV. On September 10, 1993 Club Land'Or, (Nassau) Limited ("Club Land'Or") threatened to bring suit against PIL for damages arising over the alleged closure of the Paradise Lake and Canal, for which Club Land'Or claims a right to use under a 1977 conveyance. Schedule 4.11
INSURANCE Policy Estimated Term Annual Master Policies Limits Insured Insurer Deductible Expiration Premium - --------------- ------ ------- ------- ---------- ---------- --------- General Liability $ 2,000,000 Atlantic City, Planet $200,000 One Year $270,000 Planet Ins. Co. Miami Insurance Self-Insured 5/1/94 NGA1497084 Subsidiaries, Company Retention 5/1/93 - 5/1/94 PIA Business Auto $ 2,000,000 Atlantic City, Planet $200,000 One Year $ 17,000 Planet Ins. Co. Miami Insurance 5/1/94 NKA1497083 Subsidiaries, Company 5/1/93 - 5/1/94 PIA General Liability $ 2,000,000 Bahamas and Reliance $403,000 One Year $109,500 Reliance Inc. Co. Bahamas Insurance Self-Insured 5/1/94 NGB0103290 Subsidiaries Company Retention 5/1/93 - 5/1/94 Employee Benefits Liability deductible Business Auto $ 2,000,000 Bahamas and Reliance $200,000 One Year Included Reliance Ins. Co. Bahamas Insurance Self-Insured 5/1/94 in GL NKA0101194 Subsidiaries Company Retention Pricing 5/1/93 - 5/1/94 Umbrella Liability $10,000,000 Atlantic City, General Star $10,000 One Year $245,000 General Star Ins. Co. Miami National 5/1/94 NUG303110-B Subsidiaries, Insurance 5/1/93 - 5/1/94 PIA Company Bahamas and Bahamas Subsidiaries Umbrella Liability $ 5,000,000 Atlantic City, Fidelity & One Year $36,750 Fidelity & Casualty Co. Miami Casualty 5/1/94 CXU001517 Subsidiaries, Insurance 5/1/93 - 5/1/94 PIA Company Bahamas and Bahamas Subsidiaries Umbrella Liability $ 5,000,000 Atlantic City, Planet One Year $36,750 Planet Ins. Co. Miami Insurance 5/1/94 NEA1499597 Subsidiaries, Company 5/1/93 - 5/1/94 PIA Bahamas and Bahamas Subsidiaries
Schedule 4.11 (continued)
Policy Estimated Term Annual Master Policies Limits Insured Insurer Deductible Expiration Premium - --------------- ------ ------- ------- ---------- ---------- --------- Umbrella Liability $ 13,000,000 Atlantic City, International One Year $ 36,750 International Ins. Co. Miami Insurance 5/1/94 5312064708 Subsidiaries, Company 5/1/93 - 5/1/94 PIA Bahamas and Bahamas Subsidiaries Umbrella Liability Home $ 13,000,000 Atlantic City, Home One Year $53,060 Ins. Co. Miami Insurance 5/1/94 $176.69 HXL1642545 Subsidiaries, Company NJ 5/1/93 - 5/1/94 PIA P.L.I.G.A Surcharge Bahamas and Bahamas Subsidiaries Umbrella Liability $ 12,000,000 Atlantic City, Transamerica One Year $48,488 Transamerica Inc. Co. Miami Insurance 5/1/94 XLX9190206 Subsidiaries, Company 5/1/93 - 5/1/94 PIA Bahamas and Bahamas Subsidiaries Umbrella Liability $ 50,000,000 Atlantic City, X. L. One Year $275,000 X. L. Ins. Co. Miami Insurance 5/1/94 XLUMB-00376 Subsidiaries, Company 5/1/93 - 5/1/94 PIA Bahamas and Bahamas Subsidiaries Umbrella Liability $100,000,000 Atlantic City, A. C. E. One Year $235,000 A.C.E. Ins. Co. Miami Insurance 5/1/94 RTA-5147 Subsidiaries, Company 5/1/93 - 5/1/94 PIA Bahamas and Bahamas Subsidiaries Crime Reliance Ins. Co. $ 5,000,000 Atlantic City, Reliance $205,000 One Year $100,000 NFA149710100 Miami Insurance Employee 5/22/94 Subsidiaries, Company dishonesty, PIA Credit Card Forgery, Safe Bahamas Deposit Legal and Bahamas Liability, Subsidiaries etc. Worker's Compensation Statutory Atlantic City, Liberty One Year $187,291 & Employer's Liability Miami Mutual 5/1/94 Liberty Mutual Subsidiaries, Insurance Insurance Co. PIA Company WC1351234457013 5/1/93 - 5/1/94
2 Schedule 4.11 (continued)
Policy Estimated Term Annual Master Policies Limits Insured Insurer Deductible Expiration Premium - --------------- ------ ------- ------- ---------- ---------- --------- Workers' Compensation Statutory Bahamas and Reliance None One Year $25,000 Reliance Ins. Co. State of NJ Bahamas Insurance 5/1/94 NWA0103289 Benefits Subsidiaries Company 5/1/93 - 5/1/94 (Non-Bahamian Performers Only) Special Contingency $ 10,000,000 Atlantic City, Federal One Year $10,750 Federal Ins. Co. Miami Insurance 1/2/94 80817818-D Subsidiaries, Company 1/2/93 - 1/2/94 PIA Bahamas and Bahamas Subsidiaries Excess Special $ 10,000,000 Atlantic City, Reliance One Year $4,250 Contingency Reliance Miami Insurance 1/2/94 Ins. Co. Subsidiaries, Company NFK2040298 PIA 1/2/93 - 1/2/94 Bahamas and Bahamas Subsidiaries Property Industrial $441,885,000 Atlantic City, Industrial One Year $422,884 Risk Insurers Miami Risk 3/31/94 31-3-57262 Subsidiaries, Insurers 3/31/93 - 3/31/94 PIA Property (DIC) $ 5,000,000 Atlantic City, Home One Year $17,500 Home Ins. Co. Miami Insurance 3/31/94 SPXF820354 Subsidiaries, Co. 3/31/93 - 3/31/94 PIA Property (DIC) $ 10,000,000 Atlantic City, Agricultural One Year $32,500 Agricultural Ins. Co. Miami Insurance 3/31/94 for CPP7947445 Subsidiaries, Co. CPP 3/31/93 - 3/31/94 PIA 7947445 1MF011683 and CIM3787 Property (DIC) $ 2,500,000 Atlantic City, Mt. Hawley Mt. Hawley Ins. Co. Miami Insurance Co. 1MF011683 Subsidiaries, 3/31/93 - 3/31/94 PIA Property (DIC) $ 2,500,000 Atlantic City, Homestead Homestead Ins. Co. Miami Insurance Co. CIM3787 Subsidiaries, 3/31/93 - 3/31/94 PIA
3 Schedule 4.11 (continued)
Policy Estimated Term Annual Master Policies Limits Insured Insurer Deductible Expiration Premium - --------------- ------ ------- ------- ---------- ---------- --------- Property Industrial $ 125,000,000 Bahamas and Industrial $50,000 per One Year $420,000 Risk Insurers Issued Bahamas Risk occurrence 3/31/94 by Hartford Fire Subsidiaries Insurers 93 UEH JM6275 Issued by $500,000 per 3/31/93 - 3/31/94 Hartford wind and Hail Fire $200,000 per occurrence flood $250,000 per occurrence earthquake 24 hr. Waiting Period for Power interruption $5,000 per Conveyance Property in Transit Boiler & Machinery $ 50,000,000 Bahamas and Travelers 350,000 each One Year $8,780 Travelers Ins. Co. Bahamas Insurance- loss 24 hrs 11/1/93 M5J-660-183K431A-TIL-92 Subsidiaries Company for B1 $ EE 11/1/92 - 11/1/93 Paradise Island Bridge $ 5,000,000 Bahamas Lloyds of 3 days One Year $54,000 Lloyds of London Bahamas London Average Daily 6/11/94 757/PJ920138 Subsidiaries loan 6/11/93 - 6/11/94 Aviation Hull: 10 Miami,PIA National 1% aircraft One Year $623,141 National Union Fire $ CGL:$200 Mil Bahamas and Union Fire vallue, 11/16/93 (net) Through AIG, Inc. Bahamas Insurance of subject to AV3224015 Subsidiaries Pittsburgh, $100,000 min 11/16/93 - 11/16/94 PA except total loss Ocean Cargo & War Risk $ 1,000,000 Miami, Fireman's Countinous $12,750 Fireman's Fund Subsidiaries, Fund until (marine) OP-17742 PIA, Bahamas cancelled $1,312.50 Continuousand Bahamas by either (war) Anniversary Date: Subsidiaries party February 1 giving other 30 days written notice Business Pleasure Atlantic City, Hartford Three $25,366 Travel Hartford Miami Years Annual ETB 101345 Subsidiaries Install- 1/1/93 - 1/1/96 PIA, Bahamas and Attach: ments Bahamas 1/1/93 including Subsidiaries War Risk Minimum an Expires: Terrorism 1/1/96
4 Schedule 4.11 (continued)
Policy Term Master Policies Limits Insured Insurer Deductible Expiration Rate - --------------- ------ ------- ------- ---------- ---------- --------- Life Insurance Policy Two or three RII John Alden n/a 1/1/95 .22/$1,000 L0001574 times salary, Life coverage of $1 million/ covered person Accidental Death & same as life RII American n/a 1/1/94 .03/$1,000 Dismemberment Policy insurance International coverage BSC9017594 Group Long Term Disability 60% of salary RII Principal n/a 10/1/94 .32/$100 of Policy GLT68129 to a maximum Mutual Life coverage of $5,000/mo. Insurance payroll per covered Company person Short Term Disability $272/wk. per RII Metropolitan n/a one year .61/$10 of Policy 29941 covered person Life 8/1/94 benefit Insurance Company Health Insurance Varies - RII self-insured varied n/a generally "reasonable and customary" fees; lifetime maximum of $1 million Executive Health Policy $25,000/family RII Lincoln n/a cost plus G4000002417 per year National Life 15% plus Insurance employer Company fee and quarterly participant premium Life Insurance two or three Resorts Colina n/a 09/01/92- .32/$1,000 Policy 59BH0175 times salary International 93 coverage or $10,000 (Bahamas) 1984, (renewal (Colina's depending on LTD,(RIB) terms for renewal employment 1993-994 rate for classification have not 1993-1994 with a been is maximum of formally .36/$1,000) $500,000/cover finalized) ed person Accidental Death & same as life RIB American n/a 09/01/93- .03/$1,000 Dismemberment Policy insurance International 94 coverage BSC9017249 Group Long Term Disability 60% of salary RIB Colina n/a 09/01/93- 1.20/$100 Policy 59BH0175 to maximum of 94 of covered $6,000/mo. per payroll covered person
5 Schedule 4.11 (continued)
Policy Term Master Policies Limits Insured Insurer Deductible Expiration Rate - --------------- ------ ------- ------- ---------- ---------- --------- Health Insurance varies, with a RIB Colina varies 09/01/93- $58.09/ lifetime 94 single maximum of $152.38/ $1 million family Executive Health Policy $15,000/family RIB Colina n/a cost plus 59BH0175 per year 5%
6 Schedule 4.12 UNITED STATES BENEFIT PLANS I. RETIREMENT SAVINGS PLAN Eligible employees of RIH, RII, PIA and RRII may participate in the Resorts. Retirement Savings Plan, administered through Metropolitan Life Insurance Company, New York, NY. Employees of these four corporations may join the Savings Plan after one year of service and reaching age 21. The Savings Plan is a defined contribution individual account plan and employees may elect to contribute from their before-tax earnings (pursuant to Rule 401(k)) or after-tax earnings, up to 14% of their pay. In 1992, the Plan will not consider pay above $228,860. 401(k) contributions in 1992 cannot exceed $8,728. Employers will match employees' contributions at the rate of 50 cents per dollar saved, up to 4% of employee pay. Employees eligible for participation in the Savings Plan are automatically considered participants of the Plan's profit sharing feature. The employers have discretion over their profit sharing contribution from year to year. A determination letter was received from the IRS on March 15, 1988 for the Resorts International Hotel Inc. Thrift Savings and Incentive Plan, which was amended and restated as the Resorts Retirement Savings Plan. A new determination letter will be sought prior to the expiration of the remedial amendment period. The Savings Plan and the Profit Sharing Plan are not insured by the Pension Benefit Guaranty Corporation. Some of the 401(k) assets were invested with Mutual Benefit Life Insurance Company. As of September 30, 1993, $29,637.01 of these assets were frozen and may not be available for transfer under Section 6.09(b) of the Purchase Agreement. II. HEALTH INSURANCE PLAN RII sponsors and administers a self-funded group health insurance plan (the "Health Plan") for their eligible employees and dependents of such employees. Subsidiaries covered under this Health Plan include RRII, ISI and PIA. Medical benefits offered include up to 100% coverage of hospital expenses, physician 7 Schedule 4.12 (continued) visits, surgery and obstetrical care, diagnostic x-rays and lab tests, chiropractic care and maternity expenses. The Health Plan also offers vision and dental benefits. The services offered are provided by a Preferred Provider Organization, which is a network of participating physicians and hospitals. All regular full-time employees of RII who are in active service are eligible for coverage. Employees who have lost their eligibility due to reduced work hours or termination of employment, except for gross misconduct, may be entitled to have their coverage extended for 18 months, and in certain instances, up to 36 months, under COBRA. RII reserves the right to terminate, suspend, withdraw, or amend the Health Plan in whole or in part at any time without the consent of any person, with adequate notice being provided to all covered employees. III. LIFE INSURANCE PLAN RII offers, through John Alden Life, life insurance to and pays the required premiums for their eligible active employees. The subsidiaries covered under the policy include RIH, PIA, RRII and ISI. Employees may be entitled to insurance of two or three times their salary, to the maximum $1 million. Certain proof of health may be required for higher coverage levels. Coverage stops after an employee ceases active work for RII, retires, or otherwise loses eligibility. Employees can, however, convert this insurance to a new individual life insurance policy. Employees may assign their ownership of the insurance, provided that the new owner is not RII, the policyholder. IV. LONG TERM DISABILITY INSURANCE PLAN RII sponsors and administers a long term disability insurance plan (the "Disability Plan") for the benefit of eligible employees (active, full-time employees). Subsidiaries covered under the Disability Plan include PIA, RRII & ISI. Coverage ceases when the Disability Plan terminates or when the employee ceases to be eligible. Benefits payable under the Disability Plan are calculated as a function of employee earnings. RII pays the full costs of the Disability Plan. V. SHORT TERM DISABILITY PLAN RII offers short term disability for the benefit of eligible employees insured through Metropolitan Life 8 Insurance Company. The weekly benefit is 66-2/3% of basic weekly salary up to a maximum benefit of $272.00. The maximum benefit period is 26 weeks. Subsidiaries covered under the plan include PIA, RRII and ISI. VI. ACCIDENTAL DEATH AND DISMEMBERMENT RII offers AD&D for the benefit of eligible employees with coverage of two or three times salary (depending upon employment classification) to a maximum of $1 million. Subsidiaries covered under the plan include PIA, RRII and ISI. VII. EXECUTIVE HEALTH RII offers Executive Health to eligible participants through participation in the Medical Reimbursement Plan Trust underwritten by Lincoln National Life Insurance Company. Reference is made to Schedule 4.11 for detailed information regarding insurance and said Schedule 4.11 is incorporated by reference in this Schedule 4.12. VIII. RIH PENSION PLANS RIH contributes to five pension plans on behalf of participating unionized Atlantic City employees of RIH. These plans are as follows: 1. Hotel Employees and Restaurant Employees International Union Pension Plan 2. Local 68 I.U.O.E. Pension Fund 3. IBPAT Pension Fund 4. N.J. Carpenters Pension Plan 5. American Federation of Musicians and Employees Pension Fund IX. PERFORMANCE BONUS PLAN There is a performance bonus plan (Plan) for all eligible corporate employees of RII, the Atlantic City casino/hotel employees (RIH), the Paradise Island operations which includes IHC, PBI, PEL, PIBM, PIL, PSSL, PCL, ISI, RRII, 9 and PIVI (collectively the "PI Group"), and the airline operations (PIA). Although the plan varies in certain details among the various operations, the basic structure of the Plan is uniform. Each employee is assigned a salary grade. The salary grade is dependent upon the work being performed, the job's authority and responsibility, and the compensation being paid. The higher the responsibility, the higher the salary grade. Bonus points, representing that portion of budgeted annual Earnings Before Depreciation Interest and Taxes ("EBDIT") which is achieved for the year are scaled to an individual's level of responsibility within the Company. The individual's Pool is then sub-divided between quantitative and qualitative goals. Equaling the budgeted EBDIT achieves the quantitative goal and could result in as much as 75% of the individual's Pool being earned. The qualitative goals are more judgmental and will vary depending on the operation. If qualitative goals are met the individuals can earn the remaining 25% of his Pool. The breakdown of total bonus between achieving quantitative and qualitative goals is 75% and 25% respectively except for RII's employees where the breakdown is 65% and 35%. X. STOCK OPTION PLAN On September 17, 1990, the Resorts International, Inc. Senior Management Stock Option Plan (the "1990 Stock Option Plan") was implemented. The 1990 Stock Option Plan authorizes the grant of stock options to eligible members of management. The number of shares which may be granted under the 1990 Stock Option Plan may not exceed ten percent (10%) of the shares of Common Stock Outstanding, as defined in the 1990 Stock Option Plan, subject to adjustment. Pursuant to the 1990 Stock Option Plan, options to purchase up to five percent (5%) of the shares of Common Stock Outstanding may be granted to Mr. Hanlon; the remaining options may be granted to other eligible employees at the discretion of a committee appointed by the Board of Directors of RII. 10 XI. PIA MANAGEMENT INCENTIVE PLAN This bonus plan is based on a bonus equal to a percentage of monthly salary with the percentages determined from monthly performance criteria. If the performance goals are not met, the bonus percentage is adjusted to reflect the level of performance achieved. If the goals are met, the maximum monthly bonus is paid. XII. PIRC 1993 BONUS PLAN Attached as Exhibit I to this Schedule 4.12 are the schedules detailing the 1993 bonus plan for Paradise Island Resorts Casino, which includes IHC, PBI, PEL, and PIL (collectively "PIRC") , RRII, PIV and ISI. This bonus plan is based on a salary percentage as a function of achieved EBDIT. The list of employees eligible for the bonus plan are divided into three categories with a different salary percentage for each category. Exhibit I is a summary, by category, of the bonus plan, and details the eligible employees and their potential bonuses. XIII. SEVERANCE BENEFITS Reference is made to Schedule 6.09(a), paragraph I and said schedule 6.09(a) is hereby incorporated by reference in this Schedule 4.12. 11 MERV GRIFFIN'S PARADISE ISLAND RESORT AND CASINO EXHIBIT I TO 1993 BONUS SCHEDULE SCHEDULE 4.12 SUMMARY
LIST #1 TARGET EBDIT % OF % SALARY (000'S) EBDIT BONUS COST % EBDIT - -------------------------------------------------------------------- --------- ---------- ----------- --------- $12,000 91% 2% $5,200 0.0% 13,171 100% 5% 13,000 0.1% 14,488 110% 10% 26,000 0.2% 15,937 120% 15% 39,000 0.2% 17,531 130% 20% 52,000 0.3% 19,284 140% 25% 65,000 0.3% 21,212 150% 30% 78,000 0.4% LIST #2 TARGET EBDIT % OF % SALARY (000'S) EBDIT BONUS COST % EBDIT - -------------------------------------------------------------------- --------- ---------- ----------- --------- $12,000 91% 2% $27,440 0.2% 13,171 100% 4% 54,881 0.4% 14,488 110% 6% 82,321 0.6% 15,937 120% 8% 109,762 0.7% 17,531 130% 10% 137,202 0.8% 19,284 140% 12% 164,643 0.9% 21,212 150% 14% 187,883 0.9% LIST #3 TARGET EBDIT % OF % SALARY (000'S) EBDIT BONUS COST % EBDIT - -------------------------------------------------------------------- --------- ---------- ----------- --------- $12,000 91% 2% $48,030 0.4% 13,171 100% 3% 72,046 0.5% 14,488 110% 4% 96,061 0.7% 15,937 120% 5% 120,076 0.8% 17,531 130% 6% 144,091 0.8% 19,284 140% 7% 168,106 0.9% 21,212 150% 8% 192,121 0.9% ____________________________________________________________________________________________________________________ TOTAL TARGET EBDIT % OF (000'S) EBDIT COST % EBDIT - -------------------------------------------------------------------- --------- ---------- ----------- --------- $12,000 91% $80,671 0.7% 13,171 100% 139,927 1.1% 14,488 110% 204,382 1.4% 15,937 120% 268,838 1.7% 17,531 130% 333,293 1.9% 19,284 140% 397,749 2.1% 21,212 150% 458,005 2.2% ____________________________________________________________________________________________________________________
MERV GRIFFIN'S PARADISE ISLAND RESORT AND CASINO 1993 BONUS SCHEDULE
LIST #1 EBDIT EBDIT EBDIT EBDIT EBDIT EBDIT NAME POSITION GRADE SALARY 91% 100% 110% 120% 130% 140% - ------------ ------------ ------------- ----------- --------- --------- --------- ----------- ----------- ----------- GARRINGTON, J BARRIE SR VP ADMIN 30 110,000 2,200 5,500 11,000 16,500 22,000 27,500 WILLIAMS, MICHAEL J SR VP OPER 33 150,000 3,000 7,500 15,000 22,500 30,000 37,500 ------------- ----------- --------- --------- --------- ----------- ----------- ----------- 260,000 $ 5,200 $ 13,000 $ 26,000 $ 39,000 $ 52,000 $ 65,000 ----------- SALARY NORM LIST #1 130,000 2,600 6,500 13,000 19,500 26,000 32,500 # OF PEOPLE 2 2 2 2 2 2 --------- --------- --------- ----------- ----------- ----------- TOTAL 5,200 13,000 26,000 39,000 52,000 65,000 EBDIT NAME 150% - ------------ ----------- GARRINGTON, J BARRIE 33,000 WILLIAMS, MICHAEL J 45,000 ----------- $ 78,000 39,000 2 ----------- 78,000
LIST #2 EBDIT EBDIT EBDIT EBDIT EBDIT EBDIT NAME POSITION GRADE SALARY 91% 100% 110% 120% 130% 140% - ------------ ------------ ------------- ----------- --------- --------- --------- ----------- ----------- ----------- ALBURY, GENE VP OF FI- NANCE 28 85,000 1,700 3,400 5,100 6,800 8,500 10,200 CAREY, KAREN VP--HR 26 70,000 1,400 2,800 4,200 5,600 7,000 8,400 CAREY, NEV- VP UTIL- ILLE ITIES 26 65,000 1,300 2,600 3,900 5,200 6,500 7,800 CLARK, DENISE VP CAS MKT 30 105,000 2,100 4,200 6,300 8,400 10,500 12,600 CROCKET, DON SR VP CAS OPER 30 105,000 2,100 4,200 6,300 8,400 10,500 12,600 GREEN, JAY VP SALES & MKT 117,800 2,356 4,712 7,068 9,424 11,780 14,136 HENDERSON, ASST CASINO RICHARD MGR 23 65,000 1,300 2,600 3,900 5,200 6,500 7,800 HERCULES, DIR CAS LINCOLN ADMIN 26 73,500 1,470 2,940 4,410 5,880 7,350 8,820 HIGOS, FRED DIR OF GOLF 22 52,500 1,050 2,100 3,150 4,200 5,250 6,300 LAURENO, LORI VP--RRU/ PIV 24 85,000 1,700 3,400 5,100 6,800 8,500 10,200 MIRAMONTES, VP--FACILI- CELSO TIES PIRC 28 85,000 1,700 3,400 5,100 6,800 8,500 10,200 MUNROE, KEN- ASST CASINO DAL MGR 26 65,000 1,300 2,600 3,900 5,200 6,500 7,800 OLIN, STAN DIR PURCHASING 24 61,524 1,230 2,461 3,691 4,922 6,152 7,383 PRUDDEN, DOUG GM PARA PARA 26 60,000 1,200 2,400 3,600 4,800 6,000 7,200 RATZEL, BILL VP HOT OP & MG DIR 28 85,000 1,700 3,400 5,100 6,800 8,500 10,200 SASTRE, VP AND MG GABRIEL DIR 30 100,000 2,000 4,000 6,000 8,000 10,000 12,000 SAWYER, DIR OPER DOUGLAS ANAL 26 67,500 1,350 2,700 4,050 5,400 6,750 8,100 THOMPSON, DIR OF PAUL SECURITY 23 55,000 1,100 2,200 3,300 4,400 5,500 6,600 WEBB, BRIAN GM OCEAN CLUB 23 54,200 1,084 2,168 3,252 4,336 5,420 6,504 ----------- --------- --------- --------- ----------- ----------- ----------- 1,372,024 $ 27,400 $ 54,000 $ 82,321 $ 109,762 $ 137,282 $ 164,643 EBDIT NAME 150% - ------------ ----------- ALBURY, GENE 11,900 CAREY, KAREN 9,800 CAREY, NEV- ILLE 9,100 CLARK, DENISE 14,700 CROCKET, DON 14,700 GREEN, JAY 16,492 HENDERSON, RICHARD 9,100 HERCULES, LINCOLN 10,290 HIGOS, FRED 7,350 LAURENO, LORI 11,900 MIRAMONTES, CELSO 11,900 MUNROE, KEN- DAL 9,100 OLIN, STAN 8,613 PRUDDEN, DOUG 8,400 RATZEL, BILL 11,900 SASTRE, GABRIEL 9,800 SAWYER, DOUGLAS 9,450 THOMPSON, PAUL 7,700 WEBB, BRIAN 7,588 ----------- $ 187,889
MERV GRIFFIN'S PARADISE ISLAND RESORT AND CASINO 1993 BONUS SCHEDULE
LIST #3 EBDIT EBDIT EBDIT EBDIT EBDIT EBDIT EBDIT NAME POSITION GRADE SALARY 91% 100% 110% 120% 130% 140% 150% - ------------ ------------ ---------- --------- --------- --------- --------- --------- --------- --------- --------- ADDERLEY, DIR SALES NED 19 35,000 700 1,050 1,400 1,750 2,100 2,450 2,800 ALBURY, DIR EMP CHARLES RELATIONS 21 41,980 900 1,349 1,799 2,249 2,699 3,149 3,598 ANDERSON, SHOW MGR JEREMY 22 50,440 1,009 1,513 2,018 2,522 3,026 3,531 4,035 ATKINSON, CAS SHIFT ALEX MGR 23 54,964 1,099 1,649 2,199 2,748 3,298 3,847 4,397 BARTLETT, SR INTRNL ROMA AUDITOR 19 28,000 560 840 1,120 1,400 1,680 1,960 2,240 BENSON, DEP DIR HERMAN ENG 23 54,080 1,082 1,622 2,163 2,704 3,245 3,786 4,326 BETHEL, DIR F & B STEPHEN 21 46,800 936 1,404 1,872 2,340 2,808 3,276 3,744 BOWE, FRONT STUART OFFICE MGR 19 35,048 701 1,051 1,402 1,752 2,103 2,453 2,804 BURROWS, DIR CAS OSCAR SURV 23 57,000 1,140 1,710 2,280 2,850 3,420 3,990 4,560 CAMBRIDGE, EXEC ASST ERNEST MGR--OC 22 53,976 1,080 1,619 2,159 2,699 3,239 3,778 4,318 CAREW, PROJECT DENIS MGR 21 46,800 936 1,404 1,872 2,340 2,808 3,276 3,744 CAREY, MGR RDS & ANTHONY LDSCPING 19 33,800 676 1,014 1,352 1,690 2,028 2,366 2,704 CHEA, EXEC SOUS CHRIS- CHEF TOPHER 21 46,800 936 1,404 1,872 2,340 2,808 3,276 3,744 COLEBROOKE, DIR OF CHARLES RES- TAURANTS 19 36,400 728 1,092 1,456 1,820 2,184 2,548 2,912 COOPER, DIR--CAGE EUGENE OPS 22 52,500 1,050 1,575 2,100 2,625 3,150 3,675 4,200 CULMER, ASST FIN ANGELA CONTR I 21 48,500 970 1,455 1,940 2,425 2,910 3,395 3,880 DAVIS, SR OPER FRANK ANAL 20 41,900 838 1,257 1,676 2,095 2,514 2,933 3,352 ENEAS, DIR PUB SANDRA REL 20 41,976 840 1,259 1,679 2,099 2,519 2,938 3,358 FERGUSON, DIR TRAIN- DEBORAH ING 20 40,300 806 1,209 1,612 2,015 2,418 2,821 3,224 FLAUM, CAS COL- MICHAEL LECTIONS 20 40,155 803 1,205 1,606 2,008 2,409 2,881 3,212 HACKETT, CAS SHIFT JANICE MGR 23 54,964 1,099 1,649 2,199 2,748 3,298 3,847 4,397 HAMILTON, DIR HSEKP- DONNA ING 19 35,048 701 1,051 1,402 1,752 2,103 2,453 2,804 HAVEN, DIR CASINO CARL CREDIT 26 83,300 1,666 2,499 3,332 4,165 4,998 5,831 6,664 HEPBURN, DIR BARS JERRY 19 34,684 694 1,041 1,387 1,734 2,081 2,428 2,775 HUTCH- MGR PIA INSON, AIR OLIVER 19 39,120 782 1,174 1,565 1,956 2,347 2,738 3,880 JENOURE, ASST FIN BRENDA CONTR II 20 45,000 900 1,350 1,800 2,250 2,700 3,150 3,600
MERV GRIFFIN'S PARADISE ISLAND RESORT AND CASINO 1993 BONUS SCHEDULE
LIST #3 EBDIT EBDIT EBDIT EBDIT EBDIT EBDIT EBDIT NAME POSITION GRADE SALARY 91% 100% 110% 120% 130% 140% 150% - ------------ ------------ ---------- ---------- --------- --------- --------- --------- --------- --------- --------- LUNN, ASST FIN LIONEL CONTR III 21 48,000 960 1,440 1,920 2,400 2,880 3,360 3,840 MARCHE, SR EXEC KEVIN HOST 23 54,964 1,099 1,649 2,199 2,748 3,298 3,847 4,397 MATSAS, CASINO HARRY SHIFT MGR 23 60,000 1,200 1,800 2,400 3,000 3,600 4,200 4,800 MAURA, ASST MGR PETER PAR PAR 19 25,694 514 771 1,028 1,285 1,542 1,799 2,056 MAYHOOK, CASINO PETER SHFT MGR 23 59,800 1,196 1,794 2,392 2,990 3,588 4,186 4,784 McDONALD, DIR AC- RONN TIVITIES 25 67,600 1,352 2,028 2,704 3,380 4,056 4,732 5,408 MICKLEWHYTE, CAS CON- DAVID TROLLER 23 53,000 1,060 1,590 2,120 2,650 3,180 3,710 4,240 O'BRIAN, ASST NEIL MANAGER 17 28,600 572 858 1,144 1,430 1,716 2,002 2,288 OUTIEN, DIR IND PETER RELA- TIONS 22 50,570 1,011 1,517 2,023 2,529 3,034 3,540 4,046 PARKER, CLEOMI RISK MGMT 19 36,381 728 1,091 1,455 1,819 2,183 2,547 2,910 REINOSO, PIL DIR-- FRAN- ENG CISCO 23 54,964 1,099 1,649 2,199 2,748 3,298 3,847 4,397 SANDS, DIR CONV CLINT SRVCS 19 35,360 707 1,061 1,414 1,768 2,122 2,475 2,829 SCHMIDT, EXEC CHEF HELMUT 23 64,000 1,280 1,920 2,560 3,200 3,840 4,480 5,120 SPYCHALLA, CAS AN- DINO ALYST 23 55,000 1,100 1,650 2,200 2,750 3,300 3,850 4,400 STRACHAN, SUPPORT DION SERV MGR 19 35,000 700 1,050 1,400 1,750 2,100 2,450 2,800 SYMONETTE, DIR-- LINDA RECRUITING 20 40,300 806 1,209 1,612 2,015 2,418 2,821 3,224 UMBRIA, DIRECTOR STEVE MIS 23 52,500 1,050 1,575 2,100 2,625 3,150 3,675 4,200 BALFOUR, DIR CAS ANTHONY CREDIT 52,500 1,050 1,575 2,100 2,625 3,150 3,675 4,200 CHOMINSKI, DIR TRAVEL RICK IND 55,000 1,100 1,650 2,200 2,750 3,300 3,850 4,400 DEL POZO, CASINO MKT BOB REP 80,000 1,600 2,400 3,200 4,000 4,800 5,600 6,400 FEICK, DIR OPS JOSEPHINE RRI/PIV 45,000 900 1,350 1,800 2,250 2,700 3,150 3,600 SAUSSIER, DIR CAS BOB COLLEC- TIONS 42,000 840 1,260 1,680 2,100 2,520 2,940 3,360 SOLOV, CASINO MKT STEVE REP 78,750 1,575 2,363 3,150 3,938 4,725 5,513 6,300 ZAPPATER- EXEC DIR RA, NORMA MKTG 45,000 900 1,350 1,800 2,250 2,700 3,150 3,600 ---------- --------- --------- --------- --------- --------- --------- --------- $2,401,518 $ 48,030 $ 72,046 $ 96,061 $ 120,076 $ 144,091 $ 168,106 $ 192,121 ---------- SALARY NORM LIST #3 45,518 910 1,821 2,731 3,641 4,552 5,462 6,371 # OF PEOPLE 50 50 50 50 50 50 50 --------- --------- --------- --------- --------- --------- --------- TOTAL 45,518 91,036 136,554 152,072 227,590 273,108 318,626
Schedule 4.12A THE BAHAMAS BENEFIT PLANS I. PENSION AND WELFARE FUNDS A. The Bahamas Hotel Industry Management Pension Plan effective January 1, 1980 as amended by resolutions from time to time was created in response to the collective bargaining agreement (the "Collective Bargaining Agreement") between the Bahamas Hotel Catering and Allied Workers Union (the "Union") and the Bahamas Hotel Employers' Association (the "BHEA"), of which the Company is a member. New employees become eligible to participate in the Pension Plan retroactively to the January 1 or July 1 that immediately precedes the completion of 20 weeks of work with a participating employer. The regular retirement age is 65, with at least 10 Pension Credits (earned based on weeks worked), and the regular pension benefit is 0.009 of Final Average Salary (average of 6 highest consecutive years of earnings out of the last ten years during which pension credits were earned) times Pension Credits earned (up to 25) and divided by 12. The Early Retirement Date is Age 55, with at least 15 Pension Credits. B. The Bahamas Hotel and Allied Industries Pension Fund (the "Pension Fund") effective January 1, 1980 was created pursuant to the Collective Bargaining Agreement. New employees become eligible to participate in the Pension Fund retroactively to the January 1 or July 1 that immediately precedes the completion of 10 weeks of work with a participating employer. Participants are eligible for a regular pension at age 65, with at least 10 Pension Credits (earned based on weeks worked). C. HEALTH AND WELFARE FUND This fund is a sub-fund of the Pension Fund. Contributions to the Health and Welfare Fund are made pursuant to Section 35 of the contract negotiated between the Bahamas Hotel Employers Association and the Bahamas Hotel Catering and Allied Workers Union and dated January, 1990 (and the Addendum thereto dated January 1992). Contributions to this fund are currently at one and a half percent of wages of eligible employees. There is currently no plan of benefits for this fund, and benefits are not being regularly paid out. D. MUSICIANS PENSION FUND This pension fund was established pursuant to the Collective Bargaining Agreement between the BHEA and the Bahamas Musicians' and Entertainers' Union (the "Musicians Union") dated December 1987 ("1987 Agreement"). The Agreement and Declaration of Trust for this fund was entered into on February 14, 1988. The trustees of this fund have not yet established a plan of benefits, and benefits are not being regularly paid out. The money is accumulating in trust, and contributions are made into this trust fund on behalf of eligible participants pursuant to Section Twenty-Two of the 1987 Agreement. The 1987 Agreement, which expired in December of 1990, has been extended in writing numerous times, and is currently extended under oral agreement between the Musicians Union president and the BHEA (although there is no written extension as of yet). Under the 1987 Agreement (and extensions thereof), three percent of salary is contributed on behalf of eligible employees to this fund. E. EMPLOYEE ASSISTANCE FUND The Bahamas Hotel Catering and Allied Workers Union Employees' Assistance Fund is contributed to in accordance with Section 39 of the January 1990 Agreement Between Bahamas Hotel Employers' Association and Bahamas Hotel Catering and Allied Workers Union. According to the terms of such agreement, this fund is controlled and administered by a Board of Trustees and employer contributions are paid to this fund through the Union. II. WELFARE BENEFITS 1. Employers and employees in The Bahamas are required to register with the National Insurance Board (the "NIB"). Employers must withhold a percentage of their employees' weekly wages and contribute a percentage of such wages. Benefits provided by the NIB include funeral benefits, maternity benefits, retirement benefits, invalidity benefits, sickness benefits, survivor's benefits, death benefits, disability benefits and industrial injury benefits. 2. A Group Insurance Program for the permanent active non-union non-executive employees of the Company and its Subsidiaries is offered through Colina Insurance Company. Reference is made to Schedule 4.11 and said Schedule 4.11 hereby is incorporated by reference in this Schedule 4.12A. A. LIFE INSURANCE COVERAGE FOR NON-EXECUTIVE, NON-UNION EMPLOYEES Effective November 1, 1990 Coverage $10,000 Reduction 50% at age 65 Termination At age 70 or upon retirement, whichever occurs first. B. COMPREHENSIVE MEDICAL BENEFIT FOR EMPLOYEES AND QUALIFIED DEPENDENT(S) Effective August 1, 1990 Lifetime Maximum $1,000,000.00 Lifetime Maximum $25,000.00 Mental or Nervous Disorders Calendar Year Deductible $250.00 Individual $750.00 Family Termination At age 70 or upon retirement, whichever occurs first. 3. Group Insurance Program for Permanent Active Executives, through Colina Insurance Company A. LIFE INSURANCE COVERAGE FOR EXECUTIVES Effective November 1, 1990 Coverage Two times annual salary to a maximum of $500,000.00 Reduction 50% at age 65 Termination At age 70 or upon retirement, whichever occurs first. B. LONG-TERM DISABILITY COVERAGE FOR EXECUTIVES Benefit 60% of basic salary to maximum of $6,000.00 per month, with a minimum of $50.00 per month. Termination Age 65 or upon retirement, whichever occurs first. C. COMPREHENSIVE MEDICAL BENEFITS FOR EXECUTIVES Effective August 1, 1990 Lifetime Maximum $1,000,000.00 Lifetime Maximum $25,000.00 Mental or Nervous Disorders Calendar Year Deductible $250.00 Individual $750.00 Family Reduction 50% at age 65. Termination At age 70 or upon retirement, whichever occurs first. 4. Group Insurance Program for the Company's Permanent Active Senior Executives, through Colina Insurance Company A. BASIC LIFE INSURANCE FOR SENIOR EXECUTIVES Effective November 1, 1990 Amount Three times annual salary to limit of $500,000 Reduction Reduced by 50% at age 65 Termination Terminates at earlier of age 70 or retirement B. LONG-TERM DISABILITY BENEFITS FOR SENIOR EXECUTIVES Benefit 60% of basic salary to maximum of $6,000.00 per month, with a minimum of $50.00 per month. Elimination Period Sickness - 90 days Accident - 90 days Termination Age 65 or upon retirement, whichever occurs first. C. COMPREHENSIVE MEDICAL BENEFITS FOR SENIOR EXECUTIVES AND QUALIFIED DEPENDENTS Effective August 1, 1990 Lifetime Maximum $1,000,000.00 Lifetime Maximum Mental or Nervous Disorders $25,000.00 Calendar Year Deductible $250.00 Individual $750.00 Family Termination At age 70 or upon retirement, whichever occurs first. D. MEDICAL REIMBURSEMENT PLAN FOR SENIOR EXECUTIVES Provides supplemental medical benefits to eligible Senior Executives. The Medical Executive Reimbursement Plan reimburses out-of-pocket expenses such as dental, visitations, deductibles and coinsurance not payable by the regular plan up to $15,000 per family per year. III. INDIVIDUAL EMPLOYMENT AGREEMENTS Some recently hired non-union employees have signed individual employment agreements which provide for redundancy termination payments. These payments are made in accordance with the following formula: 1 week salary for each of the 1st-10th year of employment, 1.5 weeks salary for each of the 11th-15th year of employment and 2 weeks salary for each year from the 16th year of employment. These contracts may also provide for a "duty meal" as a fringe benefit. IV. PIRC 1993 BONUS PLAN Attached as Exhibit I to this Schedule 4.12A are the schedules detailing the 1993 bonus plan for PIRC, RRII, PIV and ISI. This bonus plan is based on a salary percentage as a function of EBDIT. The list of employees eligible for the bonus plan are divided into three categories with a different salary percentage for each category. Exhibit I is a summary, by category, of the bonus plan, and details the eligible employees and their potential bonuses. MERV GRIFFIN'S PARADISE ISLAND RESORT AND CASINO EXHIBIT I TO 1993 BONUS SCHEDULE SCHEDULE 4.12A SUMMARY
LIST #1 TARGET EBDIT % OF % SALARY (000'S) EBDIT BONUS COST % EBDIT - -------------------------------------------------------------------- --------- ---------- ----------- --------- $12,000 91% 2% $5,200 0.0% 13,171 100% 5% 13,000 0.1% 14,488 110% 10% 26,000 0.2% 15,937 120% 15% 39,000 0.2% 17,531 130% 20% 52,000 0.3% 19,284 140% 25% 65,000 0.3% 21,212 150% 30% 78,000 0.4% LIST #2 TARGET EBDIT % OF % SALARY (000'S) EBDIT BONUS COST % EBDIT - -------------------------------------------------------------------- --------- ---------- ----------- --------- $12,000 91% 2% $27,440 0.2% 13,171 100% 4% 54,881 0.4% 14,488 110% 6% 82,321 0.6% 15,937 120% 8% 109,762 0.7% 17,531 130% 10% 137,202 0.8% 19,284 140% 12% 164,643 0.9% 21,212 150% 14% 187,883 0.9% LIST #3 TARGET EBDIT % OF % SALARY (000'S) EBDIT BONUS COST % EBDIT - -------------------------------------------------------------------- --------- ---------- ----------- --------- $12,000 91% 2% $48,030 0.4% 13,171 100% 3% 72,046 0.5% 14,488 110% 4% 96,061 0.7% 15,937 120% 5% 120,076 0.8% 17,531 130% 6% 144,091 0.8% 19,284 140% 7% 168,106 0.9% 21,212 150% 8% 192,121 0.9% ____________________________________________________________________________________________________________________ TOTAL TARGET EBDIT % OF (000'S) EBDIT COST % EBDIT - -------------------------------------------------------------------- --------- ---------- ----------- --------- $12,000 91% $80,671 0.7% 13,171 100% 139,927 1.1% 14,488 110% 204,382 1.4% 15,937 120% 268,838 1.7% 17,531 130% 333,293 1.9% 19,284 140% 397,749 2.1% 21,212 150% 458,005 2.2% ____________________________________________________________________________________________________________________
MERV GRIFFIN'S PARADISE ISLAND RESORT AND CASINO 1993 BONUS SCHEDULE
LIST #1 EBDIT EBDIT EBDIT EBDIT EBDIT EBDIT NAME POSITION GRADE SALARY 91% 100% 110% 120% 130% 140% - ------------ ------------ ------------- ----------- --------- --------- --------- ----------- ----------- ----------- GARRINGTON, J BARRIE SR VP ADMIN 30 110,000 2,200 5,500 11,000 16,500 22,000 27,500 WILLIAMS, MICHAEL J SR VP OPER 33 150,000 3,000 7,500 15,000 22,500 30,000 37,500 ------------- ----------- --------- --------- --------- ----------- ----------- ----------- 260,000 $ 5,200 $ 13,000 $ 26,000 $ 39,000 $ 52,000 $ 65,000 ----------- SALARY NORM LIST #1 130,000 2,600 6,500 13,000 19,500 26,000 32,500 # OF PEOPLE 2 2 2 2 2 2 --------- --------- --------- ----------- ----------- ----------- TOTAL 5,200 13,000 26,000 39,000 52,000 65,000 EBDIT NAME 150% - ------------ ----------- GARRINGTON, J BARRIE 33,000 WILLIAMS, MICHAEL J 45,000 ----------- $ 78,000 39,000 2 ----------- 78,000
LIST #2 EBDIT EBDIT EBDIT EBDIT EBDIT EBDIT NAME POSITION GRADE SALARY 91% 100% 110% 120% 130% 140% - ------------ ------------ ------------- ----------- --------- --------- --------- ----------- ----------- ----------- ALBURY, GENE VP OF FI- NANCE 28 85,000 1,700 3,400 5,100 6,800 8,500 10,200 CAREY, KAREN VP--HR 26 70,000 1,400 2,800 4,200 5,600 7,000 8,400 CAREY, NEV- VP UTIL- ILLE ITIES 26 65,000 1,300 2,600 3,900 5,200 6,500 7,800 CLARK, DENISE VP CAS MKT 30 105,000 2,100 4,200 6,300 8,400 10,500 12,600 CROCKET, DON SR VP CAS OPER 30 105,000 2,100 4,200 6,300 8,400 10,500 12,600 GREEN, JAY VP SALES & MKT 117,800 2,356 4,712 7,068 9,424 11,780 14,136 HENDERSON, ASST CASINO RICHARD MGR 23 65,000 1,300 2,600 3,900 5,200 6,500 7,800 HERCULES, DIR CAS LINCOLN ADMIN 26 73,500 1,470 2,940 4,410 5,880 7,350 8,820 HIGOS, FRED DIR OF GOLF 22 52,500 1,050 2,100 3,150 4,200 5,250 6,300 LAURENO, LORI VP--RRU/ PIV 24 85,000 1,700 3,400 5,100 6,800 8,500 10,200 MIRAMONTES, VP--FACILI- CELSO TIES PIRC 28 85,000 1,700 3,400 5,100 6,800 8,500 10,200 MUNROE, KEN- ASST CASINO DAL MGR 26 65,000 1,300 2,600 3,900 5,200 6,500 7,800 OLIN, STAN DIR PURCHASING 24 61,524 1,230 2,461 3,691 4,922 6,152 7,383 PRUDDEN, DOUG GM PARA PARA 26 60,000 1,200 2,400 3,600 4,800 6,000 7,200 RATZEL, BILL VP HOT OP & MG DIR 28 85,000 1,700 3,400 5,100 6,800 8,500 10,200 SASTRE, VP AND MG GABRIEL DIR 30 100,000 2,000 4,000 6,000 8,000 10,000 12,000 SAWYER, DIR OPER DOUGLAS ANAL 26 67,500 1,350 2,700 4,050 5,400 6,750 8,100 THOMPSON, DIR OF PAUL SECURITY 23 55,000 1,100 2,200 3,300 4,400 5,500 6,600 WEBB, BRIAN GM OCEAN CLUB 23 54,200 1,084 2,168 3,252 4,336 5,420 6,504 ----------- --------- --------- --------- ----------- ----------- ----------- 1,372,024 $ 27,400 $ 54,000 $ 82,321 $ 109,762 $ 137,282 $ 164,643 EBDIT NAME 150% - ------------ ----------- ALBURY, GENE 11,900 CAREY, KAREN 9,800 CAREY, NEV- ILLE 9,100 CLARK, DENISE 14,700 CROCKET, DON 14,700 GREEN, JAY 16,492 HENDERSON, RICHARD 9,100 HERCULES, LINCOLN 10,290 HIGOS, FRED 7,350 LAURENO, LORI 11,900 MIRAMONTES, CELSO 11,900 MUNROE, KEN- DAL 9,100 OLIN, STAN 8,613 PRUDDEN, DOUG 8,400 RATZEL, BILL 11,900 SASTRE, GABRIEL 9,800 SAWYER, DOUGLAS 9,450 THOMPSON, PAUL 7,700 WEBB, BRIAN 7,588 ----------- $ 187,889
MERV GRIFFIN'S PARADISE ISLAND RESORT AND CASINO 1993 BONUS SCHEDULE
LIST #3 EBDIT EBDIT EBDIT EBDIT EBDIT EBDIT EBDIT NAME POSITION GRADE SALARY 91% 100% 110% 120% 130% 140% 150% - ------------ ------------ ---------- --------- --------- --------- --------- --------- --------- --------- --------- ADDERLEY, DIR SALES NED 19 35,000 700 1,050 1,400 1,750 2,100 2,450 2,800 ALBURY, DIR EMP CHARLES RELATIONS 21 41,980 900 1,349 1,799 2,249 2,699 3,149 3,598 ANDERSON, SHOW MGR JEREMY 22 50,440 1,009 1,513 2,018 2,522 3,026 3,531 4,035 ATKINSON, CAS SHIFT ALEX MGR 23 54,964 1,099 1,649 2,199 2,748 3,298 3,847 4,397 BARTLETT, SR INTRNL ROMA AUDITOR 19 28,000 560 840 1,120 1,400 1,680 1,960 2,240 BENSON, DEP DIR HERMAN ENG 23 54,080 1,082 1,622 2,163 2,704 3,245 3,786 4,326 BETHEL, DIR F & B STEPHEN 21 46,800 936 1,404 1,872 2,340 2,808 3,276 3,744 BOWE, FRONT STUART OFFICE MGR 19 35,048 701 1,051 1,402 1,752 2,103 2,453 2,804 BURROWS, DIR CAS OSCAR SURV 23 57,000 1,140 1,710 2,280 2,850 3,420 3,990 4,560 CAMBRIDGE, EXEC ASST ERNEST MGR--OC 22 53,976 1,080 1,619 2,159 2,699 3,239 3,778 4,318 CAREW, PROJECT DENIS MGR 21 46,800 936 1,404 1,872 2,340 2,808 3,276 3,744 CAREY, MGR RDS & ANTHONY LDSCPING 19 33,800 676 1,014 1,352 1,690 2,028 2,366 2,704 CHEA, EXEC SOUS CHRIS- CHEF TOPHER 21 46,800 936 1,404 1,872 2,340 2,808 3,276 3,744 COLEBROOKE, DIR OF CHARLES RES- TAURANTS 19 36,400 728 1,092 1,456 1,820 2,184 2,548 2,912 COOPER, DIR--CAGE EUGENE OPS 22 52,500 1,050 1,575 2,100 2,625 3,150 3,675 4,200 CULMER, ASST FIN ANGELA CONTR I 21 48,500 970 1,455 1,940 2,425 2,910 3,395 3,880 DAVIS, SR OPER FRANK ANAL 20 41,900 838 1,257 1,676 2,095 2,514 2,933 3,352 ENEAS, DIR PUB SANDRA REL 20 41,976 840 1,259 1,679 2,099 2,519 2,938 3,358 FERGUSON, DIR TRAIN- DEBORAH ING 20 40,300 806 1,209 1,612 2,015 2,418 2,821 3,224 FLAUM, CAS COL- MICHAEL LECTIONS 20 40,155 803 1,205 1,606 2,008 2,409 2,881 3,212 HACKETT, CAS SHIFT JANICE MGR 23 54,964 1,099 1,649 2,199 2,748 3,298 3,847 4,397 HAMILTON, DIR HSEKP- DONNA ING 19 35,048 701 1,051 1,402 1,752 2,103 2,453 2,804 HAVEN, DIR CASINO CARL CREDIT 26 83,300 1,666 2,499 3,332 4,165 4,998 5,831 6,664 HEPBURN, DIR BARS JERRY 19 34,684 694 1,041 1,387 1,734 2,081 2,428 2,775 HUTCH- MGR PIA INSON, AIR OLIVER 19 39,120 782 1,174 1,565 1,956 2,347 2,738 3,880 JENOURE, ASST FIN BRENDA CONTR II 20 45,000 900 1,350 1,800 2,250 2,700 3,150 3,600
MERV GRIFFIN'S PARADISE ISLAND RESORT AND CASINO 1993 BONUS SCHEDULE
LIST #3 EBDIT EBDIT EBDIT EBDIT EBDIT EBDIT EBDIT NAME POSITION GRADE SALARY 91% 100% 110% 120% 130% 140% 150% - ------------ ------------ ---------- ---------- --------- --------- --------- --------- --------- --------- --------- LUNN, ASST FIN LIONEL CONTR III 21 48,000 960 1,440 1,920 2,400 2,880 3,360 3,840 MARCHE, SR EXEC KEVIN HOST 23 54,964 1,099 1,649 2,199 2,748 3,298 3,847 4,397 MATSAS, CASINO HARRY SHIFT MGR 23 60,000 1,200 1,800 2,400 3,000 3,600 4,200 4,800 MAURA, ASST MGR PETER PAR PAR 19 25,694 514 771 1,028 1,285 1,542 1,799 2,056 MAYHOOK, CASINO PETER SHFT MGR 23 59,800 1,196 1,794 2,392 2,990 3,588 4,186 4,784 McDONALD, DIR AC- RONN TIVITIES 25 67,600 1,352 2,028 2,704 3,380 4,056 4,732 5,408 MICKLEWHYTE, CAS CON- DAVID TROLLER 23 53,000 1,060 1,590 2,120 2,650 3,180 3,710 4,240 O'BRIAN, ASST NEIL MANAGER 17 28,600 572 858 1,144 1,430 1,716 2,002 2,288 OUTIEN, DIR IND PETER RELA- TIONS 22 50,570 1,011 1,517 2,023 2,529 3,034 3,540 4,046 PARKER, CLEOMI RISK MGMT 19 36,381 728 1,091 1,455 1,819 2,183 2,547 2,910 REINOSO, PIL DIR-- FRAN- ENG CISCO 23 54,964 1,099 1,649 2,199 2,748 3,298 3,847 4,397 SANDS, DIR CONV CLINT SRVCS 19 35,360 707 1,061 1,414 1,768 2,122 2,475 2,829 SCHMIDT, EXEC CHEF HELMUT 23 64,000 1,280 1,920 2,560 3,200 3,840 4,480 5,120 SPYCHALLA, CAS AN- DINO ALYST 23 55,000 1,100 1,650 2,200 2,750 3,300 3,850 4,400 STRACHAN, SUPPORT DION SERV MGR 19 35,000 700 1,050 1,400 1,750 2,100 2,450 2,800 SYMONETTE, DIR-- LINDA RECRUITING 20 40,300 806 1,209 1,612 2,015 2,418 2,821 3,224 UMBRIA, DIRECTOR STEVE MIS 23 52,500 1,050 1,575 2,100 2,625 3,150 3,675 4,200 BALFOUR, DIR CAS ANTHONY CREDIT 52,500 1,050 1,575 2,100 2,625 3,150 3,675 4,200 CHOMINSKI, DIR TRAVEL RICK IND 55,000 1,100 1,650 2,200 2,750 3,300 3,850 4,400 DEL POZO, CASINO MKT BOB REP 80,000 1,600 2,400 3,200 4,000 4,800 5,600 6,400 FEICK, DIR OPS JOSEPHINE RRI/PIV 45,000 900 1,350 1,800 2,250 2,700 3,150 3,600 SAUSSIER, DIR CAS BOB COLLEC- TIONS 42,000 840 1,260 1,680 2,100 2,520 2,940 3,360 SOLOV, CASINO MKT STEVE REP 78,750 1,575 2,363 3,150 3,938 4,725 5,513 6,300 ZAPPATER- EXEC DIR RA, NORMA MKTG 45,000 900 1,350 1,800 2,250 2,700 3,150 3,600 ---------- --------- --------- --------- --------- --------- --------- --------- $2,401,518 $ 48,030 $ 72,046 $ 96,061 $ 120,076 $ 144,091 $ 168,106 $ 192,121 ---------- SALARY NORM LIST #3 45,518 910 1,821 2,731 3,641 4,552 5,462 6,371 # OF PEOPLE 50 50 50 50 50 50 50 --------- --------- --------- --------- --------- --------- --------- TOTAL 45,518 91,036 136,554 152,072 227,590 273,108 318,626
Schedule 4.14 ENVIRONMENTAL MATTERS I. Paradise Island Utilities, a division of PIL, operates a wastewater treatment plant in connection with the Bahamian facilities. Effluent from this plant is used for irrigation. II. IHC operates an air conditioning process in connection with the Bahamian facilities. This process discharges cooling water into a lagoon. III. Miami matters. See attachment. Schedule 4.14 Attachment MERV GRIFFIN'S PARADISE ISLAND AIRLINES, INC. 1550 S.W. 43RD STREET, P.O. BOX 350510, FORT LAUDERDALE, FLORIDA 33315 TELEPHONE: (305) 359-8043 UNDERGROUND FUEL STORAGE TANKS IN FT. LAUDERDALE 1550 S.W. 43RD ST.
QTY CAPACITY STATUS 3 ea 12,000 gal tanks never used 1 ea 1,000 gal waste oil tank being used 1 ea engine oil tank not in use
Schedule 4.16(a) AGREEMENTS AFFECTING THE SHARES I. HCB: RIGHT OF FIRST REFUSAL Reference is made to the agreements and instruments listed in Schedule 4.04 and said Schedule 4.04 is hereby incorporated by reference in this Schedule 4.16. II. ENCUMBRANCES, ETC. Reference is made to the agreements and instruments listed in Schedule 4.04 and said Schedule 4.04 is hereby incorporated by reference in this Schedule 4.16. Schedule 4.16(b) SHARED CONTRACTS Reference is made to the agreements and instruments listed in Schedules 4.11 and 4.12 and said Schedules 4.11 and 4.12 are hereby incorporated by reference in this Schedule 4.16(b). Schedule 4.17 MATERIAL CONTRACTS I. Leases - Real Property A. Paradise Island Airlines Fort Lauderdale Airport Ground Lease dated May 31, 1983. Assignment requires written consent by landlord, not to be unreasonably withheld. B. Paradise Island Airlines Fort Lauderdale Airport Terminal Counter & Gate Space Lease dated February 25, 1983. Assignment of the lease needs consent of landlord. C. Month to month lease agreement number x-178 between Dade County, Florida, and PIA, for baggage and terminal space at Miami International Airport. No assignment or subleases allowed. D. Lease agreement dated October 1, 1990 between USAir, Inc. and PIA for ground handling agreement at West Palm Beach Airport, West Palm Beach Florida. No assignment by either party without written consent of other party. E. RII leases the 5th floor of the Concord Centre Building located at 2875 N.E. 191st Street, North Miami, Florida under Lease Agreement, dated March 1, 1993, with Concord Centre, Ltd. Assignment of the lease needs consent of the landlord. F. Lease for 901 N.E. 125th Street, North Miami, Florida under Lease Agreement dated June 1, 1983, and amendment thereof dated June 22, 1992. Assignment of the lease needs consent of landlord. G. Reference is made to the agreements and instruments listed in Schedule 4.07 and said Schedule 4.07 is hereby incorporated by reference in this Schedule 4.17. Schedule 4.17 II. LEASES - AIRCRAFT
AIRCRAFT LESSOR EXPIRES - -------- ------ ------- 780MG Concord Jan 19, 1994 703MG Concord May 27, 1994 158CL AGES Group Dec 11, 1994 169AG AGES Group April 21, 1995 454AG AGES Group April 21, 1994 765MG ANTL ----
Reference is made to the agreements and instruments listed in Schedule 4.08 and said Schedule 4.08 is hereby incorporated by reference in this Schedule 4.17. III. CONTRACTS WITH THE HOTEL CORPORATION OF THE BAHAMAS ("HCB") A. Agreement dated December 21, 1989 between RII and HCB regarding Right of First Refusal with respect to sale of RII's Paradise Island operations. The lease is silent as to assigment. B. Supplementary Agreement dated January 8, 1990 between RIB, RII, GRI and HCB regarding confirmation of HCB's Right of First Refusal with respect to sale of RII's Paradise Island operations. The lease is silent as to assigment. C. Casino Operating (Management) Agreement dated May 23, 1978 between PEL and HCB, as amended by Letter of Agreement dated July 2, 1985 from HCB to RIB. Operator may not assign lease. D. Lease of Paradise Island Casino and fixtures dated May 23, 1978 by Paradise Realty Limited to HCB, as renewed by Letter dated October 20, 1988. No assignment or sublease without permission of the landlord. IV. MERV GRIFFIN A. License and Services Agreement dated September 17, 1992 between RII, RIH and The Griffin Group relating to grant of use of Merv Griffin's name and likeness in connection with promotion of RII's hotels and casinos. Upon sale of a property, RII and RIH must stop using the name and likeness in connection with such sold property within 60 days after sale or 120 days if RII and/or RIH has operating agreement with the buyer; The Griffin 2 Schedule 4.17 Group has the option to obtain royalties from buyer for continued use of the name and likeness. V. AGENTS AND PROMOTERS A. Letter of Understanding between PEL and Min Der, as independent contractor dated March 18, 1993. Can be terminated by either party within 6 months with a written notice. B. Letter of Understanding between PEL and Bob Pellegrini, as independent contractor dated October 19, 1992. Can be terminated by either party within 90 days with a written notice. VI. ADVERTISING CONTRACTS A. Authorization Contract between RIB & Broadcast Barter Bureau dated June 4, 1992. Credits offered in exchange for media are good from June 4, 1992 to June 4, 1994. Silent as to assignment. B. Agreement between RIB & Broadcast Marketing Corp. dated January 29, 1993. Credits offered in exchange for media are good from January 31, 1993 to January 31, 1995. Agreement requires RIB to get its purchaser to acknowledge and agree to honor credits. Silent as to assignment. C. Letter Agreement between RIB & Liberty Travel/Gogo Tours dated December 16, 1992 relating to cooperative advertising in 1993. Silent as to assignment. D. Commitment Letter to NY Times dated April 4, 1993 regarding 52 weeks of advertising for Resorts International (Bahamas). Silent as to assignment. VII. HIGH POINT DEVELOPMENT COMPANY LIMITED ("HP") A. Amenities Agreement between PIL, RIB, IHCL and HP dated April 19, 1990 relating to granting guests of the new hotel privileges to amenities of Paradise Island Resorts & Casino. B. Shareholders Agreement between PIL and Roy Speer, Leroy Bowe, Berlin Wilbert Key, William F. Naughton and Earle Anthony Roberts dated April 19, 1990 relating to ownership of HP. 3 Schedule 4.17 VIII. EMPLOYEE MATTERS A. Metlife Savings Plan Program Policy (US employees). Contract is non-assignable. B. Agreement between Bahamas Hotel Employers' Association and Bahamas Hotel Catering and Allied Workers Union ("Industrial Agreement") dated January 7, 1990, as amended by Addendum dated January 7, 1992. To become an obligation of the Buyer. C. Bahamas Hotel Industry Management Pension Plan and Participation Agreements. D. Bahamas Hotel & Allied Industries Pension Plan and Participation Agreements. E. Agreement between The Bahamas Hotel Employers' Association and Bahamas Musicians' and Entertainers' Union dated December 1, 1987, amended and renewed by oral agreement between Michael Richley and Duke Hanna. Contract non-assignable. F. Bahamas Musician's Entertainers Pension Fund. G. Reference is made to the agreements and instruments listed in Schedules 4.11 and 4.12 and said Schedules 4.11 and 4.12 are hereby incorporated by reference in this Schedule 4.17. H. Individual Employee Contracts with some Company employees. 4 Schedule 4.17 IX. 1990 REORGANIZATION A. Indenture for Senior Secured Redeemable Series Note dated September 14, 1990 between RII and Manufacturers Hanover Trust Company ("MHTC"), as Trustee, together with the Series A Notes and Series B Notes issued thereunder. B. Mortgage & Security Agreement with Assignment of Rents dated September 14, 1990 among RII, NPC, EZC and MHTC. C. Assignment of Leases & Rents dated September 14, 1990 among RII, NPC, EZC and MHTC. D. RII Pledge Agreement dated September 14, 1990 between RII and MHTC. E. Mortgage and Security Agreement with Assignment of Rents dated September 14, 1990 between RIH & MHTC. F. Assignment of Leases and Rents dated September 14, 1990 between RIH and MHTC. G. RIH Security Agreement dated September 14, 1990 between RIH & MHTC. H. Trademark Security Agreement dated September 14, 1990 between RIH and MHTC. I. RIH Pledge Agreement dated September 14, 1990 between RIH & MHTC. J. RIB Collateral Assignment Agreement dated September 14, 1990 among RIH, RIB, PIL, IHCL, PBIL, and MHTC. K. RIH Notes Pledge Agreement dated September 14, 1990 among GRI, RIH and MHTC. L. RIB Stock Pledge Agreement dated September 14, 1990 between GRI and MHTC. M. Indenture for Showboat Notes (First Mortgage Non-Recourse Pass-Through Note) dated September 14, 1990 between RII and the Bank of New York ("BONY") as Trustee. N. $50,000,000 Promissory Note dated November 14, 1988 by RIB to RIH, assigned by RIH to BONY as Trustee of Showboat Notes. 5 Schedule 4.17 O. Agreement of Guarantee dated November 14, 1988 made by IHCL to RIH relating to the $50,000,000 Promissory Note, assigned to BONY. P. Agreement of Guarantee dated November 14, 1988 made by PBIL to RIH relating to the $50,000,000 Promissory Note, assigned to BONY. Q. Agreement of Guarantee dated November 14, 1988 made by PIL to RIH relating to the $50,000,000 Promissory Note, assigned to BONY. X. MISCELLANEOUS A. Paradise Island Limited - One year renewable lease for office and warehouse facility located at 1550 S.W. 43rd Street, Fort Lauderdale under Lease Agreement dated December 20, 1991 between PIA as Lessor and ISI as Lessee. Lessee shall not sublet or assign without the written consent or the Lessor, not to be unreasonably withheld. B. ISI - Airport facility ("Airport") located on the southeast corner of Paradise Island and related office space and counterspace in the the Airport, under Lease Agreement dated December 20, 1991, expiration 2003 between PIL as Lessor and PIA as Lessee. Lease may not be assigned without written consent of Lessor. C. Insurance Policies - Reference is made to the agreements and instruments listed in Schedules 4.11 and 4.12 and said Schedules 4.11 and 4.12 are hereby incorporated by reference in this Schedule 4.17. D. Non-exclusive License and Equipment Agreement dated August 4, 1993 between Progressive Games Inc. for four (4) "Carribean Stud" poker tables. 6 Schedule 4.17 E. Agreements - EXPIRES ------- 1. EDS Reservations Computer Equipment and Software. Jun. 1998 2. UNC - Airwork - Aircraft Engine overhauls. Fixed labor costs. Assures discounts. Feb. 1995 3. Club Med - Contract to provide charters to San Salvador. Total value to P.I.A. $487,000 Apr. 1994 4. US Army - Verbal agreement to provide army pilots training. Approximate value to PIA of $100,000 Dec. 1993 5. AGES - Written agreement to finish overhaul of DHC-7 S/N 71. Man hours charged to AGES to be applied to lease at $5,000/month. Date for completion is approximately 1/1/94. F. Purchase Orders 1. TCAS with Bendix and Goodyear for aircraft 780MG which will be recovered as per lease. Our total liability is approximately $50,000. G. Engine Overhauls Pratt & Whitney $160,000 Pratt & Whitney 225,000 H. Engine Repair UNC $112,000 UNC 50,000 Hot section I. AT&T Network Services (Inbound Long Distance Term Discount Plan): Effective Date: February 8, 1993 Term: 24 months 7 Schedule 4.17 $20,000 per month* *if cancelled after 1 year, the cancellation fee is 35% of the balance. J. Worldspan (Airline Computer System): Effective Date: July 14, 1993 Term: 60 months Commitment: $8,495 per month* *Much of this expense is offset by booking credits K.
NAME/ APPROXIMATE VENDOR DESCRIPTION TERMINATION DATE ANNUAL COST - -------------------------------------------------------------------------------------------------- Wang Hardware/software maintenance Renewable Annually $100,000 AT&T Bahamas Watts Line (Stateside Renewable Annually $135,000 Charge) (January 4, 1994) AT&T MEGACOM Long Distance Service Renewable Annually Approximately (All South Florida Locations) (February 1994) $120,000 per annum min. AT&T 800 Service - RRII/RIB S & M Expires-February 1995 $240,000 per annum min. MCI Nassau-Florida Data Lines for Indefinite $132,000 Reservations/Casino CMS/Hrgas
L.
OUTSTANDING APPROXIMATE ITEMS COMPANY AMOUNT COMPLETION DATE - -------------------------------------------------------------------------------- Bath Towels Edward Don & Co. $98,090 Feb. '94 Hand Towels Edward Don & Co. 18,846 Feb. '94 Bath Mats Edward Don & Co. 11,075 Feb. '94 Wash Cloths Edward Don & Co. 4,940 Dec. '93 Room Soaps Guest Supply 24,988 Feb. '94 Room Amenities Guest Supply 31,024 Feb. '94 Plastic Bunzl USA 73,671 Jun '94 Glasses Paper Napkins Flamingo Paper 87,860 Jun '94 Playing Cards G. Matteson 75,256 Feb. '94
8 Schedule 4.18 INVENTORY None Schedule 4.19 RECEIVABLES/PAYABLES None Schedule 4.20 EMPLOYEES CLAIMS I. The Bahamas Hotel Catering and Allied Workers Union (the "Union") has filed arbitration claims against all members of the Bahamas Hotel Employers'Association (the "BHEA"), which includes the Company, for refusing to implement wage and pension contribution increases agreed to in the collective bargaining agreement between the Union and the BHEA dated as of January 7, 1990, and amended by the Addendum dated as of January 7, 1992. On March 19, 1993, the Minister of Labour referred the dispute to arbitrators. The Company has not accrued any liability for the unpaid wage and pension contribution increases. II. The following employment related claims have been filed:
Plaintiff Defendant(s) Claim Dated Filed - --------- ------------ ----- ----------- John Rahming RIB Wrongful dismissal 12/3/91 Glen Wells PIL Injuries caused by 7/27/83 fellow employees Harvey DonCooke RIB Wrongful dismissal 3/18/92 William Armstrong RIB Wrongful dismissal 7/24/92 Donald Carroll RIB Wrongful dismissal 8/7/92 Bahamas Hotel Catering Paradise-Paradise Wrongful dismissal 2/17/89 & Allied Workers Union on behalf of Michael Forbes Bahamas Hotel Paradise Resort & Casino Wrongful dismissal 4/29/89 Managerial Association (Mr. Herbert Wemyss) Lewis Farrington Britannia Towers Wrongful dismissal 6/15/89 Telvern Dean RIB Wrongful dismissal 3/6/90 Lillian Fawkes RIB Wrongful dismissal 8/2/90 Neacker C. Knowles Brittania Towers Hotel Wrongful dismissal 10/17/90 Kenneth Knowles RIB Wrongful dismissal 7/1/91 Brenville Ferguson RIB Wrongful dismissal 9/13/91
Claudius Rolle RIB Wrongful dismissal 5/14/91 Roosevelt Adderley RIB Wrongful dismissal 5/14/91 Nevelon McKenzie RIB Wrongful dismissal 5/14/91 Lawrence Ferguson RIB Wrongful dismissal 5/14/91 Terrance Hutner RIB Wrongful dismissal 2/8/92 Andrew Forbes RIB Wrongful dismissal 1/7/92 Keith Cornell RIB Wrongful dismissal 10/7/92 Kevin Adderley RIB Wrongful dismissal 10/7/92 Roy Rodgers RIB Wrongful Dismissal 6/93 Donnie Johnson RIB Wrongful Dismissal 6/93 Kenva Hunter RIB Wrongful dismissal Not filed- demand letter received 7/8/92
III. Reference is made to Schedule 4.12(A)I.D. and said Paragraph I.D. is hereby incorporated by reference in this Schedule 4.20. IV. Reference is made to Schedule 4.10 and said Schedule 4.10 is hereby incorporated by reference in this Schedule 4.20. Schedule 4.21 TAX MATTERS None Schedule 4.22 RII BROKERS None Schedule 4.23 AFFILIATE TRANSACTIONS The PIRI Group recorded the following income and expense from RII and other affiliates:
1990 ------------------------------------ Through From August 31 September 1 1991 1992 --------- ----------- ---- ---- (In Thousands of Dollars) Income - RIH - Charter flights $ 151 === Expenses: RII - Parent services fee . . $ 3,560 $ 1,587 $ 5,126 $ 5,284 - Building rental . . . . 29 15 44 44 RIH - Interest expense. . . . 4,500 2,250 6,750 6,750 ------- ------- ------- ------- $ 8,089 $ 3,852 $ 11,920 $ 12,078 ===== ===== ====== ======
For periods through August 31, 1990, RII charged the PIRI Group for services provided based on an allocation of corporate overhead costs incurred by RII. Effective with the reorganization, RII began charging the PIRI Group a fee of three (3) percent of certain gross revenues for such services. Also, recapitalization costs reflected on the Combined Statements of Operations include charges of $11,366,000 for 1990 and $1,099,000 for 1992 representing the PIRI Group's allocated portion (approximately one-third) of RII's consolidated recapitalization costs. In addition to the above, charges for insurance cost are allocated to the PIRI Group based on relative amounts of operating revenue, payroll, property value, or other appropriate measures. Cash advances are periodically made between RII and the PIRI group and related payments thereto as needed. As used herein, "RIH" means Resorts International Hotel, Inc., a New Jersey corporation. Schedule 5.05 BUYERS BROKERS Lazard Freres & Co. Schedule 5.08 PARENT EXPENSES (i) costs, fees and expenses of Parent's legal counsel, accountants and public relations advisors and the costs of preparing public relations videos, in each case incurred in respect of the operations of Buyer, the drafting of Buyer's organizational documents and discussions and negotiations with the Government and agencies of the Commonwealth of The Bahamas and the negotiation and preparation of the Purchase Agreement and related documents, (ii) the fees and expenses of Applied Technology Management, incurred in respect of the environmental study commissioned in respect of the Paradise Island Business, (iii) the architectural fees and expenses of Wimberly, Allison, Tong & Goo and engineering fees incurred in connection with the transactions contemplated by the Purchase Agreement and related documents and (iv) all travel costs incurred by Parent and its Affiliates and any expenses, including, without limitation, travel expenses, for which Parent or its Affiliates may have agreed to reimburse Lazard Freres & Co. or any of their other respective advisors in connection with the transactions contemplated by the Purchase Agreement and related documents. PARENT EXPENSES NOT SUBJECT TO $2 MILLION CAP (i) The architectural fees and expenses of Wimberly, Allison, Tong & Goo and engineering fees incurred in connection with the transactions contemplated by the Purchase Agreement and related documents. (ii) Commitment Fees, Parent's legal fees and expenses and legal fees and expenses of any Bank's counsel payable by Parent relating to the Bank Financing. (iii) All reasonable fees and Expenses (including fees and expenses of counsel) relating to the Buyer Registration Statement and Buyer Prospectus. PARENT EXPENSES SUBJECT TO $2 MILLION CAP (i) All reasonable costs, fees and expenses of Parent's legal counsel, accountants and public relations advisors and the costs of preparing public relations videos, in each case incurred in respect of the operations of Buyer, the drafting of Buyer's organizational documents and discussions and negotiations with the Government and agencies of the Commonwealth of The Bahamas and the negotiation and preparation of the Purchase Agreement and related documents (specifically excluding, however, any legal expenses, incurred as a result of negotiations with TCW and Fidelity). (ii) All reasonable fees and expenses of Applied Technology Management, incurred in respect of the environmental study commissioned in respect of the Paradise Island Business. (iii) All reasonable travel costs incurred by Parent and its Affiliates and any expenses, including, without limitation, travel expenses, for which Parent or its Affiliates may have agreed to reimburse Lazard Freres & Co. or any of their other respective advisors in connection with the transactions contemplated by the Purchase Agreement and related documents. The parties agree that the allocation of legal fees to Buyer with respect to the negotiation and drafting of this Agreement and other related agreements shall be subject to the reasonable approval of the independent directors of Buyer.
Certain RII Employees Schedule 6.09 - ---------------------------------------------------------------------------------------------------------------------------------- - - RESORTS INT'L INC. PAYROLL COM 0 10/93 PAGE 1 US$ MIAMI RESORTS INTERNATIONAL INC. LAS 1 SUN PE 10/03/93 ALL US EMPLOYEES BY CO (SALARY) PRT 0 TUE 09/28/93 PR-4380-07-001-00 038-SA-U-C- ACTIVE NON CORPORATE EMPLOYEES RPT P PRCALL 18:47 - ---------------------------------------------------------------------------------------------------------------------------------- - - HIRE TERM ANNUAL LAST NAME FIRST NAME EMPLOYEE # DATE DATE SALARY DEPARTMENT SERVICE POSITION CO CL - ---------------------------------------------------------------------------------------------------------------------------------- - - RESORTS INT'L INC. US$ MIAMI ADAMS VALERIE V. ###-##-#### 02/19/92 12.0 PIV ACCOUNTING ACCOUNTING DATA ENTRY 001 00 US A ALAIMO VINCENT J. ###-##-#### 10/07/92 17.7 CREDIT CREDIT GROUP COLL. CORD. 001 00 US A ALLEN PATRICIA A. ###-##-#### 01/08/92 2.1 MIAMI G&A MIAMI G&A STOCKROOM 001 00 US T ALONZO MARIA LUISA ###-##-#### 09/14/89 13.9 PAYABLES CHALKS/ISI CLERKS 001 00 US A ALVAREZ DORIS ###-##-#### 08/22/88 26.0 PIV ACCOUNTING ACCOUNTING SR. ACCOUNTANT 001 00 US A BABURAM ANNA E. ###-##-#### 05/03/88 29.0 PIV ACCOUNTING ACCOUNTING SR. ACCOUNTANT 001 00 US A BARRIERE RAQUEL ###-##-#### 06/22/92 13.4 PIV ACCOUNTING ACCOUNTING ACCOUNTING CLERK 001 00 US A BEROLO CLARA ###-##-#### 01/27/75 20.9 M.I.S DATA PROCESSING DATA ENTRY 001 00 US A BINDER WARREN E. ###-##-#### 06/01/92 10.0 MARKETING MARKETING MIA DIR. MRKTG. SERV. 001 00 US A BOHANA JESSE ###-##-#### 11/20/89 47.3 TAX TAX DIRECTOR OF TAXES 001 00 US A CEDENO GILDA GARDENIA ###-##-#### 05/08/84 19.8 PAYABLES PAYABLES ASST SUPERVISOR 001 00 US A CHARRY YILMA E. ###-##-#### 09/12/77 21.8 PAYABLES CHALKS/ISI ASST SUPERVISOR 001 00 US A CLARKE RITA B. ###-##-#### 07/30/76 26.0 CREDIT CREDIT ASST MANAGER 001 00 US A COHEN ELAYNE H. ###-##-#### 09/30/91 17.1 CREDIT CREDIT SR. COLL. CLERK 001 00 US A COLON RALPH ###-##-#### 09/20/91 18.1 PIV/ISI ACCTG ACCOUNTING JR. ACCOUNTANT 001 00 US A CONTRERAS CARMEN ###-##-#### 12/15/80 16.0 M.I.S. DATA PROCESSING DATA ENTRY 001 00 US A CONTRERAS CONCEPCION ###-##-#### 06/25/90 10.4 M.I.S. DATA PROCESSING P.T. DATA ENTRY 001 00 US X DEBROSSE VIRGIL A. ###-##-#### 11/20/89 16.0 ACCOUNTING ACCOUNTING ACCOUNTING CLERK 001 00 US A DIAZ SYLVIA ###-##-#### 01/16/87 13.4 PAYABLES PAYABLES CLERKS 001 00 US A FARRINGTON ROBERT B. ###-##-#### 09/20/82 20.6 M.I.S. MICROFILM MICROFILM SUPERV 001 00 US A FERNANDEZ JUTTA E. ###-##-#### 02/01/82 35.4 CREDIT CREDIT MANAGER 001 00 US A GITTINGS PEARL ###-##-#### 11/07/77 17.2 PAYABLES PAYABLES CLERKS 001 00 US A HAWK BELINDA FAYE ###-##-#### 09/07/84 20.9 MIAMI G&A MIAMI G&A PAYROLL 001 00 US A HOBOY ROBBIN L. ###-##-#### 08/08/88 15.0 PAYABLES PAYABLES CLERKS 001 00 US A HURTT JAMES H. ###-##-#### 10/24/89 33.0 TREASURER DEPT. TREASURER DEPT. ASST TO TREASURER 001 00 US A INSUA DEANNA M. ###-##-#### 08/29/88 15.0 MIAMI G&A MIAMI G&A PHONE OPERATOR 001 00 US A JAMES E. CURTIS ###-##-#### 06/26/89 15.6 M.I.S. DATA PROCESSING COMPUTER OPERATOR 001 00 US A JESTER SANDRA L. ###-##-#### 01/30/78 49.7 M.I.S. DATA PROCESSING SR SYSTEM ANALYST 001 00 US A JOHNS SANDRA S. ###-##-#### 09/29/80 70.0 CORPORATE CORPORATE DIR FIN REPORTING 001 00 US A JOHNSON ALICE A. ###-##-#### 09/26/88 14.4 PAYABLES PAYABLES CLERKS 001 00 US A JULIOUS SHEROL C. ###-##-#### 08/01/85 15.8 CREDIT CREDIT LEAD D/E BILLING 001 00 US A KERTESZ IRENE W. ###-##-#### 02/20/90 15.3 CREDIT CREDIT COLLECTION CLERK 001 00 US A LATHER TERRY L. ###-##-#### 03/14/88 17.7 ACCOUNTING ACCOUNTING ACCOUNTING CLERK 001 00 US A LAZZARI JOHN S. ###-##-#### 02/24/87 23.5 FINANCIAL & TAX FINANCIAL & TAX ACCOUNTANT 001 00 US A LEMONS JAMIE MICHELE ###-##-#### 06/01/87 15.5 CREDIT CREDIT D/E BILLING 001 00 US A LEWIS DEIDRA ###-##-#### 10/06/92 9.9 M.I.S. MICROFILM MICROFILM CLERKS 001 00 US A LEWIS KENT 000-00-0001 03/06/78 62.0 PIV ACCOUNTING ACCOUNTING MANAGER 001 00 US A LONG CYNTHIA F. ###-##-#### 10/14/76 29.5 PAYABLES PAYABLES SUPERVISOR 001 00 US A LORENCES LAURA ###-##-#### 05/07/90 25.0 PIV ACCTG ACCOUNTING STAFF ACCOUNTANT 001 00 US A MALAVE CLOTILDA ###-##-#### 01/29/90 15.5 CREDIT CREDIT COLLECTION CLERK 001 00 US A MARCELIN GHISLAINE ###-##-#### 01/15/90 15.5 CREDIT CREDIT D/E BILLING 001 00 US A MARCINIAK JENNIFER A. ###-##-#### 04/12/91 22.7 TREASURER DEPT. TREASURER DEPT. SECRETARY 001 00 US A MARRIOTT C. INES ###-##-#### 04/01/93 14.0 CREDIT CREDIT COLLECTION CLERK 001 00 US A MARTINEZ MICHELE STROUD ###-##-#### 12/10/84 31.0 ACCOUNTING ACCOUNTING SUPERVISOR 001 00 US A METELLUS NIVA ###-##-#### 09/18/91 11.3 CREDIT CREDIT A/R CLERK 001 00 US A MYERS MARY C. ###-##-#### 03/24/78 29.0 MIAMI G&A MIAMI G&A OFFICE MANAGER 001 00 US A NELSON ROBIN BRITT ###-##-#### 01/22/80 25.4 TREASURER DEPT. TREASURER DEPT. SECRETARY 001 00 US A
- ---------------------------------------------------------------------------------------------------------------------------------- - - RESORTS INT'L INC. PAYROLL COM 0 10/93 PAGE 2 US$ MIAMI RESORTS INTERNATIONAL INC. LAS 1 SUN PE 10/03/93 NELSON ALL US EMPLOYEES BY CO (SALARY) PRT 0 TUE 09/28/93 PR-4380-07-001-00 038-SA-U-C- ACTIVE NON CORPORATE EMPLOYEES RPT P PRCALL 18:47 - ---------------------------------------------------------------------------------------------------------------------------------- - - HIRE TERM ANNUAL LAST NAME FIRST NAME EMPLOYEE # DATE DATE SALARY DEPARTMENT SERVICE POSITION CO CL - ---------------------------------------------------------------------------------------------------------------------------------- - - RESORTS INT'L INC. US$ MIAMI NICHOLSON HAZEL G. ###-##-#### 02/03/92 20.0 PIV/RIB ACCTG ACCOUNTING SEC/ADMIN ASST 001 00 US A NICOLOSI PETER V. ###-##-#### 10/29/90 25.0 M.I.S. DATA PROCESSING COMPUTER OPERATOR 001 00 US T OLIVEIRA HAYDEE ###-##-#### 02/11/85 23.7 PAYABLES CHALKS/ISI ASST SUPERVISOR 001 00 US A ORR BELINDA T. ###-##-#### 06/11/90 10.9 M.I.S. MICROFILM ASST. SUPERVISOR 001 00 US A OWEN AUDREY M. ###-##-#### 02/02/87 24.7 M.I.S. DATA PROCESSING ADMIN ASST 001 00 US A PATINO MONICA M. ###-##-#### 10/12/92 20.8 PIV/ISI ACCTG ACCOUNTING JR. ACCOUNTANT 001 00 US A PEIRCE JOHN C ###-##-#### 03/17/75 70.0 CORPORATE M.I.S. DIRECTOR D.P. 001 00 US A PEREZ OSCAR L. ###-##-#### 04/23/90 15.0 M.I.S. DATA PROCESSING DATA ENTRY 001 00 US T PEREZ RUBY ###-##-#### 06/01/90 14.8 PAYABLES PAYABLES CLERKS 001 00 US A PORETSKY MARTIN ###-##-#### 06/29/87 20.3 MIAMI G&A MIAMI G&A STOCKROOM SUPER. 001 00 US A RAMOS ROBIN CALAMITA ###-##-#### 10/13/83 30.0 FINANCIAL & TAX FINANCIAL & TAX SENIOR ACCOUNTANT 001 00 US A RICH ELIZABETH ###-##-#### 12/12/88 16.2 PAYABLES PAYABLES CLERKS 001 00 US A RIOS WILBERTO ###-##-#### 08/30/93 10.9 MIAMI G&A MIAMI G&A STOCKROOM 001 00 US A ROBERTSON ANNE K. ###-##-#### 09/04/90 52.5 FINANCIAL FINANCIAL MGR FIN REPORTING 001 00 US A RODRIGUEZ MARY ###-##-#### 01/18/75 20.6 M.I.S. DATA PROCESSING DATA ENTRY 001 00 US A RODRIGUEZ MIREYA A. ###-##-#### 04/01/91 9.2 M.I.S. DATA PROCESSING DATA ENTRY 001 00 US T ROLLE DARLENE F. ###-##-#### 10/03/91 18.0 ACCOUNTING ACCOUNTING ACCOUNTING CLERK 001 00 US A RYAN MICHAEL J. ###-##-#### 08/07/89 20.6 ACCOUNTING ACCOUNTING JR. ACCOUNTANT 001 00 US A SANTIAGO RAMON L. ###-##-#### 04/19/93 13.5 PAYABLES CHALKS/ISI CLERKS 001 00 US A SAULOG SHARLENE E. ###-##-#### 01/13/86 13.4 PIV ACCOUNTING ACCOUNTING ACCOUNTING CLERK 001 00 US A SAXNER EILEEN M. ###-##-#### 01/19/81 29.4 CORPORATE CORPORATE SECRETARY 001 00 US A SHELTON JAMES E ###-##-#### 06/05/75 30.9 M.I.S. DATA PROCESSING COMPUTER OPERATOR 001 00 US A SPIVAK MELISSA A. ###-##-#### 09/04/90 14.7 PAYABLES PAYABLES CLERKS 001 00 US A STUKEL JAN M. ###-##-#### 12/14/87 15.4 PAYABLES CHALKS/ISI CLERKS 001 00 US A SZESZKOWSKI HELEN A. ###-##-#### 03/14/88 16.5 MIAMI G&A MIAMI G&A CLERICAL 001 00 US A TAPOGNA JANET M. ###-##-#### 02/01/89 16.6 PAYABLES PAYABLES CLERKS 001 00 US T TAYLOR KAREN A. ###-##-#### 03/23/93 9.9 MIAMI G&A MIAMI G&A CLERICAL 001 00 US X TAYLOR KIMBERLY A. ###-##-#### 09/28/89 13.0 PAYABLES PAYABLES CLERKS 001 00 US A TORRES IDA L. ###-##-#### 09/06/88 15.2 M.I.S. DATA PROCESSING DATA ENTRY 001 00 US A TURNER PATRICK W.G. ###-##-#### 08/21/91 11.2 MIAMI G&A MIAMI G&A STOCKROOM 001 00 US A VELEZ JUANA A. ###-##-#### 06/01/76 19.6 M.I.S. DATA PROCESSING DATA ENTRY 001 00 US A VERNON ASLEY M. ###-##-#### 01/30/89 13.9 CREDIT CREDIT COLLECTION CLERK 001 00 US A WOODARD, JR. RAY D. ###-##-#### 07/28/86 33.2 M.I.S. DATA PROCESSING PROGRAMMER 001 00 US A WOOGIN SHAWNE D. ###-##-#### 09/04/90 34.0 TAX TAX SR TAX ACCOUNTANT 001 00 US A YASSES BRIAN S. ###-##-#### 07/05/88 23.2 ACCOUNTING ACCOUNTING STAFF ACCOUNTANT 001 00 US A COMPANY TOTAL 82 - ---------------------------------------------------------------------------------------------------------------------------------- - - RESORTS INT'L (BAHAMAS) LIMITED US$ MIAMI APONTE ODALYS ###-##-#### 06/19/89 18.0 MARKETING MARKETING T.I.S. ADMIN ASST 004 00 US A BUSBY ROBYN M. ###-##-#### 04/07/87 26.0 MARKETING MARKETING MARKETING MGR. 004 00 US A BYRNES TERRY S. ###-##-#### 03/24/92 35.0 SALES MIAMI SALES MIAMI NAT'L SALES MGR 004 00 US A CANALES ANNETTE JO ###-##-#### 07/21/92 17.5 MARKETING MARKETING MIAMI ADMIN. ASST. 004 00 US A CHOMINSKI RICHARD J. ###-##-#### 08/04/89 55.0 MARKETING MARKETING EX DIR TRAVEL IND 004 00 US A
- ---------------------------------------------------------------------------------------------------------------------------------- - - RESORTS INT'L INC. PAYROLL COM 0 10/93 PAGE 3 US$ MIAMI RESORTS INTERNATIONAL INC. LAS 1 SUN PE 10/03/93 CHOMINSKI ALL US EMPLOYEES BY CO (SALARY) PRT 0 TUE 09/28/93 PR-4380-07-001-00 038-SA-U-C- ACTIVE NON CORPORATE EMPLOYEES RPT P PRCALL 18:47 - ---------------------------------------------------------------------------------------------------------------------------------- - - HIRE TERM ANNUAL LAST NAME FIRST NAME EMPLOYEE # DATE DATE SALARY DEPARTMENT SERVICE POSITION CO CL - ---------------------------------------------------------------------------------------------------------------------------------- - - RESORTS INT'L (BAHAMAS) LIMITED US$ MIAMI COHEN DAVID S. ###-##-#### 07/31/89 32.0 MARKETING MARKETING MIAMI SALES MANAGER 004 00 US A COLLINS DANIEL J. ###-##-#### 07/31/91 26.8 SALES MIAMI SALES MIAMI GRP. SALES REP. 004 00 US A DELAWDER LOUISE MARIE ###-##-#### 02/28/83 26.8 SALES MIAMI SALES MIAMI SALES MGR PIRAC 004 00 US A DRAHL KIMBERLY A. ###-##-#### 03/23/87 30.0 PITDA PITDA MARKETING MGR. 004 00 US A GARCIA SHERRY L. ###-##-#### 06/20/88 22.0 MARKETING MARKETING T.I.S. ADMIN ASST 004 00 US A GILES ILITA L. ###-##-#### 09/15/92 20.0 SALES MIAMI SALES MIAMI EX. SECT. OFF./MGR 004 00 US T GREENSTEIN JAY S. ###-##-#### 10/15/80 117.8 SALES MIAMI SALES MIAMI VICE PRESIDENT 004 00 US A LEWIS CLAUDIA ###-##-#### 01/06/92 15.0 SALES MIAMI SALES MIAMI SALES SECRETARY 004 00 US A LUNAN DONNAMARIE N. ###-##-#### 03/12/91 15.5 SALES MIAMI SALES MIAMI SALES SECRETARY 004 00 US A NEWMAN CYNTHIA A. ###-##-#### 10/19/92 12.0 SALES MIAMI SALES MIAMI FILE COORDINATOR 004 00 US A PORTER CYNTHIA R. ###-##-#### 05/27/93 16.6 MARKETING MARKETING TEMP FRIEND.FEST. 004 00 US T RODRIGUEZ ELBA ###-##-#### 12/03/84 18.9 SALES MIAMI SALES MIAMI WORD PROCESSOR 004 00 US A SAMUELS JENNIFER A. ###-##-#### 08/10/90 15.5 SALES MIAMI SALES MIAMI SALES SECRETARY 004 00 US A STATHIS SHARON MCCABE ###-##-#### 03/06/89 32.4 MARKETING MARKETING MIAMI SALES MANAGER 004 00 US A STERRETT MARY ANN ###-##-#### 05/20/85 46.6 SALES MIAMI SALES MIAMI DIR AGENCE GROUP 004 00 US A WILLIAMS NANCY J. ###-##-#### 06/01/93 31.5 MARKETING MARKETING MIAMI SALES MANAGER 004 00 US A ZAPPATERRA NORMA ###-##-#### 01/02/85 45.0 MARKETING MARKETING DIR MRKTG SERV 004 00 US A COMPANY TOTAL 22 - ---------------------------------------------------------------------------------------------------------------------------------- - - BAHAMAS DEVELOPERS LTD. US$ REGULAR GABLER, JR RUDOLPH 000-03-8414 39.0 BDL BDL BDL 006 00 US A COMPANY TOTAL 1 - ---------------------------------------------------------------------------------------------------------------------------------- - - RESORTS REPRESENTATION INT'L INC. US$ MIAMI ARANHA JEANNE M. ###-##-#### 04/19/88 30.9 PIVI MANAGEMENT ADMIN ASSISTANT 046 00 US A BABBS CHRISTINA D. ###-##-#### 01/25/93 13.5 RRII RESERVATION RES. AGENT/FT 046 00 US A BANEGAS BONNIE R. ###-##-#### 07/26/93 12.5 RRII RESERVATION RES. AGENT/FT 046 00 US A BARNES WAYNE B. ###-##-#### 07/29/91 13.9 RRII HRGAS TAGGER 046 00 US A BARRIERE RAYSA ###-##-#### 07/26/93 11.4 RRII RES. SERVICES DOCUMENT CLERK/FT 046 00 US A BENENSON ELIANE ###-##-#### 09/03/91 15.0 RRII GROUP SALES GROUP SALES SEC. 046 00 US A BIDWELL BRESSIA K. ###-##-#### 11/02/87 23.7 RRII RES. SERVICES RES. SERVICES SUPR 046 00 US A BOYD RACQUEL N. ###-##-#### 03/29/91 13.9 RRII RESERVATION RES. AGENT/FT 046 00 US A BROWN SHARON P. ###-##-#### 12/28/92 13.5 RRII RESERVATION RES. AGENT/FT 046 00 US A BURROUGHS CHRISTOPHER J. ###-##-#### 08/04/93 12.5 RRII RESERVATIONS RES. AGENT/PT 046 00 US X CASTRO EPIGMENIA ###-##-#### 01/13/92 13.5 RRII RES. SERVICES DOCUMENT CLERK/FT 046 00 US A CESAROTTI MARIANNE L. ###-##-#### 04/29/91 25.8 PIVI MANAGEMENT PERSONNEL MGR. 046 00 US A CHOISEUL PAUL I. ###-##-#### 06/14/93 27.0 RRII ADMINISTRATION AUTO/TELECOM. MGR 046 00 US A CLARKE ROSANNA C. ###-##-#### 11/27/89 15.6 RRII RESERVATION LEAD AGENT 046 00 US A CRISTOBAL MARIA T. ###-##-#### 01/13/92 20.0 RRII/PIV ADMINISTRATION TEC. ASST DIR OPS 046 00 US T
- ---------------------------------------------------------------------------------------------------------------------------------- - - RESORTS INT'L INC. PAYROLL COM 0 10/93 PAGE 4 US$ MIAMI RESORTS INTERNATIONAL INC. LAS 1 SUN PE 10/03/93 CRISTOBAL ALL US EMPLOYEES BY CO (SALARY) PRT 0 TUE 09/28/93 PR-4380-07-001-00 038-SA-U-C- ACTIVE NON CORPORATE EMPLOYEES RPT P PRCALL 18:48 - ---------------------------------------------------------------------------------------------------------------------------------- - - HIRE TERM ANNUAL LAST NAME FIRST NAME EMPLOYEE # DATE DATE SALARY DEPARTMENT SERVICE POSITION CO CL - ---------------------------------------------------------------------------------------------------------------------------------- - - RESORTS REPRESENTATION INT'L INC. US$ MIAMI D'ASCOLI ANTHONY F. ###-##-#### 09/03/92 17.7 RRII RESERVATION SPEC. SERV. AGENT 046 00 US A DAVIS CYNTHIA D. ###-##-#### 12/07/87 14.7 RRII RESERVATION RES. AGENT/FT 046 00 US A DEBROSSE CHERYL A. ###-##-#### 06/30/87 16.1 RRII RES. SERVICES LEAD QUAL. CONT 046 00 US A DETORO MAURICIO J. ###-##-#### 01/22/90 13.9 RRII RESERVATION RES. AGENT/FT 046 00 US A DIONNE KAREN E. ###-##-#### 01/13/92 13.5 RRII RESERVATIONS RES. AGENT/PT 046 00 US T FEICK JOSEPHINE M. ###-##-#### 07/08/85 45.0 PIVI MANAGEMENT DIR OF OPERATIONS 046 00 US A FELICIANO CARMEN M. ###-##-#### 02/10/93 13.5 RRII RESERVATION RES. AGENT/FT 046 00 US A FITZGERALD JOANNE A. ###-##-#### 06/13/88 13.9 RRII HRGAS DATA ENTRY CL/FT 046 00 US A FLETCHER MAREEN C. ###-##-#### 01/13/92 16.6 RRII RES. SERVICES LEAD TICKET AGENT 046 00 US A FLYNN CLAUDIA A. ###-##-#### 03/07/91 13.9 RRII RES. SERVICES TICKET AGENT 046 00 US A FRAZIER MICHELE J. ###-##-#### 05/14/92 13.0 RRII RES. SERVICES FILE CLERK/FT 046 00 US A GALARDE MARIAMAR ###-##-#### 07/20/92 13.5 RRII RESERVATION RES. AGENT/FT 046 00 US A GITTENS- NEWTON DEANNE C. ###-##-#### 01/13/92 13.5 RRII HRGAS DATA ENTRY CL/PT 046 00 US X GOFF ALEXIS ###-##-#### 10/14/92 13.5 RRII RESERVATION RES. AGENT/FT 046 00 US A GOFF SARAH E. ###-##-#### 06/18/93 13.5 RRII RESERVATIONS RES. AGENT/PT 046 00 US X GONZALEZ MARINA E. ###-##-#### 05/10/93 18.7 RRII ADMINISTRATION SECT TO VP 046 00 US A GRAHAM CHERYL V. ###-##-#### 06/07/93 11.4 RRII RESERVATION RES. AGENT/FT 046 00 US A GRAY SANDRA A. ###-##-#### 05/11/92 25.0 RRII ADMINISTRATION CUSTOMER SERV SUP 046 00 US A GRIFFIN PAMELA L. ###-##-#### 10/14/92 13.5 RRII RESERVATIONS RES. AGENT/PT 046 00 US X HALL-ZENNY INGRID ###-##-#### 05/25/92 30.0 RRII HRGAS RESERVATION MGR 046 00 US A HARDRICT LOYDI MOISE ###-##-#### 07/20/92 13.5 RRII RESERVATION RES. AGENT/FT 046 00 US A HERNANDEZ ADRIANA ###-##-#### 07/05/93 13.0 RRII RES. SERVICES DOCUMENT CLERK/FT 046 00 US A HERNANDEZ EVELYN ###-##-#### 04/06/92 13.5 RRII RESERVATION RES. AGENT/FT 046 00 US A HERNANDEZ IVAN O. ###-##-#### 09/16/91 18.2 RRII RES. SERVICES BILLING PR0. CLERK 046 00 US A JACKSON ADRIENNE E. ###-##-#### 10/14/91 13.5 RRII HRGAS DATA ENTRY CL/PT 046 00 US X JACKSON VALERIE R. ###-##-#### 07/27/93 16.6 RRII ADMINISTRATION CUST SERV REP. 046 00 US A JEFFERSON DEBRA A.C. ###-##-#### 11/18/91 15.6 RRII RES. SERVICES PYMT. OP LEAD 046 00 US A JOHNSON TARA L. ###-##-#### 09/03/91 13.5 RRII RESERVATION RES. AGENT/FT 046 00 US A JUSTIZ MARTA C. ###-##-#### 07/29/91 13.9 RRII HRGAS DATA ENTRY CL/FT 046 00 US A LAURENO LORI J. ###-##-#### 04/15/85 85.0 RRII/PIV MANAGEMENT VICE PRESIDENT 046 00 US A LAURENO LYNNE T. ###-##-#### 02/28/85 30.9 RRII GROUP SALES GROUP SALES SUPER 046 00 US A LAZZARI CATHLEEN A. ###-##-#### 08/12/92 13.5 RRII RESERVATIONS RES. AGENT/PT 046 00 US I LEHMAN JOEL M. ###-##-#### 08/04/93 12.5 RRII RESERVATION RES. AGENT/FT 046 00 US A LOPEZ ALEXANDRA ###-##-#### 06/07/93 12.5 RRII RESERVATION RES. AGENT/FT 046 00 US A MILENSKY MARLA S. ###-##-#### 06/10/92 13.5 RRII RESERVATION RES. AGENT/FT 046 00 US I MONTAG KATHLEEN ###-##-#### 10/19/92 27.0 PIVI/RRII SALES SALES MANAGER 046 00 US A MORALES DARLENE ###-##-#### 04/14/93 12.5 RRII RESERVATION RES. AGENT/FT 046 00 US A MORIS ANDRES A. ###-##-#### 11/11/86 23.7 RRII RESERVATION RESERVATION SUPER 046 00 US A NACCARATO DOMENICK ###-##-#### 12/07/92 15.6 RRII RESERVATION RES. AGENT/FT 046 00 US A PALENSCAR MICHELE M. ###-##-#### 01/13/92 32.0 PIV MANAGEMENT FIN. ANALYST 046 00 US A PATINO MARIA C. ###-##-#### 03/23/91 13.9 RRII HRGAS DATA ENTRY CL/PT 046 00 US X PEREZ ESTHER ###-##-#### 10/25/88 13.5 RRII RES. SERVICES DOCUMENT CLERK/FT 046 00 US A PEREZ NELSON A. ###-##-#### 08/04/93 12.5 RRII RESERVATION RES. AGENT/FT 046 00 US A PETERSON CAROL M. ###-##-#### 12/30/91 13.5 RRII HRGAS DATA ENTRY CL/FT 046 00 US A PINDER TERESA M. ###-##-#### 05/03/93 13.5 RRII HRGAS DATA ENTRY CL/FT 046 00 US A PRICNE DAWN M. ###-##-#### 09/14/93 12.5 RRII RES. SERVICES DOCUMENT CLERK/PT 046 00 US X PULIDO SUSAN ###-##-#### 04/14/93 13.5 RRII RESERVATIONS RES. AGENT/PT 046 00 US X
- ---------------------------------------------------------------------------------------------------------------------------------- - - RESORTS INT'L INC. PAYROLL COM 0 10/93 PAGE 5 US$ MIAMI RESORTS INTERNATIONAL INC. LAS 1 SUN PE 10/03/93 PULIDO ALL US EMPLOYEES BY CO (SALARY) PRT 0 TUE 09/28/93 PR-4380-07-001-00 038-SA-U-C- ACTIVE NON CORPORATE EMPLOYEES RPT P PRCALL 18:48 - ---------------------------------------------------------------------------------------------------------------------------------- - - HIRE TERM ANNUAL LAST NAME FIRST NAME EMPLOYEE # DATE DATE SALARY DEPARTMENT SERVICE POSITION CO CL - ---------------------------------------------------------------------------------------------------------------------------------- - - RESORTS INT'L INC. US$ MIAMI QUINTERO LISSETTE ###-##-#### 04/06/93 13.5 RRII RES. SERVICES PYMT OP CLERK 046 00 US A RIVET KATHY ###-##-#### 10/23/85 23.7 RRII RESERVATION TRAIN INSTRUCTOR 046 00 US A RODRIGUEZ ANA I. ###-##-#### 08/20/90 15.6 RRII RESERVATION LEAD AGENT 046 00 US A RODRIGUEZ PAMELA F. ###-##-#### 08/17/90 15.6 RRII ADMINISTRATION SECT TO DIR OPS 046 00 US A ROWE CHARLES A. ###-##-#### 12/28/92 13.5 RRII RESERVATIONS RES. AGENT/PT 046 00 US X SCHECTMAN NINA ###-##-#### 07/18/88 26.8 RRII SALES INSIDE SALES MGR. 046 00 US A SCOTT MICHAEL D. ###-##-#### 09/07/93 12.5 RRII RESERVATION RES. AGENT/FT 046 00 US A SCOTT RICK ###-##-#### 07/01/91 23.0 RRII MARKETING SEN. MRKTG. COORD. 046 00 US A TEWES REBECCA J. ###-##-#### 05/09/88 29.8 RRII MARKETING MKTG. SERV. SUPER. 046 00 US A THOMAS JOANNE M. ###-##-#### 06/07/93 12.5 RRII RESERVATION RES. AGENT/FT 046 00 US A TITUS BOAKYE ANGELLA J. ###-##-#### 11/19/90 20.1 RRII GROUP SALES GROUP SALES REP. 046 00 US A VELARDO SONIA A. ###-##-#### 02/01/93 13.5 RRII RESERVATION RES. AGENT/FT 046 00 US A VEZINA SANDRA L. ###-##-#### 11/11/92 29.0 PIVI/RRII SALES SALES MANAGER 046 00 US A WALKER TANYA M. ###-##-#### 01/06/92 13.5 RRII HRGAS DATA ENTRY CL/PT 046 00 US X WALL KRISTA A. ###-##-#### 12/28/92 13.5 RRII RESERVATIONS RES. AGENT/PT 046 00 US X WHITEHURST SUSAN G. ###-##-#### 11/11/86 16.3 RRII RESERVATION RES. AGENT/FT 046 00 US A WILBANKS TRACEY A. ###-##-#### 04/14/93 13.5 RRII RESERVATION RES. AGENT/FT 046 00 US A WOODALL LARRY J. ###-##-#### 09/07/93 12.5 RRII RESERVATION RES. AGENT/FT 046 00 US A ZASTROW REBECCA ###-##-#### 06/01/87 14.0 RRII RES. SERVICES DOCUMENT CLERK/PT 046 00 US X ZEBEGRET LOIS ###-##-#### 02/17/87 18.7 RRII RESERVATION TRAVEL AGENT 046 00 US A COMPANY TOTAL 82 - ---------------------------------------------------------------------------------------------------------------------------------- - - INTERNATIONAL SUPPLIERS, INC. US$ MIAMI BERNARD MARSHALL J. ###-##-#### 06/15/92 38.0 PURCHASING PURCHASING FOOD/BEV. BUYER 049 00 US A CASSITTY CECILIA A. ###-##-#### 09/18/89 13.7 PURCHASING PURCHASING OFF. FILE CLERK 049 00 US A CERIO- KNOPMAN MEGHAN ###-##-#### 01/25/93 13.0 PURCHASING PURCHASING WH FILE CLERK 049 00 US A FORT FAYELENA D. ###-##-#### 06/29/92 14.6 PURCHASING PURCHASING DATA ENTRY 049 00 US A GOLAUB WELTON D. ###-##-#### 07/16/91 24.0 PURCHASING PURCHASING ASST. BUYER 049 00 US A HOOK JAMES L. ###-##-#### 03/02/87 17.6 PURCHASING PURCHASING WAREHOUSE LABORER 049 00 US A LOVEJOY ELLEN S. ###-##-#### 08/06/92 13.0 PURCHASING PURCHASING WH FILE CLERK 049 00 US A LOWE II WILLIAM C. ###-##-#### 02/23/87 17.5 PURCHASING PURCHASING WAREHOUSE LABORER 049 00 US A OLIN STANLEY L. ###-##-#### 01/11/88 61.5 PURCHASING PURCHASING DIR. PURCHASING 049 00 US A ROBINSON MARSHA ###-##-#### 09/26/89 32.4 PURCHASING PURCHASING ASST. DIR. PURCH. 049 00 US A ROSSEAU PHILIP E. ###-##-#### 02/11/85 54.3 PURCHASING PURCHASING SENIOR BUYER 049 00 US A SILVERMAN LOIS ANN ###-##-#### 11/09/81 24.8 PURCHASING PURCHASING PURCHASING AGENT 049 00 US A WEBB BRENDA L. ###-##-#### 09/22/87 25.8 PURCHASING PURCHASING WAREHOUSE MANAGER 049 00 US A COMPANY TOTAL 13 4,309.1 - ---------------------------------------------------------------------------------------------------------------------------------- - - ALL COMPANIES 200
- ---------------------------------------------------------------------------------------------------------------------------------- - - RESORTS INT'L INC. PAYROLL COM 0 10/93 PAGE 6 US$ MIAMI RESORTS INTERNATIONAL INC. LAS 1 SUN PE 10/03/93 WEBB ALL US EMPLOYEES BY CO (SALARY) PRT 0 TUE 09/28/93 PR-4380-07-001-00 038-SA-U-C- ACTIVE NON CORPORATE EMPLOYEES RPT P PRCALL 18:48 - ---------------------------------------------------------------------------------------------------------------------------------- - - HIRE TERM ANNUAL LAST NAME FIRST NAME EMPLOYEE # DATE DATE SALARY DEPARTMENT SERVICE POSITION CO CL - ---------------------------------------------------------------------------------------------------------------------------------- - - REPORT: 038 FORMAT: SA VERSION: U SEQUENCE: C FREQUENCY: SELECTION AND MERGE PARAMETERS FOR 07-PR-001-00 PRMASTER-035 RECORDS FOUND MEETING SELECTION CRITERIA 2.990 23.2% RECORDS REJECTED 9.881 76.8% TOTAL NUMBER OF RECORDS 12.871 100.0% COMPANY NE 015 END AND COMPANY NE 021 AND CLIENT NE 02 END AND TERMDATE EQ O END AND DIV NE 2200 AND EMPNO NE 202325386 END END RECORDS PROCESSED 200 LASER COPY DISTRIBUTE TO JCP Peirce, John C. DEPARTMENT Data Processing LOCATION Miami-1st floor COMMENT 1 035 ACTIVE NON CORPORATE EMPLOYEES FOR DGB Bowden, David G. DEPARTMENT Financial LOCATION Miami-3rd floor
- ---------------------------------------------------------------------------------------------------------------------------------- - - RESORTS INT'L INC. PAYROLL COM 0 10/93 PAGE 1 US$ MIAMI RESORTS INTERNATIONAL INC. LAS 0 SUN PE 10/03/93 ALL US EMPLOYEES BY CO (SALARY) PRT 1 WED 09/29/93 PR-4388-07-001-00 038-SA-U-C- ACTIVE EMPLS-PIA (021-00 & 021-04) RPT P PRCALL 16:04 - ---------------------------------------------------------------------------------------------------------------------------------- - - HIRE TERM ANNUAL LAST NAME FIRST NAME EMPLOYEE # DATE DATE SALARY DEPARTMENT SERVICE POSITION CO CL - ---------------------------------------------------------------------------------------------------------------------------------- - - PARADISE ISLAND AIRLINES, INC. US$ SOUTHERN AARON TERRANCE D. ###-##-#### 12/10/90 27.0 MECHANIC ICP EARNINGS MECHANIC 021 00 US A AMITY SALLY JANE ###-##-#### 09/17/84 13.9 ADMINISTRATION GENERAL LEDGER OFFICE 021 00 US A ANDERSON LAWRENCE J. ###-##-#### 04/01/91 12.1 FLIGHT GENERAL LEDGER DASH 7 - 1ST OFF 021 00 US A ARANHA NORMAN P. ###-##-#### 08/04/83 26.7 FLIGHT GENERAL LEDGER DASH 7 CAPTAIN 021 00 US A AVERY DAVID M. ###-##-#### 04/08/91 28.1 REPAIR STATION PAYROLL SUPERVISOR 021 00 US A BAILEY BONNIE S. ###-##-#### 11/27/89 11.2 FLIGHT GENERAL LEDGER FLIGHT ATTENDANTS 021 00 US A BAUMILLER TROY M. ###-##-#### 05/15/93 20.8 MECHANIC ICP EARNINGS MECHANIC 021 00 US A BEARD JILL A. ###-##-#### 12/03/91 11.2 FLIGHT GENERAL LEDGER FLIGHT ATTENDANTS 021 00 US A BODEN NIALL J. ###-##-#### 03/15/93 13.0 FLIGHT GENERAL LEDGER DHC6 - 1ST OFF 021 00 US A BOLLOTTA JR. FRANK ###-##-#### 10/02/89 12.9 FLL AIRPORT STATION TICKETING 021 00 US A BORAH CALVA D. ###-##-#### 07/31/85 13.9 MAINTENANCE GENERAL LEDGER STOCKROOM 021 00 US A BOUTILLETTE JUDY L. ###-##-#### 02/13/93 18.7 MAINTENANCE GENERAL LEDGER ADMINISTRATION 021 00 US A BROOKS CHARLAMAE V. ###-##-#### 12/03/91 11.2 FLIGHT GENERAL LEDGER FLIGHT ATTENDANTS 021 00 US A BROOKS PAULA-ANN L. ###-##-#### 12/03/91 11.2 FLIGHT GENERAL LEDGER FLIGHT ATTENDANTS 021 00 US A BUSING BINA M. ###-##-#### 01/22/93 11.2 FLIGHT GENERAL LEDGER FLIGHT ATTENDANTS 021 00 US A CAIN RONALD J. ###-##-#### 06/30/86 22.1 FLIGHT GENERAL LEDGER DASH 7 CAPTAIN 021 00 US A CAIN THOMAS N. ###-##-#### 06/07/91 24.6 MECHANIC ICP EARNINGS MECHANIC 021 00 US A CAIRO BELKYS ###-##-#### 02/16/93 30.0 ADMINISTRATION GENERAL LEDGER HUMAN RESOURCES 021 00 US A CALABRESE JOANN T. ###-##-#### 03/06/89 12.7 FLIGHT GENERAL LEDGER DASH 7 - 1ST OFF 021 00 US A CAMPBELL ARTHUR ###-##-#### 01/23/88 24.2 FLIGHT GENERAL LEDGER DASH 7 CAPTAIN 021 00 US A CAMPBELL WAYNE A. ###-##-#### 08/05/93 20.8 MECHANIC ICP EARNINGS MECHANIC 021 00 US T CARDEMAS ARMANDO ###-##-#### 08/31/92 75.0 ADMINISTRATION GENERAL LEDGER V.P. MAINT/FLIGHT 021 00 US A CARRINGTON GAYLE ###-##-#### 04/08/91 26.7 REPAIR STATION PAYROLL MECHANICS 021 00 US A CERNY KENNETH D. ###-##-#### 07/16/93 20.8 MECHANIC ICP EARNINGS MECHANIC 021 00 US A CHAMBERS DONNA M. ###-##-#### 08/12/92 12.5 MIAMI AIRPORT STATION TICKETING 021 00 US A CHEEMPARAYIL JOSEPH JAMES C ###-##-#### 12/10/92 12.5 MAINTENANCE GENERAL LEDGER STOCKROOM 021 00 US A CLABORN JOHN S. ###-##-#### 09/20/90 13.5 FLL AIRPORT STATION TICKETING 021 00 US A CONSTANTINE ANNETTE J. ###-##-#### 03/06/89 18.6 ADMINISTRATION GENERAL LEDGER OFFICE 021 00 US A COOK TIMOTHY F. ###-##-#### 01/31/87 27.5 FLIGHT GENERAL LEDGER ADMIN & GENERAL 021 00 US A COX CHARLES R. ###-##-#### 09/11/84 26.2 MAINTENANCE GENERAL LEDGER STOCKROOM 021 00 US A CRIGLER JOHN M. ###-##-#### 05/05/93 12.5 FLL AIRPORT STATION TICKETING 021 00 US X CUBERO JOHN A. ###-##-#### 10/16/89 18.5 FLIGHT GENERAL LEDGER ADMIN & GENERAL 021 00 US A DAY DONALD ###-##-#### 08/22/78 23.6 REPAIR STATION PAYROLL STORES 021 00 US A DELACRUZ RAMON A. ###-##-#### 06/01/93 10.9 MIAMI AIRPORT STATION LINE SERVICE 021 00 US A DIAZ JUAN F. ###-##-#### 03/28/90 13.4 MAINTENANCE GENERAL LEDGER GROUND SUPPORT 021 00 US A DISCENZA JOHN M. ###-##-#### 02/10/85 21.0 FLL AIRPORT LINE SERVICE RAMP+SECUR. SPEC. 021 00 US A ESPOSITO PETER A. ###-##-#### 04/16/90 22.7 ADMINISTRATION GENERAL LEDGER TRAINERS 021 00 US A FAGAN KAREN M. ###-##-#### 08/11/93 10.9 FLL AIRPORT STATION TICKETING 021 00 US X FALCONER PABLO ###-##-#### 08/11/93 9.9 FLL AIRPORT PAYROLL LINE SERVICE 021 00 US A FISHER JOHN ###-##-#### 04/15/87 16.3 MAINTENANCE GENERAL LEDGER GROUND SUPPORT 021 00 US A FLAHERTY COLLEEN M. ###-##-#### 02/06/89 12.6 FLIGHT GENERAL LEDGER FLIGHT ATTENDANTS 021 00 US A FRANKLIN CARSON ###-##-#### 12/11/84 14.4 MECHANIC ICP EARNINGS MECHANIC 021 00 US A FRASER WILLIAM J. ###-##-#### 12/04/91 11.7 FLIGHT GENERAL LEDGER DASH 7 - 1ST OFF 021 00 US A FRAWLEY KIM E. ###-##-#### 02/16/93 28.0 MIAMI AIPRORT PAYROLL STATION MANAGER 021 00 US A GALLARDO IVAN Y. ###-##-#### 10/25/82 15.0 SUPERVISORY SUPERVISORY SUPERVISOR 021 00 US A MAINT MAINT GARNER ANGELA M. ###-##-#### 04/06/92 12.5 FLL AIRPORT STATION TICKETING 021 00 US A GILES BRENDA A. ###-##-#### 01/22/93 11.2 FLIGHT GENERAL LEDGER FLIGHT ATTENDANTS 021 00 US A
- ---------------------------------------------------------------------------------------------------------------------------------- - - RESORTS INT'L INC. PAYROLL COM 0 10/93 PAGE 2 US$ MIAMI RESORTS INTERNATIONAL INC. LAS 0 SUN PE 10/03/93 GILES ALL US EMPLOYEES BY CO (SALARY) PRT 1 WED 09/29/93 PR-4388-07-001-00 038-SA-U-C- ACTIVE EMPLS-PIA (021-00 & 021-04) RPT P PRCALL 16:04 - ---------------------------------------------------------------------------------------------------------------------------------- - - HIRE TERM ANNUAL LAST NAME FIRST NAME EMPLOYEE # DATE DATE SALARY DEPARTMENT SERVICE POSITION CO CL - ---------------------------------------------------------------------------------------------------------------------------------- - - PARADISE ISLAND AIRLINES, INC. US$ SOUTHERN GOFFI SUSANA ###-##-#### 10/01/90 21.5 MARKETING GENERAL LEDGER MARKETING 021 00 US A GOMEZ- SANCHEZ DAISY I. ###-##-#### 04/16/90 20.0 ADMINISTRATION GENERAL LEDGER HUMAN RESOURCES 021 00 US A GONZALEZ JOSE ANTONIO ###-##-#### 05/14/93 20.8 MECHANIC ICP EARNINGS MECHANIC 021 00 US A GONZALEZ LIZETT ###-##-#### 02/03/92 12.5 MIAMI AIRPORT STATION TICKETING 021 00 US A GREENAWALT DAN A. ###-##-#### 12/16/91 20.8 REPAIR STATION PAYROLL MECHANICS 021 00 US I GROVE GARY F. ###-##-#### 09/29/86 21.1 FLIGHT GENERAL LEDGER DASH 7 CAPTAIN 021 00 US A GUTHRIDGE JOHN G. ###-##-#### 04/01/91 21.8 FLIGHT GENERAL LEDGER DHC6 - CAPTAIN 021 00 US A GUZMAN CARLOS G. ###-##-#### 06/21/84 23.2 FLIGHT GENERAL LEDGER DASH 7 CAPTAIN 021 00 US A HAIGHT MATTHEW D. ###-##-#### 12/26/88 20.1 FLIGHT GENERAL LEDGER DASH 7 CAPTAIN 021 00 US A HAMPEL MICHAEL L. ###-##-#### 04/01/91 12.1 FLIGHT GENERAL LEDGER DASH 7 - 1ST OFF 021 00 US A HARDENBURG LOUISE C. ###-##-#### 05/24/93 12.5 FLL AIRPORT STATION TICKETING 021 00 US X HAVERTY RITA M. ###-##-#### 01/22/93 11.2 FLIGHT GENERAL LEDGER FLIGHT ATTENDANTS 021 00 US A HENRY JASPER ###-##-#### 01/22/86 21.4 REPAIR STATION PAYROLL STORES 021 00 US A HEREDIA RAQUEL ###-##-#### 04/25/85 12.1 ADMINISTRATION GENERAL LEDGER OFFICE 021 00 US A HERNANDEZ GEORGE LUIS ###-##-#### 12/12/90 11.2 MIAMI AIRPORT STATION LINE SERVICE 021 00 US A HERNANDEZ LUCIANA ###-##-#### 11/11/84 15.6 MIAMI AIRPORT STATION TICKETING 021 00 US A HICKS ROBERTA A. ###-##-#### 03/19/93 11.7 FLIGHT GENERAL LEDGER DASH 7 - 1ST OFF 021 00 US A HODGE GLENNIS V. ###-##-#### 12/11/91 10.9 FLL AIRPORT PAYROLL LINE SERVICE 021 00 US X HOWELL, JR. WILLIAM S. ###-##-#### 10/07/85 22.1 FLIGHT GENERAL LEDGER DASH 7 CAPTAIN 021 00 US A ITURRIA DIMITRI ###-##-#### 10/31/88 22.2 FLIGHT GENERAL LEDGER ADMIN & GENERAL 021 00 US A JACOBS BRIAN A. ###-##-#### 09/05/93 20.8 MECHANIC ICP EARNINGS MECHANIC 021 00 US A JAUREGUI LUIS ROBERTO ###-##-#### 07/01/84 25.5 FLIGHT GENERAL LEDGER DASH 7 CAPTAIN 021 00 US A JOHNSON CYNTHIA ANN ###-##-#### 12/05/88 15.1 MIAMI AIRPORT STATION TICKETING 021 00 US A JOHNSON JAMES F. ###-##-#### 04/28/93 12.5 MIAMI AIRPORT STATION TICKETING 021 00 US A JOSEPH AMY RENEE ###-##-#### 01/22/93 11.2 FLIGHT GENERAL LEDGER FLIGHT ATTENDANTS 021 00 US A JULIAN PHILIP H. ###-##-#### 01/12/87 20.1 FLIGHT GENERAL LEDGER DASH 7 CAPTAIN 021 00 US A JUSTIZ WENDY B ###-##-#### 11/19/83 21.4 ADMINISTRATION GENERAL LEDGER TRAINERS 021 00 US A KALIS KAREN S. ###-##-#### 05/18/92 18.0 FLIGHT GENERAL LEDGER ADMIN & GENERAL 021 00 US A KALLMAN KATHERINE A. ###-##-#### 07/27/92 16.6 ADMINISTRATION GENERAL LEDGER BAG CLAIMS ADMIN 021 00 US A KAMMERER DANIEL ###-##-#### 04/25/88 20.1 FLIGHT GENERAL LEDGER DASH 7 CAPTAIN 021 00 US A KASER THOMAS ###-##-#### 02/08/93 24.0 FLIGHT GENERAL LEDGER ADMIN & GENERAL 021 00 US A KELLEY CHARLES D. ###-##-#### 03/23/93 20.8 MECHANIC ICP EARNINGS MECHANIC 021 00 US A KHAN AHMOOD A. ###-##-#### 03/04/93 26.0 MECHANIC ICP EARNINGS MECHANIC 021 00 US A KNAPP EDWARD D. ###-##-#### 05/10/93 55.0 A/G ADMIN A/G ADMIN A/G ADMIN 021 00 US A LAFOSSE LUIS E. ###-##-#### 03/06/89 12.7 FLIGHT GENERAL LEDGER DASH 7 - 1ST OFF 021 00 US A LAPORTE DOMINIQUE M. ###-##-#### 10/02/92 14.6 FLL AIRPORT PAYROLL LINE SERVICE 021 00 US A LOEWINGER CRAIG B. ###-##-#### 04/01/91 12.1 FLIGHT GENERAL LEDGER DASH 7 - 1ST OFF 021 00 US A LUFT SHAWN D. ###-##-#### 07/08/93 13.5 MAINTENANCE GENERAL LEDGER STOCKROOM 021 00 US A LUKA CHANDY ###-##-#### 10/10/77 40.0 MAINTENANCE GENERAL LEDGER STOCKROOM 021 00 US A MADDEN CHARLES ###-##-#### 02/18/86 26.8 MECHANIC ICP EARNINGS MECHANIC 021 00 US A MALARSKI SHARON W. ###-##-#### 07/17/89 16.1 FLL AIRPORT STATION TICKETING 021 00 US A MARCUS DEBORAH ILENE ###-##-#### 01/12/87 22.5 MAINTENANCE GENERAL LEDGER ADMINISTRATION 021 00 US X MARRERO RAFAEL A. ###-##-#### 09/05/93 20.8 MECHANIC ICP EARNINGS MECHANIC 021 00 US A MARSH MEGAN H. ###-##-#### 07/06/93 16.6 ADMINISTRATION GENERAL LEDGER OFFICE 021 00 US A MARTIN II LARRY J. ###-##-#### 02/11/93 52.0 MAINTENANCE GENERAL LEDGER ADMINISTRATION 021 00 US A MAYNARD MICHAEL A. ###-##-#### 02/21/90 15.6 REPAIR STATION PAYROLL STORES 021 00 US A MOONEY STEVEN G ###-##-#### 08/16/93 9.9 MIAMI AIRPORT STATION LINE SERVICE 021 00 US X
- ---------------------------------------------------------------------------------------------------------------------------------- - - RESORTS INT'L INC. PAYROLL COM 0 10/93 PAGE 3 US$ MIAMI RESORTS INTERNATIONAL INC. LAS 0 SUN PE 10/03/93 MOONEY ALL US EMPLOYEES BY CO (SALARY) PRT 1 WED 09/29/93 PR-4388-07-001-00 038-SA-U-C- ACTIVE EMPLS-PIA (021-00 & 021-04) RPT P PRCALL 16:04 - ---------------------------------------------------------------------------------------------------------------------------------- - - HIRE TERM ANNUAL LAST NAME FIRST NAME EMPLOYEE # DATE DATE SALARY DEPARTMENT SERVICE POSITION CO CL - ---------------------------------------------------------------------------------------------------------------------------------- - - PARADISE ISLAND AIRLINES, INC. US$ SOUTHERN MOORE JOY B ###-##-#### 05/01/91 17.7 ADMINISTRATION GENERAL LEDGER OFFICE 021 00 US T MUNOZ RUBEN 000-00-0049 11/08/74 26.2 MECHANIC ICP EARNINGS MECHANIC 021 00 US A MUNROE TROY M. ###-##-#### 02/06/86 24.6 MECHANIC ICP EARNINGS MECHANIC 021 00 US A NEASMAN JANETTE M. ###-##-#### 06/01/92 13.3 MIAMI AIRPORT STATION TICKETING 021 00 US A NEMEROFF GARY M. ###-##-#### 01/07/93 10.9 FLL AIRPORT PAYROLL LINE SERVICE 021 00 US A NUNN GREGORY WM. ###-##-#### 11/11/91 23.9 REPAIR STATION PAYROLL MECHANICS 021 00 US A O'BRIEN MELISSA V. ###-##-#### 01/22/93 11.2 FLIGHT GENERAL LEDGER FLIGHT ATTENDANTS 021 00 US I OATES KENNETH W. ###-##-#### 04/03/89 21.2 MAINTENANCE GENERAL LEDGER STOCKROOM 021 00 US A OSHINSKI LORI L. ###-##-#### 01/22/93 11.2 FLIGHT GENERAL LEDGER FLIGHT ATTENDANTS 021 00 US A PANZARELLA PHILIP J. ###-##-#### 09/05/93 20.8 MECHANIC ICP EARNINGS MECHANIC 021 00 US A PASCUAL OSWALD A. ###-##-#### 12/07/92 11.7 FLIGHT GENERAL LEDGER DASH 7 - 1ST OFF 021 00 US A PECORA LISA A. ###-##-#### 03/19/93 11.7 FLIGHT GENERAL LEDGER DASH 7 - 1ST OFF 021 00 US A PENNERMAN REGINALD A. ###-##-#### 06/02/93 10.9 MIAMI AIRPORT STATION LINE SERVICE 021 00 US A PHAIR RAYMOND ###-##-#### 03/12/93 20.8 MECHANIC ICP EARNINGS MECHANIC 021 00 US A PINHEIRO VICTOR ###-##-#### 06/03/85 26.0 REPAIR STATION PAYROLL STORES 021 00 US A PLUMMER CHRISTOPHER L. ###-##-#### 12/04/91 11.7 FLIGHT GENERAL LEDGER DASH 7 - 1ST OFF 021 00 US A PLUMMER GABRIEL S. ###-##-#### 07/10/89 12.3 FLIGHT GENERAL LEDGER FLIGHT ATTENDANTS 021 00 US A POE ANN ###-##-#### 04/01/91 12.1 FLIGHT GENERAL LEDGER DASH 7 - 1ST OFF 021 00 US A POSTELL CARLO ###-##-#### 07/14/86 40.0 MAINTENANCE GENERAL LEDGER ADMINISTRATION 021 00 US A PRESBURG JOHN W. ###-##-#### 07/02/90 110.0 ADMINISTRATION GENERAL LEDGER EXEC. V.P./C.E.O. 021 00 US A PROPHETE GARY ###-##-#### 08/30/90 11.2 MIAMI AIRPORT STATION LINE SERVICE 021 00 US A RAMKISSOON CHRISTOPHER R. ###-##-#### 04/20/92 10.9 MIAMI AIRPORT STATION LINE SERVICE 021 00 US A REYES JAVIER J. ###-##-#### 03/24/93 20.8 MECHANIC ICP EARNINGS MECHANIC 021 00 US A RHODD ALWYN K. ###-##-#### 04/08/91 11.8 MECHANIC ICP EARNINGS MECHANIC 021 00 US A RIBOTT ANGEL H. ###-##-#### 12/18/90 12.3 MECHANIC ICP EARNINGS MECHANIC 021 00 US A RIESDORPH HUGH H. ###-##-#### 10/13/80 24.2 FLIGHT GENERAL LEDGER DASH 7 CAPTAIN 021 00 US A RODRIGUEZ GUSTAVO A. ###-##-#### 03/19/93 11.7 FLIGHT GENERAL LEDGER DASH 7 - 1ST OFF 021 00 US A RONGA MARK A. ###-##-#### 06/13/91 24.7 MECHANIC ICP EARNINGS MECHANIC 021 00 US A SATKOWSKI DAVID J. ###-##-#### 04/17/93 20.8 MECHANIC ICP EARNINGS MECHANIC 021 00 US A SCHACHLEITER JOHN W. ###-##-#### 03/06/89 46.8 FLIGHT GENERAL LEDGER DASH 7 CAPTAIN 021 00 US A SCHAEFFER KENNETH BRYAN ###-##-#### 03/19/93 11.7 FLIGHT GENERAL LEDGER DASH 7 - 1ST OFF 021 00 US A SERGE R. ALEXANDER ###-##-#### 04/25/88 20.1 FLIGHT GENERAL LEDGER DASH 7 CAPTAIN 021 00 US A SERRA KENNETH M. ###-##-#### 08/31/87 25.8 MECHANIC ICP EARNINGS MECHANIC 021 00 US A SHAVER WENDY A. ###-##-#### 02/10/86 30.1 MECHANIC ICP EARNINGS MECHANIC 021 00 US A SILVERMAN LAWRENCE A. ###-##-#### 11/20/92 10.9 FLL AIRPORT PAYROLL LINE SERVICE 021 00 US A SMITH MICHAEL LLOYD ###-##-#### 11/15/82 27.3 MAINTENANCE GENERAL LEDGER GROUND SUPPORT 021 00 US A SPURRIER WADE ###-##-#### 12/04/91 11.7 FLIGHT GENERAL LEDGER DASH 7 -1ST OFF 021 00 US A STEVENS KAREN E. ###-##-#### 02/06/89 12.6 FLIGHT GENERAL LEDGER FLIGHT ATTENDANTS 021 00 US A STRAVINO KAREN ###-##-#### 02/06/89 13.4 FLIGHT GENERAL LEDGER FLIGHT ATTENDANTS 021 00 US X SUTTON WALTER S. ###-##-#### 11/25/91 23.9 REPAIR STATION PAYROLL MECHANICS 021 00 US A TACIE ROSEMARY LYNNE ###-##-#### 02/06/89 13.1 FLIGHT GENERAL LEDGER FLIGHT ATTENDANTS 021 00 US A THURUTHUMALILMATHEW M. ###-##-#### 12/18/92 12.5 MAINTENANCE GENERAL LEDGER STOCKROOM 021 00 US A TORRES ANTONIO F. ###-##-#### 01/30/93 10.9 MIAMI AIRPORT STATION LINE SERVICE 021 00 US A TRIBOLETTI DANIEL ###-##-#### 05/22/89 12.7 FLIGHT GENERAL LEDGER DASH 7 - 1ST OFF 021 00 US A VASQUEZ HENRY ###-##-#### 12/04/91 11.7 FLIGHT GENERAL LEDGER DASH 7 - 1ST OFF 021 00 US A VERMEULEN SALLY G. ###-##-#### 09/17/90 11.5 FLIGHT GENERAL LEDGER FLIGHT ATTENDANTS 021 00 US A VICTORIA CARLOS H. ###-##-#### 01/02/89 16.9 MIAMI AIRPORT STATION LINE SERVICE 021 00 US A
- ---------------------------------------------------------------------------------------------------------------------------------- - - RESORTS INT'L INC. PAYROLL COM 0 10/93 PAGE 4 US$ MIAMI RESORTS INTERNATIONAL INC. LAS 0 SUN PE 10/03/93 VICTORIA ALL US EMPLOYEES BY CO (SALARY) PRT 1 WED 09/29/93 PR-4388-07-001-00 038-SA-U-C- ACTIVE EMPLS-PIA (021-00 & 021-04) RPT P PRCALL 16:04 - ---------------------------------------------------------------------------------------------------------------------------------- - - HIRE TERM ANNUAL LAST NAME FIRST NAME EMPLOYEE # DATE DATE SALARY DEPARTMENT SERVICE POSITION CO CL - ---------------------------------------------------------------------------------------------------------------------------------- - - PARADISE ISLAND AIRLINES, INC. US$ SOUTHERN VIEIRA DENNIS P. ###-##-#### 10/28/91 25.0 REPAIR STATION PAYROLL MECHANICS 021 00 US A WAGAN BRENDICIA ###-##-#### 07/03/89 13.5 MIAMI AIRPORT STATION TICKETING 021 00 US A WALKUP JOYCE N. ###-##-#### 06/06/89 13.5 FLL AIRPORT STATION TICKETING 021 00 US A WEBB DEBBIE M. ###-##-#### 06/12/89 65.0 ADMINISTRATION GENERAL LEDGER V.P. ADMIN/SALES 021 00 US A WENDL DANIEL J. ###-##-#### 12/26/88 20.1 FLIGHT GENERAL LEDGER DASH 7 CAPTAIN 021 00 US A WESTON SUSAN C. ###-##-#### 05/15/89 12.3 FLIGHT GENERAL LEDGER FLIGHT ATTENDANTS 021 00 US A WHALEN BARBARA ###-##-#### 09/17/90 11.5 FLIGHT GENERAL LEDGER FLIGHT ATTENDANTS 021 00 US A WHEATLE GERVAISE M. ###-##-#### 04/08/93 12.5 MAINTENANCE GENERAL LEDGER STOCKROOM 021 00 US A WHITEHEAD YVONNE J. ###-##-#### 03/09/89 16.3 FLL AIRPORT STATION TICKETING 021 00 US A WILEY ROBERT G. ###-##-#### 05/30/85 23.6 MECHANIC ICP EARNINGS MECHANIC 021 00 US I WOIDA JAMES F. ###-##-#### 09/29/86 21.1 FLIGHT GENERAL LEDGER DASH 7 CAPTAIN 021 00 US A WRZOSEK PETER J. ###-##-#### 08/21/92 10.9 FLL AIRPORT PAYROLL LINE SERVICE 021 00 US A COMPANY TOTAL 153 - ---------------------------------------------------------------------------------------------------------------------------------- - - PARADISE ISLAND AIRLINES, INC. US$ ACCOUNTING PERSONNEL ADAMS ALICE L. ###-##-#### 03/02/92 17.7 AIRLINE ACCT. ACCOUNTING INTER. ACCOUNTANT 021 00 US A ALLEN PATRICIA A. ###-##-#### 01/08/92 16.1 AIRLINE ACCT. ACCOUNTING ADMIN. ASST. 021 00 US A COCCARO SHARON RENEE ###-##-#### 05/19/91 15.7 AIRLINE ACCT. ACCOUNTING ACCOUNTING CLERK 021 00 US A FARRINGTON AMY L. ###-##-#### 09/02/86 27.8 AIRLINE ACCT. ACCOUNTING SR. ACCOUNTANT 021 00 US T HALL KATHLEEN A. ###-##-#### 01/19/87 18.0 AIRLINE ACCT. ACCOUNTING ACCOUNTANT 021 00 US A KIRBY DEBORAH L. ###-##-#### 11/18/80 50.0 AIRLINE ACCT. ACCOUNTING MANAGER 021 00 US A LEZAMA SANDRA HELENA ###-##-#### 04/08/91 24.0 AIRLINE ACCT. ACCOUNTING ACCOUNTING CLERK 021 00 US I MCLEAN RICHARD ###-##-#### 05/12/92 18.7 AIRLINE ACCT. ACCOUNTING ACCOUNTING CLERK 021 00 US A MCRAE PATRICIA P. ###-##-#### 03/03/86 19.3 AIRLINE ACCT. ACCOUNTING STAFF ACCOUNTANT 021 00 US A PEREZ OSCAR L. ###-##-#### 04/23/90 15.0 AIRLINE ACCT. ACCOUNTING ACCOUNTING CLERK 021 00 US A SERRA LEISY ###-##-#### 10/10/88 13.4 AIRLINE ACCT. ACCOUNTING CLERK 021 00 US A WAGNER, JR. G. LEE ###-##-#### 10/04/90 21.6 AIRLINE ACCT. ACCOUNTING STAFF ACCOUNTANT 021 00 US A WILKS BARBARA E. ###-##-#### 08/05/91 24.7 AIRLINE ACCT. ACCOUNTING INTER. ACCOUNTANT 021 00 US A WILLIAMS JEAN D. ###-##-#### 03/21/88 20.1 AIRLINE ACCT. ACCOUNTING AGENCY ACCOUNTANT 021 00 US A WILLIAMS WINSTON V. ###-##-#### 09/06/93 24.0 AIRLINE ACCT. ACCOUNTING STAFF ACCOUNTANT 021 00 US A WRIGHT GLORIA C. ###-##-#### 07/17/89 15.7 AIRLINE ACCT. ACCOUNTING ACCOUNTING CLERK 021 00 US A COMPANY TOTAL 16 3,308.0 - ---------------------------------------------------------------------------------------------------------------------------------- - - ALL COMPANIES 169
Schedule 6.09(a) PARADISE EMPLOYEES I. SEVERANCE BENEFITS Non-management employees receive 1 week salary for each year of service. Directors and officers receive 2 weeks salary for each year of service. II. PARADISE EMPLOYEES Reference is made to the agreements and instruments listed in Schedule 6.09 and said Schedule 6.09 is hereby incorporated by reference in this Schedule 6.09(a). Schedule 6.09(c) LIST OF OFFICERS & DIRECTORS
OFFICE DIRECTOR DIRECTOR DIRECTOR PRESIDENT SR. VICE VICE VICE TREASURER SECRETARY ASST. PRESIDENT PRESIDENT PRESIDENT SECRETARY RIB V-Wallace Farrington Hudson V-Wallace Williams Kearney O'Donnell Bowden Friedman Farrington Farrington Whitney Whitney McKoy McKoy IHC Williams Whitney Farrington Williams Farrington Ratzel O'Donnell Bowden Friedman Kearney Farrington [Sastre] (Food & Bev) PEL McKoy Whitney Farrington Crocket Kearney O'Donnell Bowden Friedman Wyre Farrington Casino Marketing) PIL V-Wallace Whitney Farrington V-Wallace Farrington Carey O'Donnell Bowden Friedman (Utilities) Farrington Williams Kearney PBIL V-Wallace Kearney Farrington V-Wallace Farrington Kearney O'Donnell Bowden Friedman Williams Farrington BDL Whitney Farrington Farrington Kearney O'Donnell Bowden Friedman Farrington PCL Whitney Williams Farrington Williams Farrington O'Donnell Bowden Friedman Farrington PIBMCL Williams Whitney Farrington Farrington O'Donnell Bowden Friedman Farrington PSSL V-Wallace Thompson Farrington V-Wallace Farrington Thompson Albury Parker Farrington
Schedule 10.01(n) MATERIAL CONTRACT CONSENTS 1. Paradise Island Airlines Ft. Lauderdale Airport Terminal Counter and Gate Space Lease. 2. Paradise Island Airlines Ft. Lauderdale Ground Lease (Hangar). 3. Miami Airport Lease (baggage and ticket counter space). 4. West Palm Beach Airport Ground Handling Agreement with US Air. ================================================================= STANDBY DISTRIBUTION AGREEMENT between RESORTS INTERNATIONAL, INC. and P. I. RESORTS LIMITED ----------------------------------------- Dated as of October __, 1993 ------------------------------------------ Purchase of Stock of Resorts International (Bahamas) 1984 Limited, and certain assets of RII Paradise Subsidiaries ================================================================= TABLE OF CONTENTS ----------------- ARTICLE I Definitions . . . . . . . . . . . . . . . . 2 SECTION 1.01. Definitions . . . . . . . . . . . . . . . . 2 ARTICLE II Purchase and Sale of the Shares and the RII Paradise Assets . . . . . . . . 3 SECTION 2.01. Transfer of the Shares . . . . . . . . . . 3 SECTION 2.02. Purchase and Sale of the Shares, the RII Real Estate Assets and the RII Paradise Assets . . . . . . . . . . . . . . 3 SECTION 2.03. Delivery of Certificates and Other Instruments of Transfer . . . . . . . . . . 3 SECTION 2.04. Purchase Price . . . . . . . . . . . . . . 4 SECTION 2.05. Preparation of the Closing Date Balance Sheet and Operations Statement; Adjustments . . . . . . . . . . . . . . . . 4 SECTION 2.06. Closing . . . . . . . . . . . . . . . . . . 6 SECTION 2.07. Third-Party Consents . . . . . . . . . . . 6 SECTION 2.08. Further Assurances . . . . . . . . . . . . 7 SECTION 2.09. Power of Attorney, etc . . . . . . . . . . 8 ARTICLE III Assumption of Certain Liabilities . . . . . 9 SECTION 3.01. Assumed Liabilities . . . . . . . . . . . . 9 SECTION 3.02. Liabilities Not Assumed . . . . . . . . . . 9 SECTION 3.03. No Successor . . . . . . . . . . . . . . . 10 SECTION 3.04. Indemnification . . . . . . . . . . . . . . 10 ARTICLE IV Representations and Warranties of RII . . . 11 SECTION 4.01. Incorporation of Representations and Warranties. . . . . . . . . . . . . . 11 SECTION 4.02. Organization and Good Standing of Buyer . . . . . . . . . . . . . . . . . . . 12 SECTION 4.03. Authorization of Buyer . . . . . . . . . . 12 SECTION 4.04. Buyer: No Conflict; Required Filings and Consents . . . . . . . . . . . 12 SECTION 4.05. Buyer Shares . . . . . . . . . . . . . . . 13 ARTICLE V Additional Agreements . . . . . . . . . . . 14 SECTION 5.01. Conduct of Paradise Island Business Pending the Closing . . . . . . . . . . . . 14 SECTION 5.02. Securities Laws . . . . . . . . . . . . . . 14 SECTION 5.03. Documents and Motions to be Filed by RII and GRI . . . . . . . . . . . . . . . . 15 SECTION 5.04. Reorganization Proceedings . . . . . . . . 15 SECTION 5.05. Access to Information. . . . . . . . . . 16 SECTION 5.06. Notification of Certain Matters . . . . . . 16 SECTION 5.07. Further Action; Reasonable Efforts . . . . 17 SECTION 5.08. Employee Benefit Matters . . . . . . . . . 17 SECTION 5.09. Bulk Transfer Laws . . . . . . . . . . . . 19 SECTION 5.10. Intercompany Accounts, Contracts Guaranties and Indebtedness . . . . . . . . 19 SECTION 5.11. Reorganization Plan Solicitation Documents . . . . . . . . . . . . . . . . . 20 SECTION 5.12. Reorganization Proceedings . . . . . . . . 20 SECTION 5.13. Airline Governmental Consents . . . . . . . 21 SECTION 5.14. Comfort Letter . . . . . . . . . . . . . . 22 SECTION 5.15. Attorneys Fees . . . . . . . . . . . . . . 22 SECTION 5.16. Transfer Taxes . . . . . . . . . . . . . . 22 SECTION 5.17. Actions on Behalf of Buyer; Knowledge of Buyer . . . . . . . . . . . . . . . . . 22 SECTION 5.18. Articles of Association . . . . . . . . . . 23 SECTION 5.19. Representations and Warranties . . . . . . 23 SECTION 5.20. Operation of Buyer and Buyer Subsidiaries . . . . . . . . . . . . . . . 23 SECTION 5.21. Insurance Proceeds . . . . . . . . . . . . 23 SECTION 5.22. Acquisition Proposals . . . . . . . . . . . 24 ARTICLE VI Conditions to the Closing . . . . . . . . 24 SECTION 6.01. Conditions to Obligations of Buyer . . . . 24 SECTION 6.02. Conditions to Obligations of RII . . . . . 27 ARTICLE VII Survival and Indemnification . . . . . . . 27 SECTION 7.01. Survival of Representations . . . . . . . . 27 SECTION 7.02. Indemnification by RII . . . . . . . . . . 28 SECTION 7.03. Notice, etc. . . . . . . . . . . . . . . . 28 SECTION 7.04. Reimbursement of Costs . . . . . . . . . . 29 SECTION 7.05. Time Limitations . . . . . . . . . . . . . 29 SECTION 7.06. Sole and Exclusive Remedy . . . . . . . . . 29 ARTICLE VIII Termination, Amendment And Waiver . . . . . 30 SECTION 8.01. Termination . . . . . . . . . . . . . . . . 30 SECTION 8.02. Rights of Termination . . . . . . . . . . . 31 SECTION 8.03. Effect of Termination . . . . . . . . . . 31 SECTION 8.04. Waiver . . . . . . . . . . . . . . . . . . 31 SECTION 8.05. Amendments . . . . . . . . . . . . . . . . 32 ARTICLE IX General Provisions . . . . . . . . . . . . 32 SECTION 9.01. Notices . . . . . . . . . . . . . . . . . . 32 SECTION 9.02. Entire Agreement; Assignment . . . . . . . 33 SECTION 9.03. Parties in Interest . . . . . . . . . . . . 34 SECTION 9.04. GOVERNING LAW . . . . . . . . . . . . . . . 34 SECTION 9.05. Headings . . . . . . . . . . . . . . . . . 34 SECTION 9.06. Counterparts . . . . . . . . . . . . . . . 34 SECTION 9.07. Specific Performance . . . . . . . . . . . 34 SECTION 9.08. JURISDICTION . . . . . . . . . . . . . . . 34 SECTION 9.09. Knowledge or Consents . . . . . . . . . . . 35 SECTION 9.10. Rights of Fidelity and TCW . . . . . . . . 35 EXHIBITS Exhibit A Comfort Letter Exhibit B Articles of Association of Buyer Exhibit C Form of Opinion of Gibson, Dunn & Crutcher Exhibit D Management Agreement STANDBY DISTRIBUTION AGREEMENT STANDBY DISTRIBUTION AGREEMENT dated as of October __, 1993 (this "Agreement"), between RESORTS INTERNATIONAL, INC., a Delaware corporation ("RII"), and P.I. RESORTS LIMITED, a Bahamian corporation ("Buyer"). WHEREAS, RII has entered into that certain Purchase Agreement, dated as of October __, 1993 (the "Sun Purchase Agreement"), by and between RII and Sun International Hotels Limited ("SIHL") providing for the sale of the Shares to SIHL on the terms and conditions set forth therein; WHEREAS, in connection with the proposed sale of the Shares to SIHL, the Sun Purchase Agreement further contemplates that SIHL will cause certain subsidiaries thereof to acquire the RII Real Estate Assets from RII and the RII Paradise Assets from the RII Paradise Subsidiaries on the terms and conditions set forth therein; WHEREAS, Buyer is, as of the date hereof, a wholly- owned subsidiary of RII; WHEREAS, if and only if the transactions contemplated by the Sun Purchase Agreement are not consummated in accordance with the terms thereof and the Sun Purchase Agreement is terminated in accordance with the terms thereof, Buyer desires to acquire the Shares from RII, and RII desires to sell the Shares to Buyer on the terms and conditions set forth herein (such purchase, the "Stock Acquisition"); WHEREAS, in connection with the Stock Acquisition, Buyer desires to cause the Buyer Subsidiaries to acquire the RII Real Estate Assets from RII and the RII Paradise Assets from the RII Paradise Subsidiaries, and RII desires to sell the RII Real Estate Assets and to cause the RII Paradise Subsidiaries to sell the RII Paradise Assets to the Buyer Subsidiaries on the terms and conditions set forth herein (such purchase, the "Asset Acquisition"); WHEREAS, in connection with the Stock Acquisition and the Asset Acquisition (collectively, the "Acquisitions"), RII and GRI will file the Reorganization Plan with the Bankruptcy Court, providing, INTER ALIA, under certain terms and conditions to be set forth in the Reorganization Plan (including the condition that the Sun Purchase Agreement shall have terminated in accordance with the terms thereof), for the (i) sale of the Shares to Buyer, (ii) sale of the RII Paradise Assets and the RII Real Estate Assets to the Buyer Subsidiaries, (iii) distribution to holders of the Old Series Notes (as defined in the Reorganization Plan) of RII of the Buyer Shares and (iv) the other distributions to holders of the Old Series Notes of RII to be made pursuant to the Reorganization Plan; WHEREAS, the respective Boards of Directors of each of RII and Buyer deem it advisable and in the best interests of such corporations that, if the Sun Purchase Agreement terminates in accordance with its terms, the Stock Acquisition and Asset Acquisition occur upon the terms and subject to the conditions set forth herein and in the Reorganization Plan; NOW, THEREFORE, in consideration of the premises and the mutual covenants, agreements, representations and warranties herein contained, and subject to the conditions hereinafter set forth, and for the purpose of prescribing the terms and conditions of the Stock Acquisition and Asset Acquisition, if the Sun Purchase Agreement terminates in accordance with its terms, the parties hereto agree as follows: ARTICLE I DEFINITIONS SECTION 1.01. DEFINITIONS. Capitalized terms used but not defined herein shall have the meanings ascribed to those terms in Appendix A to the Sun Purchase Agreement or elsewhere in the Sun Purchase Agreement, except that (a) all references to "Buyer" therein and herein shall be deemed to refer to Paradise Island Resorts Limited, (b) all references therein and herein to "Buyer Subsidiaries" shall be deemed to refer to direct or indirect wholly-owned Subsidiaries of Paradise Island Resorts Limited to be formed to buy the RII Paradise Assets from the RII Paradise Subsidiaries and the RII Real Estate Assets from RII, (c) all references herein to the "Closing" shall be deemed to refer to the closing of the Acquisitions under this Agreement and (d) as otherwise expressly required by the context hereof. 2 ARTICLE II PURCHASE AND SALE OF THE SHARES AND THE RII PARADISE ASSETS SECTION 2.01. TRANSFER OF THE SHARES. Prior to Closing, RII may, with the consent of Fidelity and TCW, cause GRI to transfer the Shares to RII in a transaction reasonably acceptable to Fidelity and TCW and their counsel. SECTION 2.02. PURCHASE AND SALE OF THE SHARES, THE RII REAL ESTATE ASSETS AND THE RII PARADISE ASSETS. On the terms and subject to the conditions of this Agreement, on the Closing Date (a) RII agrees to sell, transfer and deliver, or cause GRI to sell, transfer and deliver, to Buyer, and Buyer agrees to purchase and accept from RII or GRI, as applicable, the Shares, free and clear of all Encumbrances, other than those Encumbrances arising from acts of Buyer or its Affiliates from and after (but not prior to) the Closing and (b) RII shall, and shall cause each RII Paradise Subsidiary to, sell, convey, assign, transfer and deliver to a Buyer Subsidiary designated by Buyer, and Buyer shall cause each such Buyer Subsidiary to purchase and accept from RII and each such RII Paradise Subsidiary, all right, title and interest of RII in the RII Real Estate Assets and all right, title and interest of each such RII Paradise Subsidiary in the RII Paradise Assets, free and clear of all Encumbrances except Permitted Encumbrances and those Encumbrances arising from acts of Buyer or its Affiliates from and after (but not prior to) the Closing. SECTION 2.03. DELIVERY OF CERTIFICATES AND OTHER INSTRUMENTS OF TRANSFER. On the Closing Date (a) RII or GRI, as applicable, shall deliver to Buyer certificates representing the Shares together with stock powers executed in blank and (b) RII shall, and shall cause the RII Paradise Subsidiaries to, deliver to the Buyer Subsidiaries such specific assignments, bills of sale (to be in a form reasonably satisfactory to Fidelity, TCW and RII), endorsements, deeds and other good and sufficient instruments of conveyance and transfer, in form and substance reasonably satisfactory to Fidelity and TCW and their counsel, as shall be effective to vest in the Buyer Subsidiaries title to all the RII Paradise Assets and the RII Real Estate Assets. All right, title and interest of RII in the RII Real Estate Assets and of the RII Paradise 3 Subsidiaries in the RII Paradise Assets shall pass and delivery of the RII Real Estate Assets and the RII Paradise Assets shall take place in such location or locations as Fidelity, TCW and RII shall determine. SECTION 2.04. PURCHASE PRICE. As consideration for the transfer of the Shares, the RII Real Estate Assets and the RII Paradise Assets (the "Purchase Price"), Buyer shall cause on the Closing Date (a) the 5,000,000 Ordinary Shares, par value $.01 per share, of Buyer (the "Buyer Shares") to be delivered, on behalf of RII and the RII Paradise Subsidiaries, to the Disbursing Agent designated pursuant to the Reorganization Plan or pursuant to an order of the Bankruptcy Court for purposes of making distributions thereunder to the holders of the Old Series Notes of RII and (b) the Buyer Subsidiaries to assume the Assumed Liabilities in accordance with Article III hereof. The Purchase Price shall be allocated as set forth on Schedule 2.04 to the Sun Purchase Agreement. SECTION 2.05. PREPARATION OF THE CLOSING DATE BALANCE SHEET AND OPERATIONS STATEMENT; ADJUSTMENTS. (a) Within 45 days after the Closing Date, RII shall cause to be prepared, in accordance with the books and records of account of the Paradise Island Business and a physical inventory, and shall deliver, an audited balance sheet for the Paradise Island Business as of the Closing Date (the "Preliminary Closing Date Balance Sheet") and an audited statement of operations for the Paradise Island Business for the period beginning at 12:01 a.m. on January 1, 1994, and ending at the close of business on the Closing Date (the "Preliminary Closing Date Operations Statement"), accompanied by an opinion of Ernst & Young thereon to the effect that such balance sheet and statement of operations present fairly in all material respects the financial position and results of operation of the Paradise Island Business at such date and for such period in conformity with GAAP and the preparation of the June 30 Balance Sheet and the statement of operations for the six months ending June 30, 1993. Representatives of Buyer's auditors, which will be a nationally- recognized firm of independent accountants, shall be entitled to review the scope of the audit in advance thereof as well as the work of Ernst & Young as it progresses and all drafts of the Preliminary Closing Date Balance Sheet and the Preliminary Closing Date Operations Statement. Within 10 days after the delivery to Buyer of the Preliminary Closing Date Balance Sheet and the Preliminary Closing Date Operations Statement, Buyer shall 4 notify RII if it disagrees in any respect with such Preliminary Closing Date Balance Sheet or Preliminary Closing Date Operations Statement. If Buyer does disagree, Buyer and RII shall promptly attempt to settle such disagreement. If Buyer and RII are unable to resolve such disagreement within 7 days after such notice, such disagreement shall be referred to the Accounting Arbitrator for a determination, which shall be final and binding on the parties hereto for all purposes of this Agreement. The fees of the Accounting Arbitrator shall be allocated between Buyer and RII by the Accounting Arbitrator based on its good faith view as to which party's positions were more reasonable. The Preliminary Closing Date Balance Sheet and Preliminary Closing Date Operations Statement as agreed to by the parties or as adjusted pursuant to the determination of the Accounting Arbitrator are herein referred to as the "Closing Date Balance Sheet" and the "Closing Date Operations Statement". Buyer and RII agree that if prior to 35 days after the Closing Date there has not been a resolution of the dispute (the "Union Contract Dispute") between the Company and the Bahamas Hotel Catering and Allied Workers Union (the "Union") with respect to amounts claimed by the Union to be owed by the Company through December 31, 1993, under the collective bargaining agreement dated as of January 7, 1990, between the Bahamas Hotel Employers Association and the Union, then RII and Buyer shall agree as to the amount they believe it would reasonably take to settle the Union Contract Dispute (the "Union Contract Dispute Amount"). If Buyer and Seller are unable to agree on the Union Contract Dispute Amount by the fortieth day after the Closing Date, then the Union Contract Arbitrator shall determine such amount prior to the sixtieth day after the Closing Date, and such determination shall be final and binding on the parties hereto. The Union Contract Dispute Amount, as agreed to by the parties or determined by the Union Contract Arbitrator, shall appear on the Preliminary Closing Date Balance Sheet and the Closing Date Balance Sheet as a Current Liability. Prior to the Closing Date, RII shall, as between the parties, control the resolution of the Union Contract Dispute; PROVIDED, HOWEVER, RII shall consult with Fidelity and TCW with respect thereto and allow a representative of Fidelity or TCW to be present when reasonable in all material negotiations in connection therewith. (b) Within three Business Days after the Closing Date, Buyer and RII shall jointly prepare a cash statement setting forth the amount of Adjusted Cash of the Paradise 5 Island Business as of the Closing Date. If the Adjusted Cash of the Paradise Island Business shown on such cash statement shall be less than the Target Adjusted Cash, on the fourth Business Day after the Closing Date RII shall pay to Buyer the difference in immediately available funds. (c) If the Adjusted Working Capital of the Paradise Island Business plus any Adjusted Cash in excess of $5 million shown on the Closing Date Balance Sheet shall be greater than the Target Adjusted Working Capital plus the EBITDA Adjustment, on the Adjustment Date (as defined below) Buyer shall pay to RII the difference in immediately available funds, together with interest on such amount at the Applicable Rate from and including the Closing Date to but excluding the Adjustment Date. If the Adjusted Working Capital of the Paradise Island Business plus any Adjusted Cash in excess of $5 million shown on the Closing Date Balance Sheet shall be less than the Targeted Adjusted Working Capital plus the EBITDA Adjustment, on the Adjustment Date RII shall pay to Buyer the difference in immediately available funds, together with interest on such amount at the Applicable Rate from and including the Closing Date to but excluding the Adjustment Date. For purposes of the foregoing, "Adjustment Date" shall mean (i) if Buyer does not disagree in any respect with the Preliminary Closing Date Balance Sheet, the 10th day following Buyer's receipt of the Preliminary Closing Date Balance Sheet or (ii) if Buyer shall disagree in any respect with the Preliminary Closing Date Balance Sheet, the third Business Day following either the resolution of such disagreement by the parties or a final determination by the Accounting Arbitrator in accordance with Section 2.05(a). SECTION 2.06. CLOSING. The Closing of the transactions contemplated by this Agreement shall take place at the offices of Gibson Dunn & Crutcher, 200 Park Avenue, New York, New York, on a date to be agreed upon by RII, Fidelity and TCW, as promptly as practicable following the satisfaction or waiver of all of the conditions set forth in Article VI hereof, but in no event later than 10 Business Days thereafter. SECTION 2.07. THIRD-PARTY CONSENTS. To the extent that any Contract relating to the RII Paradise Assets to be assumed by a Buyer Subsidiary for which assignment to such Buyer Subsidiary is provided for herein is not assignable without the consent of another party (a "Non-Assignable Contract"), this Agreement shall not constitute an assignment or an 6 attempted assignment thereof if such assignment or attempted assignment would constitute a breach thereof. RII and Buyer agree to use their best efforts (without the payment of money) to obtain the consent of such other party to the assignment of any such Contract to the relevant Buyer Subsidiary in all cases in which such consent is or may be required for such assignment. If any such consent shall not be obtained, RII agrees to cooperate with Buyer in any reasonable arrangement (at the cost and for the account of such Buyer Subsidiary) designed to provide for the relevant Buyer Subsidiary the benefits intended to be assigned to such Buyer Subsidiary under the relevant Contract, including enforcement of any and all rights of the relevant RII Paradise Subsidiary against the other party thereto arising out of the breach or cancellation thereof by such other party or otherwise. If and to the extent that such arrangement cannot be made, except as provided in the next sentence, neither Buyer nor any Buyer Subsidiary shall have any obligation with respect to any such Contract. If PIA is unable to assign to a designated Buyer Subsidiary the Ft. Lauderdale Ground Space Lease (Hangar) with Broward County, Florida (the "Hangar Lease"), or is otherwise unable to arrange for such designated Buyer Subsidiary to obtain the benefits of the Hangar Lease, then (i) PIA shall use its reasonable best efforts to sub-lease the Hangar Lease and (ii) Buyer and PIA shall each be responsible for 50% of the obligations of lessee under the Hangar Lease and shall each be entitled to receive 50% of the proceeds relating to any sublease of the Hangar Lease. SECTION 2.08. FURTHER ASSURANCES. From and after the Closing, upon request of Buyer, RII shall, and shall cause any of its Affiliates formerly owning an interest in the Paradise Island Assets to, execute, acknowledge and deliver all such further acts, assurances, deeds, assignments, transfers, conveyances and other instruments and papers as may be reasonably required to sell, assign, transfer, convey and deliver (at Buyer's expense, unless otherwise provided in this Agreement) to and vest in Buyer, the Company or its Subsidiaries or the Buyer Subsidiaries, as the case may be, and more fully protect their respective right, title and interest in and employment of, the Shares and all the Paradise Island Assets and the RII Real Estate Assets and as otherwise may be appropriate to carry out the transactions contemplated in this Agreement. (b) From and after the Closing, upon request of RII, Buyer shall, and shall cause any of the Buyer 7 Subsidiaries or any Subsidiaries of Buyer to, execute, acknowledge and deliver all such further acts, assurance, assumptions and other instruments and papers as may be reasonably required (i) in respect of the assumption by the Buyer Subsidiaries of the Assumed Liabilities, and (ii) as otherwise may be appropriate to carry out the transactions contemplated in this Agreement. SECTION 2.09. POWER OF ATTORNEY, ETC. (a) Effective on the Closing Date, RII shall cause each RII Paradise Subsidiary to constitute and appoint, and will cause any Affiliate owning an interest in any RII Paradise Assets to constitute and appoint, the applicable Buyer Subsidiary designated by Buyer and its successors, legal representatives and assigns, the true and lawful attorneys of such RII Paradise Subsidiary and such Affiliates, with full power of substitution, in the name of such RII Paradise Subsidiary and such Affiliates, but on behalf of and for the benefit of such Buyer Subsidiary and its successors, legal representatives and assigns, and at the expense of such Buyer Subsidiary: (i) to demand and receive from time to time any and all of the RII Paradise Assets and to make endorsements and give receipts and releases for and in respect of the same and any part thereof; (ii) to institute, prosecute, compromise and settle any and all proceedings at law, in equity or otherwise that any Buyer Subsidiary and its successors, legal representatives or assigns may deem proper in order to collect, assert or enforce any claim, right or title of any kind in or to the RII Paradise Assets; (iii) to defend or compromise any or all actions, suits or proceedings in respect of any of the RII Paradise Assets; and (iv) to do all such acts and things in relation to the matters set forth in the preceding clauses (i) through (iii) as each such Buyer Subsidiary and its successors, legal representatives or assigns shall deem desirable. RII hereby agrees that the appointment to be hereby made and the powers to be hereby granted are coupled with an interest and are and shall be irrevocable by it in any manner or for any reason. RII shall cause each RII Paradise Subsidiary to deliver to the applicable Buyer Subsidiary designated by Buyer at Closing an acknowledged power of attorney to the foregoing effect executed by each such RII Paradise Subsidiary and any Affiliate selling any of the Paradise Island Assets. Buyer agrees to indemnify and hold RII and its Affiliates harmless from and against any Losses resulting from Buyer's improper use of the power of attorney described in this Section 2.09(a). 8 (b) Effective upon the Closing Date Buyer and the Buyer Subsidiaries shall have the right to receive and open all mail, packages and other communications which relate to the Paradise Island Business addressed to any of the RII Paradise Subsidiaries. RII agrees promptly to deliver to Buyer and the Buyer Subsidiaries any mail, packages or other communications received directly or indirectly by RII or any of its Affiliates that relate to the Paradise Island Business. Buyer and the Buyer Subsidiaries shall have the right and authority to collect, for its own account, all receivables and other items which shall be transferred or are intended to be transferred to Buyer and the Buyer Subsidiaries as provided in this Agreement, and to endorse with the name of RII or any of its Affiliates any checks or drafts received on account of any such receivables or other items, and RII shall promptly transfer or deliver, or cause its Affiliates to transfer or deliver, to Buyer and the Buyer Subsidiaries any cash or other property received directly or indirectly by RII or any of its Affiliates in respect of such receivables or other items including any amounts payable as interest. Buyer and the Buyer Subsidiaries shall promptly deliver to RII packages and other communications received by them which relate to RII or any of its Affiliates but do not relate to the Paradise Island Business. ARTICLE III ASSUMPTION OF CERTAIN LIABILITIES SECTION 3.01. ASSUMED LIABILITIES. Buyer shall cause designated Buyer Subsidiaries to severally assume on the Closing Date the Assumed Liabilities, and shall cause each designated Buyer Subsidiary to execute an Assumption Agreement relating to the Assumed Liabilities assumed by such designated Buyer Subsidiary. On the Closing Date, Buyer shall assume the obligations of RII under Sections 7.02(a)(vi) and (vii) of the Sun Purchase Agreement. SECTION 3.02. LIABILITIES NOT ASSUMED. Except for the Assumed Liabilities and as provided in Section 3.04 and the last sentence of Section 3.01, neither Buyer nor any Buyer Subsidiary, pursuant to this Agreement or the Assumption Agreements or otherwise, assumes, agrees to perform, pay, discharge or indemnify RII or any of its Affiliates against, or otherwise agrees to have any responsibility for, any liabilities or obligations of RII, 9 GRI or any RII Paradise Subsidiary, fixed, contingent or otherwise, known or unknown, relating to or arising out of the RII Paradise Assets, whether arising prior to, on or after the Closing. SECTION 3.03. NO SUCCESSOR. It is expressly understood that the parties intend that neither the Buyer nor any Buyer Subsidiary shall be considered a successor to any RII Paradise Subsidiary and that neither Buyer nor any Buyer Subsidiary shall have any liability except as otherwise provided in this Agreement or the Assumption Agreements. Without limiting the generality of the foregoing, neither Buyer nor any Buyer Subsidiary, pursuant to this Agreement, the Assumption Agreements or otherwise, assumes (a) any liability for or obligation with respect to (i) any Indebtedness of RII or its Affiliates or (ii) any Taxes relating to RII or its Affiliates (except Assumed Taxes), (b) any liabilities or obligations owed to RII or any of its Affiliates (except for liabilities owed to RII or any of its Affiliates under this Agreement or any agreements, certificates or other instruments delivered by Buyer or the Buyer Subsidiaries pursuant to this Agreement), and (c) any liabilities that do not constitute Assumed Liabilities. SECTION 3.04. INDEMNIFICATION. (a) From and after the Closing Date, RII and the RII Paradise Subsidiaries shall indemnify Buyer, the Buyer Subsidiaries and their respective Affiliates (each a "Buyer Indemnified Party") against, and hold them harmless from, any Losses with respect to the ownership, use or operation of the RII Paradise Assets prior to the Closing Date (other than the Assumed Liabilities), which any Buyer Indemnified Party may be requested to pay, perform or discharge at any time. No Buyer Indemnified Party shall be entitled to indemnification under this Section 3.04(a) until the date on which the aggregate amount of the claims made by Buyer Indemnified Parties is at least equal to $25,000, at which time claims may be asserted by any Buyer Indemnified Party against the indemnifying parties regardless of amount. (b) From and after the Closing Date, Buyer and the Buyer Subsidiaries shall indemnify RII, the RII Paradise Subsidiaries and their respective Affiliates (each an "RII Indemnified Party") against, and hold them harmless from, any Losses with respect to (i) the Assumed Liabilities, (ii) the ownership, use or operation of the RII Paradise Assets on or after the Closing Date, (iii) any liability or 10 obligation of the Company or any of its Subsidiaries (fixed, contingent or otherwise, known or unknown (except to the extent such liability or obligation was incurred after the date of this Agreement and in breach of Section 5.01)), which any RII Indemnified Party may be requested to pay, perform or discharge at any time and (iv) the obligations assumed by Buyer as contemplated by the last sentence of Section 3.01 hereof to pay any Buyer Expense Reimbursement to SIHL under the Sun Purchase Agreement. No RII Indemnified Party shall be entitled to indemnification under this Section 3.04(b) until the date on which the aggregate amount of the claims made by RII Indemnified Parties is at least equal to $25,000, at which time claims may be asserted by any RII Indemnified Party against the indemnifying parties regardless of the amount. (c) The provisions of Sections 7.03 and 7.04 shall apply to any indemnification under this Section 3.04. (d) The indemnification obligations of the applicable parties under this Section 3.04 shall constitute the sole and exclusive remedies of the applicable Buyer Indemnified Parties and RII Indemnified Parties, as the case may be, with respect to the matters described in this Section 3.04. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF RII RII represents and warrants to Buyer as follows: SECTION 4.01. INCORPORATION OF REPRESENTATIONS AND WARRANTIES. Each of the representations and warranties made by RII to SIHL in Sections 4.01, 4.02, 4.03, 4.04, 4.13, 4.16 and 4.22 of the Sun Purchase Agreement (but not any other representations or warranties contained in Article IV thereof) is hereby made by RII in favor of Buyer for all purposes as if such representations and warranties were fully set forth herein; PROVIDED, HOWEVER, that any such representation or warranty relating to the delivery of documents, information schedules or other materials to Buyer shall not be deemed to be satisfied hereunder unless and until RII shall have delivered such documents, information schedules or other materials to Fidelity and TCW; and PROVIDED, FURTHER, that for purposes of this Agreement clause (iii) of Section 4.03(b) of the Sun Purchase 11 Agreement shall be deemed to have been stricken in its entirety and replaced by the following: "(iii) consents and approvals required to be obtained by Buyer or RII from the government of the Commonwealth of The Bahamas in order to effectuate the transactions contemplated hereby, to operate the Paradise Island Business or to permit the public trading of the Buyer Shares when they are distributed in accordance with the Reorganization Plan, including without limitation any approvals for exchange controls required to be received from the Exchange Control Department of the Central Bank of The Bahamas (the "Bahamas Exchange Control Approval")". SECTION 4.02. ORGANIZATION AND GOOD STANDING OF BUYER. Buyer is, and each of the Buyer Subsidiaries will be at Closing, a corporation duly organized, validly existing and in good standing under the laws of the Commonwealth of the Bahamas. SECTION 4.03. AUTHORIZATION OF BUYER. Buyer has all necessary corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder. The execution and delivery of this Agreement by Buyer and the purchase of the Shares by Buyer have been, and the purchase of the RII Paradise Assets by the Buyer Subsidiaries will be at Closing, duly and validly authorized by all necessary corporate action on the part of Buyer and the Buyer Subsidiaries and no other corporate proceedings or shareholder actions on the part of Buyer or the Buyer Subsidiaries are or will be necessary to authorize this Agreement or to purchase the Shares and the RII Paradise Assets. This Agreement has been duly and validly executed and delivered by Buyer and, assuming the due authorization, execution and delivery by RII, constitutes the legal, valid and binding obligation of Buyer, enforceable against Buyer in accordance with its terms (subject as to enforcement to applicable bankruptcy, reorganization, insolvency, fraudulent transfer and moratorium and similar laws from time to time in effect affecting creditors' rights generally and to legal and equitable limitations on availability of specific performance and other equitable remedies). SECTION 4.04. BUYER: NO CONFLICT; REQUIRED FILINGS AND CONSENTS. (a) The execution and delivery of this Agreement by Buyer does not (and in the case of the Buyer Subsidiaries will not at Closing), and the performance of this Agreement by Buyer and each Buyer Subsidiary will not, (i) conflict with or violate the memorandum of association or articles of association or equivalent 12 organizational documents of Buyer or any Buyer Subsidiary, (ii) conflict with or violate any law, rule, regulation, order, judgment or decree applicable to Buyer or any Buyer Subsidiary or by which any of them or their properties is bound or affected or (iii) result in any breach of or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, or result in the creation of any Encumbrance on any of the property or assets of Buyer or any Buyer Subsidiary pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which Buyer or any Buyer Subsidiary is a party or by which any of them or their properties is bound or affected, except, in the case of this clause (iii) and clause (ii) above, for any such breaches, defaults or other occurrences which would not, individually or in the aggregate, have a Material Adverse Effect. (b) The execution and delivery of this Agreement by Buyer does not, and the performance of this Agreement by Buyer will not, require any consent, approval, authorization or permit of, or filing with or notification to, any Governmental Authority except for (i) the Confirmation Order, (ii) required filings under the HSR Act, (iii) the Airline Governmental Consents, (iv) the Governmental Consents and (v) where failure to obtain such consents, approvals, authorizations or permits, or to make such filings or notifications, would not prevent or materially delay consummation of the transactions contemplated hereby, or otherwise prevent Buyer from performing its obligations under this Agreement. SECTION 4.05. BUYER SHARES. The authorized capital stock of Buyer consists of 25,000,000 Ordinary Shares, $.01 par value per share, of which two shares are duly authorized and validly issued and outstanding, fully paid and non-assessable (the "Founder's Shares") and 10,000,000 Preference Shares, $.01 par value per share, of which no shares are issued and outstanding. As of the date hereof, RII is the registered holder of one of the Founder's Shares. RII is the sole beneficial owner of both of the Founder's Shares. The Buyer Shares upon issuance and delivery in accordance with the terms of this Agreement will be duly authorized, validly issued and outstanding, fully paid and non-assessable. The Founder's Share has not been, and the Buyer Shares will not be, issued in violation of, 13 and are not subject to, any preemptive or subscription rights. Except as set forth above, there are no shares of capital stock or other equity securities of Buyer outstanding. Except for the agreements and instruments described in Schedule 4.16(a) of the Sun Purchase Agreement, there are no outstanding warrants, options, agreements, convertible or exchangeable securities or other commitments (other than this Agreement) pursuant to which RII or any of its Affiliates is or may become obligated to issue, sell, purchase, return or redeem any shares of capital stock or other securities of Buyer or any Subsidiary of Buyer, and there are not any equity securities of Buyer or any Subsidiary of Buyer reserved for issuance for any purpose (other than the Buyer Shares). Prior to the Closing, RII will have caused Buyer to form, under the laws of the Commonwealth of The Bahamas, the Buyer Subsidiaries, and there will be one Buyer Subsidiary to purchase the assets of each RII Paradise Subsidiary hereunder. At the Closing, Buyer directly will have good and valid title to all of the outstanding shares of capital stock of each Subsidiary of Buyer, free and clear of Encumbrances, and all such shares will be duly authorized and validly issued and outstanding, fully paid and non-assessable. Buyer does not directly or indirectly own any capital stock of or other equity interests in any corporation, partnership or other entity other than the Buyer Subsidiaries. ARTICLE V ADDITIONAL AGREEMENTS SECTION 5.01. CONDUCT OF PARADISE ISLAND BUSINESS PENDING THE CLOSING. Each of the covenants and agreements made by RII to SIHL in Section 6.01 of the Sun Purchase Agreement is hereby made by RII in favor of Buyer for all purposes as if such covenants and agreements were fully set forth herein; PROVIDED, HOWEVER, that any consents required to be obtained from Buyer thereunder shall not be deemed to have been granted unless and until Fidelity and TCW shall have consented thereto in writing. SECTION 5.02. SECURITIES LAWS. Each of RII and Buyer shall make all filings under the Securities Act and the Exchange Act necessitated by the provisions of this Agreement. RII shall cause the Buyer Shares to be registered under the Exchange Act and listed on the American 14 Stock Exchange or authorized for quotation on the NASDAQ National Market System. SECTION 5.03. DOCUMENTS AND MOTIONS TO BE FILED BY RII AND GRI. (a) Promptly upon completion of the Reorganization Plan Solicitation and in no event later than February 15, 1994, RII and GRI shall commence the Bankruptcy Cases. Notwithstanding anything to the contrary, RII and GRI shall not be under any obligation to commence the Bankruptcy Cases unless and until RII and GRI shall have received in the Reorganization Plan Solicitation the requisite number of acceptances from impaired creditors and the requisite number of consents to terminate the Old Security Documents (as defined in the Reorganization Plan). (b) Promptly upon the commencement of the Bankruptcy Cases, and in no event later than five Business Days thereafter, RII and GRI shall (i) file the Disclosure Statement and the Reorganization Plan and the certification of votes for acceptance or rejection of the Reorganization Plan with the Bankruptcy Court and (ii) seek from the Bankruptcy Court and take all steps necessary to obtain a hearing at the earliest practicable date for approval of the Disclosure Statement and confirmation of the Reorganization Plan. (c) RII shall use its reasonable best efforts to file the Registration Statement with the SEC as soon as possible. SECTION 5.04. REORGANIZATION PROCEEDINGS. (i) RII shall, and shall cause GRI to, seek confirmation of the Reorganization Plan by the Bankruptcy Court using the acceptances of the Reorganization Plan received by RII and GRI pursuant to the Reorganization Plan Solicitation, (ii) RII shall, and shall cause GRI to, comply in all material respects with the Bankruptcy Code and all other laws, rules, regulations, decrees and orders promulgated thereunder in connection with obtaining confirmation of the Reorganization Plan, (iii) RII shall, and shall cause GRI to, use its best efforts to obtain, and shall, and shall cause GRI to, refrain from knowingly taking any action that would be likely to prevent, materially impede or result in the revocation of, (A) the entry by the Bankruptcy Court of the Confirmation Order and (B) the vesting upon the date on which the Reorganization Plan shall become effective of (y) the property of each of RII and GRI in the reorganized entities and (z) the property dealt with by the 15 Reorganization Plan in the recipients thereof under the Reorganization Plan, in each case free and clear of all claims and interests of creditors and equity securityholders except as provided in and in accordance with the Reorganization Plan and (iv) RII shall not, and shall cause GRI not to, consent to any amendment or supplement to, or modification of, the Reorganization Plan or the Disclosure Statement that purports to change in any material respect the terms or conditions of the transactions contemplated by this Agreement without the prior written consent of Fidelity and TCW. SECTION 5.05. ACCESS TO INFORMATION. From the date hereof to the Closing Date, RII shall, and shall cause its Affiliates, officers, directors, employees, auditors and other agents to, (i) afford the officers, employees, auditors and other agents of Fidelity and TCW reasonable access at all reasonable times to its officers, employees, agents, properties, offices, plants and other facilities and to all books and records, and shall furnish Fidelity and TCW with all financial, operating and other data and information with respect to the Paradise Island Business as Fidelity and TCW, through their officers, employees or agents, may reasonably request and (ii) furnish, and cause the officers and employees of RII and its Affiliates to furnish, to Fidelity and TCW and their authorized representatives such additional financial and operating data and other information regarding the Paradise Island Assets and the Paradise Island Business as Fidelity or TCW shall from time to time reasonably request including, without limitation, all monthly or other interim financial and operating reports relating to the Paradise Island Business prepared by or for officers of RII and its Affiliates. Without limiting the foregoing, RII agrees to provide representatives of Fidelity and TCW with offices in Paradise Island and Miami and such representatives shall be given adequate prior notice (if time permits) of and allowed to attend all material meetings of RII and its Subsidiaries relating to the Paradise Island Business. Notwithstanding the foregoing, RII shall not be obligated to provide Fidelity or TCW or any of their authorized representatives with any material confidential information or any material nonpublic information unless Fidelity and TCW shall have entered into reasonable confidentiality arrangements with respect to such confidential or nonpublic information, subject to reasonable and customary exceptions. SECTION 5.06. NOTIFICATION OF CERTAIN MATTERS. RII shall give prompt notice to Fidelity and TCW of (i) the 16 occurrence or non-occurrence of any event the occurrence or non- occurrence of which would be likely to cause a representation or warranty contained in this Agreement to be untrue or inaccurate in any material respect and (ii) any failure of RII or Buyer to comply with or satisfy in any material respect any covenant, condition or agreement to be complied with or satisfied by it hereunder; PROVIDED, HOWEVER, that the delivery of any notice pursuant to this Section 5.06 shall not limit, increase or otherwise affect the remedies available hereunder to the party receiving such notice. SECTION 5.07. FURTHER ACTION; REASONABLE EFFORTS. Upon the terms and subject to the conditions hereof, each of RII and Buyer shall use all reasonable best efforts (without undue expense) to take or cause to be taken all appropriate action and to do or cause to be done all things reasonably necessary, proper or advisable under applicable laws and regulations to consummate and make effective the transactions contemplated hereby and by the Reorganization Plan, including, without limitation, using all reasonable efforts to obtain all licenses, permits, consents, approvals, authorizations, qualifications and orders of Governmental Authorities and parties to Material Contracts as are necessary for the consummation of the transactions contemplated hereby and by the Reorganization Plan and to fulfill the conditions to the Closing. SECTION 5.08. EMPLOYEE BENEFIT MATTERS. (a) As of the Closing Date, Buyer shall cause the Buyer Subsidiaries to offer employment to each person employed by the RII Paradise Subsidiaries whose primary functions relate to the operation of the Paradise Island Business and each person set forth on Schedule 6.09 to the Sun Purchase Agreement (a "Paradise Employee"), except that Buyer may designate in writing within 60 days from the date of this Agreement up to 40 Paradise Employees to whom it does not wish to offer employment (the "Excluded Employees"). Schedule 6.09(a) to the Sun Purchase Agreement generally describes severance benefits for Paradise Island Employees and sets forth a list of each Paradise Employee and the salary as of the date hereof and the employment commencement date of each such Paradise Employee. The Buyer Subsidiaries shall not be required to offer employment to any Excluded Employee and RII hereby agrees that all obligations, including obligations under any Benefit Plan or similar employee benefits, to such Excluded Employees shall remain the responsibility solely of RII. RII shall cooperate with 17 and assist Buyer in any reasonable manner in hiring Paradise Employees (other than any Excluded Employee). Buyer agrees that, for a period of one year from the Closing Date, Buyer will not, without the written consent of RII, employ any Excluded Employees, as consultants or otherwise. Any Paradise Employee who becomes an employee of Buyer or the Buyer Subsidiaries shall be referred to herein as a "Continuing Employee". (b) Buyer shall have no obligation to maintain or assume obligations under any Benefit Plan, or to provide any employee benefits, other than the obligations contained in this subsection. Within 90 days from the date of this Agreement, Buyer shall determine whether it shall offer Continuing Employees a 401(k) plan. If Buyer determines to offer Continuing Employees a 401(k) plan, then on or prior to the Closing, Buyer shall sponsor, or cause one or more of its Affiliates to sponsor, a plan (the "Successor Plan") that is qualified under Section 401 of the Code, under which there is established a trust (the "Successor Trust") that is exempt under Section 501 of the Code, to which the following transfers shall be made. As promptly as practical after the Closing Date, RII shall take all actions necessary to transfer to the Successor Trust the account balances in the Resorts Retirement Savings Plan (the "Savings Plan") of all Continuing Employees. Such transfers shall be made solely in cash or, where applicable, in cash plus any loan from an account to a Continuing Employee that satisfies the requirements of ERISA and the Code. The transfer of the account balances referred to above shall take place upon receipt by RII of either (x) a copy of a favorable determination letter or letters from the IRS that the Successor Plan is qualified under Section 401 of the Code and the Successor Trust is exempt from taxation under Section 501 of the Code or (y) an opinion of counsel to Buyer, on which RII is entitled to rely and which is reasonably satisfactory to RII, that the Successor Plan is qualified under Section 401 of the Code and the Successor Trust is exempt from taxation under Section 501 of the Code. (c) Schedule 6.09(c) to the Sun Purchase Agreement sets forth a list of the officers and directors of the Company or any of its Subsidiaries who are not directly involved in the business and operations of the Company and its Subsidiaries. On the Closing Date, RII shall cause to be delivered to Buyer duly signed (i) resignations (with respect to their entire association with or employment by the Company or any of its Subsidiaries) effective as of the 18 Closing Date of all such officers and directors and (ii) releases of such officers and directors releasing the Company and its Subsidiaries of all obligations and liabilities relating to such resignations. (d) RII and Buyer agree to cooperate in making all appropriate filings and taking all appropriate actions required to implement this Section 5.08. SECTION 5.09. BULK TRANSFER LAWS. RII shall cause each RII Paradise Subsidiary to comply in all material respects with the provisions of any so-called Bulk Transfer Law of all states of the United States in which any of the RII Paradise Assets subject to any such Bulk Transfer Law are located in connection with the sale of the RII Subsidiary Assets to the Buyer Subsidiaries. RII represents and warrants to Buyer that the list of creditors to be provided by RII pursuant to such Bulk Transfer Laws will, to RII's knowledge, contain the names and business addresses of all creditors of the RII Paradise Subsidiaries, with the amounts of credit listed when known, and also the names of all persons who are known to RII to assert claims against any RII Paradise Subsidiary even though such claims are disputed, and that such list will be true, correct and complete in all material respects and will comply in all material respects with such Bulk Transfer Laws. As promptly as practicable after the Closing, RII shall pay and discharge when known all amounts so listed (other than Assumed Liabilities and claims disputed in good faith). SECTION 5.10. INTERCOMPANY ACCOUNTS, CONTRACTS GUARANTIES AND INDEBTEDNESS. On or prior to the Closing Date, the net amount of all Indebtedness between RII and any of its Affiliates (other than the Company and any Subsidiary of the Company), on the one hand, and the Company and any Subsidiary of the Company, on the other hand, shall be cancelled or contributed to the capital of the relevant entity. On or prior to the Closing Date, RII shall cause the Company and each Subsidiary of the Company not to have any Indebtedness, except for Indebtedness disclosed on Schedule 4.06(b) to the Sun Purchase Agreement. On or prior to the Closing Date, RII shall terminate or cause to be terminated all Contracts between and among RII and its Affiliates and any of the Company, the Subsidiaries of 19 the Company and the RII Paradise Subsidiaries (to the extent such Contracts relate to the Paradise Island Business), and shall cancel or cause to be cancelled all guarantees and security interests given by the Company, the Subsidiaries of the Company or the RII Paradise Subsidiaries on behalf of RII or any of its Affiliates. On or prior to the Closing Date, RII shall cancel or cause to be cancelled (a) all liens held by RII or any of its Affiliates on any of the Paradise Island Assets and (b) all liens held by the Company or any of its Subsidiaries on any of the assets of RII or any of its Affiliates (other than the Paradise Island Assets) and (c) all liens on any of the Paradise Island Assets relating to Indebtedness, except any such liens disclosed on Schedule 4.06(b) to the Sun Purchase Agreement. SECTION 5.11. REORGANIZATION PLAN SOLICITATION DOCUMENTS. RII shall use its reasonable best efforts to prepare each of the Registration Statement and the Disclosure Statement so that they shall not (i) at the time the Disclosure Statement is first mailed, (ii) at the time the Registration Statement becomes effective, (iii) on the date of the Bankruptcy Court's hearing with respect to the Disclosure Statement, (iv) on the date of the confirmation of the Reorganization Plan by the Bankruptcy Court or (v) at the Closing, contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. Notwithstanding the foregoing, RII makes no such covenant with respect to any information included in the Registration Statement or the Disclosure Statement that was supplied in writing to RII by Fidelity or TCW (or any representative of Fidelity or TCW) specifically for use therein. If, at any time prior to the Closing Date, any event relating to RII or any of its Affiliates, officers or directors should be discovered by RII or any of its Affiliates which is required by the Bankruptcy Court to be set forth in a supplement to the Disclosure Statement, RII will prepare, file with (and, if required, use its best efforts to have approved by) the SEC and the Bankruptcy Court and dissemi- nate any such supplements. RII shall use its reasonable best efforts to ensure that the Registration Statement and the Disclosure Statement did, or shall, as the case may be, comply as to form in all material respects with the requirements of the Securities Act, the Exchange Act and the Bankruptcy Code and all other laws, rules, regulations, decrees and orders promulgated thereunder. SECTION 5.12. REORGANIZATION PROCEEDINGS. Neither RII nor GRI will knowingly take any action, or fail to take any action, which could reasonably be expected to prevent, materially impede or result in the revocation of 20 the confirmation of the Reorganization Plan (as provided in Section 1144 of the Bankruptcy Code). SECTION 5.13. AIRLINE GOVERNMENTAL CONSENTS. In the ----------------------------- event the Airline Governmental Consents are not obtained before the Closing Date, RII and Buyer agree that until the earlier of the date such Airline Governmental Consents are obtained and one year after the Closing Date, RII and Buyer will enter into a service agreement pursuant to which RII or a Subsidiary of RII will, through PIA, operate scheduled air service equivalent to that currently operated by PIA, such scheduled air service to be operated for the account of Buyer. Such service agreement will be mutually agreed upon by RII and Buyer and shall generally provide that Buyer will receive all revenues generated by PIA in its provision of that scheduled air service operated for the account of the Buyer. Such service agreement shall further provide that Buyer will be responsible for all expenses related to such scheduled air service. RII will be responsible for procuring all other services for the airline, including flight crews, maintenance and catering services, and will receive a commercially reasonable fee for its participation in such arrangement. In addition, Buyer would indemnify RII and its Subsidiaries against any losses and liabilities arising from its participation in such lease arrangement other than losses or liabilities arising from the gross negligence or willful misconduct of the indemnified party. This Agreement may not be terminated and, assuming RII has otherwise used its reasonable best efforts (without the payment of money) to assist Buyer in obtaining the Airline Governmental Consents, a breach of this Agreement shall not be deemed to have occurred as a result of a failure to obtain the Airline Governmental Consents or because RII is prohibited by any governmental agency from complying with this Section 5.13. This Agreement may not be terminated nor shall a condition to Closing fail to be satisfied as a result of RII and Buyer failing to enter into the service agreement referred to above; PROVIDED, HOWEVER, that if RII and Buyer shall fail to enter into the service agreement referred to above, Fidelity and TCW shall be entitled, in their discretion, (a) to cause RII to sell all or substantially all of the assets of PIA or all of the issued and outstanding capital stock of PIA to a third party purchaser designated by Fidelity and TCW on terms negotiated by Fidelity and TCW and reasonably acceptable to RII (in lieu of selling such assets to a Buyer Subsidiary), and, as determined by Fidelity and TCW, to pay, or direct the payment of, the purchase price payable in connection with 21 any such sale either to Buyer or to the Disbursing Agent designated pursuant to the Reorganization Plan or pursuant to an order of the Bankruptcy Court for purposes of making distributions thereunder to the holders of Old Series Notes of RII or (b) to make alternative arrangements, reasonably acceptable to RII, pursuant to which a third party manager shall enter into a service agreement with RII and Buyer and shall operate scheduled air service, through PIA, for the account of Buyer until the earlier of the date the Airline Governmental Consents are obtained and one year after the Closing Date, and to cause RII to execute such documents or take such actions as may be reasonably required to effectuate such alternative arrangements (provided that either of such alternative arrangements shall not result in any out-of-pocket costs or expenses, other than DE MINIMIS costs or expenses, that would not have been incurred hereunder), to RII or any of its Affiliates after the Closing Date). SECTION 5.14. COMFORT LETTER. RII shall cause Ernst & Young to deliver to Buyer a comfort letter dated a date not more than five Business Days before November 30, 1993, which Comfort Letter shall be in the form of Exhibit A. SECTION 5.15. ATTORNEYS FEES. In any action by any party to enforce the terms of this Agreement, the prevailing party shall be entitled to receive reimbursement of all of its reasonable attorneys fees and expenses incurred in such action. SECTION 5.16. TRANSFER TAXES. Any sales, transfer (including any real property transfer) and other Taxes (excluding gross or net income taxes), including without limitation any documentary stamp tax, and any filing, recording or other fees applicable to the conveyance and transfer pursuant to the provisions of this Agreement of the Shares, the RII Real Estate Assets and the Paradise Island Assets (collectively, the "Transfer Taxes"), shall be borne and paid by RII. The provisions of this Section shall survive the Closing of this Agreement. SECTION 5.17. ACTIONS ON BEHALF OF BUYER; KNOWLEDGE OF BUYER. RII shall not cause Buyer to take any actions in respect of any amendments to or waivers or actions under this Agreement except as are agreed to or directed by Fidelity and TCW, and Fidelity and TCW may, in their reasonable judgment, cause Buyer to take any actions 22 that Buyer may take under this Agreement; PROVIDED, HOWEVER, that Fidelity and TCW shall not act so as to prevent Buyer from performing any of its affirmative obligations, agreements or covenants hereunder. No knowledge of any facts shall be imputed to the Buyer under this Agreement unless such facts are known to Fidelity and TCW. SECTION 5.18. ARTICLES OF ASSOCIATION. The Articles of Association of Buyer are attached hereto as Exhibit B, and RII shall cause such Articles to remain in full force and effect and not to be amended prior to or on the Closing unless consent thereto shall be granted by Fidelity and TCW. SECTION 5.19. REPRESENTATIONS AND WARRANTIES. If any representation or warranty contained in Article IV shall be, or shall become, inaccurate or shall be breached by RII at any time prior to Closing, RII will, promptly upon discovering such inaccuracy or breach, (i) notify Fidelity and TCW and (ii) use its best efforts to cure such breach or inaccuracy as soon as is reasonably practicable and prior to the Closing. SECTION 5.20. OPERATION OF BUYER AND BUYER SUBSIDIARIES. RII agrees that, since their respective inceptions and as of the Closing Date, (a) neither Buyer nor any of the Buyer Subsidiaries shall have engaged in any activity or business other than those relating to the implementation of this Agreement and preparation relating thereto, in each case as shall have been agreed to in writing by Fidelity and TCW, and (b) neither Buyer nor any of the Buyer Subsidiaries shall have Indebtedness. SECTION 5.21. INSURANCE PROCEEDS. If any of the Paradise Island Assets are destroyed or damaged or taken in condemnation, the insurance proceeds or condemnation award with respect thereto shall be a Paradise Island Asset. At the Closing, RII shall pay to Buyer any such insurance proceeds or condemnation awards received by RII on or prior to the Closing and shall assign to or assert for the benefit of Buyer all of its rights against any insurance companies, governmental entities and others with respect to such damage, destruction or condemnation. If and to the extent that there is available insurance under policies maintained by RII or its Subsidiaries in respect of any Assumed Liability, except for any such insurance proceeds with respect to which the insured is directly or indirectly self- insured or has agreed to indemnify the insurer, RII shall 23 cause such insurance to be applied toward the payment of such Assumed Liability. SECTION 5.22. ACQUISITION PROPOSALS. Neither RII nor any of its Affiliates shall propose or support before the Bankruptcy Court any proposal for the sale or disposition of the Paradise Island Business, other than the Acquisitions or as contemplated by the Sun Purchase Agreement, without the prior written consent of Fidelity and TCW. ARTICLE VI CONDITIONS TO THE CLOSING SECTION 6.01. CONDITIONS TO OBLIGATIONS OF BUYER. The obligations of Buyer to effect the Closing shall be subject to the prior fulfillment of each of the following conditions: (a) REPRESENTATIONS AND WARRANTIES; AGREEMENTS AND COVENANTS. (i) Each of the representations and warranties of RII contained in Section 4.02, 4.03, 4.04 and 4.05 hereof and each of the representations and warranties incorporated from the Sun Purchase Agreement pursuant to Section 4.01 qualified as to materiality shall be true and correct in all respects and those not so qualified shall be true and correct in all material res- pects, in each case when made and as of the Closing Date, (ii) RII shall not have failed to comply with the covenants in Sections 5.01 and 5.09, where such failures in the aggregate would have a Material Adverse Effect, (iii) RII shall have complied in all respects with the covenants contained in Sections 5.10 and 5.20, (iv) except for the covenants contained in Sections 5.03, 5.04, 5.11 and 5.12, each of the other agreements and covenants contained in this Agreement and in any certificate or agreement by RII delivered pursuant hereto to be performed or complied with by RII, at or before Closing, shall have been duly performed or complied with in all material respects, PROVIDED, HOWEVER, that a breach of Section 5.06 would not constitute a failure of a condition hereunder, if the representation, warranty or covenant in question would not have resulted in a failure of a condition hereunder, and (v) Buyer shall have received a certificate of RII, signed by a Vice President thereof as to the fulfillment of the conditions set forth in the foregoing clauses (i), (ii), (iii) and (iv). 24 (b) SUN PURCHASE AGREEMENT. The Sun Purchase Agreement shall have been terminated in accordance with its terms. (c) HSR ACT. Any waiting period (and any extension thereof) applicable to the consummation of the transactions contemplated hereby under the HSR Act shall have expired or been terminated. (d) CONFIRMATION OF THE REORGANIZATION PLAN AND ENTRY OF THE CONFIRMATION ORDER; CONSUMMATION OF THE REORGANIZATION PLAN. The Confirmation Order shall have been entered by the Bankruptcy Court and the Effective Date (as defined in the Reorganization Plan) shall have occurred, or there shall be no unsatisfied conditions to the occurrence of the Effective Date other than the Closing, and such Confirmation Order shall be in full force and effect and shall not then be stayed. (e) GOVERNMENTAL CONSENTS. All Governmental Consents shall have been received on or prior to the Closing Date. (f) NO INJUNCTIONS. There shall not be in effect any injunction or restraining order issued by a court of competent jurisdiction against the consummation of the sale and purchase of the Shares, the RII Real Estate Assets and the RII Paradise Assets pursuant to this Agreement. (g) BANKRUPTCY; INSOLVENCY; ETC. No proceeding shall have been instituted or consented to by or against any of the Company, any of its Subsidiaries or any RII Paradise Subsidiary seeking to adjudicate any of them a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief or composition of any of their debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of any order for relief or the appointment of a receiver, trustee, custodian or other similar official for any of them or any substantial part of any of their property, and such proceeding shall not have been dismissed or terminated within 60 days of the commencement thereof. (h) OPINIONS. Buyer shall have received an opinion of Gibson, Dunn & Crutcher, counsel to RII, in form and content reasonably acceptable to Fidelity and TCW, as to matters set forth on Exhibit C hereto and opinions of 25 Florida counsel reasonably acceptable to Buyer and Harry B. Sands & Co. in form and content reasonably acceptable to Fidelity and TCW. (i) RESIGNATIONS. Buyer shall have received resignations and releases of all officers and directors of the Company and its Subsidiaries who are not directly involved in the business and operations of the Company and its Subsidiaries in accordance with Section 5.08(c). (j) SECURITY DOCUMENTS. The agreements listed in Schedule 4.16 to the Sun Purchase Agreement shall not be in full force and effect. (k) MANAGEMENT AGREEMENT. At the election of Buyer, RII and Buyer shall have entered into a Management Agreement in substantially the form attached hereto as Exhibit D, and all conditions under the Management Agreement shall have been satisfied by RII or waived by Buyer. (l) REGISTRATION RIGHTS AGREEMENT. RII and Buyer shall have taken such action, including granting such registration rights, as may be necessary to ensure that all shares of the capital stock of Buyer issued upon consummation of the transactions contemplated hereby may be re-sold publicly, without restriction under the Securities Act by the recipients thereof following the disbursement of such shares by the Disbursing Agent as contemplated by Section 2.04. (m) SUN SECURITY INTEREST. RII shall have caused Buyer to have granted a security interest to Sun International Investments Limited as contemplated by Section 7.02(b) of the Sun Purchase Agreement (the "Permitted Sun Lien"), and RII shall have caused Buyer to assume its obligations to pay the Buyer Expense Reimbursement to SIHL pursuant to Sections 7.02(a)(vi) and (vii) of the Sun Purchase Agreement. (n) ADDITIONAL TIME. If Fidelity and TCW reasonably shall have determined that it is necessary and appropriate for the time of the Closing to be extended (including without limitation to allow time for the completion of their due diligence investigation of the Paradise Island Business) beyond the date when the other conditions set forth in this Section 6.01 have been satisfied, a reasonable period of additional time (not to 26 exceed 30 days) shall have elapsed from the date when such other conditions were satisfied. SECTION 6.02. CONDITIONS TO OBLIGATIONS OF RII. The obligations of RII to effect the Closing shall be subject to the prior fulfillment of each of the following conditions: (a) HSR ACT. Any waiting period (and any extension thereof) applicable to the consummation of the transactions contemplated hereby under the HSR Act shall have expired or been terminated. (B) CONFIRMATION OF THE REORGANIZATION PLAN AND ENTRY OF THE CONFIRMATION ORDER; CONSUMMATION OF THE REORGANIZATION PLAN. The Confirmation Order shall have been entered by the Bankruptcy Court and the Effective Date (as defined in the Reorganization Plan) shall have occurred, or there shall be no unsatisfied conditions to the occurrence of the Effective Date other than the Closing, and such Confirmation Order shall be in full force and effect and shall not then been stayed. (c) CONSENTS. All Governmental Consents shall have been received on or prior to the Closing Date. (d) NO INJUNCTIONS. There shall not be in effect any injunction or restraining order issued by a court of competent jurisdiction against the consummation of the sale and purchase of the Shares, the RII Real Estate Assets and the RII Paradise Assets pursuant to this Agreement. (e) SUN PURCHASE AGREEMENT. The Sun Purchase Agreement shall have been terminated in accordance with its terms. (f) SECURITY DOCUMENTS. The agreements listed in Schedule 4.16 to the Sun Purchase Agreement shall not be in full force and effect. ARTICLE VII SURVIVAL AND INDEMNIFICATION SECTION 7.01. SURVIVAL OF REPRESENTATIONS. The representations and warranties of RII set forth in Sections 4.02, 4.03, 4.04 and 4.05 hereof and the representations and 27 warranties incorporated from Sections 4.01, 4.02, 4.03(a), 4.04, 4.16(a) and 4.22 of the Sun Purchase Agreement (the "Surviving Representations") and the covenants and agreements contained in this Agreement (except the covenants contained in Sections 5.11 and 5.12 which shall not survive the Closing), and the covenants and agreements contained in any agreements, certificates or other instruments delivered pursuant to this Agreement, shall survive the Closing and shall remain in full force and effect, regardless of any investigation made by or on behalf of any party, but subject to all limitations and other provisions contained in this Agreement or any agreements, certificates or other instruments delivered pursuant to this Agreement. All representations and warranties set forth herein and in any agreements, certificates or other instruments delivered pursuant hereto (other than the Surviving Representations) shall not survive the Closing and shall not remain in full force and effect; PROVIDED, HOWEVER, that no representation or warranty shall be deemed not to have survived the Closing if any breach or inaccuracy thereof was knowingly or fraudulently concealed by RII or any of its Subsidiaries prior to the Closing and such breach or inaccuracy was not actually known to TCW and Fidelity prior to the Closing. SECTION 7.02. INDEMNIFICATION BY RII. Subject to the other provisions of this Article VII, RII hereby agrees to indemnify and hold Buyer and its Affiliates harmless from and against any and all claims, damages, liabilities, liens, losses or other obligations whatsoever, together with reasonable costs and expenses, including reasonable fees and disbursements of counsel and expenses of investigation (collectively, "Losses"), arising out of, based upon or caused by the inaccuracy of any representation or the breach of any warranty of RII contained in the Surviving Representations. SECTION 7.03. NOTICE, ETC. Each indemnified party agrees to give the indemnifying party prompt written notice of any action, claim, demand, discovery of fact, proceeding or suit (collectively, "Claims") for which such indemnified party intends to assert a right to indemnification under this Agreement; PROVIDED, HOWEVER, that failure to give such notification shall not affect the indemnified party's entitlement to indemnification hereunder except to the extent that the indemnifying party shall have been actually prejudiced as a result of such failure. The indemnifying party shall have the sole right to defend, settle or otherwise dispose of any Claim, on such terms as 28 the indemnifying party, in its sole discretion, shall deem appropriate; PROVIDED, HOWEVER, that (i) the indemnified party may participate in the defense of any claim pursuant to which the indemnified party could become subject to injunctive or other equitable relief or the business of the indemnified party could be materially and adversely affected in any manner (such participation in the defense of any claim to be at the indemnified party's expense unless the use of separate counsel arises by reason of a material conflict of interest between the indemnifying party and the indemnified party in connection with the defense of such claim) and (ii) the indemnifying party shall obtain the written consent of the indemnified party, which shall not be unreasonably withheld or delayed, prior to ceasing to defend, settling or otherwise disposing of any such Claim, or taking any course of action or omitting to take a permitted course of action with respect thereto, if as a result thereof the indemnified party would become subject to injunctive or other equitable relief. SECTION 7.04. REIMBURSEMENT OF COSTS. The costs and expenses, including reasonable fees and disbursements of counsel and expenses of investigation, incurred by any indemnified party in connection with any claim for which the indemnified party is entitled to indemnification hereunder shall be reimbursed on a quarterly basis by the indemnifying party. SECTION 7.05. TIME LIMITATIONS. Notwithstanding anything to the contrary contained herein, each party's obligation to indemnify or otherwise hold harmless the other party and its Affiliates for any Loss arising out of, based upon or caused by the inaccuracy or breach of any Surviving Representation shall, terminate at 11:59 p.m. New York City time, on the later of March 31, 1995 or the first anniversary of the Closing Date; PROVIDED, HOWEVER, that claims pending on, or asserted prior to such date may continue to be asserted and shall be indemnified against. SECTION 7.06. SOLE AND EXCLUSIVE REMEDY. The indemnification obligations of the applicable parties under Section 7.02 hereof shall constitute the sole and exclusive remedies of the indemnified party with respect to the matters described in Section 7.02. 29 ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER SECTION 8.01. TERMINATION. This Agreement may be terminated at any time prior to the Closing Date, notwithstanding the fact that votes may have been received pursuant to the Reorganization Plan Solicitation: (a) by mutual written consent of RII and Buyer at any time prior to entry the Confirmation Order; (b) in the event that a proposal for the sale of the Paradise Island Business by RII or GRI, other than the Acquisitions or the transactions contemplated by the Sun Purchase Agreement, is approved by the Bankruptcy Court this Agreement will automatically be deemed terminated without the necessity of providing written notice notwithstanding any provision to the contrary herein; (c) by Buyer, if a Material Adverse Effect occurs as a result of any fire, flood, hurricane, accident, explosion or other calamity or casualty or any strike, labor disturbance, riot, act of God or public enemy, or the institution of condemnation proceedings affecting any material portion of the Real Property or Improvements (a "Force Majeure Event"), PROVIDED, HOWEVER, that Buyer shall not have the right to terminate this Agreement in the event that the loss caused by the Force Majeure Event (including the present value of lost profits) is less than $20 million and there is adequate insurance to cover such loss; (d) by Buyer, if Buyer reasonably determines that RII will not be able to deliver good title free and clear of encumbrances other than Permitted Encumbrances and the Permitted Sun Lien, to a material portion of the Paradise Island Business or the Shares by September 30, 1994; (e) by Buyer, if as a result of a breach of RII of its covenant to operate the Paradise Island Business in the ordinary course contained in Section 5.01, a Material Adverse Effect has occurred; (f) by Buyer, if the Sun Purchase Agreement shall have been terminated by SIHL, after November 30, 1993, pursuant to Section 6.14(b)(iii) thereof on account of any matter arising or occurring on or before November 30, 1993 (x) which was known by RII or any of its Affiliates or which 30 would have been known by RII or any of its Affiliates had they not been grossly negligent or (y) which was fraudulently or knowingly concealed from SIHL by RII or any of its Affiliates; (g) by Buyer, if in Fidelity's and TCW's reasonable judgment (based on the advice of legal counsel), the consummation of the transactions contemplated hereby could be expected to result in the incurrence of any personal liabilities by the holders of Buyer's capital stock by virtue of their status as shareholders (and expressly not including any losses resulting solely from a decline in the economic value of such capital stock); PROVIDED, HOWEVER, that in the event of a good faith dispute concerning whether Buyer is entitled to terminate the Agreement under this subparagraph (g), the matter shall be submitted to a court of competent jurisdiction for resolution, and the determination of such court shall be final and binding upon the parties; (h) by Buyer, if RII or any of its Affiliates shall have breached the covenant set forth in Section 5.22 hereof; or (i) in the event that the sale of the Paradise Island Business by RII and the RII Paradise Subsidiaries to SIHL is consummated pursuant to the Sun Purchase Agreement, this Agreement will automatically be deemed terminated without the necessity of providing written notice notwithstanding any provision to the contrary herein. SECTION 8.02. RIGHTS OF TERMINATION. The right of termination hereunder may be exercised by Buyer or RII, as the case may be, only by giving written notice, signed on behalf of such party to the other party. A right of termination may be exercised on Buyer's behalf only by Fidelity and TCW. SECTION 8.03. EFFECT OF TERMINATION. In the event of the termination of this Agreement pursuant to Section 8.01, this Agreement shall forthwith become void and have no effect, but no such termination shall prejudice any party's rights and remedies against the other for breaches of obligations under this Agreement. SECTION 8.04. WAIVER. Subject to Section 5.17, at any time prior to the Closing Date, any party hereto may (a) extend the time for the performance of any of the obligations or other 31 acts of the other party hereto, (b) waive any inaccuracies in the representations and warranties contained herein or in any document delivered pursuant hereto and (c) waive compliance with any of the agreements or conditions contained herein. Any such extension or waiver shall be valid if set forth in an instrument in writing signed by the party to be bound thereby. The failure of any party to assert any of its rights hereunder shall not constitute a waiver of any such rights. The rights of Buyer hereunder may be exercised on its behalf only by Fidelity and TCW. SECTION 8.05. AMENDMENTS. The parties hereto may, by written agreement signed by such parties, modify any of the covenants or agreements or extend the time for any performance of any of the obligations contained in this Agreement or any document delivered pursuant to this Agreement. No such written agreement shall be signed on behalf of Buyer or shall be valid without the written consent thereto of Fidelity and TCW. ARTICLE IX GENERAL PROVISIONS SECTION 9.01. NOTICES. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by cable, telecopy, telegram or telex or by registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the following addresses (or at such other address for a party as shall be specified by like notice): if to Buyer: Paradise Island Resorts Limited c/o Resorts International, Inc. 1133 Boardwalk Atlantic City, NJ 08401 Attention: Christopher D. Whitney, Esq. 32 with a copies to: Fidelity Management and Research Company 82 Devonshire Street Boston, MA 02109 Attention: Judy Mencher, Esq. Trust Company of the West 865 South Figueora Street Suite 1800 Los Angeles, CA 90017 Attention: Bruce Karsh Weil, Gotshal & Manges 767 Fifth Avenue New York, NY 10153 Attention: Bruce R. Zirinsky, Esq. if to RII: Resorts International, Inc. 1133 Boardwalk Atlantic City, NJ 08401 Attention: Christopher D. Whitney, Esq. with a copy to: Gibson, Dunn & Crutcher 200 Park Avenue New York, NY 10166 Attention: Steven R. Finley, Esq. SECTION 9.02. ENTIRE AGREEMENT; ASSIGNMENT. This Agreement constitutes the entire agreement among the parties with respect to the subject matter hereof and supersedes all prior agreements and undertakings, both written and oral, among the parties with respect to the subject matter hereof. This Agreement shall not be assigned by operation of law or otherwise, except that Buyer may assign all or any of its rights and obligations hereunder to any wholly owned Subsidiary of Buyer upon the execution of a written instrument whereby such assignee agrees to assume all of the assignor's obligations hereunder and be bound by all the terms and conditions of this Agreement; PROVIDED, that no such assignment shall relieve the assigning party of its 33 obligations hereunder if such assignee does not perform such obligations. SECTION 9.03. PARTIES IN INTEREST. This Agreement shall be binding upon and inure solely to the benefit of each party hereto, and, except to the extent that consent or approval of Fidelity and TCW may be required hereunder (E.G., Sections 5.17, 8.02, 8.04 and 8.05 hereof), nothing in this Agreement, express or implied, is intended to or shall confer upon any other person any rights, benefits or remedies of any nature whatsoever under or by reason of this Agreement. SECTION 9.04. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICTS OF LAW THEREOF. SECTION 9.05. HEADINGS. The descriptive headings contained in this Agreement are included for convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement. SECTION 9.06. COUNTERPARTS. This Agreement may be executed in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. SECTION 9.07. SPECIFIC PERFORMANCE. The parties hereto agree that irreparable damage would occur in the event any of the provisions of this Agreement were not to be performed in accordance with the terms hereof and that the parties shall be entitled to specific performance of the terms hereof, in addition to any other remedy at law or equity. SECTION 9.08. JURISDICTION. THE PARTIES HEREBY WAIVE ANY OBJECTION THEY MAY HAVE TO PERSONAL JURISDICTION AND VENUE IN THE U.S. DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND, WHERE NO DIVERSITY OR OTHER SUBJECT MATTER JURISDICTION EXISTS IN SUCH U.S. DISTRICT COURT, THE PARTIES WAIVE SUCH OBJECTIONS IN ANY COURT OF THE STATE OF NEW YORK LOCATED IN THE COUNTY OF NEW YORK, AS TO LITIGATION RELATING TO THIS AGREEMENT. BUYER HEREBY IRREVOCABLY APPOINTS AND DESIGNATES AS ITS LAWFUL 34 AGENT AND ATTORNEY FOR RECEIPT AND SERVICE OF PROCESS IN ANY ACTION ARISING OR TAKEN HEREUNDER BY RII THE PRENTICE-HALL CORPORATION SYSTEM, INC., 15 COLUMBUS CIRCLE, NEW YORK, NEW YORK 10023. SECTION 9.09. KNOWLEDGE OR CONSENTS. For the purpose of this Agreement (including the Schedules hereto), unless the context otherwise expressly requires, whenever a document or matter is subject to the "approval", "consent", "satisfaction" or "acceptance" (including any variation of such terms) of any party to this Agreement or Fidelity or TCW, such person, shall not unreasonably withhold or delay its approval, consent, satisfaction or acceptance of such document or matter; PROVIDED, HOWEVER, that the foregoing is without prejudice to RII's right to seek approval, consent, satisfaction or acceptance of any documents or matters from the Bankruptcy Court (in Fidelity's and TCW's stead) upon a showing by RII, and a finding by the Bankruptcy Court, that any consent, approval, satisfaction or acceptance is being unreasonably withheld by Fidelity or TCW. For the purpose of this Agreement (including the Schedules hereto) and subject to Section 5.17 hereof, unless the context otherwise expressly requires, "knowledge" with respect to any person (other than an individual) shall mean the knowledge of an executive officer, director, partner, executor or trustee of such person. SECTION 9.10. RIGHTS OF FIDELITY AND TCW. If, and only if, at any time prior to the Closing Date, Fidelity and TCW shall cease to beneficially own an aggregate of at least twenty percent (20%) of the aggregate principal amount of the outstanding Old Series Notes, then all the rights of consent, approval, acceptance or direction granted to Fidelity and TCW hereunder shall thereupon cease to exist; PROVIDED, HOWEVER, that nothing in this Section 9.10 shall limit or otherwise prejudice in any manner any rights which Fidelity and TCW may have under the Bankruptcy Code and the Bankruptcy Rules. In addition, if either of Fidelity or TCW shall cease to beneficially own any Old Series Notes whatsoever (but the other retains an aggregate of at least twenty percent (20%) of the aggregate principal amount of the outstanding Old Series Notes), then the rights described above shall be extinguished solely as to the person ceasing to own any such Old Series Notes, without prejudice to the rights of the other hereunder. 35 IN WITNESS WHEREOF, Buyer and RII have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized. RESORTS INTERNATIONAL, INC. By: /s/ Christopher D. Whitney ____________________________ Name: Christopher D. Whitney Title: Executive Vice President, Chief of Staff P.I. RESORTS LIMITED By: /s/ Christopher D. Whitney ____________________________ Name: Christopher D. Whitney Title: President 36 EXHIBIT A COMFORT LETTER EXHIBIT A [Letterhead of Ernst & Young] [ ], 1993 Paradise Island --------------- Dear Sirs, We have performed the procedures requested by you, as described below, with respect to the Purchase Agreement (the "Purchase Agreement") dated August [ ], 1993, among Resorts International, Inc. ("RII") a Delaware corporation and Sun International Hotels Limited ("Sun") a Bahamian corporation. The Purchase Agreement provides for the Stock Acquisition and the Asset Acquisition (in each case as defined in the Purchase Agreement and, together, the "Acquisitions"). This letter is solely to assist Sun with the proposed Acquisition and is not to be used for any other purpose. The procedures that we performed, and our findings are summarized as follows: 1. We are independent certified public accountants with respect to (RII and the RII Paradise Subsidiaries) under the standards of the American Institute of Certified Public Accountants (Code of Professional Ethics Rule 101 and related interpretations). 2. We have audited the combined statements of operations in respect of the Paradise Island Business for the three fiscal years ending December 31, 1992, and the combined balance sheets in respect of the Paradise Island Business as of December 31, 1990, December 31, 1991 and December 31, 1992. These financial statements and our report with respect thereto dated [ ] are included as Exhibit A to this letter. We have not audited any financial statements as of any date or for any period subsequent to December 31, 1992. Therefore, save as set forth in this letter, we are unable to and do not express any opinion on any unaudited interim financial statements as of any date or for any period subsequent to December 31, 1992. 3. For the purposes of this letter we have read the 1993 minutes of meetings of the shareholders and the boards of directors of RII and each of the RII Paradise Subsidiaries as set forth in the minute books of those companies as at the date hereof, officials of RII and of the RII Paradise Subsidiaries having advised us that the minutes of all such meetings through that data were set forth therein. In addition, with respect to the six month period ended June 30, 1993, we have: (a) read the unaudited combined statement of operations in respect of the Paradise Island Business for the fiscal quarters ending March 31, 1993 and June 30, 1993 and the unaudited combined balance sheets in respect of the Paradise Island Business as of March 31, 1993 and June 30, 1993. These financial statements are included as Exhibit B to this letter; and (b) made inquiries of certain officials of RII and the RII Paradise Subsidiaries who have responsibility for financial and accounting matters regarding whether the unaudited financial statements referred to in paragraph (a) have been prepared on a basis consistent with that of the audited financial statements referred to in paragraph 2. 4. With respect to the monthly periods ended July 31, August 31 and September 30, 1993 we have: (a) read the unaudited combined statement of operations in respect of the Paradise Island Business for each of the calendar months ending July 31, August 31, and September 30, 1993 and the unaudited balance sheets in respect of the Paradise Island Business as of July 31, August 31 and September 30, 1993. These financial statements are included as Exhibit C to this letter; and (b) made inquiries of certain officials of RII and the RII Paradise Subsidiaries who have responsibility for financial and accounting matters regarding whether the unaudited financial statements referred to in paragraph (a) have been prepared on a basis consistent with that of the audited financial statements referred to in paragraph 2. 5. Nothing came in our attention as a result of the foregoing procedures in paragraphs 3 or 4 above that caused us to believe that: (a) the unaudited combined financial statements referred to in Paragraphs 3(a) and 4(a) are not in conformity with GAAP applied on a consistent basis throughout the period covered or were not prepared on a basis consistent with that of the audited financial statements referred to in paragraph 2 [except for ]; or (b) at each of June 30, July 31, August 31 and September 30, 1993 (i) there was any decrease in net current assets or in fixed assets other than normal depreciation or increases in long-term liabilities or contingencies as compared with amounts shown in the December 31, 1992 audited balance sheet or (ii) there were any decreases, as compared with the corresponding period in the preceding year, in the amount of operating revenues or income [except for ]. 6. Officials of RII and RII paradise Subsidiaries have advised us that no financial statements as of any date or for any period subsequent to [September 30,] 1993, are available; accordingly, the procedures carried out by us with respect to changes in financial statement items after [September 30,] 1993, have, of necessity, been even more limited than those with respect to the periods ending [September 30,] 1993. We have made inquiries of certain officials of RII and the RII Paradise Subsidiaries who have responsibility for financial and accounting matters regarding whether: (a) there was any decrease as at [ ], 1993, in net current assets or in fixed assets other than normal depreciation or increases in long-term liabilities or contingencies as compared with amounts shown on the [September 30,] 1993, unaudited combined balance sheet; (b) for the period from [September 30,] 1993 to [ ], 1993, there were any decreases, as compared with the corresponding period in the preceding year, in the amount of operating revenues or income; or (c) there were any liabilities or obligations incurred since [September 30,] 1993, other than liabilities and obligations incurred in the ordinary course of business consistent with past practice, not shown or adequately provided for in the [September 30,] 1993 unaudited combined balance sheet. 7. On the basis of the procedures referred to in paragraph 6 and our reading of the minutes as described in paragraph 3, nothing came to our attention that caused us to believe that there was any such change or decrease, or any such liabilities or obligations, as is mentioned in paragraph 6 except for [ ]. Very truly yours, Sun International Hotels Limited [ ] EXHIBIT B ARTICLES OF ASSOCIATION OF BUYER P.I. RESORTS LIMITED AMENDED AND RESTATED ARTICLES OF ASSOCIATION (ADOPTED ON 15TH, DECEMBER 1993) PRELIMINARY AND CONSTRUCTION 1. The Articles contained in the First Schedule to the Companies Act shall not apply to the Company. 2. (1) In these Articles, except where the subject or context otherwise requires: "Articles" means the articles of association of the Company on the date hereof as the same may be amended from time to time; the "board" means the directors or any of them acting as the board of directors of the Company; "Closing Date" shall mean the date the Company acquires the Paradise Island assets of Resorts International Inc.; "Commonwealth" means the Commonwealth of The Bahamas; "Companies Act" means the Companies Act 1992 including any modification or re-enactment thereof for the time being in force; "Company" means P. I. Resorts Limited, the company to which these Articles apply; "director" means a director of the Company; "dollar" or "$" means the lawful currency of the United States of America; "holder" means, in relation to any shares, the member whose name is entered in the register of members as the holder of such shares; "Ordinary Shares" means the Ordinary Shares of $0.01 each of the Company having the rights set forth in these Articles; "Preference Shares" means the Preference Shares of $0.01 each of the Company having the rights set forth in these Articles; "secretary" means the secretary of the Company and includes a joint, assistant, deputy or temporary secretary and any other person appointed to perform the duties of the secretary; and "shares" means shares in the Company including the Ordinary Shares and the Preference Shares. (2) Save as aforesaid or as otherwise defined herein any words or expressions defined in the Companies Act (but excluding any modification thereof not in force at the date of adoption of these Articles) shall, if not inconsistent with the subject or the context, bear the same meaning in these Articles. (3) For the purposes of these Articles, references to writing include references to any visible substitute for writing and to anything partly in one form and partly in another form; words denoting the singular number include the plural number and vice versa; words denoting the masculine gender include the feminine gender and vice versa; and references to persons include references to bodies corporate. 3. In addition to the registered office of the Company in the Commonwealth, which shall be at such place as the directors shall from time to time appoint, the Company may have an office for the transaction of business at any other place, and meetings of the Company or of the directors may be held either within or without the Commonwealth at such place as the directors may determine. SHARES 4. The authorized share capital of the Company at the date of adoption of these Articles is $350,000 divided into 35,000,000 Ordinary Shares of $0.01 each and 10,000,000 Preference Shares of $0.01 each, having the rights set forth in these Articles. The Preference Shares may be issued by the Directors from time to time in one or more Series having such rights as the board may by resolution determine. All the shares of the Company shall be in registered form, shall be fully paid for at the time of issuance and shall be nonassessable. 2 5. Without prejudice to any special rights previously conferred on the holders of existing shares in the Company, any shares in the Company may be issued with such preferred, deferred or other special rights or such restrictions, whether in regard to dividend, voting, return of share capital or otherwise, as the board may from time to time by resolution determine. Preference Shares may be voting, non-voting or voting only for specific purposes or in specific circumstances; PROVIDED, HOWEVER that the Company shall be prohibited from issuing any non-voting Preference Shares which are not entitled to at least one vote per share in the specific case where an event of default in the payment of dividends has occurred with respect to such shares. 6. Where at any time the share capital is divided into different classes or series of shares, the rights attached to any class or series (unless otherwise provided by the terms of issue of the shares of the class or series) may only be varied or abrogated with the sanction of a resolution of the board and either (i) the consent in writing of the holders of a majority in nominal value of the issued shares of the class or series or (ii) the sanction of a resolution of members holding shares of that class or series passed at a separate general meeting of the holders of the shares of that class or series. CERTIFICATES 7. Every person whose name is entered as a member in the register of members shall, without payment, be entitled to a certificate under the common seal of the Company specifying the share or shares held by him and the amount paid up thereon, provided that in respect of a share or shares held jointly by several persons the Company shall not be bound to issue more than one certificate, and delivery of a certificate for a share to one of several joint holders shall be sufficient delivery to all. 8. A share certificate defaced, lost or destroyed may be renewed or replaced on payment of such fee, if any, as may be prescribed, and on such terms, if any, as to evidence and indemnity as the directors think fit. 3 PURCHASE OF SHARES 9. Subject to and in accordance with the provisions of the Companies Act and without prejudice to any relevant special rights attached to any class or series of shares, the Company may, with the agreement of the holders of the relevant shares, purchase any of its own shares of any class or series (including redeemable shares) at any price (whether at par or above or below par), and any shares to be so purchased may be selected by the Company in any manner whatsoever. TRANSFER AND TRANSMISSION OF SHARES 10. Subject to Article 11, the instrument of transfer of any share in the Company shall be executed by the transferor (or its duly authorized agent), and the transferor shall be deemed to remain the holder of the share until the name of the transferee is entered in the register of members in respect thereof. 11. Shares in the Company shall be transferred in any usual or common form. The transfer agent for the Company or the Company's board may determine if a form of transfer is usual or common in the case of any question or dispute concerning a transfer. 12. The board may: (a) decline to register a transfer of shares unless the instrument of transfer is accompanied by the certificate or certificates of the shares to which it relates, and such other evidence as the board may reasonably require to show the right of the transferor to make the transfer; and (b) suspend the registration of transfers during the fourteen days immediately preceding the ordinary general meeting in each year. 13. The executors or administrators of a deceased sole holder of a share shall be the only persons recognized by the Company as having any title to the share. In the case of a share registered in the names of two or more holders, the survivors or the executors or administrators of 4 the deceased survivor shall be the only persons recognized by the Company as having any title to the share. 14. Any person becoming entitled to a share in consequence of the death or bankruptcy of a member shall, upon such evidence being produced as may from time to time be required by the board, have the right, either to be registered as a member in respect of the share or, instead of being registered himself, to make such transfer of the share as the deceased or bankrupt person could have made; but the directors shall, in either case, have the same right to decline or suspend registration as they would have had in the case of a transfer of the share by the deceased or bankrupt person before the death or bankruptcy. 15. A person becoming entitled to a share by reason of the death or bankruptcy of the holder shall be entitled to the same dividends and other advantages to which he would be entitled if he were the registered holder of the share, except that he shall not, before being registered as a member in respect of the share, be entitled in respect of it to exercise any right conferred by membership in relation to meetings of the Company. ALTERATION OF CAPITAL 16. The Company may, by a resolution of the holders of Ordinary Shares, increase the share capital by such sum to be divided into shares of such amount as the resolution shall prescribe. 17. The Company may, by resolution of the board (and the holders of the Ordinary Shares, if and to the extent required by the Companies Act): (a) consolidate and divide its share capital into shares of larger amount than its existing shares; (b) subdivide its existing shares, or any of them or divide the whole or any part of its share capital into shares of smaller amount than is fixed by the Articles; or (c) reduce its share capital in any manner and with and subject to any incident authorized and consent required by law. 5 GENERAL MEETINGS 18. The statutory general meeting of the Company shall be held within the period required by Section 70 of the Companies Act. 19. (1) A general meeting shall be held once in every year at such time (not being more than fifteen months after the holding of the last preceding general meeting) and at such place as may be prescribed by the board. (2) In default of a general meeting so held, a general meeting shall be held in the month next following and may be convened by any two or more members holding Ordinary Shares carrying at least one-tenth of the votes of all members entitled to vote at general meetings, in the same manner as nearly as possible as that in which meetings are to be convened by the directors and any such meetings shall be held at such place as the members convening the meeting may designate in the notice thereof. 20. The above-mentioned general meetings shall be called annual general meetings; all other general meetings shall be called extraordinary. 21. The board may, whenever it thinks fit, convene an extraordinary general meeting, and extraordinary general meetings shall also be convened by the board on the requisition, in accordance with Section 71 of the Companies Act, of members of the Company holding not less than one-tenth of the paid-up capital of the Company, or, in default, may be convened by such requisitionists, as provided by Section 71(3) of the Companies Act. PROCEEDINGS AT GENERAL MEETINGS 22. (1) Thirty-days' notice at the least (exclusive of the day on which the notice is served or deemed to be served, but inclusive of the day for which notice is given) specifying the place, the day and the hour of meeting and, in case of special business, the general nature of that business, shall be given in the manner hereinafter mentioned, or in such other manner, if any, as may be prescribed by the Company in general meeting, to such persons as are under the Articles entitled to receive such notices from the Company. 6 (2) Every notice convening a general meeting shall include a statement having reasonable prominence that a member entitled to attend and vote is entitled to appoint a proxy to attend and vote instead of him, and that a proxy need not also be a member. 23. All business shall be deemed special that is transacted at an extraordinary meeting, as shall all that is transacted at an ordinary meeting with the exception of (i) sanctioning a dividend, (ii) the consideration of the accounts, balance-sheets and the ordinary report of the directors and auditors, (iii) election of directors and other officers in the place of those retiring by rotation and (iv) the fixing of the remuneration of the auditors. 24. No business shall be transacted by any general meeting unless a quorum of members is present at the time when the meeting proceeds to business; save as herein otherwise provided, members present in person or by proxy holding at least a majority of the then outstanding of Ordinary Shares shall be a quorum. 25. Where within half an hour from the time appointed for the meeting a quorum is not present, the meeting, if convened upon the requisition of members, shall be dissolved; in any other case it shall stand adjourned to the same day in the next week, at the same time and place and where at the adjourned meeting a quorum is not present within half an hour from the time appointed for the meeting, the members present shall be a quorum. 26. The chairman, if any, of the board shall preside as chairman at every general meeting of the Company. 27. Where there is no such chairman or at any meeting he is not present within fifteen minutes after the time appointed for holding the meeting or at which he is unwilling to act as chairman, the directors in office prior to such meeting who are present shall choose someone of their number to be chairman. 28. (1) The chairman may, with the consent of any meeting at which a quorum is present (and shall if so directed by the meeting), adjourn the meeting from time to time and from place to place, but no business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment takes place. 7 (2) When a meeting is adjourned for ten days or more, notice of the adjourned meeting shall be given as in the case of any original meeting. (3) Save as aforesaid, it shall not be necessary to give any notice of an adjournment or of the business to be transacted at an adjourned meeting. 29. At any general meeting a resolution put to the vote of the meeting shall be decided on a voice call or show of hands, unless a poll is (before or on the declaration of the result of the show of hands) demanded by at least two members present in person or by proxy holding Ordinary Shares carrying at least one-tenth of the votes of all members entitled to vote at the meeting or by the chairman and unless a poll is so demanded, a declaration by the chairman that a resolution has, on a voice call or show of hands, been carried or carried unanimously or by a particular majority or lost, and an entry to that effect in the book of the proceedings of the Company, shall be conclusive evidence of the fact, without proof of the number or proportion of the votes recorded in favor of or against that resolution. 30. If a poll is duly demanded it shall be taken in such manner as the chairman directs, and the results of the poll shall be deemed to be the resolution of the meeting at which the poll is demanded. 31. The demand for a poll may, before the poll is taken, be withdrawn but only with the consent of the chairman and a demand so withdrawn shall not be taken to have invalidated the result of the voice call or show of hands taking place before the demand was made. VOTES OF MEMBERS 32. Every member shall have one vote for each Ordinary Share of which he is the holder. Voting rights of Preference Shares (if any) shall be as specified in accordance with Article 5. 33. In the case of joint holders of the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders; and for this purpose seniority shall be determined by the order in which the names stand in the register of members. 8 34. A member of unsound mind, or in respect of whom an order has been made by any court having jurisdiction with respect to persons of unsound mind, may vote, whether on a voice call, show of hands or on a poll, by his committee or other person in the nature of a committee appointed by that court. PROXIES 35. (1) The instrument appointing a proxy shall be in writing under the hand of the appointer or his attorney duly authorized in writing or, if the appointer is a corporation, either under the common seal or under the hand of an officer or attorney so authorized. (2) An instrument appointing a proxy may be in the following form or in any other form which the board may approve: "I of being a member of P. I. Resorts Limited, hereby appoint of as my proxy to vote for me and on my behalf at the general meeting of the Company to be held on the day of and at any adjournment thereof." 36. The instrument appointing a proxy and the power of attorney or other authority, if any, under which it is signed or a certified copy of that power or authority shall be deposited at the registered office of the Company not less than forty-eight hours before the holding of the meeting at which the person named in the instrument proposes to vote, or shall be delivered to the Company at such meeting, and in default the instrument of proxy shall not be treated as valid. 37. A vote given in accordance with the terms of an instrument of proxy shall be valid notwithstanding the previous death or insanity of the principal or revocation of the instrument of proxy, or the authority under which the instrument of proxy was executed, or transfer of the shares in respect of which the vote is given, provided no transfer shall have been received at the registered office of the Company before the meeting or adjourned meeting at which the instrument or proxy is used. 9 CORPORATE REPRESENTATIVES 38. Any body corporate which is a member of the Company may by resolution of its directors or other governing body or by authority to be given under seal or under the hand of an officer duly authorized by it authorize such person as it thinks fit to act as its representative at any meeting of the Company or at any separate meeting of the holders of any class or series of shares and such authority may be general or in respect of specific meetings. A person so authorized shall be entitled to exercise the same power on behalf of the grantor of the authority as the grantor could exercise if it were an individual member of the Company and the grantor shall for the purposes of these Articles be deemed to be present in person at any such meeting if a person so authorized is present at it. CLASS MEETINGS SERIES MEETINGS 39. All provisions of these Articles relating to general meetings of the Company shall apply mutatis mutandis to every separate meeting of the holders of any class or series of shares in the capital of the Company. DIRECTORS 40. Unless otherwise determined by a resolution of the members, the number of the directors shall be five. 41. The directors shall be appointed and may be removed in accordance with the Companies Act. 42. It shall be presumed that it is in the best interests of the Company to allow directors to participate in meetings of the board or of committees thereof by telephonic communication and otherwise as set forth in Article 56 and, accordingly, it shall be a term of appointment of each director that he irrevocable consents to the holding of such meetings in the manner set forth in Article 56. 43. The directors of the Company holding office immediately following the Closing Date shall hold office until the date of the annual general meeting to be held in 1997. At the annual general meeting held in 1997 and at each subsequent annual general meeting, directors shall be appointed by resolution of the holders of Ordinary Shares in 10 accordance with these Articles (including provisions as to nomination) and any director so appointed (and any director appointed to fill a vacancy in the directors prior to the next annual general meeting) shall hold office until the date of the next annual general meeting of the Company, or if later the date his successor shall be duly elected and qualified. EXECUTIVE DIRECTORS 44. The board may appoint one or more of its body to be the holder of any one or more executive office (except that of auditor) under the Company and may enter into an agreement or arrangement with any director for his employment by the Company or for the provision by him of any services outside the scope of the ordinary duties of a director. Any such appointment, agreement or arrangement may be made upon such terms, including terms as to remuneration, as the board determines, and any remuneration which is so determined may be in addition to or in lieu of any ordinary remuneration as a director. The board may revoke or vary any such appointment but without prejudice to any rights or claims which the person whose appointment is revoked or varied may have against the Company by reason thereof. 45. Any appointment of a director to an executive office shall terminate if he ceases to be a director but without prejudice to any rights or claims which he may have against the Company by reason of the termination of such appointment. A director appointed to an executive office shall not ipso facto cease to be a director if his appointment to such executive officer terminates. 46. The emoluments of any director holding executive office for his services as such shall be determined by the board, and may be of any description, and (without limiting the generality of the foregoing) may include admission to or continuance of membership of any scheme (including any share acquisition scheme) or fund instituted or established or financed or contributed to by the Company for the provision of pensions, life assurance or other benefits for employees or their dependents, or the payment of a pension or other benefits to him or his dependents on or after retirement or death, apart from membership of any such scheme or fund. 11 POWERS AND DUTIES OF THE BOARD 47. The business of the Company shall be managed by the board, which may exercise all such powers of the Company as are not by the Companies Act or by these Articles, required to be exercised by the Company in general meeting, subject nevertheless to these Articles (including in particular Article 68 for so long as it is in effect) and to the Companies Act. PROCEEDINGS OF DIRECTORS 48. (1) The directors may meet together for the dispatch of business, adjourn and otherwise regulate their meetings, as they think fit. (2) Questions arising at any meeting shall be decided by a majority of votes. (3) A director may, and the secretary on the requisition of a director shall, at any time summon a meeting of the directors. Directors shall be given reasonable notice (which, except in the case of emergencies shall be not less than three business days) of the time and place appointed for such meeting of the directors, which notice may be waived by any or all directors at any time before or after such meeting. 49. The quorum necessary for the transaction of the business of the directors may be fixed by the directors and unless so fixed shall be three. 50. The continuing directors may act notwithstanding any vacancy in their body, but, if and so long as their number is reduced below the number fixed by or pursuant to the Articles as the necessary quorum of directors, the continuing directors may act for the purpose of summoning a general meeting of the Company, but for no other purpose. 51. The directors may elect a chairman of their meetings and determine the period for which he is to hold office; but if no such chairman is elected or if at any meeting the chairman is not present within five minutes after the time appointed for holding the same, the directors present may choose one of their number to be chairman of the meeting. 12 52. The directors may delegate any of their powers to committees consisting of such members of the Company or members of their body as they think fit; any committee so formed shall in the exercise of the powers so delegated conform to any regulations that may be imposed on them by the directors. 53. A committee may elect a chairman of their meetings; if no such chairman is elected or if at any meeting the chairman is not present within five minutes after the time appointed for holding the same, the members present may choose one of their number to be chairman of the meeting. 54. (1) A committee shall meet and adjourn as determined by the board and otherwise as they think proper. (2) Questions arising at any meeting shall be determined by a majority of votes of the members present. 55. A resolution in writing signed by a simple majority of the directors entitled to vote on that resolution at a meeting of the board or of the members of an existing committee of the board with authority to consider and act on the matter (not being less than the number of directors required to form a quorum of the board) shall be as valid and effectual as if it had been passed at a meeting of the board or (as the case may be) a committee of the board duly convened and held and for this purpose a resolution may consist of several documents to the same effect, each signed by one or more directors. 56. A meeting of the board or of a committee of the board may, if all the directors consent, consist of a conference between directors who are not all in one place, but of whom each is able (directly or by telephonic communication) to speak to each of the others, and to be heard and recognized by each of the others. A director taking part in such a conference shall be deemed to be present in person at the meeting and shall be entitled to vote or be counted in a quorum accordingly. Such a meeting shall be deemed to take place where the largest group of those participating in the conference is assembled, or, if there is no such group, where the chairman of the meeting then is. The word meeting in these Articles shall be construed accordingly. 13 57. The board shall cause minutes to be made in books provided for the purpose: (a) of all appointments of officers made by the board; (b) of the names of the directors or members present at each meeting of the directors and of any committee of the directors; and (c) of all resolutions and proceedings at all meetings of the Company and of the board or committees of the board. POWERS OF ATTORNEY 58. The board may from time to time and at any time by power of attorney appoint any company, firm or person or body of persons, whether nominated directly or indirectly by the board, to be the attorney or attorneys of the Company for such purposes and with such powers, authorities and discretions (not exceeding those vested in or exercisable by the board under these Articles) and for such period and subject to such conditions as they may think fit, and any such powers of attorney may contain such provisions for the protection and convenience of persons dealing with any such attorney as the board may think fit and may also authorize any such attorney to delegate all or any of the powers, authorities and discretions vested in him. THE SEAL 59. The seal of the Company shall not be affixed to any instrument except by the authority of a resolution of the directors, and in the presence of at least two directors and of the secretary or such other person as the directors may appoint for the purpose; and those two directors and secretary or other person as aforesaid shall sign every instrument to which the seal of the Company is so affixed in their presence. The Company is hereby authorized to adopt and use an official seal in accordance with the provisions of Section 26 of the Companies Act. 14 DIVIDENDS AND RESERVE 60. The board may from time to time declare and pay to the members of the Company such quarterly dividends as appear to the directors to be justified by the profits of the Company. 61. No dividend shall be paid otherwise than out of profits or surplus available for the purpose in accordance with the Companies Act. 62. The directors may, before recommending any dividend, set aside out of the profits of the Company such sums as they think proper as a reserve or reserves which shall, at the discretion of the directors, be applicable for meeting contingencies or for equalizing dividends or for any other purpose to which the profits of the Company may be properly applied, and pending such application may, at the like discretion, either be employed in the business of the Company or be invested in such investments (other than shares of the Company), as the directors may from time to time think fit. 63. Where several persons are registered as joint holders of any share any one of them may give effectual receipts for any dividend payable on the share. 64. No dividend shall bear interest against the Company. ACCOUNTS 65. The directors shall cause true accounts to be kept: (a) of the sums of money received and expended by the Company and the matter in respect of which such receipt and expenditure takes place; and (b) of the assets and liabilities of the Company. 66. The books of account shall be kept at the registered office of the Company or at such other place or places as the directors think fit and shall always be open to the inspection of the directors. 15 67. The directors shall from time to time determine whether and to what extent and at what time and places and under what conditions or regulation the accounts and books of the Company or any of them shall be open to the inspection of members not being directors, and no member (not being a director) shall have any right of inspecting any account or book or document of the Company except as conferred by statute or authorized by the directors or by the Company in general meeting. 68. Once at least in every year the directors shall lay before the Company in general meeting a profit and loss account for the period since the preceding account or (in the case of the first account) since the incorporation of the Company, made up to a date not more than six months before such meeting. 69. (1) A balance-sheet shall be made out in every year and laid before the Company in general meeting made up to a date not more than six months before such meeting. (2) The balance-sheet shall be accompanied by a report of the board as to the state of the Company's affairs and the amount which they recommend to be paid by way of dividend and the amount, if any, which they propose to carry to a reserve fund. 70. A copy of the balance-sheet and report shall, seven days previous to the meeting, be sent to the persons entitled to receive notices of general meetings in the manner in which notices are to be given hereunder. NOTICES 71. (1) A notice may be given by the Company to any member either personally or by sending it by post to him to his registered address. (2) Where a notice is sent by post, service of the notice shall be deemed to be effected by properly addressing, pre-paying and posting a letter (by air-mail if to an address outside the country from which it is sent) containing the notice and, unless the contrary is proved, to have been effected three days after posting (or seven days if sent to an address outside the country from which it is sent). 16 72. A notice may be given by the Company to the joint holders of a share by giving the notice to the joint holder named first in the register in respect of the share. 73. A notice may be given by the Company to the persons entitled to a share in consequence of the death or bankruptcy of a member by sending it through the post in a pre- paid letter addressed to them by name or by the title of representatives of the deceased, or trustees of the bankrupt, or by any like description, at the address, if any, supplied for the purpose by the persons claiming to be so entitled, or (until such an address has been so supplied) by giving the notice in any manner in which the same might have been given if the death or bankruptcy has not occurred. 74. Notice of every general meeting shall be given in some manner hereinbefore authorized to the members of the Company, including any person entitled to a share in consequence of the death or bankruptcy of a member, who, but for his death or bankruptcy, would be entitled to receive notice of the meeting and to very director. No other persons shall be entitled to receive notice of general meetings. INDEMNITY 75. The Company shall, subject to the provisions of Article 79, indemnity to the fullest extent permitted by the Companies Act any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative and whether external or internal to the Company by reason of the fact that he is or was a director or officer of the Company, or is or was serving at the request of the Company as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such suit, action or proceeding if he acted in good faith and in a manner which he reasonably believed to be in, or not opposed to, the best interests of the Company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe that his conduct was unlawful. 76. Subject to Article 79, expenses incurred by a director or officer in defending a civil or criminal action, 17 suit or proceeding shall be paid by the Company in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of the director or officer to repay such amount if it shall ultimately be determined that he is not entitled under Article 75 to be indemnified by the Company in respect of such expenses. 77. The board shall from time to time cause the Company to purchase and maintain insurance from reputable insurance carriers on behalf of any person who is or was a director or officer of the Company, or is or was serving at the request of the Company as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such with reasonable limits and subject to reasonable and customary deductibles, for so long as such insurance is available from such carriers. 78. The Company's indemnification under Article 76 of any person who is or was serving, at the request of the Company as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, shall be reduced by amounts such person receives as indemnification (i) under any policy of insurance purchased and maintained on his behalf by the Company, (ii) from such other corporation, partnership, joint venture, trust or other enterprise, or (iii) under any other applicable indemnification provision. 79. (a) It shall be a condition of the Company's obligation to indemnify or advance expenses under Articles 75 and 76 that the person asserting, or proposing to assert, the right to be indemnified, promptly after receipt of notice of commencement of any action, suit or proceeding in respect of which a claim for indemnification is or is to be made against the Company notify the Company of the commencement of such action, suit or proceeding, including therewith a copy of all papers served and the name of counsel retained or to be retained by such person in connection with such action, suit or proceeding, and thereafter to keep the Company timely and fully apprised of all developments and proceedings in connection with such action, suit or proceeding or as the Company shall request; and the fees and expenses of any counsel retained by a person asserting, or proposing to assert, the right to be indemnified under 18 Article 75 shall be at the expense of such person unless the counsel retained shall have been approved by the Company in writing, which approval shall not be unreasonably withheld. (b) If a claim for indemnification and advancement of expenses under Articles 75 and 76 is not paid in full by the Company within forty five (45) days after a written claim therefor has been received by the Company, the claimant may at any time thereafter bring suit against the Company to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled to be paid also the expenses of prosecuting such claim. 80. To the fullest extent permitted by the Companies Act as it exists on the date hereof or as it may hereafter be amended, no director or officer of the Company shall be liable to the Company or its members for monetary or other damages for breach of fiduciary duty as a director or officer. 81. The provisions of Articles 75 to 80 shall continue as to, and for the benefit of, a person who has ceased to be a director or officer and shall inure to the benefit of the heirs, executors and administrators of such a person. 82. No amendment to or repeal of the provisions of Articles 75 to 80 shall apply to or have any effect on the eligibility for, or entitlement to, indemnification, advancement of expenses and the other rights provided by, or granted pursuant to, Articles 75 to 80 for or with respect to any acts or omissions of any director or officer occurring prior to any such amendment or repeal. 19 EXHIBIT C SUBORDINATION PROVISIONS EXHIBIT C All opinions set forth below shall be delivered in customary form and in reliance, where customary, on typical certificates and certified copies of documents: (i) RII is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware; (ii) RII has all necessary corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder; (iii) the execution and delivery of this Agreement by RII, and the sale of the Shares and the RII Real Estate Assets by RII, have been duly and validly authorized by all necessary corporate action on the part of RII, and no other corporate proceedings or shareholder actions on the part of RII are necessary to authorize this Agreement and the sale of the Shares and the RII Real Estate Assets; (iv) this Agreement has been duly and validly executed and delivered by RII, and this Agreement constitutes the legal, valid and binding obligation of RII, enforceable against RII in accordance with its terms (subject as to enforcement to applicable bankruptcy, reorganization, insolvency, fraudulent transfer and moratorium and similar laws from time to time in effect affecting creditors' rights generally and to legal and equitable limitations on availability of specific performance and other equitable remedies); (v) the execution and delivery of this Agreement by RII does not, and the performance of this Agreement by RII will not, (A) conflict with or violate the certificate of incorporation or bylaws of RII, (B) to the actual knowledge of such counsel, conflict with or violate any law, rule, regulation, order judgment or decree applicable to RII; (vi) assuming that Buyer has purchased the Shares for value in good faith and without notice of any adverse claim, good and valid title to the Shares will pass to Buyer, free and clear of any adverse claim; and (vii) as of the Closing Date, the order of the Bankruptcy Court confirming the sale of the Shares by RII to Buyer has been duly entered, is in full force and effect and has not been stayed. [Subject to changes to reflect GRI as the transferor of the Shares, if applicable] EXHIBIT D MANAGEMENT AGREEMENT INTERIM MANAGEMENT AGREEMENT INTERIM MANAGEMENT AGREEMENT, dated as of this _____ day of ______, 199_, by and between P.I. Resorts Limited, a Bahamas corporation ("OWNER"), and Resorts International, Inc., a Delaware corporation ("MANAGER"). W I T N E S S E T H : - - - - - - - - - - WHEREAS, Owner owns and operates, directly and through subsidiaries, certain businesses in the leisure, resort and related industries on Paradise Island in The Bahamas and in the State of Florida, as more particularly described on EXHIBIT "A" attached hereto and made a part hereof (collectively, the "BUSINESSES"); and WHEREAS, Owner desires to engage and employ Manager to perform, and Manager desires to perform (or cause to be performed), certain management services respecting the operation of the Businesses (collectively, the "SERVICES"); and WHEREAS, the parties hereto are entering into this Agreement in accordance with the Plan of Reorganization (the "PLAN") confirmed by the bankruptcy court for the District of New Jersey in the bankruptcy case styled In re: RESORTS INTERNATIONAL, INC. and GRIFFIN RESORTS, INC., (Case Nos. ___________ and _________; Jointly Administered Under Case No. _______________________________. NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, and other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: 1. MANAGEMENT. Owner hereby engages and employs Manager to act as its exclusive agent to oversee the day-to-day management of the business and affairs of the Businesses and to provide the Services detailed in paragraph 2(c) hereof in connection with the Businesses, and Manager hereby accepts such engagement and employment, on and subject to the terms and conditions hereinafter set forth. 2. RESPONSIBILITIES OF THE PARTIES. (a) STANDARDS. With respect to the operation of the Businesses, Manager shall manage and maintain the Businesses in a manner reasonably consistent with the standards and procedures exercised by other first class operators of businesses comparable (in terms of type, class and quality) to the Businesses, in the same or similar competitive markets as the Businesses. For purposes hereof such management standard is hereinafter referred to as the "MANAGEMENT STANDARD". (b) NO INTERFERENCE. Owner hereby agrees that, except to the extent otherwise provided in this Agreement, 2 Manager shall have exclusive control of and responsibility for the operation of the Businesses during the Term (as hereinafter defined). Manager agrees that, in connection with its performance hereunder, Manager shall not knowingly take any action which would cause Owner to violate any material term of any of the loan indentures described in SCHEDULE "1" attached hereto (collectively, the "INDENTURES"; and the trustees thereunder, together with their successors in trust and assigns, the "TRUSTEES"). Manager further agrees that no action which Owner or any of the Trustees shall take under and in accordance with the provisions of the Indentures or the Security Instruments (as defined in the Indentures, and as such agreements are in effect on the date hereof) shall constitute a breach by Owner of this Agreement, notwithstanding that the same may constitute an interference with or disturbance of management within the contemplation of these provisions; provided, however, that if and to the extent that such action by Owner or the Trustees shall constitute an interference with or disturbance of management within the contemplation of these provisions, then Manager shall be relieved of such management obligation hereunder so interfered with or disturbed. 3 (c) SERVICES. Manager covenants and agrees to perform, or cause to be performed, consistent with the Management Standard, the following Services in connection with the Businesses: (i) PERMITS. Manager, on behalf of and with the cooperation of Owner, shall oversee the obtaining of and maintenance of all necessary licenses, findings of suitability, approvals and permits required by any law, rule or regulation of any applicable national, state or local authorities having jurisdiction over the Businesses (the "APPLICABLE GOVERNMENTAL AUTHORITIES"), as may be required for the operation of the hotel and casino Businesses as hotel and casino businesses including, without limitation, gaming, liquor, bar, restaurant, sign and hotel licenses and any permits required in connection with any refurbishing or expansion of such Businesses, and for the operation of the airline and other Businesses to permit the same to be operated in a manner similar to their current operation. Manager shall comply with the rules, regulations and orders of the Applicable Governmental Authorities and with any conditions set out in any such licenses and permits issued by any such authorities and, with the cooperation of Owner, shall provide any information, report or access to records 4 reasonably required by the Applicable Governmental Authorities. (ii) PERSONNEL. Except as otherwise expressly provided herein, all personnel employed at the Businesses shall be employees of Owner. Manager shall hire, terminate, advance, demote, supervise, direct the work of and determine the compensation and other benefits (except for the establishment of any new employee pension and profit-sharing plans, which shall be proposed by Manager and shall be subject to the approval of the Board of Directors of Owner, not to be unreasonably withheld or delayed, it being understood that any employee pension and profit-sharing plans in existence as of the date hereof have been approved by the Board of Directors of Owner) of all personnel working at the Businesses, in all events consistent with the then current Annual Budget (hereinafter defined); PROVIDED, HOWEVER, that Manager will not enter into any employment contracts with any employees for a period that exceeds the Initial Term (as hereinafter defined) or the then current Term of this Agreement, as the case may be, or any material employee contracts or benefit arrangements (I.E., any such contract or arrangement involving an annual compensation (including salary and bonuses) of more than $125,000), unless first approved by 5 the Board of Directors of Owner. Manager agrees that employees' wages, benefits and conditions of employment (inclusive of any discretionary employee bonuses granted from time to time by Manager) shall be granted by Manager consistent with the Management Standard and the then current Annual Budget. The parties hereto agree that all wages, bonuses, compensation and benefits (including, without limitation, severance and termination pay) of personnel at the Businesses, and state and federal withholding, social security and similar employee related taxes, are the exclusive obligation of Owner and that Manager shall furnish to Owner such information as shall be required by Owner in order for Owner to satisfy such obligation. Manager shall be responsible for the training of all personnel and shall cooperate with all personnel in their efforts to obtain and maintain key employee, casino employee or casino hotel employee licenses issued by the Applicable Governmental Authorities, if such are required, and Manager will hire only persons with valid employee licenses, if under the rules and regulations of the Applicable Governmental Authorities, such employee licenses are a condition of employment. The employees necessary to discharge Manager's obligations and responsibilities hereunder (I.E. those 6 providing management related services) shall be employees of Manager (or its affiliates) ("MANAGER EMPLOYEES") and shall be hired, paid and discharged by Manager in its reasonable discretion; provided, however, that if Owner (exercising reasonable judgment, in good faith) shall request Manager to terminate the management responsibilities of any Manager Employee in respect of the Businesses, then Manager shall effect such termination. Manager, in its sole discretion, shall determine, consistent with the Management Standard and the then current Annual Budget, the number of Manager Employees necessary to discharge Manager's obligations and responsibilities hereunder. The salaries and other compensation arrangements of Manager Employees shall be the responsibility of Manager and, except to the extent provided in paragraph 7(a) below, Manager shall not have any right of reimbursement from Owner in respect thereof. (iii) SALES AND PROMOTIONS. Manager shall formulate, coordinate and implement promotion, marketing and sales programs, and shall cause the Businesses to participate in promotional, marketing and sales campaigns and, as appropriate, activities involving complimentary rooms and food and beverages to bona fide travel agents, tourist officials and airlines representatives, and to all other individuals and entities whatsoever which, in 7 Manager's reasonable discretion consistent with the Management Standard, is deemed to be beneficial to the Businesses. Credit facilities shall be granted by Manager in its reasonable discretion and in accordance with the Management Standard and the then current Annual Budget; provided, however, that except for extending credit for the purchase of goods, services, gaming or entertainment in the ordinary course of the Businesses, and except as otherwise required or permitted herein, Manager shall not be authorized to make any loans or extensions of credit for or on behalf of Owner without the prior approval of the Board of Directors of Owner. (iv) BOOKS AND RECORDS. Consistent with the Management Standard, Manager shall maintain, or cause to be maintained, a complete accounting system for and on behalf of Owner in connection with its management of the Businesses. The books and records shall be kept in accordance with generally accepted accounting principles consistently applied and in accordance with the uniform system of accounts for hotels and casinos and otherwise consistent with the system of accounts required by GAAP for the applicable Business. Such books and records shall be kept on the basis of a [________] fiscal year. Books and 8 accounts shall be maintained at the Businesses or at the principal office of Manager with a duplicate copy thereof at the respective principal office of each of the Businesses. Owner shall have the right and privilege of examining and copying said books and records, including all daily reports prepared by Manager for internal use at the Businesses, at reasonable times during regular business hours. Manager shall comply with all requirements with respect to internal controls and accounting and shall prepare and provide all required reports under the rules and regulations of the Applicable Governmental Authorities. (v) AUDITS AND AUDITORS. Manager shall cooperate with and assist Owner's auditors in connection with the audit of the Businesses to be performed by such auditors as at the end of each fiscal year of Owner occurring after the date hereof and at least three (3) copies thereof shall be furnished to each party as soon as available to permit Owner to meet any public reporting requirements as may be applicable to it, and in no event later than 90 days following the end of such fiscal year of Owner. Any change in public auditors during the Term of this Agreement shall be subject to the prior written approval of Owner. 9 (vi) INTERIM STATEMENTS. On or before the 30th day of each month, Manager shall furnish to Owner an operating statement for the preceding calendar month for each of the Businesses, detailing the gross revenues received from all sources, opening and closing balances in each of the Management Accounts (as hereinafter defined) (including account designation and name of and location of depositaries), guest room occupancy percentages, average room rates, and expenses incurred, including estimated compensation and other amounts, if any, that may be due or payable to Manager and including a report and computation of sums due and payable to Owner. The gross revenue detail shall include specific details concerning on all gaming revenues (including total drop). Adjustments predicated on the annual audited statements for the Businesses shall be made during the first month following completion of the annual audit. (vii) BANK ACCOUNTS. (A) MANAGEMENT ACCOUNTS. Consistent with the Management Standard, Manager shall establish such operating accounts as Manager deems necessary or appropriate for the operation of the Businesses. Manager, in the future, may establish additional operating accounts with, or change existing operating accounts to, one or more banks, 10 savings and loans, or money market mutual funds as it may designate. Such accounts shall be styled "____________ -[type of account]" (e.g. operations, payroll, etc.), and all such accounts shall provide that Manager's designees shall be the only parties authorized to draw upon such accounts (the "MANAGEMENT ACCOUNTS"). Manager agrees that it will not use any Management Accounts as compensating balances related to the extension of credit to Manager or grant any right of set-off or bankers' lien on any such accounts in respect of any amounts owed by Manager to such depositaries. Manager shall seek to obtain reasonable rates of interest for the Management Accounts, with due regard to the financial stability of and services offered by the depositaries with which such accounts are kept; provided, however, that, Manager shall not be responsible for the amount, if any, of such interest or the solvency of such depositories. All depositories shall be subject to Owner's prior approval. The parties agree that all funds held from time to time in the Management Accounts are solely the property of Owner, and upon the expiration or termination of this Agreement for any reason, Manager shall cease to have authority, and shall cease, to withdraw funds from any of the Management Accounts and, upon notice to the institution(s) maintaining the Management Accounts (1) 11 Manager's designees shall be removed as signatories to the Management Accounts, and (2) Owner's designees shall become the sole signatories to the Management Accounts. Manager, when such Management Accounts first are established, shall use reasonable efforts to obtain the written confirmation of the institution maintaining such accounts that the procedure set forth in the previous sentence is agreed to, and shall be implemented, by such institution, and in the absence of such confirmation shall obtain Owner's written authorization to maintain accounts with such institution. It is understood and agreed that Manager may maintain petty cash funds at the Businesses and make payments therefrom as the same are customarily made in the hotel and casino business. Following the furnishing to Owner of interim statements pursuant to subparagraph 2(c)(vi) hereof, from time to time Manager shall direct, and Owner may direct, that sums be transferred from the Management Accounts to such accounts as may be established by Owner (and with respect to which Manager shall not have access) to the extent that such funds are in excess of amounts that Manager, consistent with the Management Standard, or Owner, deems reasonably necessary for the operation of the Businesses. 12 (B) OPERATING CAPITAL. If Owner fails or delays in furnishing funds to cover operating deficits, Owner shall indemnify and hold harmless Manager with respect to claims of third parties which may arise out of or relate to, directly or indirectly, the Businesses and such failure or delay in funding such deficits. (viii) TAXES AND INSURANCE. Throughout the Term, Owner shall furnish Manager with copies of all tax statements and insurance policies and all financing documents (including notes and mortgages) relating to the Businesses. Manager shall assist Owner's accountants in the preparation of all federal and state income and sales tax returns of Owner to the extent such returns relate to the Businesses and in connection with any inquiries or audits by Applicable Governmental Authorities. Manager will also assist Owner in procuring and maintaining liability, property and such other insurance in at least such amounts and covering such risks as is currently maintained with respect to the Businesses and in such additional amounts and covering such additional risks, if any, as Manager or Owner reasonably determines is necessary in connection with the operation of the Businesses, with responsible and reputable insurance companies or associations. All such insurance policies shall name Manager as an additional insured and all 13 insurers thereon shall be required to issue to Manager and Owner a certificate of insurance providing that such insurer shall deliver to Manager and Owner reasonable prior notice of termination of any such policy or the coverage provided thereby and, if and to the extent the same shall be available without adversely affecting Owner's coverage and without additional premiums or charges, waiving the rights of such insurer, if any, of subrogation against Manager and Owner. Without in any way diminishing Owner's responsibility hereunder, Manager is hereby authorized and directed to pay from the Management Accounts all taxes and fees including, without limitation, withholding taxes and insurance premiums, and all other items of expense relating to the ownership or operation of the Businesses. (ix) CONCESSIONS. Manager shall consummate, if in Manager's reasonable discretion it deems the same to be in the best interest of the Businesses, in the name of and for the benefit of Owner, reasonable arms-length arrangements and leases with concessionaires, licensees, tenants and other intended users of any facilities related to the Businesses; provided, however, that no concession, license or tenancy shall be granted for a period beyond the Initial Term or the then current Term. Copies of all such 14 arrangements shall be furnished to Owner upon Owner's request therefor. (x) ANNUAL BUDGET. Manager shall be obligated to furnish Owner for Owner's approval, an annual budget (the "ANNUAL BUDGET"), at least thirty (30) days prior to the end of each fiscal year of Owner. Each Annual Budget shall detail all costs, expenses and reserves reasonably anticipated by Manager or contemplated in this Agreement, for the next succeeding fiscal year. Manager, without the prior approval of Owner, shall not incur expenditures in excess of or other than those provided in the Annual Budget as approved by Owner. The Annual Budget may be amended from time to time with Owner's approval, which approval may be granted or withheld by Owner in Owner's sole discretion. If Owner shall not have approved an Annual Budget for a new fiscal year, then the last approved Annual Budget shall be deemed to be approved as the then current Annual Budget until expressly superseded. (xi) EXPENSES. All costs, expenses, funding or operating deficits and working capital, taxes, insurance premiums and other obligations and liabilities of Owner hereunder ("OWNER'S FINANCIAL OBLIGATIONS") shall be the sole and exclusive financial responsibility and obligation of Owner, except for those instances herein where it is 15 expressly and specifically stated that such item shall be the responsibility of Manager. It is understood that statements herein indicating that Manager shall furnish, provide or otherwise supply, present or contribute items or Services hereunder shall not be interpreted or construed to mean that Manager is liable or responsible to fund or pay for such items or services, except in those instances mentioned above. Except for petty cash funds which Manager maintains at the Businesses and except as may be disbursed to Owner pursuant to subparagraph 2(c)(vii)(A) hereof, all funds derived from the ownership and operation of the Businesses shall be deposited and held in the Management Accounts until disbursed to pay and discharge Owner's Financial Obligations as set forth below, subject to the laws, rules and regulations of the Applicable Governmental Authorities: (A) With respect to Owner's Financial Obligations, the same shall be funded and/or paid for as follows: (1) first, from monies which may be available in Management Accounts (subject to the provisions of subparagraph 2(c)(vii)(A) hereof) maintained for the respective Business giving rise to such Owner's Financial Obligation; (2) second, if such Management Accounts do not contain monies sufficient 16 to fund and/or pay such Owner's Financial Obligations, and other Management Accounts have funds which exceed the requirements of the Businesses for which such accounts are maintained, then from such other Management Accounts, and (3) third, if Management Accounts do not contain monies sufficient to fund and/or pay Owner's Financial Obligations, then Owner shall be obligated to fund and pay such deficits within thirty (30) days after written request therefor by Manager or if Owner fails or delays in furnishing funds to cover such deficits as aforesaid (by unreasonable failure to approve or delay in approving budgets in a timely manner or otherwise), (x) Owner shall indemnify and hold harmless Manager with respect to any liability to third parties however arising which may arise out of or relate to, directly or indirectly, such failure or delay in funding such deficits, and (y) Manager shall have the option (but not the obligation) to terminate this Agreement in accordance with subparagraph 8(b)(iii) hereof. (B) It is understood and agreed that Manager shall have no obligation or duty to fund and/or pay for any of Owner's Financial Obligations from its own funds except in those instances herein where it is 17 expressly and specifically stated that such item shall be the obligation of Manager. (xii) MATERIAL AGREEMENTS. Manager, as exclusive agent for Owner, is authorized to make and enter into any agreements (including, without limitation, agreement with Manager's affiliates, provided such agreements are upon "market" terms no more onerous to Owner or favorable to such affiliates than would be the case if Owner contracted with third parties regarding the same) as are, in Manager's reasonable discretion, necessary or desirable for the operation, supply and maintenance of the Businesses, as required by this Agreement. Manager shall be required to obtain the reasonable approval of the Board of Directors of Owner before entering into any agreement not contemplated by the approved Annual Budget involving (a) any material structural repair or rehabilitation of the Businesses in excess of $100,000; (b) any fundamental change in the character of the Businesses; or (c) any other agreement (other than employment contracts or benefit arrangements, the approval of which shall be governed by the provisions of subparagraph 2(c)(ii)(A) hereof) involving the payment of more than $100,000 over the term thereof. Manager shall not enter into any agreement involving the incurrence of debt obligations on behalf of Owner or with 18 respect to the operations of the Businesses, in excess of $100,000 in any single case or in excess of $500,000 in the aggregate, over any amounts therefor set forth in the approved Annual Budget, without obtaining the prior approval of the Board of Directors of Owner. (xiii) FUTURE CONSTRUCTION AND CAPITAL EXPENDITURES BUDGET. Construction plans and specifications for the refurbishment and modernization of the Businesses and the capital expenditures budget for the cost thereof shall be prepared by or at the direction of Manager and shall be submitted to the Board of Directors of Owner for its approval. All additions and/or material modifications to the Businesses subsequent to the date hereof will be constructed by a general contractor with hotel/casino construction experience chosen by Manager, subject to the Owner's prior approval, to perform under Manager's supervision and control. Unless expressly waived by Owner in writing, Manager shall require that said general contractor post completion, performance and payment bonds prior to the commencement of any such construction. Owner shall pay all costs associated with improvements, refurbishments, additions and material modifications to the Businesses undertaken and completed in accordance with the then current Annual Budget or any supplemental budget 19 therefor and title with respect thereto shall be in the name of Owner. Proposals in connection with any other capital expenditures to be incurred in connection with the operation of the Businesses that are in excess of 2% in any single case or in excess of 5% in the aggregate over any amounts therefor set forth in the approved Annual Budget shall be submitted to the Board of Directors of Owner for its approval. (xiv) CAPITAL REPLACEMENT AND ADDITIONS. Owner and Manager recognize the necessity of a program of replacement of tangible personal property (other than construction materials which shall be subject to subparagraph 2(c)(xiii) hereof) and the need to cause the Businesses to continue to be furnished and maintained in accordance with the standards described herein. All costs of purchases of tangible personal property pursuant to this paragraph 2(c)(xiv) shall be in accordance with the then current Annual Budget or any supplemental budget therefor approved by Owner and shall be paid by Owner within 30 days of receipt of an invoice therefor from Manager, with title thereto being taken in the name of Owner. Such purchases are subject to Owner's prior approval to the extent that any single purchase exceeds the line item therefor in the Annual 20 Budget by more than $10,000 or by more than $100,000 in the aggregate for all such purchases. (xv) LEGAL MATTERS. Manager shall coordinate and manage all legal matters and licensing activities with respect to the Businesses, including, without limitation, the preparation of required filings and reports to the Applicable Governmental Authorities, including the Securities and Exchange Commission, and Owner's stockholders and bondholders, which filings and reports shall be submitted to Owner for review and approval prior to filing or distribution. In connection with such legal matters, Manager, as exclusive agent for and on behalf of Owner, shall have the right to engage such legal counsel as it determines, in its reasonable discretion, is necessary. Manager shall obtain the reasonable approval of the Board of Directors of Owner prior to the settlement of any material claim, action or proceeding with respect to any of the Businesses or prior to taking significant action in connection with any material litigation matter (I.E., any settlement or litigation matter involving a payment in excess of $100,000 net of insurance proceeds in respect of such matter or which would substantially affect the operations or assets of the Businesses). 21 (xvi) ADDITIONAL CONSENTS AND APPROVALS. In acting hereunder in all matters relative to this Agreement, and in approving or consenting to any matter hereunder not otherwise specifically provided for, Owner and Manager shall each act in good faith and in a commercially reasonable manner. 3. INTELLECTUAL PROPERTY. (a) ACKNOWLEDGMENTS. Manager (i) acknowledges Owner's exclusive right, title and interest in and to the trademarks, tradenames and service marks presently utilized, and hereafter developed and utilized, in connection with the Businesses (collectively, the "MARKS"); and (ii) agrees not to do knowingly any act that will impair or affect the strength of the Marks, the continuity of the registration of the Marks, Owner's ownership of the Marks or the goodwill associated with the Marks. Manager agrees to render whatever reasonable assistance Owner may require, at the expense of Owner, in the procurement and maintenance of registrations of the Marks in the United States Patent and Trademark Office and in other jurisdictions. (b) QUALITY OF SERVICES. (i) Manager agrees that the services and goods provided in connection with the Marks shall be consistent with the Management Standard. 22 (ii) Manager agrees that it will permit Owner and/or its designated representatives reasonable access to the Businesses, at the expense of Owner, to enable Owner to determine whether the services and goods offered by Manager in connection with the Marks conform to the Management Standard and this Agreement. (c) MARKING. (i) Manager shall apply the appropriate legend or registration symbol, as instructed by Owner in writing, indicating the status of each of the Marks in connection with all signs, tags, labels, containers, packaging, advertising, promotional and display materials containing or referred to the Marks. (ii) Manager agrees to submit to Owner repre- sentative samples of new advertising and promotional materials and signage bearing the Marks at least fifteen (15) days before their first publication or display. Owner shall be deemed to have no objection to the material submitted if such objections are not communicated to Manager in writing within ten (10) business days after receipt of such material. (d) INFRINGEMENT. (i) If Manager receives information to the effect that any third party is using the Marks, or any 23 similar trademark, in connection with the operation of casinos, hotels or other businesses similar to the Businesses, it shall provide Owner with prompt written notice of such fact. (ii) In the event of any infringement of the Marks, Manager shall render all reasonable assistance to Owner, at Owner's expense, and will join as a co-party with Owner at Owner's reasonable request and expense in the event that Owner desires to protect or proceed against such infringement. However, Manager shall not incur any expense in connection with any such proceedings without Owner's express written permission. Any recovery in connection with such a proceeding shall be for the sole benefit of Owner. (e) ENFORCEMENT. The failure or delay of Owner in any one or more instances to enforce one or more of the terms and conditions of this Article 3, or to exercise any right or privilege under this Article 3 or the waiver of any breach of the terms and conditions contained in this Article 3, shall not be construed thereafter as a waiver of any such terms, conditions, rights or privileges and the same and all other terms, conditions, rights or privileges under this Article 3 shall continue and remain in full force and effect as though no such failure or delay had occurred. 24 (f) SOFTWARE. Manager acknowledges Owner's exclusive right, title and interest in and to the proprietary (I.E. non third party owned) software presently utilized, and hereafter developed and utilized, in connection with the Businesses (collectively, the "SOFTWARE"). Owner hereby grants to Manager a non-exclusive license (the "SOFTWARE LICENSE") to use, exclusively in connection with the operation of the Businesses and the activities at any or all of the Businesses, the software listed on SCHEDULE "2" hereto (the "SOFTWARE", which Manager hereby warrants to be all of the software currently being used in connection with, and which is material to the operation of, the Businesses as currently being operated. No right is hereby granted, and Manager specifically disclaims, any right to decompile, disassemble, reverse engineer, copy (except for backup purposes), transfer or sublicense (collectively, the "DISALLOWED USES") the Software. Upon the occurrence of a Disallowed Use, Owner shall provide Manager with notice thereof in writing and, if such Disallowed Use is not cured within ten (10) days after such notice, Owner shall have the right to terminate the Software License immediately. If Manager determines that modifications or changes to the Software are necessary or desirable, Manager shall advise Owner in writing with 25 respect thereto. Any such modifications or changes shall be subject to Owner's prior approval, which approval shall not be unreasonably withheld or delayed beyond thirty (30) days after its submission to Owner. Such modifications or changes shall be made by Manager, within a reasonable period of time, and Owner shall retain all right, title and interest thereto. Owner makes no warranty of merchantability or fitness for a particular purpose or for any purpose as to the Software. 4. REPRESENTATIONS AND WARRANTIES OF MANAGER. Manager represents and warrants to Owner as follows: (a) ORGANIZATION. Manager is a corporation duly organized, validly existing and in good standing under the law of the State of Delaware, and has the full corporate power and authority to enter into and perform its obligations under this Agreement. (b) AUTHORIZATION OF AGREEMENT. The execution, delivery and performance of this Agreement has been duly authorized and approved by all necessary corporate action on the part of Manager, and this Agreement has been duly executed and delivered by Manager and constitutes the legal, valid and binding obligation of Manager, enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, 26 reorganization, moratorium and similar laws affecting creditors' rights and remedies generally and subject, as to enforceability, to general principles of equity. The execution, delivery and performance of this Agreement by Manager does not and will not conflict with any law, rule or regulation of the Applicable Governmental Authorities. (c) LITIGATION. There are no judicial or admin istrative actions, proceedings or investigations pending or, to the best of Manager's knowledge, threatened against Manager that question the validity of this Agreement or any action taken or to be taken by Manager in connection with this Agreement and that, if adversely determined, would have a material adverse effect upon Manager's ability to perform its obligations under this Agreement. (d) CONSENTS AND APPROVALS. No authorization, consent, approval, license, finding of suitability, exemption from or filing or registration with any court or governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, including, without limitation, the Applicable Governmental Authorities, is or will be necessary as a condition to the valid execution, delivery or performance by Manager of this Agreement, other than such authorizations, consents, approvals, licenses, findings of suitability, exemptions, filings or 27 registrations as have been obtained and are in full force and effect. 5. REPRESENTATIONS AND WARRANTIES OF OWNER. Owner represents and warrants to Manager as follows: (a) OWNER'S ORGANIZATION. Owner is a corporation duly organized, validly existing and in good standing under the laws of The Bahamas and has the full corporate power and authority to enter into and perform its obligations under this Agreement. (b) AUTHORIZATION OF AGREEMENT. The execution, delivery and performance of this Agreement has been duly authorized and approved by all necessary corporate action on the part of Owner, and this Agreement has been duly executed and delivered by Owner and constitutes the legal, valid and binding obligation of Owner, enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors' rights and remedies generally and subject, as to enforceability, to general principles of equity. The execution, delivery and performance of this Agreement by Owner does not and will not conflict with any law, rule or regulation of the Applicable Governmental Authorities. 28 (c) CONSENTS AND APPROVALS. No authorization, consent, approval, license, finding of suitability, exemption from or filing or registration with any court or governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, including, without limitation, the Applicable Governmental Authorities, is or will be necessary as a condition to the valid execution, delivery or performance by Owner of this Agreement, other than such authorizations, consents, approvals, licenses, findings of suitability, exemptions, filings or registrations as have been obtained and are in full force and effect. 6. NO JOINT VENTURE. It is expressly understood and agreed that Manager is being employed by Owner as an independent contractor to provide, or cause to be provided, supervisory management and consulting services in respect of the Businesses and not as a partner or joint venturer of Owner. All purchases and acquisitions of every kind and character by Manager on behalf of Owner shall be property of Owner and all debts and liabilities incurred by Manager within the scope of the authority granted and permitted hereunder in the course of its management and operation of the Businesses shall be debts and liabilities of Owner only, and Manager shall not be liable therefor for its own 29 account, except as specifically stated to the contrary herein. 7. COMPENSATION. (a) During the Initial Term, as compensation for the Services to be rendered by Manager hereunder, Owner shall pay to Manager an annual fee (the "MANAGEMENT FEE") equal to the sum of (x) 3% of the gross revenue from the Business for such period (the "PERCENTAGE FEE"), plus (y) Manager's reasonable costs incurred during such period in connection with the rendering of the Management Services (including out of pocket costs and employee wages and benefits) ("COSTS"). For purposes of this Section 7, the term "gross revenue" shall mean the aggregate gross revenues of Owner from the conduct of the Business, computed in accordance with United States generally accepted accounting principles consistently applied, including those set forth in the AICPA Accounting and Auditing Guide for Casinos. (b) Commencing on the first anniversary of the date hereof, if Manager shall continue to provide the Management Services beyond the Initial Term, then Owner shall pay to Manager a management fee for such services (the "ANNUAL FEE") shall be an amount equal to (x) 3% of gross revenue from the Businesses (the "ANNUAL PERCENTAGE FEE") for such period, plus (y) Costs for such period. 30 (c) The Percentage Fee and the Annual Percentage Fee shall be payable in twelve equal monthly installments in arrears on the last business day of each calendar month during the balance of the term hereof, based upon an estimate utilizing gross revenue for the Initial Term, with an appropriate adjustment made within 90 days after the expiration of the then current annual period. Costs shall be reimbursed monthly. 8. TERM AND TERMINATION EVENTS. (a) The initial term of this Agreement (the "INITIAL TERM"), shall commence on the date hereof (the "COMMENCEMENT DATE"), and shall terminate on the day immediately preceding the first (1st) anniversary of the Commencement Date. Thereafter, this Agreement shall be automatically renewed from year-to-year unless notice of intent not to renew is delivered by either party to this Agreement to the other party at least six (6) months prior to the expiration of the Initial Term or any subsequent term (the Initial Period, and each one year period thereafter, as the case may be, being referred to as the then current "TERM"). (b) This Agreement may be terminated under any of the following circumstances (a "TERMINATION"): 31 (i) at any time upon the mutual written consent of Owner and Manager; (ii) automatically, as to any of the Businesses upon a sale of such Business; (iii) by Manager ninety (90) days after the delivery of a notice by Manager to Owner and the Trustees following a breach by Owner of a material term hereof and Owner's failure to cure such breach within such 90 day period; provided, however, that Manager shall not have the right to terminate this Agreement if such breach is the direct result of a wrongful act or failure to act by Manager or any of its affiliates; or (iv) by Owner immediately after the delivery of a notice of Termination by Owner to Manager in the event that Owner reasonably determines that there is cause for such termination, which, for purposes hereof, shall include a determination that Manager, in the exercise of its duties hereunder and pursuant to the terms hereof, committed fraud or finds that Manager has com- mitted willful misconduct or gross negligence; (v) by Owner, upon thirty (30) days prior written notice to Manager, for any reason whatsoever; (vi) Notwithstanding anything to the contrary contained in this paragraph 8(b), the Trustees may 32 assign Owner's rights and obligations under this Agreement in respect of any of the Businesses, to a purchaser of such Business following the occurrence of an Event of Default under any of the Indentures in accordance with the terms of the Security Instruments, subject to the prior written consent of Manager, which consent shall not be unreasonably withheld or delayed, in which case this Agreement shall not terminate but shall continue in full force and effect in all respects. (c) If Manager continues to perform the Services pursuant to this Agreement during any period following the delivery of a termination notice as provided in this paragraph 8(b) and prior to the actual Termination hereof, Manager shall continue to earn the compensation called for in this Agreement during such period. In no event shall Owner, the Trustees, the holders of the Notes or their successors or assigns be liable to Manager or for any amounts owed by or damages recoverable against Owner hereunder and Manager's recourse for the same shall be limited solely to a recovery from and against the assets of Owner comprising the Businesses. (d) Upon a Termination of this Agreement, the parties hereto shall account to each other with respect to all uncompleted business and Manager shall promptly deliver 33 to Owner any books, records, instruments or other documentation relating to the Businesses and Owner in Manager's possession or under Manager's control. The provisions of Articles 3, 7, 12 and 13 hereof shall survive the Termination of this Agreement. 9. TERMINATION FEE. In the event that this Agreement is terminated pursuant to paragraph 8(b) hereof, a termination fee (the "TERMINATION FEE") shall be payable by Owner to Manager as follows: (a) TERMINATION BY MUTUAL CONSENT OR FOR MISCONDUCT. In the event that this Agreement is terminated in accordance with subparagraphs 8(b)(i) or 8(b)(iv) hereof, no Termination Fee shall be payable by Owner to Manager. (b) TERMINATION UPON A SALE OF THE BUSINESSES. In the event that this Agreement is terminated upon a sale of any of the Businesses, other than a foreclosure sale following an Event of Default under any of the Indentures, a Termination Fee equal to (x) $1,000,000 plus (y) Costs theretofore incurred and remaining unreimbursed, shall be payable by Owner to Manager immediately upon such Termination. (c) TERMINATION UPON A BREACH BY OWNER OR AT OWNER'S DISCRETION WITHOUT CAUSE. In the event this Agreement is terminated in accordance with subparagraphs 34 8(b)(iii) or 8(b)(v) hereof, a Termination Fee equal to (x) $1,000,000 plus (y) Costs theretofore incurred and remaining unreimbursed, shall be payable by Owner to Manager immediately upon such Termination, subject to the condition that if this Agreement is terminated in accordance with subparagraph 8(b)(iii) hereof, at the request of the Trustees, Manager shall continue to perform its obligations hereunder for a period of up to one hundred fifty (150) days following such Termination provided Owner continues to pay to Manager the monthly installments of the Percentage Fee or the Annual Percentage Fee and reimburse Costs on a timely basis. 10. COOPERATION UPON TERMINATION. Upon the non -renewal or termination of this Agreement, Manager shall cause its affiliates to release and waive all rights, claims, interests and relationships they may have pursuant to any contract, principle or partnership law or otherwise, to control, retain, or discharge any matter of management with respect to the Businesses, or any other benefit thereunder or in connection therewith. Manager shall peacefully vacate and surrender possession to Owner, and shall fully cooperate in the prompt and efficient transfer of the management of the Businesses from Manager to Owner or a person or entity acceptable to Owner. In connection with 35 the foregoing, Manager shall act in good faith to avoid any breach or disruption of any contract involving the Businesses or the lapse of any insurance policy covering or pertaining to the Businesses. 11. TRANSFER OF PERMITS AND GOVERNMENTAL LICENSES UPON TERMINATION. To the extent permissible under applicable law, upon termination or expiration of this Agreement, Manager shall cooperate in the transfer of any and all permits, licenses or similar authorizations issued by any governmental body relating to the operation or management of any or all of the Businesses to the new manager. 12. EXCULPATION AND INDEMNIFICATION. (a) (i) Manager, its affiliates and each of their respective officers, partners, directors, employees and agents shall indemnify and hold harmless Owner and any person who has acquired an interest in Owner, against and from all claims, demands, actions, suits or proceedings, civil, criminal, administrative or investigative, losses sustained or liabilities incurred, including monetary damages, as a result of (x) the willful misconduct or gross negligence of Manager, its affiliates and their respective officers, partners, directors, employees or agents, or (y) a 36 breach by Manager of or default by Manager under this Agreement. (ii) In the event that any legal proceedings shall be instituted or any claim or demand shall be asserted by any person in respect of which payment may be sought by Owner under the provisions of this paragraph 12(a), Owner promptly shall cause written notice of the assertion of any such proceeding or claim of which it has actual knowledge to be forwarded to Manager. Upon receipt of such notice, Manager shall have the right, at its option and at its own expense, to be represented by counsel of its choice, and to participate in any such proceeding with counsel of its choice; PROVIDED, HOWEVER, that no settlement shall be made without prior written consent of the Owner. The indemnitee and Owner agree to cooperate fully with each other in connection with the defense, negotiation or settlement of any such legal proceeding, claim or demand. (b) (i) Subject to the provisions of subparagraph 12(b)(ii) hereof, Owner shall indemnify and hold harmless Manager, its affiliates and any of their respective officers, partners, directors, employees and agents, from and against any and all losses, claims, damages, liabilities, expenses (including reasonable legal fees and expenses), judgments, fines, set- tlements and other 37 amounts arising from any and all claims, demands, actions, suits or proceedings, civil, criminal, administrative or investigative, in which any of them may be involved, or threatened to be involved, as a party or otherwise, which relates to, or arises out of (x) the willful misconduct or gross negligence of Owner, its employees or representatives, (y) a breach by Owner of or default by Owner under this Agreement, or (z) the performance of any duties and services for or on behalf of Owner pursuant to the terms of this Agreement, regardless of whether the such indemnitee continues to be Manager, an affiliate thereof or an officer, partner, director, employee or agent of Manager or its affiliates at the time any such liability or expense is paid or incurred, and regardless of whether the liability or expense accrued at or relates to, in whole or in part, any time before, on or after the date hereof. (ii) An indemnitee shall not be entitled to indemnification under this paragraph 12(b) with respect to any claim, issue or matter in respect of which it has committed fraud, willful breach of this Agreement, gross negligence or willful or wanton misconduct. (iii) In the event that any legal proceedings shall be instituted or any claim or demand shall be asserted by any person in respect of which payment may be sought by 38 an indemnitee under the provisions of this paragraph 12(b), the indemnitee promptly shall cause written notice of the assertion of any such proceeding or claim of which it has actual knowledge to be forwarded to Owner. Upon receipt of such notice, Owner shall have the right, at its option and at its own expense, to be represented by counsel of its choice, which must be reasonably satisfactory to the indemnitee, and to defend against, negotiate, settle or otherwise deal with any proceeding, claim or demand which relates to any loss, liability, damage or deficiency indemnified against hereunder; PROVIDED, HOWEVER, that no settlement shall be made without prior written consent of the indemnitee, not to be unreasonably withheld, conditioned or delayed; and PROVIDED FURTHER, that the indemnitee may participate in any such proceeding with counsel of its choice and at its expense. The indemnitee and Owner agree to cooperate fully with each other in connection with the defense, negotiation or settlement of any such legal proceeding, claim or demand. (iv) The indemnification provided by this paragraph 12(b) shall be in addition to any other rights to which an indemnitee may be entitled under any agreement, bylaw or vote of the Board of Directors of Owner or as a matter of law or otherwise, both as to action in the 39 indemnitee's capacity as Manager, an affiliate thereof or an officer, partner, director, employee or agent of Manager or its affiliates and as to action in any other capacity, shall continue as to an indemnitee who has ceased to serve in such capacity and shall inure to the benefit of the heirs, successors, assigns and administrators of an indemnitee. (v) The provisions of this Article 12 shall survive the termination of this Agreement. 13. GOVERNMENTAL LAWS. Notwithstanding anything to the contrary contained in this Agreement, this Agreement shall be deemed to include all provisions required by the casino and gaming authorities of The Commonwealth of The Bahamas and the regulations promulgated thereunder (the "ACT"), and shall be conditioned upon the approval of the Applicable Governmental Authorities. To the extent that any term or provision contained in this Agreement shall be inconsistent with the Act, the provisions of the Act shall govern. All provisions of the Act, to the extent required by law to be included in this Agreement, are incorporated herein by reference as if fully restated in this Agreement. 14. NOTICES. All notices, demands, approvals, requests or other communications which may be or are required to be given, served or sent by any party to the other parties, shall be in writing and shall be delivered 40 personally or by certified mail, return receipt requested, to the other party's address as follows: if to Owner to: c/o __________________________ ______________________________ ______________________________ Attention: __________________ if to Manager to: ______________________________ ______________________________ ______________________________ Attention: __________________ Any party may change the name and/or address by written notice given in each instance to the other parties. Notices shall be deemed given when delivered personally, or, if sent by certified mail, the earlier of (a) three (3) business days after mailing or (b) when received. 15. SEVERABILITY. If any term or provision of this Agreement or the application thereof to any person or circumstance shall be invalid or unenforceable, to any extent, the remainder of this Agreement, or the application of such term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby, and each term and provision of this Agreement shall be valid and be enforced to the fullest extent permitted by law. 41 16. GOVERNING LAW. This Agreement shall be construed and enforced in accordance with the laws of the State of New York without regard to its conflict of laws provisions. 17. ASSIGNMENT. This Agreement and/or right to receive payments hereunder shall not be assigned by Owner or Manager without the prior written approval of the other in each instance; PROVIDED, HOWEVER, that Owner may assign its rights under this Agreement to a purchaser of the Businesses and the Trustees may assign the Owner's rights under this Agreement to a purchaser of the Businesses in a foreclosure sale following an Event of Default under any of the Indentures as provided in the Security Instruments. 18. SUCCESSORS AND ASSIGNS. Subject to the provisions of Section 17 hereof, all of the covenants, conditions and obligations contained in this Agreement shall be binding upon and inure to the benefit of the respective successors and permitted assigns of Owner and Manager to the same extent as if each such successor and permitted assign were in each case named as a party to this Agreement. 19. ENTIRE AGREEMENT; AMENDMENT. This Agreement constitutes the sole understanding of the parties with respect to the matters provided for herein and supersedes any previous agreements and understandings between the parties 42 with respect to the subject matter hereof. No amendment, modification or alteration of the terms or provisions of this Agreement shall be binding unless the same shall be in writing and duly executed by the parties hereto. 20. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original and all of which shall constitute the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this Management Agreement to be duly executed by an authorized representative thereof, all as of the day and year first above written. P.I. RESORTS LIMITED By: _____________________ Name: Title: RESORTS INTERNATIONAL, INC. By: _____________________ Name: Title: 43 EXHIBIT "A" For purposes hereof the "Businesses" shall mean all of the operations and properties conducted and owned by RII and its affiliates relating primarily to Paradise Island, the Bahamas, including, without limitation, the Paradise Island Resort & Casino, Ocean Club Golf & Tennis Resort, Paradise Beach Resort, Paradise Island Airlines, a short take-off and landing airport facility at the southeast corner of Paradise Island and approximately 219 acres of undeveloped land on Paradise Island (including approximately 120 acres of waterfront property) not used in the operation of the resorts on Paradise Island, approximately 1675 acres of undeveloped and partially developed land on Grand Bahama Island, approximately 561 acres on Andros Island and other similarly related assets not currently used actively in the Paradise Island operations. 44 SCHEDULE "1" INDENTURES ---------- 45 [GD&C Draft -- 12/30/93] [NA932010.156] -------------------------------------------- RESORTS INTERNATIONAL HOTEL FINANCING, INC., Issuer, RESORTS INTERNATIONAL HOTEL, INC., Guarantor, and STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, Trustee, -------------------------------------------- I N D E N T U R E Dated as of [ ], 1994 -------------------------------------------- 11% MORTGAGE NOTES DUE 2003 -------------------------------------------- CROSS-REFERENCE TABLE Section of Trust Indenture Act of 1939 Section of Indenture - -------------------------------------- -------------------- 310(a)(1). . . . . . . . . . . . . . . . . . . . . . . . . .8.08; 8.09 (a)(2). . . . . . . . . . . . . . . . . . . . . . . . . .8.09 (a)(3). . . . . . . . . . . . . . . . . . . . . . . . . .8.14(b) (a)(4). . . . . . . . . . . . . . . . . . . . . . . . . .Not Applicable (b) . . . . . . . . . . . . . . . . . . . . . . . . . . .8.08 (c) . . . . . . . . . . . . . . . . . . . . . . . . . . .Not Applicable 311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . .8.13 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . .8.13 (c) . . . . . . . . . . . . . . . . . . . . . . . . . . .Not Applicable 312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . .9.01; 9.02(a) (b) . . . . . . . . . . . . . . . . . . . . . . . . . . .9.02(b) (c) . . . . . . . . . . . . . . . . . . . . . . . . . . .9.02(c) 313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . .9.03(a) (b) . . . . . . . . . . . . . . . . . . . . . . . . . . .9.03(a) (c) . . . . . . . . . . . . . . . . . . . . . . . . . . .9.03(a) (d) . . . . . . . . . . . . . . . . . . . . . . . . . . .9.03(b) 314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . .9.04 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . .6.02 (c)(1). . . . . . . . . . . . . . . . . . . . . . . . . .1.06 (c)(2). . . . . . . . . . . . . . . . . . . . . . . . . .1.06 (c)(3). . . . . . . . . . . . . . . . . . . . . . . . . .9.04(c); 12.07(i) (d) . . . . . . . . . . . . . . . . . . . . . . . . . . .6.02 (e) . . . . . . . . . . . . . . . . . . . . . . . . . . .1.06 (f) . . . . . . . . . . . . . . . . . . . . . . . . . . .Not Applicable 315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . .8.01(a) (b) . . . . . . . . . . . . . . . . . . . . . . . . . . .8.02 (c) . . . . . . . . . . . . . . . . . . . . . . . . . . .8.01(b) (d) . . . . . . . . . . . . . . . . . . . . . . . . . . .8.01(c) (e) . . . . . . . . . . . . . . . . . . . . . . . . . . .7.14 316(a)(l)(A) . . . . . . . . . . . . . . . . . . . . . . . .7.12(b) (a)(l)(B) . . . . . . . . . . . . . . . . . . . . . . . .7.13 (a)(2). . . . . . . . . . . . . . . . . . . . . . . . . .Not Applicable (b) . . . . . . . . . . . . . . . . . . . . . . . . . . .7.08 317(a)(l). . . . . . . . . . . . . . . . . . . . . . . . . .7.03 (a)(2). . . . . . . . . . . . . . . . . . . . . . . . . .7.04 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . .12.03 318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . .1.07 - ------------------------- Note: This Cross-Reference Table shall not be deemed, for any purpose, to be a part of this Indenture. TABLE OF CONTENTS ----------------- Page ---- ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION Section 1.01. Definitions.. . . . . . . . . . . . . . . . . . . . 1 Section 1.02. Acts of Noteholders. . . . . . . . . . . . . . . . 16 Section 1.03. Notices, etc., to Trustee, RIH, the Company, Casino Control Commission and Director of Gaming Enforcement.. . . . . . . . . . . . . . . . . . . . 18 Section 1.04. Notices to Noteholders; Waiver. . . . . . . . . . . 19 Section 1.05. Form and Contents of Documents Delivered to Trustee.. . . . . . . . . . . . . . . . . . . . . . 20 Section 1.06. Compliance Certificates and Opinions. . . . . . . . 21 Section 1.07. Conflict with Trust Indenture Act.. . . . . . . . . 21 Section 1.08. Effect of Headings and Table of Contents. . . . . . 22 Section 1.09. Successors and Assigns. . . . . . . . . . . . . . . 22 Section 1.10. Separability Clause.. . . . . . . . . . . . . . . . 22 Section 1.11. Benefits of Indenture.. . . . . . . . . . . . . . . 22 Section 1.12. Governing Law.. . . . . . . . . . . . . . . . . . . 22 Section 1.13. Casino Control Act. . . . . . . . . . . . . . . . . 22 Section 1.14. General Application.. . . . . . . . . . . . . . . . 22 (i) Page ---- ARTICLE TWO NOTE FORM Section 2.01. Form Generally. . . . . . . . . . . . . . . . . . . 23 Section 2.02. Form of Notes.. . . . . . . . . . . . . . . . . . . 24 Section 2.03. Form of Trustee's Certificate of Authentication.. . 28 Section 2.04. Form of the Guaranty. . . . . . . . . . . . . . . . 29 ARTICLE THREE THE NOTES Section 3.01. General Title.. . . . . . . . . . . . . . . . . . . 29 Section 3.02. Form and Denominations. . . . . . . . . . . . . . . 30 Section 3.03. Execution, Authentication, Delivery and Dating. . . . . . . . . . . . . . . . . . . . . . . 30 Section 3.04. Temporary Notes.. . . . . . . . . . . . . . . . . . 30 Section 3.05. Registration, Transfer and Exchange.. . . . . . . . 31 Section 3.06. Mutilated, Destroyed, Lost and Stolen Notes.. . . . 32 Section 3.07. Payment of Interest on Notes; Interest Rights Preserved.. . . . . . . . . . . . . . . . . . . . . 33 Section 3.08. Persons Deemed Owners.. . . . . . . . . . . . . . . 34 Section 3.09. Cancellation. . . . . . . . . . . . . . . . . . . . 34 Section 3.10. Term and Form.. . . . . . . . . . . . . . . . . . . 35 Section 3.11. Exchangeability.. . . . . . . . . . . . . . . . . . 35 Section 3.12. Redemption. . . . . . . . . . . . . . . . . . . . . 35 Section 3.13. Authentication and Delivery of Original Issue.. . . . . . . . . . . . . . . . . . . . . . . 36 (ii) Page ---- ARTICLE FOUR GUARANTY Section 4.01. Guaranty. . . . . . . . . . . . . . . . . . . . . . 36 Section 4.02. Execution and Delivery of Guaranty. . . . . . . . . 37 Section 4.03 Mortgage Securing Guaranty. . . . . . . . . . . . . 38 ARTICLE FIVE SATISFACTION AND DISCHARGE Section 5.01. Payment of Indebtedness; Satisfaction and Discharge of Indenture. . . . . . . . . . . . . . . 39 Section 5.02. Application of Deposited Money. . . . . . . . . . . 40 Section 5.03. Repayment to the Company. . . . . . . . . . . . . . 40 ARTICLE SIX SECURITY Section 6.01. Assignment Agreement. . . . . . . . . . . . . . . . 41 Section 6.02. Recording, Etc. . . . . . . . . . . . . . . . . . . 42 Section 6.03. Custody of Mortgage Documents.. . . . . . . . . . . 43 Section 6.04. Suits to Protect the Trust Estate and Mortgage Documents. . . . . . . . . . . . . . . . . 44 ARTICLE SEVEN REMEDIES Section 7.01. Events of Default.. . . . . . . . . . . . . . . . . 44 Section 7.02. Acceleration of Maturity; Rescission and Annulment.. . . . . . . . . . . . . . . . . . . . . 48 Section 7.03. Covenant to Pay Trustee Amounts Due on Notes and Right of Trustee to Judgment. . . . . . . . . . 49 Section 7.04. Trustee May File Proofs of Claim. . . . . . . . . . 50 Section 7.05. Trustee May Enforce Claims Without Possession of Notes. . . . . . . . . . . . . . . . . . . . . . 51 (iii) Page ---- Section 7.06. Application of Money Collected. . . . . . . . . . . 51 Section 7.07. Limitation on Suits.. . . . . . . . . . . . . . . . 52 Section 7.08. Unconditional Right of Noteholders to Receive Principal and Interest. . . . . . . . . . . . . . . 53 Section 7.09. Restoration of Rights and Remedies. . . . . . . . . 53 Section 7.10. Rights and Remedies Cumulative. . . . . . . . . . . 53 Section 7.11. Delay or Omission Not Waiver. . . . . . . . . . . . 54 Section 7.12. Other Rights. . . . . . . . . . . . . . . . . . . . 54 Section 7.13. Waiver of Past Defaults.. . . . . . . . . . . . . . 54 Section 7.14. Undertaking for Costs.. . . . . . . . . . . . . . . 55 Section 7.15. Enforcement.. . . . . . . . . . . . . . . . . . . . 55 Section 7.16. Management of Casino-Hotel. . . . . . . . . . . . . 56 ARTICLE EIGHT THE TRUSTEE Section 8.01. Certain Duties and Responsibilities. . . . . . . 56 Section 8.02. Notice of Defaults.. . . . . . . . . . . . . . . 58 Section 8.03. Certain Rights of Trustee. . . . . . . . . . . . 58 Section 8.04. Not Responsible for Recitals or Issuance of Notes or Application of Proceeds.. . . . . . . . 60 Section 8.05. May Hold Notes.. . . . . . . . . . . . . . . . . 60 Section 8.06. Money Held in Trust. . . . . . . . . . . . . . . 60 Section 8.07. Compensation and Reimbursement.. . . . . . . . . 60 Section 8.08. Disqualification; Conflicting Interests. . . . . 61 Section 8.09. Corporate Trustee Required; Eligibility. . . . . 61 (iv) Page ---- Section 8.10. Resignation and Removal; Appointment of Successor. . . . . . . . . . . . . . . . . . . . 62 Section 8.11. Acceptance of Appointment by Successor.. . . . . 64 Section 8.12. Merger, Conversion, Consolidation or Succession to Business.. . . . . . . . . . . . . 64 Section 8.13. Preferential Collection of Claims Against Company. . . . . . . . . . . . . . . . . . . . . 64 Section 8.14. Co-trustees and Separate Trustees. . . . . . . . 65 Section 8.15. Appointment of Authenticating Agent. . . . . . . 66 ARTICLE NINE NOTEHOLDERS' LISTS AND REPORTS BY TRUSTEE Section 9.01. Company to Furnish Trustee Semi-Annual Lists of Noteholders.. . . . . . . . . . . . . . . . . 67 Section 9.02. Preservation of Information; Communications to Noteholders.. . . . . . . . . . . . . . . . . 68 Section 9.03. Reports by Trustee.. . . . . . . . . . . . . . . 68 ARTICLE TEN CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE Section 10.01. Consolidation, Merger, Conveyance or Transfer Only on Certain Terms. . . . . . . . . . . . . . 70 Section 10.02. Successor Entity Substituted.. . . . . . . . . . 72 Section 10.03. Successor Management of Casino-Hotel.. . . . . . 73 Section 10.04. Limitation on Sales of Trust Estate. . . . . . . 73 Section 10.05 RIH Sale . . . . . . . . . . . . . . . . . . . . 73 ARTICLE ELEVEN AMENDMENTS, SUPPLEMENTS AND WAIVER Section 11.01. Without Consent of Noteholders.. . . . . . . . . 73 Section 11.02. With Consent of Noteholders. . . . . . . . . . . 74 (v) Page ---- Section 11.03. Execution of Amendments and Supplements. . . . . 76 Section 11.04. Effect of Amendment or Supplement. . . . . . . . 76 Section 11.05. Conformity with Trust Indenture Act. . . . . . . 76 Section 11.06. Reference in Notes to Amendment or Supplement. . 76 ARTICLE TWELVE COVENANTS Section 12.01. Payment of Principal and Interest. . . . . . . . 77 Section 12.02. Maintenance of Office or Agency. . . . . . . . . 77 Section 12.03. Money for Security Payments to Be Held in Trust. 78 Section 12.04. Corporate Existence. . . . . . . . . . . . . . . 79 Section 12.05. To Keep Books; Inspection by Trustee.. . . . . . 80 Section 12.06. Reports and Compliance Certificates. . . . . . . 80 Section 12.07. Limitations and Dividends and Restricted Payments.. . . . . . . . . . . . . . . . . . . . 82 Section 12.08. Limitations on Additional Indebtedness and Issuance of Notes. . . . . . . . . . . . . . . . 83 Section 12.09. Limitations on Repayment of Subordinated Indebtedness.. . . . . . . . . . . . . . . . . . 84 Section 12.10. Limitation on Certain Transactions.. . . . . . . 85 Section 12.11. Restriction of Activities. . . . . . . . . . . . 85 Section 12.12. Limitation on Subsidiaries Consolidated Group. . 86 Section 12.13. Limitations on Liens.. . . . . . . . . . . . . . 86 Section 12.14. Compliance with Laws.. . . . . . . . . . . . . . 87 Section 12.15. Payment of Taxes and Other Claims. . . . . . . . 87 Section 12.16. Maintenance of Properties. . . . . . . . . . . . 87 (vi) Page ---- Section 12.17. Insurance. . . . . . . . . . . . . . . . . . . . 88 Section 12.18. Waiver of Stay, Extension or Usury Laws. . . . . 88 Section 12.19. Appointment to Fill a Vacancy in Office of Trustee. . . . . . . . . . . . . . . . . . . . . 89 Section 12.20. Validity of Liens. . . . . . . . . . . . . . . . 89 Section 12.21. Transactions with Stockholders and Affiliates. . 89 ARTICLE THIRTEEN REDEMPTION OF NOTES Section 13.01. General Applicability of Article.. . . . . . . . 90 Section 13.02. Election to Redeem; Notice to Trustee. . . . . . 90 Section 13.03. Selection by Trustee of Notes to Be Redeemed.. . 90 Section 13.04. Notice of Redemption.. . . . . . . . . . . . . . 90 Section 13.05. Deposit of Redemption Price. . . . . . . . . . . 91 Section 13.06. Notes Payable on Redemption Date.. . . . . . . . 91 Section 13.07. Notes Redeemed in Part.. . . . . . . . . . . . . 92 Section 13.08. Redemption Pursuant to Casino Control Act. . . . 92 ARTICLE FOURTEEN DEFEASANCE Section 14.01. Discharge of the Indenture and Defeasance of the Securities.. . . . . . . . . . . . . . . . . 93 Section 14.02. Application of Deposited Money.. . . . . . . . . 94 Section 14.03. Repayment to the Company.. . . . . . . . . . . . 94 (vii) TABLE OF EXHIBITS ----------------- Exhibits Document -------- -------- Exhibit A RIH Promissory Note Exhibit B Assignment Agreement from Resorts International Hotel Financing, Inc. Exhibit C Subordination Provisions Exhibit D Mortgage securing RIH Promissory Note between Resorts International Hotel, Inc. and Resorts International Hotel Financing, Inc. Exhibit E Assignment of Leases and Rents from Resorts International Hotel, Inc. to Resorts International Hotel Financing, Inc. Exhibit F Mortgage securing Guaranty of Mortgage Notes between Resorts International Hotel, Inc. and State Street Bank and Trust Company of Connecticut, National Association, as Trustee Exhibit G Intercreditor Agreement Terms INDENTURE THIS INDENTURE dated as of [ ], 1994, among Resorts International Hotel Financing, Inc., a Delaware corporation (the "Company"), Resorts International Hotel, Inc., a New Jersey corporation ("RIH"), and State Street Bank and Trust Company of Connecticut, National Association, a national banking association, as trustee (together with its successors as such trustee, the "Trustee"). PRELIMINARY STATEMENT The capitalized terms used in this Indenture which are not otherwise defined herein have the meanings set forth in Article I. The Company has duly authorized the creation, execution and delivery of its 11% Mortgage Notes due 2003 (the "Notes"), issuable in accordance with the terms hereof, and RIH has duly authorized the guaranty of the Company's obligations under this Indenture, and, to secure the Notes and to provide therefor, each of the Company and RIH has duly authorized the execution and delivery of this Indenture. All things have been done which are necessary to make the Notes, when executed by the Company and authenticated and delivered by the Trustee hereunder and duly issued by the Company, the valid obligations of the Company, and to constitute this Indenture a valid agreement of the Company and RIH, in accordance with the terms of the Notes and this Indenture. THEREFORE, for and in consideration of the premises and the purchase or acceptance of the Notes by the Holders thereof, RIH and the Company do hereby covenant and agree to and with the Trustee, for the Ratable Benefit of all Holders of the Notes thereto appertaining, as follows: ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION Section 1.01. DEFINITIONS. For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires: (a) the terms defined in this Article One have the meanings assigned to them in this Article One and include the plural as well as the singular; (b) 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; (c) all accounting terms not otherwise defined herein have the meanings assigned to them, and all computations herein provided for shall be made, in accordance with GAAP consistently applied; and (d) 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. "ACCOUNTANT" means a Person engaged in the practice of accounting who (except as otherwise expressly provided in this Indenture) may be employed by or affiliated with the Company or RIH. "ACT" when used with respect to any Noteholder or Noteholders has the meaning stated in Section 1.02(a). "AFFILIATE" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person, and, with respect to any specified natural Person, any other Person having a relationship by blood, marriage or adoption not more remote than first cousin with such specified Person. For purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing; PROVIDED, HOWEVER, that, except as may be required under the TIA, the term "Affiliate" shall not include, with respect to the Company or RIH, any of Fidelity Management & Research Company, TCW Special Credits or funds or accounts managed or advised by either of them. "AFTER-ACQUIRED FEE MORTGAGE DEBT" means any Indebtedness secured by an After-Acquired Fee Mortgage. "AFTER-ACQUIRED FEE MORTGAGE" has the meaning stated in Section 2.07 of the Mortgage. "ASSIGNMENT AGREEMENT" means the Assignment of Agreements dated as of the date hereof, providing for the assignment of the RIH Promissory Note and other Mortgage Documents to the Trustee by the Company, and acknowledgment thereof by RIH, a copy of which is attached hereto as Exhibit B. "ASSIGNMENT OF LEASES AND RENTS" means the Assignment of Leases and Rents dated as of the date hereof, from RIH to the Company securing the RIH Promissory Note, a copy of which is attached hereto as Exhibit E. "AUTHENTICATING AGENT" means any Person named as Authenticating Agent for the Notes in accordance with the provisions of this Indenture until a successor Authenticating Agent becomes such pursuant thereto, and thereafter Authenticating Agent shall mean such successor. "AUTHORIZED SIGNATURE" means the signatures of the chairman of the board, the president or a Vice President and of the treasurer, an assistant treasurer, the controller, an assistant controller, the secretary or an assistant secretary of the Company or RIH, as the case may be. "CAPITALIZED LEASE OBLIGATION" means, with respect to any Person, any lease of any property (whether real, personal or mixed) by such Person as lessee which, in conformity with GAAP consistently applied, is accounted for as a capitalized lease on the balance sheet of such Person. "CASE" means, collectively, the bankruptcy cases involving RII and GRI in the United States Bankruptcy Court for the District of Delaware. "CASINO" means that portion of the Casino-Hotel used for gaming and related activities. "CASINO-HOTEL" means the casino and hotel complex and ancillary structures and facilities located on the Premises and furniture, fixtures and equipment at any time contained therein. "CASINO CONTROL ACT" means the New Jersey Casino Control Act and the regulations promulgated thereunder, as amended. "CASINO CONTROL COMMISSION" means the New Jersey Casino Control Commission, as from time to time constituted, or if at any time after the execution of this Indenture such Commission is not existing and performing the duties theretofore assigned to it, then the body performing such duties at such time. "COMBINATION TRANSACTION" has the meaning stated in Section 10.01. 3 "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 instrument such Commission is not existing and performing the duties theretofore assigned to it under the TIA, then the body performing such duties at such time. "COMPANY" means the Person named as the "Company" in the first paragraph of this instrument until a successor entity shall have become such pursuant to the applicable provisions of this Indenture, and thereafter, except to the extent otherwise contemplated by Section 10.02, "Company" shall mean such successor entity exclusively. "COMPANY CONSENT", "COMPANY ORDER" and "COMPANY REQUEST" mean, respectively, a written consent, order or request signed with an Authorized Signature and delivered to the Trustee. "CONSOLIDATED CASH FLOW" means, with respect to any Person for any period, an amount equal to the sum of (i) the consolidated net income (or loss) of such Person for such period determined in accordance with GAAP consistently applied, excluding interest income, interest expense and gains or losses from extraordinary or nonrecurring items, plus (ii) all amounts deducted in computing such consolidated net income (or loss) in respect of depreciation and amortization, plus (iii) non-cash charges arising from the reduction of CRDA Deposits to market value, minus (iv) taxes based upon or measured by income which are payable in cash, minus (v) CRDA Deposits. "CONSOLIDATED INTEREST CHARGES" means, with respect to any Person for any period, the consolidated interest expense (not including the non-cash amortization of discount on the original issuance of (a) the RIH Promissory Note, (b) any intercompany indebtedness of RIH issued in connection with Indebtedness represented by the Junior Mortgage Facility and (c) any intercompany indebtedness of RIH issued in connection with Indebtedness represented by the Working Capital Facility), whether payable in cash or in-kind (and with respect to RIH, including, without limitation, the interest paid or accrued (without duplication) on (i) the RIH Promissory Note, (ii) any intercompany indebtedness of RIH issued in connection with Indebtedness represented by the Junior Mortgage Facility and (iii) any intercompany indebtedness of RIH issued in connection with Indebtedness represented by the Working Capital Facility), without deduction for interest income (other than cash interest income received from RII in payment of its interest cost on any Working Capital Facility), in each case for such Person and 4 its consolidated Subsidiaries for such period determined in accordance with GAAP consistently applied. "CONSOLIDATED INTEREST COVERAGE RATIO" shall mean, at any date of calculation thereof, the ratio of (a) Consolidated Cash Flow of RIH and its consolidated Subsidiaries for the immediately preceding four consecutive fiscal quarters to (b) Consolidated Interest Charges of RIH and its consolidated Subsidiaries for such period. "CONSOLIDATED NET INCOME" means, with respect to any Person for any period, an amount equal to consolidated net income (or loss) of such Person for such period determined in accordance with GAAP consistently applied, minus (a) federal and state taxes based upon or measured by income which are payable in cash, plus (b) non-cash charges arising from federal and state taxes based upon or measured by income. "CRDA DEPOSITS" means (a) the quarterly deposits made by RIH to the Casino Reinvestment Development Authority in an amount equal to 1.25% of RIH's gross revenue in order to satisfy its investment obligation pursuant to the Casino Control Act, and (b) the amounts invested in qualified investments in lieu of any of the quarterly deposits (or portion thereof) referred to in clause (a) above. "CRDA DISPUTE" means the dispute existing on the date hereof between RIH and the New Jersey Casino Reinvestment Development Authority regarding CRDA Deposits and New Jersey Casino Reinvestment Authority Notes, which dispute involves an amount of approximately $30,000,000. "DEFAULT" means the occurrence and continuance of an Event of Default or an event which, after notice or lapse of time or both, would become an Event of Default. "DEFAULTED INTEREST" has the meaning stated in Section 3.07. "EFFECTIVE DATE" means the date on which the prepackaged plan of reorganization of RII and GRI becomes effective. "EVENT OF DEFAULT" has the meaning stated in Section 7.01. An Event of Default shall "exist" if an Event of Default shall have occurred and be continuing. "EXCHANGE ACT" means the Securities and Exchange Act of 1934, as amended. "EXISTING ENCUMBRANCES" has the meaning stated in Section 1.01 of the Mortgage. 5 "FAIR MARKET VALUE" of any Notes means (a) the average of the closing sales price of the Notes for the 30 trading days immediately prior to the date of determination of such value on the largest national securities exchange on which such Notes shall have traded on such trading days, or (b) if no such sales of such Notes occurred during such 30-day period or if the Notes are not so listed but are traded in the over-the-counter market with quotations available in the National Association of Securities Dealers Automated Quotation System ("NASDAQ"), the average of the means between the "bid" and "asked" prices on such national securities exchange or as quoted on NASDAQ, as the case may be, during such 30-day period, or (c) if the Notes are not traded on a national securities exchange or quoted on NASDAQ, the fair market value of such Notes as of the date of determination as determined by agreement of two nationally recognized Independent investment banking firms, one to be chosen by the Company and the other by the Holder of the Notes being valued, with the costs of each such firm being the responsibility of the Person selecting such firm. If such firms cannot agree upon such fair market value, such firms shall select a third nationally recognized Independent investment banking firm, which shall determine such fair market value, the costs of such third firm being shared equally by the Company and such Holder. "F,F&E FINANCING AGREEMENT" has the meaning stated in Section 1.01 of the Mortgage. "GAAP" means United States generally accepted accounting principles. "GRI" means GGRI, Inc., a Delaware corporation. "GROUND LEASES" has the meaning stated in Granting Clause Second of the Mortgage. "GUARANTY" means the guaranty contained in Article Four. "GUARANTY MORTGAGE" means the Mortgage securing Guaranty of Mortgage Notes dated as of the date hereof, between RIH, as mortgagor, and the Trustee, as mortgagee, securing the Guaranty, a copy of which is attached hereto as Exhibit F. "HOTEL" means that portion of the Casino-Hotel not included within the Casino. "INDEBTEDNESS" means, as applied to any Person, without duplication, any indebtedness, exclusive of deferred taxes, (a) in respect of borrowed money (whether or not the recourse of the lender is to the whole of the assets of such Person or only to a portoin thereof); (b) evidenced by bonds, 6 notes, debentures or similar instruments or letters of credit; (c) representing the balance deferred and unpaid of the purchase price of any property, if and to the extent such indebtedness would appear as a liability upon a balance sheet of such Person prepared in accordance with GAAP (but excluding trade accounts payable arising in the ordinary course of business that are not overdue by more than 90 days or are being contested by such Person in good faith); (d) any Capitalized Lease Obligations (other than, with respect to RIH or the Company, the Ground Leases) of such Person; and (e) Indebtedness of others guaranteed by such Person, including, without limitation, every obligation of such Person (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or to purchase (or to advance or supply funds for the purchase of) any security for the payment of such Indebtedness, (ii) to purchase property, securities or services for the purpose of assuring the holder of such Indebtedness of the payment of such Indebtedness, or (iii) to maintain working capital, equity capital or other financial sta tement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness; PROVIDED, HOWEVER, that the guaranty by any Person shall not include endorsements by such Person for collection or deposit, in either case in the ordinary course of business. The term "INDEBTEDNESS" does not include: (1) any of the types of indebtedness described in clauses (a) through (e) above (inclusive) owed by the Company to RIH or any of their Subsidiaries, by RIH to the Company or any of their Subsidiaries or by any such Subsidiary to RIH, the Company or any other such Subsidiary (including, without limitation, the RIH Promissory Note and the RIH Junior Promissory Note); (2) the Guaranty, the Junior Guaranty and the Working Capital Facility Guaranty; (3) matters relating to the CRDA Dispute, New Jersey Casino Reinvestment Development Authority Notes or the CRDA Deposits; and (4) any payments made by the Company or RIH under the RII Management Agreement, the RII Tax Sharing Agreement or the Services Agreement. "INDENTURE" means this instrument as originally executed or as it may from time to time be supplemented, modified or amended by one or more indentures or other instruments supplemental hereto entered into pursuant to the applicable provisions thereof. "INDEPENDENT" when used with respect to any specified Person means such a Person who (a) is in fact independent, (b) does not have any direct financial interest or any material indirect financial interest in the Company or in any other obligor upon the Notes or in any Affiliate of the Company or of such other obligor and (c) is not connected with the Company or such other obligor or any Affiliate of the Company or such other obligor as an officer, employee, promoter, underwriter, trustee, partner, director or person 7 performing similar functions. Whenever it is herein provided that any Independent Person's opinion or certificate shall be furnished to the Trustee, such Person shall be appointed by a Company Order, and such opinion or certificate shall state that the signer has read this definition and that the signer is Independent within the meaning hereof. A Person who is performing or who has performed services as an independent contractor to any specified Person shall not be considered not Independent merely by reason of the fact that such Person is or has performed such services. "INTERCREDITOR AGREEMENT" means the Intercreditor Agreement dated as of the date hereof, among the Trustee, the trustee under the Junior Mortgage Note Indenture and such other parties that may from time to time become a party thereto, which shall incorporate the terms set forth in Exhibit G. "INTEREST PAYMENT DATE" means the date on which an installment of interest on the Notes is due and payable. "JUNIOR ASSIGNMENT OF LEASES AND RENTS" means the Assignment of Leases and Rents dated as of the date hereof, from RIH to the Company securing the RIH Junior Promissory Note. "JUNIOR GUARANTY" means any guaranty of the Junior Mortgage Facility by RIH, including, without limitation, the guaranty of the Junior Mortgage Notes due 2004 by RIH contained in Article Four of the Junior Mortgage Note Indenture. "JUNIOR GUARANTY MORTGAGE" means the Mortgage securing the Guaranty of Junior Mortgage Notes dated as of the date hereof, between RIH, as mortgagor, and U.S. Trust Company, N.A., as mortgagee, securing the Junior Guaranty. "JUNIOR MORTGAGE" means the Mortgage securing the RIH Junior Promissory Note dated as of the date hereof, between the Company, as successor mortgagee, and RIH, as mortgagor. "JUNIOR MORTGAGE DOCUMENTS" means (a) the Junior Mortgage, the Junior Guaranty Mortgage, the RIH Junior Promissory Note, the Junior Assignment of Leases and Rents and any other security document to which either RIH or the Company is a party relating to the Junior Mortgage Notes, which is executed and delivered pursuant to or in connection with the Junior Mortgage, the Junior Guaranty Mortgage or the Junior Assignment Agreement, and (b) any mortgage, deed of trust, guaranty, promissory note, collateral assignment agreement, assignment of leases and rents, assignment of operating assets 8 and any other security document to which either RIH or the Company is a party relating to the Junior Mortgage Facility. "JUNIOR MORTGAGE FACILITY" means the Junior Mortgage Notes and any secured or unsecured facility or facilities entered into by RIH or the Company providing for the making of loans to RIH or the Company on a revolving or term basis, or the issuance of notes, debentures or bonds by RIH or the Company, as such agreement, indenture or instrument may be amended, supplemented or modified from time to time, or any refinancing thereof, in an aggregate principal amount up to $35,000,000 plus additional notes, debentures or bonds issued in payment of interest accrued on outstanding notes, debentures or bonds; PROVIDED, HOWEVER, that the lender or lenders thereunder (or any trustee or agent acting on behalf of such lender or lenders) shall have executed an intercreditor agreement covering the matters set forth on Exhibit G. The liens, if any, securing the Junior Mortgage Facility shall be PARI PASSU with the lien of the Junior Mortgage and the Junior Guaranty Mortgage. The term "JUNIOR MORTGAGE FACILITY" does not include the Junior Guaranty. "JUNIOR MORTGAGE NOTE INDENTURE" means the Indenture dated as of the date hereof, among the Company, RIH and U.S. Trust Company of California, N.A., as trustee, pursuant to which the Junior Mortgage Notes were issued, as originally executed or as it may from time to time be supplemented, modified or amended by one or more indentures or other instruments supplemental thereto entered pursuant to the applicable provisions thereof. "JUNIOR MORTGAGE NOTES" means the 11.375% Junior Mortgage Notes due 2004 of the Company issued pursuant to the Junior Mortgage Note Indenture, including, without limitation, any Additional Notes (as defined in the Junior Mortgage Note Indenture). "LEGAL REQUIREMENTS" has the meaning stated in Section 1.01 of the Mortgage. "MATURITY" when used with respect to any Note means the date on which the principal (or any portion thereof) of such Note becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration or call for redemption or otherwise. "MORTGAGE" means the Mortgage securing the RIH Promissory Note dated as of the date hereof, between the Company, as successor mortgagee, and RIH, as mortgagor. "MORTGAGE DEBT" means, at any point in time, the RIH Promissory Note, the RIH Junior Promissory Note and any 9 secured Indebtedness outstanding under any Working Capital Facility. "MORTGAGE DOCUMENTS" means the Mortgage, the Guaranty Mortgage, the RIH Promissory Note, the Assignment of Leases and Rents and any other security document to which either RIH or the Company is a party relating to the Notes, which is executed and delivered pursuant to or in connection with the Mortgage, the Guaranty Mortgage or the Assignment Agreement. "NATIONAL ACCOUNTANTS" has the meaning stated in Section 12.06(a). "NEW JERSEY CASINO REINVESTMENT DEVELOPMENT AUTHORITY NOTES" shall mean bonds issued by the Casino Reinvestment Development Authority, a public authority created under the Casino Control Act. "NON-RECOURSE INDEBTEDNESS" means indebtedness incurred in connection with the acquisition, purchase, improvement or development of property or assets (other than the Trust Estate) used by the Company, RIH or any Subsidiary of RIH or the Company to engage in the casino business, the hotel business or related or ancillary business or purpose and which is secured only by such assets and without recourse to RIH, the Company or any Subsidiary of RIH or the Company or the Trust Estate for such indebtedness. "NOTEHOLDER" or "HOLDER" means a Person in whose name a Note is registered in the Note Register. "NOTE REGISTER" and "NOTE REGISTRAR" have the respective meanings stated in Section 3.05. "NOTES" has the meaning stated in the Preliminary Statement of this instrument and more particularly includes any Note authenticated and delivered hereunder. The term "Notes" does not include the Guaranty. "OFFICER" of the Company or RIH means any Person authorized to execute an Authorized Signature. "OFFICERS' CERTIFICATE" delivered by the Company or RIH means a certificate signed with an Authorized Signature and delivered to the Trustee. Whenever this Indenture requires that an Officers' Certificate be signed also by an Accountant or other expert, such Accountant or other expert may (except as otherwise expressly provided in this Indenture) be in the general employ of the Company or RIH. "OPINION OF COUNSEL" means a written opinion of counsel who may (except as otherwise expressly provided in 10 this Indenture) be an employee of the Company or RIH. Unless otherwise specifically provided in this Indenture, such counsel may rely as to any statement of facts not personally known to such counsel and relating to such opinion on an Officers' Certificate, to the extent not rejected by the Trustee and its counsel (which rejection shall not be unreasonably given). "OUTSTANDING" when used with respect to Notes means, as of the date of determination, all Notes theretofore authenticated and delivered under this Indenture, except: (a) Notes theretofore canceled by the Trustee or delivered to the Trustee for cancellation; (b) Notes for whose payment or redemption money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent in trust for the Holders of such Notes; (c) Notes in exchange for or in lieu of which other Notes have been authenticated and delivered under this Indenture; and (d) Notes alleged to have been destroyed, lost or stolen which have been paid as provided in Section 3.06; PROVIDED, HOWEVER, that in determining whether the Holders of the requisite principal amount of Notes Outstanding have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Notes owned by the Company or any other obligor upon the Notes or any Affiliate of the Company or of such other obligor shall be disregarded and deemed not to be Outstanding. In determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Notes which the Trustee actually knows to be so owned shall be so disregarded. "OUTSTANDING AMOUNT" of any Indebtedness at any time means the principal amount outstanding of such Indebtedness at such time. "PAYING AGENT" means any Person now or hereafter authorized by the Company to pay the principal of or interest on any Notes on behalf of the Company. "PERMITS" has the meaning stated in Section 1.01 of the Mortgage. "PERMITTED ENCUMBRANCES" has the meaning stated in Section 1.01 of the Mortgage. 11 "PERSON" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or any other entity or government or any agency or political subdivision thereof. "PLACE OF PAYMENT" when used with respect to the Notes means a city or any political subdivision thereof in which the Company is by this Indenture required to maintain an office or agency for the payment of the principal of or interest on the Notes. "PLAN" means the Plan of Reorganization of RII and GRI dated [ ], 1994. "PREDECESSOR NOTES" of any particular Note means every previous Note evidencing all or a portion of the same debt as that evidenced by such particular Note; and, for purposes of this definition, any Note authenticated and delivered under Section 3.06 in lieu of a lost, destroyed or stolen Note shall be deemed to evidence the same debt as the lost, destroyed or stolen Note. "PREMISES" has the meaning stated in Granting Clause Third of the Mortgage. "RATABLE BENEFIT" means, for any class or classes of Indebtedness at any time, in proportion to the total Outstanding Amount of such class or classes held by each holder thereof at such time. "REDEMPTION DATE" when used with respect to any Note to be redeemed means the date fixed for such redemption pursuant to this Indenture. 12 "REDEMPTION PRICE" when used with respect to any Note to be redeemed means the price at which it is to be redeemed pursuant to this Indenture. It does not include installments of interest due on or before the Redemption Date. "REGULAR RECORD DATE" for the interest payable on any Interest Payment Date on the Notes means the date specified in the provisions of this Indenture. "RESPONSIBLE OFFICER" means any Vice President, any Assistant Vice President or any other officer or assistant officer of the Trustee assigned by the Trustee to administer its corporate trust matters. "RESTRICTED PAYMENT" means (a) any declaration or payment of any dividend or the making of any distribution to holders of capital stock of RIH or the Company or any Subsidiary of RIH or the Company in respect of such capital stock (other than to RIH or the Company or a direct or indirect wholly owned Subsidiary of RIH or the Company), (b) any purchase, redemption or other acquisition or retirement for value of any capital stock (or warrants, rights or options to acquire any capital stock or Indebtedness convertible into or exchangeable for any capital stock) of RIH or the Company or any Subsidiary of RIH or the Company (other than purchases, redemptions, acquisitions or retirement solely from RIH or the Company or a direct or indirect wholly owned Subsidiary of RIH or the Company); PROVIDED, HOWEVER, that any such purchase, redemption or other acquisition or retirement that is required by the Casino Control Commission or under the Casino Control Act shall not constitute a Restricted Payment. The term "Restricted Payment" also shall not include any loan or advance to RII of all or any portion of the proceeds of the Indebtedness represented by the Working Capital Facility. "RIH" means the person named as "RIH" in the first paragraph of this instrument until a successor entity shall have become such pursuant to the applicable provisions of the Indenture, and thereafter, except to the extent otherwise 13 contemplated by Section 10.02, "RIH" shall mean such successor entity exclusively. "RIH JUNIOR PROMISSORY NOTE" means, collectively, the secured junior promissory note, dated the date hereof, made by RIH in the principal amount of $35,000,000, plus any additional junior promissory notes, issued in connection with the payment of interest accrued on outstanding Junior Mortgage Notes, payable to the order of the Company, a copy of which is attached to the Junior Mortgage Note Indenture as Exhibit A. "RIH SALE" means (a) a consolidation, combination or merger involving RIH and any other Person, (b) a sale, assignment, conveyance or transfer or RIH's interest in the Trust Estate, substantially as an entirety, to any other Person or group of Persons in one transaction or a series of related transactions, or (c) any transaction as a result of which RIH ceases to be a direct or indirect wholly owned Subsidiary of RII; provided, however, that nay of the transactions described in clauses (a), (b), and (c) above shall not constitute an RIH Sale if the other party or parties to the transaction consists of only one or more of the following Persons: the Company provided, further, however, that notwithstanding any other provision of this definition, if the primary effect of any of the aforesaid transactions is the redemption of the Notes, then such transaction shall not be considered to be a RIH Sale. "RIH PROMISSORY NOTE" means the secured promissory note, amended and restated as of the date hereof, made by RIH in the principal amount of $125,000,000 payable to the order of the Company, a copy of which is attached hereto as Exhibit A. "RIHF SENIOR FACILITY" means the senior secured note facility contemplated by the purchase agreement dated as of the date hereof, among the Company, RIH, RII and funds managed by Fidelity Management and Research Company, which allows the Company to borrow up to $20,000,000 in aggregate principal amount through the issuance of RIHF Senior Facility Notes. The term "RIHF SENIOR FACILITY" does not include the Working Capital Facility Guaranty. "RIHF SENIOR FACILITY NOTES" means, collectively, the notes executed and delivered by the Company under the RIHF Senior Facility. "RII" means Resorts International, Inc., a Delaware corporation. "RII MANAGEMENT CONTRACT" means the Management Contract dated as of the date hereof, between RII and RIH 14 pursuant to which RII provides certain management services to RIH for an annual fee of 3% of the gross revenues of RIH. "RII TAX SHARING AGREEMENT" means the Tax Sharing Agreement dated as of the date hereof between RII and RIH pursuant to which (i) RIH will not make any payments to RII or any other Affiliate in respect of taxes, other than to reimburse RII for any cash payments actually made by RII in respect of any federal, state or local income or alternative minimum taxes arising from the earnings or operations of RIH; PROVIDED, HOWEVER, that RIH shall not be required to reimburse RII for cash payments in respect of federal, state or local income or alternative minimum taxes that would not have been owed but for the reduction, if any, of the amount of the consolidated net operating loss carryforwards or consolidated current losses of the affiliated group of which RII is a common parent which resulted from the inclusion in the consolidated return filed for such group for any taxable year ending after the Effective Date of the income of any entity other than RIH, other than income directly attributable to the consummation of the Plan, including but not limited to the transfer of the stock of RIB (as defined in the Plan) and the assets of the U.S. Paradise Island Subsidiaries (as defined in the Plan), and (ii) RIH will be entitled to any refund (plus the interest thereon) of any taxes for which RIH is required to reimburse RII. "SERVICES AGREEMENT" means the Services Agreement dated as of September 17, 1992, between RII, RIH and The Griffin Group, Inc. "SPECIAL RECORD DATE" for the payment of any Defaulted Interest on Notes means a date fixed by the Trustee pursuant to Section 3.07. "STATED MATURITY" when used with respect to any Note means the date specified in such Note as the fixed date on which the principal of such Note is due and payable. "SUBSIDIARY" of any Person means a corporation more than 50% of the outstanding voting stock of which is owned, directly or indirectly, by such Person or one or more Subsidiaries of such Person. "TIA" or "TRUST INDENTURE ACT" means the Trust Indenture Act of 1939, as amended. "TRUSTEE" means the Person named as the "Trustee" in the first paragraph of this instrument until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter Trustee shall mean such successor Trustee. 15 "TRUST ESTATE" has the meaning stated in the Granting Clauses to the Mortgage. "U.S. GOVERNMENT OBLIGATIONS" has the meaning stated in Section 14.01. "U.S. LEGAL TENDER" means such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts, PROVIDED that for purposes of Article Fourteen, U.S. Legal Tender includes wire transfer payable in U.S. Legal Tender. "VICE PRESIDENT" when used with respect to the Company, RIH or the Trustee means any vice president, whether or not designated by a number or a word added to the title. "WORKING CAPITAL FACILITY" means the RIHF Senior Facility (and the RIHF Senior Facility Notes issued thereunder) and any other secured or unsecured facility or facilities entered into by RIH and/or the Company providing for the making of working capital loans to RIH or the Company (with RII [and GRI] as a guarantor[s] thereunder) on a revolving or term basis, or the issuance of notes, debentures or bonds by RIH, the Company or RII, as such agreement may be amended, supplemented or modified from time to time, or any refinancing thereof, in an aggregate principal amount up to $20,000,000; PROVIDED, HOWEVER, that the lender or lenders thereunder (or any trustee or agent acting on behalf of such lender or lenders) shall have executed an intercreditor agreement covering the matters set forth on Exhibit G. The liens, if any, securing the Working Capital Facility may be senior to the lien of the Mortgage, the Guaranty Mortgage, the Junior Mortgage and the Junior Guaranty Mortgage. The term "WORKING CAPITAL FACILITY" does not include the Working Capital Facility Guaranty. "WORKING CAPITAL FACILITY MORTGAGE DOCUMENTS" means any mortgage, deed of trust, guaranty, promissory note, collateral assignment agreement, assignment of leases and rents, assignment of operating assets and any other security document to which either RIH or the Company is a party relating to the Working Capital Facility. "WORKING CAPITAL FACILITY GUARANTY" means any guaranty of the Working Capital Facility by RIH, including, without limitation, the guaranty of the RIHF Senior Facility Notes. Section 1.02. ACTS OF NOTEHOLDERS. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Noteholders may be embodied 16 in and evidenced by one or more instruments of substantially similar tenor signed by such Noteholders in person or by an agent 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 Noteholders 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 Company and (subject to Section 8.01(c)) in favor of the Trustee, if made in the manner provided in this Section 1.02. (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 the certificate of any 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. Whenever such execution is by an officer of a corporation or a member of a partnership on behalf of such corporation or partnership, such certificate or affidavit shall also constitute sufficient proof of his authority. (c) The fact and date of execution of any such instrument or writing and the authority of any Person executing the same may also be proved in any other manner which the Trustee deems sufficient; and the Trustee may in any instance require further proof with respect to any of the matters referred to in this Section 1.02. (d) The ownership of Notes shall be proved by the Note Register. (e) Any request, demand, authorization, direction, notice, consent, waiver or other action by the Holder of any Note shall bind every future Holder of the same Note and the Holder of every Note issued upon the transfer thereof or in exchange therefor or in lieu thereof, in respect of anything done 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 Note. (f) The Company may, in the circumstances permitted by the Trust Indenture Act, set any day as the record date for the purpose of determining the holder of Outstanding Notes entitled to give or take any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by this Indenture to be given or taken by holders of Notes. With regard to any record date set pursuant to this 17 Section 1.02(f) the holders of Outstanding Notes on such record date (or their duly appointed agents), and only such Persons, shall be entitled to give or take the relevant action, whether or not such Persons remain holders after such record date. (g) Until a waiver or consent becomes effective, such waiver or consent by a Holder is a continuing waiver or consent by the Holder and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder's Note, even if notation of the waiver or consent is not made on any Note. However, any such Holder or subsequent Holder may, until such waiver or consent becomes effective, revoke the waiver or consent as to his Note or portion of his Note. Such revocation shall be effective only if the Trustee receives the notice of such revocation before the date on which the waiver or consent has become effective. Section 1.03. NOTICES, ETC., TO TRUSTEE, RIH, THE COMPANY, CASINO CONTROL COMMISSION AND DIRECTOR OF GAMING ENFORCEMENT. (a) Any request, demand, authorization, direction, notice (including, without limitation, a notice of default), consent, waiver or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with, the Company, RIH, the Trustee, the Casino Control Commission or the Director of the Division of Gaming Enforcement be deemed given when either (i) delivered by hand or (ii) two days after sending by registered or certified mail, postage prepaid, in either case, addressed as follows: To the Company: Resorts International Hotel Financing, Inc. c/o Resorts International, Inc. 1133 Boardwalk Atlantic City, New Jersey 08401 Attn.: Secretary To RIH: Resorts International Hotel, Inc. c/o Resorts International, Inc. 1133 Boardwalk Atlantic City, New Jersey 08401 Attn.: Secretary 18 To the Trustee: State Street Bank and Trust Company of Connecticut, National Association 750 Main Street Hartford, Connecticut 06103 Attn.: Corporate Trust Department To Casino Control Commission: New Jersey Casino Control Commission Arcade Building Tennessee Avenue & Boardwalk Atlantic City, New Jersey 08401 Attn.: Chairman To Director of Division of Gaming Enforcement: New Jersey Division of Gaming Enforcement 140 E. Front Street CN 047 Trenton, New Jersey 08625 Attn.: Director (b) By notice to the Company, RIH, the Trustee, Casino Control Commission and/or Director of the Division of Gaming Enforcement, given as provided above, any party may designate additional or substitute addresses for such notices, which, notwithstanding Section 1.03(a), shall be deemed given when received. Section 1.04. NOTICES TO NOTEHOLDERS; WAIVER. Where this Indenture provides for notice to Noteholders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each Holder of such Notes, at the address of such Holder as it appears in the Note Register, not later than the latest date, and not earlier than the earliest date, prescribed for the provision of such notice. In any case where notice to Noteholders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Noteholder shall affect the sufficiency of such notice with respect to other Noteholders. 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 Noteholders 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. 19 In case, by reason of the suspension of regular mail service, or by reason of any other cause, it shall be impracticable to give such notice by mail, then such notification may be given by any other method that the Trustee shall consider to be reasonable and shall be deemed to be a sufficient giving of such notice for every purpose hereunder. Section 1.05. FORM AND CONTENTS OF DOCUMENTS DELIVERED TO TRUSTEE. Whenever 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 such matters in one or several documents. Any certificate or opinion of an Officer of the Company or of RIH may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such Officer knows that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any 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 RIH stating that the information with respect to such factual matters is in the possession of the Company or RIH, unless such counsel knows that the certificate or opinion or representations with respect to such matters are erroneous. If appropriate to the matter being opined upon and to the extent not prohibited by the TIA, any Opinion of Counsel may be subject to rights of creditors and the availability of equitable remedies. Whenever 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. Whenever in this Indenture, in connection with any application or certificate or report to the Trustee, it is provided that the Company or RIH shall deliver any document as a condition of the granting of such application, or as evidence of the Company's or RIH's compliance with any term hereof, it is intended that the truth and accuracy, at the time of the granting of such application or at the effective date of such certificate or report (as the case may be), of the facts and opinions stated in such document shall in such case be conditions precedent to the right of the Company or 20 RIH to have such application granted or to the sufficiency of such certificate or report. Section 1.06. COMPLIANCE CERTIFICATES AND OPINIONS. Upon any application or request by the Company or RIH to the Trustee to take any action under any provision of this Indenture or any Mortgage Document, the Company or RIH shall furnish to the Trustee an Officers' Certificate stating that all conditions precedent, if any, provided for in this Indenture or such Mortgage Document 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 or any Mortgage Document shall include: (a) a statement that each individual signing such certificate or opinion has read such condition or covenant and the definitions herein relating thereto; (b) 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; (c) 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 condition or covenant has been complied with; and (d) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. Section 1.07. CONFLICT WITH TRUST INDENTURE ACT. If any provision hereof or of the Mortgage Documents or the Assignment Agreement limits, qualifies or conflicts with another provision hereof or of the Mortgage Documents or the Assignment Agreement which is required to be included herein or therein by any of the provisions of the TIA, such required provision shall control. 21 Section 1.08. EFFECT OF HEADINGS AND TABLE OF CONTENTS. The Article and Section headings herein and in the Table of Contents are for convenience only and shall not affect the construction hereof. Section 1.09. SUCCESSORS AND ASSIGNS. All covenants and agreements in this Indenture by the Company or RIH shall, subject to Section 10.02, bind its successors and assigns, whether so expressed or not. Section 1.10. SEPARABILITY CLAUSE. In case any provision in this Indenture or in the Notes 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 1.11. BENEFITS OF INDENTURE. Nothing in this Indenture or in the Notes, express or implied, shall give to any Person other than the parties hereto and their successors hereunder, any separate trustee or co-trustee appointed under Section 8.14 and the Holders of Notes, any benefit or any legal or equitable right, remedy or claim under this Indenture. Section 1.12. GOVERNING LAW. This Indenture and each Note shall be deemed to be a contract under the laws of the State of New York and shall be construed in accordance with and governed by the internal laws of the State of New York. Section 1.13. CASINO CONTROL ACT. Each of the provisions of this Indenture is subject to and shall be enforced in compliance with the provisions of the Casino Control Act, unless such provisions are in conflict with the TIA, in which case the TIA shall control. Section 1.14. GENERAL APPLICATION. (a) The assertion of any rights upon any Default shall be subject in each instance to the giving of any notice and the expiration of any grace period provided for in Section 7.01 as a condition to such Default becoming an Event of Default, unless the TIA requires otherwise, in which case the TIA shall control. 22 (b) For the purposes of this Indenture, it is understood that an event which does not materially diminish the value of the Trustee's interest in the Trust Estate shall not be deemed an impairment of security, as that phrase is used in this Indenture. (c) This Indenture may not be used to interpret another indenture, loan or debt agreement of the Company, other than the Mortgage and the Guaranty Mortgage. Any such indenture, loan or debt agreement may not be used to interpret this Indenture. (d) In the event of a conflict between any provision of this Indenture and any provision of a Mortgage Document, the provision of this Indenture shall prevail. ARTICLE TWO NOTE FORM Section 2.01. FORM GENERALLY. The Notes and the Trustee's certificate of authentication shall be substantially in the forms set forth in this Article Two, 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 Notes as evidenced by their execution thereof. Any portion of the text of any Note may be set forth on the reverse thereof. The definitive Notes shall be printed, lithographed or engraved or produced by any combination of these methods or produced in any other manner permitted by the rules of any securities exchange on which the Notes may be listed, all as determined by the officers executing such Notes as evidenced by their execution thereof. 23 Section 2.02. FORM OF NOTES. The form of the Notes shall be substantially as follows: [Face of Notes] RESORTS INTERNATIONAL HOTEL FINANCING, INC. 11% MORTGAGE NOTE DUE 2003 No.______________ $________________ Resorts International Hotel Financing, Inc., a Delaware corporation (hereinafter called the "Company", which term includes any successor entity under the Indenture referred to on the reverse), for value received, hereby promises to pay to ______________, or registered assigns, on September 15, 2003 the sum of __________ Dollars (or so much thereof as shall not have been paid upon prior redemption) and to pay interest (computed on the basis of a 360-day year of twelve 30-day months based on the actual number of days elapsed) thereon from [ ], 1994 [the Effective Date], or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually at March 15 and September 15 in each year (commencing September 15, 1994), at the rate of 11% per annum, until the principal hereof is paid or made available for payment. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in said Indenture, be paid to the Person in whose name this Note (or one or more Predecessor Notes) is registered at the close of business on the Regular Record Date for such interest, which shall be the first day (whether or not a business day) of the calendar month of 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 may be paid to the Person in whose name this Note (or one or more Predecessor Notes) 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 thereof being given to Noteholders not less than ten 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 Notes of this series may be listed and upon such notice as may be required by such exchange, all as more fully provided in said Indenture. The principal of and interest on this Note shall be payable at the corporate trust office of the Trustee, as defined on the reverse, or at an office or agency of the Company in the Borough of Manhattan, City and State of New York. All such payments shall be made in such coin or 24 currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. At the option of the Company, payment of interest may be made by check mailed to the address of the Person entitled thereto as such address shall appear on the Note Register. Unless the certificate of authentication hereon has been executed by the Trustee or the Authenticating Agent by manual signature, this Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. THIS NOTE SHALL BE DEEMED TO BE A CONTRACT UNDER THE LAWS OF THE STATE OF NEW YORK AND SHALL BE CONSTRUE IN ACCORDANCE WITH AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK. IN WITNESS WHEREOF, the Company has caused this Note to be executed. RESORTS INTERNATIONAL HOTEL FINANCING, INC. Dated: ______________________ By:________________________ Attest:______________________ [Back of Notes] This Note is one of a duly authorized issue of Notes of the Company designated as "11% Mortgage Notes due 2003" (the "Notes"), issued under an Indenture dated as of __________ __, 1994 (the "Indenture"), among the Company, Resorts International Hotel, Inc., a New Jersey corporation, as guarantor ("RIH"), and State Street Bank and Trust Company of Connecticut, National Association, a national banking association, as Trustee (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 description of the nature and extent of the security, the respective rights thereunder of the Holders of the Notes, the Trustee and the Company and the terms upon which the Notes are, and are to be, authenticated and delivered. Payment of principal and interest (including interest on overdue principal) and performance of all obligations under the Indenture is guaranteed by RIH (the "Guaranty"). The Notes are secured by an assignment of one or more secured senior promissory notes of RIH, which owns and 25 operates the property known as Merv Griffin's Resorts Casino Hotel, and of a mortgage on the Trust Estate made by RIH (the "Mortgage"). Additionally, the Guaranty is secured by a separate direct mortgage of the Trust Estate made by RIH to the Trustee (the "Guaranty Mortgage"). All terms in this Note defined in the Indenture shall have the same meaning herein as therein. The lien of the Mortgage is pari passu with the lien of the Guaranty Mortgage, junior to the lien securing payment of the RIHF Senior Facility Notes and any other secured Working Capital Facility and junior to the lien (if any) securing the Working Capital Facility Guaranty. The Notes may be redeemed at the option of the Company, as a whole or from time to time in part, on or after the fifth anniversary of the Effective Date on notice as provided in the Indenture, at par together with interest accrued and unpaid thereon to the date fixed for redemption. In the event of an RIH Sale, all the Notes shall be redeemed by the Company, whether such RIH Sale occurs before, on or after the fifth anniversary of the Effective Date, at par together with interest, if any, accrued and unpaid thereon to the Redemption Date; PROVIDED, HOWEVER, that such obligation of the Company to redeem the Notes in the event of a proposed RIH Sale shall cease to exist if the Holders of not less than 66-2/3% in Outstanding Amount of the Outstanding Notes have consented to such proposed RIH Sale. Notwithstanding the foregoing, each Holder by accepting a Note agrees that if the Casino Control Commission does not waive the qualification requirement as to the Holder (whether the record owner or beneficial owner) of this Note and requires that the Holder be qualified under the Casino Control Act, then, in such event, the Holder must qualify under the Casino Control Act. If the Holder does not so qualify, the Holder must dispose of its interest in this Note, within 30 days after the Company's receipt of notice of such finding, or the Company may repurchase this Note at the lower of the Holder's original cost and the Fair Market Value of this Note, plus accrued interest thereon to the date of such repurchase. Commencing on the date the Casino Control Commission serves notice upon either RIH or the Company that any Holder is disqualified, it shall be unlawful for any such disqualified Holder: (i) to receive any dividends or interest upon this Note; (ii) to exercise, directly or through any trustee or nominee, any right conferred by this Note; or (iii) to receive any remuneration in any form from either the Company or RIH for services rendered or otherwise. It is provided in the Indenture that Notes of a denomination larger than $1,000 may be redeemed in part ($1,000 or a multiple thereof) and that upon any partial 26 redemption of any such Note the same shall be surrendered in exchange for one or more new Notes in authorized form for the unredeemed portion of principal. Notes (or portions thereof as aforesaid) for whose redemption and payment provision is made in accordance with the Indenture shall thereupon cease to be entitled to the lien of the Indenture and the Mortgage and shall cease to bear interest from and after the date fixed for redemption. If an Event of Default shall occur, the principal of the Notes and all accrued and unpaid interest thereon may become or be declared due and payable in the manner and with the effect provided in the Indenture. The Indenture permits, with certain exceptions as therein provided, the amendment thereto and the modification of the rights and obligations of the Company and the rights of the Holders of the Notes under the Indenture at any time by the Company with the consent of the Holders of a majority or 66-2/3%, as the case may be, in aggregate Outstanding Amount of the Notes at the time Outstanding affected by such modification. The Indenture also contains provisions permitting the Holders of specified percentages in Outstanding Amount of Notes at the time Outstanding on behalf of the Holders of all the Notes to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Note shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note issued upon the transfer hereof or in exchange hereof or in lieu hereof, in respect of anything done or offered to be done by the Trustee in the Company in reliance thereon, whether or not notation of such action is made upon this Note. The Company may, in the circumstances permitted by the Trust Indenture Act, set any day as the record date for the purpose of determining the holders of Outstanding Notes entitled to give or take any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by the Indenture to be given or taken by holders of Notes. With regard to any such record date, the holders of Outstanding Notes on such record date (or their duly appointed agents), and only such Persons, shall be entitled to give or take the relevant action, whether or not such Persons remain holders after such record date. No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and interest on this Note at the times, places and rates, and in the coin or currency, herein prescribed. 27 As provided in the Indenture and subject to certain limitations therein set forth, this Note is transferable on the Note Register of the Company, upon surrender of this Note for transfer at the corporate trust office of the Trustee, or at an office or agency of the Company in the Borough of Manhattan, City and State of New York, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Note Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Notes, of authorized denominations and for the same aggregate principal amount will be issued to the designated transferee or transferees. The Notes are issuable only as registered Notes without coupons in denominations of $1,000 and integral multiples thereof. As provided in the Indenture, and subject to certain limitations therein set forth, Notes are exchangeable for a like aggregate principal amount of Notes of a different authorized denomination, as requested by the Holder surrendering the same. No service charge shall be made for any transfer or exchange hereinbefore referred to, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. The Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Note is registered as the owner hereof for the purpose of receiving payment as herein provided and for all other purposes, whether or not this Note be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. Section 2.03. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION. This is one of the Notes referred to in the within-mentioned Indenture. STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, as Trustee By:__________________________ Authorized Signature 28 Section 2.04. FORM OF THE GUARANTY. The form of the Guaranty of RIH shall be substantially as follows and shall appear on the reverse of each Note: GUARANTY OF RESORTS INTERNATIONAL HOTEL, INC. For value received, Resorts International Hotel, Inc., a New Jersey corporation, hereby unconditionally guarantees, as more fully set forth in Article Four of the Indenture, to the Holder of this Note the payment of the principal of and interest on this Note in the amounts and at the time when due and interest on the overdue principal and interest, if any, of this Note, if lawful, and the payment or performance of all other obligations of the Company to the Holder or the Trustee, all in accordance with and subject to the terms and limitations of this Note and Article Four of the Indenture, the foregoing Guaranty being a guaranty of payment and not of collectibility and being absolute and in no way conditional or contingent. This Guaranty will not become effective until the Trustee or the Authenticating Agent signs the certificate of authentication on such Note. As more fully described in the Indenture, this Guaranty is secured by a mortgage of the Trust Estate made by RIH to the Trustee. RESORTS INTERNATIONAL HOTEL, INC. Dated:__________________________ By:_______________________________ Attest:_________________________ ARTICLE THREE THE NOTES Section 3.01. GENERAL TITLE. The general title of the Notes shall be "11% Mortgage Notes due 2003". 29 Section 3.02. FORM AND DENOMINATIONS. The form of the Notes shall be as provided by the provisions of this Indenture. The Notes shall be issuable only in registered form and in such denominations as shall be provided in the provisions of this Indenture. The Notes shall be of the denominations of $1,000 and any integral multiple thereof. Section 3.03. EXECUTION, AUTHENTICATION, DELIVERY AND DATING. The Notes shall be executed on behalf of the Company by its chairman of the board, vice chairman of the board, its president, or one of its Vice Presidents and attested to by an Officer of the Company other than an Officer who has executed the Notes. The signature of any of these Persons on the Notes may be manual or facsimile. Notes bearing the manual or facsimile signatures of individuals who were at any time Officers of the Company shall bind the Company, notwithstanding that such individuals or any of them shall have ceased to be such prior to the authentication and delivery of such Notes. At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Notes executed by the Company to the Trustee for authentication and the Trustee shall authenticate and deliver such Notes as in this Indenture provided and not otherwise. All Notes shall be dated the date of their authentication. No Note shall be secured by, or be entitled to any lien, right or benefit under, this Indenture or be valid or obligatory for any purpose, unless there appears on such Note a certificate of authentication substantially in the form provided for herein, executed by the Trustee or the Authenticating Agent by manual signature, and such certificate upon any Note shall be conclusive evidence, and the only evidence, that such Note has been duly authenticated and delivered hereunder. Section 3.04. TEMPORARY NOTES. Pending the preparation of definitive Notes, the Company may execute, and upon Company Request the Trustee shall authenticate and deliver, temporary Notes which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any denomination, substantially of the tenor of the definitive Notes in lieu of which they are issued, in registered form, without coupons, with provision for registration as to principal and with such appropriate insertions, omissions, substitutions and other variations as 30 the Officers executing such Notes may determine, as evidenced by their execution of such Notes. If temporary Notes are issued, the Company will cause definitive Notes to be prepared without unreasonable delay. After the preparation of definitive Notes, the temporary Notes shall be exchangeable for definitive Notes upon surrender of the temporary Notes at the office or agency of the Company in a Place of Payment therefor, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Notes, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a like principal amount of definitive Notes of authorized denominations. Until so exchanged, temporary Outstanding Notes shall in all respects be entitled to the security and benefits of this Indenture. Section 3.05. REGISTRATION, TRANSFER AND EXCHANGE. The Company shall cause to be kept at one of the offices or agencies maintained by the Company as provided in Section 12.02 a register (herein sometimes referred to as the "Note Register") in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Notes and registration of transfers of Notes entitled to be registered or transferred as herein provided. The Trustee is hereby appointed "Note Registrar" for the purpose of registering Notes and transfers of Notes as herein provided. Upon surrender for transfer of any Note at the office or agency of the Company in a Place of Payment therefor, the Company shall execute and, upon request of the Company, the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Notes of any authorized denominations and of a like aggregate principal amount. The Trustee has no obligation to determine that any Note has been properly transferred and may conclusively rely on instructions given by the Company pursuant to this Section 3.05. All Notes surrendered upon any exchange or transfer provided for in this Indenture shall be promptly canceled by the Trustee and thereafter disposed of as directed by a Company Request. All Notes issued upon any transfer or exchange of Notes shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same security and benefits under this Indenture, as the Notes surrendered upon such transfer or exchange. 31 Every Note presented or surrendered for transfer, exchange or discharge from registration shall (if so required by the Company or the Note Registrar) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Note Registrar duly executed, by the Holder thereof or his attorney duly authorized in writing. No service charge shall be made for any registration, discharge from registration, transfer or exchange of Notes, 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 transfer or exchange of Notes, other than exchanges under Section 3.04 or 11.06 not involving any transfer. The Company shall not be required (i) to issue, transfer or exchange any Note during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption of Notes under Section 13.04 and ending at the close of business on the day of such mailing, or (ii) to transfer or exchange any Note so selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part. Section 3.06. MUTILATED, DESTROYED, LOST AND STOLEN NOTES. If (a) any mutilated Note is surrendered to the Trustee, or the Company and the Trustee receive evidence to their satisfaction of the destruction, loss or theft of any Note and (b) 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 Note has been acquired by a bona fide purchaser, the Company shall execute and upon its request the Trustee shall authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Note, a new Note of like tenor and principal amount, bearing a number not contemporaneously outstanding. In case any such mutilated, destroyed, lost or stolen Note has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Note, pay such Note. Upon the issuance of any new Note under this Section 3.06, 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 connected therewith. 32 Every new Note issued pursuant to this Section 3.06 in lieu of any destroyed, lost or stolen Note shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Note shall be at any time enforceable by anyone, and shall be entitled to all the security and benefits of this Indenture equally and ratably with all other Notes. The provisions of this Section 3.06 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 Notes. Section 3.07. PAYMENT OF INTEREST ON NOTES; INTEREST RIGHTS PRESERVED. Interest on any Note 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 that Note (or one or more Predecessor Notes) is registered at the close of business on the Regular Record Date for such interest specified in the provisions of this Indenture. Any interest on any Note which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date ("Defaulted Interest") shall forthwith cease to be payable to the Holder on the relevant Regular Record Date solely by virtue of such Holder having been such Holder; and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in subsection (a) or (b) below: (a) The Company may elect to make payment of any Defaulted Interest on the Notes to the Persons in whose names such Notes (or their respective Predecessor Record Date for the payment of such Defaulted Interest Notes) are registered at the close of business on a Special, 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 Note and the date of the proposed payment (which date shall be such as will enable the Trustee to comply with the next sentence hereof), 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 provided in this subsection (a) and not to be deemed part of the Trust Estate. Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which 33 shall be not more than 15 nor less than ten days prior to the date of the proposed payment and not less than ten 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 mailed, first-class postage prepaid, to each Holder of a Note at his address as it appears in the Note Register not less than ten days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been mailed as aforesaid, such Defaulted Interest shall be paid to the Persons in whose names the Notes (or their respective Predecessor Notes) are registered on such Special Record Date and shall no longer be payable pursuant to subsection (b) of this Section 3.07. (b) The Company may make payment of any Defaulted Interest on the Notes in any other lawful manner not inconsistent with the requirements of any securities exchange in which the Notes 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 subsection (b), such payment shall be deemed practicable by the Trustee. Subject to the foregoing provisions of this Section 3.07, each Note delivered under this Indenture upon transfer of or in exchange for or in lieu of any other Note shall carry all the rights to interest accrued and unpaid, and to accrue, which were carried by such other Note. Section 3.08. PERSONS DEEMED OWNERS. The Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name any Note is registered as the owner of such Note for the purpose of receiving payment of principal of, and interest on, such Note and for all other purposes whatsoever whether or not such Note be overdue, and, to the extent permitted by law, neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. Section 3.09. CANCELLATION. All Notes surrendered for payment, redemption, transfer, exchange or conversion, if surrendered to the Trustee, shall be promptly canceled by it, and, if surrendered to any Person other than the Trustee, shall be delivered to the Trustee and, if not already canceled, shall be promptly canceled by it. The Company shall deliver to the Trustee for 34 cancellation any Notes previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever, and all Notes so delivered shall be promptly canceled by the Trustee. No Note shall be authenticated in lieu of or in exchange for any Note canceled as provided in this Section 3.09, except as expressly provided by this Indenture. All canceled Notes held by the Trustee shall be disposed of as directed by a Company Request. Section 3.10. TERM AND FORM. The Stated Maturity of the Notes shall be September 15, 2003. The aggregate principal amount of Notes that may be authenticated, delivered and outstanding is limited to $125,000,000. The Notes shall bear interest from [ ], 1994 [the Effective Date] or from the most recent Interest Payment Date to which interest has been paid or duly provided for, payable semi-annually on March 15 and September 15 each year, commencing September 15, 1994. The Notes shall bear interest at the rate of 11% per annum until the principal thereof shall become due and payable, and at the rate of 14% per annum on any overdue principal and, to the extent permitted by law, overdue interest. Interest shall be computed on the basis of a 360-day year of twelve 30-day months based on the actual number of days elapsed. The principal and the Redemption Price of the Notes and interest on the Notes on each Interest Payment Date shall be payable at a Place of Payment, and, in addition to any other lawful means of such payment, may be paid by check payable to the order of the Noteholder. The Regular Record Date referred to in Section 3.07 for the payment of the interest on the Notes payable, and punctually paid or duly provided for, on any Interest Payment Date shall be the first day (whether or not a business day) of the calendar month of such Interest Payment Date. Section 3.11. EXCHANGEABILITY. Subject to Section 3.05, all Notes shall be fully interchangeable with other Notes, and, upon surrender at the office or agency of the Company in a Place of Payment therefor, all Notes shall be exchangeable for other Notes of a different authorized denomination or denominations, as requested by the Holder surrendering the same. The Company will execute, and the Trustee shall authenticate and deliver, Notes whenever the same are required for any such exchange. Section 3.12. REDEMPTION. The Company may, at its option, redeem, in accordance with Article Thirteen, all or from time to time any 35 part of the Notes on or after the fifth anniversary of the Effective Date, at par together, in each case, with interest, if any, accrued and unpaid thereon to the Redemption Date. In the event of an RIH Sale, all the Notes shall be redeemed by the Company whether such RIH Sale occurs before, on or after the fifth anniversary of the Effective Date, at par together with interest, if any, accrued and unpaid thereon to the Redemption Date; PROVIDED, HOWEVER, that such obligation of the Company to redeem the Notes in the event of a proposed RIH Sale shall cease to exist if the Holders of not less than 66-2/3% in Outstanding Amount of the Outstanding Notes have consented to such proposed RIH Sale. Section 3.13. AUTHENTICATION AND DELIVERY OF ORIGINAL ISSUE. Forthwith upon the execution and delivery of this Indenture, Notes up to an aggregate principal amount of $125,000,000 may be executed by the Company and delivered to the Trustee for authentication, and shall thereupon be authenticated and delivered by the Trustee upon Company Order, without any further action by the Company. ARTICLE FOUR GUARANTY Section 4.01. GUARANTY. RIH hereby guarantees (such guaranty to be referred to herein as the "Guaranty") to each Holder of a Note 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 Notes or the obligations of the Company hereunder or thereunder, that: (a) the principal of and interest on the Notes will be promptly paid in the amounts and at the times when due, whether at the maturity or Interest Payment Date, by acceleration, call for redemption or otherwise, and interest on the overdue principal, if any, of the Notes, and all other obligations of the Company to the Holders or the Trustee hereunder or thereunder will be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and (b) in case of any extension of time of payment or renewal of any Notes or payment or performance of any of such other obligations, that 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 for whatever reason, RIH will be obligated to pay the same immediately. RIH hereby agrees that its obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Notes or 36 this Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Notes with respect to any provisions hereof or thereof, any releases of collateral, any delays in obtaining or realizing upon or failures to obtain or realize upon collateral, the recovery of any judgment against the Company, any action to enforce the same or any other circumstances which might otherwise constitute a legal or equitable discharge or defense of a guarantor. This Guaranty is a guaranty of payment and not of collectibility, and is secured by the Guaranty Mortgage, as described therein. RIH hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest, notice and all demands whatsoever and covenants that this Guaranty will not be discharged except by complete performance of the obligations contained in the Notes and this Indenture. If any Noteholder or the Trustee is required by any court or otherwise to return to either RIH or the Company, or any custodian, trustee, liquidator or other similar official acting in relation to either RIH or the Company, any amount paid by either RIH or the Company to the Trustee or such Noteholder, this Guaranty, to the extent theretofore discharged, shall be reinstated in full force and effect. RIH agrees that it shall not be entitled to, and hereby irrevocably waives, any right of subrogation in relation to the Company in respect of any obligations guaranteed hereby. RIH further agrees that, as between RIH, on the one hand, and the Holders and the Trustee, on the other hand, (i) the maturity of the obligations guaranteed hereby may be accelerated as provided in Section 7.02 for the purposes of this Guaranty, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (ii) in the event of any declaration of acceleration of such obligations as provided in Section 7.02, such obligations (whether or not due and payable) shall forthwith become due and payable by RIH for the purpose of this Guaranty. Section 4.02. EXECUTION AND DELIVERY OF GUARANTY. To evidence its Guaranty set forth in Section 4.01, RIH hereby agrees to execute its Guaranty substantially in the form set forth in Section 2.04, to be endorsed on each Note authenticated and delivered by the Trustee and that this Indenture shall be executed on behalf of RIH by an Authorized Signature. RIH hereby agrees that its Guaranty set forth in Section 4.01 shall remain in full force and effect notwithstanding any failure to endorse on each Note a notation of such Guaranty; PROVIDED, HOWEVER, that the Trustee or the 37 Authenticating Agent has signed the certificate of authentication on such Note. If an Officer whose signature is on this Indenture no longer holds that office at the time the Trustee authenticates a Note on which a Guaranty is endorsed, the Guaranty shall be valid nevertheless. The delivery of any Note by the Trustee, after the authentication thereof hereunder, shall constitute due delivery of the Guaranty set forth in this Indenture on behalf of RIH. Section 4.03 MORTGAGE SECURING GUARANTY. In order to secure the due and punctual payment of all amounts which may ever become owing under the Guaranty, when and as the same shall be due and payable, and performance of all other obligations of RIH to the Holders or the Trustee under the Guaranty, according to the terms hereof, RIH has mortgaged and encumbered all of its right, title and interest in and to the Trust Estate to the Trustee pursuant to the Guaranty Mortgage. RIH has the full right, power and authority to grant, bargain, sell, release, convey, hypothecate, assign, mortgage, pledge, transfer and confirm the property constituting the Trust Estate, in the manner and form done, or intended to be done, in the Guaranty Mortgage, free and clear of all liens, pledges, charges and encumbrances, whatsoever, except for the items described in clauses (a) through (d) (inclusive) of Section 12.13, and (a) will forever warrant and defend the title to the same against the claims of all Persons whatsoever in accordance with the terms of the Guaranty Mortgage, (b) will execute, acknowledge and deliver to the Trustee such further instruments as the Trustee may require or request, and (c) will do or cause to be done all such acts and things as may be reasonably necessary or proper, or as may be required by the Trustee (other than obtaining a loan title insurance policy or title policy endorsement pertaining to the Guaranty Mortgage), to assure and confirm to the Trustee its interest in the Trust Estate and the right, title and interest in and to the Guaranty Mortgage, so as to render the same available for the security and benefit of this Guaranty secured thereby, according to the intent and purposes herein expressed. The Guaranty Mortgage creates and vests in the Trustee a direct and valid lien, which lien is senior to the lien securing payment of the Junior Mortgage Facility, senior to any lien securing the Junior Guaranty, PARI PASSU with the lien of the Mortgage, junior to the lien securing payment of the RIHF Senior Facility Notes and any other secured Working Capital Facility and junior to any lien securing the Working Capital Facility Guaranty. To the extent that any security interest in the Trust Estate or the Guaranty Mortgage is deemed to be 38 granted and to be governed by the Uniform Commercial Code, the Guaranty Mortgage is deemed to be a security agreement. ARTICLE FIVE SATISFACTION AND DISCHARGE Section 5.01. PAYMENT OF INDEBTEDNESS; SATISFACTION AND DISCHARGE OF INDENTURE. Whenever the following conditions exist, namely: (a) all Notes theretofore authenticated and delivered have been canceled by the Trustee or delivered to the Trustee for cancellation, excluding, however, (1) Notes for the payment of which money has theretofore been deposited in trust with the Trustee or a Paying Agent (other than the Company) or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust as provided in Section 12.03, (2) Notes alleged to have been destroyed, lost or stolen which have been replaced or paid as provided in Section 3.06, except for any such Note which, prior to the satisfaction and discharge of this Indenture, has been presented to the Trustee with a claim of ownership and enforceability by the Holder thereof and where enforceability has not been determined adversely against such Holder by a court of competent jurisdiction, and (3) other than any Notes excluded by clauses (1) and (2) of this Section 5.01(a), Notes which have become due and payable, Notes which will become due and payable at their Stated Maturity within one year and Notes which have been or 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, provided the Company, in the case of such Notes, has deposited or caused to be deposited with the Trustee in trust for the purpose an amount sufficient to pay and discharge the entire indebtedness on such Notes for principal and interest to the date of maturity thereof in the case of Notes which have become due and payable or to the Stated Maturity or Redemption Date, as the case may be; 39 (b) the Company or RIH has paid or caused to be paid all other sums payable hereunder by the Company; and (c) the Company or RIH has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each of which shall state that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with; then this Indenture and the lien, rights and interests created hereby shall cease, terminate and become null and void (except as to any surviving rights of transfer or exchange of Notes herein or therein provided for and any right to receive payments of principal and interest as provided in Section 5.01(a)(3)) and the Trustee and each co-trustee and separate trustee, if any, then acting as such hereunder shall, at the expense of the Company, execute and deliver a termination statement prepared by the Company in form reasonably satisfactory to the Trustee and such instruments of satisfaction and discharge as may be necessary and pay, assign, transfer and deliver to the Company or upon Company Order all cash, securities and other personal property then held by it hereunder, other than pursuant to Section 5.01(a)(3). In the absence of satisfaction of all of the above conditions, the payment of all Outstanding Notes shall not render this Indenture inoperative. Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Section 8.07 shall survive. Section 5.02. APPLICATION OF DEPOSITED MONEY. Money deposited with the Trustee pursuant to Section 5.01 shall constitute a separate trust fund for the benefit of the Persons entitled thereto. Subject to the provisions of Section 12.03, such money shall be applied by the Trustee to the payment (either directly or through any Paying Agent, as the Trustee may determine) to the Persons entitled thereto, of the principal and interest for whose payment such money has been deposited with the Trustee. Section 5.03. REPAYMENT TO THE COMPANY. The Trustee and any Paying Agent shall promptly pay to the Company upon request any excess money or securities held by them at any time. 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, or interest on, any Note and remaining unclaimed for two years 40 after such principal or interest has become due and payable shall be paid to the Company on its request, or (if then held by the Company) shall be dis- charged from such trust, unless otherwise required by mandatory provisions of applicable escheat or abandoned or unclaimed property law, and the Holder of such Note 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 regard to such 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 ex- pense 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 City of new York, State of New York, or mailed to each such Holder, or both, 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 or mailing, as the case may be, any unclaimed balance of such money then remaining will be paid to the Company. ARTICLE SIX SECURITY Section 6.01. ASSIGNMENT AGREEMENT. In order to secure the due and punctual payment of the principal of and interest on the Notes, when and as the same shall be due and payable, whether at Maturity or at an Interest Payment Date, by acceleration, call for redemption or otherwise, of the Notes and performance of all other obligations of the Company to the Holders or the Trustee under this Indenture, according to the terms hereof, the Company has made an assignment of all of its right, title and interest in and to the Mortgage Documents (other than the Guaranty Mortgage) to the Trustee pursuant to the Assignment Agreement. RIH has the full right, power and authority to grant, bargain, sell, release, convey, hypothecate, assign, mortgage, pledge, transfer and confirm the property constituting the Trust Estate, in the manner and form done, or intended to be done, in the Mortgage Documents, and the Company has the full right, power and authority to grant, bargain, sell, release, re-convey, assign, transfer and confirm, absolutely, all of its right, title and interest in and to the Mortgage Documents, in each case free and clear of all liens, pledges, charges and encumbrances, whatsoever, except for the items described in clauses (a) through (d) (inclusive) of Section 12.13, and (a) each will forever warrant and defend the title to the same 41 against the claims of all persons whatsoever in accordance with the terms of the Mortgage Documents and the Assignment Agreement, (b) each will execute, acknowledge and deliver to the Trustee such further assignments, transfers, assurances or other instruments as the Trustee may require or request, and (c) each will do or cause to be done all such acts and things as may be reasonably necessary or proper, or as may be required by the Trustee, to assure and confirm to the Trustee its interest in the Trust Estate and the right, title and interest in and to the Mortgage Documents, so as to render the same available for the security and benefit of this Indenture and of the Notes secured hereby, according to the intent and purposes herein expressed. The Mortgage Documents (other than the Guaranty Mortgage) and the Assignment Agreement together create and vest in the Trustee a direct and valid lien, which is PARI PASSU with the Guaranty Mortgage, junior to the lien securing payment of the RIHF Senior Facility Notes and any other secured Working Capital Facility and junior to any lien securing payment of the Working Capital Facility Guaranty, on the property constituting the Trust Estate and the interest in the Mortgage Documents which they purport to create. To the extent that any security interest in the Trust Estate or the Mortgage Documents are deemed to be granted and to be governed by the Uniform Commercial Code, the Mortgage and the Assignment Agreement are deemed to be security agreements. Section 6.02. RECORDING, ETC. The Company will cause, at its own expense, the Assignment Agreement, the Mortgage Documents, this Indenture and all amendments or supplements thereto, to be registered, recorded and filed and/or re-recorded, refiled and renewed in such manner and in such place or places, if any, as may be required by law in order fully to preserve and protect the lien of the Mortgage Documents and the Assignment Agreement on all parts of the Trust Estate and the Mortgage Documents and the interest in the RIH Promissory Note and to effectuate and preserve the security of the Noteholders and all rights of the Trustee. The Company shall furnish to the Trustee: (a) promptly after the execution and delivery of this Indenture or other instrument of further assurance or amendment, including any supplemental indenture, an Opinion or Opinions of Counsel either (1) stating that, in the opinion of such counsel, this Indenture, the Mortgage Documents and the assignment to the Trustee of the Mortgage Documents intended to be made by the Assignment Agreement and all other instruments of further assurance or amendment have been properly recorded, registered and filed to the extent necessary to make effective the liens intended to be created by the 42 Mortgage Documents and the Assignment Agreement, and reciting the details of such action or referring to prior Opinions of Counsel in which such details are given, and stating that as to the Mortgage Documents and the Assignment Agreement such recording, registering and filing are the only recordings, registerings and filings necessary to give notice thereof and that no re-recordings, re-registerings or re-filings are necessary to maintain such notice, and further stating that all financing statements and continuation statements have been executed and filed that are necessary fully to preserve and protect the rights of the Noteholders and the Trustee hereunder and under the Mortgage Documents and the Assignment Agreement, or (2) stating that, in the opinion of such counsel, no such action is necessary to make such liens and assignments effective; and (b) within 60 days after June 30 in each year beginning with the year 1995, an Opinion or Opinions of Counsel, dated as of such date, either (1) stating that, in the opinion of such counsel, such action has been taken with respect to the recording, registering, filing, re-recording, re-registering and re-filing of all supplemental indentures, financing statements, continuation statements or other instruments of further assurance as is necessary to maintain the liens of the Mortgage Documents and the assignment of the Mortgage Documents to the Trustee made by the Assignment Agreement and reciting the details of such action or referring to prior Opinions of Counsel in which such details are given, and stating that all financing statements and continuation statements have been executed and filed that are necessary fully to preserve and protect the rights of the Noteholders and the Trustee hereunder and under the Mortgage Documents and the Assignment Agreement, or (2) stating that, in the opinion of such counsel, no such action is necessary to maintain such liens and assignments. The Company and RIH shall cause TIA SECTION 314(d) relating to the release of property from the liens of the Mortgage to be complied with. Any certificate or opinion required by TIA SECTION 314(d) may be made by an Officer of the Company or RIH, unless otherwise required by TIA SECTION 314(d). Section 6.03. CUSTODY OF MORTGAGE DOCUMENTS. The Trustee shall hold in its possession the Mortgage Documents, except as it from time to time may be required for actions, suits or proceedings relating to the Mortgage Documents or for the purpose of enforcing or realizing upon any right or value thereby represented. The Trustee may, from time to time, in its sole discretion, for 43 the purpose of convenient location of the Mortgage Documents, appoint one or more agents to hold physical custody, for the account of the Trustee, of the Mortgage Documents. Section 6.04. SUITS TO PROTECT THE TRUST ESTATE AND MORTGAGE DOCUMENTS. Upon five days' prior written notice to the Company (or such shorter period or without notice if deemed necessary and appropriate by the Trustee), the Trustee shall have the power, but not the obligation to institute and to maintain such suits and proceedings as it may deem necessary or appropriate to prevent any impairment of the Trust Estate by any acts which may be unlawful or in violation of the Mortgage Documents, the Assignment Agreement or this Indenture, and such suits and proceedings as the Trustee may deem necessary or appropriate to preserve or protect its interest and the interests of the Noteholders in the Trust Estate and the Mortgage Documents and the principal, interest, issues, 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 result in an impairment of security hereunder or be materially prejudicial to the interests of the Noteholders or of the Trustee). The Trustee shall also have authority to exercise any rights or powers conferred on the Trustee as the holder of the Note. ARTICLE SEVEN REMEDIES Section 7.01. EVENTS OF DEFAULT. "EVENT OF DEFAULT", whenever used herein, means any one of the following events (including any applicable notice requirement and any period of grace as specified in this Section 7.01) (whatever the reason for such event 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): (a) default in the payment of any interest upon any Note when such interest becomes due and payable and continuance of such default (the deposit with the Trustee pursuant to Section 3.07 of funds sufficient to make such interest payment in full being deemed to cure any such 44 default for the purposes hereof) for a period of ten days; or (b) default in the payment of all or any portion of the principal of any Note at its Maturity; or (c) default in the performance or breach of any covenant of the Company or RIH in this Indenture (other than a covenant a default in the performance or breach of which is elsewhere in this Section 7.01 specifically dealt with), the Assignment Agreement or any of the Mortgage Documents and continuance of such default or breach for a period of 30 days (or such shorter or longer cure period, if any, as may be specified in respect of such default or breach in the Assignment Agreement or the applicable Mortgage Document, as the case may be), and (other than with respect to Sections 12.07, 12.08, 12.09, 12.10, 12.11, 12.12, 12.13 or 12.21) after there has been given (i) to the Company by the Trustee or (ii) to the Company and the Trustee by the Holders of at least 25% in Outstanding Amount of the Outstanding Notes, 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; PROVIDED, HOWEVER, that, if such default or breach is of a covenant set forth in Section 12.02, 12.04, 12.05, 12.11, 12.13 or 12.21, and if such default or breach is of such a nature that is curable but is not susceptible of being cured with due diligence within such 30-day period (or such shorter or longer cure period) (for reasons other than lack of funds), then such period shall be extended for such further period of time as may reasonably be required to cure such default or breach, so long as (i) RIH delivers an Officers' Certificate to the Trustee within such period stating (A) the applicability of the provisions of this proviso to such default or breach, (B) the Company's or RIH's intention to remedy such default or breach with reasonable diligence and (C) the steps which the Company or RIH has undertaken to remedy such default or breach, and (ii) RIH delivers to the Trustee additional Officers' Certificates every 30 days thereafter updating the information contained in the certificate described in clause (i) above, in which case such period shall be extended for such further period of time as may reasonably be required to cure such default or breach, provided that the Company or RIH is then proceeding and thereafter continues to proceed to cure such default or breach with reasonable diligence; PROVIDED FURTHER, HOWEVER, that such additional period of time shall not in any case exceed 60 days; or (d) a proceeding or case shall be commenced, without the application or consent of the Company or RIH, 45 in any court of competent jurisdiction, seeking (i) its liquidation, reorganization, dissolution or winding-up, or the composition or readjustment of its debts, (ii) the appointment of a trustee, receiver, custodian, liquidator or the like of the Company or RIH or of all or any substantial part of its assets, or (iii) similar relief in respect of the Company or RIH under any law relating to bankruptcy, insolvency, reorganization, winding-up, or composition or adjustment of debts, and such proceeding or case shall continue undismissed, or an order, judgment or decree approving or ordering any of the foregoing shall be entered and continue unstayed and in effect, for a period of 60 consecutive days; or (e) the commencement by the Company or RIH of a voluntary case under the federal bankruptcy laws or any other applicable federal or state law, or the consent or acquiescence by any of them to the filing of any such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee or sequestrator (or other similar official) of the Company or RIH or any substantial part of any of their property, or the making by any of them of an assignment for the benefit of creditors, or the taking of action by the Company or RIH in furtherance of any such action; or (f) the revocation, suspension or involuntary loss of any Permit which results in the cessation of a substantial portion of the operations of the Casino-Hotel for a period of more than 90 consecutive days; or (g) (i) a default by the Company, RIH or any of their Subsidiaries under any Indebtedness (other than the Indebtedness represented by the Working Capital Facility and the Junior Mortgage Facility) in an aggregate principal amount in excess of $5,000,000, which default results in the acceleration of the maturity of any such Indebtedness under the evidence of indebtedness, indenture or other instrument governing such Indebtedness; PROVIDED, HOWEVER, that, if such default under such evidence of indebtedness, indenture or other instrument shall be cured by the obligor, or be waived by the holders of such Indebtedness, in each case as may be permitted by such evidence of indebtedness, indenture or other instrument and in each case resulting in rescission of such acceleration thereunder, then the Event of Default hereunder by reason of such default shall be deemed likewise to have been thereupon cured or waived; or (ii) a default by the Company, RIH or any of their Subsidiaries under any Indebtedness represented by the Working Capital Facility or the Junior Mortgage Facility, the effect of which default (after the expiration of any applicable notice or grace periods) is to permit the 46 holder or holders of any such Indebtedness represented by the Working Capital Facility or the Junior Mortgage Facility in an aggregate principal amount in excess of $5,000,000 (or a trustee or agent on behalf of such holder or holders) to cause the acceleration of the maturity of such Indebtedness represented by the Working Capital Facility or the Junior Mortgage Facility under the evidence of indebtedness, indenture or other instrument governing such Indebtedness; PROVIDED, HOWEVER, that if such default under such evidence of indebtedness, indenture or other instrument shall be cured by the obligor, or be waived by the holders of such Indebtedness, in each case as may be permitted by such evidence of indebtedness, indenture or other instrument (and, if such default resulted in the acceleration of the maturity of such Indebtedness, such acceleration shall have been rescinded thereunder) then the Event of Default hereunder by reason of such default shall be deemed likewise to have been thereupon cured or waived; or (iii) the existence of a final judgment of a court of competent jurisdiction in an amount in excess of $3,000,000 against the Company, RIH or the Trust Estate, which judgment has not been satisfied or otherwise provided for, for a period of 30 days (during which execution shall not be effectively stayed) following the date on which such judgment becomes a lien against the Trust Estate or any part thereof (unless the lawsuit in question was commenced without effective service of process upon either the Company or RIH in which case such 30-day period shall not commence until the Company or RIH receives notice of such final judgment); or (iv) the existence of a final judgment of a court of competent jurisdiction in an amount in excess of $15,000,000 against the Company, RIH or the Trust Estate, which judgment has not been satisfied or otherwise provided for, for a period of 60 days (during which execution shall not be effectively stayed) following the date of such final judgment; or (v) the existence of a final judgment of a court of competent jurisdiction, regardless of amount, against the Company, RIH or the Trust Estate, which judgment has not been satisfied or otherwise provided for, for a period of 60 days (during which execution shall not be effectively stayed) following the date of such final judgment, if such judgment, by itself or upon recordation or other action of the judgment creditor, imposes or would impose a lien on the Trust Estate or any part thereof senior to the lien of the Mortgage; or (h) default in the performance, or breach, of any covenant of the Company or RIH in Article Ten; or 47 (i) the existence of a judgment of a court of competent jurisdiction in an amount in excess of $3,000,000 against RIH regarding the CRDA Dispute, which judgment has not been stayed, satisfied or otherwise provided for, for a period of 30 days (during which execution shall not be effectively stayed) (unless the lawsuit in question was commenced without effective service of process upon RIH in which case such 30-day period shall not commence until RIH receives notice of such final judgment); or (j) if RII fails to pay or discharge or cause to be paid or discharged, within 30 days before the same shall become delinquent, all taxes levied or imposed upon RII; PROVIDED, HOWEVER, that no Event of Default or Default shall be deemed to exist hereunder with respect to any tax liability not paid or discharged by RII if and to the extent that the amount, applicability or validity of such tax liabilities is being contested in good faith by appropriate proceedings if adequate reserves therefor have been established in accordance with GAAP; PROVIDED FURTHER, HOWEVER, that this clause (j) shall not apply to amounts due with respect to any period during which neither the Company, RIH nor any of their Subsidiaries is included in RII's consolidated group for federal income tax purposes. No action, event, claim, liability or judgment regarding the CRDA Dispute shall constitute a Default or an Event of Default under this Section 7.01 unless and until a judgment shall have been entered against RIH which constitutes an Event of Default pursuant to clause (i) of this Section 7.01. Section 7.02. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT. If an Event of Default (other than one referred to in clause (d) or (e) of Section 7.01) occurs and is continuing, then and in every such case the Trustee or the Holders of not less than 25% in Outstanding Amount of the Notes Outstanding may declare the Outstanding Amount and all accrued interest of all the Notes to be due and payable immediately, by a notice in writing to the Company (and to the Trustee, if given by any Noteholders), and upon any such declaration such Outstanding Amount shall become immediately due and payable. If an Event of Default referred to in clause (d) or (e) of Section 7.01 occurs, then the Outstanding Amount of all the Notes shall automatically become immediately due and payable without presentment, demand, protest or other formalities of any kind, all of which are hereby expressly waived by the Company. 48 At any time after such a declaration of acceleration has been made, but before any judgment or decree for payment of money due on any Notes has been obtained by the Trustee as hereinafter provided in this Article Seven, the Holders of a majority in Outstanding Amount of the Notes may, by written notice to the Company and the Trustee, rescind and annul such declaration and its consequences if: (a) the Company has deposited with the Trustee a sum sufficient to pay: (1) all overdue installments of interest on all Notes, (2) the principal of any Notes which have become due otherwise than by such declaration of acceleration and interest thereon at the rate or rates prescribed therefor in the Notes, and (3) 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 (b) all Events of Default, other than the non-payment of the Outstanding Amount of Notes which have become due solely by such declaration of acceleration, have been cured, or have been waived as provided in Section 7.13. No such rescission and annulment shall affect any subsequent default or impair any right consequent thereon. Section 7.03. COVENANT TO PAY TRUSTEE AMOUNTS DUE ON NOTES AND RIGHT OF TRUSTEE TO JUDGMENT. The Company covenants that, if: (a) default is made in the payment of any interest on any Note when such interest becomes due and payable, and such default continues for a period of 10 days (the deposit with the Trustee during such 10 day period pursuant to Section 3.07 of funds sufficient to make such interest payment in full being deemed to cure any such default for the purposes hereof), or (b) default is made in the payment of the principal of any Note at its Maturity, then, upon demand of the Trustee, the Company will pay to the Trustee for the benefit of the Holders of such Notes, the whole amount then due and payable on such Notes for principal and interest, with interest at the rate prescribed therefor in 49 the Notes on overdue principal 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 and as trustee of an express trust, shall be entitled to sue for and recover judgment against the Company, RIH and any other obligor on the Notes for the whole amount so due and unpaid. The Trustee shall be entitled to institute such suit either before, after or during the pendency of any proceedings for the enforcement of this Indenture or of the Mortgage Documents or of the Assignment Agreement, but only after the occurrence of an Event of Default. Subject to the Intercreditor Agreement, in the case of a foreclosure of the Mortgage and a sale of the Trust Estate and application of the proceeds as provided in Section 7.06, the Trustee, in its own name and as trustee of an express trust, shall be entitled to enforce payment of, and to receive, all amounts then remaining due and unpaid upon the Notes, for the benefit of the Holders thereof, and shall be entitled to recover judgment for any portion of the same remaining unpaid, with interest as aforesaid. No recovery of any such judgment upon any property of the Company shall affect or impair the security provided by this Indenture and the Assignment Agreement or the lien of the Mortgage upon the Trust Estate or any rights, powers or remedies of the Holders of the Notes. Section 7.04. 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 RIH or any other obligor upon the Notes or the property of the Company or RIH or of such other obligor or their creditors, the Trustee (irrespective of whether the principal (or any portion thereof) of the Notes 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 or interest) shall be entitled and empowered, by intervention in such proceeding or otherwise, (a) to file and prove a claim for the whole amount of principal and interest owing and unpaid in respect of the Outstanding Notes 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 50 advances of the Trustee, its agents and counsel) and of the Noteholders allowed in such judicial proceeding, and (b) 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 other similar official in any such judicial proceeding is hereby authorized by each Noteholder 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 Noteholders, to pay to the Trustee any amount due to 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 8.07. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Noteholder any plan of reorganization, arrangement, adjustment or compensation affecting the Notes or the rights of any Holder thereof, or to authorize the Trustee to vote on the claim of any Noteholder in any such proceeding. Section 7.05. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF NOTES. All rights of action and claims under this Indenture, the Notes, the Assignment Agreement or the Mortgage Documents may be prosecuted and enforced by the Trustee without the possession of any of the Notes or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust. 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 Notes in respect of which such judgment has been recovered. Section 7.06. APPLICATION OF MONEY COLLECTED. Subject to the Intercreditor Agreement, any money collected by the Trustee pursuant to this Article Seven or pursuant to Article Three or Section 5.11 or 5.20 of the Mortgage which is not required to be paid to the Mortgagor thereunder shall be applied in the following order, at the date or dates fixed by the Trustee and upon such date interest shall cease to accrue, and, in case of the distribution of such money on account of principal upon presentation of the Notes, and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid: 51 (a) FIRST: To the payment of all amounts due the Trustee under Section 8.07; (b) SECOND: To the payment of the whole amount then due upon the Outstanding Notes, for principal and interest, in respect of which or for the benefit of which such money has been collected, with interest (to the extent that such interest has been collected by the Trustee or a sum sufficient therefor has been so collected and payment thereof is legally enforceable at the respective rate or rates prescribed therefor in the Notes) on overdue principal; and in case such proceeds shall be insufficient to pay in full the whole amount so due and unpaid upon such Notes, then first, payment of accrued but unpaid interest (with interest thereon as aforesaid), and second, to outstanding principal, in each case, ratably according to the aggregate amount so due; and (c) THIRD: To the payment of the remainder, if any, to the Company or to whomever may be lawfully entitled to receive the same or as a court of competent jurisdiction may direct. Section 7.07. LIMITATION ON SUITS. No Holder of any Note shall have any right to institute any proceeding, judicial or otherwise, under or with respect to this Indenture, the Assignment Agreement or the Mortgage Documents, or for the appointment of a receiver or trustee or for any other remedy hereunder, unless: (a) such Holder has previously given written notice to the Trustee of a continuing Event of Default; (b) the Holders of not less than 25% in Outstanding Amount of the Outstanding Notes 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; (c) 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; (d) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and (e) no direction inconsistent with such written request has been given to the Trustee during such 60-day 52 period by the Holder of a majority in Outstanding Amount of the Outstanding Notes; it being understood and intended that no one or more Holders of Notes shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture, the Assignment Agreement or the Mortgage Documents, to affect, disturb or prejudice the right of any other Holders of Notes, or to obtain or to seek to obtain priority or preference over any other Holders or to enforce any right under this Indenture, the Assignment Agreement or the Mortgage Documents, except in the manner herein and therein provided and for the Ratable Benefit of all Notes. Section 7.08. UNCONDITIONAL RIGHT OF NOTEHOLDERS TO RECEIVE PRINCIPAL AND INTEREST. Notwithstanding any other provision in this Indenture, the Holder of any Note shall have the right, which is absolute and unconditional, to receive payment of the principal of and interest on such Note on the Stated Maturity or Interest Payment Dates expressed in such Note (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 7.09. RESTORATION OF RIGHTS AND REMEDIES. If the Trustee or any Noteholder has instituted any proceeding to enforce any right or remedy under this Indenture, the Assignment Agreement or the Mortgage Documents and such proceeding has been discontinued or abandoned for any reason or has been determined adversely to the Trustee or to such Noteholder, then and in every such case the Company, the Trustee and the Noteholders shall, subject to any determination in such proceeding, be restored to their former positions hereunder, and thereafter all rights and remedies of the Trustee and the Noteholders shall continue as though no such proceeding had been instituted. Section 7.10. RIGHTS AND REMEDIES CUMULATIVE. No right or remedy herein conferred upon or reserved to the Trustee or to the Noteholders 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. 53 Section 7.11. DELAY OR OMISSION NOT WAIVER. No delay or omission of the Trustee or of any Holder of any Note to exercise any right or remedy accruing upon an 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 Seven or by law to the Trustee or to the Noteholders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Noteholders, as the case may be. Section 7.12. OTHER RIGHTS. Subject to Section 8.03(e), the Holders of a majority in Outstanding Amount of the Outstanding Notes shall have the right, during the continuance of an Event of Default, (a) to require the Trustee to proceed to enforce this Indenture, either by judicial proceedings for the enforcement of the payment of the Notes by the foreclosure of the Mortgage and exercise of any remedies under the Mortgage Documents and the Assignment Agreement and the sale of the Trust Estate or otherwise or, at the election of the Trustee, by the exercise of the power of entry and/or sale conferred by the Mortgage; and (b) 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 upon the Trustee hereunder, provided that (1) such direction shall not be in conflict with any rule of law or this Indenture or any applicable Mortgage Document or the Assignment Agreement; (2) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction; and (3) the Trustee shall not be required to determine if any action so directed would be unjustly prejudicial to the Holders not taking part in such direction. Section 7.13. WAIVER OF PAST DEFAULTS. Before any judgment or decree for payment of money due has been obtained by the Trustee as provided in this Article Seven, the Holders of not less than 66-2/3% in Outstanding Amount of the Outstanding Notes may, by Act of such Noteholders delivered to the Trustee and the Company, on 54 behalf of the Holders of all the Notes waive any past Default hereunder and its consequences, except a Default (a) in the payment of the principal of or interest on any Note, or (b) in respect of a covenant or provision hereof which under Article Eleven cannot be modified or amended without the consent of the Holder of each Outstanding Note affected. Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or impair any right subsequent thereon. Section 7.14. UNDERTAKING FOR COSTS. All parties to this Indenture agree, and each Holder of any Note by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, the Assignment Agreement or the Mortgage Documents, or in any suit against the Trustee for any action taken or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to the merits and good faith of the claim or defense made by such party litigant; but the provisions of this Section 7.14 shall not apply to any suit instituted by the Trustee, to any suit instituted by any Noteholders, or group of Noteholders, holding in the aggregate more than 10% in Outstanding Amount of the Outstanding Notes, or to any suit instituted by any Noteholder for the enforcement of the payment of the principal of or interest on any Note on or after the Stated Maturity expressed in such Note (or, in the case of redemption, on or after the Redemption Date) or the relevant Interest Payment Date. Section 7.15. ENFORCEMENT. In case an Event of Default shall occur and be continuing, the Trustee, in it discretion may, subject to the provisions of Section 7.12, proceed to protect and enforce its rights and the rights of the Noteholders under this Indenture by a suit, action or proceeding in equity or at law or otherwise, whether for the specific performance of any covenant or agreement contained in this Indenture or in aid of the execution of any power granted in this Indenture or for the enforcement of any other legal, equitable or other remedy, 55 as the Trustee, being advised by counsel, shall deem most effectual to protect and enforce any of the rights of the Trustee or the Noteholders hereunder. In case an Event of Default shall occur and be continuing under the Mortgage, the Trustee, as assignee of the Mortgage Documents, in its discretion may, subject to the provisions of Section 7.12, proceed to enforce its rights under the Mortgage Documents and the Assignment Agreement. Section 7.16. MANAGEMENT OF CASINO-HOTEL. Notwithstanding any provision of this Article Seven to the contrary, (a) following an Event of Default under the Mortgage and the taking of possession of the Trust Estate by the Trustee and/or the appointment of a receiver of the Trust Estate or any part thereof, the Trustee or any such receiver shall be authorized, in addition to the rights and power of the Trustee and such receiver set forth elsewhere in this Indenture, the Assignment Agreement and the Mortgage Documents, to retain one or more experienced operators of hotels and/or casinos to manage and operate the Casino-Hotel on behalf of the Noteholders, provided that any such operator shall have all necessary legal qualifications, including all Permits, to manage the Casino-Hotel; and (b) no Noteholder shall have any right to take possession of, operate or manage all or any portion of the Casino-Hotel, individually or as a member of a group, unless such Noteholder shall have all necessary legal qualifications, including all Permits, to do so and shall otherwise be qualified to be retained to manage the Casino-Hotel under subsection (a) of this Section 7.16. ARTICLE EIGHT THE TRUSTEE Section 8.01. CERTAIN DUTIES AND RESPONSIBILITIES. (a) Except during the continuance of an Event of Default, (1) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture and the Mortgage Documents, and no implied covenants or obligations shall be read into this Indenture and the Mortgage Documents against the Trustee; and 56 (2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture or the Mortgage Documents; but in the case of any such certificates or opinions which by any provision hereof or thereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture and the Mortgage Documents. (b) In case an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture or the Mortgage Document, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person's own affairs. (c) No provision of this Indenture or any Mortgage Document shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that (1) this Section 8.01(c) shall not be construed to limit the effect of Section 8.01(a); (2) the Trustee shall not be liable for any error of judgment made in good faith by it, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; (3) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of not less than a majority in Outstanding Amount of the Outstanding Notes relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture or any Mortgage Document; and (4) no provision of this Indenture shall require the Trustee 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. 57 (d) Whether or not therein expressly so provided, every provision of this Indenture and the Mortgage Documents relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section 8.01. Section 8.02. NOTICE OF DEFAULTS. Within 45 days after the occurrence of any Default hereunder of which a Responsible Officer of the Trustee has actual knowledge, the Trustee shall transmit by mail to all Holders of Notes as their names and addresses appear in the Note Register, 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 interest on any Note, 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 determine that the withholding of such notice is in the best interests of the Noteholders. Section 8.03. CERTAIN RIGHTS OF TRUSTEE. Except as otherwise provided in Section 8.01: (a) 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, coupon, 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; (b) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order; (c) 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; (d) 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 58 the Trustee hereunder in good faith and in reliance thereon; (e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture or any of the Mortgage Documents at the request or direction of any of the Noteholders pursuant to this Indenture, unless such Noteholders shall have offered to the Trustee reasonable security or indemnity reasonably satisfactory to the Trustee against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (f) 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, 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 and RIH, personally or by agent or attorney; (g) 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; (h) the Trustee shall not be deemed to have knowledge of and shall not be required to take any action with respect to any Event of Default (other than an Event of Default described in Section 7.01(a) and (b) or any event which would, with the giving of notice or the passage of time or both, constitute an Event of Default, unless the Trustee shall have actual knowledge of such event or shall have been notified in writing of such event by Noteholders holding in the aggregate more than 25% in Outstanding Amount of the Outstanding Notes; (i) subject to Section 8.01(c), the Trustee shall not be personally liable, in case of entry by it upon the Trust Estate, for debts contracted or liabilities or damages incurred in the management or operation of the Trust Estate; and (j) in addition to and not in limitation of its other powers hereunder, the Trustee shall have such power and authority as may be necessary to enter into and 59 accept delivery of any document as may be necessary to effect on behalf of the Holders of the Notes the subordination of the indebtedness in respect of the Notes to any secured Working Capital Facility (in accordance with the provisions of the Mortgage), and upon written request of the Company, the Trustee shall enter into such agreements on behalf of the holders of the Notes. Section 8.04. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF NOTES OR APPLICATION OF PROCEEDS. The recitals contained herein and in the Notes, except in a certificate of authentication on the Notes, shall be taken as the statements of the Company, and the Trustee assumes no responsibility for their correctness. The Trustee makes no representation as to the validity or sufficiency of this Indenture, the Notes or the Mortgage Documents. The Trustee shall not be accountable for the use or application by the Company of Notes or the proceeds thereof or of any money paid to the Company or by a Company Order under any provision hereof. Section 8.05. MAY HOLD NOTES. The Trustee, any Paying Agent, Note Registrar, Authenticating Agent or any other agent of the Company, in its individual or any other capacity, may become the owner or pledgee of Notes and, subject to Sections 8.08 and 8.13, if operative, may otherwise deal with the Company with the same rights it would have if it were not Trustee, Paying Agent, Note Registrar, Authenticating Agent or such other agent. Section 8.06. MONEY HELD IN TRUST. 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 agreed with the Company. Section 8.07. COMPENSATION AND REIMBURSEMENT. The Company agrees: (a) to pay to the Trustee from time to time reasonable compensation for all services rendered by it hereunder and under the Mortgage Documents (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (b) except as otherwise expressly provided herein and in the Mortgage Documents, to reimburse the Trustee 60 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 the Trustee's negligence or bad faith; and (c) 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 Indenture or the trust created hereunder or the performance of its duties hereunder, including the reasonable costs and expenses of defending itself against or investigating any claim or liability in con- nection with the exercise or performance of any of its powers or duties hereunder (including reasonable attorneys' fees and expenses). As security for the performance of the obligations of the Company and RIH under this Section 8.07, the Trustee shall be secured under this Indenture and the Mortgage Documents by a lien prior to the Mortgage upon all property and funds held or collected by the Trustee, and for the payment of such compensation, expenses, reimbursements and indemnity the Trustee shall have the right to use and apply any money held by it pursuant hereto. Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company and RIH under this Section 8.07 shall survive. Section 8.08. DISQUALIFICATION; CONFLICTING INTERESTS. This Indenture shall always have a Trustee who satisfies the requirements of TIA SECTION 310(a)(l) and SECTION 310(a)(5). The Trustee shall comply with TIA SECTION 310(b) including the second sentence of TIA SECTION 310(b)(9). Section 8.09. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY. There shall at all times be a Trustee hereunder which shall be a corporation organized and doing business under the law of the United States of America or of any state, authorized under such laws to exercise corporate trust powers, having (or in the case of a corporation included in a bank holding company system, the related bank holding company having) a combined capital and surplus of at least $100,000,000, subject to supervision or examination by federal or state authority. In addition, if the Trustee is a 61 corporation included in a bank holding company system, the Trustee, independently of such bank holding company, shall meet the capital requirements of TIA SECTION 310(a)(2). The Trustee shall comply with TIA SECTION 310(b); provided, however, that there shall be excluded from the operation of TIA SECTION 310(b)(1) any indenture or indentures under which other securities, or certificates of interest or participation in other securities, of the Company are outstanding, if the requirements for such exclusion set forth in TIA SECTION 310(b)(1) are met. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of such supervising or examining authority, then for the purposes of this Section 8.09, 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 8.09, it shall resign immediately in the manner and with the effect hereinafter specified in this Article Eight. Section 8.10. 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 Eight shall become effective until the acceptance of appointment by the successor Trustee under Section 8.11. (b) The Trustee may resign at any time by giving written notice thereof to the Company. If an instrument of acceptance by a successor Trustee 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) The Trustee may be removed at any time by Act of the Holders of a majority in Outstanding Amount of the Outstanding Notes, delivered to the Trustee and to the Company. (d) If at any time: (1) the Trustee shall fail to comply with Section 8.08 after written request therefor by the Company or by any Noteholder who is a bona fide Holder of a Note, or (2) the Trustee shall cease to be eligible under Section 8.09 and shall fail to resign after written request therefor by the Company or by any Noteholder who is a bona fide Holder of a Note, or 62 (3) 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, (i) the Company by a Company Order may remove the Trustee, or (ii) subject to Section 7.14, any Noteholder who is a bona fide Holder of a Note 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 the Trustee for any cause, the Company, by a Company Order, shall promptly appoint a successor Trustee. In case all or substantially all of the Trust Estate shall be in the possession of a receiver or trustee lawfully appointed, such receiver or trustee, by written instrument, may similarly appoint a successor to fill such vacancy until a new Trustee shall be so appointed by the Noteholders. If, within one year after such resignation, removal or incapacity or the occurrence of such vacancy, a successor Trustee shall be appointed by Act of the Holders of a majority in Outstanding Amount of the Outstanding Notes 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 or by such receiver or trustee. If no successor Trustee shall have been so appointed by the Company or the Noteholders and accepted appointment in the manner hereinafter provided, subject to Section 7.14, any Noteholder who is a bona fide Holder of a Note may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee. (f) The Company shall give written notice of each resignation and each removal of the Trustee and each appointment of a successor Trustee to each Noteholder by mailing such notice by first-class mail, postage prepaid, to each Noteholder as such Noteholder's name and address appear in the Note Register; provided, however, that failure of the Company to give such notice shall not affect the resignation or removal of such Trustee. Each notice shall include the name of the successor Trustee and the address of its principal corporate trust office. 63 Section 8.11. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR. Every successor Trustee appointed hereunder shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall became effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the estates, properties, 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 conveying and transferring to such successor Trustee all the estates, properties, 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, subject nevertheless to its lien, if any, provided for in Section 8.07. 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 estates, properties, 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 Eight. Section 8.12. 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 Eight, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Notes 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 Notes so authenticated with the same effect as if such successor Trustee had itself authenticated such Notes. Section 8.13. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY. The Trustee will comply with TIA SECTION 311(a). A Trustee 6 who has resigned or been removed shall be subject to TIA SECTION 311(a) to the extent indicated. Section 8.14. CO-TRUSTEES AND SEPARATE TRUSTEES. At any time or times, for the purpose of meeting the legal requirements of the TIA or of any jurisdiction in which any of the Trust Estate may at the time be located or in which it shall be necessary or desirable for the Trustee to act, the Company and the Trustee shall have power to appoint, and, upon the written request of the Trustee or of the Holders of at least 25% in Outstanding Amount of the Notes Outstanding, the Company shall for such purpose join with the Trustee in the execution, delivery and performance of all instruments and agreements necessary or proper to appoint, one or more Persons approved by the Trustee either to act as co-trustee, jointly with the Trustee, of all or any part of the Mortgage Documents or of the Trust Estate covered by such Mortgage Documents, or to act as separate trustee of any such property, in either case with such powers as may be provided in the instrument of appointment, and to vest in such Person or Persons in the capacity aforesaid, any property, title, right or power deemed necessary or desirable, subject to the other provisions of this Section 8.14. If the Company does not join in such appointment within 15 days after the receipt by it of a request so to do, or in case an Event of Default has occurred and is continuing, the Trustee alone shall have power to make such appointment. Should any written instrument from the Company be required by any co-trustee or separate trustee so appointed for more fully confirming to such co-trustee or separate trustee such property, title, right or power, any and all such instruments shall, on request, be executed, acknowledged and delivered by the Company within three business days of such request. Every co-trustee or separate trustee shall, to the extent permitted by law, but to such extent only, be appointed subject to the following terms, namely: (a) the Notes shall be authenticated and delivered, and all rights, powers, duties and obligations hereunder in respect of the custody of securities, cash and other personal property held by, or required to be deposited or pledged with, the Trustee hereunder, shall be exercised solely, by the Trustee; (b) the rights, powers, duties and obligations hereby conferred or imposed upon the Trustee in respect of any property covered by such appointment shall be conferred or imposed upon and exercised or performed by the Trustee or by the Trustee and such co-trustee or 6 separate trustee jointly, as shall be provided in the instrument appointing such co-trustee or separate trustee, except to the extent that under any law of any jurisdiction in which any particular act is to be performed, the Trustee shall be incompetent or unqualified to perform such act, in which event such rights, powers, duties and obligations shall be exercised and performed by such co-trustee or separate trustee; (c) the Trustee, at any time, by an instrument in writing executed by it may accept the resignation of or remove any co-trustee or separate trustee appointed under this Section 8.14. A successor to any co-trustee or separate trustee so resigned or removed may be appointed in the manner provided in this Section 8.14; (d) the Trustee, or any other such trustee hereunder, shall not be personally liable by reason of any act or omission of any co-trustee or separate trustee hereunder, and no co-trustee or separate trustee hereunder shall be personally liable by reason of any act or omission of the Trustee, or any other such trustee hereunder; (e) any Act of Noteholders delivered to the Trustee shall be deemed to have been delivered to each such co-trustee and separate trustee; and (f) any co-trustee or separate trustee appointed hereunder shall be entitled to compensation and indemnification from the Company under Section 8.07 hereunder and shall be entitled to all such other rights and protections afforded the Trustee hereunder. Section 8.15 APPOINTMENT OF AUTHENTICATING AGENT. Upon the request of the Company, the Trustee shall appoint an Authenticating Agent with power to act on its behalf and subject to its direction in the authentication and delivery of the Notes designated for such authentication by the Company and containing provisions therein for such authentication in connection with transfers and exchanges under Sections 3.04, 3.05, 3.06 and 13.07, as fully to all intents and purposes as though the Authenticating Agent had been expressly authorized by those Sections to authenticate and deliver such Notes. For all purposes of this Indenture, the authentication and delivery of Notes by the Authenticating Agent pursuant to this Section 8.15 shall be deemed to be the authentication and delivery of Notes "by the Trustee". Such Authenticating Agent shall at all times be a bank or trust company having its principal office in the Borough of Manhattan, City and State of New York, and shall at all times be a corporation organized and doing business under the laws 66 of the United States or of any State with a combined capital and surplus of at least $50,000,000 and authorized under such laws to exercise corporate trust powers and subject to supervision or examination by federal or state authority. If such corporation publishes reports of condition at least annually pursuant to law or the requirements of such authority, then for the purposes of this Section 8.15 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. Any corporation into which any Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, consolidation or conversion to which any Authenticating Agent shall be a party, or any corporation succeeding to the corporate trust business of any Authenticating Agent, shall be the successor of the Authenticating Agent hereunder, if such successor corporation is otherwise eligible under this Section 8.15, without the execution or filing of any further act on the part of the parties hereto or the Authenticating Agent or such successor corporation. Any Authenticating Agent may at any time resign by giving written notice of resignation to the Trustee and the Company. The Trustee may at any time terminate the agency of any Authenticating Agent by giving written notice of termination to such Authenticating Agent and the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time any Authenticating Agent shall cease to be eligible under this Section 8.15, the Trustee shall promptly appoint a successor Authenticating Agent, and shall give written notice of such appointment to the Company. The Company agrees to pay to the Authenticating Agent from time to time reasonable compensation for its services. The provisions of Sections 3.10, 8.04 and 8.05 shall be applicable to any Authenticating Agent. ARTICLE NINE NOTEHOLDERS' LISTS AND REPORTS BY TRUSTEE Section 9.01. COMPANY TO FURNISH TRUSTEE SEMI-ANNUAL LISTS OF NOTEHOLDERS. The Company will furnish or cause to be furnished to the Trustee semi-annually, not less than 45 days nor more than 67 60 days after each date (month and day) specified as a semi-annual Interest Payment Date for the Notes (whether or not any Notes are then Outstanding), and at such other times as the Trustee may request in writing, within 60 days after receipt by the Company of any such request, a list in such form as the Trustee may reasonably require containing all the information in the possession or control of the Company, or any of its Paying Agents other than the Trustee, as to the names and addresses of the Holders of Notes, obtained since the date as of which the next previous list, if any, was furnished, excluding from any such list the names and addresses received by the Trustee in its capacity as Note Registrar. Any such list may be dated as of a date not more than 15 days prior to the time such information is furnished and need not include information received after such date. Section 9.02. PRESERVATION OF INFORMATION; COMMUNICATIONS TO NOTEHOLDERS. (a) The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders of Notes (1) contained in the most recent list furnished to the Trustee as provided in Section 9.01, (2) received by the Trustee in the capacity of Paying Agent (if so acting) hereunder or (3) received by the Trustee in its capacity as Note Registrar. The Trustee may destroy any list furnished to it as provided in Section 9.01 upon receipt of a new list so furnished. (b) Holders may communicate pursuant to TIA SECTION 312(b) with other Holders with respect to their rights under this Indenture or the Notes. The Company, the Trustee, the Note Registrar and any other Person shall have the protection of TIA SECTION 312(c). (c) Every Holder of Notes, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee nor any Paying Agent shall be held accountable by reason of the disclosure of any such information as to the names and addresses of the Holders of Notes in accordance with Section 9.02(b), regardless of the source from which information was derived, and that the Trustee shall not be held accountable by reason of mailing any material pursuant to a request made under Section 9.02(b). Section 9.03. REPORTS BY TRUSTEE. (a) Within 60 days after each May 15 beginning with May 15, 1995, the Trustee shall transmit to each Noteholder a report dated as of such May 15 that complies with TIA SECTION 313(a). The Trustee shall also comply with TIA SECTION 313(b) and SECTION 313(c). 68 (b) A copy of each such report shall, at the time of such transmission to Noteholders, be filed by the Trustee with any stock exchange on which the Notes are listed and also with the Commission. The Company will notify the Trustee when the Notes are listed on any stock exchange. (c) The Trustee will provide the Casino Control Commission and the Director of the Division of Gaming Enforcement of New Jersey with: (1) copies of all notices, reports and other written communications which the Trustee gives to Noteholders; (2) a list of Noteholders promptly after the original issuance of the Notes and a list of Noteholders annualy on December 1 of each year, or such other time as requested by the Casino Control Commission or Director of Division of Gaming Enforcement; (3) notice of any Event of Default under this Indenture or of any event, occurrence or condition actually known by the Trustee which, with the giving of notice or lapse of time or both would constitute an Event of Default under this Indenture (including the Guaranty), the RIH Promissory Note or the Mortgage Documents (as such term is defined in such instruments), any acceleration of the Indebtedness evidenced or secured hereby or thereby, the institution of any legal actions or proceedings before any court or governmental authority in respect of this Indenture (including the Guaranty) or the Mortgage Documents, the entering into or taking possession of any property constituting the Trust Estate and any rescission, annulment or waiver in respect of an Event of Default under any instruments described in this clause (3); (4) notice of the removal or resignation of the Trustee; (5) notice of any transfer or assignment of rights under this Indenture (including the Guaranty) (but not in respect of the Notes) or the Mortgage Documents after a Responsible Officer of the Trustee becomes aware of the same; and (6) a copy of any amendment to the Notes, this Indenture (including the Guaranty) or the Mortgage Documents immediately; 69 provided however, that the Trustee shall not be liable to any Person (other than the Casino Control Commission and the Director of the Division of Gaming Enforcement of New Jersey) for any failure to provide any of the above- mentioned documents to the Casino Control Commission and the Director of the Division of Gaming Enforcement of New Jersey. The notice specified in Section 9.03 (c) above shall be in writing and, except as set forth below, shall be given immediately after the Trustee has actual knowledge of any circumstances requiring such notice. In the case of any notice in respect of any Default or Event of Default under any instrument described in Section 9.03(c), such notice shall be accompanied by a copy of any notice from the Holders of Notes, or a representative thereof or the Trustee, to the defaulting Person and, if accompanied by any such notice to the defaulting Person, shall be given simultaneously with the giving of any such notice to the defaulting Person. In the case of any legal actions or proceedings, such notice shall be accompanied by a copy of the complaint or other initial pleading or document. The Trustee and its Responsible Officers shall cooperate with the Casino Control Commission and the Director of the Division of Gaming Enforcement of New Jersey in order to provide such Commission and Director with information and documentation relevant to compliance with Section 9.03(c) above and as otherwise required by the Casino Control Act. The expiration date of the current gaming Permit held by RIH is February 26, 1994. Subsequent gaming Permits held by RIH are scheduled to expire every two years on February 26th, commencing February 26, 1996 unless and until the Trustee is advised otherwise. RIH will advise the Trustee of any change in such expiration date within five business days of knowledge thereof. ARTICLE TEN CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE Section 10.01. CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER ONLY ON CERTAIN TERMS. Neither the Company nor RIH shall consolidate, combine or merge with or into any other Person or permit any other Person to consolidate, combine or merge with or into the Company or RIH, as the case may be; and neither the Company with respect to its assets nor RIH with respect to the Trust 70 Estate shall sell, assign, convey or transfer its interest in such assets or the Trust Estate, as the case may be, substantially as an entirety (and notwithstanding anything to the contrary contained herein (including the proviso at the end of this sentence, but subject to Section 10.05), but subject to the provisions of the Mortgage regarding dispositions of the Trust Estate, neither the Company with respect to its assets nor RIH with respect to the Trust Estate may sell, assign, convey or transfer such assets or the Trust Estate, as the case may be, other than substantially as an entirety) to any other Person or group of Persons in one transaction or a series of related transactions, or permit any other Person or group of Persons to convey or transfer all or substantially all of its assets, subject to liabilities other than DE MINIMIS liabilities, to the Company or RIH; and the Company and RIH shall not transfer, convey, sell or otherwise dispose of to any other Person, or issue to any Person, any equity interest in the Company or RIH, as the case may be (each of the aforesaid transactions described in this Section 10.01 is referred to herein as a "Combination Transaction"); PROVIDED, HOWEVER, that (i) the Company may engage in a Combination Transaction in which the only other party or parties is RIH or a direct or indirect wholly owned Subsidiary of the Company or RIH, and (ii) the Company or RIH may engage in any other Combination Transaction (either independently or at the same time as other Combination Transactions), subject to the following with respect to each such Combination Transaction: (a) the conditions set forth in Section 10.03 are satisfied; (b) in the event the Company or RIH shall consolidate, combine or merge with or into another Person or sell, assign, convey or transfer its interest in its assets or in the Trust Estate, as the case may be, substantially as an entirety (but not less than substantially as an entirety) to another Person in one transaction or a series of related transactions, the entity which is formed by or survives such consolidation, combination or merger or the Person to which such assets or the Trust Estate are conveyed or transferred: (1) shall be organized and existing under the laws of the United States of America, any state thereof, or the District of Columbia; (2) shall expressly assume, by an indenture supplemental hereto, in form reasonably satisfactory to the Trustee, executed and delivered to the Trustee, the performance and observance of every covenant, obligation and condition of this Indenture 71 to be performed or observed by the Company or RIH, whichever the case may be; (3) shall expressly assume, by an instrument executed and delivered to the Trustee, in form reasonably satisfactory to the Trustee, the due and punctual performance of every covenant, obligation and condition of the Mortgage Documents and Assignment Agreement to be performed by the Company or RIH, whichever the case may be; and (4) immediately after and giving effect to such transaction could incur at least $1.00 of additional Indebtedness under Section 12.08; (c) immediately after giving effect to such transaction, no Event of Default, or Default hereunder or under the Mortgage shall have occurred and be continuing; (d) such Combination Transaction shall be on such terms as shall not impair the lien and security and priority hereof or of the Mortgage Documents or of the Assignment Agreement and the rights and powers of the Trustee and the Holders of the Notes hereunder and thereunder; and (e) the Company or RIH, as the case may be, shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each of which shall state that such Combination Transaction and such supplemental indenture comply with this Article Ten and that all conditions precedent herein provided for relating to such transaction have been complied with. Section 10.02. SUCCESSOR ENTITY SUBSTITUTED. Upon any consolidation, combination or merger or any conveyance or transfer of an interest in the assets of the Company or in the Trust Estate permitted by Section 10.01, the successor entity formed by such consolidation or into which the Company or RIH is combined or to which such conveyance or transfer is made shall succeed to, and be substituted for, and may exercise every right and power of, and shall be bound by every obligation and liability of, the Company or RIH, whichever the case may be, under this Indenture with the same effect as if such successor entity had been named as the Company or RIH herein; PROVIDED, HOWEVER, that no such consolidation or combination involving the Company or RIH, unless such transaction is in compliance with the provisions of this Article Ten, shall have the effect of releasing the Person named as "the Company" or "RIH", as the case may be, in the first paragraph of this instrument, or any successor entity which shall theretofore have become such in the manner 72 prescribed in this Article Ten, from its liability as obligor and maker on the RIH Promissory Note or any of the Notes. Section 10.03. SUCCESSOR MANAGEMENT OF CASINO-HOTEL. Neither the Company nor RIH shall engage in any Combination Transaction unless, immediately following such Combination Transaction, (a) RIH (or any successor entity) shall be eligible for and shall meet all relevant Legal Requirements, including holding all permits, required for the normal operation of the business of owning and operating the Casino-Hotel, and (b) RIH (or any successor entity) shall be controlled by a Person that is, or shall retain to manage the Casino-Hotel one or more Persons that are, experienced in the operation and management of casino-hotels. Section 10.04. LIMITATION ON SALES OF TRUST ESTATE. Except as otherwise expressly permitted by the Mortgage and this Indenture, neither the Company nor RIH shall sell, assign, lease, sublease, hypothecate, pledge, mortgage or otherwise transfer all or any part of the assets of the Company or the Trust Estate or any interest therein (including, without limitation, any interest in the Ground Leases). Without limiting the generality of the foregoing, RIH shall not separate, or attempt to separate, its ownership of its interest in the Ground Leases from the ownership of the buildings constituting the Casino-Hotel or any part thereof. Section 10.05 RIH SALE. The foregoing provisions of this Article Ten shall not apply in connection with an RIH Sale. ARTICLE ELEVEN AMENDMENTS, SUPPLEMENTS AND WAIVER Section 11.01. WITHOUT CONSENT OF NOTEHOLDERS. Without the consent of the Holders of any Notes, the parties hereto may from time to time amend or supplement this Indenture, the Assignment Agreement, the Notes or the Mortgage Documents, as long as the form of such amendment or supplement is satisfactory to the Trustee, for any of the following purposes: (a) to correct or amplify the description of the Trust Estate or better to assure, convey and confirm unto the Trustee the assignment of the Mortgage Documents; or 73 (b) to add additional conditions, limitations and restrictions thereafter to be observed to the conditions, limitations and restrictions on the authorized amount, terms of issue, authentication and delivery of Notes as herein set forth; or (c) to comply with Article Ten; or (d) to add to the covenants of the Company for the benefit of the Holders of all Notes or to surrender any right or power herein conferred upon the Company; or (e) to cure any ambiguity, defect or inconsistency in any of the enumerated documents, provided such action shall not adversely affect the interests of the Holders of the Notes; or (f) to modify, eliminate or add to the provisions of this Indenture to such extent as shall be necessary to effect the qualification of this Indenture under the TIA or under any similar federal statute hereafter enacted, and to add to this Indenture such other provisions as may be expressly permitted by the TIA, EXCLUDING, HOWEVER, the provisions referred to in TIA SECTION 316(a)(2) as in effect at the date as of which this instrument was executed or any corresponding provision in any similar federal statute hereafter enacted; or (g) to effectuate any subordination contemplated in Section 8.03(i); or (h) to comply with the requirements of the Casino Control Act. The terms of any such enumerated document entered into pursuant to this Section 11.01 shall be subject to prior approval of the Casino Control Commission in consultation with the New Jersey Division of Gaming Enforcement. Section 11.02. WITH CONSENT OF NOTEHOLDERS. With the consent of the Holders of not less than 66-2/3% in Outstanding Amount of the Notes then Outstanding, by Act of such Holders delivered to the Company and the Trustee, the parties hereto may amend or supplement this Indenture, the Mortgage Documents, the Assignment Agreement or the Notes, provided that the form of such amendment or supplement is reasonably satisfactory to the Trustee. The Holders of 66-2/3% in Outstanding Amount of the Notes then Outstanding may waive compliance by the Company or RIH with any provision of this Indenture, the Mortgage Documents, the Assignment Agreement or the Notes, except a default in the payment of principal of or interest on any Note, without notice to any 74 Noteholder. Without the consent of the Holder of each Outstanding Note affected thereby, an amendment, supplement or waiver, including a waiver pursuant to Section 7.13, may not: (a) change the Stated Maturity of the principal of, or any installment of interest on, any Note, or reduce the principal amount thereof or the interest thereon or the amount payable upon the redemption thereof, or change any Place of Payment where, or the coin or currency in which, any Note, or the interest thereon, is payable, or impair the right to institute suit for the enforcement of any such payment on or after the Stated Maturity thereof (or, in the case of redemption, on or after the Redemption Date); or (b) reduce the percentage in Outstanding Amount of the Outstanding Notes, the consent of whose Holders is required for any amendment, supplement or waiver; or (c) modify or alter the provisions of the proviso to the definition of the term Outstanding; or (d) modify any of the provisions of this Section or Section 7.13, except to increase any percentage provided thereby or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Note affected thereby; or (e) permit the creation of any lien ranking prior to the lien of the Mortgage (except for such liens expressly permitted pursuant to Section 12.13). In determining whether to execute any amendment or supplement, subject to Sections 11.02(a) through (e), the Trustee may in its discretion determine whether or not any Notes would be affected by any such amendment or supplement and any such determination shall be conclusive upon the Holders of all Notes, whether theretofore or thereafter authenticated and delivered hereafter. The Trustee shall not be liable for any such determination made in good faith. It shall not be necessary for any Act of Noteholders under this Section to approve the particular form of any proposed amendment, supplement or waiver, but it shall be sufficient if such Act shall approve the substance thereof. In connection with any amendment, supplement or waiver under this Indenture, the Company or RIH may, but shall not be obligated to, offer to any Holder who consents to such amendment, supplement or waiver, or to all Holders, at the discretion of the Company or RIH,consideration for such Holder's consent to such amendment,supplement or waiver. The terms of any such enumerated document entered into pursuant to 75 this Section 11.02 shall be subject to the prior approval of the Casino Control Commission in consultation with the New Jersey Division of Gaming Enforecement. Section 11.03. EXECUTION OF AMENDMENTS AND SUPPLEMENTS. In executing, or accepting the additional trusts created by, any amendment or supplement permitted by this Article or the modification thereby of the trusts already created by this Indenture, the Trustee shall be entitled to receive from the Company, and, subject to Section 8.01(c), shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such amendment or supplement is authorized or permitted by this Indenture. The Trustee may, but shall not, except to the extent required in the case of a supplemental indenture entered into under Section 11.01(e), be obligated to, enter into any such amendment or supplement which affects the Trustee's own rights, duties or immunities under this Indenture or otherwise. Section 11.04. EFFECT OF AMENDMENT OR SUPPLEMENT. Upon the execution of any amendment or supplement under this Article, every Holder of Notes theretofore or thereafter authenticated and delivered hereunder shall be bound thereby. Section 11.05. CONFORMITY WITH TRUST INDENTURE ACT. Every supplemental indenture executed pursuant to this Article shall conform to the requirements of the TIA and Casino Control Act as then in effect. Section 11.06. REFERENCE IN NOTES TO AMENDMENT OR SUPPLEMENT. In the absence of a direction from the Company, Notes authenticated and delivered after the execution of any amendment or supplement pursuant to this Article may, and if required by the Trustee shall, bear a notation in form approved by the Trustee as to any matter provided for in such amendment or supplement. If the Company shall so determine, new Notes so modified as to conform, in the opinion of the Trustee and the Company, to any such amendment or supplement may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for Outstanding Notes. 76 ARTICLE TWELVE COVENANTS Section 12.01. PAYMENT OF PRINCIPAL AND INTEREST. The Company will duly and punctually pay or cause to be paid the principal of and interest on each of the Notes at the place or places, at the respective times and in the manner provided in the Notes and this Indenture. Each installment of interest on the Notes may be paid by mailing checks for such interest payable to or upon the written order of the Holders of Notes entitled thereto, to such address and in such name as they shall appear on the Note Register. Any installment of principal and interest shall be considered paid on the date it is due if the Trustee or Paying Agent (other than the Company or a Subsidiary of the Company or any Affiliate thereof) holds on that date money in immediately available funds designated exclusively for and sufficient to pay the installment and the Trustee and/or the Paying Agent has not received instructions from the Company not to make such payment or is not prohibited from paying such money to the Noteholders pursuant to the terms of this Indenture. The Company shall pay interest (including post-petition interest in any proceeding under any applicable bankruptcy law) to the extent legally permitted on overdue principal at the rate set forth in the Notes; and it shall pay interest (including post-petition interest in any proceeding under any applicable bankruptcy law) on unpaid interest otherwise payable under the first clause of this sentence at the same rate to the extent legally permitted. Section 12.02. MAINTENANCE OF OFFICE OR AGENCY. The Company will maintain, in the Borough of Manhattan, the City of New York, State of New York, an office or agency where Notes may be presented or surrendered for payment, where Notes may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Company in respect of the Notes and this Indenture may be served. The Company initially appoints the Trustee as its agent for presentation or surrender of Notes for payment or registration, transfer or exchange. The Trustee (or its corporate parent) will maintain an office in the Borough of Manhattan, the City of New York, State of New York, for such purposes. The Company may from time to time designate one or more other offices or agencies (in or outside the City of New York, State of New York) where the Notes may be presented or surrendered for any or all such purposes, and may from time to 77 time rescind such designations; 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 Borough of Manhattan, the City of New York, State of New York, for such purposes as stated in this Section 12.02. The Company will give prompt written notice to the Trustee of any such designation and any change in the location of any such office or agency. If at any time the Company shall fail to maintain such an 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 principal corporate trust office of the Trustee, and the Company hereby appoints the Trustee its agent to receive all such presentations, surrenders, notices and demands. Section 12.03. 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, or interest on, any of the Notes, segregate and hold in trust for the benefit of the Persons entitled thereto a sum, sufficient to pay the principal or interest so becoming due until such sums shall be paid or issued to such Persons or otherwise disposed of as herein provided, and will promptly notify the Trustee of such action or any failure so to act. The Company will, on or before each due date of the principal of or interest on, any Notes, deposit with a Paying Agent a sum in same day funds, sufficient to pay the principal or interest so becoming due, such sum, as the case may be, to be held in trust for the benefit of the Persons entitled to such principal 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: (a) hold all sums received by it as such agent for the payment of the principal of or interest on Notes (whether such sums have been paid to it by the Company or by any other obligor on the Notes) 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; 78 (b) promptly give the Trustee notice of any failure by the Company (or any other obligor upon the Notes) to make any payment of the principal of, or interest on, the Notes when the same shall be due and payable; and (c) at any time during the continuance of any such failure, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent. 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, or interest on, any Note and remaining unclaimed for two years after such principal or interest has become due and payable shall be paid to the Company on its request, or (if then held by the Company) shall be discharged from such trust, unless otherwise required by mandatory provisions of applicable escheat or abandoned or unclaimed property law, 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 regard to such 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 City of New York, State of New York, or mailed to each such Holder, or both, 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 or mailing, as the case may be, any unclaimed balance of such money then remaining will be paid to the Company. Section 12.04. CORPORATE EXISTENCE. Subject to Article Ten, each of the Company and RIH will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence and the corporate existence of each of its Subsidiaries in accordance with the respective organizational documents of the Company, RIH and each such Subsidiary and the rights (charter and statutory), licenses, permits, approvals and governmental franchises of it and each of its Subsidiaries necessary to the conduct of its and their respective businesses, including, without limitation, all licenses, permits, approvals and franchises necessary to assure the continued operation of RIH's gaming operations at the Casino-Hotel; PROVIDED, HOWEVER, any direct or indirect wholly owned subsidiary of RIH may consolidate with, merge into or transfer or distribute all or part of its properties and assets to RIH or the Company or as otherwise provided in Section 10.01. 79 Section 12.05. TO KEEP BOOKS; INSPECTION BY TRUSTEE. The Company and RIH will each keep proper books of record and account, in which full and correct entries shall be made of all material dealings or transactions of or in relation to the Notes and the properties, business and affairs of the Company and RIH in accordance with GAAP. The Company and RIH will at any and all times, upon the written request of the Trustee and at the expense of RIH, permit the Trustee by its representatives to inspect the Casino-Hotel and the books of account, records, reports and other papers of the Company and RIH, and to make copies and extracts therefrom, and will afford and procure a reasonable opportunity to make any such inspection (provided that the Company and RIH shall have received reasonable advance notice of such inspection and that any such inspection shall not unreasonably interfere with the business operations of the Company and RIH). The Company and RIH will furnish to the Trustee any and all information as the Trustee may reasonably request with respect to the performance by the Company and RIH of their covenants in this indenture. Section 12.06. REPORTS AND COMPLIANCE CERTIFICATES. (a) RIH shall furnish or cause to be furnished to the Trustee, within 105 days after each fiscal year of RIH: (i) a copy of annual audited financial statements of RIH prepared in conformity with GAAP, accompanied by a report of Ernst & Young or of another firm of independent certified public accountants of recognized national standing selected by RIH (the "National Accountants"), together with a certificate from such National Accountants stating that their audit examination has included a review of the terms of this Indenture and that the National Accountants have not become aware of any Event of Default or that a Default has occurred and is continuing, and if they have become aware of any such Event of Default or Default, describing it; PROVIDED, HOWEVER, that the National Accountants shall not be liable to any Person for any failure to discover any Event of Default or Default in connection with such review; and (ii) a copy of annual unaudited financial statements of RIH, including notes to such financial statements and corresponding management's discussion and analysis, in form and substance comparable to that which would be required to be filed with the Commission in an Annual Report on Form 10-K under the Exchange Act, prepared in the same manner as the audited financial statements referred to in clause (i) of this Section 12.06(a), signed by a proper accounting officer of RIH. RIH contemporaneously with the furnishing of such audited financial statements to the Trustee under clause (i) this Section 12.06(a), RIH shall mail copies of such audited financial statements to the Holders (which need not include the certificate referred to in such clause (i)). 80 (b) RIH shall furnish or cause to be furnished to the Trustee, within 60 days after each quarter of each fiscal year of RIH, except the final quarter of such fiscal year, a copy of unaudited financial statements of RIH prepared on a consistent basis with the audited financial statements referred to in clause (i) of Section 12.06(a), signed by a proper accounting officer of RIH and consisting of at least a balance sheet as at the close of such quarter and statements of operations and cash flow for such quarter and for the period from the beginning of such fiscal year to the close of such quarter, including notes to such financial statements and corresponding management's discussion and analysis, in form and substance comparable to that which would be required to be filed with the Commission in a Quarterly Report on Form 10-Q under the Exchange Act. RIH contemporaneously with the furnishing of such unaudited financial statements to the Trustee under this Section 12.06(b), RIH shall mail copies of such unaudited financial statements to the Holders (which need not be signed by a proper accounting officer of RIH). (c) RIH shall furnish or cause to be furnished to the Trustee, contemporaneously with the furnishing of a copy of the annual financial statements and of the quarterly financial statements referred to in Section 12.06(a) and Section 12.06(b), an Officers' Certificate dated the date of such annual financial statement or such quarterly financial statements to the effect that no Default or Event of Default has occurred and is continuing, or, if there is any such Default or Event of Default, describing it and the steps, if any, being taken to cure it. (d) RIH shall furnish or cause to be furnished to the Trustee, copies of each filing and report made by RIH or the Company with the Commission pursuant to the reporting and filing requirements of Section 13 or 15(d) of the Exchange Act, within 15 days after RIH or the Company, as applicable, is required to file the same. (e) RIH agrees that, if RIH becomes exempt from the Commission reporting and filing requirements of Section 13 or 15(d) of the Exchange Act, RIH shall prepare such periodic reports as it would otherwise have been required to file with the Commission and (i) at its own expense, cause all such periodic reports to be filed with the Commission, the Trustee and any exchange upon which the Notes then are listed, in each case on the date when such periodic report would have been required to be filed with the Commission under Section 13 or 15(d) of the Exchange Act, if either of such provisions were applicable, and (ii) keep copies of such periodic reports available at its office and promptly provide any Person who so requests with a copy of any such periodic report, at the Company's expense. 81 (f) Each of the Company and RIH shall comply with the provisions of SECTION 314(a) of the Trust Indenture Act. (g) The Company shall deliver to the Trustee, promptly upon becoming aware of any Default or Event of Default (but in no event later than five business days thereafter) in the performance of any covenant or agreement of the Company contained in this Indenture or any of the Mortgage Documents, an Officers' Certificate specifying with particularity such event. Section 12.07. LIMITATIONS AND DIVIDENDS AND RESTRICTED PAYMENTS. (a) The Company hereby covenants that, on and after the date of this Indenture, it will not, directly or indirectly, make, or permit any Subsidiary of the Company to make, any Restricted Payment. (b) RIH hereby covenants that, on or after the date of this Indenture,it will not, directly or indirectly make, or permit any Subsidiary of RIH to make, any Restricted Payment; PROVIDED, HOWEVER, that: (i) if RIH's Consolidated Interest Coverage Ratio, as certified to the Trustee by an Officers' Certificate, calculated at the time of the declaration of the dividend or distribution is equal to or exceeds two, then RIH may declare and pay cash dividends or make cash distributions in respect of any class of capital stock of RIH in an amount not to exceed in the aggregate with any other such cash dividends or distributions declared or made from and after the date hereof, 50 percent of RIH's Consolidated Net Income from and after the date hereof; and (ii) if (1) RIH's Consolidated Interest Coverage Ratio, as certified to the Trustee by an Officer's Certificate, calculated at the time of the declaration of the dividend or distribution is equal to or exceeds two, and (2) RIH has cash in excess of the amount required to pay interest on the Notes and the Junior Mortgage Notes on the next Interest Payment Date plus $20,000,000, then RIH may declare and pay cash dividends or make cash distributions in respect of any class of capital stock of RIH in an amount not to exceed such excess cash amount. (c) The Company and RIH will not, and will not permit any of their respective Subsidiaries to, create or otherwise cause or suffer to exist or become effective any encumbrance or restriction of any kind on the ability of any Subsidiary of RIH or the Company: (i) to pay dividends or make any other distribution on the capital stock of such Subsidiary that is owned by RIH, the Company or a wholly owned Subsidiary of the Company or RIH, as applicable; (ii) to pay any Indebtedness owed by such Subsidiary to RIH, the Company or any wholly owned Subsidiary of the Company or RIH, as 82 applicable; (iii) to make loans or advances to RIH, the Company or any wholly owned Subsidiary of the Company or RIH, as applicable; or (iv) to transfer any of its property or assets to the Company, RIH or any wholly owned Subsidiary of the Company or RIH, as applicable, except (A) any restrictions existing on or prior to the date hereof, or in connection with agreements in effect, or entered into, on the date hereof, or any permitted amendments, renewals, refundings, refinancings or extensions thereof; PROVIDED, HOWEVER, that the terms and conditions of any such amendments, renewals, refundings, refinancings or extensions are no more restrictive with respect to the matters set forth in clauses (i) through (iv) of this Section 12.07(c) than the agreements being amended, refunded, renewed, refinanced or extended; (B) any restrictions or encumbrances existing or arising pursuant to the terms of Indebtedness of a Person outstanding at the time such Person becomes a Subsidiary of the Company or RIH and not incurred in connection with, or in contemplation of, such Person becoming a Subsidiary of the Company or RIH or any permitted amendments, renewals, refinancings or extensions thereof; PROVIDED, HOWEVER, that the terms and conditions of any such amendments, renewals, refundings, refinancings or extensions are no more restrictive with respect to the matters set forth in clauses (i) through (iv) of this Section 12.07(c) than the agreements being amended, renewed, refunded, refinanced or extended; (c) encumbrances or restrictions existing under or by reason of applicable law or regulation (including, without limitation, the Casino Control Act) or this Indenture; (d) customary provisions restricting assignment of contracts or subletting or assignment of any lease governing a leasehold interest of any Subsidiary of the Company or RIH; or (e) net worth maintenance requirements imposed by any governmental authority. Section 12.08. LIMITATIONS ON ADDITIONAL INDEBTEDNESS AND ISSUANCE OF NOTES. (a) The Company and RIH shall not, and shall not permit any of their respective Subsidiaries to, directly or indirectly, incur, issue, assume, guarantee or otherwise become directly or indirectly liable with respect to, including, without limitation, through any merger or consolidation to which the Company, RIH or any of their respective Subsidiaries is a party or through any other acquisition of any such Subsidiary (collectively, "incur"), or have outstanding, any Indebtedness other than, without duplication, the following: (i) the Notes; (ii) Indebtedness represented by the Junior Mortgage Facility; 83 (iii) Indebtedness represented by the Working Capital Facility; (iv) Indebtedness represented by Capitalized Lease Obligations in an amount not in excess of $5,000,000 in the aggregate at any time outstanding; (v) Indebtedness represented by F,F&E Financing Agreements in an amount not in excess of $10,000,000 in the aggregate at any time outstanding; (vi) unsecured Indebtedness in an amount not in excess of $5,000,000 in the aggregate at any time outstanding that is subordinated and junior to the Junior Mortgage Notes at least to the extent set forth in the Subordination Provisions attached hereto as Exhibit C and which Indebtedness does not have any requirements for amortization payments, mandatory redemption or sinking fund payments prior to the stated maturity of the Junior Mortgage Notes and does not provide for the payment of interest in cash at any time when the most recent installment of interest on the Junior Mortgage Notes was not paid in cash; (vii) Non-Recourse Indebtedness in an amount not in excess of $25,000,000 in the aggregate at any time outstanding; (viii) After-Acquired Fee Mortgage Debt in an amount not in excess of $3,000,000 in the aggregate at any time outstanding; and (ix) Intercompany advances between RIH, the Company or any of their direct or indirect Subsidiaries on the one hand, and RII, on the other hand, in an in excess of $1,000,000 in the aggregate at any time outstanding. (b) The Company and RIH shall not permit any of their respective Subsidiaries to issue (other than to the Company, RIH or a direct or indirect wholly owned Subsidiary of the Company or RIH) any capital stock which has voting rights or has a preference as to any distribution over its common stock. Section 12.09. LIMITATIONS ON REPAYMENT OF SUBORDINATED INDEBTEDNESS. Neither the Company nor RIH shall, and neither the Company nor RIH shall permit any Subsidiary to, directly or indirectly, purchase, redeem, defease (including, but not 84 limited to, in-substance or legal defeasance) or otherwise acquire or retire for value prior to the stated maturity of, or prior to any scheduled mandatory redemption or sinking fund payment with respect to (collectively, to "repay" or a "repayment"), the principal of any Indebtedness of the Company, RIH or any Subsidiary of the Company or RIH which is subordinated (whether pursuant to its terms or by operation of law) in right of payment to the Notes; PROVIDED, HOWEVER, that this Section 12.09 shall not apply with respect to the Indebtedness represented by the Junior Mortgage Facility. Section 12.10. LIMITATION ON CERTAIN TRANSACTIONS. Each of the Company and RIH covenants that it will not, and will not permit any Subsidiary to, repurchase any Notes in the open market if an Event of Default shall have occurred and shall be continuing hereunder, under the Junior Mortgage Note Indenture or under the Senior Facility Note Indenture. Section 12.11. RESTRICTION OF ACTIVITIES. (a) RIH shall not, on or after the date of execution of this Indenture, until the date that is 91 days after the payment in full by the Company of the principal of (and interest, if any, on) all Outstanding Notes, engage in any business or investment activities other than those necessary for, incident to, connected with or arising out of acquiring, financing, owning and operating the Casino-Hotel or additional hotels or casinos or related or ancillary businesses. (b) Neither the Company nor RIH shall make any loans to any Affiliate or any other Person other than (i) Indebtedness of the type described in clause (ix) of Section 12.08(a), and (ii) loans to RII from the proceeds of the Indebtedness represented by the Working Capital Facility; PROVIDED, HOWEVER, that RIH shall have the right to make loans to employees of RIH actively involved in the operation of the Casino-Hotel or to engage in credit transactions in the operation of the Casino-Hotel, if such loans or credit transactions are in the ordinary course of business of operating a casino-hotel. (c) The Company shall not engage in any business (and shall not have any Subsidiaries) other than (i) to 85 collect principal, interest (and any interest on overdue principal and interest) and other amounts under any intercompany notes or guaranties made to the order of or otherwise in favor of the Company, (ii) to preserve its rights under this Indenture and the Mortgage Documents and otherwise to comply with its obligations thereunder and under the Notes, (iii) to do or cause to be done all things necessary or appropriate to protect the Trust Estate, (iv) to preserve its rights under the Junior Mortgage Indenture and the Junior Mortgage Documents and otherwise to comply with its obligations thereunder and under the Junior Mortgage Notes, (v) to issue the Indebtedness represented by any other Junior Mortgage Facility Notes, (vi) to issue Indebtedness represented by the Working Capital Facility; (vii) to preserve its rights under the Working Capital Facility and otherwise comply with its obligations under the Working Capital Facility, (viii) to incur any other Indebtedness permitted under this Indenture, (ix) to do all such acts and deeds necessary in connection with the Junior Mortgage Facility and the documents and instruments relating thereto and in connection with the Working Capital Facility and the documents and instruments relating thereto, (x) to declare, issue and pay dividends on, or make any redemptions or repurchases of, the Company's capital stock as contemplated by its Certificate of Incorporation (to the extent permitted hereby) and otherwise to comply with and perform the provisions of its Certificate of Incorporation and By-laws, and (xi) to do such further acts and deeds to effectuate any of the matters listed in the foregoing clauses of this Section 12.11(c). Section 12.12. LIMITATION ON SUBSIDIARIES CONSOLIDATED GROUP. The Company and RIH shall not have any Subsidiaries except the Subsidiaries existing on the date of this Indenture and Subsidiaries acquired by the Company or RIH in transactions not prohibited by the other provisions of this Indenture which are and shall at all times be wholly owned (directly or indirectly) by the Company or RIH. Section 12.13. LIMITATIONS ON LIENS. Neither the Company nor RIH will create, incur, suffer to exist or permit to be created or incurred any mortgage, lien, charge or encumbrance on or pledge of the Mortgage Documents or any of the Trust Estate, other than (a) the lien of the Mortgage Documents and the Assignment Agreement, (b) liens on the Trust Estate in connection with Indebtedness permitted by clauses (i), (ii), (iii), (iv) or (v) of Section 12.08(a), (c) other Permitted Encumbrances on the Trust Estate, and (d) a notice of intention or building contract filed by a mechanic, materialman or laborer under the New Jersey lien law. Without limiting the generality of the 86 previous sentence, but notwithstanding the provisions of such sentence, RIH shall not be deemed to have breached such provisions by virtue of the existence of liens for Impositions (as defined in the Mortgage) or mechanics' liens so long as RIH is in good faith contesting the validity of such liens in accordance with the provisions of Section 5.09 of the Mortgage. Section 12.14. COMPLIANCE WITH LAWS. Each of the Company and RIH shall comply, and shall cause each of its Subsidiaries to comply, with the Casino Control Act and all other applicable statutes (including, without limitation, ERISA), rules, regulations, orders and restrictions of the United States of America, states and municipalities, and of any governmental department, commission, board, regulatory authority, bureau, agency and instrumentality of the foregoing in respect of the conduct of its business and the ownership of its properties and assets, including, without limitation, the Trust Estate, except such as are being contested in good faith by appropriate proceedings in accordance with the Mortgage Documents (to the extent applicable) and except for such non-compliances as will not in the aggregate have a material adverse effect on the business, properties, operations or financial condition of the Company, RIH or their respective Subsidiaries. Section 12.15. PAYMENT OF TAXES AND OTHER CLAIMS. The Company or RIH shall 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, RIH or any of their respective Subsidiaries or upon the Trust Estate or any portion thereof or upon the income, profits or property of the Company, RIH or any of their respective Subsidiaries, and (b) all lawful claims for labor, materials and supplies which, if unpaid, will by law become a Lien upon the Trust Estate or upon any other property of the Company, RIH or any of their respective Subsidiaries; PROVIDED, HOWEVER, that the Company and RIH shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessments, charge or claim the amount, applicability or validity of which is being contested in good faith by appropriate proceedings in accordance with the Mortgage Documents (to the extent applicable) if adequate reserves therefor have been established in accordance with GAAP. Section 12.16. MAINTENANCE OF PROPERTIES. Each of the Company and RIH shall cause the Trust Estate and all other properties (other than obsolete 87 equipment) owned by or leased to it or any of its Subsidiaries, and used or useful in the conduct of its business or the business of the Company, RIH or such Subsidiary to be maintained and kept in good condition, repair and working order, except for reasonable wear and use, and will cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as required by the Mortgage Documents or, to the extent not governed by the Mortgage Documents, as in the reasonable judgment of the Board of Directors of RII may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times. Section 12.17. INSURANCE. Each of the Company and RIH shall maintain, and shall cause each of its Subsidiaries to maintain, with financially sound and reputable insurers, appropriate insurance on each of their respective properties and businesses against liabilities, casualties, risks and contingencies of the type and in amounts required by the Mortgage Documents or, to the extent not governed by the Mortgage Documents, as customarily maintained by corporations and other entities engaged in the same or similar businesses and similarly situated; PROVIDED, HOWEVER, that any such insurer shall be qualified to do business in the jurisdiction where the insured property is located. Section 12.18. WAIVER OF STAY, EXTENSION OR USURY LAWS. Each of the Company and RIH covenants (to the extent that it may lawfully do so) that it will not, and will not cause or permit any of its Subsidiaries to, at any time insist upon, or plead, or in any manner whatsoever claim, and will resist any and all efforts to be compelled to take the benefit or advantage of, any stay or extension law or any usury law or other law that would prohibit or forgive the Company or RIH from paying all or any portion of the principal of, or premium, if any, and interest on the Notes or the RIH Promissory Note or the Guaranty as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Indenture or the RIH Promissory Note or the Guaranty; and (to the extent that it may lawfully do so) the Company and RIH hereby expressly waive all benefit or advantage of any such law, and covenant that they will not hinder, delay or impede the execution of any power granted to the Trustee herein and in the Mortgage Documents, but will suffer and permit the execution of every such power as though no such law had been enacted. 88 Section 12.19. APPOINTMENT TO FILL A VACANCY IN OFFICE OF TRUSTEE. The Company, whenever necessary to avoid or fill a vacancy in the office of Trustee, will appoint, in the manner provided in Section 8.10, a Trustee, so that there shall at all times be a Trustee hereunder. Section 12.20. VALIDITY OF LIENS. Each of the Company and RIH represents and warrants that it has, and covenants that it shall continue to have, full corporate power and lawful authority to grant, release, convey, assign, transfer, mortgage, pledge, hypothecate and otherwise create the lien on the Trust Estate; and the Company and RIH shall warrant, preserve and defend the interest of the Trustee in and to the Trust Estate against the claims of all Persons, except as otherwise expressly permitted by the Mortgage Documents or this Indenture, and will take all action necessary to maintain and preserve the lien on the Trust Estate contemplated therein. Section 12.21. TRANSACTIONS WITH STOCKHOLDERS AND AFFILIATES. Each of the Company and RIH covenants that it shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, enter into or permit to exist any transaction (including, without limitation, the purchase, sale, lease or exchange of any property or the rendering of any service) with any Affiliate of the Company or RIH or with any Affiliate of any such holder, unless (a) such transaction is upon fair and reasonable terms which are no less favorable to the Company or such Subsidiary, as the case may be, than would be available in an arm's-length transaction with an unrelated person and (b) if over $250,000, such transaction is determined in the good faith judgment of a majority of the members of the Board of Directors of either (i) RII, so long as RII owns, directly or indirectly, a majority of the outstanding capital stock of RIH, directly or indirectly, or (ii) RIH, to be in the best interests of the Company, RIH or such Subsidiary as applicable; PROVIDED, HOWEVER, that this provision shall not apply to (A) any agreements, documents, instruments or transactions entered into in connection with the RIHF Senior Facility Notes, (B) the Services Agreement, (C) the RII Management Contract, or (D) the RII Tax Sharing Agreement. 89 ARTICLE THIRTEEN REDEMPTION OF NOTES Section 13.01. GENERAL APPLICABILITY OF ARTICLE. Notes which are redeemable before their Stated Maturity shall be redeemable in accordance with their terms and in accordance with this Article. Section 13.02. ELECTION TO REDEEM; NOTICE TO TRUSTEE. The election of the Company to redeem any Notes shall be evidenced by a Company Order. Redemption of any Notes shall not take place earlier than 15 days after the corporate action taken to authorize the redemption. In case of any redemption at the election of the Company of less than all the Outstanding Notes, 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 Notes to be redeemed. Section 13.03. SELECTION BY TRUSTEE OF NOTES TO BE REDEEMED. If less than all the Outstanding Notes are to be redeemed, the particular Notes to be redeemed shall be selected by a random, automated selection process or pro rata, as deemed appropriate by the Trustee, not more than 60 days prior to the Redemption Date by the Trustee from the Outstanding Notes which have not previously been called for redemption, and such selection method may provide for the selection for redemption of portions (equal to the greater of $1,000 and the smallest authorized denomination of the Notes of such series, or a multiple thereof) of the principal of Notes of a denomination larger than $1,000. The Trustee shall promptly notify the Company in writing of the Notes selected for redemption and, in the case of any Note 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 the redemption of Notes shall relate, in the case of any Note redeemed or to be redeemed only in part, to the portion of the principal of such Note which has been or is to be redeemed. Section 13.04. NOTICE OF REDEMPTION. Notice of redemption shall be given by the Company or, at the Company's request, by the Trustee in the name and 90 at the expense of the Company by first-class mail, postage prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption Date, to each Holder of Notes of such series to be redeemed, at his address appearing in the Note Register. Any notice which is mailed in the manner herein provided shall be conclusively presumed to have been duly given, whether or not the Holder receives the notice. In any case, failure to duly give notice by mail, or any defect in the notice to the Holder of any Notes designated for redemption in whole or in part, shall not affect the validity of the proceedings for the redemption of any other Notes. All notices of redemption shall state: (a) the Redemption Date; (b) the Redemption Price; (c) the principal amount of Notes to be redeemed, and, if less than all outstanding Notes are to be redeemed, the identification (and, in the case of partial redemption, the respective principal amounts) of the Notes to be redeemed; (d) that on the Redemption Date, the Redemption Price of each of the Notes to be redeemed will become due and payable and that the interest thereon shall cease to accrue from and after such date; and (e) the place or places where the Notes to be redeemed are to be surrendered for payment of the Redemption Price. Section 13.05. 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 12.03) an amount of money sufficient to pay the Redemption Price of all the Notes which are to be redeemed on that date. Such money shall be held in trust for the benefit of the Persons entitled to such Redemption Price and shall not be deemed to be part of the Trust Estate. Section 13.06. NOTES PAYABLE ON REDEMPTION DATE. Notice of redemption having been given as aforesaid, the Notes so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified and from and after such date (unless the Company 91 shall default in the payment of the Redemption Price) such Notes shall cease to bear interest. Upon surrender of any such Note for redemption in accordance with said notice, such Note shall be paid by the Company at the Redemption Price. Installments of interest due on or prior to the Redemption Date shall be payable to the Holders of the Notes registered as such on the relevant Record Dates according to the terms of such Notes and the provisions of Section 3.07. If any Note called for redemption shall not be so paid upon surrender thereof for redemption, the principal shall, until paid, bear interest from the Redemption Date at the rate prescribed therefor in the Note. Section 13.07. NOTES REDEEMED IN PART. Any Note which is to be redeemed only in part shall be surrendered at a Place of Payment therefor (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 his attorney duly authorized in writing) and the Company shall execute and the Trustee shall authenticate and deliver to the Holder of such Note, without service charge, a new Note or Notes of any authorized denomination or denominations as requested by such Holder in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Note so surrendered. Section 13.08. REDEMPTION PURSUANT TO CASINO CONTROL ACT. Notwithstanding the provisions of this Article Thirteen, if the Casino Control Commission does not waive the qualification requirements as to any Noteholder (whether the record owner or beneficial owner) and requires that such Noteholder be qualified under the Casino Control Act, then, in such event, such Noteholder must qualify under such Act. If a Noteholder does not so qualify, the Noteholder must dispose of its interest in the Notes, within 30 days after the Company's receipt of notice of such finding, or the Company may repurchase such Notes at the lower of the Outstanding Amount and the Fair Market Value of such Notes, plus accrued interest to the date of such repurchase. Commencing on the date the Casino Control Commission serves notice upon either RIH or the Company that any Holder is disqualified, it shall be unlawful for any such disqualified Holder: (i) to receive any dividends or interest upon this Note; (ii) to exercise, directly or through any trustee or nominee, any right conferred by this Note; or (iii) to receive any remuneration in any form from either the Company or RIH for services rendered or otherwise. 92 ARTICLE FOURTEEN DEFEASANCE Section 14.01. DISCHARGE OF THE INDENTURE AND DEFEASANCE OF THE SECURITIES. The Company shall be deemed to have paid and discharged the entire Indebtedness on the Notes and the provisions of this Indenture (except as to any surviving rights of transfer or exchange of Notes herein or therein provided for and any right to receive payments of principal and interest as provided in this Section 14.01), if: (1) The Company irrevocably deposits in trust with the Trustee, pursuant to an irrevocable trust and security agreement in form and substance reasonably satisfactory to the Trustee, U.S. Legal Tender or direct non-callable obligations of, or non-callable obligations guaranteed as to timely payment by, the United States of America for the payment of which obligation or guarantee the full faith and credit of the United States of America is pledged ("U.S. Government Obligations") maturing as to principal and interest in such amounts and at such times as are sufficient, without consideration of the reinvestment of such interest and after payment of all Federal, state and local taxes or other charges or assessments in respect thereof payable by the Trustee, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof (in form and substance reasonably satisfactory to the Trustee) delivered to the Trustee, to pay reasonable compensation to the Trustee under Section 8.07 and the principal of and interest on the outstanding Notes on the dates on which any such payments are due and payable in accordance with the terms of the Indenture and of the Notes; (2) Such deposits shall not cause the Trustee to have a conflicting interest as defined in and for purposes of the TIA; (3) Such deposit will not result in a Default under this Indenture; (4) The Company shall deliver to the Trustee an Opinion of Counsel, or a private ruling of the Internal Revenue Service, in form and substance satisfactory to the Trustee, to the effect that Holders of the Notes will not recognize income, gain or loss for Federal income tax purposes as a result of such deposit and the defeasance contemplated hereby and will be subject to Federal income tax in the same amounts and in 93 the same manner and at the same times as would have been the case if such deposit and defeasance had not occurred; (5) The deposit shall not result in the Company, the Trustee or the trust becoming or being deemed to be an "investment company" under the Investment Company Act of 1940, as amended; (6) The Holders shall have a perfected security interest under applicable law in the U.S. Legal Tender or U.S. Government Obligations deposited pursuant to Section 14.01(1); and (7) The Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent specified herein relating to the defeasance contemplated by this Section 14.01 have been complied with. If all or any portion of the Notes are to be redeemed through such irrevocable trust, the Company must make arrangements satisfactory to the Trustee, at the time of such deposit, for the giving of the notice of such redemption or redemptions by the Trustee in the name and at the expense of the Company. The Trustee and each co-trustee and separate trustee, if any, then acting as such hereunder shall, at the expense of the Company, execute and deliver a termination statement and such instruments of satisfaction and discharge as may be necessary and pay, assign, transfer and deliver to the Company or upon Company Order all cash, securities and other personal property then held by it hereunder, other than pursuant to this Section 14.01. Section 14.02. APPLICATION OF DEPOSITED MONEY. U.S. Legal Tender or U.S. Government Obligations deposited with the Trustee pursuant to Section 14.01 shall be applied by the Trustee in accordance with Section 5.02. Section 14.03. REPAYMENT TO THE COMPANY. The Trustee and the Paying Agent shall promptly pay to the Company upon request any excess money or securities held by them at any time in accordance with the provisions of Section 5.03. 94 ____________________ This instrument may be executed in any number of counterparts or with counterpart signatures, each of which as executed shall be deemed to be an original, but all such counterparts shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed and attested, all as of the day and year first above written. RESORTS INTERNATIONAL HOTEL FINANCING, INC. Attest: By: ------------------------- -------------------------- Name: Title: RESORTS INTERNATIONAL HOTEL, INC. Attest: By: _________________________ __________________________ Name: Title: STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, as Trustee Attest: By: _________________________ __________________________ Name: Title: 95 STATE OF NEW YORK : : ss COUNTY OF NEW YORK : I certify that on ___________, 1993, ____________________ personally came before me, and he acknowledged under oath, to my satisfaction, that: (a) he is the ______________ of Resorts International Hotel Financing, Inc., the corporation named in this document; (b) he is the attesting witness to the signing of this document by the proper corporate officer who is ___________________ of Resorts International Hotel Financing Inc.; (c) this document was signed and delivered by the corporation as its voluntary act duly authorized by a proper resolution of its Board of Directors; (d) he knows the proper seal of the corporation which was affixed to this document; and (e) he signed this proof to attest to the truth of these facts. ________________________________ Signed and sworn to before me on _________, 1993. _____________________________ Notary Public of the State of New York STATE OF NEW YORK : : ss COUNTY OF NEW YORK : I certify that on ___________, 1993, _________________ personally came before me, and this person acknowledged under oath, to my satisfaction, that: (a) this person is the ________________ of Resorts International Hotel, Inc., the corporation named in this document; (b) this person is the attesting witness to the signing of this document by the proper corporate officer who is ______________________, the __________________________ of Resorts International Hotel, Inc.; (c) this document was signed and delivered by the corporation by its voluntary act duly authorized by a proper resolution of its Board of Directors; (d) this person knows the proper seal of the corporation which was affixed to this document; and (e) this person signed this proof to attest to the truth of these facts. -------------------------------- Signed and sworn to before me on _________, 1993. - ----------------------------- Notary Public [seal] STATE OF NEW YORK : : ss COUNTY OF NEW YORK : I certify that on ________, 1993, ________________ personally came before me, and this person acknowledged under oath, to my satisfaction, that: (a) this person is the _________________ of State Street Bank and Trust Company of Connecticut, National Association, a national banking association named in this document; (b) this person is the attesting witness to the signing of this document by the proper corporate officer who is __________________, the __________________________ of State Street Bank and Trust Company of Connecticut, National Association; (c) this document was signed and delivered by the corporation by its voluntary act duly authorized by a proper resolution of its Board of Directors; (d) this person knows the proper seal of the corporation which was affixed to this document; and (e) this person signed this proof to attest to the truth of these facts. -------------------------------- Signed and sworn to before me on _________, 1993. - ----------------------------- Notary Public Exhibit A RIH Promissory Note EXHIBIT A AMENDED AND RESTATED SECURED PROMISSORY NOTE $125,000,000 [ ], 1994 WHEREAS, in partial repayment of certain inter- company debt owed by Resorts International Hotel, Inc., a New Jersey corporation ("RIH"), to Resorts International, Inc., a Delaware corporation ("RII"), RIH has issued to RII a promissory note on the date hereof in the principal amount of $125,000,000 (as the same may be amended or restated from time to time, the "Note"), which Note is secured by a Mortgage Securing RIH Promissory Note dated as of the date hereof (the "Mortgage"), by RIH, as mortgagor which Mortgage encumbers certain real property owned or leased by RIH together with all buildings and improvements erected thereon (collectively, the "Property"); and WHEREAS, RII has transferred the Note and the Mortgage to RIHF in exchange for 11% Mortgage Notes due 2003 (the "Notes") in an aggregate principal amount of $125,000,000, which Notes were issued pursuant to that certain Indenture dated as of even date herewith (the "Indenture") among RIHF, as issuer, RIH, as guarantor, and State Street Bank and Trust Company of Connecticut, National Association, as trustee (the "Trustee"); and WHEREAS, RIHF has requested RIH to amend and restate the Note; NOW, THEREFORE, RIH agrees to amend and restate the Note as follows: RIH, for value received hereby promises to pay to the order of RIHF (RIHF and any subsequent holder of this Note being herein referred to as the "Payee"), the principal sum of One Hundred Twenty-Five Million Dollars ($125,000,000), or such other principal sum as shall be outstanding hereunder, on September 15, 2003 (the "Maturity Date") in accordance with the provisions hereof, with interest on such principal sum from time to time outstanding, computed from [ ], 1994 [the Effective Date], in semi-annual installments of interest on March 15 and September 15 of each year, commencing 1 initially on September 15, 1994, at a rate of 11% per annum on the unpaid balance hereof, until the principal hereof is paid in full. Payments of principal and interest on this Note shall be made at [address of the Payee], or at such other address as the Payee may designate in writing. Interest will be computed on the basis of a 360-day year of twelve 30-day months, based on the actual number of days elapsed. Principal and interest shall be paid in money of the United States that at the time of payment is legal tender for public and private debts. l.(a) This Note shall be prepaid (i) in connection with, but only to the extent of, any redemption of the Notes of RIHF issued pursuant to the Indenture (all prepayments of this Note are hereinafter referred to as "Prepayments"), and/or (ii) by the surrender to the Trustee of the principal amount of any Notes purchased or otherwise acquired by RIH or the Company (as defined in the Indenture) other than pursuant to the redemption provisions of the Notes and surrendered to the Trustee for cancellation in accordance with the provisions of the Notes or the Indenture (it being expressly understood that the same Notes shall reduce the principal amount of this Note only once). Each Prepayment under clause (i) above shall be made at the time that payment is required or permitted to be made by the Company to the Trustee under the Indenture in respect of any redemption of Notes. Each Prepayment under clause (ii) above shall be deemed to be made at the time of surrender of such Notes for cancellation. Each Prepayment of this Note pursuant to clause (i) above shall be in an amount equal to the aggregate amount paid to holders of Notes on account of the redemption thereof (other than interest), together with accrued and unpaid interest on the amount of the reduction in the principal amount of this Note as a result of such Prepayment. The principal amount of this Note shall be reduced as a result of such prepayment in an amount equal to the aggregate principal amount of the Notes so redeemed or surrendered. (b) Except as set forth in Section 1(a), this Note may not be prepaid in whole or in part. 2. RIH shall pay interest on overdue principal and prepayment premium at the rate of 14% per annum. 3. This Note is secured by the Mortgage on the Property. 4. If (i) RIH defaults in the payment of interest when the same becomes due and payable and the default continues for a period of ten days following receipt of a notice from the Payee or the Trustee specifying such default 2 and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; (ii) RIH defaults in the payment of the principal or any part thereof when the same becomes due and payable at Maturity (as defined in the Mortgage); (iii) there shall occur any other Event of Default under the Mortgage or any other Note (as defined in the Mortgage); or (iv) there shall occur any other Event of Default under the Indenture, then on the happening of any such event, the Payee may declare the entire Outstanding Amount (as defined in the Indenture) of this Note and all accrued and unpaid interest thereon and all sums due under Section 5 of this Note and the Mortgage (collectively, the "Debt") to become immediately due and payable. 5. RIH hereby waives presentment and demand for payment, notice of dishonor, protest and notice of protest of this Note and agrees to pay all costs of collection when incurred, including reasonable attorneys' fees, which costs may be added to the amount due under this Note and be receivable therewith, and to perform and comply with each of the terms, covenants and provisions contained in this Note and the Mortgage on the part of RIH to be observed or performed. Except as expressly provided herein, no release of any security for the principal sum due under this Note or extension of time for payment of this Note, or any installment hereof, and no alteration, amendment or waiver of any provision of this Note or the Mortgage shall release, discharge, modify, change or affect the liability of RIH under this Note or the Mortgage. 6. RIH covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any usury, stay or extension law or any other law which would prohibit or forgive RIH from paying all or any portion of the interest on this Note, wherever enacted, now or at any time hereafter in force, or which may otherwise affect the covenants or the performance of this Note or the Mortgage; and RIH (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Payee, but will suffer and permit the execution of every such power as though no such law had been enacted. 7. This Note shall be deemed to be a contract under the laws of the State of New York and shall be construed in accordance with and governed by the internal laws of the State of New York. 8. This Note may not be changed or terminated orally, but only by an agreement in writing signed by the 3 party against whom enforcement of such change or termination is sought. 9. RIH shall not claim any credit or deduction from the interest or principal due hereunder by reason of payment of any tax assessed upon the Property. 10. Whenever the provisions of this Note and the provisions of the Indenture shall be inconsistent, the provisions of the Indenture shall govern. 11. This Note is subject to and shall be enforced in compliance with the provisions of the New Jersey Casino Control Act. This Note shall not be transferred, assigned or amended without the prior approval of the New Jersey Casino Control Commission. 12. Whenever used herein, the singular number shall include the plural, the plural the singular, and the words "Payee" and "RIH" shall include their respective successors and assigns. IN WITNESS WHEREOF, RIH has duly executed this Note as of the day and year first above written. RESORTS INTERNATIONAL HOTEL, INC. By: _____________________________ Name: Title: 4 STATE OF NEW YORK ) )ss. COUNTY OF NEW YORK ) BE IT REMEMBERED, that on this [ ] day of [ ], 1994, before me, the subscriber, a Notary public of the State of New York, personally appeared [ ], [ ] of RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation, and he acknowledged that he signed, sealed and delivered the same as his voluntary act and deed and the act and deed of said RESORTS INTERNATIONAL HOTEL, INC., and that he received a true copy of the within instrument on behalf of said corporation. Notary Public of the State of New York [Seal] 5 Exhibit B Assignment Agreement from Resorts International Hotel Financing, Inc. NA932280131 - MORTGAGE ASSIGNMENT GD&C DRAFT DATED 12/17/93 ============================================================================== ASSIGNMENT OF AGREEMENTS ________________ RESORTS INTERNATIONAL HOTEL FINANCING, INC., a Delaware corporation, as Assignor, TO STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION a national banking association, as Assignee Dated as of _________________, 1994 ============================================================================== Prepared by:__________________________ D. Eric Remensperger, Esq. ASSIGNMENT OF AGREEMENTS THIS ASSIGNMENT made as of the ___ day of ___________, 1994, by RESORTS INTERNATIONAL HOTEL FINANCING, INC., a Delaware corporation ("ASSIGNOR"), having an address at c/o Resorts International, Inc., 1133 Boardwalk, Atlantic City, New Jersey 08401, to STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, a national banking association, having an address at 750 Main Street, Suite 1114, Hartford, Connecticut 06103, in its capacity as Trustee ("Assignee"), under that certain Indenture dated as of even date herewith (the "INDENTURE") among Assignor, Assignee and Resorts International Hotel, Inc., a New Jersey corporation ("MORTGAGOR"). WITNESSETH: WHEREAS, in partial repayment of certain inter-company debt owed by Mortgagor to Resorts International, Inc., a Delaware corporation ("RII"), Mortgagor has issued to RII a secured promissory note on the date hereof in the principal amount of $125,000,000 (as the same may be amended or restated from time to time, the "RIH PROMISSORY NOTE"), which note is secured by a Mortgage Securing RIH Promissory Note of even date (the "MORTGAGE"), which Mortgage encumbers certain real property owned or leased by Mortgagor as more specifically described on SCHEDULE 1 hereto together with all buildings and improvements erected thereon (collectively, the "PROPERTY"); and WHEREAS, RII has transferred the RIH Promissory Note and the Mortgage to Assignor in exchange for 11% Mortgage Notes due 2003 (the "NOTES") in an aggregate principal amount of $125,000,000, which Notes were issued pursuant to the Indenture; and WHEREAS, as further security for the obligations of Mortgagor under the RIH Promissory Note, Mortgagor has executed and delivered (i) an Assignment of Operating Assets and (ii) an Assignment of Leases and Rents, each in favor of Assignor (as assignee of RII) and each dated as of the date hereof (said Assignments and the Mortgage collectively referred to herein as the "RIH PROMISSORY NOTE MORTGAGE DOCUMENTS"), pursuant to which Mortgagor granted a security interest in specified personal property, assigned certain other rights and assigned all right, title and interest of Mortgagor in leases and rents to Assignor, all as security for the performance and observance of obligations of Mortgagor under the RIH Promissory Note; and WHEREAS, the rights and obligations of the Assignee hereunder are subject to the terms set forth in that certain Intercreditor Agreement dated as of the date hereof among Assignor, Assignee, Mortgagor, Fidelity Management and Trust Company, as trustee, and U.S. Trust Company of California, N.A., as trustee (and such other parties that may from time to time become a party thereto); and WHEREAS, in order to secure payment of the Notes and all other payments due to the holder(s) from time to time of the Notes (collectively, the "HOLDERS") or the Trustee under the Indenture, Assignor has agreed to execute this Assignment and to be bound by its terms; NOW, THEREFORE, THIS ASSIGNMENT FURTHER WITNESSETH: That Assignor in consideration of the purchase of the Notes by the Holders, Ten Dollars ($10.00) lawful money of the United States of America duly paid to Assignor by Assignee at or before the execution and delivery of these presents and for other good and valuable consideration, the receipt of which are hereby acknowledged, does hereby sell, assign and transfer unto Assignee and unto its successors and to its assigns forever, for its benefit and for the benefit of the Holders, and does hereby grant to Assignee a security interest in and to all of Assignor's estate, right, title and interest in, to and under any and all of the following described property, rights and interests (collectively, the "ASSIGNED PROPERTIES"): GRANTING CLAUSE FIRST All right, title and interest of Assignor in and to the RIH Promissory Note, including all renewals, extensions, modifications and replacements of the same, and without limiting the generality of the foregoing, the present, continuing and future right to make claim for, collect or cause to be collected, receive or cause to be received directly from Mortgagor thereunder, all payments of principal, interest and other sums of money payable thereunder. GRANTING CLAUSE SECOND All right, title and interest of Assignor in and to the RIH Promissory Note Mortgage Documents, including all extensions, renewals, modifications, supplements and replacements of the same. 2 TO HAVE AND TO HOLD all said properties, rights and interests unto Assignee and its successors and assigns forever. THIS ASSIGNMENT FURTHER WITNESSETH, that Assignor hereby agrees and covenants with Assignee as follows: ARTICLE ONE PARTICULAR COVENANTS OF ASSIGNOR Section 1.01. PERFORMANCE OF COVENANTS. Assignor represents, warrants and covenants that it is duly authorized to enter into this Assignment, and to grant and convey a lien on and security interest in the Assigned Properties to Assignee in the manner and to the extent herein set forth and that all action on its part required for the execution and delivery of this Assignment has been duly and effectively taken. Section 1.02. FURTHER ACTION REQUIRED. (a) Assignor covenants that it will, from time to time, execute and deliver such further instruments and take such further actions as may be required to carry out the purposes of this Assignment. (b) Assignor hereby appoints Assignee as its lawful attorney-in-fact (such power being coupled with an interest) in the name of Assignor or Assignee or both to execute any instruments or to take any actions to enforce all rights, powers and remedies of Assignor under or pursuant to the Assigned Properties. (c) Nothing contained herein shall limit the rights of Assignee contained in the Mortgage or the Indenture. (d) Until this Assignment is discharged in accordance with Section 5.01 hereof, no amendment, waiver, modification, discharge, release, enforcement or satisfaction by Assignor of any of the rights or remedies under the Assigned Properties shall be effective without the prior consent and approval of Assignee, and Assignor shall have no power or authority to take any such action without such consent and approval. ARTICLE TWO OBLIGATIONS TO ASSIGNEE Section 2.01. CONTINUING OBLIGATIONS. (a) Assignee shall have no obligation, duty or liability with respect to the Assigned Properties or any of 3 them (other than those specifically assumed in its capacity as Trustee pursuant to the Indenture). (b) Assignor shall at all times remain liable to observe and perform all of its covenants and obligations, if any, under the Assigned Properties, and does hereby agree to indemnify and hold harmless Assignee, its successors and assigns, from any liability, loss, damage or expense it or they may incur under the Assigned Properties or by reason of this Assignment. ARTICLE THREE PAYMENTS Section 3.01. PAYMENTS. All Revenues (as hereinafter defined) due and to become due under or pursuant to the Assigned Properties shall be paid by Mortgagor directly to Assignee at the address set forth in Section 6.02 hereof. Neither Assignor nor Assignee shall have the right, without Mortgagor's prior written consent, to instruct Mortgagor to pay Revenues to Assignor or in any manner or to any party other than directly to Assignee. Section 3.02. MORTGAGOR'S ACKNOWLEDGMENT. Mortgagor hereby joins in the execution of this Assignment to acknowledge (a) the assignment by Assignor to Assignee of Assignor's right, title and interest in, to and under the Assigned Properties, (b) Mortgagor's agreement to make payment of all Revenues under the Assigned Properties directly to Assignee at the address set forth in this Assignment, and (c) the right of Assignee to exercise or enforce in its own name, in the name of Assignor, or both, all of the rights, powers and remedies of Assignor in, to and under the Assigned Properties. Section 3.03. REVENUES. As used herein, the term "REVENUES" shall mean (a) all amounts paid or payable by Mortgagor under the RIH Promissory Note or the RIH Promissory Note Mortgage Documents, and (b) the net proceeds realized upon or as a result of the enforcement of any mortgage lien or security interest granted under the Assigned Properties or this Assignment or upon or as a result of the exercise of any right or remedy under the Assigned Properties or this Assignment. Section 3.04. CONFIRMATION. Assignor hereby agrees, and Mortgagor hereby acknowledges, that Mortgagor may rely exclusively on Assignee's directive that Assignee is entitled to take action under this Assignment. 4 ARTICLE FOUR DEFAULT PROVISIONS AND REMEDIES Section 4.01. ENFORCEMENT OF REMEDIES. (a) Upon the occurrence of any default under the Indenture or the Assigned Properties, or any of them (each, a "DEFAULT"), not cured within the applicable grace period after the applicable notice provision, if any, has been satisfied (each called an "EVENT OF DEFAULT"), Assignee may, at its option, (i) proceed directly to protect and enforce its rights and the rights of any Holders under this Assignment or pursuant to the Assigned Properties, or any one of them, by such suits, actions or special proceedings in equity or at law, or by proceedings in the office of any board or officer having jurisdiction, either for the specific performance of any covenant or agreement contained herein, or in the Assigned Properties, or any of them, or in aid of execution of any power granted herein or pursuant to the Assigned Properties, or any one of them, or for the enforcement of any proper legal or equitable remedy, including, without limitation, foreclosure of the Mortgage and/or the sale of the collateral or part thereof secured thereby at such foreclosure sale, subject to statutory and other legal requirements, as Assignee shall deem most effective to protect and enforce such rights, and Assignor hereby appoints Assignee as its lawful attorney-in-fact (such power being coupled with an interest) in the name of Assignor or Assignee or both to effectuate such foreclosure and/or sale of such collateral or part thereof; or (ii) instruct, direct and cause Assignor to effectuate the foregoing on behalf of and for the benefit of Assignee and the Holders, it being further understood that Mortgagor joins in the execution of this Assignment in order to acknowledge its agreement to promptly and duly execute and deliver any and all documents and take any and all actions required by Assignee in order to permit Assignee to foreclose and/or sell such collateral or part thereof, and obtain the benefits of this Assignment, as aforesaid. (b) Upon the occurrence of any Event of Default, Assignee shall be entitled to sue for, enforce payment of and receive any and all amounts then and at any time remaining due from Assignor or Mortgagor for principal and interest on the RIH Promissory Note, or other sums due under the RIH Promissory Note Mortgage Documents, as the case may be, or otherwise under any of the provisions of the Assigned Properties, or any of them, with interest interest on overdue payments of such principal, at the rate set forth in the RIH Promissory Note, from the date of Default to the date of such payment, together with any and all fees, costs and expenses of collection (including reasonable attorneys' fees and court costs), subject to statutory and other legal requirements. 5 (c) Regardless of the occurrence of an Event of Default, upon five days' written notice to Mortgagor (or such shorter period or without notice if deemed necessary and appropriate by Assignee), Assignee may institute and maintain or cause in the name of Assignor or Assignee or both to be instituted and maintained such suits and proceedings as it may be advised by its counsel shall be necessary and appropriate to prevent any impairment of the Assigned Properties, or any of them, and to protect its interests in the Assigned Properties, and in the rents, issues, rights, revenues and other income arising therefrom, including power to institute and maintain proceedings to restrain the enforcement or compliance with any 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 hereunder or would be materially prejudicial to the interests of Assignee. (d) Nothing contained in this Article Four is intended to grant Assignee any greater remedies and rights than those allowed to Assignor in the respective Assigned Properties. In the event of any conflict between the remedies and rights contained in any of the Assigned Properties and the remedies and rights contained in this Article Four, then the remedies and rights set forth in the applicable Assigned Property shall govern. ARTICLE FIVE DISCHARGE OF ASSIGNMENT Section 5.01. DISCHARGE OF ASSIGNMENT. If Assignor shall pay or cause to be paid, or there shall otherwise be paid, to Assignee and/or the Holders' all amounts required to be paid by Assignor pursuant to the Indenture and the Notes, and the conditions precedent for the Indenture shall cease, determine and become null and void in accordance with Section 5.01 of the Indenture, Assignee shall promptly cancel and discharge of record this Assignment and any financing statements filed in connection herewith and execute and deliver to Assignor and to Mortgagor all such instruments as may be appropriate to evidence such discharge and satisfaction of said lien or liens, and Assignee shall pay over or deliver to Assignor all other moneys and securities held by it pursuant to this Assignment, which are not required for the payment of (a) principal and redemption price, if applicable, of and interest on, the Notes, and (b) all other amounts required to be paid by Assignor pursuant to the Indenture and the Notes. 6 ARTICLE SIX MISCELLANEOUS PROVISIONS Section 6.01. BINDING SUCCESSORS AND ASSIGNS. All of the covenants, stipulations, obligations and agreements contained in this Assignment shall be binding upon and inure to the benefit of Assignor, Assignee and Mortgagor (to the extent applicable to Mortgagor) and their respective successors and assigns. Section 6.02. NOTICES. (a) Any request, notice, demand, authorization, direction, request or other instrument authorized or required by this Assignment to be given to or filed with Assignor, Assignee or Mortgagor (collectively, "NOTICES") shall be deemed given when either (i) delivered by hand or (ii) five days after sending by registered or certified mail, postage prepaid, in either case addressed as follows: If to Assignor, at: Resorts International Hotel Financing, Inc. c/o Resorts International, Inc. 1133 Boardwalk Atlantic City, New Jersey 08401 Attention: Christopher D. Whitney If to Assignee, at: State Street Bank and Trust Company of Connecticut, National Association 750 Main Street Suite 1114 Hartford, Connecticut 06103 Attention: Corporate Trust Department If to Mortgagor, at: Resorts International Hotel, Inc. c/o Resorts International, Inc. 1133 Boardwalk Atlantic City, New Jersey 08401 Attention: Christopher D. Whitney (b) By Notice to Mortgagor, Assignor and/or Assignee, given as provided above, any party may designate additional or substitute addresses for Notices, which shall, notwithstanding Section 6.02(a), be deemed given with received. Section 6.03. PARTIAL INVALIDITY. In case any one or more of the provisions of this Assignment shall for any reason be held to be illegal or invalid, such illegality or 7 invalidity shall not affect any other provision of this Assignment, but this Assignment shall be construed and enforced at the time as if such illegal or invalid provisions had not been contained herein or therein, nor shall such illegality or invalidity or any application thereof affect any legal and valid application herein or thereof from time to time. Section 6.04. APPLICABLE LAW. This Assignment shall be governed by and construed under the internal laws of the State of New Jersey, without giving effect to the principles of conflicts of law. Section 6.05. NO AMENDMENT. For so long as the Notes shall remain outstanding, the Assigned Properties may not be modified, amended or terminated except in accordance with the provisions of the Indenture or the Assigned Properties. Section 6.07. CASINO CONTROL ACT. Each of the provisions of this Assignment is subject to and shall be enforced in compliance with the provisions of the New Jersey Casino Control Act. This Agreement shall not be transferred, assigned or amended without prior approval of the New Jersey Casino Control Commission. IN WITNESS WHEREOF, Assignor, Assignees and Mortgagor have executed this Assignment Agreement as of the date first above written. RESORTS INTERNATIONAL HOTEL FINANCING, INC. Attest: _________________________________________ By:_____________________________ President RESORTS INTERNATIONAL HOTEL, INC. Attest: _________________________________________ By:______________________________ President 8 STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION Attest: _______________________________________ By:______________________________ Title 9 STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK ) BE IT REMEMBERED that on ______________, 1994, before me, the subscriber, __________________, personally appeared _______________, who, being by me duly sworn on his oath, deposes and makes proof to my satisfaction, that he is the Asst. Secretary of Resorts International Hotel Financing, Inc., the corporation named in the within instrument; that __________________ is the Vice President of said Corporation; that the execution, as well as the making of this instrument, has been duly authorized by a proper resolution of the board of directors of the said corporation; that deponent well knows the corporate seal of said corporation; and that the seal affixed to said instrument is the proper corporate seal and was thereto affixed and said instrument signed and delivered by said Vice President as and for the voluntary act and deed of said corporation. In presence of deponent who thereupon subscribed his name thereto as attesting witness; and deponent signed this proof to attest to the truth of these facts. ____________________________ [Name] [Assistant] Secretary Sworn to and subscribed before me, the date aforesaid ____________________________ Notary Public My commission expires: ____________________________ 10 STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK ) BE IT REMEMBERED that on _________________, 1994, before me, the subscriber, __________________, personally appeared ___________________, who being by me duly sworn on his oath, deposes and makes proof to my satisfaction, that he is the Asst. Secretary of STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, the corporation named in the within instrument; that ____________ is the Vice President of said corporation; that the execution, as well as the making of this instrument, has been duly authorized by a proper resolution of the board of directors of the said corporation; that deponent well knows the corporate seal of said corporation; and that the seal affixed to said instrument is the proper corporate seal and was thereto affixed and said instrument signed and delivered by said Vice President as and for the voluntary act and deed of said corporation. In presence of deponent who thereupon subscribed his name thereto as attesting witness; and deponent signed this proof to attest to the truth of these facts. ____________________________ [Name] [Assistant] Secretary Sworn to and subscribed before me, the date aforesaid ____________________________ Notary Public My commission expires: ____________________________ 11 STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK ) BE IT REMEMBERED that on _________________, 1994, before me, the subscriber, __________________, personally appeared ___________________, who being by me duly sworn on his oath, deposes and makes proof to my satisfaction, that he is the Asst. Secretary of Resorts International Hotel, Inc., the corporation named in the within instrument; that ______________ is the Vice President of said corporation; that the execution, as well as the making of this instrument, has been duly authorized by a proper resolution of the board of directors of the said corporation; that deponent well knows the corporate seal of said corporation; and that the seal affixed to said instrument is the proper corporate seal and was thereto affixed and said instrument signed and delivered by said Vice President as and for the voluntary act and deed of said corporation. In presence of deponent who thereupon subscribed his name thereto as attesting witness; and deponent signed this proof to attest to the truth of these facts. ____________________________ [Name] [Assistant] Secretary Sworn to and subscribed before me, the date aforesaid ____________________________ Notary Public My commission expires: ____________________________ 12 EXHIBIT C SUBORDINATION PROVISIONS A. SUBORDINATION. Anything herein to the contrary notwithstanding, the Subordinated Debt, including principal, premium, if any, and interest, shall be subordinate and junior to the extent set forth in subparagraphs (i) to (v), inclusive, below, to all Senior Indebtedness. (i) If the Company (as defined in this Exhibit C) shall default in the payment of any principal of or interest on any Senior Indebtedness when the same becomes due and payable, whether at maturity or at a date fixed for prepayment or by declaration of acceleration or otherwise, then, unless and until such default shall have been remedied by payment in full in cash or waived or shall have ceased to exist or all amounts then due and payable in respect of Senior Indebtedness shall have been paid in full or provision shall have been made for such payment in cash, no holder of the Subordinated Debt shall accept or receive any direct or indirect payment (in cash, property, by set-off or otherwise) of or on account of any Subordinated Debt. (ii) In the event of any insolvency, bankruptcy, liquidation, reorganization or other similar proceedings, or any receivership proceedings in connection therewith, relative to the Company, and in the event of any proceedings for voluntary liquidation, dissolution or other winding up of the Company, whether or not involving insolvency or bankruptcy proceedings, then all Senior Indebtedness shall first be paid in full in cash, or such payment shall have been provided for in cash, before any payment of or on account of principal or interest is made by the Company upon the Subordinated Debt. (iii) In any of the proceedings referred to in subparagraph (ii) above, any payment or distribution of any kind or character, whether in cash, property, stock or obligations, which may be payable or deliverable by the Company in respect of the Subordinated Debt shall be paid or delivered directly to the holders of Senior Indebtedness (or to a banking institution selected by the court or Person making the payment or delivery or designated by any holder of Senior Indebtedness) for application in payment thereof in accordance with the priorities then existing among such holders, unless and until all principal of and interest on all Senior Indebtedness shall have been paid in full in cash or such payment shall have been provided for; PROVIDED, HOWEVER, that no such delivery shall be made to holders of Senior Indebtedness of stock or obligations which are issued pursuant to reorganization proceedings or dissolution or liquidation proceedings, or upon any merger, consolidation, sale, lease, transfer or other disposal not prohibited by the provisions of the Subordinated Debt, by the Company, as reorganized, or by the corporation succeeding to the Company or acquiring its property and assets, if such stock or obligations are subordinate and junior (whether by law or agreement) at least to the extent provided in this Section ___ to the payment of all Senior Indebtedness then outstanding and to the payment of any stock or obligations which are issued in exchange or substitution for any Senior Indebtedness then outstanding. (iv) Upon the occurrence and continuance of any Default Subordination Event (other than under circumstances when the terms of subparagraph (ii) above are applicable), no holder of the Subordinated Debt shall accept or receive any direct or indirect payment (in cash, property, by set-off or otherwise) of or on account of any indebtedness in respect of the Subordinated Debt during the Applicable Stand-Still Period; PROVIDED, HOWEVER, that in the case of any payment on or in respect of any Subordinated Debt which would (in the absence of any such Default Subordination Event) have been due and payable on any date (a "Scheduled Payment Date") during such Applicable Stand-Still Period, the provisions of this subparagraph (iv) shall not prevent such payment (a "Scheduled Payment") on or after the date (the "Deferred Maturity Date") immediately following the termination of such Applicable Stand-Still Period. Notwithstanding the foregoing provisions of this subparagraph (iv), the failure by the Company to make a Scheduled Payment on a Scheduled Payment Date during an Applicable Stand-Still Period shall nevertheless constitute an Event of Default. (v) If any payment or distribution of any character, whether in cash, securities or other property, shall be received by any holder of Subordinated Debt in contravention of any of the terms of this Section ___ and before all the Senior Indebtedness shall have been paid in full, such payment or distribution shall be received in trust for the benefit of the holders of the Senior Indebtedness at the time outstanding in accordance with the priorities then existing among such holders, and shall forthwith be paid over or delivered and transferred to the holders of Senior Indebtedness. B. OBLIGATION OF OBLIGORS UNCONDITIONAL. The provisions of this Section ___ are for the purpose of defining the relative rights of the holders of Senior Indebtedness on the one hand, and the holders of the Subordinated Debt on the other hand, against the Company and its property; and nothing herein shall impair, as between the Company and the holders of the Subordinated Debt, the obligation of the Company, which is unconditional and absolute, to pay to the holders thereof the principal thereof and premium, if any, and interest thereon in accordance with their terms and the provisions hereof, nor shall anything herein prevent the holders of the Subordinated Debt from exercising all remedies otherwise permitted by applicable law or hereunder upon default hereunder or under the Subordinated Debt (including, without limitation, the right to demand payment and sue for performance hereof and of the Subordinated Debt and to accelerate the maturity thereof as provided in Section ___), subject to the rights, if any, under this Section ___ of holders of Senior Indebtedness to receive cash, property, stock or obligations otherwise payable or deliverable by the Company to the holders of the Subordinated Debt; PROVIDED, HOWEVER, that upon the commencement and during the continuance of an Applicable Stand-Still Period the holders of the Subordinated Debt, to the extent they are otherwise entitled to do so, will not accelerate the maturity of the Subordinated Debt or pursue any other remedy to enforce payment thereof or initiate any bankruptcy or insolvency proceeding relative to the Company unless and until the earlier of (i) the end of such Applicable Stand-Still Period and (ii) the acceleration of the Senior Indebtedness related to such Applicable Stand-Still Period. C. SUBROGATION. Upon payment in full of Senior Indebtedness, the holders of the Subordinated Debt shall be subrogated to the rights of the holders of the Senior Indebtedness to receive payments or distributions of assets of the Company made on Senior Indebtedness until the principal of and premium, if any, and interest on the Subordinated Debt shall be paid in full, and, for the purposes of such subrogation, no payments to the holders of Senior Indebtedness of any cash, property, stock or obligations to which the holders of the Subordinated Debt would be entitled except for the provisions of subparagraph (iii) of Section A above shall, as between the Company, its creditors (other than the holders of the Senior Indebtedness) and the holders of the Subordinated Debt, be deemed to be a payment by the Company to or on account of the Senior Indebtedness. D. DEFINITIONS. "COMPANY" means RIH, the Company or any of their respective subsidiaries, as the case may be. "DEFAULT SUBORDINATION EVENT" means the existence of all of the following: (i) an event of default shall have occurred and be continuing in respect of the Senior Indebtedness, (ii) the holders of the Subordinated Debt shall have received a notice from or on behalf of any holder of Senior Indebtedness specifying that such event of default has occurred and is continuing and that such notice constitutes a "Default Subordination Notice", and (iii) no other Default Subordination Notice shall have been delivered by or on behalf of any holder of Senior Indebtedness within the 365-day period immediately preceding the giving of such notice. The "APPLICABLE STAND-STILL PERIOD" relating to any Default Subordination Event shall be deemed to continue until the event of default under the Senior Indebtedness giving rise thereto shall have been cured (by payment or otherwise) or waived or a period of 180 days shall have elapsed from the giving of the Default Subordination Notice relating thereto, in any such case whichever shall be the shorter period. "SENIOR INDEBTEDNESS" shall mean and include all obligations (whether now outstanding or hereafter incurred), for the payment of which the Company is responsible or liable as obligor, guarantor or otherwise, including, without limitation, principal, interest, premium, fees, expenses and indemnities, whether now owing or hereafter incurred (including any interest accruing subsequent to the commencement of a proceeding described in Section 7.04, regardless of whether the claims of holders of such payment obligations for such interest are allowed in any such proceeding). Exhibit D Mortgage securing RIH Promissory Note between Resorts International Hotel, Inc, and Resorts International Hotel Financing, Inc. NA932010185 - MORTGAGE SECURING RIH PROMISSORY NOTE GD&C DRAFT DATED 12/17/93 MORTGAGE SECURING RIH PROMISSORY NOTE by and between RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation, as Mortgagor, and RESORTS INTERNATIONAL HOTEL FINANCING, INC. a Delaware corporation, as Mortgagee Dated as of ________ __, 1994 Prepared by:_______________________ D. Eric Remensperger After recording return to: Gibson, Dunn & Crutcher 200 Park Avenue New York, New York 10166 Attention: D. Eric Remensperger MORTGAGE SECURING RIH PROMISSORY NOTE THIS MORTGAGE, dated as of ________ ___, 1994, between RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation ("Mortgagor"), and RESORTS INTERNATIONAL HOTEL FINANCING, INC., a Delaware corporation ("RIHF"), having an address at c/o Resorts International, Inc., 1133 Boardwalk, Atlantic City, New Jersey 08401 (RIHF, or its successors or assigns which shall than be the Noteholder (as hereinafter defined), being referred to herein as "Mortgagee"). WITNESSETH: In consideration of $10.00 in hand paid by Mortgagee to Mortgagor and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in order to (i) the payment of the principal amount (and premium, if any) of the secured promissory note by Mortgagor to Mortgagee in the principal amount of $125,000,000 as amended and restated the date hereof (hereinafter collectively referred to as the "Note"), in lawful money of the United States, to be paid in accordance with the provisions thereof (and all renewals, extensions, and modifications thereof) all of which are hereby made an integral part hereof as though set forth at length herein; (ii) payment of interest (including interest on all overdue principal and premium, if any) becoming due under the provisions of the Note; (iii) payment by Mortgagor to Mortgagee of all sums expended or advanced by Mortgagee pursuant to any term or provision of this Mortgage; (iv) performance of each covenant, term, condition and agreement of Mortgagor herein or in the Note contained; (v) all costs and expenses, including reasonable counsel fees and expenses as provided in Section 3.07, which may arise in respect of the Note and this Mortgage or of the obligations secured hereby; and (vi) performance and observance of all of the provisions herein contained, Mortgagor has executed and delivered this Mortgage and has bargained, sold, aliened, mortgaged, pledged, released, conveyed and confirmed unto Mortgagee and its successors hereunder and assigns forever, all of its right, title and interest in, to and under any of the following described property: GRANTING CLAUSES GRANTING CLAUSE FIRST All the property, rights, title, interest, privileges and franchises particularly described in annexed Schedule 1 (the "Owned Land") which Schedule is hereby made a part of, and deemed to be described in, this Granting Clause as fully as if set forth in this Granting Clause at length. GRANTING CLAUSE SECOND All of the property, rights, title, interest, privileges and franchises of the Mortgagor as lessee in those certain leases (the "Ground Leases") particularly described in Schedule 2, which Schedule is hereby made a part of, and deemed to be described in, this Granting Clause as fully as if set forth in this Granting Clause at length, which Ground Leases cover the real property described in such Schedule 2 (the "Leased Land") and in and to any and all modifications, extensions andrenewals of the Ground Leases and all options set forth therein, together with (i) all credits, deposits, privileges and rights of the Mortgagor as lessee under the Ground Leases, now or at any time existing, (ii) the leaseholds and the leasehold estates created by the Ground Leases and (iii) all of the estates, rights, titles, claims or demands whatsoever of Mortgagor, either in law or in equity, in possession or in expectancy, of, in and to the Ground Leases and the Leased Land, together with (x) any and all other, further or additional title, estates, interests or rights which may at anytime be acquired by the Mortgagor in or to the Leased Land, and the Mortgagor expressly agrees that if the Mortgagor shall, at any time prior to payment in full of all indebtedness secured hereby, acquire fee simple title or any other greater estate to the Leased Land pursuant to the Ground Leases, or otherwise, the lien of this Mortgage shall attach, extend to, cover and be a lien upon such fee simple title or other greater estate and thereupon the lien of this Mortgage shall be prior to the lien of any mortgage or deed of trust placed on such acquired title, estate, interest or right subsequent to the date of this Mortgage and (y) any right to possession or statutory term of years derived from, or incident to, the Ground Leases pursuant to Section 365(h) of the U.S. Bankruptcy Code (the "Code") or any comparable provision contained in any present or future federal, state, local, foreign or other statute, law, rule or regulation. 3 GRANTING CLAUSE THIRD All the rents, issues, profits, revenues and other income and proceeds of the property subjected or required to be subjected to the lien of this Mortgage, including, without limitation, the property described in Granting Clauses First, Second, and Sixth (such property is hereinafter collectively referred to as the "Premises") and all the estate, right, title and interest of every nature whatsoever of the Mortgagor in and to the same and every part thereof. The collective metes and bounds description of the Owned Land and the Leased Land is set forth in annexed Schedule 3. GRANTING CLAUSE FOURTH All of the rights as lessor under Leases in effect on the date of execution of this Mortgage or hereafter entered into by the Mortgagor, if any, including extensions, renewals or amendments of all of the same, and the immediate and continuing right as security in accordance with an Assignment of Leases and Rents of even date herewith between Mortgagor and Mortgagee, and, after the occurrence of an Event of Default, to make claim for, collect, receive and receipt for (and to apply the same as provided herein) any and all rents, income, revenues, issues, profits, security and other sums of money payable or receivable thereunder or pursuant thereto, and all proceeds thereof, whether payable as rent, insurance proceeds, condemnation awards, security or otherwise and whether payable prior to or subsequent to the maturity date of the Note, to receive and give notices and consents thereunder, to bring actions and proceedings thereunder or for the enforcement thereof, to make waivers and agreements, to take such action upon the happening of a default under any Lease, including the commencement, conduct and consummation of any proceedings at law or in equity as shall be permitted by any provision of any Lease, and to do any and all things which the Mortgagor or any lessor is or may become entitled to do under the Leases; provided, that the assignment made by this granting Clause Fourth shall not impair or diminish any obligation of the Mortgagor under the Leases, or shall any such obligation be imposed upon the Mortgagee. GRANTING CLAUSE FIFTH Without limiting the generality of the provisions of Granting Clause Third, the Mortgagor's rights, privileges and franchises in and to the following, to the extent of the Mortgagor's interest therein and thereto and to the extent assignable (collectively, "Operating Assets"): 4 (a) bookings and receipts for the use of guest rooms, banquet facilities and meeting rooms at the Casino-Hotel; (b) all contracts respecting utility services for, and the maintenance, operations, or equipping of the Premises, including guaranties and warranties relating thereto; (c) the Permits; (d) all contract rights, leases, concessions, trademarks, trade names, service marks, service names, logos, copyrights, warranties and other items of intangible personal property relating to the ownership or operation of the Casino-Hotel, including, without limitation, (1) telephone and other communication numbers, (2) all software licensing agreements as are required to operate computer software systems at the Casino-Hotel, all transferable proprietary interest in software required to operate the computer systems at the Casino Hotel and books and records relating to the software programs, and (3) lessee's interest under leases of Tangible Personal Property; (e) all agreements entered into by or on behalf of the Mortgagor or which have been assigned to the Mortgagor, for the design and construction, and for the equipping and furnishing, of the Casino-Hotel, including architect's agreements, engineering agreements, construction contracts, consulting agreements and agreements or purchase orders for all items of Tangible Personal Property and payment and performance bonds in favor of the Mortgagor in connection with the Trust Estate (and all warranties and guaranties thereunder and warranties and guaranties of any subcontractor and bond issued in connection with the work to be performed by any subcontractor); (f) the following personal property (the "Tangible Personal Property") now or hereafter acquired by the Mortgagor: (i) all furniture, furnishings, equipment, machinery, apparatus, appliances, fixtures and fittings and other articles of tangible personal property which are, or are to be located on, or used in connection with the operation of, the Casino-Hotel; (ii) all slot machines, electronic gaming devices, crap tables, blackjack tables, roulette tables, baccarat tables, and big six 5 wheels, located or to be located in the Casino-Hotel, and all furnishings and equipment to be used in connection with the operation thereof; (iii) all cards, dice, gaming chips and placques, tokens, chip racks, dealing shoes, dice cups, dice sticks, layouts, paddles, roulette balls and other consumable supplies and items to be used in connection with the gaming operations of the Casino-Hotel; (iv) all china, glassware, linens, kitchen utensils, silverware and uniforms, whether in use or held in reserve storage for future use, in connection with the operation of the Casino-Hotel, which are on hand or on order whether stored on-site or off-site; (v) all consumables and operating supplies of every kind and nature for use in all of the operating departments of the Casino-Hotel, or in the improvements now or hereafter located on any of the Owned Land, including without limitation, accounting supplies, guest supplies, forms, printing, stationery, food and beverage stock, bar supplies, laundry supplies and brochures to existing purchase orders; (vi) all sets and scenery, costumes, props and other items of tangible personal property on hand or on order for use in the production of shows in the showroom of the Casino-Hotel; and (vii) all cars, limousines, vans, buses, trucks and other vehicles owned or leased by the Mortgagor for use in Casino-Hotel operations, together with all equipment, parts and supplies used to service, repair, maintain and equip the foregoing; (g) all drawings, designs, plans and specifications prepared by the architects, interior designers, landscape designers and any other consultants for the development of the Premises, as amended from time to time; (h)any administrative and judicial proceedings initiated by the Mortgagor, or in which the Mortgagor has intervened, concerning the Casino-Hotel, and agreements, if any, which are the subject matter of such proceedings; 6 (i) any customer lists utilized by the Mortgagor, including lists of transient guests and restaurant and bar patrons and "high roller" lists; and (j) all of the goodwill in connection with the operation of the Premises. The Mortgagor and Mortgagee acknowledge that notwithstanding anything contained in this Mortgage to the contrary, the Mortgagor may share facilities, operations and employees with any other hotel owned by any Affiliate of the Mortgagor provided that (i) such sharing of facilities is permitted by all applicable Legal Requirements, (ii) terms on which such facilities are shared are not detrimental to the operations of the Casino-Hotel or the financial condition of the Mortgagor and (iii) the regular operation of the Casino-Hotel would not be materially impaired upon the separation of such facilities. The assignment made by this Granting Clause Fifth shall not impair or diminish any obligation of the Mortgagor with respect to the Operating Assets, nor shall any such obligation be imposed on the Mortgagee. GRANTING CLAUSE SIXTH (a) All of the Mortgagor's right, title and interest in and to all buildings and improvements of every kind and description now or hereafter erected or placed on the Owned Land and/or the Leased Land and all fixtures and articles of personal property now or hereafter attached to or contained in and used in connection with such buildings and improvements, including, but not limited to, all apparatus, furniture, furnishings, machinery, motors, elevators, fittings, radiators, cooking ranges, ice boxes, ice machines, printing presses, mirrors, bars, mechanical refrigerators, furnaces, coal and oil-burning apparatus, wall cabinets, machinery, generators, partitions, steam and hot water boilers, lighting and power plants, pipes, plumbing, radiators, sinks, bath tubs, water closets, gas and electrical fixtures, awnings, shades, screens, blinds, dishwashers, freezers, vacuum cleaning systems, office equipment and other furnishings, and all plumbing, heating, lighting, cooking, laundry, ventilating, incinerating, air-conditioning and sprinkler equipment or other fire prevention or extinguishing apparatus and material, and fixtures and appurtenances thereto; and all renewals or replacements thereof or articles in substitution therefor, whether or not the same are or shall be attached to the Owned Land, the Leased Land or to any such buildings and improvements thereon, in any manner and 7 (b) All of the Mortgagor's right, title and interest in and to (i) the Leased Land, if the Mortgagor acquires the fee simple title to the Leased Land or any part thereof (subject to the provisions Section 2.06 hereof), (ii) all air rights and rights to maintain supporting columns and all rights to construct and maintain bridges, and to create private rights of way over streets now or hereafter owned or enjoyed by the Mortgagor and appurtenant to the Owned Land or Leased Land, and (iii) all right, title and interest of Mortgagor as grantee or licensee in and to the following to the extent necessary for the use and enjoyment of the Owned Land or the Leased Land: (A) all those plots, pieces or parcels of land and air rights, more particularly described on Schedule 5, attached hereto and made a part hereof (the "Bridge Easement Parcels"), with respect to which Mortgagor has easements, licenses or other rights of possession or use pursuant to these certain easement and license agreements more particularly described on Schedule 5 (the "Bridge Easements"), (B) all those plots, pieces or parcels of land and air rights, more particularly described on Schedule 6 attached hereto and made a part hereof (the "Elevator Easement Parcels"), with respect to which Mortgagor has easements, licenses or other rights of possession or use pursuant to those certain license agreements more particularly described on Schedule 6 (the "Elevator Easements"), and; (C) all that plot, piece or parcel of land and air rights more particularly described on Schedule 7 attached hereto and made a part hereof (the "Turn-Around Easement Parcel") with respect to which Mortgagor has easements, licenses, or other rights of possession or use pursuant to that certain easement more particularly described on Schedule 7 (the "Turn-Around Easement"), (the Bridge Easement Parcels, the Elevator Easement Parcels and the Turn-Around Easement Parcel are collectively referred to herein as the "Easement Parcels"; and the Bridge Easements, the Elevator Easements and the Turn-Around Easement are collectively referred to as the "Easements"), together with all rights of way, privileges, liberties, tenements, hereditaments and ppurtenances belonging or in any way appertaining to such estates, it being the intention hereof that all property, interests, rights and privileges and franchises pertaining to the Premises (other than Excepted Property) shall be as fully embraced within and subjected to the lien hereof as if such property were specifically described herein. To the extent the grant of a security interest in any portion of the Trust Estate is governed by the Uniform Commercial Code, this Mortgage is hereby deemed to be as well a security agreement under the Uniform Commercial Code for the purpose of creating hereby a security interest in all of the Mortgagor's right, title and interest in and to such property, securing the obligations secured hereby, for the benefit of the Mortgagee. 8 TOGETHER with all of the Mortgagor's right, title and interest in and to all mineral and water rights and any title or reversion, in and to the beds of the ways, streets, avenues and alleys adjoining the Premises to the center line thereof and in and to all strips, gaps and gores adjoining the premises on all sides thereof; and TOGETHER with all of the Mortgagor's right, title and interest to and singular the tenements, hereditaments, easements, appurtenances, passages, water courses, riparian rights, other rights, liberties and privileges thereof or in any way appertaining to the Premises, including any other claim at law or in equity as well as any after-acquired title, franchise or license and the reversion and reversions and remainder and remainders thereof; and TOGETHER with all awards and other compensation heretofore or hereafter to be made to the present and all subsequent owners of the Trust Estate for any taking by eminent domain, either permanent or temporary, of all or any part of the Trust Estate or any easement or appurtenances thereof, including severance and consequential damage and change in grade of streets, all in accordance with and subject to the provisions of the Superior Instrument Requirements and Section 5.20; and TOGETHER with all proceeds of any unearned premiums on any insurance policies described in Section 5.11, and the right to receive and apply the proceeds of any insurance, judgments, or settlements made in lieu thereof, for damage to the Trust Estate or otherwise, all in accordance with and subject to the provisions of Section 5.11 and the Superior Instrument Requirements. EXCLUDING, with respect to all of the hereinabove granted property, rights, title, interest, privileges and franchises, the Excepted Property. TO HAVE AND TO HOLD all the Premises, Leases, Ground Leases, Operating Assets, Easements, properties, options, credits, deposits, rights, privileges and franchises of every kind and description, real, personal or mixed, granted hereby, bargained, sold, aliened, assigned, transferred, hypothecated, pledged, released, conveyed, mortgaged, or confirmed as aforesaid, or intended, agreed or covenanted so to be, together with all the appurtenances thereto appertaining (the Premises, Leases, Ground Leases, Operating Assets, Easements, properties, options, credits, deposits, rights, privileges and franchises, being herein collectively called the "Trust Estate") unto the Mortgagee and its successors and assigns forever. 9 SUBJECT, HOWEVER, on the date hereof, to Existing Encumbrances and, after the date hereof, to Permitted Encumbrances. SUBJECT, FURTHER, to the rights and obligations of the Mortgagee and the Noteholder as set forth in that certain Intercreditor Agreement dated as of the date hereof among RIH, RIHF, Trustee, Fidelity Management and Trust Company ("Fidelity"), as trustee under that certain note purchase agreement dated as of the date hereof among Fidelity, RIH and RIHF, and U.S. Trust of California, N.A.,("U.S. Trust"), as trustee under that certain indenture dated as of the date hereof among U.S. Trust, RIH and RIHF (and such other parties that may from time to time become a party thereto). BUT IN TRUST, NEVERTHELESS, for the benefit and security of the Noteholder. UPON CONDITION that, until the happening of an Event of Default and subject to the provisions of Article Two, the Mortgagor shall be permitted to possess and use the Trust Estate, and to receive and use the rents, issues, profits, revenues and other income of the Trust Estate. AND IT IS HEREBY COVENANTED AND DECLARED that the Trust Estate is to be held and applied by the Mortgagee, subject to the further covenants, conditions and trusts hereinafter set forth, and the Mortgagor does hereby covenant and agree to and with the Mortgagee, for the benefit of the holder of the Note as follows: ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION Section 1.01. DEFINITIONS. For all purposes of this Mortgage, except as otherwise expressly provided or unless the context otherwise requires: (a) the terms defined in this Article One have the meanings assigned to them in this Article One and include the plural as well as the singular; (b) all accounting terms not otherwise defined herein have the meanings assigned to them, and all computations herein provided for shall be made in accordance with generally accepted accounting principles consistently applied; and 10 (c) the words "herein," "hereof" and "hereunder" and other words of similar import refer to this Mortgage as a whole and not to any particular Article, Section or other subdivision. "AFFILIATE" has the meaning set forth in Section 1.01 of the Indenture. "AFTER-ACQUIRED FEE MORTGAGE" has the meaning set forth in Section 2.07. "ALTERATIONS" has the meaning set forth in Section 5.12. "APPRAISER" means an MAI appraiser (i.e., a Member in good standing of the American Institute of Real Estate Appraisers) who is (i) of recognized standing among appraisers of properties similar to the Casino-Hotel and (ii) experienced in the appraisals of properties of a similar size and scope to that of the Casino-Hotel, selected by the Mortgagor. "ASSIGNMENT OF LEASES AND RENTS" has the meaning stated in Section 1.01 of the Indenture. "CAPITALIZED LEASE OBLIGATION" has the meaning stated in Section 1.01 of the Indenture. "CASINO" means that portion of the Casino-Hotel used for gaming and related activities. "CASINO-HOTEL" means the casino and hotel complex and ancillary structures and facilities located on the Premises and furniture, fixtures and equipment at any time contained therein. "CASUALTY" means any act or occurrence of any kind or nature which results in damage, loss or destruction to any buildings or improvements on the Premises and/or Tangible Personal Property. "CODE" has the meaning stated in Granting Clause Second. "COMBINATION TRANSACTION" has the meaning stated in Section 10.01 of the Indenture. "DEFAULT" means the occurrence and continuance of an Event of Default or an event which, after notice or lapse of time or both, would become an Event of Default. "DEPOSITARY" means an Independent entity to which insurance proceeds or a condemnation award is paid to be 11 held in trust for restoration pursuant to the provisions of a Ground Lease or Superior Mortgage. "EVENT OF DEFAULT" has the meaning stated in Section 3.01. An Event of Default shall "exist" if an Event of Default shall have occurred and be continuing. "EXCEPTED PROPERTY" means: (1) subject to the provisions of the Assignment of Leases and Rents, any cash held by the Mortgagor from rents, issues, profits, revenues and other proceed of the Trust Estate to the extent that such cash may be, but has not been, distributed or paid out in accordance with the Services Agreement or in accordance with the provisions of Section 12.07 the Indenture; (2) all personal property owned by lessees under Leases and the personal property of any guests staying in the Hotel; (3) any property deemed to be Excepted Property pursuant to the provisions of Section 2.03 hereof; (4) Tangible Personal Property subject to an FF&E Financing Agreement; and (5) counterchecks and any other property the granting of a security interest in which is prohibited by the New Jersey Casino Control Act, N.J.S.A. 5:12-1 ET SEQ., and the regulations promulgated thereunder. "EXISTING ENCUMBRANCES" means the matters set forth in Schedule 8. "FIRST MORTGAGE DEBT" means any financing secured by a Superior Mortgage secured by or imposing a lien on all or a portion of the Trust Estate on a parity with or senior to the lien of this Mortgage. "FF&E FINANCING AGREEMENT" means a purchase money lien upon any Tangible Personal Property and other items constituting Operating Assets, such as computer software, which are financed, purchased or leased by the Mortgagor, provided that, except as set forth on Schedule 3, the principal amount of the indebtedness secured by such lien shall not exceed eighty-five (85%) percent of the cost to the Mortgagor of such property at the time of acquisition. "GROUND LEASES" has the meaning stated in Granting Clause Second. 12 "GUARANTY MORTGAGE" means that certain Mortgage Securing Guaranty of Mortgage Notes dated as of the date hereof from Mortgagor to State Street Bank and Trust Company of Connecticut, National Association, a national banking association, which secures the Notes (as defined in the Indenture), the lien of which shall be PARI PASSU with the lien of this Mortgage. "HOTEL" means that portion of the Casino-Hotel not included within the Casino. "IMPOSITIONS" has the meaning stated in Section 5.08. "INDENTURE" means that certain Indenture - 11% Mortgage Notes due 2003, dated as of even date herewith among the Mortgagor, RIHF, as issuer, and State Street Bank and Trust Company of Connecticut, National Association, as trustee, as it may from time to time be supplemented, modified or amended by one or more trust indentures or other instruments supplemental thereto entered into pursuant to the applicable provisions thereof. "INDEPENDENT" when used with respect to any specified Person means such a Person who (a) is in fact independent, (b) does not have any direct financial interest or any material indirect financial interest in the Mortgagor or in any other obligor upon the Note or in any Affiliate of the Mortgagor or of such other obligor and (c) is not connected with the Mortgagor or such other obligor or any Affiliate of the Mortgagor or such other obligor as an officer, employee, promoter, underwriter, trustee, partner, director or person performing similar functions. Whenever it is herein provided that any Independent Person's opinion or certificate shall be furnished to the Mortgagee, such opinion or certificate shall state that the signer has read this definition and that the signer is Independent within the meaning thereof. A Person who is performing or who has performed services as an independent contractor to any specified Person shall not be considered not Independent merely by reason of the fact that such Person is or has performed such services. "INSURANCE AMOUNT" has the meaning stated in Section 5.11(a)(1). "INSURANCE REQUIREMENTS" means all terms of any insurance policy covering or applicable to the Trust Estate or any part thereof, all requirements of the issuer of any such policy, and all orders, rules, regulations and other requirements of the National Board of Fire Underwriters (or any other body exercising similar functions) applicable to or affecting the Trust Estate or any part thereof or any use or condition of the Trust Estate or any other part thereof. 13 "INSURANCE TRUSTEE" means the Trustee or, if the Trustee so elects, any bank, trust company or insurance company with net worth in excess of $100,000,000, designated by the Trustee. "INSURER" means an insurance company or companies selected by the Mortgagor authorized to issue insurance in the State of New Jersey with an A.M. Best rating as high or higher than the rating of insurance companies insuring other casino-hotels in Atlantic City, New Jersey. "LEASE" means each lease or sublease demising all or any portion of the Owned Land, the Leased Land or the buildings or improvements thereon and made by the Mortgagor as lessor or sublessor, as the case may be, or any spaces in any building or buildings which constitute a part of the Trust Estate, including every agreement relating thereto or entered into in connection therewith and every guaranty of the performance and observance of the covenants, conditions and agreements to be performed by the lessee under any such lease. Notwithstanding the foregoing, the term "Lease" shall not include any transient room rentals. "LEASED LAND" has the meaning stated in Granting Clause Second. "LEGAL REQUIREMENTS" means all laws, statutes, codes, acts, ordinances, orders, judgments, decrees, injunctions, rules, regulations, permits, licenses, authorizations, directions and requirements (including, without limitation, the New Jersey Environment Cleanup Responsibility Act and the New Jersey Spill Compensation and Control Act of 1976) of all governments, departments, commissions, boards, courts, authorities, agencies, officials and officers, of governments, federal, state and municipal (including, without limitation, the New Jersey Department of Environmental Protection, the Atlantic City Bureau of Investigations, Division of Protection, the Atlantic City Bureau of Investigations, Division of Gaming Enforcement of the State of New Jersey, and the Casino Control Commission of the State of New Jersey), foreseen or unforeseen, ordinary or extraordinary, which now is or at any time hereafter becomes applicable to the Trust Estate or any part thereof, or any of the adjoining sidewalks, or the use of the Casino-Hotel as a gaming or gambling facility or any other use or condition of the Trust Estate or any part thereof. "LESSORS" means the lessors under the Ground Leases. "MATURITY" when used with respect to the Note means the date on which the principal of such Note becomes due and payable as therein or herein provided, whether at 14 the Stated Maturity or by declaration of acceleration or prepayment or otherwise. "MORTGAGE DOCUMENTS" has the meaning set forth in Section 1.01 of the Indenture. "MORTGAGOR" means the Person named as the "Mortgagor" in the first paragraph of this instrument until a successor entity shall have become such pursuant to the applicable provisions of this Mortgage, and thereafter, except to the extent otherwise contemplated by Section 4.02, "Mortgagor" shall mean such successor entity exclusively. "NOTEHOLDER" shall mean the holder or holders of the Note. "NOTE" has the meaning set forth in the Preamble. "NOTICES" has the meaning stated in Section 1.02. "OFFICERS' CERTIFICATE" means a certificate signed by an officer of the Mortgagor and delivered to the Mortgagee. Whenever this Mortgage requires that an Officers' Certificate be signed also by an Architect or an Accountant or other expert, such Architect, Accountant or other expert may (except as otherwise expressly provided in this Mortgage) be in the general employ of the Mortgagor. "OPERATING ASSETS" has the meaning stated in Granting Clause Fifth. "OPINION OF COUNSEL" means a written opinion of counsel who may (except as otherwise expressly provided in this Mortgage) be an employee of the Mortgagor or an employee of an Affiliate of the Mortgagor. Unless otherwise specifically provided in this Mortgage, such counsel may rely, as to any state of facts not personally known to such counsel and relating to such opinions, on an Officers' Certificate to the extent not rejected by the Trustee and its counsel (which rejection shall not be unreasonably given). "ORIGINAL POLICY" means an ALTA Loan Policies of Title issued by [list title insurance companies], pursuant to Title Commitment No. ____________ redated to the date hereof. "OUTSTANDING AMOUNT" has the meaning stated in Section 1.01 of the Indenture. "OWNED LAND" has the meaning stated in Granting Clause First. 15 "PERMITS" means all licenses, franchises, statements of compliance, certificates of operation, certificates of occupancy and permits required for the lawful ownership, occupancy, operation and use of all or a material portion of the Premises whether held by the Mortgagor or any other Person (which may be temporary or permanent) (including, without limitation, those required for the use of the Casino-Hotel as a licensed casino facility), in accordance with all applicable Legal Requirements. "PERMITTED ENCUMBRANCES" means: (1) liens for taxes, assessments, or governmental charges not yet due and payable or if due and payable are not delinquent to the extent that any fine, penalty, interest or cost may be added for nonpayment thereof; (2) Existing Encumbrances; (3) FF&E Financing Agreements; (4) After-Acquired Fee Mortgages; (5) the lien of the Mortgage Documents and any rights granted as provided therein; (6) Restricted Encumbrances; (7) the lien of the Trustee provided for by Section 8.07 of the Indenture; (8) any Working Capital Facility Lien; and (9) Capitalized Lease Obligations. "PERSON" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or any other entity or government or any agency or political subdivision thereof. "PREMISES" has the meaning set forth in Granting Clause Third. "RELEASED LAND" has the meaning stated in Section 2.05. "RELEASED FEE LAND" has the meaning stated in Section 2.06. "RESTORATION" has the meaning stated in Section 5.11(e). 16 "RESTRICTED ENCUMBRANCES" means Leases permitted by and made in accordance with Section 5.13 of this Mortgage. "RIHF" shall mean Resorts International Hotel Financing, Inc., a Delaware corporation. "SERVICES AGREEMENT" has the meaning set forth in Section 1.01 of the Indenture. "SETTLEMENT COSTS" has the meaning stated in Section 5.20. "STATED MATURITY" when used with respect to a note means the date specified in such note as the fixed date on which the principal of such note is due and payable. "SUPERIOR INSTRUMENT REQUIREMENTS" means the applicable terms, conditions and provisions of (i) the Ground Leases with respect to the Leased Land; and (ii) Superior Mortgages with respect to the portion of the Trust Estate encumbered thereby. "SUPERIOR MORTGAGES" means, collectively, any Working Capital Facility Lien and any After-Acquired Fee Mortgages. "TAKING" means the acquisition or condemnation by eminent domain of the whole or any part of the Premises, by a competent authority, for any public or quasi-public use or purpose. "TANGIBLE PERSONAL PROPERTY" has the meaning stated in Granting Clause Fifth. "TRUSTEE" means the Person named as the "Trustee" in the first paragraph of the Indenture and any successor thereto. "TRUST ESTATE" has the meaning stated in the habendum to the Granting Clauses. "TRUST INDENTURE ACT" has the meaning stated in Section 1.01 of the Indenture. "WORKING CAPITAL FACILITY" has the meaning stated in Section 1.01 of the Indenture. "WORKING CAPITAL FACILITY LIEN" has the meaning stated in Section 5.22(c) of this Mortgage. Section 1.02. NOTICES, ETC. 17 (a) Any request, demand, authorization, direction, notice (including, without limitation, a notice of default), consent, waiver or other document provided or permitted by this Mortgage to be made upon, given or furnished to, or filed with, the Mortgagor or the Mortgagee (collectively, "Notices") shall be deemed given when either (i) delivered by hand or (ii) two days after sending by registered or certified mail, postage prepaid, addressed as follows: To the Mortgagor: Resorts International Hotel, Inc. c/o Resorts International, Inc. 1133 Boardwalk Atlantic City, New Jersey 08401 Attention: Christopher D. Whitney If to Mortgagee: Resorts International Hotel Financing, Inc. c/o Resorts International, Inc. 1133 Boardwalk Atlantic City, New Jersey 08401 Attention: Christopher D. Whitney (b) By Notice to the Mortgagor, the Mortgagee and the Trustee, any party may designate additional or substitute address for Notices which, notwithstanding Subsection (a) above, shall be deemed given when received. Section 1.03. FORM AND CONTENT OF DOCUMENTS DELIVERED TO MORTGAGEE. Whenever 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 such matters in one or several documents. Any certificate or opinion of an Officer of the Mortgagor may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such Officer knows that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any 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 Mortgagor stating that the information with respect to such factual matters is in the possession of the Mortgagor, unless such counsel knows that the certificate or opinion or representations with respect to such matters are 18 erroneous. If appropriate to the matter being opined upon and to the extent not prohibited by the Trust Indenture Act, any Opinion of Counsel may be subject to rights of creditors and the availability of equitable remedies. Whenever any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Mortgage, they may, but need not, be consolidated and form one instrument. Whenever in this Mortgage, in connection with any application or certificate or report to the Mortgagee, it is provided that the Mortgagor shall deliver any document as a condition of the granting of such application, or as evidence of the Mortgagor's compliance with any term hereof, it is intended that the truth and accuracy, at the time of the granting of such application or at the effective date of such certificate or report (as the case may be), of the facts and opinions stated in such document shall in such case be conditions precedent to the right of the Mortgagor to have such application granted or to the sufficiency of such certificate or report. Section 1.04. COMPLIANCE CERTIFICATES AND OPINIONS. Upon any application or request by the Mortgagor to the Mortgagee to take any action under any provision of this Mortgage, the Mortgagor shall furnish to the Mortgagee an Officers' Certificate stating that all conditions precedent, if any, provided for in this Mortgage 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 Mortgage 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 Mortgage shall include: (a) a statement that each individual signing such certificate or opinion has read such condition or covenant and the definitions herein relating thereto; (b) 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; (c) a statement that, in the opinion of each such individual, he has made such 19 examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such condition or covenant has been complied with; and (d) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. Section 1.05. EFFECT OF HEADINGS. The Article and Section headings herein are for convenience only and shall not affect the construction hereof. Section 1.06. SUCCESSORS AND ASSIGNS; AMENDMENTS. (a) Subject to Section 4.02 hereof and Section 10.02 of the Indenture, this Mortgage shall be binding upon and inure to the benefit of the parties hereto and of the respective successors and assigns of the parties hereto to the same effect as if each such successor or assign were in each case named as a party to this Mortgage. (b) This Mortgage may not be modified, amended, discharged, released nor any of its provisions waived except by agreement in writing executed by the Mortgagor and the Mortgagee and in accordance with the provisions of this Mortgage and the Indenture. Section 1.07. SEPARABILITY CLAUSE. In case any provision in this Mortgage 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 1.08. BENEFITS OF MORTGAGE. Nothing in this Mortgage, express or implied, shall give to any Person, other than the parties hereto and their successors and assigns, any benefit or any legal or equitable right, remedy or claim under this Mortgage. Section 1.09. GOVERNING LAW. This Mortgage shall be deemed to be a contract under the laws of the State of New Jersey and shall be construed in accordance with and governed by the laws of the State of New Jersey. Section 1.10. [Reserved] Section 1.11. PROVISIONS REQUIRED BY INDENTURE. Whenever the provisions of this Mortgage and the provisions of the Indenture shall be inconsistent, the provisions of the Indenture shall govern. Section 1.12. RIGHTS OF THE TRUSTEE. So long as the Trustee is the holder of a security interest in this 20 Mortgage and the Note by an assignment from Mortgagee to Trustee, except as otherwise provided in Section 8.01 of the Indenture: (a) the Mortgagee 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, coupon or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) whenever in the administration of this Mortgage the Mortgagee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Mortgagee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate; (c) the Mortgagee 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 the Mortgagee hereunder in good faith and in reliance thereon; (d) the Mortgagee shall be under no obligation to exercise any of the rights or powers vested in it by this Mortgage at the request or direction of any Noteholder pursuant to the Indenture, unless such holder shall have offered to the Mortgagee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (e) the Mortgagee 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, or other paper or document but the Mortgagee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Mortgagee shall determine to make such further inquiry or investigation, it shall be entitled (subject to the express limitations with respect thereto contained in this Mortgage) to examine the books, records and premises of the Mortgagor, personally or by agent or attorney; (f) the Mortgagee may execute any of the trusts or power hereunder or perform any duties hereunder either directly or by or through agents or attorneys, and the Mortgagee shall not be responsible for any 21 misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder; (g) the Mortgagee shall not be personally liable, in case of entry by it upon the Trust Estate, for debts contracted or liabilities or damages incurred in the management or operation of the Trust Estate; and (h) no provision of this Mortgage shall require the Mortgagee to expend or risk its own funds or otherwise incur any financial liability in the performance of its obligations hereunder, or in the exercise 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. Section 1.13. MORTGAGE SUBJECT TO THE PROVISIONS OF THE ACT. Each provision of this Mortgage is subject to and shall be enforced in compliance with the provisions of the New Jersey Casino Control Act. This Mortgage shall not be transferred, assigned or amended without prior approval of the New Jersey Casino Control Commission. Section 1.14. DISCHARGE OF LIEN. If the Mortgagor shall pay or cause to be paid, or there shall otherwise be paid, to the Mortgagee all amounts required to be paid by the Mortgagor pursuant to the Note, and the conditions precedent for the Indenture to cease, determine and become null and void in accordance with Section 5.01 of the Indenture shall have occurred, the Mortgagee shall promptly cancel and discharge this Mortgage, and execute and deliver to the Mortgagor all such instruments as may be necessary, required or appropriate to evidence such discharge and satisfaction of such lien or liens. Section 1.15. GENERAL APPLICATION. (a) The assertion of any rights upon any Default shall be subject in each instance to the giving of any notice and the expiration of any grace period provided for in Section 3.01 as a condition to such Default making it an Event of Default, unless the Trust Indenture Act requires otherwise, in which case the Trust Indenture Act shall control. (b) For the purposes of this Mortgage, it is understood that an event which does not materially diminish the value of the Mortgagee's interest in the Trust Estate shall not be deemed an "impairment of security", as that phrase is used in this Mortgage. 22 ARTICLE TWO RELEASE; OTHER EXCEPTED PROPERTY; SUBORDINATION Section 2.01. POSSESSION BY MORTGAGOR; DISPOSITIONS WITHOUT RELEASE. So long as there shall have been no acceleration of maturity of the Note under Section 3.02, the Mortgagor shall be suffered and permitted, with power freely and without let or hindrance on the part of the Mortgagee, subject to the provisions of this Mortgage and the Guaranty Mortgage, to possess, use, manage, operate and enjoy the Trust Estate and every part thereof and to collect, receive, use, invest and dispose of the rents, issues, tolls, profits, revenues and other income from the Trust Estate or any part hereof, to use, consume and dispose of any consumables, goods, wares and merchandise in the ordinary course of business of operating the Casino-Hotel and to adjust and settle all matters relating to choses in action, leases and contracts. Section 2.02. OBSOLETE PROPERTY; TANGIBLE PERSONAL PROPERTY; LEASE MODIFICATIONS. The Mortgagor shall have the right, at any time and from time to time, unless an Event of Default shall have occurred and be continuing, without any release from or consent by the Mortgagee: (a) to sell or dispose of, free from the lien of this Mortgage, any Tangible Personal Property which, in its reasonable opinion, may have become obsolete or unfit for use or which is no longer necessary in the conduct of its businesses or the operation of the Trust Estate, and no purchaser of any such property shall be bound to inquire into any question affecting the Mortgagor's right to sell or otherwise dispose of the same, free from the lien of this Mortgage; (b)to alter, repair, replace, change the location (provided notice shall be given to Mortgagee as to any new location) or position of and add to any Tangible Personal Property; provided, however, that no change shall be made in the location of any such property subject to the lien pf this Mortgage which would in any respect impair the security of this Mortgage upon such property; or (c) to renew, extend, surrender, terminate, modify or amend any leases of Tangible Personal Property, when, in the Mortgagor's reasonable opinion, it is prudent to do so. The Mortgagor shall retain any net cash proceeds (subject to the right to pay dividends or make cash distributions pursuant to Section 12.07 of the Indenture) received from the sale or disposition of any Tangible 23 Personal Property under Subsection (a) of this Section 2.02, in the business of operating the Casino-Hotel. The Mortgagee shall be under no responsibility or duty with respect to the exercise of the rights of the Mortgagor under this Section 2.02 or the application of the proceeds of any sale or disposition of any Tangible Personal Property. Section 2.03. OTHER EXCEPTED PROPERTY. Notwithstanding any provisions contained in this Mortgage or the Indenture to the contrary, including, without limitation, the provisions of Granting Clauses Fifth and Sixth and of Articles Two and Five hereof, if the Mortgagor acquires Tangible Personal Property and other items constituting operating assets, such as computer software subject to any FF&E Financing Agreement, or becomes the lessee under a lease for any of the same and if the document evidencing such F&E Financing Agreement prohibits subordinate liens or the provisions of any such lease prohibits any assignment thereof by the lessee, and if any such prohibition is customary with respect to similar transactions of the lender or lessor, as the case may be, then the property so purchased or the lessee's interest in the lease, as the case may be, shall be deemed to be Excepted Property. If any such FF&E Financing Agreement permits subordinate liens then the Mortgagee agrees to execute and deliver to the Mortgagor, at the Mortgagor's expense, such documents as the holder of such FF&E Financing Agreement may reasonably request to evidence the subordination of the lien of this Mortgage to the lien of such FF&E Financing Agreement. Section 2.04. [Reserved] Section 2.05. RELEASED LAND. (a) Notwithstanding anything to the contrary herein contained, the Mortgagor shall have the right, at any time and from time to time, unless an Event of Default shall have occurred and be continuing, to convey all or any part 24 of the Released Fee Land (the land to be so conveyed is hereinafter referred to as the "Released Land"), free from the lien of the Mortgage, provided that: (i) the Mortgagor furnishes the Mortgagee with an Officers' Certificate requesting the release of such property from the Trust Estate and stating (w) so long as the Released Land is owned or used by an Affiliate of the Mortgagor, the Released Land shall not be operated in a manner in competition with the operation of the Casino-Hotel as a casino, (x) that no permanent structures have been constructed on the Released Land, (y) that the Mortgagor is not required to hold the Released Land in, order to maintain all Permits and in order to comply with the provisions of all material contracts to which the Mortgagor is a party or by which the Mortgagor is bound and either (A) the Mortgagor has made adequate provision to maintain all Permits and to comply with such contractual requirements by: (1) owning and using the balance of the Trust Estate; (2) acquiring fee title to any real property that would enable Mortgagor to maintain all Permits and satisfy such contractual requirements; or (3) acquiring a Qualified Leasehold Interest in real property that would enable the Mortgagor to maintain such Permits and satisfy such contractual requirements; or (B) neither the requirements of such Permits nor such contracts require the Mortgagor to own the Released Land or use or operate any land in the manner in which the Released Land is intended to be used; or (C) such requirements have been waived, and (z) that such conveyance will not materially interfere with the operation of the Casino-Hotel; (ii) the Mortgagor delivers to the Mortgagee an Opinion of Counsel to the effect that the Mortgagor is not required to own and use the Released Land in order to maintain in good standing all Permits or by the provisions of any material contract to which the Mortgagor is a party or by which it is bound to own and use the Released Land; (iii) the Mortgagor delivers to the Mortgagee, if applicable, an endorsement to the Original Policy in accordance with Section 2.05(d); (iv) the Mortgagor delivers to the Mortgagee an executed counterpart of the instruments of conveyance in recordable form, which shall contain a covenant prohibiting the use of the Released Land by any Affiliate of the Mortgagor (A) as a casino or (B) in a manner in competition with the operation of 25 the Casino-Hotel as a casino prior to the latest Stated Maturity Date of the Note; and (v) in the case of a conveyance or release described in (A) or (B) above, if the Released Land is being conveyed to an Affiliate of the Mortgagor, the cash consideration received by the Mortgagor for the Released Land shall not be less than the product of the Release Price multiplied by the area (in square feet) of the Released Land. (b) The Mortgagee shall, from time to time, promptly execute any written instrument in form reasonably satisfactory to the prospective purchaser to confirm the release of the Released Fee Land, upon receipt by the Mortgagee of an Officers' Certificate stating that the Mortgagor is entitled to such release by virtue of the Mortgagor's compliance with this Section 2.05 (and, if applicable, Section 2.05 of the Guaranty Mortgage), PROVIDED, that the Mortgagee shall have no liability thereunder and all costs and expenses (including reasonable attorneys' fees) shall be paid by the Mortgagor. Section 2.06. RELEASED FEE LAND. (a) Notwithstanding anything to the contrary herein contained, in the event the Mortgagor intends to exercise an option to acquire fee title to Leased Land under the provisions of any Ground Lease, the Mortgagor shall have the right, unless an Event of Default shall have occurred and be continuing, to have an Affiliate exercise such options(s) or for the Mortgagor to exercise such options(s) on behalf of an Affiliate and in connection therewith to cause fee simple title to the Leased Land or any part thereof to be conveyed to an Affiliate of the Mortgagor (provided that no portion of the purchase price of the Leased Land or part thereof is paid by Mortgagor), free from the lien of this Mortgage (the land to be so conveyed is hereinafter referred to as the "Released Fee Land"), provided that the Mortgagor furnishes the Mortgagee with the following: (i) an Officers' Certificate requesting the release of the Released Fee Land from the Trust Estate and stating that (A) the Mortgagor is not required to own the Released Fee Land in order to maintain all Permits and in order to comply with the provisions of all material contracts to which the Mortgagor is a party or by which the Mortgagor is bound, (B) such Affiliate has received all Permits necessary to own the Released Fee Land (including without limitation all approvals required by the Casino Control Commission of the State of New Jersey), (C) there has been delivered to the Mortgagor and the Mortgagee a true copy of an instrument executed by such Affiliate stating that 26 (i) such Affiliate may only engage in the activity of owning the Released Fee Land and (ii) such Affiliate shall not convey the Released Fee Land to another Affiliate of the Mortgagor, unless such other Affiliate executes and delivers to the Mortgagor and the Mortgagee, the instruments that would have been required to be delivered pursuant to clause (C) if the Mortgagor conveyed the Released Fee Land to such other Affiliate (provided that this restriction shall only be effective until such time as this Mortgage shall be satisfied of record) and (D) the deed conveying the Released Fee Land to such Affiliate shall state that such conveyance is made subject to the terms, provisions and conditions of the applicable Ground Lease and that the fee and leasehold interests in the Released Fee Land shall not merge by reason of the Mortgagor and/or any Affiliate owning both the leasehold and fee estate therein, and that such estates shall always remain separate and distinct; (ii) an Opinion of Counsel to the effect that (A) the Mortgagor is not required to own the Released Fee Land in order to maintain in good standing all Permits or by the provisions of any material contract to which the Mortgagor is a party or by which it is bound to own the Released Fee Land and (B) the instruments described in clause (C) of subparagraph (i) were duly executed by and are binding upon such Affiliate; and (iii) an endorsement to the Original Policy, confirming that no merger of the fee and leasehold estates in the Released Fee Land has resulted from such conveyance. In addition, simultaneously with such acquisition, the Affiliate and Mortgagor shall enter into an instrument in form and substance reasonably satisfactory to Mortgagee, amending the applicable Ground Lease to provide such mortgagee protections as are customary and to the extent reasonably required by Mortgagee, including, without limitation, (A) a covenant of the landlord not to terminate the Ground Lease for any reason whatsoever (including without limitation, due to any default by tenant of its obligations under such Ground Lease), and (B) an agreement by the landlord not to accept payment of any fixed or base rent from the tenant (and, if tendered by the Mortgagor, and agreement to return same to the Mortgagor) or any other charges payable thereunder at any time that an Event of Default shall have occurred and shall be continuing. (b) The Mortgagee shall, from time to time, promptly execute any written instrument in form reasonably satisfactory to the prospective purchaser to confirm the 27 release of the Released Fee Land, upon receipt by the Mortgagee of an Officers' Certificate stating that the Mortgagor is entitled to such release by virtue of the Mortgagor's compliance with this Section 2.06, PROVIDED that the Mortgagee shall have no liability thereunder and all costs and expenses (including reasonable attorneys' fees) shall be paid by the Mortgagor. Section 2.07. AFTER-ACQUIRED FEE MORTGAGES. (a) Notwithstanding anything contained herein to the contrary (i) if no Event of Default has occurred and is continuing and (ii) if the Mortgagor shall acquire Released Fee Land, then simultaneously with the acquisition thereof, the Mortgagor shall have the right to encumber such fee simple title with a mortgage (such mortgage and any refinancing thereof permitted by the Indenture is hereinafter referred to as an "After-Acquired Fee Mortgage"). The lien of this Mortgage on the Released Fee Land shall be subordinated to the lien of the After-Acquired Fee Mortgage on the Released Fee Land (and to the lien of other Superior Mortgages which shall become a lien thereon in accordance with the terms thereof), provided the following conditions are satisfied: (i) the After-Acquired Fee Mortgage encumbers the fee simple title to such real property and no other property; (ii) the indebtedness secured by the After-Acquired Fee Mortgage (A) does not exceed 75% of the cost to the Mortgagor of such fee simple title at the time of the acquisition and (B) satisfies the criteria set forth in Section 12.08 of the Indenture; (iii) in the event the After-Acquired Fee Mortgage encumbers fee simple title to the Leased Land or any part thereof, such After-Acquired Fee Mortgage contains provisions binding on the holder of the After-Acquired Fee Mortgage and its successors and assigns confirming the provisions of Section 5.21(d) of this Mortgage; (iv) the Released Fee Land is not being acquired from an Affiliate of the Mortgagor; (v) the After-Acquired Fee Mortgage and other loan documents shall contain a provision binding upon the holder of such After-Acquired Fee Mortgage and other loan documents that all insurance proceeds in the event of a Casualty and awards for Takings of less than the entire Released Fee Land shall be used for purposes of Restoration; and 28 (vi) the Mortgagor delivers to the Mortgagee an Officers' Certificate requesting such subordination and certifying that the requirements of (i) through (v) above have been satisfied. (b) Anything contained in this Section 2.07 or elsewhere in this Mortgage to the contrary notwithstandi, the subordination of this Mortgage to any After-Acquired Fee Mortgage constituting a lien on Released Fee Land shall not be self-operative but shall be effective only upon the execution and delivery by the Mortgagee of an instrument in writing effecting such subordination. The Mortgagee shall deliver such instrument of subordination on the following conditions: (x) the Mortgagee shall have received an Officers' Certificate confirming that the conditions of (i) through (vi) of paragraph (a) have been satisfied, together with a true and correct copy of the After-Acquired Fee Mortgage and all other instruments securing the indebtedness evidenced thereby and (y) the instrument of subordination shall specifically state that this Mortgage is being subordinated not with respect to the lien of this Mortgage on the Ground Lease or on the leasehold estate created thereby, but only with respect to the fee simple title to the Leased Land or applicable part thereof and only if and to the extent that the After-Acquired Fee Mortgage being subordinated to is subject and subordinate to the Ground Lease and the leasehold estate created thereby. ARTICLE THREE REMEDIES Section 3.01. EVENTS OF DEFAULT. "Event of Default," whenever used herein, means any one of following events (including any applicable notice requirement and any period of grace as specified in this Section 3.01) (whatever the reason for such event 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): (a) default in the payment of any interest on the Note when such interest becomes due and payable and continuance of such default for a period of 10 days after there has been given a written notice to the Mortgagor specifying such default and stating that such notice is a "Notice of Default" hereunder; or (b) default in the payment of the principal of any Note at its Maturity; or 29 (c) an "Event of Default" as defined in Section 3.01 of the Guaranty Mortgage shall occur; or (d) default in the payment of any other sum due under the Note or this Mortgage and the continuance of such default for a period of 10 days after there has been given to the Mortgagor a written notice specifying such default and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; or (e) default in the performance, or breach, of any covenant of the Mortgagor in this Mortgage (other than a covenant a default in the performance or breach of which is elsewhere in this Section specifically dealt with), and continuance of such default or breach for a period of 30 days after there has been given to the Mortgagor 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 (i) the default or breach is of such a nature that is curable but not susceptible of being cured with due diligence within such 30-day period (for reasons other than the lack of funds), (ii) the Mortgagor delivers an Officers' Certificate to the Mortgagee within such 30-day period stating (A) the applicability of the provisions of Clause (i) to such default or breach, (B) the Mortgagor's intention to remedy such default or breach with reasonable diligence and (C) the steps which the Mortgagor has undertaken to remedy such default or breach and (iii) the Mortgagor delivers to the Mortgagee additional Officers' Certificates every 30 days thereafter updating the information contained in the certificate described in Clause (ii), in which case such 30 day period shall be extended for such further period of time as may reasonably be required to cure the same, provided that the Mortgagor is then proceeding and thereafter continues to proceed to cure the same with reasonable diligence; or (f) an "Event of Default" as defined in Section 7.01 of the Indenture, shall occur; or (g) default by the Mortgagor under any of the terms of any Ground Lease which shall not be fully cured or waived prior to the expiration of any grace period contained in such Ground Lease, unless prior to the expiration of such grace period, the Mortgagor gives the Mortgagee an Officers' Certificate, an Opinion of Counsel and a true copy of the Injunction referred to below, which Certificate and Opinion state that (i) a court of competent jurisdiction has issued an injunction (which is in force and effect and has not been modified or reversed on appeal) tolling or staying 30 the expiration of the grace period set forth in such Ground Lease with respect to such default, (ii) such injunction specifically provides that in addition to the tolling or stay describe in (i) above, such tolling or stay also applies to the Mortgagee for purposes of determining the duration and expiration of the periods during which the Mortgagee may exercise its rights under such Ground Lease (including without limitation, periods to cure lessee defaults and delivering a guarantee and the period during which the Mortgagee may elect to enter into a new lease thereunder), (iii) such injunction further provides that the tolling or stay under (i) and (ii) shall be effective until such time that the Mortgagee is personally served with notice of the expiration of such injunction and (iv) the Mortgagee is named as a party in any action or proceeding involving such injunction and therefore entitled to notice of any modification or termination thereof; and, if such injunction is issued, then so long as such injunction remains in force and effect and the preceding provisions of this Section 3.01(g) have been complied with, the grace period referred to in the third line of this subparagraph (g) shall be deemed to mean the grace period after giving effect to any such tolling or stay in (i) above; or (h) default by the Mortgagor under any of the terms of any Superior Mortgage which default results in the acceleration of the maturity of such Superior Mortgage and which shall not be fully cured or waived prior to the expiration of any grace period contained in such Superior Mortgage, unless prior to the expiration of such grace period, the Mortgagor gives the Mortgagee an Officers' Certificate and an Opinion of Counsel and a true copy of the injunction referred to below, which Certificate and Opinion shall state (i) that a court of competent jurisdiction has issued an injunction (which is in force and effect and has not been modified or reversed on appeal) tolling or staying the expiration of the grace period set forth in such Superior Mortgage with respect to such default and (ii) the Mortgagee is named a party in any action or proceeding relating to such injunction and therefore is entitled to notice of any modification or termination thereof; and if such injunction is issued, then so long as such injunction remains in force and effect, and the preceding provisions of this Section 3.01(h) have been complied with, the grace period referred to in the third line of this subparagraph (h) shall be deemed to mean the grace period after giving effect to any such tolling or stay; or 31 (i) any modification, amendment or supplement of any Ground Lease without the prior written consent of the Mortgage; or (j) any modification, amendment or supplement of any Superior Mortgage without the prior written consent of the Mortgagee, except to the extent that such modification, amendment or supplement is permitted by Section 5.22(b)(i) hereof; or (k) default in the performance, or breach, of any of the provisions of Article Four and the continuance of such default or breach for a period of 60 days after there has been given a written notice to the Mortgagor specifying that such notice is a "Notice of Default" hereunder; or (l) any representation or warranty of the Mortgagor set forth in this Mortgage or in any notice, certificate, demand or request delivered to the Mortgagee pursuant to this Mortgage shall prove to be incorrect as of the time when made and the facts constituting such incorrectness impairs the Mortgagee's security and such impairment continues for a period of 30 days after there has been given to the Mortgagor a written notice specifying that such notice is a "Notice of Default" hereunder, unless (i) such impairment is curable, but not susceptible of cure within such 30-day period (for reasons other than lack of funds), (ii) the Mortgagor gives an Officers' Certificate to the Mortgagee within such 30-day period stating (A) the applicability of the provisions of (i) to such impairment, (B) the Mortgagor's intention to remedy the same with reasonable diligence and (C) the steps which the Mortgagor has undertaken to remedy such default or breach and (iii) the Mortgagor delivers to the Mortgagee additional Officers' Certificates every 30 days thereafter updating the information contained in the certificate described in (ii), in which case such 30-day period shall be extended for such further period of time as may reasonably be required to cure the same, provided that the Mortgagor is then proceeding and thereafter continues to proceed to cure the same with reasonable diligence. Section 3.02. DEMAND UNDER NOTE. If an Event of Default occurs and is continuing, then the Mortgagee may declare the Outstanding Amount of the Note to be due and payable immediately, by a notice in writing to the Mortgagor and upon any such declaration such principal shall become immediately due and payable. Section 3.03. APPLICATION OF MONEYS RECEIVED BY MORTGAGEE. Any moneys received by the Mortgagee pursuant to 32 the provisions of this Article Three (including moneys received by the Trustee after any action or act by the Mortgagee under Section 3.10) shall be applied by the Mortgagee in accordance with the provisions of Section 7.06 of the Indenture. Section 3.04. RESTORATION OF RIGHTS AND REMEDIES. If the Mortgagee has instituted any proceeding to enforce any right or remedy under this Mortgage and such proceeding has been discontinued or abandoned for any reason or has been determined adversely to the Mortgagee, then and in every such case the Mortgagor and the Mortgagee shall, subject to any determination in such proceeding, be restored to its former position hereunder, and thereafter all rights and remedies of the Mortgagee shall continue as though no such proceeding had been instituted. Section 3.05. RIGHTS AND REMEDIES CUMULATIVE. No right or remedy herein conferred upon or reserved to the Mortgagee 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 3.06. DELAY OR OMISSION NOT WAIVER. No delay or omission of the Mortgagee to exercise any right or remedy accruing upon an 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 Three by law to the Mortgagee may be exercised, from time to time, and as often as may be deemed expedient, by the Mortgagee. Section 3.07. UNDERTAKING FOR COSTS. If any action or proceeding shall be commenced (including, without limitation, an action to foreclose this Mortgage or to collect the indebtedness secured hereby) to which action or proceeding the Mortgagee is made or becomes a party, or in which it becomes necessary in the opinion of the Mortgagee to defend or uphold the lien of this Mortgage, the Mortgagor shall pay to Mortgagee all expenses, including reasonable attorneys' fees and expenses, incurred by the Mortgagee in connection therewith, together with interest at the rate then payable on the Note, from the date of payment less the net amount received by the Mortgagee or the Trustee, as their interests may appear under any title insurance policy, and, until paid, all such expenses, together with interest as aforesaid, shall be a lien on the Trust Estate. 33 Section 3.08. WAIVER OF APPRAISEMENT AND OTHER LAWS. To the full extent that it may lawfully so agree, the Mortgagor will not at any time insist upon, plead, claim or take the benefit or advantage of, any appraisement, valuation, stay, extension or redemption law now or hereafter in force, in order to prevent or hinder the enforcement of this Mortgage or the absolute sale of the Trust Estate, or any part hereof, or the possession thereof by any purchaser at any sale under this Article Three; and the Mortgagor, for itself and all who may claim under it, so far as it or they now or hereafter may lawfully do so, hereby waives the benefit of all such laws. The Mortgagor, for itself and all who may claim under it, waives, to the extent that it may lawfully do so, all right to have the property in the Trust Estate marshalled upon any foreclosure hereof, and agrees that any court having jurisdiction to foreclose this Mortgage may order the sale of the Trust Estate as an entirety. If any law in this Section 3.08 referred to and now in force, of which the Mortgagor or its successor or successors might take advantage despite this Section 3.08, shall hereafter be repealed or cease to be in force, such law shall not thereafter be deemed to constitute any part of the contract herein contained or to preclude the application of this Section 3.08. Section 3.09. ENTRY. The Mortgagor agrees that upon the occurrence of an Event of Default the Mortgagor, upon demand of the Mortgagee during the continuance thereof, shall forthwith surrender to the Mortgagee the actual possession of, and it shall be lawful for the Mortgagee by such officers or agents as it may appoint to enter and take possession of, the Trust Estate (and the books and papers of the Mortgagor), and to hold, operate and manage the Trust Estate (including the making of all needful repairs, and such alterations, additions and improvements as the Mortgagee shall deem wise) and to receive the rents, issues, tolls, profits, revenues and other income thereof, and, after deducting the costs and expenses of entering, taking possession, holding, operating and managing the Trust Estate, as well as payments for taxes, insurance and other proper charges upon the Trust Estate and reasonable compensation to itself, its agents and counsel, to apply the same as provided in Section 3.03, PROVIDED, HOWEVER, that the Mortgagee's rights under this Section 3.09 shall be subject to the provisions of the New Jersey Casino Control Act and Section 3.14. Whenever all that is then due upon the Note and under any of the terms of this Mortgage shall have been paid and all defaults hereunder shall have been made good, the Mortgagee shall surrender possession to the Mortgagor. 34 Section 3.10. POWER OF SALE; SUITS FOR ENFORCEMENT. In case an Event of Default shall occur and be continuing, the Mortgagee, with or without entry, in its discretion may: (a) sell, subject to any mandatory requirements of applicable law, the Trust Estate as an entirety, or in such parcels, as the Mortgagee may determine, to the highest bidder at public auction at such place and at such time (which sale may be adjourned by the Mortgagee from time to time in its discretion by announcement at the time and place fixed for such sale, without further notice) and upon such terms as the Mortgagee may fix and briefly specify in a notice of sale to be published as required by law; or (b) proceed to protect and enforce its rights under this Mortgage by sale pursuant to judicial proceedings or by a suit, action or proceeding in equity or at law or otherwise, whether for the specific performance of any covenant or agreement contained in this Mortgage or in aid of the execution of any power granted in this Mortgage or for the foreclosure of this Mortgage or for the enforcement of any other legal, equitable or other remedy, as the Mortgagee, being advised by counsel, shall deem most effectual to protect and enforce any of the rights of the Mortgagee; the failure to join tenants shall not be asserted as a defense to any foreclosure or proceeding to enforce the rights of the Mortgagee. Section 3.11. INCIDENT OF SALE. Upon any sale of any of the Trust Estate, whether made under the power of sale hereby given or pursuant to judicial proceedings, to the extent permitted by law: (a) the principal of and accrued interest on the Note, if not previously due, shall at once become and be immediately due and payable; (b) subject to the provisions of Section 3.14 and the receipt of any required prior approvals of the New Jersey Casino Control Commission, the Mortgagee may bid for and purchase the property offered for sale, and upon compliance with the terms of sale may hold, retain and possess and dispose of such property, without further accountability, and may, in paying the purchase money therefor, delivery any notes or claims for interest thereon in lieu of cash to the amount which shall, upon distribution of the net proceeds of such sale, be payable thereon, and such notes or claims for interest thereon, in case the amounts so payable thereon shall be less than the amount due thereon, 35 shall be returned to the holders thereof after being appropriately stamped to show partial payment; (c) the Mortgagee may make and deliver to the purchaser or purchasers a good and sufficient deed, bill of sale and instrument of assignment and transfer of the property sold; (d) the Mortgagee is hereby irrevocably appointed the true and lawful attorney of the Mortgagor, in its name and stead, to make all necessary deeds, bills of sale and instruments of assignment and transfer of the property thus sold; and for that purpose it may execute all necessary deeds, bills of sale and instruments of assignment and transfer, and may substitute one or more persons, firms or corporations with like power, the Mortgagor hereby ratifying and confirming all that its attorney or such substitute or substitutes shall lawfully do by virtue hereof; but if so requested by the Mortgagee or by any purchaser, the Mortgagor shall ratify and confirm any such sale or transfer by executing and delivering to the Mortgagee or to such purchaser or purchasers all proper deeds, bills of sale, instruments of assignment and transfer and releases as may be designated in any such request; (e) all right, title, interest, claim and demand whatsoever, either at law or in equity or otherwise, of the Mortgagor of, in and to the property so sold shall be divested and such sale shall be a perpetual bar both at law and in equity against the Mortgagor, its successors and assigns, and against any and all persons claiming or who may claim the property sold or any part thereof from, through or under the Mortgagor, its successors and assigns; and (f) the receipt of the Mortgagee or of the officer making such sale shall be a sufficient discharge to the purchaser or purchasers at such sale for his or their purchase money and such purchaser or purchasers and his or their assigns or personal representatives shall not, after paying such purchase money and receiving such receipt, be obliged to see to the application of such purchase money, or be in anywise answerable for any loss, misapplication or non-application thereof. Section 3.12. RECEIVER. Upon the occurrence of an Event of Default and commencement of judicial proceedings by the Mortgagee to enforce any right under this Mortgage, the Mortgagee shall be entitled, as against the Mortgagor, without notice or demand and without regard to the adequacy of the security for the Note or the solvency of the 36 Mortgagor, to the appointment of a receiver of the Trust Estate, and of the rents, issues, profits, revenues and other income thereof, PROVIDED, HOWEVER, that the Mortgagee's rights under this Section 3.12 shall be subject to the provisions of the New Jersey Casino Control Act and Section 3.14 hereof. Section 3.13. SUITS TO PROTECT THE TRUST ESTATE. Upon 5 days' prior written notice to the Mortgagor (or such shorter period or without notice if deemed necessary and appropriate by the Mortgagee), the Mortgagee shall have power to institute and maintain such proceedings as it may deem necessary and appropriate to prevent any impairment of the Trust Estate by any acts which may be unlawful or in violation of this Mortgage and to protect its interests in the Trust Estate and in the rents, issues, profits, revenues and other income arising therefrom, including power to institute and maintain proceedings to restrain the enforcement of or compliance with any 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 hereunder or be materially prejudicial to the interests of the Mortgagee. Section 3.14. MANAGEMENT OF CASINO-HOTEL. Notwithstanding any provision of this Article Three to the contrary, following an Event of Default and the taking of possession of the Trust Estate or any part thereof by the Mortgagee and/or the appointment of receiver of the Trust Estate or any part thereof, the Mortgagee or any such receiver shall be authorized, in addition to the rights and powers of the Mortgagee and such receiver set forth elsewhere in this Mortgage, to retain one or more experienced operators of hotels and/or casinos to manage the Casino-Hotel, PROVIDED that any such operator shall have all necessary legal qualifications, including all Permits, to manage the Casino-Hotel. ARTICLE FOUR CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE Section 4.01. CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER ONLY ON CERTAIN TERMS. The Mortgagor shall comply with all provisions applicable to the Mortgagor in Article Ten of the Indenture. Section 4.02. SUCCESSOR ENTITY SUBSTITUTED. Upon any consolidation or combination or any conveyance or transfer of the Trust Estate or any portion thereof in accordance with Section 10.01 of the Indenture, the 37 successor entity formed by such consolidation or into which the Mortgagor is combined or to which such conveyance or transfer is made shall succeed to, and be substituted for, and may exercise every right and power of, the Mortgagor under this Mortgage with the same effect as if such successor entity had been named as the Mortgagor herein; PROVIDED, HOWEVER, that no such conveyance or transfer of the Trust Estate substantially as an entirety, unless such conveyance or transfer is in compliance with the provisions of Article Ten of the Indenture, shall have the effect of releasing the Person named as "the Mortgagor" in the first paragraph of this instrument or any successor entity which shall theretofore have become such in the manner prescribed in such Article Ten from its liability as obligor or maker of the Note. Section 4.03. LIMITATION ON SALES OF TRUST ESTATE. Except as otherwise expressly permitted by this Mortgage or the Indenture, the Mortgagor shall not sell, assign, lease, sublease, hypothecate, pledge, mortgage or otherwise transfer all or any part of the Trust Estate or any interest therein (including without limitation any interest in the Ground Leases). Without limiting the generality of the foregoing, the Mortgagor shall not separate, or attempt to separate, its ownership of its interest in the Ground Leases from its ownership of the buildings constituting the Casino-Hotel or any part thereof. ARTICLE FIVE COVENANTS AND REPRESENTATIONS OF MORTGAGOR Section 5.01. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST. The Mortgagor will duly and punctually pay the principal of (and premium, if any) and interest on the Note in accordance with the terms of the Note and this Mortgage. Section 5.02. FF&E FINANCING AGREEMENTS. The Mortgagor covenants and agrees to comply with all of the terms and conditions set forth in any FF&E Financing Agreements before the expiration of any applicable notice and cure periods contained in the FF&E Financing Agreements. Section 5.03. LIMITATIONS ON LIENS. (a) The Mortgagor will not create, incur, suffer or permit to be created or incurred or to exist any mortgage, lien, charge or encumbrance on or pledge of any of the Trust Estate, other than (i) Permitted Encumbrances, (ii) liens on the Trust Estate in connection with indebtedness permitted by clauses (i), (ii), (iii), (iv) or (v) of Section 12.08(a) of the Indenture, and (iii) a building contract or a notice of intention filed by a 38 mechanic, materialman or laborer under the New Jersey lien law. Without limiting the generality of the foregoing sentence but notwithstanding the provisions of the foregoing sentence, the Mortgagor shall not be deemed to have breached the provisions of the foregoing sentence by virtue of the existence of a lien for Impositions or mechanics liens so long as the Mortgagor is in good faith contesting the validity of the same in accordance with the provisions of Section 5.09 to the extent that the matters described in (i) and (ii) do not constitute a default under any Ground Lease or Superior Mortgage. (b) Mortgagee acknowledges that, contemporaneously with the execution and delivery of this Mortgage, it has assigned this Mortgage to the Trustee and that the Trustee is also the mortgagee under the Guaranty Mortgage, which Guaranty Mortgage creates a lien upon the same Trust Estate PARI PASSU with the lien of this Mortgage. Mortgagee further acknowledges and agrees that whenever it is provided in the Guaranty Mortgage that the Mortgagor shall deliver any notice or document, or is require to make any payment thereunder, the delivery of such notice or document or the making of such payment pursuant to the terms of the Guaranty Mortgage shall also constitute the delivery of such notice or document or the making of such payment in satisfaction of the terms, conditions and provisions of this Mortgage to the same extent as the same constitutes satisfaction of the terms, conditions and provisions of the Guaranty Mortgage. Section 5.04. [Reserved] Section 5.05. ACTIONS AND PROCEEDINGS. The Mortgagor hereby acknowledges the right of the Mortgagee, in the name of and on behalf of the Mortgagor, (a) to appear in and defend any action or proceeding brought with respect to the Trust Estate or any part thereof and (b) upon 5 days' prior written notice to the Mortgagor (or such shorter period or without notice if deemed necessary and appropriate by the Mortgage), to commence any action or proceeding to protect the interest of the Mortgagee in the Trust Estate. Section 5.06. WARRANTY OF LEASEHOLD ESTATE AND TITLE. The Mortgagor represents and warrants that as of the date hereof: (a) it is duly authorized under the laws of the State of New Jersey and all other applicable laws to execute and deliver this Mortgage, and all corporate action on its part necessary for the valid execution and delivery of this Mortgage has been duly and effectively taken; 39 (b) it is the lawful owner and is lawfully seized and possessed of the Owned Land and all buildings and improvements thereon, free and clear of all liens, charges or encumbrances, other than the lien of the Mortgage Documents, any Working Capital Facility Lien and Existing Encumbrances; (c) it is the holder of and has good and marketable title to the leasehold interests and leasehold estates under the Ground Leases and to the Ground Leases, subject to no lien, encumbrance or charge other than the lien of the Mortgage Documents, any Working Capital Facility Lien and Existing Encumbrances; (d) (i) the Ground Leases are valid and subsisting demises of the Leased Land for the terms therein set forth, (ii) there are no defaults thereunder by any Lessor or the lessee as to which written notice has been given to or by the lessee, (iii) the Mortgagor has delivered true and correct copies of the Ground Leases and all modifications, amendments and supplements thereto, and (iv) each of the Ground Leases is in full force and effect and has not been modified, amended or supplemented, except as described on Schedule 2; (e) it has good title to the Operating Assets, subject to no lien, encumbrance or charge, other than the lien of the Mortgage Documents, any Working Capital Facility Lien and Existing Encumbrances; and (f) the Mortgagor has good and lawful right and authority to execute this Mortgage and to grant, bargain, sell, alien, convey, assign, transfer, hypothecate, pledge, mortgage and confirm the Trust Estate as provided herein (including without limitation with respect to the Operating Assets and the Ground Leases, without the consent of any third party, other than governmental authorities but any applicable or necessary consent or approval of any such governmental authority has been given or waived at or prior to the execution and delivery of this Mortgage), and this Mortgage constitutes a valid second mortgage lien and second priority security interest in the Trust Estate PARI PASSU with the lien of the Guaranty Mortgage, subject only to Working Capital Facility Liens and Existing Encumbrances. The Mortgagor hereby does and will forever warrant and defend (x) the title to Trust Estate (including without limitation, its leasehold estates under the lessee's interests in the Ground Leases) (subject to Permitted Encumbrances) and (y) the priority of the lien of this 40 Mortgage (subject to Permitted Encumbrances other than Restricted Encumbrances), against the claims and demands of all persons whomsoever, at the Mortgagor's sole cost and expense. Section 5.07. FURTHER ASSURANCES; RECORDING. The Mortgagor will, as provided in Section 5.13, from time to time subject its right, title an interest under all Leases to the lien of this Mortgage. The Mortgagor will cause this instrument and all other instruments of further assurance, including all financing statements and continuation statements covering security interests in personal property, to be promptly recorded, registered and filed, and at all times to be kept recorded, registered and filed, and will execute and file such financing statements and cause to be issued and filed such continuation statements, all in such manner and in such places as may be required by law or as requested by the Mortgagee to fully preserve and protect the rights of the Mortgagee as a secured party under the Uniform Commercial Code to all property comprising the Trust Estate (to the extent a grant of a security interest therein is governed by the Uniform Commercial Code) and to perfect, preserve and protect the lien of this Mortgage as a valid mortgage lien of record and a valid security interest on the Trust Estate subject to Permitted Encumbrances (other than Restricted Encumbrances). The Mortgagor will pay all filing or recording fees, and all expenses incident to the execution and delivery of this Mortgage, and any instrument of further assurance, and all federal, state, county and municipal stamp taxes and other taxes, duties, mposts, assessments and charges arising out of or in connection with the execution and delivery of the Note, this Mortgage, any financing statement or continuation statement with respect to the personal property constituting part of the Trust Estate or any instrument of further assurance. Section 5.08. PAYMENT OF TAXES AND CERTAIN CLAIMS; MAINTENANCE OF PROPERTIES; COMPLIANCE WITH LEGAL REQUIREMENTS AND INSURANCE REQUIREMENTS. The Mortgagor will: (a) subject to the provisions of Section 5.09 relating to contests, pay or cause to be paid promptly (or when installments of the same shall become due and payable, if, by law or by agreement or arrangement with the applicable governmental agency or authority, the same may be paid in installments) before any fine, penalty, interest or cost may be added for nonpayment (but no later than when the same are payable by the Mortgagor dpursuant to any Superior Instrument 41 Requirement), all taxes (including, without limitation, real estate taxes, personal or other property taxes and all sales, value added, use and similar taxes), assessments (including, without limitation, all assessments for public improvements or benefits, whether or not commenced or completed prior to the date hereof and whether or not to be completed prior to the satisfaction of this Mortgage), water, sewer or other rents, rates and charges, excises, levies, license fees, permit fees, inspection fees and other authorization fees and other charges, in each case whether general or special, ordinary or extraordinary, or foreseen or unforeseen, of every character (including all interest, additions to tax and penalties thereon), that may be assessed, levied, confirmed or imposed on or in respect of or be a lien upon (1) the Trust Estate (including without limitation the Leased Land) or any part thereof or any rent therefrom or any estate, right or interest therein, or (2) any acquisition, occupancy, use, leasing, or possession of or activity conducted on the real property or any part thereof included in the Trust Estate or any gross receipts thereof or of the rent therefrom (all of the foregoing being referred to collectively as "Impositions"). Notwithstanding the foregoing or any other provision of this Mortgage, the Mortgagor shall not be required to pay any income, profits or revenue tax upon the income of the Mortgagee, the Trustee or any Noteholder nor any franchise, excise, corporate, estate, inheritance, succession, capital levy or transfer tax of the Mortgagee, the Trustee or the Noteholder nor any interest, additions to tax or penalties in respect thereof, unless such tax is imposed, levied or assessed n substitution for any Impositions that the Mortgagor is required to pay pursuant to this Section 5.08. The Mortgagor will deliver to the Mortgagee official receipts or other proof evidencing payments of any Impositions in accordance with the requirements of this Section 5.08. The Mortgagor shall not be entitled to any credit for taxes or assessments paid against the Note; (b) except for such property which the Mortgagor may dispose of or replace pursuant to Section 2.02, maintain and keep all its properties used or useful in the conduct of its business (other than obsolete equipment), including, without limitation, the Casino-Hotel and all Tangible Personal Property, in such good repair, working order and condition, except for reasonable wear and use, and make or cause to be made all such needful and proper repairs, renewals and replacements thereto consistent with the standards of other casino-hotels in Atlantic City, New Jersey; 42 (c) occupy and continuously operate the Casino-Hotel and keep the Casino-Hotel supplied with Tangible Personal Property, all in a manner consistent with the standards of other casino-hotels in Atlantic City, New Jersey (provided that nothing contained in this Section 5.08(c) shall be deemed to reduce the time period set forth in Section 3.01(f)); (d) subject to the provisions of Section 5.09 relating to contests, the Mortgagor at its sole expense will timely (1) comply with all Legal Requirements and Insurance Requirements, whether or not compliance therewith shall require structural changes in the buildings and improvements included in the Trust Estate or interfere with the use and enjoyment of the Trust Estate or any part thereof, (2) procure, maintain and comply with all permits and other authorizations required for (i) the use of the Casino as a gaming and gambling facility, (ii) the on-premises consumption of alcoholic beverages at the Casino-Hotel and (iii) any other use of the Trust Estate or any part thereof then being made, and for the proper erection, installation, operation and maintenance of the improvements or any part thereof, and (3) comply with any instruments of record at the time in force affecting the Trust Estate or any part thereof, if the failure to comply with the same would impair the Mortgagee's security hereunder. Without limiting the generality of the foregoing, the Mortgagor represents and warrants that at the time of the execution of this Mortgage, the Mortgagor is in compliance with the requirements of clauses (1), (2) and (3); (e) in the event of the passage after the date of this Mortgage of any law of the State of New Jersey, or any other governmental entity, changing in any way the laws now in force for the taxation of mortgages, or debts secured thereby, for state or local purposes, or the manner of the operation of any such taxes, so as to affect the interest of the Mortgagee, then and in such event, the Mortgagor shall bear and pay the full amount of such taxes, provided that if for any reason payment by the Mortgagor of any such new or additional taxes would be unlawful or if the payment thereof would constitute usury or render the indebtedness secured hereby wholly or partially usurious under any of the terms or provisions of the Note, or this Mortgage, or otherwise, the Mortgagee may, at the Mortgagee's option, declare the whole sum secured by this Mortgage, with interest thereon, to be due and payable 90 days after notice of election thereof has been given by the Mortgagee, or the Mortgagee may, at the Mortgagee's option, pay that amount or portion of such taxes as renders the loan or 43 indebtedness secured hereby unlawful or usurious, in which event the Mortgagor shall concurrently therewith pay the remaining lawful and nonusurious portion or balance of such taxes. Section 5.09. PERMITTED CONTESTS. The Mortgagor may, at its sole expense, contest by appropriate legal proceedings conducted in good faith and with due diligence, the amount or validity or application, in whole or in part of any Imposition or lien therefor or any Legal Requirement or Insurance Requirement or the application of any instrument of record affecting the Trust Estate or any part thereof or any claims of mechanics, materialmen, suppliers, or vendors or lien therefore, and may withhold payment of the same pending such proceedings if permitted by law, or make payment under protest, or defer compliance with any such Legal Requirement, any such Insurance Requirement or the terms of any such instrument, and the same shall not be a Default hereunder, provided that (a) in the case of any Impositions or lien therefor or any claims of mechanics, materialmen, suppliers or vendors or lien therefor, such proceedings shall suspend the collection thereof from each of the Mortgagor, the Mortgagee, the Trustee, the Noteholder and the Trust Estate, (b) neither the Trust Estate nor any interest therein would be in any danger of being sold, forfeited, or lost, (c) such action would not result in or constitute a default under any Ground Lease or Superior Mortgage, (d) in the case of a Legal Requirement, neither the Noteholder nor the Mortgagee shall be in any danger of any civil or any criminal liability, and the failure of the Mortgagor to comply with such Legal Requirement shall not affect the continuance in good standing of any Permit or result in the suspension, termination, non-renewal or material adverse modification of any permit, and (e) in the case of an Insurance Requirement, the failure of the Mortgagor to comply therewith shall not affect the validity of any insurance required to be maintained by the Mortgagor hereunder. Section 5.10. MECHANICS' AND OTHER LIENS. Without limiting the generality of the first sentence of Section 5.03 and notwithstanding the provisions of Section 5.03(a)(ii), the Mortgagor will cause to be removed, either by payment, or bonding or otherwise, all claims and demands of mechanics, materialmen, laborers, and others which, if unpaid, might result in, or permit the creation of, a lien on the Premises and/or Trust Estate or any part thereof, or on the revenues, rents, issues, income and profits arising therefrom and in general will do or cause to be done everything necessary so that the lien hereof shall be fully preserved, at the cost of the Mortgagor, without expense to the Mortgagee. 44 Section 5.11. INSURANCE. (a) The Mortgagor will, at its expense, maintain with Insurers: (1) insurance with respect to the Mortgagor's insurable properties constituting a part of the Trust Estate against loss or damage by fire, lightning, and other risks from time to time included under "all-risk" policies and against loss or damage by sprinkler leakage, water damage, collapse, malicious mischief and explosion in respect of any steam and pressure boiler and similar apparatus located on such insurable properties, in amounts at all times sufficient to prevent the Mortgagor from becoming a coinsurer within the terms of the applicable policies, but in any event such insurance shall be maintained in such insurable amounts not less than the greatest of the following (hereinafter referred to as the "Insurance Amount"): (i) 100% of the then full insurable value of such insurable properties, the term "full insurable value" to mean the actual replacement cost (excluding the costs of foundation, footing, excavation, paving, landscaping and other similar, non-insurable improvements) determined from time to time (but not less frequently than once in any 36 calendar months), by an Architect, contractor, appraiser, or an Insurer, or (ii) the amount required to be maintained pursuant to the Superior Instrument Requirements; (2) war risk insurance as and when such insurance is obtainable from the United States of America or any agency thereof as promptly as reasonably practicable after the same becomes so obtainable, in an amount not less than the Insurance Amount, or in such lesser amount as may then be so obtainable; (3) public liability, including personal injury and property damage and comprehensive general liability connected with the possession, use, leasing, operation or condition of such insurable properties in such amounts as, in the Mortgagor's judgment, are prudent, considering the cost of such insurance, for personal injury and property damage with respect to any one occurrence, which may be under an umbrella policy. Anything contained in this clause (3) to the contrary notwithstanding, the Superior Instrument Requirements with respect to the kinds and amount of insurance described in this clause (3) shall be satisfied by the Mortgagor; 45 (4) appropriate workers' compensation insurance with respect to any work (to the extent the risks to be covered thereby are not already covered by other policies of insurance maintained by the Mortgagor) on or about such insurable properties; (5) business interruption insurance covering not less than 12 months of loss, provided that at any time that the Mortgagor is renewing any policy for such insurance or taking out any new or replacement such policy covering a period of less than 12 months, the Mortgagor shall deliver to the Mortgagee an Officers' Certificate certifying that the period of coverage to be maintained by the Mortgagor under such policy is the maximum that can be maintained at rates determined by the Mortgagor to be reasonable for such coverage; (6) to the extent available, flood insurance in an amount not less than the Insurance Amount, or such lesser amount as may then be so obtainable; and (7) such other insurance with respect to such insurable properties against loss or damage of the kinds (i) from time to time customarily insured against by persons owning or using casino-hotels of comparable size in the boardwalk area of Atlantic City, New Jersey and (ii) required to be maintained pursuant to the Superior Instrument Requirements. Notwithstanding the foregoing, to the extent permitted by Superior Instrument Requirements, (i) the Mortgagor shall be permitted to maintain a deductible with respect to the insurance policies described in clauses (1), (2), (6) and (7) in an amount not to exceed (x) for the twelve month period commencing the date hereof, $100,000 with respect to the insurance policies described in clause (1), (2), (6) and (7) thereafter, the customary deductible (if any) with respect to the insurance maintained by casino-hotels of a similar size and value in Atlantic City, New Jersey (but in no event more than $1,000,000, (ii) the Mortgagor shall be permitted to maintain a $200,000 self insured retention under the general liability policy described in clause (3) and a deductible with respect to the other insurance policies described in clause (3) in an amount not to exceed the amount of deductible as is customarily maintained by casino-hotels of similar size in Atlantic City, New Jersey, (iii) the Mortgagor shall not reduce its insurance coverage for the matters described in clause (3) (which for purposes of this paragraph means a reduction in single limits or an increase in deductible) unless and until the Mortgagor delivers to the Mortgagee an Officers' Certificate certifying (w) that the coverage the Mortgagor was theretofore maintaining cannot be maintained atrates determined by the Mortgagor to be reasonable for such coverage, (x) the amount of the proposed reduction, (y) 46 the premium for the existing and the proposed reduced coverage, and (z) that the proposed deductible satisfied the criteria set forth in this clause (iii), and (iv) the Mortgagor shall be permitted to maintain a deductible with respect to the insurance policies described in clause (5) in the forms of and in an amount not to exceed the amount of deductible as is customarily maintained by casino-hotels of similar size in Atlantic City, New Jersey. (b) Each policy of insurance maintained by the Mortgagor pursuant to Subsection (a) of this Section 5.11 shall, (1) except in the case of workers' compensation insurance, name as additional insureds the Mortgagee and, to the extent required by the Superior Instrument Requirements, the Lessors and the holders of the Superior Mortgages, (2) provide that all insurance proceeds for losses, except in the case of public liability insurance and workers' compensation insurance or as otherwise provided in Subsections (d), (e) and (f) of this Section 5.11, be payable solely to the Mortgagee or such other party as is required to receive such proceeds under a Superior Mortgage, (3) except in the case of workers' compensation, include effective waivers (whether under the terms of any such policy or otherwise) by the insurer of all claims for insurance premiums against all lost payees and named insureds (other than the Mortgagor) and all rights of subrogation against any named insured, (4) except in the case of public liability and workers' compensation insurance, provide that any losses shall be payable notwithstanding (i) any act, failure to act, negligence of, or violation or breach of warranties, declarations or conditions contained in such policy by the Mortgagor or the Mortgagee or any other named insured or loss payee (including, without limitation, with respect to the Released Fee Land, the holders of any After-Acquired Fee Mortgages), (ii) the occupation or use of the insurable properties for purposes more hazardous than permitted by the terms of the policy, (iii) any foreclosure or other proceeding or notice of sale relating to the insurable properties or (iv) any change in the title to or ownership or possession of the insurable properties, (5) contain a non-contributory mortgagee clause in favor of the Mortgagee, and (6) provide that if all or any part of such policy is cancelled, terminated or expires, the insurer will forthwith give notice thereof to each named insured an loss payee and that no cancellation, reduction in amount or material change in coverage thereof shall be effective until at least 30 days after receipt by each named insured and loss payee of written notice thereof. (c) The Mortgagor will deliver to the Mortgagee, (1) duplicate originals of all insurance policies that the Mortgagor is required to maintain pursuant to this Section 5.11 and (2) within 30 days after each reduction in insurance required to be maintained by the Mortgagor 47 hereunder, an Officers' Certificate setting forth the articulars as to all such insurance policies and certifying that the same comply with the requirements of this Section 5.11, that all premiums or installments thereof then due thereon have been paid and that the same are in full force and effect. The Mortgagee shall not be responsible for effecting or renewing any insurance or for the responsibility or solvency of the insurers. (d) The Mortgagor shall give written notice to the Mortgagee immediately upon obtaining knowledge of any Casualty which (x) results in damage, loss or destruction in an amount in excess of $5,000,000 to any buildings or improvements on the Premises and/or any Tangible Personal Property or (y) pursuant to any Superior Instrument Requirement, would require the deposit of insurance proceeds with the Depositary, or action or proceeding with respect thereto. Whenever the Superior Instrument Requirements require or permit the selection of the Depositary by the Mortgagor, the Mortgagor shall select the Insurance Trustee as the Depositary. Within 30 days after any Casualty which results in any damage, loss or destruction in an amount in excess of $10,000,000 to any buildings or improvements of the Premises and/or any Tangible Personal Property, the Mortgagor shall deliver to the Mortgagee a certificate of an Architect stating whether, in such Architect's opinion, applicable Legal Requirements permit the Restoration of such buildings and improvements for the same uses and to the same size and quality in all material respects, as existed immediately prior to the Casualty (and if such certificate states the Legal Requirements do not permit such Restoration, such certificate shall describe the manner closest approximating such criteria to which the buildings and improvements could be so restored and shall be accompanied by a Certificate of Appraised Value dated not more than 10 days prior to delivery setting forth the Appraised Value immediately prior to the Casualty and the estimated Appraised Value immediately after the Restoration). If the Mortgagor is required to deliver such Certificates of Appraised Value and if based on such Certificates of Appraised Value immediately after Restoration, the aggregate Outstanding Amount of First Mortgage Debt immediately after such Restoration shall exceed the greater of (i) 66 2/3% of the Appraised Value immediately after such Restoration or (ii) the quotient of the Outstanding Amount of First Mortgage Debt immediately prior to such Casualty divided by the Appraised Value immediately prior to the Casualty multiplied by the Appraised Value immediately after such Restoration, then the proceeds of any insurance shall, at the election of Mortgagee, either be applied to Restoration as set forth in Subsections (e), (h) and (i) below) or paid and delivered to the Mortgagee to the extent of the then Outstanding Amount of the Notes and any other interest or other sums due 48 hereunder or thereunder to be applied to the satisfaction of the Mortgage to the extent proceeds are available for such purpose and provided that no additional sums are due to the Trustee or the Noteholders under the Notes or the Indenture, the balance of any net insurance proceeds shall be paid to the Mortgagor. Notwithstanding the foregoing sentence, if such Certificates of Appraised Values indicates that the Outstanding Amount of First Mortgage Debt immediately after such Restoration exceeds the greater of the two amounts determined pursuant to subclauses (i) and (ii) above, the proceeds of insurance will be made available for Restoration (subject to paragraphs (e), (h) and (i) below) if the Mortgagor obtains an irrevocable commitment from a nationally recognized financial institution having a combined capital and surplus of at least $100,000,000, to supply, upon an acceleration under this Mortgage as a result of an Event of Default, funds to the Mortgagor as additions to capital in an amount equal to the Outstanding Amount of First Mortgage Debt in excess of the Appraised Value necessary to be paid down so that the Outstanding Amount of First Mortgage Debt will not exceed either of the two amounts determined pursuant to such clauses (i) and (ii), PROVIDED that such commitment may only be released if, upon an Appraisal at any time following completion of such Restoration, the aggregate Outstanding Amount of the First Mortgage Debt does not exceed 66-2/3% of the Appraised Value. (e) Subject to the provisions of Subsection (d) above, in case a Casualty occurs, the following shall apply: (1) if the cost of Restoration (as hereinafter defined) does not exceed the sum of $10,000,000, the net insurance proceeds shall be paid by the Mortgagee to the Mortgagor (unless the Superior Instrument Requirements provide that the same shall be paid to the Depositary); (2) if the cost of Restoration is $10,000,000 or more or if the Superior Instrument Requirements provide that the same shall be paid to the Depositary, the net insurance proceeds shall be paid by the Mortgagee to the Insurance Trustee (or other Depositary required by the Superior Instrument Requirements, provided that such Depositary holds such proceeds in trust for purposes of paying the costs of Restoration); (3) the Mortgagor shall commence with reasonable promptness under the circumstances and thereafter with due diligence proceed to perform and complete in a good and workmanlike manner the restoration, repair, replacement or rebuilding of the damage or destruction resulting from the Casualty (all of which restoration, repair, replacement or rebuilding are referred to as 49 the "Restoration") in accordance with the plans and specifications submitted to the Insurance Trustee, in conformance with all Legal Requirements and Superior Instrument Requirements, and in accordance with the further provisions of this Subsection (e), regardless of the extent of any such Casualty and whether or not net insurance proceeds, if any, shall be available or, if available, shall be sufficient, for the purpose of the Restoration (provided, however, that if the Mortgagor does not receive any net insurance proceeds within 30 days after any Casualty because the adjustment of the loss has not yet occurred, then the obligation of the Mortgagor to commence such Restoration shall be deferred until such proceeds are made available to the Mortgagor, provided that (i) Mortgagor delivers to the Mortgagee an Officer's Certificate certifying that the Mortgagor is diligently and continuously adjusting such loss with the Insurer, (ii) the Mortgagor delivers to the Mortgagee an Officers' Certificate within such 30-day period requesting the extension of such period, estimating the date on which such proceeds will be available and describing the Mortgagor's efforts to adjust such loss and certifying that such extension does not constitute a default or a breach of any of the provisions of any of the Ground Leases (or if so, such default or breach has been waived) and (iii) the Mortgagor delivers to the Mortgagee additional Officers' Certificates every 30 days thereafter updating the information contained in the certificate described in Clause (ii)). All Restoration work shall be performed in accordance with the applicable provisions of Section 5.12 and in conformance with all Superior Instrument Requirements, Legal Requirements and Insurance Requirements and, prior to commencing any Restoration, the Mortgagor shall obtain all Permits necessary in connection therewith, and shall obtain, and keep in full force and effect until the completion of such Restoration, such additional insurance as the Insurance Trustee and Superior Instrument Requirements may require. The plans and specifications for the Restoration shall be accompanied by a certificate of the Mortgagor and an Opinion of Counsel to the effect that upon the completion of the Restoration pursuant to the plans and specifications the Premises, and all buildings and improvements, thereon will comply with all superior Instrument Requirements, Legal Requirements and Insurance Requirements. Notwithstanding anything in this Section 5.11 to the contrary, if such Casualty is in an amount less than $5,000,000, the Mortgagor shall not be required to perform and complete such Restoration (unless the performance and completion of the Restoration is necessary in order for the Mortgagor to be in compliance with any term, provision or condition of 50 this Mortgage (other than this Section 5.11(e)) or any Superior Instrument Requirements; (4) Any insurance proceeds which the Mortgagor receives, shall be held by the Mortgagor in trust for the purpose of paying the cost of the Restoration, except as otherwise provided herein; (5) Any net insurance proceeds that the Insurance Trustee holds pursuant to this Subsection (e), shall be deposited in an interest-bearing investment reasonably designate by Mortgagor (to the extent the Mortgagor is permitted to designate such investment under the Superior Instrument Requirements) (and the interest thereon shall be added to such proceeds) and shall be paid by the Insurance Trustee in reimburse the Mortgagor for, or to make payment for, the Restoration, after the Insurance Trustee deducts therefrom the amount of any reasonable costs and expenses incurred in connection with the performance of its obligations under this Section 5.11. The Insurance Trustee shall make such payments not more frequently than once every 30 days upon the written request of the Mortgagor (unless more frequent payments are required by Superior Instrument Requirements), by paying to the Mortgagor or the persons named in the certificate described in Clause (6) of this Subsection (e) the respective amounts stated in such certificate from time to time as the Restoration progresses, provided the Mortgagor has complied with the requirements of this Subsection (e) and such payment is permitted by an applicable Superior Instrument Requirements. The Mortgagor's written request shall be accompanied by (i) the certificate described in Clause (6) of this Subsection (e) and (ii) a title company or official search, or other evidence reasonably acceptable to the Insurance Trustee, showing that there have not been filed with respect to the Premises, any vendor's, contractor's mechanic's, laborer's or materialman's statutory or similar lien which has not been discharged of record (or bonded against or secured by other security) or any other encumbrance irrespective of its priority (other than Permitted Encumbrances). (6) The certificate required by Clause (5) of this Subsection (e) shall (A) be an Officers' Certificate, countersigned by the Architect in charge of the Restoration with respect to the matters described in (i) and (v) below, (B) be dated not more than 10 days prior to such request and (C) set forth (in addition to any other requirements contained in any applicable Superior Instrument Requirements) that: 51 (i) all of the Restoration work theretofore performed is in substantial compliance with the plans and specifications theretofore submitted to the Insurance Trustee and in compliance with all Superior Instrument Requirements, Legal Requirements and Insurance Requirements; (ii) the sum then requested either has been paid by the Mortgagor or is justly due to contractors, subcontractors, materialmen, engineers, architects or other persons who have rendered services or furnished or contracted to deliver materials for the Restoration therein specified, and the names and addresses of such persons, a brief description of such services and materials and the several amounts so paid or due to each of such persons in respect thereof; (iii) no part of the amount requested has been or is the basis in any pervious or then pending request for the withdrawal of net insurance proceeds, and that the sum then requested does not exceed the value of the services and materials described in the certificate; (iv) except for the amount, if any, stated pursuant to Subclause (ii) of this Clause (6) in such certificate to be due for services or materials, and except for amounts in dispute and/or customary retainages, there is no outstanding indebtedness known to the person signing such certificate, after due inquiry, which is then due for labor, wages, materials, supplies or services in connection with such Restoration; and (v) the remaining cost, as estimated by the persons signing such certificate, of the Restoration in order to complete the same does not exceed the net insurance proceeds remaining in the hands of Insurance Trustee after payment of the sum requested in such certificate or if such estimated cost does exceed such insurance proceeds such certificate shall state the amount of any such deficiency. If the certificate states that such deficiency will exist, the Mortgagor shall deliver the amount of such deficiency in cash or cash equivalent to the Insurance Trustee simultaneously with the delivery of such certificate, which amount shall be deemed insurance proceeds for purposes of this Section 5.11(e); and 52 (7) If net insurance proceeds shall be insufficient to pay the entire cost of the Restoration, then, after completion of the Restoration, the Mortgagor shall pay the deficiency. If all or any part of the net insurance proceeds are not used for the restoration in accordance with this Subsection (e) (because such proceeds exceed the amount required to complete the Restoration), then upon completion of the Restoration in accordance with this Subsection (e), such amount not so used, if held by the Insurance Trustee, shall be paid to the Mortgagor (if permitted by Superior Instrument Requirements). (f) Provided that no Event of Default has occurred and is continuing, all net business interruption insurance proceeds shall be paid to the Mortgagor, to be segregated from the other funds of Mortgagor and held in trust by Mortgagor for the following purposes and in the following order of priority: (i) for the payment of Impositions and amounts due under the Ground Leases and Superior Mortgages; (ii) for debt service for the estimated period of Restoration (for purposes of this Section 5.11(f), interest and principal payments due on any payment date under the Note will deemed to accrue in equal daily installments beginning the day after the immediately preceding payment date and ending on such payment date); and (iii) for any expense incurred in connection with the operation or business of the Casino-Hotel. (g) The Mortgagor shall not take out separate insurance, concurrent in form or contributing in the event of loss with that required to be maintained pursuant to this Section 5.11, unless the same are permitted by Superior Instrument Requirements and the Mortgagee is included therein as a named insured, with loss payable to the Mortgagee and the Insurance Trustee pursuant to Section 5.11(b) hereof. The Mortgagor shall immediately notify the Mortgagee whenever any such separate insurance is taken out and shall promptly deliver to the Mortgagee a duplicate original of the policy of such insurance, a copy thereof certified by the insurer or a certificate thereof. (h) Subject to final adjustment by the insurer, insurance claims by reason of damage or destruction to any portion of the Trust Estate may be adjusted by the Mortgagor, but the Mortgagee shall have the right (but not the obligation) to join the Mortgagor in adjusting, and approving the adjustment of, any such loss except in the event of a loss where the amount of insurance reasonably anticipated to be received with respect to such loss is less than Five Million Dollars ($5,000,000), and the Mortgagor shall assist the Mortgagee in any such adjustment at the request of the Mortgagee. If the Mortgagee at its election as aforesaid joins the Mortgagor in any adjustment process, 53 then the Mortgagee's approval of the adjustment shall not be unreasonably withheld; (i) Notwithstanding anything contained herein to the contrary, if an Event of Default shall have occurred and be continuing, the Mortgagee may, at its option, (A) refrain from paying to the Mortgagor or the Insurance Trustee any net insurance proceeds or (B) instruct the Insurance Trustee to pay to the Mortgagee any insurance proceeds then held by the Insurance Trustee, as the case may be. Section 5.12. LIMITATIONS ON BUILDING DEMOLITION, ALTERATIONS, IMPROVEMENTS AND NEW CONSTRUCTION. The Mortgagor will not authorize, permit or make any demolition, alteration or improvement of any building included in the Trust Estate or any new construction on any part of the Trust Estate, except in conformity with and subject to the limitations hereinafter in this Section 5.12 set forth. Unless an Event of Default shall have occurred and be continuing, the Mortgagor shall have the right at all times to make or permit such alterations, improvements or new constructions, structural or otherwise (herein sometimes called collectively "alterations"), of or on the Trust Estate, to be made in all cases subject to the following conditions: (a) no alteration shall be undertaken or carried out except in conformity with all Superior Instrument Requirements, Legal Requirements and Insurance Requirements; (b) if the estimated cost of any alteration, together with other alterations that constitute a single construction plan or project (whether or not accomplished in several stages or procedures), exceeds [$5,000,000], the building or buildings, as so improved or altered, upon completion of the work shall be of a value not less than the value of such building or buildings immediately prior to the making of such alterations; (c) any alteration which is structural in nature or involves an estimated cost of more than [$5,000,000] shall be conducted under the supervision of an Architect, and no such alteration shall be undertaken until 10 days after there shall have been filed with the Mortgagee detailed plans and specifications and cost estimates therefor, stating that such plans and specification conform to all, prepared and approved in writing by such Architect and accompanied by a certificate of such Architect stating that such plans and specifications conform to all applicable provisions of this Section 5.12; 54 (d) no alteration involving an estimated cost of more than $5,000,000 shall be undertaken until the Mortgagor has furnished to the Mortgagee, at the Mortgagor's sole cost and expense, a surety bond or bonds, covering performance, and labor and material payments with respect to the work to be so performed, naming the Mortgagee as obligee, issued by a responsible surety company, authorized to do business in the state of New Jersey, in a form generally and customarily used by such surety in an amount equal to the estimated cost of construction of the work covered by the plans and specifications therefor, guaranteed and conditioned upon the performance and completion of such construction, substantially in conformity with the such plans and specifications and within a reasonable time, subject to delays by fire, strikes, lock-out, acts of God, inability to obtain labor or materials, governmental restrictions, enemy action, civil commotion or unavoidable Casualty or other similar causes beyond the control of the Mortgagor, free and clear of all liens, claims and liabilities for the cost of such alterations. In the event such surety bond or bonds shall be unobtainable the Mortgagor shall deliver to the Mortgagee security by cash, letter of credit or other guarantee, affording substantially the same protection as would such bond or bonds; (e) all work done in connection with any alterations shall be done promptly and in good and workmanlike manner. The work in connection with any alteration shall be prosecuted with reasonable dispatch, delays due to fire, strikes, lockouts, acts of God, inability to obtain labor or materials, governmental restrictions, enemy action, civil commotion or unavoidable casualty or similar causes beyond the control of the Mortgagor excepted; (f) if the estimated cost of alterations exceed $5,000,000, the Mortgagor shall have delivered to the Mortgagee (A) prior to the commencement of such alterations, additions or improvements copies of all Permits required for the commencement of such work together with a certificate of the Architect or an Opinion of Counsel to the effect that all Permits required for the commencement of such alterations have been obtained; and (B) within a reasonable period of time after the completion of the alterations, copies of all Permits required in connection with the completion thereof, together with either an Opinion of Counsel or a certificate of the Architect that all such Permits have been so obtained by the Mortgagor and that the Mortgagor has complied with all the requirements of this Section 5.12; 55 (g) no alterations of any kind shall be made to any building which shall change the use or reduce the size or quality of the building in any material respect; and (h) no alterations costing in excess of $5,000,000, together with other alterations that constitute a single construction plan or project (whether or not accomplished in several stages or procedures), shall be made to any building if such alterations are not expected to be completed at least 120 days prior to the maturity date of the Note (except if such alterations are required in order to comply with Legal Requirements or Superior Instrument Requirements). Section 5.13. LEASES. The Mortgagor shall not: (a) subject to the provisions of Section 5.13(d), enter into any Lease, or renew, modify, extend, terminate, or amend any Lease, except in the ordinary course of business of operating the Casino-Hotel; (b) receive or collect, or permit the receipt or collection of, any rental payments under any Lease more than one year in advance of the respective periods in respect of which they are to accrue, except that, in connection with the execution and delivery of any Lease or of any amendment to any Lease, rental payments thereunder may be collected and received in advance in an amount not in excess of three months' rent and/or a security deposit may be required thereunder in an amount not exceeding one year's rent; (c) collaterally assign, transfer or hypothecate (other than to the Mortgagee hereunder, to the mortgagee under the Guaranty Mortgage or to the holder of any Working Capital Facility Lien) any rental payment under any Lease whether then due or to accrue in the future, the interest of the Mortgagor as landlord under any Lease or the rents, issues or profits of the Trust Estate; (d) after the date hereof, enter into any Lease, or renew any Lease unless such Lease contains terms to the effect as follows: (1) the Lease and the rights of the tenants thereunder shall be subject and subordinate to the rights of the Mortgagee under this Mortgage, the mortgagee under the Guaranty Mortgage and the holders of any Superior Mortgage, 56 (2) the Lease may be assigned by the landlord thereunder to the Mortgagee, (3) the rights and remedies of the tenant in respect of any obligations of the landlord thereunder shall be nonrecourse as to any assets of the landlord other than its equity in the building in which the leased premises are located or the proceeds thereof, (4) the rights of the tenant shall be subject and subordinate to the rights of the lessee under any new lease entered into in the event of a termination of a Ground Lease; (e) modify any Lease with respect to the matters described in clauses (1) through (4) of paragraph (d). If the Mortgagor enters into a Lease (other than with any Affiliate of the Mortgagor) for a term of not less than 3 nor more than 10 years, the Mortgagee shall deliver a non-disturbance and attornment agreement substantially in the form of Schedule 4 hereto, following receipt of a certificate of a leasing broker (who is not an Affiliate of the Mortgagor or the broker involved in such transaction) experienced with respect to leases of commercial space in the Atlantic City area stating that the rent under the Lease is not less than fair market rent and that the other terms of the Lease are fair and reasonable in the commercial leasing market. The Mortgagor shall, upon demand, reimburse the Mortgagee for any costs and expenses (including reasonable attorney's fees) incurred by the Mortgagee in connection with the preparation. review and delivery of such non-disturbance and attornment agreements. Promptly after the execution and delivery hereof, the Mortgagor will cause the lessee under each Lease now in effect and promptly after each Lease is executed or becomes effective after the date of the execution and delivery hereof, the Mortgagor will cause the lessee under each such Lease, to be duly notified in writing (unless the substance and effect of such notice shall be contained in such Lease) of the subjection of the owner's interest, as lessor, in and to such Lease to the lien of this Mortgage and of the name and address of the Mortgagee. Each such notice shall state that the lease of such lessee is a Lease as herein defined. If a new Mortgagee is at any time appointed hereunder or the address of the Mortgagee shall at any time be changed, the Mortgagor will cause each lessee under each Lease to be promptly notified in writing of the name address of such new Mortgagee or the new address of the Mortgagee. The Mortgagor will use reasonable efforts (but shall not be obligated to ncur any expenditure other than DE MINIMIS 57 amounts) to obtain from each lessee under each Lease to whomany notice is sent pursuant to this paragraph an acknowledgment of receipt of such notice, and the Mortgagor will promptly deliver to the Mortgagee, upon request, a copy of each such acknowledgment of receipt which it is able to obtain. The Mortgagee shall not be responsible for securing or causing the Mortgagor to secure any such acknowledgment. Nothing contained in this Section 5.13 shall limit the provisions of Section 4.04 hereof. Section 5.14. [Reserved] Section 5.15. MAINTENANCE OF EXISTENCE OF THE MORTGAGOR. Subject to Article Four, the Mortgagor will do or cause to be done all things necessary to preserve and keep in full force and effect its existence as a corporation, and its rights (both statutory and under its articles of incorporation) and franchises. Section 5.16. TO KEEP BOOKS; INSPECTION BY MORTGAGEE. The Mortgagor will keep proper books of record and account in accordance with Section 12.05 of the Indenture. Section 5.17. ADVANCES BY MORTGAGEE. If the Mortgagor shall fail to perform any of its covenants in this Mortgage and such failure shall continue for 10 days following notice thereof given by the Mortgagee (or at any time, without notice, in case of emergency), the Mortgagee may (but is not obligated to), at any time and from time to time, take any action or make advances, to effect performance of any such covenant on behalf of the Mortgagor; and all moneys so used or advanced by the Mortgagee and all reasonable costs and expenses incurred by Mortgagee in connection therewith, together with interest on all of the same at the rate of interest set forth in the Note, shall be repaid by the Mortgagor upon demand and such advances shall be secured under this Mortgage prior to the Note. Section 5.18. WAIVER OF STAY, EXTENSION OR USURY LAWS. The Mortgagor covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any usury, stay or extension law or any other law which would prohibit or forgive the Mortgagor from paying all or any portion of the obligations evidenced by the Note as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may otherwise affect the covenants or the performance of this Mortgage; and the Mortgagor (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Mortgagee, but 58 will suffer and permit the execution of every such power as though no such law had been enacted. Section 5.19. [Reserved] Section 5.20. EMINENT DOMAIN. (a) The Mortgagor shall give written notice to the Mortgagee immediately upon obtaining knowledge of any Taking affecting the Trust Estate. If the Taking (i) is estimated to result in an award of more than $5,000,000 or (ii) the Taking would interfere with or adversely affect the operation of the Casino-Hotel in accordance with Legal Requirements then within 30 days after any such Taking, the Mortgagor shall deliver to the Mortgagee a certificate of an Architect stating whether, in such Architect's opinion, applicable Legal Requirements permit the Restoration of any buildings and improvements for the same uses and the same size and quality in all material respects as existed immediately prior to the Taking (and if such certificate states that Legal Requirements do not permit such Restoration, such certificate shall describe the manner closest approximating such criteria to which the buildings and improvements could be so restored and shall be accompanied by a Certificate of Appraised Value dated not more than 10 days prior to delivery setting forth the Appraised Value immediately prior to the Taking and the estimated Appraised Value immediately after the permitted Restoration). If the Mortgagor is required to deliver such Certificates of Appraised Value and if based on such Certificates of Appraised Value immediately after Restoration, the aggregate Outstanding Amount of First Mortgage Debt immediately after such Restoration shall exceed the greater of (i) 66-2/3% of the Appraised Value immediately after such Restoration or (ii) the quotient of the Outstanding Amount of the First Mortgage Debt immediately prior to such Taking divided by the Appraised Value immediately prior to the Taking multiplied by the Appraised Value immediately after such Restoration, then the Taking shall be deemed a Taking of "the whole or substantially all of the Premises." Notwithstanding the foregoing sentence, if such Certificates of Appraised Value indicate that the Outstanding Amount of First Mortgage Debt immediately after such Restoration exceeds the greater of the two amounts determined pursuant to subclauses (i) and (ii) above, the Taking will not be deemed a Taking of "the whole or substantially all of the Premises", if the Mortgagor obtains an irrevocable commitment from a nationally recognized financial institution having a combined capital and surplus of at least $100,000,000, to supply, upon an acceleration under this Mortgage as a result of an Event of Default, funds to the Mortgagor as additions to capital in an amount equal to the Outstanding Amount of First Mortgage Debt in excess of the Appraised Value 59 necessary to be paid down so that the Outstanding Amount of First Mortgage Debt will not exceed either of the two amounts determined pursuant to such clauses (i) and (ii), PROVIDED that such commitment may only be released if, upon an Appraisal at any time following completion of such Restoration, the aggregate Outstanding Amount of the First Mortgage Debt does not exceed 66-2/3% of the Appraised Value. (b) If at any time there shall occur a Taking of less than the whole or substantially all of the Premises and the award or awards resulting therefrom payable to the Mortgagor (and not to any Lessor or the holder of any Superior Mortgage) (after there shall have been first deducted the fees and expenses incurred in connection with the termination, settlement and collection of such award or awards, including but not limited to reasonable counsel fees and expenses, hereinafter referred to as "Settlement Costs") (i) shall not exceed the sum of $10,000,000 (except to the extent that the Insurance Trustee or a Depositary is required to hold such amount pursuant to a Superior Instrument Requirement), the entire amount of such award shall be paid to the Mortgagor; and (ii) if such award is $10,000,000 or more, the entire amount of such award shall be paid to the Insurance Trustee (or other Depositary required by a Superior Mortgage, provided that such Depositary holds such award in trust for purposes of paying the cost of Restoration). In either event, such awards shall be applied to the cost of demolition, repair, Restoration and replacement of the Trust Estate to as nearly practicable to their uses, value and condition immediately prior to the Taking (except to the extent otherwise provided by Superior Instrument Requirements). The Mortgagor shall promptly commence and with due diligence perform that Restoration in accordance with clauses (3), (4) and (7) of Section 5.11(e) (after substituting the words "Taking" of "Casualty" and "award" for "not insurance proceeds"), at no cost to the Mortgagee. All claims or suits arising out of any Taking may be settled by the Mortgagor, except that the Mortgagee shall have the right (but not the obligation) to participate in such claim or suit, and not the obligation) to participate in such claim or suit, and to approve settlement thereof (and notwithstanding anything in the Ground Leases to the contrary, the Mortgagor shall not agree to any settlement or compromise of the amount of any such claim or suit), except a claim or suit where the amount reasonably anticipated to be received by the Mortgagor is less than $5,000,000. If the Mortgagee at its election as aforesaid joins such claim or suit, the Mortgagee's approval of such settlement shall not be unreasonably withheld. The Insurance Trustee shall promptly pay such sums as are received by it from such Taking from time to time in accordance with the procedures set forth in clauses (5) and (6) of Section 5.11(e) (after substituting the words 60 "Taking" for "Casualty" and "award" for "net insurance proceeds"). (c) If at any time there shall occur a Taking of the whole or substantially all of the Premises, then the award payable to the Mortgagor shall not be applied to Restoration but shall instead be paid and delivered to the Trustee (subject to the rights of the Lessors under the Superior Leases and the holders of any Superior Mortgages) to the extent of the then Outstanding Amount of the Note and any other interest or other sums due hereunder or thereunder to be applied to the satisfaction of this Mortgage to the extent proceeds are available for such purpose and provided that no additional sums are due the Trustee or the Noteholder under the Note or the Indenture, the balance of any award shall be paid to the Mortgagor. (d) Notwithstanding anything contained herein to the contrary, if an Event of Default shall have occurred and is continuing, the Mortgagee may, at its option, (A) refrain from paying to the Mortgagor or the Insurance Trustee any award or (B) instruct the Insurance Trustee to pay to the Mortgagee any award then held by the Insurance Trustee, as the case may be. Section 5.21. GROUND LEASES. (a) The Mortgagor covenants and agrees that it will do or cause to be done all things necessary to preserve and keep unimpaired the rights of the Mortgagor, as lessee under the Ground Lease, and to prevent any termination, surrender, cancellation, forfeiture or impairment thereof. The Mortgagor shall at all times fully perform and comply with all agreements, covenants, terms and conditions imposed upon or assumed by it as lessee under each of the Ground Leases (including without limitation the covenant to pay rent and all taxes, assessments and other charges mentioned therein) prior to the expiration of any notice and/or cure period provided in each such Ground Lease. Upon receipt by the Mortgagee from a Lessor of any written notice of default by the lessee thereunder, Mortgagee may rely thereon and take any action the Mortgagee deems necessary in its sole discretion to prevent or to cure any default by the Mortgagor in the performance of or compliance with any of the agreements, covenants, terms or conditions imposed upon or assumed by the Mortgagor as lessee under each of the Ground Leases, even though the existence of such default or the nature thereof be questioned or denied by the Mortgagor or by any party on behalf of the Mortgagor, provided that if the Mortgagor has theretofore delivered to the Mortgagee the Officers' Certificate, Opinion of Counsel and a copy of the injunction, all as described in Section 3.01(g), the Mortgagee shall not take any such action unless and until the Mortgagor and/or the Mortgagee no longer has the benefit 61 of any tolling or stay referred to in Section 3.01(g). Without limiting the generality of Section 3.09 hereof, the Mortgagor hereby expressly grants to the Mortgagee, and agrees that the Mortgagee shall have, the absolute and immediate right to enter in and upon the Premises or any part thereof to such extent and as often as the Mortgagee, in its sole discretion, deems necessary or desirable for the purpose permitted by the immediately preceding sentence, subject only to applicable Legal Requirements. Subject to the preceding and without limiting the Mortgagee's other remedies under this Mortgage, the Mortgagee may pay and expend such sums of money as the Mortgagee in its sole discretion deems necessary for any such purpose, and the Mortgagor hereby agrees to pay to the Mortgagee, immediately and without demand, all such sums so paid and expended by the Mortgagee, together with interest thereon from the date of each such payment at the highest rate of interest set forth in the Note. All sums so paid and expended by the Mortgagee, and the interest thereon, shall be added to and be secured by the lien of this Mortgage. (b) The Mortgagor further covenants and agrees: (i)it will not surrender any leasehold estate and interest hereinabove described, nor terminate or cancel any Ground Lease, and that it will not without the express written consent of the Mortgagee modify, change, supplement, alter or amend such Ground Leases either orally or in writing and, as further security for the repayment of the indebtedness secured hereby and for the performance of the covenants herein and in such Ground Leases contained, the Mortgagor hereby assigns to the Mortgagee all of its rights, privileges and prerogatives as lessee under such Ground Leases to terminate, cancel, modify, change, supplement, alter or amend such Ground Leases, and any such termination, cancellation, modification, change, supplement, alteration or amendment of such Ground Leases without the prior written consent thereto by Mortgagee shall be void and of no force and effect. Unless (1) an Event of Default has occurred and is continuing and (2) either (A) there has been an acceleration of maturity of the Note pursuant to Section 3.02 hereof or (B) the Mortgagee exercises its rights under Section 3.09 hereof, the Mortgagee shall have no right to terminate, cancel, modify, change, supplement, alter or amend the Ground Leases; (ii) solely for the benefit of the Mortgagee, Trustee, the Noteholders and no other person, no release or forbearance of any of the Mortgagor's obligations under such Ground Leases, pursuant to such Ground Leases or otherwise, shall release the Mortgagor from any of its obligations under this Mortgage, 62 including its obligations with respect to the payment of rent as provided for in such Ground Leases and the performance of all of the terms, provisions, covenants, conditions and agreements contained in such Ground Leases, to be kept, performed and complied with by the lessee therein; (iii) unless the Mortgagee shall otherwise expressly consent in writing, the fee title to the Leased Land, the Mortgagor's interest in the improvements on the Leased Land and the leasehold estates shall not merge by and shall always remain separate and distinct, notwithstanding the union of such estates either in the Lessor or in the lessee, or in a third party by purchase or otherwise; (iv) the Mortgagor shall promptly notify the Mortgagee in writing of any request made by the Mortgagor, as lessee under each of the Ground Leases, or any of the Lessors, for arbitration proceedings pursuant to the Ground Leases and of the institution of any arbitration proceedings, as well as all proceedings thereunder. In addition, the Mortgagor shall promptly deliver to the Mortgagee a copy of the determination of the arbitrators in each such arbitration proceeding. The Mortgagee shall have the right to participate in such arbitration proceedings in association with the Mortgagor or on its own behalf as an interested party in accordance with the terms of the Ground Leases; (v) the Mortgagor shall not consent to the subordination of any Ground Lease to any mortgage deed of trust or other lien of the fee interest of the Lessor; (vi) in the event (A) the Mortgagor exercises its option under any Ground Lease to purchase any portion of the Leased Land, the Mortgagor shall deliver a copy of its election to exercise such option within 5 days after the Mortgagor has delivered notice of such election to the Lessor or (B) the Mortgagor acquires fee simple title or any other estate, title or interest in the Leased Land, the Mortgagor shall promptly notify the Mortgagee of such acquisition and shall cause to be executed and recorded all such other and further assurances or other instruments in writing as may be required by law or, in the opinion of the Mortgagee, be reasonably desirable to carry out the intent and meaning of clause (x) of Granting Clause Second; (vii) within 5 days after the Mortgagor's receipt of any notice of any motion, application or effort to reject the Ground Lease by any Lessor or any 63 trustee arising from or in connection with any case, proceeding or other action commenced or pending by or against any Lessor under the Code or any comparable provision contained in any present or future federal, state, local, foreign or other statute, law, rule or regulation, the Mortgagor shall give notice thereof to the Mortgagee. The Mortgagor hereby (A) assigns to the Mortgagee any and all of the Mortgagor's rights as lessee under Section 365(h) of the Code or any comparable provision contained in any present or future federal, state, local, foreign or other statute, law, rule or regulation ("Comparable Provision") and (B) covenants that it shall not elect to treat any Ground Lease as terminated pursuant to Section 365(h) of the Code or any Comparable Provision without the prior written consent of the Mortgagee and (C) agrees that any such election by the Mortgagor without such consent shall be null and void; (viii) without limiting the generality of the foregoing, the Mortgagor hereby unconditionally assigns, transfers and sets over to the Mortgagee all of the Mortgagor's claims and rights to the payment of damages arising from any rejection by Lessor of any Ground lease under the Code or any Comparable Provision. The Mortgagee shall have the right to proceed in its own name or in the name of the Mortgagor in respect of any claim, suit, action or proceeding relating to the rejection of any Ground Lease, including, without limitation, the right to file and prosecute, in cooperation with the Mortgagor, any proofs of claim, complaints, motions, applications notices and other documents, in any case in respect of Lessor under the Code or any Comparable Provision. This assignment constitutes a present, irrevocable and unconditional assignment of the foregoing claims, rights and remedies, and shall continue in effect until all of the indebtedness and obligations secured by this Mortgage shall have been satisfied and discharged in full. Any amounts received by the Mortgagee in damages arising out of the rejection of any Ground Lease as aforesaid shall be applied first to all reasonable costs and expenses of the Mortgagee (including, without limitation, reasonable attorneys' fees) incurred in connection with the exercise of any of its rights or remedies under this Section 5.21, and thereafter as provided in Section 3.03 hereof; (ix) if there shall be filed by or against the Mortgagor a petition under the Code or any Comparable Provision and the Mortgagor, as lessee under the Ground Leases, shall determine to reject any or all of the Ground Leases the Mortgagor shall give the Mortgagee not less than 10 days' prior notice of the 64 date on which the Mortgagor shall apply to the Bankruptcy Court or other judicial body with appropriate jurisdiction for authority to reject the lease. The Mortgagee shall have the right, but not the obligation, to serve upon the Mortgagor within such 10 day period a notice stating that (a) the Mortgagee demands that the Mortgagor assume and assign such Ground Lease(s) to the Mortgagee pursuant to Section 365 of the Code or any Comparable Provision and (b) the Mortgagee covenants to cure or provide adequate assurance of prompt cure of all defaults and provide adequate assurance of future performance under such Ground Lease(s). If the Mortgagee serves upon the Mortgagor the notice described in the preceding sentence, the Mortgagor shall not seek to reject such Ground Lease(s) and shall comply with the demand provided for in clause (a) of the preceding sentence within 30 days after the notice shall have been given subject to the performance by the Mortgagee of the covenant provided for in clause (b) of the preceding sentence. Effective upon the entry of an order for relief in respect of the Mortgagor under Chapter 7 of the Code or Any Comparable Provision the Mortgagor hereby assigns and transfers to the Mortgagee a non-exclusive right to apply to the Bankruptcy Court or other judicial body with appropriate jurisdiction for an order extending the period during which the Ground Lease may be rejected or assumed; (x) the Mortgagor shall promptly give to the Mortgagee copies of (A) all notices of default or (B) any other communications or notices with respect to events which relate to the possible impairment of the security of this Mortgage, which it shall give or receive under the Ground Leases and shall promptly notify the Mortgagor of any default under any Ground lease on the part of the Lessor or the Mortgagor; (xi) the Mortgagor shall enforce the obligations of the Lessor under each Ground Lease, to the end that the Mortgagor may enjoy all of the rights granted to it under the Ground leases; and (xii) the Mortgagor shall notify the Mortgagee within 5 days after the transfer of a fee interest in the Leased Land or any portion thereof to or from an Affiliate. (c) The Mortgagor hereby represents and warrants that all fixed net rent, taxes and assessments, payable under the Ground Leases have been paid to the extent they were due and payable to the date hereof and that the Mortgagor has not received notice of its failure to pay any 65 other amounts payable under the Ground Leases which have not been cured. (d) If both the Lessor's and lessee's estates under any of the Ground Leases or any portion thereof shall at any time become vested in one owner, this Mortgage and the lien created hereby shall nevertheless not be merged, extinguished, destroyed or terminated by application of the doctrine of merger and, in such event, Mortgagee shall continue to have all of the rights and privileges of the a leasehold mortgagee. (e) The Mortgagor hereby acknowledges that if any Ground Lease shall be terminated prior to the natural expiration of its term due to default by the lessee thereunder, and if pursuant to such Ground Lease, the Mortgagee or its designee shall acquire from the Lessor a new lease of the Leased land or any portion thereof, the Mortgagor shall have no right, title or interest in or to such lease or the leasehold estate created thereby, or the options therein contained. (f) Any leases for parking purposes hereafter entered into by the Mortgagor as lessee shall contain provisions permitting the assignment of the same to the Mortgagee and the Trustee and permitting assignment without the lessor's consent if this Mortgage is foreclosed. Section 5.22. SUPERIOR MORTGAGES. (a) The Mortgagor covenants and agrees that it will at all times fully perform and comply with all agreements, covenants, terms and conditions imposed upon or assumed by it as mortgagor under the Superior Mortgages prior to the expiration of any notice and/or cure period provided in each such Superior Mortgage. If a notice of default has been given by the holder of any Superior Mortgage and the maturity of the indebtedness secured by such Superior Mortgage has been accelerated as a result thereof, the Mortgagee may rely thereon and take any action the Mortgagee deems necessary in its sole discretion to prevent or to cure any default by the Mortgagor in the performance of or compliance with any of the agreements, covenants, terms or conditions imposed upon or assumed by the Mortgagor as mortgagor under each of the Superior Mortgages even though the existence of such default or the nature thereof may be questioned or denied by the Mortgagor or by any party on behalf of the Mortgagor provided that if the Mortgagor has heretofore taken such actions as described in Section 3.01(h), the Mortgagee shall not take any such action unless and until the Mortgagor and/or the Mortgagee no longer has the benefit of any such tolling or stay referred to in Section 3.01(h). Without limiting the generality of Section 3.09 hereof, the Mortgagor hereby 66 expressly grants to the Mortgagee, and agrees that upon such acceleration the Mortgagee shall have, the absolute and immediate right to enter in and upon the Premises or any part thereof to such extent and as often as the Mortgagee, in its sole discretion, deems necessary for the purpose permitted by the immediately preceding sentence, subject only to applicable Legal Requirements. The Mortgagee may (i) pay and expend such sums of money as the Mortgagee in its sole discretion deems necessary for any such purpose and (ii) in its sole discretion prepay any Superior Mortgage, and the Mortgagor hereby agrees to pay to the Mortgagee, immediately and without demand, all such sums referred to in (i) and (ii) above so paid and expended by the Mortgagee, together with interest thereon from the date of each such payment at the rate of interest set forth in the Note. All sums so paid and expended by the Mortgagee and the interest thereon shall be added to and be secured by the lien of this Mortgage. (b) The Mortgagor further covenants and agrees: (i) the Mortgagor shall not, without first obtaining the written consent of the Mortgagee in each instance: (A) modify any of the terms, covenants or conditions of any Superior Mortgage, and without limiting the foregoing, the Mortgagor shall not, without satisfying such conditions, enter into or obtain any agreement whereby the holder of any Superior Mortgage waives, postpones, extends, reduces or modifies the payment of the installment of principal or interest or any other item or amount now required to be paid under the terms of any Superior Mortgage or modifies any other provision thereof, or (B) acquire or permit or suffer any Affiliate of the Mortgagor to acquire any Superior Mortgage or any interest therein. Notwithstanding anything in clause (A) to the contrary, the Mortgagor shall have the right to amend, supplement or modify any Superior Mortgage, if (x) the then outstanding principal balance of the indebtedness secured by such Superior Mortgage is not increased thereby, and (y) in the case of any After-Acquired Fee Mortgage, such amendment, supplement or agreement does not increase the property covered thereby; (ii) the Mortgagor shall timely pay and perform all of the obligations to be paid or performed by the mortgagor under each Superior Mortgage, the note secured thereby and any other instrument evidencing or securing the indebtedness owing to any holder of any Superior Mortgage; (iii) at any time, and from time to time, the Mortgagor shall upon request of the Mortgagee promptly use its reasonable efforts to obtain an 67 estoppel certificate or letter addressed to the Mortgagee from holders of the Superior Mortgages, such certificate or letter to be in such form as the Mortgagee shall request; and (iv) the Mortgagor shall promptly give to the Mortgagee copies of (A) all notices of default or (B) any other notice or communication with respect to events which relate to the possible impairment of the security of this Mortgage, which it shall give or receive under the Superior Mortgages and shall promptly notify the Mortgagor of any default under any Superior Mortgages on the part of the Mortgagor. (c) The lien of this Mortgage in and to all or specified portions of the Trust Estate shall be subject and subordinate to any Existing Encumbrances and any mortgage, assignment, security agreement, financing statement or other lien securing any Working Capital Facility (the "Working Capital Facility Lien") encumbering Mortgagor's interest in the affected portions of the Trust Estate or any part thereof. The foregoing provisions of this Section 5.22(c) shall be self- operative with respect to Existing Encumbrances and shall be self-operative with respect to any Working Capital Facility Lien, and no further instrument shall be required to give effect to such subordination. Mortgagee shall, however, from time to time, execute instruments in form and substance reasonably satisfactory to the holder of the Working Capital Facility Lien, confirming such subordination and agreeing to such other matters reasonably required by the holder of the Working Capital Facility Lien which do not, in the aggregate, materially adversely reduce or impair the rights of Trustee under the Mortgage, and Mortgagor and others may rely conclusively thereon, provided that Mortgagee shall have no liability thereunder and all costs and expenses (including reasonable attorneys' fees) shall be paid by Mortgagor. (d) The lien of the Mortgage in and to all or specified portions of the Trust Estate shall be subject and subordinate to any Existing Encumbrances. The provisions of this Section 5.22(d) shall be self-operative, and no further instrument shall be required to give effect to such subordination. Section 5.23. MORTGAGE PARI PASSU WITH GUARANTY MORTGAGE. Notwithstanding recordation of this Mortgage in the Atlantic County, New Jersey Clerk's Office prior to the recordation of the Guaranty Mortgage, the lien of this Mortgage ranks PARI PASSU with, and not senior to, the lien reated by the Guaranty Mortgage. 68 ARTICLE SIX MISCELLANEOUS Section 6.01. COUNTERPARTS. This instrument may be executed in any number of counterparts, each of which as executed shall be deemed to be an original, but all such counterparts shall constitute one and the same instrument. Section 6.02. MODIFICATION. This Mortgage is subject to "modification" within the meaning of N.J.S.A. 46:9-8.1 ET SEQ., and this Mortgage shall have the benefit of the lien priority provisions of such statute. Such modification may include, without limitation, a change in the interest rate, maturity date or other terms and conditions of this Mortgage. THE MORTGAGOR DECLARES THAT THE MORTGAGOR HAS RECEIVED A TRUE COPY OF THIS MORTGAGE. IN WITNESS WHEREOF, the parties hereto have caused this Mortgage to be duly executed and attested, all as of the day and year first above written. RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation ATTEST:______________________ By:_____________________________ Name: Name: Title: (Asst.) Secretary Title: (Vice) President RESORTS INTERNATIONAL HOTEL FINANCING, INC. ATTEST:______________________ By:_____________________________ Name: Name: Title: (Asst.) Secretary Title: (Vice) President Exhibit E Assignment of Leases and Rents from Resorts International Hotel, Inc. to Resorts International Hotel Financing, Inc. NA932230075 - GUARANTY MORTGAGE GD&C DRAFT DATED 12/17/93 MORTGAGE SECURING GUARANTY OF MORTGAGE NOTES by and between RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation, as Mortgagor, and STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION a national banking association, as Mortgagee Dated as of ________ __, 1994 Prepared by:_______________________ D. Eric Remensperger After recording return to: Gibson, Dunn & Crutcher 200 Park Avenue New York, New York 10166 Attention: D. Eric Remensperger MORTGAGE SECURING GUARANTY OF MORTGAGE NOTES ----------------- THIS MORTGAGE, dated as of ________ ___, 1994, between RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation ("Mortgagor"), and STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, a national banking association having an address at 750 Main Street, Suite 1114 Hartford, Connecticut 06103 ("Mortgagee"), in its capacity as Trustee under that certain Indenture dated as of even date herewith (the "Indenture") among Mortgagor, Mortgagee and Resorts International Hotel Financing, Inc. ("RIHF"). WITNESSETH: In consideration of $10.00 in hand paid by Mortgagee to Mortgagor and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in order to secure (i) the Guaranty by Mortgagor of the payments of principal and interest due on the 11% Mortgage Notes due 2003 in an aggregate principal amount of $125,000,000, issued pursuant to the provisions of the Indenture (defined therein, and hereinafter collectively referred to herein, as the "Notes"), in accordance with the terms and conditions of Article Fourth of the Indenture; and performance and observance of all of the provisions herein contained, Mortgagor has executed and delivered this Mortgage and has bargained, sold, aliened, mortgaged, pledged, released, conveyed and confirmed unto Mortgagee and its successors hereunder and assigns forever, all of its right, title and interest in, to and under any of the following described property: GRANTING CLAUSES GRANTING CLAUSE FIRST All the property, rights, title, interest, privileges and franchises particularly described in annexed Schedule 1 (the "Owned Land") which Schedule is hereby made a part of, and deemed to be described in, this Granting Clause as fully as if set forth in this Granting Clause at length. GRANTING CLAUSE SECOND All of the property, rights, title, interest, privileges and franchises of the Mortgagor as lessee in those certain leases (the "Ground Leases") particularly described in Schedule 2, which Schedule is hereby made a part of, and deemed to be described in, this Granting Clause as fully as if set forth in this Granting Clause at length, which Ground Leases cover the real property described in Schedule 2 (the "Leased Land") and in and to any and all modifications, extensions and renewals of the Ground Leases and all options set forth therein, together with (i) all credits, deposits, privileges and rights of the Mortgagor as lessee under the Ground Leases, now or at any time existing, (ii) the leaseholds and the leasehold estates created by the Ground Leases and (iii) all of the estates, rights, titles, claims or demands whatsoever of Mortgagor, either in law or in equity, in possession or in expectancy, of, in and to the Ground Leases and the Leased Land, together with (x) any and all other, further or additional title, estates, interests or rights which may at anytime be acquired by the Mortgagor in or to the Leased Land, and the Mortgagor expressly agrees that if the Mortgagor shall, at any time prior to payment in full of all indebtedness secured hereby, acquire fee simple title or any other greater estate to the Leased Land pursuant to the Ground Leases, or otherwise, the lien of this Mortgage shall attach, extend to, cover and be a lien upon such fee simple title or other greater estate and thereupon the lien of this Mortgage shall be prior to the lien of any mortgage or deed of trust placed on such acquired title, estate, interest or right subsequent to the date of this Mortgage and (y) any right to possession or statutory term of years derived from, or incident to, the Ground Leases pursuant to Section 365(h) of the U.S. Bankruptcy Code (the "Code") or any comparable provision contained in any present or future federal, state, local, foreign or other statute, law, rule or regulation. GRANTING CLAUSE THIRD All the rents, issues, profits, revenues and other income and proceeds of the property subjected or required to be subjected to the lien of this Mortgage, including, without limitation, the property described in Granting Clauses First, Second, and Sixth (such property is hereinafter collectively referred to as the "Premises") and all the estate, right, title and interest of every nature whatsoever of the Mortgagor in and to the same and every part thereof. The collective metes and bounds description of the Owned Land and the Leased Land is set forth in annexed Schedule 3. 2 GRANTING CLAUSE FOURTH All of the rights as lessor under Leases in effect on the date of execution of this Mortgage or hereafter entered into by the Mortgagor, if any, including extensions, renewals or amendments of all of the same, and the immediate and continuing right as security in accordance with an Assignment of Leases and Rents of even date herewith between Mortgagor and Mortgagee, and, after the occurrence of an Event of Default, to make claim for, collect, receive and receipt for (and to apply the same as provided herein) any and all rents, income, revenues, issues, profits, security and other sums of money payable or receivable thereunder or pursuant thereto, and all proceeds thereof, whether payable as rent, insurance proceeds, condemnation awards, security or otherwise and whether payable prior to or subsequent to the maturity date of the Notes, to receive and give notices and consents thereunder, to bring actions and proceedings thereunder or for the enforcement thereof, to make waivers and agreements, to take such action upon the happening of a default under any Lease, including the commencement, conduct and consummation of any proceedings at law or in equity as shall be permitted by any provision of any Lease, and to do any and all things which the Mortgagor or any lessor is or may become entitled to do under the Leases; provided, that the assignment made by this granting Clause Fourth shall not impair or diminish any obligation of the Mortgagor under the Leases, or shall any such obligation be imposed upon the Mortgagee. GRANTING CLAUSE FIFTH Without limiting the generality of the provisions of Granting Clause Third, the Mortgagor's rights, privileges and franchises in and to the following, to the extent of the Mortgagor's interest therein and thereto and to the extent assignable (collectively, "Operating Assets"): (a) bookings and receipts for the use of guest rooms, banquet facilities and meeting rooms at the Casino-Hotel; (b) all contracts respecting utility services for, and the maintenance, operations, or equipping of the Premises, including guaranties and warranties relating thereto; (c) the Permits; (d) all contract rights, leases, concessions, trademarks, trade names, service marks, service names, logos, copyrights, warranties and other items of 3 intangible personal property relating to the ownership or operation of the Casino-Hotel, including, without limitation, (1) telephone and other communication numbers, (2) all software licensing agreements as are required to operate computer software systems at the Casino-Hotel, all transferable proprietary interest in software required to operate the computer systems at the Casino Hotel and books and records relating to the software programs, and (3) lessee's interest under leases of Tangible Personal Property; (e) all agreements entered into by or on behalf of the Mortgagor or which have been assigned to the Mortgagor, for the design and construction, and for the equipping and furnishing, of the Casino-Hotel, including architect's agreements, engineering agreements, construction contracts, consulting agreements and agreements or purchase orders for all items of Tangible Personal Property and payment and performance bonds in favor of the Mortgagor in connection with the Trust Estate (and all warranties and guaranties thereunder and warranties and guaranties of any subcontractor and bond issued in connection with the work to be performed by any subcontractor); (f) the following personal property (the "Tangible Personal Property") now or hereafter acquired by the Mortgagor: (i) all furniture, furnishings, equipment, machinery, apparatus, appliances, fixtures and fittings and other articles of tangible personal property which are, or are to be located on, or used in connection with the operation of, the Casino-Hotel; (ii) all slot machines, electronic gaming devices, crap tables, blackjack tables, roulette tables, baccarat tables, and big six wheels, located or to be located in the Casino-Hotel, and all furnishings and equipment to be used in connection with the operation thereof; (iii) all cards, dice, gaming chips and placques, tokens, chip racks, dealing shoes, dice cups, dice sticks, layouts, paddles, roulette balls and other consumable supplies and items to be used in connection with the gaming operations of the Casino-Hotel; (iv) all china, glassware, linens, kitchen utensils, silverware and uniforms, whether 4 in use or held in reserve storage for future use, in connection with the operation of the Casino-Hotel, which are on hand or on order whether stored on-site or off-site; (v) all consumables and operating supplies of every kind and nature for use in all of the operating departments of the Casino-Hotel, or in the improvements now or hereafter located on any of the Owned Land, including without limitation, accounting supplies, guest supplies, forms, printing, stationery, food and beverage stock, bar supplies, laundry supplies and brochures to existing purchase orders; (vi) all sets and scenery, costumes, props and other items of tangible personal property on hand or on order for use in the production of shows in the showroom of the Casino-Hotel; and (vii) all cars, limousines, vans, buses, trucks and other vehicles owned or leased by the Mortgagor for use in Casino-Hotel operations, together with all equipment, parts and supplies used to service, repair, maintain and equip the foregoing; (g) all drawings, designs, plans and specifications prepared by the architects, interior designers, landscape designers and any other consultants for the development of the Premises, as amended from time to time; (h) any administrative and judicial proceedings initiated by the Mortgagor, or in which the Mortgagor has intervened, concerning the Casino-Hotel, and agreements, if any, which are the subject matter of such proceedings; (i) any customer lists utilized by the Mortgagor, including lists of transient guests and restaurant and bar patrons and "high roller" lists; and (j) all of the goodwill in connection with the operation of the Premises. The Mortgagor and Mortgagee acknowledge that notwithstanding anything contained in this Mortgage to the contrary, the Mortgagor may share facilities, operations and employees with any other hotel owned by any Affiliate of the Mortgagor provided that (i) such sharing of facilities is permitted by all applicable Legal Requirements, (ii) terms on 5 which such facilities are shared are not detrimental to the operations of the Casino-Hotel or the financial condition of the Mortgagor and (iii) the regular operation of the Casino-Hotel would not be materially impaired upon the separation of such facilities. The assignment made by this Granting Clause Fifth shall not impair or diminish any obligation of the Mortgagor with respect to the Operating Assets, nor shall any such obligation be imposed on the Mortgagee. GRANTING CLAUSE SIXTH (a) All of the Mortgagor's right, title and interest in and to all buildings and improvements of every kind and description now or hereafter erected or placed on the Owned Land and/or the Leased Land and all fixtures and articles of personal property now or hereafter attached to or contained in and used in connection with such buildings and improvements, including, but not limited to, all apparatus, furniture, furnishings, machinery, motors, elevators, fittings, radiators, cooking ranges, ice boxes, ice machines, printing presses, mirrors, bars, mechanical refrigerators, furnaces, coal and oil-burning apparatus, wall cabinets, machinery, generators, partitions, steam and hot water boilers, lighting and power plants, pipes, plumbing, radiators, sinks, bath tubs, water closets, gas and electrical fixtures, awnings, shades, screens, blinds, dishwashers, freezers, vacuum cleaning systems, office equipment and other furnishings, and all plumbing, heating, lighting, cooking, laundry, ventilating, incinerating, air-conditioning and sprinkler equipment or other fire prevention or extinguishing apparatus and material, and fixtures and appurtenances thereto; and all renewals or replacements thereof or articles in substitution therefor, whether or not the same are or shall be attached to the Owned Land, the Leased Land or to any such buildings and improvements thereon, in any manner; and (b) All of the Mortgagor's right, title and interest in and to (i) the Leased Land, if the Mortgagor acquires the fee simple title to the Leased Land or any part thereof (subject to the provisions of Section 2.06 hereof), (ii) all air rights and rights to maintain supporting columns 6 and all rights to construct and maintain bridges, and to create private rights of way over streets now or hereafter owned or enjoyed by the Mortgagor and appurtenant to the Owned Land or Leased Land, and (iii) all right, title and interest of Mortgagor as grantee or licensee in and to the following to the extent necessary for the use and enjoyment of the Owned Land or the Leased Land: (A) all those plots, pieces or parcels of land and air rights, more particularly described on Schedule 5, attached hereto and made a part hereof (the "Bridge Easement Parcels"), with respect to which Mortgagor has easements, licenses or other rights of possession or use pursuant to these certain easement and license agreements more particularly described on Schedule 5 (the "Bridge Easements"), (B) all those plots, pieces or parcels of land and air rights, more particularly described on Schedule 6 attached hereto and made a part hereof (the "Elevator Easement Parcels"), with respect to which Mortgagor has easements, licenses or other rights of possession or use pursuant to those certain license agreements more particularly described on Schedule 6 (the "Elevator Easements"), and; (C) all that plot, piece or parcel of land and air rights more particularly described on Schedule 7 attached hereto and made a part hereof (the "Turn-Around Easement Parcel") with respect to which Mortgagor has easements, licenses, or other rights of possession or use pursuant to that certain easement more particularly described on Schedule 7 (the "Turn-Around Easement"), (the Bridge Easement Parcels, the Elevator Easement Parcels and the Turn-Around Easement Parcel are collectively referred to herein as the "Easement Parcels"; and the Bridge Easements, the Elevator Easements and the Turn-Around Easement are collectively referred to as the "Easements"), together with all rights of way, privileges, liberties, tenements, hereditaments and appurtenances belonging or in any way appertaining to such estates, it being the intention hereof that all property, interests, rights and privileges and franchises pertaining to the Premises (other than Excepted Property) shall be as fully embraced within and subjected to the lien hereof as if such property were specifically described herein. To the extent the grant of a security interest in any portion of the Trust Estate is governed by the Uniform Commercial Code, this Mortgage is hereby deemed to be as well a security agreement under the Uniform Commercial Code for the purpose of creating hereby a security interest in all of the Mortgagor's right, title and interest in and to such property, securing the obligations secured hereby, for the benefit of the Mortgagee. * * * TOGETHER with all of the Mortgagor's right, title and interest in and to all mineral and water rights and any title or reversion, in and to the beds of the ways, streets, avenues and alleys adjoining the Premises to the center line thereof and in and to all strips, gaps and gores adjoining the premises on all sides thereof; and TOGETHER with all of the Mortgagor's right, title and interest to and singular the tenements, hereditaments, easements, appurtenances, passages, water courses, riparian rights, other rights, liberties and privileges thereof or in 7 any way appertaining to the Premises, including any other claim at law or in equity as well as any after-acquired title, franchise or license and the reversion and reversions and remainder and remainders thereof; and TOGETHER with all awards and other compensation heretofore or hereafter to be made to the present and all subsequent owners of the Trust Estate for any taking by eminent domain, either permanent or temporary, of all or any part of the Trust Estate or any easement or appurtenances thereof, including severance and consequential damage and change in grade of streets, all in accordance with and subject to the provisions of the Superior Instrument Requirements and Section 5.20; and TOGETHER with all proceeds of any unearned premiums on any insurance policies described in Section 5.11, and the right to receive and apply the proceeds of any insurance, judgments, or settlements made in lieu thereof, for damage to the Trust Estate or otherwise, all in accordance with and subject to the provisions of Section 5.11 and the Superior Instrument Requirements. EXCLUDING, with respect to all of the hereinabove granted property, rights, title, interest, privileges and franchises, the Excepted Property. TO HAVE AND TO HOLD all the Premises, Leases, Ground Leases, Operating Assets, Easements, properties, options, credits, deposits, rights, privileges and franchises of every kind and description, real, personal or mixed, granted hereby, bargained, sold, aliened, assigned, transferred, hypothecated, pledged, released, conveyed, mortgaged, or confirmed as aforesaid, or intended, agreed or covenanted so to be, together with all the appurtenances thereto appertaining (the Premises, Leases, Ground Leases, Operating Assets, Easements, properties, options, credits, deposits, rights, privileges and franchises, being herein collectively called the "Trust Estate") unto the Mortgagee and its successors and assigns forever. SUBJECT, HOWEVER, on the date hereof, to Existing Encumbrances and, after the date hereof, to Permitted Encumbrances. SUBJECT, FURTHER, to the rights and obligations of the Mortgagee and the Noteholder as set forth in that certain Intercreditor Agreement dated as of the date hereof among RIH, RIHF, Mortgagee, Fidelity Management and Trust Company ("Fidelity"), as trustee under that certain note purchase agreement dated as of the date hereof among Fidelity, RIH and RIHF, and 8 U.S. Trust Company of California, N.A. ("U.S. Trust"), as trustee under that certain indenture dated as of the date hereof among U.S. Trust, RIH and RIHF (and such other parties that may from time to time become a party thereto). BUT IN TRUST, NEVERTHELESS, for the Ratable Benefit and security of the Noteholders without any priority of any of the Notes over any other of the Notes. UPON CONDITION that, until the happening of an Event of Default and subject to the provisions of Article Two, the Mortgagor shall be permitted to possess and use the Trust Estate, and to receive and use the rents, issues, profits, revenues and other income of the Trust Estate. AND IT IS HEREBY COVENANTED AND DECLARED that the Trust Estate is to be held and applied by the Mortgagee, subject to the further covenants, conditions and trusts hereinafter set forth, and the Mortgagor does hereby covenant and agree to and with the Mortgagee, for the Ratable Benefit of the Noteholders as follows: ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION Section 1.01. DEFINITIONS. For all purposes of this Mortgage, except as otherwise expressly provided or unless the context otherwise requires: (a) the terms defined in this Article One have the meanings assigned to them in this Article One and include the plural as well as the singular; (b) all accounting terms not otherwise defined herein have the meanings assigned to them, and all computations herein provided for shall be made in accordance with generally accepted accounting principles consistently applied; and (c) the words "herein," "hereof" and "hereunder" and other words of similar import refer to this Mortgage as a whole and not to any particular Article, Section or other subdivision. "AFFILIATE" has the meaning set forth in Section 1.01 of the Indenture. 9 "AFTER-ACQUIRED FEE MORTGAGE" has the meaning set forth in Section 2.07. "ALTERATIONS" has the meaning set forth in Section 5.12. "APPRAISER" means an MAI appraiser (i.e., a Member in good standing of the American Institute of Real Estate Appraisers) who is (i) of recognized standing among appraisers of properties similar to the Casino-Hotel and (ii) experienced in the appraisals of properties of a similar size and scope to that of the Casino-Hotel, selected by the Mortgagor. "ASSIGNMENT OF LEASES AND RENTS" has the meaning stated in Section 1.01 of the Indenture. "CAPITALIZED LEASE OBLIGATION" has the meaning stated in Section 1.01 of the Indenture. "CASINO" means that portion of the Casino-Hotel used for gaming and related activities. "CASINO-HOTEL" means the casino and hotel complex and ancillary structures and facilities located on the Premises and furniture, fixtures and equipment at any time contained therein. "CASUALTY" means any act or occurrence of any kind or nature which results in damage, loss or destruction to any buildings or improvements on the Premises and/or Tangible Personal Property. "CODE" has the meaning stated in Granting Clause Second. "COMBINATION TRANSACTION" has the meaning stated in Section 10.01 of the Indenture. "DEFAULT" means the occurrence and continuance of an Event of Default or an event which, after notice or lapse of time or both, would become an Event of Default. "DEPOSITARY" means an Independent entity to which insurance proceeds or a condemnation award is paid to be held in trust for restoration pursuant to the provisions of a Ground Lease or Superior Mortgage. "EVENT OF DEFAULT" has the meaning stated in Section 3.01. An Event of Default shall "exist" if an Event of Default shall have occurred and be continuing. "EXCEPTED PROPERTY" means: 10 (1) subject to the provisions of the Assignment of Leases and Rents, any cash held by the Mortgagor from rents, issues, profits, revenues and other proceeds of the Trust Estate to the extent that such cash may be, but has not been, distributed or paid out in accordance with the Services Agreement or in accordance with the provisions of Section 12.07 the Indenture; (2) all personal property owned by lessees under Leases and the personal property of any guests staying in the Hotel; (3) any property deemed to be Excepted Property pursuant to the provisions of Section 2.03 hereof; (4) Tangible Personal Property subject to an FF&E Financing Agreement; and (5) counterchecks and any other property the granting of a security interest in which is prohibited by the New Jersey Casino Control Act, N.J.S.A. 5:12-1 ET SEQ., and the regulations promulgated thereunder. "EXISTING ENCUMBRANCES" means the matters set forth in Schedule 8. "FIRST MORTGAGE DEBT" means any financing secured by a Superior Mortgage secured by or imposing a lien on all or a portion of the Trust Estate on a parity with or senior to the lien of this Mortgage. "FF&E FINANCING AGREEMENT" means a purchase money lien upon any Tangible Personal Property and other items constituting Operating Assets, such as computer software, which are financed, purchased or leased by the Mortgagor, provided that, except as set forth on Schedule 3, the principal amount of the indebtedness secured by such lien shall not exceed eighty-five (85%) percent of the cost to the Mortgagor of such property at the time of acquisition. "GROUND LEASES" has the meaning stated in Granting Clause Second. "GUARANTY" has the meaning set forth in Article Fourteen of the Indenture. "HOTEL" means that portion of the Casino-Hotel not included within the Casino. "IMPOSITIONS" has the meaning stated in Section 5.08. 11 "INDENTURE" means that certain Indenture - 11% Mortgage Notes due 2003, dated as of even date herewith among the Mortgagor, RIHF, as issuer, and Mortgagee, as trustee, as it may from time to time be supplemented, modified or amended by one or more trust indentures or other instruments supplemental thereto entered into pursuant to the applicable provisions thereof. "INDEPENDENT" when used with respect to any specified Person means such a Person who (a) is in fact independent, (b) does not have any direct financial interest or any material indirect financial interest in the Mortgagor or in any other obligor upon the Notes or in any Affiliate of the Mortgagor or of such other obligor and (c) is not connected with the Mortgagor or such other obligor or any Affiliate of the Mortgagor or such other obligor as an officer, employee, promoter, underwriter, trustee, partner, director or person performing similar functions. Whenever it is herein provided that any Independent Person's opinion or certificate shall be furnished to the Mortgagee, such opinion or certificate shall state that the signer has read this definition and that the signer is Independent within the meaning thereof. A Person who is performing or who has performed services as an independent contractor to any specified Person shall not be considered not Independent merely by reason of the fact that such Person is or has performed such services. "INSURANCE AMOUNT" has the meaning stated in Section 5.11(a)(1). "INSURANCE REQUIREMENTS" means all terms of any insurance policy covering or applicable to the Trust Estate or any part thereof, all requirements of the issuer of any such policy, and all orders, rules, regulations and other requirements of the National Board of Fire Underwriters (or any other body exercising similar functions) applicable to or affecting the Trust Estate or any part thereof or any use or condition of the Trust Estate or any other part thereof. "INSURANCE TRUSTEE" means the Trustee or, if the Trustee so elects, any bank, trust company or insurance company with net worth in excess of $100,000,000, designated by the Trustee. "INSURER" means an insurance company or companies selected by the Mortgagor authorized to issue insurance in the State of New Jersey with an A.M. Best rating as high or higher than the rating of insurance companies insuring other casino-hotels in Atlantic City, New Jersey. 12 "LEASE" means each lease or sublease demising all or any portion of the Owned Land, the Leased Land or the buildings or improvements thereon and made by the Mortgagor as lessor or sublessor, as the case may be, or any spaces in any building or buildings which constitute a part of the Trust Estate, including every agreement relating thereto or entered into in connection therewith and every guaranty of the performance and observance of the covenants, conditions and agreements to be performed by the lessee under any such lease. Notwithstanding the foregoing, the term "Lease" shall not include any transient room rentals. "LEASED LAND" has the meaning stated in Granting Clause Second. "LEGAL REQUIREMENTS" means all laws, statutes, codes, acts, ordinances, orders, judgments, decrees, injunctions, rules, regulations, permits, licenses, authorizations, directions and requirements (including, without limitation, the New Jersey Environment Cleanup Responsibility Act and the New Jersey Spill Compensation and Control Act of 1976) of all governments, departments, commissions, boards, courts, authorities, agencies, officials and officers, of governments, federal, state and municipal (including, without limitation, the New Jersey Department of Environmental Protection, the Atlantic City Bureau of Investigations, Division of Protection, the Atlantic City Bureau of Investigations, Division of Gaming Enforcement of the State of New Jersey, and the Casino Control Commission of the State of New Jersey), foreseen or unforeseen, ordinary or extraordinary, which now is or at any time hereafter becomes applicable to the Trust Estate or any part thereof, or any of the adjoining sidewalks, or the use of the Casino-Hotel as a gaming or gambling facility or any other use or condition of the Trust Estate or any part thereof. "LESSORS" means the lessors under the Ground Leases. "MATURITY" when used with respect to the Notes means the date on which the principal of such Notes becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration or prepayment or otherwise. "MORTGAGE DOCUMENTS" has the meaning set forth in Section 1.01 of the Indenture. "MORTGAGOR" means the Person named as the "Mortgagor" in the first paragraph of this instrument until a successor entity shall have become such pursuant to the applicable provisions of this Mortgage, and thereafter, except 13 to the extent otherwise contemplated by Section 4.02, "Mortgagor" shall mean such successor entity exclusively. "NOTEHOLDERS" has the meaning set forth in Section 1.01 of the Indenture. "NOTE MORTGAGE" means that certain Mortgage Securing RIH Promissory Note dated as of the date hereof from Mortgagor to RIHF, which secures the RIH Promissory Note (as defined in the Indenture), the lien of which shall be PARI PASSU with the lien of this Mortgage. "NOTES" has the meaning set forth in the Preamble. "NOTICES" has the meaning stated in Section 1.02. "OFFICERS' CERTIFICATE" means a certificate signed by an officer of the Mortgagor and delivered to the Mortgagee. Whenever this Mortgage requires that an Officers' Certificate be signed also by an Architect or an Accountant or other expert, such Architect, Accountant or other expert may (except as otherwise expressly provided in this Mortgage) be in the general employ of the Mortgagor. "OPERATING ASSETS" has the meaning stated in Granting Clause Fifth. "OPINION OF COUNSEL" means a written opinion of counsel who may (except as otherwise expressly provided in this Mortgage) be an employee of the Mortgagor or an employee of an Affiliate of the Mortgagor. Unless otherwise specifically provided in this Mortgage, such counsel may rely, as to any state of facts not personally known to such counsel and relating to such opinions, on an Officers' Certificate to the extent not rejected by the Trustee and its counsel (which rejection shall not be unreasonably given). "ORIGINAL POLICY" means an ALTA Loan Policies of Title issued by [list title insurance companies], pursuant to Title Commitment No. ____________ redated to the date hereof. "OUTSTANDING AMOUNT" has the meaning stated in Section 1.01 of the Indenture. "OWNED LAND" has the meaning stated in Granting Clause First. "PERMITS" means all licenses, franchises, statements of compliance, certificates of operation, certificates of occupancy and permits required for the lawful ownership, occupancy, operation and use of all or a material portion of the Premises whether held by the Mortgagor or any other Person 14 (which may be temporary or permanent) (including, without limitation, those required for the use of the Casino-Hotel as a licensed casino facility), in accordance with all applicable Legal Requirements. "PERMITTED ENCUMBRANCES" means: (1) liens for taxes, assessments, or governmental charges not yet due and payable or if due and payable are not delinquent to the extent that any fine, penalty, interest or cost may be added for nonpayment thereof; (2) Existing Encumbrances; (3) FF&E Financing Agreements; (4) After-Acquired Fee Mortgages; (5) the lien of the Mortgage Documents and any rights granted as provided therein; (6) Restricted Encumbrances; (7) the lien of the Trustee provided for by Section 8.07 of the Indenture; (8) any Working Capital Facility Lien; and (9) Capitalized Lease Obligations. "PERSON" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or any other entity or government or any agency or political subdivision thereof. "PREMISES" has the meaning set forth in Granting Clause Third. "RATABLE BENEFIT" has the meaning stated in Section 1.01 of the Indenture. "RELEASED LAND" has the meaning stated in Section 2.05. "RELEASED FEE LAND" has the meaning stated in Section 2.06. "RESTORATION" has the meaning stated in Section 5.11(e). "RESTRICTED ENCUMBRANCES" means Leases permitted by and made in accordance with Section 5.13 of this Mortgage. 15 "RIHF" shall mean Resorts International Hotel Financing, Inc., a Delaware corporation. "SERVICES AGREEMENT" has the meaning set forth in Section 1.01 of the Indenture. "STATED MATURITY" when used with respect to a note means the date specified in such note as the fixed date on which the principal of such note is due and payable. "SUPERIOR INSTRUMENT REQUIREMENTS" means the applicable terms, conditions and provisions of (i) the Ground Leases with respect to the Leased Land; and (ii) Superior Mortgages with respect to the portion of the Trust Estate encumbered thereby. "SUPERIOR MORTGAGES" means, collectively, any Working Capital Facility Lien and any After-Acquired Fee Mortgages. "TAKING" means the acquisition or condemnation by eminent domain of the whole or any part of the Premises, by a competent authority, for any public or quasi-public use or purpose. "TANGIBLE PERSONAL PROPERTY" has the meaning stated in Granting Clause Fifth. "TRUSTEE" means the Person named as the "Trustee" in the first paragraph of the Indenture and any successor thereto. "TRUST ESTATE" has the meaning stated in the habendum to the Granting Clauses. "TRUST INDENTURE ACT" has the meaning stated in Section 1.01 of the Indenture. "WORKING CAPITAL FACILITY" has the meaning stated in Section 1.01 of the Indenture. "WORKING CAPITAL FACILITY LIEN" has the meaning stated in Section 5.22(c) of this Mortgage. Section 1.02. NOTICES, ETC. (a) Any request, demand, authorization, direction, notice (including, without limitation, a notice of default), consent, waiver or other document provided or permitted by this Mortgage to be made upon, given or furnished to, or filed with, the Mortgagor or the Mortgagee (collectively, "Notices") shall be deemed given when either (i) delivered by hand or 16 (ii) two days after sending by registered or certified mail, postage prepaid, addressed as follows: To the Mortgagor: Resorts International Hotel, Inc. c/o Resorts International, Inc. 1133 Boardwalk Atlantic City, New Jersey 08401 Attention: Christopher D. Whitney If to Mortgagee: State Street Bank and Trust Company of Connecticut, National Association 750 Main Street, Suite 1114 Hartford, Connecticut Attention: Corporate Trust Department (b) By Notice to the Mortgagor, the Mortgagee and the Trustee, any party may designate additional or substitute address for Notices which, notwithstanding Subsection (a) above, shall be deemed given when received. Section 1.03. FORM AND CONTENT OF DOCUMENTS DELIVERED TO MORTGAGEE. Whenever 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 such matters in one or several documents. Any certificate or opinion of an Officer of the Mortgagor may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such Officer knows that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any 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 Mortgagor stating that the information with respect to such factual matters is in the possession of the Mortgagor, unless such counsel knows that the certificate or opinion or representations with respect to such matters are erroneous. If appropriate to the matter being opined upon and to the extent not prohibited by the Trust Indenture Act, any Opinion of Counsel may be subject to rights of creditors and the availability of equitable remedies. 17 Whenever any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Mortgage, they may, but need not, be consolidated and form one instrument. Whenever in this Mortgage, in connection with any application or certificate or report to the Mortgagee, it is provided that the Mortgagor shall deliver any document as a condition of the granting of such application, or as evidence of the Mortgagor's compliance with any term hereof, it is intended that the truth and accuracy, at the time of the granting of such application or at the effective date of such certificate or report (as the case may be), of the facts and opinions stated in such document shall in such case be conditions precedent to the right of the Mortgagor to have such application granted or to the sufficiency of such certificate or report. Section 1.04. COMPLIANCE CERTIFICATES AND OPINIONS. Upon any application or request by the Mortgagor to the Mortgagee to take any action under any provision of this Mortgage, the Mortgagor shall furnish to the Mortgagee an Officers' Certificate stating that all conditions precedent, if any, provided for in this Mortgage 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 Mortgage 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 Mortgage shall include: (a) a statement that each individual signing such certificate or opinion has read such condition or covenant and the definitions herein relating thereto; (b) 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; (c) 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 condition or covenant has been complied with; and 18 (d) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. Section 1.05. EFFECT OF HEADINGS. The Article and Section headings herein are for convenience only and shall not affect the construction hereof. Section 1.06. SUCCESSORS AND ASSIGNS; AMENDMENTS. (a) Subject to Section 4.02 hereof and Section 10.02 of the Indenture, this Mortgage shall be binding upon and inure to the benefit of the parties hereto and of the respective successors and assigns of the parties hereto to the same effect as if each such successor or assign were in each case named as a party to this Mortgage. (b) This Mortgage may not be modified, amended, discharged, released nor any of its provisions waived except by agreement in writing executed by the Mortgagor and the Mortgagee and in accordance with the provisions of this Mortgage and the Indenture. Section 1.07. SEPARABILITY CLAUSE. In case any provision in this Mortgage 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 1.08. BENEFITS OF MORTGAGE. Nothing in this Mortgage or in the Guaranty, express or implied, shall give to any Person, other than the parties hereto and their successors and assigns, any benefit or any legal or equitable right, remedy or claim under this Mortgage. Section 1.09. GOVERNING LAW. This Mortgage shall be deemed to be a contract under the laws of the State of New Jersey and shall be construed in accordance with and governed by the laws of the State of New Jersey. Section 1.10. [Reserved] Section 1.11. PROVISIONS REQUIRED BY INDENTURE. Whenever the provisions of this Mortgage and the provisions of the Indenture shall be inconsistent, the provisions of the Indenture shall govern. Section 1.12. RIGHTS OF THE TRUSTEE. So long as the Trustee is the Mortgagee hereunder, except as otherwise provided in Section 8.01 of the Indenture: (a) the Mortgagee 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, coupon or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) whenever in the administration of this Mortgage the Mortgagee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Mortgagee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate; (c) the Mortgagee 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 the Mortgagee hereunder in good faith and in reliance thereon; (d) the Mortgagee shall be under no obligation to exercise any of the rights or powers vested in it by this Mortgage at the request or direction of any Noteholder pursuant to the Indenture, unless such holder shall have offered to the Mortgagee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (e) the Mortgagee 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, or other paper or document but the Mortgagee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Mortgagee shall determine to make such further inquiry or investigation, it shall be entitled (subject to the express limitations with respect thereto contained in this Mortgage) to examine the books, records and premises of the Mortgagor, personally or by agent or attorney; (f) the Mortgagee may execute any of the trusts or power hereunder or perform any duties hereunder either directly or by or through agents or attorneys, and the Mortgagee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder; (g) the Mortgagee shall not be personally liable, in case of entry by it upon the Trust Estate, for debts contracted or liabilities or damages incurred in the management or operation of the Trust Estate; and (h) no provision of this Mortgage shall require the Mortgagee to expend or risk its own funds or otherwise incur any financial liability in the performance of its obligations hereunder, or in the exercise 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. Section 1.13. MORTGAGE SUBJECT TO THE PROVISIONS OF THE ACT. Each provision of this Mortgage is 19 subject to and shall be enforced in compliance with the provisions of the New Jersey Casino Control Act. This Mortgage shall not be transferred, assigned or amended without prior approval of the New Jersey Casino Control Commission. Section 1.14. DISCHARGE OF LIEN. If the Mortgagor shall pay or cause to be paid, or there shall otherwise be paid, to the Mortgagee all amounts required to be paid by the Mortgagor pursuant to the Guaranty, or the Note Mortgage and the Notes, and the conditions precedent for the Indenture to cease, determine and become null and void in accordance with Section 5.01 of the Indenture shall have occurred, the Mortgagee shall promptly cancel and discharge this Mortgage, and execute and deliver to the Mortgagor all such instruments as may be necessary, required or appropriate to evidence such discharge and satisfaction of such lien or liens. Section 1.15. GENERAL APPLICATION. (a) The assertion of any rights upon any Default shall be subject in each instance to the giving of any notice and the expiration of any grace period provided for in Section 3.01 as a condition to such Default making it an Event of Default, unless the Trust Indenture Act requires otherwise, in which case the Trust Indenture Act shall control. (b) For the purposes of this Mortgage, it is understood that an event which does not materially diminish the value of the Mortgagee's interest in the Trust Estate shall not be deemed an "impairment of security", as that phrase is used in this Mortgage. ARTICLE TWO RELEASE; OTHER EXCEPTED PROPERTY; SUBORDINATION Section 2.01. POSSESSION BY MORTGAGOR; DISPOSITIONS WITHOUT RELEASE. So long as there shall have been no demand for payment under the Guaranty pursuant to Section 3.02 of this Mortgage, the Mortgagor shall be suffered and permitted, with power freely and without let or hindrance on the part of the Mortgagee, subject to the provisions of this Mortgage and the Note Mortgage, to possess, use, manage, operate and enjoy the Trust Estate and every part thereof and to collect, receive, use, invest and dispose of the rents, issues, tolls, profits, revenues and other income from the Trust Estate or any part hereof, to use, consume and dispose of any consumables, goods, wares and merchandise in the ordinary course of business of operating the Casino-Hotel and to adjust and settle all matters relating to choses in action, leases and contracts. 20 Section 2.02. OBSOLETE PROPERTY; TANGIBLE PERSONAL PROPERTY; LEASE MODIFICATIONS. The Mortgagor shall have the right, at any time and from time to time, unless an Event of Default shall have occurred and be continuing, without any release from or consent by the Mortgagee: (a) to sell or dispose of, free from the lien of this Mortgage, any Tangible Personal Property which, in its reasonable opinion, may have become obsolete or unfit for use or which is no longer necessary in the conduct of its businesses or the operation of the Trust Estate, and no purchaser of any such property shall be bound to inquire into any question affecting the Mortgagor's right to sell or otherwise dispose of the same, free from the lien of this Mortgage; (b) to alter, repair, replace, change the location (provided notice shall be given to Mortgagee as to any new location) or position of and add to any Tangible Personal Property; provided, however, that no change shall be made in the location of any such property subject to the lien of this Mortgage which would in any respect impair the security of this Mortgage upon such property; or (c) to renew, extend, surrender, terminate, modify or amend any leases of Tangible Personal Property, when, in the Mortgagor's reasonable opinion, it is prudent to do so. The Mortgagor shall retain any net cash proceeds (subject to the right to pay dividends or make cash distributions pursuant to Section 12.07 of the Indenture) received from the sale or disposition of any Tangible Personal Property under Subsection (a) of this Section 2.02, in the business of operating the Casino-Hotel. The Mortgagee shall be under no responsibility or duty with respect to the exercise of the rights of the Mortgagor under this Section 2.02 or the application of the proceeds of any sale or disposition of any Tangible Personal Property. Section 2.03. OTHER EXCEPTED PROPERTY. Notwithstanding any provisions contained in this Mortgage or 21 the Indenture to the contrary, including, without limitation, the provisions of Granting Clauses Fifth and Sixth and of Articles Two and Five hereof, if the Mortgagor acquires Tangible Personal Property and other items constituting operating assets, such as computer software subject to any FF&E Financing Agreement, or becomes the lessee under a lease for any of the same and if the document evidencing such FF&E Financing Agreement prohibits subordinate liens or the provisions of any such lease prohibits any assignment thereof by the lessee, and if any such prohibition is customary with respect to similar transactions of the lender or lessor, as the case may be, then the property so purchased or the lessee's interest in the lease, as the case may be, shall be deemed to be Excepted Property. If any such FF&E Financing Agreement permits subordinate liens then the Mortgagee agrees to execute and deliver to the Mortgagor, at the Mortgagor's expense, such documents as the holder of such FF&E Financing Agreement may reasonably request to evidence the subordination of the lien of this Mortgage to the lien of such FF&E Financing Agreement. Section 2.04. [Reserved] Section 2.05. RELEASED LAND. (a) Notwithstanding anything to the contrary herein contained, the Mortgagor shall have the right, at any time and from time to time, unless an Event of Default shall have occurred and be continuing, to convey all or any part of the Released Fee Land (the land to be so conveyed is hereinafter referred to as the "Released Land"), free from the lien of the Mortgage, provided that the conditions set forth in Section 2.05(a) of the Note Mortgage have been satisfied. (b) The Mortgagee shall, from time to time, promptly execute any written instrument in form reasonably satisfactory to the prospective purchaser to confirm the release of the Released Fee Land, upon receipt by the Mortgagee of an Officers' Certificate stating that the Mortgagor is entitled to such release by virtue of the Mortgagor's compliance with this Section 2.05 and, if applicable, Section 2.05 of the Note Mortgage, PROVIDED, that the Mortgagee shall have no liability thereunder and all costs and expenses (including reasonable attorneys' fees) shall be paid by the Mortgagor. Section 2.06. RELEASED FEE LAND. (a) Notwithstanding anything to the contrary herein contained, in the event the Mortgagor intends to exercise an option to acquire fee title to Leased Land under the provisions of any Ground Lease, the Mortgagor shall have the right, unless an Event of Default shall have occurred and be 22 continuing, to have an Affiliate exercise such options(s) or for the Mortgagor to exercise such options(s) on behalf of an Affiliate and in connection therewith to cause fee simple title to the Leased Land or any part thereof to be conveyed to an Affiliate of the Mortgagor (provided that no portion of the purchase price of the Leased Land or part thereof is paid by Mortgagor), free from the lien of this Mortgage (the land to be so conveyed is hereinafter referred to as the "Released Fee Land"), provided that the Mortgagor furnishes the Mortgagee with the following: (i) an Officers' Certificate requesting the release of the Released Fee Land from the Trust Estate and stating that (A) the Mortgagor is not required to own the Released Fee Land in order to maintain all Permits and in order to comply with the provisions of all material contracts to which the Mortgagor is a party or by which the Mortgagor is bound, (B) such Affiliate has received all Permits necessary to own the Released Fee Land (including without limitation all approvals required by the Casino Control Commission of the State of New Jersey), (C) there has been delivered to the Mortgagor and the Mortgagee a true copy of an instrument executed by such Affiliate stating that (i) such Affiliate may only engage in the activity of owning the Released Fee Land and (ii) such Affiliate shall not convey the Released Fee Land to another Affiliate of the Mortgagor, unless such other Affiliate executes and delivers to the Mortgagor and the Mortgagee, the instruments that would have been required to be delivered pursuant to clause (C) if the Mortgagor conveyed the Released Fee Land to such other Affiliate (provided that this restriction shall only be effective until such time as this Mortgage shall be satisfied of record) and (D) the deed conveying the Released Fee Land to such Affiliate shall state that such conveyance is made subject to the terms, provisions and conditions of the applicable Ground Lease and that the fee and leasehold interests in the Released Fee Land shall not merge by reason of the Mortgagor and/or any Affiliate owning both the leasehold and fee estate therein, and that such estates shall always remain separate and distinct; (ii) an Opinion of Counsel to the effect that (A) the Mortgagor is not required to own the Released Fee Land in order to maintain in good standing all Permits or by the provisions of any material contract to which the Mortgagor is a party or by which it is bound to own the Released Fee Land and (B) the instruments described in clause (C) of subparagraph (i) were duly executed by and are binding upon such Affiliate; and 23 (iii) an endorsement to the Original Policy, confirming that no merger of the fee and leasehold estates in the Released Fee Land has resulted from such conveyance. In addition, simultaneously with such acquisition, the Affiliate and Mortgagor shall enter into an instrument in form and substance reasonably satisfactory to Mortgagee, amending the applicable Ground Lease to provide such mortgagee protections as are customary and to the extent reasonably required by Mortgagee, including, without limitation, (A) a covenant of the landlord not to terminate the Ground Lease for any reason whatsoever (including without limitation, due to any default by tenant of its obligations under such Ground Lease), and (B) an agreement by the landlord not to accept payment of any fixed or base rent from the tenant (and, if tendered by the Mortgagor, and agreement to return same to the Mortgagor) or any other charges payable thereunder at any time that an Event of Default shall have occurred and shall be continuing. (b) The Mortgagee shall, from time to time, promptly execute any written instrument in form reasonably satisfactory to the prospective purchaser to confirm the release of the Released Fee Land, upon receipt by the Mortgagee of an Officers' Certificate stating that the Mortgagor is entitled to such release by virtue of the Mortgago's compliance with this Section 2.06, PROVIDED that the Mortgagee shall have no liability thereunder and all costs and expenses (including reasonable attorneys' fees) shall be paid by the Mortgagor. Section 2.07. AFTER-ACQUIRED FEE MORTGAGES. (a) Notwithstanding anything contained herein to the contrary (i) if no Event of Default has occurred and is continuing and (ii) if the Mortgagor shall acquire Released Fee Land, then simultaneously with the acquisition thereof, the Mortgagor shall have the right to encumber such fee simple title with a mortgage (such mortgage and any refinancing thereof permitted by the Indenture is hereinafter referred to as an "After-Acquired Fee Mortgage"). The lien of this Mortgage on the Released Fee Land shall be subordinated to the lien of the After-Acquired Fee Mortgage on the Released Fee Land (and to the lien of other Superior Mortgages which shall become a lien thereon in accordance with the terms thereof), provided the following conditions are satisfied: (i) the After-Acquired Fee Mortgage encumbers the fee simple title to such real property and no other property; 24 (ii) the indebtedness secured by the After-Acquired Fee Mortgage (A) does not exceed 75% of the cost to the Mortgagor of such fee simple title at the time of the acquisition and (B) satisfies the criteria set forth in Section 12.08 of the Indenture; (iii) in the event the After-Acquired Fee Mortgage encumbers fee simple title to the Leased Land or any part thereof, such After-Acquired Fee Mortgage contains provisions binding on the holder of the After-Acquired Fee Mortgage and its successors and assigns confirming the provisions of Section 5.21(d) of this Mortgage; (iv) the Released Fee Land is not being acquired from an Affiliate of the Mortgagor; (v) the After-Acquired Fee Mortgage and other loan documents shall contain a provision binding upon the holder of such After-Acquired Fee Mortgage and other loan documents that all insurance proceeds in the event of a Casualty and awards for Takings of less than the entire Released Fee Land shall be used for purposes of Restoration; and (vi) the Mortgagor delivers to the Mortgagee an Officers' Certificate requesting such subordination and certifying that the requirements of (i) through (v) above have been satisfied. (b) Anything contained in this Section 2.07 or elsewhere in this Mortgage to the contrary notwithstanding, the subordination of this Mortgage to any After-Acquired Fee Mortgage constituting a lien on Released Fee Land shall not be self-operative but shall be effective only upon the execution and delivery by the Mortgagee of an instrument in writing effecting such subordination. The Mortgagee shall deliver such instrument of subordination on the following conditions: (x) the Mortgagee shall have received an Officers' Certificate confirming that the conditions of (i) through (vi) of paragraph (a) have been satisfied, together with a true and correct copy of the After-Acquired Fee Mortgage and all other instruments securing the indebtedness evidenced thereby and (y) the instrument of subordination shall specifically state that this Mortgage is being subordinated not with respect to the lien of this Mortgage on the Ground Lease or on the leasehold estate created thereby, but only with respect to the fee simple title to the Leased Land or applicable part thereof and only if and to the extent that the After-Acquired Fee Mortgage being subordinated to is subject and subordinate to the Ground Lease and the leasehold estate created thereby. 25 ARTICLE THREE REMEDIES Section 3.01. EVENTS OF DEFAULT. "Event of Default," whenever used herein, means any one of following events (including any applicable notice requirement and any period of grace as specified in this Section 3.01) (whatever the reason for such event 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): (a) default by the Mortgagor under the Guaranty and continuance of such default for a period of 10 days after there has been given a written notice to the Mortgagor specifying such default and stating that such notice is a "Notice of Default" hereunder; or (b) an "Event of Default," as defined in Section 3.01 of the Note Mortgage, shall occur; or (c) default in the performance, or breach, of any of the provisions of Article Four and the continuance of such default or breach for a period of 60 days after there has been given a written notice to the Mortgagor specifying that such notice is a "Notice of Default" hereunder; or (d) any representation or warranty of the Mortgagor set forth in this Mortgage shall prove to be incorrect as of the time when made and the facts constituting such incorrectness impairs the Mortgagee's security and such impairment continues for a period of 30 days, unless such impairment is curable, but not susceptible of cure within such 30-day period (for reasons other than lack of funds), provided that the conditions set forth in Section 3.01(l) of the Note Mortgage have been satisfied. Section 3.02. DEMAND UNDER THE GUARANTY. If an Event of Default occurs and is continuing, and the Mortgagee has declared the Outstanding Amount of the Note to be due and payable immediately pursuant to Section 3.02 of the Note Mortgage, then the Mortgagee may declare all obligations under the Guaranty to be due and payable immediately. Section 3.03. APPLICATION OF MONEYS RECEIVED BY MORTGAGEE. Any moneys received by the Mortgagee pursuant to the provisions of this Article Three (including moneys received by the Trustee after any action or act by the Mortgagee under Section 3.10) shall be applied by the 26 Mortgagee in accordance with the provisions of Section 7.06 of the Indenture. Section 3.04. RESTORATION OF RIGHTS AND REMEDIES. If the Mortgagee has instituted any proceeding to enforce any right or remedy under this Mortgage and such proceeding has been discontinued or abandoned for any reason or has been determined adversely to the Mortgagee, then and in every such case the Mortgagor and the Mortgagee shall, subject to any determination in such proceeding, be restored to its former position hereunder, and thereafter all rights and remedies of the Mortgagee shall continue as though no such proceeding had been instituted. Section 3.05. RIGHTS AND REMEDIES CUMULATIVE. No right or remedy herein conferred upon or reserved to the Mortgagee 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 3.06. DELAY OR OMISSION NOT WAIVER. No delay or omission of the Mortgagee to exercise any right or remedy accruing upon an 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 Three by law to the Mortgagee may be exercised, from time to time, and as often as may be deemed expedient, by the Mortgagee. Section 3.07. UNDERTAKING FOR COSTS. If any action or proceeding shall be commenced (including, without limitation, an action to foreclose this Mortgage or to collect under the Guaranty secured hereby) to which action or proceeding the Mortgagee is made or becomes a party, or in which it becomes necessary in the opinion of the Mortgagee to defend or uphold the lien of this Mortgage, then, to the extent it has not already done so pursuant to the terms of Section 3.07 of the Note Mortgage, the Mortgagor shall pay to Mortgagee all expenses, including reasonable attorneys' fees and expenses, incurred by the Mortgagee in connection therewith, together with interest at the rate then payable on the Notes, from the date of payment less the net amount received by the Mortgagee or the Trustee, as their interests may appear under any title insurance policy, and, until paid, all such expenses, together with interest as aforesaid, shall be a lien on the Trust Estate. 27 Section 3.08. WAIVER OF APPRAISEMENT AND OTHER LAWS. To the full extent that it may lawfully so agree, the Mortgagor will not at any time insist upon, plead, claim or take the benefit or advantage of, any appraisement, valuation, stay, extension or redemption law now or hereafter in force, in order to prevent or hinder the enforcement of this Mortgage or the absolute sale of the Trust Estate, or any part hereof, or the possession thereof by any purchaser at any sale under this Article Three; and the Mortgagor, for itself and all who may claim under it, so far as it or they now or hereafter may lawfully do so, hereby waives the benefit of all such laws. The Mortgagor, for itself and all who may claim under it, waives, to the extent that it may lawfully do so, all right to have the property in the Trust Estate marshalled upon any foreclosure hereof, and agrees that any court having jurisdiction to foreclose this Mortgage may order the sale of the Trust Estate as an entirety. If any law in this Section 3.08 referred to and now in force, of which the Mortgagor or its successor or successors might take advantage despite this Section 3.08, shall hereafter be repealed or cease to be in force, such law shall not thereafter be deemed to constitute any part of the contract herein contained or to preclude the application of this Section 3.08. Section 3.09. ENTRY. The Mortgagor agrees that upon the occurrence of an Event of Default the Mortgagor, upon demand of the Mortgagee during the continuance thereof, shall forthwith surrender to the Mortgagee the actual possession of, and it shall be lawful for the Mortgagee by such officers or agents as it may appoint to enter and take possession of, the Trust Estate (and the books and papers of the Mortgagor), and to hold, operate and manage the Trust Estate (including the making of all needful repairs, and such alterations, additions and improvements as the Mortgagee shall deem wise) and to receive the rents, issues, tolls, profits, revenues and other income thereof, and, after deducting the costs and expenses of entering, taking possession, holding, operating and managing the Trust Estate, as well as payments for taxes, insurance and other proper charges upon the Trust Estate and reasonable compensation to itself, its agents and counsel, to apply the same as provided in Section 3.03, PROVIDED, HOWEVER, that the Mortgagee's rights under this Section 3.09 shall be subject to the provisions of the New Jersey Casino Control Act and Section 3.14. Whenever all that is then due upon the Note and under any of the terms of this Mortgage shall have been paid and all defaults hereunder shall have been made good, the Mortgagee shall surrender possession to the Mortgagor. 28 Section 3.10. POWER OF SALE; SUITS FOR ENFORCEMENT. In case an Event of Default shall occur and be continuing, the Mortgagee, with or without entry, in its discretion may: (a) sell, subject to any mandatory requirements of applicable law, the Trust Estate as an entirety, or in such parcels, as the Mortgagee may determine, to the highest bidder at public auction at such place and at such time (which sale may be adjourned by the Mortgagee from time to time in its discretion by announcement at the time and place fixed for such sale, without further notice) and upon such terms as the Mortgagee may fix and briefly specify in a notice of sale to be published as required by law; or (b) proceed to protect and enforce its rights under this Mortgage by sale pursuant to judicial proceedings or by a suit, action or proceeding in equity or at law or otherwise, whether for the specific performance of any covenant or agreement contained in this Mortgage or in aid of the execution of any power granted in this Mortgage or for the foreclosure of this Mortgage or for the enforcement of any other legal, equitable or other remedy, as the Mortgagee, being advised by counsel, shall deem most effectual to protect and enforce any of the rights of the Mortgagee; the failure to join tenants shall not be asserted as a defense to any foreclosure or proceeding to enforce the rights of the Mortgagee. Section 3.11. INCIDENT OF SALE. Upon any sale of any of the Trust Estate, whether made under the power of sale hereby given or pursuant to judicial proceedings, to the extent permitted by law: (a) all obligations owing under the Guaranty, if not previously due, shall at once become and be immediately due and payable; (b) subject to the provisions of Section 3.14 and the receipt of any required prior approvals of the New Jersey Casino Control Commission, the Mortgagee may bid for and purchase the property offered for sale, and upon compliance with the terms of sale may hold, retain and possess and dispose of such property, without further accountability, and may, in paying the purchase money therefor, delivery any notes or claims for interest thereon in lieu of cash to the amount which shall, upon distribution of the net proceeds of such sale, be payable thereon, and such notes or claims for interest thereon, in case the amounts so payable thereon shall be less than the amount due thereon, shall be returned to the holders 29 thereof after being appropriately stamped to show partial payment; (c) the Mortgagee may make and deliver to the purchaser or purchasers a good and sufficient deed, bill of sale and instrument of assignment and transfer of the property sold; (d) the Mortgagee is hereby irrevocably appointed the true and lawful attorney of the Mortgagor, in its name and stead, to make all necessary deeds, bills of sale and instruments of assignment and transfer of the property thus sold; and for that purpose it may execute all necessary deeds, bills of sale and instruments of assignment and transfer, and may substitute one or more persons, firms or corporations with like power, the Mortgagor hereby ratifying and confirming all that its attorney or such substitute or substitutes shall lawfully do by virtue hereof; but if so requested by the Mortgagee or by any purchaser, the Mortgagor shall ratify and confirm any such sale or transfer by executing and delivering to the Mortgagee or to such purchaser or purchasers all proper deeds, bills of sale, instruments of assignment and transfer and releases as may be designated in any such request; (e) all right, title, interest, claim and demand whatsoever, either at law or in equity or otherwise, of the Mortgagor of, in and to the property so sold shall be divested and such sale shall be a perpetual bar both at law and in equity against the Mortgagor, its successors and assigns, and against any and all persons claiming or who may claim the property sold or any part thereof from, through or under the Mortgagor, its successors and assigns; and (f) the receipt of the Mortgagee or of the officer making such sale shall be a sufficient discharge to the purchaser or purchasers at such sale for his or their purchase money and such purchaser or purchasers and his or their assigns or personal representatives shall not, after paying such purchase money and receiving such receipt, be obliged to see to the application of such purchase money, or be in anywise answerable for any loss, misapplication or non-application thereof. Section 3.12. RECEIVER. Upon the occurrence of an Event of Default and commencement of judicial proceedings by the Mortgagee to enforce any right under this Mortgage, the Mortgagee shall be entitled, as against the Mortgagor, without notice or demand and without regard to the adequacy of the security for the Guaranty or the solvency of the Mortgagor, to 30 the appointment of a receiver of the Trust Estate, and of the rents, issues, profits, revenues and other income thereof, PROVIDED, HOWEVER, that the Mortgagee's rights under this Section 3.12 shall be subject to the provisions of the New Jersey Casino Control Act and Section 3.14 hereof. Section 3.13. SUITS TO PROTECT THE TRUST ESTATE. Upon 5 days' prior written notice to the Mortgagor (or such shorter period or without notice if deemed necessary and appropriate by the Mortgagee), the Mortgagee shall have power to institute and maintain such proceedings as it may deem necessary and appropriate to prevent any impairment of the Trust Estate by any acts which may be unlawful or in violation of this Mortgage and to protect its interests in the Trust Estate and in the rents, issues, profits, revenues and other income arising therefrom, including power to institute and maintain proceedings to restrain the enforcement of or compliance with any 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 hereunder or be materially prejudicial to the interests of the Mortgagee. Section 3.14. MANAGEMENT OF CASINO-HOTEL. Notwithstanding any provision of this Article Three to the contrary, following an Event of Default and the taking of possession of the Trust Estate or any part thereof by the Mortgagee and/or the appointment of receiver of the Trust Estate or any part thereof, the Mortgagee or any such receiver shall be authorized, in addition to the rights and powers of the Mortgagee and such receiver set forth elsewhere in this Mortgage, to retain one or more experienced operators of hotels and/or casinos to manage the Casino-Hotel, PROVIDED that any such operator shall have all necessary legal qualifications, including all Permits, to manage the Casino-Hotel. ARTICLE FOUR CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE Section 4.01. CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER ONLY ON CERTAIN TERMS. The Mortgagor shall comply with all provisions applicable to the Mortgagor in Article Ten of the Indenture. Section 4.02. SUCCESSOR ENTITY SUBSTITUTED. Upon any consolidation or combination or any conveyance or transfer of the Trust Estate or any portion thereof in accordance with Section 10.01 of the Indenture, the successor entity formed 31 by such consolidation or into which the Mortgagor is combined or to which such conveyance or transfer is made shall succeed to, and be substituted for, and may exercise every right and power of, the Mortgagor under this Mortgage with the same effect as if such successor entity had been named as the Mortgagor herein; PROVIDED, HOWEVER, that no such conveyance or transfer of the Trust Estate substantially as an entirety, unless such conveyance or transfer is in compliance with the provisions of Article Ten of the Indenture, shall have the effect of releasing the Person named as "the Mortgagor" in the first paragraph of this instrument or any successor entity which shall theretofore have become such in the manner prescribed in such Article Ten from its liability as guarantor. Section 4.03. LIMITATION ON SALES OF TRUST ESTATE. Except as otherwise expressly permitted by this Mortgage or the Indenture, the Mortgagor shall not sell, assign, lease, sublease, hypothecate, pledge, mortgage or otherwise transfer all or any part of the Trust Estate or any interest therein (including without limitation any interest in the Ground Leases). Without limiting the generality of the foregoing, the Mortgagor shall not separate, or attempt to separate, its ownership of its interest in the Ground Leases from its ownership of the buildings constituting the Casino-Hotel or any part thereof. ARTICLE FIVE COVENANTS AND REPRESENTATIONS OF MORTGAGOR Section 5.01. [Reserved] Section 5.02. FF&E FINANCING AGREEMENTS. The Mortgagor covenants and agrees to comply with all of the terms and conditions set forth in any FF&E Financing Agreements before the expiration of any applicable notice and cure periods contained in the FF&E Financing Agreements. Section 5.03. LIMITATIONS ON LIENS. The Mortgagor will not create, incur, suffer or permit to be created or incurred or to exist any mortgage, lien, charge or encumbrance on or pledge of any of the Trust Estate, other than (i) Permitted Encumbrances, (ii) liens on the Trust Estate in connection with indebtedness permitted by clauses (i), (ii), (iii), (iv) or (v) of Section 12.08(a) of the Indenture, and (iii) a building contract or a notice of intention filed by a mechanic, materialman or laborer under the New Jersey lien law. Without limiting the generality of the foregoing sentence but notwithstanding the provisions of the foregoing sentence, the Mortgagor shall not be deemed to have breached the provisions of the foregoing sentence by virtue of the 32 existence of a lien for Impositions or mechanics liens so long as the Mortgagor is in good faith contesting the validity of the same in accordance with the provisions of Section 5.09 to the extent that the matters described in (i) and (ii) do not constitute a default under any Ground Lease or Superior Mortgage. Section 5.04. [Reserved] Section 5.05. ACTIONS AND PROCEEDINGS. The Mortgagor hereby acknowledges the right of the Mortgagee, in the name of and on behalf of the Mortgagor, (a) to appear in and defend any action or proceeding brought with respect to the Trust Estate or any part thereof and (b) upon 5 days' prior written notice to the Mortgagor (or such shorter period or without notice if deemed necessary and appropriate by the Mortgage), to commence any action or proceeding to protect the interest of the Mortgagee in the Trust Estate. Section 5.06. WARRANTY OF LEASEHOLD ESTATE AND TITLE. The Mortgagor represents and warrants that as of the date hereof: (a) it is duly authorized under the laws of the State of New Jersey and all other applicable laws to execute and deliver this Mortgage, and all corporate action on its part necessary for the valid execution and delivery of this Mortgage has been duly and effectively taken; (b) it is the lawful owner and is lawfully seized and possessed of the Owned Land and all buildings and improvements thereon, free and clear of all liens, charges or encumbrances, other than the lien of the Mortgage Documents, any Working Capital Facility Lien and Existing Encumbrances; (c) it is the holder of and has good and marketable title to the leasehold interests and leasehold estates under the Ground Leases and to the Ground Leases, subject to no lien, encumbrance or charge other than the lien of the Mortgage Documents, any Working Capital Facility Lien and Existing Encumbrances; (d) (i) the Ground Leases are valid and subsisting demises of the Leased Land for the terms therein set forth, (ii) there are no defaults thereunder by any Lessor or the lessee as to which written notice has been given to or by the lessee, (iii) the Mortgagor has delivered true and correct copies of the Ground Leases and all modifications, amendments and supplements thereto, and (iv) each of the Ground Leases is in full 33 force and effect and has not been modified, amended or supplemented, except as described on Schedule 2; (e) it has good title to the Operating Assets, subject to no lien, encumbrance or charge, other than the lien of the Mortgage Documents, any Working Capital Facility Lien and Existing Encumbrances; and (f) the Mortgagor has good and lawful right and authority to execute this Mortgage and to grant, bargain, sell, alien, convey, assign, transfer, hypothecate, pledge, mortgage and confirm the Trust Estate as provided herein (including without limitation with respect to the Operating Assets and the Ground Leases, without the consent of any third party, other than governmental authorities but any applicable or necessary consent or approval of any such governmental authority has been given or waived at or prior to the execution and delivery of this Mortgage), and this Mortgage constitutes a valid second mortgage lien and second priority security interest in the Trust Estate PARI PASSU with the lien of the Note Mortgage, subject only to Working Capital Facility Liens and Existing Encumbrances. The Mortgagor hereby does and will forever warrant and defend (x) the title to Trust Estate (including without limitation, its leasehold estates under the lessee's interests in the Ground Leases) (subject to Permitted Encumbrances) and (y) the priority of the lien of this Mortgage (subject to Permitted Encumbrances other than Restricted Encumbrances), against the claims and demands of all persons whomsoever, at the Mortgagor's sole cost and expense. Section 5.07. FURTHER ASSURANCES; RECORDING. The Mortgagor will, as provided in Section 5.13, from time to time subject its right, title and interest under all Leases to the lien of this Mortgage. The Mortgagor will cause this instrument and all other instruments of further assurance, including all financing statements and continuation statements covering security interests in personal property, to be promptly recorded, registered and filed, and at all times to be kept recorded, registered and filed, and will execute and file such financing statements and cause to be issued and filed such continuation statements, all in such manner and in such places as may be required by law or as requested by the Mortgagee to fully preserve and protect the rights of the Mortgagee as a secured party under the Uniform Commercial Code to all property comprising the Trust Estate (to the extent a grant of a security interest therein is governed by the Uniform Commercial Code) and to perfect, preserve and protect the lien 34 of this Mortgage as a valid mortgage lien of record and a valid security interest on the Trust Estate subject to Permitted Encumbrances (other than Restricted Encumbrances). The Mortgagor will pay all filing or recording fees, and all expenses incident to the execution and delivery of this Mortgage, and any instrument of further assurance, and all federal, state, county and municipal stamp taxes and other taxes, duties, imposts, assessments and charges arising out of or in connection with the execution and delivery of this Mortgage, any financing statement or continuation statement with respect to the personal property constituting part of the Trust Estate or any instrument of further assurance. Section 5.08. PAYMENT OF TAXES AND CERTAIN CLAIMS; COMPLIANCE WITH LEGAL REQUIREMENTS AND INSURANCE REQUIREMENTS. The Mortgagor will: (a) subject to the provisions of Section 5.09 relating to contests, pay or cause to be paid promptly (or when installments of the same shall become due and payable, if, by law or by agreement or arrangement with the applicable governmental agency or authority, the same may be paid in installments) before any fine, penalty, interest or cost may be added for nonpayment (but no later than when the same are payable by the Mortgagor pursuant to any Superior Instrument Requirement), all taxes (including, without limitation, real estate taxes, personal or other property taxes and all sales, value added, use and similar taxes), assessments (including, without limitation, all assessments for public improvements or benefits, whether or not commenced or completed prior to the date hereof and whether or not to be completed prior to the satisfaction of this Mortgage), water, sewer or other rents, rates and charges, excises, levies, license fees, permit fees, inspection fees and other authorization fees and other charges, in each case whether general or special, ordinary or extraordinary, or foreseen or unforeseen, of every character (including all interest, additions to tax and penalties thereon), that may be assessed, levied, confirmed or imposed on or in respect of or be a lien upon (1) the Trust Estate (including without limitation the Leased Land) or any part thereof or any rent therefrom or any estate, right or interest therein, or (2) any acquisition, occupancy, use, leasing, or possession of or activity conducted on the real property or any part thereof included in the Trust Estate or any gross receipts thereof or of the rent therefrom (all of the foregoing being referred to collectively as "Impositions"). Notwithstanding the foregoing or any other provision of this Mortgage, the Mortgagor shall not be required to pay any income, 35 profits or revenue tax upon the income of the Mortgagee, the Trustee or the Noteholders nor any franchise, excise, corporate, estate, inheritance, succession, capital levy or transfer tax of the Mortgagee, the Trustee or the Noteholders nor any interest, additions to tax or penalties in respect thereof, unless such tax is imposed, levied or assessed in substitution for any Impositions that the Mortgagor is required to pay pursuant to this Section 5.08. The Mortgagor will deliver to the Mortgagee official receipts or other proof evidencing payments of any Impositions in accordance with the requirements of this Section 5.08. The Mortgagor shall not be entitled to any credit for taxes or assessments paid against the Guaranty; (b) except for such property which the Mortgagor may dispose of or replace pursuant to Section 2.02, maintain and keep all its properties used or useful in the conduct of its business (other than obsolete equipment), including, without limitation, the Casino-Hotel and all Tangible Personal Property, in such good repair, working order and condition, except for reasonable wear and use, and make or cause to be made all such needful and proper repairs, renewals and replacements thereto consistent with the standards of other casino-hotels in Atlantic City, New Jersey; (c) occupy and continuously operate the Casino-Hotel and keep the Casino-Hotel supplied with Tangible Personal Property, all in a manner consistent with the standards of other casino-hotels in Atlantic City, New Jersey (provided that nothing contained in this Section 5.08(c) shall be deemed to reduce the time period set forth in Section 3.01(f)); (d) subject to the provisions of Section 5.09 relating to contests, the Mortgagor at its sole expense will timely (1) comply with all Legal Requirements and Insurance Requirements, whether or not compliance therewith shall require structural changes in the buildings and improvements included in the Trust Estate or interfere with the use and enjoyment of the Trust Estate or any part thereof, (2) procure, maintain and comply with all permits and other authorizations required for (i) the use of the Casino as a gaming and gambling facility, (ii) the on-premises consumption of alcoholic beverages at the Casino-Hotel and (iii) any other use of the Trust Estate or any part thereof then being made, and for the proper erection, installation, operation and maintenance of the improvements or any part thereof, and (3) comply with any instruments of record at the time in force affecting the Trust Estate or any part thereof, if 36 the failure to comply with the same would impair the Mortgagee's security hereunder. Without limiting the generality of the foregoing, the Mortgagor represents and warrants that at the time of the execution of this Mortgage, the Mortgagor is in compliance with the requirements of clauses (1), (2) and (3); (e) in the event of the passage after the date of this Mortgage of any law of the State of New Jersey, or any other governmental entity, changing in any way the laws now in force for the taxation of mortgages, or debts secured thereby, for state or local purposes, or the manner of the operation of any such taxes, so as to affect the interest of the Mortgagee, then and in such event, the Mortgagor shall bear and pay the full amount of such taxes, provided that if for any reason payment by the Mortgagor of any such new or additional taxes would be unlawful or if the payment thereof would constitute usury or render the indebtedness secured hereby wholly or partially usurious under any of the terms or provisions of the Note, or this Mortgage, or otherwise, the Mortgagee may, at the Mortgagee's option, declare the whole sum secured by this Mortgage, with interest thereon, to be due and payable 90 days after notice of election thereof has been given by the Mortgagee, or the Mortgagee may, at the Mortgagee's option, pay that amount or portion of such taxes as renders the loan or indebtedness secured hereby unlawful or usurious, in which event the Mortgagor shall concurrently therewith pay the remaining lawful and nonusurious portion or balance of such taxes. Section 5.09. PERMITTED CONTESTS. The Mortgagor may, at its sole expense, contest by appropriate legal proceedings conducted in good faith and with due diligence, the amount or validity or application, in whole or in part of any Imposition or lien therefor or any Legal Requirement or Insurance Requirement or the application of any instrument of record affecting the Trust Estate or any part thereof or any claims of mechanics, materialmen, suppliers, or vendors or lien therefore, and may withhold payment of the same pending such proceedings if permitted by law, or make payment under protest, or defer compliance with any such Legal Requirement, any such Insurance Requirement or the terms of any such instrument, and the same shall not be a Default hereunder, provided that (a) in the case of any Impositions or lien therefor or any claims of mechanics, materialmen, suppliers or vendors or lien therefor, such proceedings shall suspend the collection thereof from each of the Mortgagor, the Mortgagee, the Trustee, the Noteholders and the Trust Estate, (b) neither the Trust Estate nor any interest therein would be in any danger of being sold, forfeited, or lost, (c) such action 37 would not result in or constitute a default under any Ground Lease or Superior Mortgage, (d) in the case of a Legal Requirement, neither the Noteholders nor the Mortgagee shall be in any danger of any civil or any criminal liability, and the failure of the Mortgagor to comply with such Legal Requirement shall not affect the continuance in good standing of any Permit or result in the suspension, termination, non-renewal or material adverse modification of any permit, and (e) in the case of an Insurance Requirement, the failure of the Mortgagor to comply therewith shall not affect the validity of any insurance required to be maintained by the Mortgagor hereunder. Section 5.10. MECHANICS' AND OTHER LIENS. Without limiting the generality of the first sentence of Section 5.03 and notwithstanding the provisions of Section 5.03(a)(ii), the Mortgagor will cause to be removed, either by payment, or bonding or otherwise, all claims and demands of mechanics, materialmen, laborers, and others which, if unpaid, might result in, or permit the creation of, a lien on the Premises and/or Trust Estate or any part thereof, or on the revenues, rents, issues, income and profits arising therefrom and in general will do or cause to be done everything necessary so that the lien hereof shall be fully preserved, at the cost of the Mortgagor, without expense to the Mortgagee. Section 5.11. INSURANCE. (a) The Mortgagor will, at its expense, maintain with Insurers: (1) insurance with respect to the Mortgagor's insurable properties constituting a part of the Trust Estate against loss or damage by fire, lightning, and other risks from time to time included under "all-risk" policies and against loss or damage by sprinkler leakage, water damage, collapse, malicious mischief and explosion in respect of any steam and pressure boiler and similar apparatus located on such insurable properties, in amounts at all times sufficient to prevent the Mortgagor from becoming a coinsurer within the terms of the applicable policies, but in any event such insurance shall be maintained in such insurable amounts not less than the greatest of the following (hereinafter referred to as the "Insurance Amount"): (i) 100% of the then full insurable value of such insurable properties, the term "full insurable value" to mean the actual replacement cost (excluding the costs of foundation, footing, excavation, paving, landscaping and other similar, non-insurable improvements) determined from time to time (but not less frequently than once in any 36 calendar months), by an Architect, contractor, appraiser, or an Insurer, or 38 (ii) the amount required to be maintained pursuant to the Superior Instrument Requirements; (2) war risk insurance as and when such insurance is obtainable from the United States of America or any agency thereof as promptly as reasonably practicable after the same becomes so obtainable, in an amount not less than the Insurance Amount, or in such lesser amount as may then be so obtainable; (3) public liability, including personal injury and property damage and comprehensive general liability connected with the possession, use, leasing, operation or condition of such insurable properties in such amounts as, in the Mortgagor's judgment, are prudent, considering the cost of such insurance, for personal injury and property damage with respect to any one occurrence, which may be under an umbrella policy. Anything contained in this clause (3) to the contrary notwithstanding, the Superior Instrument Requirements with respect to the kinds and amount of insurance described in this clause (3) shall be satisfied by the Mortgagor; (4) appropriate workers' compensation insurance with respect to any work (to the extent the risks to be covered thereby are not already covered by other policies of insurance maintained by the Mortgagor) on or about such insurable properties; (5) business interruption insurance covering not less than 12 months of loss, provided that, at any time that the Mortgagor is renewing any policy for such insurance or taking out any new or replacement such policy covering a period of less than 12 months, the Mortgagor shall deliver to the Mortgagee an Officers' Certificate certifying that the period of coverage to be maintained by the Mortgagor under such policy is the maximum that can be maintained at rates determined by the Mortgagor to be reasonable for such coverage; (6) to the extent available, flood insurance in an amount not less than the Insurance Amount, or such lesser amount as may then be so obtainable; and (7) such other insurance with respect to such insurable properties against loss or damage of the kinds (i) from time to time customarily insured against by persons owning or using casino-hotels of comparable size in the boardwalk area of Atlantic City, New Jersey and 39 (ii) required to be maintained pursuant to the Superior Instrument Requirements. Notwithstanding the foregoing, to the extent permitted by Superior Instrument Requirements, (i) the Mortgagor shall be permitted to maintain a deductible with respect to the insurance policies described in clauses (1), (2), (6) and (7) in an amount not to exceed (x) for the twelve month period commencing the date hereof, $100,000 with respect to the insurance policies described in clause (1), (2), (6) and (7) thereafter, the customary deductible (if any) with respect to the insurance maintained by casino-hotels of a similar size and value in Atlantic City, New Jersey (but in no event more than $1,000,000), (ii) the Mortgagor shall be permitted to maintain a $200,000 self insured retention under the general liability policy described in clause (3) and a deductible with respect to the other insurance policies described in clause (3) in an amount not to exceed the amount of deductible as is customarily maintained by casino-hotels of similar size in Atlantic City, New Jersey, (iii) the Mortgagor shall not reduce its insurance coverage for the matters described in clause (3) (which for purposes of this paragraph means a reduction in single limits or an increase in deductible) unless and until the Mortgagor delivers to the Mortgagee an Officers' Certificate certifying (w) that the coverage the Mortgagor was theretofore maintaining cannot be maintained at rates determined by the Mortgagor to be reasonable for such coverage, (x) the amount of the proposed reduction, (y) the premium for the existing and the proposed reduced coverage, and (z) that the proposed deductible satisfied the criteria set forth in this clause (iii), and (iv) the Mortgagor shall be permitted to maintain a deductible with respect to the insurance policies described in clause (5) in the forms of and in an amount not to exceed the amount of deductible as is customarily maintained by casino-hotels of similar size in Atlantic City, New Jersey. (b) Each policy of insurance maintained by the Mortgagor pursuant to Subsection (a) of this Section 5.11 shall, (1) except in the case of workers' compensation insurance, name as additional insureds the Mortgagee, in both its individual and fiduciary capacities, and, to the extent required by the Superior Instrument Requirements, the Lessors and the holders of the Superior Mortgages, (2) provide that all insurance proceeds for losses, except in the case of public liability insurance and workers' compensation insurance or as otherwise provided in Subsections (d), (e) and (f) of this Section 5.11, be payable solely to the Mortgagee or such other party as is required to receive such proceeds under a Superior Mortgage, (3) except in the case of workers' compensation, include effective waivers (whether under the terms of any such policy or otherwise) by the insurer of all claims for insurance premiums against all lost payees and named insureds (other than the Mortgagor) and all rights of subrogation against any named insured, (4) except in the case of public liability and 40 workers' compensation insurance, provide that any losses shall be payable notwithstanding (i) any act, failure to act, negligence of, or violation or breach of warranties, declarations or conditions contained in such policy by the Mortgagor or the Mortgagee or any other named insured or loss payee (including, without limitation, with respect to the Released Fee Land, the holders of any After-Acquired Fee Mortgages), (ii) the occupation or use of the insurable properties for purposes more hazardous than permitted by the terms of the policy, (iii) any foreclosure or other proceeding or notice of sale relating to the insurable properties or (iv) any change in the title to or ownership or possession of the insurable properties, (5) contain a non-contributory mortgagee clause in favor of the Mortgagee, and (6) provide that if all or any part of such policy is cancelled, terminated or expires, the insurer will forthwith give notice thereof to each named insured an loss payee and that no cancellation, reduction in amount or material change in coverage thereof shall be effective until at least 30 days after receipt by each named insured and loss payee of written notice thereof. (c) The Mortgagor will deliver to the Mortgagee, (1) duplicate originals of all insurance policies that the Mortgagor is required to maintain pursuant to this Section 5.11 and (2) within 30 days after each reduction in insurance required to be maintained by the Mortgagor hereunder, an Officers' Certificate setting forth the particulars as to all such insurance policies and certifying that the same comply with the requirements of this Section 5.11, that all premiums or installments thereof then due thereon have been paid and that the same are in full force and effect. The Mortgagee shall not be responsible for effecting or renewing any insurance or for the responsibility or solvency of the insurers. (d) The Mortgagor shall give written notice to the Mortgagee immediately upon obtaining knowledge of any Casualty which (x) results in damage, loss or destruction in an amount in excess of $5,000,000 to any buildings or improvements on the Premises and/or any Tangible Personal Property or (y) pursuant to any Superior Instrument Requirement, would require the deposit of insurance proceeds with the Depositary, or action or proceeding with respect thereto. Whenever the Superior Instrument Requirements require or permit the selection of the Depositary by the Mortgagor, the Mortgagor shall select the Insurance Trustee as the Depositary. Within 30 days after any Casualty which results in any damage, loss or destruction in an amount in excess of $10,000,000 to any buildings or improvements of the Premises and/or any Tangible Personal Property, the Mortgagor shall deliver to the Mortgagee a certificate of an Architect stating whether, in such Architect's opinion, applicable Legal Requirements permit 41 the Restoration of such buildings and improvements for the same uses and to the same size and quality in all material respects, as existed immediately prior to the Casualty (and if such certificate states the Legal Requirements do not permit such Restoration, such certificate shall describe the manner closest approximating such criteria to which the buildings and improvements could be so restored and shall be accompanied by a Certificate of Appraised Value dated not more than 10 days prior to delivery setting forth the Appraised Value immediately prior to the Casualty and the estimated Appraised Value immediately after the Restoration). If the Mortgagor is required to deliver such Certificates of Appraised Value and if based on such Certificates of Appraised Value immediately after Restoration, the aggregate Outstanding Amount of First Mortgage Debt immediately after such Restoration shall exceed the greater of (i) 66 2/3% of the Appraised Value immediately after such Restoration or (ii) the quotient of the Outstanding Amount of First Mortgage Debt immediately prior to such Casualty divided by the Appraised Value immediately prior to the Casualty multiplied by the Appraised Value immediately after such Restoration, then the proceeds of any insurance shall, at the election of Mortgagee, either be applied to Restoration as set forth in Subsections (e), (h) and (i) below) or paid and delivered to the Mortgagee to the extent of the then Outstanding Amount of the Note and any other interest or other sums due hereunder or thereunder to be applied to the satisfaction of the Mortgage to the extent proceeds are available for such purpose and provided that no additional sums are due to the Trustee or the Noteholder under the Indenture, the balance of any net insurance proceeds shall be paid to the Mortgagor. Notwithstanding the foregoing sentence, if such Certificates of Appraised Values indicates that the Outstanding Amount of First Mortgage Debt immediately after such Restoration exceeds the greater of the two amounts determined pursuant to subclauses (i) and (ii) above, the proceeds of insurance will be made available for Restoration (subject to paragraphs, (e), (h) and (i) below) if the Mortgagor obtains an irrevocable commitment from a nationally recognized financial institution having a combined capital and surplus of at least $100,000,000, to supply, upon an acceleration under this Mortgage as a result of an Event of Default, funds to the Mortgagor as additions to capital in an amount equal to the Outstanding Amount of First Mortgage Debt in excess of the Appraised Value necessary to be paid down so that the Outstanding Amount of First Mortgage Debt will not exceed either of the two amounts determined pursuant to such clauses (i) and (ii), PROVIDED that such commitment may only be released if, upon an Appraisal at any time following completion of such Restoration, the aggregate Outstanding Amount of the First Mortgage Debt does not exceed 66-2/3% of the Appraised Value. 42 (e) Subject to the provisions of Subsection (d) above, in case a Casualty occurs, the following shall apply: (1) if the cost of Restoration (as hereinafter defined) does not exceed the sum of $10,000,000, the net insurance proceeds shall be paid by the Mortgagee to the Mortgagor (unless the Superior Instrument Requirements provide that the same shall be paid to the Depositary); (2) if the cost of Restoration is $10,000,000 or more or if the Superior Instrument Requirements provide that the same shall be paid to the Depositary, the net insurance proceeds shall be paid by the Mortgagee to the Insurance Trustee (or other Depositary required by the Superior Instrument Requirements, provided that such Depositary holds such proceeds in trust for purposes of paying the costs of Restoration); (3) the Mortgagor shall commence with reasonable promptness under the circumstances and thereafter with due diligence proceed to perform and complete in a good and workmanlike manner the restoration, repair, replacement or rebuilding of the damage or destruction resulting from the Casualty (all of which restoration, repair, replacement or rebuilding are referred to as the "Restoration") in accordance with the plans and specifications submitted to the Insurance Trustee, in conformance with all Legal Requirements and Superior Instrument Requirements, and in accordance with the further provisions of this Subsection (e), regardless of the extent of any such Casualty and whether or not net insurance proceeds, if any, shall be available or, if available, shall be sufficient, for the purpose of the Restoration (provided, however, that if the Mortgagor does not receive any net insurance proceeds within 30 days after any Casualty because the adjustment of the loss has not yet occurred, then the obligation of the Mortgagor to commence such Restoration shall be deferred until such proceeds are made available to the Mortgagor, provided that (i) Mortgagor delivers to the Mortgagee an Officers' Certificate certifying that the Mortgagor is diligently and continuously adjusting such loss with the Insurer, (ii) the Mortgagor delivers to the Mortgagee an Officers' Certificate within such 30-day period requesting the extension of such period, estimating the date on which such proceeds will be available and describing the Mortgagor's efforts to adjust such loss and certifying that such extension does not constitute a default or a breach of any of the provisions of any of the Ground Leases (or if so, such default or breach has been waived) and (iii) the Mortgagor delivers to the Mortgagee additional Officers' Certificates every 30 days thereafter updating the 43 information contained in the certificate described in Clause (ii)). All Restoration work shall be performed in accordance with the applicable provisions of Section 5.12 and in conformance with all Superior Instrument Requirements, Legal Requirements and Insurance Requirements and, prior to commencing any Restoration, the Mortgagor shall obtain all Permits necessary in connection therewith, and shall obtain, and keep in full force and effect until the completion of such Restoration, such additional insurance as the Insurance Trustee and Superior Instrument Requirements may require. The plans and specifications for the Restoration shall be accompanied by a certificate of the Mortgagor and an Opinion of Counsel to the effect that upon the completion of the Restoration pursuant to the plans and specifications the Premises, and all buildings and improvements, thereon will comply with all superior Instrument Requirements, Legal Requirements and Insurance Requirements. Notwithstanding anything in this Section 5.11 to the contrary, if such Casualty is in an amount less than $5,000,000, the Mortgagor shall not be required to perform and complete such Restoration (unless the performance and completion of the Restoration is necessary in order for the Mortgagor to be in compliance with any term, provision or condition of this Mortgage (other than this Section 5.11(e)) or any Superior Instrument Requirements; (4) Any insurance proceeds which the Mortgagor receives, shall be held by the Mortgagor in trust for the purpose of paying the cost of the Restoration, except as otherwise provided herein; (5) Any net insurance proceeds that the Insurance Trustee holds pursuant to this Subsection (e), shall be deposited in an interest-bearing investment reasonably designate by Mortgagor (to the extent the Mortgagor is permitted to designate such investment under the Superior Instrument Requirements) (and the interest thereon shall be added to such proceeds) and shall be paid by the Insurance Trustee in reimburse the Mortgagor for, or to make payment for, the Restoration, after the Insurance Trustee deducts therefrom the amount of any reasonable costs and expenses incurred in connection with the performance of its obligations under this Section 5.11. The Insurance Trustee shall make such payments not more frequently than once every 30 days upon the written request of the Mortgagor (unless more frequent payments are required by Superior Instrument Requirements), by paying to the Mortgagor or the persons named in the certificate described in Clause (6) of this Subsection (e) the respective amounts stated in such certificate 44 from time to time as the Restoration progresses, provided the Mortgagor has complied with the requirements of this Subsection (e) and such payment is permitted by an applicable Superior Instrument Requirements. The Mortgagor's written request shall be accompanied by (i) the certificate described in Clause (6) of this Subsection (e) and (ii) a title company or official search, or other evidence reasonably acceptable to the Insurance Trustee, showing that there have not been filed with respect to the Premises, any vendor's, contractor's mechanic's, laborer's or materialman's statutory or similar lien which has not been discharged of record (or bonded against or secured by other security) or any other encumbrance irrespective of its priority (other than Permitted Encumbrances). (6) The certificate required by Clause (5) of this Subsection (e) shall (A) be an Officers' Certificate, countersigned by the Architect in charge of the Restoration with respect to the matters described in (i) and (v) below, (B) be dated not more than 10 days prior to such request and (C) set forth (in addition to any other requirements contained in any applicable Superior Instrument Requirements) that: (i) all of the Restoration work theretofore performed is in substantial compliance with the plans and specifications theretofore submitted to the Insurance Trustee and in compliance with all Superior Instrument Requirements, Legal Requirements and Insurance Requirements; (ii) the sum then requested either has been paid by the Mortgagor or is justly due to contractors, subcontractors, materialmen, engineers, architects or other persons who have rendered services or furnished or contracted to deliver materials for the Restoration therein specified, and the names and addresses of such persons, a brief description of such services and materials and the several amounts so paid or due to each of such persons in respect thereof; (iii) no part of the amount requested has been or is the basis in any pervious or then pending request for the withdrawal of net insurance proceeds, and that the sum then requested does not exceed the value of the services and materials described in the certificate; (iv) except for the amount, if any, stated pursuant to Subclause (ii) of this Clause (6) in 45 such certificate to be due for services or materials, and except for amounts in dispute and/or customary retainages, there is no outstanding indebtedness known to the person signing such certificate, after due inquiry, which is then due for labor, wages, materials, supplies or services in connection with such Restoration; and (v) the remaining cost, as estimated by the persons signing such certificate, of the Restoration in order to complete the same does not exceed the net insurance proceeds remaining in the hands of Insurance Trustee after payment of the sum requested in such certificate or if such estimated cost does exceed such insurance proceeds such certificate shall state the amount of any such deficiency. If the certificate states that such deficiency will exist, the Mortgagor shall deliver the amount of such deficiency in cash or cash equivalent to the Insurance Trustee simultaneously with the delivery of such certificate, which amount shall be deemed insurance proceeds for purposes of this Section 5.11(e); and (7) If net insurance proceeds shall be insufficient to pay the entire cost of the Restoration, then, after completion of the Restoration, the Mortgagor shall pay the deficiency. If all or any part of the net insurance proceeds are not used for the restoration in accordance with this Subsection (e) (because such proceeds exceed the amount required to complete the Restoration), then upon completion of the Restoration in accordance with this Subsection (e), such amount not so used, if held by the Insurance Trustee, shall be paid to the Mortgagor (if permitted by Superior Instrument Requirements). (f) Provided that no Event of Default has occurred and is continuing, all net business interruption insurance proceeds shall be paid to the Mortgagor, to be segregated from the other funds of Mortgagor and held in trust by Mortgagor for the following purposes and in the following order of priority: (i) for the payment of Impositions and amounts due under the Ground Leases and Superior Mortgages; (ii) for debt service for the estimated period of Restoration (for purposes of this Section 5.11(f), interest and principal payments due on any payment date under the Notes will deemed to accrue in equal daily installments beginning the day after the immediately preceding payment date and ending on such payment date); and (iii) for any expense incurred in connection with the operation or business of the Casino-Hotel. 46 (g) The Mortgagor shall not take out separate insurance, concurrent in form or contributing in the event of loss with that required to be maintained pursuant to this Section 5.11, unless the same are permitted by Superior Instrument Requirements and the Mortgagee is included therein as a named insured, with loss payable to the Mortgagee and the Insurance Trustee pursuant to Section 5.11(b) hereof. The Mortgagor shall immediately notify the Mortgagee whenever any such separate insurance is taken out and shall promptly deliver to the Mortgagee a duplicate original of the policy of such insurance, a copy thereof certified by the insurer or a certificate thereof. (h) Subject to final adjustment by the insurer, insurance claims by reason of damage or destruction to any portion of the Trust Estate may be adjusted by the Mortgagor, but the Mortgagee shall have the right (but not the obligation) to join the Mortgagor in adjusting, and approving the adjustment of, any such loss except in the event of a loss where the amount of insurance reasonably anticipated to be received with respect to such loss is less than [Five Million Dollars ($5,000,000)], and the Mortgagor shall assist the Mortgagee in any such adjustment at the request of the Mortgagee. If the Mortgagee at its election as aforesaid joins the Mortgagor in any adjustment process, then the Mortgagee's approval of the adjustment shall not be unreasonably withheld; (i) Notwithstanding anything contained herein to the contrary, if an Event of Default shall have occurred and be continuing, the Mortgagee may, at its option, (A) refrain from paying to the Mortgagor or the Insurance Trustee any net insurance proceeds or (B) instruct the Insurance Trustee to pay to the Mortgagee any insurance proceeds then held by the Insurance Trustee, as the case may be. Section 5.12. LIMITATIONS ON BUILDING DEMOLITION, ALTERATIONS, IMPROVEMENTS AND NEW CONSTRUCTION. The Mortgagor will not authorize, permit or make any demolition, alteration or improvement of any building included in the Trust Estate or any new construction on any part of the Trust Estate, except in conformity with and subject to the limitations hereinafter in this Section 5.12 set forth. Unless an Event of Default shall have occurred and be continuing, the Mortgagor shall have the right at all times to make or permit such alterations, improvements or new constructions, structural or otherwise (herein sometimes called collectively "alterations"), of or on the Trust Estate, to be made in all cases subject to the conditions set forth in Section 5.12 of the Note Mortgage. Section 5.13. LEASES. The Mortgagor shall not: 47 (a) subject to the provisions of Section 5.13(d), enter into any Lease, or renew, modify, extend, terminate, or amend any Lease, except in the ordinary course of business of operating the Casino-Hotel; (b) receive or collect, or permit the receipt or collection of, any rental payments under any Lease more than one year in advance of the respective periods in respect of which they are to accrue, except that, in connection with the execution and delivery of any Lease or of any amendment to any Lease, rental payments thereunder may be collected and received in advance in an amount not in excess of three months' rent and/or a security deposit may be required thereunder in an amount not exceeding one year's rent; (c) collaterally assign, transfer or hypothecate (other than to the Mortgagee hereunder, to the mortgagee under the Note Mortgage or to the holder of any Working Capital Facility Lien) any rental payment under any Lease whether then due or to accrue in the future, the interest of the Mortgagor as landlord under any Lease or the rents, issues or profits of the Trust Estate; (d) after the date hereof, enter into any Lease, or renew any Lease unless such Lease contains terms to the effect as follows: (1) the Lease and the rights of the tenants thereunder shall be subject and subordinate to the rights of the Mortgagee under this Mortgage, the mortgagee under the Note Mortgage and the holders of any Superior Mortgage, (2) the Lease may be assigned by the landlord thereunder to the Mortgagee, (3) the rights and remedies of the tenant in respect of any obligations of the landlord thereunder shall be nonrecourse as to any assets of the landlord other than its equity in the building in which the leased premises are located or the proceeds thereof, (4) the rights of the tenant shall be subject and subordinate to the rights of the lessee under any new lease entered into in the event of a termination of a Ground Lease; 48 (e) modify any Lease with respect to the matters described in clauses (1) through (4) of paragraph (d). If the Mortgagor enters into a Lease (other than with any Affiliate of the Mortgagor) for a term of not less than 3 nor more than 10 years, the Mortgagee shall deliver a non-disturbance and attornment agreement substantially in the form of Schedule 4 hereto, following receipt of a certificate of a leasing broker (who is not an Affiliate of the Mortgagor or the broker involved in such transaction) experienced with respect to leases of commercial space in the Atlantic City area stating that the rent under the Lease is not less than fair market rent and that the other terms of the Lease are fair and reasonable in the commercial leasing market. The Mortgagor shall, upon demand, reimburse the Mortgagee for any costs and expenses (including reasonable attorney's fees) incurred by the Mortgagee in connection with the preparation, review and delivery of such non-disturbance and attornment agreements. Promptly after the execution and delivery hereof, the Mortgagor will cause the lessee under each Lease now in effect and promptly after each Lease is executed or becomes effective after the date of the execution and delivery hereof, the Mortgagor will cause the lessee under each such Lease, to be duly notified in writing (unless the substance and effect of such notice shall be contained in such Lease) of the subjection of the owner's interest, as lessor, in and to such Lease to the lien of this Mortgage and of the name and address of the Mortgagee. Each such notice shall state that the lease of such lessee is a Lease as herein defined. If a new Mortgagee is at any time appointed hereunder or the address of the Mortgagee shall at any time be changed, the Mortgagor will cause each lessee under each Lease to be promptly notified in writing of the name address of such new Mortgagee or the new address of the Mortgagee. The Mortgagor will use reasonable efforts (but shall not be obligated to incur any expenditure other than DE MINIMIS amounts) to obtain from each lessee under each Lease to whom any notice is sent pursuant to this paragraph an acknowledgment of receipt of such notice, and the Mortgagor will promptly deliver to the Mortgagee, upon request, a copy of each such acknowledgment of receipt which it is able to obtain. The Mortgagee shall not be responsible for securing or causing the Mortgagor to secure any such acknowledgment. Nothing contained in this Section 5.13 shall limit the provisions of Section 4.04 hereof. Section 5.14. [Reserved] 49 Section 5.15. MAINTENANCE OF EXISTENCE OF THE MORTGAGOR. Subject to Article Four, the Mortgagor will do or cause to be done all things necessary to preserve and keep in full force and effect its existence as a corporation, and its rights (both statutory and under its articles of incorporation) and franchises. Section 5.16. TO KEEP BOOKS; INSPECTION BY MORTGAGEE. The Mortgagor will keep proper books of record and account in accordance with Section 12.05 of the Indenture. Section 5.17. ADVANCES BY MORTGAGEE. If the Mortgagor shall fail to perform any of its covenants in this Mortgage and such failure shall continue for 10 days following notice thereof given by the Mortgagee (or at any time, without notice, in case of emergency), the Mortgagee may (but is not obligated to), at any time and from time to time, take any action or make advances, to effect performance of any such covenant on behalf of the Mortgagor; and all moneys so used or advanced by the Mortgagee and all reasonable costs and expenses incurred by Mortgagee in connection therewith, together with interest on all of the same at the rate of interest set forth in the Notes, shall be repaid by the Mortgagor upon demand and such advances shall be secured under this Mortgage prior to the Guaranty. Section 5.18. WAIVER OF STAY, EXTENSION OR USURY LAWS. The Mortgagor covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any usury, stay or extension law or any other law which would prohibit or forgive the Mortgagor from paying all or any portion of the obligations under the Guaranty as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may otherwise affect the covenants or the performance of this Mortgage; and the Mortgagor (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Mortgagee, but will suffer and permit the execution of every such power as though no such law had been enacted. Section 5.19. [Reserved] Section 5.20. EMINENT DOMAIN. The Mortgagor shall satisfy the provisions of Section 5.20 of the Note Mortgage upon obtaining knowledge of any Taking affecting the Trust Estate. Section 5.21. GROUND LEASES. 50 (a) The Mortgagor covenants and agrees that it will do or cause to be done all things necessary to preserve and keep unimpaired the rights of the Mortgagor, as lessee under the Ground Lease, and to prevent any termination, surrender, cancellation, forfeiture or impairment thereof. The Mortgagor shall at all times fully perform and comply with all agreements, covenants, terms and conditions imposed upon or assumed by it as lessee under each of the Ground Leases (including without limitation the covenant to pay rent and all taxes, assessments and other charges mentioned therein) prior to the expiration of any notice and/or cure period provided in each such Ground Lease. Upon receipt by the Mortgagee from a Lessor of any written notice of default by the lessee thereunder, Mortgagee may rely thereon and take any action the Mortgagee deems necessary in its sole discretion to prevent or to cure any default by the Mortgagor in the performance of or compliance with any of the agreements, covenants, terms or conditions imposed upon or assumed by the Mortgagor as lessee under each of the Ground Leases, even though the existence of such default or the nature thereof be questioned or denied by the Mortgagor or by any party on behalf of the Mortgagor, provided that if the Mortgagor has theretofore delivered to the Mortgagee the Officers' Certificate, Opinion of Counsel and a copy of the injunction, all as described in Section 3.01(g), the Mortgagee shall not take any such action unless and until the Mortgagor and/or the Mortgagee no longer has the benefit of any tolling or stay referred to in Section 3.01(g). Without limiting the generality of Section 3.09 hereof, the Mortgagor hereby expressly grants to the Mortgagee, and agrees that the Mortgagee shall have, the absolute and immediate right to enter in and upon the Premises or any part thereof to such extent and as often as the Mortgagee, in its sole discretion, deems necessary or desirable for the purpose permitted by the immediately preceding sentence, subject only to applicable Legal Requirements. Subject to the preceding and without limiting the Mortgagee's other remedies under this Mortgage, the Mortgagee may pay and expend such sums of money as the Mortgagee in its sole discretion deems necessary for any such purpose, and the Mortgagor hereby agrees to pay to the Mortgagee, immediately and without demand, all such sums so paid and expended by the Mortgagee, together with interest thereon from the date of each such payment at the highest rate of interest set forth in the Notes. All sums so paid and expended by the Mortgagee, and the interest thereon, shall be added to and be secured by the lien of this Mortgage. (b) The Mortgagor further covenants and agrees: (i) it will not surrender any leasehold estate and interest hereinabove described, nor terminate or cancel any Ground Lease, and that it will not without the express written consent of the Mortgagee modify, change, 51 supplement, alter or amend such Ground Leases either orally or in writing and, as further security for the repayment of the indebtedness secured hereby and for the performance of the covenants herein and in such Ground Leases contained, the Mortgagor hereby assigns to the Mortgagee all of its rights, privileges and prerogatives as lessee under such Ground Leases to terminate, cancel, modify, change, supplement, alter or amend such Ground Leases, and any such termination, cancellation, modification, change, supplement, alteration or amendment of such Ground Leases without the prior written consent thereto by Mortgagee shall be void and of no force and effect. Unless (1) an Event of Default has occurred and is continuing and (2) either (A) there has been an acceleration of maturity of the Notes pursuant to Section 3.02 of the Note Mortgage or (B) the Mortgagee exercises its rights under Section 3.09 hereof, the Mortgagee shall have no right to terminate, cancel, modify, change, supplement, alter or amend the Ground Leases; (ii) solely for the benefit of the Mortgagee, Trustee, the Noteholders and no other person, no release or forbearance of any of the Mortgagor's obligations under such Ground Leases, pursuant to such Ground Leases or otherwise, shall release the Mortgagor from any of its obligations under this Mortgage, including its obligations with respect to the payment of rent as provided for in such Ground Leases and the performance of all of the terms, provisions, covenants, conditions and agreements contained in such Ground Leases, to be kept, performed and complied with by the lessee therein; (iii) unless the Mortgagee shall otherwise expressly consent in writing, the fee title to the Leased Land, the Mortgagor's interest in the improvements on the Leased Land and the leasehold estates shall not merge by and shall always remain separate and distinct, notwithstanding the union of such estates either in the Lessor or in the lessee, or in a third party by purchase or otherwise; (iv) the Mortgagor shall promptly notify the Mortgagee in writing of any request made by the Mortgagor, as lessee under each of the Ground Leases, or any of the Lessors, for arbitration proceedings pursuant to the Ground Leases and of the institution of any arbitration proceedings, as well as all proceedings thereunder. In addition, the Mortgagor shall promptly deliver to the Mortgagee a copy of the determination of the arbitrators in each such arbitration proceeding. The Mortgagee shall have the right to participate in such arbitration proceedings in association with the Mortgagor 52 or on its own behalf as an interested party in accordance with the terms of the Ground Leases; (v) the Mortgagor shall not consent to the subordination of any Ground Lease to any mortgage deed of trust or other lien of the fee interest of the Lessor; (vi) in the event (A) the Mortgagor exercises its option under any Ground Lease to purchase any portion of the Leased Land, the Mortgagor shall deliver a copy of its election to exercise such option within 5 days after the Mortgagor has delivered notice of such election to the Lessor or (B) the Mortgagor acquires fee simple title or any other estate, title or interest in the Leased Land, the Mortgagor shall promptly notify the Mortgagee of such acquisition and shall cause to be executed and recorded all such other and further assurances or other instruments in writing as may be required by law or, in the opinion of the Mortgagee, be reasonably desirable to carry out the intent and meaning of clause (x) of Granting Clause Second; (vii) within 5 days after the Mortgagor's receipt of any notice of any motion, application or effort to reject the Ground Lease by any Lessor or any trustee arising from or in connection with any case, proceeding or other action commenced or pending by or against any Lessor under the Code or any comparable provision contained in any present or future federal, state, local, foreign or other statute, law, rule or regulation, the Mortgagor shall give notice thereof to the Mortgagee. The Mortgagor hereby (A) assigns to the Mortgagee any and all of the Mortgagor's rights as lessee under Section 365(h) of the Code or any comparable provision contained in any present or future federal, state, local, foreign or other statute, law, rule or regulation ("Comparable Provision") and (B) covenants that it shall not elect to treat any Ground Lease as terminated pursuant to Section 365(h) of the Code or any Comparable Provision without the prior written consent of the Mortgagee and (C) agrees that any such election by the Mortgagor without such consent shall be null and void; (viii) without limiting the generality of the foregoing, the Mortgagor hereby unconditionally assigns, transfers and sets over to the Mortgagee all of the Mortgagor's claims and rights to the payment of damages arising from any rejection by Lessor of any Ground lease under the Code or any Comparable Provision. The Mortgagee shall have the right to proceed in its own name or in the name of the Mortgagor in respect of any claim, suit, action or proceeding relating to the rejection of 53 any Ground Lease, including, without limitation, the right to file and prosecute, in cooperation with the Mortgagor, any proofs of claim, complaints, motions, applications notices and other documents, in any case in respect of Lessor under the Code or any Comparable Provision. This assignment constitutes a present, irrevocable and unconditional assignment of the foregoing claims, rights and remedies, and shall continue in effect until all of the indebtedness and obligations secured by this Mortgage shall have been satisfied and discharged in full. Any amounts received by the Mortgagee in damages arising out of the rejection of any Ground Lease as aforesaid shall be applied first to all reasonable costs and expenses of the Mortgagee (including, without limitation, reasonable attorneys' fees) incurred in connection with the exercise of any of its rights or remedies under this Section 5.21, and thereafter as provided in Section 3.03 hereof; (ix) if there shall be filed by or against the Mortgagor a petition under the Code or any Comparable Provision and the Mortgagor, as lessee under the Ground Leases, shall determine to reject any or all of the Ground Leases the Mortgagor shall give the Mortgagee not less than 10 days' prior notice of the date on which the Mortgagor shall apply to the Bankruptcy Court or other judicial body with appropriate jurisdiction for authority to reject the lease. The Mortgagee shall have the right, but not the obligation, to serve upon the Mortgagor within such 10 day period a notice stating that (a) the Mortgagee demands that the Mortgagor assume and assign such Ground Lease(s) to the Mortgagee pursuant to Section 365 of the Code or any Comparable Provision and (b) the Mortgagee covenants to cure or provide adequate assurance of prompt cure of all defaults and provide adequate assurance of future performance under such Ground Lease(s). If the Mortgagee serves upon the Mortgagor the notice described in the preceding sentence, the Mortgagor shall not seek to reject such Ground Lease(s) and shall comply with the demand provided for in clause (a) of the preceding sentence within 30 days after the notice shall have been given subject to the performance by the Mortgagee of the covenant provided for in clause (b) of the preceding sentence. Effective upon the entry of an order for relief in respect of the Mortgagor under Chapter 7 of the Code or Any Comparable Provision the Mortgagor hereby assigns and transfers to the Mortgagee a non-exclusive right to apply to the Bankruptcy Court or other judicial body with appropriate jurisdiction for an order extending the period during which the Ground Lease may be rejected or assumed; 54 (x) the Mortgagor shall promptly give to the Mortgagee copies of (A) all notices of default or (B) any other communications or notices with respect to events which relate to the possible impairment of the security of this Mortgage, which it shall give or receive under the Ground Leases and shall promptly notify the Mortgagor of any default under any Ground lease on the part of the Lessor or the Mortgagor; (xi) the Mortgagor shall enforce the obligations of the Lessor under each Ground Lease, to the end that the Mortgagor may enjoy all of the rights granted to it under the Ground leases; and (xii) the Mortgagor shall notify the Mortgagee within 5 days after the transfer of a fee interest in the Leased Land or any portion thereof to or from an Affiliate. (c) The Mortgagor hereby represents and warrants that all fixed net rent, taxes and assessments, payable under the Ground Leases have been paid to the extent they were due and payable to the date hereof and that the Mortgagor has not received notice of its failure to pay any other amounts payable under the Ground Leases which have not been cured. (d) If both the Lessor's and lessee's estates under any of the Ground Leases or any portion thereof shall at any time become vested in one owner, this Mortgage and the lien created hereby shall nevertheless not be merged, extinguished, destroyed or terminated by application of the doctrine of merger and, in such event, Mortgagee shall continue to have all of the rights and privileges of the a leasehold mortgagee. (e) The Mortgagor hereby acknowledges that if any Ground Lease shall be terminated prior to the natural expiration of its term due to default by the lessee thereunder, and if pursuant to such Ground Lease, the Mortgagee or its designee shall acquire from the Lessor a new lease of the Leased land or any portion thereof, the Mortgagor shall have no right, title or interest in or to such lease or the leasehold estate created thereby, or the options therein contained. (f) Any leases for parking purposes hereafter entered into by the Mortgagor as lessee shall contain provisions permitting the assignment of the same to the Mortgagee and the Trustee and permitting assignment without the lessor's consent if this Mortgage is foreclosed. Section 5.22. SUPERIOR MORTGAGES. 55 (a) The Mortgagor covenants and agrees that it will at all times fully perform and comply with all agreements, covenants, terms and conditions imposed upon or assumed by it as mortgagor under the Superior Mortgages prior to the expiration of any notice and/or cure period provided in each such Superior Mortgage. If a notice of default has been given by the holder of any Superior Mortgage and the maturity of the indebtedness secured by such Superior Mortgage has been accelerated as a result thereof, the Mortgagee may rely thereon and take any action the Mortgagee deems necessary in its sole discretion to prevent or to cure any default by the Mortgagor in the performance of or compliance with any of the agreements, covenants, terms or conditions imposed upon or assumed by the Mortgagor as mortgagor under each of the Superior Mortgages even though the existence of such default or the nature thereof may be questioned or denied by the Mortgagor or by any party on behalf of the Mortgagor provided that if the Mortgagor has heretofore taken such actions as described in Section 3.01(h), the Mortgagee shall not take any such action unless and until the Mortgagor and/or the Mortgagee no longer has the benefit of any such tolling or stay referred to in Section 3.01(h). Without limiting the generality of Section 3.09 hereof, the Mortgagor hereby expressly grants to the Mortgagee, and agrees that upon such acceleration the Mortgagee shall have, the absolute and immediate right to enter in and upon the Premises or any part thereof to such extent and as often as the Mortgagee, in its sole discretion, deems necessary for the purpose permitted by the immediately preceding sentence, subject only to applicable Legal Requirements. The Mortgagee may (i) pay and expend such sums of money as the Mortgagee in its sole discretion deems necessary for any such purpose and (ii) in its sole discretion prepay any Superior Mortgage, and the Mortgagor hereby agrees to pay to the Mortgagee, immediately and without demand, all such sums referred to in (i) and (ii) above so paid and expended by the Mortgagee, together with interest thereon from the date of each such payment at the rate of interest set forth in the Note. All sums so paid and expended by the Mortgagee and the interest thereon shall be added to and be secured by the lien of this Mortgage. (b) The Mortgagor further covenants and agrees: (i) the Mortgagor shall not, without first satisfying the conditions set forth in Section 5.22(b)(i) of the Note Mortgage: (A) modify any of the terms, covenants or conditions of any Superior Mortgage, and without limiting the foregoing, the Mortgagor shall not, without satisfying such conditions, enter into or obtain any agreement whereby the holder of any Superior Mortgage waives, postpones, extends, reduces or modifies the payment of the installment of principal or interest or 56 any other item or amount now required to be paid under the terms of any Superior Mortgage or modifies any other provision thereof, or (B) acquire or permit or suffer any Affiliate of the Mortgagor to acquire any Superior Mortgage or any interest therein. Notwithstanding anything in clause (A) to the contrary, the Mortgagor shall have the right to amend, supplement or modify any Superior Mortgage, if (x) the then outstanding principal balance of the indebtedness secured by such Superior Mortgage is not increased thereby, and (y) in the case of any After-Acquired Fee Mortgage, such amendment, supplement or agreement does not increase the property covered thereby; (ii) the Mortgagor shall timely pay and perform all of the obligations to be paid or performed by the mortgagor under each Superior Mortgage, the note secured thereby and any other instrument evidencing or securing the indebtedness owing to any holder of any Superior Mortgage; (iii) at any time, and from time to time, the Mortgagor shall upon request of the Mortgagee promptly use its reasonable efforts to obtain an estoppel certificate or letter addressed to the Mortgagee from holders of the Superior Mortgages, such certificate or letter to be in such form as the Mortgagee shall request; and (iv) the Mortgagor shall promptly give to the Mortgagee copies of (A) all notices of default or (B) any other notice or communication with respect to events which relate to the possible impairment of the security of this Mortgage, which it shall give or receive under the Superior Mortgages and shall promptly notify the Mortgagor of any default under any Superior Mortgages on the part of the Mortgagor. (c) The lien of this Mortgage in and to all or specified portions of the Trust Estate shall be subject and subordinate to any Existing Encumbrances and any mortgage, assignment, security agreement, financing statement or other lien securing any Working Capital Facility (the "Working Capital Facility Lien") encumbering Mortgagor's interest in the affected portions of the Trust Estate or any part thereof. The foregoing provisions of this Section 5.22(c) shall be self-operative with respect to Existing Encumbrances and shall be self-operative with respect to any Working Capital Facility Lien, and no further instrument shall be required to give effect to such subordination. Mortgagee shall, however, from time to time, execute instruments in form 57 and substance reasonably satisfactory to the holder of the Working Capital Facility Lien, confirming such subordination and agreeing to such other matters reasonably required by the holder of the Working Capital Facility Lien which do not, in the aggregate, materially adversely reduce or impair the rights of Trustee under the Mortgage, and Mortgagor and others may rely conclusively thereon, provided that Mortgagee shall have no liability thereunder and all costs and expenses (including reasonable attorneys' fees) shall be paid by Mortgagor. (d) The lien of the Mortgage in and to all or specified portions of the Trust Estate shall be subject and subordinate to any Existing Encumbrances. The provisions of this Section 5.22(d) shall be self-operative, and no further instrument shall be required to give effect to such subordination. Section 5.23. MORTGAGE PARI PASSU WITH NOTE MORTGAGE. Notwithstanding recordation of this Mortgage in the Atlantic County, New Jersey Clerk's Office after the recordation of the Note Mortgage, the lien of this Mortgage ranks pari passu with, and not junior to, the lien created by the Note Mortgage. ARTICLE SIX MISCELLANEOUS Section 6.01. ACTION UNDER NOTE MORTGAGE. Mortgagee acknowledges that it is the assignee of the Note Mortgage, which Note Mortgage creates a lien upon the Trust Estate which is PARI PASSU with the lien of this Mortgage. Mortgagee further acknowledges and agrees that whenever it is provided in the Note Mortgage that the Mortgagor shall deliver any notice or document, or is required to make any payment thereunder, the delivery of such notice or document or the making of such payment pursuant to the terms of the Note Mortgage shall also constitute the delivery of such notice or document or the making of such payment in satisfaction of the terms, conditions and provisions of this Mortgage to the same extent as the same constitutes satisfaction of the terms, conditions and provisions of the Note Mortgage. Section 6.02. COUNTERPARTS. This instrument may be executed in any number of counterparts, each of which as executed shall be deemed to be an original, but all such counterparts shall constitute one and the same instrument. Section 6.03. MODIFICATION. This Mortgage is subject to "modification" within the meaning of N.J.S.A. 46:9- 58 8.1 ET SEQ., and this Mortgage shall have the benefit of the lien priority provisions of such statute. Such modification may include, without limitation, a change in the interest rate, maturity date or other terms and conditions of this Mortgage. THE MORTGAGOR DECLARES THAT THE MORTGAGOR HAS RECEIVED A TRUE COPY OF THIS MORTGAGE. IN WITNESS WHEREOF, the parties hereto have caused this Mortgage to be duly executed and attested, all as of the day and year first above written. RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation By:_____________________________ Name: Title: (Vice) President ATTEST:_________________________ Name: Title: (Asst.) Secretary STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION By:_____________________________ Name: Title: (Vice) President ATTEST:_________________________ Name: Title: (Asst.) Secretary 59 Exhibit F Mortgage Securing Guaranty of Mortgage Notes between Resorts International Hotel, Inc. and State Street Bank and Trust Company of Connecticut, National Association NA932230075 - GUARANTY MORTGAGE GD&C DRAFT DATED 12/17/93 MORTGAGE SECURING GUARANTY OF MORTGAGE NOTES by and between RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation, as Mortgagor, and STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION a national banking association, as Mortgagee Dated as of ________ __, 1994 Prepared by:_______________________ D. Eric Remensperger After recording return to: Gibson, Dunn & Crutcher 200 Park Avenue New York, New York 10166 Attention: D. Eric Remensperger MORTGAGE SECURING GUARANTY OF MORTGAGE NOTES ----------------- THIS MORTGAGE, dated as of ________ ___, 1994, between RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation ("Mortgagor"), and STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, a national banking association having an address at 750 Main Street, Suite 1114 Hartford, Connecticut 06103 ("Mortgagee"), in its capacity as Trustee under that certain Indenture dated as of even date herewith (the "Indenture") among Mortgagor, Mortgagee and Resorts International Hotel Financing, Inc. ("RIHF"). WITNESSETH: In consideration of $10.00 in hand paid by Mortgagee to Mortgagor and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in order to secure (i) the Guaranty by Mortgagor of the payments of principal and interest due on the 11% Mortgage Notes due 2003 in an aggregate principal amount of $125,000,000, issued pursuant to the provisions of the Indenture (defined therein, and hereinafter collectively referred to herein, as the "Notes"), in accordance with the terms and conditions of Article Fourth of the Indenture; and performance and observance of all of the provisions herein contained, Mortgagor has executed and delivered this Mortgage and has bargained, sold, aliened, mortgaged, pledged, released, conveyed and confirmed unto Mortgagee and its successors hereunder and assigns forever, all of its right, title and interest in, to and under any of the following described property: GRANTING CLAUSES GRANTING CLAUSE FIRST All the property, rights, title, interest, privileges and franchises particularly described in annexed Schedule 1 (the "Owned Land") which Schedule is hereby made a part of, and deemed to be described in, this Granting Clause as fully as if set forth in this Granting Clause at length. GRANTING CLAUSE SECOND All of the property, rights, title, interest, privileges and franchises of the Mortgagor as lessee in those certain leases (the "Ground Leases") particularly described in Schedule 2, which Schedule is hereby made a part of, and deemed to be described in, this Granting Clause as fully as if set forth in this Granting Clause at length, which Ground Leases cover the real property described in Schedule 2 (the "Leased Land") and in and to any and all modifications, extensions and renewals of the Ground Leases and all options set forth therein, together with (i) all credits, deposits, privileges and rights of the Mortgagor as lessee under the Ground Leases, now or at any time existing, (ii) the leaseholds and the leasehold estates created by the Ground Leases and (iii) all of the estates, rights, titles, claims or demands whatsoever of Mortgagor, either in law or in equity, in possession or in expectancy, of, in and to the Ground Leases and the Leased Land, together with (x) any and all other, further or additional title, estates, interests or rights which may at anytime be acquired by the Mortgagor in or to the Leased Land, and the Mortgagor expressly agrees that if the Mortgagor shall, at any time prior to payment in full of all indebtedness secured hereby, acquire fee simple title or any other greater estate to the Leased Land pursuant to the Ground Leases, or otherwise, the lien of this Mortgage shall attach, extend to, cover and be a lien upon such fee simple title or other greater estate and thereupon the lien of this Mortgage shall be prior to the lien of any mortgage or deed of trust placed on such acquired title, estate, interest or right subsequent to the date of this Mortgage and (y) any right to possession or statutory term of years derived from, or incident to, the Ground Leases pursuant to Section 365(h) of the U.S. Bankruptcy Code (the "Code") or any comparable provision contained in any present or future federal, state, local, foreign or other statute, law, rule or regulation. GRANTING CLAUSE THIRD All the rents, issues, profits, revenues and other income and proceeds of the property subjected or required to be subjected to the lien of this Mortgage, including, without limitation, the property described in Granting Clauses First, Second, and Sixth (such property is hereinafter collectively referred to as the "Premises") and all the estate, right, title and interest of every nature whatsoever of the Mortgagor in and to the same and every part thereof. The collective metes and bounds description of the Owned Land and the Leased Land is set forth in annexed Schedule 3. 2 GRANTING CLAUSE FOURTH All of the rights as lessor under Leases in effect on the date of execution of this Mortgage or hereafter entered into by the Mortgagor, if any, including extensions, renewals or amendments of all of the same, and the immediate and continuing right as security in accordance with an Assignment of Leases and Rents of even date herewith between Mortgagor and Mortgagee, and, after the occurrence of an Event of Default, to make claim for, collect, receive and receipt for (and to apply the same as provided herein) any and all rents, income, revenues, issues, profits, security and other sums of money payable or receivable thereunder or pursuant thereto, and all proceeds thereof, whether payable as rent, insurance proceeds, condemnation awards, security or otherwise and whether payable prior to or subsequent to the maturity date of the Notes, to receive and give notices and consents thereunder, to bring actions and proceedings thereunder or for the enforcement thereof, to make waivers and agreements, to take such action upon the happening of a default under any Lease, including the commencement, conduct and consummation of any proceedings at law or in equity as shall be permitted by any provision of any Lease, and to do any and all things which the Mortgagor or any lessor is or may become entitled to do under the Leases; provided, that the assignment made by this granting Clause Fourth shall not impair or diminish any obligation of the Mortgagor under the Leases, or shall any such obligation be imposed upon the Mortgagee. GRANTING CLAUSE FIFTH Without limiting the generality of the provisions of Granting Clause Third, the Mortgagor's rights, privileges and franchises in and to the following, to the extent of the Mortgagor's interest therein and thereto and to the extent assignable (collectively, "Operating Assets"): (a) bookings and receipts for the use of guest rooms, banquet facilities and meeting rooms at the Casino-Hotel; (b) all contracts respecting utility services for, and the maintenance, operations, or equipping of the Premises, including guaranties and warranties relating thereto; (c) the Permits; (d) all contract rights, leases, concessions, trademarks, trade names, service marks, service names, logos, copyrights, warranties and other items of 3 intangible personal property relating to the ownership or operation of the Casino-Hotel, including, without limitation, (1) telephone and other communication numbers, (2) all software licensing agreements as are required to operate computer software systems at the Casino-Hotel, all transferable proprietary interest in software required to operate the computer systems at the Casino Hotel and books and records relating to the software programs, and (3) lessee's interest under leases of Tangible Personal Property; (e) all agreements entered into by or on behalf of the Mortgagor or which have been assigned to the Mortgagor, for the design and construction, and for the equipping and furnishing, of the Casino-Hotel, including architect's agreements, engineering agreements, construction contracts, consulting agreements and agreements or purchase orders for all items of Tangible Personal Property and payment and performance bonds in favor of the Mortgagor in connection with the Trust Estate (and all warranties and guaranties thereunder and warranties and guaranties of any subcontractor and bond issued in connection with the work to be performed by any subcontractor); (f) the following personal property (the "Tangible Personal Property") now or hereafter acquired by the Mortgagor: (i) all furniture, furnishings, equipment, machinery, apparatus, appliances, fixtures and fittings and other articles of tangible personal property which are, or are to be located on, or used in connection with the operation of, the Casino-Hotel; (ii) all slot machines, electronic gaming devices, crap tables, blackjack tables, roulette tables, baccarat tables, and big six wheels, located or to be located in the Casino-Hotel, and all furnishings and equipment to be used in connection with the operation thereof; (iii) all cards, dice, gaming chips and placques, tokens, chip racks, dealing shoes, dice cups, dice sticks, layouts, paddles, roulette balls and other consumable supplies and items to be used in connection with the gaming operations of the Casino-Hotel; (iv) all china, glassware, linens, kitchen utensils, silverware and uniforms, whether 4 in use or held in reserve storage for future use, in connection with the operation of the Casino-Hotel, which are on hand or on order whether stored on-site or off-site; (v) all consumables and operating supplies of every kind and nature for use in all of the operating departments of the Casino-Hotel, or in the improvements now or hereafter located on any of the Owned Land, including without limitation, accounting supplies, guest supplies, forms, printing, stationery, food and beverage stock, bar supplies, laundry supplies and brochures to existing purchase orders; (vi) all sets and scenery, costumes, props and other items of tangible personal property on hand or on order for use in the production of shows in the showroom of the Casino-Hotel; and (vii) all cars, limousines, vans, buses, trucks and other vehicles owned or leased by the Mortgagor for use in Casino-Hotel operations, together with all equipment, parts and supplies used to service, repair, maintain and equip the foregoing; (g) all drawings, designs, plans and specifications prepared by the architects, interior designers, landscape designers and any other consultants for the development of the Premises, as amended from time to time; (h) any administrative and judicial proceedings initiated by the Mortgagor, or in which the Mortgagor has intervened, concerning the Casino-Hotel, and agreements, if any, which are the subject matter of such proceedings; (i) any customer lists utilized by the Mortgagor, including lists of transient guests and restaurant and bar patrons and "high roller" lists; and (j) all of the goodwill in connection with the operation of the Premises. The Mortgagor and Mortgagee acknowledge that notwithstanding anything contained in this Mortgage to the contrary, the Mortgagor may share facilities, operations and employees with any other hotel owned by any Affiliate of the Mortgagor provided that (i) such sharing of facilities is permitted by all applicable Legal Requirements, (ii) terms on 5 which such facilities are shared are not detrimental to the operations of the Casino-Hotel or the financial condition of the Mortgagor and (iii) the regular operation of the Casino-Hotel would not be materially impaired upon the separation of such facilities. The assignment made by this Granting Clause Fifth shall not impair or diminish any obligation of the Mortgagor with respect to the Operating Assets, nor shall any such obligation be imposed on the Mortgagee. GRANTING CLAUSE SIXTH (a) All of the Mortgagor's right, title and interest in and to all buildings and improvements of every kind and description now or hereafter erected or placed on the Owned Land and/or the Leased Land and all fixtures and articles of personal property now or hereafter attached to or contained in and used in connection with such buildings and improvements, including, but not limited to, all apparatus, furniture, furnishings, machinery, motors, elevators, fittings, radiators, cooking ranges, ice boxes, ice machines, printing presses, mirrors, bars, mechanical refrigerators, furnaces, coal and oil-burning apparatus, wall cabinets, machinery, generators, partitions, steam and hot water boilers, lighting and power plants, pipes, plumbing, radiators, sinks, bath tubs, water closets, gas and electrical fixtures, awnings, shades, screens, blinds, dishwashers, freezers, vacuum cleaning systems, office equipment and other furnishings, and all plumbing, heating, lighting, cooking, laundry, ventilating, incinerating, air-conditioning and sprinkler equipment or other fire prevention or extinguishing apparatus and material, and fixtures and appurtenances thereto; and all renewals or replacements thereof or articles in substitution therefor, whether or not the same are or shall be attached to the Owned Land, the Leased Land or to any such buildings and improvements thereon, in any manner; and (b) All of the Mortgagor's right, title and interest in and to (i) the Leased Land, if the Mortgagor acquires the fee simple title to the Leased Land or any part thereof (subject to the provisions of Section 2.06 hereof), (ii) all air rights and rights to maintain supporting columns 6 and all rights to construct and maintain bridges, and to create private rights of way over streets now or hereafter owned or enjoyed by the Mortgagor and appurtenant to the Owned Land or Leased Land, and (iii) all right, title and interest of Mortgagor as grantee or licensee in and to the following to the extent necessary for the use and enjoyment of the Owned Land or the Leased Land: (A) all those plots, pieces or parcels of land and air rights, more particularly described on Schedule 5, attached hereto and made a part hereof (the "Bridge Easement Parcels"), with respect to which Mortgagor has easements, licenses or other rights of possession or use pursuant to these certain easement and license agreements more particularly described on Schedule 5 (the "Bridge Easements"), (B) all those plots, pieces or parcels of land and air rights, more particularly described on Schedule 6 attached hereto and made a part hereof (the "Elevator Easement Parcels"), with respect to which Mortgagor has easements, licenses or other rights of possession or use pursuant to those certain license agreements more particularly described on Schedule 6 (the "Elevator Easements"), and; (C) all that plot, piece or parcel of land and air rights more particularly described on Schedule 7 attached hereto and made a part hereof (the "Turn-Around Easement Parcel") with respect to which Mortgagor has easements, licenses, or other rights of possession or use pursuant to that certain easement more particularly described on Schedule 7 (the "Turn-Around Easement"), (the Bridge Easement Parcels, the Elevator Easement Parcels and the Turn-Around Easement Parcel are collectively referred to herein as the "Easement Parcels"; and the Bridge Easements, the Elevator Easements and the Turn-Around Easement are collectively referred to as the "Easements"), together with all rights of way, privileges, liberties, tenements, hereditaments and appurtenances belonging or in any way appertaining to such estates, it being the intention hereof that all property, interests, rights and privileges and franchises pertaining to the Premises (other than Excepted Property) shall be as fully embraced within and subjected to the lien hereof as if such property were specifically described herein. To the extent the grant of a security interest in any portion of the Trust Estate is governed by the Uniform Commercial Code, this Mortgage is hereby deemed to be as well a security agreement under the Uniform Commercial Code for the purpose of creating hereby a security interest in all of the Mortgagor's right, title and interest in and to such property, securing the obligations secured hereby, for the benefit of the Mortgagee. * * * TOGETHER with all of the Mortgagor's right, title and interest in and to all mineral and water rights and any title or reversion, in and to the beds of the ways, streets, avenues and alleys adjoining the Premises to the center line thereof and in and to all strips, gaps and gores adjoining the premises on all sides thereof; and TOGETHER with all of the Mortgagor's right, title and interest to and singular the tenements, hereditaments, easements, appurtenances, passages, water courses, riparian rights, other rights, liberties and privileges thereof or in 7 any way appertaining to the Premises, including any other claim at law or in equity as well as any after-acquired title, franchise or license and the reversion and reversions and remainder and remainders thereof; and TOGETHER with all awards and other compensation heretofore or hereafter to be made to the present and all subsequent owners of the Trust Estate for any taking by eminent domain, either permanent or temporary, of all or any part of the Trust Estate or any easement or appurtenances thereof, including severance and consequential damage and change in grade of streets, all in accordance with and subject to the provisions of the Superior Instrument Requirements and Section 5.20; and TOGETHER with all proceeds of any unearned premiums on any insurance policies described in Section 5.11, and the right to receive and apply the proceeds of any insurance, judgments, or settlements made in lieu thereof, for damage to the Trust Estate or otherwise, all in accordance with and subject to the provisions of Section 5.11 and the Superior Instrument Requirements. EXCLUDING, with respect to all of the hereinabove granted property, rights, title, interest, privileges and franchises, the Excepted Property. TO HAVE AND TO HOLD all the Premises, Leases, Ground Leases, Operating Assets, Easements, properties, options, credits, deposits, rights, privileges and franchises of every kind and description, real, personal or mixed, granted hereby, bargained, sold, aliened, assigned, transferred, hypothecated, pledged, released, conveyed, mortgaged, or confirmed as aforesaid, or intended, agreed or covenanted so to be, together with all the appurtenances thereto appertaining (the Premises, Leases, Ground Leases, Operating Assets, Easements, properties, options, credits, deposits, rights, privileges and franchises, being herein collectively called the "Trust Estate") unto the Mortgagee and its successors and assigns forever. SUBJECT, HOWEVER, on the date hereof, to Existing Encumbrances and, after the date hereof, to Permitted Encumbrances. SUBJECT, FURTHER, to the rights and obligations of the Mortgagee and the Noteholder as set forth in that certain Intercreditor Agreement dated as of the date hereof among RIH, RIHF, Mortgagee, Fidelity Management and Trust Company ("Fidelity"), as trustee under that certain note purchase agreement dated as of the date hereof among Fidelity, RIH and RIHF, and 8 U.S. Trust Company of California, N.A. ("U.S. Trust"), as trustee under that certain indenture dated as of the date hereof among U.S. Trust, RIH and RIHF (and such other parties that may from time to time become a party thereto). BUT IN TRUST, NEVERTHELESS, for the Ratable Benefit and security of the Noteholders without any priority of any of the Notes over any other of the Notes. UPON CONDITION that, until the happening of an Event of Default and subject to the provisions of Article Two, the Mortgagor shall be permitted to possess and use the Trust Estate, and to receive and use the rents, issues, profits, revenues and other income of the Trust Estate. AND IT IS HEREBY COVENANTED AND DECLARED that the Trust Estate is to be held and applied by the Mortgagee, subject to the further covenants, conditions and trusts hereinafter set forth, and the Mortgagor does hereby covenant and agree to and with the Mortgagee, for the Ratable Benefit of the Noteholders as follows: ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION Section 1.01. DEFINITIONS. For all purposes of this Mortgage, except as otherwise expressly provided or unless the context otherwise requires: (a) the terms defined in this Article One have the meanings assigned to them in this Article One and include the plural as well as the singular; (b) all accounting terms not otherwise defined herein have the meanings assigned to them, and all computations herein provided for shall be made in accordance with generally accepted accounting principles consistently applied; and (c) the words "herein," "hereof" and "hereunder" and other words of similar import refer to this Mortgage as a whole and not to any particular Article, Section or other subdivision. "AFFILIATE" has the meaning set forth in Section 1.01 of the Indenture. 9 "AFTER-ACQUIRED FEE MORTGAGE" has the meaning set forth in Section 2.07. "ALTERATIONS" has the meaning set forth in Section 5.12. "APPRAISER" means an MAI appraiser (i.e., a Member in good standing of the American Institute of Real Estate Appraisers) who is (i) of recognized standing among appraisers of properties similar to the Casino-Hotel and (ii) experienced in the appraisals of properties of a similar size and scope to that of the Casino-Hotel, selected by the Mortgagor. "ASSIGNMENT OF LEASES AND RENTS" has the meaning stated in Section 1.01 of the Indenture. "CAPITALIZED LEASE OBLIGATION" has the meaning stated in Section 1.01 of the Indenture. "CASINO" means that portion of the Casino-Hotel used for gaming and related activities. "CASINO-HOTEL" means the casino and hotel complex and ancillary structures and facilities located on the Premises and furniture, fixtures and equipment at any time contained therein. "CASUALTY" means any act or occurrence of any kind or nature which results in damage, loss or destruction to any buildings or improvements on the Premises and/or Tangible Personal Property. "CODE" has the meaning stated in Granting Clause Second. "COMBINATION TRANSACTION" has the meaning stated in Section 10.01 of the Indenture. "DEFAULT" means the occurrence and continuance of an Event of Default or an event which, after notice or lapse of time or both, would become an Event of Default. "DEPOSITARY" means an Independent entity to which insurance proceeds or a condemnation award is paid to be held in trust for restoration pursuant to the provisions of a Ground Lease or Superior Mortgage. "EVENT OF DEFAULT" has the meaning stated in Section 3.01. An Event of Default shall "exist" if an Event of Default shall have occurred and be continuing. "EXCEPTED PROPERTY" means: 10 (1) subject to the provisions of the Assignment of Leases and Rents, any cash held by the Mortgagor from rents, issues, profits, revenues and other proceeds of the Trust Estate to the extent that such cash may be, but has not been, distributed or paid out in accordance with the Services Agreement or in accordance with the provisions of Section 12.07 the Indenture; (2) all personal property owned by lessees under Leases and the personal property of any guests staying in the Hotel; (3) any property deemed to be Excepted Property pursuant to the provisions of Section 2.03 hereof; (4) Tangible Personal Property subject to an FF&E Financing Agreement; and (5) counterchecks and any other property the granting of a security interest in which is prohibited by the New Jersey Casino Control Act, N.J.S.A. 5:12-1 ET SEQ., and the regulations promulgated thereunder. "EXISTING ENCUMBRANCES" means the matters set forth in Schedule 8. "FIRST MORTGAGE DEBT" means any financing secured by a Superior Mortgage secured by or imposing a lien on all or a portion of the Trust Estate on a parity with or senior to the lien of this Mortgage. "FF&E FINANCING AGREEMENT" means a purchase money lien upon any Tangible Personal Property and other items constituting Operating Assets, such as computer software, which are financed, purchased or leased by the Mortgagor, provided that, except as set forth on Schedule 3, the principal amount of the indebtedness secured by such lien shall not exceed eighty-five (85%) percent of the cost to the Mortgagor of such property at the time of acquisition. "GROUND LEASES" has the meaning stated in Granting Clause Second. "GUARANTY" has the meaning set forth in Article Fourteen of the Indenture. "HOTEL" means that portion of the Casino-Hotel not included within the Casino. "IMPOSITIONS" has the meaning stated in Section 5.08. 11 "INDENTURE" means that certain Indenture - 11% Mortgage Notes due 2003, dated as of even date herewith among the Mortgagor, RIHF, as issuer, and Mortgagee, as trustee, as it may from time to time be supplemented, modified or amended by one or more trust indentures or other instruments supplemental thereto entered into pursuant to the applicable provisions thereof. "INDEPENDENT" when used with respect to any specified Person means such a Person who (a) is in fact independent, (b) does not have any direct financial interest or any material indirect financial interest in the Mortgagor or in any other obligor upon the Notes or in any Affiliate of the Mortgagor or of such other obligor and (c) is not connected with the Mortgagor or such other obligor or any Affiliate of the Mortgagor or such other obligor as an officer, employee, promoter, underwriter, trustee, partner, director or person performing similar functions. Whenever it is herein provided that any Independent Person's opinion or certificate shall be furnished to the Mortgagee, such opinion or certificate shall state that the signer has read this definition and that the signer is Independent within the meaning thereof. A Person who is performing or who has performed services as an independent contractor to any specified Person shall not be considered not Independent merely by reason of the fact that such Person is or has performed such services. "INSURANCE AMOUNT" has the meaning stated in Section 5.11(a)(1). "INSURANCE REQUIREMENTS" means all terms of any insurance policy covering or applicable to the Trust Estate or any part thereof, all requirements of the issuer of any such policy, and all orders, rules, regulations and other requirements of the National Board of Fire Underwriters (or any other body exercising similar functions) applicable to or affecting the Trust Estate or any part thereof or any use or condition of the Trust Estate or any other part thereof. "INSURANCE TRUSTEE" means the Trustee or, if the Trustee so elects, any bank, trust company or insurance company with net worth in excess of $100,000,000, designated by the Trustee. "INSURER" means an insurance company or companies selected by the Mortgagor authorized to issue insurance in the State of New Jersey with an A.M. Best rating as high or higher than the rating of insurance companies insuring other casino-hotels in Atlantic City, New Jersey. 12 "LEASE" means each lease or sublease demising all or any portion of the Owned Land, the Leased Land or the buildings or improvements thereon and made by the Mortgagor as lessor or sublessor, as the case may be, or any spaces in any building or buildings which constitute a part of the Trust Estate, including every agreement relating thereto or entered into in connection therewith and every guaranty of the performance and observance of the covenants, conditions and agreements to be performed by the lessee under any such lease. Notwithstanding the foregoing, the term "Lease" shall not include any transient room rentals. "LEASED LAND" has the meaning stated in Granting Clause Second. "LEGAL REQUIREMENTS" means all laws, statutes, codes, acts, ordinances, orders, judgments, decrees, injunctions, rules, regulations, permits, licenses, authorizations, directions and requirements (including, without limitation, the New Jersey Environment Cleanup Responsibility Act and the New Jersey Spill Compensation and Control Act of 1976) of all governments, departments, commissions, boards, courts, authorities, agencies, officials and officers, of governments, federal, state and municipal (including, without limitation, the New Jersey Department of Environmental Protection, the Atlantic City Bureau of Investigations, Division of Protection, the Atlantic City Bureau of Investigations, Division of Gaming Enforcement of the State of New Jersey, and the Casino Control Commission of the State of New Jersey), foreseen or unforeseen, ordinary or extraordinary, which now is or at any time hereafter becomes applicable to the Trust Estate or any part thereof, or any of the adjoining sidewalks, or the use of the Casino-Hotel as a gaming or gambling facility or any other use or condition of the Trust Estate or any part thereof. "LESSORS" means the lessors under the Ground Leases. "MATURITY" when used with respect to the Notes means the date on which the principal of such Notes becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration or prepayment or otherwise. "MORTGAGE DOCUMENTS" has the meaning set forth in Section 1.01 of the Indenture. "MORTGAGOR" means the Person named as the "Mortgagor" in the first paragraph of this instrument until a successor entity shall have become such pursuant to the applicable provisions of this Mortgage, and thereafter, except 13 to the extent otherwise contemplated by Section 4.02, "Mortgagor" shall mean such successor entity exclusively. "NOTEHOLDERS" has the meaning set forth in Section 1.01 of the Indenture. "NOTE MORTGAGE" means that certain Mortgage Securing RIH Promissory Note dated as of the date hereof from Mortgagor to RIHF, which secures the RIH Promissory Note (as defined in the Indenture), the lien of which shall be PARI PASSU with the lien of this Mortgage. "NOTES" has the meaning set forth in the Preamble. "NOTICES" has the meaning stated in Section 1.02. "OFFICERS' CERTIFICATE" means a certificate signed by an officer of the Mortgagor and delivered to the Mortgagee. Whenever this Mortgage requires that an Officers' Certificate be signed also by an Architect or an Accountant or other expert, such Architect, Accountant or other expert may (except as otherwise expressly provided in this Mortgage) be in the general employ of the Mortgagor. "OPERATING ASSETS" has the meaning stated in Granting Clause Fifth. "OPINION OF COUNSEL" means a written opinion of counsel who may (except as otherwise expressly provided in this Mortgage) be an employee of the Mortgagor or an employee of an Affiliate of the Mortgagor. Unless otherwise specifically provided in this Mortgage, such counsel may rely, as to any state of facts not personally known to such counsel and relating to such opinions, on an Officers' Certificate to the extent not rejected by the Trustee and its counsel (which rejection shall not be unreasonably given). "ORIGINAL POLICY" means an ALTA Loan Policies of Title issued by [list title insurance companies], pursuant to Title Commitment No. ____________ redated to the date hereof. "OUTSTANDING AMOUNT" has the meaning stated in Section 1.01 of the Indenture. "OWNED LAND" has the meaning stated in Granting Clause First. "PERMITS" means all licenses, franchises, statements of compliance, certificates of operation, certificates of occupancy and permits required for the lawful ownership, occupancy, operation and use of all or a material portion of the Premises whether held by the Mortgagor or any other Person 14 (which may be temporary or permanent) (including, without limitation, those required for the use of the Casino-Hotel as a licensed casino facility), in accordance with all applicable Legal Requirements. "PERMITTED ENCUMBRANCES" means: (1) liens for taxes, assessments, or governmental charges not yet due and payable or if due and payable are not delinquent to the extent that any fine, penalty, interest or cost may be added for nonpayment thereof; (2) Existing Encumbrances; (3) FF&E Financing Agreements; (4) After-Acquired Fee Mortgages; (5) the lien of the Mortgage Documents and any rights granted as provided therein; (6) Restricted Encumbrances; (7) the lien of the Trustee provided for by Section 8.07 of the Indenture; (8) any Working Capital Facility Lien; and (9) Capitalized Lease Obligations. "PERSON" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or any other entity or government or any agency or political subdivision thereof. "PREMISES" has the meaning set forth in Granting Clause Third. "RATABLE BENEFIT" has the meaning stated in Section 1.01 of the Indenture. "RELEASED LAND" has the meaning stated in Section 2.05. "RELEASED FEE LAND" has the meaning stated in Section 2.06. "RESTORATION" has the meaning stated in Section 5.11(e). "RESTRICTED ENCUMBRANCES" means Leases permitted by and made in accordance with Section 5.13 of this Mortgage. 15 "RIHF" shall mean Resorts International Hotel Financing, Inc., a Delaware corporation. "SERVICES AGREEMENT" has the meaning set forth in Section 1.01 of the Indenture. "STATED MATURITY" when used with respect to a note means the date specified in such note as the fixed date on which the principal of such note is due and payable. "SUPERIOR INSTRUMENT REQUIREMENTS" means the applicable terms, conditions and provisions of (i) the Ground Leases with respect to the Leased Land; and (ii) Superior Mortgages with respect to the portion of the Trust Estate encumbered thereby. "SUPERIOR MORTGAGES" means, collectively, any Working Capital Facility Lien and any After-Acquired Fee Mortgages. "TAKING" means the acquisition or condemnation by eminent domain of the whole or any part of the Premises, by a competent authority, for any public or quasi-public use or purpose. "TANGIBLE PERSONAL PROPERTY" has the meaning stated in Granting Clause Fifth. "TRUSTEE" means the Person named as the "Trustee" in the first paragraph of the Indenture and any successor thereto. "TRUST ESTATE" has the meaning stated in the habendum to the Granting Clauses. "TRUST INDENTURE ACT" has the meaning stated in Section 1.01 of the Indenture. "WORKING CAPITAL FACILITY" has the meaning stated in Section 1.01 of the Indenture. "WORKING CAPITAL FACILITY LIEN" has the meaning stated in Section 5.22(c) of this Mortgage. Section 1.02. NOTICES, ETC. (a) Any request, demand, authorization, direction, notice (including, without limitation, a notice of default), consent, waiver or other document provided or permitted by this Mortgage to be made upon, given or furnished to, or filed with, the Mortgagor or the Mortgagee (collectively, "Notices") shall be deemed given when either (i) delivered by hand or 16 (ii) two days after sending by registered or certified mail, postage prepaid, addressed as follows: To the Mortgagor: Resorts International Hotel, Inc. c/o Resorts International, Inc. 1133 Boardwalk Atlantic City, New Jersey 08401 Attention: Christopher D. Whitney If to Mortgagee: State Street Bank and Trust Company of Connecticut, National Association 750 Main Street, Suite 1114 Hartford, Connecticut Attention: Corporate Trust Department (b) By Notice to the Mortgagor, the Mortgagee and the Trustee, any party may designate additional or substitute address for Notices which, notwithstanding Subsection (a) above, shall be deemed given when received. Section 1.03. FORM AND CONTENT OF DOCUMENTS DELIVERED TO MORTGAGEE. Whenever 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 such matters in one or several documents. Any certificate or opinion of an Officer of the Mortgagor may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such Officer knows that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any 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 Mortgagor stating that the information with respect to such factual matters is in the possession of the Mortgagor, unless such counsel knows that the certificate or opinion or representations with respect to such matters are erroneous. If appropriate to the matter being opined upon and to the extent not prohibited by the Trust Indenture Act, any Opinion of Counsel may be subject to rights of creditors and the availability of equitable remedies. 17 Whenever any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Mortgage, they may, but need not, be consolidated and form one instrument. Whenever in this Mortgage, in connection with any application or certificate or report to the Mortgagee, it is provided that the Mortgagor shall deliver any document as a condition of the granting of such application, or as evidence of the Mortgagor's compliance with any term hereof, it is intended that the truth and accuracy, at the time of the granting of such application or at the effective date of such certificate or report (as the case may be), of the facts and opinions stated in such document shall in such case be conditions precedent to the right of the Mortgagor to have such application granted or to the sufficiency of such certificate or report. Section 1.04. COMPLIANCE CERTIFICATES AND OPINIONS. Upon any application or request by the Mortgagor to the Mortgagee to take any action under any provision of this Mortgage, the Mortgagor shall furnish to the Mortgagee an Officers' Certificate stating that all conditions precedent, if any, provided for in this Mortgage 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 Mortgage 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 Mortgage shall include: (a) a statement that each individual signing such certificate or opinion has read such condition or covenant and the definitions herein relating thereto; (b) 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; (c) 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 condition or covenant has been complied with; and 18 (d) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. Section 1.05. EFFECT OF HEADINGS. The Article and Section headings herein are for convenience only and shall not affect the construction hereof. Section 1.06. SUCCESSORS AND ASSIGNS; AMENDMENTS. (a) Subject to Section 4.02 hereof and Section 10.02 of the Indenture, this Mortgage shall be binding upon and inure to the benefit of the parties hereto and of the respective successors and assigns of the parties hereto to the same effect as if each such successor or assign were in each case named as a party to this Mortgage. (b) This Mortgage may not be modified, amended, discharged, released nor any of its provisions waived except by agreement in writing executed by the Mortgagor and the Mortgagee and in accordance with the provisions of this Mortgage and the Indenture. Section 1.07. SEPARABILITY CLAUSE. In case any provision in this Mortgage 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 1.08. BENEFITS OF MORTGAGE. Nothing in this Mortgage or in the Guaranty, express or implied, shall give to any Person, other than the parties hereto and their successors and assigns, any benefit or any legal or equitable right, remedy or claim under this Mortgage. Section 1.09. GOVERNING LAW. This Mortgage shall be deemed to be a contract under the laws of the State of New Jersey and shall be construed in accordance with and governed by the laws of the State of New Jersey. Section 1.10. [Reserved] Section 1.11. PROVISIONS REQUIRED BY INDENTURE. Whenever the provisions of this Mortgage and the provisions of the Indenture shall be inconsistent, the provisions of the Indenture shall govern. Section 1.12. RIGHTS OF THE TRUSTEE. So long as the Trustee is the Mortgagee hereunder, except as otherwise provided in Section 8.01 of the Indenture: (a) the Mortgagee 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, coupon or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) whenever in the administration of this Mortgage the Mortgagee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Mortgagee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate; (c) the Mortgagee 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 the Mortgagee hereunder in good faith and in reliance thereon; (d) the Mortgagee shall be under no obligation to exercise any of the rights or powers vested in it by this Mortgage at the request or direction of any Noteholder pursuant to the Indenture, unless such holder shall have offered to the Mortgagee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (e) the Mortgagee 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, or other paper or document but the Mortgagee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Mortgagee shall determine to make such further inquiry or investigation, it shall be entitled (subject to the express limitations with respect thereto contained in this Mortgage) to examine the books, records and premises of the Mortgagor, personally or by agent or attorney; (f) the Mortgagee may execute any of the trusts or power hereunder or perform any duties hereunder either directly or by or through agents or attorneys, and the Mortgagee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder; (g) the Mortgagee shall not be personally liable, in case of entry by it upon the Trust Estate, for debts contracted or liabilities or damages incurred in the management or operation of the Trust Estate; and (h) no provision of this Mortgage shall require the Mortgagee to expend or risk its own funds or otherwise incur any financial liability in the performance of its obligations hereunder, or in the exercise 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. Section 1.13. MORTGAGE SUBJECT TO THE PROVISIONS OF THE ACT. Each provision of this Mortgage is 19 subject to and shall be enforced in compliance with the provisions of the New Jersey Casino Control Act. This Mortgage shall not be transferred, assigned or amended without prior approval of the New Jersey Casino Control Commission. Section 1.14. DISCHARGE OF LIEN. If the Mortgagor shall pay or cause to be paid, or there shall otherwise be paid, to the Mortgagee all amounts required to be paid by the Mortgagor pursuant to the Guaranty, or the Note Mortgage and the Notes, and the conditions precedent for the Indenture to cease, determine and become null and void in accordance with Section 5.01 of the Indenture shall have occurred, the Mortgagee shall promptly cancel and discharge this Mortgage, and execute and deliver to the Mortgagor all such instruments as may be necessary, required or appropriate to evidence such discharge and satisfaction of such lien or liens. Section 1.15. GENERAL APPLICATION. (a) The assertion of any rights upon any Default shall be subject in each instance to the giving of any notice and the expiration of any grace period provided for in Section 3.01 as a condition to such Default making it an Event of Default, unless the Trust Indenture Act requires otherwise, in which case the Trust Indenture Act shall control. (b) For the purposes of this Mortgage, it is understood that an event which does not materially diminish the value of the Mortgagee's interest in the Trust Estate shall not be deemed an "impairment of security", as that phrase is used in this Mortgage. ARTICLE TWO RELEASE; OTHER EXCEPTED PROPERTY; SUBORDINATION Section 2.01. POSSESSION BY MORTGAGOR; DISPOSITIONS WITHOUT RELEASE. So long as there shall have been no demand for payment under the Guaranty pursuant to Section 3.02 of this Mortgage, the Mortgagor shall be suffered and permitted, with power freely and without let or hindrance on the part of the Mortgagee, subject to the provisions of this Mortgage and the Note Mortgage, to possess, use, manage, operate and enjoy the Trust Estate and every part thereof and to collect, receive, use, invest and dispose of the rents, issues, tolls, profits, revenues and other income from the Trust Estate or any part hereof, to use, consume and dispose of any consumables, goods, wares and merchandise in the ordinary course of business of operating the Casino-Hotel and to adjust and settle all matters relating to choses in action, leases and contracts. 20 Section 2.02. OBSOLETE PROPERTY; TANGIBLE PERSONAL PROPERTY; LEASE MODIFICATIONS. The Mortgagor shall have the right, at any time and from time to time, unless an Event of Default shall have occurred and be continuing, without any release from or consent by the Mortgagee: (a) to sell or dispose of, free from the lien of this Mortgage, any Tangible Personal Property which, in its reasonable opinion, may have become obsolete or unfit for use or which is no longer necessary in the conduct of its businesses or the operation of the Trust Estate, and no purchaser of any such property shall be bound to inquire into any question affecting the Mortgagor's right to sell or otherwise dispose of the same, free from the lien of this Mortgage; (b) to alter, repair, replace, change the location (provided notice shall be given to Mortgagee as to any new location) or position of and add to any Tangible Personal Property; provided, however, that no change shall be made in the location of any such property subject to the lien of this Mortgage which would in any respect impair the security of this Mortgage upon such property; or (c) to renew, extend, surrender, terminate, modify or amend any leases of Tangible Personal Property, when, in the Mortgagor's reasonable opinion, it is prudent to do so. The Mortgagor shall retain any net cash proceeds (subject to the right to pay dividends or make cash distributions pursuant to Section 12.07 of the Indenture) received from the sale or disposition of any Tangible Personal Property under Subsection (a) of this Section 2.02, in the business of operating the Casino-Hotel. The Mortgagee shall be under no responsibility or duty with respect to the exercise of the rights of the Mortgagor under this Section 2.02 or the application of the proceeds of any sale or disposition of any Tangible Personal Property. Section 2.03. OTHER EXCEPTED PROPERTY. Notwithstanding any provisions contained in this Mortgage or 21 the Indenture to the contrary, including, without limitation, the provisions of Granting Clauses Fifth and Sixth and of Articles Two and Five hereof, if the Mortgagor acquires Tangible Personal Property and other items constituting operating assets, such as computer software subject to any FF&E Financing Agreement, or becomes the lessee under a lease for any of the same and if the document evidencing such FF&E Financing Agreement prohibits subordinate liens or the provisions of any such lease prohibits any assignment thereof by the lessee, and if any such prohibition is customary with respect to similar transactions of the lender or lessor, as the case may be, then the property so purchased or the lessee's interest in the lease, as the case may be, shall be deemed to be Excepted Property. If any such FF&E Financing Agreement permits subordinate liens then the Mortgagee agrees to execute and deliver to the Mortgagor, at the Mortgagor's expense, such documents as the holder of such FF&E Financing Agreement may reasonably request to evidence the subordination of the lien of this Mortgage to the lien of such FF&E Financing Agreement. Section 2.04. [Reserved] Section 2.05. RELEASED LAND. (a) Notwithstanding anything to the contrary herein contained, the Mortgagor shall have the right, at any time and from time to time, unless an Event of Default shall have occurred and be continuing, to convey all or any part of the Released Fee Land (the land to be so conveyed is hereinafter referred to as the "Released Land"), free from the lien of the Mortgage, provided that the conditions set forth in Section 2.05(a) of the Note Mortgage have been satisfied. (b) The Mortgagee shall, from time to time, promptly execute any written instrument in form reasonably satisfactory to the prospective purchaser to confirm the release of the Released Fee Land, upon receipt by the Mortgagee of an Officers' Certificate stating that the Mortgagor is entitled to such release by virtue of the Mortgagor's compliance with this Section 2.05 and, if applicable, Section 2.05 of the Note Mortgage, PROVIDED, that the Mortgagee shall have no liability thereunder and all costs and expenses (including reasonable attorneys' fees) shall be paid by the Mortgagor. Section 2.06. RELEASED FEE LAND. (a) Notwithstanding anything to the contrary herein contained, in the event the Mortgagor intends to exercise an option to acquire fee title to Leased Land under the provisions of any Ground Lease, the Mortgagor shall have the right, unless an Event of Default shall have occurred and be 22 continuing, to have an Affiliate exercise such options(s) or for the Mortgagor to exercise such options(s) on behalf of an Affiliate and in connection therewith to cause fee simple title to the Leased Land or any part thereof to be conveyed to an Affiliate of the Mortgagor (provided that no portion of the purchase price of the Leased Land or part thereof is paid by Mortgagor), free from the lien of this Mortgage (the land to be so conveyed is hereinafter referred to as the "Released Fee Land"), provided that the Mortgagor furnishes the Mortgagee with the following: (i) an Officers' Certificate requesting the release of the Released Fee Land from the Trust Estate and stating that (A) the Mortgagor is not required to own the Released Fee Land in order to maintain all Permits and in order to comply with the provisions of all material contracts to which the Mortgagor is a party or by which the Mortgagor is bound, (B) such Affiliate has received all Permits necessary to own the Released Fee Land (including without limitation all approvals required by the Casino Control Commission of the State of New Jersey), (C) there has been delivered to the Mortgagor and the Mortgagee a true copy of an instrument executed by such Affiliate stating that (i) such Affiliate may only engage in the activity of owning the Released Fee Land and (ii) such Affiliate shall not convey the Released Fee Land to another Affiliate of the Mortgagor, unless such other Affiliate executes and delivers to the Mortgagor and the Mortgagee, the instruments that would have been required to be delivered pursuant to clause (C) if the Mortgagor conveyed the Released Fee Land to such other Affiliate (provided that this restriction shall only be effective until such time as this Mortgage shall be satisfied of record) and (D) the deed conveying the Released Fee Land to such Affiliate shall state that such conveyance is made subject to the terms, provisions and conditions of the applicable Ground Lease and that the fee and leasehold interests in the Released Fee Land shall not merge by reason of the Mortgagor and/or any Affiliate owning both the leasehold and fee estate therein, and that such estates shall always remain separate and distinct; (ii) an Opinion of Counsel to the effect that (A) the Mortgagor is not required to own the Released Fee Land in order to maintain in good standing all Permits or by the provisions of any material contract to which the Mortgagor is a party or by which it is bound to own the Released Fee Land and (B) the instruments described in clause (C) of subparagraph (i) were duly executed by and are binding upon such Affiliate; and 23 (iii) an endorsement to the Original Policy, confirming that no merger of the fee and leasehold estates in the Released Fee Land has resulted from such conveyance. In addition, simultaneously with such acquisition, the Affiliate and Mortgagor shall enter into an instrument in form and substance reasonably satisfactory to Mortgagee, amending the applicable Ground Lease to provide such mortgagee protections as are customary and to the extent reasonably required by Mortgagee, including, without limitation, (A) a covenant of the landlord not to terminate the Ground Lease for any reason whatsoever (including without limitation, due to any default by tenant of its obligations under such Ground Lease), and (B) an agreement by the landlord not to accept payment of any fixed or base rent from the tenant (and, if tendered by the Mortgagor, and agreement to return same to the Mortgagor) or any other charges payable thereunder at any time that an Event of Default shall have occurred and shall be continuing. (b) The Mortgagee shall, from time to time, promptly execute any written instrument in form reasonably satisfactory to the prospective purchaser to confirm the release of the Released Fee Land, upon receipt by the Mortgagee of an Officers' Certificate stating that the Mortgagor is entitled to such release by virtue of the Mortgago's compliance with this Section 2.06, PROVIDED that the Mortgagee shall have no liability thereunder and all costs and expenses (including reasonable attorneys' fees) shall be paid by the Mortgagor. Section 2.07. AFTER-ACQUIRED FEE MORTGAGES. (a) Notwithstanding anything contained herein to the contrary (i) if no Event of Default has occurred and is continuing and (ii) if the Mortgagor shall acquire Released Fee Land, then simultaneously with the acquisition thereof, the Mortgagor shall have the right to encumber such fee simple title with a mortgage (such mortgage and any refinancing thereof permitted by the Indenture is hereinafter referred to as an "After-Acquired Fee Mortgage"). The lien of this Mortgage on the Released Fee Land shall be subordinated to the lien of the After-Acquired Fee Mortgage on the Released Fee Land (and to the lien of other Superior Mortgages which shall become a lien thereon in accordance with the terms thereof), provided the following conditions are satisfied: (i) the After-Acquired Fee Mortgage encumbers the fee simple title to such real property and no other property; 24 (ii) the indebtedness secured by the After-Acquired Fee Mortgage (A) does not exceed 75% of the cost to the Mortgagor of such fee simple title at the time of the acquisition and (B) satisfies the criteria set forth in Section 12.08 of the Indenture; (iii) in the event the After-Acquired Fee Mortgage encumbers fee simple title to the Leased Land or any part thereof, such After-Acquired Fee Mortgage contains provisions binding on the holder of the After-Acquired Fee Mortgage and its successors and assigns confirming the provisions of Section 5.21(d) of this Mortgage; (iv) the Released Fee Land is not being acquired from an Affiliate of the Mortgagor; (v) the After-Acquired Fee Mortgage and other loan documents shall contain a provision binding upon the holder of such After-Acquired Fee Mortgage and other loan documents that all insurance proceeds in the event of a Casualty and awards for Takings of less than the entire Released Fee Land shall be used for purposes of Restoration; and (vi) the Mortgagor delivers to the Mortgagee an Officers' Certificate requesting such subordination and certifying that the requirements of (i) through (v) above have been satisfied. (b) Anything contained in this Section 2.07 or elsewhere in this Mortgage to the contrary notwithstanding, the subordination of this Mortgage to any After-Acquired Fee Mortgage constituting a lien on Released Fee Land shall not be self-operative but shall be effective only upon the execution and delivery by the Mortgagee of an instrument in writing effecting such subordination. The Mortgagee shall deliver such instrument of subordination on the following conditions: (x) the Mortgagee shall have received an Officers' Certificate confirming that the conditions of (i) through (vi) of paragraph (a) have been satisfied, together with a true and correct copy of the After-Acquired Fee Mortgage and all other instruments securing the indebtedness evidenced thereby and (y) the instrument of subordination shall specifically state that this Mortgage is being subordinated not with respect to the lien of this Mortgage on the Ground Lease or on the leasehold estate created thereby, but only with respect to the fee simple title to the Leased Land or applicable part thereof and only if and to the extent that the After-Acquired Fee Mortgage being subordinated to is subject and subordinate to the Ground Lease and the leasehold estate created thereby. 25 ARTICLE THREE REMEDIES Section 3.01. EVENTS OF DEFAULT. "Event of Default," whenever used herein, means any one of following events (including any applicable notice requirement and any period of grace as specified in this Section 3.01) (whatever the reason for such event 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): (a) default by the Mortgagor under the Guaranty and continuance of such default for a period of 10 days after there has been given a written notice to the Mortgagor specifying such default and stating that such notice is a "Notice of Default" hereunder; or (b) an "Event of Default," as defined in Section 3.01 of the Note Mortgage, shall occur; or (c) default in the performance, or breach, of any of the provisions of Article Four and the continuance of such default or breach for a period of 60 days after there has been given a written notice to the Mortgagor specifying that such notice is a "Notice of Default" hereunder; or (d) any representation or warranty of the Mortgagor set forth in this Mortgage shall prove to be incorrect as of the time when made and the facts constituting such incorrectness impairs the Mortgagee's security and such impairment continues for a period of 30 days, unless such impairment is curable, but not susceptible of cure within such 30-day period (for reasons other than lack of funds), provided that the conditions set forth in Section 3.01(l) of the Note Mortgage have been satisfied. Section 3.02. DEMAND UNDER THE GUARANTY. If an Event of Default occurs and is continuing, and the Mortgagee has declared the Outstanding Amount of the Note to be due and payable immediately pursuant to Section 3.02 of the Note Mortgage, then the Mortgagee may declare all obligations under the Guaranty to be due and payable immediately. Section 3.03. APPLICATION OF MONEYS RECEIVED BY MORTGAGEE. Any moneys received by the Mortgagee pursuant to the provisions of this Article Three (including moneys received by the Trustee after any action or act by the Mortgagee under Section 3.10) shall be applied by the 26 Mortgagee in accordance with the provisions of Section 7.06 of the Indenture. Section 3.04. RESTORATION OF RIGHTS AND REMEDIES. If the Mortgagee has instituted any proceeding to enforce any right or remedy under this Mortgage and such proceeding has been discontinued or abandoned for any reason or has been determined adversely to the Mortgagee, then and in every such case the Mortgagor and the Mortgagee shall, subject to any determination in such proceeding, be restored to its former position hereunder, and thereafter all rights and remedies of the Mortgagee shall continue as though no such proceeding had been instituted. Section 3.05. RIGHTS AND REMEDIES CUMULATIVE. No right or remedy herein conferred upon or reserved to the Mortgagee 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 3.06. DELAY OR OMISSION NOT WAIVER. No delay or omission of the Mortgagee to exercise any right or remedy accruing upon an 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 Three by law to the Mortgagee may be exercised, from time to time, and as often as may be deemed expedient, by the Mortgagee. Section 3.07. UNDERTAKING FOR COSTS. If any action or proceeding shall be commenced (including, without limitation, an action to foreclose this Mortgage or to collect under the Guaranty secured hereby) to which action or proceeding the Mortgagee is made or becomes a party, or in which it becomes necessary in the opinion of the Mortgagee to defend or uphold the lien of this Mortgage, then, to the extent it has not already done so pursuant to the terms of Section 3.07 of the Note Mortgage, the Mortgagor shall pay to Mortgagee all expenses, including reasonable attorneys' fees and expenses, incurred by the Mortgagee in connection therewith, together with interest at the rate then payable on the Notes, from the date of payment less the net amount received by the Mortgagee or the Trustee, as their interests may appear under any title insurance policy, and, until paid, all such expenses, together with interest as aforesaid, shall be a lien on the Trust Estate. 27 Section 3.08. WAIVER OF APPRAISEMENT AND OTHER LAWS. To the full extent that it may lawfully so agree, the Mortgagor will not at any time insist upon, plead, claim or take the benefit or advantage of, any appraisement, valuation, stay, extension or redemption law now or hereafter in force, in order to prevent or hinder the enforcement of this Mortgage or the absolute sale of the Trust Estate, or any part hereof, or the possession thereof by any purchaser at any sale under this Article Three; and the Mortgagor, for itself and all who may claim under it, so far as it or they now or hereafter may lawfully do so, hereby waives the benefit of all such laws. The Mortgagor, for itself and all who may claim under it, waives, to the extent that it may lawfully do so, all right to have the property in the Trust Estate marshalled upon any foreclosure hereof, and agrees that any court having jurisdiction to foreclose this Mortgage may order the sale of the Trust Estate as an entirety. If any law in this Section 3.08 referred to and now in force, of which the Mortgagor or its successor or successors might take advantage despite this Section 3.08, shall hereafter be repealed or cease to be in force, such law shall not thereafter be deemed to constitute any part of the contract herein contained or to preclude the application of this Section 3.08. Section 3.09. ENTRY. The Mortgagor agrees that upon the occurrence of an Event of Default the Mortgagor, upon demand of the Mortgagee during the continuance thereof, shall forthwith surrender to the Mortgagee the actual possession of, and it shall be lawful for the Mortgagee by such officers or agents as it may appoint to enter and take possession of, the Trust Estate (and the books and papers of the Mortgagor), and to hold, operate and manage the Trust Estate (including the making of all needful repairs, and such alterations, additions and improvements as the Mortgagee shall deem wise) and to receive the rents, issues, tolls, profits, revenues and other income thereof, and, after deducting the costs and expenses of entering, taking possession, holding, operating and managing the Trust Estate, as well as payments for taxes, insurance and other proper charges upon the Trust Estate and reasonable compensation to itself, its agents and counsel, to apply the same as provided in Section 3.03, PROVIDED, HOWEVER, that the Mortgagee's rights under this Section 3.09 shall be subject to the provisions of the New Jersey Casino Control Act and Section 3.14. Whenever all that is then due upon the Note and under any of the terms of this Mortgage shall have been paid and all defaults hereunder shall have been made good, the Mortgagee shall surrender possession to the Mortgagor. 28 Section 3.10. POWER OF SALE; SUITS FOR ENFORCEMENT. In case an Event of Default shall occur and be continuing, the Mortgagee, with or without entry, in its discretion may: (a) sell, subject to any mandatory requirements of applicable law, the Trust Estate as an entirety, or in such parcels, as the Mortgagee may determine, to the highest bidder at public auction at such place and at such time (which sale may be adjourned by the Mortgagee from time to time in its discretion by announcement at the time and place fixed for such sale, without further notice) and upon such terms as the Mortgagee may fix and briefly specify in a notice of sale to be published as required by law; or (b) proceed to protect and enforce its rights under this Mortgage by sale pursuant to judicial proceedings or by a suit, action or proceeding in equity or at law or otherwise, whether for the specific performance of any covenant or agreement contained in this Mortgage or in aid of the execution of any power granted in this Mortgage or for the foreclosure of this Mortgage or for the enforcement of any other legal, equitable or other remedy, as the Mortgagee, being advised by counsel, shall deem most effectual to protect and enforce any of the rights of the Mortgagee; the failure to join tenants shall not be asserted as a defense to any foreclosure or proceeding to enforce the rights of the Mortgagee. Section 3.11. INCIDENT OF SALE. Upon any sale of any of the Trust Estate, whether made under the power of sale hereby given or pursuant to judicial proceedings, to the extent permitted by law: (a) all obligations owing under the Guaranty, if not previously due, shall at once become and be immediately due and payable; (b) subject to the provisions of Section 3.14 and the receipt of any required prior approvals of the New Jersey Casino Control Commission, the Mortgagee may bid for and purchase the property offered for sale, and upon compliance with the terms of sale may hold, retain and possess and dispose of such property, without further accountability, and may, in paying the purchase money therefor, delivery any notes or claims for interest thereon in lieu of cash to the amount which shall, upon distribution of the net proceeds of such sale, be payable thereon, and such notes or claims for interest thereon, in case the amounts so payable thereon shall be less than the amount due thereon, shall be returned to the holders 29 thereof after being appropriately stamped to show partial payment; (c) the Mortgagee may make and deliver to the purchaser or purchasers a good and sufficient deed, bill of sale and instrument of assignment and transfer of the property sold; (d) the Mortgagee is hereby irrevocably appointed the true and lawful attorney of the Mortgagor, in its name and stead, to make all necessary deeds, bills of sale and instruments of assignment and transfer of the property thus sold; and for that purpose it may execute all necessary deeds, bills of sale and instruments of assignment and transfer, and may substitute one or more persons, firms or corporations with like power, the Mortgagor hereby ratifying and confirming all that its attorney or such substitute or substitutes shall lawfully do by virtue hereof; but if so requested by the Mortgagee or by any purchaser, the Mortgagor shall ratify and confirm any such sale or transfer by executing and delivering to the Mortgagee or to such purchaser or purchasers all proper deeds, bills of sale, instruments of assignment and transfer and releases as may be designated in any such request; (e) all right, title, interest, claim and demand whatsoever, either at law or in equity or otherwise, of the Mortgagor of, in and to the property so sold shall be divested and such sale shall be a perpetual bar both at law and in equity against the Mortgagor, its successors and assigns, and against any and all persons claiming or who may claim the property sold or any part thereof from, through or under the Mortgagor, its successors and assigns; and (f) the receipt of the Mortgagee or of the officer making such sale shall be a sufficient discharge to the purchaser or purchasers at such sale for his or their purchase money and such purchaser or purchasers and his or their assigns or personal representatives shall not, after paying such purchase money and receiving such receipt, be obliged to see to the application of such purchase money, or be in anywise answerable for any loss, misapplication or non-application thereof. Section 3.12. RECEIVER. Upon the occurrence of an Event of Default and commencement of judicial proceedings by the Mortgagee to enforce any right under this Mortgage, the Mortgagee shall be entitled, as against the Mortgagor, without notice or demand and without regard to the adequacy of the security for the Guaranty or the solvency of the Mortgagor, to 30 the appointment of a receiver of the Trust Estate, and of the rents, issues, profits, revenues and other income thereof, PROVIDED, HOWEVER, that the Mortgagee's rights under this Section 3.12 shall be subject to the provisions of the New Jersey Casino Control Act and Section 3.14 hereof. Section 3.13. SUITS TO PROTECT THE TRUST ESTATE. Upon 5 days' prior written notice to the Mortgagor (or such shorter period or without notice if deemed necessary and appropriate by the Mortgagee), the Mortgagee shall have power to institute and maintain such proceedings as it may deem necessary and appropriate to prevent any impairment of the Trust Estate by any acts which may be unlawful or in violation of this Mortgage and to protect its interests in the Trust Estate and in the rents, issues, profits, revenues and other income arising therefrom, including power to institute and maintain proceedings to restrain the enforcement of or compliance with any 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 hereunder or be materially prejudicial to the interests of the Mortgagee. Section 3.14. MANAGEMENT OF CASINO-HOTEL. Notwithstanding any provision of this Article Three to the contrary, following an Event of Default and the taking of possession of the Trust Estate or any part thereof by the Mortgagee and/or the appointment of receiver of the Trust Estate or any part thereof, the Mortgagee or any such receiver shall be authorized, in addition to the rights and powers of the Mortgagee and such receiver set forth elsewhere in this Mortgage, to retain one or more experienced operators of hotels and/or casinos to manage the Casino-Hotel, PROVIDED that any such operator shall have all necessary legal qualifications, including all Permits, to manage the Casino-Hotel. ARTICLE FOUR CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE Section 4.01. CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER ONLY ON CERTAIN TERMS. The Mortgagor shall comply with all provisions applicable to the Mortgagor in Article Ten of the Indenture. Section 4.02. SUCCESSOR ENTITY SUBSTITUTED. Upon any consolidation or combination or any conveyance or transfer of the Trust Estate or any portion thereof in accordance with Section 10.01 of the Indenture, the successor entity formed 31 by such consolidation or into which the Mortgagor is combined or to which such conveyance or transfer is made shall succeed to, and be substituted for, and may exercise every right and power of, the Mortgagor under this Mortgage with the same effect as if such successor entity had been named as the Mortgagor herein; PROVIDED, HOWEVER, that no such conveyance or transfer of the Trust Estate substantially as an entirety, unless such conveyance or transfer is in compliance with the provisions of Article Ten of the Indenture, shall have the effect of releasing the Person named as "the Mortgagor" in the first paragraph of this instrument or any successor entity which shall theretofore have become such in the manner prescribed in such Article Ten from its liability as guarantor. Section 4.03. LIMITATION ON SALES OF TRUST ESTATE. Except as otherwise expressly permitted by this Mortgage or the Indenture, the Mortgagor shall not sell, assign, lease, sublease, hypothecate, pledge, mortgage or otherwise transfer all or any part of the Trust Estate or any interest therein (including without limitation any interest in the Ground Leases). Without limiting the generality of the foregoing, the Mortgagor shall not separate, or attempt to separate, its ownership of its interest in the Ground Leases from its ownership of the buildings constituting the Casino-Hotel or any part thereof. ARTICLE FIVE COVENANTS AND REPRESENTATIONS OF MORTGAGOR Section 5.01. [Reserved] Section 5.02. FF&E FINANCING AGREEMENTS. The Mortgagor covenants and agrees to comply with all of the terms and conditions set forth in any FF&E Financing Agreements before the expiration of any applicable notice and cure periods contained in the FF&E Financing Agreements. Section 5.03. LIMITATIONS ON LIENS. The Mortgagor will not create, incur, suffer or permit to be created or incurred or to exist any mortgage, lien, charge or encumbrance on or pledge of any of the Trust Estate, other than (i) Permitted Encumbrances, (ii) liens on the Trust Estate in connection with indebtedness permitted by clauses (i), (ii), (iii), (iv) or (v) of Section 12.08(a) of the Indenture, and (iii) a building contract or a notice of intention filed by a mechanic, materialman or laborer under the New Jersey lien law. Without limiting the generality of the foregoing sentence but notwithstanding the provisions of the foregoing sentence, the Mortgagor shall not be deemed to have breached the provisions of the foregoing sentence by virtue of the 32 existence of a lien for Impositions or mechanics liens so long as the Mortgagor is in good faith contesting the validity of the same in accordance with the provisions of Section 5.09 to the extent that the matters described in (i) and (ii) do not constitute a default under any Ground Lease or Superior Mortgage. Section 5.04. [Reserved] Section 5.05. ACTIONS AND PROCEEDINGS. The Mortgagor hereby acknowledges the right of the Mortgagee, in the name of and on behalf of the Mortgagor, (a) to appear in and defend any action or proceeding brought with respect to the Trust Estate or any part thereof and (b) upon 5 days' prior written notice to the Mortgagor (or such shorter period or without notice if deemed necessary and appropriate by the Mortgage), to commence any action or proceeding to protect the interest of the Mortgagee in the Trust Estate. Section 5.06. WARRANTY OF LEASEHOLD ESTATE AND TITLE. The Mortgagor represents and warrants that as of the date hereof: (a) it is duly authorized under the laws of the State of New Jersey and all other applicable laws to execute and deliver this Mortgage, and all corporate action on its part necessary for the valid execution and delivery of this Mortgage has been duly and effectively taken; (b) it is the lawful owner and is lawfully seized and possessed of the Owned Land and all buildings and improvements thereon, free and clear of all liens, charges or encumbrances, other than the lien of the Mortgage Documents, any Working Capital Facility Lien and Existing Encumbrances; (c) it is the holder of and has good and marketable title to the leasehold interests and leasehold estates under the Ground Leases and to the Ground Leases, subject to no lien, encumbrance or charge other than the lien of the Mortgage Documents, any Working Capital Facility Lien and Existing Encumbrances; (d) (i) the Ground Leases are valid and subsisting demises of the Leased Land for the terms therein set forth, (ii) there are no defaults thereunder by any Lessor or the lessee as to which written notice has been given to or by the lessee, (iii) the Mortgagor has delivered true and correct copies of the Ground Leases and all modifications, amendments and supplements thereto, and (iv) each of the Ground Leases is in full 33 force and effect and has not been modified, amended or supplemented, except as described on Schedule 2; (e) it has good title to the Operating Assets, subject to no lien, encumbrance or charge, other than the lien of the Mortgage Documents, any Working Capital Facility Lien and Existing Encumbrances; and (f) the Mortgagor has good and lawful right and authority to execute this Mortgage and to grant, bargain, sell, alien, convey, assign, transfer, hypothecate, pledge, mortgage and confirm the Trust Estate as provided herein (including without limitation with respect to the Operating Assets and the Ground Leases, without the consent of any third party, other than governmental authorities but any applicable or necessary consent or approval of any such governmental authority has been given or waived at or prior to the execution and delivery of this Mortgage), and this Mortgage constitutes a valid second mortgage lien and second priority security interest in the Trust Estate PARI PASSU with the lien of the Note Mortgage, subject only to Working Capital Facility Liens and Existing Encumbrances. The Mortgagor hereby does and will forever warrant and defend (x) the title to Trust Estate (including without limitation, its leasehold estates under the lessee's interests in the Ground Leases) (subject to Permitted Encumbrances) and (y) the priority of the lien of this Mortgage (subject to Permitted Encumbrances other than Restricted Encumbrances), against the claims and demands of all persons whomsoever, at the Mortgagor's sole cost and expense. Section 5.07. FURTHER ASSURANCES; RECORDING. The Mortgagor will, as provided in Section 5.13, from time to time subject its right, title and interest under all Leases to the lien of this Mortgage. The Mortgagor will cause this instrument and all other instruments of further assurance, including all financing statements and continuation statements covering security interests in personal property, to be promptly recorded, registered and filed, and at all times to be kept recorded, registered and filed, and will execute and file such financing statements and cause to be issued and filed such continuation statements, all in such manner and in such places as may be required by law or as requested by the Mortgagee to fully preserve and protect the rights of the Mortgagee as a secured party under the Uniform Commercial Code to all property comprising the Trust Estate (to the extent a grant of a security interest therein is governed by the Uniform Commercial Code) and to perfect, preserve and protect the lien 34 of this Mortgage as a valid mortgage lien of record and a valid security interest on the Trust Estate subject to Permitted Encumbrances (other than Restricted Encumbrances). The Mortgagor will pay all filing or recording fees, and all expenses incident to the execution and delivery of this Mortgage, and any instrument of further assurance, and all federal, state, county and municipal stamp taxes and other taxes, duties, imposts, assessments and charges arising out of or in connection with the execution and delivery of this Mortgage, any financing statement or continuation statement with respect to the personal property constituting part of the Trust Estate or any instrument of further assurance. Section 5.08. PAYMENT OF TAXES AND CERTAIN CLAIMS; COMPLIANCE WITH LEGAL REQUIREMENTS AND INSURANCE REQUIREMENTS. The Mortgagor will: (a) subject to the provisions of Section 5.09 relating to contests, pay or cause to be paid promptly (or when installments of the same shall become due and payable, if, by law or by agreement or arrangement with the applicable governmental agency or authority, the same may be paid in installments) before any fine, penalty, interest or cost may be added for nonpayment (but no later than when the same are payable by the Mortgagor pursuant to any Superior Instrument Requirement), all taxes (including, without limitation, real estate taxes, personal or other property taxes and all sales, value added, use and similar taxes), assessments (including, without limitation, all assessments for public improvements or benefits, whether or not commenced or completed prior to the date hereof and whether or not to be completed prior to the satisfaction of this Mortgage), water, sewer or other rents, rates and charges, excises, levies, license fees, permit fees, inspection fees and other authorization fees and other charges, in each case whether general or special, ordinary or extraordinary, or foreseen or unforeseen, of every character (including all interest, additions to tax and penalties thereon), that may be assessed, levied, confirmed or imposed on or in respect of or be a lien upon (1) the Trust Estate (including without limitation the Leased Land) or any part thereof or any rent therefrom or any estate, right or interest therein, or (2) any acquisition, occupancy, use, leasing, or possession of or activity conducted on the real property or any part thereof included in the Trust Estate or any gross receipts thereof or of the rent therefrom (all of the foregoing being referred to collectively as "Impositions"). Notwithstanding the foregoing or any other provision of this Mortgage, the Mortgagor shall not be required to pay any income, 35 profits or revenue tax upon the income of the Mortgagee, the Trustee or the Noteholders nor any franchise, excise, corporate, estate, inheritance, succession, capital levy or transfer tax of the Mortgagee, the Trustee or the Noteholders nor any interest, additions to tax or penalties in respect thereof, unless such tax is imposed, levied or assessed in substitution for any Impositions that the Mortgagor is required to pay pursuant to this Section 5.08. The Mortgagor will deliver to the Mortgagee official receipts or other proof evidencing payments of any Impositions in accordance with the requirements of this Section 5.08. The Mortgagor shall not be entitled to any credit for taxes or assessments paid against the Guaranty; (b) except for such property which the Mortgagor may dispose of or replace pursuant to Section 2.02, maintain and keep all its properties used or useful in the conduct of its business (other than obsolete equipment), including, without limitation, the Casino-Hotel and all Tangible Personal Property, in such good repair, working order and condition, except for reasonable wear and use, and make or cause to be made all such needful and proper repairs, renewals and replacements thereto consistent with the standards of other casino-hotels in Atlantic City, New Jersey; (c) occupy and continuously operate the Casino-Hotel and keep the Casino-Hotel supplied with Tangible Personal Property, all in a manner consistent with the standards of other casino-hotels in Atlantic City, New Jersey (provided that nothing contained in this Section 5.08(c) shall be deemed to reduce the time period set forth in Section 3.01(f)); (d) subject to the provisions of Section 5.09 relating to contests, the Mortgagor at its sole expense will timely (1) comply with all Legal Requirements and Insurance Requirements, whether or not compliance therewith shall require structural changes in the buildings and improvements included in the Trust Estate or interfere with the use and enjoyment of the Trust Estate or any part thereof, (2) procure, maintain and comply with all permits and other authorizations required for (i) the use of the Casino as a gaming and gambling facility, (ii) the on-premises consumption of alcoholic beverages at the Casino-Hotel and (iii) any other use of the Trust Estate or any part thereof then being made, and for the proper erection, installation, operation and maintenance of the improvements or any part thereof, and (3) comply with any instruments of record at the time in force affecting the Trust Estate or any part thereof, if 36 the failure to comply with the same would impair the Mortgagee's security hereunder. Without limiting the generality of the foregoing, the Mortgagor represents and warrants that at the time of the execution of this Mortgage, the Mortgagor is in compliance with the requirements of clauses (1), (2) and (3); (e) in the event of the passage after the date of this Mortgage of any law of the State of New Jersey, or any other governmental entity, changing in any way the laws now in force for the taxation of mortgages, or debts secured thereby, for state or local purposes, or the manner of the operation of any such taxes, so as to affect the interest of the Mortgagee, then and in such event, the Mortgagor shall bear and pay the full amount of such taxes, provided that if for any reason payment by the Mortgagor of any such new or additional taxes would be unlawful or if the payment thereof would constitute usury or render the indebtedness secured hereby wholly or partially usurious under any of the terms or provisions of the Note, or this Mortgage, or otherwise, the Mortgagee may, at the Mortgagee's option, declare the whole sum secured by this Mortgage, with interest thereon, to be due and payable 90 days after notice of election thereof has been given by the Mortgagee, or the Mortgagee may, at the Mortgagee's option, pay that amount or portion of such taxes as renders the loan or indebtedness secured hereby unlawful or usurious, in which event the Mortgagor shall concurrently therewith pay the remaining lawful and nonusurious portion or balance of such taxes. Section 5.09. PERMITTED CONTESTS. The Mortgagor may, at its sole expense, contest by appropriate legal proceedings conducted in good faith and with due diligence, the amount or validity or application, in whole or in part of any Imposition or lien therefor or any Legal Requirement or Insurance Requirement or the application of any instrument of record affecting the Trust Estate or any part thereof or any claims of mechanics, materialmen, suppliers, or vendors or lien therefore, and may withhold payment of the same pending such proceedings if permitted by law, or make payment under protest, or defer compliance with any such Legal Requirement, any such Insurance Requirement or the terms of any such instrument, and the same shall not be a Default hereunder, provided that (a) in the case of any Impositions or lien therefor or any claims of mechanics, materialmen, suppliers or vendors or lien therefor, such proceedings shall suspend the collection thereof from each of the Mortgagor, the Mortgagee, the Trustee, the Noteholders and the Trust Estate, (b) neither the Trust Estate nor any interest therein would be in any danger of being sold, forfeited, or lost, (c) such action 37 would not result in or constitute a default under any Ground Lease or Superior Mortgage, (d) in the case of a Legal Requirement, neither the Noteholders nor the Mortgagee shall be in any danger of any civil or any criminal liability, and the failure of the Mortgagor to comply with such Legal Requirement shall not affect the continuance in good standing of any Permit or result in the suspension, termination, non-renewal or material adverse modification of any permit, and (e) in the case of an Insurance Requirement, the failure of the Mortgagor to comply therewith shall not affect the validity of any insurance required to be maintained by the Mortgagor hereunder. Section 5.10. MECHANICS' AND OTHER LIENS. Without limiting the generality of the first sentence of Section 5.03 and notwithstanding the provisions of Section 5.03(a)(ii), the Mortgagor will cause to be removed, either by payment, or bonding or otherwise, all claims and demands of mechanics, materialmen, laborers, and others which, if unpaid, might result in, or permit the creation of, a lien on the Premises and/or Trust Estate or any part thereof, or on the revenues, rents, issues, income and profits arising therefrom and in general will do or cause to be done everything necessary so that the lien hereof shall be fully preserved, at the cost of the Mortgagor, without expense to the Mortgagee. Section 5.11. INSURANCE. (a) The Mortgagor will, at its expense, maintain with Insurers: (1) insurance with respect to the Mortgagor's insurable properties constituting a part of the Trust Estate against loss or damage by fire, lightning, and other risks from time to time included under "all-risk" policies and against loss or damage by sprinkler leakage, water damage, collapse, malicious mischief and explosion in respect of any steam and pressure boiler and similar apparatus located on such insurable properties, in amounts at all times sufficient to prevent the Mortgagor from becoming a coinsurer within the terms of the applicable policies, but in any event such insurance shall be maintained in such insurable amounts not less than the greatest of the following (hereinafter referred to as the "Insurance Amount"): (i) 100% of the then full insurable value of such insurable properties, the term "full insurable value" to mean the actual replacement cost (excluding the costs of foundation, footing, excavation, paving, landscaping and other similar, non-insurable improvements) determined from time to time (but not less frequently than once in any 36 calendar months), by an Architect, contractor, appraiser, or an Insurer, or 38 (ii) the amount required to be maintained pursuant to the Superior Instrument Requirements; (2) war risk insurance as and when such insurance is obtainable from the United States of America or any agency thereof as promptly as reasonably practicable after the same becomes so obtainable, in an amount not less than the Insurance Amount, or in such lesser amount as may then be so obtainable; (3) public liability, including personal injury and property damage and comprehensive general liability connected with the possession, use, leasing, operation or condition of such insurable properties in such amounts as, in the Mortgagor's judgment, are prudent, considering the cost of such insurance, for personal injury and property damage with respect to any one occurrence, which may be under an umbrella policy. Anything contained in this clause (3) to the contrary notwithstanding, the Superior Instrument Requirements with respect to the kinds and amount of insurance described in this clause (3) shall be satisfied by the Mortgagor; (4) appropriate workers' compensation insurance with respect to any work (to the extent the risks to be covered thereby are not already covered by other policies of insurance maintained by the Mortgagor) on or about such insurable properties; (5) business interruption insurance covering not less than 12 months of loss, provided that, at any time that the Mortgagor is renewing any policy for such insurance or taking out any new or replacement such policy covering a period of less than 12 months, the Mortgagor shall deliver to the Mortgagee an Officers' Certificate certifying that the period of coverage to be maintained by the Mortgagor under such policy is the maximum that can be maintained at rates determined by the Mortgagor to be reasonable for such coverage; (6) to the extent available, flood insurance in an amount not less than the Insurance Amount, or such lesser amount as may then be so obtainable; and (7) such other insurance with respect to such insurable properties against loss or damage of the kinds (i) from time to time customarily insured against by persons owning or using casino-hotels of comparable size in the boardwalk area of Atlantic City, New Jersey and 39 (ii) required to be maintained pursuant to the Superior Instrument Requirements. Notwithstanding the foregoing, to the extent permitted by Superior Instrument Requirements, (i) the Mortgagor shall be permitted to maintain a deductible with respect to the insurance policies described in clauses (1), (2), (6) and (7) in an amount not to exceed (x) for the twelve month period commencing the date hereof, $100,000 with respect to the insurance policies described in clause (1), (2), (6) and (7) thereafter, the customary deductible (if any) with respect to the insurance maintained by casino-hotels of a similar size and value in Atlantic City, New Jersey (but in no event more than $1,000,000), (ii) the Mortgagor shall be permitted to maintain a $200,000 self insured retention under the general liability policy described in clause (3) and a deductible with respect to the other insurance policies described in clause (3) in an amount not to exceed the amount of deductible as is customarily maintained by casino-hotels of similar size in Atlantic City, New Jersey, (iii) the Mortgagor shall not reduce its insurance coverage for the matters described in clause (3) (which for purposes of this paragraph means a reduction in single limits or an increase in deductible) unless and until the Mortgagor delivers to the Mortgagee an Officers' Certificate certifying (w) that the coverage the Mortgagor was theretofore maintaining cannot be maintained at rates determined by the Mortgagor to be reasonable for such coverage, (x) the amount of the proposed reduction, (y) the premium for the existing and the proposed reduced coverage, and (z) that the proposed deductible satisfied the criteria set forth in this clause (iii), and (iv) the Mortgagor shall be permitted to maintain a deductible with respect to the insurance policies described in clause (5) in the forms of and in an amount not to exceed the amount of deductible as is customarily maintained by casino-hotels of similar size in Atlantic City, New Jersey. (b) Each policy of insurance maintained by the Mortgagor pursuant to Subsection (a) of this Section 5.11 shall, (1) except in the case of workers' compensation insurance, name as additional insureds the Mortgagee, in both its individual and fiduciary capacities, and, to the extent required by the Superior Instrument Requirements, the Lessors and the holders of the Superior Mortgages, (2) provide that all insurance proceeds for losses, except in the case of public liability insurance and workers' compensation insurance or as otherwise provided in Subsections (d), (e) and (f) of this Section 5.11, be payable solely to the Mortgagee or such other party as is required to receive such proceeds under a Superior Mortgage, (3) except in the case of workers' compensation, include effective waivers (whether under the terms of any such policy or otherwise) by the insurer of all claims for insurance premiums against all lost payees and named insureds (other than the Mortgagor) and all rights of subrogation against any named insured, (4) except in the case of public liability and 40 workers' compensation insurance, provide that any losses shall be payable notwithstanding (i) any act, failure to act, negligence of, or violation or breach of warranties, declarations or conditions contained in such policy by the Mortgagor or the Mortgagee or any other named insured or loss payee (including, without limitation, with respect to the Released Fee Land, the holders of any After-Acquired Fee Mortgages), (ii) the occupation or use of the insurable properties for purposes more hazardous than permitted by the terms of the policy, (iii) any foreclosure or other proceeding or notice of sale relating to the insurable properties or (iv) any change in the title to or ownership or possession of the insurable properties, (5) contain a non-contributory mortgagee clause in favor of the Mortgagee, and (6) provide that if all or any part of such policy is cancelled, terminated or expires, the insurer will forthwith give notice thereof to each named insured an loss payee and that no cancellation, reduction in amount or material change in coverage thereof shall be effective until at least 30 days after receipt by each named insured and loss payee of written notice thereof. (c) The Mortgagor will deliver to the Mortgagee, (1) duplicate originals of all insurance policies that the Mortgagor is required to maintain pursuant to this Section 5.11 and (2) within 30 days after each reduction in insurance required to be maintained by the Mortgagor hereunder, an Officers' Certificate setting forth the particulars as to all such insurance policies and certifying that the same comply with the requirements of this Section 5.11, that all premiums or installments thereof then due thereon have been paid and that the same are in full force and effect. The Mortgagee shall not be responsible for effecting or renewing any insurance or for the responsibility or solvency of the insurers. (d) The Mortgagor shall give written notice to the Mortgagee immediately upon obtaining knowledge of any Casualty which (x) results in damage, loss or destruction in an amount in excess of $5,000,000 to any buildings or improvements on the Premises and/or any Tangible Personal Property or (y) pursuant to any Superior Instrument Requirement, would require the deposit of insurance proceeds with the Depositary, or action or proceeding with respect thereto. Whenever the Superior Instrument Requirements require or permit the selection of the Depositary by the Mortgagor, the Mortgagor shall select the Insurance Trustee as the Depositary. Within 30 days after any Casualty which results in any damage, loss or destruction in an amount in excess of $10,000,000 to any buildings or improvements of the Premises and/or any Tangible Personal Property, the Mortgagor shall deliver to the Mortgagee a certificate of an Architect stating whether, in such Architect's opinion, applicable Legal Requirements permit 41 the Restoration of such buildings and improvements for the same uses and to the same size and quality in all material respects, as existed immediately prior to the Casualty (and if such certificate states the Legal Requirements do not permit such Restoration, such certificate shall describe the manner closest approximating such criteria to which the buildings and improvements could be so restored and shall be accompanied by a Certificate of Appraised Value dated not more than 10 days prior to delivery setting forth the Appraised Value immediately prior to the Casualty and the estimated Appraised Value immediately after the Restoration). If the Mortgagor is required to deliver such Certificates of Appraised Value and if based on such Certificates of Appraised Value immediately after Restoration, the aggregate Outstanding Amount of First Mortgage Debt immediately after such Restoration shall exceed the greater of (i) 66 2/3% of the Appraised Value immediately after such Restoration or (ii) the quotient of the Outstanding Amount of First Mortgage Debt immediately prior to such Casualty divided by the Appraised Value immediately prior to the Casualty multiplied by the Appraised Value immediately after such Restoration, then the proceeds of any insurance shall, at the election of Mortgagee, either be applied to Restoration as set forth in Subsections (e), (h) and (i) below) or paid and delivered to the Mortgagee to the extent of the then Outstanding Amount of the Note and any other interest or other sums due hereunder or thereunder to be applied to the satisfaction of the Mortgage to the extent proceeds are available for such purpose and provided that no additional sums are due to the Trustee or the Noteholder under the Indenture, the balance of any net insurance proceeds shall be paid to the Mortgagor. Notwithstanding the foregoing sentence, if such Certificates of Appraised Values indicates that the Outstanding Amount of First Mortgage Debt immediately after such Restoration exceeds the greater of the two amounts determined pursuant to subclauses (i) and (ii) above, the proceeds of insurance will be made available for Restoration (subject to paragraphs, (e), (h) and (i) below) if the Mortgagor obtains an irrevocable commitment from a nationally recognized financial institution having a combined capital and surplus of at least $100,000,000, to supply, upon an acceleration under this Mortgage as a result of an Event of Default, funds to the Mortgagor as additions to capital in an amount equal to the Outstanding Amount of First Mortgage Debt in excess of the Appraised Value necessary to be paid down so that the Outstanding Amount of First Mortgage Debt will not exceed either of the two amounts determined pursuant to such clauses (i) and (ii), PROVIDED that such commitment may only be released if, upon an Appraisal at any time following completion of such Restoration, the aggregate Outstanding Amount of the First Mortgage Debt does not exceed 66-2/3% of the Appraised Value. 42 (e) Subject to the provisions of Subsection (d) above, in case a Casualty occurs, the following shall apply: (1) if the cost of Restoration (as hereinafter defined) does not exceed the sum of $10,000,000, the net insurance proceeds shall be paid by the Mortgagee to the Mortgagor (unless the Superior Instrument Requirements provide that the same shall be paid to the Depositary); (2) if the cost of Restoration is $10,000,000 or more or if the Superior Instrument Requirements provide that the same shall be paid to the Depositary, the net insurance proceeds shall be paid by the Mortgagee to the Insurance Trustee (or other Depositary required by the Superior Instrument Requirements, provided that such Depositary holds such proceeds in trust for purposes of paying the costs of Restoration); (3) the Mortgagor shall commence with reasonable promptness under the circumstances and thereafter with due diligence proceed to perform and complete in a good and workmanlike manner the restoration, repair, replacement or rebuilding of the damage or destruction resulting from the Casualty (all of which restoration, repair, replacement or rebuilding are referred to as the "Restoration") in accordance with the plans and specifications submitted to the Insurance Trustee, in conformance with all Legal Requirements and Superior Instrument Requirements, and in accordance with the further provisions of this Subsection (e), regardless of the extent of any such Casualty and whether or not net insurance proceeds, if any, shall be available or, if available, shall be sufficient, for the purpose of the Restoration (provided, however, that if the Mortgagor does not receive any net insurance proceeds within 30 days after any Casualty because the adjustment of the loss has not yet occurred, then the obligation of the Mortgagor to commence such Restoration shall be deferred until such proceeds are made available to the Mortgagor, provided that (i) Mortgagor delivers to the Mortgagee an Officers' Certificate certifying that the Mortgagor is diligently and continuously adjusting such loss with the Insurer, (ii) the Mortgagor delivers to the Mortgagee an Officers' Certificate within such 30-day period requesting the extension of such period, estimating the date on which such proceeds will be available and describing the Mortgagor's efforts to adjust such loss and certifying that such extension does not constitute a default or a breach of any of the provisions of any of the Ground Leases (or if so, such default or breach has been waived) and (iii) the Mortgagor delivers to the Mortgagee additional Officers' Certificates every 30 days thereafter updating the 43 information contained in the certificate described in Clause (ii)). All Restoration work shall be performed in accordance with the applicable provisions of Section 5.12 and in conformance with all Superior Instrument Requirements, Legal Requirements and Insurance Requirements and, prior to commencing any Restoration, the Mortgagor shall obtain all Permits necessary in connection therewith, and shall obtain, and keep in full force and effect until the completion of such Restoration, such additional insurance as the Insurance Trustee and Superior Instrument Requirements may require. The plans and specifications for the Restoration shall be accompanied by a certificate of the Mortgagor and an Opinion of Counsel to the effect that upon the completion of the Restoration pursuant to the plans and specifications the Premises, and all buildings and improvements, thereon will comply with all superior Instrument Requirements, Legal Requirements and Insurance Requirements. Notwithstanding anything in this Section 5.11 to the contrary, if such Casualty is in an amount less than $5,000,000, the Mortgagor shall not be required to perform and complete such Restoration (unless the performance and completion of the Restoration is necessary in order for the Mortgagor to be in compliance with any term, provision or condition of this Mortgage (other than this Section 5.11(e)) or any Superior Instrument Requirements; (4) Any insurance proceeds which the Mortgagor receives, shall be held by the Mortgagor in trust for the purpose of paying the cost of the Restoration, except as otherwise provided herein; (5) Any net insurance proceeds that the Insurance Trustee holds pursuant to this Subsection (e), shall be deposited in an interest-bearing investment reasonably designate by Mortgagor (to the extent the Mortgagor is permitted to designate such investment under the Superior Instrument Requirements) (and the interest thereon shall be added to such proceeds) and shall be paid by the Insurance Trustee in reimburse the Mortgagor for, or to make payment for, the Restoration, after the Insurance Trustee deducts therefrom the amount of any reasonable costs and expenses incurred in connection with the performance of its obligations under this Section 5.11. The Insurance Trustee shall make such payments not more frequently than once every 30 days upon the written request of the Mortgagor (unless more frequent payments are required by Superior Instrument Requirements), by paying to the Mortgagor or the persons named in the certificate described in Clause (6) of this Subsection (e) the respective amounts stated in such certificate 44 from time to time as the Restoration progresses, provided the Mortgagor has complied with the requirements of this Subsection (e) and such payment is permitted by an applicable Superior Instrument Requirements. The Mortgagor's written request shall be accompanied by (i) the certificate described in Clause (6) of this Subsection (e) and (ii) a title company or official search, or other evidence reasonably acceptable to the Insurance Trustee, showing that there have not been filed with respect to the Premises, any vendor's, contractor's mechanic's, laborer's or materialman's statutory or similar lien which has not been discharged of record (or bonded against or secured by other security) or any other encumbrance irrespective of its priority (other than Permitted Encumbrances). (6) The certificate required by Clause (5) of this Subsection (e) shall (A) be an Officers' Certificate, countersigned by the Architect in charge of the Restoration with respect to the matters described in (i) and (v) below, (B) be dated not more than 10 days prior to such request and (C) set forth (in addition to any other requirements contained in any applicable Superior Instrument Requirements) that: (i) all of the Restoration work theretofore performed is in substantial compliance with the plans and specifications theretofore submitted to the Insurance Trustee and in compliance with all Superior Instrument Requirements, Legal Requirements and Insurance Requirements; (ii) the sum then requested either has been paid by the Mortgagor or is justly due to contractors, subcontractors, materialmen, engineers, architects or other persons who have rendered services or furnished or contracted to deliver materials for the Restoration therein specified, and the names and addresses of such persons, a brief description of such services and materials and the several amounts so paid or due to each of such persons in respect thereof; (iii) no part of the amount requested has been or is the basis in any pervious or then pending request for the withdrawal of net insurance proceeds, and that the sum then requested does not exceed the value of the services and materials described in the certificate; (iv) except for the amount, if any, stated pursuant to Subclause (ii) of this Clause (6) in 45 such certificate to be due for services or materials, and except for amounts in dispute and/or customary retainages, there is no outstanding indebtedness known to the person signing such certificate, after due inquiry, which is then due for labor, wages, materials, supplies or services in connection with such Restoration; and (v) the remaining cost, as estimated by the persons signing such certificate, of the Restoration in order to complete the same does not exceed the net insurance proceeds remaining in the hands of Insurance Trustee after payment of the sum requested in such certificate or if such estimated cost does exceed such insurance proceeds such certificate shall state the amount of any such deficiency. If the certificate states that such deficiency will exist, the Mortgagor shall deliver the amount of such deficiency in cash or cash equivalent to the Insurance Trustee simultaneously with the delivery of such certificate, which amount shall be deemed insurance proceeds for purposes of this Section 5.11(e); and (7) If net insurance proceeds shall be insufficient to pay the entire cost of the Restoration, then, after completion of the Restoration, the Mortgagor shall pay the deficiency. If all or any part of the net insurance proceeds are not used for the restoration in accordance with this Subsection (e) (because such proceeds exceed the amount required to complete the Restoration), then upon completion of the Restoration in accordance with this Subsection (e), such amount not so used, if held by the Insurance Trustee, shall be paid to the Mortgagor (if permitted by Superior Instrument Requirements). (f) Provided that no Event of Default has occurred and is continuing, all net business interruption insurance proceeds shall be paid to the Mortgagor, to be segregated from the other funds of Mortgagor and held in trust by Mortgagor for the following purposes and in the following order of priority: (i) for the payment of Impositions and amounts due under the Ground Leases and Superior Mortgages; (ii) for debt service for the estimated period of Restoration (for purposes of this Section 5.11(f), interest and principal payments due on any payment date under the Notes will deemed to accrue in equal daily installments beginning the day after the immediately preceding payment date and ending on such payment date); and (iii) for any expense incurred in connection with the operation or business of the Casino-Hotel. 46 (g) The Mortgagor shall not take out separate insurance, concurrent in form or contributing in the event of loss with that required to be maintained pursuant to this Section 5.11, unless the same are permitted by Superior Instrument Requirements and the Mortgagee is included therein as a named insured, with loss payable to the Mortgagee and the Insurance Trustee pursuant to Section 5.11(b) hereof. The Mortgagor shall immediately notify the Mortgagee whenever any such separate insurance is taken out and shall promptly deliver to the Mortgagee a duplicate original of the policy of such insurance, a copy thereof certified by the insurer or a certificate thereof. (h) Subject to final adjustment by the insurer, insurance claims by reason of damage or destruction to any portion of the Trust Estate may be adjusted by the Mortgagor, but the Mortgagee shall have the right (but not the obligation) to join the Mortgagor in adjusting, and approving the adjustment of, any such loss except in the event of a loss where the amount of insurance reasonably anticipated to be received with respect to such loss is less than [Five Million Dollars ($5,000,000)], and the Mortgagor shall assist the Mortgagee in any such adjustment at the request of the Mortgagee. If the Mortgagee at its election as aforesaid joins the Mortgagor in any adjustment process, then the Mortgagee's approval of the adjustment shall not be unreasonably withheld; (i) Notwithstanding anything contained herein to the contrary, if an Event of Default shall have occurred and be continuing, the Mortgagee may, at its option, (A) refrain from paying to the Mortgagor or the Insurance Trustee any net insurance proceeds or (B) instruct the Insurance Trustee to pay to the Mortgagee any insurance proceeds then held by the Insurance Trustee, as the case may be. Section 5.12. LIMITATIONS ON BUILDING DEMOLITION, ALTERATIONS, IMPROVEMENTS AND NEW CONSTRUCTION. The Mortgagor will not authorize, permit or make any demolition, alteration or improvement of any building included in the Trust Estate or any new construction on any part of the Trust Estate, except in conformity with and subject to the limitations hereinafter in this Section 5.12 set forth. Unless an Event of Default shall have occurred and be continuing, the Mortgagor shall have the right at all times to make or permit such alterations, improvements or new constructions, structural or otherwise (herein sometimes called collectively "alterations"), of or on the Trust Estate, to be made in all cases subject to the conditions set forth in Section 5.12 of the Note Mortgage. Section 5.13. LEASES. The Mortgagor shall not: 47 (a) subject to the provisions of Section 5.13(d), enter into any Lease, or renew, modify, extend, terminate, or amend any Lease, except in the ordinary course of business of operating the Casino-Hotel; (b) receive or collect, or permit the receipt or collection of, any rental payments under any Lease more than one year in advance of the respective periods in respect of which they are to accrue, except that, in connection with the execution and delivery of any Lease or of any amendment to any Lease, rental payments thereunder may be collected and received in advance in an amount not in excess of three months' rent and/or a security deposit may be required thereunder in an amount not exceeding one year's rent; (c) collaterally assign, transfer or hypothecate (other than to the Mortgagee hereunder, to the mortgagee under the Note Mortgage or to the holder of any Working Capital Facility Lien) any rental payment under any Lease whether then due or to accrue in the future, the interest of the Mortgagor as landlord under any Lease or the rents, issues or profits of the Trust Estate; (d) after the date hereof, enter into any Lease, or renew any Lease unless such Lease contains terms to the effect as follows: (1) the Lease and the rights of the tenants thereunder shall be subject and subordinate to the rights of the Mortgagee under this Mortgage, the mortgagee under the Note Mortgage and the holders of any Superior Mortgage, (2) the Lease may be assigned by the landlord thereunder to the Mortgagee, (3) the rights and remedies of the tenant in respect of any obligations of the landlord thereunder shall be nonrecourse as to any assets of the landlord other than its equity in the building in which the leased premises are located or the proceeds thereof, (4) the rights of the tenant shall be subject and subordinate to the rights of the lessee under any new lease entered into in the event of a termination of a Ground Lease; 48 (e) modify any Lease with respect to the matters described in clauses (1) through (4) of paragraph (d). If the Mortgagor enters into a Lease (other than with any Affiliate of the Mortgagor) for a term of not less than 3 nor more than 10 years, the Mortgagee shall deliver a non-disturbance and attornment agreement substantially in the form of Schedule 4 hereto, following receipt of a certificate of a leasing broker (who is not an Affiliate of the Mortgagor or the broker involved in such transaction) experienced with respect to leases of commercial space in the Atlantic City area stating that the rent under the Lease is not less than fair market rent and that the other terms of the Lease are fair and reasonable in the commercial leasing market. The Mortgagor shall, upon demand, reimburse the Mortgagee for any costs and expenses (including reasonable attorney's fees) incurred by the Mortgagee in connection with the preparation, review and delivery of such non-disturbance and attornment agreements. Promptly after the execution and delivery hereof, the Mortgagor will cause the lessee under each Lease now in effect and promptly after each Lease is executed or becomes effective after the date of the execution and delivery hereof, the Mortgagor will cause the lessee under each such Lease, to be duly notified in writing (unless the substance and effect of such notice shall be contained in such Lease) of the subjection of the owner's interest, as lessor, in and to such Lease to the lien of this Mortgage and of the name and address of the Mortgagee. Each such notice shall state that the lease of such lessee is a Lease as herein defined. If a new Mortgagee is at any time appointed hereunder or the address of the Mortgagee shall at any time be changed, the Mortgagor will cause each lessee under each Lease to be promptly notified in writing of the name address of such new Mortgagee or the new address of the Mortgagee. The Mortgagor will use reasonable efforts (but shall not be obligated to incur any expenditure other than DE MINIMIS amounts) to obtain from each lessee under each Lease to whom any notice is sent pursuant to this paragraph an acknowledgment of receipt of such notice, and the Mortgagor will promptly deliver to the Mortgagee, upon request, a copy of each such acknowledgment of receipt which it is able to obtain. The Mortgagee shall not be responsible for securing or causing the Mortgagor to secure any such acknowledgment. Nothing contained in this Section 5.13 shall limit the provisions of Section 4.04 hereof. Section 5.14. [Reserved] 49 Section 5.15. MAINTENANCE OF EXISTENCE OF THE MORTGAGOR. Subject to Article Four, the Mortgagor will do or cause to be done all things necessary to preserve and keep in full force and effect its existence as a corporation, and its rights (both statutory and under its articles of incorporation) and franchises. Section 5.16. TO KEEP BOOKS; INSPECTION BY MORTGAGEE. The Mortgagor will keep proper books of record and account in accordance with Section 12.05 of the Indenture. Section 5.17. ADVANCES BY MORTGAGEE. If the Mortgagor shall fail to perform any of its covenants in this Mortgage and such failure shall continue for 10 days following notice thereof given by the Mortgagee (or at any time, without notice, in case of emergency), the Mortgagee may (but is not obligated to), at any time and from time to time, take any action or make advances, to effect performance of any such covenant on behalf of the Mortgagor; and all moneys so used or advanced by the Mortgagee and all reasonable costs and expenses incurred by Mortgagee in connection therewith, together with interest on all of the same at the rate of interest set forth in the Notes, shall be repaid by the Mortgagor upon demand and such advances shall be secured under this Mortgage prior to the Guaranty. Section 5.18. WAIVER OF STAY, EXTENSION OR USURY LAWS. The Mortgagor covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any usury, stay or extension law or any other law which would prohibit or forgive the Mortgagor from paying all or any portion of the obligations under the Guaranty as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may otherwise affect the covenants or the performance of this Mortgage; and the Mortgagor (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Mortgagee, but will suffer and permit the execution of every such power as though no such law had been enacted. Section 5.19. [Reserved] Section 5.20. EMINENT DOMAIN. The Mortgagor shall satisfy the provisions of Section 5.20 of the Note Mortgage upon obtaining knowledge of any Taking affecting the Trust Estate. Section 5.21. GROUND LEASES. 50 (a) The Mortgagor covenants and agrees that it will do or cause to be done all things necessary to preserve and keep unimpaired the rights of the Mortgagor, as lessee under the Ground Lease, and to prevent any termination, surrender, cancellation, forfeiture or impairment thereof. The Mortgagor shall at all times fully perform and comply with all agreements, covenants, terms and conditions imposed upon or assumed by it as lessee under each of the Ground Leases (including without limitation the covenant to pay rent and all taxes, assessments and other charges mentioned therein) prior to the expiration of any notice and/or cure period provided in each such Ground Lease. Upon receipt by the Mortgagee from a Lessor of any written notice of default by the lessee thereunder, Mortgagee may rely thereon and take any action the Mortgagee deems necessary in its sole discretion to prevent or to cure any default by the Mortgagor in the performance of or compliance with any of the agreements, covenants, terms or conditions imposed upon or assumed by the Mortgagor as lessee under each of the Ground Leases, even though the existence of such default or the nature thereof be questioned or denied by the Mortgagor or by any party on behalf of the Mortgagor, provided that if the Mortgagor has theretofore delivered to the Mortgagee the Officers' Certificate, Opinion of Counsel and a copy of the injunction, all as described in Section 3.01(g), the Mortgagee shall not take any such action unless and until the Mortgagor and/or the Mortgagee no longer has the benefit of any tolling or stay referred to in Section 3.01(g). Without limiting the generality of Section 3.09 hereof, the Mortgagor hereby expressly grants to the Mortgagee, and agrees that the Mortgagee shall have, the absolute and immediate right to enter in and upon the Premises or any part thereof to such extent and as often as the Mortgagee, in its sole discretion, deems necessary or desirable for the purpose permitted by the immediately preceding sentence, subject only to applicable Legal Requirements. Subject to the preceding and without limiting the Mortgagee's other remedies under this Mortgage, the Mortgagee may pay and expend such sums of money as the Mortgagee in its sole discretion deems necessary for any such purpose, and the Mortgagor hereby agrees to pay to the Mortgagee, immediately and without demand, all such sums so paid and expended by the Mortgagee, together with interest thereon from the date of each such payment at the highest rate of interest set forth in the Notes. All sums so paid and expended by the Mortgagee, and the interest thereon, shall be added to and be secured by the lien of this Mortgage. (b) The Mortgagor further covenants and agrees: (i) it will not surrender any leasehold estate and interest hereinabove described, nor terminate or cancel any Ground Lease, and that it will not without the express written consent of the Mortgagee modify, change, 51 supplement, alter or amend such Ground Leases either orally or in writing and, as further security for the repayment of the indebtedness secured hereby and for the performance of the covenants herein and in such Ground Leases contained, the Mortgagor hereby assigns to the Mortgagee all of its rights, privileges and prerogatives as lessee under such Ground Leases to terminate, cancel, modify, change, supplement, alter or amend such Ground Leases, and any such termination, cancellation, modification, change, supplement, alteration or amendment of such Ground Leases without the prior written consent thereto by Mortgagee shall be void and of no force and effect. Unless (1) an Event of Default has occurred and is continuing and (2) either (A) there has been an acceleration of maturity of the Notes pursuant to Section 3.02 of the Note Mortgage or (B) the Mortgagee exercises its rights under Section 3.09 hereof, the Mortgagee shall have no right to terminate, cancel, modify, change, supplement, alter or amend the Ground Leases; (ii) solely for the benefit of the Mortgagee, Trustee, the Noteholders and no other person, no release or forbearance of any of the Mortgagor's obligations under such Ground Leases, pursuant to such Ground Leases or otherwise, shall release the Mortgagor from any of its obligations under this Mortgage, including its obligations with respect to the payment of rent as provided for in such Ground Leases and the performance of all of the terms, provisions, covenants, conditions and agreements contained in such Ground Leases, to be kept, performed and complied with by the lessee therein; (iii) unless the Mortgagee shall otherwise expressly consent in writing, the fee title to the Leased Land, the Mortgagor's interest in the improvements on the Leased Land and the leasehold estates shall not merge by and shall always remain separate and distinct, notwithstanding the union of such estates either in the Lessor or in the lessee, or in a third party by purchase or otherwise; (iv) the Mortgagor shall promptly notify the Mortgagee in writing of any request made by the Mortgagor, as lessee under each of the Ground Leases, or any of the Lessors, for arbitration proceedings pursuant to the Ground Leases and of the institution of any arbitration proceedings, as well as all proceedings thereunder. In addition, the Mortgagor shall promptly deliver to the Mortgagee a copy of the determination of the arbitrators in each such arbitration proceeding. The Mortgagee shall have the right to participate in such arbitration proceedings in association with the Mortgagor 52 or on its own behalf as an interested party in accordance with the terms of the Ground Leases; (v) the Mortgagor shall not consent to the subordination of any Ground Lease to any mortgage deed of trust or other lien of the fee interest of the Lessor; (vi) in the event (A) the Mortgagor exercises its option under any Ground Lease to purchase any portion of the Leased Land, the Mortgagor shall deliver a copy of its election to exercise such option within 5 days after the Mortgagor has delivered notice of such election to the Lessor or (B) the Mortgagor acquires fee simple title or any other estate, title or interest in the Leased Land, the Mortgagor shall promptly notify the Mortgagee of such acquisition and shall cause to be executed and recorded all such other and further assurances or other instruments in writing as may be required by law or, in the opinion of the Mortgagee, be reasonably desirable to carry out the intent and meaning of clause (x) of Granting Clause Second; (vii) within 5 days after the Mortgagor's receipt of any notice of any motion, application or effort to reject the Ground Lease by any Lessor or any trustee arising from or in connection with any case, proceeding or other action commenced or pending by or against any Lessor under the Code or any comparable provision contained in any present or future federal, state, local, foreign or other statute, law, rule or regulation, the Mortgagor shall give notice thereof to the Mortgagee. The Mortgagor hereby (A) assigns to the Mortgagee any and all of the Mortgagor's rights as lessee under Section 365(h) of the Code or any comparable provision contained in any present or future federal, state, local, foreign or other statute, law, rule or regulation ("Comparable Provision") and (B) covenants that it shall not elect to treat any Ground Lease as terminated pursuant to Section 365(h) of the Code or any Comparable Provision without the prior written consent of the Mortgagee and (C) agrees that any such election by the Mortgagor without such consent shall be null and void; (viii) without limiting the generality of the foregoing, the Mortgagor hereby unconditionally assigns, transfers and sets over to the Mortgagee all of the Mortgagor's claims and rights to the payment of damages arising from any rejection by Lessor of any Ground lease under the Code or any Comparable Provision. The Mortgagee shall have the right to proceed in its own name or in the name of the Mortgagor in respect of any claim, suit, action or proceeding relating to the rejection of 53 any Ground Lease, including, without limitation, the right to file and prosecute, in cooperation with the Mortgagor, any proofs of claim, complaints, motions, applications notices and other documents, in any case in respect of Lessor under the Code or any Comparable Provision. This assignment constitutes a present, irrevocable and unconditional assignment of the foregoing claims, rights and remedies, and shall continue in effect until all of the indebtedness and obligations secured by this Mortgage shall have been satisfied and discharged in full. Any amounts received by the Mortgagee in damages arising out of the rejection of any Ground Lease as aforesaid shall be applied first to all reasonable costs and expenses of the Mortgagee (including, without limitation, reasonable attorneys' fees) incurred in connection with the exercise of any of its rights or remedies under this Section 5.21, and thereafter as provided in Section 3.03 hereof; (ix) if there shall be filed by or against the Mortgagor a petition under the Code or any Comparable Provision and the Mortgagor, as lessee under the Ground Leases, shall determine to reject any or all of the Ground Leases the Mortgagor shall give the Mortgagee not less than 10 days' prior notice of the date on which the Mortgagor shall apply to the Bankruptcy Court or other judicial body with appropriate jurisdiction for authority to reject the lease. The Mortgagee shall have the right, but not the obligation, to serve upon the Mortgagor within such 10 day period a notice stating that (a) the Mortgagee demands that the Mortgagor assume and assign such Ground Lease(s) to the Mortgagee pursuant to Section 365 of the Code or any Comparable Provision and (b) the Mortgagee covenants to cure or provide adequate assurance of prompt cure of all defaults and provide adequate assurance of future performance under such Ground Lease(s). If the Mortgagee serves upon the Mortgagor the notice described in the preceding sentence, the Mortgagor shall not seek to reject such Ground Lease(s) and shall comply with the demand provided for in clause (a) of the preceding sentence within 30 days after the notice shall have been given subject to the performance by the Mortgagee of the covenant provided for in clause (b) of the preceding sentence. Effective upon the entry of an order for relief in respect of the Mortgagor under Chapter 7 of the Code or Any Comparable Provision the Mortgagor hereby assigns and transfers to the Mortgagee a non-exclusive right to apply to the Bankruptcy Court or other judicial body with appropriate jurisdiction for an order extending the period during which the Ground Lease may be rejected or assumed; 54 (x) the Mortgagor shall promptly give to the Mortgagee copies of (A) all notices of default or (B) any other communications or notices with respect to events which relate to the possible impairment of the security of this Mortgage, which it shall give or receive under the Ground Leases and shall promptly notify the Mortgagor of any default under any Ground lease on the part of the Lessor or the Mortgagor; (xi) the Mortgagor shall enforce the obligations of the Lessor under each Ground Lease, to the end that the Mortgagor may enjoy all of the rights granted to it under the Ground leases; and (xii) the Mortgagor shall notify the Mortgagee within 5 days after the transfer of a fee interest in the Leased Land or any portion thereof to or from an Affiliate. (c) The Mortgagor hereby represents and warrants that all fixed net rent, taxes and assessments, payable under the Ground Leases have been paid to the extent they were due and payable to the date hereof and that the Mortgagor has not received notice of its failure to pay any other amounts payable under the Ground Leases which have not been cured. (d) If both the Lessor's and lessee's estates under any of the Ground Leases or any portion thereof shall at any time become vested in one owner, this Mortgage and the lien created hereby shall nevertheless not be merged, extinguished, destroyed or terminated by application of the doctrine of merger and, in such event, Mortgagee shall continue to have all of the rights and privileges of the a leasehold mortgagee. (e) The Mortgagor hereby acknowledges that if any Ground Lease shall be terminated prior to the natural expiration of its term due to default by the lessee thereunder, and if pursuant to such Ground Lease, the Mortgagee or its designee shall acquire from the Lessor a new lease of the Leased land or any portion thereof, the Mortgagor shall have no right, title or interest in or to such lease or the leasehold estate created thereby, or the options therein contained. (f) Any leases for parking purposes hereafter entered into by the Mortgagor as lessee shall contain provisions permitting the assignment of the same to the Mortgagee and the Trustee and permitting assignment without the lessor's consent if this Mortgage is foreclosed. Section 5.22. SUPERIOR MORTGAGES. 55 (a) The Mortgagor covenants and agrees that it will at all times fully perform and comply with all agreements, covenants, terms and conditions imposed upon or assumed by it as mortgagor under the Superior Mortgages prior to the expiration of any notice and/or cure period provided in each such Superior Mortgage. If a notice of default has been given by the holder of any Superior Mortgage and the maturity of the indebtedness secured by such Superior Mortgage has been accelerated as a result thereof, the Mortgagee may rely thereon and take any action the Mortgagee deems necessary in its sole discretion to prevent or to cure any default by the Mortgagor in the performance of or compliance with any of the agreements, covenants, terms or conditions imposed upon or assumed by the Mortgagor as mortgagor under each of the Superior Mortgages even though the existence of such default or the nature thereof may be questioned or denied by the Mortgagor or by any party on behalf of the Mortgagor provided that if the Mortgagor has heretofore taken such actions as described in Section 3.01(h), the Mortgagee shall not take any such action unless and until the Mortgagor and/or the Mortgagee no longer has the benefit of any such tolling or stay referred to in Section 3.01(h). Without limiting the generality of Section 3.09 hereof, the Mortgagor hereby expressly grants to the Mortgagee, and agrees that upon such acceleration the Mortgagee shall have, the absolute and immediate right to enter in and upon the Premises or any part thereof to such extent and as often as the Mortgagee, in its sole discretion, deems necessary for the purpose permitted by the immediately preceding sentence, subject only to applicable Legal Requirements. The Mortgagee may (i) pay and expend such sums of money as the Mortgagee in its sole discretion deems necessary for any such purpose and (ii) in its sole discretion prepay any Superior Mortgage, and the Mortgagor hereby agrees to pay to the Mortgagee, immediately and without demand, all such sums referred to in (i) and (ii) above so paid and expended by the Mortgagee, together with interest thereon from the date of each such payment at the rate of interest set forth in the Note. All sums so paid and expended by the Mortgagee and the interest thereon shall be added to and be secured by the lien of this Mortgage. (b) The Mortgagor further covenants and agrees: (i) the Mortgagor shall not, without first satisfying the conditions set forth in Section 5.22(b)(i) of the Note Mortgage: (A) modify any of the terms, covenants or conditions of any Superior Mortgage, and without limiting the foregoing, the Mortgagor shall not, without satisfying such conditions, enter into or obtain any agreement whereby the holder of any Superior Mortgage waives, postpones, extends, reduces or modifies the payment of the installment of principal or interest or 56 any other item or amount now required to be paid under the terms of any Superior Mortgage or modifies any other provision thereof, or (B) acquire or permit or suffer any Affiliate of the Mortgagor to acquire any Superior Mortgage or any interest therein. Notwithstanding anything in clause (A) to the contrary, the Mortgagor shall have the right to amend, supplement or modify any Superior Mortgage, if (x) the then outstanding principal balance of the indebtedness secured by such Superior Mortgage is not increased thereby, and (y) in the case of any After-Acquired Fee Mortgage, such amendment, supplement or agreement does not increase the property covered thereby; (ii) the Mortgagor shall timely pay and perform all of the obligations to be paid or performed by the mortgagor under each Superior Mortgage, the note secured thereby and any other instrument evidencing or securing the indebtedness owing to any holder of any Superior Mortgage; (iii) at any time, and from time to time, the Mortgagor shall upon request of the Mortgagee promptly use its reasonable efforts to obtain an estoppel certificate or letter addressed to the Mortgagee from holders of the Superior Mortgages, such certificate or letter to be in such form as the Mortgagee shall request; and (iv) the Mortgagor shall promptly give to the Mortgagee copies of (A) all notices of default or (B) any other notice or communication with respect to events which relate to the possible impairment of the security of this Mortgage, which it shall give or receive under the Superior Mortgages and shall promptly notify the Mortgagor of any default under any Superior Mortgages on the part of the Mortgagor. (c) The lien of this Mortgage in and to all or specified portions of the Trust Estate shall be subject and subordinate to any Existing Encumbrances and any mortgage, assignment, security agreement, financing statement or other lien securing any Working Capital Facility (the "Working Capital Facility Lien") encumbering Mortgagor's interest in the affected portions of the Trust Estate or any part thereof. The foregoing provisions of this Section 5.22(c) shall be self-operative with respect to Existing Encumbrances and shall be self-operative with respect to any Working Capital Facility Lien, and no further instrument shall be required to give effect to such subordination. Mortgagee shall, however, from time to time, execute instruments in form 57 and substance reasonably satisfactory to the holder of the Working Capital Facility Lien, confirming such subordination and agreeing to such other matters reasonably required by the holder of the Working Capital Facility Lien which do not, in the aggregate, materially adversely reduce or impair the rights of Trustee under the Mortgage, and Mortgagor and others may rely conclusively thereon, provided that Mortgagee shall have no liability thereunder and all costs and expenses (including reasonable attorneys' fees) shall be paid by Mortgagor. (d) The lien of the Mortgage in and to all or specified portions of the Trust Estate shall be subject and subordinate to any Existing Encumbrances. The provisions of this Section 5.22(d) shall be self-operative, and no further instrument shall be required to give effect to such subordination. Section 5.23. MORTGAGE PARI PASSU WITH NOTE MORTGAGE. Notwithstanding recordation of this Mortgage in the Atlantic County, New Jersey Clerk's Office after the recordation of the Note Mortgage, the lien of this Mortgage ranks pari passu with, and not junior to, the lien created by the Note Mortgage. ARTICLE SIX MISCELLANEOUS Section 6.01. ACTION UNDER NOTE MORTGAGE. Mortgagee acknowledges that it is the assignee of the Note Mortgage, which Note Mortgage creates a lien upon the Trust Estate which is PARI PASSU with the lien of this Mortgage. Mortgagee further acknowledges and agrees that whenever it is provided in the Note Mortgage that the Mortgagor shall deliver any notice or document, or is required to make any payment thereunder, the delivery of such notice or document or the making of such payment pursuant to the terms of the Note Mortgage shall also constitute the delivery of such notice or document or the making of such payment in satisfaction of the terms, conditions and provisions of this Mortgage to the same extent as the same constitutes satisfaction of the terms, conditions and provisions of the Note Mortgage. Section 6.02. COUNTERPARTS. This instrument may be executed in any number of counterparts, each of which as executed shall be deemed to be an original, but all such counterparts shall constitute one and the same instrument. Section 6.03. MODIFICATION. This Mortgage is subject to "modification" within the meaning of N.J.S.A. 46:9- 58 8.1 ET SEQ., and this Mortgage shall have the benefit of the lien priority provisions of such statute. Such modification may include, without limitation, a change in the interest rate, maturity date or other terms and conditions of this Mortgage. THE MORTGAGOR DECLARES THAT THE MORTGAGOR HAS RECEIVED A TRUE COPY OF THIS MORTGAGE. IN WITNESS WHEREOF, the parties hereto have caused this Mortgage to be duly executed and attested, all as of the day and year first above written. RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation By:_____________________________ Name: Title: (Vice) President ATTEST:_________________________ Name: Title: (Asst.) Secretary STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION By:_____________________________ Name: Title: (Vice) President ATTEST:_________________________ Name: Title: (Asst.) Secretary 59 Exhibit G Intercreditor Agreement Terms Exhibit G Outline of Material Terms of the Intercreditor Agreement for Resorts International, Inc. Subject Credit Senior Secured Loan due July 15, 2002 (the Facilities "Senior Facility"); Senior Mortgage Notes due [March] 15, 2003 (the "Senior Mortgage Notes"); Junior Mortgage Notes due June 15, 2004 (the "Junior Mortgage Notes"); and Any other credit facilities which may be required by the Indentures for the Senior Facility, the Senior Mortgage Notes or the Junior Mortgage Notes to be included in the Intercreditor Agreement (the "Additional Facilities," and together with the Senior Facility, the Senior Mortgage Notes and the Junior Mortgage Notes, the "Credit Facilities") Creditor Parties Senior Facility Trustee; Senior Mortgage Note Trustee; Junior Mortgage Note Trustee; and any lenders (or trustees or agents on behalf of any lenders) which provide Additional Facilities (collectively, the "Trustees") Each Creditor Party, by its execution of the Intercreditor Agreement (whether directly or through its trustee or agent), acknowledges the making of the other Credit Facilities and the intended uses of proceeds thereof and waives any right to object to any contemporaneous or existing Credit Facility as having constituted a fraudulent conveyance. Classification of Initial Designations:Credit Facilities Class 1 Facilities: Senior Facility, all guarantees thereof and all intercompany obligations pledged as collateral therefor. Class 2 Facilities: Senior Mortgage Notes, all guarantees thereof and all intercompany obligations pledged as collateral therefor. Class 3 Facilities: Junior Mortgage Notes, all guarantees thereof and all intercompany obligations pledged as collateral therefor. Subsequent Designations - as indicated on the signature page(s) to be executed by the lenders (or any trustees or agents on behalf of any lenders) which provide Additional Facilities and consented to by all other parties at such time. Borrower Parties Resorts International Hotel Financing, Inc. ("RIHF"), as borrower under the Secured Facilities; Resorts International Hotel, Inc. ("RIH") as guarantor under the Secured Facilities and issuer of the secured intercompany notes to RIHF collaterally assigned to each respective Trustee; Resorts International, Inc. ("RII"), as guarantor under the Senior Facility and issuer of any intercompany notes which may be issued to RIH; and [GRI, Inc. ("GRI", and together with RIHF, RIH and RII, the "Borrower Parties") as guarantor under the Senior Facility and issuer of any intercompany notes which may be issued to RIH.]1* The Borrower Parties will execute the Intercreditor Agreement principally for the purposes of (i) acknowledging the relative rights of and relationships among the Secured Facilities established therein and (ii) agreeing not to take any actions, including making any payments, inconsistent therewith. - ------------------- * Subject to discussion on structure 2 Relative Priorities Liens: Notwithstanding the time of filing, recording or perfecting of the Security Documents (which will be defined to include the Mortgages and other liens and encumbrances): Each Lien created on behalf of a Class 1 Facility shall be (i) pari passu with any other Lien created on behalf of any other Class 1 Facility and (ii) senior to any Lien created on behalf of any Class 2 Facility or Class 3 Facility. Each Lien created on behalf of a Class 2 Facility shall be (i) pari passu with any other Lien created on behalf of any other Class 2 Facility, (ii) senior to any Lien created on behalf of any Class 3 Facility and (iii) junior to any Lien created on behalf of any Class 1 Facility. Each Lien created on behalf of a Class 3 Facility shall be (i) pari passu with any other Lien created on behalf of any other Class 3 Facility, and (ii) junior to any Lien created on behalf of any Class 1 Facility or Class 2 Facility. Subrogation To be waived by all guarantors. Mortgage Default Each Class 3 Creditor shall notify each Cure Provisions Class 2 Creditor and each Class 1 Creditor of any Default or Event of Default under its respective Class 3 Facility or the Mortgage or other Security Documents securing its facility, and promptly shall send to each Class 2 Creditor and each Class 1 Creditor copies of all notices of default and all notices relating to cure and/or grace periods under such Class 3 Facility or the Mortgage or other Security Documents securing its facility. Each Class 2 Creditor shall notify each Class 1 Creditor and each Class 3 Creditor of any Default or Event of 3 Default under its respective Class 2 Facility or the Mortgage or other Security Documents securing its facility, and promptly shall send to each Class 1 Creditor and each Class 3 Creditor copies of all notices of default and all notices relating to cure and/or grace periods under such Class 2 Facility or the Mortgage or other Security Documents securing its facility. Each Class 1 Creditor shall notify each Class 2 Creditor and each Class 3 Creditor of any Default or Event of Default under its respective Class 1 Facility or the Mortgage or other Security Documents securing its facility, and promptly shall send to each Class 2 Creditor and each Class 3 Creditor copies of all notices of default and all notices relating to cure and/or grace periods under such Class 1 Facility or the Mortgage or other Security Documents securing its facility. In addition, each Trustee will be obligated to notify all other Trustees prior to exercising any remedies with respect to any shared collateral. Application of Proceeds from dispositions of Proceeds collateral, insurance proceeds, condemnation awards and similar amounts will be applied in accordance with relative priorities of Liens. Representations and Each party to the Intercreditor Warranties Agreement will make appropriate representations, including those relating to its corporate existence, power and authority, as well as to the validity and enforceability of the Intercreditor Agreement. Amendments Intercreditor Agreement may not be amended except pursuant to a writing executed by all parties thereto. Amendments for the sole purpose of adding permitted parties may be executed by the Trustees without the consent of 4 the creditors for whom they serve if all conditions precedent to the incurrence of such indebtedness have been satisfied. Amendments to sections [ ] and [ ] may be executed by the Trustees only with the approval of 100% of the creditors for whom they serve and amendments to sections [ ] and [ ] may be executed by the Trustees only with the approval of 66 2/3% of the creditors for whom they serve. Third Party Each party to the Intercreditor Beneficiarie Agreement will acknowledge that such agreement is being entered into for the benefit of the lenders under the Credit Facilities and their respective successors and assigns, each of whom is a direct intended third-party beneficiary. Certain Specific performance; no waivers; Miscellaneous cooperation and further assurances. Provisions Governing Law New York [GD&C Draft--12/30/93] [NA932820.031] -------------------------------------------- RESORTS INTERNATIONAL HOTEL FINANCING, INC., Issuer, RESORTS INTERNATIONAL HOTEL, INC., Guarantor, and U.S. TRUST COMPANY OF CALIFORNIA, N.A. Trustee -------------------------------------------- I N D E N T U R E Dated as of [ ], 1994 -------------------------------------------- 11.375% JUNIOR MORTGAGE NOTES DUE 2004 CROSS-REFERENCE TABLE SECTION OF TRUST INDENTURE ACT OF 1939 SECTION OF INDENTURE - -------------------------------------- -------------------- 310(a)(1) . . . . . . . . . . . . . . . . . . . . 8.08; 8.09 (a)(2) . . . . . . . . . . . . . . . . . . . . 8.09 (a)(3) . . . . . . . . . . . . . . . . . . . . 8.14(b) (a)(4) . . . . . . . . . . . . . . . . . . . . Not Applicable (b). . . . . . . . . . . . . . . . . . . . . . 8.08 (c). . . . . . . . . . . . . . . . . . . . . . Not Applicable 311(a). . . . . . . . . . . . . . . . . . . . . . 8.13 (b). . . . . . . . . . . . . . . . . . . . . . 8.13 (c). . . . . . . . . . . . . . . . . . . . . . Not Applicable 312(a). . . . . . . . . . . . . . . . . . . . . . 9.01; 9.02(a) (b). . . . . . . . . . . . . . . . . . . . . . 9.02(b) (c). . . . . . . . . . . . . . . . . . . . . . 9.02(c) 313(a). . . . . . . . . . . . . . . . . . . . . . 9.03(a) (b). . . . . . . . . . . . . . . . . . . . . . 9.03(a) (c). . . . . . . . . . . . . . . . . . . . . . 9.03(a) (d). . . . . . . . . . . . . . . . . . . . . . 9.03(b) 314(a). . . . . . . . . . . . . . . . . . . . . . 9.04 (b). . . . . . . . . . . . . . . . . . . . . . 6.02 (c)(1) . . . . . . . . . . . . . . . . . . . . 1.06 (c)(2) . . . . . . . . . . . . . . . . . . . . 1.06 (c)(3) . . . . . . . . . . . . . . . . . . . . 9.04(c); 12.07(i) (d). . . . . . . . . . . . . . . . . . . . . . 6.02 (e). . . . . . . . . . . . . . . . . . . . . . 1.06 (f). . . . . . . . . . . . . . . . . . . . . . Not Applicable 315(a). . . . . . . . . . . . . . . . . . . . . . 8.01(a) (b). . . . . . . . . . . . . . . . . . . . . . 8.02 (c). . . . . . . . . . . . . . . . . . . . . . 8.01(b) (d). . . . . . . . . . . . . . . . . . . . . . 8.01(c) (e). . . . . . . . . . . . . . . . . . . . . . 7.14 316(a)(l)(A). . . . . . . . . . . . . . . . . . . 7.12(b) (a)(l)(B). . . . . . . . . . . . . . . . . . . 7.13 (a)(2) . . . . . . . . . . . . . . . . . . . . Not Applicable (b). . . . . . . . . . . . . . . . . . . . . . 7.08 317(a)(l) . . . . . . . . . . . . . . . . . . . . 7.03 (a)(2) . . . . . . . . . . . . . . . . . . . . 7.04 (b). . . . . . . . . . . . . . . . . . . . . . 12.03 318(a). . . . . . . . . . . . . . . . . . . . . . 1.07 --------------------- Note: This Cross-Reference Table shall not be deemed, for any purpose, to be a part of this Indenture. TABLE OF CONTENTS PAGE ---- ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION Section 1.01. Definitions. . . . . . . . . . . . . . . . . . . . . 2 Section 1.02. Acts of Noteholders. . . . . . . . . . . . . . . . . 16 Section 1.03. Notices, etc., to Trustee, RIH and the Company. . . . . . . . . . . . . . . . . . . . . . 17 Section 1.04. Notices to Noteholders; Waiver.. . . . . . . . . . . 18 Section 1.05. Form and Contents of Documents Delivered to Trustee.. . . . . . . . . . . . . . . . . . . . . 19 Section 1.06. Compliance Certificates and Opinions.. . . . . . . . 20 Section 1.07. Conflict with Trust Indenture Act. . . . . . . . . . 21 Section 1.08. Effect of Headings and Table of Contents.. . . . . . 21 Section 1.09. Successors and Assigns.. . . . . . . . . . . . . . . 21 Section 1.10. Separability Clause. . . . . . . . . . . . . . . . . 21 Section 1.11. Benefits of Indenture. . . . . . . . . . . . . . . . 21 Section 1.12. Governing Law. . . . . . . . . . . . . . . . . . . . 21 Section 1.13. Casino Control Act.. . . . . . . . . . . . . . . . . 22 Section 1.14. General Application. . . . . . . . . . . . . . . . . 22 ARTICLE TWO NOTE FORM Section 2.01. Form Generally.. . . . . . . . . . . . . . . . . . . 22 Section 2.02. Form of Notes. . . . . . . . . . . . . . . . . . . . 23 Section 2.03. Form of Trustee's Certificate of Authentication.. . . . . . . . . . . . . . . . . . . 29 (i) PAGE ---- Section 2.04. Form of the Guaranty.. . . . . . . . . . . . . . . . 29 ARTICLE THREE THE NOTE Section 3.01. General Title. . . . . . . . . . . . . . . . . . . . 30 Section 3.02. Form and Denominations.. . . . . . . . . . . . . . . 30 Section 3.03. Execution, Authentication, Delivery and Dating . . . . . . . . . . . . . . . . . . . . . . . 29 Section 3.04. Temporary Notes. . . . . . . . . . . . . . . . . . . 31 Section 3.05. Registration, Transfer and Exchange. . . . . . . . . 31 Section 3.06. Mutilated, Destroyed, Lost and Stolen Notes. . . . . . . . . . . . . . . . . . . . . . . . 32 Section 3.07. Payment of Interest on Notes; Interest Rights Preserved.. . . . . . . . . . . . . . . . . . 33 Section 3.08. Persons Deemed Owners. . . . . . . . . . . . . . . . 34 Section 3.09. Cancellation.. . . . . . . . . . . . . . . . . . . . 35 Section 3.10. Term and Form. . . . . . . . . . . . . . . . . . . . 35 Section 3.11. Payment of Interest in Additional Notes. . . . . . . 36 Section 3.12. Exchangeability. . . . . . . . . . . . . . . . . . . 37 Section 3.13. Redemption . . . . . . . . . . . . . . . . . . . . . 37 Section 3.14. Authentication and Delivery of Original Issue. . . . . . . . . . . . . . . . . . . . . . . . 37 ARTICLE FOUR GUARANTY Section 4.01. Guaranty . . . . . . . . . . . . . . . . . . . . . . 37 Section 4.02. Execution and Delivery of Guaranty . . . . . . . . . 39 Section 4.03 Mortgage Securing Guaranty . . . . . . . . . . . . . 39 (ii) PAGE ---- ARTICLE FIVE SATISFACTION AND DISCHARGE Section 5.01. Payment of Indebtedness; Satisfaction and Discharge of Indenture . . . . . . . . . . . . . . . 40 Section 5.02. Application of Deposited Money . . . . . . . . . . . 41 Section 5.03. Repayment to the Company . . . . . . . . . . . . . . 42 ARTICLE SIX SECURITY Section 6.01. Assignment Agreement . . . . . . . . . . . . . . . . 42 Section 6.02. Recording, Etc.. . . . . . . . . . . . . . . . . . . 43 Section 6.03. Custody of Mortgage Documents. . . . . . . . . . . . 45 Section 6.04. Suits to Protect the Trust Estate and Mortgage Documents . . . . . . . . . . . . . . . . . 45 ARTICLE SEVEN REMEDIES Section 7.01. Events of Default. . . . . . . . . . . . . . . . . . 46 Section 7.02. Acceleration of Maturity; Rescission and Annulment . . . . . . . . . . . . . . . . . . . . . 50 Section 7.03. Covenant to Pay Trustee Amounts Due on Notes and Right of Trustee to Judgment . . . . . . . . . . 51 Section 7.04. Trustee May File Proofs of Claim . . . . . . . . . . 52 Section 7.05. Trustee May Enforce Claims Without Possession of Notes. . . . . . . . . . . . . . . . . 52 Section 7.06. Application of Money Collected . . . . . . . . . . . 53 Section 7.07. Limitation on Suits. . . . . . . . . . . . . . . . . 53 Section 7.08. Unconditional Right of Noteholders to Receive Principal and Interest . . . . . . . . . . . 54 Section 7.09. Restoration of Rights and Remedies . . . . . . . . . 54 (iii) PAGE ---- Section 7.10. Rights and Remedies Cumulative . . . . . . . . . . . 55 Section 7.11. Delay or Omission Not Waiver . . . . . . . . . . . . 55 Section 7.12. Other Rights . . . . . . . . . . . . . . . . . . . . 55 Section 7.13. Waiver of Past Defaults. . . . . . . . . . . . . . . 56 Section 7.14. Undertaking for Costs. . . . . . . . . . . . . . . . 56 Section 7.15. Enforcement. . . . . . . . . . . . . . . . . . . . . 57 Section 7.16. Management of Casino-Hotel . . . . . . . . . . . . . 57 ARTICLE EIGHT THE TRUSTEE Section 8.01. Certain Duties and Responsibilities. . . . . . . . . 58 Section 8.02. Notice of Defaults . . . . . . . . . . . . . . . . . 59 Section 8.03. Certain Rights of Trustee. . . . . . . . . . . . . . 59 Section 8.04. Not Responsible for Recitals or Issuance of Notes or Application of Proceeds. . . . . . . . . 61 Section 8.05. May Hold Notes . . . . . . . . . . . . . . . . . . . 61 Section 8.06. Money Held in Trust. . . . . . . . . . . . . . . . . 62 Section 8.07. Compensation and Reimbursement . . . . . . . . . . . 62 Section 8.08. Disqualification; Conflicting Interests. . . . . . . 63 Section 8.09. Corporate Trustee Required; Eligibility. . . . . . . 63 Section 8.10. Resignation and Removal; Appointment of Successor . . . . . . . . . . . . . . . . . . . . . 63 Section 8.11. Acceptance of Appointment by Successor . . . . . . . 65 Section 8.12. Merger, Conversion, Consolidation or Succession to Business . . . . . . . . . . . . . . . 65 Section 8.13. Preferential Collection of Claims Against Company. . . . . . . . . . . . . . . . . . . . . . . 66 Section 8.14. Co-trustees and Separate Trustees. . . . . . . . . . 66 (iv) PAGE ---- Section 8.15. Appointment of Authenticating Agent. . . . . . . . . 68 ARTICLE NINE NOTEHOLDERS' LISTS AND REPORTS BY TRUSTEE Section 9.01. Company to Furnish Trustee Semi-Annual Lists of Noteholders . . . . . . . . . . . . . . . . 69 Section 9.02. Preservation of Information; Communications to Noteholders. . . . . . . . . . . . 69 Section 9.03. Reports by Trustee . . . . . . . . . . . . . . . . . 70 ARTICLE TEN CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE Section 10.01. Consolidation, Merger, Conveyance or Transfer Only on Certain Terms . . . . . . . . . . . 72 Section 10.02. Successor Entity Substituted . . . . . . . . . . . . 73 Section 10.03. Successor Management of Casino-Hotel . . . . . . . . 74 Section 10.04. Limitation on Sales of Trust Estate. . . . . . . . . 74 ARTICLE ELEVEN AMENDMENTS, SUPPLEMENTS AND WAIVER Section 11.01. Without Consent of Noteholders . . . . . . . . . . . 74 Section 11.02. With Consent of Noteholders. . . . . . . . . . . . . 75 Section 11.03. Execution of Amendments and Supplements. . . . . . . 77 Section 11.04. Effect of Amendment or Supplement. . . . . . . . . . 77 Section 11.05. Conformity with Trust Indenture Act. . . . . . . . . 77 Section 11.06. Reference in Notes to Amendment or Supplement . . . . . . . . . . . . . . . . . . . . . 78 (v) ARTICLE TWELVE COVENANTS Section 12.01. Payment of Principal and Interest. . . . . . . . . . 78 Section 12.02. Maintenance of Office or Agency. . . . . . . . . . . 79 Section 12.03. Money for Security Payments to Be Held in Trust. . . . . . . . . . . . . . . . . . . . . . . . 79 Section 12.04. Corporate Existence. . . . . . . . . . . . . . . . . 81 Section 12.05. To Keep Books; Inspection by Trustee . . . . . . . . 81 Section 12.06. Reports and Compliance Certificates. . . . . . . . . 81 Section 12.07. Limitation on Dividends and Restricted Payments . . . . . . . . . . . . . . . . . . . . . . 83 Section 12.08. Limitation on Additional Indebtedness and Issuance of Notes. . . . . . . . . . . . . . . . . . 85 Section 12.09. Limitation on Repayment of Subordinated Indebtedness . . . . . . . . . . . . . . . . . . . . 86 Section 12.10. Limitation on Certain Transactions . . . . . . . . . 86 Section 12.11. Restriction of Activities. . . . . . . . . . . . . . 86 Section 12.12. Limitation on Subsidiaries; Consolidated Group. . . . . . . . . . . . . . . . . . . . . . . . 87 Section 12.13. Limitations on Liens . . . . . . . . . . . . . . . . 88 Section 12.14. Compliance with Laws . . . . . . . . . . . . . . . . 88 Section 12.15. Payment of Taxes and Other Claims. . . . . . . . . . 88 Section 12.16. Maintenance of Properties. . . . . . . . . . . . . . 89 Section 12.17. Insurance . . . . . . . . . . . . . . . . . . . . . 89 Section 12.18 Waiver of Stay, Extension or Usury Laws. . . . . . . 89 Section 12.19. Appointment to Fill a Vacancy in Office of Trustee . . . . . . . . . . . . . . . . . . . . . 90 Section 12.20 Validity of Liens. . . . . . . . . . . . . . . . . . 90 (vi) PAGE ---- Section 12.21. Transactions with Stockholders and Affiliates . . . . . . . . . . . . . . . . . . . . . 91 Section 12.22. Limitation on Open Market Purchases. . . . . . . . . 91 ARTICLE THIRTEEN REDEMPTION OF NOTES Section 13.01. General Applicability of Article . . . . . . . . . . 91 Section 13.02. Election to Redeem; Notice to Trustee. . . . . . . . 91 Section 13.03. Selection by Trustee of Notes to Be Redeemed . . . . . . . . . . . . . . . . . . . . . . 91 Section 13.04. Notice of Redemption . . . . . . . . . . . . . . . . 92 Section 13.05. Deposit of Redemption Price. . . . . . . . . . . . . 92 Section 13.06. Notes Payable on Redemption Date . . . . . . . . . . 93 Section 13.07. Notes Redeemed in Part . . . . . . . . . . . . . . . 93 Section 13.08. Redemption Pursuant to Casino Control Act. . . . . . . . . . . . . . . . . . . . . . . . . 93 (vii) TABLE OF EXHIBITS EXHIBITS DOCUMENT - -------- -------- Exhibit A RIH Junior Promissory Note Exhibit B Assignment Agreement from Resorts International Hotel Financing, Inc. Exhibit C Subordination Provisions Exhibit D Mortgage securing RIH Junior Promissory Note between Resorts International Hotel, Inc. and Resorts International Hotel Financing, Inc. Exhibit E Assignment of Leases and Rents from Resorts International Hotel, Inc. to Resorts International Hotel Financing, Inc. Exhibit F Mortgage securing Guaranty of Junior Mortgage Notes between Resorts International Hotel, Inc. and U.S. Trust Company of California, N.A., as Trustee Exhibit G Intercreditor Agreement Terms (vii) INDENTURE THIS INDENTURE dated as of [ ], 1994, among Resorts International Hotel Financing, Inc., a Delaware corporation (the "Company"), Resorts International Hotel, Inc., a New Jersey corporation ("RIH"), and U.S. Trust Company of California, N.A., a national banking association, as trustee (together with its successors as such trustee, the "Trustee"). PRELIMINARY STATEMENT The capitalized terms used in this Indenture which are not otherwise defined herein have the meanings set forth in Article I. The Company has duly authorized the creation, execution and delivery of its 11.375% Junior Mortgage Notes due 2004 (the "Notes"), issuable in accordance with the terms hereof, and RIH has duly authorized the guaranty of the Company's obligations under this Indenture, and, to secure the Notes and to provide therefor, each of the Company and RIH has duly authorized the execution and delivery of this Indenture. Each $1,000 principal amount of the Notes will be issued with one share of Resorts International, Inc.'s Class B Redeemable Common Stock (the "Class B Common Stock") (each $1,000 principal amount of the Notes and share of Class B Common Stock are referred to collectively herein as a "Unit"). Each Note may not be transfered separately from the share(s) of Class B Common Stock issued in respect of such Note. All things have been done which are necessary to make the Notes, when executed by the Company and authenticated and delivered by the Trustee hereunder and duly issued by the Company, the valid obligations of the Company, and to constitute this Indenture a valid agreement of the Company and RIH, in accordance with the terms of the Notes and this Indenture. THEREFORE, for and in consideration of the premises and the purchase or acceptance of the Notes by the Holders thereof, RIH and the Company do hereby covenant and agree to and with the Trustee, for the Ratable Benefit of all Holders of the Notes thereto appertaining, as follows: ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION Section 1.01. DEFINITIONS. For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires: (a) the terms defined in this Article One have the meanings assigned to them in this Article One and include the plural as well as the singular; (b) 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; (c) all accounting terms not otherwise defined herein have the meanings assigned to them, and all computations herein provided for shall be made, in accordance with GAAP consistently applied; and (d) 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. "ACCOUNTANT" means a Person engaged in the practice of accounting who (except as otherwise expressly provided in this Indenture) may be employed by or affiliated with the Company or RIH. "ACT" when used with respect to any Noteholder or Noteholders has the meaning stated in Section 1.02(a). "ADDITIONAL NOTES" means additional 11.375% Junior Mortgage Notes due 2004 issued in payment of interest accrued on outstanding Notes pursuant to Section 3.11. "AFFILIATE" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person, and, with respect to any specified natural Person, any other Person having a relationship by blood, marriage or adoption not more remote than first cousin with such specified Person. For purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms 2 "controlling" and "controlled" have meanings correlative to the foregoing; PROVIDED, HOWEVER, that, except as may be required under the TIA, the term "Affiliate" shall not include, with respect to the Company or RIH, any of Fidelity Management & Research Company, TCW Special Credits or funds or accounts managed or advised by either of them. "AFTER-ACQUIRED FEE MORTGAGE DEBT" means any Indebtedness secured by an After-Acquired Fee Mortgage. "AFTER-ACQUIRED FEE MORTGAGE" has the meaning stated in Section 2.07 of the Mortgage. "ASSIGNMENT AGREEMENT" means the Assignment of Agreements dated as of the date hereof, providing for the assignment of the RIH Junior Promissory Note and other Mortgage Documents to the Trustee by the Company, and acknowledgment thereof by RIH, a copy of which is attached hereto as Exhibit B. "ASSIGNMENT OF LEASES AND RENTS" means the Assignment of Leases and Rents dated as of the date hereof, from RIH to the Company securing the RIH Junior Promissory Note, a copy of which is attached hereto as Exhibit E. "AUTHENTICATING AGENT" means any Person named as Authenticating Agent for the Notes in accordance with the provisions of this Indenture until a successor Authenticating Agent becomes such pursuant thereto, and thereafter Authenticating Agent shall mean such successor. "AUTHORIZED SIGNATURE" means the signatures of the chairman of the board, the president or a Vice President and of the treasurer, an assistant treasurer, the controller, an assistant controller, the secretary or an assistant secretary of the Company or RIH, as the case may be. "CAPITALIZED LEASE OBLIGATION" means, with respect to any Person, any lease of any property (whether real, personal or mixed) by such Person as lessee which, in conformity with GAAP consistently applied, is accounted for as a capitalized lease on the balance sheet of such Person. "CASINO" means that portion of the Casino-Hotel used for gaming and related activities. "CASINO-HOTEL" means the casino and hotel complex and ancillary structures and facilities located on the Premises and furniture, fixtures and equipment at any time contained therein. 3 "CASINO CONTROL ACT" means the New Jersey Casino Control Act and the regulations promulgated thereunder, as amended. "CASINO CONTROL COMMISSION" means the New Jersey Casino Control Commission, as from time to time constituted, or if at any time after the execution of this Indenture such Commission is not existing and performing the duties theretofore assigned to it, then the body performing such duties at such time. "COMBINATION TRANSACTION" has the meaning stated in Section 10.01. "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 instrument such Commission is not existing and performing the duties theretofore assigned to it under the TIA, then the body performing such duties at such time. "COMPANY" means the Person named as the "Company" in the first paragraph of this instrument until a successor entity shall have become such pursuant to the applicable provisions of this Indenture, and thereafter, except to the extent otherwise contemplated by Section 10.02, "Company" shall mean such successor entity exclusively. "COMPANY CONSENT", "COMPANY ORDER" and "COMPANY REQUEST" mean, respectively, a written consent, order or request signed with an Authorized Signature and delivered to the Trustee. "CONSOLIDATED CASH FLOW" means, with respect to any Person for any period, an amount equal to the sum of (i) the consolidated net income (or loss) of such Person for such period determined in accordance with GAAP consistently applied, excluding interest income, interest expense and gains or losses from extraordinary or nonrecurring items, plus (ii) all amounts deducted in computing such consolidated net income (or loss) in respect of depreciation and amortization, plus (iii) non-cash charges arising from the reduction of CRDA Deposits to market value, minus (iv) taxes based upon or measured by income which are payable in cash, minus (v) CRDA Deposits. "CONSOLIDATED INTEREST CHARGES" means, with respect to any Person for any period, the consolidated interest expense (not including the non-cash amortization of discount on the original issuance of (a) the RIH Promissory Note, (b) any intercompany indebtedness of RIH issued in connection with Indebtedness represented by the Junior 4 Mortgage Facility and (c) any intercompany indebtedness of RIH issued in connection with Indebtedness represented by the Working Capital Facility), whether payable in cash or in-kind (and with respect to RIH, including, without limitation, the interest paid or accrued (without duplication) on (i) the RIH Promissory Note, (ii) any intercompany indebtedness of RIH issued in connection with Indebtedness represented by the Junior Mortgage Facility and (iii) any intercompany indebtedness of RIH issued in connection with Indebtedness represented by the Working Capital Facility), without deduction for interest income (other than cash interest income received from RII in payment of its interest cost on any Working Capital Facility), in each case for such Person and its consolidated Subsidiaries for such period determined in accordance with GAAP consistently applied. "CONSOLIDATED INTEREST COVERAGE RATIO" shall mean, at any date of calculation thereof, the ratio of (a) Consolidated Cash Flow of RIH and its consolidated Subsidiaries for the immediately preceding four consecutive fiscal quarters to (b) Consolidated Interest Charges of RIH and its consolidated Subsidiaries for such period. "CONSOLIDATED NET INCOME" means, with respect to any Person for any period, an amount equal to consolidated net income (or loss) of such Person for such period determined in accordance with GAAP consistently applied, minus (a) federal and state taxes based upon or measured by income which are payable in cash, plus (b) non-cash charges arising from federal and state taxes based upon or measured by income. "CRDA DEPOSITS" means (a) the quarterly deposits made by RIH to the Casino Reinvestment Development Authority in an amount equal to 1.25% of RIH's gross revenue in order to satisfy its investment obligation pursuant to the Casino Control Act, and (b) the amounts invested in qualified investments in lieu of any of the quarterly deposits (or portion thereof) referred to in clause (a) above. "CRDA DISPUTE" means the dispute existing on the date hereof between RIH and the New Jersey Casino Reinvestment Development Authority regarding CRDA Deposits and New Jersey Casino Reinvestment Authority Notes, which dispute involves an amount of approximately $30,000,000. "DEFAULT" means the occurrence and continuance of an Event of Default or an event which, after notice or lapse of time or both, would become an Event of Default. "DEFAULTED INTEREST" has the meaning stated in Section 3.07. 5 "EFFECTIVE DATE" means the date on which the prepackaged plan of reorganization of RII and GRI becomes effective. "EVENT OF DEFAULT" has the meaning stated in Section 7.01. An Event of Default shall "exist" if an Event of Default shall have occurred and be continuing. "EXCHANGE ACT" means the Securities and Exchange Act of 1934, as amended. "EXISTING ENCUMBRANCES" has the meaning stated in Section 1.01 of the Mortgage. "FAIR MARKET VALUE" of any Notes means (a) the average of the closing sales price of the Notes for the 30 trading days immediately prior to the date of determination of such value on the largest national securities exchange on which such Notes shall have traded on such trading days, or (b) if no such sales of such Notes occurred during such 30-day period or if the Notes are not so listed but are traded in the over-the-counter market with quotations available in the National Association of Securities Dealers Automated Quotation System ("NASDAQ"), the average of the means between the "bid" and "asked" prices on such national securities exchange or as quoted on NASDAQ, as the case may be, during such 30-day period, or (c) if the Notes are not traded on a national securities exchange or quoted on NASDAQ, the fair market value of such Notes as of the date of determination as determined by agreement of two nationally recognized Independent investment banking firms, one to be chosen by the Company and the other by the Holder of the Notes being valued, with the costs of each such firm being the responsibility of the Person selecting such firm. If such firms cannot agree upon such fair market value, such firms shall select a third nationally recognized Independent investment banking firm, which shall determine such fair market value, the costs of such third firm being shared equally by the Company and such Holder. "F,F&E FINANCING AGREEMENT" has the meaning stated in Section 1.01 of the Mortgage. "GAAP" means United States generally accepted accounting principles. "GRI" means GGRI, Inc., a Delaware corporation. "GROUND LEASES" has the meaning stated in Granting Clause Second of the Mortgage. "GUARANTY" means the guaranty contained in Article Four. 6 "GUARANTY MORTGAGE" means the Mortgage securing Guaranty of Junior Mortgage Notes dated as of the date hereof, between RIH, as mortgagor, and the Trustee, as mortgagee, securing the Guaranty, a copy of which is attached hereto as Exhibit F. "HOTEL" means that portion of the Casino-Hotel not included within the Casino. "INDEBTEDNESS" means, as applied to any Person, without duplication, any indebtedness, exclusive of deferred taxes, (a) in respect of borrowed money (whether or not the recourse of the lender is to the whole of the assets of such Person or only to a portion thereof); (b) evidenced by bonds, notes, debentures or similar instruments or letters of credit; (c) representing the balance deferred and unpaid of the purchase price of any property, if and to the extent such indebtedness would appear as a liability upon a balance sheet of such Person prepared in accordance with GAAP (but excluding trade accounts payable arising in the ordinary course of business that are not overdue by more than 90 days or are being contested by such Person in good faith); (d) any Capitalized Lease Obligations (other than, with respect to RIH or the Company, the Ground Leases) of such Person; and (e) Indebtedness of others guaranteed by such Person, including, without limitation, every obligation of such Person (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or to purchase (or to advance or supply funds for the purchase of) any security for the payment of such Indebtedness, (ii) to purchase property, securities or services for the purpose of assuring the holder of such Indebtedness of the payment of such Indebtedness, or (iii) to maintain working capital, equity capital or other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness; PROVIDED, HOWEVER, that the guaranty by any Person shall not include endorsements by such Person for collection or deposit, in either case in the ordinary course of business. The term "INDEBTEDNESS" does not include: (1) any of the types of indebtedness described in clauses (a) through (e) above (inclusive) owed by the Company to RIH or any of their Subsidiaries, by RIH to the Company or any of their Subsidiaries or by any such Subsidiary to RIH, the Company or any other such Subsidiary (including, without limitation, the RIH Promissory Note and the RIH Junior Promissory Note); (2) the Guaranty, the Junior Guaranty, the Senior Guaranty and the Working Capital Facility Guaranty; (3) matters relating to the CRDA Dispute, New Jersey Casino Reinvestment Development Authority Notes or CRDA Deposits; and (4) any payments made by the Company or RIH under the RII Management Agreement, the RII Tax Sharing Agreement or the Services Agreement. 7 "INDENTURE" means this instrument as originally executed or as it may from time to time be supplemented, modified or amended by one or more indentures or other instruments supplemental hereto entered into pursuant to the applicable provisions thereof. "INDEPENDENT" when used with respect to any specified Person means such a Person who (a) is in fact independent, (b) does not have any direct financial interest or any material indirect financial interest in the Company or in any other obligor upon the Notes or in any Affiliate of the Company or of such other obligor and (c) is not connected with the Company or such other obligor or any Affiliate of the Company or such other obligor as an officer, employee, promoter, underwriter, trustee, partner, director or person performing similar functions. Whenever it is herein provided that any Independent Person's opinion or certificate shall be furnished to the Trustee, such Person shall be appointed by a Company Order, and such opinion or certificate shall state that the signer has read this definition and that the signer is Independent within the meaning hereof. A Person who is performing or who has performed services as an independent contractor to any specified Person shall not be considered not Independent merely by reason of the fact that such Person is or has performed such services. "INTERCREDITOR AGREEMENT" means the Intercreditor Agreement dated as of the date hereof, among the Trustee, the trustee under the Senior Mortgage Note Indenture and such other parties that may from time to time become a party thereto, which shall incorporate the terms set forth in Exhibit G. "INTEREST PAYMENT DATE" means the date on which an installment of interest on the Notes is due and payable. "JUNIOR GUARANTY" means the Guaranty and any other guaranty of the Junior Mortgage Facility by RIH. "JUNIOR MORTGAGE FACILITY" means the Notes and any secured or unsecured facility or facilities entered into by RIH or the Company providing for the making of loans to RIH or the Company on a revolving or term basis, or the issuance of notes, debentures or bonds by RIH or the Company, as such agreement, indenture or instrument may be amended, supplemented or modified from time to time, or any refinancing thereof, in an aggregate principal amount up to $35,000,000 plus additional notes, debentures or bonds issued in payment of interest accrued on outstanding notes, debentures or bonds; PROVIDED, HOWEVER, that the lender or lenders thereunder (or any trustee or agent acting on behalf of such lender or lenders) shall have executed an intercreditor agreement covering the matters set forth on Exhibit G. The liens, if 8 any, securing the Junior Mortgage Facility shall be PARI PASSU with the lien of the Mortgage and the Guaranty Mortgage. The term "Junior Mortgage Facility" does not include the Junior Guaranty. "LEGAL REQUIREMENTS" has the meaning stated in Section 1.01 of the Mortgage. "MATURITY" when used with respect to any Note means the date on which the principal (or any portion thereof) of such Note becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration or call for redemption or otherwise. "MORTGAGE" means the Mortgage securing the RIH Junior Promissory Note dated as of the date hereof, between the Company, as successor mortgagee, and RIH, as mortgagor. "MORTGAGE DEBT" means, at any point in time, the RIH Promissory Note, the RIH Junior Promissory Note and any secured Indebtedness outstanding under any Working Capital Facility. "MORTGAGE DOCUMENTS" means (a) the Mortgage, the Guaranty Mortgage, the RIH Junior Promissory Note, the Assignment of Leases and Rents and any other security document to which either RIH or the Company is a party relating to the Notes, which is executed and delivered pursuant to or in connection with the Mortgage, the Guaranty Mortgage or the Assignment Agreement, and (b) any mortgage, deed of trust, guaranty, promissory note, collateral assignment agreement, assignment of leases and rents, assignment of operating assets and any other security document to which either RIH or the Company is a party relating to the Junior Mortgage Facility. "NATIONAL ACCOUNTANTS" has the meaning stated in Section 12.06(a). "NEW JERSEY CASINO REINVESTMENT DEVELOPMENT AUTHORITY NOTES" shall mean bonds issued by the Casino Reinvestment Development Authority, a public authority created under the Casino Control Act. "NON-RECOURSE INDEBTEDNESS" means indebtedness incurred in connection with the acquisition, purchase, improvement or development of property or assets (other than the Trust Estate) used by the Company, RIH or any Subsidiary of RIH or the Company to engage in the casino business, the hotel business or related or ancillary business or purpose and which is secured only by such assets and without recourse to RIH, the Company or any Subsidiary of RIH or the Company or the Trust Estate for such indebtedness. 9 "NOTEHOLDER" or "HOLDER" means a Person in whose name a Note is registered in the Note Register. "NOTE REGISTER" and "NOTE REGISTRAR" have the respective meanings stated in Section 3.05. "NOTES" has the meaning stated in the Preliminary Statement of this instrument and more particularly includes any Note authenticated and delivered hereunder, including, without limitation, any Additional Notes. The term "Notes" does not include the Guaranty. "OFFICER" of the Company or RIH means any Person authorized to execute an Authorized Signature. "OFFICERS' CERTIFICATE" delivered by the Company or RIH means a certificate signed with an Authorized Signature and delivered to the Trustee. Whenever this Indenture requires that an Officers' Certificate be signed also by an Accountant or other expert, such Accountant or other expert may (except as otherwise expressly provided in this Indenture) be in the general employ of the Company or RIH. "OPINION OF COUNSEL" means a written opinion of counsel who may (except as otherwise expressly provided in this Indenture) be an employee of the Company or RIH. Unless otherwise specifically provided in this Indenture, such counsel may rely as to any statement of facts not personally known to such counsel and relating to such opinion on an Officers' Certificate, to the extent not rejected by the Trustee and its counsel (which rejection shall not be unreasonably given). "OUTSTANDING" when used with respect to Notes means, as of the date of determination, all Notes theretofore authenticated and delivered under this Indenture, except: (a) Notes theretofore canceled by the Trustee or delivered to the Trustee for cancellation; (b) Notes for whose payment or redemption money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent in trust for the Holders of such Notes; (c) Notes in exchange for or in lieu of which other Notes have been authenticated and delivered under this Indenture; and (d) Notes alleged to have been destroyed, lost or stolen which have been paid as provided in Section 3.06; 10 PROVIDED, HOWEVER, that in determining whether the Holders of the requisite principal amount of Notes Outstanding have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Notes owned by the Company or any other obligor upon the Notes or any Affiliate of the Company or of such other obligor shall be disregarded and deemed not to be outstanding. In determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Notes which the Trustee actually knows to be so owned shall be so disregarded. "OUTSTANDING AMOUNT" of any Indebtedness at any time means the principal amount outstanding of such Indebtedness at such time. "PAYING AGENT" means any Person now or hereafter authorized by the Company to pay the principal of or interest on any Notes on behalf of the Company. "PERMITS" has the meaning stated in Section 1.01 of the Mortgage. "PERMITTED ENCUMBRANCES" has the meaning stated in Section 1.01 of the Mortgage. "PERSON" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or any other entity or government or any agency or political subdivision thereof. "PLACE OF PAYMENT" when used with respect to the Notes means a city or any political subdivision thereof in which the Company is by this Indenture required to maintain an office or agency for the payment of the principal of or interest on the Notes. "PLAN" means the Plan of Reorganization of RII and GRI dated [ ], 1994. "PREDECESSOR NOTES" of any particular Note means every previous Note evidencing all or a portion of the same debt as that evidenced by such particular Note; and, for purposes of this definition, any Note authenticated and delivered under Section 3.06 in lieu of a lost, destroyed or stolen Note shall be deemed to evidence the same debt as the lost, destroyed or stolen Note. "PREMISES" has the meaning stated in Granting Clause Third of the Mortgage. "RATABLE BENEFIT" means, for any class or classes of Indebtedness at any time, in proportion to the total Outstanding Amount of such class or classes held by each holder thereof at such time. 11 Outstanding Amount of such class or classes held by each holder thereof at such time. "REDEMPTION DATE" when used with respect to any Note to be redeemed means the date fixed for such redemption pursuant to this Indenture. "REDEMPTION PRICE" when used with respect to any Note to be redeemed means the price at which it is to be redeemed pursuant to this Indenture. It does not include installments of interest due on or before the Redemption Date. "REGULAR RECORD DATE" for the interest payable on any Interest Payment Date on the Notes means the date specified in the provisions of this Indenture. "RESPONSIBLE OFFICER" means any Vice President, any Assistant Vice President or any other officer of assistant officer of the Trustee assigned by the Trustee to administer its corporate trust matters. "RESTRICTED PAYMENT" means (a) any declaration or payment of any dividend or the making of any distribution to holders of capital stock of RIH or the Company or any Subsidiary of RIH or the Company in respect of such capital stock (other than to RIH or the Company or a direct or indirect wholly owned Subsidiary of RIH or the Company), (b) any purchase, redemption or other acquisition or retirement for value of any capital stock (or warrants, rights or options to acquire any capital stock or Indebtedness convertible into or exchangeable for any capital stock) of RIH or the Company or any Subsidiary of RIH or the Company (other than purchases, redemptions, acquisitions or retirement solely from RIH or the Company or a direct or indirect wholly owned Subsidiary of RIH or the Company); PROVIDED, HOWEVER, that any such purchase, redemption or other acquisition or retirement that is required by the Casino Control Commission or under the Casino Control Act shall not constitute a Restricted Payment. The term "Restricted Payment" also shall not include any loan or advance to RII of all or any portion of the proceeds of the Indebtedness represented by the Working Capital Facility. 12 "RIH" means the person named as "RIH" in the first paragraph of this instrument until a successor entity shall have become such pursuant to the applicable provisions of the Indenture, and thereafter, except to the extent otherwise contemplated by Section 10.02, "RIH" shall mean such successor entity exclusively. "RIH JUNIOR PROMISSORY NOTE" means the secured junior promissory note, dated the date hereof, made by RIH in the principal amount of $35,000,000, plus any additional junior promissory notes issued in connection with the payment of interest accrued on outstanding Notes payable to the order of the Company, a copy of which is attached hereto as Exhibit A. "RIH SALE" means (a) a consolidation, combination or merger involving RIH and any other Person, (b) a sale, assignment, conveyance or transfer or RIH's interest in the Trust Estate, substantially as an entirety, to any other Person or group of Persons in one transaction or a series of related transactions, or (c) any transaction as a result of which RIH ceases to be a direct or indirect wholly owned Subsidiary of RII; PROVIDED, HOWEVER, that any of the transactions described in clauses (a), (b) and (c) above shall not constitute an RIH Sale if the other party or parties to the transaction consists of only one or more of the following Persons: the Company or any wholly owned direct or indirect subsidiary of RIH or the Company; PROVIDED, FURTHER, HOWEVER, that notwithstanding any other provision of this definition, if the primary effect of any of the aforesaid transactions is the redemption of the Notes, then such transaction shall not be considered to be an RIH Sale. "RIH PROMISSORY NOTE" means the secured promissory note, amended and restated as of the date hereof, made by RIH in the principal amount of $125,000,000 payable to the order of the Company, a copy of which is attached to the Senior Mortgage Note Indenture as Exhibit A. "RIHF SENIOR FACILITY" means the senior secured note facility contemplated by the purchase agreement dated as of the date hereof, among the Company, RIH, RII and funds managed by Fidelity Management and Research Company, which allows the Company to borrow up to $20,000,000 in aggregate principal amount through the issuance of RIHF Senior Facility Notes. The term "RIHF Senior Facility" does not include the Working Capital Facility Guaranty. "RIHF SENIOR FACILITY NOTES" means, collectively, the notes executed and delivered by the Company under the RIHF Senior Facility. 13 "RII" means Resorts International, Inc., a Delaware corporation. "RII MANAGEMENT CONTRACT" means the Management Contract dated as of the date hereof, between RII and RIH pursuant to which RII provides certain management services to RIH for an annual fee of 3% of the gross revenues of RIH. "RII TAX SHARING AGREEMENT" means the Tax Sharing Agreement dated as of the date hereof between RII and RIH pursuant to which (i) RIH will not make any payments to RII or any other Affiliate in respect of taxes, other than to reimburse RII for any cash payments actually made by RII in respect of any federal, state or local income or alternative minimum taxes arising from the earnings or operations of RIH; PROVIDED, HOWEVER, that RIH shall not be required to reimburse RII for cash payments in respect of federal, state or local income or alternative minimum taxes that would not have been owed but for the reduction, if any, of the amount of the consolidated net operating loss carryforwards or consolidated current losses of the affiliated group of which RII is a common parent which resulted from the inclusion in the consolidated return filed for such group for any taxable year ending after the Effective Date of the income of any entity other than RIH, other than income directly attributable to the consummation of the Plan, including but not limited to the transfer of the stock of RIB (as defined in the Plan) and the assets of the U.S. Paradise Island Subsidiaries (as defined in the Plan), and (ii) RIH will be entitled to any refund (plus the interest thereon) of any taxes for which RIH is required to reimburse RII. "SENIOR ASSIGNMENT OF LEASES AND RENTS" means the Assignment of Leases and Rents dated as of the date hereof, from RIH to the Company securing the RIH Promissory Note. "SENIOR GUARANTY" means the guaranty of the 11% Senior Mortgage Notes due 2003 by RIH contained in Article Four of the Senior Mortgage Note Indenture. "SENIOR GUARANTY MORTGAGE" means the Mortgage securing the Guaranty of Senior Mortgage Notes dated as of the date hereof, between RIH, as mortgagor, and State Street Bank and Trust Company of Connecticut, N.A., as mortgagee. "SENIOR MORTGAGE" means the Mortgage securing the RIH Promissory Note dated as of the date hereof, between the Company, as successor mortgagee, and RIH, as mortgagor. "SENIOR MORTGAGE DOCUMENTS" means the Senior Mortgage, the Senior Guaranty Mortgage, the RIH 14 Promissory Note, the Senior Assignment of Leases and Rents and any other security document to which either RIH or the Company is a party relating to the Senior Mortgage Notes, which is executed and delivered pursuant to or in connection with the Senior Mortgage, the Senior Guaranty Mortgage or the Senior Assignment Agreement. "SENIOR MORTGAGE NOTE INDENTURE" means the Indenture dated as of the date hereof, among the Company, RIH and State Street Bank and Trust Company of Connecticut, N.A., as trustee, pursuant to which the Senior Mortgage Notes were issued, as originally executed or as it may from time to time be supplemented, modified or amended by one or more indentures or other instruments supplemental thereto entered pursuant to the applicable provisions thereof. "SENIOR MORTGAGE NOTES" means the 11% Mortgage Notes due 2003 of the Company issued pursuant to the Senior Mortgage Note Indenture. "SERVICES AGREEMENT" means the Services Agreement dated as of September 17, 1992, between RII, RIH and The Griffin Group, Inc. "SPECIAL RECORD DATE" for the payment of any Defaulted Interest on Notes means a date fixed by the Trustee pursuant to Section 3.07. "STATED MATURITY" when used with respect to any Note means the date specified in such Note as the fixed date on which the principal of such Note is due and payable. "SUBSIDIARY" of any Person means a corporation more than 50% of the outstanding voting stock of which is owned, directly or indirectly, by such Person or one or more Subsidiaries of such Person. "TIA" or "TRUST INDENTURE ACT" means the Trust Indenture Act of 1939, as amended. "TRUSTEE" means the Person named as the "Trustee" in the first paragraph of this instrument until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter Trustee shall mean such successor Trustee. "TRUST ESTATE" has the meaning stated in the Granting Clauses to the Mortgage. 15 "VICE PRESIDENT" when used with respect to the Company, RIH or the Trustee means any vice president, whether or not designated by a number or a word added to the title. "WORKING CAPITAL FACILITY" means the RIHF Senior Facility (and the RIHF Senior Facility Notes issued thereunder) and any other secured or unsecured facility or facilities entered into by RIH and/or the Company providing for the making of working capital loans to RIH or the Company (with RII [and GRI] as a guarantor[s] thereunder) on a revolving or term basis, or the issuance of notes, debentures or bonds by RIH, the Company or RII, as such agreement may be amended, supplemented or modified from time to time, or any refinancing thereof, in an aggregate principal amount up to $20,000,000; PROVIDED, HOWEVER, that the lender or lenders thereunder (or any trustee or agent acting on behalf of such lender or lenders) shall have executed an intercreditor agreement covering the matters set forth on Exhibit G. The liens, if any, securing the Working Capital Facility may be senior to the lien of the Mortgage, the Guaranty Mortgage, the Senior Mortgage and the Senior Guaranty Mortgage. The term "Working Capital Facility" does not include the Working Capital Facility Guaranty. "WORKING CAPITAL FACILITY MORTGAGE DOCUMENTS" means any mortgage, deed of trust, guaranty, promissory note, collateral assignment agreement, assignment of leases and rents, assignment of operating assets and any other security document to which either RIH or the Company is a party relating to the Working Capital Facility. "WORKING CAPITAL FACILITY GUARANTY" means any guaranty of the Working Capital Facility by RIH, including, without limitation, the guaranty of the RIHF Senior Facility Notes. Section 1.02. ACTS OF NOTEHOLDERS. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Noteholders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Noteholders in person or by an agent 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 Noteholders 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 16 favor of the Company and (subject to Section 8.01(c)) in favor of the Trustee, if made in the manner provided in this Section 1.02. (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 the certificate of any 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. Whenever such execution is by an officer of a corporation or a member of a partnership on behalf of such corporation or partnership, such certificate or affidavit shall also constitute sufficient proof of his authority. (c) The fact and date of execution of any such instrument or writing and the authority of any Person executing the same may also be proved in any other manner which the Trustee deems sufficient; and the Trustee may in any instance require further proof with respect to any of the matters referred to in this Section 1.02. (d) The ownership of Notes shall be proved by the Note Register. (e) Any request, demand, authorization, direction, notice, consent, waiver or other action by the Holder of any Note shall bind every future Holder of the same Note and the Holder of every Note issued upon the transfer thereof or in exchange therefor or in lieu thereof, in respect of anything done 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 Note. (f) The Company may, in the circumstances permitted by the Trust Indenture Act, set any day as the record date for the purpose of determining the holder of Outstanding Notes entitled to give or take any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by this Indenture to be given or taken by holders of Notes. With regard to any record date set pursuant to this Section 1.02(f) the holders of Outstanding Notes on such record date (or their duly appointed agents), and only such Persons, shall be entitled to give or take the relevant action, whether or not such Persons remain holders after such record date. (g) Until a waiver or consent becomes effective, such a waiver or consent by a Holder is a continuing waiver or consent by the Holder and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder's Note, even if notation of the waiver or consent is not made on any Note. However, any such Holder or 17 subsequent Holder may, until such waiver or consent becomes effective, revoke the waiver or consent as to his Note or portion of his Note. Such revocation shall be effective only if the Trustee receives the notice of such revocation before the date on which the waiver or consent has become effective. Section 1.03. NOTICES, ETC., TO TRUSTEE, RIH AND THE COMPANY. (a) Any request, demand, authorization, direction, notice (including, without limitation, a notice of default), consent, waiver or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with, the Company, RIH or the Trustee shall be deemed given when either (i) delivered by hand or (ii) two days after sending by registered or certified mail, postage prepaid, in either case, addressed as follows: To the Company: Resorts International Hotel Financing, Inc. c/o Resorts International, Inc. 1133 Boardwalk Atlantic City, New Jersey 08401 Attn.: Secretary To RIH: Resorts International Hotel, Inc. c/o Resorts International, Inc. 1133 Boardwalk Atlantic City, New Jersey 08401 Attn.: Secretary To the Trustee: U.S. Trust Company of California, N.A. 555 S. Flower Street Suite 2700 Los Angeles, California 90071 Attn.: Corporate Trust Department To Casino Control Commission: New Jersey Casino Control Commission Arcade Building Tenessee Avenue & Boardwalk Atlantic City, New Jersey 08401 Attn.: Chairman 18 To Director of Division of Gaming Enforcement: New Jersey Division of Gaming Enforcement 140 E. Front Street CN 047 Trenton, New Jersey 08625 Attn.: Director (b) By notice to the Company, RIH and/or the Trustee, Casino Control Commission and/or Director of Division of Gaming Enforcement, given as provided above, any party may designate additional or substitute addresses for such notices, which, notwithstanding Section 1.03(a), shall be deemed given when received. Section 1.04. NOTICES TO NOTEHOLDERS; WAIVER. Where this Indenture provides for notice to Noteholders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each Holder of such Notes, at the address of such Holder as it appears in the Note Register, not later than the latest date, and not earlier than the earliest date, prescribed for the provision of such notice. In any case where notice to Noteholders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Noteholder shall affect the sufficiency of such notice with respect to other Noteholders. 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 Noteholders 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 regular mail service, or by reason of any other cause, it shall be impracticable to give such notice by mail, then such notification may be given by any other method that the Trustee shall consider to be reasonable and shall be deemed to be a sufficient giving of such notice for every purpose hereunder. Section 1.05. FORM AND CONTENTS OF DOCUMENTS DELIVERED TO TRUSTEE. Whenever 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 19 some matters and one or more other such Persons as to such matters in one or several documents. Any certificate or opinion of an Officer of the Company or of RIH may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such Officer knows that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any 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 RIH stating that the information with respect to such factual matters is in the possession of the Company or RIH, unless such counsel knows that the certificate or opinion or representations with respect to such matters are erroneous. If appropriate to the matter being opined upon and to the extent not prohibited by the TIA, any Opinion of Counsel may be subject to rights of creditors and the availability of equitable remedies. Whenever 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. Whenever in this Indenture, in connection with any application or certificate or report to the Trustee, it is provided that the Company or RIH shall deliver any document as a condition of the granting of such application, or as evidence of the Company's or RIH's compliance with any term hereof, it is intended that the truth and accuracy, at the time of the granting of such application or at the effective date of such certificate or report (as the case may be), of the facts and opinions stated in such document shall in such case be conditions precedent to the right of the Company or RIH to have such application granted or to the sufficiency of such certificate or report. Section 1.06. COMPLIANCE CERTIFICATES AND OPINIONS. Upon any application or request by the Company or RIH to the Trustee to take any action under any provision of this Indenture or any Mortgage Document, the Company or RIH shall furnish to the Trustee an Officers' Certificate stating that all conditions precedent, if any, provided for in this Indenture or such Mortgage Document 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 20 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 or any Mortgage Document shall include: (a) a statement that each individual signing such certificate or opinion has read such condition or covenant and the definitions herein relating thereto; (b) 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; (c) 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 condition or covenant has been complied with; and (d) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. Section 1.07. CONFLICT WITH TRUST INDENTURE ACT. If any provision hereof or of the Mortgage Documents or the Assignment Agreement limits, qualifies or conflicts with another provision hereof or of the Mortgage Documents or the Assignment Agreement which is required to be included herein or therein by any of the provisions of the TIA, such required provision shall control. Section 1.08. EFFECT OF HEADINGS AND TABLE OF CONTENTS. The Article and Section headings herein and in the Table of Contents are for convenience only and shall not affect the construction hereof. Section 1.09. SUCCESSORS AND ASSIGNS. All covenants and agreements in this Indenture by the Company or RIH shall, subject to Section 10.02, bind its successors and assigns, whether so expressed or not. Section 1.10. SEPARABILITY CLAUSE. In case any provision in this Indenture or in the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining 21 provisions shall not in any way be affected or impaired thereby. Section 1.11. BENEFITS OF INDENTURE. Nothing in this Indenture or in the Notes, express or implied, shall give to any Person other than the parties hereto and their successors hereunder, any separate trustee or co-trustee appointed under Section 8.14 and the Holders of Notes, any benefit or any legal or equitable right, remedy or claim under this Indenture. Section 1.12. GOVERNING LAW. This Indenture and each Note shall be deemed to be a contract under the laws of the State of New York and shall be construed in accordance with and governed by the internal laws of the State of New York. Section 1.13. CASINO CONTROL ACT. Each of the provisions of this Indenture is subject to and shall be enforced in compliance with the provisions of the Casino Control Act, unless such provisions are in conflict with the TIA, in which case the TIA shall control. Section 1.14. GENERAL APPLICATION. (a) The assertion of any rights upon any Default shall be subject in each instance to the giving of any notice and the expiration of any grace period provided for in Section 7.01 as a condition to such Default becoming an Event of Default, unless the TIA requires otherwise, in which case the TIA shall control. (b) For the purposes of this Indenture, it is understood that an event which does not materially diminish the value of the Trustee's interest in the Trust Estate shall not be deemed an impairment of security, as that phrase is used in this Indenture. (c) This Indenture may not be used to interpret another indenture, loan or debt agreement of the Company, other than the Mortgage and the Guaranty Mortgage. Any such indenture, loan or debt agreement may not be used to interpret this Indenture. (d) In the event of a conflict between any provision of this Indenture and any provision of a Mortgage Document, the provision of this Indenture shall prevail. 22 ARTICLE TWO NOTE FORM Section 2.01. FORM GENERALLY. The Notes and the Trustee's certificate of authentication shall be substantially in the forms set forth in this Article Two, 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 Notes as evidenced by their execution thereof. Any portion of the text of any Note may be set forth on the reverse thereof. The definitive Notes shall be printed, lithographed or engraved or produced by any combination of these methods or produced in any other manner permitted by the rules of any securities exchange on which the Notes may be listed, all as determined by the officers executing such Notes as evidenced by their execution thereof. Section 2.02. FORM OF NOTES. The form of the Notes shall be substantially as follows: [FACE OF NOTES] RESORTS INTERNATIONAL HOTEL FINANCING, INC. 11.375% Junior Mortgage Note due 2004 THIS NOTE HAS BEEN ISSUED AS PART OF A UNIT WITH A NUMBER OF SHARES OF CLASS B STOCK OF RESORTS INTERNATIONAL, INC. SUCH THAT ONE SHARE OF CLASS B STOCK HAS BEEN ISSUED IN RESPECT OF EACH $1,000 PRINCIPAL AMOUNT OF NOTES. THIS NOTE MAY NOT BE TRANSFERRED SEPARATELY FROM THE SHARES OF CLASS B STOCK ISSUED IN RESPECT OF THIS NOTE. No. $ ------------- ------------- Resorts International Hotel Financing, Inc., a Delaware corporation (hereinafter called the "Company", which term includes any successor entity under the Indenture referred to on the reverse), for value received, hereby promises to pay to______________, or registered assigns, on December 15, 2004 the sum of _____________ Dollars (or so much 23 thereof as shall not have been paid upon prior redemption) and to pay interest (computed on the basis of a 360-day year of twelve 30-day months based on the actual number of days elapsed) thereon from [ ], 1994 [the Effective Date], or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually at June 15 and December 15 in each year (commencing December 15, 1994), at the rate of 11.375% per annum, until the principal hereof is paid or made available for payment. Interest also shall accrue on Additional Notes (as defined below) at such rates from and including the date of issuance thereof until the principal amount thereof is paid or made available for payment. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in said Indenture, be paid to the Person in whose name this Note (or one or more Predecessor Notes) is registered at the close of business on the Regular Record Date for such interest, which shall be the first day (whether or not a business day) of the calendar month of such Interest Payment Date. Any such interest not so punctually paid or duly provided for (including by issuance of Additional Notes in lieu of cash interest payment) shall forthwith cease to be payable to the Holder on such Regular Record Date, and may be paid to the Person in whose name this Note (or one or more Predecessor Notes) 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 thereof being given to Noteholders not less than ten 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 Notes may be listed and upon such notice as may be required by such exchange, all as more fully provided in said Indenture. The principal of and interest on this Note shall be payable at the corporate trust office of the Trustee, as defined on the reverse, or at an office or agency of the Company in the Borough of Manhattan, City and State of New York. All such payments shall be made 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, or by check or, at the option of the Company, on any Interest Payment Date, if Consolidated Cash Flow of RIH and its consolidated Subsidiaries for the period of four fiscal quarters ended on the last day of the last quarter ended prior to such Interest Payment Date was less than $35,000,000, all or any portion of such interest may be paid in additional Notes in a principal amount equal to the amount of accrued interest so paid ("Additional Notes"), PROVIDED, HOWEVER, that Additional Notes shall be issued in minimum denominations of $100 (but not fractions thereof) in a principal amount equal to such interest payment, or portion thereof, which the Company elects to so pay. The Company shall pay cash in lieu of issuing any fractional Additional Notes. The issuance of such Additional Notes shall constitute 24 full payment of interest in respect of which such Additional Notes are issued in the principal amount so issued. All interest payments made in Additional Notes must be made PRO RATA in respect of all outstanding Notes, on the basis of the respective dollar amounts of accrued and unpaid interest on such Notes. The Additional Notes shall be issued as Units such that one share of Class B Common Stock shall be issued in respect of each $1,000 principal amount of Additional Notes. The Additional Notes may not be transferred separately from the shares of Class B Common Stock issued in respect of such Additional Notes. All interest payments made in cash (other than cash payments made in lieu of issuance of fractional Additional Notes) shall be made PRO RATA in respect of all outstanding Notes, on the basis of the respective dollar amounts of accrued and unpaid interest on such Notes. The Company may deliver any such interest payment to the Paying Agent or may mail any such interest payment to a Holder at the Holder's registered address. "Consolidated Cash Flow" means, with respect to any period, an amount equal to the sum of (i) the consolidated net income (or loss) of RIH for such period determined in accordance with GAAP consistently applied, excluding interest income, interest expense and gains or losses from extraordinary or nonrecurring items, plus (ii) all amounts deducted in computing such consolidated net income (or loss) in respect of depreciation and amortization, plus (iii) non-cash charges arising from the reduction of CRDA Deposits to market value, minus (iv) taxes based upon or measured by income which are payable in cash, minus (v) CRDA Deposits. Unless the certificate of authentication hereon has been executed by the Trustee or the Authenticating Agent by manual signature, this Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. THIS NOTE SHALL BE DEEMED TO BE A CONTRACT UNDER THE LAWS OF THE STATE OF NEW YORK AND SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK. 25 IN WITNESS WHEREOF, the Company has caused this Note to be executed. RESORTS INTERNATIONAL HOTEL FINANCING, INC. Dated: By: ----------------- ------------------------- Attest: ----------------- [BACK OF NOTES] This Note is one of a duly authorized issue of Notes of the Company designated as "11.375% Junior Mortgage Notes due 2004" (the "Notes"), issued under an Indenture dated as of __________ __, 1994 (the "Indenture"), among the Company, Resorts International Hotel, Inc., a New Jersey corporation, as guarantor ("RIH"), and U.S. Trust Company of California, N.A., a national banking association, as Trustee (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 description of the nature and extent of the security, the respective rights thereunder of the Holders of the Notes, the Trustee and the Company and the terms upon which the Notes are, and are to be, authenticated and delivered. Payment of principal and interest (including interest on overdue principal) and performance of all obligations under the Indenture is guaranteed by RIH (the "Guaranty"). The Notes are secured by an assignment of one or more secured junior promissory notes of RIH, which owns and operates the property known as Merv Griffin's Resorts Casino Hotel, and of a mortgage on the Trust Estate made by RIH (the "Mortgage"). Additionally, the Guaranty is secured by a separate direct mortgage of the Trust Estate made by RIH to the Trustee (the "Guaranty Mortgage"). All terms in this Note defined in the Indenture shall have the same meaning herein as therein. The lien of the Mortgage is pari passu with the lien of the Guaranty Mortgage and junior to the lien securing payment of the RIHF Senior Facility Notes, the lien, if any, securing any other secured Working Capital Facility, the lien (if any) securing the Working Capital Facility Guaranty, to the lien securing payment of the Senior Mortgage Notes and to the lien securing the Senior Mortgage Guaranty. The Notes may be redeemed at the option of the Company, as a whole or from time to time in part, on or after 26 the fifth anniversary of the Effective Date on notice as provided in the Indenture, at par together with interest accrued and unpaid thereon to the date fixed for redemption. In the event of an RIH Sale, all the Notes shall be redeemed by the Company, whether such RIH Sale occurs before, on or after the fifth anniversary of the Effective Date, at par together with interest, if any, accrued and unpaid thereon to the Redemption Date; PROVIDED, HOWEVER, that such obligation of the Company to redeem the Notes in the event of a proposed RIH Sale shall cease to exist if the Holders of not less than 66-2/3% in Outstanding Amount of the Outstanding Notes have consented to such proposed RIH Sale. Notwithstanding the foregoing, each Holder by accepting a Note agrees that if the Casino Control Commission does not waive the qualification requirement as to the Holder (whether the record owner or beneficial owner) of this Note and requires that the Holder be qualified under the Casino Control Act, then, in such event, the Holder must qualify under the Casino Control Act. If the Holder does not so qualify, the Holder must dispose of its interest in this Note, within 30 days after the Company's receipt of notice of such finding, or the Company may repurchase this Note at the lower of the Holder's original cost and the Fair Market Value of this Note, plus accrued interest thereon to the date of such repurchase. Commencing on the date the Casino Control Commission serves notice upon either RIH or the Company that any Holder is disqualified, it shall be unlawfull for any such disqualified Holder: (i) to receive any dividends or interest upon this Note; (ii) to exercise, directly or through any trustee or nominee, any right conferred by this Note; or (iii) to receive any remuneration in any form from either the Company or RIH for services rendered or otherwise. It is provided in the Indenture that Notes of a denomination larger than $1,000 may be redeemed in part ($1,000 or a multiple thereof) and that upon any partial redemption of any such Note the same shall be surrendered in exchange for one or more new Notes in authorized form for the unredeemed portion of principal. Notes (or portions thereof as aforesaid) for whose redemption and payment provision is made in accordance with the Indenture shall thereupon cease to be entitled to the lien of the Indenture and the Mortgage and shall cease to bear interest from and after the date fixed for redemption. If an Event of Default shall occur, the principal of the Notes and all accrued and unpaid interest thereon may become or be declared due and payable in the manner and with the effect provided in the Indenture. The Indenture permits, with certain exceptions as therein provided, the amendment thereto and the modification 27 of the rights and obligations of the Company and the rights of the Holders of the Notes under the Indenture at any time by the Company with the consent of the Holders of a majority or 66-2/3%, as the case may be, in aggregate Outstanding Amount of the Notes at the time Outstanding affected by such modification. The Indenture also contains provisions permitting the Holders of specified percentages in Outstanding Amount of Notes at the time Outstanding on behalf of the Holders of all the Notes to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Note shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note issued upon the transfer hereof or in exchange hereof or in lieu hereof, in respect of anything done or offered to be done by the Trustee in the Company in reliance thereon, whether or not notation of such action is made upon this Note. The Company may, in the circumstances permitted by the Trust Indenture Act, set any day as the record date for the purpose of determining the holders of Outstanding Notes entitled to give or take any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by the Indenture to be given or taken by holders of Notes. With regard to any such record date, the holders of Outstanding Notes on such record date (or their duly appointed agents), and only such Persons, shall be entitled to give or take the relevant action, whether or not such Persons remain holders after such record date. No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and interest on this Note at the times, places and rates, and in the coin or currency, or, in the case of interest payments, by issuance of Additional Notes in lieu of cash interest payment, herein prescribed. As provided in the Indenture and subject to certain limitations therein set forth, this Note is transferable on the Note Register of the Company, upon surrender of this Note for transfer at the corporate trust office of the Trustee, or at an office or agency of the Company in the Borough of Manhattan, City and State of New York, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Note Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Notes, of authorized denominations and for the same aggregate principal amount will be issued to the designated transferee or transferees. 2 The Notes are issuable only as registered Notes without coupons in denominations of $1,000 and integral multiples thereof, except that Additional Notes may be in denominations of $100 and integral multiples of $100. As provided in the Indenture, and subject to certain limitations therein set forth, Notes are exchangeable for a like aggregate principal amount of Notes of a different authorized denomination, as requested by the Holder surrendering the same. No service charge shall be made for any transfer or exchange hereinbefore referred to, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. The Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Note is registered as the owner hereof for the purpose of receiving payment as herein provided and for all other purposes, whether or not this Note be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. Section 2.03. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION. This is one of the Notes referred to in the within-mentioned Indenture. U.S. Trust Company of California, N.A. as Trustee By: ------------------------- Authorized Signature Section 2.04. FORM OF THE GUARANTY. The form of the Guaranty of RIH shall be substantially as follows and shall appear on the reverse of each Note: GUARANTY OF RESORTS INTERNATIONAL HOTEL, INC. For value received, Resorts International Hotel, Inc., a New Jersey corporation, hereby unconditionally guarantees, as more fully set forth in Article Four of the Indenture, to the Holder of this Note the payment of the principal of and interest on this Note in the amounts and at the time when due and interest on the overdue principal and 29 interest, if any, of this Note, if lawful, and the payment or performance of all other obligations of the Company to the Holder or the Trustee, all in accordance with and subject to the terms and limitations of this Note and Article Four of the Indenture, the foregoing Guaranty being a guaranty of payment and not of collectibility and being absolute and in no way conditional or contingent. This Guaranty will not become effective until the Trustee or the Authenticating Agent signs the certificate of authentication on such Note. As more fully described in the Indenture, this Guaranty is secured by a mortgage of the Trust Estate made by RIH to the Trustee. RESORTS INTERNATIONAL HOTEL, INC. Dated: By: ----------------- ---------------------------- Attest: ----------------- ARTICLE THREE THE NOTES Section 3.01. GENERAL TITLE. The general title of the Notes shall be "11.375% Junior Mortgage Notes due 2004". Section 3.02. FORM AND DENOMINATIONS. The form of the Notes shall be as provided by the provisions of this Indenture. The Notes shall be issuable only in registered form and in such denominations as shall be provided in the provisions of this Indenture. The Notes shall be of the denominations of $1,000 and any integral multiple thereof except that Additional Notes may be in denominations of $100 and integral multiples of $100. Section 3.03. EXECUTION, AUTHENTICATION, DELIVERY AND DATING. The Notes shall be executed on behalf of the Company by its chairman of the board, vice chairman of the board, its president, or one of its Vice Presidents and attested to by an Officer of the Company other than an Officer who has executed the Notes.The signature of any of these Persons on the Notes 30 may be manual or facsimile. Notes bearing the manual or facsimile signatures of individuals who were at any time Officers of the Company shall bind the Company, notwithstanding that such individuals or any of them shall have ceased to be such prior to the authentication and delivery of such Notes. At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Notes executed by the Company to the Trustee for authentication and the Trustee shall authenticate and deliver such Notes as in this Indenture provided and not otherwise. All Notes shall be dated the date of their authentication. No Note shall be secured by, or be entitled to any lien, right or benefit under, this Indenture or be valid or obligatory for any purpose, unless there appears on such Note a certificate of authentication substantially in the form provided for herein, executed by the Trustee or the Authenticating Agent by manual signature, and such certificate upon any Note shall be conclusive evidence, and the only evidence, that such Note has been duly authenticated and delivered hereunder. Section 3.04. TEMPORARY NOTES. Pending the preparation of definitive Notes, the Company may execute, and upon Company Request the Trustee shall authenticate and deliver, temporary Notes which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any denomination, substantially of the tenor of the definitive Notes in lieu of which they are issued, in registered form, without coupons, with provision for registration as to principal and with such appropriate insertions, omissions, substitutions and other variations as the Officers executing such Notes may determine, as evidenced by their execution of such Notes. If temporary Notes are issued, the Company will cause definitive Notes to be prepared without unreasonable delay. After the preparation of definitive Notes, the temporary Notes shall be exchangeable for definitive Notes upon surrender of the temporary Notes at the office or agency of the Company in a Place of Payment therefor, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Notes, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a like principal amount of definitive Notes of authorized denominations. Until so exchanged, temporary Outstanding Notes shall in all respects be entitled to the security and benefits of this Indenture. 3 Section 3.05. REGISTRATION, TRANSFER AND EXCHANGE. The Company shall cause to be kept at one of the offices or agencies maintained by the Company as provided in Section 12.02 a register (herein sometimes referred to as the "Note Register") in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Notes and registration of transfers of Notes entitled to be registered or transferred as herein provided. The Trustee is hereby appointed "Note Registrar" for the purpose of registering Notes and transfers of Notes as herein provided. Upon surrender for transfer of any Note at the office or agency of the Company in a Place of Payment therefor, the Company shall execute and, upon request of the Company, the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Notes of any authorized denominations and of a like aggregate principal amount. The Trustee has no obligation to determine that any Note has been properly transferred and may conclusively rely on instructions given to the Company pursuant to this Section 3.05. All Notes surrendered upon any exchange or transfer provided for in this Indenture shall be promptly canceled by the Trustee and thereafter disposed of as directed by a Company Request. All Notes issued upon any transfer or exchange of Notes shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same security and benefits under this Indenture, as the Notes surrendered upon such transfer or exchange. Every Note presented or surrendered for transfer, exchange or discharge from registration shall (if so required by the Company or the Note Registrar) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Note Registrar duly executed, by the Holder thereof or his attorney duly authorized in writing. No service charge shall be made for any registration, discharge from registration, transfer or exchange of Notes, 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 transfer or exchange of Notes, other than exchanges under Section 3.04 or 11.06 not involving any transfer. The Company shall not be required (i) to issue, transfer or exchange any Note during a period beginning at the 32 opening of business 15 days before the day of the mailing of a notice of redemption of Notes under Section 13.04 and ending at the close of business on the day of such mailing, or (ii) to transfer or exchange any Note so selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part. Section 3.06. MUTILATED, DESTROYED, LOST AND STOLEN NOTES. If (a) any mutilated Note is surrendered to the Trustee, or the Company and the Trustee receive evidence to their satisfaction of the destruction, loss or theft of any Note and (b) 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 Note has been acquired by a bona fide purchaser, the Company shall execute and upon its request the Trustee shall authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Note, a new Note of like tenor and principal amount, bearing a number not contemporaneously outstanding. In case any such mutilated, destroyed, lost or stolen Note has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Note, pay such Note. Upon the issuance of any new Note under this Section 3.06, 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 connected therewith. Every new Note issued pursuant to this Section 3.06 in lieu of any destroyed, lost or stolen Note shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Note shall be at any time enforceable by anyone, and shall be entitled to all the security and benefits of this Indenture equally and ratably with all other Notes. The provisions of this Section 3.06 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 Notes. Section 3.07. PAYMENT OF INTEREST ON NOTES; INTEREST RIGHTS PRESERVED. Interest on any Note 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 that Note (or 33 one or more Predecessor Notes) is registered at the close of business on the Regular Record Date for such interest specified in the provisions of this Indenture. Any interest on any Note which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date ("Defaulted Interest") shall forthwith cease to be payable to the Holder on the relevant Regular Record Date solely by virtue of such Holder having been such Holder; and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in subsection (a) or (b) below: (a) The Company may elect to make payment of any Defaulted Interest on the Notes to the Persons in whose names such Notes (or their respective Predecessor Notes) 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 Note and the date of the proposed payment (which date shall be such as will enable the Trustee to comply with the next sentence hereof), and at the same time the Company shall deposit with the Trustee an amount of money equal to, or Additional Notes having a principal amount 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 or Additional Notes when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as provided in this subsection (a) and not to be deemed part of the Trust Estate. Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 nor less than ten days prior to the date of the proposed payment and not less than ten 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 mailed, first-class postage prepaid, to each Holder of a Note at his address as it appears in the Note Register not less than ten days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been mailed as aforesaid, such Defaulted Interest shall be paid to the Persons in whose names the Notes (or their respective Predecessor Notes) are registered on such Special Record Date and shall no longer be payable pursuant to subsection (b) of this Section 3.07. 34 (b) The Company may make payment of any Defaulted Interest on the Notes in any other lawful manner not inconsistent with the requirements of any securities exchange in which the Notes 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 subsection (b), such payment shall be deemed practicable by the Trustee. Subject to the foregoing provisions of this Section 3.07, each Note delivered under this Indenture upon transfer of or in exchange for or in lieu of any other Note shall carry all the rights to interest accrued and unpaid, and to accrue, which were carried by such other Note. Section 3.08. PERSONS DEEMED OWNERS. The Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name any Note is registered as the owner of such Note for the purpose of receiving payment of principal of, and interest on, such Note and for all other purposes whatsoever whether or not such Note be overdue, and, to the extent permitted by law, neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. Section 3.09. CANCELLATION. All Notes surrendered for payment, redemption, transfer, exchange or conversion, if surrendered to the Trustee, shall be promptly canceled by it, and, if surrendered to any Person other than the Trustee, shall be delivered to the Trustee and, if not already canceled, shall be promptly canceled by it. The Company shall deliver to the Trustee for cancellation any Notes previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever, and all Notes so delivered shall be promptly canceled by the Trustee. No Note shall be authenticated in lieu of or in exchange for any Note canceled as provided in this Section 3.09, except as expressly provided by this Indenture. All canceled Notes held by the Trustee shall be disposed of as directed by a Company Request. Section 3.10. TERM AND FORM. The Stated Maturity of the Notes shall be December 15, 2004. The aggregate principal amount of Notes that may be authenticated, delivered and outstanding is limited to $35,000,000, plus Additional Notes, if any, issued by the Company pursuant to the terms hereof. The Notes shall bear interest from [ ], 1994 [the Effective Date] or from the most recent Interest Payment Date to which interest has been paid or duly provided for, payable semi- 35 annually on June 15 and December 15 of each year, commencing December 15, 1994. The Notes shall bear interest at the rate of 11.375% per annum until the principal thereof shall become due and payable, and at the rate of 14.375% per annum on any overdue principal and, to the extent permitted by law, overdue interest. Interest shall be computed on the basis of a 360-day year of twelve 30-day months based on the actual number of days elapsed. The principal and the Redemption Price of the Notes and interest on the Notes on each Interest Payment Date shall be payable at a Place of Payment, and, in addition to any other lawful means of such payment, may be paid by check payable to the order of the Noteholder. The Regular Record Date referred to in Section 3.07 for the payment of the interest on the Notes payable, and punctually paid or duly provided for, on any Interest Payment Date shall be the first day (whether or not a business day) of the calendar month of such Interest Payment Date. Section 3.11. PAYMENT OF INTEREST IN ADDITIONAL NOTES (a) Notwithstanding any other provision of this Indenture or the Notes, the Company, at its option and in its sole discretion, on any Interest Payment Date, if Consolidated Cash Flow of RIH and its consolidated Subsidiaries for the period of four consecutive fiscal quarters of RIH ended on the last day of the last quarter ended prior to such Interest Payment Date was less than $35,000,000, may pay all or any portion of interest accrued on the Outstanding Notes (including without limitation any Additional Notes previously issued to pay interest) in Additional Notes. The Additional Notes shall have a principal amount equal to the amount of such interest payment, or portion thereof, which the Company elects to so pay. The Company shall pay cash in lieu of issuing any fractional Additional Notes. The issuance of such Additional Notes shall constitute full payment of interest in respect of which such Additional Notes are issued in the principal amount so issued. (b) All interest payments made in Additional Notes pursuant to Section 3.11(a) shall be made PRO RATA in respect of all outstanding Notes, on the basis of the respective dollar amounts of accrued and unpaid interest on such Notes. All interest payments made in cash (other than cash payments made in lieu of issuance of fractional Additional Notes) shall be so made PRO RATA in respect of all outstanding Notes, on the basis of the respective dollar amounts of accrued and unpaid interest on such Notes. (c) Prior to the issuance of any Additional Notes, a Trust Officer of the Trustee and any Paying Agent shall have 36 received an Officers' Certificate from the Company at least five Business Days prior to the relevant Regular Record Date stating that the Company will pay such interest in Additional Notes, together with a resolution of the Board of Directors authorizing the issuance of the appropriate principal amount of Additional Notes. On or before the date that is three Business Days following the relevant Regular Record Date, the Company will deliver an Officers' Certificate to the Trustee demonstrating the computation of the principal amount of Additional Notes issuable to the Holders and an Opinion of Counsel that the issuance of such Additional Notes is in compliance with all federal securities laws, and that such Additional Notes will be binding obligations of the Company, enforceable according to their terms. (d) THE ADDITIONAL NOTES SHALL BE ISSUED AS UNITS SUCH THAT ONE SHARE OF CLASS B STOCK SHALL BE ISSUED IN RESPECT OF EACH $1,000 PRINCIPAL AMOUNT OF ADDITIONAL NOTES. THE ADDITIONAL NOTES MAY NOT BE TRANSFERRED SEPARATELY FROM THE SHARES OF CLASS B COMMON STOCK ISSUED IN RESPECT OF SUCH ADDITIONAL NOTES. Section 3.12. EXCHANGEABILITY. Subject to Section 3.05, all Notes and Additional Notes shall be fully interchangeable with other Notes and Additional Notes, and, upon surrender at the office or agency of the Company in a Place of Payment therefor, all Notes shall be exchangeable for other Notes of a different authorized denomination or denominations, as requested by the Holder surrendering the same. The Company will execute, and the Trustee shall authenticate and deliver, Notes whenever the same are required for any such exchange. Section 3.13. REDEMPTION. The Company may, at its option, redeem, in accordance with Article Thirteen, all or from time to time any part of the Notes on or after the fifth anniversary of the Effective Date, at par together, in each case, with interest, if any, accrued and unpaid thereon to the Redemption Date. In the event of an RIH Sale, all Notes shall be redeemed by the Company, whether such RIH Sale occurs before, on or after the fifth anniversary of the Effective Date, at par together with interest, if any, accrued and unpaid thereon to the Redemption Date; PROVIDED, HOWEVER, that such obligation of the Company to redeem the Notes in the event of a proposed RIH Sale shall cease to exist if the Holders of not less than 66-2/3% in Outstanding Amount of the Outstanding Notes have consented to such proposed RIH Sale. 37 Section 3.14. AUTHENTICATION AND DELIVERY OF ORIGINAL ISSUE. Forthwith upon the execution and delivery of this Indenture, Notes up to an aggregate principal amount of $35,000,000 may be executed by the Company and delivered to the Trustee for authentication, and shall thereupon be authenticated and delivered by the Trustee upon Company Order, without any further action by the Company. ARTICLE FOUR GUARANTY Section 4.01. GUARANTY. RIH hereby guarantees (such guaranty to be referred to herein as the "Guaranty") to each Holder of a Note 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 Notes or the obligations of the Company hereunder or thereunder, that: (a) the principal of and interest on the Notes will be promptly paid in the amounts and at the times when due, whether at the maturity or Interest Payment Date, by acceleration, call for redemption or otherwise, and interest on the overdue principal, if any, of the Notes, and all other obligations of the Company to the Holders or the Trustee hereunder or thereunder will be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and (b) in case of any extension of time of payment or renewal of any Notes or payment or performance of any of such other obligations, that 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 for whatever reason, RIH will be obligated to pay the same immediately. RIH hereby agrees that its obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Notes or this Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Notes with respect to any provisions hereof or thereof, any releases of collateral, any delays in obtaining or realizing upon or failures to obtain or realize upon collateral, the recovery of any judgment against the Company, any action to enforce the same or any other circumstances which might otherwise constitute a legal or equitable discharge or defense of a guarantor. This Guaranty is a guaranty of payment and not of collectibility, and is secured by the Guaranty Mortgage, as described therein. RIH hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to 38 require a proceeding first against the Company, protest, notice and all demands whatsoever and covenants that this Guaranty will not be discharged except by complete performance of the obligations contained in the Notes and this Indenture. If any Noteholder or the Trustee is required by any court or otherwise to return to either RIH or the Company, or any custodian, trustee, liquidator or other similar official acting in relation to either RIH or the Company, any amount paid by either RIH or the Company to the Trustee or such Noteholder, this Guaranty, to the extent theretofore discharged, shall be reinstated in full force and effect. RIH agrees that it shall not be entitled to, and hereby irrevocably waives, any right of subrogation in relation to the Company in respect of any obligations guaranteed hereby. RIH further agrees that, as between RIH, on the one hand, and the Holders and the Trustee, on the other hand, (i) the maturity of the obligations guaranteed hereby may be accelerated as provided in Section 7.02 for the purposes of this Guaranty, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (ii) in the event of any declaration of acceleration of such obligations as provided in Section 7.02, such obligations (whether or not due and payable) shall forthwith become due and payable by RIH for the purpose of this Guaranty. Section 4.02. EXECUTION AND DELIVERY OF GUARANTY. To evidence its Guaranty set forth in Section 4.01, RIH hereby agrees to execute its Guaranty substantially in the form set forth in Section 2.04, to be endorsed on each Note authenticated and delivered by the Trustee and that this Indenture shall be executed on behalf of RIH by an Authorized Signature. RIH hereby agrees that its Guaranty set forth in Section 4.01 shall remain in full force and effect notwithstanding any failure to endorse on each Note a notation of such Guaranty; PROVIDED, HOWEVER, that the Trustee or the Authenticating Agent has signed the certificate of authentication on such Note. If an Officer whose signature is on this Indenture no longer holds that office at the time the Trustee authenticates a Note on which a Guaranty is endorsed, the Guaranty shall be valid nevertheless. The delivery of any Note by the Trustee, after the authentication thereof hereunder, shall constitute due delivery of the Guaranty set forth in this Indenture on behalf of RIH. 39 Section 4.03 MORTGAGE SECURING GUARANTY. In order to secure the due and punctual payment of all amounts which may ever become owing under the Guaranty, when and as the same shall be due and payable, and performance of all other obligations of RIH to the Holders or the Trustee under the Guaranty, according to the terms hereof, RIH has mortgaged and encumbered all of its right, title and interest in and to the Trust Estate to the Trustee pursuant to the Guaranty Mortgage. RIH has the full right, power and authority to grant, bargain, sell, release, convey, hypothecate, assign, mortgage, pledge, transfer and confirm the property constituting the Trust Estate, in the manner and form done, or intended to be done, in the Guaranty Mortgage, free and clear of all liens, pledges, charges and encumbrances, whatsoever, except for the items described in clauses (a) through (d) (inclusive) of Section 12.13, and (a) will forever warrant and defend the title to the same against the claims of all Persons whatsoever in accordance with the terms of the Guaranty Mortgage, (b) will execute, acknowledge and deliver to the Trustee such further instruments as the Trustee may require or request, and (c) will do or cause to be done all such acts and things as may be reasonably necessary or proper, or as may be required by the Trustee (other than obtaining a loan title insurance policy or title policy endorsement pertaining to the Guaranty Mortgage), to assure and confirm to the Trustee its interest in the Trust Estate and the right, title and interest in and to the Guaranty Mortgage, so as to render the same available for the security and benefit of this Guaranty secured thereby, according to the intent and purposes herein expressed. The Guaranty Mortgage creates and vests in the Trustee a direct and valid lien, which lien is pari passu with the lien of the Mortgage and junior to the liens securing payment of the RIHF Senior Facility Notes, any other secured Working Capital Facility, the Working Capital Facility Guaranty, the Senior Mortgage Notes and the Senior Guaranty. To the extent that any security interest in the Trust Estate or the Guaranty Mortgage is deemed to be granted and to be governed by the Uniform Commercial Code, the Guaranty Mortgage is deemed to be a security agreement. ARTICLE FIVE SATISFACTION AND DISCHARGE Section 5.01. PAYMENT OF INDEBTEDNESS; SATISFACTION AND DISCHARGE OF INDENTURE. Whenever the following conditions exist, namely: 40 (a) all Notes theretofore authenticated and delivered have been canceled by the Trustee or delivered to the Trustee for cancellation, excluding, however, (1) Notes for the payment of which money has theretofore been deposited in trust with the Trustee or a Paying Agent (other than the Company) or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust as provided in Section 12.03, (2) Notes alleged to have been destroyed, lost or stolen which have been replaced or paid as provided in Section 3.06, except for any such Note which, prior to the satisfaction and discharge of this Indenture, has been presented to the Trustee with a claim of ownership and enforceability by the Holder thereof and where enforceability has not been determined adversely against such Holder by a court of competent jurisdiction, and (3) other than any Notes excluded by clauses (1) and (2) of this Section 5.01(a), Notes which have become due and payable, Notes which will become due and payable at their Stated Maturity within one year and Notes which have been or 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, provided the Company, in the case of such Notes, has deposited or caused to be deposited with the Trustee in trust for the purpose an amount sufficient to pay and discharge the entire indebtedness on such Notes for principal and interest to the date of maturity thereof in the case of Notes which have become due and payable or to the Stated Maturity or Redemption Date, as the case may be; (b) the Company or RIH has paid or caused to be paid all other sums payable hereunder by the Company; and (c) the Company or RIH has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each of which shall state that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with; then this Indenture and the lien, rights and interests created hereby shall cease, terminate and become null and void (except as to any surviving rights of transfer or exchange of Notes herein or therein provided for and any right to receive payments of principal and interest as provided in 41 Section 5.01(a)(3)) and the Trustee and each co-trustee and separate trustee, if any, then acting as such hereunder shall, at the expense of the Company, execute and deliver a termination statement prepared by the Company in form reasonably satisfactory to the Trustee and such instruments of satisfaction and discharge as may be necessary and pay, assign, transfer and deliver to the Company or upon Company Order all cash, securities and other personal property then held by it hereunder, other than pursuant to Section 5.01(a)(3). In the absence of satisfaction of all of the above conditions, the payment of all Outstanding Notes shall not render this Indenture inoperative. Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Section 8.07 shall survive. Section 5.02. APPLICATION OF DEPOSITED MONEY. Money deposited with the Trustee pursuant to Section 5.01 shall constitute a separate trust fund for the benefit of the Persons entitled thereto. Subject to the provisions of Section 12.03, such money shall be applied by the Trustee to the payment (either directly or through any Paying Agent, as the Trustee may determine) to the Persons entitled thereto, of the principal and interest for whose payment such money has been deposited with the Trustee. Section 5.03. REPAYMENT TO THE COMPANY. The Trustee and any Paying Agent shall promptly pay to the Company upon request any excess money or securities held by them at any time. Any money (or, with respect to interest to be paid in Additional Notes, such Additional Notes) deposited with the Trustee or any Paying Agent, or then held by the Company, in Trustee or any Paying Agent, or then held by the Company, in trust, for the payment of the principal of, or interest on, any Note and remaining unclaimed for two years after such principal or interest has become due and payable shall be paid to the Company on its request, or (if then held by the Company) shall be discharged from such trust, unless otherwise required by mandatory provisions of applicable escheat or abandoned or unclaimed property law, and the Holder of such Note 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 regard to such money (or Additional Notes), and all liability 42 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 City of New York, State of New York, or mailed to each such Holder, or both, notice that such money (or Additional Notes) remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication or mailing, as the case may be, any unclaimed balance of such money then remaining will be paid to the Company. ARTICLE SIX SECURITY Section 6.01. ASSIGNMENT AGREEMENT. In order to secure the due and punctual payment of the principal of and interest on the Notes, when and as the same shall be due and payable, whether at Maturity or at an Interest Payment Date, by acceleration, call for redemption or otherwise, of the Notes and performance of all other obligations of the Company to the Holders or the Trustee under this Indenture, according to the terms hereof, the Company has made an assignment of all of its right, title and interest in and to the Mortgage Documents (other than the Guaranty Mortgage) to the Trustee pursuant to the Assignment Agreement. RIH has the full right, power and authority to grant, bargain, sell, release, convey, hypothecate, assign, mortgage, pledge, transfer and confirm the property constituting the Trust Estate, in the manner and form done, or intended to be done, in the Mortgage Documents, and the Company has the full right, power and authority to grant, bargain, sell, release, re-convey, assign, transfer and confirm, absolutely, all of its right, title and interest in and to the Mortgage Documents, in each case free and clear of all liens, pledges, charges and encumbrances, whatsoever, except for the items described in clauses (a) through (d) (inclusive) of Section 12.13, and (a) each will forever warrant and defend the title to the same against the claims of all persons whatsoever in accordance with the terms of the Mortgage Documents and the Assignment Agreement, (b) each will execute, acknowledge and deliver to the Trustee such further assignments, transfers, assurances or other instruments as the Trustee may require or request, and (c) each will do or cause to be done all such acts and things as may be reasonably necessary or proper, or as may be required by the Trustee, to assure and confirm to the Trustee its interest in the Trust Estate and the right, title and interest in and to the Mortgage Documents, so as to render the 43 same available for the security and benefit of this Indenture and of the Notes secured hereby, according to the intent and purposes herein expressed. The Mortgage Documents (other than the Guaranty Mortgage) and the Assignment Agreement together create and vest in the Trustee a direct and valid lien, which is pari passu with the Guaranty Mortgage, junior to the liens securing payment of the RIHF Senior Facility Notes, any other secured Working Capital Facility, the Working Capital Facility Guaranty, the Senior Mortgage Notes and the Senior Guaranty on the property constituting the Trust Estate and the interest in the Mortgage Documents which they purport to create. To the extent that any security interest in the Trust Estate or the Mortgage Documents are deemed to be granted and to be governed by the Uniform Commercial Code, the Mortgage and the Assignment Agreement are deemed to be security agreements. Section 6.02. RECORDING, ETC. The Company will cause, at its own expense, the Assignment Agreement, the Mortgage Documents, this Indenture and all amendments or supplements thereto, to be registered, recorded and filed and/or re-recorded, re-filed and renewed in such manner and in such place or places, if any, as may be required by law in order fully to preserve and protect the lien of the Mortgage Documents and the Assignment Agreement on all parts of the Trust Estate and the Mortgage Documents and the interest in the RIH Junior Promissory Note and to effectuate and preserve the security of the Noteholders and all rights of the Trustee. The Company shall furnish to the Trustee: (a) promptly after the execution and delivery of this Indenture or other instrument of further assurance or amendment, including any supplemental indenture, an Opinion or Opinions of Counsel either (1) stating that, in the opinion of such counsel, this Indenture, the Mortgage Documents and the assignment to the Trustee of the Mortgage Documents intended to be made by the Assignment Agreement and all other instruments of further assurance or amendment have been properly recorded, registered and filed to the extent necessary to make effective the liens intended to be created by the Mortgage Documents and the Assignment Agreement, and reciting the details of such action or referring to prior Opinions of Counsel in which such details are given, and stating that as to the Mortgage Documents and the Assignment Agreement such recording, registering and filing are the only recordings, registerings and filings necessary to give notice thereof and that no re-recordings, re-registerings or re-filings are necessary to maintain such notice, and further stating that all financing statements and continuation statements have 44 been executed and filed that are necessary fully to preserve and protect the rights of the Noteholders and the Trustee hereunder and under the Mortgage Documents and the Assignment Agreement, or (2) stating that, in the opinion of such counsel, no such action is necessary to make such liens and assignments effective; and (b) within 60 days after June 30 in each year beginning with the year 1995, an Opinion or Opinions of Counsel, dated as of such date, either (1) stating that, in the opinion of such counsel, such action has been taken with respect to the recording, registering, filing, re-recording, re-registering and re-filing of all supplemental indentures, financing statements, continuation statements or other instruments of further assurance as is necessary to maintain the liens of the Mortgage Documents and the assignment of the Mortgage Documents to the Trustee made by the Assignment Agreement and reciting the details of such action or referring to prior Opinions of Counsel in which such details are given, and stating that all financing statements and continuation statements have been executed and filed that are necessary fully to preserve and protect the rights of the Noteholders and the Trustee hereunder and under the Mortgage Documents and the Assignment Agreement, or (2) stating that, in the opinion of such counsel, no such action is necessary to maintain such liens and assignments. The Company and RIH shall cause TIA SECTION 314(d) relating to the release of property from the liens of the Mortgage to be complied with. Any certificate or opinion required by TIA SECTION 314(d) may be made by an Officer of the Company or RIH, unless otherwise required by TIA SECTION 314(d). Section 6.03. CUSTODY OF MORTGAGE DOCUMENTS. The Trustee shall hold in its possession the Mortgage Documents, except as it from time to time may be required for actions, suits or proceedings relating to the Mortgage Documents or for the purpose of enforcing or realizing upon any right or value thereby represented. The Trustee may, from time to time, in its sole discretion, for the purpose of convenient location of the Mortgage Documents, appoint one or more agents to hold physical custody, for the account of the Trustee, of the Mortgage Documents. Section 6.04. SUITS TO PROTECT THE TRUST ESTATE AND MORTGAGE DOCUMENTS. Upon five days' prior written notice to the Company (or such shorter period or without notice if deemed necessary and appropriate by the Trustee), the Trustee shall have the 45 power, but not the obligation, to institute and to maintain such suits and proceedings as it may deem necessary or appropriate to prevent any impairment of the Trust Estate by any acts which may be unlawful or in violation of the Mortgage Documents, the Assignment Agreement or this Indenture, and such suits and proceedings as the Trustee may deem necessary or appropriate to preserve or protect its interest and the interests of the Noteholders in the Trust Estate and the Mortgage Documents and the principal, interest, issues, 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 result in an impairment of security hereunder or be materially prejudicial to the interests of the Noteholders or of the Trustee). The Trustee shall also have authority to exercise any rights or powers conferred on the Trustee as the holder of the Note. ARTICLE SEVEN REMEDIES Section 7.01. EVENTS OF DEFAULT. "EVENT OF DEFAULT", whenever used herein, means any one of the following events (including any applicable notice requirement and any period of grace as specified in this Section 7.01) (whatever the reason for such event 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): (a) default in the payment of any interest upon any Note when such interest becomes due and payable and continuance of such default (the deposit with the Trustee pursuant to Section 3.07 of funds or Additional Notes sufficient to make such interest payment in full being deemed to cure any such default for the purposes hereof) for a period of ten days; or (b) default in the payment of all or any portion of the principal of any Note at its Maturity; or (c) default in the performance or breach of any covenant of the Company or RIH in this Indenture (other than a covenant a default in the performance or breach of which is elsewhere in this Section 7.01 specifically dealt with), the Assignment Agreement or any of the 46 Mortgage Documents and continuance of such default or breach for a period of 30 days (or such shorter or longer cure period, if any, as may be specified in respect of such default or breach in the Assignment Agreement or the applicable Mortgage Document, as the case may be), and (other than with respect to Sections 12.07, 12.08, 12.09, 12.10, 12.11, 12.12, 12.13 or 12.21) after there has been given (i) to the Company by the Trustee or (ii) to the Company and the Trustee by the Holders of at least 25% in Outstanding Amount of the Outstanding Notes, 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; PROVIDED, HOWEVER, that, if such default or breach is of a covenant set forth in Section 12.02, 12.04, 12.05, 12.11, 12.13 or 12.21, and if such default or breach is of such a nature that is curable but is not susceptible of being cured with due diligence within such 30-day period (or such shorter or longer cure period) (for reasons other than lack of funds), then such period shall be extended for such further period of time as may reasonably be required to cure such default or breach, so long as (i) RIH delivers an Officers' Certificate to the Trustee within such period stating (A) the applicability of the provisions of this proviso to such default or breach, (B) the Company's or RIH's intention to remedy such default or breach with reasonable diligence and (C) the steps which the Company or RIH has undertaken to remedy such default or breach, and (ii) RIH delivers to the Trustee additional Officers' Certificates every 30 days thereafter updating the information contained in the certificate described in clause (i) above, in which case such period shall be extended for such further period of time as may reasonably be required to cure such default or breach, provided that the Company or RIH is then proceeding and thereafter continues to proceed to cure such default or breach with reasonable diligence; PROVIDED FURTHER, HOWEVER, that such additional period of time shall not in any case exceed 60 days; or (d) a proceeding or case shall be commenced, without the application or consent of the Company or RIH, in any court of competent jurisdiction, seeking (i) its liquidation, reorganization, dissolution or winding-up, or the composition or readjustment of its debts, (ii) the appointment of a trustee, receiver, custodian, liquidator or the like of the Company or RIH or of all or any substantial part of its assets, or (iii) similar relief in respect of the Company or RIH under any law relating to bankruptcy, insolvency, reorganization, winding-up, or composition or adjustment of debts, and such proceeding or case shall continue undismissed, or an order, judgment or decree approving or ordering any of the foregoing 4 shall be entered and continue unstayed and in effect, for a period of 60 consecutive days; or (e) the commencement by the Company or RIH of a voluntary case under the federal bankruptcy laws or any other applicable federal or state law, or the consent or acquiescence by any of them to the filing of any such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee or sequestrator (or other similar official) of the Company or RIH or any substantial part of any of their property, or the making by any of them of an assignment for the benefit of creditors, or the taking of action by the Company or RIH in furtherance of any such action; or (f) the revocation, suspension or involuntary loss of any Permit which results in the cessation of a substantial portion of the operations of the Casino-Hotel for a period of more than 90 consecutive days; or (g) (i) a default by the Company, RIH or any of their Subsidiaries under any Indebtedness (other than the Indebtedness represented by the Working Capital Facility and the Junior Mortgage Facility) in an aggregate principal amount in excess of $5,000,000, which default results in the acceleration of the maturity of any such Indebtedness under the evidence of indebtedness, indenture or other instrument governing such Indebtedness; provided, however, that, if such default under such evidence of indebtedness, indenture or other instrument shall be cured by the obligor, or be waived by the holders of such Indebtedness, in each case as may be permitted by such evidence of indebtedness, indenture or other instrument and in each case resulting in rescission of such acceleration thereunder, then the Event of Default hereunder by reason of such default shall be deemed likewise to have been thereupon cured or waived; or (ii) a default by the Company, RIH or any of their Subsidiaries under any Indebtedness represented by the Working Capital Facility or the Junior Mortgage Facility, the effect of which default (after the expiration of any applicable notice or grace periods) is to permit the holder or holders of any such Indebtedness represented by the Working Capital Facility or the Junior Mortgage Facility in an aggregate principal amount in excess of $5,000,000 (or a trustee or agent on behalf of such holder or holders) to cause the acceleration of the maturity of such Indebtedness represented by the Working Capital Facility or the Junior Mortgage Facility under the evidence of indebtedness, indenture or other instrument governing such Indebtedness; provided, however, that if such default under such evidence of indebtedness, indenture or other instrument shall be 48 cured by the obligor, or be waived by the holders of such Indebtedness, in each case as may be permitted by such evidence of indebtedness, indenture or other instrument and, if such default resulted in the acceleration of the maturity of such Indebtedness, such acceleration shall have been rescinded thereunder, then the Event of Default hereunder by reason of such default shall be deemed likewise to have been thereupon cured or waived; or (iii) the existence of a final judgment of a court of competent jurisdiction in an amount in excess of $3,000,000 against the Company, RIH or the Trust Estate, which judgment has not been satisfied or otherwise provided for, for a period of 30 days (during which execution shall not be effectively stayed) following the date on which such judgment becomes a lien against the Trust Estate or any part thereof (unless the lawsuit in question was commenced without effective service of process upon either the Company or RIH in which case such 30-day period shall not commence until the Company or RIH receives notice of such final judgment); or (iv) the existence of a final judgment of a court of competent jurisdiction in an amount in excess of $15,000,000 against the Company, RIH or the Trust Estate, which judgment has not been satisfied or otherwise provided for, for a period of 60 days (during which execution shall not be effectively stayed) following the date of such final judgment; or (v) the existence of a final judgment of a court of competent jurisdiction, regardless of amount, against the Company, RIH or the Trust Estate, which judgment has not been satisfied or otherwise provided for, for a period of 60 days (during which execution shall not be effectively stayed) following the date of such final judgment, if such judgment, by itself or upon recordation or other action of the judgment creditor, imposes or would impose a lien on the Trust Estate or any part thereof senior to the lien of the Mortgage; or (h) default in the performance, or breach, of any covenant of the Company or RIH in Article Ten; or (i) the existence of a judgment of a court of competent jurisdiction in an amount in excess of $3,000,000 against RIH regarding the CRDA Dispute, which judgment has not been stayed, satisfied or otherwise provided for, for a period of 30 days (during which execution shall not be effectively stayed) (unless the lawsuit in question was commenced without effective service of process upon RIH in which case such 30-day period shall not commence until RIH receives notice of such final judgment); or 4 (j) if RII fails to pay or discharge or cause to be paid or discharged, within 30 days before the same shall become delinquent, all taxes levied or imposed upon RII; PROVIDED, HOWEVER, that no Event of Default or Default shall be deemed to exist hereunder with respect to any tax liability not paid or discharged by RII if and to the extent that the amount, applicability or validity of such tax liabilities is being contested in good faith by appropriate proceedings if adequate reserves therefor have been established in accordance with GAAP; provided further, however, that this clause (j) shall not apply to amounts due with respect to any period during which neither the Company, RIH nor any of their Subsidiaries is included in RII's consolidated group for federal income tax purposes. No action, event, claim, liability or judgment regarding the CRDA Dispute shall constitute a Default or an Event of Default under this Section 7.01 unless and until a judgment shall have been entered against RIH which constitutes an Event of Default pursuant to clause (i) of this Section 7.01. Section 7.02. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT. If an Event of Default (other than one referred to in clause (d) or (e) of Section 7.01) occurs and is continuing, then and in every such case the Trustee or the Holders of not less than 25% in Outstanding Amount of the Notes Outstanding may declare the Outstanding Amount of all the Notes and all accrued interest to be due and payable immediately, by a notice in writing to the Company (and to the Trustee, if given by any Noteholders), and upon any such declaration such Outstanding Amount shall become immediately due and payable. If an Event of Default referred to in clause (d) or (e) of Section 7.01 occurs, then the Outstanding Amount of all the Notes shall automatically become immediately due and payable without presentment, demand, protest or other formalities of any kind, all of which are hereby expressly waived by the Company. At any time after such a declaration of acceleration has been made, but before any judgment or decree for payment of money due on any Notes has been obtained by the Trustee as hereinafter provided in this Article Seven, the Holders of a majority in Outstanding Amount of the Notes may, by written notice to the Company and the Trustee, rescind and annul such declaration and its consequences if: (a) the Company has deposited with the Trustee a sum sufficient to pay: 50 (1) all overdue installments of interest on all Notes, (2) the principal of any Notes which have become due otherwise than by such declaration of acceleration and interest thereon at the rate or rates prescribed therefor in the Notes, and (3) 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 (b) all Events of Default, other than the non-payment of the Outstanding Amount of Notes which have become due solely by such declaration of acceleration, have been cured, or have been waived as provided in Section 7.13. No such rescission and annulment shall affect any subsequent default or impair any right consequent thereon. Section 7.03. COVENANT TO PAY TRUSTEE AMOUNTS DUE ON NOTES AND RIGHT OF TRUSTEE TO JUDGMENT. The Company covenants that, if: (a) default is made in the payment of any interest upon any Note when such interest becomes due and payable and such default continues for a period of 10 days (the deposit with the Trustee during such 10 day period pursuant to Section 3.07 of funds or Additional Notes (if permitted hereby) sufficient to make such interest payment in full being deemed to cure any such default for the purposes hereof), or (b) default is made in the payment of the principal of any Note at its Maturity, then, upon demand of the Trustee, the Company will pay to the Trustee for the benefit of the Holders of such Notes, the whole amount then due and payable on such Notes for principal and interest, with interest at the rate prescribed therefor in the Notes on overdue principal 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 and as trustee of an express trust, shall be entitled to sue for and recover judgment against the Company, RIH and any other obligor on the Notes for the whole amount so due and unpaid. The Trustee shall be entitled to institute such suit either 51 before, after or during the pendency of any proceedings for the enforcement of this Indenture or of the Mortgage Documents or of the Assignment Agreement, but only after the occurrence of an Event of Default. Subject to the Intercreditor Agreement, in the case of a foreclosure of the Mortgage and a sale of the Trust Estate and application of the proceeds as provided in Section 7.06, the Trustee, in its own name and as trustee of an express trust, shall be entitled to enforce payment of, and to receive, all amounts then remaining due and unpaid upon the Notes, for the benefit of the Holders thereof, and shall be entitled to recover judgment for any portion of the same remaining unpaid, with interest as aforesaid. No recovery of any such judgment upon any property of the Company shall affect or impair the security provided by this Indenture and the Assignment Agreement or the lien of the Mortgage upon the Trust Estate or any rights, powers or remedies of the Holders of the Notes. Section 7.04. 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 RIH or any other obligor upon the Notes or the property of the Company or RIH or of such other obligor or their creditors, the Trustee (irrespective of whether the principal (or any portion thereof) of the Notes 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 or interest) shall be entitled and empowered, by intervention in such proceeding or otherwise, (a) to file and prove a claim for the whole amount of principal and interest owing and unpaid in respect of the Outstanding Notes 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 Noteholders allowed in such judicial proceeding, and (b) 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 other similar official in any such judicial proceeding is hereby authorized by each Noteholder to make such payments to the Trustee, and in the event that the 52 Trustee shall consent to the making of such payments directly to the Noteholders, to pay to the Trustee any amount due to 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 8.07. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Noteholder any plan of reorganization, arrangement, adjustment or compensation affecting the Notes or the rights of any Holder thereof, or to authorize the Trustee to vote on the claim of any Noteholder in any such proceeding. Section 7.05. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF NOTES. All rights of action and claims under this Indenture, the Notes, the Assignment Agreement or the Mortgage Documents may be prosecuted and enforced by the Trustee without the possession of any of the Notes or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust. 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 Notes in respect of which such judgment has been recovered. Section 7.06. APPLICATION OF MONEY COLLECTED. Subject to the Intercreditor Agreement, any money collected by the Trustee pursuant to this Article Seven or pursuant to Article Three or Section 5.11 or 5.20 of the Mortgage which is not required to be paid to the Mortgagor thereunder shall be applied in the following order, at the date or dates fixed by the Trustee and upon such date interest shall cease to accrue, and, in case of the distribution of such money on account of principal upon presentation of the Notes, and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid: (a) FIRST: To the payment of all amounts due the Trustee under Section 8.07; (b) SECOND: To the payment of the whole amount then due upon the Outstanding Notes, for principal and interest, in respect of which or for the benefit of which such money has been collected, with interest (to the extent that such interest has been collected by the Trustee or a sum sufficient therefor has been so collected and payment thereof is legally enforceable at the respective rate or rates prescribed therefor in the 53 Notes) on overdue principal; and in case such proceeds shall be insufficient to pay in full the whole amount so due and unpaid upon such Notes, then first, payment of accrued but unpaid interest (with interest thereon as aforesaid), and second, to outstanding principal, in each case, ratably according to the aggregate amount so due; and (c) THIRD: To the payment of the remainder, if any, to the Company or to whomever may be lawfully entitled to receive the same or as a court of competent jurisdiction may direct. Section 7.07. LIMITATION ON SUITS. No Holder of any Note shall have any right to institute any proceeding, judicial or otherwise, under or with respect to this Indenture, the Assignment Agreement or the Mortgage Documents, or for the appointment of a receiver or trustee or for any other remedy hereunder, unless: (a) such Holder has previously given written notice to the Trustee of a continuing Event of Default; (b) the Holders of not less than 25% in Outstanding Amount of the Outstanding Notes 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; (c) 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; (d) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and (e) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holder of a majority in Outstanding Amount of the Outstanding Notes; it being understood and intended that no one or more Holders of Notes shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture, the Assignment Agreement or the Mortgage Documents, to affect, disturb or prejudice the right of any other Holders of Notes, or to obtain or to seek to obtain priority or preference over any other Holders or to enforce any right under this Indenture, the Assignment Agreement or the Mortgage Documents, 54 except in the manner herein and therein provided and for the Ratable Benefit of all Notes. Section 7.08. UNCONDITIONAL RIGHT OF NOTEHOLDERS TO RECEIVE PRINCIPAL AND INTEREST. Notwithstanding any other provision in this Indenture, the Holder of any Note shall have the right, which is absolute and unconditional, to receive payment of the principal of and interest on such Note on the Stated Maturity or Interest Payment Dates expressed in such Note (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 7.09. RESTORATION OF RIGHTS AND REMEDIES. If the Trustee or any Noteholder has instituted any proceeding to enforce any right or remedy under this Indenture, the Assignment Agreement or the Mortgage Documents and such proceeding has been discontinued or abandoned for any reason or has been determined adversely to the Trustee or to such Noteholder, then and in every such case the Company, the Trustee and the Noteholders shall, subject to any determination in such proceeding, be restored to their former positions hereunder, and thereafter all rights and remedies of the Trustee and the Noteholders shall continue as though no such proceeding had been instituted. Section 7.10. RIGHTS AND REMEDIES CUMULATIVE. No right or remedy herein conferred upon or reserved to the Trustee or to the Noteholders 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 7.11. DELAY OR OMISSION NOT WAIVER. No delay or omission of the Trustee or of any Holder of any Note to exercise any right or remedy accruing upon an 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 Seven or by law to the Trustee or to the Noteholders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Noteholders, as the case may be. 55 Section 7.12. OTHER RIGHTS. Subject to Section 8.03(e), the Holders of a majority in Outstanding Amount of the Outstanding Notes shall have the right, during the continuance of an Event of Default, (a) to require the Trustee to proceed to enforce this Indenture, either by judicial proceedings for the enforcement of the payment of the Notes by the foreclosure of the Mortgage and exercise of any remedies under the Mortgage Documents and the Assignment Agreement and the sale of the Trust Estate or otherwise or, at the election of the Trustee, by the exercise of the power of entry and/or sale conferred by the Mortgage; and (b) 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 upon the Trustee hereunder, provided that (1) such direction shall not be in conflict with any rule of law or this Indenture or any applicable Mortgage Document or the Assignment Agreement; (2) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction; and (3) the Trustee shall not be required to determine if any action so directed would be unjustly prejudicial to the Holders not taking part in such direction. Section 7.13. WAIVER OF PAST DEFAULTS. Before any judgment or decree for payment of money due has been obtained by the Trustee as provided in this Article Seven, the Holders of not less than 66-2/3% in Outstanding Amount of the Outstanding Notes may, by Act of such Noteholders delivered to the Trustee and the Company, on behalf of the Holders of all the Notes waive any past Default hereunder and its consequences, except a Default (a) in the payment of the principal of or interest on any Note, or (b) in respect of a covenant or provision hereof which under Article Eleven cannot be modified or amended without the consent of the Holder of each Outstanding Note affected. 56 Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or impair any right subsequent thereon. Section 7.14. UNDERTAKING FOR COSTS. All parties to this Indenture agree, and each Holder of any Note by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, the Assignment Agreement or the Mortgage Documents, or in any suit against the Trustee for any action taken or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to the merits and good faith of the claim or defense made by such party litigant; but the provisions of this Section 7.14 shall not apply to any suit instituted by the Trustee, to any suit instituted by any Noteholders, or group of Noteholders, holding in the aggregate more than 10% in Outstanding Amount of the Outstanding Notes, or to any suit instituted by any Noteholder for the enforcement of the payment of the principal of or interest on any Note on or after the Stated Maturity expressed in such Note (or, in the case of redemption, on or after the Redemption Date) or the relevant Interest Payment Date. Section 7.15. ENFORCEMENT. In case an Event of Default shall occur and be continuing, the Trustee, in it discretion may, subject to the provisions of Section 7.12, proceed to protect and enforce its rights and the rights of the Noteholders under this Indenture by a suit, action or proceeding in equity or at law or otherwise, whether for the specific performance of any covenant or agreement contained in this Indenture or in aid of the execution of any power granted in this Indenture or for the enforcement of any other legal, equitable or other remedy, as the Trustee, being advised by counsel, shall deem most effectual to protect and enforce any of the rights of the Trustee or the Noteholders hereunder. In case an Event of Default shall occur and be continuing under the Mortgage, the Trustee, as assignee of the Mortgage Documents, in its discretion may, subject to the provisions of Section 7.12, proceed to enforce its rights under the Mortgage Documents and the Assignment Agreement. 57 Section 7.16. MANAGEMENT OF CASINO-HOTEL. Notwithstanding any provision of this Article Seven to the contrary, (a) following an Event of Default under the Mortgage and the taking of possession of the Trust Estate by the Trustee and/or the appointment of a receiver of the Trust Estate or any part thereof, the Trustee or any such receiver shall be authorized, in addition to the rights and power of the Trustee and such receiver set forth elsewhere in this Indenture, the Assignment Agreement and the Mortgage Documents, to retain one or more experienced operators of hotels and/or casinos to manage and operate the Casino-Hotel on behalf of the Noteholders, provided that any such operator shall have all necessary legal qualifications, including all Permits, to manage the Casino-Hotel; and (b) no Noteholder shall have any right to take possession of, operate or manage all or any portion of the Casino-Hotel, individually or as a member of a group, unless such Noteholder shall have all necessary legal qualifications, including all Permits, to do so and shall otherwise be qualified to be retained to manage the Casino-Hotel under subsection (a) of this Section 7.16. ARTICLE EIGHT THE TRUSTEE Section 8.01. CERTAIN DUTIES AND RESPONSIBILITIES. (a) Except during the continuance of an Event of Default, (1) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture and the Mortgage Documents, and no implied covenants or obligations shall be read into this Indenture and the Mortgage Documents against the Trustee; and (2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture or the Mortgage Documents; but in the case of any such certificates or opinions which by any provision hereof or thereof are specifically required to be furnished to the Trustee, the Trustee shall be 5 under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture and the Mortgage Documents. (b) In case an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture or the Mortgage Documents, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person's own affairs. (c) No provision of this Indenture or any Mortgage Document shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that (1) this Section 8.01(c) shall not be construed to limit the effect of Section 8.01(a); (2) the Trustee shall not be liable for any error of judgment made in good faith by it, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; (3) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of not less than a majority in Outstanding Amount of the Outstanding Notes relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture or any Mortgage Document; and (4) no provision of this Indenture or the Mortgage Documents shall require the Trustee 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. (d) Whether or not therein expressly so provided, every provision of this Indenture or the Mortgage Documents relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section 8.01. Section 8.02. NOTICE OF DEFAULTS. Within 45 days after the occurrence of any Default hereunder of which a Responsible Officer of the 59 Trustee has actual knowledge, the Trustee shall transmit by mail to all Holders of Notes as their names and addresses appear in the Note Register, 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 interest on any Note, 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 best interests of the Noteholders. Section 8.03. CERTAIN RIGHTS OF TRUSTEE. Except as otherwise provided in Section 8.01: (a) 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, coupon, 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; (b) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order; (c) 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; (d) 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 the Trustee hereunder in good faith and in reliance thereon; (e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture or any of the Mortgage Documents at the request or direction of any of the Noteholders pursuant to this Indenture, unless such Noteholders shall have offered to the Trustee reasonable security or indemnity reasonably satisfactory to the Trustee against the costs, 60 expenses and liabilities which might be incurred by it in compliance with such request or direction; (f) 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, 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 and RIH, personally or by agent or attorney; (g) 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; (h) the Trustee shall not be deemed to have knowledge of and shall not be required to take any action with respect to any event of Default (other than an Event of default described in Sections 7.01(a) and (b) or any event which would, with the giving of notice or the passage of time or both, constitute an Event of Default, unless the Trustee shall have actual knowledge of such event or shall have been notified in writing of such event by Noteholders holding in the aggregate more than 25% in Outstanding Amount of the Outstanding Notes; (i) subject to Section 8.01(c), the Trustee shall not be personally liable, in case of entry by it upon the Trust Estate, for debts contracted or liabilities or damages incurred in the management or operation of the Trust Estate; and (j) in addition to and not in limitation of its other powers hereunder, the Trustee shall have such power and authority as may be necessary to enter into and accept delivery of any document as may be necessary to effect on behalf of the Holders of the Notes the subordination of the indebtedness in respect of the Notes to any secured Working Capital Facility (in accordance with the provisions of the Mortgage), and upon written request of the Company, the Trustee shall enter into such agreements on behalf of the holders of the Notes. 61 Section 8.04. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF NOTES OR APPLICATION OF PROCEEDS. The recitals contained herein and in the Notes, except in a certificate of authentication on the Notes, shall be taken as the statements of the Company, and the Trustee assumes no responsibility for their correctness. The Trustee makes no representation as to the validity or sufficiency of this Indenture, the Notes or the Mortgage Documents. The Trustee shall not be accountable for the use or application by the Company of Notes or the proceeds thereof or of any money paid to the Company or by a Company Order under any provision hereof. Section 8.05. MAY HOLD NOTES. The Trustee, any Paying Agent, Note Registrar, Authenticating Agent or any other agent of the Company, in its individual or any other capacity, may become the owner or pledgee of Notes and, subject to Sections 8.08 and 8.13, if operative, may otherwise deal with the Company with the same rights it would have if it were not Trustee, Paying Agent, Note Registrar, Authenticating Agent or such other agent. Section 8.06. MONEY HELD IN TRUST. 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 agreed with the Company. Section 8.07. COMPENSATION AND REIMBURSEMENT. The Company agrees: (a) to pay to the Trustee from time to time reasonable compensation for all services rendered by it hereunder and under the Mortgage Documents (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (b) except as otherwise expressly provided herein and in the Mortgage Documents, 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 the Trustee's negligence or bad faith; and 62 (c) 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 Indenture or the trust created hereunder or the performance of its duties hereunder, including the reasonable costs and expenses of defending itself against or investigaing any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder (including reasonable attorneys' fees and expenses). As security for the performance of the obligations of the Company and RIH under this Section 8.07, the Trustee shall be secured under this Indenture and the Mortgage Documents by a lien prior to the Mortgage upon all property and funds held or collected by the Trustee, and for the payment of such compensation, expenses, reimbursements and indemnity the Trustee shall have the right to use and apply any money held by it pursuant hereto. Notwithstanding the satisfaction of this Indenture, the obligations of the Company and RIH under this Section 8.07 shall survive. Section 8.08. DISQUALIFICATION; CONFLICTING INTERESTS. This Indenture shall always have a Trustee who satisfies the requirements of TIA SECTION 310(a)(l) and SECTION 310(a)(5). The Trustee shall comply with TIA SECTION 310(b) including the second sentence of TIA SECTION 310(b)(9). Section 8.09. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY. There shall at all times be a Trustee hereunder which shall be a corporation organized and doing business under the law of the United States of America or of any state, authorized under such laws to exercise corporate trust powers, having (or in the case of a corporation included in a bank holding company system, the related bank holding company having) a combined capital and surplus of at least $100,000,000, subject to supervision or examination by federal or state authority. In addition, if the Trustee is a corporation included in a bank holding company system, the Trustee, independently of such bank holding company, shall meet the capital requirements of TIA SECTION 310(a)(2). The Trustee shall comply with TIA SECTION 310(b); PROVIDED, HOWEVER, that there shall be excluded from the operation of TIA SECTION 310(b)(1) any indenture or indentures under which other securities, or certificates of interest or participation in other securities of the Company are outstanding, if the requirements for such exclusion set forth in TIA SECTION 310(b)(1) are met. If such 63 corporation publishes reports of condition at least annually, pursuant to law or to the requirements of such supervising or examining authority, then for the purposes of this Section 8.09, 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 8.09, it shall resign immediately in the manner and with the effect hereinafter specified in this Article Eight. Section 8.10. 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 Eight shall become effective until the acceptance of appointment by the successor Trustee under Section 8.11. (b) The Trustee may resign at any time by giving written notice thereof to the Company. If an instrument of acceptance by a successor Trustee 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) The Trustee may be removed at any time by Act of the Holders of a majority in Outstanding Amount of the Outstanding Notes, delivered to the Trustee and to the Company. (d) If at any time: (1) the Trustee shall fail to comply with Section 8.08 after written request therefor by the Company or by any Noteholder who is a bona fide Holder of a Note, or (2) the Trustee shall cease to be eligible under Section 8.09 and shall fail to resign after written request therefor by the Company or by any Noteholder who is a bona fide Holder of a Note, or (3) 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, (i) the Company by a Company Order may remove the Trustee, or (ii) subject to Section 7.14, any Noteholder who is a bona fide Holder of a Note may, on behalf 64 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 the Trustee for any cause, the Company, by a Company Order, shall promptly appoint a successor Trustee. In case all or substantially all of the Trust Estate shall be in the possession of a receiver or trustee lawfully appointed, such receiver or trustee, by written instrument, may similarly appoint a successor to fill such vacancy until a new Trustee shall be so appointed by the Noteholders. If, within one year after such resignation, removal or incapacity or the occurrence of such vacancy, a successor Trustee shall be appointed by Act of the Holders of a majority in Outstanding Amount of the Outstanding Notes 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 or by such receiver or trustee. If no successor Trustee shall have been so appointed by the Company or the Noteholders and accepted appointment in the manner hereinafter provided, subject to Section 7.14, any Noteholder who is a bona fide Holder of a Note may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee. (f) The Company shall give written notice of each resignation and each removal of the Trustee and each appointment of a successor Trustee to each Noteholder by mailing such notice by first-class mail, postage prepaid, to each Noteholder as such Noteholder's name and address appears in the Note Register; provided, however, that failure of the Company to give such notice shall not affect the resignation or removal of such Trustee. Each notice shall include the name of the successor Trustee and the address of its principal corporate trust office. Section 8.11. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR. Every successor Trustee appointed hereunder shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall became effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the estates, properties, 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 conveying and transferring to such successor Trustee all the estates, 65 properties, 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, subject nevertheless to its lien, if any, provided for in Section 8.07. 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 estates, properties, 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 Eight. Section 8.12. 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 Eight, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Notes 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 Notes so authenticated with the same effect as if such successor Trustee had itself authenticated such Notes. Section 8.13. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY. The Trustee will comply with TIA SECTION 311(a). A Trustee who has resigned or been removed shall be subject to TIA SECTION 311(a) to the extent indicated. Section 8.14. CO-TRUSTEES AND SEPARATE TRUSTEES. At any time or times, for the purpose of meeting the legal requirements of the TIA or of any jurisdiction in which any of the Trust Estate may at the time be located or in which it shall be necessary or desirable for the Trustee to act, the Company and the Trustee shall have power to appoint, and, upon the written request of the Trustee or of the Holders of at least 25% in Outstanding Amount of the Notes Outstanding, the Company shall for such purpose join with the Trustee in the execution, delivery and performance of all instruments and 66 agreements necessary or proper to appoint, one or more Persons approved by the Trustee either to act as co-trustee, jointly with the Trustee, of all or any part of the Mortgage Documents or of the Trust Estate covered by such Mortgage Documents, or to act as separate trustee of any such property, in either case with such powers as may be provided in the instrument of appointment, and to vest in such Person or Persons in the capacity aforesaid, any property, title, right or power deemed necessary or desirable, subject to the other provisions of this Section 8.14. If the Company does not join in such appointment within 15 days after the receipt by it of a request so to do, or in case an Event of Default has occurred and is continuing, the Trustee alone shall have power to make such appointment. Should any written instrument from the Company be required by any co-trustee or separate trustee so appointed for more fully confirming to such co-trustee or separate trustee such property, title, right or power, any and all such instruments shall, on request, be executed, acknowledged and delivered by the Company within three business days of such request. Every co-trustee or separate trustee shall, to the extent permitted by law, but to such extent only, be appointed subject to the following terms, namely: (a) the Notes shall be authenticated and delivered, and all rights, powers, duties and obligations hereunder in respect of the custody of securities, cash and other personal property held by, or required to be deposited or pledged with, the Trustee hereunder, shall be exercised solely, by the Trustee; (b) the rights, powers, duties and obligations hereby conferred or imposed upon the Trustee in respect of any property covered by such appointment shall be conferred or imposed upon and exercised or performed by the Trustee or by the Trustee and such co-trustee or separate trustee jointly, as shall be provided in the instrument appointing such co-trustee or separate trustee, except to the extent that under any law of any jurisdiction in which any particular act is to be performed, the Trustee shall be incompetent or unqualified to perform such act, in which event such rights, powers, duties and obligations shall be exercised and performed by such co-trustee or separate trustee; (c) the Trustee, at any time, by an instrument in writing executed by it may accept the resignation of or remove any co-trustee or separate trustee appointed under this Section 8.14. A successor to any co-trustee or 67 separate trustee so resigned or removed may be appointed in the manner provided in this Section 8.14; (d) the Trustee, or any other such trustee hereunder, shall not be personally liable by reason of any act or omission of any co-trustee or separate trustee hereunder, and no co-trustee or separate trustee hereunder shall be personally liable by reason of any act or omission of the Trustee, or any other such trustee hereunder; (e) any Act of Noteholders delivered to the Trustee shall be deemed to have been delivered to each such co-trustee and separate trustee; and (f) any co-trustee or separate trustee appointed hereunder shall be entitled to compensation and indemnification from the Company under Section 8.07 hereunder and shall be entitled to all such other rights and protections afforded the Trustee hereunder. Section 8.15. APPOINTMENT OF AUTHENTICATING AGENT. Upon the request of the Company, the Trustee shall appoint an Authenticating Agent with power to act on its behalf and subject to its direction in the authentication and delivery of the Notes designated for such authentication by the Company and containing provisions therein for such authentication in connection with transfers and exchanges under Sections 3.04, 3.05, 3.06 and 13.07, as fully to all intents and purposes as though the Authenticating Agent had been expressly authorized by those Sections to authenticate and deliver such Notes. For all purposes of this Indenture, the authentication and delivery of Notes by the Authenticating Agent pursuant to this Section 8.15 shall be deemed to be the authentication and delivery of Notes "by the Trustee". Such Authenticating Agent shall at all times be a bank or trust company having its principal office in the Borough of Manhattan, City and State of New York, and shall at all times be a corporation organized and doing business under the laws of the United States or of any State with a combined capital and surplus of at least $50,000,000 and authorized under such laws to exercise corporate trust powers and subject to supervision or examination by federal or state authority. If such corporation publishes reports of condition at least annually pursuant to law or the requirements of such authority, then for the purposes of this Section 8.15 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. Any corporation into which any Authenticating Agent may be merged or converted or with which it may be 68 consolidated, or any corporation resulting from any merger, consolidation or conversion to which any Authenticating Agent shall be a party, or any corporation succeeding to the corporate trust business of any Authenticating Agent, shall be the successor of the Authenticating Agent hereunder, if such successor corporation is otherwise eligible under this Section 8.15, without the execution or filing of any further act on the part of the parties hereto or the Authenticating Agent or such successor corporation. Any Authenticating Agent may at any time resign by giving written notice of resignation to the Trustee and the Company. The Trustee may at any time terminate the agency of any Authenticating Agent by giving written notice of termination to such Authenticating Agent and the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time any Authenticating Agent shall cease to be eligible under this Section 8.15, the Trustee shall promptly appoint a successor Authenticating Agent, and shall give written notice of such appointment to the Company. The Company agrees to pay to the Authenticating Agent from time to time reasonable compensation for its services. The provisions of Sections 3.10, 8.04 and 8.05 shall be applicable to any Authenticating Agent. ARTICLE NINE NOTEHOLDERS' LISTS AND REPORTS BY TRUSTEE Section 9.01. COMPANY TO FURNISH TRUSTEE SEMI-ANNUAL LISTS OF NOTEHOLDERS. The Company will furnish or cause to be furnished to the Trustee semi-annually, not less than 45 days nor more than 60 days after each date (month and day) specified as a semi-annual Interest Payment Date for the Notes (whether or not any Notes are then Outstanding), and at such other times as the Trustee may request in writing, within 60 days after receipt by the Company of any such request, a list in such form as the Trustee may reasonably require containing all the information in the possession or control of the Company, or any of its Paying Agents other than the Trustee, as to the names and addresses of the Holders of Notes, obtained since the date as of which the next previous list, if any, was furnished, excluding from any such list the names and addresses received by the Trustee in its capacity as Note Registrar. Any such list may be dated as of a date not more than 15 days prior to 69 the time such information is furnished and need not include information received after such date. Section 9.02. PRESERVATION OF INFORMATION; COMMUNICATIONS TO NOTEHOLDERS. (a) The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders of Notes (1) contained in the most recent list furnished to the Trustee as provided in Section 9.01, (2) received by the Trustee in the capacity of Paying Agent (if so acting) hereunder or (3) received by the Trustee in its capacity as Note Registrar. The Trustee may destroy any list furnished or provided in Section 9.01 upon receipt of a new list so furnished. (b) Holders may communicate pursuant to TIA SECTION 312(b) with other Holders with respect to their rights under this Indenture or the Notes. The Company, the Trustee, the Note Registrar and any other Person shall have the protection of TIA SECTION 312(c). (c) Every Holder of Notes, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee nor any Paying Agent shall be held accountable by reason of the disclosure of any such information as to the names and addresses of the Holders of Notes in accordance with Section 9.02(b), regardless of the source from which information was derived, and that the Trustee shall not be held accountable by reason of mailing any material pursuant to a request made under Section 9.02(b). Section 9.03. REPORTS BY TRUSTEE. (a) Within 60 days after each May 15 beginning with May 15, 1995, the Trustee shall transmit to each Noteholder a report dated as of such May 15 that complies with TIA SECTION 313(a). The Trustee shall also comply with TIA SECTION 313(b) and SECTION 313(c). (b) A copy of each such report shall, at the time of such transmission to Noteholders, be filed by the Trustee with any stock exchange on which the Notes are listed and also with the Commission. The Company will notify the Trustee when the Notes are listed on any stock exchange. (c) The Trustee will provide the Casino Control Commission and the Director of the Division of Gaming Enforcement of New Jersey with: (1) copies of all notices, reports and other written communications which the Trustee gives to Noteholders; 70 (2) a list of Noteholders promptly after the original issuance of the Notes and a list of Noteholders annually on December 1 of each year, or such other time as requested by the Casino Control Commission or Director of the Division of Gaming Enforcement; (3) notice of any Event of Default under this Indenture actually known by the Trustee or of any event, occurrence or condition actually known by the Trustee which, with the giving of notice or lapse of time or both would constitute an Event of Default under this Indenture (including the Guaranty), the RIH Junior Promissory Note or the Mortgage Documents (as such term is defined in such instruments), any acceleration of the Indebtedness evidenced or secured hereby or thereby, the institution of any legal actions or proceedings before any court or governmental authority in respect of this Indenture (including the Guaranty) or the Mortgage Documents, the entering into or taking possession of any property constituting the Trust Estate and any rescission, annulment or waiver in respect of an Event of Default under any instruments described in this clause (3); (4) notice of the removal or resignation of the Trustee; (5) notice of any transfer or assignment of rights under this Indenture (including the Guaranty) (but not in respect of the Notes) or the Mortgage Documents after a Responsible Officer of the Trustee becomes aware of the same; and (6) a copy of any amendment to the Notes, this Indenture (including the Guaranty) or the Mortgage Documents immediately; PROVIDED, HOWEVER, that the Trustee shall not be liable to any Person (other than the Casino Control Commission and the Director of the Division of Gaming Enforcement of New Jersey) for any failure to provide any of the above-mentioned documents to the Casino Control Commission and the Director of the Division of Gaming Enforcement of New Jersey. The notice specified in Section 9.03(c) above shall be in writing and, except as set forth below, shall be given immediately after the Trustee has actual knowledge of any circumstances requiring such notice. In the case of any notice in respect of any Default or Event of Default under any instrument described in Section 9.03(c), such notice shall be accompanied by a copy of 71 any notice from the Holders of Notes, or a representative thereof or the Trustee, to the defaulting Person and, if accompanied by any such notice to the defaulting Person, shall be given simultaneously with the giving of any such notice to the defaulting Person. In the case of any legal actions or proceedings, such notice shall be accompanied by a copy of the complaint or other initial pleading or document. The Trustee and its Responsible Officers shall cooperate with the Casino Control Commission and the Director of the Division of Gaming Enforcement of New Jersey in order to provide such Commission and Director with information and documentation relevant to compliance with Section 9.03(c) above and as otherwise required by the Casino Control Act. The expiration date of the current gaming Permit held by RIH is February 26, 1994. Subsequent gaming Permits held by RIH are scheduled to expire every two years on February 26th, commencing February 26, 1996 unless and until the Trustee is advised otherwise. RIH will advise the Trustee of any change in such expiration date within five business days of knowledge thereof. ARTICLE TEN CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE Section 10.01. CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER ONLY ON CERTAIN TERMS. Neither the Company nor RIH shall consolidate, combine or merge with or into any other Person or permit any other Person to consolidate, combine or merge with or into the Company or RIH, as the case may be; and neither the Company with respect to its assets nor RIH with respect to the Trust Estate shall sell, assign, convey or transfer its interest in such assets or the Trust Estate, as the case may be, substantially as an entirety (and notwithstanding anything to the contrary contained herein (including the proviso at the end of this sentence), but subject to the provisions of the Mortgage regarding dispositions of the Trust Estate, neither the Company with respect to its assets nor RIH with respect to the Trust Estate may sell, assign, convey or transfer such assets or the Trust Estate, as the case may be, other than substantially as an entirety) to any other Person or group of Persons in one transaction or a series of related transactions, or permit any other Person or group of Persons to convey or transfer all or substantially all of its assets, subject to liabilities other than DE MINIMIS liabilities, to 7 the Company or RIH; and the Company and RIH shall not transfer, convey, sell or otherwise dispose of to any other Person, or issue to any Person, any equity interest in the Company or RIH, as the case may be (each of the aforesaid transactions described in this Section 10.01 is referred to herein as a "Combination Transaction"); PROVIDED, HOWEVER, that (i) the Company may engage in a Combination Transaction in which the only other party or parties is RIH or a direct or indirect wholly owned Subsidiary of the Company or RIH, and (ii) the Company or RIH may engage in any other Combination Transaction (either independently or at the same time as other Combination Transactions), subject to the following with respect to each such Combination Transaction: (a) the conditions set forth in Section 10.03 are satisfied; (b) in the event the Company or RIH shall consolidate, combine or merge with or into another Person or sell, assign, convey or transfer its interest in its assets or in the Trust Estate, as the case may be, substantially as an entirety (but not less than substantially as an entirety) to another Person in one transaction or a series of related transactions, the entity which is formed by or survives such consolidation, combination or merger or the Person to which such assets or the Trust Estate are conveyed or transferred: (1) shall be organized and existing under the laws of the United States of America, any state thereof, or the District of Columbia; (2) shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form reasonably satisfactory to the Trustee, the performance and observance of every covenant, obligation and condition of this Indenture to be performed or observed by the Company or RIH, whichever the case may be; (3) shall expressly assume, by an instrument executed and delivered to the Trustee, in form reasonably satisfactory to the Trustee, the due and punctual performance of every covenant, obligation and condition of the Mortgage Documents and Assignment Agreement to be performed by the Company or RIH, whichever the case may be; and (4) immediately after and giving effect to such transaction could incur at least $1.00 of additional Indebtedness under Section 12.08; 73 (c) immediately after giving effect to such transaction, no Event of Default, or Default hereunder or under the Mortgage shall have occurred and be continuing; (d) such Combination Transaction shall be on such terms as shall not impair the lien and security and priority hereof or of the Mortgage Documents or of the Assignment Agreement and the rights and powers of the Trustee and the Holders of the Notes hereunder and thereunder; and (e) the Company or RIH, as the case may be, shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each of which shall state that such Combination Transaction and such supplemental indenture comply with this Article Ten and that all conditions precedent herein provided for relating to such transaction have been complied with. Section 10.02. SUCCESSOR ENTITY SUBSTITUTED. Upon any consolidation, combination or merger or any conveyance or transfer of an interest in the assets of the Company or in the Trust Estate permitted by Section 10.01, the successor entity formed by such consolidation or into which the Company or RIH is combined or to which such conveyance or transfer is made shall succeed to, and be substituted for, and may exercise every right and power of, and shall be bound by every obligation and liability of, the Company or RIH, whichever the case may be, under this Indenture with the same effect as if such successor entity had been named as the Company or RIH herein; PROVIDED, HOWEVER, that no such consolidation or combination involving the Company or RIH, unless such transaction is in compliance with the provisions of this Article Ten, shall have the effect of releasing the Person named as "the Company" or "RIH", as the case may be, in the first paragraph of this instrument, or any successor entity which shall theretofore have become such in the manner prescribed in this Article Ten, from its liability as obligor and maker on the RIH Junior Promissory Note or any of the Notes. Section 10.03. SUCCESSOR MANAGEMENT OF CASINO-HOTEL. Neither the Company nor RIH shall engage in any Combination Transaction unless, immediately following such Combination Transaction, (a) RIH (or any successor entity) shall be eligible for and shall meet all relevant Legal Requirements, including holding all permits, required for the normal operation of the business of owning and operating the Casino-Hotel, and (b) RIH (or any successor entity) shall be controlled by a Person that is, or shall retain to manage the 74 Casino-Hotel one or more Persons that are, experienced in the operation and management of casino-hotels. Section 10.04. LIMITATION ON SALES OF TRUST ESTATE. Except as otherwise expressly permitted by the Mortgage and this Indenture, neither the Company nor RIH shall sell, assign, lease, sublease, hypothecate, pledge, mortgage or otherwise transfer all or any part of the assets of the Company or the Trust Estate or any interest therein (including, without limitation, any interest in the Ground Leases). Without limiting the generality of the foregoing, RIH shall not separate, or attempt to separate, its ownership of its interest in the Ground Leases from the ownership of the buildings constituting the Casino-Hotel or any part thereof. ARTICLE ELEVEN AMENDMENTS, SUPPLEMENTS AND WAIVER Section 11.01. WITHOUT CONSENT OF NOTEHOLDERS. Without the consent of the Holders of any Notes, the parties hereto may from time to time amend or supplement this Indenture, the Assignment Agreement, the Notes or the Mortgage Documents, as long as the form of such amendment or supplement is satisfactory to the Trustee, for any of the following purposes: (a) to correct or amplify the description of the Trust Estate or better to assure, convey and confirm unto the Trustee the assignment of the Mortgage Documents; or (b) to add additional conditions, limitations and restrictions thereafter to be observed to the conditions, limitations and restrictions on the authorized amount, terms of issue, authentication and delivery of Notes as herein set forth; or (c) to comply with Article Ten; or (d) to add to the covenants of the Company for the benefit of the Holders of all Notes or to surrender any right or power herein conferred upon the Company; or (e) to cure any ambiguity, defect or inconsistency in any of the enumerated documents, provided such action shall not adversely affect the interests of the Holders of the Notes; or (f) to modify, eliminate or add to the provisions of this Indenture to such extent as shall be necessary to 75 effect the qualification of this Indenture under the TIA or under any similar federal statute hereafter enacted, and to add to this Indenture such other provisions as may be expressly permitted by the TIA, EXCLUDING, HOWEVER, the provisions referred to in TIA SECTION 316(a)(2) as in effect at the date as of which this instrument was executed or any corresponding provision in any similar federal statute hereafter enacted; or (g) to effectuate any subordination contemplated in Section 8.03(i); or (h) to comply with the requirements of the Casino Control Act. The terms of any such enumerated document entered into pursuant to this Section 11.01 shall be subject to prior approval of the Casino Control Commission in consultation with the New Jersey Division of Gaming Enforcement. Section 11.02. WITH CONSENT OF NOTEHOLDERS. With the consent of the Holders of not less than 66-2/3% in Outstanding Amount of the Notes then Outstanding, by Act of such Holders delivered to the Company and the Trustee, the parties hereto may amend or supplement this Indenture, the Mortgage Documents, the Assignment Agreement or the Notes, provided that the form of such amendment or supplement is reasonably satisfactory to the Trustee. The Holders of 66-2/3% in Outstanding Amount of the Notes then Outstanding may waive compliance by the Company or RIH with any provision of this Indenture, the Mortgage Documents, the Assignment Agreement or the Notes, except a default in the payment of principal of or interest on any Note, without notice to any Noteholder. Notwithstanding the foregoing, no modification, waiver, consent or amendment to the Notes or this Indenture shall permit the redemption of the Notes prior to the fifth anniversary of the Effective Date (other than pursuant to an RIH Sale) unless the same also shall have ben approved by the holders of 66-2/3% in Outstanding Amount (as such term is defined in the Senior Mortgage Note Indenture) of the Senior Mortgage Notes then Outstanding (as such terms are defined in the Senior Mortgage Note Indenture). Without the consent of the Holder of each Outstanding Note affected thereby, an amendment, supplement or waiver, including a waiver pursuant to Section 7.13, may not: (a) change the Stated Maturity of the principal of, or any installment of interest on, any Note, or reduce the principal amount thereof or the interest thereon or the amount payable upon the redemption thereof, or change any Place of Payment where, or the coin or currency in which, any Note, or the interest thereon, is payable, or 76 impair the right to institute suit for the enforcement of any such payment on or after the Stated Maturity thereof (or, in the case of redemption, on or after the Redemption Date); or (b) reduce the percentage in Outstanding Amount of the Outstanding Notes, the consent of whose Holders is required for any amendment, supplement or waiver; or (c) modify or alter the provisions of the proviso to the definition of the term Outstanding; or (d) modify any of the provisions of this Section or Section 7.13, except to increase any percentage provided thereby or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Note affected thereby; or (e) permit the creation of any lien ranking prior to the lien of the Mortgage (except for such liens expressly permitted pursuant to Section 12.13). In determining whether to execute any amendment or supplement, subject to Sections 11.02(a) through (e), the Trustee may in its discretion determine whether or not any Notes would be affected by any such amendment or supplement and any such determination shall be conclusive upon the Holders of all Notes, whether theretofore or thereafter authenticated and delivered hereafter. The Trustee shall not be liable for any such determination made in good faith. It shall not be necessary for any Act of Noteholders under this Section to approve the particular form of any proposed amendment, supplement or waiver, but it shall be sufficient if such Act shall approve the substance thereof. In connection with any amendment, supplement or waiver under this Indenture, the Company or RIH may, but shall not be obligated to, offer to any Holder who consents to such amendment, supplement or waiver, or to all Holders, at the discretion of the Company or RIH, consideration for such Holder's consent to such amendment, supplement or waiver. The terms of any such enumerated document entered into pursuant to this Section 11.02 shall be subject to the prior approval of the Casino Control Commission in consultation with New Jersey Division of Gaming Enforcement. Section 11.03. EXECUTION OF AMENDMENTS AND SUPPLEMENTS. In executing, or accepting the additional trusts created by, any amendment or supplement permitted by this Article or the modification thereby of the trusts already created by this Indenture, the Trustee shall be entitled to 77 receive from the Company, and, subject to Section 8.01(c), shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such amendment or supplement is authorized or permitted by this Indenture. The Trustee may, but shall not, except to the extent required in the case of a supplemental indenture entered into under Section 11.01(e), be obligated to, enter into any such amendment or supplement which affects the Trustee's own rights, duties or immunities under this Indenture or otherwise. Section 11.04. EFFECT OF AMENDMENT OR SUPPLEMENT. Upon the execution of any amendment or supplement under this Article, every Holder of Notes theretofore or thereafter authenticated and delivered hereunder shall be bound thereby. Section 11.05. CONFORMITY WITH TRUST INDENTURE ACT. Every supplemental indenture executed pursuant to this Article shall conform to the requirements of the TIA and Casino Control Act as then in effect. Section 11.06. REFERENCE IN NOTES TO AMENDMENT OR SUPPLEMENT. In the absence of a direction from the Company, Notes authenticated and delivered after the execution of any amendment or supplement pursuant to this Article may, and if required by the Trustee shall, bear a notation in form approved by the Trustee as to any matter provided for in such amendment or supplement. If the Company shall so determine, new Notes so modified as to conform, in the opinion of the Trustee and the Company, to any such amendment or supplement may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for Outstanding Notes. ARTICLE TWELVE COVENANTS Section 12.01. PAYMENT OF PRINCIPAL AND INTEREST. The Company will duly and punctually pay or cause to be paid the principal of and interest on each of the Notes at the place or places, at the respective times and in the manner provided in the Notes and this Indenture. Each installment of interest on the Notes may be paid by mailing checks for such interest payable to or upon the written order of (or, with respect to interest to be paid in Additional Notes, such 78 Additional Notes) the Holders of Notes entitled thereto, to such address and in such name as they shall appear on the Note Register. Any installment of principal and interest shall be considered paid on the date it is due if the Trustee or Paying Agent (other than the Company or a Subsidiary of the Company or any Affiliate thereof) holds on that date money in immediately available funds designated exclusively for and sufficient to pay the installment (or, with respect to interest to be paid in Additional Notes, such Additional Notes) and the Trustee and/or the Paying Agent has not received instructions from the Company not to make such payment or is not prohibited from making such payment to the Noteholders pursuant to the terms of this Indenture. The Company shall pay interest (including post-petition interest in any proceeding under any applicable bankruptcy law) to the extent legally permitted on overdue principal at the rate set forth in the Notes; and it shall pay interest (including post-petition interest in any proceeding under any applicable bankruptcy law) on unpaid interest otherwise payable under the first clause of this sentence at the same rate to the extent legally permitted. Section 12.02. MAINTENANCE OF OFFICE OR AGENCY. The Company will maintain, in the Borough of Manhattan, the City of New York, State of New York, an office or agency where Notes may be presented or surrendered for payment, where Notes may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Company in respect of the Notes and this Indenture may be served. The Company initially appoints the Trustee as its agent for presentation or surrender of Notes for payment or registration, transfer or exchange. The Trustee (or its corporate parent) will maintain an office in the Borough of Manhattan, the City of New York, State of New York, for such purposes. The Company may from time to time designate one or more other offices or agencies (in or outside the City of New York, State of New York) where the Notes may be presented or surrendered for any or all such purposes, and may from time to time rescind such designations; 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 Borough of Manhattan, the City of New York, State of New York, for such purposes as stated in this Section 12.02. The Company will give prompt written notice to the Trustee of any such designation and any change in the location of any such office or agency. 79 If at any time the Company shall fail to maintain such an 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 principal corporate trust office of the Trustee, and the Company hereby appoints the Trustee its agent to receive all such presentations, surrenders, notices and demands. Section 12.03. 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, or interest on, any of the Notes, segregate and hold in trust for the benefit of the Persons entitled thereto a sum, sufficient to pay the principal or interest so becoming due until such sums shall be paid or issued to such Persons or otherwise disposed of as herein provided, and will promptly notify the Trustee of such action or any failure so to act. The Company will, on or before each due date of the principal of or interest on, any Notes, deposit with a Paying Agent a sum in same day funds (or, with respect to interest to be paid in Additional Notes, such Additional Notes), sufficient to pay the principal or interest so becoming due, such sum, as the case may be, to be held in trust for the benefit of the Persons entitled to such principal 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: (a) hold all sums received by it as such agent for the payment of the principal of or interest on Notes (whether such sums have been paid to it by the Company or by any other obligor on the Notes) 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; (b) promptly give the Trustee notice of any failure by the Company (or any other obligor upon the Notes) to make any payment of the principal of, or interest on, the Notes when the same shall be due and payable; and (c) at any time during the continuance of any such failure, upon the written request of the Trustee, 80 forthwith pay to the Trustee all sums so held in trust by such Paying Agent. Any money (or, with respect to interest to be paid in Additional Notes, such Additional Notes) deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of, or interest on, any Note and remaining unclaimed for two years after such principal or interest has become due and payable shall be paid to the Company on its request, or (if then held by the Company) shall be discharged from such trust, unless otherwise required by mandatory provisions of applicable escheat or abandoned or unclaimed property law, 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 regard to such money (or Additional Notes), 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 City of New York, State of New York, or mailed to each such Holder, or both, notice that such money (or Additional Notes) remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication or mailing, as the case may be, any unclaimed balance of such money then remaining will be paid to the Company. Section 12.04. CORPORATE EXISTENCE. Subject to Article Ten, each of the Company and RIH will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence and the corporate existence of each of its Subsidiaries in accordance with the respective organizational documents of the Company, RIH and each such Subsidiary and the rights (charter and statutory), licenses, permits, approvals and governmental franchises of it and each of its Subsidiaries necessary to the conduct of its and their respective businesses, including, without limitation, all licenses, permits, approvals and franchises necessary to assure the continued operation of RIH's gaming operations at the Casino-Hotel; PROVIDED, HOWEVER, any direct or indirect wholly owned subsidiary of RIH may consolidate with, merge into or transfer or distribute all or part of its properties and assets to RIH or the Company or as otherwise provided in Section 10.01. 81 Section 12.05. TO KEEP BOOKS; INSPECTION BY TRUSTEE. The Company and RIH will each keep proper books of record and account, in which full and correct entries shall be made of all material dealings or transactions of or in relation to the Notes and the properties, business and affairs of the Company and RIH in accordance with GAAP. The Company and RIH will at any and all times, upon the written request of the Trustee and at the expense of RIH, permit the Trustee by its representatives to inspect the Casino-Hotel and the books of account, records, reports and other papers of the Company and RIH, and to make copies and extracts therefrom, and will afford and procure a reasonable opportunity to make any such inspection (provided that the Company and RIH shall have received reasonable advance notice of such inspection and that any such inspection shall not unreasonably interfere with the business operations of the Company and RIH). The Company and RIH will furnish to the Trustee any and all information as the Trustee may reasonably request with respect to the performance by the Company and RIH of their covenants in this indenture. Section 12.06. REPORTS AND COMPLIANCE CERTIFICATES. (a) RIH shall furnish or cause to be furnished to the Trustee, within 105 days after each fiscal year of RIH: (i) a copy of annual audited financial statements of RIH prepared in conformity with GAAP, accompanied by a report of Ernst & Young or of another firm of independent certified public accountants of recognized national standing selected by RIH (the "National Accountants"), together with a certificate from such National Accountants stating that their audit examination has included a review of the terms of this Indenture and that the National Accountants have not become aware of any Event of Default or that a Default has occurred and is continuing, and if they have become aware of any such Event of Default or Default, describing it; PROVIDED, HOWEVER, that the National Accountants shall not be liable to any Person for any failure to discover any Event of Default or Default in connection with such review; and (ii) a copy of annual unaudited financial statements of RIH, including notes to such financial statements and corresponding management's discussion and analysis, in form and substance comparable to that which would be required to be filed with the Commission in an Annual Report on Form 10-K under the Exchange Act, prepared in the same manner as the audited financial statements referred to in clause (i) of this Section 12.06(a), signed by a proper accounting officer of RIH. RIH, contemporaneously with the furnishing of such audited financial statements to the Trustee under clause (i) of this Section 12.06(a), shall mail copies of such audited financial statements to the Holders (which need not include the certificate referred to in such clause (i)). 82 (b) RIH shall furnish or cause to be furnished to the Trustee, within 60 days after each quarter of each fiscal year of RIH, except the final quarter of such fiscal year, a copy of unaudited financial statements of RIH prepared on a consistent basis with the audited financial statements referred to in clause (i) of Section 12.06(a), signed by a proper accounting officer of RIH and consisting of at least a balance sheet as at the close of such quarter and statements of operations and cash flow for such quarter and for the period from the beginning of such fiscal year to the close of such quarter, including notes to such financial statements and corresponding management's discussion and analysis, in form and substance comparable to that which would be required to be filed with the Commission in a Quarterly Report on Form 10-Q under the Exchange Act. RIH, contemporaneously with the furnishing of such unaudited financial statements to the Trustee under this Section 12.06(b), shall mail copies of such unaudited financial statements to the Holders (which need not be signed by a proper accounting officer of RIH). (c) RIH shall furnish or cause to be furnished to the Trustee, contemporaneously with the furnishing of a copy of the annual financial statements and of the quarterly financial statements referred to in Section 12.06(a) and Section 12.06(b), an Officers' Certificate dated the date of such annual financial statement or such quarterly financial statements to the effect that no Default or Event of Default has occurred and is continuing, or, if there is any such Default or Event of Default, describing it and the steps, if any, being taken to cure it. (d) RIH shall furnish or cause to be furnished to the Trustee, copies of each filing and report made by RIH or the Company with the Commission pursuant to the reporting and filing requirements of Section 13 or 15(d) of the Exchange Act, within 15 days after RIH or the Company, as applicable, is required to file the same. (e) RIH agrees that, if RIH becomes exempt from the Commission reporting and filing requirements of Section 13 or 15(d) of the Exchange Act, RIH shall prepare such periodic reports as it would otherwise have been required to file with the Commission and (i) at its own expense, cause all such periodic reports to be filed with the Commission, the Trustee and any exchange upon which the Notes then are listed, in each case on the date when such periodic report would have been required to be filed with the Commission under Section 13 or 15(d) of the Exchange Act, if either of such provisions were applicable, and (ii) keep copies of such periodic reports available at its office and promptly provide any Person who so requests with a copy of any such periodic report, at the Company's expense. 83 (f) Each of the Company and RIH shall comply with the provisions of SECTION 314(a) of the Trust Indenture Act. (g) The Company shall deliver to the Trustee, promptly upon becoming aware of any Default or Event of Default (but in no event later than five business days thereafter) in the performance of any covenant or agreement of the Company contained in this Indenture or any of the Mortgage Documents, an Officers' Certificate specifying with particularity such event. Section 12.07. LIMITATION ON DIVIDENDS AND RESTRICTED PAYMENTS. (a) The Company hereby covenants that, on and after the date of this Indenture, it will not, directly or indirectly, make, or permit any Subsidiary of the Company to make, any Restricted Payment. (b) RIH hereby covenants that, on or after the date of this Indenture, it will not, directly or indirectly, make, or permit any Subsidiary of RIH to make, any Restricted Payment; PROVIDED, HOWEVER, that: (i) if RIH's Consolidated Interest Coverage Ratio, as certified to the Trustee by an Officers' Certificate, calculated at the time of the declaration of the dividend or distribution is equal to or exceeds two, then RIH may declare and pay cash dividends or make cash distributions in respect of any class of capital stock of RIH in an amount not to exceed in the aggregate with any other such cash dividends or distributions declared or made from and after the date hereof, 50 percent of RIH's Consolidated Net Income from and after the date hereof; and (ii) if (1) RIH's Consolidated Interest Coverage Ratio, as certified to the Trustee by an Officer's Certificate, calculated at the time of the declaration of the dividend or distribution is equal to or exceeds two; and (2) RIH has cash in excess of the amount required to pay interest on the Notes and the Junior Mortgage Notes on the next Interest Payment Date plus $20,000,000, then RIH may declare and pay cash dividends or make cash distributions in respect of any class of capital stock of RIH in an amount not to exceed such excess cash amount. (c) The Company and RIH will not, and will not permit any of their respective Subsidiaries to, create or otherwise cause or suffer to exist or become effective any encumbrance or restriction of any kind on the ability of any Subsidiary of RIH or the Company: (i) to pay dividends or make any other distribution on the capital stock of such Subsidiary that is owned by RIH, the Company or a wholly owned Subsidiary of the Company or RIH, as applicable; (ii) to pay any Indebtedness owed by such Subsidiary to RIH, the Company or any wholly owned Subsidiary of the Company or RIH, as 84 applicable; (iii) to make loans or advances to RIH, the Company or any wholly owned Subsidiary of the Company or RIH, as applicable; or (iv) to transfer any of its property or assets to the Company, RIH or any wholly owned Subsidiary of the Company or RIH, as applicable, except (A) any restrictions existing on or prior to the date hereof, or in connection with agreements in effect, or entered into, on the date hereof, or any permitted amendments, renewals, refundings, refinancings or extensions thereof; PROVIDED, HOWEVER, that the terms and conditions of any such amendments, renewals, refundings, refinancings or extensions are no more restrictive with respect to the matters set forth in clauses (i) through (iv) of this Section 12.07(c) than the agreements being amended, refunded, renewed, refinanced or extended; (B) any restrictions or encumbrances existing or arising pursuant to the terms of Indebtedness of a Person outstanding at the time such Person becomes a Subsidiary of the Company or RIH and not incurred in connection with, or in contemplation of, such Person becoming a Subsidiary of the Company or RIH or any permitted amendments, renewals, refinancings or extensions thereof; PROVIDED, HOWEVER, that the terms and conditions of any such amendments, renewals, refundings, refinancings or extensions are no more restrictive with respect to the matters set forth in clauses (i) through (iv) of this Section 12.07(c) than the agreements being amended, renewed, refunded, refinanced or extended; (c) encumbrances or restrictions existing under or by reason of applicable law or regulation (including, without limitation, the Casino Control Act) or this Indenture; (d) customary provisions restricting assignment of contracts or subletting or assignment of any lease governing a leasehold interest of any Subsidiary of the Company or RIH; or (e) net worth maintenance requirements imposed by any governmental authority. Section 12.08. LIMITATION ON ADDITIONAL INDEBTEDNESS AND ISSUANCE OF NOTES. (a) The Company and RIH shall not, and shall not permit any of their respective Subsidiaries to, directly or indirectly, incur, issue, assume, guarantee or otherwise become directly or indirectly liable with respect to, including, without limitation, through any merger or consolidation to which the Company, RIH or any of their respective Subsidiaries is a party or through any other acquisition of any such Subsidiary (collectively, "incur"), or have outstanding, any Indebtedness other than, without duplication, the following: (i) the Notes and the Senior Mortgage Notes; (ii) Indebtedness represented by the Junior Mortgage Facility; 85 (iii) Indebtedness represented by the Working Capital Facility; (iv) Indebtedness represented by Capitalized Lease Obligations in an amount not in excess of $5,000,000 in the aggregate at any time outstanding; (v) Indebtedness represented by F,F&E Financing Agreements in an amount not in excess of $10,000,000 in the aggregate at any time outstanding; (vi) unsecured Indebtedness in an amount not in excess of $5,000,000 in the aggregate at any time outstanding that is subordinated and junior to the Notes at least to the extent set forth in the Subordination Provisions attached hereto as Exhibit C and which Indebtedness does not have any requirements for amortization payments, mandatory redemption or sinking fund payments prior to the stated maturity of the Notes and does not provide for the payment of interest in cash at any time when the most recent installment of interest on the Notes was not paid in cash; (vii) Non-Recourse Indebtedness in an amount not in excess of $25,000,000 in the aggregate at any time outstanding; (viii) After-Acquired Fee Mortgage Debt in an amount not in excess of $3,000,000 in the aggregate at any time outstanding; and (ix) Intercompany advances between RIH, the Company or any of their direct or indirect Subsidiaries on the one hand, and RII, on the other hand, in an aggregate amount not to exceed $1,000,000. (b) The Company and RIH shall not permit any of their respective Subsidiaries to issue (other than to the Company, RIH or a direct or indirect wholly owned Subsidiary of the Company or RIH) any capital stock which has voting rights or has a preference as to any distribution over its common stock. Section 12.09. LIMITATION ON REPAYMENT OF SUBORDINATED INDEBTEDNESS. Neither the Company nor RIH shall, and neither the Company nor RIH shall permit any Subsidiary to, directly or indirectly, purchase, redeem, defease (including, but not limited to, in-substance or legal defeasance) or otherwise acquire or retire for value prior to the stated maturity of, 8 or prior to any scheduled mandatory redemption or sinking fund payment with respect to (collectively, to "repay" or a "repayment"), the principal of any Indebtedness of the Company, RIH or any Subsidiary of the Company or RIH which is subordinated (whether pursuant to its terms or by operation of law) in right of payment to the Notes. Section 12.10. LIMITATION ON CERTAIN TRANSACTIONS. Each of the Company and RIH covenants that it will not, and will not permit any Subsidiary to, repurchase any Notes in the open market if an Event of Default shall have occurred and shall be continuing hereunder, under the Senior Mortgage Note Indenture or under the Senior Facility Note Indenture. Section 12.11. RESTRICTION OF ACTIVITIES. (a) RIH shall not, on or after the date of execution of this Indenture, until the date that is 91 days after the payment in full by the Company of the principal of (and interest, if any, on) all Outstanding Notes, engage in any business or investment activities other than those necessary for, incident to, connected with or arising out of acquiring, financing, owning and operating the Casino-Hotel or additional hotels or casinos or related or ancillary businesses. (b) Neither the Company nor RIH shall make any loans to any Affiliate or any other Person other than (i) Indebtedness of the type described in clause (ix) of Section 12.08(a), and (ii) loans to RII from the proceeds of the Indebtedness represented by the Working Capital Facility; PROVIDED, HOWEVER, that RIH shall have the right to make loans to employees of RIH actively involved in the operation of the Casino-Hotel or to engage in credit transactions in the operation of the Casino-Hotel, if such loans or credit transactions are in the ordinary course of business of operating a casino-hotel. (c) The Company shall not engage in any business (and shall not have any Subsidiaries) other than (i) to collect principal, interest (and any interest on overdue principal and interest) and other amounts under any intercompany notes or guaranties made to the order of or otherwise in favor of the Company, (ii) to preserve its rights under this Indenture and the Mortgage Documents and otherwise to comply with its obligations thereunder and under the Notes, (iii) to do or cause to be done all things necessary or appropriate to protect the Trust Estate, (iv) to preserve its rights under the Senior Mortgage Indenture and the Senior Mortgage Documents and otherwise to comply with its obligations thereunder and under the Senior Mortgage Notes, 87 (v) to issue Indebtedness represented by the Working Capital Facility, (vi) to preserve its rights under the Working Capital Facility and otherwise comply with its obligations under the Working Capital Facility, (vii) to incur any other Indebtedness permitted under this Indenture, (viii) to do all such acts and deeds necessary in connection with the Junior Mortgage Facility and the documents and instruments relating thereto and the Working Capital Facility and the documents and instruments relating thereto, (ix) to declare, issue and pay dividends on, or make any redemptions or repurchases of, the Company's capital stock as contemplated by its Certificate of Incorporation (to the extent permitted hereby) and otherwise to comply with and perform the provisions of its Certificate of Incorporation and By-laws, and (x) to do such further acts and deeds to effectuate any of the matters listed in the foregoing clauses of this Section 12.11(c). Section 12.12. LIMITATION ON SUBSIDIARIES; CONSOLIDATED GROUP. The Company and RIH shall not have any Subsidiaries except the Subsidiaries existing on the date of this Indenture and Subsidiaries acquired by the Company or RIH in transactions not prohibited by the other provisions of this Indenture which are and shall at all times be wholly owned (directly or indirectly) by the Company or RIH. Section 12.13. LIMITATIONS ON LIENS. Neither the Company nor RIH will create, incur, suffer to exist or permit to be created or incurred any mortgage, lien, charge or encumbrance on or pledge of the Mortgage Documents or any of the Trust Estate, other than (a) the lien of the Mortgage Documents and the Assignment Agreement, (b) liens on the Trust Estate in connection with Indebtedness permitted by clauses (i), (ii), (iii), (iv) or (v) of Section 12.08(a), (c) other Permitted Encumbrances on the Trust Estate, and (d) a notice of intention or building contract filed by a mechanic, materialman or laborer under the New Jersey lien law. Without limiting the generality of the previous sentence, but notwithstanding the provisions of such sentence, RIH shall not be deemed to have breached such provisions by virtue of the existence of liens for Impositions (as defined in the Mortgage) or mechanics' liens so long as RIH is in good faith contesting the validity of such liens in accordance with the provisions of Section 5.09 of the Mortgage. Section 12.14. COMPLIANCE WITH LAWS. Each of the Company and RIH shall comply, and shall cause each of its Subsidiaries to comply, with the Casino Control Act and all other applicable statutes (including, 88 without limitation, ERISA), rules, regulations, orders and restrictions of the United States of America, states and municipalities, and of any governmental department, commission, board, regulatory authority, bureau, agency and instrumentality of the foregoing in respect of the conduct of its business and the ownership of its properties and assets, including, without limitation, the Trust Estate, except such as are being contested in good faith by appropriate proceedings in accordance with the Mortgage Documents (to the extent applicable) and except for such non-compliances as will not in the aggregate have a material adverse effect on the business, properties, operations or financial condition of the Company, RIH or their respective Subsidiaries. Section 12.15. PAYMENT OF TAXES AND OTHER CLAIMS. The Company or RIH shall 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, RIH or any of their respective Subsidiaries or upon the Trust Estate or any portion thereof or upon the income, profits or property of the Company, RIH or any of their respective Subsidiaries, and (b) all lawful claims for labor, materials and supplies which, if unpaid, will by law become a Lien upon the Trust Estate or upon any other property of the Company, RIH or any of their respective Subsidiaries; PROVIDED, HOWEVER, that the Company and RIH shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessments, charge or claim the amount, applicability or validity of which is being contested in good faith by appropriate proceedings in accordance with the Mortgage Documents (to the extent applicable) if adequate reserves therefor have been established in accordance with GAAP. Section 12.16. MAINTENANCE OF PROPERTIES. Each of the Company and RIH shall cause the Trust Estate and all other properties (other than obsolete equipment) owned by or leased to it or any of its Subsidiaries, and used or useful in the conduct of its business or the business of the Company, RIH or such Subsidiary to be maintained and kept in good condition, repair and working order, except for reasonable wear and use, and will cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as required by the Mortgage Documents or, to the extent not governed by the Mortgage Documents, as in the reasonable judgment of the Board of Directors of RII may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times. 89 Section 12.17. INSURANCE. Each of the Company and RIH shall maintain, and shall cause each of its Subsidiaries to maintain, with financially sound and reputable insurers, appropriate insurance on each of their respective properties and businesses against liabilities, casualties, risks and contingencies of the type and in amounts required by the Mortgage Documents or, to the extent not governed by the Mortgage Documents, as customarily maintained by corporations and other entities engaged in the same or similar businesses and similarly situated; PROVIDED, HOWEVER, that any such insurer shall be qualified to do business in the jurisdiction where the insured property is located. Section 12.18 WAIVER OF STAY, EXTENSION OR USURY LAWS. Each of the Company and RIH covenants (to the extent that it may lawfully do so) that it will not, and will not cause or permit any of its Subsidiaries to, at any time insist upon, or plead, or in any manner whatsoever claim, and will resist any and all efforts to be compelled to take the benefit or advantage of, any stay or extension law or any usury law or other law that would prohibit or forgive the Company or RIH from paying all or any portion of the principal of, or premium, if any, and interest on the Notes or the RIH Junior Promissory Note or the Guaranty as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Indenture or the RIH Junior Promissory Note or the Guaranty; and (to the extent that it may lawfully do so) the Company and RIH hereby expressly waive all benefit or advantage of any such law, and covenant that they will not hinder, delay or impede the execution of any power granted to the Trustee herein and in the Mortgage Documents, but will suffer and permit the execution of every such power as though no such law had been enacted. Section 12.19. APPOINTMENT TO FILL A VACANCY IN OFFICE OF TRUSTEE. The Company, whenever necessary to avoid or fill a vacancy in the office of Trustee, will appoint, in the manner provided in Section 8.10, a Trustee, so that there shall at all times be a Trustee hereunder. Section 12.20 VALIDITY OF LIENS. Each of the Company and RIH represents and warrants that it has, and covenants that it shall continue to have, full corporate power and lawful authority to grant, release, convey, assign, transfer, mortgage, pledge, hypothecate and otherwise create the lien on the Trust Estate; and the Company 90 and RIH shall warrant, preserve and defend the interest of the Trustee in and to the Trust Estate against the claims of all Persons, except as otherwise expressly permitted by the Mortgage Documents or this Indenture, and will take all action necessary to maintain and preserve the lien on the Trust Estate contemplated therein. Section 12.21. TRANSACTIONS WITH STOCKHOLDERS AND AFFILIATES. Each of the Company and RIH covenants that it shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, enter into or permit to exist any transaction (including, without limitation, the purchase, sale, lease or exchange of any property or the rendering of any service) with any Affiliate of the Company or RIH or with any Affiliate of any such holder, unless (a) such transaction is upon fair and reasonable terms which are no less favorable to the Company or such Subsidiary, as the case may be, than would be available in an arm's-length transaction with an unrelated person and (b) if over $250,000, such transaction is determined in the good faith judgment of a majority of the members of the Board of Directors of either (i) RII, so long as RII owns directly or indirectly a majority of the outstanding capital stock of RIH, directly or indirectly, or (ii) RIH, to be in the best interests of the Company, RIH or such Subsidiary as applicable; PROVIDED, HOWEVER, that this provision shall not apply to (A) any agreements, documents, instruments or transactions entered into in connection with the RIHF Senior Facility Notes, (B) the Services Agreement, (C) the RII Management Contract, or (D) the RII Tax Sharing Agreement. Section 12.22. LIMITATION ON OPEN MARKET PURCHASES The Company and RIH shall not, and shall not permit any of their respective Subsidiaries to, purchase or otherwise acquire (other than pursuant to Article Thirteen) any Notes unless all interest accrued on the Notes and payable on the Interest Payment Date immediately preceding the date of such repurchase was paid solely in cash and not in Additional Notes. ARTICLE THIRTEEN REDEMPTION OF NOTES Section 13.01. GENERAL APPLICABILITY OF ARTICLE. Notes which are redeemable before their Stated Maturity shall be redeemable in accordance with their terms and in accordance with this Article. 91 Section 13.02. ELECTION TO REDEEM; NOTICE TO TRUSTEE. The election of the Company to redeem any Notes shall be evidenced by a Company Order. Redemption of any Notes shall not take place earlier than 15 days after the corporate action taken to authorize the redemption. In case of any redemption at the election of the Company of less than all the Outstanding Notes, 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 Notes to be redeemed. Section 13.03. SELECTION BY TRUSTEE OF NOTES TO BE REDEEMED. If less than all the Outstanding Notes are to be redeemed, the particular Notes to be redeemed shall be selected by a random, automated selection process or PRO RATA, as deemed appropriate by the Trustee, not more than 60 days prior to the Redemption Date by the Trustee from the Outstanding Notes which have not previously been called for redemption, and such selection method may provide for the selection for redemption of portions (equal to the greater of $1,000 and the smallest authorized denomination of the Notes of such series, or a multiple thereof) of the principal of Notes of a denomination larger than $1,000. The Trustee shall promptly notify the Company in writing of the Notes selected for redemption and, in the case of any Note 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 the redemption of Notes shall relate, in the case of any Note redeemed or to be redeemed only in part, to the portion of the principal of such Note which has been or is to be redeemed. Section 13.04. NOTICE OF REDEMPTION. Notice of redemption 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 by first-class mail, postage prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption Date, to each Holder of Notes of such series to be redeemed, at his address appearing in the Note Register. Any notice which is mailed in the manner herein provided shall be conclusively presumed to have been duly given, whether or not the Holder receives the notice. In any case, failure to duly give notice by mail, or any defect in 92 the notice to the Holder of any Notes designated for redemption in whole or in part, shall not affect the validity of the proceedings for the redemption of any other Notes. All notices of redemption shall state: (a) the Redemption Date; (b) the Redemption Price; (c) the principal amount of Notes to be redeemed, and, if less than all outstanding Notes are to be redeemed, the identification (and, in the case of partial redemption, the respective principal amounts) of the Notes to be redeemed; (d) that on the Redemption Date, the Redemption Price of each of the Notes to be redeemed will become due and payable and that the interest thereon shall cease to accrue from and after such date; and (e) the place or places where the Notes to be redeemed are to be surrendered for payment of the Redemption Price. Section 13.05. 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 12.03) an amount of money sufficient to pay the Redemption Price of all the Notes which are to be redeemed on that date. Such money shall be held in trust for the benefit of the Persons entitled to such Redemption Price and shall not be deemed to be part of the Trust Estate. Section 13.06. NOTES PAYABLE ON REDEMPTION DATE. Notice of redemption having been given as aforesaid, the Notes so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified and from and after such date (unless the Company shall default in the payment of the Redemption Price) such Notes shall cease to bear interest. Upon surrender of any such Note for redemption in accordance with said notice, such Note shall be paid by the Company at the Redemption Price. Installments of interest due on or prior to the Redemption Date shall be payable to the Holders of the Notes registered as such on the relevant Record Dates according to the terms of such Notes and the provisions of Section 3.07. 93 If any Note called for redemption shall not be so paid upon surrender thereof for redemption, the principal shall, until paid, bear interest from the Redemption Date at the rate prescribed therefor in the Note. Section 13.07. NOTES REDEEMED IN PART. Any Note which is to be redeemed only in part shall be surrendered at a Place of Payment therefor (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 his attorney duly authorized in writing) and the Company shall execute and the Trustee shall authenticate and deliver to the Holder of such Note, without service charge, a new Note or Notes of any authorized denomination or denominations as requested by such Holder in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Note so surrendered. Section 13.08. REDEMPTION PURSUANT TO CASINO CONTROL ACT. Notwithstanding the provisions of this Article Thirteen, if the Casino Control Commission does not waive the qualification requirements as to any Noteholder (whether the record owner or beneficial owner) and requires that such Noteholder be qualified under the Casino Control Act, then, in such event, such Noteholder must qualify under such Act. If a Noteholder does not so qualify, the Noteholder must dispose of its interest in the Notes, within 30 days after the Company's receipt of notice of such finding, or the Company may repurchase such Notes at the lower of the Outstanding Amount and the Fair Market Value of such Notes, plus accrued interest to the date of such repurchase. Commencing on the date the Casino Control Commission serves notice upon either RIH or the Company that any Holder is disqualified, it shall be unlawful for any such disqualified Holder: (i) to receive any dividends or interest upon this Note; (ii) to exercise, directly or through any trustee or nominee, any right conferred by this Note; or (iii) to receive any remuneration in any form from either the Company or RIH for services rendered or otherwise. ------------------------------ This instrument may be executed in any number of counterparts or with counterpart signatures, each of which as executed shall be deemed to be an original, but all such counterparts shall constitute one and the same instrument. 94 IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed and attested, all as of the day and year first above written. RESORTS INTERNATIONAL HOTEL FINANCING, INC. Attest: By: ------------------- ------------------------------ Name: Title: RESORTS INTERNATIONAL HOTEL, INC. Attest: By: ------------------- ------------------------------ Name: Title: U.S. TRUST COMPANY OF CALIFORNIA, N.A., as Trustee Attest: By: ------------------- ------------------------------ Name: Title: 95 STATE OF NEW YORK : : ss COUNTY OF NEW YORK : I certify that on __________, 1993, _______________ personally came before me, and he acknowledged under oath, to my satisfaction, that: (a) he is the ______________ of Resorts International Hotel Financing, Inc., the corporation named in this document; (b) he is the attesting witness to the signing of this document by the proper corporate officer who is _______________ of Resorts International Hotel Financing Inc.; (c) this document was signed and delivered by the corporation as its voluntary act duly authorized by a proper resolution of its Board of Directors; (d) he knows the proper seal of the corporation which was affixed to this document; and (e) he signed this proof to attest to the truth of these facts. ------------------------- Signed and sworn to before me on _________, 1993. - ---------------------- Notary Public of the State of New York STATE OF NEW YORK : : ss COUNTY OF NEW YORK : I certify that on ________, 1993, ________________ personally came before me, and this person acknowledged under oath, to my satisfaction, that: (a) this person is the __________________________ of Resorts International Hotel, Inc., the corporation named in this document; (b) this person is the attesting witness to the signing of this document by the proper corporate officer who is ______________________, the __________________________ of Resorts International Hotel, Inc.; (c) this document was signed and delivered by the corporation by its voluntary act duly authorized by a proper resolution of its Board of Directors; (d) this person knows the proper seal of the corporation which was affixed to this document; and (e) this person signed this proof to attest to the truth of these facts. -------------------- Signed and sworn to before me on _________, 1993. - ------------------------- Notary Public [seal] STATE OF NEW YORK : : ss COUNTY OF NEW YORK : I certify that on ________, 1993, ________________ personally came before me, and this person acknowledged under oath, to my satisfaction, that: (a) this person is the __________________________ of U.S. Trust Company of California, N.A., a national banking association named in this document; (b) this person is the attesting witness to the signing of this document by the proper corporate officer who is ______________________, the __________________________ of U.S. Trust Company of California, N.A., a national banking association; (c) this document was signed and delivered by the corporation by its voluntary act duly authorized by a proper resolution of its Board of Directors; (d) this person knows the proper seal of the corporation which was affixed to this document; and (e) this person signed this proof to attest to the truth of these facts. ------------------------- Signed and sworn to before me on _________, 1993. - ------------------------- Notary Public [seal] Exhibit A RIH Senior Promissory Note EXHIBIT A AMENDED AND RESTATED SECURED PROMISSORY NOTE $35,000,000 [ ], 1994 WHEREAS, in partial repayment of certain inter-company debt owed by Resorts International Hotel, Inc., a New Jersey corporation ("RIH"), to Resorts International, Inc., a Delaware corporation ("RII"), RIH has issued to RII a promissory note on the date hereof in the principal amount of $35,000,000 (as the same may be amended or restated from time to time, the "Note"), which Note is secured by a Mortgage Securing RIH Junior Promissory Note dated as of the date hereof (the "Mortgage"), by RIH, as Mortgagor, which Mortgage encumbers certain real property owned or leased by RIH together with all buildings and improvements erected thereon (collectively, the "Property"); and WHEREAS, RII has transferred the Note and the Mortgage to RIHF in exchange for 11.375% Junior Mortgage Notes due 2004 (the "Junior Notes") in an aggregate principal amount of $35,000,000, which Junior Notes were issued pursuant to that certain Indenture dated as of even date herewith (the "Indenture") among RIHF, as issuer, RIH, as guarantor, and U.S. Trust Company of California, N. A., as trustee (the "Trustee"); and WHEREAS, RIHF has requested RIH to amend and restate the Note; NOW, THEREFORE, RIH agrees to amend and restate the Note as follows: RIH, for value received hereby promises to pay to the order of RIHF (RIHF and any subsequent holder of this Note being herein referred to as the "Payee"), the principal sum of Thirty-Five Million Dollars ($35,000,000), or such other principal sum as shall be outstanding hereunder, on December 15, 2004 (the "Maturity Date") in accordance with the provisions hereof, with interest on such principal sum from time to time outstanding, computed from [ ], 1994 [the Effective Date], in semi-annual installments of interest on June 15 and December 15 of each year, commencing initially on December 15, 1994, at a rate of 11.375% per annum on the unpaid balance hereof, until the principal hereof is paid in full. Payments of principal and interest on this Note shall be made at [address of the Payee], or at such other address as the Payee may designate in writing. Interest will be computed on the basis of a 360-day year of twelve 30-day months based on the actual number of days elapsed. Principal and interest shall be paid in money of the United States that at the time of payment is legal tender for public and private debts. The principal sum of this Note shall be increased from time to time if any Additional Notes (as defined in the Indenture) are issued under the Indenture as of the date of their original issuance by the principal amount of such Additional Notes. l.(a) This Note shall be prepaid (i) in connection with, but only to the extent of, any redemption of the Junior Notes of RIHF issued pursuant to the Indenture (all prepayments of this Note are hereinafter referred to as "Prepayments"), and/or (ii) by the surrender to the Trustee of the principal amount of any Junior Notes purchased or otherwise acquired by RIH or the Company (as defined in the Indenture) other than pursuant to the redemption provisions of the Junior Notes for cancellation in accordance with the provisions of the Junior Notes or the Indenture (it being expressly understood that the same Junior Notes shall reduce the principal amount of this Note only once). Each Prepayment under clause (i) above shall be made at the time that payment is required or permitted to be made by the Company to the Trustee under the Indenture in respect of any redemption of Junior Notes. Each Prepayment under clause (ii) above shall be deemed to be made at the time of surrender of such Junior Notes for cancellation. Each Prepayment of this Note pursuant to clause (i) above shall be in an amount equal to the aggregate amount paid to holders of Junior Notes on account of the redemption thereof (other than interest), together with accrued and unpaid interest on the amount of the reduction in the principal amount of this Note as a result of such Prepayment. The principal amount of this Note shall be reduced as a result of such prepayment in an amount equal to the aggregate principal amount of the Junior Notes so redeemed or surrendered. (b)Except as set forth in Section 1(a), this Note may not be prepaid in whole or in part. 2.RIH shall pay interest on overdue principal and prepayment premium at the rate of 14.375% per annum. 3.This Note is secured by the Mortgage on the Property. 2 4.If (i) RIH defaults in the payment of interest when the same becomes due and payable and the default continues for a period of ten days following receipt of a notice from the Payee or the Trustee specifying such default and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; (ii) RIH defaults in the payment of the principal or any part thereof when the same becomes due and payable at Maturity (as defined in the Mortgage); (iii) there shall occur any other Event of Default under the Mortgage or any other Note (as defined in the Mortgage); or (iv) there shall occur any other Event of Default under the Indenture, then on the happening of any such event, the Payee may declare the entire Outstanding Amount (as defined in the Indenture) of this Note and all accrued and unpaid interest thereon and all sums due under Section 5 of this Note and the Mortgage (collectively, the "Debt") to become immediately due and payable. 5. RIH hereby waives presentment and demand for payment, notice of dishonor, protest and notice of protest of this Note and agrees to pay all costs of collection when incurred, including reasonable attorneys' fees, which costs may be added to the amount due under this Note and be receivable therewith, and to perform and comply with each of the terms, covenants and provisions contained in this Note and the Mortgage on the part of RIH to be observed or performed. Except as expressly provided herein, no release of any security for the principal sum due under this Note or extension of time for payment of this Note, or any installment hereof, and no alteration, amendment or waiver of any provision of this Note or the Mortgage shall release, discharge, modify, change or affect the liability of RIH under this Note or the Mortgage. 6. RIH covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any usury, stay or extension law or any other law which would prohibit or forgive RIH from paying all or any portion of the interest on this Note, wherever enacted, now or at any time hereafter in force, or which may otherwise affect the covenants or the performance of this Note or the Mortgage; and RIH (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Payee, but will suffer and permit the execution of every such power as though no such law had been enacted. 7. This Note shall be deemed to be a contract under the laws of the State of New York and shall be construed 3 in accordance with and governed by the internal laws of the State of New York. 8. This Note may not be changed or terminated orally, but only by an agreement in writing signed by the party against whom enforcement of such change or termination is sought. 9. RIH shall not claim any credit or deduction from the interest or principal due hereunder by reason of payment of any tax assessed upon the Property. 10. Whenever the provisions of this Note and the provisions of the Indenture shall be inconsistent, the provisions of the Indenture shall govern. 11. This Note is subject to and shall be enforced in compliance with the provisions of the New Jersey Casino Control Act. This note shall not be transferred, assigned or amended without prior approval of the New Jersey Casino Control Commission. 12. Whenever used herein, the singular number shall include the plural, the plural the singular, and the words "Payee" and "RIH" shall include their respective successors and assigns. IN WITNESS WHEREOF, RIH has duly executed this Note as of the day and year first above written. RESORTS INTERNATIONAL HOTEL, INC. By: ________________________ Name: Title: 4 STATE OF NEW YORK ) ) ss. COUNTY OF NEW YORK ) BE IT REMEMBERED, that on this [ ] day of [ ], 1994, before me, the subscriber, a Notary public of the State of New York, personally appeared [ ], [ ] of RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation, and he acknowledged that he signed, sealed and delivered the same as his voluntary act and deed and the act and deed of said RESORTS INTERNATIONAL HOTEL, INC., and that he received a true copy of the within instrument on behalf of said corporation. _____________________________________ Notary Public of the State of New York [Seal] 5 Exhibit B Assignment Agreement from Resorts International Hotel Financing, Inc. NA932810098 - JUNIOR MORTGAGE ASSIGNMENT GD&C DRAFT DATED 12/17/93 ============================================================================== ASSIGNMENT OF AGREEMENTS ________________ RESORTS INTERNATIONAL HOTEL FINANCING, INC., a Delaware corporation, as Assignor, TO U.S. TRUST COMPANY OF CALIFORNIA, N.A., a national banking association, as Assignee Dated as of _________________, 1994 =============================================================================== Prepared by:__________________________ D. Eric Remensperger, Esq. ASSIGNMENT OF AGREEMENTS THIS ASSIGNMENT made as of the ___ day of ___________, 1994, by RESORTS INTERNATIONAL HOTEL FINANCING, INC., a Delaware corporation ("ASSIGNOR"), having an address at c/o Resorts International, Inc., 1133 Boardwalk, Atlantic City, New Jersey 08401, to U. S. TRUST COMPANY OF CALIFORNIA, N.A. a national banking association, having an address at 555 South Flower Street, Suite 2780 Los Angeles, California 90071, in its capacity as Trustee ("ASSIGNEE"), under that certain Indenture dated as of even date herewith (the "INDENTURE") among Assignor, Assignee and Resorts International Hotel, Inc., a New Jersey corporation ("MORTGAGOR"). WITNESSETH: WHEREAS, in partial repayment of certain inter-company debt owed by Mortgagor to Resorts International, Inc., a Delaware corporation ("RII"), Mortgagor has issued to RII a promissory note on the date hereof in the principal amount of $35,000,000 (as the same may be amended or restated from time to time, the "RIH JUNIOR PROMISSORY NOTE"), which note is secured by a Mortgage Securing RIH Junior Promissory Note dated as of the date hereof (the "MORTGAGE"), which Mortgage encumbers certain real property owned or leased by Mortgagor as more specifically described on SCHEDULE 1 hereto together with all buildings and improvements erected thereon (collectively, the "PROPERTY"); and WHEREAS, RII has transferred the RIH Junior Promissory Note and the Mortgage to Assignor in exchange for 11.375% Junior Mortgage Notes due 2004 (the "NOTES") in an aggregate principal amount of $35,000,000, which Notes were issued pursuant to the Indenture; and WHEREAS, as further security for the obligations of Mortgagor under the RIH Junior Promissory Note, Mortgagor has executed and delivered (i) an Assignment of Operating Assets and (ii) an Assignment of Leases and Rents, each in favor of Assignor (as assignee of RII) and each dated as of the date hereof (said Assignments and the Mortgage collectively referred to herein as the "RIH JUNIOR PROMISSORY NOTE MORTGAGE DOCUMENTS"), pursuant to which Mortgagor granted a security interest in specified personal property, assigned certain other rights and assigned all right, title and interest of Mortgagor in leases and rents to Assignor, all as security for the performance and observance of obligations of Mortgagor under the RIH Junior Promissory Note; and WHEREAS, the rights and obligations of the Assignee hereunder are subject to the terms set forth in that certain Intercreditor Agreement dated as of the date hereof among Assignor, Assignee, Mortgagor, Fidelity Management and Trust Company, as trustee, and State Street Bank and Trust Company of Connecticut, National Association, as trustee (and such other parties that may from time to time become a party thereto); and WHEREAS, in order to secure payment of the Notes and all other payments due to the holder(s) from time to time of the Notes (collectively, the "HOLDERS") or the Trustee under the Indenture, Assignor has agreed to execute this Assignment and to be bound by its terms; NOW, THEREFORE, THIS ASSIGNMENT FURTHER WITNESSETH: That Assignor in consideration of the purchase of the Notes by the Holders, Ten Dollars ($10.00) lawful money of the United States of America duly paid to Assignor by Assignee at or before the execution and delivery of these presents and for other good and valuable consideration, the receipt of which are hereby acknowledged, does hereby sell, assign and transfer unto Assignee and unto its successors and to its assigns forever, for its benefit and for the benefit of the Holders, and does hereby grant to Assignee a security interest in and to all of Assignor's estate, right, title and interest in, to and under any and all of the following described property, rights and interests (collectively, the "ASSIGNED PROPERTIES"): GRANTING CLAUSE FIRST All right, title and interest of Assignor in and to the RIH Junior Promissory Note, including all renewals, extensions, modifications and replacements of the same, and without limiting the generality of the foregoing, the present, continuing and future right to make claim for, collect or cause to be collected, receive or cause to be received directly from Mortgagor thereunder, all payments of principal, interest and other sums of money payable thereunder. GRANTING CLAUSE SECOND All right, title and interest of Assignor in and to the RIH Junior Promissory Note Mortgage Documents, including 2 all extensions, renewals, modifications, supplements and replacements of the same. TO HAVE AND TO HOLD all said properties, rights and interests unto Assignee and its successors and assigns forever. THIS ASSIGNMENT FURTHER WITNESSETH, that Assignor hereby agrees and covenants with Assignee as follows: ARTICLE ONE PARTICULAR COVENANTS OF ASSIGNOR Section 1.01. PERFORMANCE OF COVENANTS. Assignor represents, warrants and covenants that it is duly authorized to enter into this Assignment, and to grant and convey a lien on and security interest in the Assigned Properties to Assignee in the manner and to the extent herein set forth and that all action on its part required for the execution and delivery of this Assignment has been duly and effectively taken. Section 1.02. FURTHER ACTION REQUIRED. (a) Assignor covenants that it will, from time to time, execute and deliver such further instruments and take such further actions as may be required to carry out the purposes of this Assignment. (b) Assignor hereby appoints Assignee as its lawful attorney-in-fact (such power being coupled with an interest) in the name of Assignor or Assignee or both to execute any instruments or to take any actions to enforce all rights, powers and remedies of Assignor under or pursuant to the Assigned Properties. (c) Nothing contained herein shall limit the rights of Assignee contained in the Mortgage or the Indenture. (d) Until this Assignment is discharged in accordance with Section 5.01 hereof, no amendment, waiver, modification, discharge, release, enforcement or satisfaction by Assignor of any of the rights or remedies under the Assigned Properties shall be effective without the prior consent and approval of Assignee, and Assignor shall have no power or authority to take any such action without such consent and approval. ARTICLE TWO OBLIGATIONS TO ASSIGNEE Section 2.01. CONTINUING OBLIGATIONS. 3 (a) Assignee shall have no obligation, duty or liability with respect to the Assigned Properties or any of them (other than those specifically assumed in its capacity as Trustee pursuant to the Indenture). (b) Assignor shall at all times remain liable to observe and perform all of its covenants and obligations, if any, under the Assigned Properties, and does hereby agree to indemnify and hold harmless Assignee, its successors and assigns, from any liability, loss, damage or expense it or they may incur under the Assigned Properties or by reason of this Assignment. ARTICLE THREE PAYMENTS Section 3.01. PAYMENTS. All Revenues (as hereinafter defined) due and to become due under or pursuant to the Assigned Properties shall be paid by Mortgagor directly to Assignee at the address set forth in Section 6.02 hereof. Neither Assignor nor Assignee shall have the right, without Mortgagor's prior written consent, to instruct Mortgagor to pay Revenues to Assignor or in any manner or to any party other than directly to Assignee. Section 3.02. MORTGAGOR'S ACKNOWLEDGMENT. Mortgagor hereby joins in the execution of this Assignment to acknowledge (a) the assignment by Assignor to Assignee of Assignor's right, title and interest in, to and under the Assigned Properties, (b) Mortgagor's agreement to make payment of all Revenues under the Assigned Properties directly to Assignee at the address set forth in this Assignment, and (c) the right of Assignee to exercise or enforce in its own name, in the name of Assignor, or both, all of the rights, powers and remedies of Assignor in, to and under the Assigned Properties. Section 3.03. REVENUES. As used herein, the term "REVENUES" shall mean (a) all amounts paid or payable by Mortgagor under the RIH Junior Promissory Note or the RIH Junior Promissory Note Mortgage Documents, and (b) the net proceeds realized upon or as a result of the enforcement of any mortgage lien or security interest granted under the Assigned Properties or this Assignment or upon or as a result of the exercise of any right or remedy under the Assigned Properties or this Assignment. Section 3.04. CONFIRMATION. Assignor hereby agrees, and Mortgagor hereby acknowledges, that Mortgagor may rely exclusively on Assignee's directive that Assignee is entitled to take action under this Assignment. 4 ARTICLE FOUR DEFAULT PROVISIONS AND REMEDIES Section 4.01. ENFORCEMENT OF REMEDIES. (a) Upon the occurrence of any default under the Indenture or the Assigned Properties, or any of them (each, a "DEFAULT"), not cured within the applicable grace period after the applicable notice provision, if any, has been satisfied (each called an "EVENT OF DEFAULT"), Assignee may, at its option, (i) proceed directly to protect and enforce its rights and the rights of any Holders under this Assignment or pursuant to the Assigned Properties, or any one of them, by such suits, actions or special proceedings in equity or at law, or by proceedings in the office of any board or officer having jurisdiction, either for the specific performance of any covenant or agreement contained herein, or in the Assigned Properties, or any of them, or in aid of execution of any power granted herein or pursuant to the Assigned Properties, or any one of them, or for the enforcement of any proper legal or equitable remedy, including, without limitation, foreclosure of the Mortgage and/or the sale of the collateral or part thereof secured thereby at such foreclosure sale, subject to statutory and other legal requirements, as Assignee shall deem most effective to protect and enforce such rights, and Assignor hereby appoints Assignee as its lawful attorney-in-fact (such power being coupled with an interest) in the name of Assignor or Assignee or both to effectuate such foreclosure and/or sale of such collateral or part thereof; or (ii) instruct, direct and cause Assignor to effectuate the foregoing on behalf of and for the benefit of Assignee and the Holders, it being further understood that Mortgagor joins in the execution of this Assignment in order to acknowledge its agreement to promptly and duly execute and deliver any and all documents and take any and all actions required by Assignee in order to permit Assignee to foreclose and/or sell such collateral or part thereof, and obtain the benefits of this Assignment, as aforesaid. (b) Upon the occurrence of any Event of Default, Assignee shall be entitled to sue for, enforce payment of and receive any and all amounts then and at any time remaining due from Assignor or Mortgagor for principal and interest on the RIH Junior Promissory Note, or other sums due under the RIH Junior Promissory Note Mortgage Documents, as the case may be, or otherwise under any of the provisions of the Assigned Properties, or any of them, with interest on overdue payments of such principal, at the rate set forth in the RIH Junior Promissory Note, from the date of Default to the date of such payment, together with any and all fees, costs and expenses of collection (including reasonable attorneys' fees and court costs), subject to statutory and other legal requirements. 5 (c) Regardless of the occurrence of an Event of Default, upon five days' written notice to Mortgagor (or such shorter period or without notice if deemed necessary and appropriate by Assignee), Assignee may institute and maintain or cause in the name of Assignor or Assignee or both to be instituted and maintained such suits and proceedings as it may be advised by its counsel shall be necessary and appropriate to prevent any impairment of the Assigned Properties, or any of them, and to protect its interests in the Assigned Properties, and in the rents, issues, rights, revenues and other income arising therefrom, including power to institute and maintain proceedings to restrain the enforcement or compliance with any 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 hereunder or would be materially prejudicial to the interests of Assignee. (d) Nothing contained in this Article Four is intended to grant Assignee any greater remedies and rights than those allowed to Assignor in the respective Assigned Properties. In the event of any conflict between the remedies and rights contained in any of the Assigned Properties and the remedies and rights contained in this Article Four, then the remedies and rights set forth in the applicable Assigned Property shall govern. ARTICLE FIVE DISCHARGE OF ASSIGNMENT Section 5.01. DISCHARGE OF ASSIGNMENT. If Assignor shall pay or cause to be paid, or there shall otherwise be paid, to Assignee and/or the Holders' all amounts required to be paid by Assignor pursuant to the Indenture and the Notes, and the conditions precedent for the Indenture shall cease, determine and become null and void in accordance with Section 5.01 of the Indenture, Assignee shall promptly cancel and discharge of record this Assignment and any financing statements filed in connection herewith and execute and deliver to Assignor and to Mortgagor all such instruments as may be appropriate to evidence such discharge and satisfaction of said lien or liens, and Assignee shall pay over or deliver to Assignor all other moneys and securities held by it pursuant to this Assignment, which are not required for the payment of (a) principal and redemption price, if applicable, of and interest on, the Notes, and (b) all other amounts required to be paid by Assignor pursuant to the Indenture and the Notes. 6 ARTICLE SIX MISCELLANEOUS PROVISIONS Section 6.01. BINDING SUCCESSORS AND ASSIGNS. All of the covenants, stipulations, obligations and agreements contained in this Assignment shall be binding upon and inure to the benefit of Assignor, Assignee and Mortgagor (to the extent applicable to Mortgagor) and their respective successors and assigns. Section 6.02. NOTICES. (a) Any request, notice, demand, authorization, direction, request or other instrument authorized or required by this Assignment to be given to or filed with Assignor, Assignee or Mortgagor (collectively, "NOTICES") shall be deemed given when either (i) delivered by hand or (ii) five days after sending by registered or certified mail, postage prepaid, in either case addressed as follows: If to Assignor, at: Resorts International Hotel Financing, Inc. c/o Resorts International, Inc. 1133 Boardwalk Atlantic City, New Jersey 08401 Attention: Christopher D. Whitney If to Assignee, at: U.S. TRUST COMPANY OF CALIFORNIA, N.A. 555 South Flower Street Suite 2780 Los Angeles, California 90071 Attention: Corporate Trust Department If to Mortgagor, at: Resorts International Hotel, Inc. c/o Resorts International, Inc. 1133 Boardwalk Atlantic City, New Jersey 08401 Attention: Christopher D. Whitney (b) By Notice to Mortgagor, Assignor and/or Assignee, given as provided above, any party may designate additional or substitute addresses for Notices, which shall, notwithstanding Section 6.02(a), be deemed given with received. Section 6.03. PARTIAL INVALIDITY. In case any one or more of the provisions of this Assignment shall for any 7 reason be held to be illegal or invalid, such illegality or invalidity shall not affect any other provision of this Assignment, but this Assignment shall be construed and enforced at the time as if such illegal or invalid provisions had not been contained herein or therein, nor shall such illegality or invalidity or any application thereof affect any legal and valid application herein or thereof from time to time. Section 6.04. APPLICABLE LAW. This Assignment shall be governed by and construed under the internal laws of the State of New Jersey, without giving effect to the principles of conflicts of law. Section 6.05. NO AMENDMENT. For so long as the Notes shall remain outstanding, the Assigned Properties may not be modified, amended or terminated except in accordance with the provisions of the Indenture or the Assigned Properties. Section 6.07. CASINO CONTROL ACT. Each of the provisions of this Assignment is subject to and shall be enforced in compliance with the provisions of the New Jersey Casino Control Act. This Agreement shall not be transferred, assigned or amended without prior approval of the New Jersey Casino Control Commission. IN WITNESS WHEREOF, Assignor, Assignees and Mortgagor have executed this Assignment Agreement as of the date first above written. RESORTS INTERNATIONAL HOTEL FINANCING, INC. Attest: _________________________________ By:_______________________________ President RESORTS INTERNATIONAL HOTEL, INC. Attest: _________________________________ By:_______________________________ President 8 U.S. TRUST COMPANY OF CALIFORNIA, N.A. Attest: ___________________________________ By:_________________________________ Title 9 STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK) BE IT REMEMBERED that on ______________, 1994, before me, the subscriber, __________________, personally appeared _______________, who, being by me duly sworn on his oath, deposes and makes proof to my satisfaction, that he is the Asst. Secretary of U.S. TRUST COMPANY OF CALIFORNIA, N.A., the corporation named in the within instrument; that __________________ is the Vice President of said Corporation; that the execution, as well as the making of this instrument, has been duly authorized by a proper resolution of the board of directors of the said corporation; that deponent well knows the corporate seal of said corporation; and that the seal affixed to said instrument is the proper corporate seal and was thereto affixed and said instrument signed and delivered by said Vice President as and for the voluntary act and deed of said corporation. In presence of deponent who thereupon subscribed his name thereto as attesting witness; and deponent signed this proof to attest to the truth of these facts. ____________________________ [Name] [Assistant] Secretary Sworn to and subscribed before me, the date aforesaid ____________________________ Notary Public My commission expires: ____________________________ 10 STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK) BE IT REMEMBERED that on _________________, 1994, before me, the subscriber, __________________, personally appeared ___________________, who being by me duly sworn on his oath, deposes and makes proof to my satisfaction, that he is the Asst. Secretary of Resorts International Hotel, Inc., the corporation named in the within instrument; that ____________ is the Vice President of said Corporation; that the execution, as well as the making of this instrument, has been duly authorized by a proper resolution of the board of directors of the said corporation; that deponent well knows the corporate seal of said corporation; and that the seal affixed to said instrument is the proper corporate seal and was thereto affixed and said instrument signed and delivered by said Vice President as and for the voluntary act and deed of said corporation. In presence of deponent who thereupon subscribed his name thereto as attesting witness; and deponent signed this proof to attest to the truth of these facts. ____________________________ [Name] [Assistant] Secretary Sworn to and subscribed before me, the date aforesaid ____________________________ Notary Public My commission expires: ____________________________ 11 STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK) BE IT REMEMBERED that on _________________, 1994, before me, the subscriber, __________________, personally appeared ___________________, who being by me duly sworn on his oath, deposes and makes proof to my satisfaction, that he is the Asst. Secretary of Resorts International Hotel, Inc., the corporation named in the within instrument; that ______________ is the Vice President of said corporation; that the execution, as well as the making of this instrument, has been duly authorized by a proper resolution of the board of directors of the said corporation; that deponent well knows the corporate seal of said corporation; and that the seal affixed to said instrument is the proper corporate seal and was thereto affixed and said instrument signed and delivered by said Vice President as and for the voluntary act and deed of said corporation. In presence of deponent who thereupon subscribed his name thereto as attesting witness; and deponent signed this proof to attest to the truth of these facts. ____________________________ [Name] [Assistant] Secretary Sworn to and subscribed before me, the date aforesaid ____________________________ Notary Public My commission expires: ____________________________ 12 EXHIBIT C SUBORDINATION PROVISIONS EXHIBIT C SUBORDINATION PROVISIONS A. SUBORDINATION. Anything herein to the contrary notwithstanding, Subordinated Debt, including principal, premium, if any, and interest, shall be subordinate and junior to the extent set forth in subparagraphs (i) to (v), inclusive, below, to all Senior Indebtedness. (i) If the Company (as defined in this Exhibit C) shall default in the payment of any principal of or interest on any Senior Indebtedness when the same becomes due and payable, whether at maturity or at a date fixed for prepayment or by declaration of acceleration or otherwise, then, unless and until such default shall have been remedied by payment in full in cash or waived or shall have ceased to exist or all amounts then due and payable in respect of Senior Indebtedness shall have been paid in full or provision shall have been made for such payment in cash, no holder of the Subordinated Debt shall accept or receive any direct or indirect payment (in cash, property, by set-off or otherwise) of or on account of any Subordinated Debt. (ii) In the event of any insolvency, bankruptcy, liquidation, reorganization or other similar proceedings, or any receivership proceedings in connection therewith, relative to the Company, and in the event of any proceedings for voluntary liquidation, dissolution or other winding up of the Company, whether or not involving insolvency or bankruptcy proceedings, then all Senior Indebtedness shall first be paid in full in cash, or such payment shall have been provided for in cash, before any payment of or on account of principal or interest is made by the Company upon the Subordinated Debt. (iii) In any of the proceedings referred to in subparagraph (ii) above, any payment or distribution of any kind or character, whether in cash, property, stock or obligations, which may be payable or deliverable by the Company in respect of the Subordinated Debt shall be paid or delivered directly to the holders of Senior Indebtedness (or to a banking institution selected by the court or Person making the payment or delivery or designated by any holder of Senior Indebtedness) for application in payment thereof in accordance with the priorities then existing among such holders, unless and until all principal of and interest on all Senior Indebtedness shall have been paid in full in cash or such payment shall have been provided for; PROVIDED, HOWEVER, that no such delivery shall be made to holders of Senior Indebtedness of stock or obligations which are issued pursuant to reorganization proceedings or dissolution or liquidation proceedings, or upon any merger, consolidation, sale, lease, transfer or other disposal not prohibited by the provisions of the Subordinated Debt, by the Company, as reorganized, or by the corporation succeeding to the Company or acquiring its property and assets, if such stock or obligations are subordinate and junior (whether by law or agreement) at least to the extent provided in this Section ___ to the payment of all Senior Indebtedness then outstanding and to the payment of any stock or obligations which are issued in exchange or substitution for any Senior Indebtedness then outstanding. (iv) Upon the occurrence and continuance of any Default Subordination Event (other than under circumstances when the terms of subparagraph (ii) above are applicable), no holder of the Subordinated Debt shall accept or receive any direct or indirect payment (in cash, property, by set-off or otherwise) of or on account of any indebtedness in respect of the Subordinated Debt during the Applicable Stand-Still Period; PROVIDED, HOWEVER, that in the case of any payment on or in respect of any Subordinated Debt which would (in the absence of any such Default Subordination Event) have been due and payable on any date (a "Scheduled Payment Date") during such Applicable Stand-Still Period, the provisions of this subparagraph (iv) shall not prevent such payment (a "Scheduled Payment") on or after the date (the "Deferred Maturity Date") immediately following the termination of such Applicable Stand-Still Period. Notwithstanding the foregoing provisions of this subparagraph (iv), the failure by the Company to make a Scheduled Payment on a Scheduled Payment Date during an Applicable Stand-Still Period shall nevertheless constitute an Event of Default. (v) If any payment or distribution of any character, whether in cash, securities or other property, shall be received by any holder of Subordinated Debt in contravention of any of the terms of this Section ___ and before all the Senior Indebtedness shall have been paid in full, such payment or distribution shall be received in trust for the benefit of the holders of the Senior Indebtedness at the time outstanding in accordance with the priorities then existing among such holders, and shall forthwith be paid over or delivered and transferred to the holders of Senior Indebtedness. B. OBLIGATION OF OBLIGORS UNCONDITIONAL. The provisions of this Section ___ are for the purpose of defining the relative rights of the holders of Senior Indebtedness on the one hand, and the holders of the Subordinated Debt on the other hand, against the Company and its property; and nothing herein shall impair, as between the Company and the holders of the Subordinated Debt, the obligation of the Company, which is unconditional and absolute, to pay to the holders thereof the principal thereof and premium, if any, and interest thereon in accordance with their terms and the provisions hereof, nor shall anything herein prevent the holders of the Subordinated Debt from exercising all remedies otherwise permitted by applicable law or hereunder upon default hereunder or under the Subordinated Debt (including, without limitation, the right to demand payment and sue for performance hereof and of the Subordinated Debt and to accelerate the maturity thereof as provided in Section ___), subject to the rights, if any, under this Section ___ of holders of Senior Indebtedness to receive cash, property, stock or obligations otherwise payable or deliverable by the Company to the holders of the Subordinated Debt; PROVIDED, HOWEVER, that upon the commencement and during the continuance of an Applicable Stand-Still Period the holders of the Subordinated Debt, to the extent they are otherwise entitled to do so, will not accelerate the maturity of the Subordinated Debt or pursue any other remedy to enforce payment thereof or initiate any bankruptcy or insolvency proceeding relative to the Company unless and until the earlier of (i) the end of such Applicable Stand-Still Period and (ii) the acceleration of the Senior Indebtedness related to such Applicable Stand-Still Period. C. Subrogation. Upon payment in full of Senior Indebtedness, the holders of the Subordinated Debt shall be subrogated to the rights of the holders of the Senior Indebtedness to receive payments or distributions of assets of the Company made on Senior Indebtedness until the principal of and premium, if any, and interest on the Subordinated Debt shall be paid in full, and, for the purposes of such subrogation, no payments to the holders of Senior Indebtedness of any cash, property, stock or obligations to which the holders of the Subordinated Debt would be entitled except for the provisions of subparagraph (iii) of Section A above shall, as between the Company, its creditors (other than the holders of the Senior Indebtedness) and the holders of the Subordinated Debt, be deemed to be a payment by the Company to or on account of the Senior Indebtedness. D. DEFINITIONS. "DEFAULT SUBORDINATION EVENT" means the existence of all of the following: (i) an event of default shall have occurred and be continuing in respect of the Senior Indebtedness, (ii) the holders of the Subordinated Debt shall have received a notice from or on behalf of any holder of Senior Indebtedness specifying that such event of default has occurred and is continuing and that such notice constitutes a "Default Subordination Notice", and (iii) no other Default Subordination Notice shall have been delivered by or on behalf of any holder of Senior Indebtedness within the 365-day period immediately preceding the giving of such notice. The "APPLICABLE STAND-STILL PERIOD" relating to any Default Subordination Event shall be deemed to continue until the event of default under the Senior Indebtedness giving rise thereto shall have been cured (by payment or otherwise) or waived or a period of 180 days shall have elapsed from the giving of the Default Subordination Notice relating thereto, in any such case whichever shall be the shorter period. "SENIOR INDEBTEDNESS" shall mean and include all obligations (whether now outstanding or hereafter incurred), for the payment of which the Company is responsible or liable as obligor, guarantor or otherwise, including, without limitation, principal, interest, premium, fees, expenses and indemnities, whether now owing or hereafter incurred (including any interest accruing subsequent to the commencement of a proceeding described in Section 7.04, regardless of whether the claims of holders of such payment obligations for such interest are allowed in any such proceeding). NA932810086 - NOTE MORTGAGE RIH JUNIOR PROMISSORY NOTE GD&C DRAFT DATED 12/17/93 MORTGAGE SECURING RIH JUNIOR PROMISSORY NOTE by and between RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation, as Mortgagor, and RESORTS INTERNATIONAL HOTEL FINANCING, INC. a Delaware corporation, as Mortgagee Dated as of ________ __, 1994 Prepared by:_______________________ D. Eric Remensperger After recording return to: Gibson, Dunn & Crutcher 200 Park Avenue New York, New York 10166 Attention: D. Eric Remensperger MORTGAGE SECURING RIH JUNIOR PROMISSORY NOTE THIS MORTGAGE, dated as of ________ ___, 1994, between RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation ("Mortgagor"), and RESORTS INTERNATIONAL HOTEL FINANCING, INC., a Delaware corporation ("RIHF"), having an address at c/o Resorts International, Inc., 1133 Boardwalk, Atlantic City, New Jersey 08401 (RIHF, or its successors or assigns which shall than be the Noteholder (as hereinafter defined), being referred to herein as "Mortgagee"). WITNESSETH: In consideration of $10.00 in hand paid by Mortgagee to Mortgagor and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in order to secure (i) the payment of the principal amount (and premium, if any) of the secured junior promissory note by Mortgagor to Mortgagee in the principal amount of $35,000,000 as amended and restated the date hereof (hereinafter collectively referred to as the "Note"), in lawful money of the United States, to be paid in accordance with the provisions thereof (and all renewals, extensions, and modifications thereof) all of which are hereby made an integral part hereof as though set forth at length herein; (ii) payment of interest (including interest on all overdue principal and premium, if any) becoming due under the provisions of the Note; (iii) payment by Mortgagor to Mortgagee of all sums expended or advanced by Mortgagee pursuant to any term or provision of this Mortgage; (iv) performance of each covenant, term, condition and agreement of Mortgagor herein or in the Note contained; (v) all costs and expenses, including reasonable counsel fees and expenses as provided in Section 3.07, which may arise in respect of the Note and this Mortgage or of the obligations secured hereby; and (vi) performance and observance of all of the provisions herein contained, Mortgagor has executed and delivered this Mortgage and has bargained, sold, aliened, mortgaged, pledged, released, conveyed and confirmed unto Mortgagee and its successors hereunder and assigns forever, all of its right, title and interest in, to and under any of the following described property: GRANTING CLAUSES GRANTING CLAUSE FIRST All the property, rights, title, interest, privileges and franchises particularly described in annexed Schedule 1 (the "Owned Land") which Schedule is hereby made a part of, and deemed to be described in, this Granting Clause as fully as if set forth in this Granting Clause at length. GRANTING CLAUSE SECOND All of the property, rights, title, interest, privileges and franchises of the Mortgagor as lessee in those certain leases (the "Ground Leases") particularly described in Schedule 2, which Schedule is hereby made a part of, and deemed to be described in, this Granting Clause as fully as if set forth in this Granting Clause at length, which Ground Leases cover the real property described in such Schedule 2 (the "Leased Land") and in and to any and all modifications, extensions and renewals of the Ground Leases and all options set forth therein, together with (i) all credits, deposits, privileges and rights of the Mortgagor as lessee under the Ground Leases, now or at any time existing, (ii) the leaseholds and the leasehold estates created by the Ground Leases and (iii) all of the estates, rights, titles, claims or demands whatsoever of Mortgagor, either in law or in equity, in possession or in expectancy, of, in and to the Ground Leases and the Leased Land, together with (x) any and all other, further or additional title, estates, interests or rights which may at anytime be acquired by the Mortgagor in or to the Leased Land, and the Mortgagor expressly agrees that if the Mortgagor shall, at any time prior to payment in full of all indebtedness secured hereby, acquire fee simple title or any other greater estate to the Leased Land pursuant to the Ground Leases, or otherwise, the lien of this Mortgage shall attach, extend to, cover and be a lien upon such fee simple title or other greater estate and thereupon the lien of this Mortgage shall be prior to the lien of any mortgage or deed of trust placed on such acquired title, estate, interest or right subsequent to the date of this Mortgage (except as otherwise provided herein) and (y) any right to possession or statutory term of years derived from, or incident to, the Ground Leases pursuant to Section 365(h) of the U.S. Bankruptcy Code (the "Code") or any comparable provision contained in any present or future federal, state, local, foreign or other statute, law, rule or regulation. 2 GRANTING CLAUSE THIRD All the rents, issues, profits, revenues and other income and proceeds of the property subjected or required to be subjected to the lien of this Mortgage, including, without limitation, the property described in Granting Clauses First, Second, and Sixth (such property is hereinafter collectively referred to as the "Premises") and all the estate, right, title and interest of every nature whatsoever of the Mortgagor in and to the same and every part thereof. The collective metes and bounds description of the Owned Land and the Leased Land is set forth in annexed Schedule 3. GRANTING CLAUSE FOURTH All of the rights as lessor under Leases in effect on the date of execution of this Mortgage or hereafter entered into by the Mortgagor, if any, including extensions, renewals or amendments of all of the same, and the immediate and continuing right as security in accordance with an Assignment of Leases and Rents of even date herewith between Mortgagor and Mortgagee, and, after the occurrence of an Event of Default, to make claim for, collect, receive and receipt for (and to apply the same as provided herein) any and all rents, income, revenues, issues, profits, security and other sums of money payable or receivable thereunder or pursuant thereto, and all proceeds thereof, whether payable as rent, insurance proceeds, condemnation awards, security or otherwise and whether payable prior to or subsequent to the maturity date of the Note, to receive and give notices and consents thereunder, to bring actions and proceedings thereunder or for the enforcement thereof, to make waivers and agreements, to take such action upon the happening of a default under any Lease, including the commencement, conduct and consummation of any proceedings at law or in equity as shall be permitted by any provision of any Lease, and to do any and all things which the Mortgagor or any lessor is or may become entitled to do under the Leases; provided, that the assignment made by this granting Clause Fourth shall not impair or diminish any obligation of the Mortgagor under the Leases, or shall any such obligation be imposed upon the Mortgagee. GRANTING CLAUSE FIFTH Without limiting the generality of the provisions of Granting Clause Third, the Mortgagor's rights, privileges and franchises in and to the following, to the extent of the Mortgagor's interest therein and thereto and to the extent assignable (collectively, "Operating Assets"): 3 (a) bookings and receipts for the use of guest rooms, banquet facilities and meeting rooms at the Casino-Hotel; (b) all contracts respecting utility services for, and the maintenance, operations, or equipping of the Premises, including guaranties and warranties relating thereto; (c) the Permits; (d) all contract rights, leases, concessions, trademarks, trade names, service marks, service names, logos, copyrights, warranties and other items of intangible personal property relating to the ownership or operation of the Casino-Hotel, including, without limitation, (1) telephone and other communication numbers, (2) all software licensing agreements as are required to operate computer software systems at the Casino-Hotel, all transferable proprietary interest in software required to operate the computer systems at the Casino Hotel and books and records relating to the software programs, and (3) lessee's interest under leases of Tangible Personal Property; (e) all agreements entered into by or on behalf of the Mortgagor or which have been assigned to the Mortgagor, for the design and construction, and for the equipping and furnishing, of the Casino-Hotel, including architect's agreements, engineering agreements, construction contracts, consulting agreements and agreements or purchase orders for all items of Tangible Personal Property and payment and performance bonds in favor of the Mortgagor in connection with the Trust Estate (and all warranties and guaranties thereunder and warranties and guaranties of any subcontractor and bond issued in connection with the work to be performed by any subcontractor); (f) the following personal property (the "Tangible Personal Property") now or hereafter acquired by the Mortgagor: (i) all furniture, furnishings, equipment, machinery, apparatus, appliances, fixtures and fittings and other articles of tangible personal property which are, or are to be located on, or used in connection with the operation of, the Casino-Hotel; (ii) all slot machines, electronic gaming devices, crap tables, blackjack tables, roulette tables, baccarat tables, and big six wheels, located or to be located in the Casino-Hotel, and all 4 furnishings and equipment to be used in connection with the operation thereof; (iii) all cards, dice, gaming chips and placques, tokens, chip racks, dealing shoes, dice cups, dice sticks, layouts, paddles, roulette balls and other consumable supplies and items to be used in connection with the gaming operations of the Casino-Hotel; (iv) all china, glassware, linens, kitchen utensils, silverware and uniforms, whether in use or held in reserve storage for future use, in connection with the operation of the Casino-Hotel, which are on hand or on order whether stored on-site or off-site; (v) all consumables and operating supplies of every kind and nature for use in all of the operating departments of the Casino-Hotel, or in the improvements now or hereafter located on any of the Owned Land, including without limitation, accounting supplies, guest supplies, forms, printing, stationery, food and beverage stock, bar supplies, laundry supplies and brochures to existing purchase orders; (vi) all sets and scenery, costumes, props and other items of tangible personal property on hand or on order for use in the production of shows in the showroom of the Casino-Hotel; and (vii) all cars, limousines, vans, buses, trucks and other vehicles owned or leased by the Mortgagor for use in Casino-Hotel operations, together with all equipment, parts and supplies used to service, repair, maintain and equip the foregoing; (g) all drawings, designs, plans and specifications prepared by the architects, interior designers, landscape designers and any other consultants for the development of the Premises, as amended from time to time; (h) any administrative and judicial proceedings initiated by the Mortgagor, or in which the Mortgagor has intervened, concerning the Casino-Hotel, and agreements, if any, which are the subject matter of such proceedings; (i) any customer lists utilized by the Mortgagor, including lists of transient guests and restaurant and bar patrons and "high roller" lists; and 5 (j) all of the goodwill in connection with the operation of the Premises. The Mortgagor and Mortgagee acknowledge that notwithstanding anything contained in this Mortgage to the contrary, the Mortgagor may share facilities, operations and employees with any other hotel owned by any Affiliate of the Mortgagor provided that (i) such sharing of facilities is permitted by all applicable Legal Requirements, (ii) terms on which such facilities are shared are not detrimental to the operations of the Casino-Hotel or the financial condition of the Mortgagor and (iii) the regular operation of the Casino-Hotel would not be materially impaired upon the separation of such facilities. The assignment made by this Granting Clause Fifth shall not impair or diminish any obligation of the Mortgagor with respect to the Operating Assets, nor shall any such obligation be imposed on the Mortgagee. GRANTING CLAUSE SIXTH (a) All of the Mortgagor's right, title and interest in and to all buildings and improvements of every kind and description now or hereafter erected or placed on the Owned Land and/or the Leased Land and all fixtures and articles of personal property now or hereafter attached to or contained in and used in connection with such buildings and improvements, including, but not limited to, all apparatus, furniture, furnishings, machinery, motors, elevators, fittings, radiators, cooking ranges, ice boxes, ice machines, printing presses, mirrors, bars, mechanical refrigerators, furnaces, coal and oil-burning apparatus, wall cabinets, machinery, generators, partitions, steam and hot water boilers, lighting and power plants, pipes, plumbing, radiators, sinks, bath tubs, water closets, gas and electrical fixtures, awnings, shades, screens, blinds, dishwashers, freezers, vacuum cleaning systems, office equipment and other furnishings, and all plumbing, heating, lighting, cooking, laundry, ventilating, incinerating, air-conditioning and sprinkler equipment or other fire prevention or extinguishing apparatus and material, and fixtures and appurtenances thereto; and all renewals or replacements thereof or articles in substitution therefor, whether or not the same are or shall be attached to the Owned Land, the Leased Land or to any such buildings and improvements thereon, in any manner; and 6 (b) All of the Mortgagor's right, title and interest in and to (i) the Leased Land, if the Mortgagor acquires the fee simple title to the Leased Land or any part thereof (subject to the provisions of Section 2.06 hereof), (ii) all air rights and rights to maintain supporting columns and all rights to construct and maintain bridges, and to create private rights of way over streets now or hereafter owned or enjoyed by the Mortgagor and appurtenant to the Owned Land or Leased Land, and (iii) all right, title and interest of Mortgagor as grantee or licensee in and to the following to the extent necessary for the use and enjoyment of the Owned Land or the Leased Land: (A) all those plots, pieces or parcels of land and air rights, more particularly described on Schedule 5, attached hereto and made a part hereof (the "Bridge Easement Parcels"), with respect to which Mortgagor has easements, licenses or other rights of possession or use pursuant to these certain easement and license agreements more particularly described on Schedule 5 (the "Bridge Easements"), (B) all those plots, pieces or parcels of land and air rights, more particularly described on Schedule 6 attached hereto and made a part hereof (the "Elevator Easement Parcels"), with respect to which Mortgagor has easements, licenses or other rights of possession or use pursuant to those certain license agreements more particularly described on Schedule 6 (the "Elevator Easements"), and; (C) all that plot, piece or parcel of land and air rights more particularly described on Schedule 7 attached hereto and made a part hereof (the "Turn-Around Easement Parcel") with respect to which Mortgagor has easements, licenses, or other rights of possession or use pursuant to that certain easement more particularly described on Schedule 7 (the "Turn-Around Easement"), (the Bridge Easement Parcels, the Elevator Easement Parcels and the Turn-Around Easement Parcel are collectively referred to herein as the "Easement Parcels"; and the Bridge Easements, the Elevator Easements and the Turn-Around Easement are collectively referred to as the "Easements"), together with all rights of way, privileges, liberties, tenements, hereditaments and appurtenances belonging or in any way appertaining to such estates, it being the intention hereof that all property, interests, rights and privileges and franchises pertaining to the Premises (other than Excepted Property) shall be as fully embraced within and subjected to the lien hereof as if such property were specifically described herein. To the extent the grant of a security interest in any portion of the Trust Estate is governed by the Uniform Commercial Code, this Mortgage is hereby deemed to be as well a security agreement under the Uniform Commercial Code for the purpose of creating hereby a security interest in all of the Mortgagor's right, title and interest in and to such property, securing the obligations secured hereby, for the benefit of the Mortgagee; * * * TOGETHER with all of the Mortgagor's right, title and interest in and to all mineral and water rights and any title or reversion, in and to the beds of the ways, streets, avenues and alleys adjoining the Premises to the center line 7 thereof and in and to all strips, gaps and gores adjoining the premises on all sides thereof; and TOGETHER with all of the Mortgagor's right, title and interest to and singular the tenements, hereditaments, easements, appurtenances, passages, water courses, riparian rights, other rights, liberties and privileges thereof or in any way appertaining to the Premises, including any other claim at law or in equity as well as any after-acquired title, franchise or license and the reversion and reversions and remainder and remainders thereof; and TOGETHER with all awards and other compensation heretofore or hereafter to be made to the present and all subsequent owners of the Trust Estate for any taking by eminent domain, either permanent or temporary, of all or any part of the Trust Estate or any easement or appurtenances thereof, including severance and consequential damage and change in grade of streets, all in accordance with and subject to the provisions of the Superior Instrument Requirements and Section 5.20; and TOGETHER with all proceeds of any unearned premiums on any insurance policies described in Section 5.11, and the right to receive and apply the proceeds of any insurance, judgments, or settlements made in lieu thereof, for damage to the Trust Estate or otherwise, all in accordance with and subject to the provisions of Section 5.11 and the Superior Instrument Requirements. EXCLUDING, with respect to all of the hereinabove granted property, rights, title, interest, privileges and franchises, the Excepted Property. TO HAVE AND TO HOLD all the Premises, Leases, Ground Leases, Operating Assets, Easements, properties, options, credits, deposits, rights, privileges and franchises of every kind and description, real, personal or mixed, granted hereby, bargained, sold, aliened, assigned, transferred, hypothecated, pledged, released, conveyed, mortgaged, or confirmed as aforesaid, or intended, agreed or covenanted so to be, together with all the appurtenances thereto appertaining (the Premises, Leases, Ground Leases, Operating Assets, Easements, properties, options, credits, deposits, rights, privileges and franchises, being herein collectively called the "Trust Estate") unto the Mortgagee and its successors and assigns forever. SUBJECT, HOWEVER, on the date hereof, to Existing Encumbrances and, after the date hereof, to Permitted Encumbrances. SUBJECT, FURTHER, to the rights and obligations of the Mortgagee and the Noteholder as set forth in that certain 8 Intercreditor Agreement dated as of the date hereof among RIH, RIHF, Trustee, Fidelity Management and Trust Company ("Fidelity"), as trustee under that certain note purchase agreement dated as of the date hereof among Fidelity, RIH and RIHF, and State Street Bank and Trust Company of Connecticut, National Association ("State Street"), as trustee under that certain indenture dated as of the date hereof among State Street, RIH and RIHF (and such other parties that may from time to time become a party thereto). BUT IN TRUST, NEVERTHELESS, for the benefit and security of the Noteholder. UPON CONDITION that, until the happening of an Event of Default and subject to the provisions of Article Two, the Mortgagor shall be permitted to possess and use the Trust Estate, and to receive and use the rents, issues, profits, revenues and other income of the Trust Estate. AND IT IS HEREBY COVENANTED AND DECLARED that the Trust Estate is to be held and applied by the Mortgagee, subject to the further covenants, conditions and trusts hereinafter set forth, and the Mortgagor does hereby covenant and agree to and with the Mortgagee, for the benefit of the holder of the Note as follows: ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION Section 1.01. DEFINITIONS. For all purposes of this Mortgage, except as otherwise expressly provided or unless the context otherwise requires: (a) the terms defined in this Article One have the meanings assigned to them in this Article One and include the plural as well as the singular; (b) all accounting terms not otherwise defined herein have the meanings assigned to them, and all computations herein provided for shall be made in accordance with generally accepted accounting principles consistently applied; and (c) the words "herein," "hereof" and "hereunder" and other words of similar import refer to this Mortgage as a whole and not to any particular Article, Section or other subdivision. "AFFILIATE" has the meaning set forth in Section 1.01 of the Indenture. 9 "AFTER-ACQUIRED FEE MORTGAGE" has the meaning set forth in Section 2.07. "ALTERATIONS" has the meaning set forth in Section 5.12. "APPRAISER" means an MAI appraiser (i.e., a Member in good standing of the American Institute of Real Estate Appraisers) who is (i) of recognized standing among appraisers of properties similar to the Casino-Hotel and (ii) experienced in the appraisals of properties of a similar size and scope to that of the Casino-Hotel, selected by the Mortgagor. "ASSIGNMENT OF LEASES AND RENTS" has the meaning stated in Section 1.01 of the Indenture. "CAPITALIZED LEASE OBLIGATION" has the meaning stated in Section 1.01 of the Indenture. "CASINO" means that portion of the Casino-Hotel used for gaming and related activities. "CASINO-HOTEL" means the casino and hotel complex and ancillary structures and facilities located on the Premises and furniture, fixtures and equipment at any time contained therein. "CASUALTY" means any act or occurrence of any kind or nature which results in damage, loss or destruction to any buildings or improvements on the Premises and/or Tangible Personal Property. "CODE" has the meaning stated in Granting Clause Second. "COMBINATION TRANSACTION" has the meaning stated in Section 10.01 of the Indenture. "DEFAULT" means the occurrence and continuance of an Event of Default or an event which, after notice or lapse of time or both, would become an Event of Default. "DEPOSITARY" means an Independent entity to which insurance proceeds or a condemnation award is paid to be held in trust for restoration pursuant to the provisions of a Ground Lease or Superior Mortgage. "EVENT OF DEFAULT" has the meaning stated in Section 3.01. An Event of Default shall "exist" if an Event of Default shall have occurred and be continuing. "EXCEPTED PROPERTY" means: 10 (1) subject to the provisions of the Assignment of Leases and Rents, any cash held by the Mortgagor from rents, issues, profits, revenues and other proceeds of the Trust Estate to the extent that such cash may be, but has not been, distributed or paid out in accordance with the Services Agreement or in accordance with the provisions of Section 12.07 the Indenture; (2) all personal property owned by lessees under Leases and the personal property of any guests staying in the Hotel; (3) any property deemed to be Excepted Property pursuant to the provisions of Section 2.03 hereof; (4) Tangible Personal Property subject to an FF&E Financing Agreement; and (5) counterchecks and any other property the granting of a security interest in which is prohibited by the New Jersey Casino Control Act, N.J.S.A. 5:12-1 et seq., and the regulations promulgated thereunder. "EXISTING ENCUMBRANCES" means the matters set forth in Schedule 8. "FIRST MORTGAGE DEBT" means any financing secured by a Superior Mortgage secured by or imposing a lien on all or a portion of the Trust Estate on a parity with or senior to the lien of this Mortgage. "FF&E FINANCING AGREEMENT" means a purchase money lien upon any Tangible Personal Property and other items constituting Operating Assets, such as computer software, which are financed, purchased or leased by the Mortgagor, provided that, except as set forth on Schedule 3, the principal amount of the indebtedness secured by such lien shall not exceed eighty-five (85%) percent of the cost to the Mortgagor of such property at the time of acquisition. "GROUND LEASES" has the meaning stated in Granting Clause Second. "GUARANTY MORTGAGE" means that certain Mortgage Securing Guaranty of Junior Mortgage Notes dated as of the date hereof from Mortgagor to U.S. Trust Company of California, N.A., a national banking association, which secures the Notes (as defined in the Indenture), the lien of which shall be PARI PASSU with the lien of this Mortgage. "HOTEL" means that portion of the Casino-Hotel not included within the Casino. 11 "IMPOSITIONS" has the meaning stated in Section 5.08. "INDENTURE" means that certain Indenture - 11.375% Junior Mortgage Notes due 2004, dated as of even date herewith among the Mortgagor, RIHF, as issuer, and U.S. Trust Company of California, N.A., as trustee, as it may from time to time be supplemented, modified or amended by one or more trust indentures or other instruments supplemental thereto entered into pursuant to the applicable provisions thereof. "INDEPENDENT" when used with respect to any specified Person means such a Person who (a) is in fact independent, (b) does not have any direct financial interest or any material indirect financial interest in the Mortgagor or in any other obligor upon the Note or in any Affiliate of the Mortgagor or of such other obligor and (c) is not connected with the Mortgagor or such other obligor or any Affiliate of the Mortgagor or such other obligor as an officer, employee, promoter, underwriter, trustee, partner, director or person performing similar functions. Whenever it is herein provided that any Independent Person's opinion or certificate shall be furnished to the Mortgagee, such opinion or certificate shall state that the signer has read this definition and that the signer is Independent within the meaning thereof. A Person who is performing or who has performed services as an independent contractor to any specified Person shall not be considered not Independent merely by reason of the fact that such Person is or has performed such services. "INSURANCE AMOUNT" has the meaning stated in Section 5.11(a)(1). "INSURANCE REQUIREMENTS" means all terms of any insurance policy covering or applicable to the Trust Estate or any part thereof, all requirements of the issuer of any such policy, and all orders, rules, regulations and other requirements of the National Board of Fire Underwriters (or any other body exercising similar functions) applicable to or affecting the Trust Estate or any part thereof or any use or condition of the Trust Estate or any other part thereof. "INSURANCE TRUSTEE" means the Trustee or, if the Trustee so elects, any bank, trust company or insurance company with net worth in excess of $100,000,000, designated by the Trustee. "INSURER" means an insurance company or companies selected by the Mortgagor authorized to issue insurance in the State of New Jersey with an A.M. Best rating as high or higher than the rating of insurance companies insuring other casino-hotels in Atlantic City, New Jersey. 12 "LEASE" means each lease or sublease demising all or any portion of the Owned Land, the Leased Land or the buildings or improvements thereon and made by the Mortgagor as lessor or sublessor, as the case may be, or any spaces in any building or buildings which constitute a part of the Trust Estate, including every agreement relating thereto or entered into in connection therewith and every guaranty of the performance and observance of the covenants, conditions and agreements to be performed by the lessee under any such lease. Notwithstanding the foregoing, the term "Lease" shall not include any transient room rentals. "LEASED LAND" has the meaning stated in Granting Clause Second. "LEGAL REQUIREMENTS" means all laws, statutes, codes, acts, ordinances, orders, judgments, decrees, injunctions, rules, regulations, permits, licenses, authorizations, directions and requirements (including, without limitation, the New Jersey Environment Cleanup Responsibility Act and the New Jersey Spill Compensation and Control Act of 1976) of all governments, departments, commissions, boards, courts, authorities, agencies, officials and officers, of governments, federal, state and municipal (including, without limitation, the New Jersey Department of Environmental Protection, the Atlantic City Bureau of Investigations, Division of Protection, the Atlantic City Bureau of Investigations, Division of Gaming Enforcement of the State of New Jersey, and the Casino Control Commission of the State of New Jersey), foreseen or unforeseen, ordinary or extraordinary, which now is or at any time hereafter becomes applicable to the Trust Estate or any part thereof, or any of the adjoining sidewalks, or the use of the Casino-Hotel as a gaming or gambling facility or any other use or condition of the Trust Estate or any part thereof. "LESSORS" means the lessors under the Ground Leases. "MATURITY" when used with respect to the Note means the date on which the principal of such Note becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration or prepayment or otherwise. "MORTGAGE DOCUMENTS" has the meaning set forth in Section 1.01 of the Indenture. "MORTGAGOR" means the Person named as the "Mortgagor" in the first paragraph of this instrument until a successor entity shall have become such pursuant to the applicable provisions of this Mortgage, and thereafter, except to the extent otherwise contemplated by Section 4.02, "Mortgagor" shall mean such successor entity exclusively. 13 "NOTEHOLDER" shall mean the holder or holders of the Note. "NOTE" has the meaning set forth in the Preamble. "NOTICES" has the meaning stated in Section 1.02. "OFFICERS' CERTIFICATE" means a certificate signed by an officer of the Mortgagor and delivered to the Mortgagee. Whenever this Mortgage requires that an Officers' Certificate be signed also by an Architect or an Accountant or other expert, such Architect, Accountant or other expert may (except as otherwise expressly provided in this Mortgage) be in the general employ of the Mortgagor. "OPERATING ASSETS" has the meaning stated in Granting Clause Fifth. "OPINION OF Counsel" means a written opinion of counsel who may (except as otherwise expressly provided in this Mortgage) be an employee of the Mortgagor or an employee of an Affiliate of the Mortgagor. Unless otherwise specifically provided in this Mortgage, such counsel may rely, as to any state of facts not personally known to such counsel and relating to such opinions, on an Officers' Certificate to the extent not rejected by the Trustee and its counsel (which rejection shall not be unreasonably given). "ORIGINAL POLICY" means an ALTA Loan Policies of Title issued by [list title insurance companies], pursuant to Title Commitment No. ____________ redated to the date hereof. "OUTSTANDING AMOUNT" has the meaning stated in Section 1.01 of the Indenture. "OWNED LAND" has the meaning stated in Granting Clause First. "PERMITS" means all licenses, franchises, statements of compliance, certificates of operation, certificates of occupancy and permits required for the lawful ownership, occupancy, operation and use of all or a material portion of the Premises whether held by the Mortgagor or any other Person (which may be temporary or permanent) (including, without limitation, those required for the use of the Casino-Hotel as a licensed casino facility), in accordance with all applicable Legal Requirements. "PERMITTED ENCUMBRANCES" means: (1) liens for taxes, assessments, or governmental charges not yet due and payable or if due and payable are not delinquent to the extent that any fine, penalty, interest or cost may be added for nonpayment thereof; 14 (2) Existing Encumbrances; (3) FF&E Financing Agreements; (4) After-Acquired Fee Mortgages; (5) the lien of the Mortgage Documents and any rights granted as provided therein; (6) Restricted Encumbrances; (7) the lien of the Trustee provided for by Section 8.07 of the Indenture; (8) any Working Capital Facility Lien; (9) liens created by the Senior Mortgage Documents; and (10) Capitalized Lease Obligations. "PERSON" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or any other entity or government or any agency or political subdivision thereof. "PREMISES" has the meaning set forth in Granting Clause Third. "RELEASED LAND" has the meaning stated in Section 2.05. "RELEASED FEE LAND" has the meaning stated in Section 2.06. "RESTORATION" has the meaning stated in Section 5.11(e). "RESTRICTED ENCUMBRANCES" means Leases permitted by and made in accordance with Section 5.13 of this Mortgage. "RIHF" shall mean Resorts International Hotel Financing, Inc., a Delaware corporation. "SENIOR GUARANTY MORTGAGE" has the meaning set forth in Section 1.01 of the Indenture. "SENIOR MORTGAGE" has the meaning set forth in Section 1.01 of the Indenture. "SENIOR MORTGAGE DOCUMENTS" has the meaning set forth in Section 1.01 of the Indenture. 15 "SERVICES AGREEMENT" has the meaning set forth in Section 1.01 of the Indenture. "SETTLEMENT COSTS" has the meaning stated in Section 5.20. "STATED MATURITY" when used with respect to a note means the date specified in such note as the fixed date on which the principal of such note is due and payable. "SUPERIOR INSTRUMENT REQUIREMENTS" means the applicable terms, conditions and provisions of (i) the Ground Leases with respect to the Leased Land; and (ii) Superior Mortgages with respect to the portion of the Trust Estate encumbered thereby. "SUPERIOR MORTGAGES" means, collectively, the Senior Mortgage, the Senior Guaranty Mortgage, any Working Capital Facility Lien and any After-Acquired Fee Mortgages. "TAKING" means the acquisition or condemnation by eminent domain of the whole or any part of the Premises, by a competent authority, or any public or quasi-public use or purpose. "TANGIBLE PERSONAL PROPERTY" has the meaning stated in Granting Clause Fifth. "TRUSTEE" means the Person named as the "Trustee" in the first paragraph of the Indenture and any successor thereto. "TRUST ESTATE" has the meaning stated in the habendum to the Granting Clauses. "TRUST INDENTURE ACT" has the meaning stated in Section 1.01 of the Indenture. "WORKING CAPITAL FACILITY" has the meaning stated in Section 1.01 of the Indenture. "WORKING CAPITAL FACILITY LIEN" has the meaning stated in Section 5.22(c) of this Mortgage. Section 1.02. NOTICES, ETC. (a) Any request, demand, authorization, direction, notice (including, without limitation, a notice of default), consent, waiver or other document provided or permitted by this Mortgage to be made upon, given or furnished to, or filed with, the Mortgagor or the Mortgagee (collectively, "Notices") shall be deemed given when either (i) delivered by hand or (ii) two days after sending by registered or certified mail, postage prepaid, addressed as follows: 16 To the Mortgagor: Resorts International Hotel, Inc. c/o Resorts International, Inc. 1133 Boardwalk Atlantic City, New Jersey 08401 Attention: Christopher D. Whitney If to Mortgagee: Resorts International Hotel Financing, Inc. c/o Resorts International, Inc. 1133 Boardwalk Atlantic City, New Jersey 08401 Attention: Christopher D. Whitney (b) By Notice to the Mortgagor, the Mortgagee and the Trustee, any party may designate additional or substitute address for Notices which, notwithstanding Subsection (a) above, shall be deemed given when received. Section 1.03. FORM AND CONTENT OF DOCUMENTS DELIVERED TO MORTGAGEE. Whenever 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 such matters in one or several documents. Any certificate or opinion of an Officer of the Mortgagor may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such Officer knows that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any 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 Mortgagor stating that the information with respect to such factual matters is in the possession of the Mortgagor, unless such counsel knows that the certificate or opinion or representations with respect to such matters are erroneous. If appropriate to the matter being opined upon and to the extent not prohibited by the Trust Indenture Act, any Opinion of Counsel may be subject to rights of creditors and the availability of equitable remedies. Whenever any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Mortgage, they may, but need not, be consolidated and form one instrument. 17 Whenever in this Mortgage, in connection with any application or certificate or report to the Mortgagee, it is provided that the Mortgagor shall deliver any document as a condition of the granting of such application, or as evidence of the Mortgagor's compliance with any term hereof, it is intended that the truth and accuracy, at the time of the granting of such application or at the effective date of such certificate or report (as the case may be), of the facts and opinions stated in such document shall in such case be conditions precedent to the right of the Mortgagor to have such application granted or to the sufficiency of such certificate or report. Section 1.04. COMPLIANCE CERTIFICATES AND OPINIONS. Upon any application or request by the Mortgagor to the Mortgagee to take any action under any provision of this Mortgage, the Mortgagor shall furnish to the Mortgagee an Officers' Certificate stating that all conditions precedent, if any, provided for in this Mortgage 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 Mortgage 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 Mortgage shall include: (a) a statement that each individual signing such certificate or opinion has read such condition or covenant and the definitions herein relating thereto; (b) 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; (c) 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 condition or covenant has been complied with; and (d) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. Section 1.05. EFFECT OF HEADINGS. The Article and Section headings herein are for convenience only and shall not affect the construction hereof. 18 Section 1.06. SUCCESSORS AND ASSIGNS; AMENDMENTS. (a) Subject to Section 4.02 hereof and Section 10.02 of the Indenture, this Mortgage shall be binding upon and inure to the benefit of the parties hereto and of the respective successors and assigns of the parties hereto to the same effect as if each such successor or assign were in each case named as a party to this Mortgage. (b) This Mortgage may not be modified, amended, discharged, released nor any of its provisions waived except by agreement in writing executed by the Mortgagor and the Mortgagee and in accordance with the provisions of this Mortgage and the Indenture. Section 1.07. SEPARABILITY CLAUSE. In case any provision in this Mortgage 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 1.08. BENEFITS OF MORTGAGE. Nothing in this Mortgage, express or implied, shall give to any Person, other than the parties hereto and their successors and assigns, any benefit or any legal or equitable right, remedy or claim under this Mortgage. Section 1.09. GOVERNING LAW. This Mortgage shall be deemed to be a contract under the laws of the State of New Jersey and shall be construed in accordance with and governed by the laws of the State of New Jersey. Section 1.10. [Reserved] Section 1.11. PROVISIONS REQUIRED BY INDENTURE. Whenever the provisions of this Mortgage and the provisions of the Indenture shall be inconsistent, the provisions of the Indenture shall govern. Section 1.12. RIGHTS OF THE TRUSTEE. So long as the Trustee is the Mortgagee hereunder, except as otherwise provided in Section 8.01 of the Indenture: (a) the Mortgagee 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, coupon or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) whenever in the administration of this Mortgage the Mortgagee shall deem it desirable that a matter be 19 proved or established prior to taking, suffering or omitting any action hereunder, the Mortgagee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate; (c) the Mortgagee 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 the Mortgagee hereunder in good faith and in reliance thereon; (d) the Mortgagee shall be under no obligation to exercise any of the rights or powers vested in it by this Mortgage at the request or direction of any Noteholder pursuant to the Indenture, unless such holder shall have offered to the Mortgagee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (e) the Mortgagee 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, or other paper or document but the Mortgagee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Mortgagee shall determine to make such further inquiry or investigation, it shall be entitled (subject to the express limitations with respect thereto contained in this Mortgage) to examine the books, records and premises of the Mortgagor, personally or by agent or attorney; (f) the Mortgagee may execute any of the trusts or power hereunder or perform any duties hereunder either directly or by or through agents or attorneys, and the Mortgagee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder; (g) the Mortgagee shall not be personally liable, in case of entry by it upon the Trust Estate, for debts contracted or liabilities or damages incurred in the management or operation of the Trust Estate; and (h) no provision of this Mortgage shall require the Mortgagee to expend or risk its own funds or otherwise incur any financial liability in the performance of its obligations hereunder, or in the exercise of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate 20 indemnity against such risk or liability is not reasonably assured to it. Section 1.13. MORTGAGE SUBJECT TO THE PROVISIONS OF THE ACT. Each provision of this Mortgage is subject to and shall be enforced in compliance with the provisions of the New Jersey Casino Control Act. This Mortgage shall not be transferred, assigned or amended without prior approval of the New Jersey Casino Control Commission. Section 1.14. DISCHARGE OF LIEN. If the Mortgagor shall pay or cause to be paid, or there shall otherwise be paid, to the Mortgagee all amounts required to be paid by the Mortgagor pursuant to the Note, and the conditions precedent for the Indenture to cease, determine and become null and void in accordance with Section 5.01 of the Indenture shall have occurred, the Mortgagee shall promptly cancel and discharge this Mortgage, and execute and deliver to the Mortgagor all such instruments as may be necessary, required or appropriate to evidence such discharge and satisfaction of such lien or liens. Section 1.15. GENERAL APPLICATION. (a) The assertion of any rights upon any Default shall be subject in each instance to the giving of any notice and the expiration of any grace period provided for in Section 3.01 as a condition to such Default making it an Event of Default, unless the Trust Indenture Act requires otherwise, in which case the Trust Indenture Act shall control. (b) For the purposes of this Mortgage, it is understood that an event which does not materially diminish the value of the Mortgagee's interest in the Trust Estate shall not be deemed an "impairment of security", as that phrase is used in this Mortgage. ARTICLE TWO RELEASE; OTHER EXCEPTED PROPERTY; SUBORDINATION Section 2.01. POSSESSION BY MORTGAGOR; DISPOSITIONS WITHOUT RELEASE. So long as there shall have been no acceleration of maturity of the Note under Section 3.02, the Mortgagor shall be suffered and permitted, with power freely and without let or hindrance on the part of the Mortgagee, subject to the provisions of this Mortgage and the Guaranty Mortgage, to possess, use, manage, operate and enjoy the Trust Estate and every part thereof and to collect, receive, use, invest and dispose of the rents, issues, tolls, profits, revenues and other income from the Trust Estate or any part hereof, to use, consume and dispose of any consumables, goods, wares and merchandise in the ordinary course of business of operating the Casino-Hotel and to adjust 21 and settle all matters relating to choses in action, leases and contracts. Section 2.02. OBSOLETE PROPERTY; TANGIBLE PERSONAL PROPERTY; LEASE MODIFICATIONS. The Mortgagor shall have the right, at any time and from time to time, unless an Event of Default shall have occurred and be continuing, without any release from or consent by the Mortgagee: (a) to sell or dispose of, free from the lien of this Mortgage, any Tangible Personal Property which, in its reasonable opinion, may have become obsolete or unfit for use or which is no longer necessary in the conduct of its businesses or the operation of the Trust Estate, and no purchaser of any such property shall be bound to inquire into any question affecting the Mortgagor's right to sell or otherwise dispose of the same, free from the lien of this Mortgage; (b) to alter, repair, replace, change the location (provided notice shall be given to Mortgagee as to any new location) or position of and add to any Tangible Personal Property; provided, however, that no change shall be made in the location of any such property subject to the lien of this Mortgage which would in any respect impair the security of this Mortgage upon such property; or (c) to renew, extend, surrender, terminate, modify or amend any leases of Tangible Personal Property, when, in the Mortgagor's reasonable opinion, it is prudent to do so. The Mortgagor shall retain any net cash proceeds (subject to the right to pay dividends or make cash distributions pursuant to Section 12.07 of the Indenture) received from the sale or disposition of any Tangible Personal Property under Subsection (a) of this Section 2.02, in the business of operating the Casino-Hotel. The Mortgagee shall be under no responsibility or duty with respect to the exercise of the rights of the Mortgagor under this Section 2.02 or the application of the proceeds of any sale or disposition of any Tangible Personal Property. 22 Section 2.03. OTHER EXCEPTED PROPERTY. Notwithstanding any provisions contained in this Mortgage or the Indenture to the contrary, including, without limitation, the provisions of Granting Clauses Fifth and Sixth and of Articles Two and Five hereof, if the Mortgagor acquires Tangible Personal Property and other items constituting operating assets, such as computer software subject to any FF&E Financing Agreement, or becomes the lessee under a lease for any of the same and if the document evidencing such FF&E Financing Agreement prohibits subordinate liens or the provisions of any such lease prohibits any assignment thereof by the lessee, and if any such prohibition is customary with respect to similar transactions of the lender or lessor, as the case may be, then the property so purchased or the lessee's interest in the lease, as the case may be, shall be deemed to be Excepted Property. If any such FF&E Financing Agreement permits subordinate liens then the Mortgagee agrees to execute and deliver to the Mortgagor, at the Mortgagor's expense, such documents as the holder of such FF&E Financing Agreement may reasonably request to evidence the subordination of the lien of this Mortgage to the lien of such FF&E Financing Agreement. Section 2.04. [Reserved] Section 2.05. RELEASED LAND. (a) Notwithstanding anything to the contrary herein contained, the Mortgagor shall have the right, at any time and from time to time, unless an Event of Default shall have occurred and be continuing, to convey all or any part of the Released Fee Land (the land to be so conveyed is hereinafter referred to as the "Released Land"), free from the lien of the Mortgage, provided that: (i) the Mortgagor furnishes the Mortgagee with an Officers' Certificate requesting the release of such property from the Trust Estate and stating (w) so long as the Released Land is owned or used by an Affiliate of the Mortgagor, the Released Land shall not be operated in a manner in competition with the operation of the Casino-Hotel as a casino, (x) that no permanent structures have been constructed on the Released Land, (y) that the Mortgagor is not required to hold the Released Land in order to maintain all Permits and in order to comply with the provisions of all material contracts to which the Mortgagor is a party or by which the Mortgagor is bound and either (A) the Mortgagor has made adequate provision to maintain all Permits and to comply with such contractual requirements by: (1) owning and using the 23 balance of the Trust Estate; (2) acquiring fee title to any real property that would enable Mortgagor to maintain all Permits and satisfy such contractual requirements; or (3) acquiring a Qualified Leasehold Interest in real property that would enable the Mortgagor to maintain such Permits and satisfy such contractual requirements; or (B) neither the requirements of such Permits nor such contracts require the Mortgagor to own the Released Land or use or operate any land in the manner in which the Released Land is intended to be used; or (C) such requirements have been waived, and (z) that such conveyance will not materially interfere with the operation of the Casino-Hotel; (ii) the Mortgagor delivers to the Mortgagee an Opinion of Counsel to the effect that the Mortgagor is not required to own and use the Released Land in order to maintain in good standing all Permits or by the provisions of any material contract to which the Mortgagor is a party or by which it is bound to own and use the Released Land; (iii) the Mortgagor delivers to the Mortgagee, if applicable, an endorsement to the Original Policy in accordance with Section 2.05(d); (iv) the Mortgagor delivers to the Mortgagee an executed counterpart of the instruments of conveyance in recordable form, which shall contain a covenant prohibiting the use of the Released Land by any Affiliate of the Mortgagor (A) as a casino or (B) in a manner in competition with the operation of the Casino-Hotel as a casino prior to the latest Stated Maturity Date of the Note; and (v) in the case of a conveyance or release described in (A) or (B) above, if the Released Land is being conveyed to an Affiliate of the Mortgagor, the cash consideration received by the Mortgagor for the Released Land shall not be less than the product of the Release Price multiplied by the area (in square feet) of the Released Land. (b) The Mortgagee shall, from time to time, promptly execute any written instrument in form reasonably satisfactory to the prospective purchaser to confirm the release of the Released Fee Land, upon receipt by the Mortgagee of an Officers' Certificate stating that the Mortgagor is entitled to such release by virtue of the Mortgagor's compliance with this Section 2.05 and, if applicable, Section 2.05 of the Guaranty Mortgage, PROVIDED, that the Mortgagee shall have no liability thereunder and all costs and expenses (including reasonable attorneys' fees) shall be paid by the Mortgagor. 24 Section 2.06. RELEASED FEE LAND. (a) Notwithstanding anything to the contrary herein contained, in the event the Mortgagor intends to exercise an option to acquire fee title to Leased Land under the provisions of any Ground Lease, the Mortgagor shall have the right, unless an Event of Default shall have occurred and be continuing, to have an Affiliate exercise such options(s) or for the Mortgagor to exercise such options(s) on behalf of an Affiliate and in connection therewith to cause fee simple title to the Leased Land or any part thereof to be conveyed to an Affiliate of the Mortgagor (provided that no portion of the purchase price of the Leased Land or part thereof is paid by Mortgagor), free from the lien of this Mortgage (the land to be so conveyed is hereinafter referred to as the "Released Fee Land"), provided that the Mortgagor furnishes the Mortgagee with the following: (i) an Officers' Certificate requesting the release of the Released Fee Land from the Trust Estate and stating that (A) the Mortgagor is not required to own the Released Fee Land in order to maintain all Permits and in order to comply with the provisions of all material contracts to which the Mortgagor is a party or by which the Mortgagor is bound, (B) such Affiliate has received all Permits necessary to own the Released Fee Land (including without limitation all approvals required by the Casino Control Commission of the State of New Jersey), (C) there has been delivered to the Mortgagor and the Mortgagee a true copy of an instrument executed by such Affiliate stating that (i) such Affiliate may only engage in the activity of owning the Released Fee Land and (ii) such Affiliate shall not convey the Released Fee Land to another Affiliate of the Mortgagor, unless such other Affiliate executes and delivers to the Mortgagor and the Mortgagee, the instruments that would have been required to be delivered pursuant to clause (C) if the Mortgagor conveyed the Released Fee Land to such other Affiliate (provided that this restriction shall only be effective until such time as this Mortgage shall be satisfied of record) and (D) the deed conveying the Released Fee Land to such Affiliate shall state that such conveyance is made subject to the terms, provisions and conditions of the applicable Ground Lease and that the fee and leasehold interests in the Released Fee Land shall not merge by reason of the Mortgagor and/or any Affiliate owning both the leasehold and fee estate therein, and that such estates shall always remain separate and distinct; (ii) an Opinion of Counsel to the effect that (A) the Mortgagor is not required to own the Released Fee Land in order to maintain in good standing all Permits or by the provisions of any material contract to which the 25 Mortgagor is a party or by which it is bound to own the Released Fee Land and (B) the instruments described in clause (C) of subparagraph (i) were duly executed by and are binding upon such Affiliate; and (iii) an endorsement to the Original Policy, confirming that no merger of the fee and leasehold estates in the Released Fee Land has resulted from such conveyance. In addition, simultaneously with such acquisition, the Affiliate and Mortgagor shall enter into an instrument in form and substance reasonably satisfactory to Mortgagee, amending the applicable Ground Lease to provide such mortgagee protections as are customary and to the extent reasonably required by Mortgagee, including, without limitation, (A) a covenant of the landlord not to terminate the Ground Lease for any reason whatsoever (including without limitation, due to any default by tenant of its obligations under such Ground Lease), and (B) an agreement by the landlord not to accept payment of any fixed or base rent from the tenant (and, if tendered by the Mortgagor, and agreement to return same to the Mortgagor) or any other charges payable thereunder at any time that an Event of Default shall have occurred and shall be continuing. (b) The Mortgagee shall, from time to time, promptly execute any written instrument in form reasonably satisfactory to the prospective purchaser to confirm the release of the Released Fee Land, upon receipt by the Mortgagee of an Officers' Certificate stating that the Mortgagor is entitled to such release by virtue of the Mortgagor's compliance with this Section 2.06, PROVIDED that the Mortgagee shall have no liability thereunder and all costs and expenses (including reasonable attorneys' fees) shall be paid by the Mortgagor. 26 Section 2.07. AFTER-ACQUIRED FEE MORTGAGES. (a) Notwithstanding anything contained herein to the contrary (i) if no Event of Default has occurred and is continuing and (ii) if the Mortgagor shall acquire Released Fee Land, then simultaneously with the acquisition thereof, the Mortgagor shall have the right to encumber such fee simple title with a mortgage (such mortgage and any refinancing thereof permitted by the Indenture is hereinafter referred to as an "After-Acquired Fee Mortgage"). The lien of this Mortgage on the Released Fee Land shall be subordinated to the lien of the After-Acquired Fee Mortgage on the Released Fee Land (and to the lien of other Superior Mortgages which shall become a lien thereon in accordance with the terms thereof), provided the following conditions are satisfied: (i) the After-Acquired Fee Mortgage encumbers the fee simple title to such real property and no other property; (ii) the indebtedness secured by the After-Acquired Fee Mortgage (A) does not exceed 75% of the cost to the Mortgagor of such fee simple title at the time of the acquisition and (B) satisfies the criteria set forth in Section 12.08 of the Indenture; (iii) in the event the After-Acquired Fee Mortgage encumbers fee simple title to the Leased Land or any part thereof, such After-Acquired Fee Mortgage contains provisions binding on the holder of the After-Acquired Fee Mortgage and its successors and assigns confirming the provisions of Section 5.21(d) of this Mortgage; (iv) the Released Fee Land is not being acquired from an Affiliate of the Mortgagor; (v) the After-Acquired Fee Mortgage and other loan documents shall contain a provision binding upon the holder of such After-Acquired Fee Mortgage and other loan documents that all insurance proceeds in the event of a Casualty and awards for Takings of less than the entire Released Fee Land shall be used for purposes of Restoration; and (vi) the Mortgagor delivers to the Mortgagee an Officers' Certificate requesting such subordination and certifying that the requirements of (i) through (v) above have been satisfied. (b) Anything contained in this Section 2.07 or elsewhere in this Mortgage to the contrary notwithstanding, the subordination of this Mortgage to any After-Acquired Fee Mortgage constituting a lien on Released Fee Land shall not be 27 self-operative but shall be effective only upon the execution and delivery by the Mortgagee of an instrument in writing effecting such subordination. The Mortgagee shall deliver such instrument of subordination on the following conditions: (x) the Mortgagee shall have received an Officers' Certificate confirming that the conditions of (i) through (vi) of paragraph (a) have been satisfied, together with a true and correct copy of the After- Acquired Fee Mortgage and all other instruments securing the indebtedness evidenced thereby and (y) the instrument of subordination shall specifically state that this Mortgage is being subordinated not with respect to the lien of this Mortgage on the Ground Lease or on the leasehold estate created thereby, but only with respect to the fee simple title to the Leased Land or applicable part thereof and only if and to the extent that the After-Acquired Fee Mortgage being subordinated to is subject and subordinate to the Ground Lease and the leasehold estate created thereby. ARTICLE THREE REMEDIES Section 3.01. EVENTS OF DEFAULT. "Event of Default," whenever used herein, means any one of following events (including any applicable notice requirement and any period of grace as specified in this Section 3.01) (whatever the reason for such event 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): (a) default in the payment of any interest on the Note when such interest becomes due and payable and continuance of such default for a period of 10 days after there has been given a written notice to the Mortgagor specifying such default and stating that such notice is a "Notice of Default" hereunder; or (b) default in the payment of the principal of any Note at its Maturity; or (c) an "Event of Default" as defined in Section 3.01 of the Guaranty Mortgage shall occur; or (d) default in the payment of any other sum due under the Note or this Mortgage and the continuance of such default for a period of 10 days after there has been given to the Mortgagor a written notice specifying such default and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; or (e) default in the performance, or breach, of any covenant of the Mortgagor in this Mortgage (other than a 28 covenant a default in the performance or breach of which is elsewhere in this Section specifically dealt with), and continuance of such default or breach for a period of 30 days after there has been given to the Mortgagor 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 (i) the default or breach is of such a nature that is curable but not susceptible of being cured with due diligence within such 30-day period (for reasons other than the lack of funds), (ii) the Mortgagor delivers an Officers' Certificate to the Mortgagee within such 30-day period stating (A) the applicability of the provisions of Clause (i) to such default or breach, (B) the Mortgagor's intention to remedy such default or breach with reasonable diligence and (C) the steps which the Mortgagor has undertaken to remedy such default or breach and (iii) the Mortgagor delivers to the Mortgagee additional Officers' Certificates every 30 days thereafter updating the information contained in the certificate described in Clause (ii), in which case such 30 day period shall be extended for such further period of time as may reasonably be required to cure the same, provided that the Mortgagor is then proceeding and thereafter continues to proceed to cure the same with reasonable diligence; or (f) an "Event of Default" as defined in Section 7.01 of the Indenture, shall occur; or (g) default by the Mortgagor under any of the terms of any Ground Lease which shall not be fully cured or waived prior to the expiration of any grace period contained in such Ground Lease, unless prior to the expiration of such grace period, the Mortgagor gives the Mortgagee an Officers' Certificate, an Opinion of Counsel and a true copy of the Injunction referred to below, which Certificate and Opinion state that (i) a court of competent jurisdiction has issued an injunction (which is in force and effect and has not been modified or reversed on appeal) tolling or staying the expiration of the grace period set forth in such Ground Lease with respect to such default, (ii) such injunction specifically provides that in addition to the tolling or stay describe in (i) above, such tolling or stay also applies to the Mortgagee for purposes of determining the duration and expiration of the periods during which the Mortgagee may exercise its rights under such Ground Lease (including without limitation, periods to cure lessee defaults and delivering a guarantee and the period during which the Mortgagee may elect to enter into a new lease thereunder), (iii) such injunction further provides that the tolling or stay under (i) and (ii) shall be effective until such time that the Mortgagee is personally served 29 with notice of the expiration of such injunction and (iv) the Mortgagee is named as a party in any action or proceeding involving such injunction and therefore entitled to notice of any modification or termination thereof; and, if such injunction is issued, then so long as such injunction remains in force and effect and the preceding provisions of this Section 3.01(g) have been complied with, the grace period referred to in the third line of this subparagraph (g) shall be deemed to mean the grace period after giving effect to any such tolling or stay in (i) above; or (h) default by the Mortgagor under any of the terms of any Superior Mortgage which default results in the acceleration of the maturity of such Superior Mortgage and which shall not be fully cured or waived prior to the expiration of any grace period contained in such Superior Mortgage, unless prior to the expiration of such grace period, the Mortgagor gives the Mortgagee an Officers' Certificate and an Opinion of Counsel and a true copy of the injunction referred to below, which Certificate and Opinion shall state (i) that a court of competent jurisdiction has issued an injunction (which is in force and effect and has not been modified or reversed on appeal) tolling or staying the expiration of the grace period set forth in such Superior Mortgage with respect to such default and (ii) the Mortgagee is named a party in any action or proceeding relating to such injunction and therefore is entitled to notice of any modification or termination thereof; and if such injunction is issued, then so long as such injunction remains in force and effect, and the preceding provisions of this Section 3.01(h) have been complied with, the grace period referred to in the third line of this subparagraph (h) shall be deemed to mean the grace period after giving effect to any such tolling or stay; or (i) any modification, amendment or supplement of any Ground Lease without the prior written consent of the Mortgage; or (j) any modification, amendment or supplement of any Superior Mortgage without the prior written consent of the Mortgagee, except to the extent that such modification, amendment or supplement is permitted by Section 5.22(b)(i) hereof; or (k) default in the performance, or breach, of any of the provisions of Article Four and the continuance of such default or breach for a period of 60 days after there has been given a written notice to the Mortgagor specifying that such notice is a "Notice of Default" hereunder; or 30 (l) any representation or warranty of the Mortgagor set forth in this Mortgage or in any notice, certificate, demand or request delivered to the Mortgagee pursuant to this Mortgage shall prove to be incorrect as of the time when made and the facts constituting such incorrectness impairs the Mortgagee's security and such impairment continues for a period of 30 days after there has been given to the Mortgagor a written notice specifying that such notice is a "Notice of Default" hereunder, unless (i) such impairment is curable, but not susceptible of cure within such 30-day period (for reasons other than lack of funds), (ii) the Mortgagor gives an Officers' Certificate to the Mortgagee within such 30-day period stating (A) the applicability of the provisions of (i) to such impairment, (B) the Mortgagor's intention to remedy the same with reasonable diligence and (C) the steps which the Mortgagor has undertaken to remedy such default or breach and (iii) the Mortgagor delivers to the Mortgagee additional Officers' Certificates every 30 days thereafter updating the information contained in the certificate described in (ii), in which case such 30-day period shall be extended for such further period of time as may reasonably be required to cure the same, provided that the Mortgagor is then proceeding and thereafter continues to proceed to cure the same with reasonable diligence. Section 3.02. DEMAND UNDER NOTE. If an Event of Default occurs and is continuing, then the Mortgagee may declare the Outstanding Amount of the Note to be due and payable immediately, by a notice in writing to the Mortgagor and upon any such declaration such principal shall become immediately due and payable. Section 3.03. APPLICATION OF MONEYS RECEIVED BY MORTGAGEE. Any moneys received by the Mortgagee pursuant to the provisions of this Article Three (including moneys received by the Trustee after any action or act by the Mortgagee under Section 3.10) shall be applied by the Mortgagee in accordance with the provisions of Section 7.06 of the Indenture. Section 3.04. RESTORATION OF RIGHTS AND REMEDIES. If the Mortgagee has instituted any proceeding to enforce any right or remedy under this Mortgage and such proceeding has been discontinued or abandoned for any reason or has been determined adversely to the Mortgagee, then and in every such case the Mortgagor and the Mortgagee shall, subject to any determination in such proceeding, be restored to its former position hereunder, and thereafter all rights and remedies of the Mortgagee shall continue as though no such proceeding had been instituted. 31 Section 3.05. RIGHTS AND REMEDIES CUMULATIVE. No right or remedy herein conferred upon or reserved to the Mortgagee 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 3.06. DELAY OR OMISSION NOT WAIVER. No delay or omission of the Mortgagee to exercise any right or remedy accruing upon an 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 Three by law to the Mortgagee may be exercised, from time to time, and as often as may be deemed expedient, by the Mortgagee. Section 3.07. UNDERTAKING FOR COSTS. If any action or proceeding shall be commenced (including, without limitation, an action to foreclose this Mortgage or to collect the indebtedness secured hereby) to which action or proceeding the Mortgagee is made or becomes a party, or in which it becomes necessary in the opinion of the Mortgagee to defend or uphold the lien of this Mortgage, the Mortgagor shall pay to Mortgagee all expenses, including reasonable attorneys' fees and expenses, incurred by the Mortgagee in connection therewith, together with interest at the rate then payable on the Note, from the date of payment less the net amount received by the Mortgagee or the Trustee, as their interests may appear under any title insurance policy, and, until paid, all such expenses, together with interest as aforesaid, shall be a lien on the Trust Estate. Section 3.08. WAIVER OF APPRAISEMENT AND OTHER LAWS. To the full extent that it may lawfully so agree, the Mortgagor will not at any time insist upon, plead, claim or take the benefit or advantage of, any appraisement, valuation, stay, extension or redemption law now or hereafter in force, in order to prevent or hinder the enforcement of this Mortgage or the absolute sale of the Trust Estate, or any part hereof, or the possession thereof by any purchaser at any sale under this Article Three; and the Mortgagor, for itself and all who may claim under it, so far as it or they now or hereafter may lawfully do so, hereby waives the benefit of all such laws. The Mortgagor, for itself and all who may claim under it, waives, to the extent that it may lawfully do so, all right to have the property in the Trust Estate marshalled upon any foreclosure hereof, and agrees that any court having jurisdiction to foreclose this Mortgage may order the sale of the Trust Estate as an entirety. 32 If any law in this Section 3.08 referred to and now in force, of which the Mortgagor or its successor or successors might take advantage despite this Section 3.08, shall hereafter be repealed or cease to be in force, such law shall not thereafter be deemed to constitute any part of the contract herein contained or to preclude the application of this Section 3.08. Section 3.09. ENTRY. The Mortgagor agrees that upon the occurrence of an Event of Default the Mortgagor, upon demand of the Mortgagee during the continuance thereof, shall forthwith surrender to the Mortgagee the actual possession of, and it shall be lawful for the Mortgagee by such officers or agents as it may appoint to enter and take possession of, the Trust Estate (and the books and papers of the Mortgagor), and to hold, operate and manage the Trust Estate (including the making of all needful repairs, and such alterations, additions and improvements as the Mortgagee shall deem wise) and to receive the rents, issues, tolls, profits, revenues and other income thereof, and, after deducting the costs and expenses of entering, taking possession, holding, operating and managing the Trust Estate, as well as payments for taxes, insurance and other proper charges upon the Trust Estate and reasonable compensation to itself, its agents and counsel, to apply the same as provided in Section 3.03, PROVIDED, HOWEVER, that the Mortgagee's rights under this Section 3.09 shall be subject to the provisions of the New Jersey Casino Control Act and Section 3.14. Whenever all that is then due upon the Note and under any of the terms of this Mortgage shall have been paid and all defaults hereunder shall have been made good, the Mortgagee shall surrender possession to the Mortgagor. Section 3.10. POWER OF SALE; SUITS FOR ENFORCEMENT. In case an Event of Default shall occur and be continuing, the Mortgagee, with or without entry, in its discretion may: (a) sell, subject to any mandatory requirements of applicable law, the Trust Estate as an entirety, or in such parcels, as the Mortgagee may determine, to the highest bidder at public auction at such place and at such time (which sale may be adjourned by the Mortgagee from time to time in its discretion by announcement at the time and place fixed for such sale, without further notice) and upon such terms as the Mortgagee may fix and briefly specify in a notice of sale to be published as required by law; or (b) proceed to protect and enforce its rights under this Mortgage by sale pursuant to judicial proceedings or by a suit, action or proceeding in equity or at law or otherwise, whether for the specific performance of any covenant or agreement contained in this Mortgage or in aid of the execution of any power granted in this Mortgage or for the foreclosure of this 33 Mortgage or for the enforcement of any other legal, equitable or other remedy, as the Mortgagee, being advised by counsel, shall deem most effectual to protect and enforce any of the rights of the Mortgagee; the failure to join tenants shall not be asserted as a defense to any foreclosure or proceeding to enforce the rights of the Mortgagee. Section 3.11. INCIDENT OF SALE. Upon any sale of any of the Trust Estate, whether made under the power of sale hereby given or pursuant to judicial proceedings, to the extent permitted by law: (a) the principal of and accrued interest on the Note, if not previously due, shall at once become and be immediately due and payable; (b) subject to the provisions of Section 3.14 and the receipt of any required prior approvals of the New Jersey Casino Control Commission, the Mortgagee may bid for and purchase the property offered for sale, and upon compliance with the terms of sale may hold, retain and possess and dispose of such property, without further accountability, and may, in paying the purchase money therefor, delivery any notes or claims for interest thereon in lieu of cash to the amount which shall, upon distribution of the net proceeds of such sale, be payable thereon, and such notes or claims for interest thereon, in case the amounts so payable thereon shall be less than the amount due thereon, shall be returned to the holders thereof after being appropriately stamped to show partial payment; (c) the Mortgagee may make and deliver to the purchaser or purchasers a good and sufficient deed, bill of sale and instrument of assignment and transfer of the property sold; (d) the Mortgagee is hereby irrevocably appointed the true and lawful attorney of the Mortgagor, in its name and stead, to make all necessary deeds, bills of sale and instruments of assignment and transfer of the property thus sold; and for that purpose it may execute all necessary deeds, bills of sale and instruments of assignment and transfer, and may substitute one or more persons, firms or corporations with like power, the Mortgagor hereby ratifying and confirming all that its attorney or such substitute or substitutes shall lawfully do by virtue hereof; but if so requested by the Mortgagee or by any purchaser, the Mortgagor shall ratify and confirm any such sale or transfer by executing and delivering to the Mortgagee or to such purchaser or purchasers all proper deeds, bills of sale, instruments 34 of assignment and transfer and releases as may be designated in any such request; (e) all right, title, interest, claim and demand whatsoever, either at law or in equity or otherwise, of the Mortgagor of, in and to the property so sold shall be divested and such sale shall be a perpetual bar both at law and in equity against the Mortgagor, its successors and assigns, and against any and all persons claiming or who may claim the property sold or any part thereof from, through or under the Mortgagor, its successors and assigns; and (f) the receipt of the Mortgagee or of the officer making such sale shall be a sufficient discharge to the purchaser or purchasers at such sale for his or their purchase money and such purchaser or purchasers and his or their assigns or personal representatives shall not, after paying such purchase money and receiving such receipt, be obliged to see to the application of such purchase money, or be in anywise answerable for any loss, misapplication or non-application thereof. Section 3.12. RECEIVER. Upon the occurrence of an Event of Default and commencement of judicial proceedings by the Mortgagee to enforce any right under this Mortgage, the Mortgagee shall be entitled, as against the Mortgagor, without notice or demand and without regard to the adequacy of the security for the Note or the solvency of the Mortgagor, to the appointment of a receiver of the Trust Estate, and of the rents, issues, profits, revenues and other income thereof, PROVIDED, HOWEVER, that the Mortgagee's rights under this Section 3.12 shall be subject to the provisions of the New Jersey Casino Control Act and Section 3.14 hereof. Section 3.13. SUITS TO PROTECT THE TRUST ESTATE. Upon 5 days' prior written notice to the Mortgagor (or such shorter period or without notice if deemed necessary and appropriate by the Mortgagee), the Mortgagee shall have power to institute and maintain such proceedings as it may deem necessary and appropriate to prevent any impairment of the Trust Estate by any acts which may be unlawful or in violation of this Mortgage and to protect its interests in the Trust Estate and in the rents, issues, profits, revenues and other income arising therefrom, including power to institute and maintain proceedings to restrain the enforcement of or compliance with any 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 hereunder or be materially prejudicial to the interests of the Mortgagee. Section 3.14. MANAGEMENT OF CASINO-HOTEL. Notwithstanding any provision of this Article Three to the 35 contrary, following an Event of Default and the taking of possession of the Trust Estate or any part thereof by the Mortgagee and/or the appointment of receiver of the Trust Estate or any part thereof, the Mortgagee or any such receiver shall be authorized, in addition to the rights and powers of the Mortgagee and such receiver set forth elsewhere in this Mortgage, to retain one or more experienced operators of hotels and/or casinos to manage the Casino-Hotel, PROVIDED that any such operator shall have all necessary legal qualifications, including all Permits, to manage the Casino-Hotel. ARTICLE FOUR CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE Section 4.01. CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER ONLY ON CERTAIN TERMS. The Mortgagor shall comply with all provisions applicable to the Mortgagor in Article Ten of the Indenture. Section 4.02. SUCCESSOR ENTITY SUBSTITUTED. Upon any consolidation or combination or any conveyance or transfer of the Trust Estate or any portion thereof in accordance with Section 10.01 of the Indenture, the successor entity formed by such consolidation or into which the Mortgagor is combined or to which such conveyance or transfer is made shall succeed to, and be substituted for, and may exercise every right and power of, the Mortgagor under this Mortgage with the same effect as if such successor entity had been named as the Mortgagor herein; PROVIDED, HOWEVER, that no such conveyance or transfer of the Trust Estate substantially as an entirety, unless such conveyance or transfer is in compliance with the provisions of Article Ten of the Indenture, shall have the effect of releasing the Person named as "the Mortgagor" in the first paragraph of this instrument or any successor entity which shall theretofore have become such in the manner prescribed in such Article Ten from its liability as obligor or maker of the Note. Section 4.03. LIMITATION ON SALES OF TRUST ESTATE. Except as otherwise expressly permitted by this Mortgage or the Indenture, the Mortgagor shall not sell, assign, lease, sublease, hypothecate, pledge, mortgage or otherwise transfer all or any part of the Trust Estate or any interest therein (including without limitation any interest in the Ground Leases). Without limiting the generality of the foregoing, the Mortgagor shall not separate, or attempt to separate, its ownership of its interest in the Ground Leases from its ownership of the buildings constituting the Casino-Hotel or any part thereof. 36 ARTICLE FIVE COVENANTS AND REPRESENTATIONS OF MORTGAGOR Section 5.01. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST. The Mortgagor will duly and punctually pay the principal of (and premium, if any) and interest on the Note in accordance with the terms of the Note and this Mortgage. Section 5.02. FF&E FINANCING AGREEMENTS. The Mortgagor covenants and agrees to comply with all of the terms and conditions set forth in any FF&E Financing Agreements before the expiration of any applicable notice and cure periods contained in the FF&E Financing Agreements. Section 5.03. LIMITATIONS ON LIENS. (a) The Mortgagor will not create, incur, suffer or permit to be created or incurred or to exist any mortgage, lien, charge or encumbrance on or pledge of any of the Trust Estate, other than (i) Permitted Encumbrances, (ii) liens on the Trust Estate in connection with indebtedness permitted by clauses (i), (ii), (iii), (iv) or (v) of Section 12.08(a) of the Indenture, and (iii) a building contract or a notice of intention filed by a mechanic, materialman or laborer under the New Jersey lien law. Without limiting the generality of the foregoing sentence but notwithstanding the provisions of the foregoing sentence, the Mortgagor shall not be deemed to have breached the provisions of the foregoing sentence by virtue of the existence of a lien for Impositions or mechanics liens so long as the Mortgagor is in good faith contesting the validity of the same in accordance with the provisions of Section 5.09 to the extent that the matters described in (i) and (ii) do not constitute a default under any Ground Lease or Superior Mortgage. (b) Mortgagee acknowledges that, contemporaneously with the execution and delivery of this Mortgage, it has assigned this Mortgage to the Trustee and that the Trustee is also the mortgagee under the Guaranty Mortgage, which Guaranty Mortgage creates a lien upon the same Trust Estate pari passu with the lien of this Mortgage. Mortgagee further acknowledges and agrees that whenever it is provided in the Guaranty Mortgage that the Mortgagor shall deliver any notice or document, or is require to make any payment thereunder, the delivery of such notice or document or the making of such payment pursuant to the terms of the Guaranty Mortgage shall also constitute the delivery of such notice or document or the making of such payment in satisfaction of the terms, conditions and provisions of this Mortgage to the same extent as the same constitutes satisfaction of the terms, conditions and provisions of the Guaranty Mortgage. Section 5.04. [Reserved] 37 Section 5.05. ACTIONS AND PROCEEDINGS. The Mortgagor hereby acknowledges the right of the Mortgagee, in the name of and on behalf of the Mortgagor, (a) to appear in and defend any action or proceeding brought with respect to the Trust Estate or any part thereof and (b) upon 5 days' prior written notice to the Mortgagor (or such shorter period or without notice if deemed necessary and appropriate by the Mortgage), to commence any action or proceeding to protect the interest of the Mortgagee in the Trust Estate. Section 5.06. WARRANTY OF LEASEHOLD ESTATE AND TITLE. The Mortgagor represents and warrants that as of the date hereof: (a) it is duly authorized under the laws of the State of New Jersey and all other applicable laws to execute and deliver this Mortgage, and all corporate action on its part necessary for the valid execution and delivery of this Mortgage has been duly and effectively taken; (b) it is the lawful owner and is lawfully seized and possessed of the Owned Land and all buildings and improvements thereon, free and clear of all liens, charges or encumbrances, other than the lien of the Mortgage Documents, any Working Capital Facility Lien and Existing Encumbrances; (c) it is the holder of and has good and marketable title to the leasehold interests and leasehold estates under the Ground Leases and to the Ground Leases, subject to no lien, encumbrance or charge other than the lien of the Mortgage Documents, any Working Capital Facility Lien and Existing Encumbrances; (d)(i) the Ground Leases are valid and subsisting demises of the Leased Land for the terms therein set forth, (ii) there are no defaults thereunder by any Lessor or the lessee as to which written notice has been given to or by the lessee, (iii) the Mortgagor has delivered true and correct copies of the Ground Leases and all modifications, amendments and supplements thereto, and (iv) each of the Ground Leases is in full force and effect and has not been modified, amended or supplemented, except as described on Schedule 2; (e) it has good title to the Operating Assets, subject to no lien, encumbrance or charge, other than the lien of the Mortgage Documents, any Working Capital Facility Lien and Existing Encumbrances; and (f) the Mortgagor has good and lawful right and authority to execute this Mortgage and to grant, bargain, sell, alien, convey, assign, transfer, hypothecate, 38 pledge, mortgage and confirm the Trust Estate as provided herein (including without limitation with respect to the Operating Assets and the Ground Leases, without the consent of any third party, other than governmental authorities but any applicable or necessary consent or approval of any such governmental authority has been given or waived at or prior to the execution and delivery of this Mortgage), and this Mortgage constitutes a valid third mortgage lien and third priority security interest in the Trust Estate PARI PASSU with the lien of the Guaranty Mortgage, subject only to Working Capital Facility Liens and Existing Encumbrances. The Mortgagor hereby does and will forever warrant and defend (x) the title to Trust Estate (including without limitation, its leasehold estates under the lessee's interests in the Ground Leases) (subject to Permitted Encumbrances) and (y) the priority of the lien of this Mortgage (subject to Permitted Encumbrances other than Restricted Encumbrances), against the claims and demands of all persons whomsoever, at the Mortgagor's sole cost and expense. Section 5.07. FURTHER ASSURANCES; RECORDING. The Mortgagor will, as provided in Section 5.13, from time to time subject its right, title and interest under all Leases to the lien of this Mortgage. The Mortgagor will cause this instrument and all other instruments of further assurance, including all financing statements and continuation statements covering security interests in personal property, to be promptly recorded, registered and filed, and at all times to be kept recorded, registered and filed, and will execute and file such financing statements and cause to be issued and filed such continuation statements, all in such manner and in such places as may be required by law or as requested by the Mortgagee to fully preserve and protect the rights of the Mortgagee as a secured party under the Uniform Commercial Code to all property comprising the Trust Estate (to the extent a grant of a security interest therein is governed by the Uniform Commercial Code) and to perfect, preserve and protect the lien of this Mortgage as a valid mortgage lien of record and a valid security interest on the Trust Estate subject to Permitted Encumbrances (other than Restricted Encumbrances). The Mortgagor will pay all filing or recording fees, and all expenses incident to the execution and delivery of this Mortgage, and any instrument of further assurance, and all federal, state, county and municipal stamp taxes and other taxes, duties, imposts, assessments and charges arising out of or in connection with the execution and delivery of the Note, this Mortgage, any financing statement or continuation statement with respect to the personal property constituting 39 part of the Trust Estate or any instrument of further assurance. Section 5.08. PAYMENT OF TAXES AND CERTAIN CLAIMS; MAINTENANCE OF PROPERTIES; COMPLIANCE WITH LEGAL REQUIREMENTS AND INSURANCE REQUIREMENTS. The Mortgagor will: (a)subject to the provisions of Section 5.09 relating to contests, pay or cause to be paid promptly (or when installments of the same shall become due and payable, if, by law or by agreement or arrangement with the applicable governmental agency or authority, the same may be paid in installments) before any fine, penalty, interest or cost may be added for nonpayment (but no later than when the same are payable by the Mortgagor pursuant to any Superior Instrument Requirement), all taxes (including, without limitation, real estate taxes, personal or other property taxes and all sales, value added, use and similar taxes), assessments (including, without limitation, all assessments for public improvements or benefits, whether or not commenced or completed prior to the date hereof and whether or not to be completed prior to the satisfaction of this Mortgage), water, sewer or other rents, rates and charges, excises, levies, license fees, permit fees, inspection fees and other authorization fees and other charges, in each case whether general or special, ordinary or extraordinary, or foreseen or unforeseen, of every character (including all interest, additions to tax and penalties thereon), that may be assessed, levied, confirmed or imposed on or in respect of or be a lien upon (1) the Trust Estate (including without limitation the Leased Land) or any part thereof or any rent therefrom or any estate, right or interest therein, or (2) any acquisition, occupancy, use, leasing, or possession of or activity conducted on the real property or any part thereof included in the Trust Estate or any gross receipts thereof or of the rent therefrom (all of the foregoing being referred to collectively as "Impositions"). Notwithstanding the foregoing or any other provision of this Mortgage, the Mortgagor shall not be required to pay any income, profits or revenue tax upon the income of the Mortgagee, the Trustee or any Noteholder nor any franchise, excise, corporate, estate, inheritance, succession, capital levy or transfer tax of the Mortgagee, the Trustee or the Noteholder nor any interest, additions to tax or penalties in respect thereof, unless such tax is imposed, levied or assessed in substitution for any Impositions that the Mortgagor is required to pay pursuant to this Section 5.08. The Mortgagor will deliver to the Mortgagee official receipts or other proof evidencing payments of any Impositions in accordance with the requirements of this Section 5.08. The Mortgagor shall 40 not be entitled to any credit for taxes or assessments paid against the Note; (b) except for such property which the Mortgagor may dispose of or replace pursuant to Section 2.02, maintain and keep all its properties used or useful in the conduct of its business (other than obsolete equipment), including, without limitation, the Casino-Hotel and all Tangible Personal Property, in such good repair, working order and condition, except for reasonable wear and use, and make or cause to be made all such needful and proper repairs, renewals and replacements thereto consistent with the standards of other casino-hotels in Atlantic City, New Jersey; (c) occupy and continuously operate the Casino-Hotel and keep the Casino-Hotel supplied with Tangible Personal Property, all in a manner consistent with the standards of other casino-hotels in Atlantic City, New Jersey (provided that nothing contained in this Section 5.08(c) shall be deemed to reduce the time period set forth in Section 3.01(f)); (d) subject to the provisions of Section 5.09 relating to contests, the Mortgagor at its sole expense will timely (1) comply with all Legal Requirements and Insurance Requirements, whether or not compliance therewith shall require structural changes in the buildings and improvements included in the Trust Estate or interfere with the use and enjoyment of the Trust Estate or any part thereof, (2) procure, maintain and comply with all permits and other authorizations required for (i) the use of the Casino as a gaming and gambling facility, (ii) the on-premises consumption of alcoholic beverages at the Casino-Hotel and (iii) any other use of the Trust Estate or any part thereof then being made, and for the proper erection, installation, operation and maintenance of the improvements or any part thereof, and (3) comply with any instruments of record at the time in force affecting the Trust Estate or any part thereof, if the failure to comply with the same would impair the Mortgagee's security hereunder. Without limiting the generality of the foregoing, the Mortgagor represents and warrants that at the time of the execution of this Mortgage, the Mortgagor is in compliance with the requirements of clauses (1), (2) and (3); (e) in the event of the passage after the date of this Mortgage of any law of the State of New Jersey, or any other governmental entity, changing in any way the laws now in force for the taxation of mortgages, or debts secured thereby, for state or local purposes, or the manner of the operation of any such taxes, so as to affect the interest of the Mortgagee, then and in such 41 event, the Mortgagor shall bear and pay the full amount of such taxes, provided that if for any reason payment by the Mortgagor of any such new or additional taxes would be unlawful or if the payment thereof would constitute usury or render the indebtedness secured hereby wholly or partially usurious under any of the terms or provisions of the Note, or this Mortgage, or otherwise, the Mortgagee may, at the Mortgagee's option, declare the whole sum secured by this Mortgage, with interest thereon, to be due and payable 90 days after notice of election thereof has been given by the Mortgagee, or the Mortgagee may, at the Mortgagee's option, pay that amount or portion of such taxes as renders the loan or indebtedness secured hereby unlawful or usurious, in which event the Mortgagor shall concurrently therewith pay the remaining lawful and nonusurious portion or balance of such taxes. Section 5.09. PERMITTED CONTESTS. The Mortgagor may, at its sole expense, contest by appropriate legal proceedings conducted in good faith and with due diligence, the amount or validity or application, in whole or in part of any Imposition or lien therefor or any Legal Requirement or Insurance Requirement or the application of any instrument of record affecting the Trust Estate or any part thereof or any claims of mechanics, materialmen, suppliers, or vendors or lien therefore, and may withhold payment of the same pending such proceedings if permitted by law, or make payment under protest, or defer compliance with any such Legal Requirement, any such Insurance Requirement or the terms of any such instrument, and the same shall not be a Default hereunder, provided that (a) in the case of any Impositions or lien therefor or any claims of mechanics, materialmen, suppliers or vendors or lien therefor, such proceedings shall suspend the collection thereof from each of the Mortgagor, the Mortgagee, the Trustee, the Noteholder and the Trust Estate, (b) neither the Trust Estate nor any interest therein would be in any danger of being sold, forfeited, or lost, (c) such action would not result in or constitute a default under any Ground Lease or Superior Mortgage, (d) in the case of a Legal Requirement, neither the Noteholder nor the Mortgagee shall be in any danger of any civil or any criminal liability, and the failure of the Mortgagor to comply with such Legal Requirement shall not affect the continuance in good standing of any Permit or result in the suspension, termination, non-renewal or material adverse modification of any permit, and (e) in the case of an Insurance Requirement, the failure of the Mortgagor to comply therewith shall not affect the validity of any insurance required to be maintained by the Mortgagor hereunder. Section 5.10. MECHANICS' AND OTHER LIENS. Without limiting the generality of the first sentence of Section 5.03 and notwithstanding the provisions of Section 5.03(a)(ii), the 42 Mortgagor will cause to be removed, either by payment, or bonding or otherwise, all claims and demands of mechanics, materialmen, laborers, and others which, if unpaid, might result in, or permit the creation of, a lien on the Premises and/or Trust Estate or any part thereof, or on the revenues, rents, issues, income and profits arising therefrom and in general will do or cause to be done everything necessary so that the lien hereof shall be fully preserved, at the cost of the Mortgagor, without expense to the Mortgagee. Section 5.11. INSURANCE. (a) The Mortgagor will, at its expense, maintain with Insurers: (1) insurance with respect to the Mortgagor's insurable properties constituting a part of the Trust Estate against loss or damage by fire, lightning, and other risks from time to time included under "all-risk" policies and against loss or damage by sprinkler leakage, water damage, collapse, malicious mischief and explosion in respect of any steam and pressure boiler and similar apparatus located on such insurable properties, in amounts at all times sufficient to prevent the Mortgagor from becoming a coinsurer within the terms of the applicable policies, but in any event such insurance shall be maintained in such insurable amounts not less than the greatest of the following (hereinafter referred to as the "Insurance Amount"): (i) 100% of the then full insurable value of such insurable properties, the term "full insurable value" to mean the actual replacement cost (excluding the costs of foundation, footing, excavation, paving, landscaping and other similar, non-insurable improvements) determined from time to time (but not less frequently than once in any 36 calendar months), by an Architect, contractor, appraiser, or an Insurer, (ii) the amount required to be maintained pursuant to the Superior Instrument Requirements; (2) war risk insurance as and when such insurance is obtainable from the United States of America or any agency thereof as promptly as reasonably practicable after the same becomes so obtainable, in an amount not less than the Insurance Amount, or in such lesser amount as may then be so obtainable; (3) public liability, including personal injury and property damage and comprehensive general liability connected with the possession, use, leasing, operation or condition of such insurable properties in such amounts as, in the Mortgagor's judgment, are prudent, considering the cost of such insurance, for personal injury and 43 property damage with respect to any one occurrence, which may be under an umbrella policy. Anything contained in this clause (3) to the contrary notwithstanding, the Superior Instrument Requirements with respect to the kinds and amount of insurance described in this clause (3) shall be satisfied by the Mortgagor; (4) appropriate workers' compensation insurance with respect to any work (to the extent the risks to be covered thereby are not already covered by other policies of insurance maintained by the Mortgagor) on or about such insurable properties; (5) business interruption insurance covering not less than 12 months of loss, provided that, at any time that the Mortgagor is renewing any policy for such insurance or taking out any new or replacement such policy covering a period of less than 12 months, the Mortgagor shall deliver to the Mortgagee an Officers' Certificate certifying that the period of coverage to be maintained by the Mortgagor under such policy is the maximum that can be maintained at rates determined by the Mortgagor to be reasonable for such coverage; (6) to the extent available, flood insurance in an amount not less than the Insurance Amount, or such lesser amount as may then be so obtainable; and (7) such other insurance with respect to such insurable properties against loss or damage of the kinds (i) from time to time customarily insured against by persons owning or using casino-hotels of comparable size in the boardwalk area of Atlantic City, New Jersey and (ii) required to be maintained pursuant to the Superior Instrument Requirements. Notwithstanding the foregoing, to the extent permitted by Superior Instrument Requirements, (i) the Mortgagor shall be permitted to maintain a deductible with respect to the insurance policies described in clauses (1), (2), (6) and (7) in an amount not to exceed (x) for the twelve month period commencing the date hereof, $100,000 with respect to the insurance policies described in clause (1), (2), (6) and (7) thereafter, the customary deductible (if any) with respect to the insurance maintained by casino-hotels of a similar size and value in Atlantic City, New Jersey (but in no event more than $1,000,000), (ii) the Mortgagor shall be permitted to maintain a $200,000 self insured retention under the general liability policy described in clause (3) and a deductible with respect to the other insurance policies described in clause (3) in an amount not to exceed the amount of deductible as is customarily maintained by casino-hotels of similar size in Atlantic City, New Jersey, (iii) the Mortgagor shall not reduce its insurance coverage for the matters described in clause (3) (which for purposes of 44 this paragraph means a reduction in single limits or an increase in deductible) unless and until the Mortgagor delivers to the Mortgagee an Officers' Certificate certifying (w) that the coverage the Mortgagor was theretofore maintaining cannot be maintained at rates determined by the Mortgagor to be reasonable for such coverage, (x) the amount of the proposed reduction, (y) the premium for the existing and the proposed reduced coverage, and (z) that the proposed deductible satisfied the criteria set forth in this clause (iii), and (iv) the Mortgagor shall be permitted to maintain a deductible with respect to the insurance policies described in clause (5) in the forms of and in an amount not to exceed the amount of deductible as is customarily maintained by casino-hotels of similar size in Atlantic City, New Jersey. (b) Each policy of insurance maintained by the Mortgagor pursuant to Subsection (a) of this Section 5.11 shall, (1) except in the case of workers' compensation insurance, name as additional insureds the Mortgagee and, to the extent required by the Superior Instrument Requirements, the Lessors and the holders of the Superior Mortgages, (2) provide that all insurance proceeds for losses, except in the case of public liability insurance and workers' compensation insurance or as otherwise provided in Subsections (d), (e) and (f) of this Section 5.11, be payable solely to the Mortgagee or such other party as is required to receive such proceeds under a Superior Mortgage, (3) except in the case of workers' compensation, include effective waivers (whether under the terms of any such policy or otherwise) by the insurer of all claims for insurance premiums against all lost payees and named insureds (other than the Mortgagor) and all rights of subrogation against any named insured, (4) except in the case of public liability and workers' compensation insurance, provide that any losses shall be payable notwithstanding (i) any act, failure to act, negligence of, or violation or breach of warranties, declarations or conditions contained in such policy by the Mortgagor or the Mortgagee or any other named insured or loss payee (including, without limitation, with respect to the Released Fee Land, the holders of any After-Acquired Fee Mortgages), (ii) the occupation or use of the insurable properties for purposes more hazardous than permitted by the terms of the policy, (iii) any foreclosure or other proceeding or notice of sale relating to the insurable properties or (iv) any change in the title to or ownership or possession of the insurable properties, (5) contain a non-contributory mortgagee clause in favor of the Mortgagee, and (6) provide that if all or any part of such policy is cancelled, terminated or expires, the insurer will forthwith give notice thereof to each named insured an loss payee and that no cancellation, reduction in amount or material change in coverage thereof shall be effective until at least 30 days after receipt by each named insured and loss payee of written notice thereof. 45 (c) The Mortgagor will deliver to the Mortgagee, (1) duplicate originals of all insurance policies that the Mortgagor is required to maintain pursuant to this Section 5.11 and (2) within 30 days after each reduction in insurance required to be maintained by the Mortgagor hereunder, an Officers' Certificate setting forth the particulars as to all such insurance policies and certifying that the same comply with the requirements of this Section 5.11, that all premiums or installments thereof then due thereon have been paid and that the same are in full force and effect. The Mortgagee shall not be responsible for effecting or renewing any insurance or for the responsibility or solvency of the insurers. (d) The Mortgagor shall give written notice to the Mortgagee immediately upon obtaining knowledge of any Casualty which (x) results in damage, loss or destruction in an amount in excess of $5,000,000 to any buildings or improvements on the Premises and/or any Tangible Personal Property or (y) pursuant to any Superior Instrument Requirement, would require the deposit of insurance proceeds with the Depositary, or action or proceeding with respect thereto. Whenever the Superior Instrument Requirements require or permit the selection of the Depositary by the Mortgagor, the Mortgagor shall select the Insurance Trustee as the Depositary. Within 30 days after any Casualty which results in any damage, loss or destruction in an amount in excess of $10,000,000 to any buildings or improvements of the Premises and/or any Tangible Personal Property, the Mortgagor shall deliver to the Mortgagee a certificate of an Architect stating whether, in such Architect's opinion, applicable Legal Requirements permit the Restoration of such buildings and improvements for the same uses and to the same size and quality in all material respects, as existed immediately prior to the Casualty (and if such certificate states the Legal Requirements do not permit such Restoration, such certificate shall describe the manner closest approximating such criteria to which the buildings and improvements could be so restored and shall be accompanied by a Certificate of Appraised Value dated not more than 10 days prior to delivery setting forth the Appraised Value immediately prior to the Casualty and the estimated Appraised Value immediately after the Restoration). If the Mortgagor is required to deliver such Certificates of Appraised Value and if based on such Certificates of Appraised Value immediately after Restoration, the aggregate Outstanding Amount of First Mortgage Debt immediately after such Restoration shall exceed the greater of (i) 66 2/3% of the Appraised Value immediately after such Restoration or (ii) the quotient of the Outstanding Amount of First Mortgage Debt immediately prior to such Casualty divided by the Appraised Value immediately prior to the Casualty multiplied by the Appraised Value immediately after such Restoration, then the proceeds of any insurance shall, at the election of Mortgagee, either be applied to Restoration as set forth in Subsections (e), (h) and (i) 46 below) or paid and delivered to the Mortgagee to the extent of the then Outstanding Amount of the Notes and any other interest or other sums due hereunder or thereunder to be applied to the satisfaction of the Mortgage to the extent proceeds are available for such purpose and provided that no additional sums are due to the Trustee or the Noteholders under the Notes or the Indenture, the balance of any net insurance proceeds shall be paid to the Mortgagor. Notwithstanding the foregoing sentence, if such Certificates of Appraised Values indicates that the Outstanding Amount of First Mortgage Debt immediately after such Restoration exceeds the greater of the two amounts determined pursuant to subclauses (i) and (ii) above, the proceeds of insurance will be made available for Restoration (subject to paragraphs, (e), (h) and (i) below) if the Mortgagor obtains an irrevocable commitment from a nationally recognized financial institution having a combined capital and surplus of at least $100,000,000, to supply, upon an acceleration under this Mortgage as a result of an Event of Default, funds to the Mortgagor as additions to capital in an amount equal to the Outstanding Amount of First Mortgage Debt in excess of the Appraised Value necessary to be paid down so that the Outstanding Amount of First Mortgage Debt will not exceed either of the two amounts determined pursuant to such clauses (i) and (ii), PROVIDED that such commitment may only be released if, upon an Appraisal at any time following completion of such Restoration, the aggregate Outstanding Amount of the First Mortgage Debt does not exceed 66-2/3% of the Appraised Value. (e) Subject to the provisions of Subsection (d) above, in case a Casualty occurs, the following shall apply: (1) if the cost of Restoration (as hereinafter defined) does not exceed the sum of $10,000,000, the net insurance proceeds shall be paid by the Mortgagee to the Mortgagor (unless the Superior Instrument Requirements provide that the same shall be paid to the Depositary); (2) if the cost of Restoration is $10,000,000 or more or if the Superior Instrument Requirements provide that the same shall be paid to the Depositary, the net insurance proceeds shall be paid by the Mortgagee to the Insurance Trustee (or other Depositary required by the Superior Instrument Requirements, provided that such Depositary holds such proceeds in trust for purposes of paying the costs of Restoration); (3) the Mortgagor shall commence with reasonable promptness under the circumstances and thereafter with due diligence proceed to perform and complete in a good and workmanlike manner the restoration, repair, replacement or rebuilding of the damage or destruction 47 resulting from the Casualty (all of which restoration, repair, replacement or rebuilding are referred to as the "Restoration") in accordance with the plans and specifications submitted to the Insurance Trustee, in conformance with all Legal Requirements and Superior Instrument Requirements, and in accordance with the further provisions of this Subsection (e), regardless of the extent of any such Casualty and whether or not net insurance proceeds, if any, shall be available or, if available, shall be sufficient, for the purpose of the Restoration (provided, however, that if the Mortgagor does not receive any net insurance proceeds within 30 days after any Casualty because the adjustment of the loss has not yet occurred, then the obligation of the Mortgagor to commence such Restoration shall be deferred until such proceeds are made available to the Mortgagor, provided that (i) Mortgagor delivers to the Mortgagee an Officers' Certificate certifying that the Mortgagor is diligently and continuously adjusting such loss with the Insurer, (ii) the Mortgagor delivers to the Mortgagee an Officers' Certificate within such 30-day period requesting the extension of such period, estimating the date on which such proceeds will be available and describing the Mortgagor's efforts to adjust such loss and certifying that such extension does not constitute a default or a breach of any of the provisions of any of the Ground Leases (or if so, such default or breach has been waived) and (iii) the Mortgagor delivers to the Mortgagee additional Officers' Certificates every 30 days thereafter updating the information contained in the certificate described in Clause (ii)). All Restoration work shall be performed in accordance with the applicable provisions of Section 5.12 and in conformance with all Superior Instrument Requirements, Legal Requirements and Insurance Requirements and, prior to commencing any Restoration, the Mortgagor shall obtain all Permits necessary in connection therewith, and shall obtain, and keep in full force and effect until the completion of such Restoration, such additional insurance as the Insurance Trustee and Superior Instrument Requirements may require. The plans and specifications for the Restoration shall be accompanied by a certificate of the Mortgagor and an Opinion of Counsel to the effect that upon the completion of the Restoration pursuant to the plans and specifications the Premises, and all buildings and improvements, thereon will comply with all superior Instrument Requirements, Legal Requirements and Insurance Requirements. Notwithstanding anything in this Section 5.11 to the contrary, if such Casualty is in an amount less than $5,000,000, the Mortgagor shall not be required to perform and complete such Restoration (unless the performance and completion of the Restoration is necessary in order for the Mortgagor to be in compliance with any term, provision or condition of this Mortgage 48 (other than this Section 5.11(e)) or any Superior Instrument Requirements; (4) Any insurance proceeds which the Mortgagor receives, shall be held by the Mortgagor in trust for the purpose of paying the cost of the Restoration, except as otherwise provided herein; (5) Any net insurance proceeds that the Insurance Trustee holds pursuant to this Subsection (e), shall be deposited in an interest-bearing investment reasonably designate by Mortgagor (to the extent the Mortgagor is permitted to designate such investment under the Superior Instrument Requirements) (and the interest thereon shall be added to such proceeds) and shall be paid by the Insurance Trustee in reimburse the Mortgagor for, or to make payment for, the Restoration, after the Insurance Trustee deducts therefrom the amount of any reasonable costs and expenses incurred in connection with the performance of its obligations under this Section 5.11. The Insurance Trustee shall make such payments not more frequently than once every 30 days upon the written request of the Mortgagor (unless more frequent payments are required by Superior Instrument Requirements), by paying to the Mortgagor or the persons named in the certificate described in Clause (6) of this Subsection (e) the respective amounts stated in such certificate from time to time as the Restoration progresses, provided the Mortgagor has complied with the requirements of this Subsection (e) and such payment is permitted by an applicable Superior Instrument Requirements. The Mortgagor's written request shall be accompanied by (i) the certificate described in Clause (6) of this Subsection (e) and (ii) a title company or official search, or other evidence reasonably acceptable to the Insurance Trustee, showing that there have not been filed with respect to the Premises, any vendor's, contractor's mechanic's, laborer's or materialman's statutory or similar lien which has not been discharged of record (or bonded against or secured by other security) or any other encumbrance irrespective of its priority (other than Permitted Encumbrances). (6) The certificate required by Clause (5) of this Subsection (e) shall (A) be an Officers' Certificate, countersigned by the Architect in charge of the Restoration with respect to the matters described in (i) and (v) below, (B) be dated not more than 10 days prior to such request and (C) set forth (in addition to any other requirements contained in any applicable Superior Instrument Requirements) that: (i) all of the Restoration work theretofore performed is in substantial compliance with the 49 plans and specifications theretofore submitted to the Insurance Trustee and in compliance with all Superior Instrument Requirements, Legal Requirements and Insurance Requirements; (ii) the sum then requested either has been paid by the Mortgagor or is justly due to contractors, subcontractors, materialmen, engineers, architects or other persons who have rendered services or furnished or contracted to deliver materials for the Restoration therein specified, and the names and addresses of such persons, a brief description of such services and materials and the several amounts so paid or due to each of such persons in respect thereof; (iii) no part of the amount requested has been or is the basis in any pervious or then pending request for the withdrawal of net insurance proceeds, and that the sum then requested does not exceed the value of the services and materials described in the certificate; (iv) except for the amount, if any, stated pursuant to Subclause (ii) of this Clause (6) in such certificate to be due for services or materials, and except for amounts in dispute and/or customary retainages, there is no outstanding indebtedness known to the person signing such certificate, after due inquiry, which is then due for labor, wages, materials, supplies or services in connection with such Restoration; and (v) the remaining cost, as estimated by the persons signing such certificate, of the Restoration in order to complete the same does not exceed the net insurance proceeds remaining in the hands of Insurance Trustee after payment of the sum requested in such certificate or if such estimated cost does exceed such insurance proceeds such certificate shall state the amount of any such deficiency. If the certificate states that such deficiency will exist, the Mortgagor shall deliver the amount of such deficiency in cash or cash equivalent to the Insurance Trustee simultaneously with the delivery of such certificate, which amount shall be deemed insurance proceeds for purposes of this Section 5.11(e); and (7) If net insurance proceeds shall be insufficient to pay the entire cost of the Restoration, then, after completion of the Restoration, the Mortgagor shall pay the deficiency. If all or any part of the net insurance proceeds are not used for the restoration in accordance 50 with this Subsection (e) (because such proceeds exceed the amount required to complete the Restoration), then upon completion of the Restoration in accordance with this Subsection (e), such amount not so used, if held by the Insurance Trustee, shall be paid to the Mortgagor (if permitted by Superior Instrument Requirements). (f) Provided that no Event of Default has occurred and is continuing, all net business interruption insurance proceeds shall be paid to the Mortgagor, to be segregated from the other funds of Mortgagor and held in trust by Mortgagor for the following purposes and in the following order of priority: (i) for the payment of Impositions and amounts due under the Ground Leases and Superior Mortgages; (ii) for debt service for the estimated period of Restoration (for purposes of this Section 5.11(f), interest and principal payments due on any payment date under the Note will deemed to accrue in equal daily installments beginning the day after the immediately preceding payment date and ending on such payment date); and (iii) for any expense incurred in connection with the operation or business of the Casino-Hotel. (g) The Mortgagor shall not take out separate insurance, concurrent in form or contributing in the event of loss with that required to be maintained pursuant to this Section 5.11, unless the same are permitted by Superior Instrument Requirements and the Mortgagee is included therein as a named insured, with loss payable to the Mortgagee and the Insurance Trustee pursuant to Section 5.11(b) hereof. The Mortgagor shall immediately notify the Mortgagee whenever any such separate insurance is taken out and shall promptly deliver to the Mortgagee a duplicate original of the policy of such insurance, a copy thereof certified by the insurer or a certificate thereof. (h) Subject to final adjustment by the insurer, insurance claims by reason of damage or destruction to any portion of the Trust Estate may be adjusted by the Mortgagor, but the Mortgagee shall have the right (but not the obligation) to join the Mortgagor in adjusting, and approving the adjustment of, any such loss except in the event of a loss where the amount of insurance reasonably anticipated to be received with respect to such loss is less than Five Million Dollars ($5,000,000), and the Mortgagor shall assist the Mortgagee in any such adjustment at the request of the Mortgagee. If the Mortgagee at its election as aforesaid joins the Mortgagor in any adjustment process, then the Mortgagee's approval of the adjustment shall not be unreasonably withheld; (i) Notwithstanding anything contained herein to the contrary, if an Event of Default shall have occurred and be continuing, the Mortgagee may, at its option, (A) refrain from paying to the Mortgagor or the Insurance Trustee any net insurance proceeds or (B) instruct the Insurance Trustee to 51 pay to the Mortgagee any insurance proceeds then held by the Insurance Trustee, as the case may be. Section 5.12. LIMITATIONS ON BUILDING DEMOLITION, ALTERATIONS, IMPROVEMENTS AND NEW CONSTRUCTION. The Mortgagor will not authorize, permit or make any demolition, alteration or improvement of any building included in the Trust Estate or any new construction on any part of the Trust Estate, except in conformity with and subject to the limitations hereinafter in this Section 5.12 set forth. Unless an Event of Default shall have occurred and be continuing, the Mortgagor shall have the right at all times to make or permit such alterations, improvements or new constructions, structural or otherwise (herein sometimes called collectively "alterations"), of or on the Trust Estate, to be made in all cases subject to the following conditions: (a) no alteration shall be undertaken or carried out except in conformity with all Superior Instrument Requirements, Legal Requirements and Insurance Requirements; (b) if the estimated cost of any alteration, together with other alterations that constitute a single construction plan or project (whether or not accomplished in several stages or procedures), exceeds $5,000,000, the building or buildings, as so improved or altered, upon completion of the work shall be of a value not less than the value of such building or buildings immediately prior to the making of such alterations; (c) any alteration which is structural in nature or involves an estimated cost of more than $5,000,000 shall be conducted under the supervision of an Architect, and no such alteration shall be undertaken until 10 days after there shall have been filed with the Mortgagee detailed plans and specifications and cost estimates therefor, stating that such plans and specification conform to all, prepared and approved in writing by such Architect and accompanied by a certificate of such Architect stating that such plans and specifications conform to all applicable provisions of this Section 5.12; (d) no alteration involving an estimated cost of more than $5,000,000 shall be undertaken until the Mortgagor has furnished to the Mortgagee, at the Mortgagor's sole cost and expense, a surety bond or bonds, covering performance, and labor and material payments with respect to the work to be so performed, naming the Mortgagee as obligee, issued by a responsible surety company, authorized to do business in the state of New Jersey, in a form generally and customarily used 52 by such surety in an amount equal to the estimated cost of construction of the work covered by the plans and specifications therefor, guaranteed and conditioned upon the performance and completion of such construction, substantially in conformity with the such plans and specifications and within a reasonable time, subject to delays by fire, strikes, lock-out, acts of God, inability to obtain labor or materials, governmental restrictions, enemy action, civil commotion or unavoidable Casualty or other similar causes beyond the control of the Mortgagor, free and clear of all liens, claims and liabilities for the cost of such alterations. In the event such surety bond or bonds shall be unobtainable the Mortgagor shall deliver to the Mortgagee security by cash, letter of credit or other guarantee, affording substantially the same protection as would such bond or bonds; (e) all work done in connection with any alterations shall be done promptly and in good and workmanlike manner. The work in connection with any alteration shall be prosecuted with reasonable dispatch, delays due to fire, strikes, lockouts, acts of God, inability to obtain labor or materials, governmental restrictions, enemy action, civil commotion or unavoidable casualty or similar causes beyond the control of the Mortgagor excepted; (f) if the estimated cost of alterations exceed $5,000,000, the Mortgagor shall have delivered to the Mortgagee (A) prior to the commencement of such alterations, additions or improvements copies of all Permits required for the commencement of such work together with a certificate of the Architect or an Opinion of Counsel to the effect that all Permits required for the commencement of such alterations have been obtained; and (B) within a reasonable period of time after the completion of the alterations, copies of all Permits required in connection with the completion thereof, together with either an Opinion of Counsel or a certificate of the Architect that all such Permits have been so obtained by the Mortgagor and that the Mortgagor has complied with all the requirements of this Section 5.12; (g) no alterations of any kind shall be made to any building which shall change the use or reduce the size or quality of the building in any material respect; and (h) no alterations costing in excess of $5,000,000, together with other alterations that constitute a single construction plan or project (whether or not accomplished in several stages or procedures), shall be made to any building if such alterations are not 53 expected to be completed at least 120 days prior to the maturity date of the Note (except if such alterations are required in order to comply with Legal Requirements or Superior Instrument Requirements). Section 5.13. LEASES. The Mortgagor shall not: (a) subject to the provisions of Section 5.13(d), enter into any Lease, or renew, modify, extend, terminate, or amend any Lease, except in the ordinary course of business of operating the Casino-Hotel; (b) receive or collect, or permit the receipt or collection of, any rental payments under any Lease more than one year in advance of the respective periods in respect of which they are to accrue, except that, in connection with the execution and delivery of any Lease or of any amendment to any Lease, rental payments thereunder may be collected and received in advance in an amount not in excess of three months' rent and/or a security deposit may be required thereunder in an amount not exceeding one year's rent; (c) collaterally assign, transfer or hypothecate (other than to the Mortgagee hereunder, to the mortgagee under the Guaranty Mortgage or to the holder of any Working Capital Facility Lien) any rental payment under any Lease whether then due or to accrue in the future, the interest of the Mortgagor as landlord under any Lease or the rents, issues or profits of the Trust Estate; (d) after the date hereof, enter into any Lease, or renew any Lease unless such Lease contains terms to the effect as follows: (1) the Lease and the rights of the tenants thereunder shall be subject and subordinate to the rights of the Mortgagee under this Mortgage, the mortgagee under the Guaranty Mortgage and the holders of any Superior Mortgage, (2) the Lease may be assigned by the landlord thereunder to the Mortgagee, (3) the rights and remedies of the tenant in respect of any obligations of the landlord thereunder shall be nonrecourse as to any assets of the landlord other than its equity in the building in which the leased premises are located or the proceeds thereof, (4) the rights of the tenant shall be subject and subordinate to the rights of the lessee 54 under any new lease entered into in the event of a termination of a Ground Lease; (e) modify any Lease with respect to the matters described in clauses (1) through (4) of paragraph (d). If the Mortgagor enters into a Lease (other than with any Affiliate of the Mortgagor) for a term of not less than 3 nor more than 10 years, the Mortgagee shall deliver a non-disturbance and attornment agreement substantially in the form of Schedule 4 hereto, following receipt of a certificate of a leasing broker (who is not an Affiliate of the Mortgagor or the broker involved in such transaction) experienced with respect to leases of commercial space in the Atlantic City area stating that the rent under the Lease is not less than fair market rent and that the other terms of the Lease are fair and reasonable in the commercial leasing market. The Mortgagor shall, upon demand, reimburse the Mortgagee for any costs and expenses (including reasonable attorney's fees) incurred by the Mortgagee in connection with the preparation, review and delivery of such non-disturbance and attornment agreements. Promptly after the execution and delivery hereof, the Mortgagor will cause the lessee under each Lease now in effect and promptly after each Lease is executed or becomes effective after the date of the execution and delivery hereof, the Mortgagor will cause the lessee under each such. Lease, to be duly notified in writing (unless the substance and effect of such notice shall be contained in such Lease) of the subjection of the owner's interest, as lessor, in and to such Lease to the lien of this Mortgage and of the name and address of the Mortgagee. Each such notice shall state that the lease of such lessee is a Lease as herein defined. If a new Mortgagee is at any time appointed hereunder or the address of the Mortgagee shall at any time be changed, the Mortgagor will cause each lessee under each Lease to be promptly notified in writing of the name address of such new Mortgagee or the new address of the Mortgagee. The Mortgagor will use reasonable efforts (but shall not be obligated to incur any expenditure other than de minimis amounts) to obtain from each lessee under each Lease to whom any notice is sent pursuant to this paragraph an acknowledgment of receipt of such notice, and the Mortgagor will promptly deliver to the Mortgagee, upon request, a copy of each such acknowledgment of receipt which it is able to obtain. The Mortgagee shall not be responsible for securing or causing the Mortgagor to secure any such acknowledgment. Nothing contained in this Section 5.13 shall limit the provisions of Section 4.04 hereof. Section 5.14. [Reserved] 55 Section 5.15. MAINTENANCE OF EXISTENCE OF THE MORTGAGOR. Subject to Article Four, the Mortgagor will do or cause to be done all things necessary to preserve and keep in full force and effect its existence as a corporation, and its rights (both statutory and under its articles of incorporation) and franchises. Section 5.16. TO KEEP BOOKS; INSPECTION BY MORTGAGEE. The Mortgagor will keep proper books of record and account in accordance with Section 12.05 of the Indenture. Section 5.17. ADVANCES BY MORTGAGEE. If the Mortgagor shall fail to perform any of its covenants in this Mortgage and such failure shall continue for 10 days following notice thereof given by the Mortgagee (or at any time, without notice, in case of emergency), the Mortgagee may (but is not obligated to), at any time and from time to time, take any action or make advances, to effect performance of any such covenant on behalf of the Mortgagor; and all moneys so used or advanced by the Mortgagee and all reasonable costs and expenses incurred by Mortgagee in connection therewith, together with interest on all of the same at the rate of interest set forth in the Note, shall be repaid by the Mortgagor upon demand and such advances shall be secured under this Mortgage prior to the Note. Section 5.18. WAIVER OF STAY, EXTENSION OR USURY LAWS. The Mortgagor covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any usury, stay or extension law or any other law which would prohibit or forgive the Mortgagor from paying all or any portion of the obligations evidenced by the Note as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may otherwise affect the covenants or the performance of this Mortgage; and the Mortgagor (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Mortgagee, but will suffer and permit the execution of every such power as though no such law had been enacted. Section 5.19. [Reserved] Section 5.20. EMINENT DOMAIN. (a) The Mortgagor shall give written notice to the Mortgagee immediately upon obtaining knowledge of any Taking affecting the Trust Estate. If the Taking (i) is estimated to result in an award of more than [$5,000,000] or (ii) the Taking would interfere with or adversely affect the operation of the Casino-Hotel in accordance with Legal Requirements then within 30 days after any such Taking, the Mortgagor shall 56 deliver to the Mortgagee a certificate of an Architect stating whether, in such Architect's opinion, applicable Legal Requirements permit the Restoration of any buildings and improvements for the same uses and the same size and quality in all material respects as existed immediately prior to the Taking (and if such certificate states that Legal Requirements do not permit such Restoration, such certificate shall describe the manner closest approximating such criteria to which the buildings and improvements could be so restored and shall be accompanied by a Certificate of Appraised Value dated not more than 10 days prior to delivery setting forth the Appraised Value immediately prior to the Taking and the estimated Appraised Value immediately after the permitted Restoration). If the Mortgagor is required to deliver such Certificates of Appraised Value and if based on such Certificates of Appraised Value immediately after Restoration, the aggregate Outstanding Amount of First Mortgage Debt immediately after such Restoration shall exceed the greater of (i) 66-2/3% of the Appraised Value immediately after such Restoration or (ii) the quotient of the Outstanding Amount of the First Mortgage Debt immediately prior to such Taking divided by the Appraised Value immediately prior to the Taking multiplied by the Appraised Value immediately after such Restoration, then the Taking shall be deemed a Taking of "the whole or substantially all of the Premises." Notwithstanding the foregoing sentence, if such Certificates of Appraised Value indicate that the Outstanding Amount of First Mortgage Debt immediately after such Restoration exceeds the greater of the two amounts determined pursuant to subclauses (i) and (ii) above, the Taking will not be deemed a Taking of "the whole or substantially all of the Premises", if the Mortgagor obtains an irrevocable commitment from a nationally recognized financial institution having a combined capital and surplus of at least [$100,000,000], to supply, upon an acceleration under this Mortgage as a result of an Event of Default, funds to the Mortgagor as additions to capital in an amount equal to the Outstanding Amount of First Mortgage Debt in excess of the Appraised Value necessary to be paid down so that the Outstanding Amount of First Mortgage Debt will not exceed either of the two amounts determined pursuant to such clauses (i) and (ii), PROVIDED that such commitment may only be released if, upon an Appraisal at any time following completion of such Restoration, the aggregate Outstanding Amount of the First Mortgage Debt does not exceed 66-2/3% of the Appraised Value. (b) If at any time there shall occur a Taking of less than the whole or substantially all of the Premises and the award or awards resulting therefrom payable to the Mortgagor (and not to any Lessor or the holder of any Superior Mortgage) (after there shall have been first deducted the fees and expenses incurred in connection with the termination, settlement and collection of such award or awards, including but not limited to reasonable counsel fees and expenses, 57 hereinafter referred to as "Settlement Costs") (i) shall not exceed the sum of [$10,000,000] (except to the extent that the Insurance trustee or a Depositary is required to hold such amount pursuant to a Superior Instrument Requirement), the entire amount of such award shall be paid to the Mortgagor; and (ii) if such award is [$10,000,000] or more, the entire amount of such award shall be paid to the Insurance Trustee (or other Depositary required by a Superior Mortgage, provided that such Depositary holds such award in trust for purposes of paying the cost of Restoration). In either event, such awards shall be applied to the cost of demolition, repair, Restoration and replacement of the Trust Estate to as nearly practicable to their uses, value and condition immediately prior to the Taking (except to the extent otherwise provided by Superior Instrument Requirements). The Mortgagor shall promptly commence and with due diligence perform that Restoration in accordance with clauses (3), (4) and (7) of Section 5.11(e) (after substituting the words "Taking" of "Casualty" and "award" for "not insurance proceeds"), at no cost to the Mortgagee. All claims or suits arising out of any Taking may be settled by the Mortgagor, except that the Mortgagee shall have the right (but not the obligation) to participate in such claim or suit, and not the obligation) to participate in such claim or suit, and to approve settlement thereof (and notwithstanding anything in the Ground Leases to the contrary, the Mortgagor shall not agree to any settlement or compromise of the amount of any such claim or suit), except a claim or suit where the amount reasonably anticipated to be received by the Mortgagor is less than $5,000,000. If the Mortgagee at its election as aforesaid joins such claim or suit, the Mortgagee's approval of such settlement shall not be unreasonably withheld. The Insurance Trustee shall promptly pay such sums as are received by it from such Taking from time to time in accordance with the procedures set forth in clauses (5) and (6) of Section 5.11(e) (after substituting the words "Taking" for "Casualty" and "award" for "net insurance proceeds"). (c) If at any time there shall occur a Taking of the whole or substantially all of the Premises, then the award payable to the Mortgagor shall not be applied to Restoration but shall instead be paid and delivered to the Trustee (subject to the rights of the Lessors under the Superior Leases and the holders of any Superior Mortgages) to the extent of the then Outstanding Amount of the Note and any other interest or other sums due hereunder or thereunder to be applied to the satisfaction of this Mortgage to the extent proceeds are available for such purpose and provided that no additional sums are due the Trustee or the Noteholder under the Note or the Indenture, the balance of any award shall be paid to the Mortgagor. (d) Notwithstanding anything contained herein to the contrary, if an Event of Default shall have occurred and 58 is continuing, the Mortgagee may, at its option, (A) refrain from paying to the Mortgagor or the Insurance Trustee any award or (B) instruct the Insurance Trustee to pay to the Mortgagee any award then held by the Insurance Trustee, as the case may be. Section 5.21. GROUND LEASES. (a) The Mortgagor covenants and agrees that it will do or cause to be done all things necessary to preserve and keep unimpaired the rights of the Mortgagor, as lessee under the Ground Lease, and to prevent any termination, surrender, cancellation, forfeiture or impairment thereof. The Mortgagor shall at all times fully perform and comply with all agreements, covenants, terms and conditions imposed upon or assumed by it as lessee under each of the Ground Leases (including without limitation the covenant to pay rent and all taxes, assessments and other charges mentioned therein) prior to the expiration of any notice and/or cure period provided in each such Ground Lease. Upon receipt by the Mortgagee from a Lessor of any written notice of default by the lessee thereunder, Mortgagee may rely thereon and take any action the Mortgagee deems necessary in its sole discretion to prevent or to cure any default by the Mortgagor in the performance of or compliance with any of the agreements, covenants, terms or conditions imposed upon or assumed by the Mortgagor as lessee under each of the Ground Leases, even though the existence of such default or the nature thereof be questioned or denied by the Mortgagor or by any party on behalf of the Mortgagor, provided that if the Mortgagor has theretofore delivered to the Mortgagee the Officers' Certificate, Opinion of Counsel and a copy of the injunction, all as described in Section 3.01(g), the Mortgagee shall not take any such action unless and until the Mortgagor and/or the Mortgagee no longer has the benefit of any tolling or stay referred to in Section 3.01(g). Without limiting the generality of Section 3.09 hereof, the Mortgagor hereby expressly grants to the Mortgagee, and agrees that the Mortgagee shall have, the absolute and immediate right to enter in and upon the Premises or any part thereof to such extent and as often as the Mortgagee, in its sole discretion, deems necessary or desirable for the purpose permitted by the immediately preceding sentence, subject only to applicable Legal Requirements. Subject to the preceding and without limiting the Mortgagee's other remedies under this Mortgage, the Mortgagee may pay and expend such sums of money as the Mortgagee in its sole discretion deems necessary for any such purpose, and the Mortgagor hereby agrees to pay to the Mortgagee, immediately and without demand, all such sums so paid and expended by the Mortgagee, together with interest thereon from the date of each such payment at the highest rate of interest set forth in the Note. All sums so paid and expended by the Mortgagee, and the interest thereon, shall be added to and be secured by the lien of this Mortgage. 59 (b) The Mortgagor further covenants and agrees: (i) it will not surrender any leasehold estate and interest hereinabove described, nor terminate or cancel any Ground Lease, and that it will not without the express written consent of the Mortgagee modify, change, supplement, alter or amend such Ground Leases either orally or in writing and, as further security for the repayment of the indebtedness secured hereby and for the performance of the covenants herein and in such Ground Leases contained, the Mortgagor hereby assigns to the Mortgagee all of its rights, privileges and prerogatives as lessee under such Ground Leases to terminate, cancel, modify, change, supplement, alter or amend such Ground Leases, and any such termination, cancellation, modification, change, supplement, alteration or amendment of such Ground Leases without the prior written consent thereto by Mortgagee shall be void and of no force and effect. Unless (1) an Event of Default has occurred and is continuing and (2) either (A) there has been an acceleration of maturity of the Note pursuant to Section 3.02 hereof or (B) the Mortgagee exercises its rights under Section 3.09 hereof, the Mortgagee shall have no right to terminate, cancel, modify, change, supplement, alter or amend the Ground Leases; (ii) solely for the benefit of the Mortgagee, Trustee, the Noteholders and no other person, no release or forbearance of any of the Mortgagor's obligations under such Ground Leases, pursuant to such Ground Leases or otherwise, shall release the Mortgagor from any of its obligations under this Mortgage, including its obligations with respect to the payment of rent as provided for in such Ground Leases and the performance of all of the terms, provisions, covenants, conditions and agreements contained in such Ground Leases, to be kept, performed and complied with by the lessee therein; (iii) unless the Mortgagee shall otherwise expressly consent in writing, the fee title to the Leased Land, the Mortgagor's interest in the improvements on the Leased Land and the leasehold estates shall not merge by and shall always remain separate and distinct, notwithstanding the union of such estates either in the Lessor or in the lessee, or in a third party by purchase or otherwise; (iv) the Mortgagor shall promptly notify the Mortgagee in writing of any request made by the Mortgagor, as lessee under each of the Ground Leases, or any of the Lessors, for arbitration proceedings pursuant to the Ground Leases and of the institution of any arbitration proceedings, as well as all proceedings thereunder. In addition, the Mortgagor shall promptly 60 deliver to the Mortgagee a copy of the determination of the arbitrators in each such arbitration proceeding. The Mortgagee shall have the right to participate in such arbitration proceedings in association with the Mortgagor or on its own behalf as an interested party in accordance with the terms of the Ground Leases; (v) the Mortgagor shall not consent to the subordination of any Ground Lease to any mortgage deed of trust or other lien of the fee interest of the Lessor; (vi) in the event (A) the Mortgagor exercises its option under any Ground Lease to purchase any portion of the Leased Land, the Mortgagor shall deliver a copy of its election to exercise such option within 5 days after the Mortgagor has delivered notice of such election to the Lessor or (B) the Mortgagor acquires fee simple title or any other estate, title or interest in the Leased Land, the Mortgagor shall promptly notify the Mortgagee of such acquisition and shall cause to be executed and recorded all such other and further assurances or other instruments in writing as may be required by law or, in the opinion of the Mortgagee, be reasonably desirable to carry out the intent and meaning of clause (x) of Granting Clause Second; (vii) within 5 days after the Mortgagor's receipt of any notice of any motion, application or effort to reject the Ground Lease by any Lessor or any trustee arising from or in connection with any case, proceeding or other action commenced or pending by or against any Lessor under the Code or any comparable provision contained in any present or future federal, state, local, foreign or other statute, law, rule or regulation, the Mortgagor shall give notice thereof to the Mortgagee. The Mortgagor hereby (A) assigns to the Mortgagee any and all of the Mortgagor's rights as lessee under Section 365(h) of the Code or any comparable provision contained in any present or future federal, state, local, foreign or other statute, law, rule or regulation ("Comparable Provision") and (B) covenants that it shall not elect to treat any Ground Lease as terminated pursuant to Section 365(h) of the Code or any Comparable Provision without the prior written consent of the Mortgagee and (C) agrees that any such election by the Mortgagor without such consent shall be null and void; (viii) without limiting the generality of the foregoing, the Mortgagor hereby unconditionally assigns, transfers and sets over to the Mortgagee all of the Mortgagor's claims and rights to the payment of damages arising from any rejection by Lessor of any Ground lease under the Code or any Comparable Provision. The Mortgagee shall have the right to proceed in its own name or in 61 the name of the Mortgagor in respect of any claim, suit, action or proceeding relating to the rejection of any Ground Lease, including, without limitation, the right to file and prosecute, in cooperation with the Mortgagor, any proofs of claim, complaints, motions, applications notices and other documents, in any case in respect of Lessor under the Code or any Comparable Provision. This assignment constitutes a present, irrevocable and unconditional assignment of the foregoing claims, rights and remedies, and shall continue in effect until all of the indebtedness and obligations secured by this Mortgage shall have been satisfied and discharged in full. Any amounts received by the Mortgagee in damages arising out of the rejection of any Ground Lease as aforesaid shall be applied first to all reasonable costs and expenses of the Mortgagee (including, without limitation, reasonable attorneys' fees) incurred in connection with the exercise of any of its rights or remedies under this Section 5.21, and thereafter as provided in Section 3.03 hereof; (ix) if there shall be filed by or against the Mortgagor a petition under the Code or any Comparable Provision and the Mortgagor, as lessee under the Ground Leases, shall determine to reject any or all of the Ground Leases the Mortgagor shall give the Mortgagee not less than 10 days' prior notice of the date on which the Mortgagor shall apply to the Bankruptcy Court or other judicial body with appropriate jurisdiction for authority to reject the lease. The Mortgagee shall have the right, but not the obligation, to serve upon the Mortgagor within such 10 day period a notice stating that (a) the Mortgagee demands that the Mortgagor assume and assign such Ground Lease(s) to the Mortgagee pursuant to Section 365 of the Code or any Comparable Provision and (b) the Mortgagee covenants to cure or provide adequate assurance of prompt cure of all defaults and provide adequate assurance of future performance under such Ground Lease(s). If the Mortgagee serves upon the Mortgagor the notice described in the preceding sentence, the Mortgagor shall not seek to reject such Ground Lease(s) and shall comply with the demand provided for in clause (a) of the preceding sentence within 30 days after the notice shall have been given subject to the performance by the Mortgagee of the covenant provided for in clause (b) of the preceding sentence. Effective upon the entry of an order for relief in respect of the Mortgagor under Chapter 7 of the Code or Any Comparable Provision the Mortgagor hereby assigns and transfers to the Mortgagee a non-exclusive right to apply to the Bankruptcy Court or other judicial body with appropriate jurisdiction for an order extending the period during which the Ground Lease may be rejected or assumed; 62 (x) the Mortgagor shall promptly give to the Mortgagee copies of (A) all notices of default or (B) any other communications or notices with respect to events which relate to the possible impairment of the security of this Mortgage, which it shall give or receive under the Ground Leases and shall promptly notify the Mortgagor of any default under any Ground lease on the part of the Lessor or the Mortgagor; (xi) the Mortgagor shall enforce the obligations of the Lessor under each Ground Lease, to the end that the Mortgagor may enjoy all of the rights granted to it under the Ground leases; and (xii) the Mortgagor shall notify the Mortgagee within 5 days after the transfer of a fee interest in the Leased Land or any portion thereof to or from an Affiliate. (c) The Mortgagor hereby represents and warrants that all fixed net rent, taxes and assessments, payable under the Ground Leases have been paid to the extent they were due and payable to the date hereof and that the Mortgagor has not received notice of its failure to pay any other amounts payable under the Ground Leases which have not been cured. (d) If both the Lessor's and lessee's estates under any of the Ground Leases or any portion thereof shall at any time become vested in one owner, this Mortgage and the lien created hereby shall nevertheless not be merged, extinguished, destroyed or terminated by application of the doctrine of merger and, in such event, Mortgagee shall continue to have all of the rights and privileges of the a leasehold mortgagee. (e) The Mortgagor hereby acknowledges that if any Ground Lease shall be terminated prior to the natural expiration of its term due to default by the lessee thereunder, and if pursuant to such Ground Lease, the Mortgagee or its designee shall acquire from the Lessor a new lease of the Leased land or any portion thereof, the Mortgagor shall have no right, title or interest in or to such lease or the leasehold estate created thereby, or the options therein contained. (f) Any leases for parking purposes hereafter entered into by the Mortgagor as lessee shall contain provisions permitting the assignment of the same to the Mortgagee and the Trustee and permitting assignment without the lessor's consent if this Mortgage is foreclosed. Section 5.22. SUPERIOR MORTGAGES. (a) The Mortgagor covenants and agrees that it will at all times fully perform and comply with all agreements, 63 covenants, terms and conditions imposed upon or assumed by it as mortgagor under the Superior Mortgages prior to the expiration of any notice and/or cure period provided in each such Superior Mortgage. If a notice of default has been given by the holder of any Superior Mortgage and the maturity of the indebtedness secured by such Superior Mortgage has been accelerated as a result thereof, the Mortgagee may rely thereon and take any action the Mortgagee deems necessary in its sole discretion to prevent or to cure any default by the Mortgagor in the performance of or compliance with any of the agreements, covenants, terms or conditions imposed upon or assumed by the Mortgagor as mortgagor under each of the Superior Mortgages even though the existence of such default or the nature thereof may be questioned or denied by the Mortgagor or by any party on behalf of the Mortgagor provided that if the Mortgagor has heretofore taken such actions as described in Section 3.01(h), the Mortgagee shall not take any such action unless and until the Mortgagor and/or the Mortgagee no longer has the benefit of any such tolling or stay referred to in Section 3.01(h). Without limiting the generality of Section 3.09 hereof, the Mortgagor hereby expressly grants to the Mortgagee, and agrees that upon such acceleration the Mortgagee shall have, the absolute and immediate right to enter in and upon the Premises or any part thereof to such extent and as often as the Mortgagee, in its sole discretion, deems necessary for the purpose permitted by the immediately preceding sentence, subject only to applicable Legal Requirements. The Mortgagee may (i) pay and expend such sums of money as the Mortgagee in its sole discretion deems necessary for any such purpose and (ii) in its sole discretion prepay any Superior Mortgage, and the Mortgagor hereby agrees to pay to the Mortgagee, immediately and without demand, all such sums referred to in (i) and (ii) above so paid and expended by the Mortgagee, together with interest thereon from the date of each such payment at the rate of interest set forth in the Note. All sums so paid and expended by the Mortgagee and the interest thereon shall be added to and be secured by the lien of this Mortgage. (b) The Mortgagor further covenants and agrees: (i) the Mortgagor shall not, without first obtaining the written consent of the Mortgagee in each instance: (A) modify any of the terms, covenants or conditions of any Superior Mortgage, and without limiting the foregoing, the Mortgagor shall not, without satisfying such conditions, enter into or obtain any agreement whereby the holder of any Superior Mortgage waives, postpones, extends, reduces or modifies the payment of the installment of principal or interest or any other item or amount now required to be paid under the terms of any Superior Mortgage or modifies any other provision thereof, or (B) acquire or permit or suffer any Affiliate of the Mortgagor to acquire any Superior 64 Mortgage or any interest therein. Notwithstanding anything in clause (A) to the contrary, the Mortgagor shall have the right to amend, supplement or modify any Superior Mortgage, if (x) the then outstanding principal balance of the indebtedness secured by such Superior Mortgage is not increased thereby, and (y) in the case of any After-Acquired Fee Mortgage, such amendment, supplement or agreement does not increase the property covered thereby; (ii) the Mortgagor shall timely pay and perform all of the obligations to be paid or performed by the mortgagor under each Superior Mortgage, the note secured thereby and any other instrument evidencing or securing the indebtedness owing to any holder of any Superior Mortgage; (iii) at any time, and from time to time, the Mortgagor shall upon request of the Mortgagee promptly use its reasonable efforts to obtain an estoppel certificate or letter addressed to the Mortgagee from holders of the Superior Mortgages, such certificate or letter to be in such form as the Mortgagee shall request; and (iv) the Mortgagor shall promptly give to the Mortgagee copies of (A) all notices of default or (B) any other notice or communication with respect to events which relate to the possible impairment of the security of this Mortgage, which it shall give or receive under the Superior Mortgages and shall promptly notify the Mortgagor of any default under any Superior Mortgages on the part of the Mortgagor. (c) The lien of this Mortgage in and to all or specified portions of the Trust Estate shall be subject and subordinate to any Existing Encumbrances, to the liens created by the Senior Mortgage Documents and any mortgage, assignment, security agreement, financing statement or other lien securing any Working Capital Facility (the "Working Capital Facility Lien") encumbering Mortgagor's interest in the affected portions of the Trust Estate or any part thereof. The foregoing provisions of this Section 5.22(c) shall be self-operative with respect to the liens created by the Senior Mortgage Documents and any Working Capital Facility Lien, and no further instrument shall be required to give effect to such subordination. Mortgagee shall, however, from time to time, execute instruments in form and substance reasonably satisfactory to the holder of the liens created by the Senior Mortgage Documents and the holder of the Working Capital Facility Lien, confirming such subordination and agreeing to such other matters reasonably required by the holders of such liens which do not, in the aggregate, 65 materially adversely reduce or impair the rights of Trustee under the Mortgage, and Mortgagor and others may rely conclusively thereon, provided that Mortgagee shall have no liability thereunder and all costs and expenses (including reasonable attorneys' fees) shall be paid by Mortgagor. (d) The lien of the Mortgage in and to all or specified portions of the Trust Estate shall be subject and subordinate to any Existing Encumbrances. The provisions of this Section 5.22(d) shall be self-operative, and no further instrument shall be required to give effect to such subordination. Section 5.23. MORTGAGE PARI PASSU WITH GUARANTY MORTGAGE. Notwithstanding recordation of this Mortgage in the Atlantic County, New Jersey Clerk's Office prior to the recordation of the Guaranty Mortgage, the lien of this Mortgage ranks PARI PASSU with, and not senior to, the lien created by the Guaranty Mortgage. ARTICLE SIX MISCELLANEOUS Section 6.01. COUNTERPARTS. This instrument may be executed in any number of counterparts, each of which as executed shall be deemed to be an original, but all such counterparts shall constitute one and the same instrument. Section 6.02. MODIFICATION. This Mortgage is subject to modification" within the meaning of N.J.S.A. 46:9-8.1 et seq., and this Mortgage shall have the benefit of the lien priority provisions of such statute. Such modification may include, without limitation, a change in the interest rate, maturity date or other terms and conditions of this Mortgage. THE MORTGAGOR DECLARES THAT THE MORTGAGOR HAS RECEIVED A TRUE COPY OF THIS MORTGAGE. IN WITNESS WHEREOF, the parties hereto have caused this Mortgage to be duly executed and attested, all as of the day and year first above written. RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation 66 ATTEST:______________________ By:_____________________________ Name: Name: Title: (Asst.) Secretary Title: (Vice) President RESORTS INTERNATIONAL HOTEL FINANCING, INC. ATTEST:______________________ By:_____________________________ Name: Name: Title: (Asst.) Secretary Title: (Vice) President 67 Exhibit E Assignment of Leases and Rents from Resorts International Hotel, Inc. to Resorts International Hotel Financing, Inc. NA932810100 - ASSIGNMENT OF RENTS (RIH JUNIOR PROMISSORY NOTE) GD&C DRAFT DATED 12/17/93 ============================================================================= ASSIGNMENT OF LEASES AND RENTS ________________ RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation, as Assignor, TO RESORTS INTERNATIONAL HOTEL FINANCING, INC., a Delaware corporation, as Assignee Dated as of _________________, 1994 ========================================================================== Prepared by:__________________________ D. Eric Remensperger, Esq. ASSIGNMENT OF LEASES AND RENTS THIS ASSIGNMENT made as of the ____ day of ____________, 1994, by RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation, having its principal office at c/o Resorts International, Inc., 1133 Boardwalk, Atlantic City, New Jersey ("ASSIGNOR") to RESORTS INTERNATIONAL HOTEL FINANCING, INC., a Delaware corporation, having its principal office at c/o Resorts International, Inc., 1133 Boardwalk, Atlantic City, New Jersey ("ASSIGNEE"). WITNESSETH: WHEREAS, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in order to secure: (i) the obligations of Assignor under a promissory note dated as of the date hereof made by Assignor to Assignee in the principal amount of $35,000,000 (as the same may be amended or restated from time to time, the "RIH JUNIOR PROMISSORY NOTE"), which note is secured by a Mortgage Securing RIH Junior Promissory Note dated as of the date hereof, between Assignor, as mortgagor, and Assignee, as mortgagee (the "MORTGAGE"; capitalized terms used and not otherwise defined herein shall have the meanings ascribed to those terms in the Mortgage); and (ii) the performance and observance of all of the provisions herein contained; NOW, THEREFORE, Assignor has and does hereby bargain, sell, transfer, assign, convey, set over and deliver unto Assignee, for the purposes set forth above (subject, however, to the rights of the holders of Superior Mortgages and other Existing Encumbrances), all leases or occupancy agreements wherein it is lessor concerning or affecting the use or occupancy of the certain real property owned or leased by Assignor, which real property is described on SCHEDULE 1 hereto and which real property, together with all buildings and improvements erected thereon, is hereinafter collectively referred to as the "PROPERTY", or any part thereof, now existing or which may be executed at any time in the future, and all amendments, extensions and renewals of such leases or occupancy agreements, and any of them, all of which are collectively referred to as the "LEASES", all rents and other income which may now or hereafter be or become due or owing under the Leases, and any of them, and any and all payments derived from or relating to the Leases to which Assignor is entitled, including but not limited to (a) claims for the recovery of damages done to the Property, (b) claims for damages resulting from acts of insolvency or acts of bankruptcy or otherwise, and (c) lump sum payments for the cancellation of Leases or the waiver of any obligation or term thereof prior to the expiration date; PROVIDED, HOWEVER, that no Excepted Property is conveyed hereby; it being intended hereby to establish a present and complete transfer unto Assignee of all of Assignor's right, title, interest and estate in and to the Leases and all the rents, payments and other income arising thereunder; PROVIDED, HOWEVER, that Assignor is hereby granted a license by Assignee to (i) collect all of such rents, payments and other income herein assigned which may become due during the life of this Assignment and (ii) enter into, renew, modify, extend, terminate, amend, collectively assign, transfer or hypothecate any or all of the Leases, in accordance with the provisions of Sections 4.04 and 5.13 of the Mortgage, each until an Event of Default under the Mortgage (an "EVENT OF DEFAULT") shall have occurred and be continuing. Upon the occurrence of an Event of Default, Assignor agrees to deposit with Assignee upon demand such of the Leases and the rents payable thereunder as may from time to time be designated by Assignee. Assignor hereby appoints Assignee the true and lawful attorney of Assignor with full power of substitution, and with power for Assignor and in the name of Assignor and/or in its name, place and stead, to demand, collect, receive and give receipts and complete acquittance for any and all other rents and other amounts herein assigned which may be or become due and payable under the Leases, and at its discretion to file any claim or take any other action or proceeding and make any settlement of any claims, either in its own name or in the name of Assignor or otherwise, which Assignee may deem necessary or desirable in order to collect and enforce the payment of any and all rents and other amounts herein assigned. No right shall be exercised by Assignee under this paragraph until an Event of Default has occurred. All lessees under the Leases are hereby expressly authorized and directed, after the occurrence, and during the continuance, of an Event of Default, to pay all rents and other sums herein assigned to Assignee or such nominee as Assignee may designate in writing delivered to and received by such lessees, who thereafter are expressly relieved of any and all duty, liability or obligation to Assignor in respect of all payments so made. Assignee is hereby vested with full power to use all measures, legal and equitable, deemed by it necessary or proper to enforce this Assignment and to collect the rents and other sums assigned hereunder. Assignee shall be under no obligation to exercise any of the rights or to press any of the claims assigned to it hereunder, or to perform or carry out any of the obligations of Assignor under any of the Leases, and does not assume any of the liabilities in connection with or arising or growing out of the covenants and agreements of Assignor in the Leases. It is further 2 understood that this Assignment shall not operate to place responsibility for the control, care, management or repair of Assignor's estates or interests in and to the Property, or parts thereof, upon Assignee, nor shall it operate to make Assignee liable for the carrying out of any of the terms and conditions of any of the Leases, or for any waste to Assignor's estates or interests in and to the Property by any lessee or sublessee of Assignor under any leases, or by any occupant of the Property, or by any party whatsoever or for any dangerous or defective condition of the Property or for any negligence in the management, upkeep, repair or control of Assignor's estates or interests in and to the Property resulting in loss or injury or death to any lessee, licensee, employee or stranger thereat. No right shall be exercised by Assignee under this paragraph until an Event of Default has occurred. Assignee hereby agrees promptly to remit to Assignor any amounts collected hereunder by Assignee which are in excess of those applied to pay in full the aforesaid liabilities and indebtedness at the time due. Nothing herein contained is intended to limit or reduce the rights of Assignee or the obligations of Assignor set forth in the Mortgage, but rather all of the terms, provisions and conditions of this Assignment are in addition to and in supplement of such rights and obligations. If any provision contained in this Assignment is in conflict with, or inconsistent with, any provision in the Mortgage, the provisions contained in the Mortgage shall govern and control. Upon the release of any portion of the Property from the lien of the Mortgage pursuant to Section 2.05 or 2.06 of the Mortgage, this Assignment shall be null and void with respect to those Leases (the "RELEASED LEASES") which cover exclusively the portion of the Property so released (and no other portion of the Property) and all estate, right, title and interest of Assignee in and to the Released Leases shall revert to Assignor, but in all other respects and for all other purposes, this Assignment shall remain in full force and effect. Assignee shall, from time to time, promptly execute any written instrument in form reasonably satisfactory to the proposed purchaser of a portion of the Property as aforesaid to confirm any reversion of Assignee's right, title and interest in the Released Leases effectuated in accordance with this paragraph, upon receipt by Assignee of an Officer's Certificate stating that Assignor is entitled to such reversion by virtue of the Mortgagor's compliance with the provisions of this paragraph and Section 2.05 or 2.06 of the Mortgage (as the case may be), provided that Assignee shall have no liability thereunder and all costs and expenses shall be paid by Assignor. 3 Assignee acknowledges that (i) contemporaneously with the execution and delivery of this Assignment, it has assigned this Assignment to U.S. Trust Company of California, N.A. ("Trustee"), as trustee under an Indenture of even date herewith among Assignor, Assignee and Trustee (the "Indenture"), and (ii) that the Trustee is also the assignee under an Assignment of Leases and Rents dated as of the date hereof from Assignor to Trustee securing the obligations of Assignor in respect of the Guaranty under and as defined in the Indenture (the "Other Assignment"), which assignment creates a lien on the Leases and rents and income due and owing thereunder PARI PASSU with the lien of this Assignment. Assignee further acknowledges and agrees that whenever it is provided in the Other Assignment that the Assignor shall deliver any notice or document, or is require to make any payment thereunder, the delivery of such notice or document or the making of such payment pursuant to the terms of such Other Assignment shall also constitute the delivery of such notice or document or the making of such payment in satisfaction of the terms, conditions and provisions of this Assignment to the same extent as the same constitutes satisfaction of the terms, conditions and provisions of the Other Assignment. Upon the termination of the Mortgage and the payment in full of the obligations secured thereby, this Assignment shall be and become null and void, and all estate, right, title and interest of Assignee in and to the Leases shall revert to Assignor and Assignee shall promptly cancel and discharge of record this Assignment and any financing statement filed in connection herewith and execute and deliver to Assignor all such instruments as may be appropriate to evidence such discharge and satisfaction of this Assignment (provided that Assignee shall have no liability hereunder or thereunder and all costs and expenses shall be paid by Assignor); otherwise, this Assignment shall remain in full force and effect as herein provided, shall inure to the benefit of Assignee and its successors and assigns, and shall be binding upon Assignor and its successors and assigns, and any subsequent holder of Assignor's right, title and interest and estate in and to the Property. This Assignment shall be governed by and construed under the internal laws of the State of New Jersey, without giving effect to the principles of conflicts of laws. This Assignment is subject to and shall be enforced in compliance with the provisions of the New Jersey Casino Control Act. This Assignment shall not be transferred, assigned or amended without the prior approval of the New Jersey Casino Control Commission. The rights and obligations of the Assignee hereunder are subject to the terms set forth in that certain Intercreditor Agreement dated as of the date hereof among 4 Assignor, Assignee, Fidelity Management and Trust Company, as trustee, Trustee and State Street Bank and Trust Company of Connecticut, National Association, as trustee (and such other parties that may from time to time become a party thereto). IN WITNESS WHEREOF, the parties hereto have caused this Assignment to be duly executed and attested, all as of the day and year first above written. RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation By:_____________________________ Name: Title: (Vice) President ATTEST:_________________________ Name: Title: (Asst.) Secretary RESORTS INTERNATIONAL HOTEL, FINANCING, INC., a Delaware corporation By:_____________________________ Name: Title: (Vice) President ATTEST:_________________________ Name: Title: (Asst.) Secretary 5 STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK) BE IT REMEMBERED that on ______________, 1994, before me, the subscriber, __________________, personally appeared _____________, who, being by me duly sworn on his oath, deposes and makes proof to my satisfaction, that he is the (Asst.) Secretary of RESORTS INTERNATIONAL HOTEL, INC., the corporation named in the within instrument; that ______________ is the (Vice) President of said corporation; that the execution, as well as the making of this instrument, has been duly authorized by a proper resolution of the board of directors of the said corporation; that deponent well knows the corporate seal of said corporation; and that the seal affixed to said instrument is the proper corporate seal and was thereto affixed and said instrument signed and delivered by said Vice President as and for the voluntary act and deed of said corporation. In presence of deponent who thereupon subscribed his name thereto as attesting witness; and deponent signed this proof to attest to the truth of these facts. _____________________________ [Name] Assistant Secretary Sworn to and subscribed before me, the date aforesaid ____________________________ Notary Public My commission expires:_____________________________ 6 STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK) BE IT REMEMBERED that on _________________, 1994, before me, the subscriber, __________________, personally appeared ___________________, who being by me duly sworn on his oath, deposes and makes proof to my satisfaction, that he is the Asst. Secretary of RESORTS INTERNATIONAL HOTEL FINANCING, INC., the corporation named in the within instrument; that ____________ is the Vice President of said corporation; that the execution, as well as the making of this instrument, has been duly authorized by a proper resolution of the board of directors of the said corporation; that deponent well knows the corporate seal of said corporation; and that the seal affixed to said instrument is the proper corporate seal and was thereto affixed and said instrument signed and delivered by said Vice President as and for the voluntary act and deed of said corporation. In presence of deponent who thereupon subscribed his name thereto as attesting witness; and deponent signed this proof to attest to the truth of these facts. __________________________ [Name] Secretary Sworn to and subscribed before me, the date aforesaid ____________________________ Notary Public My commission expires:_____________________________ 7 Exhibit F Mortgage securing Guaranty of Junior Mortgage Notes between Resorts International Hotel, Inc. and U.S. Trust Company of California, N.A. ------------------------------------ : NA932810097 - GUARANTY MORTGAGE : : JUNIOR NOTES : : GD&C DRAFT DATED 12/17/93 : ------------------------------------ MORTGAGE SECURING GUARANTY OF JUNIOR MORTGAGE NOTES by and between RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation, as Mortgagor, and U.S. Trust Company of California, N.A., a national banking association, as Mortgagee Dated as of ________ __, 1994 Prepared by:_______________________ D. Eric Remensperger After recording return to: Gibson, Dunn & Crutcher 200 Park Avenue New York, New York 10166 Attention: D. Eric Remensperger MORTGAGE SECURING GUARANTY OF JUNIOR MORTGAGE NOTES THIS MORTGAGE, dated as of ________ ___, 1994, between RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation ("Mortgagor"), and U.S. Trust Company of California, N.A., a national banking association having an address at 555 South Flower Street, Suite 2780, Los Angeles, California 90071 ("Mortgagee"), in its capacity as Trustee under that certain Indenture dated as of even date herewith (the "Indenture") among Mortgagor, Mortgagee and Resorts International Hotel Financing, Inc. ("RIHF"). WITNESSETH: In consideration of $10.00 in hand paid by Mortgagee to Mortgagor and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in order to secure (i) the Guaranty by Mortgagor of the payments of principal and interest due on the 11.375% Junior Mortgage Notes due 2004 in an aggregate principal amount of $35,000,000, issued pursuant to the provisions of the Indenture (defined therein, and hereinafter collectively referred to herein, as the "Notes"), in accordance with the terms and conditions of Article Fourth of the Indenture; and performance and observance of all of the provisions herein contained, Mortgagor has executed and delivered this Mortgage and has bargained, sold, aliened, mortgaged, pledged, released, conveyed and confirmed unto Mortgagee and its successors hereunder and assigns forever, all of its right, title and interest in, to and under any of the following described property: GRANTING CLAUSES GRANTING CLAUSE FIRST All the property, rights, title, interest, privileges and franchises particularly described in annexed Schedule 1 (the "Owned Land") which Schedule is hereby made a part of, and deemed to be described in, this Granting Clause as fully as if set forth in this Granting Clause at length. GRANTING CLAUSE SECOND All of the property, rights, title, interest, privileges and franchises of the Mortgagor as lessee in those certain leases (the "Ground Leases") particularly described in Schedule 2, which Schedule is hereby made a part of, and deemed to be described in, this Granting Clause as fully as if set forth in this Granting Clause at length, which Ground Leases cover the real property described in Schedule 2 (the "Leased Land") and in and to any and all modifications, extensions and renewals of the Ground Leases and all options set forth therein, together with (i) all credits, deposits, privileges and rights of the Mortgagor as lessee under the Ground Leases, now or at any time existing, (ii) the leaseholds and the leasehold estates created by the Ground Leases and (iii) all of the estates, rights, titles, claims or demands whatsoever of Mortgagor, either in law or in equity, in possession or in expectancy, of, in and to the Ground Leases and the Leased Land, together with (x) any and all other, further or additional title, estates, interests or rights which may at anytime be acquired by the Mortgagor in or to the Leased Land, and the Mortgagor expressly agrees that if the Mortgagor shall, at any time prior to payment in full of all indebtedness secured hereby, acquire fee simple title or any other greater estate to the Leased Land pursuant to the Ground Leases, or otherwise, the lien of this Mortgage shall attach, extend to, cover and be a lien upon such fee simple title or other greater estate and thereupon the lien of this Mortgage shall be prior to the lien of any mortgage or deed of trust placed on such acquired title, estate, interest or right subsequent to the date of this Mortgage (except as otherwise provided herein) and (y) any right to possession or statutory term of years derived from, or incident to, the Ground Leases pursuant to Section 365(h) of the U.S. Bankruptcy Code (the "Code") or any comparable provision contained in any present or future federal, state, local, foreign or other statute, law, rule or regulation. GRANTING CLAUSE THIRD All the rents, issues, profits, revenues and other income and proceeds of the property subjected or required to be subjected to the lien of this Mortgage, including, without limitation, the property described in Granting Clauses First, Second, and Sixth (such property is hereinafter collectively referred to as the "Premises") and all the estate, right, title and interest of every nature whatsoever of the Mortgagor in and to the same and every part thereof. The collective 2 metes and bounds description of the Owned Land and the Leased Land is set forth in annexed Schedule 3. GRANTING CLAUSE FOURTH All of the rights as lessor under Leases in effect on the date of execution of this Mortgage or hereafter entered into by the Mortgagor, if any, including extensions, renewals or amendments of all of the same, and the immediate and continuing right as security in accordance with an Assignment of Leases and Rents of even date herewith between Mortgagor and Mortgagee, and, after the occurrence of an Event of Default, to make claim for, collect, receive and receipt for (and to apply the same as provided herein) any and all rents, income, revenues, issues, profits, security and other sums of money payable or receivable thereunder or pursuant thereto, and all proceeds thereof, whether payable as rent, insurance proceeds, condemnation awards, security or otherwise and whether payable prior to or subsequent to the maturity date of the Notes, to receive and give notices and consents thereunder, to bring actions and proceedings thereunder or for the enforcement thereof, to make waivers and agreements, to take such action upon the happening of a default under any Lease, including the commencement, conduct and consummation of any proceedings at law or in equity as shall be permitted by any provision of any Lease, and to do any and all things which the Mortgagor or any lessor is or may become entitled to do under the Leases; provided, that the assignment made by this granting Clause Fourth shall not impair or diminish any obligation of the Mortgagor under the Leases, or shall any such obligation be imposed upon the Mortgagee. GRANTING CLAUSE FIFTH Without limiting the generality of the provisions of Granting Clause Third, the Mortgagor's rights, privileges and franchises in and to the following, to the extent of the Mortgagor's interest therein and thereto and to the extent assignable (collectively, "Operating Assets"): (a) bookings and receipts for the use of guest rooms, banquet facilities and meeting rooms at the Casino-Hotel; (b) all contracts respecting utility services for, and the maintenance, operations, or equipping of the Premises, including guaranties and warranties relating thereto; (c) the Permits; 3 (d) all contract rights, leases, concessions, trademarks, trade names, service marks, service names, logos, copyrights, warranties and other items of intangible personal property relating to the ownership or operation of the Casino-Hotel, including, without limitation, (1) telephone and other communication numbers, (2) all software licensing agreements as are required to operate computer software systems at the Casino-Hotel, all transferable proprietary interest in software required to operate the computer systems at the Casino Hotel and books and records relating to the software programs, and (3) lessee's interest under leases of Tangible Personal Property; (e) all agreements entered into by or on behalf of the Mortgagor or which have been assigned to the Mortgagor, for the design and construction, and for the equipping and furnishing, of the Casino-Hotel, including architect's agreements, engineering agreements, construction contracts, consulting agreements and agreements or purchase orders for all items of Tangible Personal Property and payment and performance bonds in favor of the Mortgagor in connection with the Trust Estate (and all warranties and guaranties thereunder and warranties and guaranties of any subcontractor and bond issued in connection with the work to be performed by any subcontractor); (f) the following personal property (the "Tangible Personal Property") now or hereafter acquired by the Mortgagor: (i) all furniture, furnishings, equipment, machinery, apparatus, appliances, fixtures and fittings and other articles of tangible personal property which are, or are to be located on, or used in connection with the operation of, the Casino-Hotel; (ii) all slot machines, electronic gaming devices, crap tables, blackjack tables, roulette tables, baccarat tables, and big six wheels, located or to be located in the Casino-Hotel, and all furnishings and equipment to be used in connection with the operation thereof; (iii) all cards, dice, gaming chips and placques, tokens, chip racks, dealing shoes, dice cups, dice sticks, layouts, paddles, roulette balls and other consumable supplies and items to be used 4 in connection with the gaming operations of the Casino-Hotel; (iv) all china, glassware, linens, kitchen utensils, silverware and uniforms, whether in use or held in reserve storage for future use, in connection with the operation of the Casino-Hotel, which are on hand or on order whether stored on-site or off-site; (v) all consumables and operating supplies of every kind and nature for use in all of the operating departments of the Casino-Hotel, or in the improvements now or hereafter located on any of the Owned Land, including without limitation, accounting supplies, guest supplies, forms, printing, stationery, food and beverage stock, bar supplies, laundry supplies and brochures to existing purchase orders; (vi) all sets and scenery, costumes, props and other items of tangible personal property on hand or on order for use in the production of shows in the showroom of the Casino-Hotel; and (vii) all cars, limousines, vans, buses, trucks and other vehicles owned or leased by the Mortgagor for use in Casino-Hotel operations, together with all equipment, parts and supplies used to service, repair, maintain and equip the foregoing; (g) all drawings, designs, plans and specifications prepared by the architects, interior designers, landscape designers and any other consultants for the development of the Premises, as amended from time to time; (h) any administrative and judicial proceedings initiated by the Mortgagor, or in which the Mortgagor has intervened, concerning the Casino-Hotel, and agreements, if any, which are the subject matter of such proceedings; (i) any customer lists utilized by the Mortgagor, including lists of transient guests and restaurant and bar patrons and "high roller" lists; and (j) all of the goodwill in connection with the operation of the Premises. 5 The Mortgagor and Mortgagee acknowledge that notwithstanding anything contained in this Mortgage to the contrary, the Mortgagor may share facilities, operations and employees with any other hotel owned by any Affiliate of the Mortgagor provided that (i) such sharing of facilities is permitted by all applicable Legal Requirements, (ii) terms on which such facilities are shared are not detrimental to the operations of the Casino-Hotel or the financial condition of the Mortgagor and (iii) the regular operation of the Casino-Hotel would not be materially impaired upon the separation of such facilities. The assignment made by this Granting Clause Fifth shall not impair or diminish any obligation of the Mortgagor with respect to the Operating Assets, nor shall any such obligation be imposed on the Mortgagee. GRANTING CLAUSE SIXTH (a) All of the Mortgagor's right, title and interest in and to all buildings and improvements of every kind and description now or hereafter erected or placed on the Owned Land and/or the Leased Land and all fixtures and articles of personal property now or hereafter attached to or contained in and used in connection with such buildings and improvements, including, but not limited to, all apparatus, furniture, furnishings, machinery, motors, elevators, fittings, radiators, cooking ranges, ice boxes, ice machines, printing presses, mirrors, bars, mechanical refrigerators, furnaces, coal and oil-burning apparatus, wall cabinets, machinery, generators, partitions, steam and hot water boilers, lighting and power plants, pipes, plumbing, radiators, sinks, bath tubs, water closets, gas and electrical fixtures, awnings, shades, screens, blinds, dishwashers, freezers, vacuum cleaning systems, office equipment and other furnishings, and all plumbing, heating, lighting, cooking, laundry, ventilating, incinerating, air-conditioning and sprinkler equipment or other fire prevention or extinguishing apparatus and material, and fixtures and appurtenances thereto; and all renewals or replacements thereof or articles in substitution therefor, whether or not the same are or shall be attached to the Owned Land, the Leased Land or to any such buildings and improvements thereon, in any manner; and 6 (b) All of the Mortgagor's right, title and interest in and to (i) the Leased Land, if the Mortgagor acquires the fee simple title to the Leased Land or any part thereof (subject to the provisions of Section 2.06 hereof), (ii) all air rights and rights to maintain supporting columns and all rights to construct and maintain bridges, and to create private rights of way over streets now or hereafter owned or enjoyed by the Mortgagor and appurtenant to the Owned Land or Leased Land, and (iii) all right, title and interest of Mortgagor as grantee or licensee in and to the following to the extent necessary for the use and enjoyment of the Owned Land or the Leased Land: (A) all those plots, pieces or parcels of land and air rights, more particularly described on Schedule 5, attached hereto and made a part hereof (the "Bridge Easement Parcels"), with respect to which Mortgagor has easements, licenses or other rights of possession or use pursuant to these certain easement and license agreements more particularly described on Schedule 5 (the "Bridge Easements"), (B) all those plots, pieces or parcels of land and air rights, more particularly described on Schedule 6 attached hereto and made a part hereof (the "Elevator Easement Parcels"), with respect to which Mortgagor has easements, licenses or other rights of possession or use pursuant to those certain license agreements more particularly described on Schedule 6 (the "Elevator Easements"), and; (C) all that plot, piece or parcel of land and air rights more particularly described on Schedule 7 attached hereto and made a part hereof (the "Turn-Around Easement Parcel") with respect to which Mortgagor has easements, licenses, or other rights of possession or use pursuant to that certain easement more particularly described on Schedule 7 (the "Turn-Around Easement"), (the Bridge Easement Parcels, the Elevator Easement Parcels and the Turn-Around Easement Parcel are collectively referred to herein as the "Easement Parcels"; and the Bridge Easements, the Elevator Easements and the Turn-Around Easement are collectively referred to as the "Easements"), together with all rights of way, privileges, liberties, tenements, hereditaments and appurtenances belonging or in any way appertaining to such estates, it being the intention hereof that all property, interests, rights and privileges and franchises pertaining to the Premises (other than Excepted Property) shall be as fully embraced within and subjected to the lien hereof as if such property were specifically described herein. To the extent the grant of a security interest in any portion of the Trust Estate is governed by the Uniform Commercial Code, this Mortgage is hereby deemed to be as well a security agreement under the Uniform Commercial Code for the purpose of creating hereby a security interest in all of the Mortgagor's right, title and interest in and to such property, securing the obligations secured hereby, for the benefit of the Mortgagee; * * * TOGETHER with all of the Mortgagor's right, title and interest in and to all mineral and water rights and any title or reversion, in and to the beds of the ways, streets, 7 avenues and alleys adjoining the Premises to the center line thereof and in and to all strips, gaps and gores adjoining the premises on all sides thereof; and TOGETHER with all of the Mortgagor's right, title and interest to and singular the tenements, hereditaments, easements, appurtenances, passages, water courses, riparian rights, other rights, liberties and privileges thereof or in any way appertaining to the Premises, including any other claim at law or in equity as well as any after-acquired title, franchise or license and the reversion and reversions and remainder and remainders thereof; and TOGETHER with all awards and other compensation heretofore or hereafter to be made to the present and all subsequent owners of the Trust Estate for any taking by eminent domain, either permanent or temporary, of all or any part of the Trust Estate or any easement or appurtenances thereof, including severance and consequential damage and change in grade of streets, all in accordance with and subject to the provisions of the Superior Instrument Requirements and Section 5.20; and TOGETHER with all proceeds of any unearned premiums on any insurance policies described in Section 5.11, and the right to receive and apply the proceeds of any insurance, judgments, or settlements made in lieu thereof, for damage to the Trust Estate or otherwise, all in accordance with and subject to the provisions of Section 5.11 and the Superior Instrument Requirements. EXCLUDING, with respect to all of the hereinabove granted property, rights, title, interest, privileges and franchises, the Excepted Property. TO HAVE AND TO HOLD all the Premises, Leases, Ground Leases, Operating Assets, Easements, properties, options, credits, deposits, rights, privileges and franchises of every kind and description, real, personal or mixed, granted hereby, bargained, sold, aliened, assigned, transferred, hypothecated, pledged, released, conveyed, mortgaged, or confirmed as aforesaid, or intended, agreed or covenanted so to be, together with all the appurtenances thereto appertaining (the Premises, Leases, Ground Leases, Operating Assets, Easements, properties, options, credits, deposits, rights, privileges and franchises, being herein collectively called the "Trust Estate") unto the Mortgagee and its successors and assigns forever. SUBJECT, HOWEVER, on the date hereof, to Existing Encumbrances and, after the date hereof, to Permitted Encumbrances. 8 SUBJECT, FURTHER, to the rights and obligations of the Mortgagee and the Noteholder as set forth in that certain Intercreditor Agreement dated as of the date hereof among RIH, RIHF, Mortgagee, Fidelity Management and Trust Company ("Fidelity"), as trustee under that certain note purchase agreement dated as of the date hereof among Fidelity, RIH and RIHF, and State Street Bank and Trust Company of Connecticut, National Association ("State Street"), as trustee under that certain indenture dated as of the date hereof among State Street, RIH and RIHF (and such other parties that may from time to time become a party thereto). BUT IN TRUST, NEVERTHELESS, for the Ratable Benefit and security of the Noteholders without any priority of any of the Notes over any other of the Notes. UPON CONDITION that, until the happening of an Event of Default and subject to the provisions of Article Two, the Mortgagor shall be permitted to possess and use the Trust Estate, and to receive and use the rents, issues, profits, revenues and other income of the Trust Estate. AND IT IS HEREBY COVENANTED AND DECLARED that the Trust Estate is to be held and applied by the Mortgagee, subject to the further covenants, conditions and trusts hereinafter set forth, and the Mortgagor does hereby covenant and agree to and with the Mortgagee, for the Ratable Benefit of the Noteholders as follows: ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION Section 1.01. DEFINITIONS. For all purposes of this Mortgage, except as otherwise expressly provided or unless the context otherwise requires: (a) the terms defined in this Article One have the meanings assigned to them in this Article One and include the plural as well as the singular; (b) all accounting terms not otherwise defined herein have the meanings assigned to them, and all computations herein provided for shall be made in accordance with generally accepted accounting principles consistently applied; and (c) the words "herein," "hereof" and "hereunder" and other words of similar import refer to this Mortgage 9 as a whole and not to any particular Article, Section or other subdivision. "AFFILIATE" has the meaning set forth in Section 1.01 of the Indenture. "AFTER-ACQUIRED FEE MORTGAGE" has the meaning set forth in Section 2.07. "ALTERATIONS" has the meaning set forth in Section 5.12. "APPRAISER" means an MAI appraiser (i.e., a Member in good standing of the American Institute of Real Estate Appraisers) who is (i) of recognized standing among appraisers of properties similar to the Casino-Hotel and (ii) experienced in the appraisals of properties of a similar size and scope to that of the Casino-Hotel, selected by the Mortgagor. "ASSIGNMENT OF LEASES AND RENTS" has the meaning stated in Section 1.01 of the Indenture. "CAPITALIZED LEASE OBLIGATION" has the meaning stated in Section 1.01 of the Indenture. "CASINO" means that portion of the Casino-Hotel used for gaming and related activities. "CASINO-HOTEL" means the casino and hotel complex and ancillary structures and facilities located on the Premises and furniture, fixtures and equipment at any time contained therein. "CASUALTY" means any act or occurrence of any kind or nature which results in damage, loss or destruction to any buildings or improvements on the Premises and/or Tangible Personal Property. "CODE" has the meaning stated in Granting Clause Second. "COMBINATION TRANSACTION" has the meaning stated in Section 10.01 of the Indenture. "DEFAULT" means the occurrence and continuance of an Event of Default or an event which, after notice or lapse of time or both, would become an Event of Default. "DEPOSITARY" means an Independent entity to which insurance proceeds or a condemnation award is paid to be held in trust for restoration pursuant to the provisions of a Ground Lease or Superior Mortgage. 10 "EVENT OF DEFAULT" has the meaning stated in Section 3.01. An Event of Default shall "exist" if an Event of Default shall have occurred and be continuing. "EXCEPTED PROPERTY" means: (1) subject to the provisions of the Assignment of Leases and Rents, any cash held by the Mortgagor from rents, issues, profits, revenues and other proceeds of the Trust Estate to the extent that such cash may be, but has not been, distributed or paid out in accordance with the Services Agreement or in accordance with the provisions of Section 12.07 of the Indenture; (2) all personal property owned by lessees under Leases and the personal property of any guests staying in the Hotel; (3) any property deemed to be Excepted Property pursuant to the provisions of Section 2.03 hereof; (4) Tangible Personal Property subject to an FF&E Financing Agreement; and (5) counterchecks and any other property the granting of a security interest in which is prohibited by the New Jersey Casino Control Act, N.J.S.A. 5:12-1 et seq., and the regulations promulgated thereunder. "EXISTING ENCUMBRANCES" means the matters set forth in Schedule 8. "FIRST MORTGAGE DEBT" means any financing secured by a Superior Mortgage secured by or imposing a lien on all or a portion of the Trust Estate on a parity with or senior to the lien of this Mortgage. "FF&E FINANCING AGREEMENT" means a purchase money lien upon any Tangible Personal Property and other items constituting Operating Assets, such as computer software, which are financed, purchased or leased by the Mortgagor, provided that, except as set forth on Schedule 3, the principal amount of the indebtedness secured by such lien shall not exceed eighty-five (85%) percent of the cost to the Mortgagor of such property at the time of acquisition. "GROUND LEASES" has the meaning stated in Granting Clause Second. "GUARANTY" has the meaning set forth in Article Fourteen of the Indenture. 11 "HOTEL" means that portion of the Casino-Hotel not included within the Casino. "IMPOSITIONS" has the meaning stated in Section 5.08. "INDENTURE" means that certain Indenture - 11.375% Junior Mortgage Notes due 2004, dated as of even date herewith among the Mortgagor, RIHF, as issuer, and Mortgagee, as trustee, as it may from time to time be supplemented, modified or amended by one or more trust indentures or other instruments supplemental thereto entered into pursuant to the applicable provisions thereof. "INDEPENDENT" when used with respect to any specified Person means such a Person who (a) is in fact independent, (b) does not have any direct financial interest or any material indirect financial interest in the Mortgagor or in any other obligor upon the Notes or in any Affiliate of the Mortgagor or of such other obligor and (c) is not connected with the Mortgagor or such other obligor or any Affiliate of the Mortgagor or such other obligor as an officer, employee, promoter, underwriter, trustee, partner, director or person performing similar functions. Whenever it is herein provided that any Independent Person's opinion or certificate shall be furnished to the Mortgagee, such opinion or certificate shall state that the signer has read this definition and that the signer is Independent within the meaning thereof. A Person who is performing or who has performed services as an independent contractor to any specified Person shall not be considered not Independent merely by reason of the fact that such Person is or has performed such services. "INSURANCE AMOUNT" has the meaning stated in Section 5.11(a)(1). "INSURANCE REQUIREMENTS" means all terms of any insurance policy covering or applicable to the Trust Estate or any part thereof, all requirements of the issuer of any such policy, and all orders, rules, regulations and other requirements of the National Board of Fire Underwriters (or any other body exercising similar functions) applicable to or affecting the Trust Estate or any part thereof or any use or condition of the Trust Estate or any other part thereof. "INSURANCE TRUSTEE" means the Trustee or, if the Trustee so elects, any bank, trust company or insurance company with net worth in excess of $100,000,000, designated by the Trustee. 12 "INSURER" means an insurance company or companies selected by the Mortgagor authorized to issue insurance in the State of New Jersey with an A.M. Best rating as high or higher than the rating of insurance companies insuring other casino-hotels in Atlantic City, New Jersey. "LEASE" means each lease or sublease demising all or any portion of the Owned Land, the Leased Land or the buildings or improvements thereon and made by the Mortgagor as lessor or sublessor, as the case may be, or any spaces in any building or buildings which constitute a part of the Trust Estate, including every agreement relating thereto or entered into in connection therewith and every guaranty of the performance and observance of the covenants, conditions and agreements to be performed by the lessee under any such lease. Notwithstanding the foregoing, the term "Lease" shall not include any transient room rentals. "LEASED LAND" has the meaning stated in Granting Clause Second. "LEGAL REQUIREMENTS" means all laws, statutes, codes, acts, ordinances, orders, judgments, decrees, injunctions, rules, regulations, permits, licenses, authorizations, directions and requirements (including, without limitation, the New Jersey Environment Cleanup Responsibility Act and the New Jersey Spill Compensation and Control Act of 1976) of all governments, departments, commissions, boards, courts, authorities, agencies, officials and officers, of governments, federal, state and municipal (including, without limitation, the New Jersey Department of Environmental Protection, the Atlantic City Bureau of Investigations, Division of Protection, the Atlantic City Bureau of Investigations, Division of Gaming Enforcement of the State of New Jersey, and the Casino Control Commission of the State of New Jersey), foreseen or unforeseen, ordinary or extraordinary, which now is or at any time hereafter becomes applicable to the Trust Estate or any part thereof, or any of the adjoining sidewalks, or the use of the Casino-Hotel as a gaming or gambling facility or any other use or condition of the Trust Estate or any part thereof. "LESSORS" means the lessors under the Ground Leases. "MATURITY" when used with respect to the Notes means the date on which the principal of such Notes becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration or prepayment or otherwise. 13 "MORTGAGE DOCUMENTS" has the meaning set forth in Section 1.01 of the Indenture. "MORTGAGOR" means the Person named as the "Mortgagor" in the first paragraph of this instrument until a successor entity shall have become such pursuant to the applicable provisions of this Mortgage, and thereafter, except to the extent otherwise contemplated by Section 4.02, "Mortgagor" shall mean such successor entity exclusively. "NOTEHOLDERS" has the meaning set forth in Section 1.01 of the Indenture. "NOTE MORTGAGE" means that certain Mortgage Securing RIH Junior Promissory Note dated as of the date hereof from Mortgagor to RIHF, which secures the RIH Junior Promissory Note (as defined in the Indenture), the lien of which shall be pari passu with the lien of this Mortgage. "NOTES" has the meaning set forth in the Preamble. "NOTICES" has the meaning stated in Section 1.02. "OFFICERS' CERTIFICATE" means a certificate signed by an officer of the Mortgagor and delivered to the Mortgagee. Whenever this Mortgage requires that an Officers' Certificate be signed also by an Architect or an Accountant or other expert, such Architect, Accountant or other expert may (except as otherwise expressly provided in this Mortgage) be in the general employ of the Mortgagor. "OPERATING ASSETS" has the meaning stated in Granting Clause Fifth. "OPINION OF COUNSEL" means a written opinion of counsel who may (except as otherwise expressly provided in this Mortgage) be an employee of the Mortgagor or an employee of an Affiliate of the Mortgagor. Unless otherwise specifically provided in this Mortgage, such counsel may rely, as to any state of facts not personally known to such counsel and relating to such opinions, on an Officers' Certificate to the extent not rejected by the Trustee and its counsel (which rejection shall not be unreasonably given). "ORIGINAL POLICY" means an ALTA Loan Policies of Title issued by [list title insurance companies], pursuant to Title Commitment No. ____________ redated to the date hereof. "OUTSTANDING AMOUNT" has the meaning stated in Section 1.01 of the Indenture. 14 "OWNED LAND" has the meaning stated in Granting Clause First. "PERMITS" means all licenses, franchises, statements of compliance, certificates of operation, certificates of occupancy and permits required for the lawful ownership, occupancy, operation and use of all or a material portion of the Premises whether held by the Mortgagor or any other Person (which may be temporary or permanent) (including, without limitation, those required for the use of the Casino-Hotel as a licensed casino facility), in accordance with all applicable Legal Requirements. "PERMITTED ENCUMBRANCES" means: (1) liens for taxes, assessments, or governmental charges not yet due and payable or if due and payable are not delinquent to the extent that any fine, penalty, interest or cost may be added for nonpayment thereof; (2) Existing Encumbrances; (3) FF&E Financing Agreements; (4) After-Acquired Fee Mortgages; (5) the lien of the Mortgage Documents and any rights granted as provided therein; (6) Restricted Encumbrances; (7) the lien of the Trustee provided for by Section 8.07 of the Indenture; (8) any Working Capital Facility Lien; (9) liens created by the Senior Mortgage Documents; and (10) Capitalized Lease Obligations. "PERSON" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or any other entity or government or any agency or political subdivision thereof. "PREMISES" has the meaning set forth in Granting Clause Third. "RATABLE BENEFIT" has the meaning stated in Section 1.01 of the Indenture. 15 "RELEASED LAND" has the meaning stated in Section 2.05. "RELEASED FEE LAND" has the meaning stated in Section 2.06. "RESTORATION" has the meaning stated in Section 5.11(e). "RESTRICTED ENCUMBRANCES" means Leases permitted by and made in accordance with Section 5.13 of this Mortgage. "RIHF" shall mean Resorts International Hotel Financing, Inc., a Delaware corporation. "SENIOR GUARANTY MORTGAGE" has the meaning stated in Section 1.01 of the Indenture. "SENIOR MORTGAGE" has the meaning stated in Section 1.01 of the Indenture. "SENIOR MORTGAGE DOCUMENTS" has the meaning stated in Section 1.01 of the Indenture. "SERVICES AGREEMENT" has the meaning set forth in Section 1.01 of the Indenture. "STATED MATURITY" when used with respect to a note means the date specified in such note as the fixed date on which the principal of such note is due and payable. "SUPERIOR INSTRUMENT REQUIREMENTS" means the applicable terms, conditions and provisions of (i) the Ground Leases with respect to the Leased Land; and (ii) Superior Mortgages with respect to the portion of the Trust Estate encumbered thereby. "SUPERIOR MORTGAGES" means, collectively, the Senior Mortgage, the Senior Guaranty Mortgage, any Working Capital Facility Lien and any After-Acquired Fee Mortgages. "TAKING" means the acquisition or condemnation by eminent domain of the whole or any part of the Premises, by a competent authority, for any public or quasi-public use or purpose. "TANGIBLE PERSONAL PROPERTY" has the meaning stated in Granting Clause Fifth. 16 "TRUSTEE" means the Person named as the "Trustee" in the first paragraph of the Indenture and any successor thereto. "TRUST ESTATE" has the meaning stated in the habendum to the Granting Clauses. "TRUST INDENTURE ACT" has the meaning stated in Section 1.01 of the Indenture. "WORKING CAPITAL FACILITY" has the meaning stated in Section 1.01 of the Indenture. "WORKING CAPITAL FACILITY LIEN" has the meaning stated in Section 5.22(c) of this Mortgage. Section 1.02. NOTICES, ETC. (a) Any request, demand, authorization, direction, notice (including, without limitation, a notice of default), consent, waiver or other document provided or permitted by this Mortgage to be made upon, given or furnished to, or filed with, the Mortgagor or the Mortgagee (collectively, "Notices") shall be deemed given when either (i) delivered by hand or (ii) two days after sending by registered or certified mail, postage prepaid, addressed as follows: To the Mortgagor: Resorts International Hotel, Inc. c/o Resorts International, Inc. 1133 Boardwalk Atlantic City, New Jersey 08401 Attention: Christopher D. Whitney If to Mortgagee: U.S. Trust Company of California, N.A. 555 South Flower Street, Suite 2780 Los Angeles, California 90071 Attention: Corporate Trust Department (b) By Notice to the Mortgagor, the Mortgagee and the Trustee, any party may designate additional or substitute address for Notices which, notwithstanding Subsection (a) above, shall be deemed given when received. Section 1.03. FORM AND CONTENT OF DOCUMENTS DELIVERED TO MORTGAGEE. Whenever 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 17 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 such matters in one or several documents. Any certificate or opinion of an Officer of the Mortgagor may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such Officer knows that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any 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 Mortgagor stating that the information with respect to such factual matters is in the possession of the Mortgagor, unless such counsel knows that the certificate or opinion or representations with respect to such matters are erroneous. If appropriate to the matter being opined upon and to the extent not prohibited by the Trust Indenture Act, any Opinion of Counsel may be subject to rights of creditors and the availability of equitable remedies. Whenever any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Mortgage, they may, but need not, be consolidated and form one instrument. Whenever in this Mortgage, in connection with any application or certificate or report to the Mortgagee, it is provided that the Mortgagor shall deliver any document as a condition of the granting of such application, or as evidence of the Mortgagor's compliance with any term hereof, it is intended that the truth and accuracy, at the time of the granting of such application or at the effective date of such certificate or report (as the case may be), of the facts and opinions stated in such document shall in such case be conditions precedent to the right of the Mortgagor to have such application granted or to the sufficiency of such certificate or report. Section 1.04. COMPLIANCE CERTIFICATES AND OPINIONS. Upon any application or request by the Mortgagor to the Mortgagee to take any action under any provision of this Mortgage, the Mortgagor shall furnish to the Mortgagee an Officers' Certificate stating that all conditions precedent, if any, provided for in this Mortgage 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 18 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 Mortgage 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 Mortgage shall include: (a) a statement that each individual signing such certificate or opinion has read such condition or covenant and the definitions herein relating thereto; (b) 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; (c) 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 condition or covenant has been complied with; and (d) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. Section 1.05. EFFECT OF HEADINGS. The Article and Section headings herein are for convenience only and shall not affect the construction hereof. Section 1.06. SUCCESSORS AND ASSIGNS; AMENDMENTS. (a) Subject to Section 4.02 hereof and Section 10.02 of the Indenture, this Mortgage shall be binding upon and inure to the benefit of the parties hereto and of the respective successors and assigns of the parties hereto to the same effect as if each such successor or assign were in each case named as a party to this Mortgage. (b) This Mortgage may not be modified, amended, discharged, released nor any of its provisions waived except by agreement in writing executed by the Mortgagor and the Mortgagee and in accordance with the provisions of this Mortgage and the Indenture. Section 1.07. SEPARABILITY CLAUSE. In case any provision in this Mortgage shall be invalid, illegal or unenforceable, the validity, legality and enforceability of 19 the remaining provisions shall not in any way be affected or impaired thereby. Section 1.08. BENEFITS OF MORTGAGE. Nothing in this Mortgage or in the Guaranty, express or implied, shall give to any Person, other than the parties hereto and their successors and assigns, any benefit or any legal or equitable right, remedy or claim under this Mortgage. Section 1.09. GOVERNING LAW. This Mortgage shall be deemed to be a contract under the laws of the State of New Jersey and shall be construed in accordance with and governed by the laws of the State of New Jersey. Section 1.10. [Reserved] Section 1.11. PROVISIONS REQUIRED BY INDENTURE. Whenever the provisions of this Mortgage and the provisions of the Indenture shall be inconsistent, the provisions of the Indenture shall govern. Section 1.12. RIGHTS OF THE TRUSTEE. So long as the Trustee is the Mortgagee hereunder, except as otherwise provided in Section 8.01 of the Indenture: (a) the Mortgagee 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, coupon or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) whenever in the administration of this Mortgage the Mortgagee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Mortgagee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate; (c) the Mortgagee 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 the Mortgagee hereunder in good faith and in reliance thereon; 2 (d) the Mortgagee shall be under no obligation to exercise any of the rights or powers vested in it by this Mortgage at the request or direction of any Noteholder pursuant to the Indenture, unless such holder shall have offered to the Mortgagee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (e) the Mortgagee 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, or other paper or document but the Mortgagee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Mortgagee shall determine to make such further inquiry or investigation, it shall be entitled (subject to the express limitations with respect thereto contained in this Mortgage) to examine the books, records and premises of the Mortgagor, personally or by agent or attorney; (f) the Mortgagee may execute any of the trusts or power hereunder or perform any duties hereunder either directly or by or through agents or attorneys, and the Mortgagee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder; (g) the Mortgagee shall not be personally liable, in case of entry by it upon the Trust Estate, for debts contracted or liabilities or damages incurred in the management or operation of the Trust Estate; and (h) no provision of this Mortgage shall require the Mortgagee to expend or risk its own funds or otherwise incur any financial liability in the performance of its obligations hereunder, or in the exercise 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. 2 Section 1.13. MORTGAGE SUBJECT TO THE PROVISIONS OF THE ACT. Each provision of this Mortgage is subject to and shall be enforced in compliance with the provisions of the New Jersey Casino Control Act. This Mortgage shall not be transferred, assigned or amended without the prior approval of the New Jersey Casino Control Commission. Section 1.14. DISCHARGE OF LIEN. If the Mortgagor shall pay or cause to be paid, or there shall otherwise be paid, to the Mortgagee all amounts required to be paid by the Mortgagor pursuant to the Guaranty, or the Note Mortgage and the Notes, and the conditions precedent for the Indenture to cease, determine and become null and void in accordance with Section 5.01 of the Indenture shall have occurred, the Mortgagee shall promptly cancel and discharge this Mortgage, and execute and deliver to the Mortgagor all such instruments as may be necessary, required or appropriate to evidence such discharge and satisfaction of such lien or liens. Section 1.15. GENERAL APPLICATION. (a) The assertion of any rights upon any Default shall be subject in each instance to the giving of any notice and the expiration of any grace period provided for in Section 3.01 as a condition to such Default making it an Event of Default, unless the Trust Indenture Act requires otherwise, in which case the Trust Indenture Act shall control. (b) For the purposes of this Mortgage, it is understood that an event which does not materially diminish the value of the Mortgagee's interest in the Trust Estate 22 shall not be deemed an "impairment of security", as that phrase is used in this Mortgage. ARTICLE TWO RELEASE; OTHER EXCEPTED PROPERTY; SUBORDINATION Section 2.01. POSSESSION BY MORTGAGOR; DISPOSITIONS WITHOUT RELEASE. So long as there shall have been no demand for payment under the Guaranty pursuant to Section 3.02 of this Mortgage, the Mortgagor shall be suffered and permitted, with power freely and without let or hindrance on the part of the Mortgagee, subject to the provisions of this Mortgage and the Note Mortgage, to possess, use, manage, operate and enjoy the Trust Estate and every part thereof and to collect, receive, use, invest and dispose of the rents, issues, tolls, profits, revenues and other income from the Trust Estate or any part hereof, to use, consume and dispose of any consumables, goods, wares and merchandise in the ordinary course of business of operating the Casino-Hotel and to adjust and settle all matters relating to choses in action, leases and contracts. Section 2.02. OBSOLETE PROPERTY; TANGIBLE PERSONAL PROPERTY; LEASE MODIFICATIONS. The Mortgagor shall have the right, at any time and from time to time, unless an Event of Default shall have occurred and be continuing, without any release from or consent by the Mortgagee: (a) to sell or dispose of, free from the lien of this Mortgage, any Tangible Personal Property which, in its reasonable opinion, may have become obsolete or unfit for use or which is no longer necessary in the conduct of its businesses or the operation of the Trust Estate, and no purchaser of any such property shall be bound to inquire into any question affecting the Mortgagor's right to sell or otherwise dispose of the same, free from the lien of this Mortgage; (b) to alter, repair, replace, change the location (provided notice shall be given to Mortgagee as to any new location) or position of and add to any Tangible Personal Property; provided, however, that no change shall be made in the location of any such property subject to the lien of this Mortgage which would in any respect impair the security of this Mortgage upon such property; or (c) to renew, extend, surrender, terminate, modify or amend any leases of Tangible Personal Property, when, 23 in the Mortgagor's reasonable opinion, it is prudent to do so. The Mortgagor shall retain any net cash proceeds (subject to the right to pay dividends or make cash distributions pursuant to Section 12.07 of the Indenture) received from the sale or disposition of any Tangible Personal Property under Subsection (a) of this Section 2.02, in the business of operating the Casino-Hotel. The Mortgagee shall be under no responsibility or duty with respect to the exercise of the rights of the Mortgagor under this Section 2.02 or the application of the proceeds of any sale or disposition of any Tangible Personal Property. The Mortgagee shall, from time to time, promptly execute any written instrument in form satisfactory to it to confirm the propriety of any action taken by the Mortgagor under this Section 2.02, provided that the conditions set forth in Section 2.02 of the Note Mortgage have been satisfied. Section 2.03. OTHER EXCEPTED PROPERTY. Notwithstanding any provisions contained in this Mortgage or the Indenture to the contrary, including, without limitation, the provisions of Granting Clauses Fifth and Sixth and of Articles Two and Five hereof, if the Mortgagor acquires Tangible Personal Property and other items constituting operating assets, such as computer software subject to any FF&E Financing Agreement, or becomes the lessee under a lease for any of the same and if the document evidencing such FF&E Financing Agreement prohibits subordinate liens or the provisions of any such lease prohibits any assignment thereof by the lessee, and if any such prohibition is customary with respect to similar transactions of the lender or lessor, as the case may be, then the property so purchased or the lessee's interest in the lease, as the case may be, shall be deemed to be Excepted Property. If any such FF&E Financing Agreement permits subordinate liens then the Mortgagee agrees to execute and deliver to the Mortgagor, at the Mortgagor's expense, such documents as the holder of such FF&E Financing Agreement may reasonably request to evidence the subordination of the lien of this Mortgage to the lien of such FF&E Financing Agreement. Section 2.04. [Reserved] Section 2.05. RELEASED LAND. (a) Notwithstanding anything to the contrary herein contained, the Mortgagor shall have the right, at any time and 24 from time to time, unless an Event of Default shall have occurred and be continuing, to convey all or any part of the Released Fee Land (the land to be so conveyed is hereinafter referred to as the "Released Land"), free from the lien of the Mortgage, provided that the conditions set forth in Section 2.05(a) of the Note Mortgage have been satisfied. (b) The Mortgagee shall, from time to time, promptly execute any written instrument in form reasonably satisfactory to the prospective purchaser to confirm the release of the Released Fee Land, upon receipt by the Mortgagee of an Officers' Certificate stating that the Mortgagor is entitled to such release by virtue of the Mortgagor's compliance with this Section 2.05 and, if applicable, Section 2.05 of the Note Mortgage, provided, that the Mortgagee shall have no liability thereunder and all costs and expenses (including reasonable attorneys' fees) shall be paid by the Mortgagor. Section 2.06. RELEASED FEE LAND. (a) Notwithstanding anything to the contrary herein contained, in the event the Mortgagor intends to exercise an option to acquire fee title to Leased Land under the provisions of any Ground Lease, the Mortgagor shall have the right, unless an Event of Default shall have occurred and be continuing, to have an Affiliate exercise such options(s) or for the Mortgagor to exercise such options(s) on behalf of an Affiliate and in connection therewith to cause fee simple title to the Leased Land or any part thereof to be conveyed to an Affiliate of the Mortgagor (provided that no portion of the purchase price of the Leased Land or part thereof is paid by Mortgagor), free from the lien of this Mortgage (the land to be so conveyed is hereinafter referred to as the "Released Fee Land"), provided that the Mortgagor furnishes the Mortgagee with the following: (i) an Officers' Certificate requesting the release of the Released Fee Land from the Trust Estate and stating that (A) the Mortgagor is not required to own the Released Fee Land in order to maintain all Permits and in order to comply with the provisions of all material contracts to which the Mortgagor is a party or by which the Mortgagor is bound, (B) such Affiliate has received all Permits necessary to own the Released Fee Land (including without limitation all approvals required by the Casino Control Commission of the State of New Jersey), (C) there has been delivered to the Mortgagor and the Mortgagee a true copy of an instrument executed by such Affiliate stating that (i) such Affiliate may only engage in the activity of owning the Released Fee Land and (ii) such Affiliate shall not convey the Released Fee Land to another Affiliate of the Mortgagor, 25 unless such other Affiliate executes and delivers to the Mortgagor and the Mortgagee, the instruments that would have been required to be delivered pursuant to clause (C) if the Mortgagor conveyed the Released Fee Land to such other Affiliate (provided that this restriction shall only be effective until such time as this Mortgage shall be satisfied of record) and (D) the deed conveying the Released Fee Land to such Affiliate shall state that such conveyance is made subject to the terms, provisions and conditions of the applicable Ground Lease and that the fee and leasehold interests in the Released Fee Land shall not merge by reason of the Mortgagor and/or any Affiliate owning both the leasehold and fee estate therein, and that such estates shall always remain separate and distinct; (ii) an Opinion of Counsel to the effect that (A) the Mortgagor is not required to own the Released Fee Land in order to maintain in good standing all Permits or by the provisions of any material contract to which the Mortgagor is a party or by which it is bound to own the Released Fee Land and (B) the instruments described in clause (C) of subparagraph (i) were duly executed by and are binding upon such Affiliate; and (iii) an endorsement to the Original Policy, confirming that no merger of the fee and leasehold estates in the Released Fee Land has resulted from such conveyance. In addition, simultaneously with such acquisition, the Affiliate and Mortgagor shall enter into an instrument in form and substance reasonably satisfactory to Mortgagee, amending the applicable Ground Lease to provide such mortgagee protections as are customary and to the extent reasonably required by Mortgagee, including, without limitation, (A) a covenant of the landlord not to terminate the Ground Lease for any reason whatsoever (including without limitation, due to any default by tenant of its obligations under such Ground Lease), and (B) an agreement by the landlord not to accept payment of any fixed or base rent from the tenant (and, if tendered by the Mortgagor, an agreement to return same to the Mortgagor) or any other charges payable thereunder at any time that an Event of Default shall have occurred and shall be continuing. (b) The Mortgagee shall, from time to time, promptly execute any written instrument in form reasonably satisfactory to the prospective purchaser to confirm the release of the Released Fee Land, upon receipt by the Mortgagee of an Officers' Certificate stating that the Mortgagor is entitled to such release by virtue of the 26 Mortgagor's compliance with this Section 2.06, PROVIDED that the Mortgagee shall have no liability thereunder and all costs and expenses (including reasonable attorneys' fees) shall be paid by the Mortgagor. Section 2.07. AFTER-ACQUIRED FEE MORTGAGES. (a) Notwithstanding anything contained herein to the contrary (i) if no Event of Default has occurred and is continuing and (ii) if the Mortgagor shall acquire Released Fee Land, then simultaneously with the acquisition thereof, the Mortgagor shall have the right to encumber such fee simple title with a mortgage (such mortgage and any refinancing thereof permitted by the Indenture is hereinafter referred to as an "After-Acquired Fee Mortgage"). The lien of this Mortgage on the Released Fee Land shall be subordinated to the lien of the After-Acquired Fee Mortgage on the Released Fee Land (and to the lien of other Superior Mortgages which shall become a lien thereon in accordance with the terms thereof), provided the following conditions are satisfied: (i) the After-Acquired Fee Mortgage encumbers the fee simple title to such real property and no other property; (ii) the indebtedness secured by the After-Acquired Fee Mortgage (A) does not exceed 75% of the cost to the Mortgagor of such fee simple title at the time of the acquisition and (B) satisfies the criteria set forth in Section 12.08 of the Indenture; (iii) in the event the After-Acquired Fee Mortgage encumbers fee simple title to the Leased Land or any part thereof, such After-Acquired Fee Mortgage contains provisions binding on the holder of the After-Acquired Fee Mortgage and its successors and assigns confirming the provisions of Section 5.21(d) of this Mortgage; (iv) the Released Fee Land is not being acquired from an Affiliate of the Mortgagor; (v) the After-Acquired Fee Mortgage and other loan documents shall contain a provision binding upon the holder of such After-Acquired Fee Mortgage and other loan documents that all insurance proceeds in the event of a Casualty and awards for Takings of less than the entire Released Fee Land shall be used for purposes of Restoration; and (vi) the Mortgagor delivers to the Mortgagee an Officers' Certificate requesting such subordination and 27 certifying that the requirements of (i) through (v) above have been satisfied. (b) Anything contained in this Section 2.07 or elsewhere in this Mortgage to the contrary notwithstanding, the subordination of this Mortgage to any After-Acquired Fee Mortgage constituting a lien on Released Fee Land shall not be self-operative but shall be effective only upon the execution and delivery by the Mortgagee of an instrument in writing effecting such subordination. The Mortgagee shall deliver such instrument of subordination on the following conditions: (x) the Mortgagee shall have received an Officers' Certificate confirming that the conditions of (i) through (vi) of paragraph (a) have been satisfied, together with a true and correct copy of the After-Acquired Fee Mortgage and all other instruments securing the indebtedness evidenced thereby and (y) the instrument of subordination shall specifically state that this Mortgage is being subordinated not with respect to the lien of this Mortgage on the Ground Lease or on the leasehold estate created thereby, but only with respect to the fee simple title to the Leased Land or applicable part thereof and only if and to the extent that the After-Acquired Fee Mortgage being subordinated to is subject and subordinate to the Ground Lease and the leasehold estate created thereby. ARTICLE THREE REMEDIES Section 3.01. EVENTS OF DEFAULT. "Event of Default," whenever used herein, means any one of following events (including any applicable notice requirement and any period of grace as specified in this Section 3.01) (whatever the reason for such event 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): (a) default by the Mortgagor under the Guaranty and continuance of such default for a period of 10 days after there has been given a written notice to the Mortgagor specifying such default and stating that such notice is a "Notice of Default" hereunder; or (b) an "Event of Default," as defined in Section 3.01 of the Note Mortgage, shall occur; or (c) default in the performance, or breach, of any of the provisions of Article Four and the continuance of such default or breach for a period of 60 days after there has been given a written notice to the Mortgagor 28 specifying that such notice is a "Notice of Default" hereunder; or (d) any representation or warranty of the Mortgagor set forth in this Mortgage shall prove to be incorrect as of the time when made and the facts constituting such incorrectness impairs the Mortgagee's security and such impairment continues for a period of 30 days, unless such impairment is curable, but not susceptible of cure within such 30-day period (for reasons other than lack of funds), provided that the conditions set forth in Section 3.01(l) of the Note Mortgage have been satisfied. Section 3.02. DEMAND UNDER THE GUARANTY. If an Event of Default occurs and is continuing, and the Mortgagee has declared the Outstanding Amount of the Note to be due and payable immediately pursuant to Section 3.02 of the Note Mortgage, then the Mortgagee may declare all obligations under the Guaranty to be due and payable immediately. Section 3.03. APPLICATION OF MONEYS RECEIVED BY MORTGAGEE. Any moneys received by the Mortgagee pursuant to the provisions of this Article Three (including moneys received by the Trustee after any action or act by the Mortgagee under Section 3.10) shall be applied by the Mortgagee in accordance with the provisions of Section 7.06 of the Indenture. Section 3.04. RESTORATION OF RIGHTS AND REMEDIES. If the Mortgagee has instituted any proceeding to enforce any right or remedy under this Mortgage and such proceeding has been discontinued or abandoned for any reason or has been determined adversely to the Mortgagee, then and in every such case the Mortgagor and the Mortgagee shall, subject to any determination in such proceeding, be restored to its former position hereunder, and thereafter all rights and remedies of the Mortgagee shall continue as though no such proceeding had been instituted. Section 3.05. RIGHTS AND REMEDIES CUMULATIVE. No right or remedy herein conferred upon or reserved to the Mortgagee 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. 29 Section 3.06. DELAY OR OMISSION NOT WAIVER. No delay or omission of the Mortgagee to exercise any right or remedy accruing upon an 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 Three by law to the Mortgagee may be exercised, from time to time, and as often as may be deemed expedient, by the Mortgagee. Section 3.07. UNDERTAKING FOR COSTS. If any action or proceeding shall be commenced (including, without limitation, an action to foreclose this Mortgage or to collect under the Guaranty secured hereby) to which action or proceeding the Mortgagee is made or becomes a party, or in which it becomes necessary in the opinion of the Mortgagee to defend or uphold the lien of this Mortgage, then, to the extent it has not already done so pursuant to the terms of Section 3.07 of the Note Mortgage, the Mortgagor shall pay to Mortgagee all expenses, including reasonable attorneys' fees and expenses, incurred by the Mortgagee in connection therewith, together with interest at the rate then payable on the Notes, from the date of payment less the net amount received by the Mortgagee or the Trustee, as their interests may appear under any title insurance policy, and, until paid, all such expenses, together with interest as aforesaid, shall be a lien on the Trust Estate. Section 3.08. WAIVER OF APPRAISEMENT AND OTHER LAWS. To the full extent that it may lawfully so agree, the Mortgagor will not at any time insist upon, plead, claim or take the benefit or advantage of, any appraisement, valuation, stay, extension or redemption law now or hereafter in force, in order to prevent or hinder the enforcement of this Mortgage or the absolute sale of the Trust Estate, or any part hereof, or the possession thereof by any purchaser at any sale under this Article Three; and the Mortgagor, for itself and all who may claim under it, so far as it or they now or hereafter may lawfully do so, hereby waives the benefit of all such laws. The Mortgagor, for itself and all who may claim under it, waives, to the extent that it may lawfully do so, all right to have the property in the Trust Estate marshalled upon any foreclosure hereof, and agrees that any court having jurisdiction to foreclose this Mortgage may order the sale of the Trust Estate as an entirety. If any law in this Section 3.08 referred to and now in force, of which the Mortgagor or its successor or successors might take advantage despite this Section 3.08, shall hereafter be repealed or cease to be in force, such law shall not thereafter be deemed to constitute any part of the 30 contract herein contained or to preclude the application of this Section 3.08. Section 3.09. ENTRY. The Mortgagor agrees that upon the occurrence of an Event of Default the Mortgagor, upon demand of the Mortgagee during the continuance thereof, shall forthwith surrender to the Mortgagee the actual possession of, and it shall be lawful for the Mortgagee by such officers or agents as it may appoint to enter and take possession of, the Trust Estate (and the books and papers of the Mortgagor), and to hold, operate and manage the Trust Estate (including the making of all needful repairs, and such alterations, additions and improvements as the Mortgagee shall deem wise) and to receive the rents, issues, tolls, profits, revenues and other income thereof, and, after deducting the costs and expenses of entering, taking possession, holding, operating and managing the Trust Estate, as well as payments for taxes, insurance and other proper charges upon the Trust Estate and reasonable compensation to itself, its agents and counsel, to apply the same as provided in Section 3.03, PROVIDED, HOWEVER, that the Mortgagee's rights under this Section 3.09 shall be subject to the provisions of the New Jersey Casino Control Act and Section 3.14. Whenever all that is then due upon the Note and under any of the terms of this Mortgage shall have been paid and all defaults hereunder shall have been made good, the Mortgagee shall surrender possession to the Mortgagor. Section 3.10. POWER OF SALE; SUITS FOR ENFORCEMENT. In case an Event of Default shall occur and be continuing, the Mortgagee, with or without entry, in its discretion may: (a) sell, subject to any mandatory requirements of applicable law, the Trust Estate as an entirety, or in such parcels, as the Mortgagee may determine, to the highest bidder at public auction at such place and at such time (which sale may be adjourned by the Mortgagee from time to time in its discretion by announcement at the time and place fixed for such sale, without further notice) and upon such terms as the Mortgagee may fix and briefly specify in a notice of sale to be published as required by law; or (b) proceed to protect and enforce its rights under this Mortgage by sale pursuant to judicial proceedings or by a suit, action or proceeding in equity or at law or otherwise, whether for the specific performance of any covenant or agreement contained in this Mortgage or in aid of the execution of any power granted in this Mortgage or for the foreclosure of this Mortgage or for the enforcement of any other legal, equitable or other remedy, as the Mortgagee, being advised by counsel, shall deem most effectual to protect 31 and enforce any of the rights of the Mortgagee; the failure to join tenants shall not be asserted as a defense to any foreclosure or proceeding to enforce the rights of the Mortgagee. Section 3.11. INCIDENT OF SALE. Upon any sale of any of the Trust Estate, whether made under the power of sale hereby given or pursuant to judicial proceedings, to the extent permitted by law: (a) all obligations owing under the Guaranty, if not previously due, shall at once become and be immediately due and payable; (b) subject to the provisions of Section 3.14 and the receipt of any required prior approvals of the New Jersey Casino Control Commission, the Mortgagee may bid for and purchase the property offered for sale, and upon compliance with the terms of sale may hold, retain and possess and dispose of such property, without further accountability, and may, in paying the purchase money therefor, delivery any notes or claims for interest thereon in lieu of cash to the amount which shall, upon distribution of the net proceeds of such sale, be payable thereon, and such notes or claims for interest thereon, in case the amounts so payable thereon shall be less than the amount due thereon, shall be returned to the holders thereof after being appropriately stamped to show partial payment; (c) the Mortgagee may make and deliver to the purchaser or purchasers a good and sufficient deed, bill of sale and instrument of assignment and transfer of the property sold; (d) the Mortgagee is hereby irrevocably appointed the true and lawful attorney of the Mortgagor, in its name and stead, to make all necessary deeds, bills of sale and instruments of assignment and transfer of the property thus sold; and for that purpose it may execute all necessary deeds, bills of sale and instruments of assignment and transfer, and may substitute one or more persons, firms or corporations with like power, the Mortgagor hereby ratifying and confirming all that its attorney or such substitute or substitutes shall lawfully do by virtue hereof; but if so requested by the Mortgagee or by any purchaser, the Mortgagor shall ratify and confirm any such sale or transfer by executing and delivering to the Mortgagee or to such purchaser or purchasers all proper deeds, bills of sale, instruments of assignment and transfer and releases as may be designated in any such request; 32 (e) all right, title, interest, claim and demand whatsoever, either at law or in equity or otherwise, of the Mortgagor of, in and to the property so sold shall be divested and such sale shall be a perpetual bar both at law and in equity against the Mortgagor, its successors and assigns, and against any and all persons claiming or who may claim the property sold or any part thereof from, through or under the Mortgagor, its successors and assigns; and (f) the receipt of the Mortgagee or of the officer making such sale shall be a sufficient discharge to the purchaser or purchasers at such sale for his or their purchase money and such purchaser or purchasers and his or their assigns or personal representatives shall not, after paying such purchase money and receiving such receipt, be obliged to see to the application of such purchase money, or be in anywise answerable for any loss, misapplication or non-application thereof. Section 3.12. RECEIVER. Upon the occurrence of an Event of Default and commencement of judicial proceedings by the Mortgagee to enforce any right under this Mortgage, the Mortgagee shall be entitled, as against the Mortgagor, without notice or demand and without regard to the adequacy of the security for the Guaranty or the solvency of the Mortgagor, to the appointment of a receiver of the Trust Estate, and of the rents, issues, profits, revenues and other income thereof, PROVIDED, HOWEVER, that the Mortgagee's rights under this Section 3.12 shall be subject to the provisions of the New Jersey Casino Control Act and Section 3.14 hereof. Section 3.13. SUITS TO PROTECT THE TRUST ESTATE. Upon 5 days' prior written notice to the Mortgagor (or such shorter period or without notice if deemed necessary and appropriate by the Mortgagee), the Mortgagee shall have power to institute and maintain such proceedings as it may deem necessary and appropriate to prevent any impairment of the Trust Estate by any acts which may be unlawful or in violation of this Mortgage and to protect its interests in the Trust Estate and in the rents, issues, profits, revenues and other income arising therefrom, including power to institute and maintain proceedings to restrain the enforcement of or compliance with any 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 hereunder or be materially prejudicial to the interests of the Mortgagee. Section 3.14. MANAGEMENT OF CASINO-HOTEL. Notwithstanding any provision of this Article Three to the 33 contrary, following an Event of Default and the taking of possession of the Trust Estate or any part thereof by the Mortgagee and/or the appointment of receiver of the Trust Estate or any part thereof, the Mortgagee or any such receiver shall be authorized, in addition to the rights and powers of the Mortgagee and such receiver set forth elsewhere in this Mortgage, to retain one or more experienced operators of hotels and/or casinos to manage the Casino-Hotel, PROVIDED that any such operator shall have all necessary legal qualifications, including all Permits, to manage the Casino-Hotel. ARTICLE FOUR CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE Section 4.01. CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER ONLY ON CERTAIN TERMS. The Mortgagor shall comply with all provisions applicable to the Mortgagor in Article Ten of the Indenture. Section 4.02. SUCCESSOR ENTITY SUBSTITUTED. Upon any consolidation or combination or any conveyance or transfer of the Trust Estate or any portion thereof in accordance with Section 10.01 of the Indenture, the successor entity formed by such consolidation or into which the Mortgagor is combined or to which such conveyance or transfer is made shall succeed to, and be substituted for, and may exercise every right and power of, the Mortgagor under this Mortgage with the same effect as if such successor entity had been named as the Mortgagor herein; PROVIDED, HOWEVER, that no such conveyance or transfer of the Trust Estate substantially as an entirety, unless such conveyance or transfer is in compliance with the provisions of Article Ten of the Indenture, shall have the effect of releasing the Person named as "the Mortgagor" in the first paragraph of this instrument or any successor entity which shall theretofore have become such in the manner prescribed in such Article Ten from its liability as guarantor. Section 4.03. LIMITATION ON SALES OF TRUST ESTATE. Except as otherwise expressly permitted by this Mortgage or the Indenture, the Mortgagor shall not sell, assign, lease, sublease, hypothecate, pledge, mortgage or otherwise transfer all or any part of the Trust Estate or any interest therein (including without limitation any interest in the Ground Leases). Without limiting the generality of the foregoing, the Mortgagor shall not separate, or attempt to separate, its ownership of its interest in the Ground Leases from its ownership of the buildings constituting the Casino-Hotel or any part thereof. 34 ARTICLE FIVE COVENANTS AND REPRESENTATIONS OF MORTGAGOR Section 5.01. [Reserved] Section 5.02. FF&E FINANCING AGREEMENTS. The Mortgagor covenants and agrees to comply with all of the terms and conditions set forth in any FF&E Financing Agreements before the expiration of any applicable notice and cure periods contained in the FF&E Financing Agreements. Section 5.03. LIMITATIONS ON LIENS. The Mortgagor will not create, incur, suffer or permit to be created or incurred or to exist any mortgage, lien, charge or encumbrance on or pledge of any of the Trust Estate, other than (i) Permitted Encumbrances, (ii) liens on the Trust Estate in connection with indebtedness permitted by clauses (i), (ii), (iii), (iv) or (v) of Section 12.08(a) of the Indenture, and (iii) a building contract or a notice of intention filed by a mechanic, materialman or laborer under the New Jersey lien law. Without limiting the generality of the foregoing sentence but notwithstanding the provisions of the foregoing sentence, the Mortgagor shall not be deemed to have breached the provisions of the foregoing sentence by virtue of the existence of a lien for Impositions or mechanics liens so long as the Mortgagor is in good faith contesting the validity of the same in accordance with the provisions of Section 5.09 to the extent that the matters described in (i) and (ii) do not constitute a default under any Ground Lease or Superior Mortgage. Section 5.04. [Reserved] Section 5.05. ACTIONS AND PROCEEDINGS. The Mortgagor hereby acknowledges the right of the Mortgagee, in the name of and on behalf of the Mortgagor, (a) to appear in and defend any action or proceeding brought with respect to the Trust Estate or any part thereof and (b) upon 5 days' prior written notice to the Mortgagor (or such shorter period or without notice if deemed necessary and appropriate by the Mortgage), to commence any action or proceeding to protect the interest of the Mortgagee in the Trust Estate. Section 5.06. WARRANTY OF LEASEHOLD ESTATE AND TITLE. The Mortgagor represents and warrants that as of the date hereof: (a) it is duly authorized under the laws of the State of New Jersey and all other applicable laws to 35 execute and deliver this Mortgage, and all corporate action on its part necessary for the valid execution and delivery of this Mortgage has been duly and effectively taken; (b) it is the lawful owner and is lawfully seized and possessed of the Owned Land and all buildings and improvements thereon, free and clear of all liens, charges or encumbrances, other than the lien of the Mortgage Documents, any Working Capital Facility Lien and Existing Encumbrances; (c) it is the holder of and has good and marketable title to the leasehold interests and leasehold estates under the Ground Leases and to the Ground Leases, subject to no lien, encumbrance or charge other than the lien of the Mortgage Documents, any Working Capital Facility Lien and Existing Encumbrances; (d) (i) the Ground Leases are valid and subsisting demises of the Leased Land for the terms therein set forth, (ii) there are no defaults thereunder by any Lessor or the lessee as to which written notice has been given to or by the lessee, (iii) the Mortgagor has delivered true and correct copies of the Ground Leases and all modifications, amendments and supplements thereto, and (iv) each of the Ground Leases is in full force and effect and has not been modified, amended or supplemented, except as described on Schedule 2; (e) it has good title to the Operating Assets, subject to no lien, encumbrance or charge, other than the lien of the Mortgage Documents, any Working Capital Facility Lien and Existing Encumbrances; and (f) the Mortgagor has good and lawful right and authority to execute this Mortgage and to grant, bargain, sell, alien, convey, assign, transfer, hypothecate, pledge, mortgage and confirm the Trust Estate as provided herein (including without limitation with respect to the Operating Assets and the Ground Leases, without the consent of any third party, other than governmental authorities but any applicable or necessary consent or approval of any such governmental authority has been given or waived at or prior to the execution and delivery of this Mortgage), and this Mortgage constitutes a valid third mortgage lien and third priority security interest in the Trust Estate PARI PASSU with the lien of the Note Mortgage, subject only to Working Capital Facility Liens and Existing Encumbrances. 36 The Mortgagor hereby does and will forever warrant and defend (x) the title to Trust Estate (including without limitation, its leasehold estates under the lessee's interests in the Ground Leases) (subject to Permitted Encumbrances) and (y) the priority of the lien of this Mortgage (subject to Permitted Encumbrances other than Restricted Encumbrances), against the claims and demands of all persons whomsoever, at the Mortgagor's sole cost and expense. Section 5.07. FURTHER ASSURANCES; RECORDING. The Mortgagor will, as provided in Section 5.13, from time to time subject its right, title and interest under all Leases to the lien of this Mortgage. The Mortgagor will cause this instrument and all other instruments of further assurance, including all financing statements and continuation statements covering security interests in personal property, to be promptly recorded, registered and filed, and at all times to be kept recorded, registered and filed, and will execute and file such financing statements and cause to be issued and filed such continuation statements, all in such manner and in such places as may be required by law or as requested by the Mortgagee to fully preserve and protect the rights of the Mortgagee as a secured party under the Uniform Commercial Code to all property comprising the Trust Estate (to the extent a grant of a security interest therein is governed by the Uniform Commercial Code) and to perfect, preserve and protect the lien of this Mortgage as a valid mortgage lien of record and a valid security interest on the Trust Estate subject to Permitted Encumbrances (other than Restricted Encumbrances). The Mortgagor will pay all filing or recording fees, and all expenses incident to the execution and delivery of this Mortgage, and any instrument of further assurance, and all federal, state, county and municipal stamp taxes and other taxes, duties, imposts, assessments and charges arising out of or in connection with the execution and delivery of this Mortgage, any financing statement or continuation statement with respect to the personal property constituting part of the Trust Estate or any instrument of further assurance. Section 5.08. PAYMENT OF TAXES AND CERTAIN CLAIMS; COMPLIANCE WITH LEGAL REQUIREMENTS AND INSURANCE REQUIREMENTS. The Mortgagor will: (a) subject to the provisions of Section 5.09 relating to contests, pay or cause to be paid promptly (or when installments of the same shall become due and payable, if, by law or by agreement or arrangement with the applicable governmental agency or authority, the same 37 may be paid in installments) before any fine, penalty, interest or cost may be added for nonpayment (but no later than when the same are payable by the Mortgagor pursuant to any Superior Instrument Requirement), all taxes (including, without limitation, real estate taxes, personal or other property taxes and all sales, value added, use and similar taxes), assessments (including, without limitation, all assessments for public improvements or benefits, whether or not commenced or completed prior to the date hereof and whether or not to be completed prior to the satisfaction of this Mortgage), water, sewer or other rents, rates and charges, excises, levies, license fees, permit fees, inspection fees and other authorization fees and other charges, in each case whether general or special, ordinary or extraordinary, or foreseen or unforeseen, of every character (including all interest, additions to tax and penalties thereon), that may be assessed, levied, confirmed or imposed on or in respect of or be a lien upon (1) the Trust Estate (including without limitation the Leased Land) or any part thereof or any rent therefrom or any estate, right or interest therein, or (2) any acquisition, occupancy, use, leasing, or possession of or activity conducted on the real property or any part thereof included in the Trust Estate or any gross receipts thereof or of the rent therefrom (all of the foregoing being referred to collectively as "Impositions"). Notwithstanding the foregoing or any other provision of this Mortgage, the Mortgagor shall not be required to pay any income, profits or revenue tax upon the income of the Mortgagee, the Trustee or the Noteholders nor any franchise, excise, corporate, estate, inheritance, succession, capital levy or transfer tax of the Mortgagee, the Trustee or the Noteholders nor any interest, additions to tax or penalties in respect thereof, unless such tax is imposed, levied or assessed in substitution for any Impositions that the Mortgagor is required to pay pursuant to this Section 5.08. The Mortgagor will deliver to the Mortgagee official receipts or other proof evidencing payments of any Impositions in accordance with the requirements of this Section 5.08. The Mortgagor shall not be entitled to any credit for taxes or assessments paid against the Guaranty; (b) except for such property which the Mortgagor may dispose of or replace pursuant to Section 2.02, maintain and keep all its properties used or useful in the conduct of its business (other than obsolete equipment), including, without limitation, the Casino-Hotel and all Tangible Personal Property, in such good repair, working order and condition, except for reasonable wear and use, and make or cause to be made all 38 such needful and proper repairs, renewals and replacements thereto consistent with the standards of other casino-hotels in Atlantic City, New Jersey; (c) occupy and continuously operate the Casino-Hotel and keep the Casino-Hotel supplied with Tangible Personal Property, all in a manner consistent with the standards of other casino-hotels in Atlantic City, New Jersey (provided that nothing contained in this Section 5.08(c) shall be deemed to reduce the time period set forth in Section 3.01(f)); (d) subject to the provisions of Section 5.09 relating to contests, the Mortgagor at its sole expense will timely (1) comply with all Legal Requirements and Insurance Requirements, whether or not compliance therewith shall require structural changes in the buildings and improvements included in the Trust Estate or interfere with the use and enjoyment of the Trust Estate or any part thereof, (2) procure, maintain and comply with all permits and other authorizations required for (i) the use of the Casino as a gaming and gambling facility, (ii) the on-premises consumption of alcoholic beverages at the Casino-Hotel and (iii) any other use of the Trust Estate or any part thereof then being made, and for the proper erection, installation, operation and maintenance of the improvements or any part thereof, and (3) comply with any instruments of record at the time in force affecting the Trust Estate or any part thereof, if the failure to comply with the same would impair the Mortgagee's security hereunder. Without limiting the generality of the foregoing, the Mortgagor represents and warrants that at the time of the execution of this Mortgage, the Mortgagor is in compliance with the requirements of clauses (1), (2) and (3); (e) in the event of the passage after the date of this Mortgage of any law of the State of New Jersey, or any other governmental entity, changing in any way the laws now in force for the taxation of mortgages, or debts secured thereby, for state or local purposes, or the manner of the operation of any such taxes, so as to affect the interest of the Mortgagee, then and in such event, the Mortgagor shall bear and pay the full amount of such taxes, provided that if for any reason payment by the Mortgagor of any such new or additional taxes would be unlawful or if the payment thereof would constitute usury or render the indebtedness secured hereby wholly or partially usurious under any of the terms or provisions of the Note, or this Mortgage, or otherwise, the Mortgagee may, at the Mortgagee's option, declare the whole sum secured by this Mortgage, with interest 39 thereon, to be due and payable 90 days after notice of election thereof has been given by the Mortgagee, or the Mortgagee may, at the Mortgagee's option, pay that amount or portion of such taxes as renders the loan or indebtedness secured hereby unlawful or usurious, in which event the Mortgagor shall concurrently therewith pay the remaining lawful and nonusurious portion or balance of such taxes. Section 5.09. PERMITTED CONTESTS. The Mortgagor may, at its sole expense, contest by appropriate legal proceedings conducted in good faith and with due diligence, the amount or validity or application, in whole or in part of any Imposition or lien therefor or any Legal Requirement or Insurance Requirement or the application of any instrument of record affecting the Trust Estate or any part thereof or any claims of mechanics, materialmen, suppliers, or vendors or lien therefore, and may withhold payment of the same pending such proceedings if permitted by law, or make payment under protest, or defer compliance with any such Legal Requirement, any such Insurance Requirement or the terms of any such instrument, and the same shall not be a Default hereunder, provided that (a) in the case of any Impositions or lien therefor or any claims of mechanics, materialmen, suppliers or vendors or lien therefor, such proceedings shall suspend the collection thereof from each of the Mortgagor, the Mortgagee, the Trustee, the Noteholders and the Trust Estate, (b) neither the Trust Estate nor any interest therein would be in any danger of being sold, forfeited, or lost, (c) such action would not result in or constitute a default under any Ground Lease or Superior Mortgage, (d) in the case of a Legal Requirement, neither the Noteholders nor the Mortgagee shall be in any danger of any civil or any criminal liability, and the failure of the Mortgagor to comply with such Legal Requirement shall not affect the continuance in good standing of any Permit or result in the suspension, termination, non-renewal or material adverse modification of any permit, and (e) in the case of an Insurance Requirement, the failure of the Mortgagor to comply therewith shall not affect the validity of any insurance required to be maintained by the Mortgagor hereunder. Section 5.10. MECHANICS' AND OTHER LIENS. Without limiting the generality of the first sentence of Section 5.03 and notwithstanding the provisions of Section 5.03(a)(ii), the Mortgagor will cause to be removed, either by payment, or bonding or otherwise, all claims and demands of mechanics, materialmen, laborers, and others which, if unpaid, might result in, or permit the creation of, a lien on the Premises and/or Trust Estate or any part thereof, or on the revenues, rents, issues, income and profits arising therefrom and in general will do or cause to be done everything necessary so 40 that the lien hereof shall be fully preserved, at the cost of the Mortgagor, without expense to the Mortgagee. Section 5.11. INSURANCE. (a) The Mortgagor will, at its expense, maintain with Insurers: (1) insurance with respect to the Mortgagor's insurable properties constituting a part of the Trust Estate against loss or damage by fire, lightning, and other risks from time to time included under "all-risk" policies and against loss or damage by sprinkler leakage, water damage, collapse, malicious mischief and explosion in respect of any steam and pressure boiler and similar apparatus located on such insurable properties, in amounts at all times sufficient to prevent the Mortgagor from becoming a coinsurer within the terms of the applicable policies, but in any event such insurance shall be maintained in such insurable amounts not less than the greatest of the following (hereinafter referred to as the "Insurance Amount"): (i) 100% of the then full insurable value of such insurable properties, the term "full insurable value" to mean the actual replacement cost (excluding the costs of foundation, footing, excavation, paving, landscaping and other similar, non-insurable improvements) determined from time to time (but not less frequently than once in any 36 calendar months), by an Architect, contractor, appraiser, or an Insurer, or (ii) the amount required to be maintained pursuant to the Superior Instrument Requirements; (2) war risk insurance as and when such insurance is obtainable from the United States of America or any agency thereof as promptly as reasonably practicable after the same becomes so obtainable, in an amount not less than the Insurance Amount, or in such lesser amount as may then be so obtainable; (3) public liability, including personal injury and property damage and comprehensive general liability connected with the possession, use, leasing, operation or condition of such insurable properties in such amounts as, in the Mortgagor's judgment, are prudent, considering the cost of such insurance, for personal injury and property damage with respect to any one occurrence, which may be under an umbrella policy. Anything contained in this clause (3) to the contrary notwithstanding, the Superior Instrument Requirements with respect to the 41 kinds and amount of insurance described in this clause (3) shall be satisfied by the Mortgagor; (4) appropriate workers' compensation insurance with respect to any work (to the extent the risks to be covered thereby are not already covered by other policies of insurance maintained by the Mortgagor) on or about such insurable properties; (5) business interruption insurance covering not less than 12 months of loss, provided that, at any time that the Mortgagor is renewing any policy for such insurance or taking out any new or replacement such policy covering a period of less than 12 months, the Mortgagor shall deliver to the Mortgagee an Officers' Certificate certifying that the period of coverage to be maintained by the Mortgagor under such policy is the maximum that can be maintained at rates determined by the Mortgagor to be reasonable for such coverage; (6) to the extent available, flood insurance in an amount not less than the Insurance Amount, or such lesser amount as may then be so obtainable; and (7) such other insurance with respect to such insurable properties against loss or damage of the kinds (i) from time to time customarily insured against by persons owning or using casino-hotels of comparable size in the boardwalk area of Atlantic City, New Jersey and (ii) required to be maintained pursuant to the Superior Instrument Requirements. Notwithstanding the foregoing, to the extent permitted by Superior Instrument Requirements, (i) the Mortgagor shall be permitted to maintain a deductible with respect to the insurance policies described in clauses (1), (2), (6) and (7) in an amount not to exceed (x) for the twelve month period commencing the date hereof, $100,000 with respect to the insurance policies described in clause (1), (2), (6) and (7) thereafter, the customary deductible (if any) with respect to the insurance maintained by casino-hotels of a similar size and value in Atlantic City, New Jersey (but in no event more than $1,000,000), (ii) the Mortgagor shall be permitted to maintain a $200,000 self insured retention under the general liability policy described in clause (3) and a deductible with respect to the other insurance policies described in clause (3) in an amount not to exceed the amount of deductible as is customarily maintained by casino-hotels of similar size in Atlantic City, New Jersey, (iii) the Mortgagor shall not reduce its insurance coverage for the matters described in clause (3) (which for purposes of this paragraph means a reduction in single limits or an increase in deductible) unless and until the Mortgagor 42 delivers to the Mortgagee an Officers' Certificate certifying (w) that the coverage the Mortgagor was theretofore maintaining cannot be maintained at rates determined by the Mortgagor to be reasonable for such coverage, (x) the amount of the proposed reduction, (y) the premium for the existing and the proposed reduced coverage, and (z) that the proposed deductible satisfied the criteria set forth in this clause (iii), and (iv) the Mortgagor shall be permitted to maintain a deductible with respect to the insurance policies described in clause (5) in the forms of and in an amount not to exceed the amount of deductible as is customarily maintained by casino-hotels of similar size in Atlantic City, New Jersey. (b) Each policy of insurance maintained by the Mortgagor pursuant to Subsection (a) of this Section 5.11 shall, (1) except in the case of workers' compensation insurance, name as additional insureds the Mortgagee, in both its individual and fiduciary capacities, and, to the extent required by the Superior Instrument Requirements, the Lessors and the holders of the Superior Mortgages, (2) provide that all insurance proceeds for losses, except in the case of public liability insurance and workers' compensation insurance or as otherwise provided in Subsections (d), (e) and (f) of this Section 5.11, be payable solely to the Mortgagee or such other party as is required to receive such proceeds under a Superior Mortgage, (3) except in the case of workers' compensation, include effective waivers (whether under the terms of any such policy or otherwise) by the insurer of all claims for insurance premiums against all lost payees and named insureds (other than the Mortgagor) and all rights of subrogation against any named insured, (4) except in the case of public liability and workers' compensation insurance, provide that any losses shall be payable notwithstanding (i) any act, failure to act, negligence of, or violation or breach of warranties, declarations or conditions contained in such policy by the Mortgagor or the Mortgagee or any other named insured or loss payee (including, without limitation, with respect to the Released Fee Land, the holders of any After-Acquired Fee Mortgages), (ii) the occupation or use of the insurable properties for purposes more hazardous than permitted by the terms of the policy, (iii) any foreclosure or other proceeding or notice of sale relating to the insurable properties or (iv) any change in the title to or ownership or possession of the insurable properties, (5) contain a non-contributory mortgagee clause in favor of the Mortgagee, and (6) provide that if all or any part of such policy is cancelled, terminated or expires, the insurer will forthwith give notice thereof to each named insured and loss payee and that no cancellation, reduction in amount or material change in coverage thereof shall be effective until at least 30 days after receipt by each named insured and loss payee of written notice thereof. 43 (c) The Mortgagor will deliver to the Mortgagee, (1) duplicate originals of all insurance policies that the Mortgagor is required to maintain pursuant to this Section 5.11 and (2) within 30 days after each reduction in insurance required to be maintained by the Mortgagor hereunder, an Officers' Certificate setting forth the particulars as to all such insurance policies and certifying that the same comply with the requirements of this Section 5.11, that all premiums or installments thereof then due thereon have been paid and that the same are in full force and effect. The Mortgagee shall not be responsible for effecting or renewing any insurance or for the responsibility or solvency of the insurers. (d) The Mortgagor shall give written notice to the Mortgagee immediately upon obtaining knowledge of any Casualty which (x) results in damage, loss or destruction in an amount in excess of [$5,000,000] to any buildings or improvements on the Premises and/or any Tangible Personal Property or (y) pursuant to any Superior Instrument Requirement, would require the deposit of insurance proceeds with the Depositary, or action or proceeding with respect thereto. Whenever the Superior Instrument Requirements require or permit the selection of the Depositary by the Mortgagor, the Mortgagor shall select the Insurance Trustee as the Depositary. Within 30 days after any Casualty which results in any damage, loss or destruction in an amount in excess of $10,000,000 to any buildings or improvements of the Premises and/or any Tangible Personal Property, the Mortgagor shall deliver to the Mortgagee a certificate of an Architect stating whether, in such Architect's opinion, applicable Legal Requirements permit the Restoration of such buildings and improvements for the same uses and to the same size and quality in all material respects, as existed immediately prior to the Casualty (and if such certificate states the Legal Requirements do not permit such Restoration, such certificate shall describe the manner closest approximating such criteria to which the buildings and improvements could be so restored and shall be accompanied by a Certificate of Appraised Value dated not more than 10 days prior to delivery setting forth the Appraised Value immediately prior to the Casualty and the estimated Appraised Value immediately after the Restoration). If the Mortgagor is required to deliver such Certificates of Appraised Value and if based on such Certificates of Appraised Value immediately after Restoration, the aggregate Outstanding Amount of First Mortgage Debt immediately after such Restoration shall exceed the greater of (i) 66 2/3% of the Appraised Value immediately after such Restoration or (ii) the quotient of the Outstanding Amount of First Mortgage Debt immediately prior to such Casualty divided by the Appraised Value immediately prior to the Casualty multiplied by the Appraised Value immediately 44 after such Restoration, then the proceeds of any insurance shall, at the election of Mortgagee, either be applied to Restoration as set forth in Subsections (e), (h) and (i) below) or paid and delivered to the Mortgagee to the extent of the then Outstanding Amount of the Note and any other interest or other sums due hereunder or thereunder to be applied to the satisfaction of the Mortgage to the extent proceeds are available for such purpose and provided that no additional sums are due to the Trustee or the Noteholder under the Indenture, the balance of any net insurance proceeds shall be paid to the Mortgagor. Notwithstanding the foregoing sentence, if such Certificates of Appraised Values indicates that the Outstanding Amount of First Mortgage Debt immediately after such Restoration exceeds the greater of the two amounts determined pursuant to subclauses (i) and (ii) above, the proceeds of insurance will be made available for Restoration (subject to paragraphs, (e), (h) and (i) below) if the Mortgagor obtains an irrevocable commitment from a nationally recognized financial institution having a combined capital and surplus of at least $100,000,000, to supply, upon an acceleration under this Mortgage as a result of an Event of Default, funds to the Mortgagor as additions to capital in an amount equal to the Outstanding Amount of First Mortgage Debt in excess of the Appraised Value necessary to be paid down so that the Outstanding Amount of First Mortgage Debt will not exceed either of the two amounts determined pursuant to such clauses (i) and (ii), PROVIDED that such commitment may only be released if, upon an Appraisal at any time following completion of such Restoration, the aggregate Outstanding Amount of the First Mortgage Debt does not exceed 66- 2/3% of the Appraised Value. (e) Subject to the provisions of Subsection (d) above, in case a Casualty occurs, the following shall apply: (1) if the cost of Restoration (as hereinafter defined) does not exceed the sum of $10,000,000, the net insurance proceeds shall be paid by the Mortgagee to the Mortgagor (unless the Superior Instrument Requirements provide that the same shall be paid to the Depositary); (2) if the cost of Restoration is $10,000,000 or more or if the Superior Instrument Requirements provide that the same shall be paid to the Depositary, the net insurance proceeds shall be paid by the Mortgagee to the Insurance Trustee (or other Depositary required by the Superior Instrument Requirements, provided that such Depositary holds such proceeds in trust for purposes of paying the costs of Restoration); 45 (3) the Mortgagor shall commence with reasonable promptness under the circumstances and thereafter with due diligence proceed to perform and complete in a good and workmanlike manner the restoration, repair, replacement or rebuilding of the damage or destruction resulting from the Casualty (all of which restoration, repair, replacement or rebuilding are referred to as the "Restoration") in accordance with the plans and specifications submitted to the Insurance Trustee, in conformance with all Legal Requirements and Superior Instrument Requirements, and in accordance with the further provisions of this Subsection (e), regardless of the extent of any such Casualty and whether or not net insurance proceeds, if any, shall be available or, if available, shall be sufficient, for the purpose of the Restoration (provided, however, that if the Mortgagor does not receive any net insurance proceeds within 30 days after any Casualty because the adjustment of the loss has not yet occurred, then the obligation of the Mortgagor to commence such Restoration shall be deferred until such proceeds are made available to the Mortgagor, provided that (i) Mortgagor delivers to the Mortgagee an Officers' Certificate certifying that the Mortgagor is diligently and continuously adjusting such loss with the Insurer, (ii) the Mortgagor delivers to the Mortgagee an Officers' Certificate within such 30-day period requesting the extension of such period, estimating the date on which such proceeds will be available and describing the Mortgagor's efforts to adjust such loss and certifying that such extension does not constitute a default or a breach of any of the provisions of any of the Ground Leases (or if so, such default or breach has been waived) and (iii) the Mortgagor delivers to the Mortgagee additional Officers' Certificates every 30 days thereafter updating the information contained in the certificate described in Clause (ii)). All Restoration work shall be performed in accordance with the applicable provisions of Section 5.12 and in conformance with all Superior Instrument Requirements, Legal Requirements and Insurance Requirements and, prior to commencing any Restoration, the Mortgagor shall obtain all Permits necessary in connection therewith, and shall obtain, and keep in full force and effect until the completion of such Restoration, such additional insurance as the Insurance Trustee and Superior Instrument Requirements may require. The plans and specifications for the Restoration shall be accompanied by a certificate of the Mortgagor and an Opinion of Counsel to the effect that upon the completion of the Restoration pursuant to the plans and specifications the Premises, and all buildings and improvements, thereon will comply with all superior Instrument Requirements, Legal Requirements and Insurance 46 Requirements. Notwithstanding anything in this Section 5.11 to the contrary, if such Casualty is in an amount less than $5,000,000, the Mortgagor shall not be required to perform and complete such Restoration (unless the performance and completion of the Restoration is necessary in order for the Mortgagor to be in compliance with any term, provision or condition of this Mortgage (other than this Section 5.11(e)) or any Superior Instrument Requirements; (4) Any insurance proceeds which the Mortgagor receives, shall be held by the Mortgagor in trust for the purpose of paying the cost of the Restoration, except as otherwise provided herein; (5) Any net insurance proceeds that the Insurance Trustee holds pursuant to this Subsection (e), shall be deposited in an interest-bearing investment reasonably designated by Mortgagor (to the extent the Mortgagor is permitted to designate such investment under the Superior Instrument Requirements) (and the interest thereon shall be added to such proceeds) and shall be paid by the Insurance Trustee to reimburse the Mortgagor for, or to make payment for, the Restoration, after the Insurance Trustee deducts therefrom the amount of any reasonable costs and expenses incurred in connection with the performance of its obligations under this Section 5.11. The Insurance Trustee shall make such payments not more frequently than once every 30 days upon the written request of the Mortgagor (unless more frequent payments are required by Superior Instrument Requirements), by paying to the Mortgagor or the persons named in the certificate described in Clause (6) of this Subsection (e) the respective amounts stated in such certificate from time to time as the Restoration progresses, provided the Mortgagor has complied with the requirements of this Subsection (e) and such payment is permitted by an applicable Superior Instrument Requirements. The Mortgagor's written request shall be accompanied by (i) the certificate described in Clause (6) of this Subsection (e) and (ii) a title company or official search, or other evidence reasonably acceptable to the Insurance Trustee, showing that there have not been filed with respect to the Premises, any vendor's, contractor's, mechanic's, laborer's or materialman's statutory or similar lien which has not been discharged of record (or bonded against or secured by other security) or any other encumbrance irrespective of its priority (other than Permitted Encumbrances). (6) The certificate required by Clause (5) of this Subsection (e) shall (A) be an Officers' Certificate, 47 countersigned by the Architect in charge of the Restoration with respect to the matters described in (i) and (v) below, (B) be dated not more than 10 days prior to such request and (C) set forth (in addition to any other requirements contained in any applicable Superior Instrument Requirements) that: (i) all of the Restoration work theretofore performed is in substantial compliance with the plans and specifications theretofore submitted to the Insurance Trustee and in compliance with all Superior Instrument Requirements, Legal Requirements and Insurance Requirements; (ii) the sum then requested either has been paid by the Mortgagor or is justly due to contractors, subcontractors, materialmen, engineers, architects or other persons who have rendered services or furnished or contracted to deliver materials for the Restoration therein specified, and the names and addresses of such persons, a brief description of such services and materials and the several amounts so paid or due to each of such persons in respect thereof; (iii) no part of the amount requested has been or is the basis in any pervious or then pending request for the withdrawal of net insurance proceeds, and that the sum then requested does not exceed the value of the services and materials described in the certificate; (iv) except for the amount, if any, stated pursuant to Subclause (ii) of this Clause (6) in such certificate to be due for services or materials, and except for amounts in dispute and/or customary retainages, there is no outstanding indebtedness known to the person signing such certificate, after due inquiry, which is then due for labor, wages, materials, supplies or services in connection with such Restoration; and (v) the remaining cost, as estimated by the persons signing such certificate, of the Restoration in order to complete the same does not exceed the net insurance proceeds remaining in the hands of Insurance Trustee after payment of the sum requested in such certificate or if such estimated cost does exceed such insurance proceeds such certificate shall state the amount of any such deficiency. If the certificate states that such deficiency will exist, the Mortgagor shall deliver the amount of 48 such deficiency in cash or cash equivalent to the Insurance Trustee simultaneously with the delivery of such certificate, which amount shall be deemed insurance proceeds for purposes of this Section 5.11(e); and (7) If net insurance proceeds shall be insufficient to pay the entire cost of the Restoration, then, after completion of the Restoration, the Mortgagor shall pay the deficiency. If all or any part of the net insurance proceeds are not used for the Restoration in accordance with this Subsection (e) (because such proceeds exceed the amount required to complete the Restoration), then upon completion of the Restoration in accordance with this Subsection (e), such amount not so used, if held by the Insurance Trustee, shall be paid to the Mortgagor (if permitted by Superior Instrument Requirements). (f) Provided that no Event of Default has occurred and is continuing, all net business interruption insurance proceeds shall be paid to the Mortgagor, to be segregated from the other funds of Mortgagor and held in trust by Mortgagor for the following purposes and in the following order of priority: (i) for the payment of Impositions and amounts due under the Ground Leases and Superior Mortgages; (ii) for debt service for the estimated period of Restoration (for purposes of this Section 5.11(f), interest and principal payments due on any payment date under the Notes will deemed to accrue in equal daily installments beginning the day after the immediately preceding payment date and ending on such payment date); and (iii) for any expense incurred in connection with the operation or business of the Casino-Hotel. (g) The Mortgagor shall not take out separate insurance, concurrent in form or contributing in the event of loss with that required to be maintained pursuant to this Section 5.11, unless the same are permitted by Superior Instrument Requirements and the Mortgagee is included therein as a named insured, with loss payable to the Mortgagee and the Insurance Trustee pursuant to Section 5.11(b) hereof. The Mortgagor shall immediately notify the Mortgagee whenever any such separate insurance is taken out and shall promptly deliver to the Mortgagee a duplicate original of the policy of such insurance, a copy thereof certified by the insurer or a certificate thereof. (h) Subject to final adjustment by the insurer, insurance claims by reason of damage or destruction to any portion of the Trust Estate may adjusted by the Mortgagor, but the Mortgagee shall have the right (but not the obligation) to join the Mortgagor in adjusting, and approving the adjustment of, any such loss except in the event of a loss where the amount of insurance reasonably anticipated 49 to be received with respect to such loss is less than Five Million Dollars ($5,000,000), and the Mortgagor shall assist the Mortgagee in any such adjustment at the request of the Mortgagee. If the Mortgagee at its election as aforesaid joins the Mortgagor in any adjustment process, then the Mortgagee's approval of the adjustment shall not be unreasonably withheld; (i) Notwithstanding anything contained herein to the contrary, if an Event of Default shall have occurred and be continuing, the Mortgagee may, at its option, (A) refrain from paying to the Mortgagor or the Insurance Trustee any net insurance proceeds or (B) instruct the Insurance Trustee to pay to the Mortgagee any insurance proceeds then held by the Insurance Trustee, as the case may be. Section 5.12. LIMITATIONS ON BUILDING DEMOLITION, ALTERATIONS, IMPROVEMENTS AND NEW CONSTRUCTION. The Mortgagor will not authorize, permit or make any demolition, alteration or improvement of any building included in the Trust Estate or any new construction on any part of the Trust Estate, except in conformity with and subject to the limitations hereinafter in this Section 5.12 set forth. Unless an Event of Default shall have occurred and be continuing, the Mortgagor shall have the right at all times to make or permit such alterations, improvements or new constructions, structural or otherwise (herein sometimes called collectively "alterations"), of or on the Trust Estate, to be made in all cases subject to the conditions set forth in Section 5.12 of the Note Mortgage. Section 5.13. LEASES. The Mortgagor shall not: (a) subject to the provisions of Section 5.13(d), enter into any Lease, or renew, modify, extend, terminate, or amend any Lease, except in the ordinary course of business of operating the Casino-Hotel; (b) receive or collect, or permit the receipt or collection of, any rental payments under any Lease more than one year in advance of the respective periods in respect of which they are to accrue, except that, in connection with the execution and delivery of any Lease or of any amendment to any Lease, rental payments thereunder may be collected and received in advance in an amount not in excess of three months' rent and/or a security deposit may be required thereunder in an amount not exceeding one year's rent; (c) collaterally assign, transfer or hypothecate (other than to the Mortgagee hereunder, to 50 the mortgagee under the Note Mortgage or to the holder of any Working Capital Facility Lien) any rental payment under any Lease whether then due or to accrue in the future, the interest of the Mortgagor as landlord under any Lease or the rents, issues or profits of the Trust Estate; (d) after the date hereof, enter into any Lease, or renew any Lease unless such Lease contains terms to the effect as follows: (1) the Lease and the rights of the tenants thereunder shall be subject and subordinate to the rights of the Mortgagee under this Mortgage, the mortgagee under the Note Mortgage and the holders of any Superior Mortgage, (2) the Lease may be assigned by the landlord thereunder to the Mortgagee, (3) the rights and remedies of the tenant in respect of any obligations of the landlord thereunder shall be nonrecourse as to any assets of the landlord other than its equity in the building in which the leased premises are located or the proceeds thereof, (4) the rights of the tenant shall be subject and subordinate to the rights of the lessee under any new lease entered into in the event of a termination of a Ground Lease; (e) modify any Lease with respect to the matters described in clauses (1) through (4) of paragraph (d). If the Mortgagor enters into a Lease (other than with any Affiliate of the Mortgagor) for a term of not less than 3 nor more than 10 years, the Mortgagee shall deliver a non-disturbance and attornment agreement substantially in the form of Schedule 4 hereto, following receipt of a certificate of a leasing broker (who is not an Affiliate of the Mortgagor or the broker involved in such transaction) experienced with respect to leases of commercial space in the Atlantic City area stating that the rent under the Lease is not less than fair market rent and that the other terms of the Lease are fair and reasonable in the commercial leasing market. The Mortgagor shall, upon demand, reimburse the Mortgagee for any costs and expenses (including reasonable attorney's fees) incurred by the Mortgagee in connection with the preparation, review and delivery of such non-disturbance and attornment agreements. 51 Promptly after the execution and delivery hereof, the Mortgagor will cause the lessee under each Lease now in effect and promptly after each Lease is executed or becomes effective after the date of the execution and delivery hereof, the Mortgagor will cause the lessee under each such Lease, to be duly notified in writing (unless the substance and effect of such notice shall be contained in such Lease) of the subjection of the owner's interest, as lessor, in and to such Lease to the lien of this Mortgage and of the name and address of the Mortgagee. Each such notice shall state that the lease of such lessee is a Lease as herein defined. If a new Mortgagee is at any time appointed hereunder or the address of the Mortgagee shall at any time be changed, the Mortgagor will cause each lessee under each Lease to be promptly notified in writing of the name and address of such new Mortgagee or the new address of the Mortgagee. The Mortgagor will use reasonable efforts (but shall not be obligated to incur any expenditure other than de minimis amounts) to obtain from each lessee under each Lease to whom any notice is sent pursuant to this paragraph an acknowledgment of receipt of such notice, and the Mortgagor will promptly deliver to the Mortgagee, upon request, a copy of each such acknowledgment of receipt which it is able to obtain. The Mortgagee shall not be responsible for securing or causing the Mortgagor to secure any such acknowledgment. Nothing contained in this Section 5.13 shall limit the provisions of Section 4.04 hereof. Section 5.14. [Reserved] Section 5.15. MAINTENANCE OF EXISTENCE OF THE MORTGAGOR. Subject to Article Four, the Mortgagor will do or cause to be done all things necessary to preserve and keep in full force and effect its existence as a corporation, and its rights (both statutory and under its articles of incorporation) and franchises. Section 5.16. TO KEEP BOOKS; INSPECTION BY MORTGAGEE. The Mortgagor will keep proper books of record and account in accordance with Section 12.05 of the Indenture. Section 5.17. ADVANCES BY MORTGAGEE. If the Mortgagor shall fail to perform any of its covenants in this Mortgage and such failure shall continue for 10 days following notice thereof given by the Mortgagee (or at any time, without notice, in case of emergency), the Mortgagee may (but is not obligated to), at any time and from time to time, take any action or make advances, to effect performance of any such covenant on behalf of the Mortgagor; and all moneys so used or advanced by the Mortgagee and all reasonable costs and 52 expenses incurred by Mortgagee in connection therewith, together with interest on all of the same at the rate of interest set forth in the Notes, shall be repaid by the Mortgagor upon demand and such advances shall be secured under this Mortgage prior to the Guaranty. Section 5.18. WAIVER OF STAY, EXTENSION OR USURY LAWS. The Mortgagor covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any usury, stay or extension law or any other law which would prohibit or forgive the Mortgagor from paying all or any portion of the obligations under the Guaranty as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may otherwise affect the covenants or the performance of this Mortgage; and the Mortgagor (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Mortgagee, but will suffer and permit the execution of every such power as though no such law had been enacted. Section 5.19. [Reserved] Section 5.20. EMINENT DOMAIN. The Mortgagor shall satisfy the provisions of Section 5.20 of the Note Mortgage upon obtaining knowledge of any Taking affecting the Trust Estate. Section 5.21. GROUND LEASES. (a) The Mortgagor covenants and agrees that it will do or cause to be done all things necessary to preserve and keep unimpaired the rights of the Mortgagor, as lessee under the Ground Lease, and to prevent any termination, surrender, cancellation, forfeiture or impairment thereof. The Mortgagor shall at all times fully perform and comply with all agreements, covenants, terms and conditions imposed upon or assumed by it as lessee under each of the Ground Leases (including without limitation the covenant to pay rent and all taxes, assessments and other charges mentioned therein) prior to the expiration of any notice and/or cure period provided in each such Ground Lease. Upon receipt by the Mortgagee from a Lessor of any written notice of default by the lessee thereunder, Mortgagee may rely thereon and take any action the Mortgagee deems necessary in its sole discretion to prevent or to cure any default by the Mortgagor in the performance of or compliance with any of the agreements, covenants, terms or conditions imposed upon or assumed by the Mortgagor as lessee under each of the Ground Leases, even though the existence of such default or the nature thereof be questioned or denied by 53 the Mortgagor or by any party on behalf of the Mortgagor, provided that if the Mortgagor has theretofore delivered to the Mortgagee the Officers' Certificate, Opinion of Counsel and a copy of the injunction, all as described in Section 3.01(g), the Mortgagee shall not take any such action unless and until the Mortgagor and/or the Mortgagee no longer has the benefit of any tolling or stay referred to in Section 3.01(g). Without limiting the generality of Section 3.09 hereof, the Mortgagor hereby expressly grants to the Mortgagee, and agrees that the Mortgagee shall have, the absolute and immediate right to enter in and upon the Premises or any part thereof to such extent and as often as the Mortgagee, in its sole discretion, deems necessary or desirable for the purpose permitted by the immediately preceding sentence, subject only to applicable Legal Requirements. Subject to the preceding and without limiting the Mortgagee's other remedies under this Mortgage, the Mortgagee may pay and expend such sums of money as the Mortgagee in its sole discretion deems necessary for any such purpose, and the Mortgagor hereby agrees to pay to the Mortgagee, immediately and without demand, all such sums so paid and expended by the Mortgagee, together with interest thereon from the date of each such payment at the highest rate of interest set forth in the Notes. All sums so paid and expended by the Mortgagee, and the interest thereon, shall be added to and be secured by the lien of this Mortgage. (b) The Mortgagor further covenants and agrees: (i) it will not surrender any leasehold estate and interest hereinabove described, nor terminate or cancel any Ground Lease, and that it will not without the express written consent of the Mortgagee modify, change, supplement, alter or amend such Ground Leases either orally or in writing and, as further security for the repayment of the indebtedness secured hereby and for the performance of the covenants herein and in such Ground Leases contained, the Mortgagor hereby assigns to the Mortgagee all of its rights, privileges and prerogatives as lessee under such Ground Leases to terminate, cancel, modify, change, supplement, alter or amend such Ground Leases, and any such termination, cancellation, modification, change, supplement, alteration or amendment of such Ground Leases without the prior written consent thereto by Mortgagee shall be void and of no force and effect. Unless (1) an Event of Default has occurred and is continuing and (2) either (A) there has been an acceleration of maturity of the Notes pursuant to Section 3.02 of the Note Mortgage or (B) the Mortgagee exercises its rights under Section 3.09 hereof, the Mortgagee shall have no right to terminate, cancel, modify, change, supplement, alter or amend the Ground Leases; 54 (ii) solely for the benefit of the Mortgagee, Trustee, the Noteholders and no other person, no release or forbearance of any of the Mortgagor's obligations under such Ground Leases, pursuant to such Ground Leases or otherwise, shall release the Mortgagor from any of its obligations under this Mortgage, including its obligations with respect to the payment of rent as provided for in such Ground Leases and the performance of all of the terms, provisions, covenants, conditions and agreements contained in such Ground Leases, to be kept, performed and complied with by the lessee therein; (iii) unless the Mortgagee shall otherwise expressly consent in writing, the fee title to the Leased Land, the Mortgagor's interest in the improvements on the Leased Land and the leasehold estates shall not merge by and shall always remain separate and distinct, notwithstanding the union of such estates either in the Lessor or in the lessee, or in a third party by purchase or otherwise; (iv) the Mortgagor shall promptly notify the Mortgagee in writing of any request made by the Mortgagor, as lessee under each of the Ground Leases, or any of the Lessors, for arbitration proceedings pursuant to the Ground Leases and of the institution of any arbitration proceedings, as well as all proceedings thereunder. In addition, the Mortgagor shall promptly deliver to the Mortgagee a copy of the determination of the arbitrators in each such arbitration proceeding. The Mortgagee shall have the right to participate in such arbitration proceedings in association with the Mortgagor or on its own behalf as an interested party in accordance with the terms of the Ground Leases; (v) the Mortgagor shall not consent to the subordination of any Ground Lease to any mortgage deed of trust or other lien of the fee interest of the Lessor; (vi) in the event (A) the Mortgagor exercises its option under any Ground Lease to purchase any portion of the Leased Land, the Mortgagor shall deliver a copy of its election to exercise such option within 5 days after the Mortgagor has delivered notice of such election to the Lessor or (B) the Mortgagor acquires fee simple title or any other estate, title or interest in the Leased Land, the Mortgagor shall promptly notify the Mortgagee of such acquisition and shall cause to be executed and recorded all such other and further assurances or other instruments in writing as may be required by law or, in the opinion of the Mortgagee, be reasonably 55 desirable to carry out the intent and meaning of clause (x) of Granting Clause Second; (vii) within 5 days after the Mortgagor's receipt of any notice of any motion, application or effort to reject the Ground Lease by any Lessor or any trustee arising from or in connection with any case, proceeding or other action commenced or pending by or against any Lessor under the Code or any comparable provision contained in any present or future federal, state, local, foreign or other statute, law, rule or regulation, the Mortgagor shall give notice thereof to the Mortgagee. The Mortgagor hereby (A) assigns to the Mortgagee any and all of the Mortgagor's rights as lessee under Section 365(h) of the Code or any comparable provision contained in any present or future federal, state, local, foreign or other statute, law, rule or regulation ("Comparable Provision") and (B) covenants that it shall not elect to treat any Ground Lease as terminated pursuant to Section 365(h) of the Code or any Comparable Provision without the prior written consent of the Mortgagee and (C) agrees that any such election by the Mortgagor without such consent shall be null and void; (viii) without limiting the generality of the foregoing, the Mortgagor hereby unconditionally assigns, transfers and sets over to the Mortgagee all of the Mortgagor's claims and rights to the payment of damages arising from any rejection by Lessor of any Ground lease under the Code or any Comparable Provision. The Mortgagee shall have the right to proceed in its own name or in the name of the Mortgagor in respect of any claim, suit, action or proceeding relating to the rejection of any Ground Lease, including, without limitation, the right to file and prosecute, in cooperation with the Mortgagor, any proofs of claim, complaints, motions, applications notices and other documents, in any case in respect of Lessor under the Code or any Comparable Provision. This assignment constitutes a present, irrevocable and unconditional assignment of the foregoing claims, rights and remedies, and shall continue in effect until all of the indebtedness and obligations secured by this Mortgage shall have been satisfied and discharged in full. Any amounts received by the Mortgagee in damages arising out of the rejection of any Ground Lease as aforesaid shall be applied first to all reasonable costs and expenses of the Mortgagee (including, without limitation, reasonable attorneys' fees) incurred in connection with the exercise of any of its rights or remedies under this Section 5.21, and thereafter as provided in Section 3.03 hereof; 56 (ix) if there shall be filed by or against the Mortgagor a petition under the Code or any Comparable Provision and the Mortgagor, as lessee under the Ground Leases, shall determine to reject any or all of the Ground Leases the Mortgagor shall give the Mortgagee not less than 10 days' prior notice of the date on which the Mortgagor shall apply to the Bankruptcy Court or other judicial body with appropriate jurisdiction for authority to reject the lease. The Mortgagee shall have the right, but not the obligation, to serve upon the Mortgagor within such 10 day period a notice stating that (a) the Mortgagee demands that the Mortgagor assume and assign such Ground Lease(s) to the Mortgagee pursuant to Section 365 of the Code or any Comparable Provision and (b) the Mortgagee covenants to cure or provide adequate assurance of prompt cure of all defaults and provide adequate assurance of future performance under such Ground Lease(s). If the Mortgagee serves upon the Mortgagor the notice described in the preceding sentence, the Mortgagor shall not seek to reject such Ground Lease(s) and shall comply with the demand provided for in clause (a) of the preceding sentence within 30 days after the notice shall have been given subject to the performance by the Mortgagee of the covenant provided for in clause (b) of the preceding sentence. Effective upon the entry of an order for relief in respect of the Mortgagor under Chapter 7 of the Code or Any Comparable Provision the Mortgagor hereby assigns and transfers to the Mortgagee a non-exclusive right to apply to the Bankruptcy Court or other judicial body with appropriate jurisdiction for an order extending the period during which the Ground Lease may be rejected or assumed; (x) the Mortgagor shall promptly give to the Mortgagee copies of (A) all notices of default or (B) any other communications or notices with respect to events which relate to the possible impairment of the security of this Mortgage, which it shall give or receive under the Ground Leases and shall promptly notify the Mortgagor of any default under any Ground Lease on the part of the Lessor or the Mortgagor; (xi) the Mortgagor shall enforce the obligations of the Lessor under each Ground Lease, to the end that the Mortgagor may enjoy all of the rights granted to it under the Ground Leases; and (xii) the Mortgagor shall notify the Mortgagee within 5 days after the transfer of a fee interest in the Leased Land or any portion thereof to or from an Affiliate. 57 (c) The Mortgagor hereby represents and warrants that all fixed net rent, taxes and assessments, payable under the Ground Leases have been paid to the extent they were due and payable to the date hereof and that the Mortgagor has not received notice of its failure to pay any other amounts payable under the Ground Leases which have not been cured. (d) If both the Lessor's and Lessee's estates under any of the Ground Leases or any portion thereof shall at any time become vested in one owner, this Mortgage and the lien created hereby shall nevertheless not be merged, extinguished, destroyed or terminated by application of the doctrine of merger and, in such event, Mortgagee shall continue to have all of the rights and privileges of the leasehold mortgagee. (e) The Mortgagor hereby acknowledges that if any Ground Lease shall be terminated prior to the natural expiration of its term due to default by the Lessee thereunder, and if pursuant to such Ground Lease, the Mortgagee or its designee shall acquire from the Lessor a new lease of the Leased land or any portion thereof, the Mortgagor shall have no right, title or interest in or to such lease or the leasehold estate created thereby, or the options therein contained. (f) Any leases for parking purposes hereafter entered into by the Mortgagor as lessee shall contain provisions permitting the assignment of the same to the Mortgagee and the Trustee and permitting assignment without the lessor's consent if this Mortgage is foreclosed. Section 5.22. SUPERIOR MORTGAGES. (a) The Mortgagor covenants and agrees that it will at all times fully perform and comply with all agreements, covenants, terms and conditions imposed upon or assumed by it as mortgagor under the Superior Mortgages prior to the expiration of any notice and/or cure period provided in each such Superior Mortgage. If a notice of default has been given by the holder of any Superior Mortgage and the maturity of the indebtedness secured by such Superior Mortgage has been accelerated as a result thereof, the Mortgagee may rely thereon and take any action the Mortgagee deems necessary in its sole discretion to prevent or to cure any default by the Mortgagor in the performance of or compliance with any of the agreements, covenants, terms or conditions imposed upon or assumed by the Mortgagor as mortgagor under each of the Superior Mortgages even though the existence of such default or the nature thereof may be questioned or denied by the Mortgagor or by any party on behalf of the Mortgagor provided that if the Mortgagor has heretofore taken such actions as 58 described in Section 3.01(h), the Mortgagee shall not take any such action unless and until the Mortgagor and/or the Mortgagee no longer has the benefit of any such tolling or stay referred to in Section 3.01(h). Without limiting the generality of Section 3.09 hereof, the Mortgagor hereby expressly grants to the Mortgagee, and agrees that upon such acceleration the Mortgagee shall have, the absolute and immediate right to enter in and upon the Premises or any part thereof to such extent and as often as the Mortgagee, in its sole discretion, deems necessary for the purpose permitted by the immediately preceding sentence, subject only to applicable Legal Requirements. The Mortgagee may (i) pay and expend such sums of money as the Mortgagee in its sole discretion deems necessary for any such purpose and (ii) in its sole discretion prepay any Superior Mortgage, and the Mortgagor hereby agrees to pay to the Mortgagee, immediately and without demand, all such sums referred to in (i) and (ii) above so paid and expended by the Mortgagee, together with interest thereon from the date of each such payment at the rate of interest set forth in the Note. All sums so paid and expended by the Mortgagee and the interest thereon shall be added to and be secured by the lien of this Mortgage. (b) The Mortgagor further covenants and agrees: (i) the Mortgagor shall not, without first satisfying the conditions set forth in Section 5.22(b)(i) of the Note Mortgage: (A) modify any of the terms, covenants or conditions of any Superior Mortgage, and without limiting the foregoing, the Mortgagor shall not, without satisfying such conditions, enter into or obtain any agreement whereby the holder of any Superior Mortgage waives, postpones, extends, reduces or modifies the payment of the installment of principal or interest or any other item or amount now required to be paid under the terms of any Superior Mortgage or modifies any other provision thereof, or (B) acquire or permit or suffer any Affiliate of the Mortgagor to acquire any Superior Mortgage or any interest therein. Notwithstanding anything in clause (A) to the contrary, the Mortgagor shall have the right to amend, supplement or modify any Superior Mortgage, if (x) the then outstanding principal balance of the indebtedness secured by such Superior Mortgage is not increased thereby, and (y) in the case of any After-Acquired Fee Mortgage, such amendment, supplement or agreement does not increase the property covered thereby; (ii) the Mortgagor shall timely pay and perform all of the obligations to be paid or performed by the Mortgagor under each Superior Mortgage, the note secured thereby and any other instrument evidencing or 59 securing the indebtedness owing to any holder of any Superior Mortgage; (iii) at any time, and from time to time, the Mortgagor shall upon request of the Mortgagee promptly use its reasonable efforts to obtain an estoppel certificate or letter addressed to the Mortgagee from holders of the Superior Mortgages, such certificate or letter to be in such form as the Mortgagee shall request; and (iv) the Mortgagor shall promptly give to the Mortgagee copies of (A) all notices of default or (B) any other notice or communication with respect to events which relate to the possible impairment of the security of this Mortgage, which it shall give or receive under the Superior Mortgages and shall promptly notify the Mortgagor of any default under any Superior Mortgages on the part of the Mortgagor. (c) The lien of this Mortgage in and to all or specified portions of the Trust Estate shall be subject and subordinate to any Existing Encumbrances, the liens created by the Senior Mortgage Documents and any mortgage, assignment, security agreement, financing statement or other lien securing any Working Capital Facility (the "Working Capital Facility Lien") encumbering Mortgagor's interest in the affected portions of the Trust Estate or any part thereof. The foregoing provisions of this Section 5.22(c) shall be self-operative with respect to the liens created by the Senior Mortgage Note Documents and any Working Capital Facility Lien, and no further instrument shall be required to give effect to such subordination. Mortgagee shall, however, from time to time, execute instruments in form and substance reasonably satisfactory to the holder of the Working Capital Facility Lien, confirming such subordination and agreeing to such other matters reasonably required by the holder of the liens created by the Senior Mortgage Documents and the holders of such liens which do not, in the aggregate, materially adversely reduce or impair the rights of Trustee under the Mortgage, and Mortgagor and others may rely conclusively thereon, provided that Mortgagee shall have no liability thereunder and all costs and expenses (including reasonable attorneys' fees) shall be paid by Mortgagor. (d) The lien of the Mortgage in and to all or specified portions of the Trust Estate shall be subject and subordinate to any Existing Encumbrances. The provisions of this Section 5.22(d) shall be self-operative, and no further instrument shall be required to give effect to such subordination. 60 Section 5.23. MORTGAGE PARI PASSU WITH NOTE MORTGAGE. Notwithstanding recordation of this Mortgage in the Atlantic County, New Jersey Clerk's Office after the recordation of the Note Mortgage, the lien of this Mortgage ranks PARI PASSU with, and not junior to, the lien created by the Note Mortgage. ARTICLE SIX MISCELLANEOUS Section 6.01. ACTION UNDER NOTE MORTGAGE. Mortgagee acknowledges that it is the assignee of the Note Mortgage, which Note Mortgage creates a lien upon the Trust Estate which is PARI PASSU with the lien of this Mortgage. Mortgagee further acknowledges and agrees that whenever it is provided in the Note Mortgage that the Mortgagor shall deliver any notice or document, or is required to make any payment thereunder, the delivery of such notice or document or the making of such payment pursuant to the terms of the Note Mortgage shall also constitute the delivery of such notice or document or the making of such payment in satisfaction of the terms, conditions and provisions of this Mortgage to the same extent as the same constitutes satisfaction of the terms, conditions and provisions of the Note Mortgage. Section 6.02. COUNTERPARTS. This instrument may be executed in any number of counterparts, each of which as executed shall be deemed to be an original, but all such counterparts shall constitute one and the same instrument. Section 6.03. MODIFICATION. This Mortgage is subject to "modification" within the meaning of N.J.S.A. 46:9-8.1 et seq., and this Mortgage shall have the benefit of the lien priority provisions of such statute. Such modification may include, without limitation, a change in the interest rate, maturity date or other terms and conditions of this Mortgage. THE MORTGAGOR DECLARES THAT THE MORTGAGOR HAS RECEIVED A TRUE COPY OF THIS MORTGAGE. IN WITNESS WHEREOF, the parties hereto have caused this Mortgage to be duly executed and attested, all as of the day and year first above written. 61 RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation By:_____________________________ Name: Title: (Vice) President ATTEST:_________________________ Name: Title: (Asst.) Secretary U.S. TRUST COMPANY OF CALIFORNIA, N.A. By:_____________________________ Name: Title: (Vice) President ATTEST:_________________________ Name: Title: (Asst.) Secretary 62 Exhibit G Intercreditor Agreement Terms Exhibit G Outline of Material Terms of the Intercreditor Agreement for Resorts International, Inc. Subject Credit Senior Secured Loan due July 15, 2002 (the Facilities "Senior Facility"); Senior Mortgage Notes due [March] 15, 2003 (the "Senior Mortgage Notes"); Junior Mortgage Notes due June 15, 2004 (the "Junior Mortgage Notes"); and Any other credit facilities which may be required by the Indentures for the Senior Facility, the Senior Mortgage Notes or the Junior Mortgage Notes to be included in the Intercreditor Agreement (the "Additional Facilities," and together with the Senior Facility, the Senior Mortgage Notes and the Junior Mortgage Notes, the "Credit Facilities") Creditor Parties Senior Facility Trustee; Senior Mortgage Note Trustee; Junior Mortgage Note Trustee; and any lenders (or trustees or agents on behalf of any lenders) which provide Additional Facilities (collectively, the "Trustees") Each Creditor Party, by its execution of the Intercreditor Agreement (whether directly or through its trustee or agent), acknowledges the making of the other Credit Facilities and the intended uses of proceeds thereof and waives any right to object to any contemporaneous or existing Credit Facility as having constituted a fraudulent conveyance. Classification of Initial Designations:Credit Facilities Class 1 Facilities: Senior Facility, all guarantees thereof and all intercompany obligations pledged as collateral therefor. Class 2 Facilities: Senior Mortgage Notes, all guarantees thereof and all intercompany obligations pledged as collateral therefor. Class 3 Facilities: Junior Mortgage Notes, all guarantees thereof and all intercompany obligations pledged as collateral therefor. Subsequent Designations - as indicated on the signature page(s) to be executed by the lenders (or any trustees or agents on behalf of any lenders) which provide Additional Facilities and consented to by all other parties at such time. Borrower Parties Resorts International Hotel Financing, Inc. ("RIHF"), as borrower under the Secured Facilities; Resorts International Hotel, Inc. ("RIH") as guarantor under the Secured Facilities and issuer of the secured intercompany notes to RIHF collaterally assigned to each respective Trustee; Resorts International, Inc. ("RII"), as guarantor under the Senior Facility and issuer of any intercompany notes which may be issued to RIH; and [GRI, Inc. ("GRI", and together with RIHF, RIH and RII, the "Borrower Parties") as guarantor under the Senior Facility and issuer of any intercompany notes which may be issued to RIH.]1* The Borrower Parties will execute the Intercreditor Agreement principally for the purposes of (i) acknowledging the relative rights of and relationships among the Secured Facilities established therein and (ii) agreeing not to take any actions, including making any payments, inconsistent therewith. - ------------------- * Subject to discussion on structure 2 Relative Priorities Liens: Notwithstanding the time of filing, recording or perfecting of the Security Documents (which will be defined to include the Mortgages and other liens and encumbrances): Each Lien created on behalf of a Class 1 Facility shall be (i) pari passu with any other Lien created on behalf of any other Class 1 Facility and (ii) senior to any Lien created on behalf of any Class 2 Facility or Class 3 Facility. Each Lien created on behalf of a Class 2 Facility shall be (i) pari passu with any other Lien created on behalf of any other Class 2 Facility, (ii) senior to any Lien created on behalf of any Class 3 Facility and (iii) junior to any Lien created on behalf of any Class 1 Facility. Each Lien created on behalf of a Class 3 Facility shall be (i) pari passu with any other Lien created on behalf of any other Class 3 Facility, and (ii) junior to any Lien created on behalf of any Class 1 Facility or Class 2 Facility. Subrogation To be waived by all guarantors. Mortgage Default Each Class 3 Creditor shall notify each Cure Provisions Class 2 Creditor and each Class 1 Creditor of any Default or Event of Default under its respective Class 3 Facility or the Mortgage or other Security Documents securing its facility, and promptly shall send to each Class 2 Creditor and each Class 1 Creditor copies of all notices of default and all notices relating to cure and/or grace periods under such Class 3 Facility or the Mortgage or other Security Documents securing its facility. Each Class 2 Creditor shall notify each Class 1 Creditor and each Class 3 Creditor of any Default or Event of 3 Default under its respective Class 2 Facility or the Mortgage or other Security Documents securing its facility, and promptly shall send to each Class 1 Creditor and each Class 3 Creditor copies of all notices of default and all notices relating to cure and/or grace periods under such Class 2 Facility or the Mortgage or other Security Documents securing its facility. Each Class 1 Creditor shall notify each Class 2 Creditor and each Class 3 Creditor of any Default or Event of Default under its respective Class 1 Facility or the Mortgage or other Security Documents securing its facility, and promptly shall send to each Class 2 Creditor and each Class 3 Creditor copies of all notices of default and all notices relating to cure and/or grace periods under such Class 1 Facility or the Mortgage or other Security Documents securing its facility. In addition, each Trustee will be obligated to notify all other Trustees prior to exercising any remedies with respect to any shared collateral. Application of Proceeds from dispositions of Proceeds collateral, insurance proceeds, condemnation awards and similar amounts will be applied in accordance with relative priorities of Liens. Representations and Each party to the Intercreditor Warranties Agreement will make appropriate representations, including those relating to its corporate existence, power and authority, as well as to the validity and enforceability of the Intercreditor Agreement. Amendments Intercreditor Agreement may not be amended except pursuant to a writing executed by all parties thereto. Amendments for the sole purpose of adding permitted parties may be executed by the Trustees without the consent of 4 the creditors for whom they serve if all conditions precedent to the incurrence of such indebtedness have been satisfied. Amendments to sections [ ] and [ ] may be executed by the Trustees only with the approval of 100% of the creditors for whom they serve and amendments to sections [ ] and [ ] may be executed by the Trustees only with the approval of 66 2/3% of the creditors for whom they serve. Third Party Each party to the Intercreditor Beneficiarie Agreement will acknowledge that such agreement is being entered into for the benefit of the lenders under the Credit Facilities and their respective successors and assigns, each of whom is a direct intended third-party beneficiary. Certain Specific performance; no waivers; Miscellaneous cooperation and further assurances. Provisions Governing Law New Yor SCHEDULE "2" SOFTWARE 1. Casino Customer Rating Software for Games and Slots. 2. Casino Tracking System for Field Agents, Junkets, Special Events and Commissioned Agents. 3. Casino Player Marketing System. 4. Casino/Hotel Computer Interface. 5. Property - Player Interface. 6. Casino Purges. 7. Complimentary Slips. 8. Enhancements developed by _____________________ relating to the Hotel System computer software leased from IBM. 9. Modifications and enhancements developed by _______________________ with respect to the Inventory/Purchasing System software licensed from ____________________________________ 10. MVP Card software. 11. D-Card software for consolidation of debit information concerning room, food and beverage charges. 12. Accounts Receivable System software. 13. Interactive Television Services software. 14. Maid Accounting System software. 15. Source Archive System software for monitoring each programmer's use of each software unit. 46 16. Income Journal System software. 17. Cross System Support software used for maintaining back-up files. 18. Guest Refund Check System software. 19. Check Reconciliation System software used in connection with payroll, guest refunds and accounts payable. 20. W-2 Program software. 21. W-2G/10425 Reporting System software used to generate W-2G forms for slot winnings. 22. Shipment Management Tools software. 23. Software Tool Version software used to monitor the version of software being used. 24. Worker Tracker System software used to monitor and prioritize problem reports with respect to software and hardware and requests for modifications. 25. Show Reservation & Ticket Box Office System software. 26. Payroll/Personnel System software. 27. Problem Management software used to monitor reports of system problems, person assigned to repair, length of time to respond, etc. 28. Employee Survey System software used to generate information based on responses from guest comment cards. 29. Gross Revenue Tip Reporting and Allocation System software. 30. Surveillance Tracking System software. (Currently under development). 31. Record Retention System software. (Currently under development). 47 32. Prospect Database software used for a direct mail marketing system for prospective customers. 33. Job Accounting System software used to identify each job and program running on the main system at any given time. 34. Security Audit System software used to monitor security codes assigned to employees. 48 EXHIBIT C 1994 STOCK OPTION PLAN [To Be Completed] EXHIBIT D RIHF SENIOR FACILITY TERM SHEET RESORTS INTERNATIONAL, INC. Revised Term Sheet for 11.0% Senior Secured Loan due 2002 Issuer Resorts International Hotel Financing, Inc. ("RIHF" or "Issuer"). Guarantors Resorts International Hotel, Inc. ("RIH") and, if any proceeds are loaned by RIH to RII, Resorts International, Inc. ("RII"). Issue Senior Secured Loan due 2002. Principal Up to $20 million. Availability Available in one borrowing during the twelve months following the effective date of the Plan of Reorganization of RII and GGRI, Inc. Maturity July 15, 2002 (approx. 8 years). Interest 11.0% payable semi-annually in cash on January 15th and July 15th on the basis of a 360-day year consisting of twelve 30-day months. Interest will accrue on the principal amount advanced from the date of drawdown. Security - A secured promissory note from RIH in an aggregate principal amount of $20 million (the "RIH Note") payable in amounts and at times necessary to pay the principal of and interest on the RIHF Senior Facility Note issued pursuant to the Senior Facility Indenture (the "Indenture"), with a collateral assignment of the mortgage, assignment of leases and rents and assignment of operating assets securing such note. The mortgage securing the RIH Note will be a first priority lien on all property and improvements of Merv Griffin's Resorts Casino Hotel in Atlantic City, New Jersey. - The guarantee of RIH will be secured by a first mortgage, an assignment of leases and rents and an assignment of operating assets (in form and substance similar to the mortgage, assignment of leases and rents and assignment of assets securing the 11% Senior Mortgage Notes due 2003 (the "Senior Mortgage Notes")) which mortgage shall be PARI PASSU with the liens created by the mortgage documents securing the RIH Note. - If any proceeds are loaned by RIH to RII, the collateral securing RIH's guarantee will include the promissory note by RII evidencing such loan. Rank Senior as to payment of all principal, interest, premiums, fees and expenses to all debt, including Senior Mortgage Notes and Junior Mortgage Notes. Mandatory Redemption Upon the merger or consolidation of RIH or GGRI, Inc. or a sale of assets by RIH; provided that such a merger or consolidation shall be permitted without mandatory redemption only if (i) all tests applicable to the Senior Mortgage Notes are satisfied, and (ii) the surviving entity assumes all obligations of its predecessor under the Indenture. Optional Redemption At any time during a period ending on the third anniversary of the funding date at 103% of par. At any time thereafter at par. Open Market Purchases Authorized, in accordance with the Indenture (on terms similar to those set forth in the indenture for the Senior Mortgage Notes). Indenture Modifications Requirement of two-thirds of outstanding principal amount (on terms similar to those set forth in the indenture for the Senior Mortgage Notes). Use of Proceeds Advances will be made to RIHF and must be loaned by RIHF to RIH. No further restrictions. Conditions to Advances Execution of an Indenture reasonably satisfactory to Purchaser based generally upon the indenture for the Senior Mortgage Notes (except as described herein or as agreed); no defaults or Events of Default under and as defined in the Indenture and the indenture for the Senior Mortgage Notes or Junior Mortgage Notes; and effectiveness of a registration statement covering Purchaser's public resale of the Notes by Purchaser (see "Registration", below). Indenture Covenants Payments of principal and interest; corporate existence; quarterly and annual financial reports; compliance certificates and notice of defaults; limitation on dividends and restricted payments. In addition, RII shall be limited as to debt incurrence so that it may (i) issue the intercompany notes contemplated hereby, and (ii) incur additional indebtedness to the extent that RII's Pro Forma Consolidated Interest Coverage Ratio for the four full fiscal quarters next preceding the date such additional indebtedness is proposed to be incurred would have been less than or equal to ____, determined on a pro forma basis (including pro forma for the intended application of the net proceeds of such indebtedness) as if such additional indebtedness had been outstanding at the beginning of such four quarter period. Cross-Defaults The Senior Facility loan will contain cross defaults to the Senior Mortgage Notes and the Junior Mortgage Notes and cross-acceleration provisions similar to those set forth in the indenture for the Senior Mortgage Notes. Registration As a condition to the advance of funds hereunder, Issuer, RII, RIH and GGRI, Inc. shall take such actions as may be necessary to ensure that all notes issued to Purchaser in respect of the Senior Facility loan may be re-sold publicly by Purchaser, without restriction under the Securities Act of 1933, as amended, immediately following the issuance thereof, provided such re-sale occurs within 180 days thereafter. EX-3 2 EXHIBIT 3.08 BY-LAWS OF RESORTS INTERNATIONAL HOTEL FINANCING, INC. (a Delaware corporation) (Adopted September 30, 1993) ARTICLE I OFFICES SECTION 1. REGISTERED OFFICE. The registered office of RESORTS INTERNATIONAL FINANCING, INC. (the "CORPORATION") in the State of Delaware shall be at 1013 Centre Road, City of Wilmington, County of New Castle, and the name of the registered agent in charge thereof is Corporation Service Company. SECTION 2. OTHER OFFICES. The Corporation also may have an office or offices at any other place or places within or without the State of Delaware. ARTICLE II MEETINGS OF STOCKHOLDERS; STOCKHOLDERS' CONSENT IN LIEU OF MEETING SECTION 1. ANNUAL MEETINGS. The annual meeting of the stockholders for the election of directors, and for the transaction of such other business as may properly come before the meeting, shall be held at such place, date and hour as shall be fixed by the Board of Directors (the "BOARD") and designated in the notice or waiver of notice thereof; except that no annual meeting need be held if all actions, including the election of directors, required by the General Corporation Law of Delaware to be taken at a stockholders' annual meeting are taken by written consent in lieu of meeting pursuant to SECTION 5 of this Article. SECTION 2. SPECIAL MEETINGS. Special meetings of the stockholders may be called at any time by the Board, the Chairman of the Board or the President of the Corporation or a stockholder or stockholders holding of record at least a majority of the shares of outstanding stock of the Corporation, such meetings to be held at such place, date and hour as shall be designated in the notice or waiver of notice thereof. SECTION 3. PLACE OF MEETINGS. All meetings of the stockholders shall be held at such places, within or without the State of Delaware, as may from time to time be designated by the person or persons calling the respective meeting and specified in the respective notices or waivers of notice thereof. SECTION 4. NOTICE OF MEETINGS. Unless waived in writing by the stockholder of record or unless such stockholder shall be represented at the meeting in person or by proxy, written notice of each meeting of stockholders shall be given not less than 10 nor more than 60 days before the date of such meeting to each stockholder of record entitled to vote at such meeting. Such notice shall state the place, date and hour of the meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called. SECTION 5. STOCKHOLDERS' CONSENT IN LIEU OF MEETINGS. Any action by stockholders may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Every written consent shall bear the date of the signature of each stockholder who signs the consent and such writing or writings shall be filed with the minutes of stockholder meetings within 60 days of the earliest dated consent. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. ARTICLE III BOARD OF DIRECTORS SECTION 1. GENERAL POWERS. The business and affairs of the Corporation shall be managed by or under the direction of the Board, which may exercise all such powers of the Corporation and do all such lawful acts and things as are not by law or by the Certificate of Incorporation directed or required to be exercised or done by the stockholders. SECTION 2. NUMBER AND TERM OF HOLDING OFFICE. The number of directors which shall constitute the whole Board shall be two or such other number as from time to time shall be fixed by resolution of the Board. Directors need not be stockholders. Each director shall hold office until the annual meeting next after his election and until his successor 2 shall be elected and shall qualify or until his earlier death or resignation or removal in the manner hereinafter provided. SECTION 3. CHAIRMAN OF THE BOARD AND ORGANIZATION OF BUSINESS. The Board may elect from among its members a Chairman of the Board who shall be an officer of the Board. The Chairman of the Board shall preside at all meetings of the Board at which he shall be present and shall perform such other duties as may be assigned to him from time to time by the Board. In the absence of the Chairman of the Board, the President, if a director, or, in his absence, a chairman chosen by a majority of the directors present, shall act as Chairman. The Secretary of the Corporation or, in his absence, any person (who shall be an Assistant Secretary if an Assistant Secretary shall be present) whom the Chairman shall appoint, shall act as secretary of such meeting and keep the minutes thereof. SECTION 4. RESIGNATIONS. Any director may resign at any time by giving written notice of his resignation to the Board, the President or the Secretary of the Corporation. Any such resignation shall take effect at the time specified therein or, if such time is not specified therein, immediately upon its receipt. SECTION 5. REMOVAL OF DIRECTORS. Any director or the entire Board may be removed, either with or without cause, at any time by the holders of a majority of the shares then entitled to vote at an election of directors or by written consent of the stockholders pursuant to SECTION 5 of ARTICLE II hereof. SECTION 6. VACANCIES. In case of any vacancy on the Board or in case of any newly created directorship, a director to fill the vacancy or the newly created directorship for the unexpired portion of the term being filled may be elected by a majority of the directors of the Corporation then in office, even though the directors then in office may constitute less than a quorum, or by a sole remaining director. SECTION 7. PLACE OF MEETING. The Board may hold its meetings at such place or places within or without the State of Delaware as the Board may from time to time by resolution determine or as shall be designated in the notices or waivers of notice thereof. SECTION 8. MEETINGS. (A) ANNUAL MEETINGS. As soon as practicable after each annual election of directors, the Board shall meet for the purpose of organization and the transaction of other business, unless it shall have transacted 3 all such business by written consent pursuant to SECTION 11 of this Article. (B) OTHER MEETINGS. Other meetings of the Board shall be held at such times and places as the Board shall from time to time determine or upon call by the Chairman of the Board, the President or any two or more of the directors. SECTION 9. NOTICE OF MEETINGS. The Secretary of the Corporation shall give notice to each director of each meeting, including the time and place of such meeting. Notice of each such meeting shall be mailed to each director addressed to him at his residence or usual place of business, at least two days before the day on which such meeting is to be held, or shall be sent to him by telegraph, cable, wireless or other form of recorded communication or be delivered personally or by telephone not later than the day before the day on which such meeting is to be held. Notice of any meeting shall not be required to be given to any director who shall attend such meeting. A written waiver of notice, signed by the person entitled thereto, whether before or after the time stated therein, shall be equivalent to adequate notice. SECTION 10. QUORUM AND MANNER OF ACTING. Except as provided in SECTION 6 of this Article, a majority of the total number of directors shall be necessary at any meeting of the Board in order to constitute a quorum for the transaction of business at such meeting, and the vote of a majority of those directors present at any such meeting at which a quorum shall be present shall be necessary for the passage of any resolution or act of the Board, except as otherwise expressly required by law or the Certificate of Incorporation or these By-laws. In the absence of a quorum for any such meeting, a majority of the directors present thereat may adjourn such meeting from time to time until a quorum shall be present. Notice of any adjourned meeting need not be given. SECTION 11. UNANIMOUS DIRECTOR CONSENT IN LIEU OF MEETING. Any action by the Board or a committee appointed pursuant to SECTION 1 of ARTICLE IV hereof may be taken without a meeting if all members of the Board or such committee, as the case may be, consent to such action in writing and the writing or writings are filed with the minutes of the proceedings of the Board or such committee. SECTION 12. ACTION BY MEANS OF CONFERENCE TELEPHONE OR SIMILAR COMMUNICATIONS EQUIPMENT. Any one or more members of the Board, or of any committee designated by the Board, may participate in a meeting of the Board or any such committee, as the case may be, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and 4 participation in a meeting by such means shall constitute presence in person at such meeting. SECTION 13. REMUNERATION. No director shall be entitled to receive from the Corporation any amounts or fees for attendance at meetings of the Board or of any committee, or both, unless the Board shall otherwise determine. The Board may provide that the Corporation shall reimburse each director or member of a committee for any expenses incurred by him on account of his attendance at any such meeting. Nothing contained in this Section shall be construed to preclude any director from serving the Corporation in any other capacity and receiving remuneration therefor. ARTICLE IV COMMITTEES SECTION 1. COMMITTEES. The Board may, by resolution passed by a majority of the whole Board, designate one or more committees, each committee to consist of one or more directors of the Corporation. The Board may designate one or more directors as alternate members of any committee who may replace an absent or disqualified member at any meeting of such committee. In the absence or disqualification of any member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board constituting such committee, shall have and may exercise all the delegable powers and authority of the Board in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers that may require it. Notices for meetings of a committee shall be given in the manner required by SECTION 9 of ARTICLE III hereof and may be waived in writing or dispensed with as therein provided. Unless otherwise provided in the resolution of the Board constituting any such committee, such committee shall adopt its own resolutions of procedure and shall keep a record of its proceedings which shall be reported upon to the Board and filed with the minutes of the proceedings of the Board or such committee. 5 ARTICLE V OFFICERS SECTION 1. NUMBER. The officers of the Corporation shall be a President, a Secretary and a Treasurer and may include a Chairman of the Board, one or more Vice Presidents, one or more Assistant Secretaries and one or more Assistant Treasurers. Each such officer shall be elected or appointed by the Board and shall hold office until his successor shall be elected or appointed and qualified or until his earlier death or resignation or removal in the manner hereinafter provided. Any number of offices may be held by the same person. The Board may elect or appoint such other officers of the Corporation as it shall deem necessary who shall have such authority and shall perform such duties as the Board may prescribe. All officers elected or appointed by the Board shall be subject to removal at any time by the Board with or without cause. Any officer may resign at any time by giving written notice to the Board or the President or the Secretary of the Corporation, and such resignation shall take effect at the time specified therein or, if such time is not specified therein, immediately upon its receipt. SECTION 2. THE PRESIDENT. The President of the Corporation, subject to the direction of the Board, shall be the chief executive officer of the Corporation, shall have general charge of the business and affairs of the Corporation, shall have the direction of all other officers, agents and employees and may assign such duties to the other officers of the Corporation as he shall deem appropriate. SECTION 3. SECRETARY. The Secretary of the Corporation shall keep the records of all meetings of stockholders and of the Board. He shall affix the seal of the Corporation to all deeds, contracts, bonds or other instruments requiring the corporate seal when the same shall have been signed on behalf of the Corporation by a duly authorized officer and shall be the custodian of all contracts, deeds, documents and all other indicia of title to properties owned by the Corporation and of its other corporate records. SECTION 4. ASSISTANT SECRETARIES. The Assistant Secretaries, if any, in order of their seniority or in any other order determined by the Board shall, in the absence or 6 disability of the Secretary, perform the duties and exercise the powers of the Secretary and shall perform such other duties as the Board or the Secretary shall prescribe. SECTION 5. THE TREASURER. The Treasurer shall have the care and custody of the corporate funds and other valuable effects, including securities, and shall keep full and accurate accounts of the receipts and disbursements in books belonging to the Corporation, and shall deposit all moneys and other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated by the Board. The Treasurer shall disburse the funds of the Corporation as may be ordered by the Board, taking proper vouchers for such disbursements, and shall render to the President and directors, at the meetings of the Board, or whenever they may require it, an account of all his transactions as Treasurer and of the financial condition of the Corporation; and, in general, the Treasurer shall perform all the duties incident to the office of Treasurer and such other duties as from time to time may be assigned to him by the President or the Board. SECTION 6. ASSISTANT TREASURERS. The Assistant Treasurers, if any, in the order of their seniority or in any other order determined by the Board, shall in the absence or disability of the Treasurer perform the duties and exercise the powers of the Treasurer and shall perform such other duties as the Board or the Treasurer may prescribe. ARTICLE VI CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC. SECTION 1. EXECUTION OF DOCUMENTS. The Board shall designate the officers, employees and agents of the Corporation who shall have power to execute and deliver deeds, contracts, mortgages, bonds, debentures, checks, drafts and other orders for the payment of money and other documents for and in the name of the Corporation and may authorize such officers, employees and agents to delegate such power (including authority to redelegate) by written instrument to other officers, employees or agents of the Corporation. SECTION 2. DEPOSITS. All funds of the Corporation not otherwise employed shall be deposited from time to time to the credit of the Corporation or otherwise as the Board, the Treasurer or any other officer of the Corporation to whom power in that respect shall have been delegated by the Board shall select. 7 SECTION 3. PROXIES IN RESPECT OF STOCK OR OTHER SECURITIES OF OTHER CORPORATIONS. The President or any officer of the Corporation designated by the Board shall have authority from time to time to appoint an agent or agents of the Corporation to exercise in the name and on behalf of the Corporation the powers and rights which the Corporation may have as the holder of stock or other securities or interests in any other corporation or business entity and to vote or consent in respect of such stock, securities or interests; the President or such designated officer may instruct the person or persons so appointed as to the manner of exercising such powers and rights and the manner of such voting or consenting; and the President or such designated officer may execute or cause to be executed in the name and on behalf of the Corporation and under its corporate seal, or otherwise, such written proxies, powers of attorney or other instruments as he may deem necessary or proper in order that the Corporation may exercise its said powers and rights. ARTICLE VII SHARES AND THEIR TRANSFER SECTION 1. CERTIFICATES FOR STOCK. Every owner of stock of the Corporation shall be entitled to have a certificate or certificates, to be in such form as the Board shall prescribe, certifying the number and class of shares of the stock of the Corporation owned by him. The certificates representing shares of such stock shall be numbered in the order in which they shall be issued and shall be signed in the name of the Corporation by the President or a Vice President, and by the Secretary or an Assistant Secretary or by the Treasurer or an Assistant Treasurer. Any of or all of the signatures on the certificates may be a facsimile. In case any officer, transfer agent or registrar who has signed, or whose facsimile signature has been placed upon, any such certificate, shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, such certificate may nevertheless be issued by the Corporation with the same effect as though the person who signed such certificate, or whose facsimile signature shall have been placed thereupon, were such officer, transfer agent or registrar at the date of issue. A record shall be kept of the respective names of the persons, firms or corporations owning the stock represented by such certificates, the number and class of shares represented by such certificates, respectively, and the respective dates thereof, and in case of cancellation, the respective dates of cancellation. Every certificate surrendered to the Corporation for exchange or transfer shall be cancelled, and no new certificate or certificates shall be issued in exchange for any existing 8 certificate until such existing certificate shall have been so cancelled, except in cases provided for in SECTION 4 of this Article. SECTION 2. TRANSFERS OF STOCK. Transfers of shares of stock of the Corporation shall be made only on the books of the Corporation by the registered holder thereof, or by his attorney thereunto authorized by power of attorney duly executed and filed with the Secretary, or with a transfer agent appointed as provided in SECTION 3 of this Article, and upon surrender of the certificate or certificates for such shares properly endorsed and the payment of all taxes thereon. The person in whose name shares of stock stand on the books of the Corporation shall be deemed the owner thereof for all purposes as regards the Corporation. Whenever any transfer of shares shall be made for collateral security, and not absolutely, such fact shall be so expressed in the entry of transfer if, when the certificate or certificates shall be presented to the Corporation for transfer, both the transferor and the transferee request the Corporation to do so. SECTION 3. REGULATIONS. The Board may make such rules and regulations as it may deem expedient, not inconsistent with these By-laws, concerning the issue, transfer and registration of certificates for shares of the stock of the Corporation. It may appoint, or authorize any officer or officers to appoint, one or more transfer clerks or one or more transfer agents and one or more registrars, and may require all certificates for stock to bear the signature or signatures of any of them. SECTION 4. LOST, STOLEN, DESTROYED, AND MUTILATED CERTIFICATES. In any case of loss, theft, destruction or mutilation of any certificate of stock, another may be issued in its place upon proof of such loss, theft, destruction or mutilation and upon the giving of a bond of indemnity to the Corporation in such form and in such sum as the Board may direct; PROVIDED, HOWEVER, that a new certificate may be issued without requiring any bond when, in the judgment of the Board, it is proper so to do. ARTICLE VIII BOOKS AND RECORDS, SEAL, FISCAL YEAR SECTION 1. BOOKS AND RECORDS. The books and records of the Corporation may be kept at such places within or without the State of Delaware as the Board may from time to time determine. 9 SECTION 2. SEAL. The Board shall provide a corporate seal, which shall be in the form of a circle and shall bear the full name of the Corporation and the words and figures "Corporate Seal 1993 Delaware". SECTION 3. FISCAL YEAR. The fiscal year of the Corporation shall end on the 31st day of December in each year, unless changed by resolution of the Board. ARTICLE IX INDEMNIFICATION SECTION 1. ACTION, ETC., OTHER THAN BY OR IN THE RIGHT OF THE CORPORATION. The Corporation shall indemnify any person who shall be or shall have been a party or shall be threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that he shall be or shall have been a director, officer, employee or agent of the Corporation, or shall be or shall have been serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he shall have acted in good faith and in a manner he reasonably shall have believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct shall have been unlawful. The termination of any action, suit or proceedings by judgment, order, settlement, conviction or upon a plea of NOLO CONTENDERE or its equivalent, shall not, of itself, create a presumption that the person shall not have acted in good faith and in a manner which he reasonably shall have believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, that he shall have had reasonable cause to believe that his conduct shall have been unlawful. SECTION 2. ACTIONS, ETC., BY OR IN THE RIGHT OF THE CORPORATION. The Corporation shall indemnify any person who shall be or shall have been a party or shall be threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he shall be or shall have been a director, officer, employee or agent of the Corporation, or shall be or shall have been serving at the 10 request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he shall have acted in good faith and in a manner he reasonably shall have believed to be in or not opposed to the best interests of the Corporation, except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person shall be fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper. SECTION 3. DETERMINATION OF RIGHT OF INDEMNIFICATION. Any indemnification under SECTION 1 or 2 of this Article (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent shall be proper in the circumstances because he shall have met the applicable standard of conduct set forth in SECTION 1 or 2 of this Article. Such determination shall be made (i) by the Board by a majority vote of a quorum consisting of directors who shall not have been parties to such action, suit or proceeding, (ii) if such a quorum shall not be obtainable, or, even if obtainable, if a quorum of disinterested directors shall so direct, by independent legal counsel in a written opinion, or (iii) by the stockholders. SECTION 4. RIGHT TO INDEMNIFICATION. Notwithstanding the other provisions of this Article, to the extent that a director, officer, employee or agent of the Corporation shall be successful on the merits or otherwise in defense of any action, suit or proceeding referred to in SECTION 1 or 2 of this Article, or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith. SECTION 5. PREPAID EXPENSES. Expenses (including attorneys' fees) incurred by an officer or director in defending any civil, criminal, administrative or investigative action, suit or proceeding may be paid by the Corporation in advance of the final disposition of such action, suit or proceeding as authorized by the Board in the specific case upon receipt of an undertaking by or on behalf of such officer or director to repay such amount if it shall ultimately be determined that he shall not be entitled to be indemnified by 11 the Corporation as authorized in this Article. Such expenses (including attorneys' fees) incurred by other employees and agents may be so paid upon such terms and conditions, if any, as the Board deems appropriate. SECTION 6. OTHER RIGHTS AND REMEDIES. The indemnification provided by this Article shall not be deemed exclusive of any other rights to which a person seeking indemnification may be entitled by law or under any agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. SECTION 7. INSURANCE. Upon resolution passed by the Board, the Corporation may purchase and maintain insurance on behalf of any person who shall be or shall have been a director, officer, employee or agent of the Corporation, or shall be or shall have been serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such liability under the provisions of this Article. ARTICLE X WAIVER OF NOTICE Whenever any notice is required to be given by these By-laws or the Certificate of Incorporation of the Corporation or the laws of the State of Delaware, the person entitled thereto may, in person or by attorney thereunto authorized, in writing or by telegraph, cable or other form of recorded communication, waive such notice, whether before or after the meeting or other matter in respect of which such notice is given, and in such event such notice need not be given to such person and such waiver shall be deemed equivalent to such notice. 12 ARTICLE XI AMENDMENTS These By-laws may be altered or repealed by the vote of the Board, subject to the power of the stockholders of the Corporation to alter or repeal any By-law made by the Board. 13 EX-3 3 EXHIBIT 3.09 P.I. RESORTS LIMITED AMENDED AND RESTATED ARTICLES OF ASSOCIATION (ADOPTED ON 15TH, DECEMBER 1993) PRELIMINARY AND CONSTRUCTION 1. The Articles contained in the First Schedule to the Companies Act shall not apply to the Company. 2. (1) In these Articles, except where the subject or context otherwise requires: "Articles" means the articles of association of the Company on the date hereof as the same may be amended from time to time; the "board" means the directors or any of them acting as the board of directors of the Company; "Closing Date" shall mean the date the Company acquires the Paradise Island assets of Resorts International Inc.; "Commonwealth" means the Commonwealth of The Bahamas; "Companies Act" means the Companies Act 1992 including any modification or re-enactment thereof for the time being in force; "Company" means P. I. Resorts Limited, the company to which these Articles apply; "director" means a director of the Company; "dollar" or "$" means the lawful currency of the United States of America; "holder" means, in relation to any shares, the member whose name is entered in the register of members as the holder of such shares; "Ordinary Shares" means the Ordinary Shares of $0.01 each of the Company having the rights set forth in these Articles; "Preference Shares" means the Preference Shares of $0.01 each of the Company having the rights set forth in these Articles; "secretary" means the secretary of the Company and includes a joint, assistant, deputy or temporary secretary and any other person appointed to perform the duties of the secretary; and "shares" means shares in the Company including the Ordinary Shares and the Preference Shares. (2) Save as aforesaid or as otherwise defined herein any words or expressions defined in the Companies Act (but excluding any modification thereof not in force at the date of adoption of these Articles) shall, if not inconsistent with the subject or the context, bear the same meaning in these Articles. (3) For the purposes of these Articles, references to writing include references to any visible substitute for writing and to anything partly in one form and partly in another form; words denoting the singular number include the plural number and vice versa; words denoting the masculine gender include the feminine gender and vice versa; and references to persons include references to bodies corporate. 3. In addition to the registered office of the Company in the Commonwealth, which shall be at such place as the directors shall from time to time appoint, the Company may have an office for the transaction of business at any other place, and meetings of the Company or of the directors may be held either within or without the Commonwealth at such place as the directors may determine. SHARES 4. The authorized share capital of the Company at the date of adoption of these Articles is $350,000 divided into 35,000,000 Ordinary Shares of $0.01 each and 10,000,000 Preference Shares of $0.01 each, having the rights set forth in these Articles. The Preference Shares may be issued by the Directors from time to time in one or more Series having such rights as the board may by resolution determine. All the shares of the Company shall be in registered form, shall be fully paid for at the time of issuance and shall be nonassessable. 2 5. Without prejudice to any special rights previously conferred on the holders of existing shares in the Company, any shares in the Company may be issued with such preferred, deferred or other special rights or such restrictions, whether in regard to dividend, voting, return of share capital or otherwise, as the board may from time to time by resolution determine. Preference Shares may be voting, non-voting or voting only for specific purposes or in specific circumstances; PROVIDED, HOWEVER that the Company shall be prohibited from issuing any non-voting Preference Shares which are not entitled to at least one vote per share in the specific case where an event of default in the payment of dividends has occurred with respect to such shares. 6. Where at any time the share capital is divided into different classes or series of shares, the rights attached to any class or series (unless otherwise provided by the terms of issue of the shares of the class or series) may only be varied or abrogated with the sanction of a resolution of the board and either (i) the consent in writing of the holders of a majority in nominal value of the issued shares of the class or series or (ii) the sanction of a resolution of members holding shares of that class or series passed at a separate general meeting of the holders of the shares of that class or series. CERTIFICATES 7. Every person whose name is entered as a member in the register of members shall, without payment, be entitled to a certificate under the common seal of the Company specifying the share or shares held by him and the amount paid up thereon, provided that in respect of a share or shares held jointly by several persons the Company shall not be bound to issue more than one certificate, and delivery of a certificate for a share to one of several joint holders shall be sufficient delivery to all. 8. A share certificate defaced, lost or destroyed may be renewed or replaced on payment of such fee, if any, as may be prescribed, and on such terms, if any, as to evidence and indemnity as the directors think fit. 3 PURCHASE OF SHARES 9. Subject to and in accordance with the provisions of the Companies Act and without prejudice to any relevant special rights attached to any class or series of shares, the Company may, with the agreement of the holders of the relevant shares, purchase any of its own shares of any class or series (including redeemable shares) at any price (whether at par or above or below par), and any shares to be so purchased may be selected by the Company in any manner whatsoever. TRANSFER AND TRANSMISSION OF SHARES 10. Subject to Article 11, the instrument of transfer of any share in the Company shall be executed by the transferor (or its duly authorized agent), and the transferor shall be deemed to remain the holder of the share until the name of the transferee is entered in the register of members in respect thereof. 11. Shares in the Company shall be transferred in any usual or common form. The transfer agent for the Company or the Company's board may determine if a form of transfer is usual or common in the case of any question or dispute concerning a transfer. 12. The board may: (a) decline to register a transfer of shares unless the instrument of transfer is accompanied by the certificate or certificates of the shares to which it relates, and such other evidence as the board may reasonably require to show the right of the transferor to make the transfer; and (b) suspend the registration of transfers during the fourteen days immediately preceding the ordinary general meeting in each year. 13. The executors or administrators of a deceased sole holder of a share shall be the only persons recognized by the Company as having any title to the share. In the case of a share registered in the names of two or more holders, the survivors or the executors or administrators of 4 the deceased survivor shall be the only persons recognized by the Company as having any title to the share. 14. Any person becoming entitled to a share in consequence of the death or bankruptcy of a member shall, upon such evidence being produced as may from time to time be required by the board, have the right, either to be registered as a member in respect of the share or, instead of being registered himself, to make such transfer of the share as the deceased or bankrupt person could have made; but the directors shall, in either case, have the same right to decline or suspend registration as they would have had in the case of a transfer of the share by the deceased or bankrupt person before the death or bankruptcy. 15. A person becoming entitled to a share by reason of the death or bankruptcy of the holder shall be entitled to the same dividends and other advantages to which he would be entitled if he were the registered holder of the share, except that he shall not, before being registered as a member in respect of the share, be entitled in respect of it to exercise any right conferred by membership in relation to meetings of the Company. ALTERATION OF CAPITAL 16. The Company may, by a resolution of the holders of Ordinary Shares, increase the share capital by such sum to be divided into shares of such amount as the resolution shall prescribe. 17. The Company may, by resolution of the board (and the holders of the Ordinary Shares, if and to the extent required by the Companies Act): (a) consolidate and divide its share capital into shares of larger amount than its existing shares; (b) subdivide its existing shares, or any of them or divide the whole or any part of its share capital into shares of smaller amount than is fixed by the Articles; or (c) reduce its share capital in any manner and with and subject to any incident authorized and consent required by law. 5 GENERAL MEETINGS 18. The statutory general meeting of the Company shall be held within the period required by Section 70 of the Companies Act. 19. (1) A general meeting shall be held once in every year at such time (not being more than fifteen months after the holding of the last preceding general meeting) and at such place as may be prescribed by the board. (2) In default of a general meeting so held, a general meeting shall be held in the month next following and may be convened by any two or more members holding Ordinary Shares carrying at least one-tenth of the votes of all members entitled to vote at general meetings, in the same manner as nearly as possible as that in which meetings are to be convened by the directors and any such meetings shall be held at such place as the members convening the meeting may designate in the notice thereof. 20. The above-mentioned general meetings shall be called annual general meetings; all other general meetings shall be called extraordinary. 21. The board may, whenever it thinks fit, convene an extraordinary general meeting, and extraordinary general meetings shall also be convened by the board on the requisition, in accordance with Section 71 of the Companies Act, of members of the Company holding not less than one-tenth of the paid-up capital of the Company, or, in default, may be convened by such requisitionists, as provided by Section 71(3) of the Companies Act. PROCEEDINGS AT GENERAL MEETINGS 22. (1) Thirty-days' notice at the least (exclusive of the day on which the notice is served or deemed to be served, but inclusive of the day for which notice is given) specifying the place, the day and the hour of meeting and, in case of special business, the general nature of that business, shall be given in the manner hereinafter mentioned, or in such other manner, if any, as may be prescribed by the Company in general meeting, to such persons as are under the Articles entitled to receive such notices from the Company. 6 (2) Every notice convening a general meeting shall include a statement having reasonable prominence that a member entitled to attend and vote is entitled to appoint a proxy to attend and vote instead of him, and that a proxy need not also be a member. 23. All business shall be deemed special that is transacted at an extraordinary meeting, as shall all that is transacted at an ordinary meeting with the exception of (i) sanctioning a dividend, (ii) the consideration of the accounts, balance-sheets and the ordinary report of the directors and auditors, (iii) election of directors and other officers in the place of those retiring by rotation and (iv) the fixing of the remuneration of the auditors. 24. No business shall be transacted by any general meeting unless a quorum of members is present at the time when the meeting proceeds to business; save as herein otherwise provided, members present in person or by proxy holding at least a majority of the then outstanding of Ordinary Shares shall be a quorum. 25. Where within half an hour from the time appointed for the meeting a quorum is not present, the meeting, if convened upon the requisition of members, shall be dissolved; in any other case it shall stand adjourned to the same day in the next week, at the same time and place and where at the adjourned meeting a quorum is not present within half an hour from the time appointed for the meeting, the members present shall be a quorum. 26. The chairman, if any, of the board shall preside as chairman at every general meeting of the Company. 27. Where there is no such chairman or at any meeting he is not present within fifteen minutes after the time appointed for holding the meeting or at which he is unwilling to act as chairman, the directors in office prior to such meeting who are present shall choose someone of their number to be chairman. 28. (1) The chairman may, with the consent of any meeting at which a quorum is present (and shall if so directed by the meeting), adjourn the meeting from time to time and from place to place, but no business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment takes place. 7 (2) When a meeting is adjourned for ten days or more, notice of the adjourned meeting shall be given as in the case of any original meeting. (3) Save as aforesaid, it shall not be necessary to give any notice of an adjournment or of the business to be transacted at an adjourned meeting. 29. At any general meeting a resolution put to the vote of the meeting shall be decided on a voice call or show of hands, unless a poll is (before or on the declaration of the result of the show of hands) demanded by at least two members present in person or by proxy holding Ordinary Shares carrying at least one-tenth of the votes of all members entitled to vote at the meeting or by the chairman and unless a poll is so demanded, a declaration by the chairman that a resolution has, on a voice call or show of hands, been carried or carried unanimously or by a particular majority or lost, and an entry to that effect in the book of the proceedings of the Company, shall be conclusive evidence of the fact, without proof of the number or proportion of the votes recorded in favor of or against that resolution. 30. If a poll is duly demanded it shall be taken in such manner as the chairman directs, and the results of the poll shall be deemed to be the resolution of the meeting at which the poll is demanded. 31. The demand for a poll may, before the poll is taken, be withdrawn but only with the consent of the chairman and a demand so withdrawn shall not be taken to have invalidated the result of the voice call or show of hands taking place before the demand was made. VOTES OF MEMBERS 32. Every member shall have one vote for each Ordinary Share of which he is the holder. Voting rights of Preference Shares (if any) shall be as specified in accordance with Article 5. 33. In the case of joint holders of the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders; and for this purpose seniority shall be determined by the order in which the names stand in the register of members. 8 34. A member of unsound mind, or in respect of whom an order has been made by any court having jurisdiction with respect to persons of unsound mind, may vote, whether on a voice call, show of hands or on a poll, by his committee or other person in the nature of a committee appointed by that court. PROXIES 35. (1) The instrument appointing a proxy shall be in writing under the hand of the appointer or his attorney duly authorized in writing or, if the appointer is a corporation, either under the common seal or under the hand of an officer or attorney so authorized. (2) An instrument appointing a proxy may be in the following form or in any other form which the board may approve: "I of being a member of P. I. Resorts Limited, hereby appoint of as my proxy to vote for me and on my behalf at the general meeting of the Company to be held on the day of and at any adjournment thereof." 36. The instrument appointing a proxy and the power of attorney or other authority, if any, under which it is signed or a certified copy of that power or authority shall be deposited at the registered office of the Company not less than forty-eight hours before the holding of the meeting at which the person named in the instrument proposes to vote, or shall be delivered to the Company at such meeting, and in default the instrument of proxy shall not be treated as valid. 37. A vote given in accordance with the terms of an instrument of proxy shall be valid notwithstanding the previous death or insanity of the principal or revocation of the instrument of proxy, or the authority under which the instrument of proxy was executed, or transfer of the shares in respect of which the vote is given, provided no transfer shall have been received at the registered office of the Company before the meeting or adjourned meeting at which the instrument or proxy is used. 9 CORPORATE REPRESENTATIVES 38. Any body corporate which is a member of the Company may by resolution of its directors or other governing body or by authority to be given under seal or under the hand of an officer duly authorized by it authorize such person as it thinks fit to act as its representative at any meeting of the Company or at any separate meeting of the holders of any class or series of shares and such authority may be general or in respect of specific meetings. A person so authorized shall be entitled to exercise the same power on behalf of the grantor of the authority as the grantor could exercise if it were an individual member of the Company and the grantor shall for the purposes of these Articles be deemed to be present in person at any such meeting if a person so authorized is present at it. CLASS MEETINGS SERIES MEETINGS 39. All provisions of these Articles relating to general meetings of the Company shall apply mutatis mutandis to every separate meeting of the holders of any class or series of shares in the capital of the Company. DIRECTORS 40. Unless otherwise determined by a resolution of the members, the number of the directors shall be five. 41. The directors shall be appointed and may be removed in accordance with the Companies Act. 42. It shall be presumed that it is in the best interests of the Company to allow directors to participate in meetings of the board or of committees thereof by telephonic communication and otherwise as set forth in Article 56 and, accordingly, it shall be a term of appointment of each director that he irrevocable consents to the holding of such meetings in the manner set forth in Article 56. 43. The directors of the Company holding office immediately following the Closing Date shall hold office until the date of the annual general meeting to be held in 1997. At the annual general meeting held in 1997 and at each subsequent annual general meeting, directors shall be appointed by resolution of the holders of Ordinary Shares in 10 accordance with these Articles (including provisions as to nomination) and any director so appointed (and any director appointed to fill a vacancy in the directors prior to the next annual general meeting) shall hold office until the date of the next annual general meeting of the Company, or if later the date his successor shall be duly elected and qualified. EXECUTIVE DIRECTORS 44. The board may appoint one or more of its body to be the holder of any one or more executive office (except that of auditor) under the Company and may enter into an agreement or arrangement with any director for his employment by the Company or for the provision by him of any services outside the scope of the ordinary duties of a director. Any such appointment, agreement or arrangement may be made upon such terms, including terms as to remuneration, as the board determines, and any remuneration which is so determined may be in addition to or in lieu of any ordinary remuneration as a director. The board may revoke or vary any such appointment but without prejudice to any rights or claims which the person whose appointment is revoked or varied may have against the Company by reason thereof. 45. Any appointment of a director to an executive office shall terminate if he ceases to be a director but without prejudice to any rights or claims which he may have against the Company by reason of the termination of such appointment. A director appointed to an executive office shall not ipso facto cease to be a director if his appointment to such executive officer terminates. 46. The emoluments of any director holding executive office for his services as such shall be determined by the board, and may be of any description, and (without limiting the generality of the foregoing) may include admission to or continuance of membership of any scheme (including any share acquisition scheme) or fund instituted or established or financed or contributed to by the Company for the provision of pensions, life assurance or other benefits for employees or their dependents, or the payment of a pension or other benefits to him or his dependents on or after retirement or death, apart from membership of any such scheme or fund. 11 POWERS AND DUTIES OF THE BOARD 47. The business of the Company shall be managed by the board, which may exercise all such powers of the Company as are not by the Companies Act or by these Articles, required to be exercised by the Company in general meeting, subject nevertheless to these Articles (including in particular Article 68 for so long as it is in effect) and to the Companies Act. PROCEEDINGS OF DIRECTORS 48. (1) The directors may meet together for the dispatch of business, adjourn and otherwise regulate their meetings, as they think fit. (2) Questions arising at any meeting shall be decided by a majority of votes. (3) A director may, and the secretary on the requisition of a director shall, at any time summon a meeting of the directors. Directors shall be given reasonable notice (which, except in the case of emergencies shall be not less than three business days) of the time and place appointed for such meeting of the directors, which notice may be waived by any or all directors at any time before or after such meeting. 49. The quorum necessary for the transaction of the business of the directors may be fixed by the directors and unless so fixed shall be three. 50. The continuing directors may act notwithstanding any vacancy in their body, but, if and so long as their number is reduced below the number fixed by or pursuant to the Articles as the necessary quorum of directors, the continuing directors may act for the purpose of summoning a general meeting of the Company, but for no other purpose. 51. The directors may elect a chairman of their meetings and determine the period for which he is to hold office; but if no such chairman is elected or if at any meeting the chairman is not present within five minutes after the time appointed for holding the same, the directors present may choose one of their number to be chairman of the meeting. 12 52. The directors may delegate any of their powers to committees consisting of such members of the Company or members of their body as they think fit; any committee so formed shall in the exercise of the powers so delegated conform to any regulations that may be imposed on them by the directors. 53. A committee may elect a chairman of their meetings; if no such chairman is elected or if at any meeting the chairman is not present within five minutes after the time appointed for holding the same, the members present may choose one of their number to be chairman of the meeting. 54. (1) A committee shall meet and adjourn as determined by the board and otherwise as they think proper. (2) Questions arising at any meeting shall be determined by a majority of votes of the members present. 55. A resolution in writing signed by a simple majority of the directors entitled to vote on that resolution at a meeting of the board or of the members of an existing committee of the board with authority to consider and act on the matter (not being less than the number of directors required to form a quorum of the board) shall be as valid and effectual as if it had been passed at a meeting of the board or (as the case may be) a committee of the board duly convened and held and for this purpose a resolution may consist of several documents to the same effect, each signed by one or more directors. 56. A meeting of the board or of a committee of the board may, if all the directors consent, consist of a conference between directors who are not all in one place, but of whom each is able (directly or by telephonic communication) to speak to each of the others, and to be heard and recognized by each of the others. A director taking part in such a conference shall be deemed to be present in person at the meeting and shall be entitled to vote or be counted in a quorum accordingly. Such a meeting shall be deemed to take place where the largest group of those participating in the conference is assembled, or, if there is no such group, where the chairman of the meeting then is. The word meeting in these Articles shall be construed accordingly. 13 57. The board shall cause minutes to be made in books provided for the purpose: (a) of all appointments of officers made by the board; (b) of the names of the directors or members present at each meeting of the directors and of any committee of the directors; and (c) of all resolutions and proceedings at all meetings of the Company and of the board or committees of the board. POWERS OF ATTORNEY 58. The board may from time to time and at any time by power of attorney appoint any company, firm or person or body of persons, whether nominated directly or indirectly by the board, to be the attorney or attorneys of the Company for such purposes and with such powers, authorities and discretions (not exceeding those vested in or exercisable by the board under these Articles) and for such period and subject to such conditions as they may think fit, and any such powers of attorney may contain such provisions for the protection and convenience of persons dealing with any such attorney as the board may think fit and may also authorize any such attorney to delegate all or any of the powers, authorities and discretions vested in him. THE SEAL 59. The seal of the Company shall not be affixed to any instrument except by the authority of a resolution of the directors, and in the presence of at least two directors and of the secretary or such other person as the directors may appoint for the purpose; and those two directors and secretary or other person as aforesaid shall sign every instrument to which the seal of the Company is so affixed in their presence. The Company is hereby authorized to adopt and use an official seal in accordance with the provisions of Section 26 of the Companies Act. 14 DIVIDENDS AND RESERVE 60. The board may from time to time declare and pay to the members of the Company such quarterly dividends as appear to the directors to be justified by the profits of the Company. 61. No dividend shall be paid otherwise than out of profits or surplus available for the purpose in accordance with the Companies Act. 62. The directors may, before recommending any dividend, set aside out of the profits of the Company such sums as they think proper as a reserve or reserves which shall, at the discretion of the directors, be applicable for meeting contingencies or for equalizing dividends or for any other purpose to which the profits of the Company may be properly applied, and pending such application may, at the like discretion, either be employed in the business of the Company or be invested in such investments (other than shares of the Company), as the directors may from time to time think fit. 63. Where several persons are registered as joint holders of any share any one of them may give effectual receipts for any dividend payable on the share. 64. No dividend shall bear interest against the Company. ACCOUNTS 65. The directors shall cause true accounts to be kept: (a) of the sums of money received and expended by the Company and the matter in respect of which such receipt and expenditure takes place; and (b) of the assets and liabilities of the Company. 66. The books of account shall be kept at the registered office of the Company or at such other place or places as the directors think fit and shall always be open to the inspection of the directors. 15 67. The directors shall from time to time determine whether and to what extent and at what time and places and under what conditions or regulation the accounts and books of the Company or any of them shall be open to the inspection of members not being directors, and no member (not being a director) shall have any right of inspecting any account or book or document of the Company except as conferred by statute or authorized by the directors or by the Company in general meeting. 68. Once at least in every year the directors shall lay before the Company in general meeting a profit and loss account for the period since the preceding account or (in the case of the first account) since the incorporation of the Company, made up to a date not more than six months before such meeting. 69. (1) A balance-sheet shall be made out in every year and laid before the Company in general meeting made up to a date not more than six months before such meeting. (2) The balance-sheet shall be accompanied by a report of the board as to the state of the Company's affairs and the amount which they recommend to be paid by way of dividend and the amount, if any, which they propose to carry to a reserve fund. 70. A copy of the balance-sheet and report shall, seven days previous to the meeting, be sent to the persons entitled to receive notices of general meetings in the manner in which notices are to be given hereunder. NOTICES 71. (1) A notice may be given by the Company to any member either personally or by sending it by post to him to his registered address. (2) Where a notice is sent by post, service of the notice shall be deemed to be effected by properly addressing, pre-paying and posting a letter (by air-mail if to an address outside the country from which it is sent) containing the notice and, unless the contrary is proved, to have been effected three days after posting (or seven days if sent to an address outside the country from which it is sent). 16 72. A notice may be given by the Company to the joint holders of a share by giving the notice to the joint holder named first in the register in respect of the share. 73. A notice may be given by the Company to the persons entitled to a share in consequence of the death or bankruptcy of a member by sending it through the post in a pre- paid letter addressed to them by name or by the title of representatives of the deceased, or trustees of the bankrupt, or by any like description, at the address, if any, supplied for the purpose by the persons claiming to be so entitled, or (until such an address has been so supplied) by giving the notice in any manner in which the same might have been given if the death or bankruptcy has not occurred. 74. Notice of every general meeting shall be given in some manner hereinbefore authorized to the members of the Company, including any person entitled to a share in consequence of the death or bankruptcy of a member, who, but for his death or bankruptcy, would be entitled to receive notice of the meeting and to very director. No other persons shall be entitled to receive notice of general meetings. INDEMNITY 75. The Company shall, subject to the provisions of Article 79, indemnity to the fullest extent permitted by the Companies Act any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative and whether external or internal to the Company by reason of the fact that he is or was a director or officer of the Company, or is or was serving at the request of the Company as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such suit, action or proceeding if he acted in good faith and in a manner which he reasonably believed to be in, or not opposed to, the best interests of the Company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe that his conduct was unlawful. 76. Subject to Article 79, expenses incurred by a director or officer in defending a civil or criminal action, 17 suit or proceeding shall be paid by the Company in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of the director or officer to repay such amount if it shall ultimately be determined that he is not entitled under Article 75 to be indemnified by the Company in respect of such expenses. 77. The board shall from time to time cause the Company to purchase and maintain insurance from reputable insurance carriers on behalf of any person who is or was a director or officer of the Company, or is or was serving at the request of the Company as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such with reasonable limits and subject to reasonable and customary deductibles, for so long as such insurance is available from such carriers. 78. The Company's indemnification under Article 76 of any person who is or was serving, at the request of the Company as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, shall be reduced by amounts such person receives as indemnification (i) under any policy of insurance purchased and maintained on his behalf by the Company, (ii) from such other corporation, partnership, joint venture, trust or other enterprise, or (iii) under any other applicable indemnification provision. 79. (a) It shall be a condition of the Company's obligation to indemnify or advance expenses under Articles 75 and 76 that the person asserting, or proposing to assert, the right to be indemnified, promptly after receipt of notice of commencement of any action, suit or proceeding in respect of which a claim for indemnification is or is to be made against the Company notify the Company of the commencement of such action, suit or proceeding, including therewith a copy of all papers served and the name of counsel retained or to be retained by such person in connection with such action, suit or proceeding, and thereafter to keep the Company timely and fully apprised of all developments and proceedings in connection with such action, suit or proceeding or as the Company shall request; and the fees and expenses of any counsel retained by a person asserting, or proposing to assert, the right to be indemnified under 18 Article 75 shall be at the expense of such person unless the counsel retained shall have been approved by the Company in writing, which approval shall not be unreasonably withheld. (b) If a claim for indemnification and advancement of expenses under Articles 75 and 76 is not paid in full by the Company within forty five (45) days after a written claim therefor has been received by the Company, the claimant may at any time thereafter bring suit against the Company to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled to be paid also the expenses of prosecuting such claim. 80. To the fullest extent permitted by the Companies Act as it exists on the date hereof or as it may hereafter be amended, no director or officer of the Company shall be liable to the Company or its members for monetary or other damages for breach of fiduciary duty as a director or officer. 81. The provisions of Articles 75 to 80 shall continue as to, and for the benefit of, a person who has ceased to be a director or officer and shall inure to the benefit of the heirs, executors and administrators of such a person. 82. No amendment to or repeal of the provisions of Articles 75 to 80 shall apply to or have any effect on the eligibility for, or entitlement to, indemnification, advancement of expenses and the other rights provided by, or granted pursuant to, Articles 75 to 80 for or with respect to any acts or omissions of any director or officer occurring prior to any such amendment or repeal. 19 EX-4 4 EXHIBIT 4.04 [GD&C Draft -- 12/30/93] [NA932010.156] -------------------------------------------- RESORTS INTERNATIONAL HOTEL FINANCING, INC., Issuer, RESORTS INTERNATIONAL HOTEL, INC., Guarantor, and STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, Trustee, -------------------------------------------- I N D E N T U R E Dated as of [ ], 1994 -------------------------------------------- 11% MORTGAGE NOTES DUE 2003 -------------------------------------------- CROSS-REFERENCE TABLE Section of Trust Indenture Act of 1939 Section of Indenture - -------------------------------------- -------------------- 310(a)(1). . . . . . . . . . . . . . . . . . . . . . . . . .8.08; 8.09 (a)(2). . . . . . . . . . . . . . . . . . . . . . . . . .8.09 (a)(3). . . . . . . . . . . . . . . . . . . . . . . . . .8.14(b) (a)(4). . . . . . . . . . . . . . . . . . . . . . . . . .Not Applicable (b) . . . . . . . . . . . . . . . . . . . . . . . . . . .8.08 (c) . . . . . . . . . . . . . . . . . . . . . . . . . . .Not Applicable 311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . .8.13 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . .8.13 (c) . . . . . . . . . . . . . . . . . . . . . . . . . . .Not Applicable 312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . .9.01; 9.02(a) (b) . . . . . . . . . . . . . . . . . . . . . . . . . . .9.02(b) (c) . . . . . . . . . . . . . . . . . . . . . . . . . . .9.02(c) 313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . .9.03(a) (b) . . . . . . . . . . . . . . . . . . . . . . . . . . .9.03(a) (c) . . . . . . . . . . . . . . . . . . . . . . . . . . .9.03(a) (d) . . . . . . . . . . . . . . . . . . . . . . . . . . .9.03(b) 314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . .9.04 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . .6.02 (c)(1). . . . . . . . . . . . . . . . . . . . . . . . . .1.06 (c)(2). . . . . . . . . . . . . . . . . . . . . . . . . .1.06 (c)(3). . . . . . . . . . . . . . . . . . . . . . . . . .9.04(c); 12.07(i) (d) . . . . . . . . . . . . . . . . . . . . . . . . . . .6.02 (e) . . . . . . . . . . . . . . . . . . . . . . . . . . .1.06 (f) . . . . . . . . . . . . . . . . . . . . . . . . . . .Not Applicable 315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . .8.01(a) (b) . . . . . . . . . . . . . . . . . . . . . . . . . . .8.02 (c) . . . . . . . . . . . . . . . . . . . . . . . . . . .8.01(b) (d) . . . . . . . . . . . . . . . . . . . . . . . . . . .8.01(c) (e) . . . . . . . . . . . . . . . . . . . . . . . . . . .7.14 316(a)(l)(A) . . . . . . . . . . . . . . . . . . . . . . . .7.12(b) (a)(l)(B) . . . . . . . . . . . . . . . . . . . . . . . .7.13 (a)(2). . . . . . . . . . . . . . . . . . . . . . . . . .Not Applicable (b) . . . . . . . . . . . . . . . . . . . . . . . . . . .7.08 317(a)(l). . . . . . . . . . . . . . . . . . . . . . . . . .7.03 (a)(2). . . . . . . . . . . . . . . . . . . . . . . . . .7.04 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . .12.03 318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . .1.07 - ------------------------- Note: This Cross-Reference Table shall not be deemed, for any purpose, to be a part of this Indenture. TABLE OF CONTENTS ----------------- Page ---- ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION Section 1.01. Definitions.. . . . . . . . . . . . . . . . . . . . 1 Section 1.02. Acts of Noteholders. . . . . . . . . . . . . . . . 16 Section 1.03. Notices, etc., to Trustee, RIH, the Company, Casino Control Commission and Director of Gaming Enforcement.. . . . . . . . . . . . . . . . . . . . 18 Section 1.04. Notices to Noteholders; Waiver. . . . . . . . . . . 19 Section 1.05. Form and Contents of Documents Delivered to Trustee.. . . . . . . . . . . . . . . . . . . . . . 20 Section 1.06. Compliance Certificates and Opinions. . . . . . . . 21 Section 1.07. Conflict with Trust Indenture Act.. . . . . . . . . 21 Section 1.08. Effect of Headings and Table of Contents. . . . . . 22 Section 1.09. Successors and Assigns. . . . . . . . . . . . . . . 22 Section 1.10. Separability Clause.. . . . . . . . . . . . . . . . 22 Section 1.11. Benefits of Indenture.. . . . . . . . . . . . . . . 22 Section 1.12. Governing Law.. . . . . . . . . . . . . . . . . . . 22 Section 1.13. Casino Control Act. . . . . . . . . . . . . . . . . 22 Section 1.14. General Application.. . . . . . . . . . . . . . . . 22 (i) Page ---- ARTICLE TWO NOTE FORM Section 2.01. Form Generally. . . . . . . . . . . . . . . . . . . 23 Section 2.02. Form of Notes.. . . . . . . . . . . . . . . . . . . 24 Section 2.03. Form of Trustee's Certificate of Authentication.. . 28 Section 2.04. Form of the Guaranty. . . . . . . . . . . . . . . . 29 ARTICLE THREE THE NOTES Section 3.01. General Title.. . . . . . . . . . . . . . . . . . . 29 Section 3.02. Form and Denominations. . . . . . . . . . . . . . . 30 Section 3.03. Execution, Authentication, Delivery and Dating. . . . . . . . . . . . . . . . . . . . . . . 30 Section 3.04. Temporary Notes.. . . . . . . . . . . . . . . . . . 30 Section 3.05. Registration, Transfer and Exchange.. . . . . . . . 31 Section 3.06. Mutilated, Destroyed, Lost and Stolen Notes.. . . . 32 Section 3.07. Payment of Interest on Notes; Interest Rights Preserved.. . . . . . . . . . . . . . . . . . . . . 33 Section 3.08. Persons Deemed Owners.. . . . . . . . . . . . . . . 34 Section 3.09. Cancellation. . . . . . . . . . . . . . . . . . . . 34 Section 3.10. Term and Form.. . . . . . . . . . . . . . . . . . . 35 Section 3.11. Exchangeability.. . . . . . . . . . . . . . . . . . 35 Section 3.12. Redemption. . . . . . . . . . . . . . . . . . . . . 35 Section 3.13. Authentication and Delivery of Original Issue.. . . . . . . . . . . . . . . . . . . . . . . 36 (ii) Page ---- ARTICLE FOUR GUARANTY Section 4.01. Guaranty. . . . . . . . . . . . . . . . . . . . . . 36 Section 4.02. Execution and Delivery of Guaranty. . . . . . . . . 37 Section 4.03 Mortgage Securing Guaranty. . . . . . . . . . . . . 38 ARTICLE FIVE SATISFACTION AND DISCHARGE Section 5.01. Payment of Indebtedness; Satisfaction and Discharge of Indenture. . . . . . . . . . . . . . . 39 Section 5.02. Application of Deposited Money. . . . . . . . . . . 40 Section 5.03. Repayment to the Company. . . . . . . . . . . . . . 40 ARTICLE SIX SECURITY Section 6.01. Assignment Agreement. . . . . . . . . . . . . . . . 41 Section 6.02. Recording, Etc. . . . . . . . . . . . . . . . . . . 42 Section 6.03. Custody of Mortgage Documents.. . . . . . . . . . . 43 Section 6.04. Suits to Protect the Trust Estate and Mortgage Documents. . . . . . . . . . . . . . . . . 44 ARTICLE SEVEN REMEDIES Section 7.01. Events of Default.. . . . . . . . . . . . . . . . . 44 Section 7.02. Acceleration of Maturity; Rescission and Annulment.. . . . . . . . . . . . . . . . . . . . . 48 Section 7.03. Covenant to Pay Trustee Amounts Due on Notes and Right of Trustee to Judgment. . . . . . . . . . 49 Section 7.04. Trustee May File Proofs of Claim. . . . . . . . . . 50 Section 7.05. Trustee May Enforce Claims Without Possession of Notes. . . . . . . . . . . . . . . . . . . . . . 51 (iii) Page ---- Section 7.06. Application of Money Collected. . . . . . . . . . . 51 Section 7.07. Limitation on Suits.. . . . . . . . . . . . . . . . 52 Section 7.08. Unconditional Right of Noteholders to Receive Principal and Interest. . . . . . . . . . . . . . . 53 Section 7.09. Restoration of Rights and Remedies. . . . . . . . . 53 Section 7.10. Rights and Remedies Cumulative. . . . . . . . . . . 53 Section 7.11. Delay or Omission Not Waiver. . . . . . . . . . . . 54 Section 7.12. Other Rights. . . . . . . . . . . . . . . . . . . . 54 Section 7.13. Waiver of Past Defaults.. . . . . . . . . . . . . . 54 Section 7.14. Undertaking for Costs.. . . . . . . . . . . . . . . 55 Section 7.15. Enforcement.. . . . . . . . . . . . . . . . . . . . 55 Section 7.16. Management of Casino-Hotel. . . . . . . . . . . . . 56 ARTICLE EIGHT THE TRUSTEE Section 8.01. Certain Duties and Responsibilities. . . . . . . 56 Section 8.02. Notice of Defaults.. . . . . . . . . . . . . . . 58 Section 8.03. Certain Rights of Trustee. . . . . . . . . . . . 58 Section 8.04. Not Responsible for Recitals or Issuance of Notes or Application of Proceeds.. . . . . . . . 60 Section 8.05. May Hold Notes.. . . . . . . . . . . . . . . . . 60 Section 8.06. Money Held in Trust. . . . . . . . . . . . . . . 60 Section 8.07. Compensation and Reimbursement.. . . . . . . . . 60 Section 8.08. Disqualification; Conflicting Interests. . . . . 61 Section 8.09. Corporate Trustee Required; Eligibility. . . . . 61 (iv) Page ---- Section 8.10. Resignation and Removal; Appointment of Successor. . . . . . . . . . . . . . . . . . . . 62 Section 8.11. Acceptance of Appointment by Successor.. . . . . 64 Section 8.12. Merger, Conversion, Consolidation or Succession to Business.. . . . . . . . . . . . . 64 Section 8.13. Preferential Collection of Claims Against Company. . . . . . . . . . . . . . . . . . . . . 64 Section 8.14. Co-trustees and Separate Trustees. . . . . . . . 65 Section 8.15. Appointment of Authenticating Agent. . . . . . . 66 ARTICLE NINE NOTEHOLDERS' LISTS AND REPORTS BY TRUSTEE Section 9.01. Company to Furnish Trustee Semi-Annual Lists of Noteholders.. . . . . . . . . . . . . . . . . 67 Section 9.02. Preservation of Information; Communications to Noteholders.. . . . . . . . . . . . . . . . . 68 Section 9.03. Reports by Trustee.. . . . . . . . . . . . . . . 68 ARTICLE TEN CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE Section 10.01. Consolidation, Merger, Conveyance or Transfer Only on Certain Terms. . . . . . . . . . . . . . 70 Section 10.02. Successor Entity Substituted.. . . . . . . . . . 72 Section 10.03. Successor Management of Casino-Hotel.. . . . . . 73 Section 10.04. Limitation on Sales of Trust Estate. . . . . . . 73 Section 10.05 RIH Sale . . . . . . . . . . . . . . . . . . . . 73 ARTICLE ELEVEN AMENDMENTS, SUPPLEMENTS AND WAIVER Section 11.01. Without Consent of Noteholders.. . . . . . . . . 73 Section 11.02. With Consent of Noteholders. . . . . . . . . . . 74 (v) Page ---- Section 11.03. Execution of Amendments and Supplements. . . . . 76 Section 11.04. Effect of Amendment or Supplement. . . . . . . . 76 Section 11.05. Conformity with Trust Indenture Act. . . . . . . 76 Section 11.06. Reference in Notes to Amendment or Supplement. . 76 ARTICLE TWELVE COVENANTS Section 12.01. Payment of Principal and Interest. . . . . . . . 77 Section 12.02. Maintenance of Office or Agency. . . . . . . . . 77 Section 12.03. Money for Security Payments to Be Held in Trust. 78 Section 12.04. Corporate Existence. . . . . . . . . . . . . . . 79 Section 12.05. To Keep Books; Inspection by Trustee.. . . . . . 80 Section 12.06. Reports and Compliance Certificates. . . . . . . 80 Section 12.07. Limitations and Dividends and Restricted Payments.. . . . . . . . . . . . . . . . . . . . 82 Section 12.08. Limitations on Additional Indebtedness and Issuance of Notes. . . . . . . . . . . . . . . . 83 Section 12.09. Limitations on Repayment of Subordinated Indebtedness.. . . . . . . . . . . . . . . . . . 84 Section 12.10. Limitation on Certain Transactions.. . . . . . . 85 Section 12.11. Restriction of Activities. . . . . . . . . . . . 85 Section 12.12. Limitation on Subsidiaries Consolidated Group. . 86 Section 12.13. Limitations on Liens.. . . . . . . . . . . . . . 86 Section 12.14. Compliance with Laws.. . . . . . . . . . . . . . 87 Section 12.15. Payment of Taxes and Other Claims. . . . . . . . 87 Section 12.16. Maintenance of Properties. . . . . . . . . . . . 87 (vi) Page ---- Section 12.17. Insurance. . . . . . . . . . . . . . . . . . . . 88 Section 12.18. Waiver of Stay, Extension or Usury Laws. . . . . 88 Section 12.19. Appointment to Fill a Vacancy in Office of Trustee. . . . . . . . . . . . . . . . . . . . . 89 Section 12.20. Validity of Liens. . . . . . . . . . . . . . . . 89 Section 12.21. Transactions with Stockholders and Affiliates. . 89 ARTICLE THIRTEEN REDEMPTION OF NOTES Section 13.01. General Applicability of Article.. . . . . . . . 90 Section 13.02. Election to Redeem; Notice to Trustee. . . . . . 90 Section 13.03. Selection by Trustee of Notes to Be Redeemed.. . 90 Section 13.04. Notice of Redemption.. . . . . . . . . . . . . . 90 Section 13.05. Deposit of Redemption Price. . . . . . . . . . . 91 Section 13.06. Notes Payable on Redemption Date.. . . . . . . . 91 Section 13.07. Notes Redeemed in Part.. . . . . . . . . . . . . 92 Section 13.08. Redemption Pursuant to Casino Control Act. . . . 92 ARTICLE FOURTEEN DEFEASANCE Section 14.01. Discharge of the Indenture and Defeasance of the Securities.. . . . . . . . . . . . . . . . . 93 Section 14.02. Application of Deposited Money.. . . . . . . . . 94 Section 14.03. Repayment to the Company.. . . . . . . . . . . . 94 (vii) TABLE OF EXHIBITS ----------------- Exhibits Document -------- -------- Exhibit A RIH Senior Promissory Note Exhibit B Assignment Agreement from Resorts International Hotel Financing, Inc. Exhibit C Subordination Provisions Exhibit D Mortgage securing RIH Senior Promissory Note between Resorts International Hotel, Inc. and Resorts International Hotel Financing, Inc. Exhibit E Assignment of Leases and Rents from Resorts International Hotel, Inc. to Resorts International Hotel Financing, Inc. Exhibit F Mortgage securing Guaranty of Senior Mortgage Notes between Resorts International Hotel, Inc. and State Street Bank and Trust Company of Connecticut, National Association, as Trustee Exhibit G Intercreditor Agreement Terms INDENTURE THIS INDENTURE dated as of [ ], 1994, among Resorts International Hotel Financing, Inc., a Delaware corporation (the "Company"), Resorts International Hotel, Inc., a New Jersey corporation ("RIH"), and State Street Bank and Trust Company of Connecticut, National Association, a national banking association, as trustee (together with its successors as such trustee, the "Trustee"). PRELIMINARY STATEMENT The capitalized terms used in this Indenture which are not otherwise defined herein have the meanings set forth in Article I. The Company has duly authorized the creation, execution and delivery of its 11% Mortgage Notes due 2003 (the "Notes"), issuable in accordance with the terms hereof, and RIH has duly authorized the guaranty of the Company's obligations under this Indenture, and, to secure the Notes and to provide therefor, each of the Company and RIH has duly authorized the execution and delivery of this Indenture. All things have been done which are necessary to make the Notes, when executed by the Company and authenticated and delivered by the Trustee hereunder and duly issued by the Company, the valid obligations of the Company, and to constitute this Indenture a valid agreement of the Company and RIH, in accordance with the terms of the Notes and this Indenture. THEREFORE, for and in consideration of the premises and the purchase or acceptance of the Notes by the Holders thereof, RIH and the Company do hereby covenant and agree to and with the Trustee, for the Ratable Benefit of all Holders of the Notes thereto appertaining, as follows: ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION Section 1.01. DEFINITIONS. For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires: (a) the terms defined in this Article One have the meanings assigned to them in this Article One and include the plural as well as the singular; (b) 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; (c) all accounting terms not otherwise defined herein have the meanings assigned to them, and all computations herein provided for shall be made, in accordance with GAAP consistently applied; and (d) 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. "ACCOUNTANT" means a Person engaged in the practice of accounting who (except as otherwise expressly provided in this Indenture) may be employed by or affiliated with the Company or RIH. "ACT" when used with respect to any Noteholder or Noteholders has the meaning stated in Section 1.02(a). "AFFILIATE" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person, and, with respect to any specified natural Person, any other Person having a relationship by blood, marriage or adoption not more remote than first cousin with such specified Person. For purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing; PROVIDED, HOWEVER, that, except as may be required under the TIA, the term "Affiliate" shall not include, with respect to the Company or RIH, any of Fidelity Management & Research Company, TCW Special Credits or funds or accounts managed or advised by either of them. "AFTER-ACQUIRED FEE MORTGAGE DEBT" means any Indebtedness secured by an After-Acquired Fee Mortgage. "AFTER-ACQUIRED FEE MORTGAGE" has the meaning stated in Section 2.07 of the Mortgage. "ASSIGNMENT AGREEMENT" means the Assignment of Agreements dated as of the date hereof, providing for the assignment of the RIH Senior Promissory Note and other Mortgage Documents to the Trustee by the Company, and acknowledgment thereof by RIH, a copy of which is attached hereto as Exhibit B. "ASSIGNMENT OF LEASES AND RENTS" means the Assignment of Leases and Rents dated as of the date hereof, from RIH to the Company securing the RIH Senior Promissory Note, a copy of which is attached hereto as Exhibit E. "AUTHENTICATING AGENT" means any Person named as Authenticating Agent for the Notes in accordance with the provisions of this Indenture until a successor Authenticating Agent becomes such pursuant thereto, and thereafter Authenticating Agent shall mean such successor. "AUTHORIZED SIGNATURE" means the signatures of the chairman of the board, the president or a Vice President and of the treasurer, an assistant treasurer, the controller, an assistant controller, the secretary or an assistant secretary of the Company or RIH, as the case may be. "CAPITALIZED LEASE OBLIGATION" means, with respect to any Person, any lease of any property (whether real, personal or mixed) by such Person as lessee which, in conformity with GAAP consistently applied, is accounted for as a capitalized lease on the balance sheet of such Person. "CASE" means, collectively, the bankruptcy cases involving RII and GRI in the United States Bankruptcy Court for the District of Delaware. "CASINO" means that portion of the Casino-Hotel used for gaming and related activities. "CASINO-HOTEL" means the casino and hotel complex and ancillary structures and facilities located on the Premises and furniture, fixtures and equipment at any time contained therein. "CASINO CONTROL ACT" means the New Jersey Casino Control Act and the regulations promulgated thereunder, as amended. "CASINO CONTROL COMMISSION" means the New Jersey Casino Control Commission, as from time to time constituted, or if at any time after the execution of this Indenture such Commission is not existing and performing the duties theretofore assigned to it, then the body performing such duties at such time. "COMBINATION TRANSACTION" has the meaning stated in Section 10.01. 3 "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 instrument such Commission is not existing and performing the duties theretofore assigned to it under the TIA, then the body performing such duties at such time. "COMPANY" means the Person named as the "Company" in the first paragraph of this instrument until a successor entity shall have become such pursuant to the applicable provisions of this Indenture, and thereafter, except to the extent otherwise contemplated by Section 10.02, "Company" shall mean such successor entity exclusively. "COMPANY CONSENT", "COMPANY ORDER" and "COMPANY REQUEST" mean, respectively, a written consent, order or request signed with an Authorized Signature and delivered to the Trustee. "CONSOLIDATED CASH FLOW" means, with respect to any Person for any period, an amount equal to the sum of (i) the consolidated net income (or loss) of such Person for such period determined in accordance with GAAP consistently applied, excluding interest income, interest expense and gains or losses from extraordinary or nonrecurring items, plus (ii) all amounts deducted in computing such consolidated net income (or loss) in respect of depreciation and amortization, plus (iii) non-cash charges arising from the reduction of CRDA Deposits to market value, minus (iv) taxes based upon or measured by income which are payable in cash, minus (v) CRDA Deposits. "CONSOLIDATED INTEREST CHARGES" means, with respect to any Person for any period, the consolidated interest expense (not including the non-cash amortization of discount on the original issuance of (a) the RIH Senior Promissory Note, (b) any intercompany indebtedness of RIH issued in connection with Indebtedness represented by the Junior Mortgage Facility and (c) any intercompany indebtedness of RIH issued in connection with Indebtedness represented by the Working Capital Facility), whether payable in cash or in-kind (and with respect to RIH, including, without limitation, the interest paid or accrued (without duplication) on (i) the RIH Promissory Note, (ii) any intercompany indebtedness of RIH issued in connection with Indebtedness represented by the Junior Mortgage Facility and (iii) any intercompany indebtedness of RIH issued in connection with Indebtedness represented by the Working Capital Facility), without deduction for interest income (other than cash interest income received from RII in payment of its interest cost on any Working Capital Facility), in each case for such Person and 4 its consolidated Subsidiaries for such period determined in accordance with GAAP consistently applied. "CONSOLIDATED INTEREST COVERAGE RATIO" shall mean, at any date of calculation thereof, the ratio of (a) Consolidated Cash Flow of RIH and its consolidated Subsidiaries for the immediately preceding four consecutive fiscal quarters to (b) Consolidated Interest Charges of RIH and its consolidated Subsidiaries for such period. "CONSOLIDATED NET INCOME" means, with respect to any Person for any period, an amount equal to consolidated net income (or loss) of such Person for such period determined in accordance with GAAP consistently applied, minus (a) federal and state taxes based upon or measured by income which are payable in cash, plus (b) non-cash charges arising from federal and state taxes based upon or measured by income. "CRDA DEPOSITS" means (a) the quarterly deposits made by RIH to the Casino Reinvestment Development Authority in an amount equal to 1.25% of RIH's gross revenue in order to satisfy its investment obligation pursuant to the Casino Control Act, and (b) the amounts invested in qualified investments in lieu of any of the quarterly deposits (or portion thereof) referred to in clause (a) above. "CRDA DISPUTE" means the dispute existing on the date hereof between RIH and the New Jersey Casino Reinvestment Development Authority regarding CRDA Deposits and New Jersey Casino Reinvestment Authority Notes, which dispute involves an amount of approximately $30,000,000. "DEFAULT" means the occurrence and continuance of an Event of Default or an event which, after notice or lapse of time or both, would become an Event of Default. "DEFAULTED INTEREST" has the meaning stated in Section 3.07. "EFFECTIVE DATE" means the date on which the prepackaged plan of reorganization of RII and GRI becomes effective. "EVENT OF DEFAULT" has the meaning stated in Section 7.01. An Event of Default shall "exist" if an Event of Default shall have occurred and be continuing. "EXCHANGE ACT" means the Securities and Exchange Act of 1934, as amended. "EXISTING ENCUMBRANCES" has the meaning stated in Section 1.01 of the Mortgage. 5 "FAIR MARKET VALUE" of any Notes means (a) the average of the closing sales price of the Notes for the 30 trading days immediately prior to the date of determination of such value on the largest national securities exchange on which such Notes shall have traded on such trading days, or (b) if no such sales of such Notes occurred during such 30-day period or if the Notes are not so listed but are traded in the over-the-counter market with quotations available in the National Association of Securities Dealers Automated Quotation System ("NASDAQ"), the average of the means between the "bid" and "asked" prices on such national securities exchange or as quoted on NASDAQ, as the case may be, during such 30-day period, or (c) if the Notes are not traded on a national securities exchange or quoted on NASDAQ, the fair market value of such Notes as of the date of determination as determined by agreement of two nationally recognized Independent investment banking firms, one to be chosen by the Company and the other by the Holder of the Notes being valued, with the costs of each such firm being the responsibility of the Person selecting such firm. If such firms cannot agree upon such fair market value, such firms shall select a third nationally recognized Independent investment banking firm, which shall determine such fair market value, the costs of such third firm being shared equally by the Company and such Holder. "F,F&E FINANCING AGREEMENT" has the meaning stated in Section 1.01 of the Mortgage. "GAAP" means United States generally accepted accounting principles. "GRI" means GGRI, Inc., a Delaware corporation. "GROUND LEASES" has the meaning stated in Granting Clause Second of the Mortgage. "GUARANTY" means the guaranty contained in Article Four. "GUARANTY MORTGAGE" means the Mortgage securing Guaranty of Mortgage Notes dated as of the date hereof, between RIH, as mortgagor, and the Trustee, as mortgagee, securing the Guaranty, a copy of which is attached hereto as Exhibit F. "HOTEL" means that portion of the Casino-Hotel not included within the Casino. "INDEBTEDNESS" means, as applied to any Person, without duplication, any indebtedness, exclusive of deferred taxes, (a) in respect of borrowed money (whether or not the recourse of the lender is to the whole of the assets of such Person or only to a portoin thereof); (b) evidenced by bonds, 6 notes, debentures or similar instruments or letters of credit; (c) representing the balance deferred and unpaid of the purchase price of any property, if and to the extent such indebtedness would appear as a liability upon a balance sheet of such Person prepared in accordance with GAAP (but excluding trade accounts payable arising in the ordinary course of business that are not overdue by more than 90 days or are being contested by such Person in good faith); (d) any Capitalized Lease Obligations (other than, with respect to RIH or the Company, the Ground Leases) of such Person; and (e) Indebtedness of others guaranteed by such Person, including, without limitation, every obligation of such Person (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or to purchase (or to advance or supply funds for the purchase of) any security for the payment of such Indebtedness, (ii) to purchase property, securities or services for the purpose of assuring the holder of such Indebtedness of the payment of such Indebtedness, or (iii) to maintain working capital, equity capital or other financial sta tement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness; PROVIDED, HOWEVER, that the guaranty by any Person shall not include endorsements by such Person for collection or deposit, in either case in the ordinary course of business. The term "INDEBTEDNESS" does not include: (1) any of the types of indebtedness described in clauses (a) through (e) above (inclusive) owed by the Company to RIH or any of their Subsidiaries, by RIH to the Company or any of their Subsidiaries or by any such Subsidiary to RIH, the Company or any other such Subsidiary (including, without limitation, the RIH Promissory Note and the RIH Junior Promissory Note); (2) the Guaranty, the Junior Guaranty and the Working Capital Facility Guaranty; (3) matters relating to the CRDA Dispute, New Jersey Casino Reinvestment Development Authority Notes or the CRDA Deposits; and (4) any payments made by the Company or RIH under the RII Management Agreement, the RII Tax Sharing Agreement or the Services Agreement. "INDENTURE" means this instrument as originally executed or as it may from time to time be supplemented, modified or amended by one or more indentures or other instruments supplemental hereto entered into pursuant to the applicable provisions thereof. "INDEPENDENT" when used with respect to any specified Person means such a Person who (a) is in fact independent, (b) does not have any direct financial interest or any material indirect financial interest in the Company or in any other obligor upon the Notes or in any Affiliate of the Company or of such other obligor and (c) is not connected with the Company or such other obligor or any Affiliate of the Company or such other obligor as an officer, employee, promoter, underwriter, trustee, partner, director or person 7 performing similar functions. Whenever it is herein provided that any Independent Person's opinion or certificate shall be furnished to the Trustee, such Person shall be appointed by a Company Order, and such opinion or certificate shall state that the signer has read this definition and that the signer is Independent within the meaning hereof. A Person who is performing or who has performed services as an independent contractor to any specified Person shall not be considered not Independent merely by reason of the fact that such Person is or has performed such services. "INTERCREDITOR AGREEMENT" means the Intercreditor Agreement dated as of the date hereof, among the Trustee, the trustee under the Junior Mortgage Note Indenture and such other parties that may from time to time become a party thereto, which shall incorporate the terms set forth in Exhibit G. "INTEREST PAYMENT DATE" means the date on which an installment of interest on the Notes is due and payable. "JUNIOR ASSIGNMENT OF LEASES AND RENTS" means the Assignment of Leases and Rents dated as of the date hereof, from RIH to the Company securing the RIH Junior Promissory Note. "JUNIOR GUARANTY" means any guaranty of the Junior Mortgage Facility by RIH, including, without limitation, the guaranty of the Junior Mortgage Notes due 2004 by RIH contained in Article Four of the Junior Mortgage Note Indenture. "JUNIOR GUARANTY MORTGAGE" means the Mortgage securing the Guaranty of Junior Mortgage Notes dated as of the date hereof, between RIH, as mortgagor, and [The Chase Manhattan Bank (National Association)], as mortgagee, securing the Junior Guaranty. "JUNIOR MORTGAGE" means the Mortgage securing the RIH Junior Promissory Note dated as of the date hereof, between the Company, as successor mortgagee, and RIH, as mortgagor. "JUNIOR MORTGAGE DOCUMENTS" means (a) the Junior Mortgage, the Junior Guaranty Mortgage, the RIH Junior Promissory Note, the Junior Assignment of Leases and Rents and any other security document to which either RIH or the Company is a party relating to the Junior Mortgage Notes, which is executed and delivered pursuant to or in connection with the Junior Mortgage, the Junior Guaranty Mortgage or the Junior Assignment Agreement, and (b) any mortgage, deed of trust, guaranty, promissory note, collateral assignment agreement, assignment of leases and rents, assignment of operating assets 8 and any other security document to which either RIH or the Company is a party relating to the Junior Mortgage Facility. "JUNIOR MORTGAGE FACILITY" means the Junior Mortgage Notes and any secured or unsecured facility or facilities entered into by RIH or the Company providing for the making of loans to RIH or the Company on a revolving or term basis, or the issuance of notes, debentures or bonds by RIH or the Company, as such agreement, indenture or instrument may be amended, supplemented or modified from time to time, or any refinancing thereof, in an aggregate principal amount up to $35,000,000 plus additional notes, debentures or bonds issued in payment of interest accrued on outstanding notes, debentures or bonds; PROVIDED, HOWEVER, that the lender or lenders thereunder (or any trustee or agent acting on behalf of such lender or lenders) shall have executed an intercreditor agreement covering the matters set forth on Exhibit G. The liens, if any, securing the Junior Mortgage Facility shall be PARI PASSU with the lien of the Junior Mortgage and the Junior Guaranty Mortgage. The term "JUNIOR MORTGAGE FACILITY" does not include the Junior Guaranty. "JUNIOR MORTGAGE NOTE INDENTURE" means the Indenture dated as of the date hereof, among the Company, RIH and [The Chase Manhattan Bank (National Association)], as trustee, pursuant to which the Junior Mortgage Notes were issued, as originally executed or as it may from time to time be supplemented, modified or amended by one or more indentures or other instruments supplemental thereto entered pursuant to the applicable provisions thereof. "JUNIOR MORTGAGE NOTES" means the 11.375% Junior Mortgage Notes due 2004 of the Company issued pursuant to the Junior Mortgage Note Indenture, including, without limitation, any Additional Notes (as defined in the Junior Mortgage Note Indenture). "LEGAL REQUIREMENTS" has the meaning stated in Section 1.01 of the Mortgage. "MATURITY" when used with respect to any Note means the date on which the principal (or any portion thereof) of such Note becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration or call for redemption or otherwise. "MORTGAGE" means the Mortgage securing the RIH Senior Promissory Note dated as of the date hereof, between the Company, as successor mortgagee, and RIH, as mortgagor. "MORTGAGE DEBT" means, at any point in time, the RIH Senior Promissory Note, the RIH Junior Promissory Note and any 9 secured Indebtedness outstanding under any Working Capital Facility. "MORTGAGE DOCUMENTS" means the Mortgage, the Guaranty Mortgage, the RIH Promissory Note, the Assignment of Leases and Rents and any other security document to which either RIH or the Company is a party relating to the Notes, which is executed and delivered pursuant to or in connection with the Mortgage, the Guaranty Mortgage or the Assignment Agreement. "NATIONAL ACCOUNTANTS" has the meaning stated in Section 12.06(a). "NEW JERSEY CASINO REINVESTMENT DEVELOPMENT AUTHORITY NOTES" shall mean bonds issued by the Casino Reinvestment Development Authority, a public authority created under the Casino Control Act. "NON-RECOURSE INDEBTEDNESS" means indebtedness incurred in connection with the acquisition, purchase, improvement or development of property or assets (other than the Trust Estate) used by the Company, RIH or any Subsidiary of RIH or the Company to engage in the casino business, the hotel business or related or ancillary business or purpose and which is secured only by such assets and without recourse to RIH, the Company or any Subsidiary of RIH or the Company or the Trust Estate for such indebtedness. "NOTEHOLDER" or "HOLDER" means a Person in whose name a Note is registered in the Note Register. "NOTE REGISTER" and "NOTE REGISTRAR" have the respective meanings stated in Section 3.05. "NOTES" has the meaning stated in the Preliminary Statement of this instrument and more particularly includes any Note authenticated and delivered hereunder. The term "Notes" does not include the Guaranty. "OFFICER" of the Company or RIH means any Person authorized to execute an Authorized Signature. "OFFICERS' CERTIFICATE" delivered by the Company or RIH means a certificate signed with an Authorized Signature and delivered to the Trustee. Whenever this Indenture requires that an Officers' Certificate be signed also by an Accountant or other expert, such Accountant or other expert may (except as otherwise expressly provided in this Indenture) be in the general employ of the Company or RIH. "OPINION OF COUNSEL" means a written opinion of counsel who may (except as otherwise expressly provided in 10 this Indenture) be an employee of the Company or RIH. Unless otherwise specifically provided in this Indenture, such counsel may rely as to any statement of facts not personally known to such counsel and relating to such opinion on an Officers' Certificate, to the extent not rejected by the Trustee and its counsel (which rejection shall not be unreasonably given). "OUTSTANDING" when used with respect to Notes means, as of the date of determination, all Notes theretofore authenticated and delivered under this Indenture, except: (a) Notes theretofore canceled by the Trustee or delivered to the Trustee for cancellation; (b) Notes for whose payment or redemption money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent in trust for the Holders of such Notes; (c) Notes in exchange for or in lieu of which other Notes have been authenticated and delivered under this Indenture; and (d) Notes alleged to have been destroyed, lost or stolen which have been paid as provided in Section 3.06; PROVIDED, HOWEVER, that in determining whether the Holders of the requisite principal amount of Notes Outstanding have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Notes owned by the Company or any other obligor upon the Notes or any Affiliate of the Company or of such other obligor shall be disregarded and deemed not to be Outstanding. In determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Notes which the Trustee actually knows to be so owned shall be so disregarded. "OUTSTANDING AMOUNT" of any Indebtedness at any time means the principal amount outstanding of such Indebtedness at such time. "PAYING AGENT" means any Person now or hereafter authorized by the Company to pay the principal of or interest on any Notes on behalf of the Company. "PERMITS" has the meaning stated in Section 1.01 of the Mortgage. "PERMITTED ENCUMBRANCES" has the meaning stated in Section 1.01 of the Mortgage. 11 "PERSON" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or any other entity or government or any agency or political subdivision thereof. "PLACE OF PAYMENT" when used with respect to the Notes means a city or any political subdivision thereof in which the Company is by this Indenture required to maintain an office or agency for the payment of the principal of or interest on the Notes. "PLAN" means the Plan of Reorganization of RII and GRI dated [ ], 1994. "PREDECESSOR NOTES" of any particular Note means every previous Note evidencing all or a portion of the same debt as that evidenced by such particular Note; and, for purposes of this definition, any Note authenticated and delivered under Section 3.06 in lieu of a lost, destroyed or stolen Note shall be deemed to evidence the same debt as the lost, destroyed or stolen Note. "PREMISES" has the meaning stated in Granting Clause Third of the Mortgage. "RATABLE BENEFIT" means, for any class or classes of Indebtedness at any time, in proportion to the total Outstanding Amount of such class or classes held by each holder thereof at such time. "REDEMPTION DATE" when used with respect to any Note to be redeemed means the date fixed for such redemption pursuant to this Indenture. 12 "REDEMPTION PRICE" when used with respect to any Note to be redeemed means the price at which it is to be redeemed pursuant to this Indenture. It does not include installments of interest due on or before the Redemption Date. "REGULAR RECORD DATE" for the interest payable on any Interest Payment Date on the Notes means the date specified in the provisions of this Indenture. "RESPONSIBLE OFFICER" means any Vice President, any Assistant Vice President or any other officer or assistant officer of the Trustee assigned by the Trustee to administer its corporate trust matters. "RESTRICTED PAYMENT" means (a) any declaration or payment of any dividend or the making of any distribution to holders of capital stock of RIH or the Company or any Subsidiary of RIH or the Company in respect of such capital stock (other than to RIH or the Company or a direct or indirect wholly owned Subsidiary of RIH or the Company), (b) any purchase, redemption or other acquisition or retirement for value of any capital stock (or warrants, rights or options to acquire any capital stock or Indebtedness convertible into or exchangeable for any capital stock) of RIH or the Company or any Subsidiary of RIH or the Company (other than purchases, redemptions, acquisitions or retirement solely from RIH or the Company or a direct or indirect wholly owned Subsidiary of RIH or the Company); PROVIDED, HOWEVER, that any such purchase, redemption or other acquisition or retirement that is required by the Casino Control Commission or under the Casino Control Act shall not constitute a Restricted Payment. The term "Restricted Payment" also shall not include any loan or advance to RII of all or any portion of the proceeds of the Indebtedness represented by the Working Capital Facility. "RIH" means the person named as "RIH" in the first paragraph of this instrument until a successor entity shall have become such pursuant to the applicable provisions of the Indenture, and thereafter, except to the extent otherwise 13 contemplated by Section 10.02, "RIH" shall mean such successor entity exclusively. "RIH JUNIOR PROMISSORY NOTE" means, collectively, the secured junior promissory note, dated the date hereof, made by RIH in the principal amount of $35,000,000, plus any additional junior promissory notes, issued in connection with the payment of interest accrued on outstanding Junior Mortgage Notes, payable to the order of the Company, a copy of which is attached to the Junior Mortgage Note Indenture as Exhibit A. "RIH SALE" means (a) a consolidation, combination or merger involving RIH and any other Person, (b) a sale, assignment, conveyance or transfer or RIH's interest in the Trust Estate, substantially as an entirety, to any other Person or group of Persons in one transaction or a series of related transactions, or (c) any transaction as a result of which RIH ceases to be a direct or indirect wholly owned Subsidiary of RII; provided, however, that nay of the transactions described in clauses (a), (b), and (c) above shall not constitute an RIH Sale if the other party or parties to the transaction consists of only one or more of the following Persons: the Company provided, further, however, that notwithstanding any other provision of this definition, if the primary effect of any of the aforesaid transactions is the redemption of the Notes, then such transaction shall not be considered to be a RIH Sale. "RIH PROMISSORY NOTE" means the secured senior promissory note, amended and restated as of the date hereof, made by RIH in the principal amount of $125,000,000 payable to the order of the Company, a copy of which is attached hereto as Exhibit A. "RIHF SENIOR FACILITY" means the senior secured note facility contemplated by the purchase agreement dated as of the date hereof, among the Company, RIH, RII and funds managed by Fidelity Management and Research Company, which allows the Company to borrow up to $20,000,000 in aggregate principal amount through the issuance of RIHF Senior Facility Notes. The term "RIHF SENIOR FACILITY" does not include the Working Capital Facility Guaranty. "RIHF SENIOR FACILITY NOTES" means, collectively, the notes executed and delivered by the Company under the RIHF Senior Facility. "RII" means Resorts International, Inc., a Delaware corporation. "RII MANAGEMENT CONTRACT" means the Management Contract dated as of the date hereof, between RII and RIH 14 pursuant to which RII provides certain management services to RIH for an annual fee of 3% of the gross revenues of RIH. "RII TAX SHARING AGREEMENT" means the Tax Sharing Agreement dated as of the date hereof between RII and RIH pursuant to which (i) RIH will not make any payments to RII or any other Affiliate in respect of taxes, other than to reimburse RII for any cash payments actually made by RII in respect of any federal, state or local income or alternative minimum taxes arising from the earnings or operations of RIH; PROVIDED, HOWEVER, that RIH shall not be required to reimburse RII for cash payments in respect of federal, state or local income or alternative minimum taxes that would not have been owed but for the reduction, if any, of the amount of the consolidated net operating loss carryforwards or consolidated current losses of the affiliated group of which RII is a common parent which resulted from the inclusion in the consolidated return filed for such group for any taxable year ending after the Effective Date of the income of any entity other than RIH, other than income directly attributable to the consummation of the Plan, including but not limited to the transfer of the stock of RIB (as defined in the Plan) and the assets of the U.S. Paradise Island Subsidiaries (as defined in the Plan), and (ii) RIH will be entitled to any refund (plus the interest thereon) of any taxes for which RIH is required to reimburse RII. "SERVICES AGREEMENT" means the Services Agreement dated as of September 17, 1992, between RII, RIH and The Griffin Group, Inc. "SPECIAL RECORD DATE" for the payment of any Defaulted Interest on Notes means a date fixed by the Trustee pursuant to Section 3.07. "STATED MATURITY" when used with respect to any Note means the date specified in such Note as the fixed date on which the principal of such Note is due and payable. "SUBSIDIARY" of any Person means a corporation more than 50% of the outstanding voting stock of which is owned, directly or indirectly, by such Person or one or more Subsidiaries of such Person. "TIA" or "TRUST INDENTURE ACT" means the Trust Indenture Act of 1939, as amended. "TRUSTEE" means the Person named as the "Trustee" in the first paragraph of this instrument until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter Trustee shall mean such successor Trustee. 15 "TRUST ESTATE" has the meaning stated in the Granting Clauses to the Mortgage. "U.S. GOVERNMENT OBLIGATIONS" has the meaning stated in Section 14.01. "U.S. LEGAL TENDER" means such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts, PROVIDED that for purposes of Article Fourteen, U.S. Legal Tender includes wire transfer payable in U.S. Legal Tender. "VICE PRESIDENT" when used with respect to the Company, RIH or the Trustee means any vice president, whether or not designated by a number or a word added to the title. "WORKING CAPITAL FACILITY" means the RIHF Senior Facility (and the RIHF Senior Facility Notes issued thereunder) and any other secured or unsecured facility or facilities entered into by RIH and/or the Company providing for the making of working capital loans to RIH or the Company (with RII [and GRI] as a guarantor[s] thereunder) on a revolving or term basis, or the issuance of notes, debentures or bonds by RIH, the Company or RII, as such agreement may be amended, supplemented or modified from time to time, or any refinancing thereof, in an aggregate principal amount up to $20,000,000; PROVIDED, HOWEVER, that the lender or lenders thereunder (or any trustee or agent acting on behalf of such lender or lenders) shall have executed an intercreditor agreement covering the matters set forth on Exhibit G. The liens, if any, securing the Working Capital Facility may be senior to the lien of the Mortgage, the Guaranty Mortgage, the Junior Mortgage and the Junior Guaranty Mortgage. The term "WORKING CAPITAL FACILITY" does not include the Working Capital Facility Guaranty. "WORKING CAPITAL FACILITY MORTGAGE DOCUMENTS" means any mortgage, deed of trust, guaranty, promissory note, collateral assignment agreement, assignment of leases and rents, assignment of operating assets and any other security document to which either RIH or the Company is a party relating to the Working Capital Facility. "WORKING CAPITAL FACILITY GUARANTY" means any guaranty of the Working Capital Facility by RIH, including, without limitation, the guaranty of the RIHF Senior Facility Notes. Section 1.02. ACTS OF NOTEHOLDERS. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Noteholders may be embodied 16 in and evidenced by one or more instruments of substantially similar tenor signed by such Noteholders in person or by an agent 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 Noteholders 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 Company and (subject to Section 8.01(c)) in favor of the Trustee, if made in the manner provided in this Section 1.02. (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 the certificate of any 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. Whenever such execution is by an officer of a corporation or a member of a partnership on behalf of such corporation or partnership, such certificate or affidavit shall also constitute sufficient proof of his authority. (c) The fact and date of execution of any such instrument or writing and the authority of any Person executing the same may also be proved in any other manner which the Trustee deems sufficient; and the Trustee may in any instance require further proof with respect to any of the matters referred to in this Section 1.02. (d) The ownership of Notes shall be proved by the Note Register. (e) Any request, demand, authorization, direction, notice, consent, waiver or other action by the Holder of any Note shall bind every future Holder of the same Note and the Holder of every Note issued upon the transfer thereof or in exchange therefor or in lieu thereof, in respect of anything done 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 Note. (f) The Company may, in the circumstances permitted by the Trust Indenture Act, set any day as the record date for the purpose of determining the holder of Outstanding Notes entitled to give or take any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by this Indenture to be given or taken by holders of Notes. With regard to any record date set pursuant to this 17 Section 1.02(f) the holders of Outstanding Notes on such record date (or their duly appointed agents), and only such Persons, shall be entitled to give or take the relevant action, whether or not such Persons remain holders after such record date. (g) Until a waiver or consent becomes effective, such waiver or consent by a Holder is a continuing waiver or consent by the Holder and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder's Note, even if notation of the waiver or consent is not made on any Note. However, any such Holder or subsequent Holder may, until such waiver or consent becomes effective, revoke the waiver or consent as to his Note or portion of his Note. Such revocation shall be effective only if the Trustee receives the notice of such revocation before the date on which the waiver or consent has become effective. Section 1.03. NOTICES, ETC., TO TRUSTEE, RIH, THE COMPANY, CASINO CONTROL COMMISSION AND DIRECTOR OF GAMING ENFORCEMENT. (a) Any request, demand, authorization, direction, notice (including, without limitation, a notice of default), consent, waiver or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with, the Company, RIH, the Trustee, the Casino Control Commission or the Director of the Division of Gaming Enforcement be deemed given when either (i) delivered by hand or (ii) two days after sending by registered or certified mail, postage prepaid, in either case, addressed as follows: To the Company: Resorts International Hotel Financing, Inc. c/o Resorts International, Inc. 1133 Boardwalk Atlantic City, New Jersey 08401 Attn.: Secretary To RIH: Resorts International Hotel, Inc. c/o Resorts International, Inc. 1133 Boardwalk Atlantic City, New Jersey 08401 Attn.: Secretary 18 To the Trustee: State Street Bank and Trust Company of Connecticut, National Association 750 Main Street Hartford, Connecticut 06103 Attn.: Corporate Trust Department To Casino Control Commission: New Jersey Casino Control Commission Arcade Building Tennessee Avenue & Boardwalk Atlantic City, New Jersey 08401 Attn.: Chairman To Director of Division of Gaming Enforcement: New Jersey Division of Gaming Enforcement 140 E. Front Street CN 047 Trenton, New Jersey 08625 Attn.: Director (b) By notice to the Company, RIH, the Trustee, Casino Control Commission and/or Director of the Division of Gaming Enforcement, given as provided above, any party may designate additional or substitute addresses for such notices, which, notwithstanding Section 1.03(a), shall be deemed given when received. Section 1.04. NOTICES TO NOTEHOLDERS; WAIVER. Where this Indenture provides for notice to Noteholders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each Holder of such Notes, at the address of such Holder as it appears in the Note Register, not later than the latest date, and not earlier than the earliest date, prescribed for the provision of such notice. In any case where notice to Noteholders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Noteholder shall affect the sufficiency of such notice with respect to other Noteholders. 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 Noteholders 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. 19 In case, by reason of the suspension of regular mail service, or by reason of any other cause, it shall be impracticable to give such notice by mail, then such notification may be given by any other method that the Trustee shall consider to be reasonable and shall be deemed to be a sufficient giving of such notice for every purpose hereunder. Section 1.05. FORM AND CONTENTS OF DOCUMENTS DELIVERED TO TRUSTEE. Whenever 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 such matters in one or several documents. Any certificate or opinion of an Officer of the Company or of RIH may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such Officer knows that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any 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 RIH stating that the information with respect to such factual matters is in the possession of the Company or RIH, unless such counsel knows that the certificate or opinion or representations with respect to such matters are erroneous. If appropriate to the matter being opined upon and to the extent not prohibited by the TIA, any Opinion of Counsel may be subject to rights of creditors and the availability of equitable remedies. Whenever 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. Whenever in this Indenture, in connection with any application or certificate or report to the Trustee, it is provided that the Company or RIH shall deliver any document as a condition of the granting of such application, or as evidence of the Company's or RIH's compliance with any term hereof, it is intended that the truth and accuracy, at the time of the granting of such application or at the effective date of such certificate or report (as the case may be), of the facts and opinions stated in such document shall in such case be conditions precedent to the right of the Company or 20 RIH to have such application granted or to the sufficiency of such certificate or report. Section 1.06. COMPLIANCE CERTIFICATES AND OPINIONS. Upon any application or request by the Company or RIH to the Trustee to take any action under any provision of this Indenture or any Mortgage Document, the Company or RIH shall furnish to the Trustee an Officers' Certificate stating that all conditions precedent, if any, provided for in this Indenture or such Mortgage Document 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 or any Mortgage Document shall include: (a) a statement that each individual signing such certificate or opinion has read such condition or covenant and the definitions herein relating thereto; (b) 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; (c) 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 condition or covenant has been complied with; and (d) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. Section 1.07. CONFLICT WITH TRUST INDENTURE ACT. If any provision hereof or of the Mortgage Documents or the Assignment Agreement limits, qualifies or conflicts with another provision hereof or of the Mortgage Documents or the Assignment Agreement which is required to be included herein or therein by any of the provisions of the TIA, such required provision shall control. 21 Section 1.08. EFFECT OF HEADINGS AND TABLE OF CONTENTS. The Article and Section headings herein and in the Table of Contents are for convenience only and shall not affect the construction hereof. Section 1.09. SUCCESSORS AND ASSIGNS. All covenants and agreements in this Indenture by the Company or RIH shall, subject to Section 10.02, bind its successors and assigns, whether so expressed or not. Section 1.10. SEPARABILITY CLAUSE. In case any provision in this Indenture or in the Notes 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 1.11. BENEFITS OF INDENTURE. Nothing in this Indenture or in the Notes, express or implied, shall give to any Person other than the parties hereto and their successors hereunder, any separate trustee or co-trustee appointed under Section 8.14 and the Holders of Notes, any benefit or any legal or equitable right, remedy or claim under this Indenture. Section 1.12. GOVERNING LAW. This Indenture and each Note shall be deemed to be a contract under the laws of the State of New York and shall be construed in accordance with and governed by the internal laws of the State of New York. Section 1.13. CASINO CONTROL ACT. Each of the provisions of this Indenture is subject to and shall be enforced in compliance with the provisions of the Casino Control Act, unless such provisions are in conflict with the TIA, in which case the TIA shall control. Section 1.14. GENERAL APPLICATION. (a) The assertion of any rights upon any Default shall be subject in each instance to the giving of any notice and the expiration of any grace period provided for in Section 7.01 as a condition to such Default becoming an Event of Default, unless the TIA requires otherwise, in which case the TIA shall control. 22 (b) For the purposes of this Indenture, it is understood that an event which does not materially diminish the value of the Trustee's interest in the Trust Estate shall not be deemed an impairment of security, as that phrase is used in this Indenture. (c) This Indenture may not be used to interpret another indenture, loan or debt agreement of the Company, other than the Mortgage and the Guaranty Mortgage. Any such indenture, loan or debt agreement may not be used to interpret this Indenture. (d) In the event of a conflict between any provision of this Indenture and any provision of a Mortgage Document, the provision of this Indenture shall prevail. ARTICLE TWO NOTE FORM Section 2.01. FORM GENERALLY. The Notes and the Trustee's certificate of authentication shall be substantially in the forms set forth in this Article Two, 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 Notes as evidenced by their execution thereof. Any portion of the text of any Note may be set forth on the reverse thereof. The definitive Notes shall be printed, lithographed or engraved or produced by any combination of these methods or produced in any other manner permitted by the rules of any securities exchange on which the Notes may be listed, all as determined by the officers executing such Notes as evidenced by their execution thereof. 23 Section 2.02. FORM OF NOTES. The form of the Notes shall be substantially as follows: [Face of Notes] RESORTS INTERNATIONAL HOTEL FINANCING, INC. 11% MORTGAGE NOTE DUE 2003 No.______________ $________________ Resorts International Hotel Financing, Inc., a Delaware corporation (hereinafter called the "Company", which term includes any successor entity under the Indenture referred to on the reverse), for value received, hereby promises to pay to ______________, or registered assigns, on September 15, 2003 the sum of __________ Dollars (or so much thereof as shall not have been paid upon prior redemption) and to pay interest (computed on the basis of a 360-day year of twelve 30-day months based on the actual number of days elapsed) thereon from [ ], 1994 [the Effective Date], or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually at March 15 and September 15 in each year (commencing September 15, 1994), at the rate of 11% per annum, until the principal hereof is paid or made available for payment. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in said Indenture, be paid to the Person in whose name this Note (or one or more Predecessor Notes) is registered at the close of business on the Regular Record Date for such interest, which shall be the first day (whether or not a business day) of the calendar month of 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 may be paid to the Person in whose name this Note (or one or more Predecessor Notes) 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 thereof being given to Noteholders not less than ten 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 Notes of this series may be listed and upon such notice as may be required by such exchange, all as more fully provided in said Indenture. The principal of and interest on this Note shall be payable at the corporate trust office of the Trustee, as defined on the reverse, or at an office or agency of the Company in the Borough of Manhattan, City and State of New York. All such payments shall be made in such coin or 24 currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. At the option of the Company, payment of interest may be made by check mailed to the address of the Person entitled thereto as such address shall appear on the Note Register. Unless the certificate of authentication hereon has been executed by the Trustee or the Authenticating Agent by manual signature, this Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. THIS NOTE SHALL BE DEEMED TO BE A CONTRACT UNDER THE LAWS OF THE STATE OF NEW YORK AND SHALL BE CONSTRUE IN ACCORDANCE WITH AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK. IN WITNESS WHEREOF, the Company has caused this Note to be executed. RESORTS INTERNATIONAL HOTEL FINANCING, INC. Dated: ______________________ By:________________________ Attest:______________________ [Back of Notes] This Note is one of a duly authorized issue of Notes of the Company designated as "11% Mortgage Notes due 2003" (the "Notes"), issued under an Indenture dated as of __________ __, 1994 (the "Indenture"), among the Company, Resorts International Hotel, Inc., a New Jersey corporation, as guarantor ("RIH"), and State Street Bank and Trust Company of Connecticut, National Association, a national banking association, as Trustee (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 description of the nature and extent of the security, the respective rights thereunder of the Holders of the Notes, the Trustee and the Company and the terms upon which the Notes are, and are to be, authenticated and delivered. Payment of principal and interest (including interest on overdue principal) and performance of all obligations under the Indenture is guaranteed by RIH (the "Guaranty"). The Notes are secured by an assignment of one or more secured senior promissory notes of RIH, which owns and 25 operates the property known as Merv Griffin's Resorts Casino Hotel, and of a mortgage on the Trust Estate made by RIH (the "Mortgage"). Additionally, the Guaranty is secured by a separate direct mortgage of the Trust Estate made by RIH to the Trustee (the "Guaranty Mortgage"). All terms in this Note defined in the Indenture shall have the same meaning herein as therein. The lien of the Mortgage is pari passu with the lien of the Guaranty Mortgage, junior to the lien securing payment of the RIHF Senior Facility Notes and any other secured Working Capital Facility and junior to the lien (if any) securing the Working Capital Facility Guaranty. The Notes may be redeemed at the option of the Company, as a whole or from time to time in part, on or after the fifth anniversary of the Effective Date on notice as provided in the Indenture, at par together with interest accrued and unpaid thereon to the date fixed for redemption. In the event of an RIH Sale, all the Notes shall be redeemed by the Company, whether such RIH Sale occurs before, on or after the fifth anniversary of the Effective Date, at par together with interest, if any, accrued and unpaid thereon to the Redemption Date; PROVIDED, HOWEVER, that such obligation of the Company to redeem the Notes in the event of a proposed RIH Sale shall cease to exist if the Holders of not less than 66-2/3% in Outstanding Amount of the Outstanding Notes have consented to such proposed RIH Sale. Notwithstanding the foregoing, each Holder by accepting a Note agrees that if the Casino Control Commission does not waive the qualification requirement as to the Holder (whether the record owner or beneficial owner) of this Note and requires that the Holder be qualified under the Casino Control Act, then, in such event, the Holder must qualify under the Casino Control Act. If the Holder does not so qualify, the Holder must dispose of its interest in this Note, within 30 days after the Company's receipt of notice of such finding, or the Company may repurchase this Note at the lower of the Holder's original cost and the Fair Market Value of this Note, plus accrued interest thereon to the date of such repurchase. Commencing on the date the Casino Control Commission serves notice upon either RIH or the Company that any Holder is disqualified, it shall be unlawful for any such disqualified Holder: (i) to receive any dividends or interest upon this Note; (ii) to exercise, directly or through any trustee or nominee, any right conferred by this Note; or (iii) to receive any remuneration in any form from either the Company or RIH for services rendered or otherwise. It is provided in the Indenture that Notes of a denomination larger than $1,000 may be redeemed in part ($1,000 or a multiple thereof) and that upon any partial 26 redemption of any such Note the same shall be surrendered in exchange for one or more new Notes in authorized form for the unredeemed portion of principal. Notes (or portions thereof as aforesaid) for whose redemption and payment provision is made in accordance with the Indenture shall thereupon cease to be entitled to the lien of the Indenture and the Mortgage and shall cease to bear interest from and after the date fixed for redemption. If an Event of Default shall occur, the principal of the Notes and all accrued and unpaid interest thereon may become or be declared due and payable in the manner and with the effect provided in the Indenture. The Indenture permits, with certain exceptions as therein provided, the amendment thereto and the modification of the rights and obligations of the Company and the rights of the Holders of the Notes under the Indenture at any time by the Company with the consent of the Holders of a majority or 66-2/3%, as the case may be, in aggregate Outstanding Amount of the Notes at the time Outstanding affected by such modification. The Indenture also contains provisions permitting the Holders of specified percentages in Outstanding Amount of Notes at the time Outstanding on behalf of the Holders of all the Notes to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Note shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note issued upon the transfer hereof or in exchange hereof or in lieu hereof, in respect of anything done or offered to be done by the Trustee in the Company in reliance thereon, whether or not notation of such action is made upon this Note. The Company may, in the circumstances permitted by the Trust Indenture Act, set any day as the record date for the purpose of determining the holders of Outstanding Notes entitled to give or take any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by the Indenture to be given or taken by holders of Notes. With regard to any such record date, the holders of Outstanding Notes on such record date (or their duly appointed agents), and only such Persons, shall be entitled to give or take the relevant action, whether or not such Persons remain holders after such record date. No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and interest on this Note at the times, places and rates, and in the coin or currency, herein prescribed. 27 As provided in the Indenture and subject to certain limitations therein set forth, this Note is transferable on the Note Register of the Company, upon surrender of this Note for transfer at the corporate trust office of the Trustee, or at an office or agency of the Company in the Borough of Manhattan, City and State of New York, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Note Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Notes, of authorized denominations and for the same aggregate principal amount will be issued to the designated transferee or transferees. The Notes are issuable only as registered Notes without coupons in denominations of $1,000 and integral multiples thereof. As provided in the Indenture, and subject to certain limitations therein set forth, Notes are exchangeable for a like aggregate principal amount of Notes of a different authorized denomination, as requested by the Holder surrendering the same. No service charge shall be made for any transfer or exchange hereinbefore referred to, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. The Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Note is registered as the owner hereof for the purpose of receiving payment as herein provided and for all other purposes, whether or not this Note be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. Section 2.03. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION. This is one of the Notes referred to in the within-mentioned Indenture. STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, as Trustee By:__________________________ Authorized Signature 28 Section 2.04. FORM OF THE GUARANTY. The form of the Guaranty of RIH shall be substantially as follows and shall appear on the reverse of each Note: GUARANTY OF RESORTS INTERNATIONAL HOTEL, INC. For value received, Resorts International Hotel, Inc., a New Jersey corporation, hereby unconditionally guarantees, as more fully set forth in Article Four of the Indenture, to the Holder of this Note the payment of the principal of and interest on this Note in the amounts and at the time when due and interest on the overdue principal and interest, if any, of this Note, if lawful, and the payment or performance of all other obligations of the Company to the Holder or the Trustee, all in accordance with and subject to the terms and limitations of this Note and Article Four of the Indenture, the foregoing Guaranty being a guaranty of payment and not of collectibility and being absolute and in no way conditional or contingent. This Guaranty will not become effective until the Trustee or the Authenticating Agent signs the certificate of authentication on such Note. As more fully described in the Indenture, this Guaranty is secured by a mortgage of the Trust Estate made by RIH to the Trustee. RESORTS INTERNATIONAL HOTEL, INC. Dated:__________________________ By:_______________________________ Attest:_________________________ ARTICLE THREE THE NOTES Section 3.01. GENERAL TITLE. The general title of the Notes shall be "11% Mortgage Notes due 2003". 29 Section 3.02. FORM AND DENOMINATIONS. The form of the Notes shall be as provided by the provisions of this Indenture. The Notes shall be issuable only in registered form and in such denominations as shall be provided in the provisions of this Indenture. The Notes shall be of the denominations of $1,000 and any integral multiple thereof. Section 3.03. EXECUTION, AUTHENTICATION, DELIVERY AND DATING. The Notes shall be executed on behalf of the Company by its chairman of the board, vice chairman of the board, its president, or one of its Vice Presidents and attested to by an Officer of the Company other than an Officer who has executed the Notes. The signature of any of these Persons on the Notes may be manual or facsimile. Notes bearing the manual or facsimile signatures of individuals who were at any time Officers of the Company shall bind the Company, notwithstanding that such individuals or any of them shall have ceased to be such prior to the authentication and delivery of such Notes. At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Notes executed by the Company to the Trustee for authentication and the Trustee shall authenticate and deliver such Notes as in this Indenture provided and not otherwise. All Notes shall be dated the date of their authentication. No Note shall be secured by, or be entitled to any lien, right or benefit under, this Indenture or be valid or obligatory for any purpose, unless there appears on such Note a certificate of authentication substantially in the form provided for herein, executed by the Trustee or the Authenticating Agent by manual signature, and such certificate upon any Note shall be conclusive evidence, and the only evidence, that such Note has been duly authenticated and delivered hereunder. Section 3.04. TEMPORARY NOTES. Pending the preparation of definitive Notes, the Company may execute, and upon Company Request the Trustee shall authenticate and deliver, temporary Notes which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any denomination, substantially of the tenor of the definitive Notes in lieu of which they are issued, in registered form, without coupons, with provision for registration as to principal and with such appropriate insertions, omissions, substitutions and other variations as 30 the Officers executing such Notes may determine, as evidenced by their execution of such Notes. If temporary Notes are issued, the Company will cause definitive Notes to be prepared without unreasonable delay. After the preparation of definitive Notes, the temporary Notes shall be exchangeable for definitive Notes upon surrender of the temporary Notes at the office or agency of the Company in a Place of Payment therefor, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Notes, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a like principal amount of definitive Notes of authorized denominations. Until so exchanged, temporary Outstanding Notes shall in all respects be entitled to the security and benefits of this Indenture. Section 3.05. REGISTRATION, TRANSFER AND EXCHANGE. The Company shall cause to be kept at one of the offices or agencies maintained by the Company as provided in Section 12.02 a register (herein sometimes referred to as the "Note Register") in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Notes and registration of transfers of Notes entitled to be registered or transferred as herein provided. The Trustee is hereby appointed "Note Registrar" for the purpose of registering Notes and transfers of Notes as herein provided. Upon surrender for transfer of any Note at the office or agency of the Company in a Place of Payment therefor, the Company shall execute and, upon request of the Company, the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Notes of any authorized denominations and of a like aggregate principal amount. The Trustee has no obligation to determine that any Note has been properly transferred and may conclusively rely on instructions given by the Company pursuant to this Section 3.05. All Notes surrendered upon any exchange or transfer provided for in this Indenture shall be promptly canceled by the Trustee and thereafter disposed of as directed by a Company Request. All Notes issued upon any transfer or exchange of Notes shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same security and benefits under this Indenture, as the Notes surrendered upon such transfer or exchange. 31 Every Note presented or surrendered for transfer, exchange or discharge from registration shall (if so required by the Company or the Note Registrar) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Note Registrar duly executed, by the Holder thereof or his attorney duly authorized in writing. No service charge shall be made for any registration, discharge from registration, transfer or exchange of Notes, 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 transfer or exchange of Notes, other than exchanges under Section 3.04 or 11.06 not involving any transfer. The Company shall not be required (i) to issue, transfer or exchange any Note during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption of Notes under Section 13.04 and ending at the close of business on the day of such mailing, or (ii) to transfer or exchange any Note so selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part. Section 3.06. MUTILATED, DESTROYED, LOST AND STOLEN NOTES. If (a) any mutilated Note is surrendered to the Trustee, or the Company and the Trustee receive evidence to their satisfaction of the destruction, loss or theft of any Note and (b) 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 Note has been acquired by a bona fide purchaser, the Company shall execute and upon its request the Trustee shall authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Note, a new Note of like tenor and principal amount, bearing a number not contemporaneously outstanding. In case any such mutilated, destroyed, lost or stolen Note has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Note, pay such Note. Upon the issuance of any new Note under this Section 3.06, 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 connected therewith. 32 Every new Note issued pursuant to this Section 3.06 in lieu of any destroyed, lost or stolen Note shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Note shall be at any time enforceable by anyone, and shall be entitled to all the security and benefits of this Indenture equally and ratably with all other Notes. The provisions of this Section 3.06 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 Notes. Section 3.07. PAYMENT OF INTEREST ON NOTES; INTEREST RIGHTS PRESERVED. Interest on any Note 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 that Note (or one or more Predecessor Notes) is registered at the close of business on the Regular Record Date for such interest specified in the provisions of this Indenture. Any interest on any Note which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date ("Defaulted Interest") shall forthwith cease to be payable to the Holder on the relevant Regular Record Date solely by virtue of such Holder having been such Holder; and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in subsection (a) or (b) below: (a) The Company may elect to make payment of any Defaulted Interest on the Notes to the Persons in whose names such Notes (or their respective Predecessor Record Date for the payment of such Defaulted Interest Notes) are registered at the close of business on a Special, 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 Note and the date of the proposed payment (which date shall be such as will enable the Trustee to comply with the next sentence hereof), 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 provided in this subsection (a) and not to be deemed part of the Trust Estate. Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which 33 shall be not more than 15 nor less than ten days prior to the date of the proposed payment and not less than ten 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 mailed, first-class postage prepaid, to each Holder of a Note at his address as it appears in the Note Register not less than ten days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been mailed as aforesaid, such Defaulted Interest shall be paid to the Persons in whose names the Notes (or their respective Predecessor Notes) are registered on such Special Record Date and shall no longer be payable pursuant to subsection (b) of this Section 3.07. (b) The Company may make payment of any Defaulted Interest on the Notes in any other lawful manner not inconsistent with the requirements of any securities exchange in which the Notes 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 subsection (b), such payment shall be deemed practicable by the Trustee. Subject to the foregoing provisions of this Section 3.07, each Note delivered under this Indenture upon transfer of or in exchange for or in lieu of any other Note shall carry all the rights to interest accrued and unpaid, and to accrue, which were carried by such other Note. Section 3.08. PERSONS DEEMED OWNERS. The Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name any Note is registered as the owner of such Note for the purpose of receiving payment of principal of, and interest on, such Note and for all other purposes whatsoever whether or not such Note be overdue, and, to the extent permitted by law, neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. Section 3.09. CANCELLATION. All Notes surrendered for payment, redemption, transfer, exchange or conversion, if surrendered to the Trustee, shall be promptly canceled by it, and, if surrendered to any Person other than the Trustee, shall be delivered to the Trustee and, if not already canceled, shall be promptly canceled by it. The Company shall deliver to the Trustee for 34 cancellation any Notes previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever, and all Notes so delivered shall be promptly canceled by the Trustee. No Note shall be authenticated in lieu of or in exchange for any Note canceled as provided in this Section 3.09, except as expressly provided by this Indenture. All canceled Notes held by the Trustee shall be disposed of as directed by a Company Request. Section 3.10. TERM AND FORM. The Stated Maturity of the Notes shall be September 15, 2003. The aggregate principal amount of Notes that may be authenticated, delivered and outstanding is limited to $125,000,000. The Notes shall bear interest from [ ], 1994 [the Effective Date] or from the most recent Interest Payment Date to which interest has been paid or duly provided for, payable semi-annually on March 15 and September 15 each year, commencing September 15, 1994. The Notes shall bear interest at the rate of 11% per annum until the principal thereof shall become due and payable, and at the rate of 14% per annum on any overdue principal and, to the extent permitted by law, overdue interest. Interest shall be computed on the basis of a 360-day year of twelve 30-day months based on the actual number of days elapsed. The principal and the Redemption Price of the Notes and interest on the Notes on each Interest Payment Date shall be payable at a Place of Payment, and, in addition to any other lawful means of such payment, may be paid by check payable to the order of the Noteholder. The Regular Record Date referred to in Section 3.07 for the payment of the interest on the Notes payable, and punctually paid or duly provided for, on any Interest Payment Date shall be the first day (whether or not a business day) of the calendar month of such Interest Payment Date. Section 3.11. EXCHANGEABILITY. Subject to Section 3.05, all Notes shall be fully interchangeable with other Notes, and, upon surrender at the office or agency of the Company in a Place of Payment therefor, all Notes shall be exchangeable for other Notes of a different authorized denomination or denominations, as requested by the Holder surrendering the same. The Company will execute, and the Trustee shall authenticate and deliver, Notes whenever the same are required for any such exchange. Section 3.12. REDEMPTION. The Company may, at its option, redeem, in accordance with Article Thirteen, all or from time to time any 35 part of the Notes on or after the fifth anniversary of the Effective Date, at par together, in each case, with interest, if any, accrued and unpaid thereon to the Redemption Date. In the event of an RIH Sale, all the Notes shall be redeemed by the Company whether such RIH Sale occurs before, on or after the fifth anniversary of the Effective Date, at par together with interest, if any, accrued and unpaid thereon to the Redemption Date; PROVIDED, HOWEVER, that such obligation of the Company to redeem the Notes in the event of a proposed RIH Sale shall cease to exist if the Holders of not less than 66-2/3% in Outstanding Amount of the Outstanding Notes have consented to such proposed RIH Sale. Section 3.13. AUTHENTICATION AND DELIVERY OF ORIGINAL ISSUE. Forthwith upon the execution and delivery of this Indenture, Notes up to an aggregate principal amount of $125,000,000 may be executed by the Company and delivered to the Trustee for authentication, and shall thereupon be authenticated and delivered by the Trustee upon Company Order, without any further action by the Company. ARTICLE FOUR GUARANTY Section 4.01. GUARANTY. RIH hereby guarantees (such guaranty to be referred to herein as the "Guaranty") to each Holder of a Note 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 Notes or the obligations of the Company hereunder or thereunder, that: (a) the principal of and interest on the Notes will be promptly paid in the amounts and at the times when due, whether at the maturity or Interest Payment Date, by acceleration, call for redemption or otherwise, and interest on the overdue principal, if any, of the Notes, and all other obligations of the Company to the Holders or the Trustee hereunder or thereunder will be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and (b) in case of any extension of time of payment or renewal of any Notes or payment or performance of any of such other obligations, that 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 for whatever reason, RIH will be obligated to pay the same immediately. RIH hereby agrees that its obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Notes or 36 this Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Notes with respect to any provisions hereof or thereof, any releases of collateral, any delays in obtaining or realizing upon or failures to obtain or realize upon collateral, the recovery of any judgment against the Company, any action to enforce the same or any other circumstances which might otherwise constitute a legal or equitable discharge or defense of a guarantor. This Guaranty is a guaranty of payment and not of collectibility, and is secured by the Guaranty Mortgage, as described therein. RIH hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest, notice and all demands whatsoever and covenants that this Guaranty will not be discharged except by complete performance of the obligations contained in the Notes and this Indenture. If any Noteholder or the Trustee is required by any court or otherwise to return to either RIH or the Company, or any custodian, trustee, liquidator or other similar official acting in relation to either RIH or the Company, any amount paid by either RIH or the Company to the Trustee or such Noteholder, this Guaranty, to the extent theretofore discharged, shall be reinstated in full force and effect. RIH agrees that it shall not be entitled to, and hereby irrevocably waives, any right of subrogation in relation to the Company in respect of any obligations guaranteed hereby. RIH further agrees that, as between RIH, on the one hand, and the Holders and the Trustee, on the other hand, (i) the maturity of the obligations guaranteed hereby may be accelerated as provided in Section 7.02 for the purposes of this Guaranty, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (ii) in the event of any declaration of acceleration of such obligations as provided in Section 7.02, such obligations (whether or not due and payable) shall forthwith become due and payable by RIH for the purpose of this Guaranty. Section 4.02. EXECUTION AND DELIVERY OF GUARANTY. To evidence its Guaranty set forth in Section 4.01, RIH hereby agrees to execute its Guaranty substantially in the form set forth in Section 2.04, to be endorsed on each Note authenticated and delivered by the Trustee and that this Indenture shall be executed on behalf of RIH by an Authorized Signature. RIH hereby agrees that its Guaranty set forth in Section 4.01 shall remain in full force and effect notwithstanding any failure to endorse on each Note a notation of such Guaranty; PROVIDED, HOWEVER, that the Trustee or the 37 Authenticating Agent has signed the certificate of authentication on such Note. If an Officer whose signature is on this Indenture no longer holds that office at the time the Trustee authenticates a Note on which a Guaranty is endorsed, the Guaranty shall be valid nevertheless. The delivery of any Note by the Trustee, after the authentication thereof hereunder, shall constitute due delivery of the Guaranty set forth in this Indenture on behalf of RIH. Section 4.03 MORTGAGE SECURING GUARANTY. In order to secure the due and punctual payment of all amounts which may ever become owing under the Guaranty, when and as the same shall be due and payable, and performance of all other obligations of RIH to the Holders or the Trustee under the Guaranty, according to the terms hereof, RIH has mortgaged and encumbered all of its right, title and interest in and to the Trust Estate to the Trustee pursuant to the Guaranty Mortgage. RIH has the full right, power and authority to grant, bargain, sell, release, convey, hypothecate, assign, mortgage, pledge, transfer and confirm the property constituting the Trust Estate, in the manner and form done, or intended to be done, in the Guaranty Mortgage, free and clear of all liens, pledges, charges and encumbrances, whatsoever, except for the items described in clauses (a) through (d) (inclusive) of Section 12.13, and (a) will forever warrant and defend the title to the same against the claims of all Persons whatsoever in accordance with the terms of the Guaranty Mortgage, (b) will execute, acknowledge and deliver to the Trustee such further instruments as the Trustee may require or request, and (c) will do or cause to be done all such acts and things as may be reasonably necessary or proper, or as may be required by the Trustee (other than obtaining a loan title insurance policy or title policy endorsement pertaining to the Guaranty Mortgage), to assure and confirm to the Trustee its interest in the Trust Estate and the right, title and interest in and to the Guaranty Mortgage, so as to render the same available for the security and benefit of this Guaranty secured thereby, according to the intent and purposes herein expressed. The Guaranty Mortgage creates and vests in the Trustee a direct and valid lien, which lien is senior to the lien securing payment of the Junior Mortgage Facility, senior to any lien securing the Junior Guaranty, PARI PASSU with the lien of the Mortgage, junior to the lien securing payment of the RIHF Senior Facility Notes and any other secured Working Capital Facility and junior to any lien securing the Working Capital Facility Guaranty. To the extent that any security interest in the Trust Estate or the Guaranty Mortgage is deemed to be 38 granted and to be governed by the Uniform Commercial Code, the Guaranty Mortgage is deemed to be a security agreement. ARTICLE FIVE SATISFACTION AND DISCHARGE Section 5.01. PAYMENT OF INDEBTEDNESS; SATISFACTION AND DISCHARGE OF INDENTURE. Whenever the following conditions exist, namely: (a) all Notes theretofore authenticated and delivered have been canceled by the Trustee or delivered to the Trustee for cancellation, excluding, however, (1) Notes for the payment of which money has theretofore been deposited in trust with the Trustee or a Paying Agent (other than the Company) or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust as provided in Section 12.03, (2) Notes alleged to have been destroyed, lost or stolen which have been replaced or paid as provided in Section 3.06, except for any such Note which, prior to the satisfaction and discharge of this Indenture, has been presented to the Trustee with a claim of ownership and enforceability by the Holder thereof and where enforceability has not been determined adversely against such Holder by a court of competent jurisdiction, and (3) other than any Notes excluded by clauses (1) and (2) of this Section 5.01(a), Notes which have become due and payable, Notes which will become due and payable at their Stated Maturity within one year and Notes which have been or 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, provided the Company, in the case of such Notes, has deposited or caused to be deposited with the Trustee in trust for the purpose an amount sufficient to pay and discharge the entire indebtedness on such Notes for principal and interest to the date of maturity thereof in the case of Notes which have become due and payable or to the Stated Maturity or Redemption Date, as the case may be; 39 (b) the Company or RIH has paid or caused to be paid all other sums payable hereunder by the Company; and (c) the Company or RIH has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each of which shall state that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with; then this Indenture and the lien, rights and interests created hereby shall cease, terminate and become null and void (except as to any surviving rights of transfer or exchange of Notes herein or therein provided for and any right to receive payments of principal and interest as provided in Section 5.01(a)(3)) and the Trustee and each co-trustee and separate trustee, if any, then acting as such hereunder shall, at the expense of the Company, execute and deliver a termination statement prepared by the Company in form reasonably satisfactory to the Trustee and such instruments of satisfaction and discharge as may be necessary and pay, assign, transfer and deliver to the Company or upon Company Order all cash, securities and other personal property then held by it hereunder, other than pursuant to Section 5.01(a)(3). In the absence of satisfaction of all of the above conditions, the payment of all Outstanding Notes shall not render this Indenture inoperative. Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Section 8.07 shall survive. Section 5.02. APPLICATION OF DEPOSITED MONEY. Money deposited with the Trustee pursuant to Section 5.01 shall constitute a separate trust fund for the benefit of the Persons entitled thereto. Subject to the provisions of Section 12.03, such money shall be applied by the Trustee to the payment (either directly or through any Paying Agent, as the Trustee may determine) to the Persons entitled thereto, of the principal and interest for whose payment such money has been deposited with the Trustee. Section 5.03. REPAYMENT TO THE COMPANY. The Trustee and any Paying Agent shall promptly pay to the Company upon request any excess money or securities held by them at any time. 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, or interest on, any Note and remaining unclaimed for two years 40 after such principal or interest has become due and payable shall be paid to the Company on its request, or (if then held by the Company) shall be dis- charged from such trust, unless otherwise required by mandatory provisions of applicable escheat or abandoned or unclaimed property law, and the Holder of such Note 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 regard to such 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 ex- pense 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 City of new York, State of New York, or mailed to each such Holder, or both, 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 or mailing, as the case may be, any unclaimed balance of such money then remaining will be paid to the Company. ARTICLE SIX SECURITY Section 6.01. ASSIGNMENT AGREEMENT. In order to secure the due and punctual payment of the principal of and interest on the Notes, when and as the same shall be due and payable, whether at Maturity or at an Interest Payment Date, by acceleration, call for redemption or otherwise, of the Notes and performance of all other obligations of the Company to the Holders or the Trustee under this Indenture, according to the terms hereof, the Company has made an assignment of all of its right, title and interest in and to the Mortgage Documents (other than the Guaranty Mortgage) to the Trustee pursuant to the Assignment Agreement. RIH has the full right, power and authority to grant, bargain, sell, release, convey, hypothecate, assign, mortgage, pledge, transfer and confirm the property constituting the Trust Estate, in the manner and form done, or intended to be done, in the Mortgage Documents, and the Company has the full right, power and authority to grant, bargain, sell, release, re-convey, assign, transfer and confirm, absolutely, all of its right, title and interest in and to the Mortgage Documents, in each case free and clear of all liens, pledges, charges and encumbrances, whatsoever, except for the items described in clauses (a) through (d) (inclusive) of Section 12.13, and (a) each will forever warrant and defend the title to the same 41 against the claims of all persons whatsoever in accordance with the terms of the Mortgage Documents and the Assignment Agreement, (b) each will execute, acknowledge and deliver to the Trustee such further assignments, transfers, assurances or other instruments as the Trustee may require or request, and (c) each will do or cause to be done all such acts and things as may be reasonably necessary or proper, or as may be required by the Trustee, to assure and confirm to the Trustee its interest in the Trust Estate and the right, title and interest in and to the Mortgage Documents, so as to render the same available for the security and benefit of this Indenture and of the Notes secured hereby, according to the intent and purposes herein expressed. The Mortgage Documents (other than the Guaranty Mortgage) and the Assignment Agreement together create and vest in the Trustee a direct and valid lien, which is PARI PASSU with the Guaranty Mortgage, junior to the lien securing payment of the RIHF Senior Facility Notes and any other secured Working Capital Facility and junior to any lien securing payment of the Working Capital Facility Guaranty, on the property constituting the Trust Estate and the interest in the Mortgage Documents which they purport to create. To the extent that any security interest in the Trust Estate or the Mortgage Documents are deemed to be granted and to be governed by the Uniform Commercial Code, the Mortgage and the Assignment Agreement are deemed to be security agreements. Section 6.02. RECORDING, ETC. The Company will cause, at its own expense, the Assignment Agreement, the Mortgage Documents, this Indenture and all amendments or supplements thereto, to be registered, recorded and filed and/or re-recorded, refiled and renewed in such manner and in such place or places, if any, as may be required by law in order fully to preserve and protect the lien of the Mortgage Documents and the Assignment Agreement on all parts of the Trust Estate and the Mortgage Documents and the interest in the RIH Promissory Note and to effectuate and preserve the security of the Noteholders and all rights of the Trustee. The Company shall furnish to the Trustee: (a) promptly after the execution and delivery of this Indenture or other instrument of further assurance or amendment, including any supplemental indenture, an Opinion or Opinions of Counsel either (1) stating that, in the opinion of such counsel, this Indenture, the Mortgage Documents and the assignment to the Trustee of the Mortgage Documents intended to be made by the Assignment Agreement and all other instruments of further assurance or amendment have been properly recorded, registered and filed to the extent necessary to make effective the liens intended to be created by the 42 Mortgage Documents and the Assignment Agreement, and reciting the details of such action or referring to prior Opinions of Counsel in which such details are given, and stating that as to the Mortgage Documents and the Assignment Agreement such recording, registering and filing are the only recordings, registerings and filings necessary to give notice thereof and that no re-recordings, re-registerings or re-filings are necessary to maintain such notice, and further stating that all financing statements and continuation statements have been executed and filed that are necessary fully to preserve and protect the rights of the Noteholders and the Trustee hereunder and under the Mortgage Documents and the Assignment Agreement, or (2) stating that, in the opinion of such counsel, no such action is necessary to make such liens and assignments effective; and (b) within 60 days after June 30 in each year beginning with the year 1995, an Opinion or Opinions of Counsel, dated as of such date, either (1) stating that, in the opinion of such counsel, such action has been taken with respect to the recording, registering, filing, re-recording, re-registering and re-filing of all supplemental indentures, financing statements, continuation statements or other instruments of further assurance as is necessary to maintain the liens of the Mortgage Documents and the assignment of the Mortgage Documents to the Trustee made by the Assignment Agreement and reciting the details of such action or referring to prior Opinions of Counsel in which such details are given, and stating that all financing statements and continuation statements have been executed and filed that are necessary fully to preserve and protect the rights of the Noteholders and the Trustee hereunder and under the Mortgage Documents and the Assignment Agreement, or (2) stating that, in the opinion of such counsel, no such action is necessary to maintain such liens and assignments. The Company and RIH shall cause TIA SECTION 314(d) relating to the release of property from the liens of the Mortgage to be complied with. Any certificate or opinion required by TIA SECTION 314(d) may be made by an Officer of the Company or RIH, unless otherwise required by TIA SECTION 314(d). Section 6.03. CUSTODY OF MORTGAGE DOCUMENTS. The Trustee shall hold in its possession the Mortgage Documents, except as it from time to time may be required for actions, suits or proceedings relating to the Mortgage Documents or for the purpose of enforcing or realizing upon any right or value thereby represented. The Trustee may, from time to time, in its sole discretion, for 43 the purpose of convenient location of the Mortgage Documents, appoint one or more agents to hold physical custody, for the account of the Trustee, of the Mortgage Documents. Section 6.04. SUITS TO PROTECT THE TRUST ESTATE AND MORTGAGE DOCUMENTS. Upon five days' prior written notice to the Company (or such shorter period or without notice if deemed necessary and appropriate by the Trustee), the Trustee shall have the power, but not the obligation to institute and to maintain such suits and proceedings as it may deem necessary or appropriate to prevent any impairment of the Trust Estate by any acts which may be unlawful or in violation of the Mortgage Documents, the Assignment Agreement or this Indenture, and such suits and proceedings as the Trustee may deem necessary or appropriate to preserve or protect its interest and the interests of the Noteholders in the Trust Estate and the Mortgage Documents and the principal, interest, issues, 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 result in an impairment of security hereunder or be materially prejudicial to the interests of the Noteholders or of the Trustee). The Trustee shall also have authority to exercise any rights or powers conferred on the Trustee as the holder of the Note. ARTICLE SEVEN REMEDIES Section 7.01. EVENTS OF DEFAULT. "EVENT OF DEFAULT", whenever used herein, means any one of the following events (including any applicable notice requirement and any period of grace as specified in this Section 7.01) (whatever the reason for such event 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): (a) default in the payment of any interest upon any Note when such interest becomes due and payable and continuance of such default (the deposit with the Trustee pursuant to Section 3.07 of funds sufficient to make such interest payment in full being deemed to cure any such 44 default for the purposes hereof) for a period of ten days; or (b) default in the payment of all or any portion of the principal of any Note at its Maturity; or (c) default in the performance or breach of any covenant of the Company or RIH in this Indenture (other than a covenant a default in the performance or breach of which is elsewhere in this Section 7.01 specifically dealt with), the Assignment Agreement or any of the Mortgage Documents and continuance of such default or breach for a period of 30 days (or such shorter or longer cure period, if any, as may be specified in respect of such default or breach in the Assignment Agreement or the applicable Mortgage Document, as the case may be), and (other than with respect to Sections 12.07, 12.08, 12.09, 12.10, 12.11, 12.12, 12.13 or 12.21) after there has been given (i) to the Company by the Trustee or (ii) to the Company and the Trustee by the Holders of at least 25% in Outstanding Amount of the Outstanding Notes, 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; PROVIDED, HOWEVER, that, if such default or breach is of a covenant set forth in Section 12.02, 12.04, 12.05, 12.11, 12.13 or 12.21, and if such default or breach is of such a nature that is curable but is not susceptible of being cured with due diligence within such 30-day period (or such shorter or longer cure period) (for reasons other than lack of funds), then such period shall be extended for such further period of time as may reasonably be required to cure such default or breach, so long as (i) RIH delivers an Officers' Certificate to the Trustee within such period stating (A) the applicability of the provisions of this proviso to such default or breach, (B) the Company's or RIH's intention to remedy such default or breach with reasonable diligence and (C) the steps which the Company or RIH has undertaken to remedy such default or breach, and (ii) RIH delivers to the Trustee additional Officers' Certificates every 30 days thereafter updating the information contained in the certificate described in clause (i) above, in which case such period shall be extended for such further period of time as may reasonably be required to cure such default or breach, provided that the Company or RIH is then proceeding and thereafter continues to proceed to cure such default or breach with reasonable diligence; PROVIDED FURTHER, HOWEVER, that such additional period of time shall not in any case exceed 60 days; or (d) a proceeding or case shall be commenced, without the application or consent of the Company or RIH, 45 in any court of competent jurisdiction, seeking (i) its liquidation, reorganization, dissolution or winding-up, or the composition or readjustment of its debts, (ii) the appointment of a trustee, receiver, custodian, liquidator or the like of the Company or RIH or of all or any substantial part of its assets, or (iii) similar relief in respect of the Company or RIH under any law relating to bankruptcy, insolvency, reorganization, winding-up, or composition or adjustment of debts, and such proceeding or case shall continue undismissed, or an order, judgment or decree approving or ordering any of the foregoing shall be entered and continue unstayed and in effect, for a period of 60 consecutive days; or (e) the commencement by the Company or RIH of a voluntary case under the federal bankruptcy laws or any other applicable federal or state law, or the consent or acquiescence by any of them to the filing of any such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee or sequestrator (or other similar official) of the Company or RIH or any substantial part of any of their property, or the making by any of them of an assignment for the benefit of creditors, or the taking of action by the Company or RIH in furtherance of any such action; or (f) the revocation, suspension or involuntary loss of any Permit which results in the cessation of a substantial portion of the operations of the Casino-Hotel for a period of more than 90 consecutive days; or (g) (i) a default by the Company, RIH or any of their Subsidiaries under any Indebtedness (other than the Indebtedness represented by the Working Capital Facility and the Junior Mortgage Facility) in an aggregate principal amount in excess of $5,000,000, which default results in the acceleration of the maturity of any such Indebtedness under the evidence of indebtedness, indenture or other instrument governing such Indebtedness; PROVIDED, HOWEVER, that, if such default under such evidence of indebtedness, indenture or other instrument shall be cured by the obligor, or be waived by the holders of such Indebtedness, in each case as may be permitted by such evidence of indebtedness, indenture or other instrument and in each case resulting in rescission of such acceleration thereunder, then the Event of Default hereunder by reason of such default shall be deemed likewise to have been thereupon cured or waived; or (ii) a default by the Company, RIH or any of their Subsidiaries under any Indebtedness represented by the Working Capital Facility or the Junior Mortgage Facility, the effect of which default (after the expiration of any applicable notice or grace periods) is to permit the 46 holder or holders of any such Indebtedness represented by the Working Capital Facility or the Junior Mortgage Facility in an aggregate principal amount in excess of $5,000,000 (or a trustee or agent on behalf of such holder or holders) to cause the acceleration of the maturity of such Indebtedness represented by the Working Capital Facility or the Junior Mortgage Facility under the evidence of indebtedness, indenture or other instrument governing such Indebtedness; PROVIDED, HOWEVER, that if such default under such evidence of indebtedness, indenture or other instrument shall be cured by the obligor, or be waived by the holders of such Indebtedness, in each case as may be permitted by such evidence of indebtedness, indenture or other instrument (and, if such default resulted in the acceleration of the maturity of such Indebtedness, such acceleration shall have been rescinded thereunder) then the Event of Default hereunder by reason of such default shall be deemed likewise to have been thereupon cured or waived; or (iii) the existence of a final judgment of a court of competent jurisdiction in an amount in excess of $3,000,000 against the Company, RIH or the Trust Estate, which judgment has not been satisfied or otherwise provided for, for a period of 30 days (during which execution shall not be effectively stayed) following the date on which such judgment becomes a lien against the Trust Estate or any part thereof (unless the lawsuit in question was commenced without effective service of process upon either the Company or RIH in which case such 30-day period shall not commence until the Company or RIH receives notice of such final judgment); or (iv) the existence of a final judgment of a court of competent jurisdiction in an amount in excess of $15,000,000 against the Company, RIH or the Trust Estate, which judgment has not been satisfied or otherwise provided for, for a period of 60 days (during which execution shall not be effectively stayed) following the date of such final judgment; or (v) the existence of a final judgment of a court of competent jurisdiction, regardless of amount, against the Company, RIH or the Trust Estate, which judgment has not been satisfied or otherwise provided for, for a period of 60 days (during which execution shall not be effectively stayed) following the date of such final judgment, if such judgment, by itself or upon recordation or other action of the judgment creditor, imposes or would impose a lien on the Trust Estate or any part thereof senior to the lien of the Mortgage; or (h) default in the performance, or breach, of any covenant of the Company or RIH in Article Ten; or 47 (i) the existence of a judgment of a court of competent jurisdiction in an amount in excess of $3,000,000 against RIH regarding the CRDA Dispute, which judgment has not been stayed, satisfied or otherwise provided for, for a period of 30 days (during which execution shall not be effectively stayed) (unless the lawsuit in question was commenced without effective service of process upon RIH in which case such 30-day period shall not commence until RIH receives notice of such final judgment); or (j) if RII fails to pay or discharge or cause to be paid or discharged, within 30 days before the same shall become delinquent, all taxes levied or imposed upon RII; PROVIDED, HOWEVER, that no Event of Default or Default shall be deemed to exist hereunder with respect to any tax liability not paid or discharged by RII if and to the extent that the amount, applicability or validity of such tax liabilities is being contested in good faith by appropriate proceedings if adequate reserves therefor have been established in accordance with GAAP; PROVIDED FURTHER, HOWEVER, that this clause (j) shall not apply to amounts due with respect to any period during which neither the Company, RIH nor any of their Subsidiaries is included in RII's consolidated group for federal income tax purposes. No action, event, claim, liability or judgment regarding the CRDA Dispute shall constitute a Default or an Event of Default under this Section 7.01 unless and until a judgment shall have been entered against RIH which constitutes an Event of Default pursuant to clause (i) of this Section 7.01. Section 7.02. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT. If an Event of Default (other than one referred to in clause (d) or (e) of Section 7.01) occurs and is continuing, then and in every such case the Trustee or the Holders of not less than 25% in Outstanding Amount of the Notes Outstanding may declare the Outstanding Amount and all accrued interest of all the Notes to be due and payable immediately, by a notice in writing to the Company (and to the Trustee, if given by any Noteholders), and upon any such declaration such Outstanding Amount shall become immediately due and payable. If an Event of Default referred to in clause (d) or (e) of Section 7.01 occurs, then the Outstanding Amount of all the Notes shall automatically become immediately due and payable without presentment, demand, protest or other formalities of any kind, all of which are hereby expressly waived by the Company. 48 At any time after such a declaration of acceleration has been made, but before any judgment or decree for payment of money due on any Notes has been obtained by the Trustee as hereinafter provided in this Article Seven, the Holders of a majority in Outstanding Amount of the Notes may, by written notice to the Company and the Trustee, rescind and annul such declaration and its consequences if: (a) the Company has deposited with the Trustee a sum sufficient to pay: (1) all overdue installments of interest on all Notes, (2) the principal of any Notes which have become due otherwise than by such declaration of acceleration and interest thereon at the rate or rates prescribed therefor in the Notes, and (3) 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 (b) all Events of Default, other than the non-payment of the Outstanding Amount of Notes which have become due solely by such declaration of acceleration, have been cured, or have been waived as provided in Section 7.13. No such rescission and annulment shall affect any subsequent default or impair any right consequent thereon. Section 7.03. COVENANT TO PAY TRUSTEE AMOUNTS DUE ON NOTES AND RIGHT OF TRUSTEE TO JUDGMENT. The Company covenants that, if: (a) default is made in the payment of any interest on any Note when such interest becomes due and payable, and such default continues for a period of 10 days (the deposit with the Trustee during such 10 day period pursuant to Section 3.07 of funds sufficient to make such interest payment in full being deemed to cure any such default for the purposes hereof), or (b) default is made in the payment of the principal of any Note at its Maturity, then, upon demand of the Trustee, the Company will pay to the Trustee for the benefit of the Holders of such Notes, the whole amount then due and payable on such Notes for principal and interest, with interest at the rate prescribed therefor in 49 the Notes on overdue principal 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 and as trustee of an express trust, shall be entitled to sue for and recover judgment against the Company, RIH and any other obligor on the Notes for the whole amount so due and unpaid. The Trustee shall be entitled to institute such suit either before, after or during the pendency of any proceedings for the enforcement of this Indenture or of the Mortgage Documents or of the Assignment Agreement, but only after the occurrence of an Event of Default. Subject to the Intercreditor Agreement, in the case of a foreclosure of the Mortgage and a sale of the Trust Estate and application of the proceeds as provided in Section 7.06, the Trustee, in its own name and as trustee of an express trust, shall be entitled to enforce payment of, and to receive, all amounts then remaining due and unpaid upon the Notes, for the benefit of the Holders thereof, and shall be entitled to recover judgment for any portion of the same remaining unpaid, with interest as aforesaid. No recovery of any such judgment upon any property of the Company shall affect or impair the security provided by this Indenture and the Assignment Agreement or the lien of the Mortgage upon the Trust Estate or any rights, powers or remedies of the Holders of the Notes. Section 7.04. 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 RIH or any other obligor upon the Notes or the property of the Company or RIH or of such other obligor or their creditors, the Trustee (irrespective of whether the principal (or any portion thereof) of the Notes 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 or interest) shall be entitled and empowered, by intervention in such proceeding or otherwise, (a) to file and prove a claim for the whole amount of principal and interest owing and unpaid in respect of the Outstanding Notes 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 50 advances of the Trustee, its agents and counsel) and of the Noteholders allowed in such judicial proceeding, and (b) 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 other similar official in any such judicial proceeding is hereby authorized by each Noteholder 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 Noteholders, to pay to the Trustee any amount due to 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 8.07. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Noteholder any plan of reorganization, arrangement, adjustment or compensation affecting the Notes or the rights of any Holder thereof, or to authorize the Trustee to vote on the claim of any Noteholder in any such proceeding. Section 7.05. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF NOTES. All rights of action and claims under this Indenture, the Notes, the Assignment Agreement or the Mortgage Documents may be prosecuted and enforced by the Trustee without the possession of any of the Notes or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust. 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 Notes in respect of which such judgment has been recovered. Section 7.06. APPLICATION OF MONEY COLLECTED. Subject to the Intercreditor Agreement, any money collected by the Trustee pursuant to this Article Seven or pursuant to Article Three or Section 5.11 or 5.20 of the Mortgage which is not required to be paid to the Mortgagor thereunder shall be applied in the following order, at the date or dates fixed by the Trustee and upon such date interest shall cease to accrue, and, in case of the distribution of such money on account of principal upon presentation of the Notes, and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid: 51 (a) FIRST: To the payment of all amounts due the Trustee under Section 8.07; (b) SECOND: To the payment of the whole amount then due upon the Outstanding Notes, for principal and interest, in respect of which or for the benefit of which such money has been collected, with interest (to the extent that such interest has been collected by the Trustee or a sum sufficient therefor has been so collected and payment thereof is legally enforceable at the respective rate or rates prescribed therefor in the Notes) on overdue principal; and in case such proceeds shall be insufficient to pay in full the whole amount so due and unpaid upon such Notes, then first, payment of accrued but unpaid interest (with interest thereon as aforesaid), and second, to outstanding principal, in each case, ratably according to the aggregate amount so due; and (c) THIRD: To the payment of the remainder, if any, to the Company or to whomever may be lawfully entitled to receive the same or as a court of competent jurisdiction may direct. Section 7.07. LIMITATION ON SUITS. No Holder of any Note shall have any right to institute any proceeding, judicial or otherwise, under or with respect to this Indenture, the Assignment Agreement or the Mortgage Documents, or for the appointment of a receiver or trustee or for any other remedy hereunder, unless: (a) such Holder has previously given written notice to the Trustee of a continuing Event of Default; (b) the Holders of not less than 25% in Outstanding Amount of the Outstanding Notes 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; (c) 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; (d) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and (e) no direction inconsistent with such written request has been given to the Trustee during such 60-day 52 period by the Holder of a majority in Outstanding Amount of the Outstanding Notes; it being understood and intended that no one or more Holders of Notes shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture, the Assignment Agreement or the Mortgage Documents, to affect, disturb or prejudice the right of any other Holders of Notes, or to obtain or to seek to obtain priority or preference over any other Holders or to enforce any right under this Indenture, the Assignment Agreement or the Mortgage Documents, except in the manner herein and therein provided and for the Ratable Benefit of all Notes. Section 7.08. UNCONDITIONAL RIGHT OF NOTEHOLDERS TO RECEIVE PRINCIPAL AND INTEREST. Notwithstanding any other provision in this Indenture, the Holder of any Note shall have the right, which is absolute and unconditional, to receive payment of the principal of and interest on such Note on the Stated Maturity or Interest Payment Dates expressed in such Note (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 7.09. RESTORATION OF RIGHTS AND REMEDIES. If the Trustee or any Noteholder has instituted any proceeding to enforce any right or remedy under this Indenture, the Assignment Agreement or the Mortgage Documents and such proceeding has been discontinued or abandoned for any reason or has been determined adversely to the Trustee or to such Noteholder, then and in every such case the Company, the Trustee and the Noteholders shall, subject to any determination in such proceeding, be restored to their former positions hereunder, and thereafter all rights and remedies of the Trustee and the Noteholders shall continue as though no such proceeding had been instituted. Section 7.10. RIGHTS AND REMEDIES CUMULATIVE. No right or remedy herein conferred upon or reserved to the Trustee or to the Noteholders 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. 53 Section 7.11. DELAY OR OMISSION NOT WAIVER. No delay or omission of the Trustee or of any Holder of any Note to exercise any right or remedy accruing upon an 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 Seven or by law to the Trustee or to the Noteholders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Noteholders, as the case may be. Section 7.12. OTHER RIGHTS. Subject to Section 8.03(e), the Holders of a majority in Outstanding Amount of the Outstanding Notes shall have the right, during the continuance of an Event of Default, (a) to require the Trustee to proceed to enforce this Indenture, either by judicial proceedings for the enforcement of the payment of the Notes by the foreclosure of the Mortgage and exercise of any remedies under the Mortgage Documents and the Assignment Agreement and the sale of the Trust Estate or otherwise or, at the election of the Trustee, by the exercise of the power of entry and/or sale conferred by the Mortgage; and (b) 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 upon the Trustee hereunder, provided that (1) such direction shall not be in conflict with any rule of law or this Indenture or any applicable Mortgage Document or the Assignment Agreement; (2) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction; and (3) the Trustee shall not be required to determine if any action so directed would be unjustly prejudicial to the Holders not taking part in such direction. Section 7.13. WAIVER OF PAST DEFAULTS. Before any judgment or decree for payment of money due has been obtained by the Trustee as provided in this Article Seven, the Holders of not less than 66-2/3% in Outstanding Amount of the Outstanding Notes may, by Act of such Noteholders delivered to the Trustee and the Company, on 54 behalf of the Holders of all the Notes waive any past Default hereunder and its consequences, except a Default (a) in the payment of the principal of or interest on any Note, or (b) in respect of a covenant or provision hereof which under Article Eleven cannot be modified or amended without the consent of the Holder of each Outstanding Note affected. Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or impair any right subsequent thereon. Section 7.14. UNDERTAKING FOR COSTS. All parties to this Indenture agree, and each Holder of any Note by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, the Assignment Agreement or the Mortgage Documents, or in any suit against the Trustee for any action taken or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to the merits and good faith of the claim or defense made by such party litigant; but the provisions of this Section 7.14 shall not apply to any suit instituted by the Trustee, to any suit instituted by any Noteholders, or group of Noteholders, holding in the aggregate more than 10% in Outstanding Amount of the Outstanding Notes, or to any suit instituted by any Noteholder for the enforcement of the payment of the principal of or interest on any Note on or after the Stated Maturity expressed in such Note (or, in the case of redemption, on or after the Redemption Date) or the relevant Interest Payment Date. Section 7.15. ENFORCEMENT. In case an Event of Default shall occur and be continuing, the Trustee, in it discretion may, subject to the provisions of Section 7.12, proceed to protect and enforce its rights and the rights of the Noteholders under this Indenture by a suit, action or proceeding in equity or at law or otherwise, whether for the specific performance of any covenant or agreement contained in this Indenture or in aid of the execution of any power granted in this Indenture or for the enforcement of any other legal, equitable or other remedy, 55 as the Trustee, being advised by counsel, shall deem most effectual to protect and enforce any of the rights of the Trustee or the Noteholders hereunder. In case an Event of Default shall occur and be continuing under the Mortgage, the Trustee, as assignee of the Mortgage Documents, in its discretion may, subject to the provisions of Section 7.12, proceed to enforce its rights under the Mortgage Documents and the Assignment Agreement. Section 7.16. MANAGEMENT OF CASINO-HOTEL. Notwithstanding any provision of this Article Seven to the contrary, (a) following an Event of Default under the Mortgage and the taking of possession of the Trust Estate by the Trustee and/or the appointment of a receiver of the Trust Estate or any part thereof, the Trustee or any such receiver shall be authorized, in addition to the rights and power of the Trustee and such receiver set forth elsewhere in this Indenture, the Assignment Agreement and the Mortgage Documents, to retain one or more experienced operators of hotels and/or casinos to manage and operate the Casino-Hotel on behalf of the Noteholders, provided that any such operator shall have all necessary legal qualifications, including all Permits, to manage the Casino-Hotel; and (b) no Noteholder shall have any right to take possession of, operate or manage all or any portion of the Casino-Hotel, individually or as a member of a group, unless such Noteholder shall have all necessary legal qualifications, including all Permits, to do so and shall otherwise be qualified to be retained to manage the Casino-Hotel under subsection (a) of this Section 7.16. ARTICLE EIGHT THE TRUSTEE Section 8.01. CERTAIN DUTIES AND RESPONSIBILITIES. (a) Except during the continuance of an Event of Default, (1) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture and the Mortgage Documents, and no implied covenants or obligations shall be read into this Indenture and the Mortgage Documents against the Trustee; and 56 (2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture or the Mortgage Documents; but in the case of any such certificates or opinions which by any provision hereof or thereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture and the Mortgage Documents. (b) In case an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture or the Mortgage Document, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person's own affairs. (c) No provision of this Indenture or any Mortgage Document shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that (1) this Section 8.01(c) shall not be construed to limit the effect of Section 8.01(a); (2) the Trustee shall not be liable for any error of judgment made in good faith by it, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; (3) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of not less than a majority in Outstanding Amount of the Outstanding Notes relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture or any Mortgage Document; and (4) no provision of this Indenture shall require the Trustee 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. 57 (d) Whether or not therein expressly so provided, every provision of this Indenture and the Mortgage Documents relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section 8.01. Section 8.02. NOTICE OF DEFAULTS. Within 45 days after the occurrence of any Default hereunder of which a Responsible Officer of the Trustee has actual knowledge, the Trustee shall transmit by mail to all Holders of Notes as their names and addresses appear in the Note Register, 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 interest on any Note, 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 determine that the withholding of such notice is in the best interests of the Noteholders. Section 8.03. CERTAIN RIGHTS OF TRUSTEE. Except as otherwise provided in Section 8.01: (a) 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, coupon, 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; (b) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order; (c) 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; (d) 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 58 the Trustee hereunder in good faith and in reliance thereon; (e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture or any of the Mortgage Documents at the request or direction of any of the Noteholders pursuant to this Indenture, unless such Noteholders shall have offered to the Trustee reasonable security or indemnity reasonably satisfactory to the Trustee against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (f) 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, 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 and RIH, personally or by agent or attorney; (g) 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; (h) the Trustee shall not be deemed to have knowledge of and shall not be required to take any action with respect to any Event of Default (other than an Event of Default described in Section 7.01(a) and (b) or any event which would, with the giving of notice or the passage of time or both, constitute an Event of Default, unless the Trustee shall have actual knowledge of such event or shall have been notified in writing of such event by Noteholders holding in the aggregate more than 25% in Outstanding Amount of the Outstanding Notes; (i) subject to Section 8.01(c), the Trustee shall not be personally liable, in case of entry by it upon the Trust Estate, for debts contracted or liabilities or damages incurred in the management or operation of the Trust Estate; and (j) in addition to and not in limitation of its other powers hereunder, the Trustee shall have such power and authority as may be necessary to enter into and 59 accept delivery of any document as may be necessary to effect on behalf of the Holders of the Notes the subordination of the indebtedness in respect of the Notes to any secured Working Capital Facility (in accordance with the provisions of the Mortgage), and upon written request of the Company, the Trustee shall enter into such agreements on behalf of the holders of the Notes. Section 8.04. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF NOTES OR APPLICATION OF PROCEEDS. The recitals contained herein and in the Notes, except in a certificate of authentication on the Notes, shall be taken as the statements of the Company, and the Trustee assumes no responsibility for their correctness. The Trustee makes no representation as to the validity or sufficiency of this Indenture, the Notes or the Mortgage Documents. The Trustee shall not be accountable for the use or application by the Company of Notes or the proceeds thereof or of any money paid to the Company or by a Company Order under any provision hereof. Section 8.05. MAY HOLD NOTES. The Trustee, any Paying Agent, Note Registrar, Authenticating Agent or any other agent of the Company, in its individual or any other capacity, may become the owner or pledgee of Notes and, subject to Sections 8.08 and 8.13, if operative, may otherwise deal with the Company with the same rights it would have if it were not Trustee, Paying Agent, Note Registrar, Authenticating Agent or such other agent. Section 8.06. MONEY HELD IN TRUST. 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 agreed with the Company. Section 8.07. COMPENSATION AND REIMBURSEMENT. The Company agrees: (a) to pay to the Trustee from time to time reasonable compensation for all services rendered by it hereunder and under the Mortgage Documents (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (b) except as otherwise expressly provided herein and in the Mortgage Documents, to reimburse the Trustee 60 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 the Trustee's negligence or bad faith; and (c) 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 Indenture or the trust created hereunder or the performance of its duties hereunder, including the reasonable costs and expenses of defending itself against or investigating any claim or liability in con- nection with the exercise or performance of any of its powers or duties hereunder (including reasonable attorneys' fees and expenses). As security for the performance of the obligations of the Company and RIH under this Section 8.07, the Trustee shall be secured under this Indenture and the Mortgage Documents by a lien prior to the Mortgage upon all property and funds held or collected by the Trustee, and for the payment of such compensation, expenses, reimbursements and indemnity the Trustee shall have the right to use and apply any money held by it pursuant hereto. Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company and RIH under this Section 8.07 shall survive. Section 8.08. DISQUALIFICATION; CONFLICTING INTERESTS. This Indenture shall always have a Trustee who satisfies the requirements of TIA SECTION 310(a)(l) and SECTION 310(a)(5). The Trustee shall comply with TIA SECTION 310(b) including the second sentence of TIA SECTION 310(b)(9). Section 8.09. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY. There shall at all times be a Trustee hereunder which shall be a corporation organized and doing business under the law of the United States of America or of any state, authorized under such laws to exercise corporate trust powers, having (or in the case of a corporation included in a bank holding company system, the related bank holding company having) a combined capital and surplus of at least $100,000,000, subject to supervision or examination by federal or state authority. In addition, if the Trustee is a 61 corporation included in a bank holding company system, the Trustee, independently of such bank holding company, shall meet the capital requirements of TIA SECTION 310(a)(2). The Trustee shall comply with TIA SECTION 310(b); provided, however, that there shall be excluded from the operation of TIA SECTION 310(b)(1) any indenture or indentures under which other securities, or certificates of interest or participation in other securities, of the Company are outstanding, if the requirements for such exclusion set forth in TIA SECTION 310(b)(1) are met. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of such supervising or examining authority, then for the purposes of this Section 8.09, 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 8.09, it shall resign immediately in the manner and with the effect hereinafter specified in this Article Eight. Section 8.10. 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 Eight shall become effective until the acceptance of appointment by the successor Trustee under Section 8.11. (b) The Trustee may resign at any time by giving written notice thereof to the Company. If an instrument of acceptance by a successor Trustee 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) The Trustee may be removed at any time by Act of the Holders of a majority in Outstanding Amount of the Outstanding Notes, delivered to the Trustee and to the Company. (d) If at any time: (1) the Trustee shall fail to comply with Section 8.08 after written request therefor by the Company or by any Noteholder who is a bona fide Holder of a Note, or (2) the Trustee shall cease to be eligible under Section 8.09 and shall fail to resign after written request therefor by the Company or by any Noteholder who is a bona fide Holder of a Note, or 62 (3) 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, (i) the Company by a Company Order may remove the Trustee, or (ii) subject to Section 7.14, any Noteholder who is a bona fide Holder of a Note 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 the Trustee for any cause, the Company, by a Company Order, shall promptly appoint a successor Trustee. In case all or substantially all of the Trust Estate shall be in the possession of a receiver or trustee lawfully appointed, such receiver or trustee, by written instrument, may similarly appoint a successor to fill such vacancy until a new Trustee shall be so appointed by the Noteholders. If, within one year after such resignation, removal or incapacity or the occurrence of such vacancy, a successor Trustee shall be appointed by Act of the Holders of a majority in Outstanding Amount of the Outstanding Notes 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 or by such receiver or trustee. If no successor Trustee shall have been so appointed by the Company or the Noteholders and accepted appointment in the manner hereinafter provided, subject to Section 7.14, any Noteholder who is a bona fide Holder of a Note may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee. (f) The Company shall give written notice of each resignation and each removal of the Trustee and each appointment of a successor Trustee to each Noteholder by mailing such notice by first-class mail, postage prepaid, to each Noteholder as such Noteholder's name and address appear in the Note Register; provided, however, that failure of the Company to give such notice shall not affect the resignation or removal of such Trustee. Each notice shall include the name of the successor Trustee and the address of its principal corporate trust office. 63 Section 8.11. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR. Every successor Trustee appointed hereunder shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall became effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the estates, properties, 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 conveying and transferring to such successor Trustee all the estates, properties, 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, subject nevertheless to its lien, if any, provided for in Section 8.07. 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 estates, properties, 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 Eight. Section 8.12. 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 Eight, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Notes 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 Notes so authenticated with the same effect as if such successor Trustee had itself authenticated such Notes. Section 8.13. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY. The Trustee will comply with TIA SECTION 311(a). A Trustee 6 who has resigned or been removed shall be subject to TIA SECTION 311(a) to the extent indicated. Section 8.14. CO-TRUSTEES AND SEPARATE TRUSTEES. At any time or times, for the purpose of meeting the legal requirements of the TIA or of any jurisdiction in which any of the Trust Estate may at the time be located or in which it shall be necessary or desirable for the Trustee to act, the Company and the Trustee shall have power to appoint, and, upon the written request of the Trustee or of the Holders of at least 25% in Outstanding Amount of the Notes Outstanding, the Company shall for such purpose join with the Trustee in the execution, delivery and performance of all instruments and agreements necessary or proper to appoint, one or more Persons approved by the Trustee either to act as co-trustee, jointly with the Trustee, of all or any part of the Mortgage Documents or of the Trust Estate covered by such Mortgage Documents, or to act as separate trustee of any such property, in either case with such powers as may be provided in the instrument of appointment, and to vest in such Person or Persons in the capacity aforesaid, any property, title, right or power deemed necessary or desirable, subject to the other provisions of this Section 8.14. If the Company does not join in such appointment within 15 days after the receipt by it of a request so to do, or in case an Event of Default has occurred and is continuing, the Trustee alone shall have power to make such appointment. Should any written instrument from the Company be required by any co-trustee or separate trustee so appointed for more fully confirming to such co-trustee or separate trustee such property, title, right or power, any and all such instruments shall, on request, be executed, acknowledged and delivered by the Company within three business days of such request. Every co-trustee or separate trustee shall, to the extent permitted by law, but to such extent only, be appointed subject to the following terms, namely: (a) the Notes shall be authenticated and delivered, and all rights, powers, duties and obligations hereunder in respect of the custody of securities, cash and other personal property held by, or required to be deposited or pledged with, the Trustee hereunder, shall be exercised solely, by the Trustee; (b) the rights, powers, duties and obligations hereby conferred or imposed upon the Trustee in respect of any property covered by such appointment shall be conferred or imposed upon and exercised or performed by the Trustee or by the Trustee and such co-trustee or 6 separate trustee jointly, as shall be provided in the instrument appointing such co-trustee or separate trustee, except to the extent that under any law of any jurisdiction in which any particular act is to be performed, the Trustee shall be incompetent or unqualified to perform such act, in which event such rights, powers, duties and obligations shall be exercised and performed by such co-trustee or separate trustee; (c) the Trustee, at any time, by an instrument in writing executed by it may accept the resignation of or remove any co-trustee or separate trustee appointed under this Section 8.14. A successor to any co-trustee or separate trustee so resigned or removed may be appointed in the manner provided in this Section 8.14; (d) the Trustee, or any other such trustee hereunder, shall not be personally liable by reason of any act or omission of any co-trustee or separate trustee hereunder, and no co-trustee or separate trustee hereunder shall be personally liable by reason of any act or omission of the Trustee, or any other such trustee hereunder; (e) any Act of Noteholders delivered to the Trustee shall be deemed to have been delivered to each such co-trustee and separate trustee; and (f) any co-trustee or separate trustee appointed hereunder shall be entitled to compensation and indemnification from the Company under Section 8.07 hereunder and shall be entitled to all such other rights and protections afforded the Trustee hereunder. Section 8.15 APPOINTMENT OF AUTHENTICATING AGENT. Upon the request of the Company, the Trustee shall appoint an Authenticating Agent with power to act on its behalf and subject to its direction in the authentication and delivery of the Notes designated for such authentication by the Company and containing provisions therein for such authentication in connection with transfers and exchanges under Sections 3.04, 3.05, 3.06 and 13.07, as fully to all intents and purposes as though the Authenticating Agent had been expressly authorized by those Sections to authenticate and deliver such Notes. For all purposes of this Indenture, the authentication and delivery of Notes by the Authenticating Agent pursuant to this Section 8.15 shall be deemed to be the authentication and delivery of Notes "by the Trustee". Such Authenticating Agent shall at all times be a bank or trust company having its principal office in the Borough of Manhattan, City and State of New York, and shall at all times be a corporation organized and doing business under the laws 66 of the United States or of any State with a combined capital and surplus of at least $50,000,000 and authorized under such laws to exercise corporate trust powers and subject to supervision or examination by federal or state authority. If such corporation publishes reports of condition at least annually pursuant to law or the requirements of such authority, then for the purposes of this Section 8.15 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. Any corporation into which any Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, consolidation or conversion to which any Authenticating Agent shall be a party, or any corporation succeeding to the corporate trust business of any Authenticating Agent, shall be the successor of the Authenticating Agent hereunder, if such successor corporation is otherwise eligible under this Section 8.15, without the execution or filing of any further act on the part of the parties hereto or the Authenticating Agent or such successor corporation. Any Authenticating Agent may at any time resign by giving written notice of resignation to the Trustee and the Company. The Trustee may at any time terminate the agency of any Authenticating Agent by giving written notice of termination to such Authenticating Agent and the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time any Authenticating Agent shall cease to be eligible under this Section 8.15, the Trustee shall promptly appoint a successor Authenticating Agent, and shall give written notice of such appointment to the Company. The Company agrees to pay to the Authenticating Agent from time to time reasonable compensation for its services. The provisions of Sections 3.10, 8.04 and 8.05 shall be applicable to any Authenticating Agent. ARTICLE NINE NOTEHOLDERS' LISTS AND REPORTS BY TRUSTEE Section 9.01. COMPANY TO FURNISH TRUSTEE SEMI-ANNUAL LISTS OF NOTEHOLDERS. The Company will furnish or cause to be furnished to the Trustee semi-annually, not less than 45 days nor more than 67 60 days after each date (month and day) specified as a semi-annual Interest Payment Date for the Notes (whether or not any Notes are then Outstanding), and at such other times as the Trustee may request in writing, within 60 days after receipt by the Company of any such request, a list in such form as the Trustee may reasonably require containing all the information in the possession or control of the Company, or any of its Paying Agents other than the Trustee, as to the names and addresses of the Holders of Notes, obtained since the date as of which the next previous list, if any, was furnished, excluding from any such list the names and addresses received by the Trustee in its capacity as Note Registrar. Any such list may be dated as of a date not more than 15 days prior to the time such information is furnished and need not include information received after such date. Section 9.02. PRESERVATION OF INFORMATION; COMMUNICATIONS TO NOTEHOLDERS. (a) The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders of Notes (1) contained in the most recent list furnished to the Trustee as provided in Section 9.01, (2) received by the Trustee in the capacity of Paying Agent (if so acting) hereunder or (3) received by the Trustee in its capacity as Note Registrar. The Trustee may destroy any list furnished to it as provided in Section 9.01 upon receipt of a new list so furnished. (b) Holders may communicate pursuant to TIA SECTION 312(b) with other Holders with respect to their rights under this Indenture or the Notes. The Company, the Trustee, the Note Registrar and any other Person shall have the protection of TIA SECTION 312(c). (c) Every Holder of Notes, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee nor any Paying Agent shall be held accountable by reason of the disclosure of any such information as to the names and addresses of the Holders of Notes in accordance with Section 9.02(b), regardless of the source from which information was derived, and that the Trustee shall not be held accountable by reason of mailing any material pursuant to a request made under Section 9.02(b). Section 9.03. REPORTS BY TRUSTEE. (a) Within 60 days after each May 15 beginning with May 15, 1995, the Trustee shall transmit to each Noteholder a report dated as of such May 15 that complies with TIA SECTION 313(a). The Trustee shall also comply with TIA SECTION 313(b) and SECTION 313(c). 68 (b) A copy of each such report shall, at the time of such transmission to Noteholders, be filed by the Trustee with any stock exchange on which the Notes are listed and also with the Commission. The Company will notify the Trustee when the Notes are listed on any stock exchange. (c) The Trustee will provide the Casino Control Commission and the Director of the Division of Gaming Enforcement of New Jersey with: (1) copies of all notices, reports and other written communications which the Trustee gives to Noteholders; (2) a list of Noteholders promptly after the original issuance of the Notes and a list of Noteholders annualy on December 1 of each year, or such other time as requested by the Casino Control Commission or Director of Division of Gaming Enforcement; (3) notice of any Event of Default under this Indenture or of any event, occurrence or condition actually known by the Trustee which, with the giving of notice or lapse of time or both would constitute an Event of Default under this Indenture (including the Guaranty), the RIH Promissory Note or the Mortgage Documents (as such term is defined in such instruments), any acceleration of the Indebtedness evidenced or secured hereby or thereby, the institution of any legal actions or proceedings before any court or governmental authority in respect of this Indenture (including the Guaranty) or the Mortgage Documents, the entering into or taking possession of any property constituting the Trust Estate and any rescission, annulment or waiver in respect of an Event of Default under any instruments described in this clause (3); (4) notice of the removal or resignation of the Trustee; (5) notice of any transfer or assignment of rights under this Indenture (including the Guaranty) (but not in respect of the Notes) or the Mortgage Documents after a Responsible Officer of the Trustee becomes aware of the same; and (6) a copy of any amendment to the Notes, this Indenture (including the Guaranty) or the Mortgage Documents immediately; 69 provided however, that the Trustee shall not be liable to any Person (other than the Casino Control Commission and the Director of the Division of Gaming Enforcement of New Jersey) for any failure to provide any of the above- mentioned documents to the Casino Control Commission and the Director of the Division of Gaming Enforcement of New Jersey. The notice specified in Section 9.03 (c) above shall be in writing and, except as set forth below, shall be given immediately after the Trustee has actual knowledge of any circumstances requiring such notice. In the case of any notice in respect of any Default or Event of Default under any instrument described in Section 9.03(c), such notice shall be accompanied by a copy of any notice from the Holders of Notes, or a representative thereof or the Trustee, to the defaulting Person and, if accompanied by any such notice to the defaulting Person, shall be given simultaneously with the giving of any such notice to the defaulting Person. In the case of any legal actions or proceedings, such notice shall be accompanied by a copy of the complaint or other initial pleading or document. The Trustee and its Responsible Officers shall cooperate with the Casino Control Commission and the Director of the Division of Gaming Enforcement of New Jersey in order to provide such Commission and Director with information and documentation relevant to compliance with Section 9.03(c) above and as otherwise required by the Casino Control Act. The expiration date of the current gaming Permit held by RIH is February 26, 1994. Subsequent gaming Permits held by RIH are scheduled to expire every two years on February 26th, commencing February 26, 1996 unless and until the Trustee is advised otherwise. RIH will advise the Trustee of any change in such expiration date within five business days of knowledge thereof. ARTICLE TEN CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE Section 10.01. CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER ONLY ON CERTAIN TERMS. Neither the Company nor RIH shall consolidate, combine or merge with or into any other Person or permit any other Person to consolidate, combine or merge with or into the Company or RIH, as the case may be; and neither the Company with respect to its assets nor RIH with respect to the Trust 70 Estate shall sell, assign, convey or transfer its interest in such assets or the Trust Estate, as the case may be, substantially as an entirety (and notwithstanding anything to the contrary contained herein (including the proviso at the end of this sentence, but subject to Section 10.05), but subject to the provisions of the Mortgage regarding dispositions of the Trust Estate, neither the Company with respect to its assets nor RIH with respect to the Trust Estate may sell, assign, convey or transfer such assets or the Trust Estate, as the case may be, other than substantially as an entirety) to any other Person or group of Persons in one transaction or a series of related transactions, or permit any other Person or group of Persons to convey or transfer all or substantially all of its assets, subject to liabilities other than DE MINIMIS liabilities, to the Company or RIH; and the Company and RIH shall not transfer, convey, sell or otherwise dispose of to any other Person, or issue to any Person, any equity interest in the Company or RIH, as the case may be (each of the aforesaid transactions described in this Section 10.01 is referred to herein as a "Combination Transaction"); PROVIDED, HOWEVER, that (i) the Company may engage in a Combination Transaction in which the only other party or parties is RIH or a direct or indirect wholly owned Subsidiary of the Company or RIH, and (ii) the Company or RIH may engage in any other Combination Transaction (either independently or at the same time as other Combination Transactions), subject to the following with respect to each such Combination Transaction: (a) the conditions set forth in Section 10.03 are satisfied; (b) in the event the Company or RIH shall consolidate, combine or merge with or into another Person or sell, assign, convey or transfer its interest in its assets or in the Trust Estate, as the case may be, substantially as an entirety (but not less than substantially as an entirety) to another Person in one transaction or a series of related transactions, the entity which is formed by or survives such consolidation, combination or merger or the Person to which such assets or the Trust Estate are conveyed or transferred: (1) shall be organized and existing under the laws of the United States of America, any state thereof, or the District of Columbia; (2) shall expressly assume, by an indenture supplemental hereto, in form reasonably satisfactory to the Trustee, executed and delivered to the Trustee, the performance and observance of every covenant, obligation and condition of this Indenture 71 to be performed or observed by the Company or RIH, whichever the case may be; (3) shall expressly assume, by an instrument executed and delivered to the Trustee, in form reasonably satisfactory to the Trustee, the due and punctual performance of every covenant, obligation and condition of the Mortgage Documents and Assignment Agreement to be performed by the Company or RIH, whichever the case may be; and (4) immediately after and giving effect to such transaction could incur at least $1.00 of additional Indebtedness under Section 12.08; (c) immediately after giving effect to such transaction, no Event of Default, or Default hereunder or under the Mortgage shall have occurred and be continuing; (d) such Combination Transaction shall be on such terms as shall not impair the lien and security and priority hereof or of the Mortgage Documents or of the Assignment Agreement and the rights and powers of the Trustee and the Holders of the Notes hereunder and thereunder; and (e) the Company or RIH, as the case may be, shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each of which shall state that such Combination Transaction and such supplemental indenture comply with this Article Ten and that all conditions precedent herein provided for relating to such transaction have been complied with. Section 10.02. SUCCESSOR ENTITY SUBSTITUTED. Upon any consolidation, combination or merger or any conveyance or transfer of an interest in the assets of the Company or in the Trust Estate permitted by Section 10.01, the successor entity formed by such consolidation or into which the Company or RIH is combined or to which such conveyance or transfer is made shall succeed to, and be substituted for, and may exercise every right and power of, and shall be bound by every obligation and liability of, the Company or RIH, whichever the case may be, under this Indenture with the same effect as if such successor entity had been named as the Company or RIH herein; PROVIDED, HOWEVER, that no such consolidation or combination involving the Company or RIH, unless such transaction is in compliance with the provisions of this Article Ten, shall have the effect of releasing the Person named as "the Company" or "RIH", as the case may be, in the first paragraph of this instrument, or any successor entity which shall theretofore have become such in the manner 72 prescribed in this Article Ten, from its liability as obligor and maker on the RIH Promissory Note or any of the Notes. Section 10.03. SUCCESSOR MANAGEMENT OF CASINO-HOTEL. Neither the Company nor RIH shall engage in any Combination Transaction unless, immediately following such Combination Transaction, (a) RIH (or any successor entity) shall be eligible for and shall meet all relevant Legal Requirements, including holding all permits, required for the normal operation of the business of owning and operating the Casino-Hotel, and (b) RIH (or any successor entity) shall be controlled by a Person that is, or shall retain to manage the Casino-Hotel one or more Persons that are, experienced in the operation and management of casino-hotels. Section 10.04. LIMITATION ON SALES OF TRUST ESTATE. Except as otherwise expressly permitted by the Mortgage and this Indenture, neither the Company nor RIH shall sell, assign, lease, sublease, hypothecate, pledge, mortgage or otherwise transfer all or any part of the assets of the Company or the Trust Estate or any interest therein (including, without limitation, any interest in the Ground Leases). Without limiting the generality of the foregoing, RIH shall not separate, or attempt to separate, its ownership of its interest in the Ground Leases from the ownership of the buildings constituting the Casino-Hotel or any part thereof. Section 10.05 RIH SALE. The foregoing provisions of this Article Ten shall not apply in connection with an RIH Sale. ARTICLE ELEVEN AMENDMENTS, SUPPLEMENTS AND WAIVER Section 11.01. WITHOUT CONSENT OF NOTEHOLDERS. Without the consent of the Holders of any Notes, the parties hereto may from time to time amend or supplement this Indenture, the Assignment Agreement, the Notes or the Mortgage Documents, as long as the form of such amendment or supplement is satisfactory to the Trustee, for any of the following purposes: (a) to correct or amplify the description of the Trust Estate or better to assure, convey and confirm unto the Trustee the assignment of the Mortgage Documents; or 73 (b) to add additional conditions, limitations and restrictions thereafter to be observed to the conditions, limitations and restrictions on the authorized amount, terms of issue, authentication and delivery of Notes as herein set forth; or (c) to comply with Article Ten; or (d) to add to the covenants of the Company for the benefit of the Holders of all Notes or to surrender any right or power herein conferred upon the Company; or (e) to cure any ambiguity, defect or inconsistency in any of the enumerated documents, provided such action shall not adversely affect the interests of the Holders of the Notes; or (f) to modify, eliminate or add to the provisions of this Indenture to such extent as shall be necessary to effect the qualification of this Indenture under the TIA or under any similar federal statute hereafter enacted, and to add to this Indenture such other provisions as may be expressly permitted by the TIA, EXCLUDING, HOWEVER, the provisions referred to in TIA SECTION 316(a)(2) as in effect at the date as of which this instrument was executed or any corresponding provision in any similar federal statute hereafter enacted; or (g) to effectuate any subordination contemplated in Section 8.03(i); or (h) to comply with the requirements of the Casino Control Act. The terms of any such enumerated document entered into pursuant to this Section 11.01 shall be subject to prior approval of the Casino Control Commission in consultation with the New Jersey Division of Gaming Enforcement. Section 11.02. WITH CONSENT OF NOTEHOLDERS. With the consent of the Holders of not less than 66-2/3% in Outstanding Amount of the Notes then Outstanding, by Act of such Holders delivered to the Company and the Trustee, the parties hereto may amend or supplement this Indenture, the Mortgage Documents, the Assignment Agreement or the Notes, provided that the form of such amendment or supplement is reasonably satisfactory to the Trustee. The Holders of 66-2/3% in Outstanding Amount of the Notes then Outstanding may waive compliance by the Company or RIH with any provision of this Indenture, the Mortgage Documents, the Assignment Agreement or the Notes, except a default in the payment of principal of or interest on any Note, without notice to any 74 Noteholder. Without the consent of the Holder of each Outstanding Note affected thereby, an amendment, supplement or waiver, including a waiver pursuant to Section 7.13, may not: (a) change the Stated Maturity of the principal of, or any installment of interest on, any Note, or reduce the principal amount thereof or the interest thereon or the amount payable upon the redemption thereof, or change any Place of Payment where, or the coin or currency in which, any Note, or the interest thereon, is payable, or impair the right to institute suit for the enforcement of any such payment on or after the Stated Maturity thereof (or, in the case of redemption, on or after the Redemption Date); or (b) reduce the percentage in Outstanding Amount of the Outstanding Notes, the consent of whose Holders is required for any amendment, supplement or waiver; or (c) modify or alter the provisions of the proviso to the definition of the term Outstanding; or (d) modify any of the provisions of this Section or Section 7.13, except to increase any percentage provided thereby or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Note affected thereby; or (e) permit the creation of any lien ranking prior to the lien of the Mortgage (except for such liens expressly permitted pursuant to Section 12.13). In determining whether to execute any amendment or supplement, subject to Sections 11.02(a) through (e), the Trustee may in its discretion determine whether or not any Notes would be affected by any such amendment or supplement and any such determination shall be conclusive upon the Holders of all Notes, whether theretofore or thereafter authenticated and delivered hereafter. The Trustee shall not be liable for any such determination made in good faith. It shall not be necessary for any Act of Noteholders under this Section to approve the particular form of any proposed amendment, supplement or waiver, but it shall be sufficient if such Act shall approve the substance thereof. In connection with any amendment, supplement or waiver under this Indenture, the Company or RIH may, but shall not be obligated to, offer to any Holder who consents to such amendment, supplement or waiver, or to all Holders, at the discretion of the Company or RIH,consideration for such Holder's consent to such amendment,supplement or waiver. The terms of any such enumerated document entered into pursuant to 75 this Section 11.02 shall be subject to the prior approval of the Casino Control Commission in consultation with the New Jersey Division of Gaming Enforecement. Section 11.03. EXECUTION OF AMENDMENTS AND SUPPLEMENTS. In executing, or accepting the additional trusts created by, any amendment or supplement permitted by this Article or the modification thereby of the trusts already created by this Indenture, the Trustee shall be entitled to receive from the Company, and, subject to Section 8.01(c), shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such amendment or supplement is authorized or permitted by this Indenture. The Trustee may, but shall not, except to the extent required in the case of a supplemental indenture entered into under Section 11.01(e), be obligated to, enter into any such amendment or supplement which affects the Trustee's own rights, duties or immunities under this Indenture or otherwise. Section 11.04. EFFECT OF AMENDMENT OR SUPPLEMENT. Upon the execution of any amendment or supplement under this Article, every Holder of Notes theretofore or thereafter authenticated and delivered hereunder shall be bound thereby. Section 11.05. CONFORMITY WITH TRUST INDENTURE ACT. Every supplemental indenture executed pursuant to this Article shall conform to the requirements of the TIA and Casino Control Act as then in effect. Section 11.06. REFERENCE IN NOTES TO AMENDMENT OR SUPPLEMENT. In the absence of a direction from the Company, Notes authenticated and delivered after the execution of any amendment or supplement pursuant to this Article may, and if required by the Trustee shall, bear a notation in form approved by the Trustee as to any matter provided for in such amendment or supplement. If the Company shall so determine, new Notes so modified as to conform, in the opinion of the Trustee and the Company, to any such amendment or supplement may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for Outstanding Notes. 76 ARTICLE TWELVE COVENANTS Section 12.01. PAYMENT OF PRINCIPAL AND INTEREST. The Company will duly and punctually pay or cause to be paid the principal of and interest on each of the Notes at the place or places, at the respective times and in the manner provided in the Notes and this Indenture. Each installment of interest on the Notes may be paid by mailing checks for such interest payable to or upon the written order of the Holders of Notes entitled thereto, to such address and in such name as they shall appear on the Note Register. Any installment of principal and interest shall be considered paid on the date it is due if the Trustee or Paying Agent (other than the Company or a Subsidiary of the Company or any Affiliate thereof) holds on that date money in immediately available funds designated exclusively for and sufficient to pay the installment and the Trustee and/or the Paying Agent has not received instructions from the Company not to make such payment or is not prohibited from paying such money to the Noteholders pursuant to the terms of this Indenture. The Company shall pay interest (including post-petition interest in any proceeding under any applicable bankruptcy law) to the extent legally permitted on overdue principal at the rate set forth in the Notes; and it shall pay interest (including post-petition interest in any proceeding under any applicable bankruptcy law) on unpaid interest otherwise payable under the first clause of this sentence at the same rate to the extent legally permitted. Section 12.02. MAINTENANCE OF OFFICE OR AGENCY. The Company will maintain, in the Borough of Manhattan, the City of New York, State of New York, an office or agency where Notes may be presented or surrendered for payment, where Notes may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Company in respect of the Notes and this Indenture may be served. The Company initially appoints the Trustee as its agent for presentation or surrender of Notes for payment or registration, transfer or exchange. The Trustee (or its corporate parent) will maintain an office in the Borough of Manhattan, the City of New York, State of New York, for such purposes. The Company may from time to time designate one or more other offices or agencies (in or outside the City of New York, State of New York) where the Notes may be presented or surrendered for any or all such purposes, and may from time to 77 time rescind such designations; 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 Borough of Manhattan, the City of New York, State of New York, for such purposes as stated in this Section 12.02. The Company will give prompt written notice to the Trustee of any such designation and any change in the location of any such office or agency. If at any time the Company shall fail to maintain such an 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 principal corporate trust office of the Trustee, and the Company hereby appoints the Trustee its agent to receive all such presentations, surrenders, notices and demands. Section 12.03. 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, or interest on, any of the Notes, segregate and hold in trust for the benefit of the Persons entitled thereto a sum, sufficient to pay the principal or interest so becoming due until such sums shall be paid or issued to such Persons or otherwise disposed of as herein provided, and will promptly notify the Trustee of such action or any failure so to act. The Company will, on or before each due date of the principal of or interest on, any Notes, deposit with a Paying Agent a sum in same day funds, sufficient to pay the principal or interest so becoming due, such sum, as the case may be, to be held in trust for the benefit of the Persons entitled to such principal 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: (a) hold all sums received by it as such agent for the payment of the principal of or interest on Notes (whether such sums have been paid to it by the Company or by any other obligor on the Notes) 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; 78 (b) promptly give the Trustee notice of any failure by the Company (or any other obligor upon the Notes) to make any payment of the principal of, or interest on, the Notes when the same shall be due and payable; and (c) at any time during the continuance of any such failure, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent. 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, or interest on, any Note and remaining unclaimed for two years after such principal or interest has become due and payable shall be paid to the Company on its request, or (if then held by the Company) shall be discharged from such trust, unless otherwise required by mandatory provisions of applicable escheat or abandoned or unclaimed property law, 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 regard to such 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 City of New York, State of New York, or mailed to each such Holder, or both, 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 or mailing, as the case may be, any unclaimed balance of such money then remaining will be paid to the Company. Section 12.04. CORPORATE EXISTENCE. Subject to Article Ten, each of the Company and RIH will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence and the corporate existence of each of its Subsidiaries in accordance with the respective organizational documents of the Company, RIH and each such Subsidiary and the rights (charter and statutory), licenses, permits, approvals and governmental franchises of it and each of its Subsidiaries necessary to the conduct of its and their respective businesses, including, without limitation, all licenses, permits, approvals and franchises necessary to assure the continued operation of RIH's gaming operations at the Casino-Hotel; PROVIDED, HOWEVER, any direct or indirect wholly owned subsidiary of RIH may consolidate with, merge into or transfer or distribute all or part of its properties and assets to RIH or the Company or as otherwise provided in Section 10.01. 79 Section 12.05. TO KEEP BOOKS; INSPECTION BY TRUSTEE. The Company and RIH will each keep proper books of record and account, in which full and correct entries shall be made of all material dealings or transactions of or in relation to the Notes and the properties, business and affairs of the Company and RIH in accordance with GAAP. The Company and RIH will at any and all times, upon the written request of the Trustee and at the expense of RIH, permit the Trustee by its representatives to inspect the Casino-Hotel and the books of account, records, reports and other papers of the Company and RIH, and to make copies and extracts therefrom, and will afford and procure a reasonable opportunity to make any such inspection (provided that the Company and RIH shall have received reasonable advance notice of such inspection and that any such inspection shall not unreasonably interfere with the business operations of the Company and RIH). The Company and RIH will furnish to the Trustee any and all information as the Trustee may reasonably request with respect to the performance by the Company and RIH of their covenants in this indenture. Section 12.06. REPORTS AND COMPLIANCE CERTIFICATES. (a) RIH shall furnish or cause to be furnished to the Trustee, within 105 days after each fiscal year of RIH: (i) a copy of annual audited financial statements of RIH prepared in conformity with GAAP, accompanied by a report of Ernst & Young or of another firm of independent certified public accountants of recognized national standing selected by RIH (the "National Accountants"), together with a certificate from such National Accountants stating that their audit examination has included a review of the terms of this Indenture and that the National Accountants have not become aware of any Event of Default or that a Default has occurred and is continuing, and if they have become aware of any such Event of Default or Default, describing it; PROVIDED, HOWEVER, that the National Accountants shall not be liable to any Person for any failure to discover any Event of Default or Default in connection with such review; and (ii) a copy of annual unaudited financial statements of RIH, including notes to such financial statements and corresponding management's discussion and analysis, in form and substance comparable to that which would be required to be filed with the Commission in an Annual Report on Form 10-K under the Exchange Act, prepared in the same manner as the audited financial statements referred to in clause (i) of this Section 12.06(a), signed by a proper accounting officer of RIH. RIH contemporaneously with the furnishing of such audited financial statements to the Trustee under clause (i) this Section 12.06(a), RIH shall mail copies of such audited financial statements to the Holders (which need not include the certificate referred to in such clause (i)). 80 (b) RIH shall furnish or cause to be furnished to the Trustee, within 60 days after each quarter of each fiscal year of RIH, except the final quarter of such fiscal year, a copy of unaudited financial statements of RIH prepared on a consistent basis with the audited financial statements referred to in clause (i) of Section 12.06(a), signed by a proper accounting officer of RIH and consisting of at least a balance sheet as at the close of such quarter and statements of operations and cash flow for such quarter and for the period from the beginning of such fiscal year to the close of such quarter, including notes to such financial statements and corresponding management's discussion and analysis, in form and substance comparable to that which would be required to be filed with the Commission in a Quarterly Report on Form 10-Q under the Exchange Act. RIH contemporaneously with the furnishing of such unaudited financial statements to the Trustee under this Section 12.06(b), RIH shall mail copies of such unaudited financial statements to the Holders (which need not be signed by a proper accounting officer of RIH). (c) RIH shall furnish or cause to be furnished to the Trustee, contemporaneously with the furnishing of a copy of the annual financial statements and of the quarterly financial statements referred to in Section 12.06(a) and Section 12.06(b), an Officers' Certificate dated the date of such annual financial statement or such quarterly financial statements to the effect that no Default or Event of Default has occurred and is continuing, or, if there is any such Default or Event of Default, describing it and the steps, if any, being taken to cure it. (d) RIH shall furnish or cause to be furnished to the Trustee, copies of each filing and report made by RIH or the Company with the Commission pursuant to the reporting and filing requirements of Section 13 or 15(d) of the Exchange Act, within 15 days after RIH or the Company, as applicable, is required to file the same. (e) RIH agrees that, if RIH becomes exempt from the Commission reporting and filing requirements of Section 13 or 15(d) of the Exchange Act, RIH shall prepare such periodic reports as it would otherwise have been required to file with the Commission and (i) at its own expense, cause all such periodic reports to be filed with the Commission, the Trustee and any exchange upon which the Notes then are listed, in each case on the date when such periodic report would have been required to be filed with the Commission under Section 13 or 15(d) of the Exchange Act, if either of such provisions were applicable, and (ii) keep copies of such periodic reports available at its office and promptly provide any Person who so requests with a copy of any such periodic report, at the Company's expense. 81 (f) Each of the Company and RIH shall comply with the provisions of SECTION 314(a) of the Trust Indenture Act. (g) The Company shall deliver to the Trustee, promptly upon becoming aware of any Default or Event of Default (but in no event later than five business days thereafter) in the performance of any covenant or agreement of the Company contained in this Indenture or any of the Mortgage Documents, an Officers' Certificate specifying with particularity such event. Section 12.07. LIMITATIONS AND DIVIDENDS AND RESTRICTED PAYMENTS. (a) The Company hereby covenants that, on and after the date of this Indenture, it will not, directly or indirectly, make, or permit any Subsidiary of the Company to make, any Restricted Payment. (b) RIH hereby covenants that, on or after the date of this Indenture,it will not, directly or indirectly make, or permit any Subsidiary of RIH to make, any Restricted Payment; PROVIDED, HOWEVER, that: (i) if RIH's Consolidated Interest Coverage Ratio, as certified to the Trustee by an Officers' Certificate, calculated at the time of the declaration of the dividend or distribution is equal to or exceeds two, then RIH may declare and pay cash dividends or make cash distributions in respect of any class of capital stock of RIH in an amount not to exceed in the aggregate with any other such cash dividends or distributions declared or made from and after the date hereof, 50 percent of RIH's Consolidated Net Income from and after the date hereof; and (ii) if (1) RIH's Consolidated Interest Coverage Ratio, as certified to the Trustee by an Officer's Certificate, calculated at the time of the declaration of the dividend or distribution is equal to or exceeds two, and (2) RIH has cash in excess of the amount required to pay interest on the Notes and the Junior Mortgage Notes on the next Interest Payment Date plus $20,000,000, then RIH may declare and pay cash dividends or make cash distributions in respect of any class of capital stock of RIH in an amount not to exceed such excess cash amount. (c) The Company and RIH will not, and will not permit any of their respective Subsidiaries to, create or otherwise cause or suffer to exist or become effective any encumbrance or restriction of any kind on the ability of any Subsidiary of RIH or the Company: (i) to pay dividends or make any other distribution on the capital stock of such Subsidiary that is owned by RIH, the Company or a wholly owned Subsidiary of the Company or RIH, as applicable; (ii) to pay any Indebtedness owed by such Subsidiary to RIH, the Company or any wholly owned Subsidiary of the Company or RIH, as 82 applicable; (iii) to make loans or advances to RIH, the Company or any wholly owned Subsidiary of the Company or RIH, as applicable; or (iv) to transfer any of its property or assets to the Company, RIH or any wholly owned Subsidiary of the Company or RIH, as applicable, except (A) any restrictions existing on or prior to the date hereof, or in connection with agreements in effect, or entered into, on the date hereof, or any permitted amendments, renewals, refundings, refinancings or extensions thereof; PROVIDED, HOWEVER, that the terms and conditions of any such amendments, renewals, refundings, refinancings or extensions are no more restrictive with respect to the matters set forth in clauses (i) through (iv) of this Section 12.07(c) than the agreements being amended, refunded, renewed, refinanced or extended; (B) any restrictions or encumbrances existing or arising pursuant to the terms of Indebtedness of a Person outstanding at the time such Person becomes a Subsidiary of the Company or RIH and not incurred in connection with, or in contemplation of, such Person becoming a Subsidiary of the Company or RIH or any permitted amendments, renewals, refinancings or extensions thereof; PROVIDED, HOWEVER, that the terms and conditions of any such amendments, renewals, refundings, refinancings or extensions are no more restrictive with respect to the matters set forth in clauses (i) through (iv) of this Section 12.07(c) than the agreements being amended, renewed, refunded, refinanced or extended; (c) encumbrances or restrictions existing under or by reason of applicable law or regulation (including, without limitation, the Casino Control Act) or this Indenture; (d) customary provisions restricting assignment of contracts or subletting or assignment of any lease governing a leasehold interest of any Subsidiary of the Company or RIH; or (e) net worth maintenance requirements imposed by any governmental authority. Section 12.08. LIMITATIONS ON ADDITIONAL INDEBTEDNESS AND ISSUANCE OF NOTES. (a) The Company and RIH shall not, and shall not permit any of their respective Subsidiaries to, directly or indirectly, incur, issue, assume, guarantee or otherwise become directly or indirectly liable with respect to, including, without limitation, through any merger or consolidation to which the Company, RIH or any of their respective Subsidiaries is a party or through any other acquisition of any such Subsidiary (collectively, "incur"), or have outstanding, any Indebtedness other than, without duplication, the following: (i) the Notes; (ii) Indebtedness represented by the Junior Mortgage Facility; 83 (iii) Indebtedness represented by the Working Capital Facility; (iv) Indebtedness represented by Capitalized Lease Obligations in an amount not in excess of $5,000,000 in the aggregate at any time outstanding; (v) Indebtedness represented by F,F&E Financing Agreements in an amount not in excess of $10,000,000 in the aggregate at any time outstanding; (vi) unsecured Indebtedness in an amount not in excess of $5,000,000 in the aggregate at any time outstanding that is subordinated and junior to the Junior Mortgage Notes at least to the extent set forth in the Subordination Provisions attached hereto as Exhibit C and which Indebtedness does not have any requirements for amortization payments, mandatory redemption or sinking fund payments prior to the stated maturity of the Junior Mortgage Notes and does not provide for the payment of interest in cash at any time when the most recent installment of interest on the Junior Mortgage Notes was not paid in cash; (vii) Non-Recourse Indebtedness in an amount not in excess of $25,000,000 in the aggregate at any time outstanding; (viii) After-Acquired Fee Mortgage Debt in an amount not in excess of $3,000,000 in the aggregate at any time outstanding; and (ix) Intercompany advances between RIH, the Company or any of their direct or indirect Subsidiaries on the one hand, and RII, on the other hand, in an in excess of $1,000,000 in the aggregate at any time outstanding. (b) The Company and RIH shall not permit any of their respective Subsidiaries to issue (other than to the Company, RIH or a direct or indirect wholly owned Subsidiary of the Company or RIH) any capital stock which has voting rights or has a preference as to any distribution over its common stock. Section 12.09. LIMITATIONS ON REPAYMENT OF SUBORDINATED INDEBTEDNESS. Neither the Company nor RIH shall, and neither the Company nor RIH shall permit any Subsidiary to, directly or indirectly, purchase, redeem, defease (including, but not 84 limited to, in-substance or legal defeasance) or otherwise acquire or retire for value prior to the stated maturity of, or prior to any scheduled mandatory redemption or sinking fund payment with respect to (collectively, to "repay" or a "repayment"), the principal of any Indebtedness of the Company, RIH or any Subsidiary of the Company or RIH which is subordinated (whether pursuant to its terms or by operation of law) in right of payment to the Notes; PROVIDED, HOWEVER, that this Section 12.09 shall not apply with respect to the Indebtedness represented by the Junior Mortgage Facility. Section 12.10. LIMITATION ON CERTAIN TRANSACTIONS. Each of the Company and RIH covenants that it will not, and will not permit any Subsidiary to, repurchase any Notes in the open market if an Event of Default shall have occurred and shall be continuing hereunder, under the Junior Mortgage Note Indenture or under the Senior Facility Note Indenture. Section 12.11. RESTRICTION OF ACTIVITIES. (a) RIH shall not, on or after the date of execution of this Indenture, until the date that is 91 days after the payment in full by the Company of the principal of (and interest, if any, on) all Outstanding Notes, engage in any business or investment activities other than those necessary for, incident to, connected with or arising out of acquiring, financing, owning and operating the Casino-Hotel or additional hotels or casinos or related or ancillary businesses. (b) Neither the Company nor RIH shall make any loans to any Affiliate or any other Person other than (i) Indebtedness of the type described in clause (ix) of Section 12.08(a), and (ii) loans to RII from the proceeds of the Indebtedness represented by the Working Capital Facility; PROVIDED, HOWEVER, that RIH shall have the right to make loans to employees of RIH actively involved in the operation of the Casino-Hotel or to engage in credit transactions in the operation of the Casino-Hotel, if such loans or credit transactions are in the ordinary course of business of operating a casino-hotel. (c) The Company shall not engage in any business (and shall not have any Subsidiaries) other than (i) to 85 collect principal, interest (and any interest on overdue principal and interest) and other amounts under any intercompany notes or guaranties made to the order of or otherwise in favor of the Company, (ii) to preserve its rights under this Indenture and the Mortgage Documents and otherwise to comply with its obligations thereunder and under the Notes, (iii) to do or cause to be done all things necessary or appropriate to protect the Trust Estate, (iv) to preserve its rights under the Junior Mortgage Indenture and the Junior Mortgage Documents and otherwise to comply with its obligations thereunder and under the Junior Mortgage Notes, (v) to issue the Indebtedness represented by any other Junior Mortgage Facility Notes, (vi) to issue Indebtedness represented by the Working Capital Facility; (vii) to preserve its rights under the Working Capital Facility and otherwise comply with its obligations under the Working Capital Facility, (viii) to incur any other Indebtedness permitted under this Indenture, (ix) to do all such acts and deeds necessary in connection with the Junior Mortgage Facility and the documents and instruments relating thereto and in connection with the Working Capital Facility and the documents and instruments relating thereto, (x) to declare, issue and pay dividends on, or make any redemptions or repurchases of, the Company's capital stock as contemplated by its Certificate of Incorporation (to the extent permitted hereby) and otherwise to comply with and perform the provisions of its Certificate of Incorporation and By-laws, and (xi) to do such further acts and deeds to effectuate any of the matters listed in the foregoing clauses of this Section 12.11(c). Section 12.12. LIMITATION ON SUBSIDIARIES CONSOLIDATED GROUP. The Company and RIH shall not have any Subsidiaries except the Subsidiaries existing on the date of this Indenture and Subsidiaries acquired by the Company or RIH in transactions not prohibited by the other provisions of this Indenture which are and shall at all times be wholly owned (directly or indirectly) by the Company or RIH. Section 12.13. LIMITATIONS ON LIENS. Neither the Company nor RIH will create, incur, suffer to exist or permit to be created or incurred any mortgage, lien, charge or encumbrance on or pledge of the Mortgage Documents or any of the Trust Estate, other than (a) the lien of the Mortgage Documents and the Assignment Agreement, (b) liens on the Trust Estate in connection with Indebtedness permitted by clauses (i), (ii), (iii), (iv) or (v) of Section 12.08(a), (c) other Permitted Encumbrances on the Trust Estate, and (d) a notice of intention or building contract filed by a mechanic, materialman or laborer under the New Jersey lien law. Without limiting the generality of the 86 previous sentence, but notwithstanding the provisions of such sentence, RIH shall not be deemed to have breached such provisions by virtue of the existence of liens for Impositions (as defined in the Mortgage) or mechanics' liens so long as RIH is in good faith contesting the validity of such liens in accordance with the provisions of Section 5.09 of the Mortgage. Section 12.14. COMPLIANCE WITH LAWS. Each of the Company and RIH shall comply, and shall cause each of its Subsidiaries to comply, with the Casino Control Act and all other applicable statutes (including, without limitation, ERISA), rules, regulations, orders and restrictions of the United States of America, states and municipalities, and of any governmental department, commission, board, regulatory authority, bureau, agency and instrumentality of the foregoing in respect of the conduct of its business and the ownership of its properties and assets, including, without limitation, the Trust Estate, except such as are being contested in good faith by appropriate proceedings in accordance with the Mortgage Documents (to the extent applicable) and except for such non-compliances as will not in the aggregate have a material adverse effect on the business, properties, operations or financial condition of the Company, RIH or their respective Subsidiaries. Section 12.15. PAYMENT OF TAXES AND OTHER CLAIMS. The Company or RIH shall 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, RIH or any of their respective Subsidiaries or upon the Trust Estate or any portion thereof or upon the income, profits or property of the Company, RIH or any of their respective Subsidiaries, and (b) all lawful claims for labor, materials and supplies which, if unpaid, will by law become a Lien upon the Trust Estate or upon any other property of the Company, RIH or any of their respective Subsidiaries; PROVIDED, HOWEVER, that the Company and RIH shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessments, charge or claim the amount, applicability or validity of which is being contested in good faith by appropriate proceedings in accordance with the Mortgage Documents (to the extent applicable) if adequate reserves therefor have been established in accordance with GAAP. Section 12.16. MAINTENANCE OF PROPERTIES. Each of the Company and RIH shall cause the Trust Estate and all other properties (other than obsolete 87 equipment) owned by or leased to it or any of its Subsidiaries, and used or useful in the conduct of its business or the business of the Company, RIH or such Subsidiary to be maintained and kept in good condition, repair and working order, except for reasonable wear and use, and will cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as required by the Mortgage Documents or, to the extent not governed by the Mortgage Documents, as in the reasonable judgment of the Board of Directors of RII may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times. Section 12.17. INSURANCE. Each of the Company and RIH shall maintain, and shall cause each of its Subsidiaries to maintain, with financially sound and reputable insurers, appropriate insurance on each of their respective properties and businesses against liabilities, casualties, risks and contingencies of the type and in amounts required by the Mortgage Documents or, to the extent not governed by the Mortgage Documents, as customarily maintained by corporations and other entities engaged in the same or similar businesses and similarly situated; PROVIDED, HOWEVER, that any such insurer shall be qualified to do business in the jurisdiction where the insured property is located. Section 12.18. WAIVER OF STAY, EXTENSION OR USURY LAWS. Each of the Company and RIH covenants (to the extent that it may lawfully do so) that it will not, and will not cause or permit any of its Subsidiaries to, at any time insist upon, or plead, or in any manner whatsoever claim, and will resist any and all efforts to be compelled to take the benefit or advantage of, any stay or extension law or any usury law or other law that would prohibit or forgive the Company or RIH from paying all or any portion of the principal of, or premium, if any, and interest on the Notes or the RIH Promissory Note or the Guaranty as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Indenture or the RIH Promissory Note or the Guaranty; and (to the extent that it may lawfully do so) the Company and RIH hereby expressly waive all benefit or advantage of any such law, and covenant that they will not hinder, delay or impede the execution of any power granted to the Trustee herein and in the Mortgage Documents, but will suffer and permit the execution of every such power as though no such law had been enacted. 88 Section 12.19. APPOINTMENT TO FILL A VACANCY IN OFFICE OF TRUSTEE. The Company, whenever necessary to avoid or fill a vacancy in the office of Trustee, will appoint, in the manner provided in Section 8.10, a Trustee, so that there shall at all times be a Trustee hereunder. Section 12.20. VALIDITY OF LIENS. Each of the Company and RIH represents and warrants that it has, and covenants that it shall continue to have, full corporate power and lawful authority to grant, release, convey, assign, transfer, mortgage, pledge, hypothecate and otherwise create the lien on the Trust Estate; and the Company and RIH shall warrant, preserve and defend the interest of the Trustee in and to the Trust Estate against the claims of all Persons, except as otherwise expressly permitted by the Mortgage Documents or this Indenture, and will take all action necessary to maintain and preserve the lien on the Trust Estate contemplated therein. Section 12.21. TRANSACTIONS WITH STOCKHOLDERS AND AFFILIATES. Each of the Company and RIH covenants that it shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, enter into or permit to exist any transaction (including, without limitation, the purchase, sale, lease or exchange of any property or the rendering of any service) with any Affiliate of the Company or RIH or with any Affiliate of any such holder, unless (a) such transaction is upon fair and reasonable terms which are no less favorable to the Company or such Subsidiary, as the case may be, than would be available in an arm's-length transaction with an unrelated person and (b) if over $250,000, such transaction is determined in the good faith judgment of a majority of the members of the Board of Directors of either (i) RII, so long as RII owns, directly or indirectly, a majority of the outstanding capital stock of RIH, directly or indirectly, or (ii) RIH, to be in the best interests of the Company, RIH or such Subsidiary as applicable; PROVIDED, HOWEVER, that this provision shall not apply to (A) any agreements, documents, instruments or transactions entered into in connection with the RIHF Senior Facility Notes, (B) the Services Agreement, (C) the RII Management Contract, or (D) the RII Tax Sharing Agreement. 89 ARTICLE THIRTEEN REDEMPTION OF NOTES Section 13.01. GENERAL APPLICABILITY OF ARTICLE. Notes which are redeemable before their Stated Maturity shall be redeemable in accordance with their terms and in accordance with this Article. Section 13.02. ELECTION TO REDEEM; NOTICE TO TRUSTEE. The election of the Company to redeem any Notes shall be evidenced by a Company Order. Redemption of any Notes shall not take place earlier than 15 days after the corporate action taken to authorize the redemption. In case of any redemption at the election of the Company of less than all the Outstanding Notes, 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 Notes to be redeemed. Section 13.03. SELECTION BY TRUSTEE OF NOTES TO BE REDEEMED. If less than all the Outstanding Notes are to be redeemed, the particular Notes to be redeemed shall be selected by a random, automated selection process or pro rata, as deemed appropriate by the Trustee, not more than 60 days prior to the Redemption Date by the Trustee from the Outstanding Notes which have not previously been called for redemption, and such selection method may provide for the selection for redemption of portions (equal to the greater of $1,000 and the smallest authorized denomination of the Notes of such series, or a multiple thereof) of the principal of Notes of a denomination larger than $1,000. The Trustee shall promptly notify the Company in writing of the Notes selected for redemption and, in the case of any Note 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 the redemption of Notes shall relate, in the case of any Note redeemed or to be redeemed only in part, to the portion of the principal of such Note which has been or is to be redeemed. Section 13.04. NOTICE OF REDEMPTION. Notice of redemption shall be given by the Company or, at the Company's request, by the Trustee in the name and 90 at the expense of the Company by first-class mail, postage prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption Date, to each Holder of Notes of such series to be redeemed, at his address appearing in the Note Register. Any notice which is mailed in the manner herein provided shall be conclusively presumed to have been duly given, whether or not the Holder receives the notice. In any case, failure to duly give notice by mail, or any defect in the notice to the Holder of any Notes designated for redemption in whole or in part, shall not affect the validity of the proceedings for the redemption of any other Notes. All notices of redemption shall state: (a) the Redemption Date; (b) the Redemption Price; (c) the principal amount of Notes to be redeemed, and, if less than all outstanding Notes are to be redeemed, the identification (and, in the case of partial redemption, the respective principal amounts) of the Notes to be redeemed; (d) that on the Redemption Date, the Redemption Price of each of the Notes to be redeemed will become due and payable and that the interest thereon shall cease to accrue from and after such date; and (e) the place or places where the Notes to be redeemed are to be surrendered for payment of the Redemption Price. Section 13.05. 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 12.03) an amount of money sufficient to pay the Redemption Price of all the Notes which are to be redeemed on that date. Such money shall be held in trust for the benefit of the Persons entitled to such Redemption Price and shall not be deemed to be part of the Trust Estate. Section 13.06. NOTES PAYABLE ON REDEMPTION DATE. Notice of redemption having been given as aforesaid, the Notes so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified and from and after such date (unless the Company 91 shall default in the payment of the Redemption Price) such Notes shall cease to bear interest. Upon surrender of any such Note for redemption in accordance with said notice, such Note shall be paid by the Company at the Redemption Price. Installments of interest due on or prior to the Redemption Date shall be payable to the Holders of the Notes registered as such on the relevant Record Dates according to the terms of such Notes and the provisions of Section 3.07. If any Note called for redemption shall not be so paid upon surrender thereof for redemption, the principal shall, until paid, bear interest from the Redemption Date at the rate prescribed therefor in the Note. Section 13.07. NOTES REDEEMED IN PART. Any Note which is to be redeemed only in part shall be surrendered at a Place of Payment therefor (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 his attorney duly authorized in writing) and the Company shall execute and the Trustee shall authenticate and deliver to the Holder of such Note, without service charge, a new Note or Notes of any authorized denomination or denominations as requested by such Holder in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Note so surrendered. Section 13.08. REDEMPTION PURSUANT TO CASINO CONTROL ACT. Notwithstanding the provisions of this Article Thirteen, if the Casino Control Commission does not waive the qualification requirements as to any Noteholder (whether the record owner or beneficial owner) and requires that such Noteholder be qualified under the Casino Control Act, then, in such event, such Noteholder must qualify under such Act. If a Noteholder does not so qualify, the Noteholder must dispose of its interest in the Notes, within 30 days after the Company's receipt of notice of such finding, or the Company may repurchase such Notes at the lower of the Outstanding Amount and the Fair Market Value of such Notes, plus accrued interest to the date of such repurchase. Commencing on the date the Casino Control Commission serves notice upon either RIH or the Company that any Holder is disqualified, it shall be unlawful for any such disqualified Holder: (i) to receive any dividends or interest upon this Note; (ii) to exercise, directly or through any trustee or nominee, any right conferred by this Note; or (iii) to receive any remuneration in any form from either the Company or RIH for services rendered or otherwise. 92 ARTICLE FOURTEEN DEFEASANCE Section 14.01. DISCHARGE OF THE INDENTURE AND DEFEASANCE OF THE SECURITIES. The Company shall be deemed to have paid and discharged the entire Indebtedness on the Notes and the provisions of this Indenture (except as to any surviving rights of transfer or exchange of Notes herein or therein provided for and any right to receive payments of principal and interest as provided in this Section 14.01), if: (1) The Company irrevocably deposits in trust with the Trustee, pursuant to an irrevocable trust and security agreement in form and substance reasonably satisfactory to the Trustee, U.S. Legal Tender or direct non-callable obligations of, or non-callable obligations guaranteed as to timely payment by, the United States of America for the payment of which obligation or guarantee the full faith and credit of the United States of America is pledged ("U.S. Government Obligations") maturing as to principal and interest in such amounts and at such times as are sufficient, without consideration of the reinvestment of such interest and after payment of all Federal, state and local taxes or other charges or assessments in respect thereof payable by the Trustee, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof (in form and substance reasonably satisfactory to the Trustee) delivered to the Trustee, to pay reasonable compensation to the Trustee under Section 8.07 and the principal of and interest on the outstanding Notes on the dates on which any such payments are due and payable in accordance with the terms of the Indenture and of the Notes; (2) Such deposits shall not cause the Trustee to have a conflicting interest as defined in and for purposes of the TIA; (3) Such deposit will not result in a Default under this Indenture; (4) The Company shall deliver to the Trustee an Opinion of Counsel, or a private ruling of the Internal Revenue Service, in form and substance satisfactory to the Trustee, to the effect that Holders of the Notes will not recognize income, gain or loss for Federal income tax purposes as a result of such deposit and the defeasance contemplated hereby and will be subject to Federal income tax in the same amounts and in 93 the same manner and at the same times as would have been the case if such deposit and defeasance had not occurred; (5) The deposit shall not result in the Company, the Trustee or the trust becoming or being deemed to be an "investment company" under the Investment Company Act of 1940, as amended; (6) The Holders shall have a perfected security interest under applicable law in the U.S. Legal Tender or U.S. Government Obligations deposited pursuant to Section 14.01(1); and (7) The Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent specified herein relating to the defeasance contemplated by this Section 14.01 have been complied with. If all or any portion of the Notes are to be redeemed through such irrevocable trust, the Company must make arrangements satisfactory to the Trustee, at the time of such deposit, for the giving of the notice of such redemption or redemptions by the Trustee in the name and at the expense of the Company. The Trustee and each co-trustee and separate trustee, if any, then acting as such hereunder shall, at the expense of the Company, execute and deliver a termination statement and such instruments of satisfaction and discharge as may be necessary and pay, assign, transfer and deliver to the Company or upon Company Order all cash, securities and other personal property then held by it hereunder, other than pursuant to this Section 14.01. Section 14.02. APPLICATION OF DEPOSITED MONEY. U.S. Legal Tender or U.S. Government Obligations deposited with the Trustee pursuant to Section 14.01 shall be applied by the Trustee in accordance with Section 5.02. Section 14.03. REPAYMENT TO THE COMPANY. The Trustee and the Paying Agent shall promptly pay to the Company upon request any excess money or securities held by them at any time in accordance with the provisions of Section 5.03. 94 ____________________ This instrument may be executed in any number of counterparts or with counterpart signatures, each of which as executed shall be deemed to be an original, but all such counterparts shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed and attested, all as of the day and year first above written. RESORTS INTERNATIONAL HOTEL FINANCING, INC. Attest: By: ------------------------- -------------------------- Name: Title: RESORTS INTERNATIONAL HOTEL, INC. Attest: By: _________________________ __________________________ Name: Title: STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, as Trustee Attest: By: _________________________ __________________________ Name: Title: 95 STATE OF NEW YORK : : ss COUNTY OF NEW YORK : I certify that on ___________, 1993, ____________________ personally came before me, and he acknowledged under oath, to my satisfaction, that: (a) he is the ______________ of Resorts International Hotel Financing, Inc., the corporation named in this document; (b) he is the attesting witness to the signing of this document by the proper corporate officer who is ___________________ of Resorts International Hotel Financing Inc.; (c) this document was signed and delivered by the corporation as its voluntary act duly authorized by a proper resolution of its Board of Directors; (d) he knows the proper seal of the corporation which was affixed to this document; and (e) he signed this proof to attest to the truth of these facts. ________________________________ Signed and sworn to before me on _________, 1993. _____________________________ Notary Public of the State of New York STATE OF NEW YORK : : ss COUNTY OF NEW YORK : I certify that on ___________, 1993, _________________ personally came before me, and this person acknowledged under oath, to my satisfaction, that: (a) this person is the ________________ of Resorts International Hotel, Inc., the corporation named in this document; (b) this person is the attesting witness to the signing of this document by the proper corporate officer who is ______________________, the __________________________ of Resorts International Hotel, Inc.; (c) this document was signed and delivered by the corporation by its voluntary act duly authorized by a proper resolution of its Board of Directors; (d) this person knows the proper seal of the corporation which was affixed to this document; and (e) this person signed this proof to attest to the truth of these facts. -------------------------------- Signed and sworn to before me on _________, 1993. - ----------------------------- Notary Public [seal] STATE OF NEW YORK : : ss COUNTY OF NEW YORK : I certify that on ________, 1993, ________________ personally came before me, and this person acknowledged under oath, to my satisfaction, that: (a) this person is the _________________ of State Street Bank and Trust Company of Connecticut, National Association, a national banking association named in this document; (b) this person is the attesting witness to the signing of this document by the proper corporate officer who is __________________, the __________________________ of State Street Bank and Trust Company of Connecticut, National Association; (c) this document was signed and delivered by the corporation by its voluntary act duly authorized by a proper resolution of its Board of Directors; (d) this person knows the proper seal of the corporation which was affixed to this document; and (e) this person signed this proof to attest to the truth of these facts. -------------------------------- Signed and sworn to before me on _________, 1993. - ----------------------------- Notary Public Exhibit A RIH Senior Promissory Note EXHIBIT A AMENDED AND RESTATED SECURED PROMISSORY NOTE $125,000,000 [ ], 1994 WHEREAS, in partial repayment of certain inter- company debt owed by Resorts International Hotel, Inc., a New Jersey corporation ("RIH"), to Resorts International, Inc., a Delaware corporation ("RII"), RIH has issued to RII a promissory note on the date hereof in the principal amount of $125,000,000 (as the same may be amended or restated from time to time, the "Note"), which Note is secured by a Mortgage Securing RIH Promissory Note dated as of the date hereof (the "Mortgage"), by RIH, as mortgagor which Mortgage encumbers certain real property owned or leased by RIH together with all buildings and improvements erected thereon (collectively, the "Property"); and WHEREAS, RII has transferred the Note and the Mortgage to RIHF in exchange for 11% Mortgage Notes due 2003 (the "Notes") in an aggregate principal amount of $125,000,000, which Notes were issued pursuant to that certain Indenture dated as of even date herewith (the "Indenture") among RIHF, as issuer, RIH, as guarantor, and State Street Bank and Trust Company of Connecticut, National Association, as trustee (the "Trustee"); and WHEREAS, RIHF has requested RIH to amend and restate the Note; NOW, THEREFORE, RIH agrees to amend and restate the Note as follows: RIH, for value received hereby promises to pay to the order of RIHF (RIHF and any subsequent holder of this Note being herein referred to as the "Payee"), the principal sum of One Hundred Twenty-Five Million Dollars ($125,000,000), or such other principal sum as shall be outstanding hereunder, on September 15, 2003 (the "Maturity Date") in accordance with the provisions hereof, with interest on such principal sum from time to time outstanding, computed from [ ], 1994 [the Effective Date], in semi-annual installments of interest on March 15 and September 15 of each year, commencing 1 initially on September 15, 1994, at a rate of 11% per annum on the unpaid balance hereof, until the principal hereof is paid in full. Payments of principal and interest on this Note shall be made at [address of the Payee], or at such other address as the Payee may designate in writing. Interest will be computed on the basis of a 360-day year of twelve 30-day months, based on the actual number of days elapsed. Principal and interest shall be paid in money of the United States that at the time of payment is legal tender for public and private debts. l.(a) This Note shall be prepaid (i) in connection with, but only to the extent of, any redemption of the Notes of RIHF issued pursuant to the Indenture (all prepayments of this Note are hereinafter referred to as "Prepayments"), and/or (ii) by the surrender to the Trustee of the principal amount of any Notes purchased or otherwise acquired by RIH or the Company (as defined in the Indenture) other than pursuant to the redemption provisions of the Notes and surrendered to the Trustee for cancellation in accordance with the provisions of the Notes or the Indenture (it being expressly understood that the same Notes shall reduce the principal amount of this Note only once). Each Prepayment under clause (i) above shall be made at the time that payment is required or permitted to be made by the Company to the Trustee under the Indenture in respect of any redemption of Notes. Each Prepayment under clause (ii) above shall be deemed to be made at the time of surrender of such Notes for cancellation. Each Prepayment of this Note pursuant to clause (i) above shall be in an amount equal to the aggregate amount paid to holders of Notes on account of the redemption thereof (other than interest), together with accrued and unpaid interest on the amount of the reduction in the principal amount of this Note as a result of such Prepayment. The principal amount of this Note shall be reduced as a result of such prepayment in an amount equal to the aggregate principal amount of the Notes so redeemed or surrendered. (b) Except as set forth in Section 1(a), this Note may not be prepaid in whole or in part. 2. RIH shall pay interest on overdue principal and prepayment premium at the rate of 14% per annum. 3. This Note is secured by the Mortgage on the Property. 4. If (i) RIH defaults in the payment of interest when the same becomes due and payable and the default continues for a period of ten days following receipt of a notice from the Payee or the Trustee specifying such default 2 and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; (ii) RIH defaults in the payment of the principal or any part thereof when the same becomes due and payable at Maturity (as defined in the Mortgage); (iii) there shall occur any other Event of Default under the Mortgage or any other Note (as defined in the Mortgage); or (iv) there shall occur any other Event of Default under the Indenture, then on the happening of any such event, the Payee may declare the entire Outstanding Amount (as defined in the Indenture) of this Note and all accrued and unpaid interest thereon and all sums due under Section 5 of this Note and the Mortgage (collectively, the "Debt") to become immediately due and payable. 5. RIH hereby waives presentment and demand for payment, notice of dishonor, protest and notice of protest of this Note and agrees to pay all costs of collection when incurred, including reasonable attorneys' fees, which costs may be added to the amount due under this Note and be receivable therewith, and to perform and comply with each of the terms, covenants and provisions contained in this Note and the Mortgage on the part of RIH to be observed or performed. Except as expressly provided herein, no release of any security for the principal sum due under this Note or extension of time for payment of this Note, or any installment hereof, and no alteration, amendment or waiver of any provision of this Note or the Mortgage shall release, discharge, modify, change or affect the liability of RIH under this Note or the Mortgage. 6. RIH covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any usury, stay or extension law or any other law which would prohibit or forgive RIH from paying all or any portion of the interest on this Note, wherever enacted, now or at any time hereafter in force, or which may otherwise affect the covenants or the performance of this Note or the Mortgage; and RIH (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Payee, but will suffer and permit the execution of every such power as though no such law had been enacted. 7. This Note shall be deemed to be a contract under the laws of the State of New York and shall be construed in accordance with and governed by the internal laws of the State of New York. 8. This Note may not be changed or terminated orally, but only by an agreement in writing signed by the 3 party against whom enforcement of such change or termination is sought. 9. RIH shall not claim any credit or deduction from the interest or principal due hereunder by reason of payment of any tax assessed upon the Property. 10. Whenever the provisions of this Note and the provisions of the Indenture shall be inconsistent, the provisions of the Indenture shall govern. 11. This Note is subject to and shall be enforced in compliance with the provisions of the New Jersey Casino Control Act. This Note shall not be transferred, assigned or amended without the prior approval of the New Jersey Casino Control Commission. 12. Whenever used herein, the singular number shall include the plural, the plural the singular, and the words "Payee" and "RIH" shall include their respective successors and assigns. IN WITNESS WHEREOF, RIH has duly executed this Note as of the day and year first above written. RESORTS INTERNATIONAL HOTEL, INC. By: _____________________________ Name: Title: 4 STATE OF NEW YORK ) )ss. COUNTY OF NEW YORK ) BE IT REMEMBERED, that on this [ ] day of [ ], 1994, before me, the subscriber, a Notary public of the State of New York, personally appeared [ ], [ ] of RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation, and he acknowledged that he signed, sealed and delivered the same as his voluntary act and deed and the act and deed of said RESORTS INTERNATIONAL HOTEL, INC., and that he received a true copy of the within instrument on behalf of said corporation. Notary Public of the State of New York [Seal] 5 Exhibit B Assignment Agreement from Resorts International Hotel Financing, Inc. NA932280131 - MORTGAGE ASSIGNMENT GD&C DRAFT DATED 10/17/93 ============================================================================== ASSIGNMENT OF AGREEMENTS ________________ RESORTS INTERNATIONAL HOTEL FINANCING, INC., a Delaware corporation, as Assignor, TO STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION a national banking association, as Assignee Dated as of _________________, 1994 ============================================================================== Prepared by:__________________________ D. Eric Remensperger, Esq. ASSIGNMENT OF AGREEMENTS THIS ASSIGNMENT made as of the ___ day of ___________, 1994, by RESORTS INTERNATIONAL HOTEL FINANCING, INC., a Delaware corporation ("ASSIGNOR"), having an address at c/o Resorts International, Inc., 1133 Boardwalk, Atlantic City, New Jersey 08401, to STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, a national banking association ("ASSIGNEE"), having an address at 750 Main Street Suite 1114 Hartford, Connecticut 06103 in its capacity as Trustee under that certain Indenture dated as of even date herewith (the "INDENTURE") among Assignor, Assignee and Resorts International Hotel, Inc., a New Jersey corporation ("MORTGAGOR"). WITNESSETH: WHEREAS, in partial repayment of certain inter-company debt owed by Mortgagor to Griffin Resorts, Inc., a Delaware corporation ("GRI"), Mortgagor has issued to GRI a promissory note on the date hereof in the principal amount of $125,000,000 (as the same may be amended or restated from time to time, the "RIH SENIOR PROMISSORY NOTE"), which note is secured by a Mortgage Securing RIH Senior Promissory Note dated as of the date hereof, between Mortgagor, as mortgagor and GRI, as mortgagee (the "MORTGAGE"), which Mortgage encumbers certain real property owned or leased by Mortgagor as more specifically described on SCHEDULE 1 hereto together with all buildings and improvements erected thereon (collectively, the "PROPERTY"); and WHEREAS, in partial repayment of certain inter-company debt, and as a partial dividend or return of capital, GRI has transferred the RIH Senior Promissory Note and the Mortgage to Resorts International, Inc., a Delaware corporation ("RII"); and WHEREAS, RII has transferred the RIH Senior Promissory Note and the Mortgage to Assignor in exchange for 11% Senior Mortgage Notes due 2003 (the "NOTES") in an aggregate principal amount of $125,000,000, which Notes were issued pursuant to the Indenture; and WHEREAS, as further security for the obligations of Mortgagor under the RIH Senior Promissory Note, Mortgagor has executed and delivered (i) an Assignment of Operating Assets and (ii) an Assignment of Leases and Rents, each in favor of Assignor (as assignee of RII (as assignee of GRI)) and each dated as of the date hereof (said Assignments and the Mortgage collectively referred to herein as the "RIH SENIOR PROMISSORY NOTE MORTGAGE DOCUMENTS"), pursuant to which Mortgagor granted a security interest in specified personal property, assigned certain other rights and assigned all right, title and interest of Mortgagor in leases and rents to Assignor, all as security for the performance and observance of obligations of Mortgagor under the RIH Senior Promissory Note; and WHEREAS, the rights and obligations of the Assignee hereunder are subject to the terms set forth in that certain Intercreditor Agreement dated as of the date hereof among Assignor, Assignee, Mortgagor, Fidelity Management and Trust Company, as trustee, and The Chase Manhattan Bank (National Association), as trustee (and such other parties that may from time to time become a party thereto); and WHEREAS, in order to secure payment of the Notes and all other payments due to the holder(s) from time to time of the Notes (collectively, the "HOLDERS") or the Trustee under the Indenture, Assignor has agreed to execute this Assignment and to be bound by its terms; NOW, THEREFORE, THIS ASSIGNMENT FURTHER WITNESSETH: That Assignor in consideration of the purchase of the Notes by the Holders, Ten Dollars ($10.00) lawful money of the United States of America duly paid to Assignor by Assignee at or before the execution and delivery of these presents and for other good and valuable consideration, the receipt of which are hereby acknowledged, does hereby sell, assign and transfer unto Assignee and unto its successors and to its assigns forever, for its benefit and for the benefit of the Holders, and does hereby grant to Assignee a security interest in and to all of Assignor's estate, right, title and interest in, to and under any and all of the following described property, rights and interests (collectively, the "ASSIGNED PROPERTIES"): GRANTING CLAUSE FIRST All right, title and interest of Assignor in and to the RIH Senior Promissory Note, including all renewals, extensions, modifications and replacements of the same, and without limiting the generality of the foregoing, the present, continuing and future right to make claim for, collect or cause to be collected, receive or cause to be received directly from Mortgagor thereunder, all payments of principal, interest and other sums of money payable thereunder. GRANTING CLAUSE SECOND All right, title and interest of Assignor in and to the RIH Senior Promissory Note Mortgage Documents, including all extensions, renewals, modifications, supplements and replacements of the same. 2 TO HAVE AND TO HOLD all said properties, rights and interests unto Assignee and its successors and assigns forever. THIS ASSIGNMENT FURTHER WITNESSETH, that Assignor hereby agrees and covenants with Assignee as follows: ARTICLE ONE PARTICULAR COVENANTS OF ASSIGNOR Section 1.01. PERFORMANCE OF COVENANTS. Assignor represents, warrants and covenants that it is duly authorized to enter into this Assignment, and to grant and convey a lien on and security interest in the Assigned Properties to Assignee in the manner and to the extent herein set forth and that all action on its part required for the execution and delivery of this Assignment has been duly and effectively taken. Section 1.02. FURTHER ACTION REQUIRED. (a) Assignor covenants that it will, from time to time, execute and deliver such further instruments and take such further actions as may be required to carry out the purposes of this Assignment. (b) Assignor hereby appoints Assignee as its lawful attorney-in-fact (such power being coupled with an interest) in the name of Assignor or Assignee or both to execute any instruments or to take any actions to enforce all rights, powers and remedies of Assignor under or pursuant to the Assigned Properties. (c) Nothing contained herein shall limit the rights of Assignee contained in the Mortgage or the Indenture. (d) Until this Assignment is discharged in accordance with Section 5.01 hereof, no amendment, waiver, modification, discharge, release, enforcement or satisfaction by Assignor of any of the rights or remedies under the Assigned Properties shall be effective without the prior consent and approval of Assignee, and Assignor shall have no power or authority to take any such action without such consent and approval. ARTICLE TWO OBLIGATIONS TO ASSIGNEE Section 2.01. CONTINUING OBLIGATIONS. (a) Assignee shall have no obligation, duty or liability with respect to the Assigned Properties or any of 3 them (other than those specifically assumed in its capacity as Trustee pursuant to the Indenture). (b) Assignor shall at all times remain liable to observe and perform all of its covenants and obligations, if any, under the Assigned Properties, and does hereby agree to indemnify and hold harmless Assignee, its successors and assigns, from any liability, loss, damage or expense it or they may incur under the Assigned Properties or by reason of this Assignment. ARTICLE THREE PAYMENTS Section 3.01. PAYMENTS. All Revenues (as hereinafter defined) due and to become due under or pursuant to the Assigned Properties shall be paid by Mortgagor directly to Assignee at the address set forth in Section 6.02 hereof. Neither Assignor nor Assignee shall have the right, without Mortgagor's prior written consent, to instruct Mortgagor to pay Revenues to Assignor or in any manner or to any party other than directly to Assignee. Section 3.02. MORTGAGOR'S ACKNOWLEDGMENT. Mortgagor hereby joins in the execution of this Assignment to acknowledge (a) the assignment by Assignor to Assignee of Assignor's right, title and interest in, to and under the Assigned Properties, (b) Mortgagor's agreement to make payment of all Revenues under the Assigned Properties directly to Assignee at the address set forth in this Assignment, and (c) the right of Assignee to exercise or enforce in its own name, in the name of Assignor, or both, all of the rights, powers and remedies of Assignor in, to and under the Assigned Properties. Section 3.03. REVENUES. As used herein, the term "REVENUES" shall mean (a) all amounts paid or payable by Mortgagor under the RIH Senior Promissory Note or the RIH Senior Promissory Note Mortgage Documents, and (b) the net proceeds realized upon or as a result of the enforcement of any mortgage lien or security interest granted under the Assigned Properties or this Assignment or upon or as a result of the exercise of any right or remedy under the Assigned Properties or this Assignment. Section 3.04. CONFIRMATION. Assignor hereby agrees, and Mortgagor hereby acknowledges, that Mortgagor may rely exclusively on Assignee's directive that Assignee is entitled to take action under this Assignment. 4 ARTICLE FOUR DEFAULT PROVISIONS AND REMEDIES Section 4.01. ENFORCEMENT OF REMEDIES. (a) Upon the occurrence of any default under the Indenture or the Assigned Properties, or any of them (each, a "DEFAULT"), not cured within the applicable grace period after the applicable notice provision, if any, has been satisfied (each called an "EVENT OF DEFAULT"), Assignee may, at its option, (i) proceed directly to protect and enforce its rights and the rights of any Holders under this Assignment or pursuant to the Assigned Properties, or any one of them, by such suits, actions or special proceedings in equity or at law, or by proceedings in the office of any board or officer having jurisdiction, either for the specific performance of any covenant or agreement contained herein, or in the Assigned Properties, or any of them, or in aid of execution of any power granted herein or pursuant to the Assigned Properties, or any one of them, or for the enforcement of any proper legal or equitable remedy, including, without limitation, foreclosure of the Mortgage and/or the sale of the collateral or part thereof secured thereby at such foreclosure sale, subject to statutory and other legal requirements, as Assignee shall deem most effective to protect and enforce such rights, and Assignor hereby appoints Assignee as its lawful attorney-in-fact (such power being coupled with an interest) in the name of Assignor or Assignee or both to effectuate such foreclosure and/or sale of such collateral or part thereof; or (ii) instruct, direct and cause Assignor to effectuate the foregoing on behalf of and for the benefit of Assignee and the Holders, it being further understood that Mortgagor joins in the execution of this Assignment in order to acknowledge its agreement to promptly and duly execute and deliver any and all documents and take any and all actions required by Assignee in order to permit Assignee to foreclose and/or sell such collateral or part thereof, and obtain the benefits of this Assignment, as aforesaid. (b) Upon the occurrence of any Event of Default, Assignee shall be entitled to sue for, enforce payment of and receive any and all amounts then and at any time remaining due from Assignor or Mortgagor for principal and interest on the RIH Senior Promissory Note, or other sums due under the RIH Senior Promissory Note Mortgage Documents, as the case may be, or otherwise under any of the provisions of the Assigned Properties, or any of them, with interest on overdue payments of such principal, at the rate set forth in the RIH Senior Promissory Note, from the date of Default to the date of such payment, together with any and all fees, costs and expenses of collection (including reasonable attorneys' fees and court costs), subject to statutory and other legal requirements. 5 (c) Regardless of the occurrence of an Event of Default, upon five days' written notice to Mortgagor (or such shorter period or without notice if deemed necessary and appropriate by Assignee), Assignee may institute and maintain or cause in the name of Assignor or Assignee or both to be instituted and maintained such suits and proceedings as it may be advised by its counsel shall be necessary and appropriate to prevent any impairment of the Assigned Properties, or any of them, and to protect its interests in the Assigned Properties, and in the rents, issues, rights, revenues and other income arising therefrom, including power to institute and maintain proceedings to restrain the enforcement or compliance with any 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 hereunder or would be materially prejudicial to the interests of Assignee. (d) Nothing contained in this Article Four is intended to grant Assignee any greater remedies and rights than those allowed to Assignor in the respective Assigned Properties. In the event of any conflict between the remedies and rights contained in any of the Assigned Properties and the remedies and rights contained in this Article Four, then the remedies and rights set forth in the applicable Assigned Property shall govern. ARTICLE FIVE DISCHARGE OF ASSIGNMENT Section 5.01. DISCHARGE OF ASSIGNMENT. If Assignor shall pay or cause to be paid, or there shall otherwise be paid, to Assignee and/or the Holders' all amounts required to be paid by Assignor pursuant to the Indenture and the Notes, and the conditions precedent for the Indenture shall cease, determine and become null and void in accordance with Section 5.01 of the Indenture, Assignee shall promptly cancel and discharge of record this Assignment and any financing statements filed in connection herewith and execute and deliver to Assignor and to Mortgagor all such instruments as may be appropriate to evidence such discharge and satisfaction of said lien or liens, and Assignee shall pay over or deliver to Assignor all other moneys and securities held by it pursuant to this Assignment, which are not required for the payment of (a) principal and redemption price, if applicable, of and interest on, the Notes, and (b) all other amounts required to be paid by Assignor pursuant to the Indenture and the Notes. 6 ARTICLE SIX MISCELLANEOUS PROVISIONS Section 6.01. BINDING SUCCESSORS AND ASSIGNS. All of the covenants, stipulations, obligations and agreements contained in this Assignment shall be binding upon and inure to the benefit of Assignor, Assignee and Mortgagor (to the extent applicable to Mortgagor) and their respective successors and assigns. Section 6.02. NOTICES. (a) Any request, notice, demand, authorization, direction, request or other instrument authorized or required by this Assignment to be given to or filed with Assignor, Assignee or Mortgagor (collectively, "NOTICES") shall be deemed given when either (i) delivered by hand or (ii) five days after sending by registered or certified mail, postage prepaid, in either case addressed as follows: If to Assignor, at: Resorts International Hotel Financing, Inc. c/o Resorts International, Inc. 1133 Boardwalk Atlantic City, New Jersey 08401 Attention: Christopher D. Whitney If to Assignee, at: _________________________ _________________________ _________________________ Attention: _____________ If to Mortgagor, at: Resorts International Hotel, Inc. c/o Resorts International, Inc. 1133 Boardwalk Atlantic City, New Jersey 08401 Attention: Christopher D. Whitney (b) By Notice to Mortgagor, Assignor and/or Assignee, given as provided above, any party may designate additional or substitute addresses for Notices, which shall, notwithstanding Section 6.02(a), be deemed given with received. Section 6.03. PARTIAL INVALIDITY. In case any one or more of the provisions of this Assignment shall for any reason be held to be illegal or invalid, such illegality or 7 invalidity shall not affect any other provision of this Assignment, but this Assignment shall be construed and enforced at the time as if such illegal or invalid provisions had not been contained herein or therein, nor shall such illegality or invalidity or any application thereof affect any legal and valid application herein or thereof from time to time. Section 6.04. APPLICABLE LAW. This Assignment shall be governed by and construed under the internal laws of the State of New Jersey, without giving effect to the principles of conflicts of law. Section 6.05. NO AMENDMENT. For so long as the Notes shall remain outstanding, the Assigned Properties may not be modified, amended or terminated except in accordance with the provisions of the Indenture or the Assigned Properties. Section 6.07. CONTROL ACT. Each of the provisions of this Assignment is subject to and shall be enforced in compliance with the provisions of the New Jersey Casino Control Act. IN WITNESS WHEREOF, Assignor, Assignees and Mortgagor have executed this Assignment Agreement as of the date first above written. RESORTS INTERNATIONAL HOTEL FINANCING, INC. Attest: _________________________________________ By:_____________________________ President RESORTS INTERNATIONAL HOTEL, INC. Attest: _________________________________________ By:______________________________ President STATE STREET BANK AND TRUST 8 COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION Attest: _______________________________________ By:______________________________ Title 9 STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK ) BE IT REMEMBERED that on ______________, 1994, before me, the subscriber, __________________, personally appeared _______________, who, being by me duly sworn on his oath, deposes and makes proof to my satisfaction, that he is the Asst. Secretary of Resorts International Hotel Financing, Inc., the corporation named in the within instrument; that __________________ is the Vice President of said Corporation; that the execution, as well as the making of this instrument, has been duly authorized by a proper resolution of the board of directors of the said corporation; that deponent well knows the corporate seal of said corporation; and that the seal affixed to said instrument is the proper corporate seal and was thereto affixed and said instrument signed and delivered by said Vice President as and for the voluntary act and deed of said corporation. In presence of deponent who thereupon subscribed his name thereto as attesting witness; and deponent signed this proof to attest to the truth of these facts. ____________________________ [Name] [Assistant] Secretary Sworn to and subscribed before me, the date aforesaid ____________________________ Notary Public My commission expires: ____________________________ 10 STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK ) BE IT REMEMBERED that on _________________, 1994, before me, the subscriber, __________________, personally appeared ___________________, who being by me duly sworn on his oath, deposes and makes proof to my satisfaction, that he is the Asst. Secretary of STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, the corporation named in the within instrument; that ____________ is the Vice President of said corporation; that the execution, as well as the making of this instrument, has been duly authorized by a proper resolution of the board of directors of the said corporation; that deponent well knows the corporate seal of said corporation; and that the seal affixed to said instrument is the proper corporate seal and was thereto affixed and said instrument signed and delivered by said Vice President as and for the voluntary act and deed of said corporation. In presence of deponent who thereupon subscribed his name thereto as attesting witness; and deponent signed this proof to attest to the truth of these facts. ____________________________ [Name] [Assistant] Secretary Sworn to and subscribed before me, the date aforesaid ____________________________ Notary Public My commission expires: ____________________________ 11 STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK ) BE IT REMEMBERED that on _________________, 1994, before me, the subscriber, __________________, personally appeared ___________________, who being by me duly sworn on his oath, deposes and makes proof to my satisfaction, that he is the Asst. Secretary of Resorts International Hotel, Inc., the corporation named in the within instrument; that ______________ is the Vice President of said corporation; that the execution, as well as the making of this instrument, has been duly authorized by a proper resolution of the board of directors of the said corporation; that deponent well knows the corporate seal of said corporation; and that the seal affixed to said instrument is the proper corporate seal and was thereto affixed and said instrument signed and delivered by said Vice President as and for the voluntary act and deed of said corporation. In presence of deponent who thereupon subscribed his name thereto as attesting witness; and deponent signed this proof to attest to the truth of these facts. ____________________________ [Name] [Assistant] Secretary Sworn to and subscribed before me, the date aforesaid ____________________________ Notary Public My commission expires: ____________________________ 12 EXHIBIT C SUBORDINATION PROVISIONS A. SUBORDINATION. Anything herein to the contrary notwithstanding, the Subordinated Debt, including principal, premium, if any, and interest, shall be subordinate and junior to the extent set forth in subparagraphs (i) to (v), inclusive, below, to all Senior Indebtedness. (i) If the Company (as defined in this Exhibit C) shall default in the payment of any principal of or interest on any Senior Indebtedness when the same becomes due and payable, whether at maturity or at a date fixed for prepayment or by declaration of acceleration or otherwise, then, unless and until such default shall have been remedied by payment in full in cash or waived or shall have ceased to exist or all amounts then due and payable in respect of Senior Indebtedness shall have been paid in full or provision shall have been made for such payment in cash, no holder of the Subordinated Debt shall accept or receive any direct or indirect payment (in cash, property, by set-off or otherwise) of or on account of any Subordinated Debt. (ii) In the event of any insolvency, bankruptcy, liquidation, reorganization or other similar proceedings, or any receivership proceedings in connection therewith, relative to the Company, and in the event of any proceedings for voluntary liquidation, dissolution or other winding up of the Company, whether or not involving insolvency or bankruptcy proceedings, then all Senior Indebtedness shall first be paid in full in cash, or such payment shall have been provided for in cash, before any payment of or on account of principal or interest is made by the Company upon the Subordinated Debt. (iii) In any of the proceedings referred to in subparagraph (ii) above, any payment or distribution of any kind or character, whether in cash, property, stock or obligations, which may be payable or deliverable by the Company in respect of the Subordinated Debt shall be paid or delivered directly to the holders of Senior Indebtedness (or to a banking institution selected by the court or Person making the payment or delivery or designated by any holder of Senior Indebtedness) for application in payment thereof in accordance with the priorities then existing among such holders, unless and until all principal of and interest on all Senior Indebtedness shall have been paid in full in cash or such payment shall have been provided for; PROVIDED, HOWEVER, that no such delivery shall be made to holders of Senior Indebtedness of stock or obligations which are issued pursuant to reorganization proceedings or dissolution or liquidation proceedings, or upon any merger, consolidation, sale, lease, transfer or other disposal not prohibited by the provisions of the Subordinated Debt, by the Company, as reorganized, or by the corporation succeeding to the Company or acquiring its property and assets, if such stock or obligations are subordinate and junior (whether by law or agreement) at least to the extent provided in this Section ___ to the payment of all Senior Indebtedness then outstanding and to the payment of any stock or obligations which are issued in exchange or substitution for any Senior Indebtedness then outstanding. (iv) Upon the occurrence and continuance of any Default Subordination Event (other than under circumstances when the terms of subparagraph (ii) above are applicable), no holder of the Subordinated Debt shall accept or receive any direct or indirect payment (in cash, property, by set-off or otherwise) of or on account of any indebtedness in respect of the Subordinated Debt during the Applicable Stand-Still Period; PROVIDED, HOWEVER, that in the case of any payment on or in respect of any Subordinated Debt which would (in the absence of any such Default Subordination Event) have been due and payable on any date (a "Scheduled Payment Date") during such Applicable Stand-Still Period, the provisions of this subparagraph (iv) shall not prevent such payment (a "Scheduled Payment") on or after the date (the "Deferred Maturity Date") immediately following the termination of such Applicable Stand-Still Period. Notwithstanding the foregoing provisions of this subparagraph (iv), the failure by the Company to make a Scheduled Payment on a Scheduled Payment Date during an Applicable Stand-Still Period shall nevertheless constitute an Event of Default. (v) If any payment or distribution of any character, whether in cash, securities or other property, shall be received by any holder of Subordinated Debt in contravention of any of the terms of this Section ___ and before all the Senior Indebtedness shall have been paid in full, such payment or distribution shall be received in trust for the benefit of the holders of the Senior Indebtedness at the time outstanding in accordance with the priorities then existing among such holders, and shall forthwith be paid over or delivered and transferred to the holders of Senior Indebtedness. B. OBLIGATION OF OBLIGORS UNCONDITIONAL. The provisions of this Section ___ are for the purpose of defining the relative rights of the holders of Senior Indebtedness on the one hand, and the holders of the Subordinated Debt on the other hand, against the Company and its property; and nothing herein shall impair, as between the Company and the holders of the Subordinated Debt, the obligation of the Company, which is unconditional and absolute, to pay to the holders thereof the principal thereof and premium, if any, and interest thereon in accordance with their terms and the provisions hereof, nor shall anything herein prevent the holders of the Subordinated Debt from exercising all remedies otherwise permitted by applicable law or hereunder upon default hereunder or under the Subordinated Debt (including, without limitation, the right to demand payment and sue for performance hereof and of the Subordinated Debt and to accelerate the maturity thereof as provided in Section ___), subject to the rights, if any, under this Section ___ of holders of Senior Indebtedness to receive cash, property, stock or obligations otherwise payable or deliverable by the Company to the holders of the Subordinated Debt; PROVIDED, HOWEVER, that upon the commencement and during the continuance of an Applicable Stand-Still Period the holders of the Subordinated Debt, to the extent they are otherwise entitled to do so, will not accelerate the maturity of the Subordinated Debt or pursue any other remedy to enforce payment thereof or initiate any bankruptcy or insolvency proceeding relative to the Company unless and until the earlier of (i) the end of such Applicable Stand-Still Period and (ii) the acceleration of the Senior Indebtedness related to such Applicable Stand-Still Period. C. SUBROGATION. Upon payment in full of Senior Indebtedness, the holders of the Subordinated Debt shall be subrogated to the rights of the holders of the Senior Indebtedness to receive payments or distributions of assets of the Company made on Senior Indebtedness until the principal of and premium, if any, and interest on the Subordinated Debt shall be paid in full, and, for the purposes of such subrogation, no payments to the holders of Senior Indebtedness of any cash, property, stock or obligations to which the holders of the Subordinated Debt would be entitled except for the provisions of subparagraph (iii) of Section A above shall, as between the Company, its creditors (other than the holders of the Senior Indebtedness) and the holders of the Subordinated Debt, be deemed to be a payment by the Company to or on account of the Senior Indebtedness. D. DEFINITIONS. "COMPANY" means RIH, the Company or any of their respective subsidiaries, as the case may be. "DEFAULT SUBORDINATION EVENT" means the existence of all of the following: (i) an event of default shall have occurred and be continuing in respect of the Senior Indebtedness, (ii) the holders of the Subordinated Debt shall have received a notice from or on behalf of any holder of Senior Indebtedness specifying that such event of default has occurred and is continuing and that such notice constitutes a "Default Subordination Notice", and (iii) no other Default Subordination Notice shall have been delivered by or on behalf of any holder of Senior Indebtedness within the 365-day period immediately preceding the giving of such notice. The "APPLICABLE STAND-STILL PERIOD" relating to any Default Subordination Event shall be deemed to continue until the event of default under the Senior Indebtedness giving rise thereto shall have been cured (by payment or otherwise) or waived or a period of 180 days shall have elapsed from the giving of the Default Subordination Notice relating thereto, in any such case whichever shall be the shorter period. "SENIOR INDEBTEDNESS" shall mean and include all obligations (whether now outstanding or hereafter incurred), for the payment of which the Company is responsible or liable as obligor, guarantor or otherwise, including, without limitation, principal, interest, premium, fees, expenses and indemnities, whether now owing or hereafter incurred (including any interest accruing subsequent to the commencement of a proceeding described in Section 7.04, regardless of whether the claims of holders of such payment obligations for such interest are allowed in any such proceeding). Exhibit D Mortgage securing RIH Senior Promissory Note between Resorts International Hotel, Inc, and Resorts International Hotel Financing, Inc. NA932010185 - MORTGAGE RIH SENIOR PROMISSORY NOTE GD&C DRAFT DATED (DATE 10/11/93) MORTGAGE SECURING RIH SENIOR PROMISSORY NOTE by and between RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation, as Mortgagor, and RESORTS INTERNATIONAL HOTEL FINANCING, INC. a Delaware corporation, as Mortgagee Dated as of ________ __, 1994 Prepared by:_______________________ D. Eric Remensperger After recording return to: Gibson, Dunn & Crutcher 200 Park Avenue New York, New York 10166 Attention: D. Eric Remensperger MORTGAGE SECURING RIH SENIOR PROMISSORY NOTE THIS MORTGAGE, dated as of ________ ___, 1994, between RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation ("Mortgagor"), and RESORTS INTERNATIONAL HOTEL FINANCING, INC., a Delaware corporation ("RIHF"), having an address at c/o Resorts International, Inc., 1133 Boardwalk, Atlantic City, New Jersey 08401 (RIHF, or its successors or assigns which shall than be the Noteholder (as hereinafter defined), being referred to herein as "Mortgagee"). WITNESSETH: In consideration of $10.00 in hand paid by Mortgagee to Mortgagor and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in order to secure (i) the payment of the principal amount (and premium, if any) of the secured senior promissory note by Mortgagor to Mortgagee in the principal amount of $125,000,000 (hereinafter collectively referred to as the "Note"), in lawful money of the United States, to be paid in accordance with the provisions thereof (and all renewals, extensions, and modifications thereof) all of which are hereby made an integral part hereof as though set forth at length herein; (ii) payment of interest (including interest on all overdue principal and premium, if any) becoming due under the provisions of the Note; (iii) payment by Mortgagor to Mortgagee of all sums expended or advanced by Mortgagee pursuant to any term or provision of this Mortgage; (iv) performance of each covenant, term, condition and agreement of Mortgagor herein or in the Note contained; (v) all costs and expenses, including reasonable counsel fees and expenses as provided in Section 3.07, which may arise in respect of the Note and this Mortgage or of the obligations secured hereby; and (vi) performance and observance of all of the provisions herein contained, Mortgagor has executed and delivered this Mortgage and has bargained, sold, aliened, mortgaged, pledged, released, conveyed and confirmed unto Mortgagee and its successors hereunder and assigns forever, all of its right, title and interest in, to and under any of the following described property: GRANTING CLAUSES GRANTING CLAUSE FIRST All the property, rights, title, interest, privileges and franchises particularly described in annexed Schedule 1 (the "Owned Land") which Schedule is hereby made a part of, and deemed to be described in, this Granting Clause as fully as if set forth in this Granting Clause at length. GRANTING CLAUSE SECOND All of the property, rights, title, interest, privileges and franchises of the Mortgagor as lessee in those certain leases (the "Ground Leases") particularly described in Schedule 2, which Schedule is hereby made a part of, and deemed to be described in, this Granting Clause as fully as if set forth in this Granting Clause at length, which Ground Leases cover the real property described in such Schedule 2 (the "Leased Land") and in and to any and all modifications, extensions andrenewals of the Ground Leases and all options set forth therein, together with (i) all credits, deposits, privileges and rights of the Mortgagor as lessee under the Ground Leases, now or at any time existing, (ii) the leaseholds and the leasehold estates created by the Ground Leases and (iii) all of the estates, rights, titles, claims or demands whatsoever of Mortgagor, either in law or in equity, in possession or in expectancy, of, in and to the Ground Leases and the Leased Land, together with (x) any and all other, further or additional title, estates, interests or rights which may at anytime be acquired by the Mortgagor in or to the Leased Land, and the Mortgagor expressly agrees that if the Mortgagor shall, at any time prior to payment in full of all indebtedness secured hereby, acquire fee simple title or any other greater estate to the Leased Land pursuant to the Ground Leases, or otherwise, the lien of this Mortgage shall attach, extend to, cover and be a lien upon such fee simple title or other greater estate and thereupon the lien of this Mortgage shall be prior to the lien of any mortgage or deed of trust placed on such acquired title, estate, interest or right subsequent to the date of this Mortgage and (y) any right to possession or statutory term of years derived from, or incident to, the Ground Leases pursuant to Section 365(h) of the U.S. Bankruptcy Code (the "Code") or any comparable provision contained in any present or future federal, state, local, foreign or other statute, law, rule or regulation. GRANTING CLAUSE THIRD All the rents, issues, profits, revenues and other income and proceeds of the property subjected or required to be subjected to the lien of this Mortgage, including, without limitation, the property described in Granting Clauses First, Second, and Sixth (such property is hereinafter collectively referred to as the "Premises") and all the estate, right, title and interest of every nature whatsoever of the Mortgagor in and to the same and every part thereof. The collective metes and bounds description of the Owned Land and the Leased Land is set forth in annexed Schedule 3. GRANTING CLAUSE FOURTH All of the rights as lessor under Leases in effect on the date of execution of this Mortgage or hereafter entered into by the Mortgagor, if any, including extensions, renewals or amendments of all of the same, and the immediate and continuing right as security in accordance with an Assignment of Leases and Rents of even date herewith between Mortgagor and Mortgagee, and, after the occurrence of an Event of Default, to make claim for, collect, receive and receipt for (and to apply the same as provided herein) any and all rents, income, revenues, issues, profits, security and other sums of money payable or receivable thereunder or pursuant thereto, and all proceeds thereof, whether payable as rent, insurance proceeds, condemnation awards, security or otherwise and whether payable prior to or subsequent to the maturity date of the Note, to receive and give notices and consents thereunder, to bring actions and proceedings thereunder or for the enforcement thereof, to make waivers and agreements, to take such action upon the happening of a default under any Lease, including the commencement, conduct and consummation of any proceedings at law or in equity as shall be permitted by any provision of any Lease, and to do any and all things which the Mortgagor or any lessor is or may become entitled to do under the Leases; provided, that the assignment made by this granting Clause Fourth shall not impair or diminish any obligation of the Mortgagor under the Leases, or shall any such obligation be imposed upon the Mortgagee. GRANTING CLAUSE FIFTH Without limiting the generality of the provisions of Granting Clause Third, the Mortgagor's rights, privileges and franchises in and to the following, to the extent of the Mortgagor's interest therein and thereto and to the extent assignable (collectively, "Operating Assets"): (a) bookings and receipts for the use of guest rooms, banquet facilities and meeting rooms at the Casino-Hotel; (b) all contracts respecting utility services for, and the maintenance, operations, or equipping of the Premises, including guaranties and warranties relating thereto; (c) the Permits; (d) all contract rights, leases, concessions, trademarks, trade names, service marks, service names, logos, copyrights, warranties and other items of intangible personal property relating to the ownership or operation of the Casino-Hotel, including, without limitation, (1) telephone and other communication numbers, (2) all software licensing agreements as are required to operate computer software systems at the Casino-Hotel, all transferable proprietary interest in software required to operate the computer systems at the Casino Hotel and books and records relating to the software programs, and (3) lessee's interest under leases of Tangible Personal Property; (e) all agreements entered into by or on behalf of the Mortgagor or which have been assigned to the Mortgagor, for the design and construction, and for the equipping and furnishing, of the Casino-Hotel, including architect's agreements, engineering agreements, construction contracts, consulting agreements and agreements or purchase orders for all items of Tangible Personal Property and payment and performance bonds in favor of the Mortgagor in connection with the Trust Estate (and all warranties and guaranties thereunder and warranties and guaranties of any subcontractor and bond issued in connection with the work to be performed by any subcontractor); (f) the following personal property (the "Tangible Personal Property") now or hereafter acquired by the Mortgagor: (i) all furniture, furnishings, equipment, machinery, apparatus, appliances, fixtures and fittings and other articles of tangible personal property which are, or are to be located on, or used in connection with the operation of, the Casino-Hotel; (ii) all slot machines, electronic gaming devices, crap tables, blackjack tables, roulette tables, baccarat tables, and big six wheels, located or to be located in the Casino-Hotel, and all furnishings and equipment to be used in connection with the operation thereof; (iii) all cards, dice, gaming chips and placques, tokens, chip racks, dealing shoes, dice cups, dice sticks, layouts, paddles, roulette balls and other consumable supplies and items to be used in connection with the gaming operations of the Casino-Hotel; (iv) all china, glassware, linens, kitchen utensils, silverware and uniforms, whether in use or held in reserve storage for future use, in connection with the operation of the Casino-Hotel, which are on hand or on order whether stored on-site or off-site; (v) all consumables and operating supplies of every kind and nature for use in all of the operating departments of the Casino-Hotel, or in the improvements now or hereafter located on any of the Owned Land, including without limitation, accounting supplies, guest supplies, forms, printing, stationery, food and beverage stock, bar supplies, laundry supplies and brochures to existing purchase orders; (vi) all sets and scenery, costumes, props and other items of tangible personal property on hand or on order for use in the production of shows in the showroom of the Casino-Hotel; and (vii) all cars, limousines, vans, buses, trucks and other vehicles owned or leased by the Mortgagor for use in Casino-Hotel operations, together with all equipment, parts and supplies used to service, repair, maintain and equip the foregoing; (g) all drawings, designs, plans and specifications prepared by the architects, interior designers, landscape designers and any other consultants for the development of the Premises, as amended from time to time; (h)any administrative and judicial proceedings initiated by the Mortgagor, or in which the Mortgagor has intervened, concerning the Casino-Hotel, and agreements, if any, which are the subject matter of such proceedings; (i) any customer lists utilized by the Mortgagor, including lists of transient guests and restaurant and bar patrons and "high roller" lists; and (j) all of the goodwill in connection with the operation of the Premises. The Mortgagor and Mortgagee acknowledge that notwithstanding anything contained in this Mortgage to the contrary, the Mortgagor may share facilities, operations and employees with any other hotel owned by any Affiliate of the Mortgagor provided that (i) such sharing of facilities is permitted by all applicable Legal Requirements, (ii) terms on which such facilities are shared are not detrimental to the operations of the Casino-Hotel or the financial condition of the Mortgagor and (iii) the regular operation of the Casino-Hotel would not be materially impaired upon the separation of such facilities. The assignment made by this Granting Clause Fifth shall not impair or diminish any obligation of the Mortgagor with respect to the Operating Assets, nor shall any such obligation be imposed on the Mortgagee. GRANTING CLAUSE SIXTH (a) All of the Mortgagor's right, title and interest in and to all buildings and improvements of every kind and description now or hereafter erected or placed on the Owned Land and/or the Leased Land and all fixtures and articles of personal property now or hereafter attached to or contained in and used in connection with such buildings and improvements, including, but not limited to, all apparatus, furniture, furnishings, machinery, motors, elevators, fittings, radiators, cooking ranges, ice boxes, ice machines, printing presses, mirrors, bars, mechanical refrigerators, furnaces, coal and oil-burning apparatus, wall cabinets, machinery, generators, partitions, steam and hot water boilers, lighting and power plants, pipes, plumbing, radiators, sinks, bath tubs, water closets, gas and electrical fixtures, awnings, shades, screens, blinds, dishwashers, freezers, vacuum cleaning systems, office equipment and other furnishings, and all plumbing, heating, lighting, cooking, laundry, ventilating, incinerating, air-conditioning and sprinkler equipment or other fire prevention or extinguishing apparatus and material, and fixtures and appurtenances thereto; and all renewals or replacements thereof or articles in substitution therefor, whether or not the same are or shall be attached to the Owned Land, the Leased Land or to any such buildings and improvements thereon, in any manner, and to the extent the grant of a security interest in any portion of the Trust Estate is governed by the Uniform Commercial Code, this Mortgage is hereby deemed to be as well a security agreement under the Uniform Commercial Code for the purpose of creating hereby a security interest in all of the Mortgagor's right, title and interest in and to such property, securing the obligations secured hereby, for the benefit of the Mortgagee; and (b) All of the Mortgagor's right, title and interest in and to (i) the Leased Land, if the Mortgagor acquires the fee simple title to the Leased Land or any part thereof (subject to the provisions Section 2.06 hereof), (ii) all air rights and rights to maintain supporting columns and all rights to construct and maintain bridges, and to create private rights of way over streets now or hereafter owned or enjoyed by the Mortgagor and appurtenant to the Owned Land or Leased Land, and (iii) all right, title and interest of Mortgagor as grantee or licensee in and to the following to the extent necessary for the use and enjoyment of the Owned Land or the Leased Land: (A) all those plots, pieces or parcels of land and air rights, more particularly described on Schedule 5, attached hereto and made a part hereof (the "Bridge Easement Parcels"), with respect to which Mortgagor has easements, licenses or other rights of possession or use pursuant to these certain easement and license agreements more particularly described on Schedule 5 (the "Bridge Easements"), (B) all those plots, pieces or parcels of land and air rights, more particularly described on Schedule 6 attached hereto and made a part hereof (the "Elevator Easement Parcels"), with respect to which Mortgagor has easements, licenses or other rights of possession or use pursuant to those certain license agreements more particularly described on Schedule 6 (the "Elevator Easements"), and; (C) all that plot, piece or parcel of land and air rights more particularly described on Schedule 7 attached hereto and made a part hereof (the "Turn-Around Easement Parcel") with respect to which Mortgagor has easements, licenses, or other rights of possession or use pursuant to that certain easement more particularly described on Schedule 7 (the "Turn-Around Easement"), (the Bridge Easement Parcels, the Elevator Easement Parcels and the Turn-Around Easement Parcel are collectively referred to herein as the "Easement Parcels"; and the Bridge Easements, the Elevator Easements and the Turn-Around Easement are collectively referred to as the "Easements"), together with all rights of way, privileges, liberties, tenements, hereditaments and ppurtenances belonging or in any way appertaining to such estates, it being the intention hereof that all property, interests, rights and privileges and franchises pertaining to the Premises (other than Excepted Property) shall be as fully embraced within and subjected to the lien hereof as if such property were specifically described herein. * * * TOGETHER with all of the Mortgagor's right, title and interest in and to all mineral and water rights and any title or reversion, in and to the beds of the ways, streets, avenues and alleys adjoining the Premises to the center line thereof and in and to all strips, gaps and gores adjoining the premises on all sides thereof; and TOGETHER with all of the Mortgagor's right, title and interest to and singular the tenements, hereditaments, easements, appurtenances, passages, water courses, riparian rights, other rights, liberties and privileges thereof or in any way appertaining to the Premises, including any other claim at law or in equity as well as any after-acquired title, franchise or license and the reversion and reversions and remainder and remainders thereof; and TOGETHER with all awards and other compensation heretofore or hereafter to be made to the present and all subsequent owners of the Trust Estate for any taking by eminent domain, either permanent or temporary, of all or any part of the Trust Estate or any easement or appurtenances thereof, including severance and consequential damage and change in grade of streets, all in accordance with and subject to the provisions of the Superior Instrument Requirements and Section 5.20; and TOGETHER with all proceeds of any unearned premiums on any insurance policies described in Section 5.11, and the right to receive and apply the proceeds of any insurance, judgments, or settlements made in lieu thereof, for damage to the Trust Estate or otherwise, all in accordance with and subject to the provisions of Section 5.11 and the Superior Instrument Requirements. EXCLUDING, with respect to all of the hereinabove granted property, rights, title, interest, privileges and franchises, the Excepted Property. TO HAVE AND TO HOLD all the Premises, Leases, Ground Leases, Operating Assets, Easements, properties, options, credits, deposits, rights, privileges and franchises of every kind and description, real, personal or mixed, granted hereby, bargained, sold, aliened, assigned, transferred, hypothecated, pledged, released, conveyed, mortgaged, or confirmed as aforesaid, or intended, agreed or covenanted so to be, together with all the appurtenances thereto appertaining (the Premises, Leases, Ground Leases, Operating Assets, Easements, properties, options, credits, deposits, rights, privileges and franchises, being herein collectively called the "Trust Estate") unto the Mortgagee and its successors and assigns forever. SUBJECT, HOWEVER, on the date hereof, to Existing Encumbrances and, after the date hereof, to Permitted Encumbrances. SUBJECT, FURTHER, to the rights and obligations of the Mortgagee and the Noteholder as set forth in that certain Intercreditor Agreement dated as of the date hereof among RIH, RIHF, Trustee, Fidelity Management and Trust Company ("Fidelity"), as trustee under that certain note purchase agreement dated as of the date hereof among Fidelity, RIH and RIHF, and The Chase Manhattan Bank (National Association) ("Chase"), as trustee under that certain indenture dated as of the date hereof among Chase, RIH and RIHF (and such other parties that may from time to time become a party thereto). BUT IN TRUST, NEVERTHELESS, for the benefit and security of the Noteholder. UPON CONDITION that, until the happening of an Event of Default and subject to the provisions of Article Two, the Mortgagor shall be permitted to possess and use the Trust Estate, and to receive and use the rents, issues, profits, revenues and other income of the Trust Estate. AND IT IS HEREBY COVENANTED AND DECLARED that the Trust Estate is to be held and applied by the Mortgagee, subject to the further covenants, conditions and trusts hereinafter set forth, and the Mortgagor does hereby covenant and agree to and with the Mortgagee, for the benefit of the holder of the Note as follows: ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION Section 1.01. DEFINITIONS. For all purposes of this Mortgage, except as otherwise expressly provided or unless the context otherwise requires: (a) the terms defined in this Article One have the meanings assigned to them in this Article One and include the plural as well as the singular; (b) all accounting terms not otherwise defined herein have the meanings assigned to them, and all computations herein provided for shall be made in accordance with generally accepted accounting principles consistently applied; and (c) the words "herein," "hereof" and "hereunder" and other words of similar import refer to this Mortgage as a whole and not to any particular Article, Section or other subdivision. "AFFILIATE" has the meaning set forth in Section 1.01 of the Indenture. "AFTER-ACQUIRED FEE MORTGAGE" has the meaning set forth in Section 2.07. "ALTERATIONS" has the meaning set forth in Section 5.12. "APPRAISER" means an MAI appraiser (i.e., a Member in good standing of the American Institute of Real Estate Appraisers) who is (i) of recognized standing among appraisers of properties similar to the Casino-Hotel and (ii) experienced in the appraisals of properties of a similar size and scope to that of the Casino-Hotel, selected by the Mortgagor. "ASSIGNMENT OF LEASES AND RENTS" has the meaning stated in Section 1.01 of the Indenture. "CAPITALIZED LEASE OBLIGATION" has the meaning stated in Section 1.01 of the Indenture. "CASINO" means that portion of the Casino-Hotel used for gaming and related activities. "CASINO-HOTEL" means the casino and hotel complex and ancillary structures and facilities located on the Premises and furniture, fixtures and equipment at any time contained therein. "CASUALTY" means any act or occurrence of any kind or nature which results in damage, loss or destruction to any buildings or improvements on the Premises and/or Tangible Personal Property. "CODE" has the meaning stated in Granting Clause Second. "COMBINATION TRANSACTION" has the meaning stated in Section 10.01 of the Indenture. "DEFAULT" means the occurrence and continuance of an Event of Default or an event which, after notice or lapse of time or both, would become an Event of Default. "DEPOSITARY" means an Independent entity to which insurance proceeds or a condemnation award is paid to be held in trust for restoration pursuant to the provisions of a Ground Lease or Superior Mortgage. "EVENT OF DEFAULT" has the meaning stated in Section 3.01. An Event of Default shall "exist" if an Event of Default shall have occurred and be continuing. "EXCEPTED PROPERTY" means: (1) subject to the provisions of the Assignment of Leases and Rents, any cash held by the Mortgagor from rents, issues, profits, revenues and other proceed of the Trust Estate to the extent that such cash may be, but has not been, distributed or paid out in accordance with the Services Agreement or in accordance with the provisions of Section 12.07 the Indenture; (2) all personal property owned by lessees under Leases and the personal property of any guests staying in the Hotel; (3) any property deemed to be Excepted Property pursuant to the provisions of Section 2.03 hereof; (4) Tangible Personal Property subject to an FF&E Financing Agreement; and (5) counterchecks and any other property the granting of a security interest in which is prohibited by the New Jersey Casino Control Act, N.J.S.A. 5:12-1 ET SEQ., and the regulations promulgated thereunder. "EXISTING ENCUMBRANCES" means the matters set forth in Schedule 8. "FIRST MORTGAGE DEBT" means any financing secured by a Superior Mortgage secured by or imposing a lien on all or a portion of the Trust Estate on a parity with or senior to the lien of this Mortgage. "FF&E FINANCING AGREEMENT" means a purchase money lien upon any Tangible Personal Property and other items constituting Operating Assets, such as computer software, which are financed, purchased or leased by the Mortgagor, provided that, except as set forth on Schedule 3, the principal amount of the indebtedness secured by such lien shall not exceed eighty-five (85%) percent of the cost to the Mortgagor of such property at the time of acquisition. "GROUND LEASES" has the meaning stated in Granting Clause Second. "GUARANTY MORTGAGE" means that certain Mortgage Securing Guaranty of Senior Mortgage Notes dated as of the date hereof from Mortgagor to State Street Bank and Trust Company of Connecticut, National Association, a national banking association, which secures the Notes (as defined in the Indenture), the lien of which shall be PARI PASSU with the lien of this Mortgage. "HOTEL" means that portion of the Casino-Hotel not included within the Casino. "IMPOSITIONS" has the meaning stated in Section 5.08. "INDENTURE" means that certain Indenture - 11% Senior Mortgage Notes due 2003, dated as of even date herewith among the Mortgagor, RIHF, as issuer, and State Street Bank and Trust Company of Connecticut, National Association, as trustee, as it may from time to time be supplemented, modified or amended by one or more trust indentures or other instruments supplemental thereto entered into pursuant to the applicable provisions thereof. "INDEPENDENT" when used with respect to any specified Person means such a Person who (a) is in fact independent, (b) does not have any direct financial interest or any material indirect financial interest in the Mortgagor or in any other obligor upon the Note or in any Affiliate of the Mortgagor or of such other obligor and (c) is not connected with the Mortgagor or such other obligor or any Affiliate of the Mortgagor or such other obligor as an officer, employee, promoter, underwriter, trustee, partner, director or person performing similar functions. Whenever it is herein provided that any Independent Person's opinion or certificate shall be furnished to the Mortgagee, such opinion or certificate shall state that the signer has read this definition and that the signer is Independent within the meaning thereof. A Person who is performing or who has performed services as an independent contractor to any specified Person shall not be considered not Independent merely by reason of the fact that such Person is or has performed such services. "INSURANCE AMOUNT" has the meaning stated in Section 5.11(a)(1). "INSURANCE REQUIREMENTS" means all terms of any insurance policy covering or applicable to the Trust Estate or any part thereof, all requirements of the issuer of any such policy, and all orders, rules, regulations and other requirements of the National Board of Fire Underwriters (or any other body exercising similar functions) applicable to or affecting the Trust Estate or any part thereof or any use or condition of the Trust Estate or any other part thereof. "INSURANCE TRUSTEE" means the Trustee or, if the Trustee so elects, any bank, trust company or insurance company with net worth in excess of $100,000,000, designated by the Trustee. "INSURER" means an insurance company or companies selected by the Mortgagor authorized to issue insurance in the State of New Jersey with an A.M. Best rating as high or higher than the rating of insurance companies insuring other casino-hotels in Atlantic City, New Jersey. "LEASE" means each lease or sublease demising all or any portion of the Owned Land, the Leased Land or the buildings or improvements thereon and made by the Mortgagor as lessor or sublessor, as the case may be, or any spaces in any building or buildings which constitute a part of the Trust Estate, including every agreement relating thereto or entered into in connection therewith and every guaranty of the performance and observance of the covenants, conditions and agreements to be performed by the lessee under any such lease. Notwithstanding the foregoing, the term "Lease" shall not include any transient room rentals. "LEASED LAND" has the meaning stated in Granting Clause Second. "LEGAL REQUIREMENTS" means all laws, statutes, codes, acts, ordinances, orders, judgments, decrees, injunctions, rules, regulations, permits, licenses, authorizations, directions and requirements (including, without limitation, the New Jersey Environment Cleanup Responsibility Act and the New Jersey Spill Compensation and Control Act of 1976) of all governments, departments, commissions, boards, courts, authorities, agencies, officials and officers, of governments, federal, state and municipal (including, without limitation, the New Jersey Department of Environmental Protection, the Atlantic City Bureau of Investigations, Division of Protection, the Atlantic City Bureau of Investigations, Division of Gaming Enforcement of the State of New Jersey, and the Casino Control Commission of the State of New Jersey), foreseen or unforeseen, ordinary or extraordinary, which now is or at any time hereafter becomes applicable to the Trust Estate or any part thereof, or any of the adjoining sidewalks, or the use of the Casino-Hotel as a gaming or gambling facility or any other use or condition of the Trust Estate or any part thereof. "LESSORS" means the lessors under the Ground Leases. "MATURITY" when used with respect to the Note means the date on which the principal of such Note becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration or prepayment or otherwise. "MORTGAGE DOCUMENTS" has the meaning set forth in Section 1.01 of the Indenture. "MORTGAGOR" means the Person named as the "Mortgagor" in the first paragraph of this instrument until a successor entity shall have become such pursuant to the applicable provisions of this Mortgage, and thereafter, except to the extent otherwise contemplated by Section 4.02, "Mortgagor" shall mean such successor entity exclusively. "NOTEHOLDER" shall mean the holder or holders of the Note. "NOTE" has the meaning set forth in the Preamble. "NOTICES" has the meaning stated in Section 1.02. "OFFICERS' CERTIFICATE" means a certificate signed by an officer of the Mortgagor and delivered to the Mortgagee. Whenever this Mortgage requires that an Officers' Certificate be signed also by an Architect or an Accountant or other expert, such Architect, Accountant or other expert may (except as otherwise expressly provided in this Mortgage) be in the general employ of the Mortgagor. "OPERATING ASSETS" has the meaning stated in Granting Clause Fifth. "OPINION OF COUNSEL" means a written opinion of counsel who may (except as otherwise expressly provided in this Mortgage) be an employee of the Mortgagor or an employee of an Affiliate of the Mortgagor. Unless otherwise specifically provided in this Mortgage, such counsel may rely, as to any state of facts not personally known to such counsel and relating to such opinions, on an Officers' Certificate to the extent not rejected by the Trustee and its counsel (which rejection shall not be unreasonably given). "ORIGINAL POLICY" means an ALTA Loan Policies of Title issued by [list title insurance companies], pursuant to Title Commitment No. ____________ redated to the date hereof. "OUTSTANDING AMOUNT" has the meaning stated in Section 1.01 of the Indenture. "OWNED LAND" has the meaning stated in Granting Clause First. "PERMITS" means all licenses, franchises, statements of compliance, certificates of operation, certificates of occupancy and permits required for the lawful ownership, occupancy, operation and use of all or a material portion of the Premises whether held by the Mortgagor or any other Person (which may be temporary or permanent) (including, without limitation, those required for the use of the Casino-Hotel as a licensed casino facility), in accordance with all applicable Legal Requirements. "PERMITTED ENCUMBRANCES" means: (1) liens for taxes, assessments, or governmental charges not yet due and payable or if due and payable are not delinquent to the extent that any fine, penalty, interest or cost may be added for nonpayment thereof; (2) Existing Encumbrances; (3) FF&E Financing Agreements; (4) After-Acquired Fee Mortgages; (5) the lien of the Mortgage Documents and any rights granted as provided therein; (6) Restricted Encumbrances; (7) the lien of the Trustee provided for by Section 8.07 of the Indenture; (8) any Working Capital Facility Lien; and (9) Capitalized Lease Obligations. "PERSON" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or any other entity or government or any agency or political subdivision thereof. "PREMISES" has the meaning set forth in Granting Clause Third. "RELEASED LAND" has the meaning stated in Section 2.05. "RELEASED FEE LAND" has the meaning stated in Section 2.06. "RESTORATION" has the meaning stated in Section 5.11(e). "RESTRICTED ENCUMBRANCES" means Leases permitted by and made in accordance with Section 5.13 of this Mortgage. "RIHF" shall mean Resorts International Hotel Financing, Inc., a Delaware corporation. "SERVICES AGREEMENT" has the meaning set forth in Section 1.01 of the Indenture. "SETTLEMENT COSTS" has the meaning stated in Section 5.20. "STATED MATURITY" when used with respect to a note means the date specified in such note as the fixed date on which the principal of such note is due and payable. "SUPERIOR INSTRUMENT REQUIREMENTS" means the applicable terms, conditions and provisions of (i) the Ground Leases with respect to the Leased Land; and (ii) Superior Mortgages with respect to the portion of the Trust Estate encumbered thereby. "SUPERIOR MORTGAGES" means, collectively, any Working Capital Facility Lien and any After-Acquired Fee Mortgages. "TAKING" means the acquisition or condemnation by eminent domain of the whole or any part of the Premises, by a competent authority, for any public or quasi-public use or purpose. "TANGIBLE PERSONAL PROPERTY" has the meaning stated in Granting Clause Fifth. "TRUSTEE" means the Person named as the "Trustee" in the first paragraph of the Indenture and any successor thereto. "TRUST ESTATE" has the meaning stated in the habendum to the Granting Clauses. "TRUST INDENTURE ACT" has the meaning stated in Section 1.01 of the Indenture. "WORKING CAPITAL FACILITY" has the meaning stated in Section 1.01 of the Indenture. "WORKING CAPITAL FACILITY LIEN" has the meaning stated in Section 5.22(c) of this Mortgage. Section 1.02. NOTICES, ETC. (a) Any request, demand, authorization, direction, notice (including, without limitation, a notice of default), consent, waiver or other document provided or permitted by this Mortgage to be made upon, given or furnished to, or filed with, the Mortgagor or the Mortgagee (collectively, "Notices") shall be deemed given when either (i) delivered by hand or (ii) two days after sending by registered or certified mail, postage prepaid, addressed as follows: To the Mortgagor: Resorts International Hotel, Inc. c/o Resorts International, Inc. 1133 Boardwalk Atlantic City, New Jersey 08401 Attention: Christopher D. Whitney If to Mortgagee: Resorts International Hotel Financing, Inc. c/o Resorts International, Inc. 1133 Boardwalk Atlantic City, New Jersey 08401 Attention: Christopher D. Whitney (b) By Notice to the Mortgagor, the Mortgagee and the Trustee, any party may designate additional or substitute address for Notices which, notwithstanding Subsection (a) above, shall be deemed given when received. Section 1.03. FORM AND CONTENT OF DOCUMENTS DELIVERED TO MORTGAGEE. Whenever 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 such matters in one or several documents. Any certificate or opinion of an Officer of the Mortgagor may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such Officer knows that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any 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 Mortgagor stating that the information with respect to such factual matters is in the possession of the Mortgagor, unless such counsel knows that the certificate or opinion or representations with respect to such matters are erroneous. If appropriate to the matter being opined upon and to the extent not prohibited by the Trust Indenture Act, any Opinion of Counsel may be subject to rights of creditors and the availability of equitable remedies. Whenever any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Mortgage, they may, but need not, be consolidated and form one instrument. Whenever in this Mortgage, in connection with any application or certificate or report to the Mortgagee, it is provided that the Mortgagor shall deliver any document as a condition of the granting of such application, or as evidence of the Mortgagor's compliance with any term hereof, it is intended that the truth and accuracy, at the time of the granting of such application or at the effective date of such certificate or report (as the case may be), of the facts and opinions stated in such document shall in such case be conditions precedent to the right of the Mortgagor to have such application granted or to the sufficiency of such certificate or report. Section 1.04. COMPLIANCE CERTIFICATES AND OPINIONS. Upon any application or request by the Mortgagor to the Mortgagee to take any action under any provision of this Mortgage, the Mortgagor shall furnish to the Mortgagee an Officers' Certificate stating that all conditions precedent, if any, provided for in this Mortgage 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 Mortgage 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 Mortgage shall include: (a) a statement that each individual signing such certificate or opinion has read such condition or covenant and the definitions herein relating thereto; (b) 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; (c) 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 condition or covenant has been complied with; and (d) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. Section 1.05. EFFECT OF HEADINGS. The Article and Section headings herein are for convenience only and shall not affect the construction hereof. Section 1.06. SUCCESSORS AND ASSIGNS; AMENDMENTS. (a) Subject to Section 4.02 hereof and Section 10.02 of the Indenture, this Mortgage shall be binding upon and inure to the benefit of the parties hereto and of the respective successors and assigns of the parties hereto to the same effect as if each such successor or assign were in each case named as a party to this Mortgage. (b) This Mortgage may not be modified, amended, discharged, released nor any of its provisions waived except by agreement in writing executed by the Mortgagor and the Mortgagee and in accordance with the provisions of this Mortgage and the Indenture. Section 1.07. SEPARABILITY CLAUSE. In case any provision in this Mortgage 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 1.08. BENEFITS OF MORTGAGE. Nothing in this Mortgage, express or implied, shall give to any Person, other than the parties hereto and their successors and assigns, any benefit or any legal or equitable right, remedy or claim under this Mortgage. Section 1.09. GOVERNING LAW. This Mortgage shall be deemed to be a contract under the laws of the State of New Jersey and shall be construed in accordance with and governed by the laws of the State of New Jersey. Section 1.10. [Reserved] Section 1.11. PROVISIONS REQUIRED BY INDENTURE. Whenever the provisions of this Mortgage and the provisions of the Indenture shall be inconsistent, the provisions of the Indenture shall govern. Section 1.12. RIGHTS OF THE TRUSTEE. So long as the Trustee is the holder of a security interest in this Mortgage and the Note, except as otherwise provided in Section 8.01 of the Indenture: (a) the Mortgagee 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, coupon or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) whenever in the administration of this Mortgage the Mortgagee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Mortgagee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate; (c) the Mortgagee 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 the Mortgagee hereunder in good faith and in reliance thereon; (d) the Mortgagee shall be under no obligation to exercise any of the rights or powers vested in it by this Mortgage at the request or direction of any Noteholder pursuant to the Indenture, unless such holder shall have offered to the Mortgagee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (e) the Mortgagee 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, or other paper or document but the Mortgagee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Mortgagee shall determine to make such further inquiry or investigation, it shall be entitled (subject to the express limitations with respect thereto contained in this Mortgage) to examine the books, records and premises of the Mortgagor, personally or by agent or attorney; (f) the Mortgagee may execute any of the trusts or power hereunder or perform any duties hereunder either directly or by or through agents or attorneys, and the Mortgagee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder; (g) the Mortgagee shall not be personally liable, in case of entry by it upon the Trust Estate, for debts contracted or liabilities or damages incurred in the management or operation of the Trust Estate; and (h) no provision of this Mortgage shall require the Mortgagee to expend or risk its own funds or otherwise incur any financial liability in the performance of its obligations hereunder, or in the exercise 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. Section 1.13. MORTGAGE SUBJECT TO THE PROVISIONS OF THE ACT. Each provision of this Mortgage is subject to and shall be enforced in compliance with the provisions of the New Jersey Casino Control Act. Section 1.14. DISCHARGE OF LIEN. If the Mortgagor shall pay or cause to be paid, or there shall otherwise be paid, to the Mortgagee all amounts required to be paid by the Mortgagor pursuant to the Note, and the conditions precedent for the Indenture to cease, determine and become null and void in accordance with Section 5.01 of the Indenture shall have occurred, the Mortgagee shall promptly cancel and discharge this Mortgage, and execute and deliver to the Mortgagor all such instruments as may be necessary, required or appropriate to evidence such discharge and satisfaction of such lien or liens. Section 1.15. GENERAL APPLICATION. (a) The assertion of any rights upon any Default shall be subject in each instance to the giving of any notice and the expiration of any grace period provided for in Section 3.01 as a condition to such Default making it an Event of Default, unless the Trust Indenture Act requires otherwise, in which case the Trust Indenture Act shall control. (b) For the purposes of this Mortgage, it is understood that an event which does not materially diminish the value of the Mortgagee's interest in the Trust Estate shall not be deemed an "impairment of security", as that phrase is used in this Mortgage. ARTICLE TWO RELEASE; OTHER EXCEPTED PROPERTY; SUBORDINATION Section 2.01. POSSESSION BY MORTGAGOR; DISPOSITIONS WITHOUT RELEASE. So long as there shall have been no acceleration of maturity of the Note under Section 3.02, the Mortgagor shall be suffered and permitted, with power freely and without let or hindrance on the part of the Mortgagee, subject to the provisions of this Mortgage and the Guaranty Mortgage, to possess, use, manage, operate and enjoy the Trust Estate and every part thereof and to collect, receive, use, invest and dispose of the rents, issues, tolls, profits, revenues and other income from the Trust Estate or any part hereof, to use, consume and dispose of any consumables, goods, wares and merchandise in the ordinary course of business of operating the Casino-Hotel and to adjust and settle all matters relating to choses in action, leases and contracts. Section 2.02. OBSOLETE PROPERTY; TANGIBLE PERSONAL PROPERTY; LEASE MODIFICATIONS. The Mortgagor shall have the right, at any time and from time to time, unless an Event of Default shall have occurred and be continuing, without any release from or consent by the Mortgagee: (a) to sell or dispose of, free from the lien of this Mortgage, any Tangible Personal Property which, in its reasonable opinion, may have become obsolete or unfit for use or which is no longer necessary in the conduct of its businesses or the operation of the Trust Estate, and no purchaser of any such property shall be bound to inquire into any question affecting the Mortgagor's right to sell or otherwise dispose of the same, free from the lien of this Mortgage; (b)to alter, repair, replace, change the location (provided notice shall be given to Mortgagee as to any new location) or position of and add to any Tangible Personal Property; provided, however, that no change shall be made in the location of any such property subject to the lien pf this Mortgage which would in any respect impair the security of this Mortgage upon such property; or (c) to renew, extend, surrender, terminate, modify or amend any leases of Tangible Personal Property, when, in the Mortgagor's reasonable opinion, it is prudent to do so. The Mortgagor shall retain any net cash proceeds (subject to the right to pay dividends or make cash distributions pursuant to Section 12.07 of the Indenture) received from the sale or disposition of any Tangible Personal Property under Subsection (a) of this Section 2.02, in the business of operating the Casino-Hotel. The Mortgagee shall be under no responsibility or duty with respect to the exercise of the rights of the Mortgagor under this Section 2.02 or the application of the proceeds of any sale or disposition of any Tangible Personal Property. The Mortgagee shall, from time to time, promptly execute any written instrument in form satisfactory to it to confirm the propriety of any action taken by the Mortgagor under this Section 2.02, upon receipt by the Mortgagee of an Officers' Certificate stating that the action so to be confirmed was duly taken in conformity with this Section 2.02, and that the execution of such written instrument is appropriate to confirm the propriety of such action under this Section 2.02, PROVIDED, that the Mortgagee shall have no liability thereunder and all costs and expenses (including reasonable attorneys' fees) shall be paid by the Mortgagor. Section 2.03. OTHER EXCEPTED PROPERTY. Notwithstanding any provisions contained in this Mortgage or the Indenture to the contrary, including, without limitation, the provisions of Granting Clauses Fifth and Sixth and of Articles Two and Five hereof, if the Mortgagor acquires Tangible Personal Property and other items constituting operating assets, such as computer software subject to any FF&E Financing Agreement, or becomes the lessee under a lease for any of the same and if the document evidencing such F&E Financing Agreement prohibits subordinate liens or the provisions of any such lease prohibits any assignment thereof by the lessee, and if any such prohibition is customary with respect to similar transactions of the lender or lessor, as the case may be, then the property so purchased or the lessee's interest in the lease, as the case may be, shall be deemed to be Excepted Property. If any such FF&E Financing Agreement permits subordinate liens then the Mortgagee agrees to execute and deliver to the Mortgagor, at the Mortgagor's expense, such documents as the holder of such FF&E Financing Agreement may reasonably request to evidence the subordination of the lien of this Mortgage to the lien of such FF&E Financing Agreement. Section 2.04. [Reserved] Section 2.05. RELEASED LAND. (a) Notwithstanding anything to the contrary herein contained, the Mortgagor shall have the right, at any time and from time to time, unless an Event of Default shall have occurred and be continuing, to convey all or any part of the Released Fee Land (the land to be so conveyed is hereinafter referred to as the "Released Land"), free from the lien of the Mortgage, provided that: (i) the Mortgagor furnishes the Mortgagee with an Officers' Certificate requesting the release of such property from the Trust Estate and stating (w) so long as the Released Land is owned or used by an Affiliate of the Mortgagor, the Released Land shall not be operated in a manner in competition with the operation of the Casino-Hotel as a casino, (x) that no permanent structures have been constructed on the Released Land, (y) that the Mortgagor is not required to hold the Released Land in, order to maintain all Permits and in order to comply with the provisions of all material contracts to which the Mortgagor is a party or by which the Mortgagor is bound and either (A) the Mortgagor has made adequate provision to maintain all Permits and to comply with such contractual requirements by: (1) owning and using the balance of the Trust Estate; (2) acquiring fee title to any real property that would enable Mortgagor to maintain all Permits and satisfy such contractual requirements; or (3) acquiring a Qualified Leasehold Interest in real property that would enable the Mortgagor to maintain such Permits and satisfy such contractual requirements; or (B) neither the requirements of such Permits nor such contracts require the Mortgagor to own the Released Land or use or operate any land in the manner in which the Released Land is intended to be used; or (C) such requirements have been waived, and (z) that such conveyance will not materially interfere with the operation of the Casino-Hotel; (ii) the Mortgagor delivers to the Mortgagee an Opinion of Counsel to the effect that the Mortgagor is not required to own and use the Released Land in order to maintain in good standing all Permits or by the provisions of any material contract to which the Mortgagor is a party or by which it is bound to own and use the Released Land; (iii) the Mortgagor delivers to the Mortgagee, if applicable, an endorsement to the Original Policy in accordance with Section 2.05(d); (iv) the Mortgagor delivers to the Mortgagee an executed counterpart of the instruments of conveyance in recordable form, which shall contain a covenant prohibiting the use of the Released Land by any Affiliate of the Mortgagor (A) as a casino or (B) in a manner in competition with the operation of the Casino-Hotel as a casino prior to the latest Stated Maturity Date of the Note; and (v) in the case of a conveyance or release described in (A) or (B) above, if the Released Land is being conveyed to an Affiliate of the Mortgagor, the cash consideration received by the Mortgagor for the Released Land shall not be less than the product of the Release Price multiplied by the area (in square feet) of the Released Land. (b) The Mortgagee shall, from time to time, promptly execute any written instrument in form reasonably satisfactory to the prospective purchaser to confirm the release of the Released Fee Land, upon receipt by the Mortgagee of an Officers' Certificate stating that the Mortgagor is entitled to such release by virtue of the Mortgagor's compliance with this Section 2.05, PROVIDED, that the Mortgagee shall have no liability thereunder and all costs and expenses (including reasonable attorneys' fees) shall be paid by the Mortgagor. Section 2.06. RELEASED FEE LAND. (a) Notwithstanding anything to the contrary herein contained, in the event the Mortgagor intends to exercise an option to acquire fee title to Leased Land under the provisions of any Ground Lease, the Mortgagor shall have the right, unless an Event of Default shall have occurred and be continuing, to have an Affiliate exercise such options(s) or for the Mortgagor to exercise such options(s) on behalf of an Affiliate and in connection therewith to cause fee simple title to the Leased Land or any part thereof to be conveyed to an Affiliate of the Mortgagor (provided that no portion of the purchase price of the Leased Land or part thereof is paid by Mortgagor), free from the lien of this Mortgage (the land to be so conveyed is hereinafter referred to as the "Released Fee Land"), provided that the Mortgagor furnishes the Mortgagee with the following: (i) an Officers' Certificate requesting the release of the Released Fee Land from the Trust Estate and stating that (A) the Mortgagor is not required to own the Released Fee Land in order to maintain all Permits and in order to comply with the provisions of all material contracts to which the Mortgagor is a party or by which the Mortgagor is bound, (B) such Affiliate has received all Permits necessary to own the Released Fee Land (including without limitation all approvals required by the Casino Control Commission of the State of New Jersey), (C) there has been delivered to the Mortgagor and the Mortgagee a true copy of an instrument executed by such Affiliate stating that (i) such Affiliate may only engage in the activity of owning the Released Fee Land and (ii) such Affiliate shall not convey the Released Fee Land to another Affiliate of the Mortgagor, unless such other Affiliate executes and delivers to the Mortgagor and the Mortgagee, the instruments that would have been required to be delivered pursuant to clause (C) if the Mortgagor conveyed the Released Fee Land to such other Affiliate (provided that this restriction shall only be effective until such time as this Mortgage shall be satisfied of record) and (D) the deed conveying the Released Fee Land to such Affiliate shall state that such conveyance is made subject to the terms, provisions and conditions of the applicable Ground Lease and that the fee and leasehold interests in the Released Fee Land shall not merge by reason of the Mortgagor and/or any Affiliate owning both the leasehold and fee estate therein, and that such estates shall always remain separate and distinct; (ii) an Opinion of Counsel to the effect that (A) the Mortgagor is not required to own the Released Fee Land in order to maintain in good standing all Permits or by the provisions of any material contract to which the Mortgagor is a party or by which it is bound to own the Released Fee Land and (B) the instruments described in clause (C) of subparagraph (i) were duly executed by and are binding upon such Affiliate; and (iii) an endorsement to the Original Policy, confirming that no merger of the fee and leasehold estates in the Released Fee Land has resulted from such conveyance. In addition, simultaneously with such acquisition, the Affiliate and Mortgagor shall enter into an instrument in form and substance reasonably satisfactory to Mortgagee, amending the applicable Ground Lease to provide such mortgagee protections as are customary and to the extent reasonably required by Mortgagee, including, without limitation, (A) a covenant of the landlord not to terminate the Ground Lease for any reason whatsoever (including without limitation, due to any default by tenant of its obligations under such Ground Lease), and (B) an agreement by the landlord not to accept payment of any fixed or base rent from the tenant (and, if tendered by the Mortgagor, and agreement to return same to the Mortgagor) or any other charges payable thereunder at any time that an Event of Default shall have occurred and shall be continuing. (b) The Mortgagee shall, from time to time, promptly execute any written instrument in form reasonably satisfactory to the prospective purchaser to confirm the release of the Released Fee Land, upon receipt by the Mortgagee of an Officers' Certificate stating that the Mortgagor is entitled to such release by virtue of the Mortgagor's compliance with this Section 2.06, PROVIDED that the Mortgagee shall have no liability thereunder and all costs and expenses (including reasonable attorneys' fees) shall be paid by the Mortgagor. Section 2.07. AFTER-ACQUIRED FEE MORTGAGES. (a) Notwithstanding anything contained herein to the contrary (i) if no Event of Default has occurred and is continuing and (ii) if the Mortgagor shall acquire Released Fee Land, then simultaneously with the acquisition thereof, the Mortgagor shall have the right to encumber such fee simple title with a mortgage (such mortgage and any refinancing thereof permitted by the Indenture is hereinafter referred to as an "After-Acquired Fee Mortgage"). The lien of this Mortgage on the Released Fee Land shall be subordinated to the lien of the After-Acquired Fee Mortgage on the Released Fee Land (and to the lien of other Superior Mortgages which shall become a lien thereon in accordance with the terms thereof), provided the following conditions are satisfied: (i) the After-Acquired Fee Mortgage encumbers the fee simple title to such real property and no other property; (ii) the indebtedness secured by the After-Acquired Fee Mortgage (A) does not exceed 75% of the cost to the Mortgagor of such fee simple title at the time of the acquisition and (B) satisfies the criteria set forth in Section 12.08 of the Indenture; (iii) in the event the After-Acquired Fee Mortgage encumbers fee simple title to the Leased Land or any part thereof, such After-Acquired Fee Mortgage contains provisions binding on the holder of the After-Acquired Fee Mortgage and its successors and assigns confirming the provisions of Section 5.21(d) of this Mortgage; (iv) the Released Fee Land is not being acquired from an Affiliate of the Mortgagor; (v) the After-Acquired Fee Mortgage and other loan documents shall contain a provision binding upon the holder of such After-Acquired Fee Mortgage and other loan documents that all insurance proceeds in the event of a Casualty and awards for Takings of less than the entire Released Fee Land shall be used for purposes of Restoration; and (vi) the Mortgagor delivers to the Mortgagee an Officers' Certificate requesting such subordination and certifying that the requirements of (i) through (v) above have been satisfied. (b) Anything contained in this Section 2.07 or elsewhere in this Mortgage to the contrary notwithstandi, the subordination of this Mortgage to any After-Acquired Fee Mortgage constituting a lien on Released Fee Land shall not be self-operative but shall be effective only upon the execution and delivery by the Mortgagee of an instrument in writing effecting such subordination. The Mortgagee shall deliver such instrument of subordination on the following conditions: (x) the Mortgagee shall have received an Officers' Certificate confirming that the conditions of (i) through (vi) of paragraph (a) have been satisfied, together with a true and correct copy of the After-Acquired Fee Mortgage and all other instruments securing the indebtedness evidenced thereby and (y) the instrument of subordination shall specifically state that this Mortgage is being subordinated not with respect to the lien of this Mortgage on the Ground Lease or on the leasehold estate created thereby, but only with respect to the fee simple title to the Leased Land or applicable part thereof and only if and to the extent that the After-Acquired Fee Mortgage being subordinated to is subject and subordinate to the Ground Lease and the leasehold estate created thereby. ARTICLE THREE REMEDIES Section 3.01. EVENTS OF DEFAULT. "Event of Default," whenever used herein, means any one of following events (including any applicable notice requirement and any period of grace as specified in this Section 3.01) (whatever the reason for such event 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): (a) default in the payment of any interest on the Note when such interest becomes due and payable and continuance of such default for a period of 10 days after there has been given a written notice to the Mortgagor specifying such default and stating that such notice is a "Notice of Default" hereunder; or (b) default in the payment of the principal of any Note at its Maturity; or (c) an "Event of Default" as defined in Section 3.01 of the Guaranty Mortgage shall occur; or (d) default in the payment of any other sum due under the Note or this Mortgage and the continuance of such default for a period of 10 days after there has been given to the Mortgagor a written notice specifying such default and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; or (e) default in the performance, or breach, of any covenant of the Mortgagor in this Mortgage (other than a covenant a default in the performance or breach of which is elsewhere in this Section specifically dealt with), and continuance of such default or breach for a period of 30 days after there has been given to the Mortgagor 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 (i) the default or breach is of such a nature that is curable but not susceptible of being cured with due diligence within such 30-day period (for reasons other than the lack of funds), (ii) the Mortgagor delivers an Officers' Certificate to the Mortgagee within such 30-day period stating (A) the applicability of the provisions of Clause (i) to such default or breach, (B) the Mortgagor's intention to remedy such default or breach with reasonable diligence and (C) the steps which the Mortgagor has undertaken to remedy such default or breach and (iii) the Mortgagor delivers to the Mortgagee additional Officers' Certificates every 30 days thereafter updating the information contained in the certificate described in Clause (ii), in which case such 30 day period shall be extended for such further period of time as may reasonably be required to cure the same, provided that the Mortgagor is then proceeding and thereafter continues to proceed to cure the same with reasonable diligence; or (f) an "Event of Default" as defined in Section 7.01 of the Indenture, shall occur; or (g) default by the Mortgagor under any of the terms of any Ground Lease which shall not be fully cured or waived prior to the expiration of any grace period contained in such Ground Lease, unless prior to the expiration of such grace period, the Mortgagor gives the Mortgagee an Officers' Certificate, an Opinion of Counsel and a true copy of the Injunction referred to below, which Certificate and Opinion state that (i) a court of competent jurisdiction has issued an injunction (which is in force and effect and has not been modified or reversed on appeal) tolling or staying the expiration of the grace period set forth in such Ground Lease with respect to such default, (ii) such injunction specifically provides that in addition to the tolling or stay describe in (i) above, such tolling or stay also applies to the Mortgagee for purposes of determining the duration and expiration of the periods during which the Mortgagee may exercise its rights under such Ground Lease (including without limitation, periods to cure lessee defaults and delivering a guarantee and the period during which the Mortgagee may elect to enter into a new lease thereunder), (iii) such injunction further provides that the tolling or stay under (i) and (ii) shall be effective until such time that the Mortgagee is personally served with notice of the expiration of such injunction and (iv) the Mortgagee is named as a party in any action or proceeding involving such injunction and therefore entitled to notice of any modification or termination thereof; and, if such injunction is issued, then so long as such injunction remains in force and effect and the preceding provisions of this Section 3.01(g) have been complied with, the grace period referred to in the third line of this subparagraph (g) shall be deemed to mean the grace period after giving effect to any such tolling or stay in (i) above; or (h) default by the Mortgagor under any of the terms of any Superior Mortgage which default results in the acceleration of the maturity of such Superior Mortgage and which shall not be fully cured or waived prior to the expiration of any grace period contained in such Superior Mortgage, unless prior to the expiration of such grace period, the Mortgagor gives the Mortgagee an Officers' Certificate and an Opinion of Counsel and a true copy of the injunction referred to below, which Certificate and Opinion shall state (i) that a court of competent jurisdiction has issued an injunction (which is in force and effect and has not been modified or reversed on appeal) tolling or staying the expiration of the grace period set forth in such Superior Mortgage with respect to such default and (ii) the Mortgagee is named a party in any action or proceeding relating to such injunction and therefore is entitled to notice of any modification or termination thereof; and if such injunction is issued, then so long as such injunction remains in force and effect, and the preceding provisions of this Section 3.01(h) have been complied with, the grace period referred to in the third line of this subparagraph (h) shall be deemed to mean the grace period after giving effect to any such tolling or stay; or (i) any modification, amendment or supplement of any Ground Lease without the prior written consent of the Mortgage; or (j) any modification, amendment or supplement of any Superior Mortgage without the prior written consent of the Mortgagee, except to the extent that such modification, amendment or supplement is permitted by Section 5.22(b)(i) hereof; or (k) default in the performance, or breach, of any of the provisions of Article Four and the continuance of such default or breach for a period of 60 days after there has been given a written notice to the Mortgagor specifying that such notice is a "Notice of Default" hereunder; or (l) any representation or warranty of the Mortgagor set forth in this Mortgage or in any notice, certificate, demand or request delivered to the Mortgagee pursuant to this Mortgage shall prove to be incorrect as of the time when made and the facts constituting such incorrectness impairs the Mortgagee's security and such impairment continues for a period of 30 days after there has been given to the Mortgagor a written notice specifying that such notice is a "Notice of Default" hereunder, unless (i) such impairment is curable, but not susceptible of cure within such 30-day period (for reasons other than lack of funds), (ii) the Mortgagor gives an Officers' Certificate to the Mortgagee within such 30-day period stating (A) the applicability of the provisions of (i) to such impairment, (B) the Mortgagor's intention to remedy the same with reasonable diligence and (C) the steps which the Mortgagor has undertaken to remedy such default or breach and (iii) the Mortgagor delivers to the Mortgagee additional Officers' Certificates every 30 days thereafter updating the information contained in the certificate described in (ii), in which case such 30-day period shall be extended for such further period of time as may reasonably be required to cure the same, provided that the Mortgagor is then proceeding and thereafter continues to proceed to cure the same with reasonable diligence. Section 3.02. DEMAND UNDER NOTE. If an Event of Default occurs and is continuing, then the Mortgagee may declare the Outstanding Amount of the Note to be due and payable immediately, by a notice in writing to the Mortgagor and upon any such declaration such principal shall become immediately due and payable. Section 3.03. APPLICATION OF MONEYS RECEIVED BY MORTGAGEE. Any moneys received by the Mortgagee pursuant to the provisions of this Article Three (including moneys received by the Trustee after any action or act by the Mortgagee under Section 3.10) shall be applied by the Mortgagee in accordance with the provisions of Section 7.06 of the Indenture. Section 3.04. RESTORATION OF RIGHTS AND REMEDIES. If the Mortgagee has instituted any proceeding to enforce any right or remedy under this Mortgage and such proceeding has been discontinued or abandoned for any reason or has been determined adversely to the Mortgagee, then and in every such case the Mortgagor and the Mortgagee shall, subject to any determination in such proceeding, be restored to its former position hereunder, and thereafter all rights and remedies of the Mortgagee shall continue as though no such proceeding had been instituted. Section 3.05. RIGHTS AND REMEDIES CUMULATIVE. No right or remedy herein conferred upon or reserved to the Mortgagee 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 3.06. DELAY OR OMISSION NOT WAIVER. No delay or omission of the Mortgagee to exercise any right or remedy accruing upon an 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 Three by law to the Mortgagee may be exercised, from time to time, and as often as may be deemed expedient, by the Mortgagee. Section 3.07. UNDERTAKING FOR COSTS. If any action or proceeding shall be commenced (including, without limitation, an action to foreclose this Mortgage or to collect the indebtedness secured hereby) to which action or proceeding the Mortgagee is made or becomes a party, or in which it becomes necessary in the opinion of the Mortgagee to defend or uphold the lien of this Mortgage, the Mortgagor shall pay to Mortgagee all expenses, including reasonable attorneys' fees and expenses, incurred by the Mortgagee in connection therewith, together with interest at the rate then payable on the Note, from the date of payment less the net amount received by the Mortgagee or the Trustee, as their interests may appear under any title insurance policy, and, until paid, all such expenses, together with interest as aforesaid, shall be a lien on the Trust Estate. Section 3.08. WAIVER OF APPRAISEMENT AND OTHER LAWS. To the full extent that it may lawfully so agree, the Mortgagor will not at any time insist upon, plead, claim or take the benefit or advantage of, any appraisement, valuation, stay, extension or redemption law now or hereafter in force, in order to prevent or hinder the enforcement of this Mortgage or the absolute sale of the Trust Estate, or any part hereof, or the possession thereof by any purchaser at any sale under this Article Three; and the Mortgagor, for itself and all who may claim under it, so far as it or they now or hereafter may lawfully do so, hereby waives the benefit of all such laws. The Mortgagor, for itself and all who may claim under it, waives, to the extent that it may lawfully do so, all right to have the property in the Trust Estate marshalled upon any foreclosure hereof, and agrees that any court having jurisdiction to foreclose this Mortgage may order the sale of the Trust Estate as an entirety. If any law in this Section 3.08 referred to and now in force, of which the Mortgagor or its successor or successors might take advantage despite this Section 3.08, shall hereafter be repealed or cease to be in force, such law shall not thereafter be deemed to constitute any part of the contract herein contained or to preclude the application of this Section 3.08. Section 3.09. ENTRY. The Mortgagor agrees that upon the occurrence of an Event of Default the Mortgagor, upon demand of the Mortgagee during the continuance thereof, shall forthwith surrender to the Mortgagee the actual possession of, and it shall be lawful for the Mortgagee by such officers or agents as it may appoint to enter and take possession of, the Trust Estate (and the books and papers of the Mortgagor), and to hold, operate and manage the Trust Estate (including the making of all needful repairs, and such alterations, additions and improvements as the Mortgagee shall deem wise) and to receive the rents, issues, tolls, profits, revenues and other income thereof, and, after deducting the costs and expenses of entering, taking possession, holding, operating and managing the Trust Estate, as well as payments for taxes, insurance and other proper charges upon the Trust Estate and reasonable compensation to itself, its agents and counsel, to apply the same as provided in Section 3.03, PROVIDED, HOWEVER, that the Mortgagee's rights under this Section 3.09 shall be subject to the provisions of the New Jersey Casino Control Act and Section 3.14. Whenever all that is then due upon the Note and under any of the terms of this Mortgage shall have been paid and all defaults hereunder shall have been made good, the Mortgagee shall surrender possession to the Mortgagor. Section 3.10. POWER OF SALE; SUITS FOR ENFORCEMENT. In case an Event of Default shall occur and be continuing, the Mortgagee, with or without entry, in its discretion may: (a) sell, subject to any mandatory requirements of applicable law, the Trust Estate as an entirety, or in such parcels, as the Mortgagee may determine, to the highest bidder at public auction at such place and at such time (which sale may be adjourned by the Mortgagee from time to time in its discretion by announcement at the time and place fixed for such sale, without further notice) and upon such terms as the Mortgagee may fix and briefly specify in a notice of sale to be published as required by law; or (b)proceed to protect and enforce its rights under this Mortgage by sale pursuant to judicial proceedings or by a suit, action or proceeding in equity or at law or otherwise, whether for the specific performance of any covenant or agreement contained in this Mortgage or in aid of the execution of any power granted in this Mortgage or for the foreclosure of this Mortgage or for the enforcement of any other legal, equitable or other remedy, as the Mortgagee, being advised by counsel, shall deem most effectual to protect and enforce any of the rights of the Mortgagee; the failure to join tenants shall not be asserted as a defense to any foreclosure or proceeding to enforce the rights of the Mortgagee. Section 3.11. INCIDENT OF SALE. Upon any sale of any of the Trust Estate, whether made under the power of sale hereby given or pursuant to judicial proceedings, to the extent permitted by law: (a) the principal of and accrued interest on the Note, if not previously due, shall at once become and be immediately due and payable; (b) subject to the provisions of Section 3.14 and the receipt of any required prior approvals of the New Jersey Casino Control Commission, the Mortgagee may bid for and purchase the property offered for sale, and upon compliance with the terms of sale may hold, retain and possess and dispose of such property, without further accountability, and may, in paying the purchase money therefor, delivery any notes or claims for interest thereon in lieu of cash to the amount which shall, upon distribution of the net proceeds of such sale, be payable thereon, and such notes or claims for interest thereon, in case the amounts so payable thereon shall be less than the amount due thereon, shall be returned to the holders thereof after being appropriately stamped to show partial payment; (c) the Mortgagee may make and deliver to the purchaser or purchasers a good and sufficient deed, bill of sale and instrument of assignment and transfer of the property sold; (d) the Mortgagee is hereby irrevocably appointed the true and lawful attorney of the Mortgagor, in its name and stead, to make all necessary deeds, bills of sale and instruments of assignment and transfer of the property thus sold; and for that purpose it may execute all necessary deeds, bills of sale and instruments of assignment and transfer, and may substitute one or more persons, firms or corporations with like power, the Mortgagor hereby ratifying and confirming all that its attorney or such substitute or substitutes shall lawfully do by virtue hereof; but if so requested by the Mortgagee or by any purchaser, the Mortgagor shall ratify and confirm any such sale or transfer by executing and delivering to the Mortgagee or to such purchaser or purchasers all proper deeds, bills of sale, instruments of assignment and transfer and releases as may be designated in any such request; (e) all right, title, interest, claim and demand whatsoever, either at law or in equity or otherwise, of the Mortgagor of, in and to the property so sold shall be divested and such sale shall be a perpetual bar both at law and in equity against the Mortgagor, its successors and assigns, and against any and all persons claiming or who may claim the property sold or any part thereof from, through or under the Mortgagor, its successors and assigns; and (f) the receipt of the Mortgagee or of the officer making such sale shall be a sufficient discharge to the purchaser or purchasers at such sale for his or their purchase money and such purchaser or purchasers and his or their assigns or personal representatives shall not, after paying such purchase money and receiving such receipt, be obliged to see to the application of such purchase money, or be in anywise answerable for any loss, misapplication or non-application thereof. Section 3.12. RECEIVER. Upon the occurrence of an Event of Default and commencement of judicial proceedings by the Mortgagee to enforce any right under this Mortgage, the Mortgagee shall be entitled, as against the Mortgagor, without notice or demand and without regard to the adequacy of the security for the Note or the solvency of the Mortgagor, to the appointment of a receiver of the Trust Estate, and of the rents, issues, profits, revenues and other income thereof, PROVIDED, HOWEVER, that the Mortgagee's rights under this Section 3.12 shall be subject to the provisions of the New Jersey Casino Control Act and Section 3.14 hereof. Section 3.13. SUITS TO PROTECT THE TRUST ESTATE. Upon 5 days' prior written notice to the Mortgagor (or such shorter period or without notice if deemed necessary and appropriate by the Mortgagee), the Mortgagee shall have power to institute and maintain such proceedings as it may deem necessary and appropriate to prevent any impairment of the Trust Estate by any acts which may be unlawful or in violation of this Mortgage and to protect its interests in the Trust Estate and in the rents, issues, profits, revenues and other income arising therefrom, including power to institute and maintain proceedings to restrain the enforcement of or compliance with any 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 hereunder or be materially prejudicial to the interests of the Mortgagee. Section 3.14. MANAGEMENT OF CASINO-HOTEL. Notwithstanding any provision of this Article Three to the contrary, following an Event of Default and the taking of possession of the Trust Estate or any part thereof by the Mortgagee and/or the appointment of receiver of the Trust Estate or any part thereof, the Mortgagee or any such receiver shall be authorized, in addition to the rights and powers of the Mortgagee and such receiver set forth elsewhere in this Mortgage, to retain one or more experienced operators of hotels and/or casinos to manage the Casino-Hotel, PROVIDED that any such operator shall have all necessary legal qualifications, including all Permits, to manage the Casino-Hotel. ARTICLE FOUR CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE Section 4.01. CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER ONLY ON CERTAIN TERMS. The Mortgagor shall comply with all provisions applicable to the Mortgagor in Article Ten of the Indenture. Section 4.02. SUCCESSOR ENTITY SUBSTITUTED. Upon any consolidation or combination or any conveyance or transfer of the Trust Estate or any portion thereof in accordance with Section 10.01 of the Indenture, the successor entity formed by such consolidation or into which the Mortgagor is combined or to which such conveyance or transfer is made shall succeed to, and be substituted for, and may exercise every right and power of, the Mortgagor under this Mortgage with the same effect as if such successor entity had been named as the Mortgagor herein; PROVIDED, HOWEVER, that no such conveyance or transfer of the Trust Estate substantially as an entirety, unless such conveyance or transfer is in compliance with the provisions of Article Ten of the Indenture, shall have the effect of releasing the Person named as "the Mortgagor" in the first paragraph of this instrument or any successor entity which shall theretofore have become such in the manner prescribed in such Article Ten from its liability as obligor or maker of the Note. Section 4.03. LIMITATION ON SALES OF TRUST ESTATE. Except as otherwise expressly permitted by this Mortgage or the Indenture, the Mortgagor shall not sell, assign, lease, sublease, hypothecate, pledge, mortgage or otherwise transfer all or any part of the Trust Estate or any interest therein (including without limitation any interest in the Ground Leases). Without limiting the generality of the foregoing, the Mortgagor shall not separate, or attempt to separate, its ownership of its interest in the Ground Leases from its ownership of the buildings constituting the Casino-Hotel or any part thereof. ARTICLE FIVE COVENANTS AND REPRESENTATIONS OF MORTGAGOR Section 5.01. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST. The Mortgagor will duly and punctually pay the principal of (and premium, if any) and interest on the Note in accordance with the terms of the Note and this Mortgage. Section 5.02. FF&E FINANCING AGREEMENTS. The Mortgagor covenants and agrees to comply with all of the terms and conditions set forth in any FF&E Financing Agreements before the expiration of any applicable notice and cure periods contained in the FF&E Financing Agreements. Section 5.03. LIMITATIONS ON LIENS. (a) The Mortgagor will not create, incur, suffer or permit to be created or incurred or to exist any mortgage, lien, charge or encumbrance on or pledge of any of the Trust Estate, other than (i) Permitted Encumbrances, (ii) liens on the Trust Estate in connection with indebtedness permitted by clauses (i), (ii), (iii), (iv) or (v) of Section 12.08(a) of the Indenture, and (iii) a building contract or a notice of intention filed by a mechanic, materialman or laborer under the New Jersey lien law. Without limiting the generality of the foregoing sentence but notwithstanding the provisions of the foregoing sentence, the Mortgagor shall not be deemed to have breached the provisions of the foregoing sentence by virtue of the existence of a lien for Impositions or mechanics liens so long as the Mortgagor is in good faith contesting the validity of the same in accordance with the provisions of Section 5.09 to the extent that the matters described in (i) and (ii) do not constitute a default under any Ground Lease or Superior Mortgage. (b) Mortgagee acknowledges that, contemporaneously with the execution and delivery of this Mortgage, it has assigned this Mortgage to the Trustee and that the Trustee is also the mortgagee under the Guaranty Mortgage, which Guaranty Mortgage creates a lien upon the same Trust Estate PARI PASSU with the lien of this Mortgage. Mortgagee further acknowledges and agrees that whenever it is provided in the Guaranty Mortgage that the Mortgagor shall deliver any notice or document, or is require to make any payment thereunder, the delivery of such notice or document or the making of such payment pursuant to the terms of the Guaranty Mortgage shall also constitute the delivery of such notice or document or the making of such payment in satisfaction of the terms, conditions and provisions of this Mortgage to the same extent as the same constitutes satisfaction of the terms, conditions and provisions of the Guaranty Mortgage. Section 5.04. [Reserved] Section 5.05. ACTIONS AND PROCEEDINGS. The Mortgagor hereby acknowledges the right of the Mortgagee, in the name of and on behalf of the Mortgagor, (a) to appear in and defend any action or proceeding brought with respect to the Trust Estate or any part thereof and (b) upon 5 days' prior written notice to the Mortgagor (or such shorter period or without notice if deemed necessary and appropriate by the Mortgage), to commence any action or proceeding to protect the interest of the Mortgagee in the Trust Estate. Section 5.06. WARRANTY OF LEASEHOLD ESTATE AND TITLE. The Mortgagor represents and warrants that as of the date hereof: (a) it is duly authorized under the laws of the State of New Jersey and all other applicable laws to execute and deliver this Mortgage, and all corporate action on its part necessary for the valid execution and delivery of this Mortgage has been duly and effectively taken; (b) it is the lawful owner and is lawfully seized and possessed of the Owned Land and all buildings and improvements thereon, free and clear of all liens, charges or encumbrances, other than the lien of the Mortgage Documents, any Working Capital Facility Lien and Existing Encumbrances; (c) it is the holder of and has good and marketable title to the leasehold interests and leasehold estates under the Ground Leases and to the Ground Leases, subject to no lien, encumbrance or charge other than the lien of the Mortgage Documents, any Working Capital Facility Lien and Existing Encumbrances; (d) (i) the Ground Leases are valid and subsisting demises of the Leased Land for the terms therein set forth, (ii) there are no defaults thereunder by any Lessor or the lessee as to which written notice has been given to or by the lessee, (iii) the Mortgagor has delivered true and correct copies of the Ground Leases and all modifications, amendments and supplements thereto, and (iv) each of the Ground Leases is in full force and effect and has not been modified, amended or supplemented, except as described on Schedule 2; (e) it has good title to the Operating Assets, subject to no lien, encumbrance or charge, other than the lien of the Mortgage Documents, any Working Capital Facility Lien and Existing Encumbrances; and (f) the Mortgagor has good and lawful right and authority to execute this Mortgage and to grant, bargain, sell, alien, convey, assign, transfer, hypothecate, pledge, mortgage and confirm the Trust Estate as provided herein (including without limitation with respect to the Operating Assets and the Ground Leases, without the consent of any third party, other than governmental authorities but any applicable or necessary consent or approval of any such governmental authority has been given or waived at or prior to the execution and delivery of this Mortgage), and this Mortgage constitutes a valid second mortgage lien and second priority security interest in the Trust Estate PARI PASSU with the lien of the Guaranty Mortgage, subject only to Working Capital Facility Liens and Existing Encumbrances. The Mortgagor hereby does and will forever warrant and defend (x) the title to Trust Estate (including without limitation, its leasehold estates under the lessee's interests in the Ground Leases) (subject to Permitted Encumbrances) and (y) the priority of the lien of this Mortgage (subject to Permitted Encumbrances other than Restricted Encumbrances), against the claims and demands of all persons whomsoever, at the Mortgagor's sole cost and expense. Section 5.07. FURTHER ASSURANCES; RECORDING. The Mortgagor will, as provided in Section 5.13, from time to time subject its right, title an interest under all Leases to the lien of this Mortgage. The Mortgagor will cause this instrument and all other instruments of further assurance, including all financing statements and continuation statements covering security interests in personal property, to be promptly recorded, registered and filed, and at all times to be kept recorded, registered and filed, and will execute and file such financing statements and cause to be issued and filed such continuation statements, all in such manner and in such places as may be required by law or as requested by the Mortgagee to fully preserve and protect the rights of the Mortgagee as a secured party under the Uniform Commercial Code to all property comprising the Trust Estate (to the extent a grant of a security interest therein is governed by the Uniform Commercial Code) and to perfect, preserve and protect the lien of this Mortgage as a valid mortgage lien of record and a valid security interest on the Trust Estate subject to Permitted Encumbrances (other than Restricted Encumbrances). The Mortgagor will pay all filing or recording fees, and all expenses incident to the execution and delivery of this Mortgage, and any instrument of further assurance, and all federal, state, county and municipal stamp taxes and other taxes, duties, mposts, assessments and charges arising out of or in connection with the execution and delivery of the Note, this Mortgage, any financing statement or continuation statement with respect to the personal property constituting part of the Trust Estate or any instrument of further assurance. Section 5.08. PAYMENT OF TAXES AND CERTAIN CLAIMS; MAINTENANCE OF PROPERTIES; COMPLIANCE WITH LEGAL REQUIREMENTS AND INSURANCE REQUIREMENTS. The Mortgagor will: (a) subject to the provisions of Section 5.09 relating to contests, pay or cause to be paid promptly (or when installments of the same shall become due and payable, if, by law or by agreement or arrangement with the applicable governmental agency or authority, the same may be paid in installments) before any fine, penalty, interest or cost may be added for nonpayment (but no later than when the same are payable by the Mortgagor dpursuant to any Superior Instrument Requirement), all taxes (including, without limitation, real estate taxes, personal or other property taxes and all sales, value added, use and similar taxes), assessments (including, without limitation, all assessments for public improvements or benefits, whether or not commenced or completed prior to the date hereof and whether or not to be completed prior to the satisfaction of this Mortgage), water, sewer or other rents, rates and charges, excises, levies, license fees, permit fees, inspection fees and other authorization fees and other charges, in each case whether general or special, ordinary or extraordinary, or foreseen or unforeseen, of every character (including all interest, additions to tax and penalties thereon), that may be assessed, levied, confirmed or imposed on or in respect of or be a lien upon (1) the Trust Estate (including without limitation the Leased Land) or any part thereof or any rent therefrom or any estate, right or interest therein, or (2) any acquisition, occupancy, use, leasing, or possession of or activity conducted on the real property or any part thereof included in the Trust Estate or any gross receipts thereof or of the rent therefrom (all of the foregoing being referred to collectively as "Impositions"). Notwithstanding the foregoing or any other provision of this Mortgage, the Mortgagor shall not be required to pay any income, profits or revenue tax upon the income of the Mortgagee, the Trustee or any Noteholder nor any franchise, excise, corporate, estate, inheritance, succession, capital levy or transfer tax of the Mortgagee, the Trustee or the Noteholder nor any interest, additions to tax or penalties in respect thereof, unless such tax is imposed, levied or assessed n substitution for any Impositions that the Mortgagor is required to pay pursuant to this Section 5.08. The Mortgagor will deliver to the Mortgagee official receipts or other proof evidencing payments of any Impositions in accordance with the requirements of this Section 5.08. The Mortgagor shall not be entitled to any credit for taxes or assessments paid against the Note; (b) except for such property which the Mortgagor may dispose of or replace pursuant to Section 2.02, maintain and keep all its properties used or useful in the conduct of its business (other than obsolete equipment), including, without limitation, the Casino-Hotel and all Tangible Personal Property, in such good repair, working order and condition, except for reasonable wear and use, and make or cause to be made all such needful and proper repairs, renewals and replacements thereto consistent with the standards of other casino-hotels in Atlantic City, New Jersey; (c) occupy and continuously operate the Casino-Hotel and keep the Casino-Hotel supplied with Tangible Personal Property, all in a manner consistent with the standards of other casino-hotels in Atlantic City, New Jersey (provided that nothing contained in this Section 5.08(c) shall be deemed to reduce the time period set forth in Section 3.01(f)); (d) subject to the provisions of Section 5.09 relating to contests, the Mortgagor at its sole expense will timely (1) comply with all Legal Requirements and Insurance Requirements, whether or not compliance therewith shall require structural changes in the buildings and improvements included in the Trust Estate or interfere with the use and enjoyment of the Trust Estate or any part thereof, (2) procure, maintain and comply with all permits and other authorizations required for (i) the use of the Casino as a gaming and gambling facility, (ii) the on-premises consumption of alcoholic beverages at the Casino-Hotel and (iii) any other use of the Trust Estate or any part thereof then being made, and for the proper erection, installation, operation and maintenance of the improvements or any part thereof, and (3) comply with any instruments of record at the time in force affecting the Trust Estate or any part thereof, if the failure to comply with the same would impair the Mortgagee's security hereunder. Without limiting the generality of the foregoing, the Mortgagor represents and warrants that at the time of the execution of this Mortgage, the Mortgagor is in compliance with the requirements of clauses (1), (2) and (3); (e) in the event of the passage after the date of this Mortgage of any law of the State of New Jersey, or any other governmental entity, changing in any way the laws now in force for the taxation of mortgages, or debts secured thereby, for state or local purposes, or the manner of the operation of any such taxes, so as to affect the interest of the Mortgagee, then and in such event, the Mortgagor shall bear and pay the full amount of such taxes, provided that if for any reason payment by the Mortgagor of any such new or additional taxes would be unlawful or if the payment thereof would constitute usury or render the indebtedness secured hereby wholly or partially usurious under any of the terms or provisions of the Note, or this Mortgage, or otherwise, the Mortgagee may, at the Mortgagee's option, declare the whole sum secured by this Mortgage, with interest thereon, to be due and payable 90 days after notice of election thereof has been given by the Mortgagee, or the Mortgagee may, at the Mortgagee's option, pay that amount or portion of such taxes as renders the loan or indebtedness secured hereby unlawful or usurious, in which event the Mortgagor shall concurrently therewith pay the remaining lawful and nonusurious portion or balance of such taxes. Section 5.09. PERMITTED CONTESTS. The Mortgagor may, at its sole expense, contest by appropriate legal proceedings conducted in good faith and with due diligence, the amount or validity or application, in whole or in part of any Imposition or lien therefor or any Legal Requirement or Insurance Requirement or the application of any instrument of record affecting the Trust Estate or any part thereof or any claims of mechanics, materialmen, suppliers, or vendors or lien therefore, and may withhold payment of the same pending such proceedings if permitted by law, or make payment under protest, or defer compliance with any such Legal Requirement, any such Insurance Requirement or the terms of any such instrument, and the same shall not be a Default hereunder, provided that (a) in the case of any Impositions or lien therefor or any claims of mechanics, materialmen, suppliers or vendors or lien therefor, such proceedings shall suspend the collection thereof from each of the Mortgagor, the Mortgagee, the Trustee, the Noteholder and the Trust Estate, (b) neither the Trust Estate nor any interest therein would be in any danger of being sold, forfeited, or lost, (c) such action would not result in or constitute a default under any Ground Lease or Superior Mortgage, (d) in the case of a Legal Requirement, neither the Noteholder nor the Mortgagee shall be in any danger of any civil or any criminal liability, and the failure of the Mortgagor to comply with such Legal Requirement shall not affect the continuance in good standing of any Permit or result in the suspension, termination, non-renewal or material adverse modification of any permit, and (e) in the case of an Insurance Requirement, the failure of the Mortgagor to comply therewith shall not affect the validity of any insurance required to be maintained by the Mortgagor hereunder. Section 5.10. MECHANICS' AND OTHER LIENS. Without limiting the generality of the first sentence of Section 5.03 and notwithstanding the provisions of Section 5.03(a)(ii), the Mortgagor will cause to be removed, either by payment, or bonding or otherwise, all claims and demands of mechanics, materialmen, laborers, and others which, if unpaid, might result in, or permit the creation of, a lien on the Premises and/or Trust Estate or any part thereof, or on the revenues, rents, issues, income and profits arising therefrom and in general will do or cause to be done everything necessary so that the lien hereof shall be fully preserved, at the cost of the Mortgagor, without expense to the Mortgagee. Section 5.11. INSURANCE. (a) The Mortgagor will, at its expense, maintain with Insurers: (1) insurance with respect to the Mortgagor's insurable properties constituting a part of the Trust Estate against loss or damage by fire, lightning, and other risks from time to time included under "all-risk" policies and against loss or damage by sprinkler leakage, water damage, collapse, malicious mischief and explosion in respect of any steam and pressure boiler and similar apparatus located on such insurable properties, in amounts at all times sufficient to prevent the Mortgagor from becoming a coinsurer within the terms of the applicable policies, but in any event such insurance shall be maintained in such insurable amounts not less than the greatest of the following (hereinafter referred to as the "Insurance Amount"): (i) 100% of the then full insurable value of such insurable properties, the term "full insurable value" to mean the actual replacement cost (excluding the costs of foundation, footing, excavation, paving, landscaping and other similar, non-insurable improvements) determined from time to time (but not less frequently than once in any 36 calendar months), by an Architect, contractor, appraiser, or an Insurer, (ii) the then Outstanding Amount of any First Mortgage Debt, including the Note or (iii) the amount required to be maintained pursuant to the Superior Instrument Requirements; [(2) war risk insurance as and when such insurance is obtainable from the United States of America or any agency thereof as promptly as reasonably practicable after the same becomes so obtainable, in an amount not less than the Insurance Amount, or in such lesser amount as may then be so obtainable;] (3) public liability, including personal injury and property damage and comprehensive general liability connected with the possession, use, leasing, operation or condition of such insurable properties in such amounts as, in the Mortgagor's judgment, are prudent, considering the cost of such insurance, for personal injury and property damage with respect to any one occurrence, which may be under an umbrella policy. Anything contained in this clause (3) to the contrary notwithstanding, the Superior Instrument Requirements with respect to the kinds and amount of insurance described in this clause (3) shall be satisfied by the Mortgagor; (4) appropriate workers' compensation insurance with respect to any work (to the extent the risks to be covered thereby are not already covered by other policies of insurance maintained by the Mortgagor) on or about such insurable properties; (5) business interruption insurance covering not less than [12] months of loss, provided that, following [19__], at any time that the Mortgagor is renewing any policy for such insurance or taking out any new or replacement such policy covering a period of less than 12 months, the Mortgagor shall deliver to the Mortgagee an Officers' Certificate certifying that the period of coverage to be maintained by the Mortgagor under such policy is the maximum that can be maintained at rates determined by the Mortgagor to be reasonable for such coverage; (6) to the extent available, flood insurance in an amount not less than the Insurance Amount, or such lesser amount as may then be so obtainable; and (7) such other insurance with respect to such insurable properties against loss or damage of the kinds (i) from time to time customarily insured against by persons owning or using casino-hotels of comparable size in the boardwalk area of Atlantic City, New Jersey and (ii) required to be maintained pursuant to the Superior Instrument Requirements. Notwithstanding the foregoing, to the extent permitted by Superior Instrument Requirements, (i) the Mortgagor shall be permitted to maintain a deductible with respect to the insurance policies described in clauses (1), (2), (6) and (7) in an amount not to exceed (x) for the twelve month period commencing the date hereof, [$100,000] with respect to the insurance policies described in clause (1), (2), (6) and (7) thereafter, the customary deductible (if any) with respect to the insurance maintained by casino-hotels of a similar size and value in Atlantic City, New Jersey (but in no event more than [$1,000,000]), (ii) the Mortgagor shall be permitted to maintain a deductible with respect to the insurance policies described in clause (3) in an amount not to exceed the amount of deductible as is customarily maintained by casino-hotels of similar size in Atlantic City, New Jersey, (iii) the Mortgagor shall not reduce its insurance coverage for the matters described in clause (3) (which for purposes of this paragraph means a reduction in single limits or an increase in deductible) unless and until the Mortgagor delivers to the Mortgagee an Officers' Certificate certifying (w) that the coverage the Mortgagor was theretofore maintaining cannot be maintained atrates determined by the Mortgagor to be reasonable for such coverage, (x) the amount of the proposed reduction, (y) the premium for the existing and the proposed reduced coverage, and (z) that the proposed deductible satisfied the criteria set forth in this clause (iii), and (iv) the Mortgagor shall be permitted to maintain a deductible with respect to the insurance policies described in clause (5) in the forms of and in an amount not to exceed the amount of deductible as is customarily maintained by casino-hotels of similar size in Atlantic City, New Jersey. (b) Each policy of insurance maintained by the Mortgagor pursuant to Subsection (a) of this Section 5.11 shall, (1) except in the case of workers' compensation insurance, name as insureds the Mortgagee, the Mortgagor and to the extent required by the Superior Instrument Requirements, the Lessors and the holders of the Superior Mortgages, (2) provide that all insurance proceeds for losses, except in the case of public liability insurance and workers' compensation insurance or as otherwise provided in Subsections (d), (e) and (f) of this Section 5.11, be payable solely to the Mortgagee or such other party as is required to receive such proceeds under a Superior Mortgage, (3) include effective waivers (whether under the terms of any such policy or otherwise) by the insurer of all claims for insurance premiums against all lost payees and named insureds (other than the Mortgagor) and all rights of subrogation against any named insured, (4) except in the case of public liability and workers' compensation insurance, provide that any losses shall be payable notwithstanding (i) any act, failure to act, negligence of, or violation or breach of warranties, declarations or conditions contained in such policy by the Mortgagor or the Mortgagee or any other named insured or loss payee (including, without limitation, with respect to the Released Fee Land, the holders of any After-Acquired Fee Mortgages), (ii) the occupation or use of the insurable properties for purposes more hazardous than permitted by the terms of the policy, (iii) any foreclosure or other proceeding or notice of sale relating to the insurable properties or (iv) any change in the title to or ownership or possession of the insurable properties, (5) contain a non-contributory mortgagee clause in favor of the Mortgagee, and (6) provide that if all or any part of such policy is cancelled, terminated or expires, the insurer will forthwith give notice thereof to each named insured an loss payee and that no cancellation, reduction in amount or material change in coverage thereof shall be effective until at least 30 days after receipt by each named insured and loss payee of written notice thereof. (c) The Mortgagor will deliver to the Mortgagee, (1) duplicate originals of all insurance policies that the Mortgagor is required to maintain pursuant to this Section 5.11 and (2) within 30 days after each reduction in insurance required to be maintained by the Mortgagor hereunder, an Officers' Certificate setting forth the articulars as to all such insurance policies and certifying that the same comply with the requirements of this Section 5.11, that all premiums or installments thereof then due thereon have been paid and that the same are in full force and effect. The Mortgagee shall not be responsible for effecting or renewing any insurance or for the responsibility or solvency of the insurers. (d) The Mortgagor shall give written notice to the Mortgagee immediately upon obtaining knowledge of any Casualty which (x) results in damage, loss or destruction in an amount in excess of [$5,000,000] to any buildings or improvements on the Premises and/or any Tangible Personal Property or (y) pursuant to any Superior Instrument Requirement, would require the deposit of insurance proceeds with the Depositary, or action or proceeding with respect thereto. Whenever the Superior Instrument Requirements require or permit the selection of the Depositary by the Mortgagor, the Mortgagor shall select the Insurance Trustee as the Depositary. Within 30 days after any Casualty which results in any damage, loss or destruction in an amount in excess of [$10,000,000] to any buildings or improvements of the Premises and/or any Tangible Personal Property, the Mortgagor shall deliver to the Mortgagee a certificate of an Architect stating whether, in such Architect's opinion, applicable Legal Requirements permit the Restoration of such buildings and improvements for the same uses and to the same size and quality in all material respects, as existed immediately prior to the Casualty (and if such certificate states the Legal Requirements do not permit such Restoration, such certificate shall describe the manner closest approximating such criteria to which the buildings and improvements could be so restored and shall be accompanied by a Certificate of Appraised Value dated not more than 10 days prior to delivery setting forth the Appraised Value immediately prior to the Casualty and the estimated Appraised Value immediately after the Restoration). If the Mortgagor is required to deliver such Certificates of Appraised Value and if based on such Certificates of Appraised Value immediately after Restoration, the aggregate Outstanding Amount of First Mortgage Debt immediately after such Restoration shall exceed the greater of (i) 66 2/3% of the Appraised Value immediately after such Restoration or (ii) the quotient of the Outstanding Amount of First Mortgage Debt immediately prior to such Casualty divided by the Appraised Value immediately prior to the Casualty multiplied by the Appraised Value immediately after such Restoration, then the proceeds of any insurance shall, at the election of Mortgagee, either be applied to Restoration as set forth in Subsections (e), (h) and (i) below) or paid and delivered to the Mortgagee to the extent of the then Outstanding Amount of the Notes and any other interest or other sums due hereunder or thereunder to be applied to the satisfaction of the Mortgage to the extent proceeds are available for such purpose and provided that no additional sums are due to the Trustee or the Noteholders under the Notes or the Indenture, the balance of any net insurance proceeds shall be paid to the Mortgagor. Notwithstanding the foregoing sentence, if such Certificates of Appraised Values indicates that the Outstanding Amount of First Mortgage Debt immediately after such Restoration exceeds the greater of the two amounts determined pursuant to subclauses (i) and (ii) above, the proceeds of insurance will be made available for Restoration (subject to paragraphs, (e), (h) and (i) below) if the Mortgagor obtains an irrevocable commitment from a nationally recognized financial institution having a combined capital and surplus of at least [$100,000,000], to supply, upon an acceleration under this Mortgage as a result of an Event of Default, funds to the Mortgagor as additions to capital in an amount equal to the Outstanding Amount of First Mortgage Debt in excess of the Appraised Value necessary to be paid down so that the Outstanding Amount of First Mortgage Debt will not exceed either of the two amounts determined pursuant to such clauses (i) and (ii), PROVIDED that such commitment may only be released if, upon an Appraisal at any time following completion of such Restoration, the aggregate Outstanding Amount of the First Mortgage Debt does not exceed 66-2/3% of the Appraised Value. (e) Subject to the provisions of Subsection (d) above, in case a Casualty occurs, the following shall apply: (1) if the cost of Restoration (as hereinafter defined) does not exceed the sum of [$10,000,000], the net insurance proceeds shall be paid by the Mortgagee to the Mortgagor (unless the Superior Instrument Requirements provide that the same shall be paid to the Depositary); (2) if the cost of Restoration is [$10,000,000] or more or if the Superior Instrument Requirements provide that the same shall be paid to the Depositary, the net insurance proceeds shall be paid by the Mortgagee to the Insurance Trustee (or other Depositary required by the Superior Instrument Requirements, provided that such Depositary holds such proceeds in trust for purposes of paying the costs of Restoration); (3) the Mortgagor shall commence with reasonable promptness under the circumstances and thereafter with due diligence proceed to perform and complete in a good and workmanlike manner the restoration, repair, replacement or rebuilding of the damage or destruction resulting from the Casualty (all of which restoration, repair, replacement or rebuilding are referred to as the "Restoration") in accordance with the plans and specifications submitted to the Insurance Trustee, in conformance with all Legal Requirements and Superior Instrument Requirements, and in accordance with the further provisions of this Subsection (e), regardless of the extent of any such Casualty and whether or not net insurance proceeds, if any, shall be available or, if available, shall be sufficient, for the purpose of the Restoration (provided, however, that if the Mortgagor does not receive any net insurance proceeds within 30 days after any Casualty because the adjustment of the loss has not yet occurred, then the obligation of the Mortgagor to commence such Restoration shall be deferred until such proceeds are made available to the Mortgagor, provided that (i) Mortgagor diligently and continuously adjusts such loss with the Insurer, (ii) the Mortgagor delivers to the Mortgagee an Officers' Certificate within such 30-day period requesting the extension of such period, estimating the date on which such proceeds will be available and describing the Mortgagor's efforts to adjust such loss and certifying that such extension does not constitute a default or a breach of any of the provisions of any of the Ground Leases (or if so, such default or breach has been waived) and (iii) the Mortgagor delivers to the Mortgagee additional Officers' Certificates every 30 days thereafter updating the information contained in the certificate described in Clause (ii)). All Restoration work shall be performed in accordance with the applicable provisions of Section 5.12 and in conformance with all Superior Instrument Requirements, Legal Requirements and Insurance Requirements and, prior to commencing any Restoration, the Mortgagor shall obtain all Permits necessary in connection therewith, and shall obtain, and keep in full force and effect until the completion of such Restoration, such additional insurance as the Insurance Trustee and Superior Instrument Requirements may require. The plans and specifications for the Restoration shall be accompanied by a certificate of the Mortgagor and an Opinion of Counsel to the effect that upon the completion of the Restoration pursuant to the plans and specifications the Premises, and all buildings and improvements, thereon will comply with all superior Instrument Requirements, Legal Requirements and Insurance Requirements. Notwithstanding anything in this Section 5.11 to the contrary, if such Casualty is in an amount less than [$5,000,000], the Mortgagor shall not be required to perform and complete such Restoration (unless the performance and completion of the Restoration is necessary in order for the Mortgagor to be in compliance with any term, provision or condition of this Mortgage (other than this Section 5.11(e)) or any Superior Instrument Requirements; (4) Any insurance proceeds which the Mortgagor receives, shall be held by the Mortgagor in trust for the purpose of paying the cost of the Restoration, except as otherwise provided herein; (5) Any net insurance proceeds that the Insurance Trustee holds pursuant to this Subsection (e), shall be deposited in an interest-bearing investment reasonably designate by Mortgagor (to the extent the Mortgagor is permitted to designate such investment under the Superior Instrument Requirements) (and the interest thereon shall be added to such proceeds) and shall be paid by the Insurance Trustee in reimburse the Mortgagor for, or to make payment for, the Restoration, after the Insurance Trustee deducts therefrom the amount of any reasonable costs and expenses incurred in connection with the performance of its obligations under this Section 5.11. The Insurance Trustee shall make such payments not more frequently than once every 30 days upon the written request of the Mortgagor (unless more frequent payments are required by Superior Instrument Requirements), by paying to the Mortgagor or the persons named in the certificate described in Clause (6) of this Subsection (e) the respective amounts stated in such certificate from time to time as the Restoration progresses, provided the Mortgagor has complied with the requirements of this Subsection (e) and such payment is permitted by an applicable Superior Instrument Requirements. The Mortgagor's written request shall be accompanied by (i) the certificate described in Clause (6) of this Subsection (e) and (ii) a title company or official search, or other evidence reasonably acceptable to the Insurance Trustee, showing that there have not been filed with respect to the Premises, any vendor's, contractor's mechanic's, laborer's or materialman's statutory or similar lien which has not been discharged of record (or bonded against or secured by other security) or any other encumbrance irrespective of its priority (other than Permitted Encumbrances). (6) The certificate required by Clause (5) of this Subsection (e) shall (A) be an Officers' Certificate, countersigned by the Architect in charge of the Restoration with respect to the matters described in (i) and (v) below, (B) be dated not more than 10 days prior to such request and (C) set forth (in addition to any other requirements contained in any applicable Superior Instrument Requirements) that: (i) all of the Restoration work theretofore performed is in substantial compliance with the plans and specifications theretofore submitted to the Insurance Trustee and in compliance with all Superior Instrument Requirements, Legal Requirements and Insurance Requirements; (ii) the sum then requested either has been paid by the Mortgagor or is justly due to contractors, subcontractors, materialmen, engineers, architects or other persons who have rendered services or furnished or contracted to deliver materials for the Restoration therein specified, and the names and addresses of such persons, a brief description of such services and materials and the several amounts so paid or due to each of such persons in respect thereof; (iii) no part of the amount requested has been or is the basis in any pervious or then pending request for the withdrawal of net insurance proceeds, and that the sum then requested does not exceed the value of the services and materials described in the certificate; (iv) except for the amount, if any, stated pursuant to Subclause (ii) of this Clause (6) in such certificate to be due for services or materials, and except for amounts in dispute and/or customary retainages, there is no outstanding indebtedness known to the person signing such certificate, after due inquiry, which is then due for labor, wages, materials, supplies or services in connection with such Restoration; and (v) the remaining cost, as estimated by the persons signing such certificate, of the Restoration in order to complete the same does not exceed the net insurance proceeds remaining in the hands of Insurance Trustee after payment of the sum requested in such certificate or if such estimated cost does exceed such insurance proceeds such certificate shall state the amount of any such deficiency. If the certificate states that such deficiency will exist, the Mortgagor shall deliver the amount of such deficiency in cash or cash equivalent to the Insurance Trustee simultaneously with the delivery of such certificate, which amount shall be deemed insurance proceeds for purposes of this Section 5.11(e); and (7) If net insurance proceeds shall be insufficient to pay the entire cost of the Restoration, then, after completion of the Restoration, the Mortgagor shall pay the deficiency. If all or any part of the net insurance proceeds are not used for the restoration in accordance with this Subsection (e) (because such proceeds exceed the amount required to complete the Restoration), then upon completion of the Restoration in accordance with this Subsection (e), such amount not so used, if held by the Insurance Trustee, shall be paid to the Mortgagor (if permitted by Superior Instrument Requirements). (f) Provided that no Event of Default has occurred and is continuing, all net business interruption insurance proceeds shall be paid to the Mortgagor, to be segregated from the other funds of Mortgagor and held in trust by Mortgagor for the following purposes and in the following order of priority: (i) for the payment of Impositions and amounts due under the Ground Leases and Superior Mortgages; (ii) for debt service for the estimated period of Restoration (for purposes of this Section 5.11(f), interest and principal payments due on any payment date under the Note will deemed to accrue in equal daily installments beginning the day after the immediately preceding payment date and ending on such payment date); and (iii) for any expense incurred in connection with the operation or business of the Casino-Hotel. (g) The Mortgagor shall not take out separate insurance, concurrent in form or contributing in the event of loss with that required to be maintained pursuant to this Section 5.11, unless the same are permitted by Superior Instrument Requirements and the Mortgagee is included therein as a named insured, with loss payable to the Mortgagee and the Insurance Trustee pursuant to Section 5.11(b) hereof. The Mortgagor shall immediately notify the Mortgagee whenever any such separate insurance is taken out and shall promptly deliver to the Mortgagee a duplicate original of the policy of such insurance, a copy thereof certified by the insurer or a certificate thereof. (h) Insurance claims by reason of damage or destruction to any portion of the Trust Estate may adjusted by the Mortgagor, but the Mortgagee shall have the right (but not the obligation) to join the Mortgagor in adjusting, and approving the adjustment of, any such loss except in the event of a loss where the amount of insurance reasonably anticipated to be received with respect to such loss is less than [Five Million Dollars ($5,000,000)], and the Mortgagor shall assist the Mortgagee in any such adjustment at the request of the Mortgagee. If the Mortgagee at its election as aforesaid joins the Mortgagor in any adjustment process, then the Mortgagee's approval of the adjustment shall not be unreasonably withheld; (i) Notwithstanding anything contained herein to the contrary, if an Event of Default shall have occurred and be continuing, the Mortgagee may, at its option, (A) refrain from paying to the Mortgagor or the Insurance Trustee any net insurance proceeds or (B) instruct the Insurance Trustee to pay to the Mortgagee any insurance proceeds then held by the Insurance Trustee, as the case may be. Section 5.12. LIMITATIONS ON BUILDING DEMOLITION, ALTERATIONS, IMPROVEMENTS AND NEW CONSTRUCTION. The Mortgagor will not authorize, permit or make any demolition, alteration or improvement of any building included in the Trust Estate or any new construction on any part of the Trust Estate, except in conformity with and subject to the limitations hereinafter in this Section 5.12 set forth. Unless an Event of Default shall have occurred and be continuing, the Mortgagor shall have the right at all times to make or permit such alterations, improvements or new constructions, structural or otherwise (herein sometimes called collectively "alterations"), of or on the Trust Estate, to be made in all cases subject to the following conditions: (a) no alteration shall be undertaken or carried out except in conformity with all Superior Instrument Requirements, Legal Requirements and Insurance Requirements; (b) if the estimated cost of any alteration, together with other alterations that constitute a single construction plan or project (whether or not accomplished in several stages or procedures), exceeds [$5,000,000], the building or buildings, as so improved or altered, upon completion of the work shall be of a value not less than the value of such building or buildings immediately prior to the making of such alterations; (c) any alteration which is structural in nature or involves an estimated cost of more than [$5,000,000] shall be conducted under the supervision of an Architect, and no such alteration shall be undertaken until 10 days after there shall have been filed with the Mortgagee detailed plans and specifications and cost estimates therefor, stating that such plans and specification conform to all, prepared and approved in writing by such Architect and accompanied by a certificate of such Architect stating that such plans and specifications conform to all applicable provisions of this Section 5.12; (d) no alteration involving an estimated cost of more than [$5,000,000] shall be undertaken until the Mortgagor has furnished to the Mortgagee, at the Mortgagor's sole cost and expense, a surety bond or bonds, covering performance, and labor and material payments with respect to the work to be so performed, naming the Mortgagee as obligee, issued by a responsible surety company, authorized to do business in the state of New Jersey, in a form generally and customarily used by such surety in an amount equal to the estimated cost of construction of the work covered by the plans and specifications therefor, guaranteed and conditioned upon the performance and completion of such construction, substantially in conformity with the such plans and specifications and within a reasonable time, subject to delays by fire, strikes, lock-out, acts of God, inability to obtain labor or materials, governmental restrictions, enemy action, civil commotion or unavoidable Casualty or other similar causes beyond the control of the Mortgagor, free and clear of all liens, claims and liabilities for the cost of such alterations. In the event such surety bond or bonds shall be unobtainable the Mortgagor shall deliver to the Mortgagee security by cash, letter of credit or other guarantee, affording substantially the same protection as would such bond or bonds; (e) all work done in connection with any alterations shall be done promptly and in good and workmanlike manner. The work in connection with any alteration shall be prosecuted with reasonable dispatch, delays due to fire, strikes, lockouts, acts of God, inability to obtain labor or materials, governmental restrictions, enemy action, civil commotion or unavoidable casualty or similar causes beyond the control of the Mortgagor excepted; (f) if the estimated cost of alterations exceed [$5,000,000], the Mortgagor shall have delivered to the Mortgagee (A) prior to the commencement of such alterations, additions or improvements copies of all Permits required for the commencement of such work together with a certificate of the Architect or an Opinion of Counsel to the effect that all Permits required for the commencement of such alterations have been obtained; and (B) within a reasonable period of time after the completion of the alterations, copies of all Permits required in connection with the completion thereof, together with either an Opinion of Counsel or a certificate of the Architect that all such Permits have been so obtained by the Mortgagor and that the Mortgagor has complied with all the requirements of this Section 5.12; (g) no alterations of any kind shall be made to any building which shall change the use or reduce the size or quality of the building in any material respect; and (h) no alterations costing in excess of [$5,000,000], together with other alterations that constitute a single construction plan or project (whether or not accomplished in several stages or procedures), shall be made to any building if such alterations are not expected to be completed at least 120 days prior to the maturity date of the Note (except if such alterations are required in order to comply with Legal Requirements or Superior Instrument Requirements). Section 5.13. LEASES. The Mortgagor shall not: (a) subject to the provisions of Section 5.13(d), enter into any Lease, or renew, modify, extend, terminate, or amend any Lease, except in the ordinary course of business of operating the Casino-Hotel; (b) receive or collect, or permit the receipt or collection of, any rental payments under any Lease more than one year in advance of the respective periods in respect of which they are to accrue, except that, in connection with the execution and delivery of any Lease or of any amendment to any Lease, rental payments thereunder may be collected and received in advance in an amount not in excess of three months' rent and/or a security deposit may be required thereunder in an amount not exceeding one year's rent; (c) collaterally assign, transfer or hypothecate (other than to the Mortgagee hereunder, to the mortgagee under the Guaranty Mortgage or to the holder of any Working Capital Facility Lien) any rental payment under any Lease whether then due or to accrue in the future, the interest of the Mortgagor as landlord under any Lease or the rents, issues or profits of the Trust Estate; (d) after the date hereof, enter into any Lease, or renew any Lease unless such Lease contains terms to the effect as follows: (1) the Lease and the rights of the tenants thereunder shall be subject and subordinate to the rights of the Mortgagee under this Mortgage, the mortgagee under the Guaranty Mortgage and the holders of any Superior Mortgage, (2) the Lease may be assigned by the landlord thereunder to the Mortgagee, (3) the rights and remedies of the tenant in respect of any obligations of the landlord thereunder shall be nonrecourse as to any assets of the landlord other than its equity in the building in which the leased premises are located or the proceeds thereof, (4) the rights of the tenant shall be subject and subordinate to the rights of the lessee under any new lease entered into in the event of a termination of a Ground Lease; (e) modify any Lease with respect to the matters described in clauses (1) through (4) of paragraph (d). If the Mortgagor enters into a Lease (other than with any Affiliate of the Mortgagor) for a term of not less than 3 nor more than 10 years, the Mortgagee shall deliver a non-disturbance and attornment agreement substantially in the form of Schedule 4 hereto, following receipt of a certificate of a leasing broker (who is not an Affiliate of the Mortgagor or the broker involved in such transaction) experienced with respect to leases of commercial space in the Atlantic City area stating that the rent under the Lease is not less than fair market rent and that the other terms of the Lease are fair and reasonable in the commercial leasing market. The Mortgagor shall, upon demand, reimburse the Mortgagee for any costs and expenses (including reasonable attorney's fees) incurred by the Mortgagee in connection with the preparation. review and delivery of such non-disturbance and attornment agreements. Promptly after the execution and delivery hereof, the Mortgagor will cause the lessee under each Lease now in effect and promptly after each Lease is executed or becomes effective after the date of the execution and delivery hereof, the Mortgagor will cause the lessee under each such Lease, to be duly notified in writing (unless the substance and effect of such notice shall be contained in such Lease) of the subjection of the owner's interest, as lessor, in and to such Lease to the lien of this Mortgage and of the name and address of the Mortgagee. Each such notice shall state that the lease of such lessee is a Lease as herein defined. If a new Mortgagee is at any time appointed hereunder or the address of the Mortgagee shall at any time be changed, the Mortgagor will cause each lessee under each Lease to be promptly notified in writing of the name address of such new Mortgagee or the new address of the Mortgagee. The Mortgagor will use reasonable efforts (but shall not be obligated to ncur any expenditure other than DE MINIMIS amounts) to obtain from each lessee under each Lease to whomany notice is sent pursuant to this paragraph an acknowledgment of receipt of such notice, and the Mortgagor will promptly deliver to the Mortgagee, upon request, a copy of each such acknowledgment of receipt which it is able to obtain. The Mortgagee shall not be responsible for securing or causing the Mortgagor to secure any such acknowledgment. Nothing contained in this Section 5.13 shall limit the provisions of Section 4.04 hereof. Section 5.14. [Reserved] Section 5.15. MAINTENANCE OF EXISTENCE OF THE MORTGAGOR. Subject to Article Four, the Mortgagor will do or cause to be done all things necessary to preserve and keep in full force and effect its existence as a corporation, and its rights (both statutory and under its articles of incorporation) and franchises. Section 5.16. TO KEEP BOOKS; INSPECTION BY MORTGAGEE. The Mortgagor will keep proper books of record and account in accordance with Section 12.05 of the Indenture. Section 5.17. ADVANCES BY MORTGAGEE. If the Mortgagor shall fail to perform any of its covenants in this Mortgage and such failure shall continue for 10 days following notice thereof given by the Mortgagee (or at any time, without notice, in case of emergency), the Mortgagee may (but is not obligated to), at any time and from time to time, take any action or make advances, to effect performance of any such covenant on behalf of the Mortgagor; and all moneys so used or advanced by the Mortgagee and all reasonable costs and expenses incurred by Mortgagee in connection therewith, together with interest on all of the same at the rate of interest set forth in the Note, shall be repaid by the Mortgagor upon demand and such advances shall be secured under this Mortgage prior to the Note. Section 5.18. WAIVER OF STAY, EXTENSION OR USURY LAWS. The Mortgagor covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any usury, stay or extension law or any other law which would prohibit or forgive the Mortgagor from paying all or any portion of the obligations evidenced by the Note as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may otherwise affect the covenants or the performance of this Mortgage; and the Mortgagor (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Mortgagee, but will suffer and permit the execution of every such power as though no such law had been enacted. Section 5.19. [Reserved] Section 5.20. EMINENT DOMAIN. (a) The Mortgagor shall give written notice to the Mortgagee immediately upon obtaining knowledge of any Taking affecting the Trust Estate. If the Taking (i) is estimated to result in an award of more than [$5,000,000] or (ii) the Taking would interfere with or adversely affect the operation of the Casino-Hotel in accordance with Legal Requirements then within 30 days after any such Taking, the Mortgagor shall deliver to the Mortgagee a certificate of an Architect stating whether, in such Architect's opinion, applicable Legal Requirements permit the Restoration of any buildings and improvements for the same uses and the same size and quality in all material respects as existed immediately prior to the Taking (and if such certificate states that Legal Requirements do not permit such Restoration, such certificate shall describe the manner closest approximating such criteria to which the buildings and improvements could be so restored and shall be accompanied by a Certificate of Appraised Value dated not more than 10 days prior to delivery setting forth the Appraised Value immediately prior to the Taking and the estimated Appraised Value immediately after the permitted Restoration). If the Mortgagor is required to deliver such Certificates of Appraised Value and if based on such Certificates of Appraised Value immediately after Restoration, the aggregate Outstanding Amount of First Mortgage Debt immediately after such Restoration shall exceed the greater of (i) 66-2/3% of the Appraised Value immediately after such Restoration or (ii) the quotient of the Outstanding Amount of the First Mortgage Debt immediately prior to such Taking divided by the Appraised Value immediately prior to the Taking multiplied by the Appraised Value immediately after such Restoration, then the Taking shall be deemed a Taking of "the whole or substantially all of the Premises." Notwithstanding the foregoing sentence, if such Certificates of Appraised Value indicate that the Outstanding Amount of First Mortgage Debt immediately after such Restoration exceeds the greater of the two amounts determined pursuant to subclauses (i) and (ii) above, the Taking will not be deemed a Taking of "the whole or substantially all of the Premises", if the Mortgagor obtains an irrevocable commitment from a nationally recognized financial institution having a combined capital and surplus of at least [$100,000,000], to supply, upon an acceleration under this Mortgage as a result of an Event of Default, funds to the Mortgagor as additions to capital in an amount equal to the Outstanding Amount of First Mortgage Debt in excess of the Appraised Value necessary to be paid down so that the Outstanding Amount of First Mortgage Debt will not exceed either of the two amounts determined pursuant to such clauses (i) and (ii), PROVIDED that such commitment may only be released if, upon an Appraisal at any time following completion of such Restoration, the aggregate Outstanding Amount of the First Mortgage Debt does not exceed 66-2/3% of the Appraised Value. (b) If at any time there shall occur a Taking of less than the whole or substantially all of the Premises and the award or awards resulting therefrom payable to the Mortgagor (and not to any Lessor or the holder of any Superior Mortgage) (after there shall have been first deducted the fees and expenses incurred in connection with the termination, settlement and collection of such award or awards, including but not limited to reasonable counsel fees and expenses, hereinafter referred to as "Settlement Costs") (i) shall not exceed the sum of [$10,000,000] (except to the extent that the Insurance trustee or a Depositary is required to hold such amount pursuant to a Superior Instrument Requirement), the entire amount of such award shall be paid to the Mortgagor; and (ii) if such award is [$10,000,000] or more, the entire amount of such award shall be paid to the Insurance Trustee (or other Depositary required by a Superior Mortgage, provided that such Depositary holds such award in trust for purposes of paying the cost of Restoration). In either event, such awards shall be applied to the cost of demolition, repair, Restoration and replacement of the Trust Estate to as nearly practicable to their uses, value and condition immediately prior to the Taking (except to the extent otherwise provided by Superior Instrument Requirements). The Mortgagor shall promptly commence and with due diligence perform that Restoration in accordance with clauses (3), (4) and (7) of Section 5.11(e) (after substituting the words "Taking" of "Casualty" and "award" for "not insurance proceeds"), at no cost to the Mortgagee. All claims or suits arising out of any Taking may be settled by the Mortgagor, except that the Mortgagee shall have the right (but not the obligation) to participate in such claim or suit, and not the obligation) to participate in such claim or suit, and to approve settlement thereof (and notwithstanding anything in the Ground Leases to the contrary, the Mortgagor shall not agree to any settlement or compromise of the amount of any such claim or suit), except a claim or suit where the amount reasonably anticipated to be received by the Mortgagor is less than $5,000,000. If the Mortgagee at its election as aforesaid joins such claim or suit, the Mortgagee's approval of such settlement shall not be unreasonably withheld. The Insurance Trustee shall promptly pay such sums as are received by it from such Taking from time to time in accordance with the procedures set forth in clauses (5) and (6) of Section 5.11(e) (after substituting the words "Taking" for "Casualty" and "award" for "net insurance proceeds"). (c) If at any time there shall occur a Taking of the whole or substantially all of the Premises, then the award payable to the Mortgagor shall not be applied to Restoration but shall instead be paid and delivered to the Trustee (subject to the rights of the Lessors under the Superior Leases and the holders of any Superior Mortgages) to the extent of the then Outstanding Amount of the Note and any other interest or other sums due hereunder or thereunder to be applied to the satisfaction of this Mortgage to the extent proceeds are available for such purpose and provided that no additional sums are due the Trustee or the Noteholder under the Note or the Indenture, the balance of any award shall be paid to the Mortgagor. (d) Notwithstanding anything contained herein to the contrary, if an Event of Default shall have occurred and is continuing, the Mortgagee may, at its option, (A) refrain from paying to the Mortgagor or the Insurance Trustee any award or (B) instruct the Insurance Trustee to pay to the Mortgagee any award then held by the Insurance Trustee, as the case may be. Section 5.21. GROUND LEASES. (a) The Mortgagor covenants and agrees that it will do or cause to be done all things necessary to preserve and keep unimpaired the rights of the Mortgagor, as lessee under the Ground Lease, and to prevent any termination, surrender, cancellation, forfeiture or impairment thereof. The Mortgagor shall at all times fully perform and comply with all agreements, covenants, terms and conditions imposed upon or assumed by it as lessee under each of the Ground Leases (including without limitation the covenant to pay rent and all taxes, assessments and other charges mentioned therein) prior to the expiration of any notice and/or cure period provided in each such Ground Lease. Upon receipt by the Mortgagee from a Lessor of any written notice of default by the lessee thereunder, Mortgagee may rely thereon and take any action the Mortgagee deems necessary in its sole discretion to prevent or to cure any default by the Mortgagor in the performance of or compliance with any of the agreements, covenants, terms or conditions imposed upon or assumed by the Mortgagor as lessee under each of the Ground Leases, even though the existence of such default or the nature thereof be questioned or denied by the Mortgagor or by any party on behalf of the Mortgagor, provided that if the Mortgagor has theretofore delivered to the Mortgagee the Officers' Certificate, Opinion of Counsel and a copy of the injunction, all as described in Section 3.01(g), the Mortgagee shall not take any such action unless and until the Mortgagor and/or the Mortgagee no longer has the benefit of any tolling or stay referred to in Section 3.01(g). Without limiting the generality of Section 3.09 hereof, the Mortgagor hereby expressly grants to the Mortgagee, and agrees that the Mortgagee shall have, the absolute and immediate right to enter in and upon the Premises or any part thereof to such extent and as often as the Mortgagee, in its sole discretion, deems necessary or desirable for the purpose permitted by the immediately preceding sentence, subject only to applicable Legal Requirements. Subject to the preceding and without limiting the Mortgagee's other remedies under this Mortgage, the Mortgagee may pay and expend such sums of money as the Mortgagee in its sole discretion deems necessary for any such purpose, and the Mortgagor hereby agrees to pay to the Mortgagee, immediately and without demand, all such sums so paid and expended by the Mortgagee, together with interest thereon from the date of each such payment at the highest rate of interest set forth in the Note. All sums so paid and expended by the Mortgagee, and the interest thereon, shall be added to and be secured by the lien of this Mortgage. (b) The Mortgagor further covenants and agrees: (i)it will not surrender any leasehold estate and interest hereinabove described, nor terminate or cancel any Ground Lease, and that it will not without the express written consent of the Mortgagee modify, change, supplement, alter or amend such Ground Leases either orally or in writing and, as further security for the repayment of the indebtedness secured hereby and for the performance of the covenants herein and in such Ground Leases contained, the Mortgagor hereby assigns to the Mortgagee all of its rights, privileges and prerogatives as lessee under such Ground Leases to terminate, cancel, modify, change, supplement, alter or amend such Ground Leases, and any such termination, cancellation, modification, change, supplement, alteration or amendment of such Ground Leases without the prior written consent thereto by Mortgagee shall be void and of no force and effect. Unless (1) an Event of Default has occurred and is continuing and (2) either (A) there has been an acceleration of maturity of the Note pursuant to Section 3.02 hereof or (B) the Mortgagee exercises its rights under Section 3.09 hereof, the Mortgagee shall have no right to terminate, cancel, modify, change, supplement, alter or amend the Ground Leases; (ii) solely for the benefit of the Mortgagee, Trustee, the Noteholders and no other person, no release or forbearance of any of the Mortgagor's obligations under such Ground Leases, pursuant to such Ground Leases or otherwise, shall release the Mortgagor from any of its obligations under this Mortgage, including its obligations with respect to the payment of rent as provided for in such Ground Leases and the performance of all of the terms, provisions, covenants, conditions and agreements contained in such Ground Leases, to be kept, performed and complied with by the lessee therein; (iii) unless the Mortgagee shall otherwise expressly consent in writing, the fee title to the Leased Land, the Mortgagor's interest in the improvements on the Leased Land and the leasehold estates shall not merge by and shall always remain separate and distinct, notwithstanding the union of such estates either in the Lessor or in the lessee, or in a third party by purchase or otherwise; (iv) the Mortgagor shall promptly notify the Mortgagee in writing of any request made by the Mortgagor, as lessee under each of the Ground Leases, or any of the Lessors, for arbitration proceedings pursuant to the Ground Leases and of the institution of any arbitration proceedings, as well as all proceedings thereunder. In addition, the Mortgagor shall promptly deliver to the Mortgagee a copy of the determination of the arbitrators in each such arbitration proceeding. The Mortgagee shall have the right to participate in such arbitration proceedings in association with the Mortgagor or on its own behalf as an interested party in accordance with the terms of the Ground Leases; (v) the Mortgagor shall not consent to the subordination of any Ground Lease to any mortgage deed of trust or other lien of the fee interest of the Lessor; (vi) in the event (A) the Mortgagor exercises its option under any Ground Lease to purchase any portion of the Leased Land, the Mortgagor shall deliver a copy of its election to exercise such option within 5 days after the Mortgagor has delivered notice of such election to the Lessor or (B) the Mortgagor acquires fee simple title or any other estate, title or interest in the Leased Land, the Mortgagor shall promptly notify the Mortgagee of such acquisition and, on written request by the Mortgagee, shall cause to be executed and recorded all such other and further assurances or other instruments in writing as may, in the opinion of the Mortgagee, be required or desirable to carry out the intent and meaning of clause (x) of Granting Clause Second; (vii) within 5 days after the Mortgagor's receipt of any notice of any motion, application or effort to reject the Ground Lease by any Lessor or any trustee arising from or in connection with any case, proceeding or other action commenced or pending by or against any Lessor under the Code or any comparable provision contained in any present or future federal, state, local, foreign or other statute, law, rule or regulation, the Mortgagor shall give notice thereof to the Mortgagee. The Mortgagor hereby (A) assigns to the Mortgagee any and all of the Mortgagor's rights as lessee under Section 365(h) of the Code or any comparable provision contained in any present or future federal, state, local, foreign or other statute, law, rule or regulation ("Comparable Provision") and (B) covenants that it shall not elect to treat any Ground Lease as terminated pursuant to Section 365(h) of the Code or any Comparable Provision without the prior written consent of the Mortgagee and (C) agrees that any such election by the Mortgagor without such consent shall be null and void; (viii) without limiting the generality of the foregoing, the Mortgagor hereby unconditionally assigns, transfers and sets over to the Mortgagee all of the Mortgagor's claims and rights to the payment of damages arising from any rejection by Lessor of any Ground lease under the Code or any Comparable Provision. The Mortgagee shall have the right to proceed in its own name or in the name of the Mortgagor in respect of any claim, suit, action or proceeding relating to the rejection of any Ground Lease, including, without limitation, the right to file and prosecute, in cooperation with the Mortgagor, any proofs of claim, complaints, motions, applications notices and other documents, in any case in respect of Lessor under the Code or any Comparable Provision. This assignment constitutes a present, irrevocable and unconditional assignment of the foregoing claims, rights and remedies, and shall continue in effect until all of the indebtedness and obligations secured by this Mortgage shall have been satisfied and discharged in full. Any amounts received by the Mortgagee in damages arising out of the rejection of any Ground Lease as aforesaid shall be applied first to all reasonable costs and expenses of the Mortgagee (including, without limitation, reasonable attorneys' fees) incurred in connection with the exercise of any of its rights or remedies under this Section 5.21, and thereafter as provided in Section 3.03 hereof; (ix) if there shall be filed by or against the Mortgagor a petition under the Code or any Comparable Provision and the Mortgagor, as lessee under the Ground Leases, shall determine to reject any or all of the Ground Leases the Mortgagor shall give the Mortgagee not less than 10 days' prior notice of the date on which the Mortgagor shall apply to the Bankruptcy Court or other judicial body with appropriate jurisdiction for authority to reject the lease. The Mortgagee shall have the right, but not the obligation, to serve upon the Mortgagor within such 10 day period a notice stating that (a) the Mortgagee demands that the Mortgagor assume and assign such Ground Lease(s) to the Mortgagee pursuant to Section 365 of the Code or any Comparable Provision and (b) the Mortgagee covenants to cure or provide adequate assurance of prompt cure of all defaults and provide adequate assurance of future performance under such Ground Lease(s). If the Mortgagee serves upon the Mortgagor the notice described in the preceding sentence, the Mortgagor shall not seek to reject such Ground Lease(s) and shall comply with the demand provided for in clause (a) of the preceding sentence within 30 days after the notice shall have been given subject to the performance by the Mortgagee of the covenant provided for in clause (b) of the preceding sentence. Effective upon the entry of an order for relief in respect of the Mortgagor under Chapter 7 of the Code or Any Comparable Provision the Mortgagor hereby assigns and transfers to the Mortgagee a non-exclusive right to apply to the Bankruptcy Court or other judicial body with appropriate jurisdiction for an order extending the period during which the Ground Lease may be rejected or assumed; (x) the Mortgagor shall promptly give to the Mortgagee copies of (A) all notices of default or (B) any other communications or notices with respect to events which relate to the possible impairment of the security of this Mortgage, which it shall give or receive under the Ground Leases and shall promptly notify the Mortgagor of any default under any Ground lease on the part of the Lessor or the Mortgagor; (xi) the Mortgagor shall enforce the obligations of the Lessor under each Ground Lease, to the end that the Mortgagor may enjoy all of the rights granted to it under the Ground leases; and (xii) the Mortgagor shall notify the Mortgagee within 5 days after the transfer of a fee interest in the Leased Land or any portion thereof to or from an Affiliate. (c) The Mortgagor hereby represents and warrants that all fixed net rent, taxes and assessments, payable under the Ground Leases have been paid to the extent they were due and payable to the date hereof and that the Mortgagor has not received notice of its failure to pay any other amounts payable under the Ground Leases which have not been cured. (d) If both the Lessor's and lessee's estates under any of the Ground Leases or any portion thereof shall at any time become vested in one owner, this Mortgage and the lien created hereby shall nevertheless not be merged, extinguished, destroyed or terminated by application of the doctrine of merger and, in such event, Mortgagee shall continue to have all of the rights and privileges of the a leasehold mortgagee. (e) The Mortgagor hereby acknowledges that if any Ground Lease shall be terminated prior to the natural expiration of its term due to default by the lessee thereunder, and if pursuant to such Ground Lease, the Mortgagee or its designee shall acquire from the Lessor a new lease of the Leased land or any portion thereof, the Mortgagor shall have no right, title or interest in or to such lease or the leasehold estate created thereby, or the options therein contained. (f) Any leases for parking purposes hereafter entered into by the Mortgagor as lessee shall contain provisions permitting the assignment of the same to the Mortgagee and the Trustee and permitting assignment without the lessor's consent if this Mortgage is foreclosed. Section 5.22. SUPERIOR MORTGAGES. (a) The Mortgagor covenants and agrees that it will at all times fully perform and comply with all agreements, covenants, terms and conditions imposed upon or assumed by it as mortgagor under the Superior Mortgages prior to the expiration of any notice and/or cure period provided in each such Superior Mortgage. If a notice of default has been given by the holder of any Superior Mortgage and the maturity of the indebtedness secured by such Superior Mortgage has been accelerated as a result thereof, the Mortgagee may rely thereon and take any action the Mortgagee deems necessary in its sole discretion to prevent or to cure any default by the Mortgagor in the performance of or compliance with any of the agreements, covenants, terms or conditions imposed upon or assumed by the Mortgagor as mortgagor under each of the Superior Mortgages even though the existence of such default or the nature thereof may be questioned or denied by the Mortgagor or by any party on behalf of the Mortgagor provided that if the Mortgagor has heretofore taken such actions as described in Section 3.01(h), the Mortgagee shall not take any such action unless and until the Mortgagor and/or the Mortgagee no longer has the benefit of any such tolling or stay referred to in Section 3.01(h). Without limiting the generality of Section 3.09 hereof, the Mortgagor hereby expressly grants to the Mortgagee, and agrees that upon such acceleration the Mortgagee shall have, the absolute and immediate right to enter in and upon the Premises or any part thereof to such extent and as often as the Mortgagee, in its sole discretion, deems necessary for the purpose permitted by the immediately preceding sentence, subject only to applicable Legal Requirements. The Mortgagee may (i) pay and expend such sums of money as the Mortgagee in its sole discretion deems necessary for any such purpose and (ii) in its sole discretion prepay any Superior Mortgage, and the Mortgagor hereby agrees to pay to the Mortgagee, immediately and without demand, all such sums referred to in (i) and (ii) above so paid and expended by the Mortgagee, together with interest thereon from the date of each such payment at the rate of interest set forth in the Note. All sums so paid and expended by the Mortgagee and the interest thereon shall be added to and be secured by the lien of this Mortgage. (b) The Mortgagor further covenants and agrees: (i) the Mortgagor shall not, without first obtaining the written consent of the Mortgagee in each instance: (A) modify any of the terms, covenants or conditions of any Superior Mortgage, and without limiting the foregoing, the Mortgagor shall not, without satisfying such conditions, enter into or obtain any agreement whereby the holder of any Superior Mortgage waives, postpones, extends, reduces or modifies the payment of the installment of principal or interest or any other item or amount now required to be paid under the terms of any Superior Mortgage or modifies any other provision thereof, or (B) acquire or permit or suffer any Affiliate of the Mortgagor to acquire any Superior Mortgage or any interest therein. Notwithstanding anything in clause (A) to the contrary, the Mortgagor shall have the right to amend, supplement or modify any Superior Mortgage, if (x) the then outstanding principal balance of the indebtedness secured by such Superior Mortgage is not increased thereby, and (y) in the case of any After-Acquired Fee Mortgage, such amendment, supplement or agreement does not increase the property covered thereby; (ii) the Mortgagor shall timely pay and perform all of the obligations to be paid or performed by the mortgagor under each Superior Mortgage, the note secured thereby and any other instrument evidencing or securing the indebtedness owing to any holder of any Superior Mortgage; (iii) at any time, and from time to time, the Mortgagor shall upon request of the Mortgagee promptly use its reasonable efforts to obtain an estoppel certificate or letter addressed to the Mortgagee from holders of the Superior Mortgages, such certificate or letter to be in such form as the Mortgagee shall request; and (iv) the Mortgagor shall promptly give to the Mortgagee copies of (A) all notices of default or (B) any other notice or communication with respect to events which relate to the possible impairment of the security of this Mortgage, which it shall give or receive under the Superior Mortgages and shall promptly notify the Mortgagor of any default under any Superior Mortgages on the part of the Mortgagor. (c) The lien of this Mortgage in and to all or specified portions of the Trust Estate shall be subject and subordinate to any Existing Encumbrances and any mortgage, assignment, security agreement, financing statement or other lien securing any Working Capital Facility (the "Working Capital Facility Lien") encumbering Mortgagor's interest in the affected portions of the Trust Estate or any part thereof. The foregoing provisions of this Section 5.22(c) shall be self- operative with respect to Existing Encumbrances and shall be self-operative with respect to any Working Capital Facility Lien, and no further instrument shall be required to give effect to such subordination. Mortgagee shall, however, from time to time, execute instruments in form and substance reasonably satisfactory to the holder of the Working Capital Facility Lien, confirming such subordination and agreeing to such other matters reasonably required by the holder of the Working Capital Facility Lien which do not, in the aggregate, materially adversely reduce or impair the rights of Trustee under the Mortgage, and Mortgagor and others may rely conclusively thereon, provided that Mortgagee shall have no liability thereunder and all costs and expenses (including reasonable attorneys' fees) shall be paid by Mortgagor. (d) The lien of the Mortgage in and to all or specified portions of the Trust Estate shall be subject and subordinate to any Existing Encumbrances. The provisions of this Section 5.22(d) shall be self-operative, and no further instrument shall be required to give effect to such subordination. Section 5.23. MORTGAGE PARI PASSU WITH GUARANTY MORTGAGE. Notwithstanding recordation of this Mortgage in the Atlantic County, New Jersey Clerk's Office prior to the recordation of the Guaranty Mortgage, the lien of this Mortgage ranks PARI PASSU with, and not senior to, the lien reated by the Guaranty Mortgage. ARTICLE SIX MISCELLANEOUS Section 6.01. COUNTERPARTS. This instrument may be executed in any number of counterparts, each of which as executed shall be deemed to be an original, but all such counterparts shall constitute one and the same instrument. Section 6.02. MODIFICATION. This Mortgage is subject to "modification" within the meaning of N.J.S.A. 46:9-8.1 et seq., and this Mortgage shall have the benefit of the lien priority provisions of such statute. Such modification may include, without limitation, a change in the interest rate, maturity date or other terms and conditions of this Mortgage. THE MORTGAGOR DECLARES THAT THE MORTGAGOR HAS RECEIVED A TRUE COPY OF THIS MORTGAGE. IN WITNESS WHEREOF, the parties hereto have caused this Mortgage to be duly executed and attested, all as of the day and year first above written. RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation ATTEST:______________________ By:_____________________________ Name: Name: Title: (Asst.) Secretary Title: (Vice) President RESORTS INTERNATIONAL HOTEL FINANCING, INC. ATTEST:______________________ By:_____________________________ Name: Name: Title: (Asst.) Secretary Title: (Vice) President Exhibit E Assignment of Leases and Rents from Resorts International Hotel, Inc. to Resorts International Hotel Financing, Inc. NA932380094 - ASSIGNMENT OF RENTS (RIH SENIOR PROMISSORY NOTE) GD&C DRAFT DATED 10/17/93 =============================================================================== ASSIGNMENT OF LEASES AND RENTS ________________ RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation, as Assignor, TO RESORTS INTERNATIONAL HOTEL FINANCING, INC., a Delaware corporation, as Assignee Dated as of _________________, 1994 ============================================================================== Prepared by:__________________________ D. Eric Remensperger, Esq. ASSIGNMENT OF LEASES AND RENTS THIS ASSIGNMENT made as of the ____ day of ____________, 1994, by RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation, having its principal office at c/o Resorts International, Inc., 1133 Boardwalk, Atlantic City, New Jersey ("ASSIGNOR") to RESORTS INTERNATIONAL HOTEL FINANCING, INC., a Delaware corporation, having its principal office at c/o Resorts International, Inc., 1133 Boardwalk, Atlantic City, New Jersey ("ASSIGNEE"). WITNESSETH: WHEREAS, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in order to secure: (i) the obligations of Assignor under a promissory note dated as of the date hereof made by Assignor to Assignee in the principal amount of $125,000,000 (as the same may be amended or restated from time to time, the "RIH SENIOR PROMISSORY NOTE"), which note is secured by a Mortgage Securing RIH Senior Promissory Note dated as of the date hereof, between Assignor, as mortgagor, and Assignee, as mortgagee (the "MORTGAGE"; capitalized terms used and not otherwise defined herein shall have the meanings ascribed to those terms in the Mortgage); and (ii) the performance and observance of all of the provisions herein contained; NOW, THEREFORE, Assignor has and does hereby bargain, sell, transfer, assign, convey, set over and deliver unto Assignee, for the purposes set forth above (subject, however, to the rights of the holders of Superior Mortgages and other Existing Encumbrances), all leases or occupancy agreements wherein it is lessor concerning or affecting the use or occupancy of the certain real property owned or leased by Assignor, which real property is described on SCHEDULE 1 hereto and which real property, together with all buildings and improvements erected thereon, is hereinafter collectively referred to as the "PROPERTY", or any part thereof, now existing or which may be executed at any time in the future, and all amendments, extensions and renewals of such leases or occupancy agreements, and any of them, all of which are collectively referred to as the "LEASES", all rents and other income which may now or hereafter be or become due or owing under the Leases, and any of them, and any and all payments derived from or relating to the Leases to which Assignor is entitled, including but not limited to (a) claims for the recovery of damages done to the Property, (b) claims for damages resulting from acts of insolvency or acts of bankruptcy or otherwise, and (c) lump sum payments for the cancellation of Leases or the waiver of any obligation or term thereof prior to the expiration date; PROVIDED, HOWEVER, that no Excepted Property is conveyed hereby; it being intended hereby to establish a present and complete transfer unto Assignee of all of Assignor's right, title, interest and estate in and to the Leases and all the rents, payments and other income arising thereunder; PROVIDED, HOWEVER, that Assignor is hereby granted a license by Assignee to (i) collect all of such rents, payments and other income herein assigned which may become due during the life of this Assignment and (ii) enter into, renew, modify, extend, terminate, amend, collectively assign, transfer or hypothecate any or all of the Leases, in accordance with the provisions of Sections 4.04 and 5.13 of the Mortgage, each until an Event of Default under the Mortgage (an "EVENT OF DEFAULT") shall have occurred and be continuing. Upon the occurrence of an Event of Default, Assignor agrees to deposit with Assignee upon demand such of the Leases and the rents payable thereunder as may from time to time be designated by Assignee. Assignor hereby appoints Assignee the true and lawful attorney of Assignor with full power of substitution, and with power for Assignor and in the name of Assignor and/or in its name, place and stead, to demand, collect, receive and give receipts and complete acquittance for any and all other rents and other amounts herein assigned which may be or become due and payable under the Leases, and at its discretion to file any claim or take any other action or proceeding and make any settlement of any claims, either in its own name or in the name of Assignor or otherwise, which Assignee may deem necessary or desirable in order to collect and enforce the payment of any and all rents and other amounts herein assigned. No right shall be exercised by Assignee under this paragraph until an Event of Default has occurred. All lessees under the Leases are hereby expressly authorized and directed, after the occurrence, and during the continuance, of an Event of Default, to pay all rents and other sums herein assigned to Assignee or such nominee as Assignee may designate in writing delivered to and received by such lessees, who thereafter are expressly relieved of any and all duty, liability or obligation to Assignor in respect of all payments so made. Assignee is hereby vested with full power to use all measures, legal and equitable, deemed by it necessary or proper to enforce this Assignment and to collect the rents and other sums assigned hereunder. Assignee shall be under no obligation to exercise any of the rights or to press any of the claims assigned to it hereunder, or to perform or carry out any of the obligations of Assignor under any of the Leases, and does not assume any of the liabilities in connection with or arising or growing out of the covenants and agreements of Assignor in the Leases. It is further 2 understood that this Assignment shall not operate to place responsibility for the control, care, management or repair of Assignor's estates or interests in and to the Property, or parts thereof, upon Assignee, nor shall it operate to make Assignee liable for the carrying out of any of the terms and conditions of any of the Leases, or for any waste to Assignor's estates or interests in and to the Property by any lessee or sublessee of Assignor under any leases, or by any occupant of the Property, or by any party whatsoever or for any dangerous or defective condition of the Property or for any negligence in the management, upkeep, repair or control of Assignor's estates or interests in and to the Property resulting in loss or injury or death to any lessee, licensee, employee or stranger thereat. No right shall be exercised by Assignee under this paragraph until an Event of Default has occurred. Assignee hereby agrees promptly to remit to Assignor any amounts collected hereunder by Assignee which are in excess of those applied to pay in full the aforesaid liabilities and indebtedness at the time due. Nothing herein contained is intended to limit or reduce the rights of Assignee or the obligations of Assignor set forth in the Mortgage, but rather all of the terms, provisions and conditions of this Assignment are in addition to and in supplement of such rights and obligations. If any provision contained in this Assignment is in conflict with, or inconsistent with, any provision in the Mortgage, the provisions contained in the Mortgage shall govern and control. Upon the release of any portion of the Property from the lien of the Mortgage pursuant to Section 2.05 or 2.06 of the Mortgage, this Assignment shall be null and void with respect to those Leases (the "RELEASED LEASES") which cover exclusively the portion of the Property so released (and no other portion of the Property) and all estate, right, title and interest of Assignee in and to the Released Leases shall revert to Assignor, but in all other respects and for all other purposes, this Assignment shall remain in full force and effect. Assignee shall, from time to time, promptly execute any written instrument in form reasonably satisfactory to the proposed purchaser of a portion of the Property as aforesaid to confirm any reversion of Assignee's right, title and interest in the Released Leases effectuated in accordance with this paragraph, upon receipt by Assignee of an Officer's Certificate stating that Assignor is entitled to such reversion by virtue of the Mortgagor's compliance with the provisions of this paragraph and Section 2.05 or 2.06 of the Mortgage (as the case may be), provided that Assignee shall have no liability thereunder and all costs and expenses shall be paid by Assignor. 3 Assignee acknowledges that (i) contemporaneously with the execution and delivery of this Assignment, it has assigned this Assignment to State Street Bank and Trust Company of Connecticut, National Association ("Trustee"), as trustee under an Indenture of even date herewith among Assignor, Assignee and Trustee (the "Indenture"), and (ii) that the Trustee is also the assignee under an Assignment of Leases and Rents dated as of the date hereof from Assignor to Trustee securing the obligations of Assignor in respect of the Guaranty under and as defined in the Indenture (the "Other Assignment"), which assignment creates a lien on the Leases and rents and income due and owing thereunder PARI PASSU with the lien of this Assignment. Assignee further acknowledges and agrees that whenever it is provided in the Other Assignment that the Assignor shall deliver any notice or document, or is require to make any payment thereunder, the delivery of such notice or document or the making of such payment pursuant to the terms of such Other Assignment shall also constitute the delivery of such notice or document or the making of such payment in satisfaction of the terms, conditions and provisions of this Assignment to the same extent as the same constitutes satisfaction of the terms, conditions and provisions of the Other Assignment. Upon the termination of the Mortgage and the payment in full of the obligations secured thereby, this Assignment shall be and become null and void, and all estate, right, title and interest of Assignee in and to the Leases shall revert to Assignor and Assignee shall promptly cancel and discharge of record this Assignment and any financing statement filed in connection herewith and execute and deliver to Assignor all such instruments as may be appropriate to evidence such discharge and satisfaction of this Assignment (provided that Assignee shall have no liability hereunder or thereunder and all costs and expenses shall be paid by Assignor); otherwise, this Assignment shall remain in full force and effect as herein provided, shall inure to the benefit of Assignee and its successors and assigns, and shall be binding upon Assignor and its successors and assigns, and any subsequent holder of Assignor's right, title and interest and estate in and to the Property. This Assignment shall be governed by and construed under the internal laws of the State of New Jersey, without giving effect to the principles of conflicts of laws. This Assignment is subject to and shall be enforced in compliance with the provisions of the New Jersey Casino Control Act. The rights and obligations of the Assignee hereunder are subject to the terms set forth in that certain 4 Intercreditor Agreement dated as of the date hereof among Assignor, Assignee, Fidelity Management and Trust Company, as trustee, Trustee and The Chase Manhattan Bank (National Association), as trustee (and such other parties that may from time to time become a party thereto). IN WITNESS WHEREOF, the parties hereto have caused this Assignment to be duly executed and attested, all as of the day and year first above written. RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation By:_____________________________ Name: Title: (Vice) President ATTEST:_________________________ Name: Title: (Asst.) Secretary RESORTS INTERNATIONAL HOTEL, FINANCING, INC., a Delaware corporation By:_____________________________ Name: Title: (Vice) President ATTEST:_________________________ Name: Title: (Asst.) Secretary 5 STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK ) BE IT REMEMBERED that on ______________, 1994, before me, the subscriber, __________________, personally appeared _____________, who, being by me duly sworn on his oath, deposes and makes proof to my satisfaction, that he is the (Asst.) Secretary of RESORTS INTERNATIONAL HOTEL, INC., the corporation named in the within instrument; that ______________ is the (Vice) President of said corporation; that the execution, as well as the making of this instrument, has been duly authorized by a proper resolution of the board of directors of the said corporation; that deponent well knows the corporate seal of said corporation; and that the seal affixed to said instrument is the proper corporate seal and was thereto affixed and said instrument signed and delivered by said Vice President as and for the voluntary act and deed of said corporation. In presence of deponent who thereupon subscribed his name thereto as attesting witness; and deponent signed this proof to attest to the truth of these facts. _____________________________ [Name] Assistant Secretary Sworn to and subscribed before me, the date aforesaid ____________________________ Notary Public My commission expires:_____________________________ 6 STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK ) BE IT REMEMBERED that on _________________, 1994, before me, the subscriber, __________________, personally appeared ___________________, who being by me duly sworn on his oath, deposes and makes proof to my satisfaction, that he is the Asst. Secretary of RESORTS INTERNATIONAL HOTEL FINANCING, INC., the corporation named in the within instrument; that ____________ is the Vice President of said corporation; that the execution, as well as the making of this instrument, has been duly authorized by a proper resolution of the board of directors of the said corporation; that deponent well knows the corporate seal of said corporation; and that the seal affixed to said instrument is the proper corporate seal and was thereto affixed and said instrument signed and delivered by said Vice President as and for the voluntary act and deed of said corporation. In presence of deponent who thereupon subscribed his name thereto as attesting witness; and deponent signed this proof to attest to the truth of these facts. __________________________ [Name] Secretary Sworn to and subscribed before me, the date aforesaid ____________________________ Notary Public My commission expires:_____________________________ 7 Exhibit F Mortgage Securing Guaranty of Senior Mortgage Notes between Resorts International Hotel, Inc. and State Street Bank and Trust Company of Connecticut, National Association NA932230075 - GUARANTY MORTGAGE SENIOR NOTES GD&C DRAFT DATED 10/18/93 MORTGAGE SECURING GUARANTY OF SENIOR MORTGAGE NOTES by and between RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation, as Mortgagor, and STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION a national banking association, as Mortgagee Dated as of ________ __, 1994 Prepared by:_______________________ D. Eric Remensperger After recording return to: Gibson, Dunn & Crutcher 200 Park Avenue New York, New York 10166 Attention: D. Eric Remensperger MORTGAGE SECURING GUARANTY OF SENIOR MORTGAGE NOTES ------------------------ THIS MORTGAGE, dated as of ________ ___, 1994, between RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation ("Mortgagor"), and STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, a national banking association having an address at 750 Main Street, Suite 1114 Hartford, Connecticut 06103 ("Mortgagee"), in its capacity as Trustee under that certain Indenture dated as of even date herewith (the "Indenture") among Mortgagor, Mortgagee and Resorts International Hotel Financing, Inc. ("RIHF"). WITNESSETH: In consideration of $10.00 in hand paid by Mortgagee to Mortgagor and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in order to secure (i) the Guaranty by Mortgagor of the payments of principal and interest due on the 11% Senior Mortgage Notes due 2003 in an aggregate principal amount of $125,000,000, issued pursuant to the provisions of the Indenture (defined therein, and hereinafter collectively referred to herein, as the "Notes"), in accordance with the terms and conditions of Article Fourth of the Indenture; and performance and observance of all of the provisions herein contained, Mortgagor has executed and delivered this Mortgage and has bargained, sold, aliened, mortgaged, pledged, released, conveyed and confirmed unto Mortgagee and its successors hereunder and assigns forever, all of its right, title and interest in, to and under any of the following described property: GRANTING CLAUSES GRANTING CLAUSE FIRST All the property, rights, title, interest, privileges and franchises particularly described in annexed Schedule 1 (the "Owned Land") which Schedule is hereby made a part of, and deemed to be described in, this Granting Clause as fully as if set forth in this Granting Clause at length. GRANTING CLAUSE SECOND All of the property, rights, title, interest, privileges and franchises of the Mortgagor as lessee in those certain leases (the "Ground Leases") particularly described in Schedule 2, which Schedule is hereby made a part of, and deemed to be described in, this Granting Clause as fully as if set forth in this Granting Clause at length, which Ground Leases cover the real property described in Schedule 2 (the "Leased Land") and in and to any and all modifications, extensions and renewals of the Ground Leases and all options set forth therein, together with (i) all credits, deposits, privileges and rights of the Mortgagor as lessee under the Ground Leases, now or at any time existing, (ii) the leaseholds and the leasehold estates created by the Ground Leases and (iii) all of the estates, rights, titles, claims or demands whatsoever of Mortgagor, either in law or in equity, in possession or in expectancy, of, in and to the Ground Leases and the Leased Land, together with (x) any and all other, further or additional title, estates, interests or rights which may at anytime be acquired by the Mortgagor in or to the Leased Land, and the Mortgagor expressly agrees that if the Mortgagor shall, at any time prior to payment in full of all indebtedness secured hereby, acquire fee simple title or any other greater estate to the Leased Land pursuant to the Ground Leases, or otherwise, the lien of this Mortgage shall attach, extend to, cover and be a lien upon such fee simple title or other greater estate and thereupon the lien of this Mortgage shall be prior to the lien of any mortgage or deed of trust placed on such acquired title, estate, interest or right subsequent to the date of this Mortgage and (y) any right to possession or statutory term of years derived from, or incident to, the Ground Leases pursuant to Section 365(h) of the U.S. Bankruptcy Code (the "Code") or any comparable provision contained in any present or future federal, state, local, foreign or other statute, law, rule or regulation. GRANTING CLAUSE THIRD All the rents, issues, profits, revenues and other income and proceeds of the property subjected or required to be subjected to the lien of this Mortgage, including, without limitation, the property described in Granting Clauses First, Second, and Sixth (such property is hereinafter collectively referred to as the "Premises") and all the estate, right, title and interest of every nature whatsoever of the Mortgagor in and to the same and every part thereof. The collective metes and bounds description of the Owned Land and the Leased Land is set forth in annexed Schedule 3. 2 GRANTING CLAUSE FOURTH All of the rights as lessor under Leases in effect on the date of execution of this Mortgage or hereafter entered into by the Mortgagor, if any, including extensions, renewals or amendments of all of the same, and the immediate and continuing right as security in accordance with an Assignment of Leases and Rents of even date herewith between Mortgagor and Mortgagee, and, after the occurrence of an Event of Default, to make claim for, collect, receive and receipt for (and to apply the same as provided herein) any and all rents, income, revenues, issues, profits, security and other sums of money payable or receivable thereunder or pursuant thereto, and all proceeds thereof, whether payable as rent, insurance proceeds, condemnation awards, security or otherwise and whether payable prior to or subsequent to the maturity date of the Notes, to receive and give notices and consents thereunder, to bring actions and proceedings thereunder or for the enforcement thereof, to make waivers and agreements, to take such action upon the happening of a default under any Lease, including the commencement, conduct and consummation of any proceedings at law or in equity as shall be permitted by any provision of any Lease, and to do any and all things which the Mortgagor or any lessor is or may become entitled to do under the Leases; provided, that the assignment made by this granting Clause Fourth shall not impair or diminish any obligation of the Mortgagor under the Leases, or shall any such obligation be imposed upon the Mortgagee. GRANTING CLAUSE FIFTH Without limiting the generality of the provisions of Granting Clause Third, the Mortgagor's rights, privileges and franchises in and to the following, to the extent of the Mortgagor's interest therein and thereto and to the extent assignable (collectively, "Operating Assets"): (a) bookings and receipts for the use of guest rooms, banquet facilities and meeting rooms at the Casino-Hotel; (b) all contracts respecting utility services for, and the maintenance, operations, or equipping of the Premises, including guaranties and warranties relating thereto; (c) the Permits; (d) all contract rights, leases, concessions, trademarks, trade names, service marks, service names, logos, copyrights, warranties and other items of 3 intangible personal property relating to the ownership or operation of the Casino-Hotel, including, without limitation, (1) telephone and other communication numbers, (2) all software licensing agreements as are required to operate computer software systems at the Casino-Hotel, all transferable proprietary interest in software required to operate the computer systems at the Casino Hotel and books and records relating to the software programs, and (3) lessee's interest under leases of Tangible Personal Property; (e) all agreements entered into by or on behalf of the Mortgagor or which have been assigned to the Mortgagor, for the design and construction, and for the equipping and furnishing, of the Casino-Hotel, including architect's agreements, engineering agreements, construction contracts, consulting agreements and agreements or purchase orders for all items of Tangible Personal Property and payment and performance bonds in favor of the Mortgagor in connection with the Trust Estate (and all warranties and guaranties thereunder and warranties and guaranties of any subcontractor and bond issued in connection with the work to be performed by any subcontractor); (f) the following personal property (the "Tangible Personal Property") now or hereafter acquired by the Mortgagor: (i) all furniture, furnishings, equipment, machinery, apparatus, appliances, fixtures and fittings and other articles of tangible personal property which are, or are to be located on, or used in connection with the operation of, the Casino-Hotel; (ii) all slot machines, electronic gaming devices, crap tables, blackjack tables, roulette tables, baccarat tables, and big six wheels, located or to be located in the Casino-Hotel, and all furnishings and equipment to be used in connection with the operation thereof; (iii) all cards, dice, gaming chips and placques, tokens, chip racks, dealing shoes, dice cups, dice sticks, layouts, paddles, roulette balls and other consumable supplies and items to be used in connection with the gaming operations of the Casino-Hotel; (iv) all china, glassware, linens, kitchen utensils, silverware and uniforms, whether 4 in use or held in reserve storage for future use, in connection with the operation of the Casino-Hotel, which are on hand or on order whether stored on-site or off-site; (v) all consumables and operating supplies of every kind and nature for use in all of the operating departments of the Casino-Hotel, or in the improvements now or hereafter located on any of the Owned Land, including without limitation, accounting supplies, guest supplies, forms, printing, stationery, food and beverage stock, bar supplies, laundry supplies and brochures to existing purchase orders; (vi) all sets and scenery, costumes, props and other items of tangible personal property on hand or on order for use in the production of shows in the showroom of the Casino-Hotel; and (vii) all cars, limousines, vans, buses, trucks and other vehicles owned or leased by the Mortgagor for use in Casino-Hotel operations, together with all equipment, parts and supplies used to service, repair, maintain and equip the foregoing; (g) all drawings, designs, plans and specifications prepared by the architects, interior designers, landscape designers and any other consultants for the development of the Premises, as amended from time to time; (h) any administrative and judicial proceedings initiated by the Mortgagor, or in which the Mortgagor has intervened, concerning the Casino-Hotel, and agreements, if any, which are the subject matter of such proceedings; (i) any customer lists utilized by the Mortgagor, including lists of transient guests and restaurant and bar patrons and "high roller" lists; and (j) all of the goodwill in connection with the operation of the Premises. The Mortgagor and Mortgagee acknowledge that notwithstanding anything contained in this Mortgage to the contrary, the Mortgagor may share facilities, operations and employees with any other hotel owned by any Affiliate of the Mortgagor provided that (i) such sharing of facilities is permitted by all applicable Legal Requirements, (ii) terms on 5 which such facilities are shared are not detrimental to the operations of the Casino-Hotel or the financial condition of the Mortgagor and (iii) the regular operation of the Casino-Hotel would not be materially impaired upon the separation of such facilities. The assignment made by this Granting Clause Fifth shall not impair or diminish any obligation of the Mortgagor with respect to the Operating Assets, nor shall any such obligation be imposed on the Mortgagee. GRANTING CLAUSE SIXTH (a) All of the Mortgagor's right, title and interest in and to all buildings and improvements of every kind and description now or hereafter erected or placed on the Owned Land and/or the Leased Land and all fixtures and articles of personal property now or hereafter attached to or contained in and used in connection with such buildings and improvements, including, but not limited to, all apparatus, furniture, furnishings, machinery, motors, elevators, fittings, radiators, cooking ranges, ice boxes, ice machines, printing presses, mirrors, bars, mechanical refrigerators, furnaces, coal and oil-burning apparatus, wall cabinets, machinery, generators, partitions, steam and hot water boilers, lighting and power plants, pipes, plumbing, radiators, sinks, bath tubs, water closets, gas and electrical fixtures, awnings, shades, screens, blinds, dishwashers, freezers, vacuum cleaning systems, office equipment and other furnishings, and all plumbing, heating, lighting, cooking, laundry, ventilating, incinerating, air-conditioning and sprinkler equipment or other fire prevention or extinguishing apparatus and material, and fixtures and appurtenances thereto; and all renewals or replacements thereof or articles in substitution therefor, whether or not the same are or shall be attached to the Owned Land, the Leased Land or to any such buildings and improvements thereon, in any manner, and to the extent the grant of a security interest in any portion of the Trust Estate is governed by the Uniform Commercial Code, this Mortgage is hereby deemed to be as well a security agreement under the Uniform Commercial Code for the purpose of creating hereby a security interest in all of the Mortgagor's right, title and interest in and to such property, securing the obligations secured hereby, for the benefit of the Mortgagee; and (b) All of the Mortgagor's right, title and interest in and to (i) the Leased Land, if the Mortgagor acquires the fee simple title to the Leased Land or any part thereof (subject to the provisions Section 2.06 hereof), (ii) all air rights and rights to maintain supporting columns 6 and all rights to construct and maintain bridges, and to create private rights of way over streets now or hereafter owned or enjoyed by the Mortgagor and appurtenant to the Owned Land or Leased Land, and (iii) all right, title and interest of Mortgagor as grantee or licensee in and to the following to the extent necessary for the use and enjoyment of the Owned Land or the Leased Land: (A) all those plots, pieces or parcels of land and air rights, more particularly described on Schedule 5, attached hereto and made a part hereof (the "Bridge Easement Parcels"), with respect to which Mortgagor has easements, licenses or other rights of possession or use pursuant to these certain easement and license agreements more particularly described on Schedule 5 (the "Bridge Easements"), (B) all those plots, pieces or parcels of land and air rights, more particularly described on Schedule 6 attached hereto and made a part hereof (the "Elevator Easement Parcels"), with respect to which Mortgagor has easements, licenses or other rights of possession or use pursuant to those certain license agreements more particularly described on Schedule 6 (the "Elevator Easements"), and; (C) all that plot, piece or parcel of land and air rights more particularly described on Schedule 7 attached hereto and made a part hereof (the "Turn-Around Easement Parcel") with respect to which Mortgagor has easements, licenses, or other rights of possession or use pursuant to that certain easement more particularly described on Schedule 7 (the "Turn-Around Easement"), (the Bridge Easement Parcels, the Elevator Easement Parcels and the Turn-Around Easement Parcel are collectively referred to herein as the "Easement Parcels"; and the Bridge Easements, the Elevator Easements and the Turn-Around Easement are collectively referred to as the "Easements"), together with all rights of way, privileges, liberties, tenements, hereditaments and appurtenances belonging or in any way appertaining to such estates, it being the intention hereof that all property, interests, rights and privileges and franchises pertaining to the Premises (other than Excepted Property) shall be as fully embraced within and subjected to the lien hereof as if such property were specifically described herein. * * * TOGETHER with all of the Mortgagor's right, title and interest in and to all mineral and water rights and any title or reversion, in and to the beds of the ways, streets, avenues and alleys adjoining the Premises to the center line thereof and in and to all strips, gaps and gores adjoining the premises on all sides thereof; and TOGETHER with all of the Mortgagor's right, title and interest to and singular the tenements, hereditaments, easements, appurtenances, passages, water courses, riparian rights, other rights, liberties and privileges thereof or in 7 any way appertaining to the Premises, including any other claim at law or in equity as well as any after-acquired title, franchise or license and the reversion and reversions and remainder and remainders thereof; and TOGETHER with all awards and other compensation heretofore or hereafter to be made to the present and all subsequent owners of the Trust Estate for any taking by eminent domain, either permanent or temporary, of all or any part of the Trust Estate or any easement or appurtenances thereof, including severance and consequential damage and change in grade of streets, all in accordance with and subject to the provisions of the Superior Instrument Requirements and Section 5.20; and TOGETHER with all proceeds of any unearned premiums on any insurance policies described in Section 5.11, and the right to receive and apply the proceeds of any insurance, judgments, or settlements made in lieu thereof, for damage to the Trust Estate or otherwise, all in accordance with and subject to the provisions of Section 5.11 and the Superior Instrument Requirements. EXCLUDING, with respect to all of the hereinabove granted property, rights, title, interest, privileges and franchises, the Excepted Property. TO HAVE AND TO HOLD all the Premises, Leases, Ground Leases, Operating Assets, Easements, properties, options, credits, deposits, rights, privileges and franchises of every kind and description, real, personal or mixed, granted hereby, bargained, sold, aliened, assigned, transferred, hypothecated, pledged, released, conveyed, mortgaged, or confirmed as aforesaid, or intended, agreed or covenanted so to be, together with all the appurtenances thereto appertaining (the Premises, Leases, Ground Leases, Operating Assets, Easements, properties, options, credits, deposits, rights, privileges and franchises, being herein collectively called the "Trust Estate") unto the Mortgagee and its successors and assigns forever. SUBJECT, HOWEVER, on the date hereof, to Existing Encumbrances and, after the date hereof, to Permitted Encumbrances. SUBJECT, FURTHER, to the rights and obligations of the Mortgagee and the Noteholder as set forth in that certain Intercreditor Agreement dated as of the date hereof among RIH, RIHF, Mortgagee, Fidelity Management and Trust Company ("Fidelity"), as trustee under that certain note purchase agreement dated as of the date hereof among Fidelity, RIH and RIHF, and 8 U.S. Trust Company of California, N.A. ("U.S. Trust"), as trustee under that certain indenture dated as of the date hereof among U.S. Trust, RIH and RIHF (and such other parties that may from time to time become a party thereto). BUT IN TRUST, NEVERTHELESS, for the Ratable Benefit and security of the Noteholders without any priority of any of the Notes over any other of the Notes. UPON CONDITION that, until the happening of an Event of Default and subject to the provisions of Article Two, the Mortgagor shall be permitted to possess and use the Trust Estate, and to receive and use the rents, issues, profits, revenues and other income of the Trust Estate. AND IT IS HEREBY COVENANTED AND DECLARED that the Trust Estate is to be held and applied by the Mortgagee, subject to the further covenants, conditions and trusts hereinafter set forth, and the Mortgagor does hereby covenant and agree to and with the Mortgagee, for the Ratable Benefit of the Noteholders as follows: ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION Section 1.01. DEFINITIONS. For all purposes of this Mortgage, except as otherwise expressly provided or unless the context otherwise requires: (a) the terms defined in this Article One have the meanings assigned to them in this Article One and include the plural as well as the singular; (b) all accounting terms not otherwise defined herein have the meanings assigned to them, and all computations herein provided for shall be made in accordance with generally accepted accounting principles consistently applied; and (c) the words "herein," "hereof" and "hereunder" and other words of similar import refer to this Mortgage as a whole and not to any particular Article, Section or other subdivision. "AFFILIATE" has the meaning set forth in Section 1.01 of the Indenture. 9 "AFTER-ACQUIRED FEE MORTGAGE" has the meaning set forth in Section 2.07. "ALTERATIONS" has the meaning set forth in Section 5.12. "APPRAISER" means an MAI appraiser (I.E., a Member in good standing of the American Institute of Real Estate Appraisers) who is (i) of recognized standing among appraisers of properties similar to the Casino-Hotel and (ii) experienced in the appraisals of properties of a similar size and scope to that of the Casino-Hotel, selected by the Mortgagor. "ASSIGNMENT OF LEASES AND RENTS" has the meaning stated in Section 1.01 of the Indenture. "CAPITALIZED LEASE OBLIGATION" has the meaning stated in Section 1.01 of the Indenture. "CASINO" means that portion of the Casino-Hotel used for gaming and related activities. "CASINO-HOTEL" means the casino and hotel complex and ancillary structures and facilities located on the Premises and furniture, fixtures and equipment at any time contained therein. "CASUALTY" means any act or occurrence of any kind or nature which results in damage, loss or destruction to any buildings or improvements on the Premises and/or Tangible Personal Property. "CODE" has the meaning stated in Granting Clause Second. "COMBINATION TRANSACTION" has the meaning stated in Section 10.01 of the Indenture. "DEFAULT" means the occurrence and continuance of an Event of Default or an event which, after notice or lapse of time or both, would become an Event of Default. "DEPOSITARY" means an Independent entity to which insurance proceeds or a condemnation award is paid to be held in trust for restoration pursuant to the provisions of a Ground Lease or Superior Mortgage. "EVENT OF DEFAULT" has the meaning stated in Section 3.01. An Event of Default shall "exist" if an Event of Default shall have occurred and be continuing. "EXCEPTED PROPERTY" means: 10 (1) subject to the provisions of the Assignment of Leases and Rents, any cash held by the Mortgagor from rents, issues, profits, revenues and other proceeds of the Trust Estate to the extent that such cash may be, but has not been, distributed or paid out in accordance with the Services Agreement or in accordance with the provisions of Section 12.07 the Indenture; (2) all personal property owned by lessees under Leases and the personal property of any guests staying in the Hotel; (3) any property deemed to be Excepted Property pursuant to the provisions of Section 2.03 hereof; (4) Tangible Personal Property subject to an FF&E Financing Agreement; and (5) counterchecks and any other property the granting of a security interest in which is prohibited by the New Jersey Casino Control Act, N.J.S.A. 5:12-1 ET SEQ., and the regulations promulgated thereunder. "EXISTING ENCUMBRANCES" means the matters set forth in Schedule 8. "FIRST MORTGAGE DEBT" means any financing secured by a Superior Mortgage secured by or imposing a lien on all or a portion of the Trust Estate on a parity with or senior to the lien of this Mortgage. "FF&E FINANCING AGREEMENT" means a purchase money lien upon any Tangible Personal Property and other items constituting Operating Assets, such as computer software, which are financed, purchased or leased by the Mortgagor, provided that, except as set forth on Schedule 3, the principal amount of the indebtedness secured by such lien shall not exceed eighty-five (85%) percent of the cost to the Mortgagor of such property at the time of acquisition. "GROUND LEASES" has the meaning stated in Granting Clause Second. "GUARANTY" has the meaning set forth in Article Fourteen of the Indenture. "HOTEL" means that portion of the Casino-Hotel not included within the Casino. "IMPOSITIONS" has the meaning stated in Section 5.08. 11 "INDENTURE" means that certain Indenture - 11% Senior Mortgage Notes due 2003, dated as of even date herewith among the Mortgagor, RIHF, as issuer, and Mortgagee, as trustee, as it may from time to time be supplemented, modified or amended by one or more trust indentures or other instruments supplemental thereto entered into pursuant to the applicable provisions thereof. "INDEPENDENT" when used with respect to any specified Person means such a Person who (a) is in fact independent, (b) does not have any direct financial interest or any material indirect financial interest in the Mortgagor or in any other obligor upon the Notes or in any Affiliate of the Mortgagor or of such other obligor and (c) is not connected with the Mortgagor or such other obligor or any Affiliate of the Mortgagor or such other obligor as an officer, employee, promoter, underwriter, trustee, partner, director or person performing similar functions. Whenever it is herein provided that any Independent Person's opinion or certificate shall be furnished to the Mortgagee, such opinion or certificate shall state that the signer has read this definition and that the signer is Independent within the meaning thereof. A Person who is performing or who has performed services as an independent contractor to any specified Person shall not be considered not Independent merely by reason of the fact that such Person is or has performed such services. "INSURANCE AMOUNT" has the meaning stated in Section 5.11(a)(1). "INSURANCE REQUIREMENTS" means all terms of any insurance policy covering or applicable to the Trust Estate or any part thereof, all requirements of the issuer of any such policy, and all orders, rules, regulations and other requirements of the National Board of Fire Underwriters (or any other body exercising similar functions) applicable to or affecting the Trust Estate or any part thereof or any use or condition of the Trust Estate or any other part thereof. "INSURANCE TRUSTEE" means the Trustee or, if the Trustee so elects, any bank, trust company or insurance company with net worth in excess of $100,000,000, designated by the Trustee. "INSURER" means an insurance company or companies selected by the Mortgagor authorized to issue insurance in the State of New Jersey with an A.M. Best rating as high or higher than the rating of insurance companies insuring other casino-hotels in Atlantic City, New Jersey. 12 "LEASE" means each lease or sublease demising all or any portion of the Owned Land, the Leased Land or the buildings or improvements thereon and made by the Mortgagor as lessor or sublessor, as the case may be, or any spaces in any building or buildings which constitute a part of the Trust Estate, including every agreement relating thereto or entered into in connection therewith and every guaranty of the performance and observance of the covenants, conditions and agreements to be performed by the lessee under any such lease. Notwithstanding the foregoing, the term "Lease" shall not include any transient room rentals. "LEASED LAND" has the meaning stated in Granting Clause Second. "LEGAL REQUIREMENTS" means all laws, statutes, codes, acts, ordinances, orders, judgments, decrees, injunctions, rules, regulations, permits, licenses, authorizations, directions and requirements (including, without limitation, the New Jersey Environment Cleanup Responsibility Act and the New Jersey Spill Compensation and Control Act of 1976) of all governments, departments, commissions, boards, courts, authorities, agencies, officials and officers, of governments, federal, state and municipal (including, without limitation, the New Jersey Department of Environmental Protection, the Atlantic City Bureau of Investigations, Division of Protection, the Atlantic City Bureau of Investigations, Division of Gaming Enforcement of the State of New Jersey, and the Casino Control Commission of the State of New Jersey), foreseen or unforeseen, ordinary or extraordinary, which now is or at any time hereafter becomes applicable to the Trust Estate or any part thereof, or any of the adjoining sidewalks, or the use of the Casino-Hotel as a gaming or gambling facility or any other use or condition of the Trust Estate or any part thereof. "LESSORS" means the lessors under the Ground Leases. "MATURITY" when used with respect to the Notes means the date on which the principal of such Notes becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration or prepayment or otherwise. "MORTGAGE DOCUMENTS" has the meaning set forth in Section 1.01 of the Indenture. "MORTGAGOR" means the Person named as the "Mortgagor" in the first paragraph of this instrument until a successor entity shall have become such pursuant to the applicable provisions of this Mortgage, and thereafter, except 13 to the extent otherwise contemplated by Section 4.02, "Mortgagor" shall mean such successor entity exclusively. "NOTEHOLDERS" has the meaning set forth in Section 1.01 of the Indenture. "NOTE MORTGAGE" means that certain Mortgage Securing RIH Senior Promissory Note dated as of the date hereof from Mortgagor to RIHF, which secures the RIH Senior Promissory Note (as defined in the Indenture), the lien of which shall be PARI PASSU with the lien of this Mortgage. "NOTES" has the meaning set forth in the Preamble. "NOTICES" has the meaning stated in Section 1.02. "OFFICERS' CERTIFICATE" means a certificate signed by an officer of the Mortgagor and delivered to the Mortgagee. Whenever this Mortgage requires that an Officers' Certificate be signed also by an Architect or an Accountant or other expert, such Architect, Accountant or other expert may (except as otherwise expressly provided in this Mortgage) be in the general employ of the Mortgagor. "OPERATING ASSETS" has the meaning stated in Granting Clause Fifth. "OPINION OF COUNSEL" means a written opinion of counsel who may (except as otherwise expressly provided in this Mortgage) be an employee of the Mortgagor or an employee of an Affiliate of the Mortgagor. Unless otherwise specifically provided in this Mortgage, such counsel may rely, as to any state of facts not personally known to such counsel and relating to such opinions, on an Officers' Certificate to the extent not rejected by the Trustee and its counsel (which rejection shall not be unreasonably given). "ORIGINAL POLICY" means an ALTA Loan Policies of Title issued by [list title insurance companies], pursuant to Title Commitment No. ____________ redated to the date hereof. "OUTSTANDING AMOUNT" has the meaning stated in Section 1.01 of the Indenture. "OWNED LAND" has the meaning stated in Granting Clause First. "PERMITS" means all licenses, franchises, statements of compliance, certificates of operation, certificates of occupancy and permits required for the lawful ownership, occupancy, operation and use of all or a material portion of the Premises whether held by the Mortgagor or any other Person 14 (which may be temporary or permanent) (including, without limitation, those required for the use of the Casino-Hotel as a licensed casino facility), in accordance with all applicable Legal Requirements. "PERMITTED ENCUMBRANCES" means: (1) liens for taxes, assessments, or governmental charges not yet due and payable or if due and payable are not delinquent to the extent that any fine, penalty, interest or cost may be added for nonpayment thereof; (2) Existing Encumbrances; (3) FF&E Financing Agreements; (4) After-Acquired Fee Mortgages; (5) the lien of the Mortgage Documents and any rights granted as provided therein; (6) Restricted Encumbrances; (7) the lien of the Trustee provided for by Section 8.07 of the Indenture; (8) any Working Capital Facility Lien; and (9) Capitalized Lease Obligations. "PERSON" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or any other entity or government or any agency or political subdivision thereof. "PREMISES" has the meaning set forth in Granting Clause Third. "RATABLE BENEFIT" has the meaning stated in Section 1.01 of the Indenture. "RELEASED LAND" has the meaning stated in Section 2.05. "RELEASED FEE LAND" has the meaning stated in Section 2.06. "RESTORATION" has the meaning stated in Section 5.11(e). "RESTRICTED ENCUMBRANCES" means Leases permitted by and made in accordance with Section 5.13 of this Mortgage. 15 "RIHF" shall mean Resorts International Hotel Financing, Inc., a Delaware corporation. "SERVICES AGREEMENT" has the meaning set forth in Section 1.01 of the Indenture. "STATED MATURITY" when used with respect to a note means the date specified in such note as the fixed date on which the principal of such note is due and payable. "SUPERIOR INSTRUMENT REQUIREMENTS" means the applicable terms, conditions and provisions of (i) the Ground Leases with respect to the Leased Land; and (ii) Superior Mortgages with respect to the portion of the Trust Estate encumbered thereby. "SUPERIOR MORTGAGES" means, collectively, any Working Capital Facility Lien and any After-Acquired Fee Mortgages. "TAKING" means the acquisition or condemnation by eminent domain of the whole or any part of the Premises, by a competent authority, for any public or quasi-public use or purpose. "TANGIBLE PERSONAL PROPERTY" has the meaning stated in Granting Clause Fifth. "TRUSTEE" means the Person named as the "Trustee" in the first paragraph of the Indenture and any successor thereto. "TRUST ESTATE" has the meaning stated in the habendum to the Granting Clauses. "TRUST INDENTURE ACT" has the meaning stated in Section 1.01 of the Indenture. "WORKING CAPITAL FACILITY" has the meaning stated in Section 1.01 of the Indenture. "WORKING CAPITAL FACILITY LIEN" has the meaning stated in Section 5.22(c) of this Mortgage. Section 1.02. NOTICES, ETC. (a) Any request, demand, authorization, direction, notice (including, without limitation, a notice of default), consent, waiver or other document provided or permitted by this Mortgage to be made upon, given or furnished to, or filed with, the Mortgagor or the Mortgagee (collectively, "Notices") shall be deemed given when either (i) delivered by hand or 16 (ii) two days after sending by registered or certified mail, postage prepaid, addressed as follows: To the Mortgagor: Resorts International Hotel, Inc. c/o Resorts International, Inc. 1133 Boardwalk Atlantic City, New Jersey 08401 Attention: Christopher D. Whitney If to Mortgagee: State Street Bank and Trust Company of Connecticut, National Association [Address] [City, State] Attention: ________________ (b) By Notice to the Mortgagor, the Mortgagee and the Trustee, any party may designate additional or substitute address for Notices which, notwithstanding Subsection (a) above, shall be deemed given when received. Section 1.03. FORM AND CONTENT OF DOCUMENTS DELIVERED TO MORTGAGEE. Whenever 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 such matters in one or several documents. Any certificate or opinion of an Officer of the Mortgagor may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such Officer knows that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any 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 Mortgagor stating that the information with respect to such factual matters is in the possession of the Mortgagor, unless such counsel knows that the certificate or opinion or representations with respect to such matters are erroneous. If appropriate to the matter being opined upon and to the extent not prohibited by the Trust Indenture Act, any Opinion of Counsel may be subject to rights of creditors and the availability of equitable remedies. 17 Whenever any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Mortgage, they may, but need not, be consolidated and form one instrument. Whenever in this Mortgage, in connection with any application or certificate or report to the Mortgagee, it is provided that the Mortgagor shall deliver any document as a condition of the granting of such application, or as evidence of the Mortgagor's compliance with any term hereof, it is intended that the truth and accuracy, at the time of the granting of such application or at the effective date of such certificate or report (as the case may be), of the facts and opinions stated in such document shall in such case be conditions precedent to the right of the Mortgagor to have such application granted or to the sufficiency of such certificate or report. Section 1.04. COMPLIANCE CERTIFICATES AND OPINIONS. Upon any application or request by the Mortgagor to the Mortgagee to take any action under any provision of this Mortgage, the Mortgagor shall furnish to the Mortgagee an Officers' Certificate stating that all conditions precedent, if any, provided for in this Mortgage 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 Mortgage 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 Mortgage shall include: (a) a statement that each individual signing such certificate or opinion has read such condition or covenant and the definitions herein relating thereto; (b) 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; (c) 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 condition or covenant has been complied with; and 18 (d) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. Section 1.05. EFFECT OF HEADINGS. The Article and Section headings herein are for convenience only and shall not affect the construction hereof. Section 1.06. SUCCESSORS AND ASSIGNS; AMENDMENTS. (a) Subject to Section 4.02 hereof and Section 10.02 of the Indenture, this Mortgage shall be binding upon and inure to the benefit of the parties hereto and of the respective successors and assigns of the parties hereto to the same effect as if each such successor or assign were in each case named as a party to this Mortgage. (b) This Mortgage may not be modified, amended, discharged, released nor any of its provisions waived except by agreement in writing executed by the Mortgagor and the Mortgagee and in accordance with the provisions of this Mortgage and the Indenture. Section 1.07. SEPARABILITY CLAUSE. In case any provision in this Mortgage 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 1.08. BENEFITS OF MORTGAGE. Nothing in this Mortgage or in the Guaranty, express or implied, shall give to any Person, other than the parties hereto and their successors and assigns, any benefit or any legal or equitable right, remedy or claim under this Mortgage. Section 1.09. GOVERNING LAW. This Mortgage shall be deemed to be a contract under the laws of the State of New Jersey and shall be construed in accordance with and governed by the laws of the State of New Jersey. Section 1.10. [Reserved] Section 1.11. PROVISIONS REQUIRED BY INDENTURE. Whenever the provisions of this Mortgage and the provisions of the Indenture shall be inconsistent, the provisions of the Indenture shall govern. Section 1.12. [Reserved] Section 1.13. MORTGAGE SUBJECT TO THE PROVISIONS OF THE ACT. Each provision of this Mortgage is 19 subject to and shall be enforced in compliance with the provisions of the New Jersey Casino Control Act. Section 1.14. DISCHARGE OF LIEN. If the Mortgagor shall pay or cause to be paid, or there shall otherwise be paid, to the Mortgagee all amounts required to be paid by the Mortgagor pursuant to the Guaranty, or the Note Mortgage and the Notes, and the conditions precedent for the Indenture to cease, determine and become null and void in accordance with Section 5.01 of the Indenture shall have occurred, the Mortgagee shall promptly cancel and discharge this Mortgage, and execute and deliver to the Mortgagor all such instruments as may be necessary, required or appropriate to evidence such discharge and satisfaction of such lien or liens. Section 1.15. GENERAL APPLICATION. (a) The assertion of any rights upon any Default shall be subject in each instance to the giving of any notice and the expiration of any grace period provided for in Section 3.01 as a condition to such Default making it an Event of Default, unless the Trust Indenture Act requires otherwise, in which case the Trust Indenture Act shall control. (b) For the purposes of this Mortgage, it is understood that an event which does not materially diminish the value of the Mortgagee's interest in the Trust Estate shall not be deemed an "impairment of security", as that phrase is used in this Mortgage. ARTICLE TWO RELEASE; OTHER EXCEPTED PROPERTY; SUBORDINATION Section 2.01. POSSESSION BY MORTGAGOR; DISPOSITIONS WITHOUT RELEASE. So long as there shall have been no demand for payment under the Guaranty pursuant to Section 3.02 of this Mortgage, the Mortgagor shall be suffered and permitted, with power freely and without let or hindrance on the part of the Mortgagee, subject to the provisions of this Mortgage and the Note Mortgage, to possess, use, manage, operate and enjoy the Trust Estate and every part thereof and to collect, receive, use, invest and dispose of the rents, issues, tolls, profits, revenues and other income from the Trust Estate or any part hereof, to use, consume and dispose of any consumables, goods, wares and merchandise in the ordinary course of business of operating the Casino-Hotel and to adjust and settle all matters relating to choses in action, leases and contracts. 20 Section 2.02. OBSOLETE PROPERTY; TANGIBLE PERSONAL PROPERTY; LEASE MODIFICATIONS. The Mortgagor shall have the right, at any time and from time to time, unless an Event of Default shall have occurred and be continuing, without any release from or consent by the Mortgagee: (a) to sell or dispose of, free from the lien of this Mortgage, any Tangible Personal Property which, in its reasonable opinion, may have become obsolete or unfit for use or which is no longer necessary in the conduct of its businesses or the operation of the Trust Estate, and no purchaser of any such property shall be bound to inquire into any question affecting the Mortgagor's right to sell or otherwise dispose of the same, free from the lien of this Mortgage; (b) to alter, repair, replace, change the location (provided notice shall be given to Mortgagee as to any new location) or position of and add to any Tangible Personal Property; provided, however, that no change shall be made in the location of any such property subject to the lien of this Mortgage which would in any respect impair the security of this Mortgage upon such property; or (c) to renew, extend, surrender, terminate, modify or amend any leases of Tangible Personal Property, when, in the Mortgagor's reasonable opinion, it is prudent to do so. The Mortgagor shall retain any net cash proceeds (subject to the right to pay dividends or make cash distributions pursuant to Section 12.07 of the Indenture) received from the sale or disposition of any Tangible Personal Property under Subsection (a) of this Section 2.02, in the business of operating the Casino-Hotel. The Mortgagee shall be under no responsibility or duty with respect to the exercise of the rights of the Mortgagor under this Section 2.02 or the application of the proceeds of any sale or disposition of any Tangible Personal Property. The Mortgagee shall, from time to time, promptly execute any written instrument in form satisfactory to it to confirm the propriety of any action taken by the Mortgagor under this Section 2.02, provided that the conditions set forth in Section 2.02 of the Note Mortgage have been satisfied. Section 2.03. OTHER EXCEPTED PROPERTY. Notwithstanding any provisions contained in this Mortgage or 21 the Indenture to the contrary, including, without limitation, the provisions of Granting Clauses Fifth and Sixth and of Articles Two and Five hereof, if the Mortgagor acquires Tangible Personal Property and other items constituting operating assets, such as computer software subject to any FF&E Financing Agreement, or becomes the lessee under a lease for any of the same and if the document evidencing such FF&E Financing Agreement prohibits subordinate liens or the provisions of any such lease prohibits any assignment thereof by the lessee, and if any such prohibition is customary with respect to similar transactions of the lender or lessor, as the case may be, then the property so purchased or the lessee's interest in the lease, as the case may be, shall be deemed to be Excepted Property. If any such FF&E Financing Agreement permits subordinate liens then the Mortgagee agrees to execute and deliver to the Mortgagor, at the Mortgagor's expense, such documents as the holder of such FF&E Financing Agreement may reasonably request to evidence the subordination of the lien of this Mortgage to the lien of such FF&E Financing Agreement. Section 2.04. [Reserved] Section 2.05. RELEASED LAND. (a) Notwithstanding anything to the contrary herein contained, the Mortgagor shall have the right, at any time and from time to time, unless an Event of Default shall have occurred and be continuing, to convey all or any part of the Released Fee Land (the land to be so conveyed is hereinafter referred to as the "Released Land"), free from the lien of the Mortgage, provided that the conditions set forth in Section 2.05(a) of the Note Mortgage have been satisfied. (b) The Mortgagee shall, from time to time, promptly execute any written instrument in form reasonably satisfactory to the prospective purchaser to confirm the release of the Released Fee Land, upon receipt by the Mortgagee of an Officers' Certificate stating that the Mortgagor is entitled to such release by virtue of the Mortgagor's compliance with this Section 2.05, provided, that the Mortgagee shall have no liability thereunder and all costs and expenses (including reasonable attorneys' fees) shall be paid by the Mortgagor. Section 2.06. RELEASED FEE LAND. (a) Notwithstanding anything to the contrary herein contained, in the event the Mortgagor intends to exercise an option to acquire fee title to Leased Land under the provisions of any Ground Lease, the Mortgagor shall have the right, unless an Event of Default shall have occurred and be 22 continuing, to have an Affiliate exercise such options(s) or for the Mortgagor to exercise such options(s) on behalf of an Affiliate and in connection therewith to cause fee simple title to the Leased Land or any part thereof to be conveyed to an Affiliate of the Mortgagor (provided that no portion of the purchase price of the Leased Land or part thereof is paid by Mortgagor), free from the lien of this Mortgage (the land to be so conveyed is hereinafter referred to as the "Released Fee Land"), provided that the Mortgagor furnishes the Mortgagee with the following: (i) an Officers' Certificate requesting the release of the Released Fee Land from the Trust Estate and stating that (A) the Mortgagor is not required to own the Released Fee Land in order to maintain all Permits and in order to comply with the provisions of all material contracts to which the Mortgagor is a party or by which the Mortgagor is bound, (B) such Affiliate has received all Permits necessary to own the Released Fee Land (including without limitation all approvals required by the Casino Control Commission of the State of New Jersey), (C) there has been delivered to the Mortgagor and the Mortgagee a true copy of an instrument executed by such Affiliate stating that (i) such Affiliate may only engage in the activity of owning the Released Fee Land and (ii) such Affiliate shall not convey the Released Fee Land to another Affiliate of the Mortgagor, unless such other Affiliate executes and delivers to the Mortgagor and the Mortgagee, the instruments that would have been required to be delivered pursuant to clause (C) if the Mortgagor conveyed the Released Fee Land to such other Affiliate (provided that this restriction shall only be effective until such time as this Mortgage shall be satisfied of record) and (D) the deed conveying the Released Fee Land to such Affiliate shall state that such conveyance is made subject to the terms, provisions and conditions of the applicable Ground Lease and that the fee and leasehold interests in the Released Fee Land shall not merge by reason of the Mortgagor and/or any Affiliate owning both the leasehold and fee estate therein, and that such estates shall always remain separate and distinct; (ii) an Opinion of Counsel to the effect that (A) the Mortgagor is not required to own the Released Fee Land in order to maintain in good standing all Permits or by the provisions of any material contract to which the Mortgagor is a party or by which it is bound to own the Released Fee Land and (B) the instruments described in clause (C) of subparagraph (i) were duly executed by and are binding upon such Affiliate; and 23 (iii) an endorsement to the Original Policy, confirming that no merger of the fee and leasehold estates in the Released Fee Land has resulted from such conveyance. In addition, simultaneously with such acquisition, the Affiliate and Mortgagor shall enter into an instrument in form and substance reasonably satisfactory to Mortgagee, amending the applicable Ground Lease to provide such mortgagee protections as are customary and to the extent reasonably required by Mortgagee, including, without limitation, (A) a covenant of the landlord not to terminate the Ground Lease for any reason whatsoever (including without limitation, due to any default by tenant of its obligations under such Ground Lease), and (B) an agreement by the landlord not to accept payment of any fixed or base rent from the tenant (and, if tendered by the Mortgagor, and agreement to return same to the Mortgagor) or any other charges payable thereunder at any time that an Event of Default shall have occurred and shall be continuing. (b) The Mortgagee shall, from time to time, promptly execute any written instrument in form reasonably satisfactory to the prospective purchaser to confirm the release of the Released Fee Land, upon receipt by the Mortgagee of an Officers' Certificate stating that the Mortgagor is entitled to such release by virtue of the Mortgago's compliance with this Section 2.06, PROVIDED that the Mortgagee shall have no liability thereunder and all costs and expenses (including reasonable attorneys' fees) shall be paid by the Mortgagor. Section 2.07. AFTER-ACQUIRED FEE MORTGAGES. (a) Notwithstanding anything contained herein to the contrary (i) if no Event of Default has occurred and is continuing and (ii) if the Mortgagor shall acquire Released Fee Land, then simultaneously with the acquisition thereof, the Mortgagor shall have the right to encumber such fee simple title with a mortgage (such mortgage and any refinancing thereof permitted by the Indenture is hereinafter referred to as an "After-Acquired Fee Mortgage"). The lien of this Mortgage on the Released Fee Land shall be subordinated to the lien of the After-Acquired Fee Mortgage on the Released Fee Land (and to the lien of other Superior Mortgages which shall become a lien thereon in accordance with the terms thereof), provided the following conditions are satisfied: (i) the After-Acquired Fee Mortgage encumbers the fee simple title to such real property and no other property; 24 (ii) the indebtedness secured by the After-Acquired Fee Mortgage (A) does not exceed 75% of the cost to the Mortgagor of such fee simple title at the time of the acquisition and (B) satisfies the criteria set forth in Section 12.08 of the Indenture; (iii) in the event the After-Acquired Fee Mortgage encumbers fee simple title to the Leased Land or any part thereof, such After-Acquired Fee Mortgage contains provisions binding on the holder of the After-Acquired Fee Mortgage and its successors and assigns confirming the provisions of Section 5.21(d) of this Mortgage; (iv) the Released Fee Land is not being acquired from an Affiliate of the Mortgagor; (v) the After-Acquired Fee Mortgage and other loan documents shall contain a provision binding upon the holder of such After-Acquired Fee Mortgage and other loan documents that all insurance proceeds in the event of a Casualty and awards for Takings of less than the entire Released Fee Land shall be used for purposes of Restoration; and (vi) the Mortgagor delivers to the Mortgagee an Officers' Certificate requesting such subordination and certifying that the requirements of (i) through (v) above have been satisfied. (b) Anything contained in this Section 2.07 or elsewhere in this Mortgage to the contrary notwithstanding, the subordination of this Mortgage to any After-Acquired Fee Mortgage constituting a lien on Released Fee Land shall not be self-operative but shall be effective only upon the execution and delivery by the Mortgagee of an instrument in writing effecting such subordination. The Mortgagee shall deliver such instrument of subordination on the following conditions: (x) the Mortgagee shall have received an Officers' Certificate confirming that the conditions of (i) through (vi) of paragraph (a) have been satisfied, together with a true and correct copy of the After-Acquired Fee Mortgage and all other instruments securing the indebtedness evidenced thereby and (y) the instrument of subordination shall specifically state that this Mortgage is being subordinated not with respect to the lien of this Mortgage on the Ground Lease or on the leasehold estate created thereby, but only with respect to the fee simple title to the Leased Land or applicable part thereof and only if and to the extent that the After-Acquired Fee Mortgage being subordinated to is subject and subordinate to the Ground Lease and the leasehold estate created thereby. 25 ARTICLE THREE REMEDIES Section 3.01. EVENTS OF DEFAULT. "Event of Default," whenever used herein, means any one of following events (including any applicable notice requirement and any period of grace as specified in this Section 3.01) (whatever the reason for such event 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): (a) default by the Mortgagor under the Guaranty and continuance of such default for a period of 10 days after there has been given a written notice to the Mortgagor specifying such default and stating that such notice is a "Notice of Default" hereunder; or (b) an "Event of Default," as defined in Section 3.01 of the Note Mortgage, shall occur; or (c) default in the performance, or breach, of any of the provisions of Article Four and the continuance of such default or breach for a period of 60 days after there has been given a written notice to the Mortgagor specifying that such notice is a "Notice of Default" hereunder; or (d) any representation or warranty of the Mortgagor set forth in this Mortgage shall prove to be incorrect as of the time when made and the facts constituting such incorrectness impairs the Mortgagee's security and such impairment continues for a period of 30 days, unless such impairment is curable, but not susceptible of cure within such 30-day period (for reasons other than lack of funds), provided that the conditions set forth in Section 3.01(l) of the Note Mortgage have been satisfied. Section 3.02. DEMAND UNDER THE GUARANTY. If an Event of Default occurs and is continuing, and the Mortgagee has declared the Outstanding Amount of the Note to be due and payable immediately pursuant to Section 3.02 of the Note Mortgage, then the Mortgagee may declare all obligations under the Guaranty to be due and payable immediately. Section 3.03. APPLICATION OF MONEYS RECEIVED BY MORTGAGEE. Any moneys received by the Mortgagee pursuant to the provisions of this Article Three (including moneys received by the Trustee after any action or act by the Mortgagee under Section 3.10) shall be applied by the 26 Mortgagee in accordance with the provisions of Section 7.06 of the Indenture. Section 3.04. RESTORATION OF RIGHTS AND REMEDIES. If the Mortgagee has instituted any proceeding to enforce any right or remedy under this Mortgage and such proceeding has been discontinued or abandoned for any reason or has been determined adversely to the Mortgagee, then and in every such case the Mortgagor and the Mortgagee shall, subject to any determination in such proceeding, be restored to its former position hereunder, and thereafter all rights and remedies of the Mortgagee shall continue as though no such proceeding had been instituted. Section 3.05. RIGHTS AND REMEDIES CUMULATIVE. No right or remedy herein conferred upon or reserved to the Mortgagee 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 3.06. DELAY OR OMISSION NOT WAIVER. No delay or omission of the Mortgagee to exercise any right or remedy accruing upon an 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 Three by law to the Mortgagee may be exercised, from time to time, and as often as may be deemed expedient, by the Mortgagee. Section 3.07. UNDERTAKING FOR COSTS. If any action or proceeding shall be commenced (including, without limitation, an action to foreclose this Mortgage or to collect under the Guaranty secured hereby) to which action or proceeding the Mortgagee is made or becomes a party, or in which it becomes necessary in the opinion of the Mortgagee to defend or uphold the lien of this Mortgage, then, to the extent it has not already done so pursuant to the terms of Section 3.07 of the Note Mortgage, the Mortgagor shall pay to Mortgagee all expenses, including reasonable attorneys' fees and expenses, incurred by the Mortgagee in connection therewith, together with interest at the rate then payable on the Notes, from the date of payment less the net amount received by the Mortgagee or the Trustee, as their interests may appear under any title insurance policy, and, until paid, all such expenses, together with interest as aforesaid, shall be a lien on the Trust Estate. 27 Section 3.08. WAIVER OF APPRAISEMENT AND OTHER LAWS. To the full extent that it may lawfully so agree, the Mortgagor will not at any time insist upon, plead, claim or take the benefit or advantage of, any appraisement, valuation, stay, extension or redemption law now or hereafter in force, in order to prevent or hinder the enforcement of this Mortgage or the absolute sale of the Trust Estate, or any part hereof, or the possession thereof by any purchaser at any sale under this Article Three; and the Mortgagor, for itself and all who may claim under it, so far as it or they now or hereafter may lawfully do so, hereby waives the benefit of all such laws. The Mortgagor, for itself and all who may claim under it, waives, to the extent that it may lawfully do so, all right to have the property in the Trust Estate marshalled upon any foreclosure hereof, and agrees that any court having jurisdiction to foreclose this Mortgage may order the sale of the Trust Estate as an entirety. If any law in this Section 3.08 referred to and now in force, of which the Mortgagor or its successor or successors might take advantage despite this Section 3.08, shall hereafter be repealed or cease to be in force, such law shall not thereafter be deemed to constitute any part of the contract herein contained or to preclude the application of this Section 3.08. Section 3.09. ENTRY. The Mortgagor agrees that upon the occurrence of an Event of Default the Mortgagor, upon demand of the Mortgagee during the continuance thereof, shall forthwith surrender to the Mortgagee the actual possession of, and it shall be lawful for the Mortgagee by such officers or agents as it may appoint to enter and take possession of, the Trust Estate (and the books and papers of the Mortgagor), and to hold, operate and manage the Trust Estate (including the making of all needful repairs, and such alterations, additions and improvements as the Mortgagee shall deem wise) and to receive the rents, issues, tolls, profits, revenues and other income thereof, and, after deducting the costs and expenses of entering, taking possession, holding, operating and managing the Trust Estate, as well as payments for taxes, insurance and other proper charges upon the Trust Estate and reasonable compensation to itself, its agents and counsel, to apply the same as provided in Section 3.03, PROVIDED, HOWEVER, that the Mortgagee's rights under this Section 3.09 shall be subject to the provisions of the New Jersey Casino Control Act and Section 3.14. Whenever all that is then due upon the Note and under any of the terms of this Mortgage shall have been paid and all defaults hereunder shall have been made good, the Mortgagee shall surrender possession to the Mortgagor. 28 Section 3.10. POWER OF SALE; SUITS FOR ENFORCEMENT. In case an Event of Default shall occur and be continuing, the Mortgagee, with or without entry, in its discretion may: (a) sell, subject to any mandatory requirements of applicable law, the Trust Estate as an entirety, or in such parcels, as the Mortgagee may determine, to the highest bidder at public auction at such place and at such time (which sale may be adjourned by the Mortgagee from time to time in its discretion by announcement at the time and place fixed for such sale, without further notice) and upon such terms as the Mortgagee may fix and briefly specify in a notice of sale to be published as required by law; or (b) proceed to protect and enforce its rights under this Mortgage by sale pursuant to judicial proceedings or by a suit, action or proceeding in equity or at law or otherwise, whether for the specific performance of any covenant or agreement contained in this Mortgage or in aid of the execution of any power granted in this Mortgage or for the foreclosure of this Mortgage or for the enforcement of any other legal, equitable or other remedy, as the Mortgagee, being advised by counsel, shall deem most effectual to protect and enforce any of the rights of the Mortgagee; the failure to join tenants shall not be asserted as a defense to any foreclosure or proceeding to enforce the rights of the Mortgagee. Section 3.11. INCIDENT OF SALE. Upon any sale of any of the Trust Estate, whether made under the power of sale hereby given or pursuant to judicial proceedings, to the extent permitted by law: (a) all obligations owing under the Guaranty, if not previously due, shall at once become and be immediately due and payable; (b) subject to the provisions of Section 3.14 and the receipt of any required prior approvals of the New Jersey Casino Control Commission, the Mortgagee may bid for and purchase the property offered for sale, and upon compliance with the terms of sale may hold, retain and possess and dispose of such property, without further accountability, and may, in paying the purchase money therefor, delivery any notes or claims for interest thereon in lieu of cash to the amount which shall, upon distribution of the net proceeds of such sale, be payable thereon, and such notes or claims for interest thereon, in case the amounts so payable thereon shall be less than the amount due thereon, shall be returned to the holders 29 thereof after being appropriately stamped to show partial payment; (c) the Mortgagee may make and deliver to the purchaser or purchasers a good and sufficient deed, bill of sale and instrument of assignment and transfer of the property sold; (d) the Mortgagee is hereby irrevocably appointed the true and lawful attorney of the Mortgagor, in its name and stead, to make all necessary deeds, bills of sale and instruments of assignment and transfer of the property thus sold; and for that purpose it may execute all necessary deeds, bills of sale and instruments of assignment and transfer, and may substitute one or more persons, firms or corporations with like power, the Mortgagor hereby ratifying and confirming all that its attorney or such substitute or substitutes shall lawfully do by virtue hereof; but if so requested by the Mortgagee or by any purchaser, the Mortgagor shall ratify and confirm any such sale or transfer by executing and delivering to the Mortgagee or to such purchaser or purchasers all proper deeds, bills of sale, instruments of assignment and transfer and releases as may be designated in any such request; (e) all right, title, interest, claim and demand whatsoever, either at law or in equity or otherwise, of the Mortgagor of, in and to the property so sold shall be divested and such sale shall be a perpetual bar both at law and in equity against the Mortgagor, its successors and assigns, and against any and all persons claiming or who may claim the property sold or any part thereof from, through or under the Mortgagor, its successors and assigns; and (f) the receipt of the Mortgagee or of the officer making such sale shall be a sufficient discharge to the purchaser or purchasers at such sale for his or their purchase money and such purchaser or purchasers and his or their assigns or personal representatives shall not, after paying such purchase money and receiving such receipt, be obliged to see to the application of such purchase money, or be in anywise answerable for any loss, misapplication or non-application thereof. Section 3.12. RECEIVER. Upon the occurrence of an Event of Default and commencement of judicial proceedings by the Mortgagee to enforce any right under this Mortgage, the Mortgagee shall be entitled, as against the Mortgagor, without notice or demand and without regard to the adequacy of the security for the Guaranty or the solvency of the Mortgagor, to 30 the appointment of a receiver of the Trust Estate, and of the rents, issues, profits, revenues and other income thereof, PROVIDED, HOWEVER, that the Mortgagee's rights under this Section 3.12 shall be subject to the provisions of the New Jersey Casino Control Act and Section 3.14 hereof. Section 3.13. SUITS TO PROTECT THE TRUST ESTATE. Upon 5 days' prior written notice to the Mortgagor (or such shorter period or without notice if deemed necessary and appropriate by the Mortgagee), the Mortgagee shall have power to institute and maintain such proceedings as it may deem necessary and appropriate to prevent any impairment of the Trust Estate by any acts which may be unlawful or in violation of this Mortgage and to protect its interests in the Trust Estate and in the rents, issues, profits, revenues and other income arising therefrom, including power to institute and maintain proceedings to restrain the enforcement of or compliance with any 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 hereunder or be materially prejudicial to the interests of the Mortgagee. Section 3.14. MANAGEMENT OF CASINO-HOTEL. Notwithstanding any provision of this Article Three to the contrary, following an Event of Default and the taking of possession of the Trust Estate or any part thereof by the Mortgagee and/or the appointment of receiver of the Trust Estate or any part thereof, the Mortgagee or any such receiver shall be authorized, in addition to the rights and powers of the Mortgagee and such receiver set forth elsewhere in this Mortgage, to retain one or more experienced operators of hotels and/or casinos to manage the Casino-Hotel, PROVIDED that any such operator shall have all necessary legal qualifications, including all Permits, to manage the Casino-Hotel. ARTICLE FOUR CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE Section 4.01. CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER ONLY ON CERTAIN TERMS. The Mortgagor shall comply with all provisions applicable to the Mortgagor in Article Ten of the Indenture. Section 4.02. SUCCESSOR ENTITY SUBSTITUTED. Upon any consolidation or combination or any conveyance or transfer of the Trust Estate or any portion thereof in accordance with Section 10.01 of the Indenture, the successor entity formed 31 by such consolidation or into which the Mortgagor is combined or to which such conveyance or transfer is made shall succeed to, and be substituted for, and may exercise every right and power of, the Mortgagor under this Mortgage with the same effect as if such successor entity had been named as the Mortgagor herein; PROVIDED, HOWEVER, that no such conveyance or transfer of the Trust Estate substantially as an entirety, unless such conveyance or transfer is in compliance with the provisions of Article Ten of the Indenture, shall have the effect of releasing the Person named as "the Mortgagor" in the first paragraph of this instrument or any successor entity which shall theretofore have become such in the manner prescribed in such Article Ten from its liability as guarantor. Section 4.03. LIMITATION ON SALES OF TRUST ESTATE. Except as otherwise expressly permitted by this Mortgage or the Indenture, the Mortgagor shall not sell, assign, lease, sublease, hypothecate, pledge, mortgage or otherwise transfer all or any part of the Trust Estate or any interest therein (including without limitation any interest in the Ground Leases). Without limiting the generality of the foregoing, the Mortgagor shall not separate, or attempt to separate, its ownership of its interest in the Ground Leases from its ownership of the buildings constituting the Casino-Hotel or any part thereof. ARTICLE FIVE COVENANTS AND REPRESENTATIONS OF MORTGAGOR Section 5.01. [Reserved] Section 5.02. FF&E FINANCING AGREEMENTS. The Mortgagor covenants and agrees to comply with all of the terms and conditions set forth in any FF&E Financing Agreements before the expiration of any applicable notice and cure periods contained in the FF&E Financing Agreements. Section 5.03. LIMITATIONS ON LIENS. The Mortgagor will not create, incur, suffer or permit to be created or incurred or to exist any mortgage, lien, charge or encumbrance on or pledge of any of the Trust Estate, other than (i) Permitted Encumbrances, (ii) liens on the Trust Estate in connection with indebtedness permitted by clauses (i), (ii), (iii), (iv) or (v) of Section 12.08(a) of the Indenture, and (iii) a building contract or a notice of intention filed by a mechanic, materialman or laborer under the New Jersey lien law. Without limiting the generality of the foregoing sentence but notwithstanding the provisions of the foregoing sentence, the Mortgagor shall not be deemed to have breached the provisions of the foregoing sentence by virtue of the 32 existence of a lien for Impositions or mechanics liens so long as the Mortgagor is in good faith contesting the validity of the same in accordance with the provisions of Section 5.09 to the extent that the matters described in (i) and (ii) do not constitute a default under any Ground Lease or Superior Mortgage. Section 5.04. [Reserved] Section 5.05. ACTIONS AND PROCEEDINGS. The Mortgagor hereby acknowledges the right of the Mortgagee, in the name of and on behalf of the Mortgagor, (a) to appear in and defend any action or proceeding brought with respect to the Trust Estate or any part thereof and (b) upon 5 days' prior written notice to the Mortgagor (or such shorter period or without notice if deemed necessary and appropriate by the Mortgage), to commence any action or proceeding to protect the interest of the Mortgagee in the Trust Estate. Section 5.06. WARRANTY OF LEASEHOLD ESTATE AND TITLE. The Mortgagor represents and warrants that as of the date hereof: (a) it is duly authorized under the laws of the State of New Jersey and all other applicable laws to execute and deliver this Mortgage, and all corporate action on its part necessary for the valid execution and delivery of this Mortgage has been duly and effectively taken; (b) it is the lawful owner and is lawfully seized and possessed of the Owned Land and all buildings and improvements thereon, free and clear of all liens, charges or encumbrances, other than the lien of the Mortgage Documents, any Working Capital Facility Lien and Existing Encumbrances; (c) it is the holder of and has good and marketable title to the leasehold interests and leasehold estates under the Ground Leases and to the Ground Leases, subject to no lien, encumbrance or charge other than the lien of the Mortgage Documents, any Working Capital Facility Lien and Existing Encumbrances; (d) (i) the Ground Leases are valid and subsisting demises of the Leased Land for the terms therein set forth, (ii) there are no defaults thereunder by any Lessor or the lessee as to which written notice has been given to or by the lessee, (iii) the Mortgagor has delivered true and correct copies of the Ground Leases and all modifications, amendments and supplements thereto, and (iv) each of the Ground Leases is in full 33 force and effect and has not been modified, amended or supplemented, except as described on Schedule 2; (e) it has good title to the Operating Assets, subject to no lien, encumbrance or charge, other than the lien of the Mortgage Documents, any Working Capital Facility Lien and Existing Encumbrances; and (f) the Mortgagor has good and lawful right and authority to execute this Mortgage and to grant, bargain, sell, alien, convey, assign, transfer, hypothecate, pledge, mortgage and confirm the Trust Estate as provided herein (including without limitation with respect to the Operating Assets and the Ground Leases, without the consent of any third party, other than governmental authorities but any applicable or necessary consent or approval of any such governmental authority has been given or waived at or prior to the execution and delivery of this Mortgage), and this Mortgage constitutes a valid second mortgage lien and second priority security interest in the Trust Estate PARI PASSU with the lien of the Note Mortgage, subject only to Working Capital Facility Liens and Existing Encumbrances. The Mortgagor hereby does and will forever warrant and defend (x) the title to Trust Estate (including without limitation, its leasehold estates under the lessee's interests in the Ground Leases) (subject to Permitted Encumbrances) and (y) the priority of the lien of this Mortgage (subject to Permitted Encumbrances other than Restricted Encumbrances), against the claims and demands of all persons whomsoever, at the Mortgagor's sole cost and expense. Section 5.07. FURTHER ASSURANCES; RECORDING. The Mortgagor will, as provided in Section 5.13, from time to time subject its right, title and interest under all Leases to the lien of this Mortgage. The Mortgagor will cause this instrument and all other instruments of further assurance, including all financing statements and continuation statements covering security interests in personal property, to be promptly recorded, registered and filed, and at all times to be kept recorded, registered and filed, and will execute and file such financing statements and cause to be issued and filed such continuation statements, all in such manner and in such places as may be required by law or as requested by the Mortgagee to fully preserve and protect the rights of the Mortgagee as a secured party under the Uniform Commercial Code to all property comprising the Trust Estate (to the extent a grant of a security interest therein is governed by the Uniform Commercial Code) and to perfect, preserve and protect the lien 34 of this Mortgage as a valid mortgage lien of record and a valid security interest on the Trust Estate subject to Permitted Encumbrances (other than Restricted Encumbrances). The Mortgagor will pay all filing or recording fees, and all expenses incident to the execution and delivery of this Mortgage, and any instrument of further assurance, and all federal, state, county and municipal stamp taxes and other taxes, duties, imposts, assessments and charges arising out of or in connection with the execution and delivery of this Mortgage, any financing statement or continuation statement with respect to the personal property constituting part of the Trust Estate or any instrument of further assurance. Section 5.08. PAYMENT OF TAXES AND CERTAIN CLAIMS; COMPLIANCE WITH LEGAL REQUIREMENTS AND INSURANCE REQUIREMENTS. The Mortgagor will: (a) subject to the provisions of Section 5.09 relating to contests, pay or cause to be paid promptly (or when installments of the same shall become due and payable, if, by law or by agreement or arrangement with the applicable governmental agency or authority, the same may be paid in installments) before any fine, penalty, interest or cost may be added for nonpayment (but no later than when the same are payable by the Mortgagor pursuant to any Superior Instrument Requirement), all taxes (including, without limitation, real estate taxes, personal or other property taxes and all sales, value added, use and similar taxes), assessments (including, without limitation, all assessments for public improvements or benefits, whether or not commenced or completed prior to the date hereof and whether or not to be completed prior to the satisfaction of this Mortgage), water, sewer or other rents, rates and charges, excises, levies, license fees, permit fees, inspection fees and other authorization fees and other charges, in each case whether general or special, ordinary or extraordinary, or foreseen or unforeseen, of every character (including all interest, additions to tax and penalties thereon), that may be assessed, levied, confirmed or imposed on or in respect of or be a lien upon (1) the Trust Estate (including without limitation the Leased Land) or any part thereof or any rent therefrom or any estate, right or interest therein, or (2) any acquisition, occupancy, use, leasing, or possession of or activity conducted on the real property or any part thereof included in the Trust Estate or any gross receipts thereof or of the rent therefrom (all of the foregoing being referred to collectively as "Impositions"). Notwithstanding the foregoing or any other provision of this Mortgage, the Mortgagor shall not be required to pay any income, 35 profits or revenue tax upon the income of the Mortgagee, the Trustee or the Noteholders nor any franchise, excise, corporate, estate, inheritance, succession, capital levy or transfer tax of the Mortgagee, the Trustee or the Noteholders nor any interest, additions to tax or penalties in respect thereof, unless such tax is imposed, levied or assessed in substitution for any Impositions that the Mortgagor is required to pay pursuant to this Section 5.08. The Mortgagor will deliver to the Mortgagee official receipts or other proof evidencing payments of any Impositions in accordance with the requirements of this Section 5.08. The Mortgagor shall not be entitled to any credit for taxes or assessments paid against the Guaranty; (b) except for such property which the Mortgagor may dispose of or replace pursuant to Section 2.02, maintain and keep all its properties used or useful in the conduct of its business (other than obsolete equipment), including, without limitation, the Casino-Hotel and all Tangible Personal Property, in such good repair, working order and condition, except for reasonable wear and use, and make or cause to be made all such needful and proper repairs, renewals and replacements thereto consistent with the standards of other casino-hotels in Atlantic City, New Jersey; (c) occupy and continuously operate the Casino-Hotel and keep the Casino-Hotel supplied with Tangible Personal Property, all in a manner consistent with the standards of other casino-hotels in Atlantic City, New Jersey (provided that nothing contained in this Section 5.08(c) shall be deemed to reduce the time period set forth in Section 3.01(f)); (d) subject to the provisions of Section 5.09 relating to contests, the Mortgagor at its sole expense will timely (1) comply with all Legal Requirements and Insurance Requirements, whether or not compliance therewith shall require structural changes in the buildings and improvements included in the Trust Estate or interfere with the use and enjoyment of the Trust Estate or any part thereof, (2) procure, maintain and comply with all permits and other authorizations required for (i) the use of the Casino as a gaming and gambling facility, (ii) the on-premises consumption of alcoholic beverages at the Casino-Hotel and (iii) any other use of the Trust Estate or any part thereof then being made, and for the proper erection, installation, operation and maintenance of the improvements or any part thereof, and (3) comply with any instruments of record at the time in force affecting the Trust Estate or any part thereof, if 36 the failure to comply with the same would impair the Mortgagee's security hereunder. Without limiting the generality of the foregoing, the Mortgagor represents and warrants that at the time of the execution of this Mortgage, the Mortgagor is in compliance with the requirements of clauses (1), (2) and (3); (e) in the event of the passage after the date of this Mortgage of any law of the State of New Jersey, or any other governmental entity, changing in any way the laws now in force for the taxation of mortgages, or debts secured thereby, for state or local purposes, or the manner of the operation of any such taxes, so as to affect the interest of the Mortgagee, then and in such event, the Mortgagor shall bear and pay the full amount of such taxes, provided that if for any reason payment by the Mortgagor of any such new or additional taxes would be unlawful or if the payment thereof would constitute usury or render the indebtedness secured hereby wholly or partially usurious under any of the terms or provisions of the Note, or this Mortgage, or otherwise, the Mortgagee may, at the Mortgagee's option, declare the whole sum secured by this Mortgage, with interest thereon, to be due and payable 90 days after notice of election thereof has been given by the Mortgagee, or the Mortgagee may, at the Mortgagee's option, pay that amount or portion of such taxes as renders the loan or indebtedness secured hereby unlawful or usurious, in which event the Mortgagor shall concurrently therewith pay the remaining lawful and nonusurious portion or balance of such taxes. Section 5.09. PERMITTED CONTESTS. The Mortgagor may, at its sole expense, contest by appropriate legal proceedings conducted in good faith and with due diligence, the amount or validity or application, in whole or in part of any Imposition or lien therefor or any Legal Requirement or Insurance Requirement or the application of any instrument of record affecting the Trust Estate or any part thereof or any claims of mechanics, materialmen, suppliers, or vendors or lien therefore, and may withhold payment of the same pending such proceedings if permitted by law, or make payment under protest, or defer compliance with any such Legal Requirement, any such Insurance Requirement or the terms of any such instrument, and the same shall not be a Default hereunder, provided that (a) in the case of any Impositions or lien therefor or any claims of mechanics, materialmen, suppliers or vendors or lien therefor, such proceedings shall suspend the collection thereof from each of the Mortgagor, the Mortgagee, the Trustee, the Noteholders and the Trust Estate, (b) neither the Trust Estate nor any interest therein would be in any danger of being sold, forfeited, or lost, (c) such action 37 would not result in or constitute a default under any Ground Lease or Superior Mortgage, (d) in the case of a Legal Requirement, neither the Noteholders nor the Mortgagee shall be in any danger of any civil or any criminal liability, and the failure of the Mortgagor to comply with such Legal Requirement shall not affect the continuance in good standing of any Permit or result in the suspension, termination, non-renewal or material adverse modification of any permit, and (e) in the case of an Insurance Requirement, the failure of the Mortgagor to comply therewith shall not affect the validity of any insurance required to be maintained by the Mortgagor hereunder. Section 5.10. MECHANICS' AND OTHER LIENS. Without limiting the generality of the first sentence of Section 5.03 and notwithstanding the provisions of Section 5.03(a)(ii), the Mortgagor will cause to be removed, either by payment, or bonding or otherwise, all claims and demands of mechanics, materialmen, laborers, and others which, if unpaid, might result in, or permit the creation of, a lien on the Premises and/or Trust Estate or any part thereof, or on the revenues, rents, issues, income and profits arising therefrom and in general will do or cause to be done everything necessary so that the lien hereof shall be fully preserved, at the cost of the Mortgagor, without expense to the Mortgagee. Section 5.11. INSURANCE. (a) The Mortgagor will, at its expense, maintain with Insurers: (1) insurance with respect to the Mortgagor's insurable properties constituting a part of the Trust Estate against loss or damage by fire, lightning, and other risks from time to time included under "all-risk" policies and against loss or damage by sprinkler leakage, water damage, collapse, malicious mischief and explosion in respect of any steam and pressure boiler and similar apparatus located on such insurable properties, in amounts at all times sufficient to prevent the Mortgagor from becoming a coinsurer within the terms of the applicable policies, but in any event such insurance shall be maintained in such insurable amounts not less than the greatest of the following (hereinafter referred to as the "Insurance Amount"): (i) 100% of the then full insurable value of such insurable properties, the term "full insurable value" to mean the actual replacement cost (excluding the costs of foundation, footing, excavation, paving, landscaping and other similar, non-insurable improvements) determined from time to time (but not less frequently than once in any 36 calendar months), by an Architect, contractor, appraiser, or an Insurer, 38 (ii) the then Outstanding Amount of any First Mortgage Debt, including the Notes or (iii) the amount required to be maintained pursuant to the Superior Instrument Requirements; [(2) war risk insurance as and when such insurance is obtainable from the United States of America or any agency thereof as promptly as reasonably practicable after the same becomes so obtainable, in an amount not less than the Insurance Amount, or in such lesser amount as may then be so obtainable;] (3) public liability, including personal injury and property damage and comprehensive general liability connected with the possession, use, leasing, operation or condition of such insurable properties in such amounts as, in the Mortgagor's judgment, are prudent, considering the cost of such insurance, for personal injury and property damage with respect to any one occurrence, which may be under an umbrella policy. Anything contained in this clause (3) to the contrary notwithstanding, the Superior Instrument Requirements with respect to the kinds and amount of insurance described in this clause (3) shall be satisfied by the Mortgagor; (4) appropriate workers' compensation insurance with respect to any work (to the extent the risks to be covered thereby are not already covered by other policies of insurance maintained by the Mortgagor) on or about such insurable properties; (5) business interruption insurance covering not less than [12] months of loss, provided that, following [19__], at any time that the Mortgagor is renewing any policy for such insurance or taking out any new or replacement such policy covering a period of less than 12 months, the Mortgagor shall deliver to the Mortgagee an Officers' Certificate certifying that the period of coverage to be maintained by the Mortgagor under such policy is the maximum that can be maintained at rates determined by the Mortgagor to be reasonable for such coverage; (6) to the extent available, flood insurance in an amount not less than the Insurance Amount, or such lesser amount as may then be so obtainable; and (7) such other insurance with respect to such insurable properties against loss or damage of the kinds (i) from time to time customarily insured against by persons owning or using casino-hotels of comparable size in the boardwalk area of Atlantic City, New Jersey and 39 (ii) required to be maintained pursuant to the Superior Instrument Requirements. Notwithstanding the foregoing, to the extent permitted by Superior Instrument Requirements, (i) the Mortgagor shall be permitted to maintain a deductible with respect to the insurance policies described in clauses (1), (2), (6) and (7) in an amount not to exceed (x) for the twelve month period commencing the date hereof, [$100,000] with respect to the insurance policies described in clause (1), (2), (6) and (7) thereafter, the customary deductible (if any) with respect to the insurance maintained by casino-hotels of a similar size and value in Atlantic City, New Jersey (but in no event more than [$1,000,000]), (ii) the Mortgagor shall be permitted to maintain a deductible with respect to the insurance policies described in clause (3) in an amount not to exceed the amount of deductible as is customarily maintained by casino-hotels of similar size in Atlantic City, New Jersey, (iii) the Mortgagor shall not reduce its insurance coverage for the matters described in clause (3) (which for purposes of this paragraph means a reduction in single limits or an increase in deductible) unless and until the Mortgagor delivers to the Mortgagee an Officers' Certificate certifying (w) that the coverage the Mortgagor was theretofore maintaining cannot be maintained at rates determined by the Mortgagor to be reasonable for such coverage, (x) the amount of the proposed reduction, (y) the premium for the existing and the proposed reduced coverage, and (z) that the proposed deductible satisfied the criteria set forth in this clause (iii), and (iv) the Mortgagor shall be permitted to maintain a deductible with respect to the insurance policies described in clause (5) in the forms of and in an amount not to exceed the amount of deductible as is customarily maintained by casino-hotels of similar size in Atlantic City, New Jersey. (b) Each policy of insurance maintained by the Mortgagor pursuant to Subsection (a) of this Section 5.11 shall, (1) except in the case of workers' compensation insurance, name as insureds the Mortgagee, the Mortgagor and to the extent required by the Superior Instrument Requirements, the Lessors and the holders of the Superior Mortgages, (2) provide that all insurance proceeds for losses, except in the case of public liability insurance and workers' compensation insurance or as otherwise provided in Subsections (d), (e) and (f) of this Section 5.11, be payable solely to the Mortgagee or such other party as is required to receive such proceeds under a Superior Mortgage, (3) include effective waivers (whether under the terms of any such policy or otherwise) by the insurer of all claims for insurance premiums against all lost payees and named insureds (other than the Mortgagor) and all rights of subrogation against any named insured, (4) except in the case of public liability and 40 workers' compensation insurance, provide that any losses shall be payable notwithstanding (i) any act, failure to act, negligence of, or violation or breach of warranties, declarations or conditions contained in such policy by the Mortgagor or the Mortgagee or any other named insured or loss payee (including, without limitation, with respect to the Released Fee Land, the holders of any After-Acquired Fee Mortgages), (ii) the occupation or use of the insurable properties for purposes more hazardous than permitted by the terms of the policy, (iii) any foreclosure or other proceeding or notice of sale relating to the insurable properties or (iv) any change in the title to or ownership or possession of the insurable properties, (5) contain a non-contributory mortgagee clause in favor of the Mortgagee, and (6) provide that if all or any part of such policy is cancelled, terminated or expires, the insurer will forthwith give notice thereof to each named insured an loss payee and that no cancellation, reduction in amount or material change in coverage thereof shall be effective until at least 30 days after receipt by each named insured and loss payee of written notice thereof. (c) The Mortgagor will deliver to the Mortgagee, (1) duplicate originals of all insurance policies that the Mortgagor is required to maintain pursuant to this Section 5.11 and (2) within 30 days after each reduction in insurance required to be maintained by the Mortgagor hereunder, an Officers' Certificate setting forth the particulars as to all such insurance policies and certifying that the same comply with the requirements of this Section 5.11, that all premiums or installments thereof then due thereon have been paid and that the same are in full force and effect. The Mortgagee shall not be responsible for effecting or renewing any insurance or for the responsibility or solvency of the insurers. (d) The Mortgagor shall give written notice to the Mortgagee immediately upon obtaining knowledge of any Casualty which (x) results in damage, loss or destruction in an amount in excess of [$5,000,000] to any buildings or improvements on the Premises and/or any Tangible Personal Property or (y) pursuant to any Superior Instrument Requirement, would require the deposit of insurance proceeds with the Depositary, or action or proceeding with respect thereto. Whenever the Superior Instrument Requirements require or permit the selection of the Depositary by the Mortgagor, the Mortgagor shall select the Insurance Trustee as the Depositary. Within 30 days after any Casualty which results in any damage, loss or destruction in an amount in excess of [$10,000,000] to any buildings or improvements of the Premises and/or any Tangible Personal Property, the Mortgagor shall deliver to the Mortgagee a certificate of an Architect stating whether, in such Architect's opinion, applicable Legal Requirements permit 41 the Restoration of such buildings and improvements for the same uses and to the same size and quality in all material respects, as existed immediately prior to the Casualty (and if such certificate states the Legal Requirements do not permit such Restoration, such certificate shall describe the manner closest approximating such criteria to which the buildings and improvements could be so restored and shall be accompanied by a Certificate of Appraised Value dated not more than 10 days prior to delivery setting forth the Appraised Value immediately prior to the Casualty and the estimated Appraised Value immediately after the Restoration). If the Mortgagor is required to deliver such Certificates of Appraised Value and if based on such Certificates of Appraised Value immediately after Restoration, the aggregate Outstanding Amount of First Mortgage Debt immediately after such Restoration shall exceed the greater of (i) 66 2/3% of the Appraised Value immediately after such Restoration or (ii) the quotient of the Outstanding Amount of First Mortgage Debt immediately prior to such Casualty divided by the Appraised Value immediately prior to the Casualty multiplied by the Appraised Value immediately after such Restoration, then the proceeds of any insurance shall, at the election of Mortgagee, either be applied to Restoration as set forth in Subsections (e), (h) and (i) below) or paid and delivered to the Mortgagee to the extent of the then Outstanding Amount of the Note and any other interest or other sums due hereunder or thereunder to be applied to the satisfaction of the Mortgage to the extent proceeds are available for such purpose and provided that no additional sums are due to the Trustee or the Noteholder under the Indenture, the balance of any net insurance proceeds shall be paid to the Mortgagor. Notwithstanding the foregoing sentence, if such Certificates of Appraised Values indicates that the Outstanding Amount of First Mortgage Debt immediately after such Restoration exceeds the greater of the two amounts determined pursuant to subclauses (i) and (ii) above, the proceeds of insurance will be made available for Restoration (subject to paragraphs, (e), (h) and (i) below) if the Mortgagor obtains an irrevocable commitment from a nationally recognized financial institution having a combined capital and surplus of at least [$100,000,000], to supply, upon an acceleration under this Mortgage as a result of an Event of Default, funds to the Mortgagor as additions to capital in an amount equal to the Outstanding Amount of First Mortgage Debt in excess of the Appraised Value necessary to be paid down so that the Outstanding Amount of First Mortgage Debt will not exceed either of the two amounts determined pursuant to such clauses (i) and (ii), PROVIDED that such commitment may only be released if, upon an Appraisal at any time following completion of such Restoration, the aggregate Outstanding Amount of the First Mortgage Debt does not exceed 66-2/3% of the Appraised Value. 42 (e) Subject to the provisions of Subsection (d) above, in case a Casualty occurs, the following shall apply: (1) if the cost of Restoration (as hereinafter defined) does not exceed the sum of [$10,000,000], the net insurance proceeds shall be paid by the Mortgagee to the Mortgagor (unless the Superior Instrument Requirements provide that the same shall be paid to the Depositary); (2) if the cost of Restoration is [$10,000,000] or more or if the Superior Instrument Requirements provide that the same shall be paid to the Depositary, the net insurance proceeds shall be paid by the Mortgagee to the Insurance Trustee (or other Depositary required by the Superior Instrument Requirements, provided that such Depositary holds such proceeds in trust for purposes of paying the costs of Restoration); (3) the Mortgagor shall commence with reasonable promptness under the circumstances and thereafter with due diligence proceed to perform and complete in a good and workmanlike manner the restoration, repair, replacement or rebuilding of the damage or destruction resulting from the Casualty (all of which restoration, repair, replacement or rebuilding are referred to as the "Restoration") in accordance with the plans and specifications submitted to the Insurance Trustee, in conformance with all Legal Requirements and Superior Instrument Requirements, and in accordance with the further provisions of this Subsection (e), regardless of the extent of any such Casualty and whether or not net insurance proceeds, if any, shall be available or, if available, shall be sufficient, for the purpose of the Restoration (provided, however, that if the Mortgagor does not receive any net insurance proceeds within 30 days after any Casualty because the adjustment of the loss has not yet occurred, then the obligation of the Mortgagor to commence such Restoration shall be deferred until such proceeds are made available to the Mortgagor, provided that (i) Mortgagor diligently and continuously adjusts such loss with the Insurer, (ii) the Mortgagor delivers to the Mortgagee an Officers' Certificate within such 30-day period requesting the extension of such period, estimating the date on which such proceeds will be available and describing the Mortgagor's efforts to adjust such loss and certifying that such extension does not constitute a default or a breach of any of the provisions of any of the Ground Leases (or if so, such default or breach has been waived) and (iii) the Mortgagor delivers to the Mortgagee additional Officers' Certificates every 30 days thereafter updating the 43 information contained in the certificate described in Clause (ii)). All Restoration work shall be performed in accordance with the applicable provisions of Section 5.12 and in conformance with all Superior Instrument Requirements, Legal Requirements and Insurance Requirements and, prior to commencing any Restoration, the Mortgagor shall obtain all Permits necessary in connection therewith, and shall obtain, and keep in full force and effect until the completion of such Restoration, such additional insurance as the Insurance Trustee and Superior Instrument Requirements may require. The plans and specifications for the Restoration shall be accompanied by a certificate of the Mortgagor and an Opinion of Counsel to the effect that upon the completion of the Restoration pursuant to the plans and specifications the Premises, and all buildings and improvements, thereon will comply with all superior Instrument Requirements, Legal Requirements and Insurance Requirements. Notwithstanding anything in this Section 5.11 to the contrary, if such Casualty is in an amount less than [$5,000,000], the Mortgagor shall not be required to perform and complete such Restoration (unless the performance and completion of the Restoration is necessary in order for the Mortgagor to be in compliance with any term, provision or condition of this Mortgage (other than this Section 5.11(e)) or any Superior Instrument Requirements; (4) Any insurance proceeds which the Mortgagor receives, shall be held by the Mortgagor in trust for the purpose of paying the cost of the Restoration, except as otherwise provided herein; (5) Any net insurance proceeds that the Insurance Trustee holds pursuant to this Subsection (e), shall be deposited in an interest-bearing investment reasonably designate by Mortgagor (to the extent the Mortgagor is permitted to designate such investment under the Superior Instrument Requirements) (and the interest thereon shall be added to such proceeds) and shall be paid by the Insurance Trustee in reimburse the Mortgagor for, or to make payment for, the Restoration, after the Insurance Trustee deducts therefrom the amount of any reasonable costs and expenses incurred in connection with the performance of its obligations under this Section 5.11. The Insurance Trustee shall make such payments not more frequently than once every 30 days upon the written request of the Mortgagor (unless more frequent payments are required by Superior Instrument Requirements), by paying to the Mortgagor or the persons named in the certificate described in Clause (6) of this Subsection (e) the respective amounts stated in such certificate 44 from time to time as the Restoration progresses, provided the Mortgagor has complied with the requirements of this Subsection (e) and such payment is permitted by an applicable Superior Instrument Requirements. The Mortgagor's written request shall be accompanied by (i) the certificate described in Clause (6) of this Subsection (e) and (ii) a title company or official search, or other evidence reasonably acceptable to the Insurance Trustee, showing that there have not been filed with respect to the Premises, any vendor's, contractor's mechanic's, laborer's or materialman's statutory or similar lien which has not been discharged of record (or bonded against or secured by other security) or any other encumbrance irrespective of its priority (other than Permitted Encumbrances). (6) The certificate required by Clause (5) of this Subsection (e) shall (A) be an Officers' Certificate, countersigned by the Architect in charge of the Restoration with respect to the matters described in (i) and (v) below, (B) be dated not more than 10 days prior to such request and (C) set forth (in addition to any other requirements contained in any applicable Superior Instrument Requirements) that: (i) all of the Restoration work theretofore performed is in substantial compliance with the plans and specifications theretofore submitted to the Insurance Trustee and in compliance with all Superior Instrument Requirements, Legal Requirements and Insurance Requirements; (ii) the sum then requested either has been paid by the Mortgagor or is justly due to contractors, subcontractors, materialmen, engineers, architects or other persons who have rendered services or furnished or contracted to deliver materials for the Restoration therein specified, and the names and addresses of such persons, a brief description of such services and materials and the several amounts so paid or due to each of such persons in respect thereof; (iii) no part of the amount requested has been or is the basis in any pervious or then pending request for the withdrawal of net insurance proceeds, and that the sum then requested does not exceed the value of the services and materials described in the certificate; (iv) except for the amount, if any, stated pursuant to Subclause (ii) of this Clause (6) in 45 such certificate to be due for services or materials, and except for amounts in dispute and/or customary retainages, there is no outstanding indebtedness known to the person signing such certificate, after due inquiry, which is then due for labor, wages, materials, supplies or services in connection with such Restoration; and (v) the remaining cost, as estimated by the persons signing such certificate, of the Restoration in order to complete the same does not exceed the net insurance proceeds remaining in the hands of Insurance Trustee after payment of the sum requested in such certificate or if such estimated cost does exceed such insurance proceeds such certificate shall state the amount of any such deficiency. If the certificate states that such deficiency will exist, the Mortgagor shall deliver the amount of such deficiency in cash or cash equivalent to the Insurance Trustee simultaneously with the delivery of such certificate, which amount shall be deemed insurance proceeds for purposes of this Section 5.11(e); and (7) If net insurance proceeds shall be insufficient to pay the entire cost of the Restoration, then, after completion of the Restoration, the Mortgagor shall pay the deficiency. If all or any part of the net insurance proceeds are not used for the restoration in accordance with this Subsection (e) (because such proceeds exceed the amount required to complete the Restoration), then upon completion of the Restoration in accordance with this Subsection (e), such amount not so used, if held by the Insurance Trustee, shall be paid to the Mortgagor (if permitted by Superior Instrument Requirements). (f) Provided that no Event of Default has occurred and is continuing, all net business interruption insurance proceeds shall be paid to the Mortgagor, to be segregated from the other funds of Mortgagor and held in trust by Mortgagor for the following purposes and in the following order of priority: (i) for the payment of Impositions and amounts due under the Ground Leases and Superior Mortgages; (ii) for debt service for the estimated period of Restoration (for purposes of this Section 5.11(f), interest and principal payments due on any payment date under the Notes will deemed to accrue in equal daily installments beginning the day after the immediately preceding payment date and ending on such payment date); and (iii) for any expense incurred in connection with the operation or business of the Casino-Hotel. 46 (g) The Mortgagor shall not take out separate insurance, concurrent in form or contributing in the event of loss with that required to be maintained pursuant to this Section 5.11, unless the same are permitted by Superior Instrument Requirements and the Mortgagee is included therein as a named insured, with loss payable to the Mortgagee and the Insurance Trustee pursuant to Section 5.11(b) hereof. The Mortgagor shall immediately notify the Mortgagee whenever any such separate insurance is taken out and shall promptly deliver to the Mortgagee a duplicate original of the policy of such insurance, a copy thereof certified by the insurer or a certificate thereof. (h) Insurance claims by reason of damage or destruction to any portion of the Trust Estate may adjusted by the Mortgagor, but the Mortgagee shall have the right (but not the obligation) to join the Mortgagor in adjusting, and approving the adjustment of, any such loss except in the event of a loss where the amount of insurance reasonably anticipated to be received with respect to such loss is less than [Five Million Dollars ($5,000,000)], and the Mortgagor shall assist the Mortgagee in any such adjustment at the request of the Mortgagee. If the Mortgagee at its election as aforesaid joins the Mortgagor in any adjustment process, then the Mortgagee's approval of the adjustment shall not be unreasonably withheld; (i) Notwithstanding anything contained herein to the contrary, if an Event of Default shall have occurred and be continuing, the Mortgagee may, at its option, (A) refrain from paying to the Mortgagor or the Insurance Trustee any net insurance proceeds or (B) instruct the Insurance Trustee to pay to the Mortgagee any insurance proceeds then held by the Insurance Trustee, as the case may be. Section 5.12. LIMITATIONS ON BUILDING DEMOLITION, ALTERATIONS, IMPROVEMENTS AND NEW CONSTRUCTION. The Mortgagor will not authorize, permit or make any demolition, alteration or improvement of any building included in the Trust Estate or any new construction on any part of the Trust Estate, except in conformity with and subject to the limitations hereinafter in this Section 5.12 set forth. Unless an Event of Default shall have occurred and be continuing, the Mortgagor shall have the right at all times to make or permit such alterations, improvements or new constructions, structural or otherwise (herein sometimes called collectively "alterations"), of or on the Trust Estate, to be made in all cases subject to the conditions set forth in Section 5.12 of the Note Mortgage. Section 5.13. LEASES. The Mortgagor shall not: 47 (a) subject to the provisions of Section 5.13(d), enter into any Lease, or renew, modify, extend, terminate, or amend any Lease, except in the ordinary course of business of operating the Casino-Hotel; (b) receive or collect, or permit the receipt or collection of, any rental payments under any Lease more than one year in advance of the respective periods in respect of which they are to accrue, except that, in connection with the execution and delivery of any Lease or of any amendment to any Lease, rental payments thereunder may be collected and received in advance in an amount not in excess of three months' rent and/or a security deposit may be required thereunder in an amount not exceeding one year's rent; (c) collaterally assign, transfer or hypothecate (other than to the Mortgagee hereunder, to the mortgagee under the Note Mortgage or to the holder of any Working Capital Facility Lien) any rental payment under any Lease whether then due or to accrue in the future, the interest of the Mortgagor as landlord under any Lease or the rents, issues or profits of the Trust Estate; (d) after the date hereof, enter into any Lease, or renew any Lease unless such Lease contains terms to the effect as follows: (1) the Lease and the rights of the tenants thereunder shall be subject and subordinate to the rights of the Mortgagee under this Mortgage, the mortgagee under the Note Mortgage and the holders of any Superior Mortgage, (2) the Lease may be assigned by the landlord thereunder to the Mortgagee, (3) the rights and remedies of the tenant in respect of any obligations of the landlord thereunder shall be nonrecourse as to any assets of the landlord other than its equity in the building in which the leased premises are located or the proceeds thereof, (4) the rights of the tenant shall be subject and subordinate to the rights of the lessee under any new lease entered into in the event of a termination of a Ground Lease; 48 (e) modify any Lease with respect to the matters described in clauses (1) through (4) of paragraph (d). If the Mortgagor enters into a Lease (other than with any Affiliate of the Mortgagor) for a term of not less than 3 nor more than 10 years, the Mortgagee shall deliver a non-disturbance and attornment agreement substantially in the form of Schedule 4 hereto, following receipt of a certificate of a leasing broker (who is not an Affiliate of the Mortgagor or the broker involved in such transaction) experienced with respect to leases of commercial space in the Atlantic City area stating that the rent under the Lease is not less than fair market rent and that the other terms of the Lease are fair and reasonable in the commercial leasing market. The Mortgagor shall, upon demand, reimburse the Mortgagee for any costs and expenses (including reasonable attorney's fees) incurred by the Mortgagee in connection with the preparation, review and delivery of such non-disturbance and attornment agreements. Promptly after the execution and delivery hereof, the Mortgagor will cause the lessee under each Lease now in effect and promptly after each Lease is executed or becomes effective after the date of the execution and delivery hereof, the Mortgagor will cause the lessee under each such Lease, to be duly notified in writing (unless the substance and effect of such notice shall be contained in such Lease) of the subjection of the owner's interest, as lessor, in and to such Lease to the lien of this Mortgage and of the name and address of the Mortgagee. Each such notice shall state that the lease of such lessee is a Lease as herein defined. If a new Mortgagee is at any time appointed hereunder or the address of the Mortgagee shall at any time be changed, the Mortgagor will cause each lessee under each Lease to be promptly notified in writing of the name address of such new Mortgagee or the new address of the Mortgagee. The Mortgagor will use reasonable efforts (but shall not be obligated to incur any expenditure other than DE MINIMIS amounts) to obtain from each lessee under each Lease to whom any notice is sent pursuant to this paragraph an acknowledgment of receipt of such notice, and the Mortgagor will promptly deliver to the Mortgagee, upon request, a copy of each such acknowledgment of receipt which it is able to obtain. The Mortgagee shall not be responsible for securing or causing the Mortgagor to secure any such acknowledgment. Nothing contained in this Section 5.13 shall limit the provisions of Section 4.04 hereof. Section 5.14. [Reserved] 49 Section 5.15. MAINTENANCE OF EXISTENCE OF THE MORTGAGOR. Subject to Article Four, the Mortgagor will do or cause to be done all things necessary to preserve and keep in full force and effect its existence as a corporation, and its rights (both statutory and under its articles of incorporation) and franchises. Section 5.16. TO KEEP BOOKS; INSPECTION BY MORTGAGEE. The Mortgagor will keep proper books of record and account in accordance with Section 12.05 of the Indenture. Section 5.17. ADVANCES BY MORTGAGEE. If the Mortgagor shall fail to perform any of its covenants in this Mortgage and such failure shall continue for 10 days following notice thereof given by the Mortgagee (or at any time, without notice, in case of emergency), the Mortgagee may (but is not obligated to), at any time and from time to time, take any action or make advances, to effect performance of any such covenant on behalf of the Mortgagor; and all moneys so used or advanced by the Mortgagee and all reasonable costs and expenses incurred by Mortgagee in connection therewith, together with interest on all of the same at the rate of interest set forth in the Notes, shall be repaid by the Mortgagor upon demand and such advances shall be secured under this Mortgage prior to the Guaranty. Section 5.18. WAIVER OF STAY, EXTENSION OR USURY LAWS. The Mortgagor covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any usury, stay or extension law or any other law which would prohibit or forgive the Mortgagor from paying all or any portion of the obligations under the Guaranty as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may otherwise affect the covenants or the performance of this Mortgage; and the Mortgagor (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Mortgagee, but will suffer and permit the execution of every such power as though no such law had been enacted. Section 5.19. [Reserved] Section 5.20. EMINENT DOMAIN. The Mortgagor shall satisfy the provisions of Section 5.20 of the Note Mortgage upon obtaining knowledge of any Taking affecting the Trust Estate. Section 5.21. GROUND LEASES. 50 (a) The Mortgagor covenants and agrees that it will do or cause to be done all things necessary to preserve and keep unimpaired the rights of the Mortgagor, as lessee under the Ground Lease, and to prevent any termination, surrender, cancellation, forfeiture or impairment thereof. The Mortgagor shall at all times fully perform and comply with all agreements, covenants, terms and conditions imposed upon or assumed by it as lessee under each of the Ground Leases (including without limitation the covenant to pay rent and all taxes, assessments and other charges mentioned therein) prior to the expiration of any notice and/or cure period provided in each such Ground Lease. Upon receipt by the Mortgagee from a Lessor of any written notice of default by the lessee thereunder, Mortgagee may rely thereon and take any action the Mortgagee deems necessary in its sole discretion to prevent or to cure any default by the Mortgagor in the performance of or compliance with any of the agreements, covenants, terms or conditions imposed upon or assumed by the Mortgagor as lessee under each of the Ground Leases, even though the existence of such default or the nature thereof be questioned or denied by the Mortgagor or by any party on behalf of the Mortgagor, provided that if the Mortgagor has theretofore delivered to the Mortgagee the Officers' Certificate, Opinion of Counsel and a copy of the injunction, all as described in Section 3.01(g), the Mortgagee shall not take any such action unless and until the Mortgagor and/or the Mortgagee no longer has the benefit of any tolling or stay referred to in Section 3.01(g). Without limiting the generality of Section 3.09 hereof, the Mortgagor hereby expressly grants to the Mortgagee, and agrees that the Mortgagee shall have, the absolute and immediate right to enter in and upon the Premises or any part thereof to such extent and as often as the Mortgagee, in its sole discretion, deems necessary or desirable for the purpose permitted by the immediately preceding sentence, subject only to applicable Legal Requirements. Subject to the preceding and without limiting the Mortgagee's other remedies under this Mortgage, the Mortgagee may pay and expend such sums of money as the Mortgagee in its sole discretion deems necessary for any such purpose, and the Mortgagor hereby agrees to pay to the Mortgagee, immediately and without demand, all such sums so paid and expended by the Mortgagee, together with interest thereon from the date of each such payment at the highest rate of interest set forth in the Notes. All sums so paid and expended by the Mortgagee, and the interest thereon, shall be added to and be secured by the lien of this Mortgage. (b) The Mortgagor further covenants and agrees: (i) it will not surrender any leasehold estate and interest hereinabove described, nor terminate or cancel any Ground Lease, and that it will not without the express written consent of the Mortgagee modify, change, 51 supplement, alter or amend such Ground Leases either orally or in writing and, as further security for the repayment of the indebtedness secured hereby and for the performance of the covenants herein and in such Ground Leases contained, the Mortgagor hereby assigns to the Mortgagee all of its rights, privileges and prerogatives as lessee under such Ground Leases to terminate, cancel, modify, change, supplement, alter or amend such Ground Leases, and any such termination, cancellation, modification, change, supplement, alteration or amendment of such Ground Leases without the prior written consent thereto by Mortgagee shall be void and of no force and effect. Unless (1) an Event of Default has occurred and is continuing and (2) either (A) there has been an acceleration of maturity of the Notes pursuant to Section 3.02 of the Note Mortgage or (B) the Mortgagee exercises its rights under Section 3.09 hereof, the Mortgagee shall have no right to terminate, cancel, modify, change, supplement, alter or amend the Ground Leases; (ii) solely for the benefit of the Mortgagee, Trustee, the Noteholders and no other person, no release or forbearance of any of the Mortgagor's obligations under such Ground Leases, pursuant to such Ground Leases or otherwise, shall release the Mortgagor from any of its obligations under this Mortgage, including its obligations with respect to the payment of rent as provided for in such Ground Leases and the performance of all of the terms, provisions, covenants, conditions and agreements contained in such Ground Leases, to be kept, performed and complied with by the lessee therein; (iii) unless the Mortgagee shall otherwise expressly consent in writing, the fee title to the Leased Land, the Mortgagor's interest in the improvements on the Leased Land and the leasehold estates shall not merge by and shall always remain separate and distinct, notwithstanding the union of such estates either in the Lessor or in the lessee, or in a third party by purchase or otherwise; (iv) the Mortgagor shall promptly notify the Mortgagee in writing of any request made by the Mortgagor, as lessee under each of the Ground Leases, or any of the Lessors, for arbitration proceedings pursuant to the Ground Leases and of the institution of any arbitration proceedings, as well as all proceedings thereunder. In addition, the Mortgagor shall promptly deliver to the Mortgagee a copy of the determination of the arbitrators in each such arbitration proceeding. The Mortgagee shall have the right to participate in such arbitration proceedings in association with the Mortgagor 52 or on its own behalf as an interested party in accordance with the terms of the Ground Leases; (v) the Mortgagor shall not consent to the subordination of any Ground Lease to any mortgage deed of trust or other lien of the fee interest of the Lessor; (vi) in the event (A) the Mortgagor exercises its option under any Ground Lease to purchase any portion of the Leased Land, the Mortgagor shall deliver a copy of its election to exercise such option within 5 days after the Mortgagor has delivered notice of such election to the Lessor or (B) the Mortgagor acquires fee simple title or any other estate, title or interest in the Leased Land, the Mortgagor shall promptly notify the Mortgagee of such acquisition and, on written request by the Mortgagee, shall cause to be executed and recorded all such other and further assurances or other instruments in writing as may, in the opinion of the Mortgagee, be required or desirable to carry out the intent and meaning of clause (x) of Granting Clause Second; (vii) within 5 days after the Mortgagor's receipt of any notice of any motion, application or effort to reject the Ground Lease by any Lessor or any trustee arising from or in connection with any case, proceeding or other action commenced or pending by or against any Lessor under the Code or any comparable provision contained in any present or future federal, state, local, foreign or other statute, law, rule or regulation, the Mortgagor shall give notice thereof to the Mortgagee. The Mortgagor hereby (A) assigns to the Mortgagee any and all of the Mortgagor's rights as lessee under Section 365(h) of the Code or any comparable provision contained in any present or future federal, state, local, foreign or other statute, law, rule or regulation ("Comparable Provision") and (B) covenants that it shall not elect to treat any Ground Lease as terminated pursuant to Section 365(h) of the Code or any Comparable Provision without the prior written consent of the Mortgagee and (C) agrees that any such election by the Mortgagor without such consent shall be null and void; (viii) without limiting the generality of the foregoing, the Mortgagor hereby unconditionally assigns, transfers and sets over to the Mortgagee all of the Mortgagor's claims and rights to the payment of damages arising from any rejection by Lessor of any Ground lease under the Code or any Comparable Provision. The Mortgagee shall have the right to proceed in its own name or in the name of the Mortgagor in respect of any claim, suit, action or proceeding relating to the rejection of 53 any Ground Lease, including, without limitation, the right to file and prosecute, in cooperation with the Mortgagor, any proofs of claim, complaints, motions, applications notices and other documents, in any case in respect of Lessor under the Code or any Comparable Provision. This assignment constitutes a present, irrevocable and unconditional assignment of the foregoing claims, rights and remedies, and shall continue in effect until all of the indebtedness and obligations secured by this Mortgage shall have been satisfied and discharged in full. Any amounts received by the Mortgagee in damages arising out of the rejection of any Ground Lease as aforesaid shall be applied first to all reasonable costs and expenses of the Mortgagee (including, without limitation, reasonable attorneys' fees) incurred in connection with the exercise of any of its rights or remedies under this Section 5.21, and thereafter as provided in Section 3.03 hereof; (ix) if there shall be filed by or against the Mortgagor a petition under the Code or any Comparable Provision and the Mortgagor, as lessee under the Ground Leases, shall determine to reject any or all of the Ground Leases the Mortgagor shall give the Mortgagee not less than 10 days' prior notice of the date on which the Mortgagor shall apply to the Bankruptcy Court or other judicial body with appropriate jurisdiction for authority to reject the lease. The Mortgagee shall have the right, but not the obligation, to serve upon the Mortgagor within such 10 day period a notice stating that (a) the Mortgagee demands that the Mortgagor assume and assign such Ground Lease(s) to the Mortgagee pursuant to Section 365 of the Code or any Comparable Provision and (b) the Mortgagee covenants to cure or provide adequate assurance of prompt cure of all defaults and provide adequate assurance of future performance under such Ground Lease(s). If the Mortgagee serves upon the Mortgagor the notice described in the preceding sentence, the Mortgagor shall not seek to reject such Ground Lease(s) and shall comply with the demand provided for in clause (a) of the preceding sentence within 30 days after the notice shall have been given subject to the performance by the Mortgagee of the covenant provided for in clause (b) of the preceding sentence. Effective upon the entry of an order for relief in respect of the Mortgagor under Chapter 7 of the Code or Any Comparable Provision the Mortgagor hereby assigns and transfers to the Mortgagee a non-exclusive right to apply to the Bankruptcy Court or other judicial body with appropriate jurisdiction for an order extending the period during which the Ground Lease may be rejected or assumed; 54 (x) the Mortgagor shall promptly give to the Mortgagee copies of (A) all notices of default or (B) any other communications or notices with respect to events which relate to the possible impairment of the security of this Mortgage, which it shall give or receive under the Ground Leases and shall promptly notify the Mortgagor of any default under any Ground lease on the part of the Lessor or the Mortgagor; (xi) the Mortgagor shall enforce the obligations of the Lessor under each Ground Lease, to the end that the Mortgagor may enjoy all of the rights granted to it under the Ground leases; and (xii) the Mortgagor shall notify the Mortgagee within 5 days after the transfer of a fee interest in the Leased Land or any portion thereof to or from an Affiliate. (c) The Mortgagor hereby represents and warrants that all fixed net rent, taxes and assessments, payable under the Ground Leases have been paid to the extent they were due and payable to the date hereof and that the Mortgagor has not received notice of its failure to pay any other amounts payable under the Ground Leases which have not been cured. (d) If both the Lessor's and lessee's estates under any of the Ground Leases or any portion thereof shall at any time become vested in one owner, this Mortgage and the lien created hereby shall nevertheless not be merged, extinguished, destroyed or terminated by application of the doctrine of merger and, in such event, Mortgagee shall continue to have all of the rights and privileges of the a leasehold mortgagee. (e) The Mortgagor hereby acknowledges that if any Ground Lease shall be terminated prior to the natural expiration of its term due to default by the lessee thereunder, and if pursuant to such Ground Lease, the Mortgagee or its designee shall acquire from the Lessor a new lease of the Leased land or any portion thereof, the Mortgagor shall have no right, title or interest in or to such lease or the leasehold estate created thereby, or the options therein contained. (f) Any leases for parking purposes hereafter entered into by the Mortgagor as lessee shall contain provisions permitting the assignment of the same to the Mortgagee and the Trustee and permitting assignment without the lessor's consent if this Mortgage is foreclosed. Section 5.22. SUPERIOR MORTGAGES. 55 (a) The Mortgagor covenants and agrees that it will at all times fully perform and comply with all agreements, covenants, terms and conditions imposed upon or assumed by it as mortgagor under the Superior Mortgages prior to the expiration of any notice and/or cure period provided in each such Superior Mortgage. If a notice of default has been given by the holder of any Superior Mortgage and the maturity of the indebtedness secured by such Superior Mortgage has been accelerated as a result thereof, the Mortgagee may rely thereon and take any action the Mortgagee deems necessary in its sole discretion to prevent or to cure any default by the Mortgagor in the performance of or compliance with any of the agreements, covenants, terms or conditions imposed upon or assumed by the Mortgagor as mortgagor under each of the Superior Mortgages even though the existence of such default or the nature thereof may be questioned or denied by the Mortgagor or by any party on behalf of the Mortgagor provided that if the Mortgagor has heretofore taken such actions as described in Section 3.01(h), the Mortgagee shall not take any such action unless and until the Mortgagor and/or the Mortgagee no longer has the benefit of any such tolling or stay referred to in Section 3.01(h). Without limiting the generality of Section 3.09 hereof, the Mortgagor hereby expressly grants to the Mortgagee, and agrees that upon such acceleration the Mortgagee shall have, the absolute and immediate right to enter in and upon the Premises or any part thereof to such extent and as often as the Mortgagee, in its sole discretion, deems necessary for the purpose permitted by the immediately preceding sentence, subject only to applicable Legal Requirements. The Mortgagee may (i) pay and expend such sums of money as the Mortgagee in its sole discretion deems necessary for any such purpose and (ii) in its sole discretion prepay any Superior Mortgage, and the Mortgagor hereby agrees to pay to the Mortgagee, immediately and without demand, all such sums referred to in (i) and (ii) above so paid and expended by the Mortgagee, together with interest thereon from the date of each such payment at the rate of interest set forth in the Note. All sums so paid and expended by the Mortgagee and the interest thereon shall be added to and be secured by the lien of this Mortgage. (b) The Mortgagor further covenants and agrees: (i) the Mortgagor shall not, without first satisfying the conditions set forth in Section 5.22(b)(i) of the Note Mortgage: (A) modify any of the terms, covenants or conditions of any Superior Mortgage, and without limiting the foregoing, the Mortgagor shall not, without satisfying such conditions, enter into or obtain any agreement whereby the holder of any Superior Mortgage waives, postpones, extends, reduces or modifies the payment of the installment of principal or interest or 56 any other item or amount now required to be paid under the terms of any Superior Mortgage or modifies any other provision thereof, or (B) acquire or permit or suffer any Affiliate of the Mortgagor to acquire any Superior Mortgage or any interest therein. Notwithstanding anything in clause (A) to the contrary, the Mortgagor shall have the right to amend, supplement or modify any Superior Mortgage, if (x) the then outstanding principal balance of the indebtedness secured by such Superior Mortgage is not increased thereby, and (y) in the case of any After-Acquired Fee Mortgage, such amendment, supplement or agreement does not increase the property covered thereby; (ii) the Mortgagor shall timely pay and perform all of the obligations to be paid or performed by the mortgagor under each Superior Mortgage, the note secured thereby and any other instrument evidencing or securing the indebtedness owing to any holder of any Superior Mortgage; (iii) at any time, and from time to time, the Mortgagor shall upon request of the Mortgagee promptly use its reasonable efforts to obtain an estoppel certificate or letter addressed to the Mortgagee from holders of the Superior Mortgages, such certificate or letter to be in such form as the Mortgagee shall request; and (iv) the Mortgagor shall promptly give to the Mortgagee copies of (A) all notices of default or (B) any other notice or communication with respect to events which relate to the possible impairment of the security of this Mortgage, which it shall give or receive under the Superior Mortgages and shall promptly notify the Mortgagor of any default under any Superior Mortgages on the part of the Mortgagor. (c) The lien of this Mortgage in and to all or specified portions of the Trust Estate shall be subject and subordinate to any Existing Encumbrances and any mortgage, assignment, security agreement, financing statement or other lien securing any Working Capital Facility (the "Working Capital Facility Lien") encumbering Mortgagor's interest in the affected portions of the Trust Estate or any part thereof. The foregoing provisions of this Section 5.22(c) shall be self-operative with respect to Existing Encumbrances and shall be self-operative with respect to any Working Capital Facility Lien, and no further instrument shall be required to give effect to such subordination. Mortgagee shall, however, from time to time, execute instruments in form 57 and substance reasonably satisfactory to the holder of the Working Capital Facility Lien, confirming such subordination and agreeing to such other matters reasonably required by the holder of the Working Capital Facility Lien which do not, in the aggregate, materially adversely reduce or impair the rights of Trustee under the Mortgage, and Mortgagor and others may rely conclusively thereon, provided that Mortgagee shall have no liability thereunder and all costs and expenses (including reasonable attorneys' fees) shall be paid by Mortgagor. (d) The lien of the Mortgage in and to all or specified portions of the Trust Estate shall be subject and subordinate to any Existing Encumbrances. The provisions of this Section 5.22(d) shall be self-operative, and no further instrument shall be required to give effect to such subordination. Section 5.23. MORTGAGE PARI PASSU WITH NOTE MORTGAGE. Notwithstanding recordation of this Mortgage in the Atlantic County, New Jersey Clerk's Office after the recordation of the Note Mortgage, the lien of this Mortgage ranks pari passu with, and not junior to, the lien created by the Note Mortgage. ARTICLE SIX MISCELLANEOUS Section 6.01. ACTION UNDER NOTE MORTGAGE. Mortgagee acknowledges that it is the assignee of the Note Mortgage, which Note Mortgage creates a lien upon the Trust Estate which is PARI PASSU with the lien of this Mortgage. Mortgagee further acknowledges and agrees that whenever it is provided in the Note Mortgage that the Mortgagor shall deliver any notice or document, or is required to make any payment thereunder, the delivery of such notice or document or the making of such payment pursuant to the terms of the Note Mortgage shall also constitute the delivery of such notice or document or the making of such payment in satisfaction of the terms, conditions and provisions of this Mortgage to the same extent as the same constitutes satisfaction of the terms, conditions and provisions of the Note Mortgage. Section 6.02. COUNTERPARTS. This instrument may be executed in any number of counterparts, each of which as executed shall be deemed to be an original, but all such counterparts shall constitute one and the same instrument. Section 6.03. MODIFICATION. This Mortgage is subject to "modification" within the meaning of N.J.S.A. 46:9- 58 8.1 ET SEQ., and this Mortgage shall have the benefit of the lien priority provisions of such statute. Such modification may include, without limitation, a change in the interest rate, maturity date or other terms and conditions of this Mortgage. THE MORTGAGOR DECLARES THAT THE MORTGAGOR HAS RECEIVED A TRUE COPY OF THIS MORTGAGE. IN WITNESS WHEREOF, the parties hereto have caused this Mortgage to be duly executed and attested, all as of the day and year first above written. RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation By:_____________________________ Name: Title: (Vice) President ATTEST:_________________________ Name: Title: (Asst.) Secretary STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION By:_____________________________ Name: Title: (Vice) President ATTEST:_________________________ Name: Title: (Asst.) Secretary 59 Exhibit G Intercreditor Agreement Terms Exhibit G Outline of Material Terms of the Intercreditor Agreement for Resorts International, Inc. Subject Credit Senior Secured Loan due July 15, 2002 (the Facilities "Senior Facility"); Senior Mortgage Notes due [March] 15, 2003 (the "Senior Mortgage Notes"); Junior Mortgage Notes due June 15, 2004 (the "Junior Mortgage Notes"); and Any other credit facilities which may be required by the Indentures for the Senior Facility, the Senior Mortgage Notes or the Junior Mortgage Notes to be included in the Intercreditor Agreement (the "Additional Facilities," and together with the Senior Facility, the Senior Mortgage Notes and the Junior Mortgage Notes, the "Credit Facilities") Creditor Parties Senior Facility Trustee; Senior Mortgage Note Trustee; Junior Mortgage Note Trustee; and any lenders (or trustees or agents on behalf of any lenders) which provide Additional Facilities (collectively, the "Trustees") Each Creditor Party, by its execution of the Intercreditor Agreement (whether directly or through its trustee or agent), acknowledges the making of the other Credit Facilities and the intended uses of proceeds thereof and waives any right to object to any contemporaneous or existing Credit Facility as having constituted a fraudulent conveyance. Classification of Initial Designations:Credit Facilities Class 1 Facilities: Senior Facility, all guarantees thereof and all intercompany obligations pledged as collateral therefor. Class 2 Facilities: Senior Mortgage Notes, all guarantees thereof and all intercompany obligations pledged as collateral therefor. Class 3 Facilities: Junior Mortgage Notes, all guarantees thereof and all intercompany obligations pledged as collateral therefor. Subsequent Designations - as indicated on the signature page(s) to be executed by the lenders (or any trustees or agents on behalf of any lenders) which provide Additional Facilities and consented to by all other parties at such time. Borrower Parties Resorts International Hotel Financing, Inc. ("RIHF"), as borrower under the Secured Facilities; Resorts International Hotel, Inc. ("RIH") as guarantor under the Secured Facilities and issuer of the secured intercompany notes to RIHF collaterally assigned to each respective Trustee; Resorts International, Inc. ("RII"), as guarantor under the Senior Facility and issuer of any intercompany notes which may be issued to RIH; and [GRI, Inc. ("GRI", and together with RIHF, RIH and RII, the "Borrower Parties") as guarantor under the Senior Facility and issuer of any intercompany notes which may be issued to RIH.]1* The Borrower Parties will execute the Intercreditor Agreement principally for the purposes of (i) acknowledging the relative rights of and relationships among the Secured Facilities established therein and (ii) agreeing not to take any actions, including making any payments, inconsistent therewith. - ------------------- * Subject to discussion on structure 2 Relative Priorities Liens: Notwithstanding the time of filing, recording or perfecting of the Security Documents (which will be defined to include the Mortgages and other liens and encumbrances): Each Lien created on behalf of a Class 1 Facility shall be (i) pari passu with any other Lien created on behalf of any other Class 1 Facility and (ii) senior to any Lien created on behalf of any Class 2 Facility or Class 3 Facility. Each Lien created on behalf of a Class 2 Facility shall be (i) pari passu with any other Lien created on behalf of any other Class 2 Facility, (ii) senior to any Lien created on behalf of any Class 3 Facility and (iii) junior to any Lien created on behalf of any Class 1 Facility. Each Lien created on behalf of a Class 3 Facility shall be (i) pari passu with any other Lien created on behalf of any other Class 3 Facility, and (ii) junior to any Lien created on behalf of any Class 1 Facility or Class 2 Facility. Subrogation To be waived by all guarantors. Mortgage Default Each Class 3 Creditor shall notify each Cure Provisions Class 2 Creditor and each Class 1 Creditor of any Default or Event of Default under its respective Class 3 Facility or the Mortgage or other Security Documents securing its facility, and promptly shall send to each Class 2 Creditor and each Class 1 Creditor copies of all notices of default and all notices relating to cure and/or grace periods under such Class 3 Facility or the Mortgage or other Security Documents securing its facility. Each Class 2 Creditor shall notify each Class 1 Creditor and each Class 3 Creditor of any Default or Event of 3 Default under its respective Class 2 Facility or the Mortgage or other Security Documents securing its facility, and promptly shall send to each Class 1 Creditor and each Class 3 Creditor copies of all notices of default and all notices relating to cure and/or grace periods under such Class 2 Facility or the Mortgage or other Security Documents securing its facility. Each Class 1 Creditor shall notify each Class 2 Creditor and each Class 3 Creditor of any Default or Event of Default under its respective Class 1 Facility or the Mortgage or other Security Documents securing its facility, and promptly shall send to each Class 2 Creditor and each Class 3 Creditor copies of all notices of default and all notices relating to cure and/or grace periods under such Class 1 Facility or the Mortgage or other Security Documents securing its facility. In addition, each Trustee will be obligated to notify all other Trustees prior to exercising any remedies with respect to any shared collateral. Application of Proceeds from dispositions of Proceeds collateral, insurance proceeds, condemnation awards and similar amounts will be applied in accordance with relative priorities of Liens. Representations and Each party to the Intercreditor Warranties Agreement will make appropriate representations, including those relating to its corporate existence, power and authority, as well as to the validity and enforceability of the Intercreditor Agreement. Amendments Intercreditor Agreement may not be amended except pursuant to a writing executed by all parties thereto. Amendments for the sole purpose of adding permitted parties may be executed by the Trustees without the consent of 4 the creditors for whom they serve if all conditions precedent to the incurrence of such indebtedness have been satisfied. Amendments to sections [ ] and [ ] may be executed by the Trustees only with the approval of 100% of the creditors for whom they serve and amendments to sections [ ] and [ ] may be executed by the Trustees only with the approval of 66 2/3% of the creditors for whom they serve. Third Party Each party to the Intercreditor Beneficiarie Agreement will acknowledge that such agreement is being entered into for the benefit of the lenders under the Credit Facilities and their respective successors and assigns, each of whom is a direct intended third-party beneficiary. Certain Specific performance; no waivers; Miscellaneous cooperation and further assurances. Provisions Governing Law New York EX-4 5 EXHIBIT 4.05 [GD&C Draft--12/30/93] [NA932820.031] -------------------------------------------- RESORTS INTERNATIONAL HOTEL FINANCING, INC., Issuer, RESORTS INTERNATIONAL HOTEL, INC., Guarantor, and U.S. TRUST COMPANY OF CALIFORNIA, N.A. Trustee -------------------------------------------- I N D E N T U R E Dated as of [ ], 1994 -------------------------------------------- 11.375% JUNIOR MORTGAGE NOTES DUE 2004 CROSS-REFERENCE TABLE SECTION OF TRUST INDENTURE ACT OF 1939 SECTION OF INDENTURE - -------------------------------------- -------------------- 310(a)(1) . . . . . . . . . . . . . . . . . . . . 8.08; 8.09 (a)(2) . . . . . . . . . . . . . . . . . . . . 8.09 (a)(3) . . . . . . . . . . . . . . . . . . . . 8.14(b) (a)(4) . . . . . . . . . . . . . . . . . . . . Not Applicable (b). . . . . . . . . . . . . . . . . . . . . . 8.08 (c). . . . . . . . . . . . . . . . . . . . . . Not Applicable 311(a). . . . . . . . . . . . . . . . . . . . . . 8.13 (b). . . . . . . . . . . . . . . . . . . . . . 8.13 (c). . . . . . . . . . . . . . . . . . . . . . Not Applicable 312(a). . . . . . . . . . . . . . . . . . . . . . 9.01; 9.02(a) (b). . . . . . . . . . . . . . . . . . . . . . 9.02(b) (c). . . . . . . . . . . . . . . . . . . . . . 9.02(c) 313(a). . . . . . . . . . . . . . . . . . . . . . 9.03(a) (b). . . . . . . . . . . . . . . . . . . . . . 9.03(a) (c). . . . . . . . . . . . . . . . . . . . . . 9.03(a) (d). . . . . . . . . . . . . . . . . . . . . . 9.03(b) 314(a). . . . . . . . . . . . . . . . . . . . . . 9.04 (b). . . . . . . . . . . . . . . . . . . . . . 6.02 (c)(1) . . . . . . . . . . . . . . . . . . . . 1.06 (c)(2) . . . . . . . . . . . . . . . . . . . . 1.06 (c)(3) . . . . . . . . . . . . . . . . . . . . 9.04(c); 12.07(i) (d). . . . . . . . . . . . . . . . . . . . . . 6.02 (e). . . . . . . . . . . . . . . . . . . . . . 1.06 (f). . . . . . . . . . . . . . . . . . . . . . Not Applicable 315(a). . . . . . . . . . . . . . . . . . . . . . 8.01(a) (b). . . . . . . . . . . . . . . . . . . . . . 8.02 (c). . . . . . . . . . . . . . . . . . . . . . 8.01(b) (d). . . . . . . . . . . . . . . . . . . . . . 8.01(c) (e). . . . . . . . . . . . . . . . . . . . . . 7.14 316(a)(l)(A). . . . . . . . . . . . . . . . . . . 7.12(b) (a)(l)(B). . . . . . . . . . . . . . . . . . . 7.13 (a)(2) . . . . . . . . . . . . . . . . . . . . Not Applicable (b). . . . . . . . . . . . . . . . . . . . . . 7.08 317(a)(l) . . . . . . . . . . . . . . . . . . . . 7.03 (a)(2) . . . . . . . . . . . . . . . . . . . . 7.04 (b). . . . . . . . . . . . . . . . . . . . . . 12.03 318(a). . . . . . . . . . . . . . . . . . . . . . 1.07 --------------------- Note: This Cross-Reference Table shall not be deemed, for any purpose, to be a part of this Indenture. TABLE OF CONTENTS PAGE ---- ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION Section 1.01. Definitions. . . . . . . . . . . . . . . . . . . . . 2 Section 1.02. Acts of Noteholders. . . . . . . . . . . . . . . . . 16 Section 1.03. Notices, etc., to Trustee, RIH and the Company. . . . . . . . . . . . . . . . . . . . . . 17 Section 1.04. Notices to Noteholders; Waiver.. . . . . . . . . . . 18 Section 1.05. Form and Contents of Documents Delivered to Trustee.. . . . . . . . . . . . . . . . . . . . . 19 Section 1.06. Compliance Certificates and Opinions.. . . . . . . . 20 Section 1.07. Conflict with Trust Indenture Act. . . . . . . . . . 21 Section 1.08. Effect of Headings and Table of Contents.. . . . . . 21 Section 1.09. Successors and Assigns.. . . . . . . . . . . . . . . 21 Section 1.10. Separability Clause. . . . . . . . . . . . . . . . . 21 Section 1.11. Benefits of Indenture. . . . . . . . . . . . . . . . 21 Section 1.12. Governing Law. . . . . . . . . . . . . . . . . . . . 21 Section 1.13. Casino Control Act.. . . . . . . . . . . . . . . . . 22 Section 1.14. General Application. . . . . . . . . . . . . . . . . 22 ARTICLE TWO NOTE FORM Section 2.01. Form Generally.. . . . . . . . . . . . . . . . . . . 22 Section 2.02. Form of Notes. . . . . . . . . . . . . . . . . . . . 23 Section 2.03. Form of Trustee's Certificate of Authentication.. . . . . . . . . . . . . . . . . . . 29 (i) PAGE ---- Section 2.04. Form of the Guaranty.. . . . . . . . . . . . . . . . 29 ARTICLE THREE THE NOTE Section 3.01. General Title. . . . . . . . . . . . . . . . . . . . 30 Section 3.02. Form and Denominations.. . . . . . . . . . . . . . . 30 Section 3.03. Execution, Authentication, Delivery and Dating . . . . . . . . . . . . . . . . . . . . . . . 29 Section 3.04. Temporary Notes. . . . . . . . . . . . . . . . . . . 31 Section 3.05. Registration, Transfer and Exchange. . . . . . . . . 31 Section 3.06. Mutilated, Destroyed, Lost and Stolen Notes. . . . . . . . . . . . . . . . . . . . . . . . 32 Section 3.07. Payment of Interest on Notes; Interest Rights Preserved.. . . . . . . . . . . . . . . . . . 33 Section 3.08. Persons Deemed Owners. . . . . . . . . . . . . . . . 34 Section 3.09. Cancellation.. . . . . . . . . . . . . . . . . . . . 35 Section 3.10. Term and Form. . . . . . . . . . . . . . . . . . . . 35 Section 3.11. Payment of Interest in Additional Notes. . . . . . . 36 Section 3.12. Exchangeability. . . . . . . . . . . . . . . . . . . 37 Section 3.13. Redemption . . . . . . . . . . . . . . . . . . . . . 37 Section 3.14. Authentication and Delivery of Original Issue. . . . . . . . . . . . . . . . . . . . . . . . 37 ARTICLE FOUR GUARANTY Section 4.01. Guaranty . . . . . . . . . . . . . . . . . . . . . . 37 Section 4.02. Execution and Delivery of Guaranty . . . . . . . . . 39 Section 4.03 Mortgage Securing Guaranty . . . . . . . . . . . . . 39 (ii) PAGE ---- ARTICLE FIVE SATISFACTION AND DISCHARGE Section 5.01. Payment of Indebtedness; Satisfaction and Discharge of Indenture . . . . . . . . . . . . . . . 40 Section 5.02. Application of Deposited Money . . . . . . . . . . . 41 Section 5.03. Repayment to the Company . . . . . . . . . . . . . . 42 ARTICLE SIX SECURITY Section 6.01. Assignment Agreement . . . . . . . . . . . . . . . . 42 Section 6.02. Recording, Etc.. . . . . . . . . . . . . . . . . . . 43 Section 6.03. Custody of Mortgage Documents. . . . . . . . . . . . 45 Section 6.04. Suits to Protect the Trust Estate and Mortgage Documents . . . . . . . . . . . . . . . . . 45 ARTICLE SEVEN REMEDIES Section 7.01. Events of Default. . . . . . . . . . . . . . . . . . 46 Section 7.02. Acceleration of Maturity; Rescission and Annulment . . . . . . . . . . . . . . . . . . . . . 50 Section 7.03. Covenant to Pay Trustee Amounts Due on Notes and Right of Trustee to Judgment . . . . . . . . . . 51 Section 7.04. Trustee May File Proofs of Claim . . . . . . . . . . 52 Section 7.05. Trustee May Enforce Claims Without Possession of Notes. . . . . . . . . . . . . . . . . 52 Section 7.06. Application of Money Collected . . . . . . . . . . . 53 Section 7.07. Limitation on Suits. . . . . . . . . . . . . . . . . 53 Section 7.08. Unconditional Right of Noteholders to Receive Principal and Interest . . . . . . . . . . . 54 Section 7.09. Restoration of Rights and Remedies . . . . . . . . . 54 (iii) PAGE ---- Section 7.10. Rights and Remedies Cumulative . . . . . . . . . . . 55 Section 7.11. Delay or Omission Not Waiver . . . . . . . . . . . . 55 Section 7.12. Other Rights . . . . . . . . . . . . . . . . . . . . 55 Section 7.13. Waiver of Past Defaults. . . . . . . . . . . . . . . 56 Section 7.14. Undertaking for Costs. . . . . . . . . . . . . . . . 56 Section 7.15. Enforcement. . . . . . . . . . . . . . . . . . . . . 57 Section 7.16. Management of Casino-Hotel . . . . . . . . . . . . . 57 ARTICLE EIGHT THE TRUSTEE Section 8.01. Certain Duties and Responsibilities. . . . . . . . . 58 Section 8.02. Notice of Defaults . . . . . . . . . . . . . . . . . 59 Section 8.03. Certain Rights of Trustee. . . . . . . . . . . . . . 59 Section 8.04. Not Responsible for Recitals or Issuance of Notes or Application of Proceeds. . . . . . . . . 61 Section 8.05. May Hold Notes . . . . . . . . . . . . . . . . . . . 61 Section 8.06. Money Held in Trust. . . . . . . . . . . . . . . . . 62 Section 8.07. Compensation and Reimbursement . . . . . . . . . . . 62 Section 8.08. Disqualification; Conflicting Interests. . . . . . . 63 Section 8.09. Corporate Trustee Required; Eligibility. . . . . . . 63 Section 8.10. Resignation and Removal; Appointment of Successor . . . . . . . . . . . . . . . . . . . . . 63 Section 8.11. Acceptance of Appointment by Successor . . . . . . . 65 Section 8.12. Merger, Conversion, Consolidation or Succession to Business . . . . . . . . . . . . . . . 65 Section 8.13. Preferential Collection of Claims Against Company. . . . . . . . . . . . . . . . . . . . . . . 66 Section 8.14. Co-trustees and Separate Trustees. . . . . . . . . . 66 (iv) PAGE ---- Section 8.15. Appointment of Authenticating Agent. . . . . . . . . 68 ARTICLE NINE NOTEHOLDERS' LISTS AND REPORTS BY TRUSTEE Section 9.01. Company to Furnish Trustee Semi-Annual Lists of Noteholders . . . . . . . . . . . . . . . . 69 Section 9.02. Preservation of Information; Communications to Noteholders. . . . . . . . . . . . 69 Section 9.03. Reports by Trustee . . . . . . . . . . . . . . . . . 70 ARTICLE TEN CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE Section 10.01. Consolidation, Merger, Conveyance or Transfer Only on Certain Terms . . . . . . . . . . . 72 Section 10.02. Successor Entity Substituted . . . . . . . . . . . . 73 Section 10.03. Successor Management of Casino-Hotel . . . . . . . . 74 Section 10.04. Limitation on Sales of Trust Estate. . . . . . . . . 74 ARTICLE ELEVEN AMENDMENTS, SUPPLEMENTS AND WAIVER Section 11.01. Without Consent of Noteholders . . . . . . . . . . . 74 Section 11.02. With Consent of Noteholders. . . . . . . . . . . . . 75 Section 11.03. Execution of Amendments and Supplements. . . . . . . 77 Section 11.04. Effect of Amendment or Supplement. . . . . . . . . . 77 Section 11.05. Conformity with Trust Indenture Act. . . . . . . . . 77 Section 11.06. Reference in Notes to Amendment or Supplement . . . . . . . . . . . . . . . . . . . . . 78 (v) ARTICLE TWELVE COVENANTS Section 12.01. Payment of Principal and Interest. . . . . . . . . . 78 Section 12.02. Maintenance of Office or Agency. . . . . . . . . . . 79 Section 12.03. Money for Security Payments to Be Held in Trust. . . . . . . . . . . . . . . . . . . . . . . . 79 Section 12.04. Corporate Existence. . . . . . . . . . . . . . . . . 81 Section 12.05. To Keep Books; Inspection by Trustee . . . . . . . . 81 Section 12.06. Reports and Compliance Certificates. . . . . . . . . 81 Section 12.07. Limitation on Dividends and Restricted Payments . . . . . . . . . . . . . . . . . . . . . . 83 Section 12.08. Limitation on Additional Indebtedness and Issuance of Notes. . . . . . . . . . . . . . . . . . 85 Section 12.09. Limitation on Repayment of Subordinated Indebtedness . . . . . . . . . . . . . . . . . . . . 86 Section 12.10. Limitation on Certain Transactions . . . . . . . . . 86 Section 12.11. Restriction of Activities. . . . . . . . . . . . . . 86 Section 12.12. Limitation on Subsidiaries; Consolidated Group. . . . . . . . . . . . . . . . . . . . . . . . 87 Section 12.13. Limitations on Liens . . . . . . . . . . . . . . . . 88 Section 12.14. Compliance with Laws . . . . . . . . . . . . . . . . 88 Section 12.15. Payment of Taxes and Other Claims. . . . . . . . . . 88 Section 12.16. Maintenance of Properties. . . . . . . . . . . . . . 89 Section 12.17. Insurance . . . . . . . . . . . . . . . . . . . . . 89 Section 12.18 Waiver of Stay, Extension or Usury Laws. . . . . . . 89 Section 12.19. Appointment to Fill a Vacancy in Office of Trustee . . . . . . . . . . . . . . . . . . . . . 90 Section 12.20 Validity of Liens. . . . . . . . . . . . . . . . . . 90 (vi) PAGE ---- Section 12.21. Transactions with Stockholders and Affiliates . . . . . . . . . . . . . . . . . . . . . 91 Section 12.22. Limitation on Open Market Purchases. . . . . . . . . 91 ARTICLE THIRTEEN REDEMPTION OF NOTES Section 13.01. General Applicability of Article . . . . . . . . . . 91 Section 13.02. Election to Redeem; Notice to Trustee. . . . . . . . 91 Section 13.03. Selection by Trustee of Notes to Be Redeemed . . . . . . . . . . . . . . . . . . . . . . 91 Section 13.04. Notice of Redemption . . . . . . . . . . . . . . . . 92 Section 13.05. Deposit of Redemption Price. . . . . . . . . . . . . 92 Section 13.06. Notes Payable on Redemption Date . . . . . . . . . . 93 Section 13.07. Notes Redeemed in Part . . . . . . . . . . . . . . . 93 Section 13.08. Redemption Pursuant to Casino Control Act. . . . . . . . . . . . . . . . . . . . . . . . . 93 (vii) TABLE OF EXHIBITS EXHIBITS DOCUMENT - -------- -------- Exhibit A RIH Junior Promissory Note Exhibit B Assignment Agreement from Resorts International Hotel Financing, Inc. Exhibit C Subordination Provisions Exhibit D Mortgage securing RIH Junior Promissory Note between Resorts International Hotel, Inc. and Resorts International Hotel Financing, Inc. Exhibit E Assignment of Leases and Rents from Resorts International Hotel, Inc. to Resorts International Hotel Financing, Inc. Exhibit F Mortgage securing Guaranty of Junior Mortgage Notes between Resorts International Hotel, Inc. and U.S. Trust Company of California, N.A., as Trustee Exhibit G Intercreditor Agreement Terms (vii) INDENTURE THIS INDENTURE dated as of [ ], 1994, among Resorts International Hotel Financing, Inc., a Delaware corporation (the "Company"), Resorts International Hotel, Inc., a New Jersey corporation ("RIH"), and U.S. Trust Company of California, N.A., a national banking association, as trustee (together with its successors as such trustee, the "Trustee"). PRELIMINARY STATEMENT The capitalized terms used in this Indenture which are not otherwise defined herein have the meanings set forth in Article I. The Company has duly authorized the creation, execution and delivery of its 11.375% Junior Mortgage Notes due 2004 (the "Notes"), issuable in accordance with the terms hereof, and RIH has duly authorized the guaranty of the Company's obligations under this Indenture, and, to secure the Notes and to provide therefor, each of the Company and RIH has duly authorized the execution and delivery of this Indenture. Each $1,000 principal amount of the Notes will be issued with one share of Resorts International, Inc.'s Class B Redeemable Common Stock (the "Class B Common Stock") (each $1,000 principal amount of the Notes and share of Class B Common Stock are referred to collectively herein as a "Unit"). Each Note may not be transfered separately from the share(s) of Class B Common Stock issued in respect of such Note. All things have been done which are necessary to make the Notes, when executed by the Company and authenticated and delivered by the Trustee hereunder and duly issued by the Company, the valid obligations of the Company, and to constitute this Indenture a valid agreement of the Company and RIH, in accordance with the terms of the Notes and this Indenture. THEREFORE, for and in consideration of the premises and the purchase or acceptance of the Notes by the Holders thereof, RIH and the Company do hereby covenant and agree to and with the Trustee, for the Ratable Benefit of all Holders of the Notes thereto appertaining, as follows: ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION Section 1.01. DEFINITIONS. For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires: (a) the terms defined in this Article One have the meanings assigned to them in this Article One and include the plural as well as the singular; (b) 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; (c) all accounting terms not otherwise defined herein have the meanings assigned to them, and all computations herein provided for shall be made, in accordance with GAAP consistently applied; and (d) 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. "ACCOUNTANT" means a Person engaged in the practice of accounting who (except as otherwise expressly provided in this Indenture) may be employed by or affiliated with the Company or RIH. "ACT" when used with respect to any Noteholder or Noteholders has the meaning stated in Section 1.02(a). "ADDITIONAL NOTES" means additional 11.375% Junior Mortgage Notes due 2004 issued in payment of interest accrued on outstanding Notes pursuant to Section 3.11. "AFFILIATE" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person, and, with respect to any specified natural Person, any other Person having a relationship by blood, marriage or adoption not more remote than first cousin with such specified Person. For purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms 2 "controlling" and "controlled" have meanings correlative to the foregoing; PROVIDED, HOWEVER, that, except as may be required under the TIA, the term "Affiliate" shall not include, with respect to the Company or RIH, any of Fidelity Management & Research Company, TCW Special Credits or funds or accounts managed or advised by either of them. "AFTER-ACQUIRED FEE MORTGAGE DEBT" means any Indebtedness secured by an After-Acquired Fee Mortgage. "AFTER-ACQUIRED FEE MORTGAGE" has the meaning stated in Section 2.07 of the Mortgage. "ASSIGNMENT AGREEMENT" means the Assignment of Agreements dated as of the date hereof, providing for the assignment of the RIH Junior Promissory Note and other Mortgage Documents to the Trustee by the Company, and acknowledgment thereof by RIH, a copy of which is attached hereto as Exhibit B. "ASSIGNMENT OF LEASES AND RENTS" means the Assignment of Leases and Rents dated as of the date hereof, from RIH to the Company securing the RIH Junior Promissory Note, a copy of which is attached hereto as Exhibit E. "AUTHENTICATING AGENT" means any Person named as Authenticating Agent for the Notes in accordance with the provisions of this Indenture until a successor Authenticating Agent becomes such pursuant thereto, and thereafter Authenticating Agent shall mean such successor. "AUTHORIZED SIGNATURE" means the signatures of the chairman of the board, the president or a Vice President and of the treasurer, an assistant treasurer, the controller, an assistant controller, the secretary or an assistant secretary of the Company or RIH, as the case may be. "CAPITALIZED LEASE OBLIGATION" means, with respect to any Person, any lease of any property (whether real, personal or mixed) by such Person as lessee which, in conformity with GAAP consistently applied, is accounted for as a capitalized lease on the balance sheet of such Person. "CASINO" means that portion of the Casino-Hotel used for gaming and related activities. "CASINO-HOTEL" means the casino and hotel complex and ancillary structures and facilities located on the Premises and furniture, fixtures and equipment at any time contained therein. 3 "CASINO CONTROL ACT" means the New Jersey Casino Control Act and the regulations promulgated thereunder, as amended. "CASINO CONTROL COMMISSION" means the New Jersey Casino Control Commission, as from time to time constituted, or if at any time after the execution of this Indenture such Commission is not existing and performing the duties theretofore assigned to it, then the body performing such duties at such time. "COMBINATION TRANSACTION" has the meaning stated in Section 10.01. "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 instrument such Commission is not existing and performing the duties theretofore assigned to it under the TIA, then the body performing such duties at such time. "COMPANY" means the Person named as the "Company" in the first paragraph of this instrument until a successor entity shall have become such pursuant to the applicable provisions of this Indenture, and thereafter, except to the extent otherwise contemplated by Section 10.02, "Company" shall mean such successor entity exclusively. "COMPANY CONSENT", "COMPANY ORDER" and "COMPANY REQUEST" mean, respectively, a written consent, order or request signed with an Authorized Signature and delivered to the Trustee. "CONSOLIDATED CASH FLOW" means, with respect to any Person for any period, an amount equal to the sum of (i) the consolidated net income (or loss) of such Person for such period determined in accordance with GAAP consistently applied, excluding interest income, interest expense and gains or losses from extraordinary or nonrecurring items, plus (ii) all amounts deducted in computing such consolidated net income (or loss) in respect of depreciation and amortization, plus (iii) non-cash charges arising from the reduction of CRDA Deposits to market value, minus (iv) taxes based upon or measured by income which are payable in cash, minus (v) CRDA Deposits. "CONSOLIDATED INTEREST CHARGES" means, with respect to any Person for any period, the consolidated interest expense (not including the non-cash amortization of discount on the original issuance of (a) the RIH Promissory Note, (b) any intercompany indebtedness of RIH issued in connection with Indebtedness represented by the Junior 4 Mortgage Facility and (c) any intercompany indebtedness of RIH issued in connection with Indebtedness represented by the Working Capital Facility), whether payable in cash or in-kind (and with respect to RIH, including, without limitation, the interest paid or accrued (without duplication) on (i) the RIH Promissory Note, (ii) any intercompany indebtedness of RIH issued in connection with Indebtedness represented by the Junior Mortgage Facility and (iii) any intercompany indebtedness of RIH issued in connection with Indebtedness represented by the Working Capital Facility), without deduction for interest income (other than cash interest income received from RII in payment of its interest cost on any Working Capital Facility), in each case for such Person and its consolidated Subsidiaries for such period determined in accordance with GAAP consistently applied. "CONSOLIDATED INTEREST COVERAGE RATIO" shall mean, at any date of calculation thereof, the ratio of (a) Consolidated Cash Flow of RIH and its consolidated Subsidiaries for the immediately preceding four consecutive fiscal quarters to (b) Consolidated Interest Charges of RIH and its consolidated Subsidiaries for such period. "CONSOLIDATED NET INCOME" means, with respect to any Person for any period, an amount equal to consolidated net income (or loss) of such Person for such period determined in accordance with GAAP consistently applied, minus (a) federal and state taxes based upon or measured by income which are payable in cash, plus (b) non-cash charges arising from federal and state taxes based upon or measured by income. "CRDA DEPOSITS" means (a) the quarterly deposits made by RIH to the Casino Reinvestment Development Authority in an amount equal to 1.25% of RIH's gross revenue in order to satisfy its investment obligation pursuant to the Casino Control Act, and (b) the amounts invested in qualified investments in lieu of any of the quarterly deposits (or portion thereof) referred to in clause (a) above. "CRDA DISPUTE" means the dispute existing on the date hereof between RIH and the New Jersey Casino Reinvestment Development Authority regarding CRDA Deposits and New Jersey Casino Reinvestment Authority Notes, which dispute involves an amount of approximately $30,000,000. "DEFAULT" means the occurrence and continuance of an Event of Default or an event which, after notice or lapse of time or both, would become an Event of Default. "DEFAULTED INTEREST" has the meaning stated in Section 3.07. 5 "EFFECTIVE DATE" means the date on which the prepackaged plan of reorganization of RII and GRI becomes effective. "EVENT OF DEFAULT" has the meaning stated in Section 7.01. An Event of Default shall "exist" if an Event of Default shall have occurred and be continuing. "EXCHANGE ACT" means the Securities and Exchange Act of 1934, as amended. "EXISTING ENCUMBRANCES" has the meaning stated in Section 1.01 of the Mortgage. "FAIR MARKET VALUE" of any Notes means (a) the average of the closing sales price of the Notes for the 30 trading days immediately prior to the date of determination of such value on the largest national securities exchange on which such Notes shall have traded on such trading days, or (b) if no such sales of such Notes occurred during such 30-day period or if the Notes are not so listed but are traded in the over-the-counter market with quotations available in the National Association of Securities Dealers Automated Quotation System ("NASDAQ"), the average of the means between the "bid" and "asked" prices on such national securities exchange or as quoted on NASDAQ, as the case may be, during such 30-day period, or (c) if the Notes are not traded on a national securities exchange or quoted on NASDAQ, the fair market value of such Notes as of the date of determination as determined by agreement of two nationally recognized Independent investment banking firms, one to be chosen by the Company and the other by the Holder of the Notes being valued, with the costs of each such firm being the responsibility of the Person selecting such firm. If such firms cannot agree upon such fair market value, such firms shall select a third nationally recognized Independent investment banking firm, which shall determine such fair market value, the costs of such third firm being shared equally by the Company and such Holder. "F,F&E FINANCING AGREEMENT" has the meaning stated in Section 1.01 of the Mortgage. "GAAP" means United States generally accepted accounting principles. "GRI" means GGRI, Inc., a Delaware corporation. "GROUND LEASES" has the meaning stated in Granting Clause Second of the Mortgage. "GUARANTY" means the guaranty contained in Article Four. 6 "GUARANTY MORTGAGE" means the Mortgage securing Guaranty of Junior Mortgage Notes dated as of the date hereof, between RIH, as mortgagor, and the Trustee, as mortgagee, securing the Guaranty, a copy of which is attached hereto as Exhibit F. "HOTEL" means that portion of the Casino-Hotel not included within the Casino. "INDEBTEDNESS" means, as applied to any Person, without duplication, any indebtedness, exclusive of deferred taxes, (a) in respect of borrowed money (whether or not the recourse of the lender is to the whole of the assets of such Person or only to a portion thereof); (b) evidenced by bonds, notes, debentures or similar instruments or letters of credit; (c) representing the balance deferred and unpaid of the purchase price of any property, if and to the extent such indebtedness would appear as a liability upon a balance sheet of such Person prepared in accordance with GAAP (but excluding trade accounts payable arising in the ordinary course of business that are not overdue by more than 90 days or are being contested by such Person in good faith); (d) any Capitalized Lease Obligations (other than, with respect to RIH or the Company, the Ground Leases) of such Person; and (e) Indebtedness of others guaranteed by such Person, including, without limitation, every obligation of such Person (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or to purchase (or to advance or supply funds for the purchase of) any security for the payment of such Indebtedness, (ii) to purchase property, securities or services for the purpose of assuring the holder of such Indebtedness of the payment of such Indebtedness, or (iii) to maintain working capital, equity capital or other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness; PROVIDED, HOWEVER, that the guaranty by any Person shall not include endorsements by such Person for collection or deposit, in either case in the ordinary course of business. The term "INDEBTEDNESS" does not include: (1) any of the types of indebtedness described in clauses (a) through (e) above (inclusive) owed by the Company to RIH or any of their Subsidiaries, by RIH to the Company or any of their Subsidiaries or by any such Subsidiary to RIH, the Company or any other such Subsidiary (including, without limitation, the RIH Promissory Note and the RIH Junior Promissory Note); (2) the Guaranty, the Junior Guaranty, the Senior Guaranty and the Working Capital Facility Guaranty; (3) matters relating to the CRDA Dispute, New Jersey Casino Reinvestment Development Authority Notes or CRDA Deposits; and (4) any payments made by the Company or RIH under the RII Management Agreement, the RII Tax Sharing Agreement or the Services Agreement. 7 "INDENTURE" means this instrument as originally executed or as it may from time to time be supplemented, modified or amended by one or more indentures or other instruments supplemental hereto entered into pursuant to the applicable provisions thereof. "INDEPENDENT" when used with respect to any specified Person means such a Person who (a) is in fact independent, (b) does not have any direct financial interest or any material indirect financial interest in the Company or in any other obligor upon the Notes or in any Affiliate of the Company or of such other obligor and (c) is not connected with the Company or such other obligor or any Affiliate of the Company or such other obligor as an officer, employee, promoter, underwriter, trustee, partner, director or person performing similar functions. Whenever it is herein provided that any Independent Person's opinion or certificate shall be furnished to the Trustee, such Person shall be appointed by a Company Order, and such opinion or certificate shall state that the signer has read this definition and that the signer is Independent within the meaning hereof. A Person who is performing or who has performed services as an independent contractor to any specified Person shall not be considered not Independent merely by reason of the fact that such Person is or has performed such services. "INTERCREDITOR AGREEMENT" means the Intercreditor Agreement dated as of the date hereof, among the Trustee, the trustee under the Senior Mortgage Note Indenture and such other parties that may from time to time become a party thereto, which shall incorporate the terms set forth in Exhibit G. "INTEREST PAYMENT DATE" means the date on which an installment of interest on the Notes is due and payable. "JUNIOR GUARANTY" means the Guaranty and any other guaranty of the Junior Mortgage Facility by RIH. "JUNIOR MORTGAGE FACILITY" means the Notes and any secured or unsecured facility or facilities entered into by RIH or the Company providing for the making of loans to RIH or the Company on a revolving or term basis, or the issuance of notes, debentures or bonds by RIH or the Company, as such agreement, indenture or instrument may be amended, supplemented or modified from time to time, or any refinancing thereof, in an aggregate principal amount up to $35,000,000 plus additional notes, debentures or bonds issued in payment of interest accrued on outstanding notes, debentures or bonds; PROVIDED, HOWEVER, that the lender or lenders thereunder (or any trustee or agent acting on behalf of such lender or lenders) shall have executed an intercreditor agreement covering the matters set forth on Exhibit G. The liens, if 8 any, securing the Junior Mortgage Facility shall be PARI PASSU with the lien of the Mortgage and the Guaranty Mortgage. The term "Junior Mortgage Facility" does not include the Junior Guaranty. "LEGAL REQUIREMENTS" has the meaning stated in Section 1.01 of the Mortgage. "MATURITY" when used with respect to any Note means the date on which the principal (or any portion thereof) of such Note becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration or call for redemption or otherwise. "MORTGAGE" means the Mortgage securing the RIH Junior Promissory Note dated as of the date hereof, between the Company, as successor mortgagee, and RIH, as mortgagor. "MORTGAGE DEBT" means, at any point in time, the RIH Promissory Note, the RIH Junior Promissory Note and any secured Indebtedness outstanding under any Working Capital Facility. "MORTGAGE DOCUMENTS" means (a) the Mortgage, the Guaranty Mortgage, the RIH Junior Promissory Note, the Assignment of Leases and Rents and any other security document to which either RIH or the Company is a party relating to the Notes, which is executed and delivered pursuant to or in connection with the Mortgage, the Guaranty Mortgage or the Assignment Agreement, and (b) any mortgage, deed of trust, guaranty, promissory note, collateral assignment agreement, assignment of leases and rents, assignment of operating assets and any other security document to which either RIH or the Company is a party relating to the Junior Mortgage Facility. "NATIONAL ACCOUNTANTS" has the meaning stated in Section 12.06(a). "NEW JERSEY CASINO REINVESTMENT DEVELOPMENT AUTHORITY NOTES" shall mean bonds issued by the Casino Reinvestment Development Authority, a public authority created under the Casino Control Act. "NON-RECOURSE INDEBTEDNESS" means indebtedness incurred in connection with the acquisition, purchase, improvement or development of property or assets (other than the Trust Estate) used by the Company, RIH or any Subsidiary of RIH or the Company to engage in the casino business, the hotel business or related or ancillary business or purpose and which is secured only by such assets and without recourse to RIH, the Company or any Subsidiary of RIH or the Company or the Trust Estate for such indebtedness. 9 "NOTEHOLDER" or "HOLDER" means a Person in whose name a Note is registered in the Note Register. "NOTE REGISTER" and "NOTE REGISTRAR" have the respective meanings stated in Section 3.05. "NOTES" has the meaning stated in the Preliminary Statement of this instrument and more particularly includes any Note authenticated and delivered hereunder, including, without limitation, any Additional Notes. The term "Notes" does not include the Guaranty. "OFFICER" of the Company or RIH means any Person authorized to execute an Authorized Signature. "OFFICERS' CERTIFICATE" delivered by the Company or RIH means a certificate signed with an Authorized Signature and delivered to the Trustee. Whenever this Indenture requires that an Officers' Certificate be signed also by an Accountant or other expert, such Accountant or other expert may (except as otherwise expressly provided in this Indenture) be in the general employ of the Company or RIH. "OPINION OF COUNSEL" means a written opinion of counsel who may (except as otherwise expressly provided in this Indenture) be an employee of the Company or RIH. Unless otherwise specifically provided in this Indenture, such counsel may rely as to any statement of facts not personally known to such counsel and relating to such opinion on an Officers' Certificate, to the extent not rejected by the Trustee and its counsel (which rejection shall not be unreasonably given). "OUTSTANDING" when used with respect to Notes means, as of the date of determination, all Notes theretofore authenticated and delivered under this Indenture, except: (a) Notes theretofore canceled by the Trustee or delivered to the Trustee for cancellation; (b) Notes for whose payment or redemption money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent in trust for the Holders of such Notes; (c) Notes in exchange for or in lieu of which other Notes have been authenticated and delivered under this Indenture; and (d) Notes alleged to have been destroyed, lost or stolen which have been paid as provided in Section 3.06; 10 PROVIDED, HOWEVER, that in determining whether the Holders of the requisite principal amount of Notes Outstanding have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Notes owned by the Company or any other obligor upon the Notes or any Affiliate of the Company or of such other obligor shall be disregarded and deemed not to be outstanding. In determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Notes which the Trustee actually knows to be so owned shall be so disregarded. "OUTSTANDING AMOUNT" of any Indebtedness at any time means the principal amount outstanding of such Indebtedness at such time. "PAYING AGENT" means any Person now or hereafter authorized by the Company to pay the principal of or interest on any Notes on behalf of the Company. "PERMITS" has the meaning stated in Section 1.01 of the Mortgage. "PERMITTED ENCUMBRANCES" has the meaning stated in Section 1.01 of the Mortgage. "PERSON" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or any other entity or government or any agency or political subdivision thereof. "PLACE OF PAYMENT" when used with respect to the Notes means a city or any political subdivision thereof in which the Company is by this Indenture required to maintain an office or agency for the payment of the principal of or interest on the Notes. "PLAN" means the Plan of Reorganization of RII and GRI dated [ ], 1994. "PREDECESSOR NOTES" of any particular Note means every previous Note evidencing all or a portion of the same debt as that evidenced by such particular Note; and, for purposes of this definition, any Note authenticated and delivered under Section 3.06 in lieu of a lost, destroyed or stolen Note shall be deemed to evidence the same debt as the lost, destroyed or stolen Note. "PREMISES" has the meaning stated in Granting Clause Third of the Mortgage. "RATABLE BENEFIT" means, for any class or classes of Indebtedness at any time, in proportion to the total Outstanding Amount of such class or classes held by each holder thereof at such time. 11 Outstanding Amount of such class or classes held by each holder thereof at such time. "REDEMPTION DATE" when used with respect to any Note to be redeemed means the date fixed for such redemption pursuant to this Indenture. "REDEMPTION PRICE" when used with respect to any Note to be redeemed means the price at which it is to be redeemed pursuant to this Indenture. It does not include installments of interest due on or before the Redemption Date. "REGULAR RECORD DATE" for the interest payable on any Interest Payment Date on the Notes means the date specified in the provisions of this Indenture. "RESPONSIBLE OFFICER" means any Vice President, any Assistant Vice President or any other officer of assistant officer of the Trustee assigned by the Trustee to administer its corporate trust matters. "RESTRICTED PAYMENT" means (a) any declaration or payment of any dividend or the making of any distribution to holders of capital stock of RIH or the Company or any Subsidiary of RIH or the Company in respect of such capital stock (other than to RIH or the Company or a direct or indirect wholly owned Subsidiary of RIH or the Company), (b) any purchase, redemption or other acquisition or retirement for value of any capital stock (or warrants, rights or options to acquire any capital stock or Indebtedness convertible into or exchangeable for any capital stock) of RIH or the Company or any Subsidiary of RIH or the Company (other than purchases, redemptions, acquisitions or retirement solely from RIH or the Company or a direct or indirect wholly owned Subsidiary of RIH or the Company); PROVIDED, HOWEVER, that any such purchase, redemption or other acquisition or retirement that is required by the Casino Control Commission or under the Casino Control Act shall not constitute a Restricted Payment. The term "Restricted Payment" also shall not include any loan or advance to RII of all or any portion of the proceeds of the Indebtedness represented by the Working Capital Facility. 12 "RIH" means the person named as "RIH" in the first paragraph of this instrument until a successor entity shall have become such pursuant to the applicable provisions of the Indenture, and thereafter, except to the extent otherwise contemplated by Section 10.02, "RIH" shall mean such successor entity exclusively. "RIH JUNIOR PROMISSORY NOTE" means the secured junior promissory note, dated the date hereof, made by RIH in the principal amount of $35,000,000, plus any additional junior promissory notes issued in connection with the payment of interest accrued on outstanding Notes payable to the order of the Company, a copy of which is attached hereto as Exhibit A. "RIH SALE" means (a) a consolidation, combination or merger involving RIH and any other Person, (b) a sale, assignment, conveyance or transfer or RIH's interest in the Trust Estate, substantially as an entirety, to any other Person or group of Persons in one transaction or a series of related transactions, or (c) any transaction as a result of which RIH ceases to be a direct or indirect wholly owned Subsidiary of RII; PROVIDED, HOWEVER, that any of the transactions described in clauses (a), (b) and (c) above shall not constitute an RIH Sale if the other party or parties to the transaction consists of only one or more of the following Persons: the Company or any wholly owned direct or indirect subsidiary of RIH or the Company; PROVIDED, FURTHER, HOWEVER, that notwithstanding any other provision of this definition, if the primary effect of any of the aforesaid transactions is the redemption of the Notes, then such transaction shall not be considered to be an RIH Sale. "RIH PROMISSORY NOTE" means the secured promissory note, amended and restated as of the date hereof, made by RIH in the principal amount of $125,000,000 payable to the order of the Company, a copy of which is attached to the Senior Mortgage Note Indenture as Exhibit A. "RIHF SENIOR FACILITY" means the senior secured note facility contemplated by the purchase agreement dated as of the date hereof, among the Company, RIH, RII and funds managed by Fidelity Management and Research Company, which allows the Company to borrow up to $20,000,000 in aggregate principal amount through the issuance of RIHF Senior Facility Notes. The term "RIHF Senior Facility" does not include the Working Capital Facility Guaranty. "RIHF SENIOR FACILITY NOTES" means, collectively, the notes executed and delivered by the Company under the RIHF Senior Facility. 13 "RII" means Resorts International, Inc., a Delaware corporation. "RII MANAGEMENT CONTRACT" means the Management Contract dated as of the date hereof, between RII and RIH pursuant to which RII provides certain management services to RIH for an annual fee of 3% of the gross revenues of RIH. "RII TAX SHARING AGREEMENT" means the Tax Sharing Agreement dated as of the date hereof between RII and RIH pursuant to which (i) RIH will not make any payments to RII or any other Affiliate in respect of taxes, other than to reimburse RII for any cash payments actually made by RII in respect of any federal, state or local income or alternative minimum taxes arising from the earnings or operations of RIH; PROVIDED, HOWEVER, that RIH shall not be required to reimburse RII for cash payments in respect of federal, state or local income or alternative minimum taxes that would not have been owed but for the reduction, if any, of the amount of the consolidated net operating loss carryforwards or consolidated current losses of the affiliated group of which RII is a common parent which resulted from the inclusion in the consolidated return filed for such group for any taxable year ending after the Effective Date of the income of any entity other than RIH, other than income directly attributable to the consummation of the Plan, including but not limited to the transfer of the stock of RIB (as defined in the Plan) and the assets of the U.S. Paradise Island Subsidiaries (as defined in the Plan), and (ii) RIH will be entitled to any refund (plus the interest thereon) of any taxes for which RIH is required to reimburse RII. "SENIOR ASSIGNMENT OF LEASES AND RENTS" means the Assignment of Leases and Rents dated as of the date hereof, from RIH to the Company securing the RIH Promissory Note. "SENIOR GUARANTY" means the guaranty of the 11% Senior Mortgage Notes due 2003 by RIH contained in Article Four of the Senior Mortgage Note Indenture. "SENIOR GUARANTY MORTGAGE" means the Mortgage securing the Guaranty of Senior Mortgage Notes dated as of the date hereof, between RIH, as mortgagor, and State Street Bank and Trust Company of Connecticut, N.A., as mortgagee. "SENIOR MORTGAGE" means the Mortgage securing the RIH Promissory Note dated as of the date hereof, between the Company, as successor mortgagee, and RIH, as mortgagor. "SENIOR MORTGAGE DOCUMENTS" means the Senior Mortgage, the Senior Guaranty Mortgage, the RIH 14 Promissory Note, the Senior Assignment of Leases and Rents and any other security document to which either RIH or the Company is a party relating to the Senior Mortgage Notes, which is executed and delivered pursuant to or in connection with the Senior Mortgage, the Senior Guaranty Mortgage or the Senior Assignment Agreement. "SENIOR MORTGAGE NOTE INDENTURE" means the Indenture dated as of the date hereof, among the Company, RIH and State Street Bank and Trust Company of Connecticut, N.A., as trustee, pursuant to which the Senior Mortgage Notes were issued, as originally executed or as it may from time to time be supplemented, modified or amended by one or more indentures or other instruments supplemental thereto entered pursuant to the applicable provisions thereof. "SENIOR MORTGAGE NOTES" means the 11% Mortgage Notes due 2003 of the Company issued pursuant to the Senior Mortgage Note Indenture. "SERVICES AGREEMENT" means the Services Agreement dated as of September 17, 1992, between RII, RIH and The Griffin Group, Inc. "SPECIAL RECORD DATE" for the payment of any Defaulted Interest on Notes means a date fixed by the Trustee pursuant to Section 3.07. "STATED MATURITY" when used with respect to any Note means the date specified in such Note as the fixed date on which the principal of such Note is due and payable. "SUBSIDIARY" of any Person means a corporation more than 50% of the outstanding voting stock of which is owned, directly or indirectly, by such Person or one or more Subsidiaries of such Person. "TIA" or "TRUST INDENTURE ACT" means the Trust Indenture Act of 1939, as amended. "TRUSTEE" means the Person named as the "Trustee" in the first paragraph of this instrument until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter Trustee shall mean such successor Trustee. "TRUST ESTATE" has the meaning stated in the Granting Clauses to the Mortgage. 15 "VICE PRESIDENT" when used with respect to the Company, RIH or the Trustee means any vice president, whether or not designated by a number or a word added to the title. "WORKING CAPITAL FACILITY" means the RIHF Senior Facility (and the RIHF Senior Facility Notes issued thereunder) and any other secured or unsecured facility or facilities entered into by RIH and/or the Company providing for the making of working capital loans to RIH or the Company (with RII [and GRI] as a guarantor[s] thereunder) on a revolving or term basis, or the issuance of notes, debentures or bonds by RIH, the Company or RII, as such agreement may be amended, supplemented or modified from time to time, or any refinancing thereof, in an aggregate principal amount up to $20,000,000; PROVIDED, HOWEVER, that the lender or lenders thereunder (or any trustee or agent acting on behalf of such lender or lenders) shall have executed an intercreditor agreement covering the matters set forth on Exhibit G. The liens, if any, securing the Working Capital Facility may be senior to the lien of the Mortgage, the Guaranty Mortgage, the Senior Mortgage and the Senior Guaranty Mortgage. The term "Working Capital Facility" does not include the Working Capital Facility Guaranty. "WORKING CAPITAL FACILITY MORTGAGE DOCUMENTS" means any mortgage, deed of trust, guaranty, promissory note, collateral assignment agreement, assignment of leases and rents, assignment of operating assets and any other security document to which either RIH or the Company is a party relating to the Working Capital Facility. "WORKING CAPITAL FACILITY GUARANTY" means any guaranty of the Working Capital Facility by RIH, including, without limitation, the guaranty of the RIHF Senior Facility Notes. Section 1.02. ACTS OF NOTEHOLDERS. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Noteholders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Noteholders in person or by an agent 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 Noteholders 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 16 favor of the Company and (subject to Section 8.01(c)) in favor of the Trustee, if made in the manner provided in this Section 1.02. (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 the certificate of any 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. Whenever such execution is by an officer of a corporation or a member of a partnership on behalf of such corporation or partnership, such certificate or affidavit shall also constitute sufficient proof of his authority. (c) The fact and date of execution of any such instrument or writing and the authority of any Person executing the same may also be proved in any other manner which the Trustee deems sufficient; and the Trustee may in any instance require further proof with respect to any of the matters referred to in this Section 1.02. (d) The ownership of Notes shall be proved by the Note Register. (e) Any request, demand, authorization, direction, notice, consent, waiver or other action by the Holder of any Note shall bind every future Holder of the same Note and the Holder of every Note issued upon the transfer thereof or in exchange therefor or in lieu thereof, in respect of anything done 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 Note. (f) The Company may, in the circumstances permitted by the Trust Indenture Act, set any day as the record date for the purpose of determining the holder of Outstanding Notes entitled to give or take any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by this Indenture to be given or taken by holders of Notes. With regard to any record date set pursuant to this Section 1.02(f) the holders of Outstanding Notes on such record date (or their duly appointed agents), and only such Persons, shall be entitled to give or take the relevant action, whether or not such Persons remain holders after such record date. (g) Until a waiver or consent becomes effective, such a waiver or consent by a Holder is a continuing waiver or consent by the Holder and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder's Note, even if notation of the waiver or consent is not made on any Note. However, any such Holder or 17 subsequent Holder may, until such waiver or consent becomes effective, revoke the waiver or consent as to his Note or portion of his Note. Such revocation shall be effective only if the Trustee receives the notice of such revocation before the date on which the waiver or consent has become effective. Section 1.03. NOTICES, ETC., TO TRUSTEE, RIH AND THE COMPANY. (a) Any request, demand, authorization, direction, notice (including, without limitation, a notice of default), consent, waiver or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with, the Company, RIH or the Trustee shall be deemed given when either (i) delivered by hand or (ii) two days after sending by registered or certified mail, postage prepaid, in either case, addressed as follows: To the Company: Resorts International Hotel Financing, Inc. c/o Resorts International, Inc. 1133 Boardwalk Atlantic City, New Jersey 08401 Attn.: Secretary To RIH: Resorts International Hotel, Inc. c/o Resorts International, Inc. 1133 Boardwalk Atlantic City, New Jersey 08401 Attn.: Secretary To the Trustee: U.S. Trust Company of California, N.A. 555 S. Flower Street Suite 2700 Los Angeles, California 90071 Attn.: Corporate Trust Department To Casino Control Commission: New Jersey Casino Control Commission Arcade Building Tenessee Avenue & Boardwalk Atlantic City, New Jersey 08401 Attn.: Chairman 18 To Director of Division of Gaming Enforcement: New Jersey Division of Gaming Enforcement 140 E. Front Street CN 047 Trenton, New Jersey 08625 Attn.: Director (b) By notice to the Company, RIH and/or the Trustee, Casino Control Commission and/or Director of Division of Gaming Enforcement, given as provided above, any party may designate additional or substitute addresses for such notices, which, notwithstanding Section 1.03(a), shall be deemed given when received. Section 1.04. NOTICES TO NOTEHOLDERS; WAIVER. Where this Indenture provides for notice to Noteholders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each Holder of such Notes, at the address of such Holder as it appears in the Note Register, not later than the latest date, and not earlier than the earliest date, prescribed for the provision of such notice. In any case where notice to Noteholders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Noteholder shall affect the sufficiency of such notice with respect to other Noteholders. 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 Noteholders 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 regular mail service, or by reason of any other cause, it shall be impracticable to give such notice by mail, then such notification may be given by any other method that the Trustee shall consider to be reasonable and shall be deemed to be a sufficient giving of such notice for every purpose hereunder. Section 1.05. FORM AND CONTENTS OF DOCUMENTS DELIVERED TO TRUSTEE. Whenever 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 19 some matters and one or more other such Persons as to such matters in one or several documents. Any certificate or opinion of an Officer of the Company or of RIH may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such Officer knows that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any 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 RIH stating that the information with respect to such factual matters is in the possession of the Company or RIH, unless such counsel knows that the certificate or opinion or representations with respect to such matters are erroneous. If appropriate to the matter being opined upon and to the extent not prohibited by the TIA, any Opinion of Counsel may be subject to rights of creditors and the availability of equitable remedies. Whenever 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. Whenever in this Indenture, in connection with any application or certificate or report to the Trustee, it is provided that the Company or RIH shall deliver any document as a condition of the granting of such application, or as evidence of the Company's or RIH's compliance with any term hereof, it is intended that the truth and accuracy, at the time of the granting of such application or at the effective date of such certificate or report (as the case may be), of the facts and opinions stated in such document shall in such case be conditions precedent to the right of the Company or RIH to have such application granted or to the sufficiency of such certificate or report. Section 1.06. COMPLIANCE CERTIFICATES AND OPINIONS. Upon any application or request by the Company or RIH to the Trustee to take any action under any provision of this Indenture or any Mortgage Document, the Company or RIH shall furnish to the Trustee an Officers' Certificate stating that all conditions precedent, if any, provided for in this Indenture or such Mortgage Document 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 20 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 or any Mortgage Document shall include: (a) a statement that each individual signing such certificate or opinion has read such condition or covenant and the definitions herein relating thereto; (b) 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; (c) 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 condition or covenant has been complied with; and (d) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. Section 1.07. CONFLICT WITH TRUST INDENTURE ACT. If any provision hereof or of the Mortgage Documents or the Assignment Agreement limits, qualifies or conflicts with another provision hereof or of the Mortgage Documents or the Assignment Agreement which is required to be included herein or therein by any of the provisions of the TIA, such required provision shall control. Section 1.08. EFFECT OF HEADINGS AND TABLE OF CONTENTS. The Article and Section headings herein and in the Table of Contents are for convenience only and shall not affect the construction hereof. Section 1.09. SUCCESSORS AND ASSIGNS. All covenants and agreements in this Indenture by the Company or RIH shall, subject to Section 10.02, bind its successors and assigns, whether so expressed or not. Section 1.10. SEPARABILITY CLAUSE. In case any provision in this Indenture or in the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining 21 provisions shall not in any way be affected or impaired thereby. Section 1.11. BENEFITS OF INDENTURE. Nothing in this Indenture or in the Notes, express or implied, shall give to any Person other than the parties hereto and their successors hereunder, any separate trustee or co-trustee appointed under Section 8.14 and the Holders of Notes, any benefit or any legal or equitable right, remedy or claim under this Indenture. Section 1.12. GOVERNING LAW. This Indenture and each Note shall be deemed to be a contract under the laws of the State of New York and shall be construed in accordance with and governed by the internal laws of the State of New York. Section 1.13. CASINO CONTROL ACT. Each of the provisions of this Indenture is subject to and shall be enforced in compliance with the provisions of the Casino Control Act, unless such provisions are in conflict with the TIA, in which case the TIA shall control. Section 1.14. GENERAL APPLICATION. (a) The assertion of any rights upon any Default shall be subject in each instance to the giving of any notice and the expiration of any grace period provided for in Section 7.01 as a condition to such Default becoming an Event of Default, unless the TIA requires otherwise, in which case the TIA shall control. (b) For the purposes of this Indenture, it is understood that an event which does not materially diminish the value of the Trustee's interest in the Trust Estate shall not be deemed an impairment of security, as that phrase is used in this Indenture. (c) This Indenture may not be used to interpret another indenture, loan or debt agreement of the Company, other than the Mortgage and the Guaranty Mortgage. Any such indenture, loan or debt agreement may not be used to interpret this Indenture. (d) In the event of a conflict between any provision of this Indenture and any provision of a Mortgage Document, the provision of this Indenture shall prevail. 22 ARTICLE TWO NOTE FORM Section 2.01. FORM GENERALLY. The Notes and the Trustee's certificate of authentication shall be substantially in the forms set forth in this Article Two, 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 Notes as evidenced by their execution thereof. Any portion of the text of any Note may be set forth on the reverse thereof. The definitive Notes shall be printed, lithographed or engraved or produced by any combination of these methods or produced in any other manner permitted by the rules of any securities exchange on which the Notes may be listed, all as determined by the officers executing such Notes as evidenced by their execution thereof. Section 2.02. FORM OF NOTES. The form of the Notes shall be substantially as follows: [FACE OF NOTES] RESORTS INTERNATIONAL HOTEL FINANCING, INC. 11.375% Junior Mortgage Note due 2004 THIS NOTE HAS BEEN ISSUED AS PART OF A UNIT WITH A NUMBER OF SHARES OF CLASS B STOCK OF RESORTS INTERNATIONAL, INC. SUCH THAT ONE SHARE OF CLASS B STOCK HAS BEEN ISSUED IN RESPECT OF EACH $1,000 PRINCIPAL AMOUNT OF NOTES. THIS NOTE MAY NOT BE TRANSFERRED SEPARATELY FROM THE SHARES OF CLASS B STOCK ISSUED IN RESPECT OF THIS NOTE. No. $ ------------- ------------- Resorts International Hotel Financing, Inc., a Delaware corporation (hereinafter called the "Company", which term includes any successor entity under the Indenture referred to on the reverse), for value received, hereby promises to pay to______________, or registered assigns, on December 15, 2004 the sum of _____________ Dollars (or so much 23 thereof as shall not have been paid upon prior redemption) and to pay interest (computed on the basis of a 360-day year of twelve 30-day months based on the actual number of days elapsed) thereon from [ ], 1994 [the Effective Date], or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually at June 15 and December 15 in each year (commencing December 15, 1994), at the rate of 11.375% per annum, until the principal hereof is paid or made available for payment. Interest also shall accrue on Additional Notes (as defined below) at such rates from and including the date of issuance thereof until the principal amount thereof is paid or made available for payment. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in said Indenture, be paid to the Person in whose name this Note (or one or more Predecessor Notes) is registered at the close of business on the Regular Record Date for such interest, which shall be the first day (whether or not a business day) of the calendar month of such Interest Payment Date. Any such interest not so punctually paid or duly provided for (including by issuance of Additional Notes in lieu of cash interest payment) shall forthwith cease to be payable to the Holder on such Regular Record Date, and may be paid to the Person in whose name this Note (or one or more Predecessor Notes) 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 thereof being given to Noteholders not less than ten 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 Notes may be listed and upon such notice as may be required by such exchange, all as more fully provided in said Indenture. The principal of and interest on this Note shall be payable at the corporate trust office of the Trustee, as defined on the reverse, or at an office or agency of the Company in the Borough of Manhattan, City and State of New York. All such payments shall be made 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, or by check or, at the option of the Company, on any Interest Payment Date, if Consolidated Cash Flow of RIH and its consolidated Subsidiaries for the period of four fiscal quarters ended on the last day of the last quarter ended prior to such Interest Payment Date was less than $35,000,000, all or any portion of such interest may be paid in additional Notes in a principal amount equal to the amount of accrued interest so paid ("Additional Notes"), PROVIDED, HOWEVER, that Additional Notes shall be issued in minimum denominations of $100 (but not fractions thereof) in a principal amount equal to such interest payment, or portion thereof, which the Company elects to so pay. The Company shall pay cash in lieu of issuing any fractional Additional Notes. The issuance of such Additional Notes shall constitute 24 full payment of interest in respect of which such Additional Notes are issued in the principal amount so issued. All interest payments made in Additional Notes must be made PRO RATA in respect of all outstanding Notes, on the basis of the respective dollar amounts of accrued and unpaid interest on such Notes. The Additional Notes shall be issued as Units such that one share of Class B Common Stock shall be issued in respect of each $1,000 principal amount of Additional Notes. The Additional Notes may not be transferred separately from the shares of Class B Common Stock issued in respect of such Additional Notes. All interest payments made in cash (other than cash payments made in lieu of issuance of fractional Additional Notes) shall be made PRO RATA in respect of all outstanding Notes, on the basis of the respective dollar amounts of accrued and unpaid interest on such Notes. The Company may deliver any such interest payment to the Paying Agent or may mail any such interest payment to a Holder at the Holder's registered address. "Consolidated Cash Flow" means, with respect to any period, an amount equal to the sum of (i) the consolidated net income (or loss) of RIH for such period determined in accordance with GAAP consistently applied, excluding interest income, interest expense and gains or losses from extraordinary or nonrecurring items, plus (ii) all amounts deducted in computing such consolidated net income (or loss) in respect of depreciation and amortization, plus (iii) non-cash charges arising from the reduction of CRDA Deposits to market value, minus (iv) taxes based upon or measured by income which are payable in cash, minus (v) CRDA Deposits. Unless the certificate of authentication hereon has been executed by the Trustee or the Authenticating Agent by manual signature, this Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. THIS NOTE SHALL BE DEEMED TO BE A CONTRACT UNDER THE LAWS OF THE STATE OF NEW YORK AND SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK. 25 IN WITNESS WHEREOF, the Company has caused this Note to be executed. RESORTS INTERNATIONAL HOTEL FINANCING, INC. Dated: By: ----------------- ------------------------- Attest: ----------------- [BACK OF NOTES] This Note is one of a duly authorized issue of Notes of the Company designated as "11.375% Junior Mortgage Notes due 2004" (the "Notes"), issued under an Indenture dated as of __________ __, 1994 (the "Indenture"), among the Company, Resorts International Hotel, Inc., a New Jersey corporation, as guarantor ("RIH"), and U.S. Trust Company of California, N.A., a national banking association, as Trustee (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 description of the nature and extent of the security, the respective rights thereunder of the Holders of the Notes, the Trustee and the Company and the terms upon which the Notes are, and are to be, authenticated and delivered. Payment of principal and interest (including interest on overdue principal) and performance of all obligations under the Indenture is guaranteed by RIH (the "Guaranty"). The Notes are secured by an assignment of one or more secured junior promissory notes of RIH, which owns and operates the property known as Merv Griffin's Resorts Casino Hotel, and of a mortgage on the Trust Estate made by RIH (the "Mortgage"). Additionally, the Guaranty is secured by a separate direct mortgage of the Trust Estate made by RIH to the Trustee (the "Guaranty Mortgage"). All terms in this Note defined in the Indenture shall have the same meaning herein as therein. The lien of the Mortgage is pari passu with the lien of the Guaranty Mortgage and junior to the lien securing payment of the RIHF Senior Facility Notes, the lien, if any, securing any other secured Working Capital Facility, the lien (if any) securing the Working Capital Facility Guaranty, to the lien securing payment of the Senior Mortgage Notes and to the lien securing the Senior Mortgage Guaranty. The Notes may be redeemed at the option of the Company, as a whole or from time to time in part, on or after 26 the fifth anniversary of the Effective Date on notice as provided in the Indenture, at par together with interest accrued and unpaid thereon to the date fixed for redemption. In the event of an RIH Sale, all the Notes shall be redeemed by the Company, whether such RIH Sale occurs before, on or after the fifth anniversary of the Effective Date, at par together with interest, if any, accrued and unpaid thereon to the Redemption Date; PROVIDED, HOWEVER, that such obligation of the Company to redeem the Notes in the event of a proposed RIH Sale shall cease to exist if the Holders of not less than 66-2/3% in Outstanding Amount of the Outstanding Notes have consented to such proposed RIH Sale. Notwithstanding the foregoing, each Holder by accepting a Note agrees that if the Casino Control Commission does not waive the qualification requirement as to the Holder (whether the record owner or beneficial owner) of this Note and requires that the Holder be qualified under the Casino Control Act, then, in such event, the Holder must qualify under the Casino Control Act. If the Holder does not so qualify, the Holder must dispose of its interest in this Note, within 30 days after the Company's receipt of notice of such finding, or the Company may repurchase this Note at the lower of the Holder's original cost and the Fair Market Value of this Note, plus accrued interest thereon to the date of such repurchase. Commencing on the date the Casino Control Commission serves notice upon either RIH or the Company that any Holder is disqualified, it shall be unlawfull for any such disqualified Holder: (i) to receive any dividends or interest upon this Note; (ii) to exercise, directly or through any trustee or nominee, any right conferred by this Note; or (iii) to receive any remuneration in any form from either the Company or RIH for services rendered or otherwise. It is provided in the Indenture that Notes of a denomination larger than $1,000 may be redeemed in part ($1,000 or a multiple thereof) and that upon any partial redemption of any such Note the same shall be surrendered in exchange for one or more new Notes in authorized form for the unredeemed portion of principal. Notes (or portions thereof as aforesaid) for whose redemption and payment provision is made in accordance with the Indenture shall thereupon cease to be entitled to the lien of the Indenture and the Mortgage and shall cease to bear interest from and after the date fixed for redemption. If an Event of Default shall occur, the principal of the Notes and all accrued and unpaid interest thereon may become or be declared due and payable in the manner and with the effect provided in the Indenture. The Indenture permits, with certain exceptions as therein provided, the amendment thereto and the modification 27 of the rights and obligations of the Company and the rights of the Holders of the Notes under the Indenture at any time by the Company with the consent of the Holders of a majority or 66-2/3%, as the case may be, in aggregate Outstanding Amount of the Notes at the time Outstanding affected by such modification. The Indenture also contains provisions permitting the Holders of specified percentages in Outstanding Amount of Notes at the time Outstanding on behalf of the Holders of all the Notes to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Note shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note issued upon the transfer hereof or in exchange hereof or in lieu hereof, in respect of anything done or offered to be done by the Trustee in the Company in reliance thereon, whether or not notation of such action is made upon this Note. The Company may, in the circumstances permitted by the Trust Indenture Act, set any day as the record date for the purpose of determining the holders of Outstanding Notes entitled to give or take any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by the Indenture to be given or taken by holders of Notes. With regard to any such record date, the holders of Outstanding Notes on such record date (or their duly appointed agents), and only such Persons, shall be entitled to give or take the relevant action, whether or not such Persons remain holders after such record date. No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and interest on this Note at the times, places and rates, and in the coin or currency, or, in the case of interest payments, by issuance of Additional Notes in lieu of cash interest payment, herein prescribed. As provided in the Indenture and subject to certain limitations therein set forth, this Note is transferable on the Note Register of the Company, upon surrender of this Note for transfer at the corporate trust office of the Trustee, or at an office or agency of the Company in the Borough of Manhattan, City and State of New York, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Note Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Notes, of authorized denominations and for the same aggregate principal amount will be issued to the designated transferee or transferees. 2 The Notes are issuable only as registered Notes without coupons in denominations of $1,000 and integral multiples thereof, except that Additional Notes may be in denominations of $100 and integral multiples of $100. As provided in the Indenture, and subject to certain limitations therein set forth, Notes are exchangeable for a like aggregate principal amount of Notes of a different authorized denomination, as requested by the Holder surrendering the same. No service charge shall be made for any transfer or exchange hereinbefore referred to, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. The Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Note is registered as the owner hereof for the purpose of receiving payment as herein provided and for all other purposes, whether or not this Note be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. Section 2.03. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION. This is one of the Notes referred to in the within-mentioned Indenture. U.S. Trust Company of California, N.A. as Trustee By: ------------------------- Authorized Signature Section 2.04. FORM OF THE GUARANTY. The form of the Guaranty of RIH shall be substantially as follows and shall appear on the reverse of each Note: GUARANTY OF RESORTS INTERNATIONAL HOTEL, INC. For value received, Resorts International Hotel, Inc., a New Jersey corporation, hereby unconditionally guarantees, as more fully set forth in Article Four of the Indenture, to the Holder of this Note the payment of the principal of and interest on this Note in the amounts and at the time when due and interest on the overdue principal and 29 interest, if any, of this Note, if lawful, and the payment or performance of all other obligations of the Company to the Holder or the Trustee, all in accordance with and subject to the terms and limitations of this Note and Article Four of the Indenture, the foregoing Guaranty being a guaranty of payment and not of collectibility and being absolute and in no way conditional or contingent. This Guaranty will not become effective until the Trustee or the Authenticating Agent signs the certificate of authentication on such Note. As more fully described in the Indenture, this Guaranty is secured by a mortgage of the Trust Estate made by RIH to the Trustee. RESORTS INTERNATIONAL HOTEL, INC. Dated: By: ----------------- ---------------------------- Attest: ----------------- ARTICLE THREE THE NOTES Section 3.01. GENERAL TITLE. The general title of the Notes shall be "11.375% Junior Mortgage Notes due 2004". Section 3.02. FORM AND DENOMINATIONS. The form of the Notes shall be as provided by the provisions of this Indenture. The Notes shall be issuable only in registered form and in such denominations as shall be provided in the provisions of this Indenture. The Notes shall be of the denominations of $1,000 and any integral multiple thereof except that Additional Notes may be in denominations of $100 and integral multiples of $100. Section 3.03. EXECUTION, AUTHENTICATION, DELIVERY AND DATING. The Notes shall be executed on behalf of the Company by its chairman of the board, vice chairman of the board, its president, or one of its Vice Presidents and attested to by an Officer of the Company other than an Officer who has executed the Notes.The signature of any of these Persons on the Notes 30 may be manual or facsimile. Notes bearing the manual or facsimile signatures of individuals who were at any time Officers of the Company shall bind the Company, notwithstanding that such individuals or any of them shall have ceased to be such prior to the authentication and delivery of such Notes. At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Notes executed by the Company to the Trustee for authentication and the Trustee shall authenticate and deliver such Notes as in this Indenture provided and not otherwise. All Notes shall be dated the date of their authentication. No Note shall be secured by, or be entitled to any lien, right or benefit under, this Indenture or be valid or obligatory for any purpose, unless there appears on such Note a certificate of authentication substantially in the form provided for herein, executed by the Trustee or the Authenticating Agent by manual signature, and such certificate upon any Note shall be conclusive evidence, and the only evidence, that such Note has been duly authenticated and delivered hereunder. Section 3.04. TEMPORARY NOTES. Pending the preparation of definitive Notes, the Company may execute, and upon Company Request the Trustee shall authenticate and deliver, temporary Notes which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any denomination, substantially of the tenor of the definitive Notes in lieu of which they are issued, in registered form, without coupons, with provision for registration as to principal and with such appropriate insertions, omissions, substitutions and other variations as the Officers executing such Notes may determine, as evidenced by their execution of such Notes. If temporary Notes are issued, the Company will cause definitive Notes to be prepared without unreasonable delay. After the preparation of definitive Notes, the temporary Notes shall be exchangeable for definitive Notes upon surrender of the temporary Notes at the office or agency of the Company in a Place of Payment therefor, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Notes, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a like principal amount of definitive Notes of authorized denominations. Until so exchanged, temporary Outstanding Notes shall in all respects be entitled to the security and benefits of this Indenture. 3 Section 3.05. REGISTRATION, TRANSFER AND EXCHANGE. The Company shall cause to be kept at one of the offices or agencies maintained by the Company as provided in Section 12.02 a register (herein sometimes referred to as the "Note Register") in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Notes and registration of transfers of Notes entitled to be registered or transferred as herein provided. The Trustee is hereby appointed "Note Registrar" for the purpose of registering Notes and transfers of Notes as herein provided. Upon surrender for transfer of any Note at the office or agency of the Company in a Place of Payment therefor, the Company shall execute and, upon request of the Company, the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Notes of any authorized denominations and of a like aggregate principal amount. The Trustee has no obligation to determine that any Note has been properly transferred and may conclusively rely on instructions given to the Company pursuant to this Section 3.05. All Notes surrendered upon any exchange or transfer provided for in this Indenture shall be promptly canceled by the Trustee and thereafter disposed of as directed by a Company Request. All Notes issued upon any transfer or exchange of Notes shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same security and benefits under this Indenture, as the Notes surrendered upon such transfer or exchange. Every Note presented or surrendered for transfer, exchange or discharge from registration shall (if so required by the Company or the Note Registrar) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Note Registrar duly executed, by the Holder thereof or his attorney duly authorized in writing. No service charge shall be made for any registration, discharge from registration, transfer or exchange of Notes, 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 transfer or exchange of Notes, other than exchanges under Section 3.04 or 11.06 not involving any transfer. The Company shall not be required (i) to issue, transfer or exchange any Note during a period beginning at the 32 opening of business 15 days before the day of the mailing of a notice of redemption of Notes under Section 13.04 and ending at the close of business on the day of such mailing, or (ii) to transfer or exchange any Note so selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part. Section 3.06. MUTILATED, DESTROYED, LOST AND STOLEN NOTES. If (a) any mutilated Note is surrendered to the Trustee, or the Company and the Trustee receive evidence to their satisfaction of the destruction, loss or theft of any Note and (b) 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 Note has been acquired by a bona fide purchaser, the Company shall execute and upon its request the Trustee shall authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Note, a new Note of like tenor and principal amount, bearing a number not contemporaneously outstanding. In case any such mutilated, destroyed, lost or stolen Note has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Note, pay such Note. Upon the issuance of any new Note under this Section 3.06, 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 connected therewith. Every new Note issued pursuant to this Section 3.06 in lieu of any destroyed, lost or stolen Note shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Note shall be at any time enforceable by anyone, and shall be entitled to all the security and benefits of this Indenture equally and ratably with all other Notes. The provisions of this Section 3.06 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 Notes. Section 3.07. PAYMENT OF INTEREST ON NOTES; INTEREST RIGHTS PRESERVED. Interest on any Note 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 that Note (or 33 one or more Predecessor Notes) is registered at the close of business on the Regular Record Date for such interest specified in the provisions of this Indenture. Any interest on any Note which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date ("Defaulted Interest") shall forthwith cease to be payable to the Holder on the relevant Regular Record Date solely by virtue of such Holder having been such Holder; and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in subsection (a) or (b) below: (a) The Company may elect to make payment of any Defaulted Interest on the Notes to the Persons in whose names such Notes (or their respective Predecessor Notes) 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 Note and the date of the proposed payment (which date shall be such as will enable the Trustee to comply with the next sentence hereof), and at the same time the Company shall deposit with the Trustee an amount of money equal to, or Additional Notes having a principal amount 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 or Additional Notes when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as provided in this subsection (a) and not to be deemed part of the Trust Estate. Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 nor less than ten days prior to the date of the proposed payment and not less than ten 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 mailed, first-class postage prepaid, to each Holder of a Note at his address as it appears in the Note Register not less than ten days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been mailed as aforesaid, such Defaulted Interest shall be paid to the Persons in whose names the Notes (or their respective Predecessor Notes) are registered on such Special Record Date and shall no longer be payable pursuant to subsection (b) of this Section 3.07. 34 (b) The Company may make payment of any Defaulted Interest on the Notes in any other lawful manner not inconsistent with the requirements of any securities exchange in which the Notes 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 subsection (b), such payment shall be deemed practicable by the Trustee. Subject to the foregoing provisions of this Section 3.07, each Note delivered under this Indenture upon transfer of or in exchange for or in lieu of any other Note shall carry all the rights to interest accrued and unpaid, and to accrue, which were carried by such other Note. Section 3.08. PERSONS DEEMED OWNERS. The Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name any Note is registered as the owner of such Note for the purpose of receiving payment of principal of, and interest on, such Note and for all other purposes whatsoever whether or not such Note be overdue, and, to the extent permitted by law, neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. Section 3.09. CANCELLATION. All Notes surrendered for payment, redemption, transfer, exchange or conversion, if surrendered to the Trustee, shall be promptly canceled by it, and, if surrendered to any Person other than the Trustee, shall be delivered to the Trustee and, if not already canceled, shall be promptly canceled by it. The Company shall deliver to the Trustee for cancellation any Notes previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever, and all Notes so delivered shall be promptly canceled by the Trustee. No Note shall be authenticated in lieu of or in exchange for any Note canceled as provided in this Section 3.09, except as expressly provided by this Indenture. All canceled Notes held by the Trustee shall be disposed of as directed by a Company Request. Section 3.10. TERM AND FORM. The Stated Maturity of the Notes shall be December 15, 2004. The aggregate principal amount of Notes that may be authenticated, delivered and outstanding is limited to $35,000,000, plus Additional Notes, if any, issued by the Company pursuant to the terms hereof. The Notes shall bear interest from [ ], 1994 [the Effective Date] or from the most recent Interest Payment Date to which interest has been paid or duly provided for, payable semi- 35 annually on June 15 and December 15 of each year, commencing December 15, 1994. The Notes shall bear interest at the rate of 11.375% per annum until the principal thereof shall become due and payable, and at the rate of 14.375% per annum on any overdue principal and, to the extent permitted by law, overdue interest. Interest shall be computed on the basis of a 360-day year of twelve 30-day months based on the actual number of days elapsed. The principal and the Redemption Price of the Notes and interest on the Notes on each Interest Payment Date shall be payable at a Place of Payment, and, in addition to any other lawful means of such payment, may be paid by check payable to the order of the Noteholder. The Regular Record Date referred to in Section 3.07 for the payment of the interest on the Notes payable, and punctually paid or duly provided for, on any Interest Payment Date shall be the first day (whether or not a business day) of the calendar month of such Interest Payment Date. Section 3.11. PAYMENT OF INTEREST IN ADDITIONAL NOTES (a) Notwithstanding any other provision of this Indenture or the Notes, the Company, at its option and in its sole discretion, on any Interest Payment Date, if Consolidated Cash Flow of RIH and its consolidated Subsidiaries for the period of four consecutive fiscal quarters of RIH ended on the last day of the last quarter ended prior to such Interest Payment Date was less than $35,000,000, may pay all or any portion of interest accrued on the Outstanding Notes (including without limitation any Additional Notes previously issued to pay interest) in Additional Notes. The Additional Notes shall have a principal amount equal to the amount of such interest payment, or portion thereof, which the Company elects to so pay. The Company shall pay cash in lieu of issuing any fractional Additional Notes. The issuance of such Additional Notes shall constitute full payment of interest in respect of which such Additional Notes are issued in the principal amount so issued. (b) All interest payments made in Additional Notes pursuant to Section 3.11(a) shall be made PRO RATA in respect of all outstanding Notes, on the basis of the respective dollar amounts of accrued and unpaid interest on such Notes. All interest payments made in cash (other than cash payments made in lieu of issuance of fractional Additional Notes) shall be so made PRO RATA in respect of all outstanding Notes, on the basis of the respective dollar amounts of accrued and unpaid interest on such Notes. (c) Prior to the issuance of any Additional Notes, a Trust Officer of the Trustee and any Paying Agent shall have 36 received an Officers' Certificate from the Company at least five Business Days prior to the relevant Regular Record Date stating that the Company will pay such interest in Additional Notes, together with a resolution of the Board of Directors authorizing the issuance of the appropriate principal amount of Additional Notes. On or before the date that is three Business Days following the relevant Regular Record Date, the Company will deliver an Officers' Certificate to the Trustee demonstrating the computation of the principal amount of Additional Notes issuable to the Holders and an Opinion of Counsel that the issuance of such Additional Notes is in compliance with all federal securities laws, and that such Additional Notes will be binding obligations of the Company, enforceable according to their terms. (d) THE ADDITIONAL NOTES SHALL BE ISSUED AS UNITS SUCH THAT ONE SHARE OF CLASS B STOCK SHALL BE ISSUED IN RESPECT OF EACH $1,000 PRINCIPAL AMOUNT OF ADDITIONAL NOTES. THE ADDITIONAL NOTES MAY NOT BE TRANSFERRED SEPARATELY FROM THE SHARES OF CLASS B COMMON STOCK ISSUED IN RESPECT OF SUCH ADDITIONAL NOTES. Section 3.12. EXCHANGEABILITY. Subject to Section 3.05, all Notes and Additional Notes shall be fully interchangeable with other Notes and Additional Notes, and, upon surrender at the office or agency of the Company in a Place of Payment therefor, all Notes shall be exchangeable for other Notes of a different authorized denomination or denominations, as requested by the Holder surrendering the same. The Company will execute, and the Trustee shall authenticate and deliver, Notes whenever the same are required for any such exchange. Section 3.13. REDEMPTION. The Company may, at its option, redeem, in accordance with Article Thirteen, all or from time to time any part of the Notes on or after the fifth anniversary of the Effective Date, at par together, in each case, with interest, if any, accrued and unpaid thereon to the Redemption Date. In the event of an RIH Sale, all Notes shall be redeemed by the Company, whether such RIH Sale occurs before, on or after the fifth anniversary of the Effective Date, at par together with interest, if any, accrued and unpaid thereon to the Redemption Date; PROVIDED, HOWEVER, that such obligation of the Company to redeem the Notes in the event of a proposed RIH Sale shall cease to exist if the Holders of not less than 66-2/3% in Outstanding Amount of the Outstanding Notes have consented to such proposed RIH Sale. 37 Section 3.14. AUTHENTICATION AND DELIVERY OF ORIGINAL ISSUE. Forthwith upon the execution and delivery of this Indenture, Notes up to an aggregate principal amount of $35,000,000 may be executed by the Company and delivered to the Trustee for authentication, and shall thereupon be authenticated and delivered by the Trustee upon Company Order, without any further action by the Company. ARTICLE FOUR GUARANTY Section 4.01. GUARANTY. RIH hereby guarantees (such guaranty to be referred to herein as the "Guaranty") to each Holder of a Note 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 Notes or the obligations of the Company hereunder or thereunder, that: (a) the principal of and interest on the Notes will be promptly paid in the amounts and at the times when due, whether at the maturity or Interest Payment Date, by acceleration, call for redemption or otherwise, and interest on the overdue principal, if any, of the Notes, and all other obligations of the Company to the Holders or the Trustee hereunder or thereunder will be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and (b) in case of any extension of time of payment or renewal of any Notes or payment or performance of any of such other obligations, that 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 for whatever reason, RIH will be obligated to pay the same immediately. RIH hereby agrees that its obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Notes or this Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Notes with respect to any provisions hereof or thereof, any releases of collateral, any delays in obtaining or realizing upon or failures to obtain or realize upon collateral, the recovery of any judgment against the Company, any action to enforce the same or any other circumstances which might otherwise constitute a legal or equitable discharge or defense of a guarantor. This Guaranty is a guaranty of payment and not of collectibility, and is secured by the Guaranty Mortgage, as described therein. RIH hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to 38 require a proceeding first against the Company, protest, notice and all demands whatsoever and covenants that this Guaranty will not be discharged except by complete performance of the obligations contained in the Notes and this Indenture. If any Noteholder or the Trustee is required by any court or otherwise to return to either RIH or the Company, or any custodian, trustee, liquidator or other similar official acting in relation to either RIH or the Company, any amount paid by either RIH or the Company to the Trustee or such Noteholder, this Guaranty, to the extent theretofore discharged, shall be reinstated in full force and effect. RIH agrees that it shall not be entitled to, and hereby irrevocably waives, any right of subrogation in relation to the Company in respect of any obligations guaranteed hereby. RIH further agrees that, as between RIH, on the one hand, and the Holders and the Trustee, on the other hand, (i) the maturity of the obligations guaranteed hereby may be accelerated as provided in Section 7.02 for the purposes of this Guaranty, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (ii) in the event of any declaration of acceleration of such obligations as provided in Section 7.02, such obligations (whether or not due and payable) shall forthwith become due and payable by RIH for the purpose of this Guaranty. Section 4.02. EXECUTION AND DELIVERY OF GUARANTY. To evidence its Guaranty set forth in Section 4.01, RIH hereby agrees to execute its Guaranty substantially in the form set forth in Section 2.04, to be endorsed on each Note authenticated and delivered by the Trustee and that this Indenture shall be executed on behalf of RIH by an Authorized Signature. RIH hereby agrees that its Guaranty set forth in Section 4.01 shall remain in full force and effect notwithstanding any failure to endorse on each Note a notation of such Guaranty; PROVIDED, HOWEVER, that the Trustee or the Authenticating Agent has signed the certificate of authentication on such Note. If an Officer whose signature is on this Indenture no longer holds that office at the time the Trustee authenticates a Note on which a Guaranty is endorsed, the Guaranty shall be valid nevertheless. The delivery of any Note by the Trustee, after the authentication thereof hereunder, shall constitute due delivery of the Guaranty set forth in this Indenture on behalf of RIH. 39 Section 4.03 MORTGAGE SECURING GUARANTY. In order to secure the due and punctual payment of all amounts which may ever become owing under the Guaranty, when and as the same shall be due and payable, and performance of all other obligations of RIH to the Holders or the Trustee under the Guaranty, according to the terms hereof, RIH has mortgaged and encumbered all of its right, title and interest in and to the Trust Estate to the Trustee pursuant to the Guaranty Mortgage. RIH has the full right, power and authority to grant, bargain, sell, release, convey, hypothecate, assign, mortgage, pledge, transfer and confirm the property constituting the Trust Estate, in the manner and form done, or intended to be done, in the Guaranty Mortgage, free and clear of all liens, pledges, charges and encumbrances, whatsoever, except for the items described in clauses (a) through (d) (inclusive) of Section 12.13, and (a) will forever warrant and defend the title to the same against the claims of all Persons whatsoever in accordance with the terms of the Guaranty Mortgage, (b) will execute, acknowledge and deliver to the Trustee such further instruments as the Trustee may require or request, and (c) will do or cause to be done all such acts and things as may be reasonably necessary or proper, or as may be required by the Trustee (other than obtaining a loan title insurance policy or title policy endorsement pertaining to the Guaranty Mortgage), to assure and confirm to the Trustee its interest in the Trust Estate and the right, title and interest in and to the Guaranty Mortgage, so as to render the same available for the security and benefit of this Guaranty secured thereby, according to the intent and purposes herein expressed. The Guaranty Mortgage creates and vests in the Trustee a direct and valid lien, which lien is pari passu with the lien of the Mortgage and junior to the liens securing payment of the RIHF Senior Facility Notes, any other secured Working Capital Facility, the Working Capital Facility Guaranty, the Senior Mortgage Notes and the Senior Guaranty. To the extent that any security interest in the Trust Estate or the Guaranty Mortgage is deemed to be granted and to be governed by the Uniform Commercial Code, the Guaranty Mortgage is deemed to be a security agreement. ARTICLE FIVE SATISFACTION AND DISCHARGE Section 5.01. PAYMENT OF INDEBTEDNESS; SATISFACTION AND DISCHARGE OF INDENTURE. Whenever the following conditions exist, namely: 40 (a) all Notes theretofore authenticated and delivered have been canceled by the Trustee or delivered to the Trustee for cancellation, excluding, however, (1) Notes for the payment of which money has theretofore been deposited in trust with the Trustee or a Paying Agent (other than the Company) or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust as provided in Section 12.03, (2) Notes alleged to have been destroyed, lost or stolen which have been replaced or paid as provided in Section 3.06, except for any such Note which, prior to the satisfaction and discharge of this Indenture, has been presented to the Trustee with a claim of ownership and enforceability by the Holder thereof and where enforceability has not been determined adversely against such Holder by a court of competent jurisdiction, and (3) other than any Notes excluded by clauses (1) and (2) of this Section 5.01(a), Notes which have become due and payable, Notes which will become due and payable at their Stated Maturity within one year and Notes which have been or 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, provided the Company, in the case of such Notes, has deposited or caused to be deposited with the Trustee in trust for the purpose an amount sufficient to pay and discharge the entire indebtedness on such Notes for principal and interest to the date of maturity thereof in the case of Notes which have become due and payable or to the Stated Maturity or Redemption Date, as the case may be; (b) the Company or RIH has paid or caused to be paid all other sums payable hereunder by the Company; and (c) the Company or RIH has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each of which shall state that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with; then this Indenture and the lien, rights and interests created hereby shall cease, terminate and become null and void (except as to any surviving rights of transfer or exchange of Notes herein or therein provided for and any right to receive payments of principal and interest as provided in 41 Section 5.01(a)(3)) and the Trustee and each co-trustee and separate trustee, if any, then acting as such hereunder shall, at the expense of the Company, execute and deliver a termination statement prepared by the Company in form reasonably satisfactory to the Trustee and such instruments of satisfaction and discharge as may be necessary and pay, assign, transfer and deliver to the Company or upon Company Order all cash, securities and other personal property then held by it hereunder, other than pursuant to Section 5.01(a)(3). In the absence of satisfaction of all of the above conditions, the payment of all Outstanding Notes shall not render this Indenture inoperative. Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Section 8.07 shall survive. Section 5.02. APPLICATION OF DEPOSITED MONEY. Money deposited with the Trustee pursuant to Section 5.01 shall constitute a separate trust fund for the benefit of the Persons entitled thereto. Subject to the provisions of Section 12.03, such money shall be applied by the Trustee to the payment (either directly or through any Paying Agent, as the Trustee may determine) to the Persons entitled thereto, of the principal and interest for whose payment such money has been deposited with the Trustee. Section 5.03. REPAYMENT TO THE COMPANY. The Trustee and any Paying Agent shall promptly pay to the Company upon request any excess money or securities held by them at any time. Any money (or, with respect to interest to be paid in Additional Notes, such Additional Notes) deposited with the Trustee or any Paying Agent, or then held by the Company, in Trustee or any Paying Agent, or then held by the Company, in trust, for the payment of the principal of, or interest on, any Note and remaining unclaimed for two years after such principal or interest has become due and payable shall be paid to the Company on its request, or (if then held by the Company) shall be discharged from such trust, unless otherwise required by mandatory provisions of applicable escheat or abandoned or unclaimed property law, and the Holder of such Note 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 regard to such money (or Additional Notes), and all liability 42 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 City of New York, State of New York, or mailed to each such Holder, or both, notice that such money (or Additional Notes) remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication or mailing, as the case may be, any unclaimed balance of such money then remaining will be paid to the Company. ARTICLE SIX SECURITY Section 6.01. ASSIGNMENT AGREEMENT. In order to secure the due and punctual payment of the principal of and interest on the Notes, when and as the same shall be due and payable, whether at Maturity or at an Interest Payment Date, by acceleration, call for redemption or otherwise, of the Notes and performance of all other obligations of the Company to the Holders or the Trustee under this Indenture, according to the terms hereof, the Company has made an assignment of all of its right, title and interest in and to the Mortgage Documents (other than the Guaranty Mortgage) to the Trustee pursuant to the Assignment Agreement. RIH has the full right, power and authority to grant, bargain, sell, release, convey, hypothecate, assign, mortgage, pledge, transfer and confirm the property constituting the Trust Estate, in the manner and form done, or intended to be done, in the Mortgage Documents, and the Company has the full right, power and authority to grant, bargain, sell, release, re-convey, assign, transfer and confirm, absolutely, all of its right, title and interest in and to the Mortgage Documents, in each case free and clear of all liens, pledges, charges and encumbrances, whatsoever, except for the items described in clauses (a) through (d) (inclusive) of Section 12.13, and (a) each will forever warrant and defend the title to the same against the claims of all persons whatsoever in accordance with the terms of the Mortgage Documents and the Assignment Agreement, (b) each will execute, acknowledge and deliver to the Trustee such further assignments, transfers, assurances or other instruments as the Trustee may require or request, and (c) each will do or cause to be done all such acts and things as may be reasonably necessary or proper, or as may be required by the Trustee, to assure and confirm to the Trustee its interest in the Trust Estate and the right, title and interest in and to the Mortgage Documents, so as to render the 43 same available for the security and benefit of this Indenture and of the Notes secured hereby, according to the intent and purposes herein expressed. The Mortgage Documents (other than the Guaranty Mortgage) and the Assignment Agreement together create and vest in the Trustee a direct and valid lien, which is pari passu with the Guaranty Mortgage, junior to the liens securing payment of the RIHF Senior Facility Notes, any other secured Working Capital Facility, the Working Capital Facility Guaranty, the Senior Mortgage Notes and the Senior Guaranty on the property constituting the Trust Estate and the interest in the Mortgage Documents which they purport to create. To the extent that any security interest in the Trust Estate or the Mortgage Documents are deemed to be granted and to be governed by the Uniform Commercial Code, the Mortgage and the Assignment Agreement are deemed to be security agreements. Section 6.02. RECORDING, ETC. The Company will cause, at its own expense, the Assignment Agreement, the Mortgage Documents, this Indenture and all amendments or supplements thereto, to be registered, recorded and filed and/or re-recorded, re-filed and renewed in such manner and in such place or places, if any, as may be required by law in order fully to preserve and protect the lien of the Mortgage Documents and the Assignment Agreement on all parts of the Trust Estate and the Mortgage Documents and the interest in the RIH Junior Promissory Note and to effectuate and preserve the security of the Noteholders and all rights of the Trustee. The Company shall furnish to the Trustee: (a) promptly after the execution and delivery of this Indenture or other instrument of further assurance or amendment, including any supplemental indenture, an Opinion or Opinions of Counsel either (1) stating that, in the opinion of such counsel, this Indenture, the Mortgage Documents and the assignment to the Trustee of the Mortgage Documents intended to be made by the Assignment Agreement and all other instruments of further assurance or amendment have been properly recorded, registered and filed to the extent necessary to make effective the liens intended to be created by the Mortgage Documents and the Assignment Agreement, and reciting the details of such action or referring to prior Opinions of Counsel in which such details are given, and stating that as to the Mortgage Documents and the Assignment Agreement such recording, registering and filing are the only recordings, registerings and filings necessary to give notice thereof and that no re-recordings, re-registerings or re-filings are necessary to maintain such notice, and further stating that all financing statements and continuation statements have 44 been executed and filed that are necessary fully to preserve and protect the rights of the Noteholders and the Trustee hereunder and under the Mortgage Documents and the Assignment Agreement, or (2) stating that, in the opinion of such counsel, no such action is necessary to make such liens and assignments effective; and (b) within 60 days after June 30 in each year beginning with the year 1995, an Opinion or Opinions of Counsel, dated as of such date, either (1) stating that, in the opinion of such counsel, such action has been taken with respect to the recording, registering, filing, re-recording, re-registering and re-filing of all supplemental indentures, financing statements, continuation statements or other instruments of further assurance as is necessary to maintain the liens of the Mortgage Documents and the assignment of the Mortgage Documents to the Trustee made by the Assignment Agreement and reciting the details of such action or referring to prior Opinions of Counsel in which such details are given, and stating that all financing statements and continuation statements have been executed and filed that are necessary fully to preserve and protect the rights of the Noteholders and the Trustee hereunder and under the Mortgage Documents and the Assignment Agreement, or (2) stating that, in the opinion of such counsel, no such action is necessary to maintain such liens and assignments. The Company and RIH shall cause TIA SECTION 314(d) relating to the release of property from the liens of the Mortgage to be complied with. Any certificate or opinion required by TIA SECTION 314(d) may be made by an Officer of the Company or RIH, unless otherwise required by TIA SECTION 314(d). Section 6.03. CUSTODY OF MORTGAGE DOCUMENTS. The Trustee shall hold in its possession the Mortgage Documents, except as it from time to time may be required for actions, suits or proceedings relating to the Mortgage Documents or for the purpose of enforcing or realizing upon any right or value thereby represented. The Trustee may, from time to time, in its sole discretion, for the purpose of convenient location of the Mortgage Documents, appoint one or more agents to hold physical custody, for the account of the Trustee, of the Mortgage Documents. Section 6.04. SUITS TO PROTECT THE TRUST ESTATE AND MORTGAGE DOCUMENTS. Upon five days' prior written notice to the Company (or such shorter period or without notice if deemed necessary and appropriate by the Trustee), the Trustee shall have the 45 power, but not the obligation, to institute and to maintain such suits and proceedings as it may deem necessary or appropriate to prevent any impairment of the Trust Estate by any acts which may be unlawful or in violation of the Mortgage Documents, the Assignment Agreement or this Indenture, and such suits and proceedings as the Trustee may deem necessary or appropriate to preserve or protect its interest and the interests of the Noteholders in the Trust Estate and the Mortgage Documents and the principal, interest, issues, 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 result in an impairment of security hereunder or be materially prejudicial to the interests of the Noteholders or of the Trustee). The Trustee shall also have authority to exercise any rights or powers conferred on the Trustee as the holder of the Note. ARTICLE SEVEN REMEDIES Section 7.01. EVENTS OF DEFAULT. "EVENT OF DEFAULT", whenever used herein, means any one of the following events (including any applicable notice requirement and any period of grace as specified in this Section 7.01) (whatever the reason for such event 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): (a) default in the payment of any interest upon any Note when such interest becomes due and payable and continuance of such default (the deposit with the Trustee pursuant to Section 3.07 of funds or Additional Notes sufficient to make such interest payment in full being deemed to cure any such default for the purposes hereof) for a period of ten days; or (b) default in the payment of all or any portion of the principal of any Note at its Maturity; or (c) default in the performance or breach of any covenant of the Company or RIH in this Indenture (other than a covenant a default in the performance or breach of which is elsewhere in this Section 7.01 specifically dealt with), the Assignment Agreement or any of the 46 Mortgage Documents and continuance of such default or breach for a period of 30 days (or such shorter or longer cure period, if any, as may be specified in respect of such default or breach in the Assignment Agreement or the applicable Mortgage Document, as the case may be), and (other than with respect to Sections 12.07, 12.08, 12.09, 12.10, 12.11, 12.12, 12.13 or 12.21) after there has been given (i) to the Company by the Trustee or (ii) to the Company and the Trustee by the Holders of at least 25% in Outstanding Amount of the Outstanding Notes, 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; PROVIDED, HOWEVER, that, if such default or breach is of a covenant set forth in Section 12.02, 12.04, 12.05, 12.11, 12.13 or 12.21, and if such default or breach is of such a nature that is curable but is not susceptible of being cured with due diligence within such 30-day period (or such shorter or longer cure period) (for reasons other than lack of funds), then such period shall be extended for such further period of time as may reasonably be required to cure such default or breach, so long as (i) RIH delivers an Officers' Certificate to the Trustee within such period stating (A) the applicability of the provisions of this proviso to such default or breach, (B) the Company's or RIH's intention to remedy such default or breach with reasonable diligence and (C) the steps which the Company or RIH has undertaken to remedy such default or breach, and (ii) RIH delivers to the Trustee additional Officers' Certificates every 30 days thereafter updating the information contained in the certificate described in clause (i) above, in which case such period shall be extended for such further period of time as may reasonably be required to cure such default or breach, provided that the Company or RIH is then proceeding and thereafter continues to proceed to cure such default or breach with reasonable diligence; PROVIDED FURTHER, HOWEVER, that such additional period of time shall not in any case exceed 60 days; or (d) a proceeding or case shall be commenced, without the application or consent of the Company or RIH, in any court of competent jurisdiction, seeking (i) its liquidation, reorganization, dissolution or winding-up, or the composition or readjustment of its debts, (ii) the appointment of a trustee, receiver, custodian, liquidator or the like of the Company or RIH or of all or any substantial part of its assets, or (iii) similar relief in respect of the Company or RIH under any law relating to bankruptcy, insolvency, reorganization, winding-up, or composition or adjustment of debts, and such proceeding or case shall continue undismissed, or an order, judgment or decree approving or ordering any of the foregoing 4 shall be entered and continue unstayed and in effect, for a period of 60 consecutive days; or (e) the commencement by the Company or RIH of a voluntary case under the federal bankruptcy laws or any other applicable federal or state law, or the consent or acquiescence by any of them to the filing of any such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee or sequestrator (or other similar official) of the Company or RIH or any substantial part of any of their property, or the making by any of them of an assignment for the benefit of creditors, or the taking of action by the Company or RIH in furtherance of any such action; or (f) the revocation, suspension or involuntary loss of any Permit which results in the cessation of a substantial portion of the operations of the Casino-Hotel for a period of more than 90 consecutive days; or (g) (i) a default by the Company, RIH or any of their Subsidiaries under any Indebtedness (other than the Indebtedness represented by the Working Capital Facility and the Junior Mortgage Facility) in an aggregate principal amount in excess of $5,000,000, which default results in the acceleration of the maturity of any such Indebtedness under the evidence of indebtedness, indenture or other instrument governing such Indebtedness; provided, however, that, if such default under such evidence of indebtedness, indenture or other instrument shall be cured by the obligor, or be waived by the holders of such Indebtedness, in each case as may be permitted by such evidence of indebtedness, indenture or other instrument and in each case resulting in rescission of such acceleration thereunder, then the Event of Default hereunder by reason of such default shall be deemed likewise to have been thereupon cured or waived; or (ii) a default by the Company, RIH or any of their Subsidiaries under any Indebtedness represented by the Working Capital Facility or the Junior Mortgage Facility, the effect of which default (after the expiration of any applicable notice or grace periods) is to permit the holder or holders of any such Indebtedness represented by the Working Capital Facility or the Junior Mortgage Facility in an aggregate principal amount in excess of $5,000,000 (or a trustee or agent on behalf of such holder or holders) to cause the acceleration of the maturity of such Indebtedness represented by the Working Capital Facility or the Junior Mortgage Facility under the evidence of indebtedness, indenture or other instrument governing such Indebtedness; provided, however, that if such default under such evidence of indebtedness, indenture or other instrument shall be 48 cured by the obligor, or be waived by the holders of such Indebtedness, in each case as may be permitted by such evidence of indebtedness, indenture or other instrument and, if such default resulted in the acceleration of the maturity of such Indebtedness, such acceleration shall have been rescinded thereunder, then the Event of Default hereunder by reason of such default shall be deemed likewise to have been thereupon cured or waived; or (iii) the existence of a final judgment of a court of competent jurisdiction in an amount in excess of $3,000,000 against the Company, RIH or the Trust Estate, which judgment has not been satisfied or otherwise provided for, for a period of 30 days (during which execution shall not be effectively stayed) following the date on which such judgment becomes a lien against the Trust Estate or any part thereof (unless the lawsuit in question was commenced without effective service of process upon either the Company or RIH in which case such 30-day period shall not commence until the Company or RIH receives notice of such final judgment); or (iv) the existence of a final judgment of a court of competent jurisdiction in an amount in excess of $15,000,000 against the Company, RIH or the Trust Estate, which judgment has not been satisfied or otherwise provided for, for a period of 60 days (during which execution shall not be effectively stayed) following the date of such final judgment; or (v) the existence of a final judgment of a court of competent jurisdiction, regardless of amount, against the Company, RIH or the Trust Estate, which judgment has not been satisfied or otherwise provided for, for a period of 60 days (during which execution shall not be effectively stayed) following the date of such final judgment, if such judgment, by itself or upon recordation or other action of the judgment creditor, imposes or would impose a lien on the Trust Estate or any part thereof senior to the lien of the Mortgage; or (h) default in the performance, or breach, of any covenant of the Company or RIH in Article Ten; or (i) the existence of a judgment of a court of competent jurisdiction in an amount in excess of $3,000,000 against RIH regarding the CRDA Dispute, which judgment has not been stayed, satisfied or otherwise provided for, for a period of 30 days (during which execution shall not be effectively stayed) (unless the lawsuit in question was commenced without effective service of process upon RIH in which case such 30-day period shall not commence until RIH receives notice of such final judgment); or 4 (j) if RII fails to pay or discharge or cause to be paid or discharged, within 30 days before the same shall become delinquent, all taxes levied or imposed upon RII; PROVIDED, HOWEVER, that no Event of Default or Default shall be deemed to exist hereunder with respect to any tax liability not paid or discharged by RII if and to the extent that the amount, applicability or validity of such tax liabilities is being contested in good faith by appropriate proceedings if adequate reserves therefor have been established in accordance with GAAP; provided further, however, that this clause (j) shall not apply to amounts due with respect to any period during which neither the Company, RIH nor any of their Subsidiaries is included in RII's consolidated group for federal income tax purposes. No action, event, claim, liability or judgment regarding the CRDA Dispute shall constitute a Default or an Event of Default under this Section 7.01 unless and until a judgment shall have been entered against RIH which constitutes an Event of Default pursuant to clause (i) of this Section 7.01. Section 7.02. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT. If an Event of Default (other than one referred to in clause (d) or (e) of Section 7.01) occurs and is continuing, then and in every such case the Trustee or the Holders of not less than 25% in Outstanding Amount of the Notes Outstanding may declare the Outstanding Amount of all the Notes and all accrued interest to be due and payable immediately, by a notice in writing to the Company (and to the Trustee, if given by any Noteholders), and upon any such declaration such Outstanding Amount shall become immediately due and payable. If an Event of Default referred to in clause (d) or (e) of Section 7.01 occurs, then the Outstanding Amount of all the Notes shall automatically become immediately due and payable without presentment, demand, protest or other formalities of any kind, all of which are hereby expressly waived by the Company. At any time after such a declaration of acceleration has been made, but before any judgment or decree for payment of money due on any Notes has been obtained by the Trustee as hereinafter provided in this Article Seven, the Holders of a majority in Outstanding Amount of the Notes may, by written notice to the Company and the Trustee, rescind and annul such declaration and its consequences if: (a) the Company has deposited with the Trustee a sum sufficient to pay: 50 (1) all overdue installments of interest on all Notes, (2) the principal of any Notes which have become due otherwise than by such declaration of acceleration and interest thereon at the rate or rates prescribed therefor in the Notes, and (3) 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 (b) all Events of Default, other than the non-payment of the Outstanding Amount of Notes which have become due solely by such declaration of acceleration, have been cured, or have been waived as provided in Section 7.13. No such rescission and annulment shall affect any subsequent default or impair any right consequent thereon. Section 7.03. COVENANT TO PAY TRUSTEE AMOUNTS DUE ON NOTES AND RIGHT OF TRUSTEE TO JUDGMENT. The Company covenants that, if: (a) default is made in the payment of any interest upon any Note when such interest becomes due and payable and such default continues for a period of 10 days (the deposit with the Trustee during such 10 day period pursuant to Section 3.07 of funds or Additional Notes (if permitted hereby) sufficient to make such interest payment in full being deemed to cure any such default for the purposes hereof), or (b) default is made in the payment of the principal of any Note at its Maturity, then, upon demand of the Trustee, the Company will pay to the Trustee for the benefit of the Holders of such Notes, the whole amount then due and payable on such Notes for principal and interest, with interest at the rate prescribed therefor in the Notes on overdue principal 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 and as trustee of an express trust, shall be entitled to sue for and recover judgment against the Company, RIH and any other obligor on the Notes for the whole amount so due and unpaid. The Trustee shall be entitled to institute such suit either 51 before, after or during the pendency of any proceedings for the enforcement of this Indenture or of the Mortgage Documents or of the Assignment Agreement, but only after the occurrence of an Event of Default. Subject to the Intercreditor Agreement, in the case of a foreclosure of the Mortgage and a sale of the Trust Estate and application of the proceeds as provided in Section 7.06, the Trustee, in its own name and as trustee of an express trust, shall be entitled to enforce payment of, and to receive, all amounts then remaining due and unpaid upon the Notes, for the benefit of the Holders thereof, and shall be entitled to recover judgment for any portion of the same remaining unpaid, with interest as aforesaid. No recovery of any such judgment upon any property of the Company shall affect or impair the security provided by this Indenture and the Assignment Agreement or the lien of the Mortgage upon the Trust Estate or any rights, powers or remedies of the Holders of the Notes. Section 7.04. 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 RIH or any other obligor upon the Notes or the property of the Company or RIH or of such other obligor or their creditors, the Trustee (irrespective of whether the principal (or any portion thereof) of the Notes 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 or interest) shall be entitled and empowered, by intervention in such proceeding or otherwise, (a) to file and prove a claim for the whole amount of principal and interest owing and unpaid in respect of the Outstanding Notes 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 Noteholders allowed in such judicial proceeding, and (b) 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 other similar official in any such judicial proceeding is hereby authorized by each Noteholder to make such payments to the Trustee, and in the event that the 52 Trustee shall consent to the making of such payments directly to the Noteholders, to pay to the Trustee any amount due to 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 8.07. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Noteholder any plan of reorganization, arrangement, adjustment or compensation affecting the Notes or the rights of any Holder thereof, or to authorize the Trustee to vote on the claim of any Noteholder in any such proceeding. Section 7.05. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF NOTES. All rights of action and claims under this Indenture, the Notes, the Assignment Agreement or the Mortgage Documents may be prosecuted and enforced by the Trustee without the possession of any of the Notes or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust. 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 Notes in respect of which such judgment has been recovered. Section 7.06. APPLICATION OF MONEY COLLECTED. Subject to the Intercreditor Agreement, any money collected by the Trustee pursuant to this Article Seven or pursuant to Article Three or Section 5.11 or 5.20 of the Mortgage which is not required to be paid to the Mortgagor thereunder shall be applied in the following order, at the date or dates fixed by the Trustee and upon such date interest shall cease to accrue, and, in case of the distribution of such money on account of principal upon presentation of the Notes, and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid: (a) FIRST: To the payment of all amounts due the Trustee under Section 8.07; (b) SECOND: To the payment of the whole amount then due upon the Outstanding Notes, for principal and interest, in respect of which or for the benefit of which such money has been collected, with interest (to the extent that such interest has been collected by the Trustee or a sum sufficient therefor has been so collected and payment thereof is legally enforceable at the respective rate or rates prescribed therefor in the 53 Notes) on overdue principal; and in case such proceeds shall be insufficient to pay in full the whole amount so due and unpaid upon such Notes, then first, payment of accrued but unpaid interest (with interest thereon as aforesaid), and second, to outstanding principal, in each case, ratably according to the aggregate amount so due; and (c) THIRD: To the payment of the remainder, if any, to the Company or to whomever may be lawfully entitled to receive the same or as a court of competent jurisdiction may direct. Section 7.07. LIMITATION ON SUITS. No Holder of any Note shall have any right to institute any proceeding, judicial or otherwise, under or with respect to this Indenture, the Assignment Agreement or the Mortgage Documents, or for the appointment of a receiver or trustee or for any other remedy hereunder, unless: (a) such Holder has previously given written notice to the Trustee of a continuing Event of Default; (b) the Holders of not less than 25% in Outstanding Amount of the Outstanding Notes 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; (c) 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; (d) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and (e) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holder of a majority in Outstanding Amount of the Outstanding Notes; it being understood and intended that no one or more Holders of Notes shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture, the Assignment Agreement or the Mortgage Documents, to affect, disturb or prejudice the right of any other Holders of Notes, or to obtain or to seek to obtain priority or preference over any other Holders or to enforce any right under this Indenture, the Assignment Agreement or the Mortgage Documents, 54 except in the manner herein and therein provided and for the Ratable Benefit of all Notes. Section 7.08. UNCONDITIONAL RIGHT OF NOTEHOLDERS TO RECEIVE PRINCIPAL AND INTEREST. Notwithstanding any other provision in this Indenture, the Holder of any Note shall have the right, which is absolute and unconditional, to receive payment of the principal of and interest on such Note on the Stated Maturity or Interest Payment Dates expressed in such Note (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 7.09. RESTORATION OF RIGHTS AND REMEDIES. If the Trustee or any Noteholder has instituted any proceeding to enforce any right or remedy under this Indenture, the Assignment Agreement or the Mortgage Documents and such proceeding has been discontinued or abandoned for any reason or has been determined adversely to the Trustee or to such Noteholder, then and in every such case the Company, the Trustee and the Noteholders shall, subject to any determination in such proceeding, be restored to their former positions hereunder, and thereafter all rights and remedies of the Trustee and the Noteholders shall continue as though no such proceeding had been instituted. Section 7.10. RIGHTS AND REMEDIES CUMULATIVE. No right or remedy herein conferred upon or reserved to the Trustee or to the Noteholders 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 7.11. DELAY OR OMISSION NOT WAIVER. No delay or omission of the Trustee or of any Holder of any Note to exercise any right or remedy accruing upon an 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 Seven or by law to the Trustee or to the Noteholders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Noteholders, as the case may be. 55 Section 7.12. OTHER RIGHTS. Subject to Section 8.03(e), the Holders of a majority in Outstanding Amount of the Outstanding Notes shall have the right, during the continuance of an Event of Default, (a) to require the Trustee to proceed to enforce this Indenture, either by judicial proceedings for the enforcement of the payment of the Notes by the foreclosure of the Mortgage and exercise of any remedies under the Mortgage Documents and the Assignment Agreement and the sale of the Trust Estate or otherwise or, at the election of the Trustee, by the exercise of the power of entry and/or sale conferred by the Mortgage; and (b) 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 upon the Trustee hereunder, provided that (1) such direction shall not be in conflict with any rule of law or this Indenture or any applicable Mortgage Document or the Assignment Agreement; (2) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction; and (3) the Trustee shall not be required to determine if any action so directed would be unjustly prejudicial to the Holders not taking part in such direction. Section 7.13. WAIVER OF PAST DEFAULTS. Before any judgment or decree for payment of money due has been obtained by the Trustee as provided in this Article Seven, the Holders of not less than 66-2/3% in Outstanding Amount of the Outstanding Notes may, by Act of such Noteholders delivered to the Trustee and the Company, on behalf of the Holders of all the Notes waive any past Default hereunder and its consequences, except a Default (a) in the payment of the principal of or interest on any Note, or (b) in respect of a covenant or provision hereof which under Article Eleven cannot be modified or amended without the consent of the Holder of each Outstanding Note affected. 56 Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or impair any right subsequent thereon. Section 7.14. UNDERTAKING FOR COSTS. All parties to this Indenture agree, and each Holder of any Note by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, the Assignment Agreement or the Mortgage Documents, or in any suit against the Trustee for any action taken or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to the merits and good faith of the claim or defense made by such party litigant; but the provisions of this Section 7.14 shall not apply to any suit instituted by the Trustee, to any suit instituted by any Noteholders, or group of Noteholders, holding in the aggregate more than 10% in Outstanding Amount of the Outstanding Notes, or to any suit instituted by any Noteholder for the enforcement of the payment of the principal of or interest on any Note on or after the Stated Maturity expressed in such Note (or, in the case of redemption, on or after the Redemption Date) or the relevant Interest Payment Date. Section 7.15. ENFORCEMENT. In case an Event of Default shall occur and be continuing, the Trustee, in it discretion may, subject to the provisions of Section 7.12, proceed to protect and enforce its rights and the rights of the Noteholders under this Indenture by a suit, action or proceeding in equity or at law or otherwise, whether for the specific performance of any covenant or agreement contained in this Indenture or in aid of the execution of any power granted in this Indenture or for the enforcement of any other legal, equitable or other remedy, as the Trustee, being advised by counsel, shall deem most effectual to protect and enforce any of the rights of the Trustee or the Noteholders hereunder. In case an Event of Default shall occur and be continuing under the Mortgage, the Trustee, as assignee of the Mortgage Documents, in its discretion may, subject to the provisions of Section 7.12, proceed to enforce its rights under the Mortgage Documents and the Assignment Agreement. 57 Section 7.16. MANAGEMENT OF CASINO-HOTEL. Notwithstanding any provision of this Article Seven to the contrary, (a) following an Event of Default under the Mortgage and the taking of possession of the Trust Estate by the Trustee and/or the appointment of a receiver of the Trust Estate or any part thereof, the Trustee or any such receiver shall be authorized, in addition to the rights and power of the Trustee and such receiver set forth elsewhere in this Indenture, the Assignment Agreement and the Mortgage Documents, to retain one or more experienced operators of hotels and/or casinos to manage and operate the Casino-Hotel on behalf of the Noteholders, provided that any such operator shall have all necessary legal qualifications, including all Permits, to manage the Casino-Hotel; and (b) no Noteholder shall have any right to take possession of, operate or manage all or any portion of the Casino-Hotel, individually or as a member of a group, unless such Noteholder shall have all necessary legal qualifications, including all Permits, to do so and shall otherwise be qualified to be retained to manage the Casino-Hotel under subsection (a) of this Section 7.16. ARTICLE EIGHT THE TRUSTEE Section 8.01. CERTAIN DUTIES AND RESPONSIBILITIES. (a) Except during the continuance of an Event of Default, (1) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture and the Mortgage Documents, and no implied covenants or obligations shall be read into this Indenture and the Mortgage Documents against the Trustee; and (2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture or the Mortgage Documents; but in the case of any such certificates or opinions which by any provision hereof or thereof are specifically required to be furnished to the Trustee, the Trustee shall be 5 under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture and the Mortgage Documents. (b) In case an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture or the Mortgage Documents, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person's own affairs. (c) No provision of this Indenture or any Mortgage Document shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that (1) this Section 8.01(c) shall not be construed to limit the effect of Section 8.01(a); (2) the Trustee shall not be liable for any error of judgment made in good faith by it, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; (3) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of not less than a majority in Outstanding Amount of the Outstanding Notes relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture or any Mortgage Document; and (4) no provision of this Indenture or the Mortgage Documents shall require the Trustee 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. (d) Whether or not therein expressly so provided, every provision of this Indenture or the Mortgage Documents relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section 8.01. Section 8.02. NOTICE OF DEFAULTS. Within 45 days after the occurrence of any Default hereunder of which a Responsible Officer of the 59 Trustee has actual knowledge, the Trustee shall transmit by mail to all Holders of Notes as their names and addresses appear in the Note Register, 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 interest on any Note, 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 best interests of the Noteholders. Section 8.03. CERTAIN RIGHTS OF TRUSTEE. Except as otherwise provided in Section 8.01: (a) 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, coupon, 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; (b) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order; (c) 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; (d) 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 the Trustee hereunder in good faith and in reliance thereon; (e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture or any of the Mortgage Documents at the request or direction of any of the Noteholders pursuant to this Indenture, unless such Noteholders shall have offered to the Trustee reasonable security or indemnity reasonably satisfactory to the Trustee against the costs, 60 expenses and liabilities which might be incurred by it in compliance with such request or direction; (f) 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, 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 and RIH, personally or by agent or attorney; (g) 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; (h) the Trustee shall not be deemed to have knowledge of and shall not be required to take any action with respect to any event of Default (other than an Event of default described in Sections 7.01(a) and (b) or any event which would, with the giving of notice or the passage of time or both, constitute an Event of Default, unless the Trustee shall have actual knowledge of such event or shall have been notified in writing of such event by Noteholders holding in the aggregate more than 25% in Outstanding Amount of the Outstanding Notes; (i) subject to Section 8.01(c), the Trustee shall not be personally liable, in case of entry by it upon the Trust Estate, for debts contracted or liabilities or damages incurred in the management or operation of the Trust Estate; and (j) in addition to and not in limitation of its other powers hereunder, the Trustee shall have such power and authority as may be necessary to enter into and accept delivery of any document as may be necessary to effect on behalf of the Holders of the Notes the subordination of the indebtedness in respect of the Notes to any secured Working Capital Facility (in accordance with the provisions of the Mortgage), and upon written request of the Company, the Trustee shall enter into such agreements on behalf of the holders of the Notes. 61 Section 8.04. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF NOTES OR APPLICATION OF PROCEEDS. The recitals contained herein and in the Notes, except in a certificate of authentication on the Notes, shall be taken as the statements of the Company, and the Trustee assumes no responsibility for their correctness. The Trustee makes no representation as to the validity or sufficiency of this Indenture, the Notes or the Mortgage Documents. The Trustee shall not be accountable for the use or application by the Company of Notes or the proceeds thereof or of any money paid to the Company or by a Company Order under any provision hereof. Section 8.05. MAY HOLD NOTES. The Trustee, any Paying Agent, Note Registrar, Authenticating Agent or any other agent of the Company, in its individual or any other capacity, may become the owner or pledgee of Notes and, subject to Sections 8.08 and 8.13, if operative, may otherwise deal with the Company with the same rights it would have if it were not Trustee, Paying Agent, Note Registrar, Authenticating Agent or such other agent. Section 8.06. MONEY HELD IN TRUST. 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 agreed with the Company. Section 8.07. COMPENSATION AND REIMBURSEMENT. The Company agrees: (a) to pay to the Trustee from time to time reasonable compensation for all services rendered by it hereunder and under the Mortgage Documents (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (b) except as otherwise expressly provided herein and in the Mortgage Documents, 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 the Trustee's negligence or bad faith; and 62 (c) 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 Indenture or the trust created hereunder or the performance of its duties hereunder, including the reasonable costs and expenses of defending itself against or investigaing any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder (including reasonable attorneys' fees and expenses). As security for the performance of the obligations of the Company and RIH under this Section 8.07, the Trustee shall be secured under this Indenture and the Mortgage Documents by a lien prior to the Mortgage upon all property and funds held or collected by the Trustee, and for the payment of such compensation, expenses, reimbursements and indemnity the Trustee shall have the right to use and apply any money held by it pursuant hereto. Notwithstanding the satisfaction of this Indenture, the obligations of the Company and RIH under this Section 8.07 shall survive. Section 8.08. DISQUALIFICATION; CONFLICTING INTERESTS. This Indenture shall always have a Trustee who satisfies the requirements of TIA SECTION 310(a)(l) and SECTION 310(a)(5). The Trustee shall comply with TIA SECTION 310(b) including the second sentence of TIA SECTION 310(b)(9). Section 8.09. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY. There shall at all times be a Trustee hereunder which shall be a corporation organized and doing business under the law of the United States of America or of any state, authorized under such laws to exercise corporate trust powers, having (or in the case of a corporation included in a bank holding company system, the related bank holding company having) a combined capital and surplus of at least $100,000,000, subject to supervision or examination by federal or state authority. In addition, if the Trustee is a corporation included in a bank holding company system, the Trustee, independently of such bank holding company, shall meet the capital requirements of TIA SECTION 310(a)(2). The Trustee shall comply with TIA SECTION 310(b); PROVIDED, HOWEVER, that there shall be excluded from the operation of TIA SECTION 310(b)(1) any indenture or indentures under which other securities, or certificates of interest or participation in other securities of the Company are outstanding, if the requirements for such exclusion set forth in TIA SECTION 310(b)(1) are met. If such 63 corporation publishes reports of condition at least annually, pursuant to law or to the requirements of such supervising or examining authority, then for the purposes of this Section 8.09, 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 8.09, it shall resign immediately in the manner and with the effect hereinafter specified in this Article Eight. Section 8.10. 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 Eight shall become effective until the acceptance of appointment by the successor Trustee under Section 8.11. (b) The Trustee may resign at any time by giving written notice thereof to the Company. If an instrument of acceptance by a successor Trustee 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) The Trustee may be removed at any time by Act of the Holders of a majority in Outstanding Amount of the Outstanding Notes, delivered to the Trustee and to the Company. (d) If at any time: (1) the Trustee shall fail to comply with Section 8.08 after written request therefor by the Company or by any Noteholder who is a bona fide Holder of a Note, or (2) the Trustee shall cease to be eligible under Section 8.09 and shall fail to resign after written request therefor by the Company or by any Noteholder who is a bona fide Holder of a Note, or (3) 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, (i) the Company by a Company Order may remove the Trustee, or (ii) subject to Section 7.14, any Noteholder who is a bona fide Holder of a Note may, on behalf 64 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 the Trustee for any cause, the Company, by a Company Order, shall promptly appoint a successor Trustee. In case all or substantially all of the Trust Estate shall be in the possession of a receiver or trustee lawfully appointed, such receiver or trustee, by written instrument, may similarly appoint a successor to fill such vacancy until a new Trustee shall be so appointed by the Noteholders. If, within one year after such resignation, removal or incapacity or the occurrence of such vacancy, a successor Trustee shall be appointed by Act of the Holders of a majority in Outstanding Amount of the Outstanding Notes 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 or by such receiver or trustee. If no successor Trustee shall have been so appointed by the Company or the Noteholders and accepted appointment in the manner hereinafter provided, subject to Section 7.14, any Noteholder who is a bona fide Holder of a Note may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee. (f) The Company shall give written notice of each resignation and each removal of the Trustee and each appointment of a successor Trustee to each Noteholder by mailing such notice by first-class mail, postage prepaid, to each Noteholder as such Noteholder's name and address appears in the Note Register; provided, however, that failure of the Company to give such notice shall not affect the resignation or removal of such Trustee. Each notice shall include the name of the successor Trustee and the address of its principal corporate trust office. Section 8.11. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR. Every successor Trustee appointed hereunder shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall became effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the estates, properties, 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 conveying and transferring to such successor Trustee all the estates, 65 properties, 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, subject nevertheless to its lien, if any, provided for in Section 8.07. 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 estates, properties, 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 Eight. Section 8.12. 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 Eight, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Notes 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 Notes so authenticated with the same effect as if such successor Trustee had itself authenticated such Notes. Section 8.13. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY. The Trustee will comply with TIA SECTION 311(a). A Trustee who has resigned or been removed shall be subject to TIA SECTION 311(a) to the extent indicated. Section 8.14. CO-TRUSTEES AND SEPARATE TRUSTEES. At any time or times, for the purpose of meeting the legal requirements of the TIA or of any jurisdiction in which any of the Trust Estate may at the time be located or in which it shall be necessary or desirable for the Trustee to act, the Company and the Trustee shall have power to appoint, and, upon the written request of the Trustee or of the Holders of at least 25% in Outstanding Amount of the Notes Outstanding, the Company shall for such purpose join with the Trustee in the execution, delivery and performance of all instruments and 66 agreements necessary or proper to appoint, one or more Persons approved by the Trustee either to act as co-trustee, jointly with the Trustee, of all or any part of the Mortgage Documents or of the Trust Estate covered by such Mortgage Documents, or to act as separate trustee of any such property, in either case with such powers as may be provided in the instrument of appointment, and to vest in such Person or Persons in the capacity aforesaid, any property, title, right or power deemed necessary or desirable, subject to the other provisions of this Section 8.14. If the Company does not join in such appointment within 15 days after the receipt by it of a request so to do, or in case an Event of Default has occurred and is continuing, the Trustee alone shall have power to make such appointment. Should any written instrument from the Company be required by any co-trustee or separate trustee so appointed for more fully confirming to such co-trustee or separate trustee such property, title, right or power, any and all such instruments shall, on request, be executed, acknowledged and delivered by the Company within three business days of such request. Every co-trustee or separate trustee shall, to the extent permitted by law, but to such extent only, be appointed subject to the following terms, namely: (a) the Notes shall be authenticated and delivered, and all rights, powers, duties and obligations hereunder in respect of the custody of securities, cash and other personal property held by, or required to be deposited or pledged with, the Trustee hereunder, shall be exercised solely, by the Trustee; (b) the rights, powers, duties and obligations hereby conferred or imposed upon the Trustee in respect of any property covered by such appointment shall be conferred or imposed upon and exercised or performed by the Trustee or by the Trustee and such co-trustee or separate trustee jointly, as shall be provided in the instrument appointing such co-trustee or separate trustee, except to the extent that under any law of any jurisdiction in which any particular act is to be performed, the Trustee shall be incompetent or unqualified to perform such act, in which event such rights, powers, duties and obligations shall be exercised and performed by such co-trustee or separate trustee; (c) the Trustee, at any time, by an instrument in writing executed by it may accept the resignation of or remove any co-trustee or separate trustee appointed under this Section 8.14. A successor to any co-trustee or 67 separate trustee so resigned or removed may be appointed in the manner provided in this Section 8.14; (d) the Trustee, or any other such trustee hereunder, shall not be personally liable by reason of any act or omission of any co-trustee or separate trustee hereunder, and no co-trustee or separate trustee hereunder shall be personally liable by reason of any act or omission of the Trustee, or any other such trustee hereunder; (e) any Act of Noteholders delivered to the Trustee shall be deemed to have been delivered to each such co-trustee and separate trustee; and (f) any co-trustee or separate trustee appointed hereunder shall be entitled to compensation and indemnification from the Company under Section 8.07 hereunder and shall be entitled to all such other rights and protections afforded the Trustee hereunder. Section 8.15. APPOINTMENT OF AUTHENTICATING AGENT. Upon the request of the Company, the Trustee shall appoint an Authenticating Agent with power to act on its behalf and subject to its direction in the authentication and delivery of the Notes designated for such authentication by the Company and containing provisions therein for such authentication in connection with transfers and exchanges under Sections 3.04, 3.05, 3.06 and 13.07, as fully to all intents and purposes as though the Authenticating Agent had been expressly authorized by those Sections to authenticate and deliver such Notes. For all purposes of this Indenture, the authentication and delivery of Notes by the Authenticating Agent pursuant to this Section 8.15 shall be deemed to be the authentication and delivery of Notes "by the Trustee". Such Authenticating Agent shall at all times be a bank or trust company having its principal office in the Borough of Manhattan, City and State of New York, and shall at all times be a corporation organized and doing business under the laws of the United States or of any State with a combined capital and surplus of at least $50,000,000 and authorized under such laws to exercise corporate trust powers and subject to supervision or examination by federal or state authority. If such corporation publishes reports of condition at least annually pursuant to law or the requirements of such authority, then for the purposes of this Section 8.15 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. Any corporation into which any Authenticating Agent may be merged or converted or with which it may be 68 consolidated, or any corporation resulting from any merger, consolidation or conversion to which any Authenticating Agent shall be a party, or any corporation succeeding to the corporate trust business of any Authenticating Agent, shall be the successor of the Authenticating Agent hereunder, if such successor corporation is otherwise eligible under this Section 8.15, without the execution or filing of any further act on the part of the parties hereto or the Authenticating Agent or such successor corporation. Any Authenticating Agent may at any time resign by giving written notice of resignation to the Trustee and the Company. The Trustee may at any time terminate the agency of any Authenticating Agent by giving written notice of termination to such Authenticating Agent and the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time any Authenticating Agent shall cease to be eligible under this Section 8.15, the Trustee shall promptly appoint a successor Authenticating Agent, and shall give written notice of such appointment to the Company. The Company agrees to pay to the Authenticating Agent from time to time reasonable compensation for its services. The provisions of Sections 3.10, 8.04 and 8.05 shall be applicable to any Authenticating Agent. ARTICLE NINE NOTEHOLDERS' LISTS AND REPORTS BY TRUSTEE Section 9.01. COMPANY TO FURNISH TRUSTEE SEMI-ANNUAL LISTS OF NOTEHOLDERS. The Company will furnish or cause to be furnished to the Trustee semi-annually, not less than 45 days nor more than 60 days after each date (month and day) specified as a semi-annual Interest Payment Date for the Notes (whether or not any Notes are then Outstanding), and at such other times as the Trustee may request in writing, within 60 days after receipt by the Company of any such request, a list in such form as the Trustee may reasonably require containing all the information in the possession or control of the Company, or any of its Paying Agents other than the Trustee, as to the names and addresses of the Holders of Notes, obtained since the date as of which the next previous list, if any, was furnished, excluding from any such list the names and addresses received by the Trustee in its capacity as Note Registrar. Any such list may be dated as of a date not more than 15 days prior to 69 the time such information is furnished and need not include information received after such date. Section 9.02. PRESERVATION OF INFORMATION; COMMUNICATIONS TO NOTEHOLDERS. (a) The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders of Notes (1) contained in the most recent list furnished to the Trustee as provided in Section 9.01, (2) received by the Trustee in the capacity of Paying Agent (if so acting) hereunder or (3) received by the Trustee in its capacity as Note Registrar. The Trustee may destroy any list furnished or provided in Section 9.01 upon receipt of a new list so furnished. (b) Holders may communicate pursuant to TIA SECTION 312(b) with other Holders with respect to their rights under this Indenture or the Notes. The Company, the Trustee, the Note Registrar and any other Person shall have the protection of TIA SECTION 312(c). (c) Every Holder of Notes, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee nor any Paying Agent shall be held accountable by reason of the disclosure of any such information as to the names and addresses of the Holders of Notes in accordance with Section 9.02(b), regardless of the source from which information was derived, and that the Trustee shall not be held accountable by reason of mailing any material pursuant to a request made under Section 9.02(b). Section 9.03. REPORTS BY TRUSTEE. (a) Within 60 days after each May 15 beginning with May 15, 1995, the Trustee shall transmit to each Noteholder a report dated as of such May 15 that complies with TIA SECTION 313(a). The Trustee shall also comply with TIA SECTION 313(b) and SECTION 313(c). (b) A copy of each such report shall, at the time of such transmission to Noteholders, be filed by the Trustee with any stock exchange on which the Notes are listed and also with the Commission. The Company will notify the Trustee when the Notes are listed on any stock exchange. (c) The Trustee will provide the Casino Control Commission and the Director of the Division of Gaming Enforcement of New Jersey with: (1) copies of all notices, reports and other written communications which the Trustee gives to Noteholders; 70 (2) a list of Noteholders promptly after the original issuance of the Notes and a list of Noteholders annually on December 1 of each year, or such other time as requested by the Casino Control Commission or Director of the Division of Gaming Enforcement; (3) notice of any Event of Default under this Indenture actually known by the Trustee or of any event, occurrence or condition actually known by the Trustee which, with the giving of notice or lapse of time or both would constitute an Event of Default under this Indenture (including the Guaranty), the RIH Junior Promissory Note or the Mortgage Documents (as such term is defined in such instruments), any acceleration of the Indebtedness evidenced or secured hereby or thereby, the institution of any legal actions or proceedings before any court or governmental authority in respect of this Indenture (including the Guaranty) or the Mortgage Documents, the entering into or taking possession of any property constituting the Trust Estate and any rescission, annulment or waiver in respect of an Event of Default under any instruments described in this clause (3); (4) notice of the removal or resignation of the Trustee; (5) notice of any transfer or assignment of rights under this Indenture (including the Guaranty) (but not in respect of the Notes) or the Mortgage Documents after a Responsible Officer of the Trustee becomes aware of the same; and (6) a copy of any amendment to the Notes, this Indenture (including the Guaranty) or the Mortgage Documents immediately; PROVIDED, HOWEVER, that the Trustee shall not be liable to any Person (other than the Casino Control Commission and the Director of the Division of Gaming Enforcement of New Jersey) for any failure to provide any of the above-mentioned documents to the Casino Control Commission and the Director of the Division of Gaming Enforcement of New Jersey. The notice specified in Section 9.03(c) above shall be in writing and, except as set forth below, shall be given immediately after the Trustee has actual knowledge of any circumstances requiring such notice. In the case of any notice in respect of any Default or Event of Default under any instrument described in Section 9.03(c), such notice shall be accompanied by a copy of 71 any notice from the Holders of Notes, or a representative thereof or the Trustee, to the defaulting Person and, if accompanied by any such notice to the defaulting Person, shall be given simultaneously with the giving of any such notice to the defaulting Person. In the case of any legal actions or proceedings, such notice shall be accompanied by a copy of the complaint or other initial pleading or document. The Trustee and its Responsible Officers shall cooperate with the Casino Control Commission and the Director of the Division of Gaming Enforcement of New Jersey in order to provide such Commission and Director with information and documentation relevant to compliance with Section 9.03(c) above and as otherwise required by the Casino Control Act. The expiration date of the current gaming Permit held by RIH is February 26, 1994. Subsequent gaming Permits held by RIH are scheduled to expire every two years on February 26th, commencing February 26, 1996 unless and until the Trustee is advised otherwise. RIH will advise the Trustee of any change in such expiration date within five business days of knowledge thereof. ARTICLE TEN CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE Section 10.01. CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER ONLY ON CERTAIN TERMS. Neither the Company nor RIH shall consolidate, combine or merge with or into any other Person or permit any other Person to consolidate, combine or merge with or into the Company or RIH, as the case may be; and neither the Company with respect to its assets nor RIH with respect to the Trust Estate shall sell, assign, convey or transfer its interest in such assets or the Trust Estate, as the case may be, substantially as an entirety (and notwithstanding anything to the contrary contained herein (including the proviso at the end of this sentence), but subject to the provisions of the Mortgage regarding dispositions of the Trust Estate, neither the Company with respect to its assets nor RIH with respect to the Trust Estate may sell, assign, convey or transfer such assets or the Trust Estate, as the case may be, other than substantially as an entirety) to any other Person or group of Persons in one transaction or a series of related transactions, or permit any other Person or group of Persons to convey or transfer all or substantially all of its assets, subject to liabilities other than DE MINIMIS liabilities, to 7 the Company or RIH; and the Company and RIH shall not transfer, convey, sell or otherwise dispose of to any other Person, or issue to any Person, any equity interest in the Company or RIH, as the case may be (each of the aforesaid transactions described in this Section 10.01 is referred to herein as a "Combination Transaction"); PROVIDED, HOWEVER, that (i) the Company may engage in a Combination Transaction in which the only other party or parties is RIH or a direct or indirect wholly owned Subsidiary of the Company or RIH, and (ii) the Company or RIH may engage in any other Combination Transaction (either independently or at the same time as other Combination Transactions), subject to the following with respect to each such Combination Transaction: (a) the conditions set forth in Section 10.03 are satisfied; (b) in the event the Company or RIH shall consolidate, combine or merge with or into another Person or sell, assign, convey or transfer its interest in its assets or in the Trust Estate, as the case may be, substantially as an entirety (but not less than substantially as an entirety) to another Person in one transaction or a series of related transactions, the entity which is formed by or survives such consolidation, combination or merger or the Person to which such assets or the Trust Estate are conveyed or transferred: (1) shall be organized and existing under the laws of the United States of America, any state thereof, or the District of Columbia; (2) shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form reasonably satisfactory to the Trustee, the performance and observance of every covenant, obligation and condition of this Indenture to be performed or observed by the Company or RIH, whichever the case may be; (3) shall expressly assume, by an instrument executed and delivered to the Trustee, in form reasonably satisfactory to the Trustee, the due and punctual performance of every covenant, obligation and condition of the Mortgage Documents and Assignment Agreement to be performed by the Company or RIH, whichever the case may be; and (4) immediately after and giving effect to such transaction could incur at least $1.00 of additional Indebtedness under Section 12.08; 73 (c) immediately after giving effect to such transaction, no Event of Default, or Default hereunder or under the Mortgage shall have occurred and be continuing; (d) such Combination Transaction shall be on such terms as shall not impair the lien and security and priority hereof or of the Mortgage Documents or of the Assignment Agreement and the rights and powers of the Trustee and the Holders of the Notes hereunder and thereunder; and (e) the Company or RIH, as the case may be, shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each of which shall state that such Combination Transaction and such supplemental indenture comply with this Article Ten and that all conditions precedent herein provided for relating to such transaction have been complied with. Section 10.02. SUCCESSOR ENTITY SUBSTITUTED. Upon any consolidation, combination or merger or any conveyance or transfer of an interest in the assets of the Company or in the Trust Estate permitted by Section 10.01, the successor entity formed by such consolidation or into which the Company or RIH is combined or to which such conveyance or transfer is made shall succeed to, and be substituted for, and may exercise every right and power of, and shall be bound by every obligation and liability of, the Company or RIH, whichever the case may be, under this Indenture with the same effect as if such successor entity had been named as the Company or RIH herein; PROVIDED, HOWEVER, that no such consolidation or combination involving the Company or RIH, unless such transaction is in compliance with the provisions of this Article Ten, shall have the effect of releasing the Person named as "the Company" or "RIH", as the case may be, in the first paragraph of this instrument, or any successor entity which shall theretofore have become such in the manner prescribed in this Article Ten, from its liability as obligor and maker on the RIH Junior Promissory Note or any of the Notes. Section 10.03. SUCCESSOR MANAGEMENT OF CASINO-HOTEL. Neither the Company nor RIH shall engage in any Combination Transaction unless, immediately following such Combination Transaction, (a) RIH (or any successor entity) shall be eligible for and shall meet all relevant Legal Requirements, including holding all permits, required for the normal operation of the business of owning and operating the Casino-Hotel, and (b) RIH (or any successor entity) shall be controlled by a Person that is, or shall retain to manage the 74 Casino-Hotel one or more Persons that are, experienced in the operation and management of casino-hotels. Section 10.04. LIMITATION ON SALES OF TRUST ESTATE. Except as otherwise expressly permitted by the Mortgage and this Indenture, neither the Company nor RIH shall sell, assign, lease, sublease, hypothecate, pledge, mortgage or otherwise transfer all or any part of the assets of the Company or the Trust Estate or any interest therein (including, without limitation, any interest in the Ground Leases). Without limiting the generality of the foregoing, RIH shall not separate, or attempt to separate, its ownership of its interest in the Ground Leases from the ownership of the buildings constituting the Casino-Hotel or any part thereof. ARTICLE ELEVEN AMENDMENTS, SUPPLEMENTS AND WAIVER Section 11.01. WITHOUT CONSENT OF NOTEHOLDERS. Without the consent of the Holders of any Notes, the parties hereto may from time to time amend or supplement this Indenture, the Assignment Agreement, the Notes or the Mortgage Documents, as long as the form of such amendment or supplement is satisfactory to the Trustee, for any of the following purposes: (a) to correct or amplify the description of the Trust Estate or better to assure, convey and confirm unto the Trustee the assignment of the Mortgage Documents; or (b) to add additional conditions, limitations and restrictions thereafter to be observed to the conditions, limitations and restrictions on the authorized amount, terms of issue, authentication and delivery of Notes as herein set forth; or (c) to comply with Article Ten; or (d) to add to the covenants of the Company for the benefit of the Holders of all Notes or to surrender any right or power herein conferred upon the Company; or (e) to cure any ambiguity, defect or inconsistency in any of the enumerated documents, provided such action shall not adversely affect the interests of the Holders of the Notes; or (f) to modify, eliminate or add to the provisions of this Indenture to such extent as shall be necessary to 75 effect the qualification of this Indenture under the TIA or under any similar federal statute hereafter enacted, and to add to this Indenture such other provisions as may be expressly permitted by the TIA, EXCLUDING, HOWEVER, the provisions referred to in TIA SECTION 316(a)(2) as in effect at the date as of which this instrument was executed or any corresponding provision in any similar federal statute hereafter enacted; or (g) to effectuate any subordination contemplated in Section 8.03(i); or (h) to comply with the requirements of the Casino Control Act. The terms of any such enumerated document entered into pursuant to this Section 11.01 shall be subject to prior approval of the Casino Control Commission in consultation with the New Jersey Division of Gaming Enforcement. Section 11.02. WITH CONSENT OF NOTEHOLDERS. With the consent of the Holders of not less than 66-2/3% in Outstanding Amount of the Notes then Outstanding, by Act of such Holders delivered to the Company and the Trustee, the parties hereto may amend or supplement this Indenture, the Mortgage Documents, the Assignment Agreement or the Notes, provided that the form of such amendment or supplement is reasonably satisfactory to the Trustee. The Holders of 66-2/3% in Outstanding Amount of the Notes then Outstanding may waive compliance by the Company or RIH with any provision of this Indenture, the Mortgage Documents, the Assignment Agreement or the Notes, except a default in the payment of principal of or interest on any Note, without notice to any Noteholder. Notwithstanding the foregoing, no modification, waiver, consent or amendment to the Notes or this Indenture shall permit the redemption of the Notes prior to the fifth anniversary of the Effective Date (other than pursuant to an RIH Sale) unless the same also shall have ben approved by the holders of 66-2/3% in Outstanding Amount (as such term is defined in the Senior Mortgage Note Indenture) of the Senior Mortgage Notes then Outstanding (as such terms are defined in the Senior Mortgage Note Indenture). Without the consent of the Holder of each Outstanding Note affected thereby, an amendment, supplement or waiver, including a waiver pursuant to Section 7.13, may not: (a) change the Stated Maturity of the principal of, or any installment of interest on, any Note, or reduce the principal amount thereof or the interest thereon or the amount payable upon the redemption thereof, or change any Place of Payment where, or the coin or currency in which, any Note, or the interest thereon, is payable, or 76 impair the right to institute suit for the enforcement of any such payment on or after the Stated Maturity thereof (or, in the case of redemption, on or after the Redemption Date); or (b) reduce the percentage in Outstanding Amount of the Outstanding Notes, the consent of whose Holders is required for any amendment, supplement or waiver; or (c) modify or alter the provisions of the proviso to the definition of the term Outstanding; or (d) modify any of the provisions of this Section or Section 7.13, except to increase any percentage provided thereby or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Note affected thereby; or (e) permit the creation of any lien ranking prior to the lien of the Mortgage (except for such liens expressly permitted pursuant to Section 12.13). In determining whether to execute any amendment or supplement, subject to Sections 11.02(a) through (e), the Trustee may in its discretion determine whether or not any Notes would be affected by any such amendment or supplement and any such determination shall be conclusive upon the Holders of all Notes, whether theretofore or thereafter authenticated and delivered hereafter. The Trustee shall not be liable for any such determination made in good faith. It shall not be necessary for any Act of Noteholders under this Section to approve the particular form of any proposed amendment, supplement or waiver, but it shall be sufficient if such Act shall approve the substance thereof. In connection with any amendment, supplement or waiver under this Indenture, the Company or RIH may, but shall not be obligated to, offer to any Holder who consents to such amendment, supplement or waiver, or to all Holders, at the discretion of the Company or RIH, consideration for such Holder's consent to such amendment, supplement or waiver. The terms of any such enumerated document entered into pursuant to this Section 11.02 shall be subject to the prior approval of the Casino Control Commission in consultation with New Jersey Division of Gaming Enforcement. Section 11.03. EXECUTION OF AMENDMENTS AND SUPPLEMENTS. In executing, or accepting the additional trusts created by, any amendment or supplement permitted by this Article or the modification thereby of the trusts already created by this Indenture, the Trustee shall be entitled to 77 receive from the Company, and, subject to Section 8.01(c), shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such amendment or supplement is authorized or permitted by this Indenture. The Trustee may, but shall not, except to the extent required in the case of a supplemental indenture entered into under Section 11.01(e), be obligated to, enter into any such amendment or supplement which affects the Trustee's own rights, duties or immunities under this Indenture or otherwise. Section 11.04. EFFECT OF AMENDMENT OR SUPPLEMENT. Upon the execution of any amendment or supplement under this Article, every Holder of Notes theretofore or thereafter authenticated and delivered hereunder shall be bound thereby. Section 11.05. CONFORMITY WITH TRUST INDENTURE ACT. Every supplemental indenture executed pursuant to this Article shall conform to the requirements of the TIA and Casino Control Act as then in effect. Section 11.06. REFERENCE IN NOTES TO AMENDMENT OR SUPPLEMENT. In the absence of a direction from the Company, Notes authenticated and delivered after the execution of any amendment or supplement pursuant to this Article may, and if required by the Trustee shall, bear a notation in form approved by the Trustee as to any matter provided for in such amendment or supplement. If the Company shall so determine, new Notes so modified as to conform, in the opinion of the Trustee and the Company, to any such amendment or supplement may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for Outstanding Notes. ARTICLE TWELVE COVENANTS Section 12.01. PAYMENT OF PRINCIPAL AND INTEREST. The Company will duly and punctually pay or cause to be paid the principal of and interest on each of the Notes at the place or places, at the respective times and in the manner provided in the Notes and this Indenture. Each installment of interest on the Notes may be paid by mailing checks for such interest payable to or upon the written order of (or, with respect to interest to be paid in Additional Notes, such 78 Additional Notes) the Holders of Notes entitled thereto, to such address and in such name as they shall appear on the Note Register. Any installment of principal and interest shall be considered paid on the date it is due if the Trustee or Paying Agent (other than the Company or a Subsidiary of the Company or any Affiliate thereof) holds on that date money in immediately available funds designated exclusively for and sufficient to pay the installment (or, with respect to interest to be paid in Additional Notes, such Additional Notes) and the Trustee and/or the Paying Agent has not received instructions from the Company not to make such payment or is not prohibited from making such payment to the Noteholders pursuant to the terms of this Indenture. The Company shall pay interest (including post-petition interest in any proceeding under any applicable bankruptcy law) to the extent legally permitted on overdue principal at the rate set forth in the Notes; and it shall pay interest (including post-petition interest in any proceeding under any applicable bankruptcy law) on unpaid interest otherwise payable under the first clause of this sentence at the same rate to the extent legally permitted. Section 12.02. MAINTENANCE OF OFFICE OR AGENCY. The Company will maintain, in the Borough of Manhattan, the City of New York, State of New York, an office or agency where Notes may be presented or surrendered for payment, where Notes may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Company in respect of the Notes and this Indenture may be served. The Company initially appoints the Trustee as its agent for presentation or surrender of Notes for payment or registration, transfer or exchange. The Trustee (or its corporate parent) will maintain an office in the Borough of Manhattan, the City of New York, State of New York, for such purposes. The Company may from time to time designate one or more other offices or agencies (in or outside the City of New York, State of New York) where the Notes may be presented or surrendered for any or all such purposes, and may from time to time rescind such designations; 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 Borough of Manhattan, the City of New York, State of New York, for such purposes as stated in this Section 12.02. The Company will give prompt written notice to the Trustee of any such designation and any change in the location of any such office or agency. 79 If at any time the Company shall fail to maintain such an 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 principal corporate trust office of the Trustee, and the Company hereby appoints the Trustee its agent to receive all such presentations, surrenders, notices and demands. Section 12.03. 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, or interest on, any of the Notes, segregate and hold in trust for the benefit of the Persons entitled thereto a sum, sufficient to pay the principal or interest so becoming due until such sums shall be paid or issued to such Persons or otherwise disposed of as herein provided, and will promptly notify the Trustee of such action or any failure so to act. The Company will, on or before each due date of the principal of or interest on, any Notes, deposit with a Paying Agent a sum in same day funds (or, with respect to interest to be paid in Additional Notes, such Additional Notes), sufficient to pay the principal or interest so becoming due, such sum, as the case may be, to be held in trust for the benefit of the Persons entitled to such principal 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: (a) hold all sums received by it as such agent for the payment of the principal of or interest on Notes (whether such sums have been paid to it by the Company or by any other obligor on the Notes) 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; (b) promptly give the Trustee notice of any failure by the Company (or any other obligor upon the Notes) to make any payment of the principal of, or interest on, the Notes when the same shall be due and payable; and (c) at any time during the continuance of any such failure, upon the written request of the Trustee, 80 forthwith pay to the Trustee all sums so held in trust by such Paying Agent. Any money (or, with respect to interest to be paid in Additional Notes, such Additional Notes) deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of, or interest on, any Note and remaining unclaimed for two years after such principal or interest has become due and payable shall be paid to the Company on its request, or (if then held by the Company) shall be discharged from such trust, unless otherwise required by mandatory provisions of applicable escheat or abandoned or unclaimed property law, 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 regard to such money (or Additional Notes), 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 City of New York, State of New York, or mailed to each such Holder, or both, notice that such money (or Additional Notes) remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication or mailing, as the case may be, any unclaimed balance of such money then remaining will be paid to the Company. Section 12.04. CORPORATE EXISTENCE. Subject to Article Ten, each of the Company and RIH will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence and the corporate existence of each of its Subsidiaries in accordance with the respective organizational documents of the Company, RIH and each such Subsidiary and the rights (charter and statutory), licenses, permits, approvals and governmental franchises of it and each of its Subsidiaries necessary to the conduct of its and their respective businesses, including, without limitation, all licenses, permits, approvals and franchises necessary to assure the continued operation of RIH's gaming operations at the Casino-Hotel; PROVIDED, HOWEVER, any direct or indirect wholly owned subsidiary of RIH may consolidate with, merge into or transfer or distribute all or part of its properties and assets to RIH or the Company or as otherwise provided in Section 10.01. 81 Section 12.05. TO KEEP BOOKS; INSPECTION BY TRUSTEE. The Company and RIH will each keep proper books of record and account, in which full and correct entries shall be made of all material dealings or transactions of or in relation to the Notes and the properties, business and affairs of the Company and RIH in accordance with GAAP. The Company and RIH will at any and all times, upon the written request of the Trustee and at the expense of RIH, permit the Trustee by its representatives to inspect the Casino-Hotel and the books of account, records, reports and other papers of the Company and RIH, and to make copies and extracts therefrom, and will afford and procure a reasonable opportunity to make any such inspection (provided that the Company and RIH shall have received reasonable advance notice of such inspection and that any such inspection shall not unreasonably interfere with the business operations of the Company and RIH). The Company and RIH will furnish to the Trustee any and all information as the Trustee may reasonably request with respect to the performance by the Company and RIH of their covenants in this indenture. Section 12.06. REPORTS AND COMPLIANCE CERTIFICATES. (a) RIH shall furnish or cause to be furnished to the Trustee, within 105 days after each fiscal year of RIH: (i) a copy of annual audited financial statements of RIH prepared in conformity with GAAP, accompanied by a report of Ernst & Young or of another firm of independent certified public accountants of recognized national standing selected by RIH (the "National Accountants"), together with a certificate from such National Accountants stating that their audit examination has included a review of the terms of this Indenture and that the National Accountants have not become aware of any Event of Default or that a Default has occurred and is continuing, and if they have become aware of any such Event of Default or Default, describing it; PROVIDED, HOWEVER, that the National Accountants shall not be liable to any Person for any failure to discover any Event of Default or Default in connection with such review; and (ii) a copy of annual unaudited financial statements of RIH, including notes to such financial statements and corresponding management's discussion and analysis, in form and substance comparable to that which would be required to be filed with the Commission in an Annual Report on Form 10-K under the Exchange Act, prepared in the same manner as the audited financial statements referred to in clause (i) of this Section 12.06(a), signed by a proper accounting officer of RIH. RIH, contemporaneously with the furnishing of such audited financial statements to the Trustee under clause (i) of this Section 12.06(a), shall mail copies of such audited financial statements to the Holders (which need not include the certificate referred to in such clause (i)). 82 (b) RIH shall furnish or cause to be furnished to the Trustee, within 60 days after each quarter of each fiscal year of RIH, except the final quarter of such fiscal year, a copy of unaudited financial statements of RIH prepared on a consistent basis with the audited financial statements referred to in clause (i) of Section 12.06(a), signed by a proper accounting officer of RIH and consisting of at least a balance sheet as at the close of such quarter and statements of operations and cash flow for such quarter and for the period from the beginning of such fiscal year to the close of such quarter, including notes to such financial statements and corresponding management's discussion and analysis, in form and substance comparable to that which would be required to be filed with the Commission in a Quarterly Report on Form 10-Q under the Exchange Act. RIH, contemporaneously with the furnishing of such unaudited financial statements to the Trustee under this Section 12.06(b), shall mail copies of such unaudited financial statements to the Holders (which need not be signed by a proper accounting officer of RIH). (c) RIH shall furnish or cause to be furnished to the Trustee, contemporaneously with the furnishing of a copy of the annual financial statements and of the quarterly financial statements referred to in Section 12.06(a) and Section 12.06(b), an Officers' Certificate dated the date of such annual financial statement or such quarterly financial statements to the effect that no Default or Event of Default has occurred and is continuing, or, if there is any such Default or Event of Default, describing it and the steps, if any, being taken to cure it. (d) RIH shall furnish or cause to be furnished to the Trustee, copies of each filing and report made by RIH or the Company with the Commission pursuant to the reporting and filing requirements of Section 13 or 15(d) of the Exchange Act, within 15 days after RIH or the Company, as applicable, is required to file the same. (e) RIH agrees that, if RIH becomes exempt from the Commission reporting and filing requirements of Section 13 or 15(d) of the Exchange Act, RIH shall prepare such periodic reports as it would otherwise have been required to file with the Commission and (i) at its own expense, cause all such periodic reports to be filed with the Commission, the Trustee and any exchange upon which the Notes then are listed, in each case on the date when such periodic report would have been required to be filed with the Commission under Section 13 or 15(d) of the Exchange Act, if either of such provisions were applicable, and (ii) keep copies of such periodic reports available at its office and promptly provide any Person who so requests with a copy of any such periodic report, at the Company's expense. 83 (f) Each of the Company and RIH shall comply with the provisions of SECTION 314(a) of the Trust Indenture Act. (g) The Company shall deliver to the Trustee, promptly upon becoming aware of any Default or Event of Default (but in no event later than five business days thereafter) in the performance of any covenant or agreement of the Company contained in this Indenture or any of the Mortgage Documents, an Officers' Certificate specifying with particularity such event. Section 12.07. LIMITATION ON DIVIDENDS AND RESTRICTED PAYMENTS. (a) The Company hereby covenants that, on and after the date of this Indenture, it will not, directly or indirectly, make, or permit any Subsidiary of the Company to make, any Restricted Payment. (b) RIH hereby covenants that, on or after the date of this Indenture, it will not, directly or indirectly, make, or permit any Subsidiary of RIH to make, any Restricted Payment; PROVIDED, HOWEVER, that: (i) if RIH's Consolidated Interest Coverage Ratio, as certified to the Trustee by an Officers' Certificate, calculated at the time of the declaration of the dividend or distribution is equal to or exceeds two, then RIH may declare and pay cash dividends or make cash distributions in respect of any class of capital stock of RIH in an amount not to exceed in the aggregate with any other such cash dividends or distributions declared or made from and after the date hereof, 50 percent of RIH's Consolidated Net Income from and after the date hereof; and (ii) if (1) RIH's Consolidated Interest Coverage Ratio, as certified to the Trustee by an Officer's Certificate, calculated at the time of the declaration of the dividend or distribution is equal to or exceeds two; and (2) RIH has cash in excess of the amount required to pay interest on the Notes and the Junior Mortgage Notes on the next Interest Payment Date plus $20,000,000, then RIH may declare and pay cash dividends or make cash distributions in respect of any class of capital stock of RIH in an amount not to exceed such excess cash amount. (c) The Company and RIH will not, and will not permit any of their respective Subsidiaries to, create or otherwise cause or suffer to exist or become effective any encumbrance or restriction of any kind on the ability of any Subsidiary of RIH or the Company: (i) to pay dividends or make any other distribution on the capital stock of such Subsidiary that is owned by RIH, the Company or a wholly owned Subsidiary of the Company or RIH, as applicable; (ii) to pay any Indebtedness owed by such Subsidiary to RIH, the Company or any wholly owned Subsidiary of the Company or RIH, as 84 applicable; (iii) to make loans or advances to RIH, the Company or any wholly owned Subsidiary of the Company or RIH, as applicable; or (iv) to transfer any of its property or assets to the Company, RIH or any wholly owned Subsidiary of the Company or RIH, as applicable, except (A) any restrictions existing on or prior to the date hereof, or in connection with agreements in effect, or entered into, on the date hereof, or any permitted amendments, renewals, refundings, refinancings or extensions thereof; PROVIDED, HOWEVER, that the terms and conditions of any such amendments, renewals, refundings, refinancings or extensions are no more restrictive with respect to the matters set forth in clauses (i) through (iv) of this Section 12.07(c) than the agreements being amended, refunded, renewed, refinanced or extended; (B) any restrictions or encumbrances existing or arising pursuant to the terms of Indebtedness of a Person outstanding at the time such Person becomes a Subsidiary of the Company or RIH and not incurred in connection with, or in contemplation of, such Person becoming a Subsidiary of the Company or RIH or any permitted amendments, renewals, refinancings or extensions thereof; PROVIDED, HOWEVER, that the terms and conditions of any such amendments, renewals, refundings, refinancings or extensions are no more restrictive with respect to the matters set forth in clauses (i) through (iv) of this Section 12.07(c) than the agreements being amended, renewed, refunded, refinanced or extended; (c) encumbrances or restrictions existing under or by reason of applicable law or regulation (including, without limitation, the Casino Control Act) or this Indenture; (d) customary provisions restricting assignment of contracts or subletting or assignment of any lease governing a leasehold interest of any Subsidiary of the Company or RIH; or (e) net worth maintenance requirements imposed by any governmental authority. Section 12.08. LIMITATION ON ADDITIONAL INDEBTEDNESS AND ISSUANCE OF NOTES. (a) The Company and RIH shall not, and shall not permit any of their respective Subsidiaries to, directly or indirectly, incur, issue, assume, guarantee or otherwise become directly or indirectly liable with respect to, including, without limitation, through any merger or consolidation to which the Company, RIH or any of their respective Subsidiaries is a party or through any other acquisition of any such Subsidiary (collectively, "incur"), or have outstanding, any Indebtedness other than, without duplication, the following: (i) the Notes and the Senior Mortgage Notes; (ii) Indebtedness represented by the Junior Mortgage Facility; 85 (iii) Indebtedness represented by the Working Capital Facility; (iv) Indebtedness represented by Capitalized Lease Obligations in an amount not in excess of $5,000,000 in the aggregate at any time outstanding; (v) Indebtedness represented by F,F&E Financing Agreements in an amount not in excess of $10,000,000 in the aggregate at any time outstanding; (vi) unsecured Indebtedness in an amount not in excess of $5,000,000 in the aggregate at any time outstanding that is subordinated and junior to the Notes at least to the extent set forth in the Subordination Provisions attached hereto as Exhibit C and which Indebtedness does not have any requirements for amortization payments, mandatory redemption or sinking fund payments prior to the stated maturity of the Notes and does not provide for the payment of interest in cash at any time when the most recent installment of interest on the Notes was not paid in cash; (vii) Non-Recourse Indebtedness in an amount not in excess of $25,000,000 in the aggregate at any time outstanding; (viii) After-Acquired Fee Mortgage Debt in an amount not in excess of $3,000,000 in the aggregate at any time outstanding; and (ix) Intercompany advances between RIH, the Company or any of their direct or indirect Subsidiaries on the one hand, and RII, on the other hand, in an aggregate amount not to exceed $1,000,000. (b) The Company and RIH shall not permit any of their respective Subsidiaries to issue (other than to the Company, RIH or a direct or indirect wholly owned Subsidiary of the Company or RIH) any capital stock which has voting rights or has a preference as to any distribution over its common stock. Section 12.09. LIMITATION ON REPAYMENT OF SUBORDINATED INDEBTEDNESS. Neither the Company nor RIH shall, and neither the Company nor RIH shall permit any Subsidiary to, directly or indirectly, purchase, redeem, defease (including, but not limited to, in-substance or legal defeasance) or otherwise acquire or retire for value prior to the stated maturity of, 8 or prior to any scheduled mandatory redemption or sinking fund payment with respect to (collectively, to "repay" or a "repayment"), the principal of any Indebtedness of the Company, RIH or any Subsidiary of the Company or RIH which is subordinated (whether pursuant to its terms or by operation of law) in right of payment to the Notes. Section 12.10. LIMITATION ON CERTAIN TRANSACTIONS. Each of the Company and RIH covenants that it will not, and will not permit any Subsidiary to, repurchase any Notes in the open market if an Event of Default shall have occurred and shall be continuing hereunder, under the Senior Mortgage Note Indenture or under the Senior Facility Note Indenture. Section 12.11. RESTRICTION OF ACTIVITIES. (a) RIH shall not, on or after the date of execution of this Indenture, until the date that is 91 days after the payment in full by the Company of the principal of (and interest, if any, on) all Outstanding Notes, engage in any business or investment activities other than those necessary for, incident to, connected with or arising out of acquiring, financing, owning and operating the Casino-Hotel or additional hotels or casinos or related or ancillary businesses. (b) Neither the Company nor RIH shall make any loans to any Affiliate or any other Person other than (i) Indebtedness of the type described in clause (ix) of Section 12.08(a), and (ii) loans to RII from the proceeds of the Indebtedness represented by the Working Capital Facility; PROVIDED, HOWEVER, that RIH shall have the right to make loans to employees of RIH actively involved in the operation of the Casino-Hotel or to engage in credit transactions in the operation of the Casino-Hotel, if such loans or credit transactions are in the ordinary course of business of operating a casino-hotel. (c) The Company shall not engage in any business (and shall not have any Subsidiaries) other than (i) to collect principal, interest (and any interest on overdue principal and interest) and other amounts under any intercompany notes or guaranties made to the order of or otherwise in favor of the Company, (ii) to preserve its rights under this Indenture and the Mortgage Documents and otherwise to comply with its obligations thereunder and under the Notes, (iii) to do or cause to be done all things necessary or appropriate to protect the Trust Estate, (iv) to preserve its rights under the Senior Mortgage Indenture and the Senior Mortgage Documents and otherwise to comply with its obligations thereunder and under the Senior Mortgage Notes, 87 (v) to issue Indebtedness represented by the Working Capital Facility, (vi) to preserve its rights under the Working Capital Facility and otherwise comply with its obligations under the Working Capital Facility, (vii) to incur any other Indebtedness permitted under this Indenture, (viii) to do all such acts and deeds necessary in connection with the Junior Mortgage Facility and the documents and instruments relating thereto and the Working Capital Facility and the documents and instruments relating thereto, (ix) to declare, issue and pay dividends on, or make any redemptions or repurchases of, the Company's capital stock as contemplated by its Certificate of Incorporation (to the extent permitted hereby) and otherwise to comply with and perform the provisions of its Certificate of Incorporation and By-laws, and (x) to do such further acts and deeds to effectuate any of the matters listed in the foregoing clauses of this Section 12.11(c). Section 12.12. LIMITATION ON SUBSIDIARIES; CONSOLIDATED GROUP. The Company and RIH shall not have any Subsidiaries except the Subsidiaries existing on the date of this Indenture and Subsidiaries acquired by the Company or RIH in transactions not prohibited by the other provisions of this Indenture which are and shall at all times be wholly owned (directly or indirectly) by the Company or RIH. Section 12.13. LIMITATIONS ON LIENS. Neither the Company nor RIH will create, incur, suffer to exist or permit to be created or incurred any mortgage, lien, charge or encumbrance on or pledge of the Mortgage Documents or any of the Trust Estate, other than (a) the lien of the Mortgage Documents and the Assignment Agreement, (b) liens on the Trust Estate in connection with Indebtedness permitted by clauses (i), (ii), (iii), (iv) or (v) of Section 12.08(a), (c) other Permitted Encumbrances on the Trust Estate, and (d) a notice of intention or building contract filed by a mechanic, materialman or laborer under the New Jersey lien law. Without limiting the generality of the previous sentence, but notwithstanding the provisions of such sentence, RIH shall not be deemed to have breached such provisions by virtue of the existence of liens for Impositions (as defined in the Mortgage) or mechanics' liens so long as RIH is in good faith contesting the validity of such liens in accordance with the provisions of Section 5.09 of the Mortgage. Section 12.14. COMPLIANCE WITH LAWS. Each of the Company and RIH shall comply, and shall cause each of its Subsidiaries to comply, with the Casino Control Act and all other applicable statutes (including, 88 without limitation, ERISA), rules, regulations, orders and restrictions of the United States of America, states and municipalities, and of any governmental department, commission, board, regulatory authority, bureau, agency and instrumentality of the foregoing in respect of the conduct of its business and the ownership of its properties and assets, including, without limitation, the Trust Estate, except such as are being contested in good faith by appropriate proceedings in accordance with the Mortgage Documents (to the extent applicable) and except for such non-compliances as will not in the aggregate have a material adverse effect on the business, properties, operations or financial condition of the Company, RIH or their respective Subsidiaries. Section 12.15. PAYMENT OF TAXES AND OTHER CLAIMS. The Company or RIH shall 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, RIH or any of their respective Subsidiaries or upon the Trust Estate or any portion thereof or upon the income, profits or property of the Company, RIH or any of their respective Subsidiaries, and (b) all lawful claims for labor, materials and supplies which, if unpaid, will by law become a Lien upon the Trust Estate or upon any other property of the Company, RIH or any of their respective Subsidiaries; PROVIDED, HOWEVER, that the Company and RIH shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessments, charge or claim the amount, applicability or validity of which is being contested in good faith by appropriate proceedings in accordance with the Mortgage Documents (to the extent applicable) if adequate reserves therefor have been established in accordance with GAAP. Section 12.16. MAINTENANCE OF PROPERTIES. Each of the Company and RIH shall cause the Trust Estate and all other properties (other than obsolete equipment) owned by or leased to it or any of its Subsidiaries, and used or useful in the conduct of its business or the business of the Company, RIH or such Subsidiary to be maintained and kept in good condition, repair and working order, except for reasonable wear and use, and will cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as required by the Mortgage Documents or, to the extent not governed by the Mortgage Documents, as in the reasonable judgment of the Board of Directors of RII may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times. 89 Section 12.17. INSURANCE. Each of the Company and RIH shall maintain, and shall cause each of its Subsidiaries to maintain, with financially sound and reputable insurers, appropriate insurance on each of their respective properties and businesses against liabilities, casualties, risks and contingencies of the type and in amounts required by the Mortgage Documents or, to the extent not governed by the Mortgage Documents, as customarily maintained by corporations and other entities engaged in the same or similar businesses and similarly situated; PROVIDED, HOWEVER, that any such insurer shall be qualified to do business in the jurisdiction where the insured property is located. Section 12.18 WAIVER OF STAY, EXTENSION OR USURY LAWS. Each of the Company and RIH covenants (to the extent that it may lawfully do so) that it will not, and will not cause or permit any of its Subsidiaries to, at any time insist upon, or plead, or in any manner whatsoever claim, and will resist any and all efforts to be compelled to take the benefit or advantage of, any stay or extension law or any usury law or other law that would prohibit or forgive the Company or RIH from paying all or any portion of the principal of, or premium, if any, and interest on the Notes or the RIH Junior Promissory Note or the Guaranty as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Indenture or the RIH Junior Promissory Note or the Guaranty; and (to the extent that it may lawfully do so) the Company and RIH hereby expressly waive all benefit or advantage of any such law, and covenant that they will not hinder, delay or impede the execution of any power granted to the Trustee herein and in the Mortgage Documents, but will suffer and permit the execution of every such power as though no such law had been enacted. Section 12.19. APPOINTMENT TO FILL A VACANCY IN OFFICE OF TRUSTEE. The Company, whenever necessary to avoid or fill a vacancy in the office of Trustee, will appoint, in the manner provided in Section 8.10, a Trustee, so that there shall at all times be a Trustee hereunder. Section 12.20 VALIDITY OF LIENS. Each of the Company and RIH represents and warrants that it has, and covenants that it shall continue to have, full corporate power and lawful authority to grant, release, convey, assign, transfer, mortgage, pledge, hypothecate and otherwise create the lien on the Trust Estate; and the Company 90 and RIH shall warrant, preserve and defend the interest of the Trustee in and to the Trust Estate against the claims of all Persons, except as otherwise expressly permitted by the Mortgage Documents or this Indenture, and will take all action necessary to maintain and preserve the lien on the Trust Estate contemplated therein. Section 12.21. TRANSACTIONS WITH STOCKHOLDERS AND AFFILIATES. Each of the Company and RIH covenants that it shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, enter into or permit to exist any transaction (including, without limitation, the purchase, sale, lease or exchange of any property or the rendering of any service) with any Affiliate of the Company or RIH or with any Affiliate of any such holder, unless (a) such transaction is upon fair and reasonable terms which are no less favorable to the Company or such Subsidiary, as the case may be, than would be available in an arm's-length transaction with an unrelated person and (b) if over $250,000, such transaction is determined in the good faith judgment of a majority of the members of the Board of Directors of either (i) RII, so long as RII owns directly or indirectly a majority of the outstanding capital stock of RIH, directly or indirectly, or (ii) RIH, to be in the best interests of the Company, RIH or such Subsidiary as applicable; PROVIDED, HOWEVER, that this provision shall not apply to (A) any agreements, documents, instruments or transactions entered into in connection with the RIHF Senior Facility Notes, (B) the Services Agreement, (C) the RII Management Contract, or (D) the RII Tax Sharing Agreement. Section 12.22. LIMITATION ON OPEN MARKET PURCHASES The Company and RIH shall not, and shall not permit any of their respective Subsidiaries to, purchase or otherwise acquire (other than pursuant to Article Thirteen) any Notes unless all interest accrued on the Notes and payable on the Interest Payment Date immediately preceding the date of such repurchase was paid solely in cash and not in Additional Notes. ARTICLE THIRTEEN REDEMPTION OF NOTES Section 13.01. GENERAL APPLICABILITY OF ARTICLE. Notes which are redeemable before their Stated Maturity shall be redeemable in accordance with their terms and in accordance with this Article. 91 Section 13.02. ELECTION TO REDEEM; NOTICE TO TRUSTEE. The election of the Company to redeem any Notes shall be evidenced by a Company Order. Redemption of any Notes shall not take place earlier than 15 days after the corporate action taken to authorize the redemption. In case of any redemption at the election of the Company of less than all the Outstanding Notes, 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 Notes to be redeemed. Section 13.03. SELECTION BY TRUSTEE OF NOTES TO BE REDEEMED. If less than all the Outstanding Notes are to be redeemed, the particular Notes to be redeemed shall be selected by a random, automated selection process or PRO RATA, as deemed appropriate by the Trustee, not more than 60 days prior to the Redemption Date by the Trustee from the Outstanding Notes which have not previously been called for redemption, and such selection method may provide for the selection for redemption of portions (equal to the greater of $1,000 and the smallest authorized denomination of the Notes of such series, or a multiple thereof) of the principal of Notes of a denomination larger than $1,000. The Trustee shall promptly notify the Company in writing of the Notes selected for redemption and, in the case of any Note 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 the redemption of Notes shall relate, in the case of any Note redeemed or to be redeemed only in part, to the portion of the principal of such Note which has been or is to be redeemed. Section 13.04. NOTICE OF REDEMPTION. Notice of redemption 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 by first-class mail, postage prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption Date, to each Holder of Notes of such series to be redeemed, at his address appearing in the Note Register. Any notice which is mailed in the manner herein provided shall be conclusively presumed to have been duly given, whether or not the Holder receives the notice. In any case, failure to duly give notice by mail, or any defect in 92 the notice to the Holder of any Notes designated for redemption in whole or in part, shall not affect the validity of the proceedings for the redemption of any other Notes. All notices of redemption shall state: (a) the Redemption Date; (b) the Redemption Price; (c) the principal amount of Notes to be redeemed, and, if less than all outstanding Notes are to be redeemed, the identification (and, in the case of partial redemption, the respective principal amounts) of the Notes to be redeemed; (d) that on the Redemption Date, the Redemption Price of each of the Notes to be redeemed will become due and payable and that the interest thereon shall cease to accrue from and after such date; and (e) the place or places where the Notes to be redeemed are to be surrendered for payment of the Redemption Price. Section 13.05. 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 12.03) an amount of money sufficient to pay the Redemption Price of all the Notes which are to be redeemed on that date. Such money shall be held in trust for the benefit of the Persons entitled to such Redemption Price and shall not be deemed to be part of the Trust Estate. Section 13.06. NOTES PAYABLE ON REDEMPTION DATE. Notice of redemption having been given as aforesaid, the Notes so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified and from and after such date (unless the Company shall default in the payment of the Redemption Price) such Notes shall cease to bear interest. Upon surrender of any such Note for redemption in accordance with said notice, such Note shall be paid by the Company at the Redemption Price. Installments of interest due on or prior to the Redemption Date shall be payable to the Holders of the Notes registered as such on the relevant Record Dates according to the terms of such Notes and the provisions of Section 3.07. 93 If any Note called for redemption shall not be so paid upon surrender thereof for redemption, the principal shall, until paid, bear interest from the Redemption Date at the rate prescribed therefor in the Note. Section 13.07. NOTES REDEEMED IN PART. Any Note which is to be redeemed only in part shall be surrendered at a Place of Payment therefor (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 his attorney duly authorized in writing) and the Company shall execute and the Trustee shall authenticate and deliver to the Holder of such Note, without service charge, a new Note or Notes of any authorized denomination or denominations as requested by such Holder in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Note so surrendered. Section 13.08. REDEMPTION PURSUANT TO CASINO CONTROL ACT. Notwithstanding the provisions of this Article Thirteen, if the Casino Control Commission does not waive the qualification requirements as to any Noteholder (whether the record owner or beneficial owner) and requires that such Noteholder be qualified under the Casino Control Act, then, in such event, such Noteholder must qualify under such Act. If a Noteholder does not so qualify, the Noteholder must dispose of its interest in the Notes, within 30 days after the Company's receipt of notice of such finding, or the Company may repurchase such Notes at the lower of the Outstanding Amount and the Fair Market Value of such Notes, plus accrued interest to the date of such repurchase. Commencing on the date the Casino Control Commission serves notice upon either RIH or the Company that any Holder is disqualified, it shall be unlawful for any such disqualified Holder: (i) to receive any dividends or interest upon this Note; (ii) to exercise, directly or through any trustee or nominee, any right conferred by this Note; or (iii) to receive any remuneration in any form from either the Company or RIH for services rendered or otherwise. ------------------------------ This instrument may be executed in any number of counterparts or with counterpart signatures, each of which as executed shall be deemed to be an original, but all such counterparts shall constitute one and the same instrument. 94 IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed and attested, all as of the day and year first above written. RESORTS INTERNATIONAL HOTEL FINANCING, INC. Attest: By: ------------------- ------------------------------ Name: Title: RESORTS INTERNATIONAL HOTEL, INC. Attest: By: ------------------- ------------------------------ Name: Title: U.S. TRUST COMPANY OF CALIFORNIA, N.A., as Trustee Attest: By: ------------------- ------------------------------ Name: Title: 95 STATE OF NEW YORK : : ss COUNTY OF NEW YORK : I certify that on __________, 1993, _______________ personally came before me, and he acknowledged under oath, to my satisfaction, that: (a) he is the ______________ of Resorts International Hotel Financing, Inc., the corporation named in this document; (b) he is the attesting witness to the signing of this document by the proper corporate officer who is _______________ of Resorts International Hotel Financing Inc.; (c) this document was signed and delivered by the corporation as its voluntary act duly authorized by a proper resolution of its Board of Directors; (d) he knows the proper seal of the corporation which was affixed to this document; and (e) he signed this proof to attest to the truth of these facts. ------------------------- Signed and sworn to before me on _________, 1993. - ---------------------- Notary Public of the State of New York STATE OF NEW YORK : : ss COUNTY OF NEW YORK : I certify that on ________, 1993, ________________ personally came before me, and this person acknowledged under oath, to my satisfaction, that: (a) this person is the __________________________ of Resorts International Hotel, Inc., the corporation named in this document; (b) this person is the attesting witness to the signing of this document by the proper corporate officer who is ______________________, the __________________________ of Resorts International Hotel, Inc.; (c) this document was signed and delivered by the corporation by its voluntary act duly authorized by a proper resolution of its Board of Directors; (d) this person knows the proper seal of the corporation which was affixed to this document; and (e) this person signed this proof to attest to the truth of these facts. -------------------- Signed and sworn to before me on _________, 1993. - ------------------------- Notary Public [seal] STATE OF NEW YORK : : ss COUNTY OF NEW YORK : I certify that on ________, 1993, ________________ personally came before me, and this person acknowledged under oath, to my satisfaction, that: (a) this person is the __________________________ of U.S. Trust Company of California, N.A., a national banking association named in this document; (b) this person is the attesting witness to the signing of this document by the proper corporate officer who is ______________________, the __________________________ of U.S. Trust Company of California, N.A., a national banking association; (c) this document was signed and delivered by the corporation by its voluntary act duly authorized by a proper resolution of its Board of Directors; (d) this person knows the proper seal of the corporation which was affixed to this document; and (e) this person signed this proof to attest to the truth of these facts. ------------------------- Signed and sworn to before me on _________, 1993. - ------------------------- Notary Public [seal] Exhibit A RIH Senior Promissory Note EXHIBIT A AMENDED AND RESTATED SECURED PROMISSORY NOTE $35,000,000 [ ], 1994 WHEREAS, in partial repayment of certain inter-company debt owed by Resorts International Hotel, Inc., a New Jersey corporation ("RIH"), to Resorts International, Inc., a Delaware corporation ("RII"), RIH has issued to RII a promissory note on the date hereof in the principal amount of $35,000,000 (as the same may be amended or restated from time to time, the "Note"), which Note is secured by a Mortgage Securing RIH Junior Promissory Note dated as of the date hereof (the "Mortgage"), by RIH, as Mortgagor, which Mortgage encumbers certain real property owned or leased by RIH together with all buildings and improvements erected thereon (collectively, the "Property"); and WHEREAS, RII has transferred the Note and the Mortgage to RIHF in exchange for 11.375% Junior Mortgage Notes due 2004 (the "Junior Notes") in an aggregate principal amount of $35,000,000, which Junior Notes were issued pursuant to that certain Indenture dated as of even date herewith (the "Indenture") among RIHF, as issuer, RIH, as guarantor, and U.S. Trust Company of California, N. A., as trustee (the "Trustee"); and WHEREAS, RIHF has requested RIH to amend and restate the Note; NOW, THEREFORE, RIH agrees to amend and restate the Note as follows: RIH, for value received hereby promises to pay to the order of RIHF (RIHF and any subsequent holder of this Note being herein referred to as the "Payee"), the principal sum of Thirty-Five Million Dollars ($35,000,000), or such other principal sum as shall be outstanding hereunder, on December 15, 2004 (the "Maturity Date") in accordance with the provisions hereof, with interest on such principal sum from time to time outstanding, computed from [ ], 1994 [the Effective Date], in semi-annual installments of interest on June 15 and December 15 of each year, commencing initially on December 15, 1994, at a rate of 11.375% per annum on the unpaid balance hereof, until the principal hereof is paid in full. Payments of principal and interest on this Note shall be made at [address of the Payee], or at such other address as the Payee may designate in writing. Interest will be computed on the basis of a 360-day year of twelve 30-day months based on the actual number of days elapsed. Principal and interest shall be paid in money of the United States that at the time of payment is legal tender for public and private debts. The principal sum of this Note shall be increased from time to time if any Additional Notes (as defined in the Indenture) are issued under the Indenture as of the date of their original issuance by the principal amount of such Additional Notes. l.(a) This Note shall be prepaid (i) in connection with, but only to the extent of, any redemption of the Junior Notes of RIHF issued pursuant to the Indenture (all prepayments of this Note are hereinafter referred to as "Prepayments"), and/or (ii) by the surrender to the Trustee of the principal amount of any Junior Notes purchased or otherwise acquired by RIH or the Company (as defined in the Indenture) other than pursuant to the redemption provisions of the Junior Notes for cancellation in accordance with the provisions of the Junior Notes or the Indenture (it being expressly understood that the same Junior Notes shall reduce the principal amount of this Note only once). Each Prepayment under clause (i) above shall be made at the time that payment is required or permitted to be made by the Company to the Trustee under the Indenture in respect of any redemption of Junior Notes. Each Prepayment under clause (ii) above shall be deemed to be made at the time of surrender of such Junior Notes for cancellation. Each Prepayment of this Note pursuant to clause (i) above shall be in an amount equal to the aggregate amount paid to holders of Junior Notes on account of the redemption thereof (other than interest), together with accrued and unpaid interest on the amount of the reduction in the principal amount of this Note as a result of such Prepayment. The principal amount of this Note shall be reduced as a result of such prepayment in an amount equal to the aggregate principal amount of the Junior Notes so redeemed or surrendered. (b)Except as set forth in Section 1(a), this Note may not be prepaid in whole or in part. 2.RIH shall pay interest on overdue principal and prepayment premium at the rate of 14.375% per annum. 3.This Note is secured by the Mortgage on the Property. 2 4.If (i) RIH defaults in the payment of interest when the same becomes due and payable and the default continues for a period of ten days following receipt of a notice from the Payee or the Trustee specifying such default and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; (ii) RIH defaults in the payment of the principal or any part thereof when the same becomes due and payable at Maturity (as defined in the Mortgage); (iii) there shall occur any other Event of Default under the Mortgage or any other Note (as defined in the Mortgage); or (iv) there shall occur any other Event of Default under the Indenture, then on the happening of any such event, the Payee may declare the entire Outstanding Amount (as defined in the Indenture) of this Note and all accrued and unpaid interest thereon and all sums due under Section 5 of this Note and the Mortgage (collectively, the "Debt") to become immediately due and payable. 5. RIH hereby waives presentment and demand for payment, notice of dishonor, protest and notice of protest of this Note and agrees to pay all costs of collection when incurred, including reasonable attorneys' fees, which costs may be added to the amount due under this Note and be receivable therewith, and to perform and comply with each of the terms, covenants and provisions contained in this Note and the Mortgage on the part of RIH to be observed or performed. Except as expressly provided herein, no release of any security for the principal sum due under this Note or extension of time for payment of this Note, or any installment hereof, and no alteration, amendment or waiver of any provision of this Note or the Mortgage shall release, discharge, modify, change or affect the liability of RIH under this Note or the Mortgage. 6. RIH covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any usury, stay or extension law or any other law which would prohibit or forgive RIH from paying all or any portion of the interest on this Note, wherever enacted, now or at any time hereafter in force, or which may otherwise affect the covenants or the performance of this Note or the Mortgage; and RIH (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Payee, but will suffer and permit the execution of every such power as though no such law had been enacted. 7. This Note shall be deemed to be a contract under the laws of the State of New York and shall be construed 3 in accordance with and governed by the internal laws of the State of New York. 8. This Note may not be changed or terminated orally, but only by an agreement in writing signed by the party against whom enforcement of such change or termination is sought. 9. RIH shall not claim any credit or deduction from the interest or principal due hereunder by reason of payment of any tax assessed upon the Property. 10. Whenever the provisions of this Note and the provisions of the Indenture shall be inconsistent, the provisions of the Indenture shall govern. 11. This Note is subject to and shall be enforced in compliance with the provisions of the New Jersey Casino Control Act. This note shall not be transferred, assigned or amended without prior approval of the New Jersey Casino Control Commission. 12. Whenever used herein, the singular number shall include the plural, the plural the singular, and the words "Payee" and "RIH" shall include their respective successors and assigns. IN WITNESS WHEREOF, RIH has duly executed this Note as of the day and year first above written. RESORTS INTERNATIONAL HOTEL, INC. By: ________________________ Name: Title: 4 STATE OF NEW YORK ) ) ss. COUNTY OF NEW YORK ) BE IT REMEMBERED, that on this [ ] day of [ ], 1994, before me, the subscriber, a Notary public of the State of New York, personally appeared [ ], [ ] of RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation, and he acknowledged that he signed, sealed and delivered the same as his voluntary act and deed and the act and deed of said RESORTS INTERNATIONAL HOTEL, INC., and that he received a true copy of the within instrument on behalf of said corporation. _____________________________________ Notary Public of the State of New York [Seal] 5 Exhibit B Assignment Agreement from Resorts International Hotel Financing, Inc. NA932810098 - JUNIOR MORTGAGE ASSIGNMENT GD&C DRAFT DATED 12/17/93 ============================================================================== ASSIGNMENT OF AGREEMENTS ________________ RESORTS INTERNATIONAL HOTEL FINANCING, INC., a Delaware corporation, as Assignor, TO U.S. TRUST COMPANY OF CALIFORNIA, N.A., a national banking association, as Assignee Dated as of _________________, 1994 =============================================================================== Prepared by:__________________________ D. Eric Remensperger, Esq. ASSIGNMENT OF AGREEMENTS THIS ASSIGNMENT made as of the ___ day of ___________, 1994, by RESORTS INTERNATIONAL HOTEL FINANCING, INC., a Delaware corporation ("ASSIGNOR"), having an address at c/o Resorts International, Inc., 1133 Boardwalk, Atlantic City, New Jersey 08401, to U. S. TRUST COMPANY OF CALIFORNIA, N.A. a national banking association, having an address at 555 South Flower Street, Suite 2780 Los Angeles, California 90071, in its capacity as Trustee ("ASSIGNEE"), under that certain Indenture dated as of even date herewith (the "INDENTURE") among Assignor, Assignee and Resorts International Hotel, Inc., a New Jersey corporation ("MORTGAGOR"). WITNESSETH: WHEREAS, in partial repayment of certain inter-company debt owed by Mortgagor to Resorts International, Inc., a Delaware corporation ("RII"), Mortgagor has issued to RII a promissory note on the date hereof in the principal amount of $35,000,000 (as the same may be amended or restated from time to time, the "RIH JUNIOR PROMISSORY NOTE"), which note is secured by a Mortgage Securing RIH Junior Promissory Note dated as of the date hereof (the "MORTGAGE"), which Mortgage encumbers certain real property owned or leased by Mortgagor as more specifically described on SCHEDULE 1 hereto together with all buildings and improvements erected thereon (collectively, the "PROPERTY"); and WHEREAS, RII has transferred the RIH Junior Promissory Note and the Mortgage to Assignor in exchange for 11.375% Junior Mortgage Notes due 2004 (the "NOTES") in an aggregate principal amount of $35,000,000, which Notes were issued pursuant to the Indenture; and WHEREAS, as further security for the obligations of Mortgagor under the RIH Junior Promissory Note, Mortgagor has executed and delivered (i) an Assignment of Operating Assets and (ii) an Assignment of Leases and Rents, each in favor of Assignor (as assignee of RII) and each dated as of the date hereof (said Assignments and the Mortgage collectively referred to herein as the "RIH JUNIOR PROMISSORY NOTE MORTGAGE DOCUMENTS"), pursuant to which Mortgagor granted a security interest in specified personal property, assigned certain other rights and assigned all right, title and interest of Mortgagor in leases and rents to Assignor, all as security for the performance and observance of obligations of Mortgagor under the RIH Junior Promissory Note; and WHEREAS, the rights and obligations of the Assignee hereunder are subject to the terms set forth in that certain Intercreditor Agreement dated as of the date hereof among Assignor, Assignee, Mortgagor, Fidelity Management and Trust Company, as trustee, and State Street Bank and Trust Company of Connecticut, National Association, as trustee (and such other parties that may from time to time become a party thereto); and WHEREAS, in order to secure payment of the Notes and all other payments due to the holder(s) from time to time of the Notes (collectively, the "HOLDERS") or the Trustee under the Indenture, Assignor has agreed to execute this Assignment and to be bound by its terms; NOW, THEREFORE, THIS ASSIGNMENT FURTHER WITNESSETH: That Assignor in consideration of the purchase of the Notes by the Holders, Ten Dollars ($10.00) lawful money of the United States of America duly paid to Assignor by Assignee at or before the execution and delivery of these presents and for other good and valuable consideration, the receipt of which are hereby acknowledged, does hereby sell, assign and transfer unto Assignee and unto its successors and to its assigns forever, for its benefit and for the benefit of the Holders, and does hereby grant to Assignee a security interest in and to all of Assignor's estate, right, title and interest in, to and under any and all of the following described property, rights and interests (collectively, the "ASSIGNED PROPERTIES"): GRANTING CLAUSE FIRST All right, title and interest of Assignor in and to the RIH Junior Promissory Note, including all renewals, extensions, modifications and replacements of the same, and without limiting the generality of the foregoing, the present, continuing and future right to make claim for, collect or cause to be collected, receive or cause to be received directly from Mortgagor thereunder, all payments of principal, interest and other sums of money payable thereunder. GRANTING CLAUSE SECOND All right, title and interest of Assignor in and to the RIH Junior Promissory Note Mortgage Documents, including 2 all extensions, renewals, modifications, supplements and replacements of the same. TO HAVE AND TO HOLD all said properties, rights and interests unto Assignee and its successors and assigns forever. THIS ASSIGNMENT FURTHER WITNESSETH, that Assignor hereby agrees and covenants with Assignee as follows: ARTICLE ONE PARTICULAR COVENANTS OF ASSIGNOR Section 1.01. PERFORMANCE OF COVENANTS. Assignor represents, warrants and covenants that it is duly authorized to enter into this Assignment, and to grant and convey a lien on and security interest in the Assigned Properties to Assignee in the manner and to the extent herein set forth and that all action on its part required for the execution and delivery of this Assignment has been duly and effectively taken. Section 1.02. FURTHER ACTION REQUIRED. (a) Assignor covenants that it will, from time to time, execute and deliver such further instruments and take such further actions as may be required to carry out the purposes of this Assignment. (b) Assignor hereby appoints Assignee as its lawful attorney-in-fact (such power being coupled with an interest) in the name of Assignor or Assignee or both to execute any instruments or to take any actions to enforce all rights, powers and remedies of Assignor under or pursuant to the Assigned Properties. (c) Nothing contained herein shall limit the rights of Assignee contained in the Mortgage or the Indenture. (d) Until this Assignment is discharged in accordance with Section 5.01 hereof, no amendment, waiver, modification, discharge, release, enforcement or satisfaction by Assignor of any of the rights or remedies under the Assigned Properties shall be effective without the prior consent and approval of Assignee, and Assignor shall have no power or authority to take any such action without such consent and approval. ARTICLE TWO OBLIGATIONS TO ASSIGNEE Section 2.01. CONTINUING OBLIGATIONS. 3 (a) Assignee shall have no obligation, duty or liability with respect to the Assigned Properties or any of them (other than those specifically assumed in its capacity as Trustee pursuant to the Indenture). (b) Assignor shall at all times remain liable to observe and perform all of its covenants and obligations, if any, under the Assigned Properties, and does hereby agree to indemnify and hold harmless Assignee, its successors and assigns, from any liability, loss, damage or expense it or they may incur under the Assigned Properties or by reason of this Assignment. ARTICLE THREE PAYMENTS Section 3.01. PAYMENTS. All Revenues (as hereinafter defined) due and to become due under or pursuant to the Assigned Properties shall be paid by Mortgagor directly to Assignee at the address set forth in Section 6.02 hereof. Neither Assignor nor Assignee shall have the right, without Mortgagor's prior written consent, to instruct Mortgagor to pay Revenues to Assignor or in any manner or to any party other than directly to Assignee. Section 3.02. MORTGAGOR'S ACKNOWLEDGMENT. Mortgagor hereby joins in the execution of this Assignment to acknowledge (a) the assignment by Assignor to Assignee of Assignor's right, title and interest in, to and under the Assigned Properties, (b) Mortgagor's agreement to make payment of all Revenues under the Assigned Properties directly to Assignee at the address set forth in this Assignment, and (c) the right of Assignee to exercise or enforce in its own name, in the name of Assignor, or both, all of the rights, powers and remedies of Assignor in, to and under the Assigned Properties. Section 3.03. REVENUES. As used herein, the term "REVENUES" shall mean (a) all amounts paid or payable by Mortgagor under the RIH Junior Promissory Note or the RIH Junior Promissory Note Mortgage Documents, and (b) the net proceeds realized upon or as a result of the enforcement of any mortgage lien or security interest granted under the Assigned Properties or this Assignment or upon or as a result of the exercise of any right or remedy under the Assigned Properties or this Assignment. Section 3.04. CONFIRMATION. Assignor hereby agrees, and Mortgagor hereby acknowledges, that Mortgagor may rely exclusively on Assignee's directive that Assignee is entitled to take action under this Assignment. 4 ARTICLE FOUR DEFAULT PROVISIONS AND REMEDIES Section 4.01. ENFORCEMENT OF REMEDIES. (a) Upon the occurrence of any default under the Indenture or the Assigned Properties, or any of them (each, a "DEFAULT"), not cured within the applicable grace period after the applicable notice provision, if any, has been satisfied (each called an "EVENT OF DEFAULT"), Assignee may, at its option, (i) proceed directly to protect and enforce its rights and the rights of any Holders under this Assignment or pursuant to the Assigned Properties, or any one of them, by such suits, actions or special proceedings in equity or at law, or by proceedings in the office of any board or officer having jurisdiction, either for the specific performance of any covenant or agreement contained herein, or in the Assigned Properties, or any of them, or in aid of execution of any power granted herein or pursuant to the Assigned Properties, or any one of them, or for the enforcement of any proper legal or equitable remedy, including, without limitation, foreclosure of the Mortgage and/or the sale of the collateral or part thereof secured thereby at such foreclosure sale, subject to statutory and other legal requirements, as Assignee shall deem most effective to protect and enforce such rights, and Assignor hereby appoints Assignee as its lawful attorney-in-fact (such power being coupled with an interest) in the name of Assignor or Assignee or both to effectuate such foreclosure and/or sale of such collateral or part thereof; or (ii) instruct, direct and cause Assignor to effectuate the foregoing on behalf of and for the benefit of Assignee and the Holders, it being further understood that Mortgagor joins in the execution of this Assignment in order to acknowledge its agreement to promptly and duly execute and deliver any and all documents and take any and all actions required by Assignee in order to permit Assignee to foreclose and/or sell such collateral or part thereof, and obtain the benefits of this Assignment, as aforesaid. (b) Upon the occurrence of any Event of Default, Assignee shall be entitled to sue for, enforce payment of and receive any and all amounts then and at any time remaining due from Assignor or Mortgagor for principal and interest on the RIH Junior Promissory Note, or other sums due under the RIH Junior Promissory Note Mortgage Documents, as the case may be, or otherwise under any of the provisions of the Assigned Properties, or any of them, with interest on overdue payments of such principal, at the rate set forth in the RIH Junior Promissory Note, from the date of Default to the date of such payment, together with any and all fees, costs and expenses of collection (including reasonable attorneys' fees and court costs), subject to statutory and other legal requirements. 5 (c) Regardless of the occurrence of an Event of Default, upon five days' written notice to Mortgagor (or such shorter period or without notice if deemed necessary and appropriate by Assignee), Assignee may institute and maintain or cause in the name of Assignor or Assignee or both to be instituted and maintained such suits and proceedings as it may be advised by its counsel shall be necessary and appropriate to prevent any impairment of the Assigned Properties, or any of them, and to protect its interests in the Assigned Properties, and in the rents, issues, rights, revenues and other income arising therefrom, including power to institute and maintain proceedings to restrain the enforcement or compliance with any 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 hereunder or would be materially prejudicial to the interests of Assignee. (d) Nothing contained in this Article Four is intended to grant Assignee any greater remedies and rights than those allowed to Assignor in the respective Assigned Properties. In the event of any conflict between the remedies and rights contained in any of the Assigned Properties and the remedies and rights contained in this Article Four, then the remedies and rights set forth in the applicable Assigned Property shall govern. ARTICLE FIVE DISCHARGE OF ASSIGNMENT Section 5.01. DISCHARGE OF ASSIGNMENT. If Assignor shall pay or cause to be paid, or there shall otherwise be paid, to Assignee and/or the Holders' all amounts required to be paid by Assignor pursuant to the Indenture and the Notes, and the conditions precedent for the Indenture shall cease, determine and become null and void in accordance with Section 5.01 of the Indenture, Assignee shall promptly cancel and discharge of record this Assignment and any financing statements filed in connection herewith and execute and deliver to Assignor and to Mortgagor all such instruments as may be appropriate to evidence such discharge and satisfaction of said lien or liens, and Assignee shall pay over or deliver to Assignor all other moneys and securities held by it pursuant to this Assignment, which are not required for the payment of (a) principal and redemption price, if applicable, of and interest on, the Notes, and (b) all other amounts required to be paid by Assignor pursuant to the Indenture and the Notes. 6 ARTICLE SIX MISCELLANEOUS PROVISIONS Section 6.01. BINDING SUCCESSORS AND ASSIGNS. All of the covenants, stipulations, obligations and agreements contained in this Assignment shall be binding upon and inure to the benefit of Assignor, Assignee and Mortgagor (to the extent applicable to Mortgagor) and their respective successors and assigns. Section 6.02. NOTICES. (a) Any request, notice, demand, authorization, direction, request or other instrument authorized or required by this Assignment to be given to or filed with Assignor, Assignee or Mortgagor (collectively, "NOTICES") shall be deemed given when either (i) delivered by hand or (ii) five days after sending by registered or certified mail, postage prepaid, in either case addressed as follows: If to Assignor, at: Resorts International Hotel Financing, Inc. c/o Resorts International, Inc. 1133 Boardwalk Atlantic City, New Jersey 08401 Attention: Christopher D. Whitney If to Assignee, at: U.S. TRUST COMPANY OF CALIFORNIA, N.A. 555 South Flower Street Suite 2780 Los Angeles, California 90071 Attention: Corporate Trust Department If to Mortgagor, at: Resorts International Hotel, Inc. c/o Resorts International, Inc. 1133 Boardwalk Atlantic City, New Jersey 08401 Attention: Christopher D. Whitney (b) By Notice to Mortgagor, Assignor and/or Assignee, given as provided above, any party may designate additional or substitute addresses for Notices, which shall, notwithstanding Section 6.02(a), be deemed given with received. Section 6.03. PARTIAL INVALIDITY. In case any one or more of the provisions of this Assignment shall for any 7 reason be held to be illegal or invalid, such illegality or invalidity shall not affect any other provision of this Assignment, but this Assignment shall be construed and enforced at the time as if such illegal or invalid provisions had not been contained herein or therein, nor shall such illegality or invalidity or any application thereof affect any legal and valid application herein or thereof from time to time. Section 6.04. APPLICABLE LAW. This Assignment shall be governed by and construed under the internal laws of the State of New Jersey, without giving effect to the principles of conflicts of law. Section 6.05. NO AMENDMENT. For so long as the Notes shall remain outstanding, the Assigned Properties may not be modified, amended or terminated except in accordance with the provisions of the Indenture or the Assigned Properties. Section 6.07. CASINO CONTROL ACT. Each of the provisions of this Assignment is subject to and shall be enforced in compliance with the provisions of the New Jersey Casino Control Act. This Agreement shall not be transferred, assigned or amended without prior approval of the New Jersey Casino Control Commission. IN WITNESS WHEREOF, Assignor, Assignees and Mortgagor have executed this Assignment Agreement as of the date first above written. RESORTS INTERNATIONAL HOTEL FINANCING, INC. Attest: _________________________________ By:_______________________________ President RESORTS INTERNATIONAL HOTEL, INC. Attest: _________________________________ By:_______________________________ President 8 U.S. TRUST COMPANY OF CALIFORNIA, N.A. Attest: ___________________________________ By:_________________________________ Title 9 STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK) BE IT REMEMBERED that on ______________, 1994, before me, the subscriber, __________________, personally appeared _______________, who, being by me duly sworn on his oath, deposes and makes proof to my satisfaction, that he is the Asst. Secretary of U.S. TRUST COMPANY OF CALIFORNIA, N.A., the corporation named in the within instrument; that __________________ is the Vice President of said Corporation; that the execution, as well as the making of this instrument, has been duly authorized by a proper resolution of the board of directors of the said corporation; that deponent well knows the corporate seal of said corporation; and that the seal affixed to said instrument is the proper corporate seal and was thereto affixed and said instrument signed and delivered by said Vice President as and for the voluntary act and deed of said corporation. In presence of deponent who thereupon subscribed his name thereto as attesting witness; and deponent signed this proof to attest to the truth of these facts. ____________________________ [Name] [Assistant] Secretary Sworn to and subscribed before me, the date aforesaid ____________________________ Notary Public My commission expires: ____________________________ 10 STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK) BE IT REMEMBERED that on _________________, 1994, before me, the subscriber, __________________, personally appeared ___________________, who being by me duly sworn on his oath, deposes and makes proof to my satisfaction, that he is the Asst. Secretary of Resorts International Hotel, Inc., the corporation named in the within instrument; that ____________ is the Vice President of said Corporation; that the execution, as well as the making of this instrument, has been duly authorized by a proper resolution of the board of directors of the said corporation; that deponent well knows the corporate seal of said corporation; and that the seal affixed to said instrument is the proper corporate seal and was thereto affixed and said instrument signed and delivered by said Vice President as and for the voluntary act and deed of said corporation. In presence of deponent who thereupon subscribed his name thereto as attesting witness; and deponent signed this proof to attest to the truth of these facts. ____________________________ [Name] [Assistant] Secretary Sworn to and subscribed before me, the date aforesaid ____________________________ Notary Public My commission expires: ____________________________ 11 STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK) BE IT REMEMBERED that on _________________, 1994, before me, the subscriber, __________________, personally appeared ___________________, who being by me duly sworn on his oath, deposes and makes proof to my satisfaction, that he is the Asst. Secretary of Resorts International Hotel, Inc., the corporation named in the within instrument; that ______________ is the Vice President of said corporation; that the execution, as well as the making of this instrument, has been duly authorized by a proper resolution of the board of directors of the said corporation; that deponent well knows the corporate seal of said corporation; and that the seal affixed to said instrument is the proper corporate seal and was thereto affixed and said instrument signed and delivered by said Vice President as and for the voluntary act and deed of said corporation. In presence of deponent who thereupon subscribed his name thereto as attesting witness; and deponent signed this proof to attest to the truth of these facts. ____________________________ [Name] [Assistant] Secretary Sworn to and subscribed before me, the date aforesaid ____________________________ Notary Public My commission expires: ____________________________ 12 EXHIBIT C SUBORDINATION PROVISIONS EXHIBIT C SUBORDINATION PROVISIONS A. SUBORDINATION. Anything herein to the contrary notwithstanding, Subordinated Debt, including principal, premium, if any, and interest, shall be subordinate and junior to the extent set forth in subparagraphs (i) to (v), inclusive, below, to all Senior Indebtedness. (i) If the Company (as defined in this Exhibit C) shall default in the payment of any principal of or interest on any Senior Indebtedness when the same becomes due and payable, whether at maturity or at a date fixed for prepayment or by declaration of acceleration or otherwise, then, unless and until such default shall have been remedied by payment in full in cash or waived or shall have ceased to exist or all amounts then due and payable in respect of Senior Indebtedness shall have been paid in full or provision shall have been made for such payment in cash, no holder of the Subordinated Debt shall accept or receive any direct or indirect payment (in cash, property, by set-off or otherwise) of or on account of any Subordinated Debt. (ii) In the event of any insolvency, bankruptcy, liquidation, reorganization or other similar proceedings, or any receivership proceedings in connection therewith, relative to the Company, and in the event of any proceedings for voluntary liquidation, dissolution or other winding up of the Company, whether or not involving insolvency or bankruptcy proceedings, then all Senior Indebtedness shall first be paid in full in cash, or such payment shall have been provided for in cash, before any payment of or on account of principal or interest is made by the Company upon the Subordinated Debt. (iii) In any of the proceedings referred to in subparagraph (ii) above, any payment or distribution of any kind or character, whether in cash, property, stock or obligations, which may be payable or deliverable by the Company in respect of the Subordinated Debt shall be paid or delivered directly to the holders of Senior Indebtedness (or to a banking institution selected by the court or Person making the payment or delivery or designated by any holder of Senior Indebtedness) for application in payment thereof in accordance with the priorities then existing among such holders, unless and until all principal of and interest on all Senior Indebtedness shall have been paid in full in cash or such payment shall have been provided for; PROVIDED, HOWEVER, that no such delivery shall be made to holders of Senior Indebtedness of stock or obligations which are issued pursuant to reorganization proceedings or dissolution or liquidation proceedings, or upon any merger, consolidation, sale, lease, transfer or other disposal not prohibited by the provisions of the Subordinated Debt, by the Company, as reorganized, or by the corporation succeeding to the Company or acquiring its property and assets, if such stock or obligations are subordinate and junior (whether by law or agreement) at least to the extent provided in this Section ___ to the payment of all Senior Indebtedness then outstanding and to the payment of any stock or obligations which are issued in exchange or substitution for any Senior Indebtedness then outstanding. (iv) Upon the occurrence and continuance of any Default Subordination Event (other than under circumstances when the terms of subparagraph (ii) above are applicable), no holder of the Subordinated Debt shall accept or receive any direct or indirect payment (in cash, property, by set-off or otherwise) of or on account of any indebtedness in respect of the Subordinated Debt during the Applicable Stand-Still Period; PROVIDED, HOWEVER, that in the case of any payment on or in respect of any Subordinated Debt which would (in the absence of any such Default Subordination Event) have been due and payable on any date (a "Scheduled Payment Date") during such Applicable Stand-Still Period, the provisions of this subparagraph (iv) shall not prevent such payment (a "Scheduled Payment") on or after the date (the "Deferred Maturity Date") immediately following the termination of such Applicable Stand-Still Period. Notwithstanding the foregoing provisions of this subparagraph (iv), the failure by the Company to make a Scheduled Payment on a Scheduled Payment Date during an Applicable Stand-Still Period shall nevertheless constitute an Event of Default. (v) If any payment or distribution of any character, whether in cash, securities or other property, shall be received by any holder of Subordinated Debt in contravention of any of the terms of this Section ___ and before all the Senior Indebtedness shall have been paid in full, such payment or distribution shall be received in trust for the benefit of the holders of the Senior Indebtedness at the time outstanding in accordance with the priorities then existing among such holders, and shall forthwith be paid over or delivered and transferred to the holders of Senior Indebtedness. B. OBLIGATION OF OBLIGORS UNCONDITIONAL. The provisions of this Section ___ are for the purpose of defining the relative rights of the holders of Senior Indebtedness on the one hand, and the holders of the Subordinated Debt on the other hand, against the Company and its property; and nothing herein shall impair, as between the Company and the holders of the Subordinated Debt, the obligation of the Company, which is unconditional and absolute, to pay to the holders thereof the principal thereof and premium, if any, and interest thereon in accordance with their terms and the provisions hereof, nor shall anything herein prevent the holders of the Subordinated Debt from exercising all remedies otherwise permitted by applicable law or hereunder upon default hereunder or under the Subordinated Debt (including, without limitation, the right to demand payment and sue for performance hereof and of the Subordinated Debt and to accelerate the maturity thereof as provided in Section ___), subject to the rights, if any, under this Section ___ of holders of Senior Indebtedness to receive cash, property, stock or obligations otherwise payable or deliverable by the Company to the holders of the Subordinated Debt; PROVIDED, HOWEVER, that upon the commencement and during the continuance of an Applicable Stand-Still Period the holders of the Subordinated Debt, to the extent they are otherwise entitled to do so, will not accelerate the maturity of the Subordinated Debt or pursue any other remedy to enforce payment thereof or initiate any bankruptcy or insolvency proceeding relative to the Company unless and until the earlier of (i) the end of such Applicable Stand-Still Period and (ii) the acceleration of the Senior Indebtedness related to such Applicable Stand-Still Period. C. Subrogation. Upon payment in full of Senior Indebtedness, the holders of the Subordinated Debt shall be subrogated to the rights of the holders of the Senior Indebtedness to receive payments or distributions of assets of the Company made on Senior Indebtedness until the principal of and premium, if any, and interest on the Subordinated Debt shall be paid in full, and, for the purposes of such subrogation, no payments to the holders of Senior Indebtedness of any cash, property, stock or obligations to which the holders of the Subordinated Debt would be entitled except for the provisions of subparagraph (iii) of Section A above shall, as between the Company, its creditors (other than the holders of the Senior Indebtedness) and the holders of the Subordinated Debt, be deemed to be a payment by the Company to or on account of the Senior Indebtedness. D. DEFINITIONS. "DEFAULT SUBORDINATION EVENT" means the existence of all of the following: (i) an event of default shall have occurred and be continuing in respect of the Senior Indebtedness, (ii) the holders of the Subordinated Debt shall have received a notice from or on behalf of any holder of Senior Indebtedness specifying that such event of default has occurred and is continuing and that such notice constitutes a "Default Subordination Notice", and (iii) no other Default Subordination Notice shall have been delivered by or on behalf of any holder of Senior Indebtedness within the 365-day period immediately preceding the giving of such notice. The "APPLICABLE STAND-STILL PERIOD" relating to any Default Subordination Event shall be deemed to continue until the event of default under the Senior Indebtedness giving rise thereto shall have been cured (by payment or otherwise) or waived or a period of 180 days shall have elapsed from the giving of the Default Subordination Notice relating thereto, in any such case whichever shall be the shorter period. "SENIOR INDEBTEDNESS" shall mean and include all obligations (whether now outstanding or hereafter incurred), for the payment of which the Company is responsible or liable as obligor, guarantor or otherwise, including, without limitation, principal, interest, premium, fees, expenses and indemnities, whether now owing or hereafter incurred (including any interest accruing subsequent to the commencement of a proceeding described in Section 7.04, regardless of whether the claims of holders of such payment obligations for such interest are allowed in any such proceeding). NA932810086 - NOTE MORTGAGE RIH JUNIOR PROMISSORY NOTE GD&C DRAFT DATED 12/17/93 MORTGAGE SECURING RIH JUNIOR PROMISSORY NOTE by and between RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation, as Mortgagor, and RESORTS INTERNATIONAL HOTEL FINANCING, INC. a Delaware corporation, as Mortgagee Dated as of ________ __, 1994 Prepared by:_______________________ D. Eric Remensperger After recording return to: Gibson, Dunn & Crutcher 200 Park Avenue New York, New York 10166 Attention: D. Eric Remensperger MORTGAGE SECURING RIH JUNIOR PROMISSORY NOTE THIS MORTGAGE, dated as of ________ ___, 1994, between RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation ("Mortgagor"), and RESORTS INTERNATIONAL HOTEL FINANCING, INC., a Delaware corporation ("RIHF"), having an address at c/o Resorts International, Inc., 1133 Boardwalk, Atlantic City, New Jersey 08401 (RIHF, or its successors or assigns which shall than be the Noteholder (as hereinafter defined), being referred to herein as "Mortgagee"). WITNESSETH: In consideration of $10.00 in hand paid by Mortgagee to Mortgagor and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in order to secure (i) the payment of the principal amount (and premium, if any) of the secured junior promissory note by Mortgagor to Mortgagee in the principal amount of $35,000,000 as amended and restated the date hereof (hereinafter collectively referred to as the "Note"), in lawful money of the United States, to be paid in accordance with the provisions thereof (and all renewals, extensions, and modifications thereof) all of which are hereby made an integral part hereof as though set forth at length herein; (ii) payment of interest (including interest on all overdue principal and premium, if any) becoming due under the provisions of the Note; (iii) payment by Mortgagor to Mortgagee of all sums expended or advanced by Mortgagee pursuant to any term or provision of this Mortgage; (iv) performance of each covenant, term, condition and agreement of Mortgagor herein or in the Note contained; (v) all costs and expenses, including reasonable counsel fees and expenses as provided in Section 3.07, which may arise in respect of the Note and this Mortgage or of the obligations secured hereby; and (vi) performance and observance of all of the provisions herein contained, Mortgagor has executed and delivered this Mortgage and has bargained, sold, aliened, mortgaged, pledged, released, conveyed and confirmed unto Mortgagee and its successors hereunder and assigns forever, all of its right, title and interest in, to and under any of the following described property: GRANTING CLAUSES GRANTING CLAUSE FIRST All the property, rights, title, interest, privileges and franchises particularly described in annexed Schedule 1 (the "Owned Land") which Schedule is hereby made a part of, and deemed to be described in, this Granting Clause as fully as if set forth in this Granting Clause at length. GRANTING CLAUSE SECOND All of the property, rights, title, interest, privileges and franchises of the Mortgagor as lessee in those certain leases (the "Ground Leases") particularly described in Schedule 2, which Schedule is hereby made a part of, and deemed to be described in, this Granting Clause as fully as if set forth in this Granting Clause at length, which Ground Leases cover the real property described in such Schedule 2 (the "Leased Land") and in and to any and all modifications, extensions and renewals of the Ground Leases and all options set forth therein, together with (i) all credits, deposits, privileges and rights of the Mortgagor as lessee under the Ground Leases, now or at any time existing, (ii) the leaseholds and the leasehold estates created by the Ground Leases and (iii) all of the estates, rights, titles, claims or demands whatsoever of Mortgagor, either in law or in equity, in possession or in expectancy, of, in and to the Ground Leases and the Leased Land, together with (x) any and all other, further or additional title, estates, interests or rights which may at anytime be acquired by the Mortgagor in or to the Leased Land, and the Mortgagor expressly agrees that if the Mortgagor shall, at any time prior to payment in full of all indebtedness secured hereby, acquire fee simple title or any other greater estate to the Leased Land pursuant to the Ground Leases, or otherwise, the lien of this Mortgage shall attach, extend to, cover and be a lien upon such fee simple title or other greater estate and thereupon the lien of this Mortgage shall be prior to the lien of any mortgage or deed of trust placed on such acquired title, estate, interest or right subsequent to the date of this Mortgage (except as otherwise provided herein) and (y) any right to possession or statutory term of years derived from, or incident to, the Ground Leases pursuant to Section 365(h) of the U.S. Bankruptcy Code (the "Code") or any comparable provision contained in any present or future federal, state, local, foreign or other statute, law, rule or regulation. 2 GRANTING CLAUSE THIRD All the rents, issues, profits, revenues and other income and proceeds of the property subjected or required to be subjected to the lien of this Mortgage, including, without limitation, the property described in Granting Clauses First, Second, and Sixth (such property is hereinafter collectively referred to as the "Premises") and all the estate, right, title and interest of every nature whatsoever of the Mortgagor in and to the same and every part thereof. The collective metes and bounds description of the Owned Land and the Leased Land is set forth in annexed Schedule 3. GRANTING CLAUSE FOURTH All of the rights as lessor under Leases in effect on the date of execution of this Mortgage or hereafter entered into by the Mortgagor, if any, including extensions, renewals or amendments of all of the same, and the immediate and continuing right as security in accordance with an Assignment of Leases and Rents of even date herewith between Mortgagor and Mortgagee, and, after the occurrence of an Event of Default, to make claim for, collect, receive and receipt for (and to apply the same as provided herein) any and all rents, income, revenues, issues, profits, security and other sums of money payable or receivable thereunder or pursuant thereto, and all proceeds thereof, whether payable as rent, insurance proceeds, condemnation awards, security or otherwise and whether payable prior to or subsequent to the maturity date of the Note, to receive and give notices and consents thereunder, to bring actions and proceedings thereunder or for the enforcement thereof, to make waivers and agreements, to take such action upon the happening of a default under any Lease, including the commencement, conduct and consummation of any proceedings at law or in equity as shall be permitted by any provision of any Lease, and to do any and all things which the Mortgagor or any lessor is or may become entitled to do under the Leases; provided, that the assignment made by this granting Clause Fourth shall not impair or diminish any obligation of the Mortgagor under the Leases, or shall any such obligation be imposed upon the Mortgagee. GRANTING CLAUSE FIFTH Without limiting the generality of the provisions of Granting Clause Third, the Mortgagor's rights, privileges and franchises in and to the following, to the extent of the Mortgagor's interest therein and thereto and to the extent assignable (collectively, "Operating Assets"): 3 (a) bookings and receipts for the use of guest rooms, banquet facilities and meeting rooms at the Casino-Hotel; (b) all contracts respecting utility services for, and the maintenance, operations, or equipping of the Premises, including guaranties and warranties relating thereto; (c) the Permits; (d) all contract rights, leases, concessions, trademarks, trade names, service marks, service names, logos, copyrights, warranties and other items of intangible personal property relating to the ownership or operation of the Casino-Hotel, including, without limitation, (1) telephone and other communication numbers, (2) all software licensing agreements as are required to operate computer software systems at the Casino-Hotel, all transferable proprietary interest in software required to operate the computer systems at the Casino Hotel and books and records relating to the software programs, and (3) lessee's interest under leases of Tangible Personal Property; (e) all agreements entered into by or on behalf of the Mortgagor or which have been assigned to the Mortgagor, for the design and construction, and for the equipping and furnishing, of the Casino-Hotel, including architect's agreements, engineering agreements, construction contracts, consulting agreements and agreements or purchase orders for all items of Tangible Personal Property and payment and performance bonds in favor of the Mortgagor in connection with the Trust Estate (and all warranties and guaranties thereunder and warranties and guaranties of any subcontractor and bond issued in connection with the work to be performed by any subcontractor); (f) the following personal property (the "Tangible Personal Property") now or hereafter acquired by the Mortgagor: (i) all furniture, furnishings, equipment, machinery, apparatus, appliances, fixtures and fittings and other articles of tangible personal property which are, or are to be located on, or used in connection with the operation of, the Casino-Hotel; (ii) all slot machines, electronic gaming devices, crap tables, blackjack tables, roulette tables, baccarat tables, and big six wheels, located or to be located in the Casino-Hotel, and all 4 furnishings and equipment to be used in connection with the operation thereof; (iii) all cards, dice, gaming chips and placques, tokens, chip racks, dealing shoes, dice cups, dice sticks, layouts, paddles, roulette balls and other consumable supplies and items to be used in connection with the gaming operations of the Casino-Hotel; (iv) all china, glassware, linens, kitchen utensils, silverware and uniforms, whether in use or held in reserve storage for future use, in connection with the operation of the Casino-Hotel, which are on hand or on order whether stored on-site or off-site; (v) all consumables and operating supplies of every kind and nature for use in all of the operating departments of the Casino-Hotel, or in the improvements now or hereafter located on any of the Owned Land, including without limitation, accounting supplies, guest supplies, forms, printing, stationery, food and beverage stock, bar supplies, laundry supplies and brochures to existing purchase orders; (vi) all sets and scenery, costumes, props and other items of tangible personal property on hand or on order for use in the production of shows in the showroom of the Casino-Hotel; and (vii) all cars, limousines, vans, buses, trucks and other vehicles owned or leased by the Mortgagor for use in Casino-Hotel operations, together with all equipment, parts and supplies used to service, repair, maintain and equip the foregoing; (g) all drawings, designs, plans and specifications prepared by the architects, interior designers, landscape designers and any other consultants for the development of the Premises, as amended from time to time; (h) any administrative and judicial proceedings initiated by the Mortgagor, or in which the Mortgagor has intervened, concerning the Casino-Hotel, and agreements, if any, which are the subject matter of such proceedings; (i) any customer lists utilized by the Mortgagor, including lists of transient guests and restaurant and bar patrons and "high roller" lists; and 5 (j) all of the goodwill in connection with the operation of the Premises. The Mortgagor and Mortgagee acknowledge that notwithstanding anything contained in this Mortgage to the contrary, the Mortgagor may share facilities, operations and employees with any other hotel owned by any Affiliate of the Mortgagor provided that (i) such sharing of facilities is permitted by all applicable Legal Requirements, (ii) terms on which such facilities are shared are not detrimental to the operations of the Casino-Hotel or the financial condition of the Mortgagor and (iii) the regular operation of the Casino-Hotel would not be materially impaired upon the separation of such facilities. The assignment made by this Granting Clause Fifth shall not impair or diminish any obligation of the Mortgagor with respect to the Operating Assets, nor shall any such obligation be imposed on the Mortgagee. GRANTING CLAUSE SIXTH (a) All of the Mortgagor's right, title and interest in and to all buildings and improvements of every kind and description now or hereafter erected or placed on the Owned Land and/or the Leased Land and all fixtures and articles of personal property now or hereafter attached to or contained in and used in connection with such buildings and improvements, including, but not limited to, all apparatus, furniture, furnishings, machinery, motors, elevators, fittings, radiators, cooking ranges, ice boxes, ice machines, printing presses, mirrors, bars, mechanical refrigerators, furnaces, coal and oil-burning apparatus, wall cabinets, machinery, generators, partitions, steam and hot water boilers, lighting and power plants, pipes, plumbing, radiators, sinks, bath tubs, water closets, gas and electrical fixtures, awnings, shades, screens, blinds, dishwashers, freezers, vacuum cleaning systems, office equipment and other furnishings, and all plumbing, heating, lighting, cooking, laundry, ventilating, incinerating, air-conditioning and sprinkler equipment or other fire prevention or extinguishing apparatus and material, and fixtures and appurtenances thereto; and all renewals or replacements thereof or articles in substitution therefor, whether or not the same are or shall be attached to the Owned Land, the Leased Land or to any such buildings and improvements thereon, in any manner; and 6 (b) All of the Mortgagor's right, title and interest in and to (i) the Leased Land, if the Mortgagor acquires the fee simple title to the Leased Land or any part thereof (subject to the provisions of Section 2.06 hereof), (ii) all air rights and rights to maintain supporting columns and all rights to construct and maintain bridges, and to create private rights of way over streets now or hereafter owned or enjoyed by the Mortgagor and appurtenant to the Owned Land or Leased Land, and (iii) all right, title and interest of Mortgagor as grantee or licensee in and to the following to the extent necessary for the use and enjoyment of the Owned Land or the Leased Land: (A) all those plots, pieces or parcels of land and air rights, more particularly described on Schedule 5, attached hereto and made a part hereof (the "Bridge Easement Parcels"), with respect to which Mortgagor has easements, licenses or other rights of possession or use pursuant to these certain easement and license agreements more particularly described on Schedule 5 (the "Bridge Easements"), (B) all those plots, pieces or parcels of land and air rights, more particularly described on Schedule 6 attached hereto and made a part hereof (the "Elevator Easement Parcels"), with respect to which Mortgagor has easements, licenses or other rights of possession or use pursuant to those certain license agreements more particularly described on Schedule 6 (the "Elevator Easements"), and; (C) all that plot, piece or parcel of land and air rights more particularly described on Schedule 7 attached hereto and made a part hereof (the "Turn-Around Easement Parcel") with respect to which Mortgagor has easements, licenses, or other rights of possession or use pursuant to that certain easement more particularly described on Schedule 7 (the "Turn-Around Easement"), (the Bridge Easement Parcels, the Elevator Easement Parcels and the Turn-Around Easement Parcel are collectively referred to herein as the "Easement Parcels"; and the Bridge Easements, the Elevator Easements and the Turn-Around Easement are collectively referred to as the "Easements"), together with all rights of way, privileges, liberties, tenements, hereditaments and appurtenances belonging or in any way appertaining to such estates, it being the intention hereof that all property, interests, rights and privileges and franchises pertaining to the Premises (other than Excepted Property) shall be as fully embraced within and subjected to the lien hereof as if such property were specifically described herein. To the extent the grant of a security interest in any portion of the Trust Estate is governed by the Uniform Commercial Code, this Mortgage is hereby deemed to be as well a security agreement under the Uniform Commercial Code for the purpose of creating hereby a security interest in all of the Mortgagor's right, title and interest in and to such property, securing the obligations secured hereby, for the benefit of the Mortgagee; * * * TOGETHER with all of the Mortgagor's right, title and interest in and to all mineral and water rights and any title or reversion, in and to the beds of the ways, streets, avenues and alleys adjoining the Premises to the center line 7 thereof and in and to all strips, gaps and gores adjoining the premises on all sides thereof; and TOGETHER with all of the Mortgagor's right, title and interest to and singular the tenements, hereditaments, easements, appurtenances, passages, water courses, riparian rights, other rights, liberties and privileges thereof or in any way appertaining to the Premises, including any other claim at law or in equity as well as any after-acquired title, franchise or license and the reversion and reversions and remainder and remainders thereof; and TOGETHER with all awards and other compensation heretofore or hereafter to be made to the present and all subsequent owners of the Trust Estate for any taking by eminent domain, either permanent or temporary, of all or any part of the Trust Estate or any easement or appurtenances thereof, including severance and consequential damage and change in grade of streets, all in accordance with and subject to the provisions of the Superior Instrument Requirements and Section 5.20; and TOGETHER with all proceeds of any unearned premiums on any insurance policies described in Section 5.11, and the right to receive and apply the proceeds of any insurance, judgments, or settlements made in lieu thereof, for damage to the Trust Estate or otherwise, all in accordance with and subject to the provisions of Section 5.11 and the Superior Instrument Requirements. EXCLUDING, with respect to all of the hereinabove granted property, rights, title, interest, privileges and franchises, the Excepted Property. TO HAVE AND TO HOLD all the Premises, Leases, Ground Leases, Operating Assets, Easements, properties, options, credits, deposits, rights, privileges and franchises of every kind and description, real, personal or mixed, granted hereby, bargained, sold, aliened, assigned, transferred, hypothecated, pledged, released, conveyed, mortgaged, or confirmed as aforesaid, or intended, agreed or covenanted so to be, together with all the appurtenances thereto appertaining (the Premises, Leases, Ground Leases, Operating Assets, Easements, properties, options, credits, deposits, rights, privileges and franchises, being herein collectively called the "Trust Estate") unto the Mortgagee and its successors and assigns forever. SUBJECT, HOWEVER, on the date hereof, to Existing Encumbrances and, after the date hereof, to Permitted Encumbrances. SUBJECT, FURTHER, to the rights and obligations of the Mortgagee and the Noteholder as set forth in that certain 8 Intercreditor Agreement dated as of the date hereof among RIH, RIHF, Trustee, Fidelity Management and Trust Company ("Fidelity"), as trustee under that certain note purchase agreement dated as of the date hereof among Fidelity, RIH and RIHF, and State Street Bank and Trust Company of Connecticut, National Association ("State Street"), as trustee under that certain indenture dated as of the date hereof among State Street, RIH and RIHF (and such other parties that may from time to time become a party thereto). BUT IN TRUST, NEVERTHELESS, for the benefit and security of the Noteholder. UPON CONDITION that, until the happening of an Event of Default and subject to the provisions of Article Two, the Mortgagor shall be permitted to possess and use the Trust Estate, and to receive and use the rents, issues, profits, revenues and other income of the Trust Estate. AND IT IS HEREBY COVENANTED AND DECLARED that the Trust Estate is to be held and applied by the Mortgagee, subject to the further covenants, conditions and trusts hereinafter set forth, and the Mortgagor does hereby covenant and agree to and with the Mortgagee, for the benefit of the holder of the Note as follows: ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION Section 1.01. DEFINITIONS. For all purposes of this Mortgage, except as otherwise expressly provided or unless the context otherwise requires: (a) the terms defined in this Article One have the meanings assigned to them in this Article One and include the plural as well as the singular; (b) all accounting terms not otherwise defined herein have the meanings assigned to them, and all computations herein provided for shall be made in accordance with generally accepted accounting principles consistently applied; and (c) the words "herein," "hereof" and "hereunder" and other words of similar import refer to this Mortgage as a whole and not to any particular Article, Section or other subdivision. "AFFILIATE" has the meaning set forth in Section 1.01 of the Indenture. 9 "AFTER-ACQUIRED FEE MORTGAGE" has the meaning set forth in Section 2.07. "ALTERATIONS" has the meaning set forth in Section 5.12. "APPRAISER" means an MAI appraiser (i.e., a Member in good standing of the American Institute of Real Estate Appraisers) who is (i) of recognized standing among appraisers of properties similar to the Casino-Hotel and (ii) experienced in the appraisals of properties of a similar size and scope to that of the Casino-Hotel, selected by the Mortgagor. "ASSIGNMENT OF LEASES AND RENTS" has the meaning stated in Section 1.01 of the Indenture. "CAPITALIZED LEASE OBLIGATION" has the meaning stated in Section 1.01 of the Indenture. "CASINO" means that portion of the Casino-Hotel used for gaming and related activities. "CASINO-HOTEL" means the casino and hotel complex and ancillary structures and facilities located on the Premises and furniture, fixtures and equipment at any time contained therein. "CASUALTY" means any act or occurrence of any kind or nature which results in damage, loss or destruction to any buildings or improvements on the Premises and/or Tangible Personal Property. "CODE" has the meaning stated in Granting Clause Second. "COMBINATION TRANSACTION" has the meaning stated in Section 10.01 of the Indenture. "DEFAULT" means the occurrence and continuance of an Event of Default or an event which, after notice or lapse of time or both, would become an Event of Default. "DEPOSITARY" means an Independent entity to which insurance proceeds or a condemnation award is paid to be held in trust for restoration pursuant to the provisions of a Ground Lease or Superior Mortgage. "EVENT OF DEFAULT" has the meaning stated in Section 3.01. An Event of Default shall "exist" if an Event of Default shall have occurred and be continuing. "EXCEPTED PROPERTY" means: 10 (1) subject to the provisions of the Assignment of Leases and Rents, any cash held by the Mortgagor from rents, issues, profits, revenues and other proceeds of the Trust Estate to the extent that such cash may be, but has not been, distributed or paid out in accordance with the Services Agreement or in accordance with the provisions of Section 12.07 the Indenture; (2) all personal property owned by lessees under Leases and the personal property of any guests staying in the Hotel; (3) any property deemed to be Excepted Property pursuant to the provisions of Section 2.03 hereof; (4) Tangible Personal Property subject to an FF&E Financing Agreement; and (5) counterchecks and any other property the granting of a security interest in which is prohibited by the New Jersey Casino Control Act, N.J.S.A. 5:12-1 et seq., and the regulations promulgated thereunder. "EXISTING ENCUMBRANCES" means the matters set forth in Schedule 8. "FIRST MORTGAGE DEBT" means any financing secured by a Superior Mortgage secured by or imposing a lien on all or a portion of the Trust Estate on a parity with or senior to the lien of this Mortgage. "FF&E FINANCING AGREEMENT" means a purchase money lien upon any Tangible Personal Property and other items constituting Operating Assets, such as computer software, which are financed, purchased or leased by the Mortgagor, provided that, except as set forth on Schedule 3, the principal amount of the indebtedness secured by such lien shall not exceed eighty-five (85%) percent of the cost to the Mortgagor of such property at the time of acquisition. "GROUND LEASES" has the meaning stated in Granting Clause Second. "GUARANTY MORTGAGE" means that certain Mortgage Securing Guaranty of Junior Mortgage Notes dated as of the date hereof from Mortgagor to U.S. Trust Company of California, N.A., a national banking association, which secures the Notes (as defined in the Indenture), the lien of which shall be PARI PASSU with the lien of this Mortgage. "HOTEL" means that portion of the Casino-Hotel not included within the Casino. 11 "IMPOSITIONS" has the meaning stated in Section 5.08. "INDENTURE" means that certain Indenture - 11.375% Junior Mortgage Notes due 2004, dated as of even date herewith among the Mortgagor, RIHF, as issuer, and U.S. Trust Company of California, N.A., as trustee, as it may from time to time be supplemented, modified or amended by one or more trust indentures or other instruments supplemental thereto entered into pursuant to the applicable provisions thereof. "INDEPENDENT" when used with respect to any specified Person means such a Person who (a) is in fact independent, (b) does not have any direct financial interest or any material indirect financial interest in the Mortgagor or in any other obligor upon the Note or in any Affiliate of the Mortgagor or of such other obligor and (c) is not connected with the Mortgagor or such other obligor or any Affiliate of the Mortgagor or such other obligor as an officer, employee, promoter, underwriter, trustee, partner, director or person performing similar functions. Whenever it is herein provided that any Independent Person's opinion or certificate shall be furnished to the Mortgagee, such opinion or certificate shall state that the signer has read this definition and that the signer is Independent within the meaning thereof. A Person who is performing or who has performed services as an independent contractor to any specified Person shall not be considered not Independent merely by reason of the fact that such Person is or has performed such services. "INSURANCE AMOUNT" has the meaning stated in Section 5.11(a)(1). "INSURANCE REQUIREMENTS" means all terms of any insurance policy covering or applicable to the Trust Estate or any part thereof, all requirements of the issuer of any such policy, and all orders, rules, regulations and other requirements of the National Board of Fire Underwriters (or any other body exercising similar functions) applicable to or affecting the Trust Estate or any part thereof or any use or condition of the Trust Estate or any other part thereof. "INSURANCE TRUSTEE" means the Trustee or, if the Trustee so elects, any bank, trust company or insurance company with net worth in excess of $100,000,000, designated by the Trustee. "INSURER" means an insurance company or companies selected by the Mortgagor authorized to issue insurance in the State of New Jersey with an A.M. Best rating as high or higher than the rating of insurance companies insuring other casino-hotels in Atlantic City, New Jersey. 12 "LEASE" means each lease or sublease demising all or any portion of the Owned Land, the Leased Land or the buildings or improvements thereon and made by the Mortgagor as lessor or sublessor, as the case may be, or any spaces in any building or buildings which constitute a part of the Trust Estate, including every agreement relating thereto or entered into in connection therewith and every guaranty of the performance and observance of the covenants, conditions and agreements to be performed by the lessee under any such lease. Notwithstanding the foregoing, the term "Lease" shall not include any transient room rentals. "LEASED LAND" has the meaning stated in Granting Clause Second. "LEGAL REQUIREMENTS" means all laws, statutes, codes, acts, ordinances, orders, judgments, decrees, injunctions, rules, regulations, permits, licenses, authorizations, directions and requirements (including, without limitation, the New Jersey Environment Cleanup Responsibility Act and the New Jersey Spill Compensation and Control Act of 1976) of all governments, departments, commissions, boards, courts, authorities, agencies, officials and officers, of governments, federal, state and municipal (including, without limitation, the New Jersey Department of Environmental Protection, the Atlantic City Bureau of Investigations, Division of Protection, the Atlantic City Bureau of Investigations, Division of Gaming Enforcement of the State of New Jersey, and the Casino Control Commission of the State of New Jersey), foreseen or unforeseen, ordinary or extraordinary, which now is or at any time hereafter becomes applicable to the Trust Estate or any part thereof, or any of the adjoining sidewalks, or the use of the Casino-Hotel as a gaming or gambling facility or any other use or condition of the Trust Estate or any part thereof. "LESSORS" means the lessors under the Ground Leases. "MATURITY" when used with respect to the Note means the date on which the principal of such Note becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration or prepayment or otherwise. "MORTGAGE DOCUMENTS" has the meaning set forth in Section 1.01 of the Indenture. "MORTGAGOR" means the Person named as the "Mortgagor" in the first paragraph of this instrument until a successor entity shall have become such pursuant to the applicable provisions of this Mortgage, and thereafter, except to the extent otherwise contemplated by Section 4.02, "Mortgagor" shall mean such successor entity exclusively. 13 "NOTEHOLDER" shall mean the holder or holders of the Note. "NOTE" has the meaning set forth in the Preamble. "NOTICES" has the meaning stated in Section 1.02. "OFFICERS' CERTIFICATE" means a certificate signed by an officer of the Mortgagor and delivered to the Mortgagee. Whenever this Mortgage requires that an Officers' Certificate be signed also by an Architect or an Accountant or other expert, such Architect, Accountant or other expert may (except as otherwise expressly provided in this Mortgage) be in the general employ of the Mortgagor. "OPERATING ASSETS" has the meaning stated in Granting Clause Fifth. "OPINION OF Counsel" means a written opinion of counsel who may (except as otherwise expressly provided in this Mortgage) be an employee of the Mortgagor or an employee of an Affiliate of the Mortgagor. Unless otherwise specifically provided in this Mortgage, such counsel may rely, as to any state of facts not personally known to such counsel and relating to such opinions, on an Officers' Certificate to the extent not rejected by the Trustee and its counsel (which rejection shall not be unreasonably given). "ORIGINAL POLICY" means an ALTA Loan Policies of Title issued by [list title insurance companies], pursuant to Title Commitment No. ____________ redated to the date hereof. "OUTSTANDING AMOUNT" has the meaning stated in Section 1.01 of the Indenture. "OWNED LAND" has the meaning stated in Granting Clause First. "PERMITS" means all licenses, franchises, statements of compliance, certificates of operation, certificates of occupancy and permits required for the lawful ownership, occupancy, operation and use of all or a material portion of the Premises whether held by the Mortgagor or any other Person (which may be temporary or permanent) (including, without limitation, those required for the use of the Casino-Hotel as a licensed casino facility), in accordance with all applicable Legal Requirements. "PERMITTED ENCUMBRANCES" means: (1) liens for taxes, assessments, or governmental charges not yet due and payable or if due and payable are not delinquent to the extent that any fine, penalty, interest or cost may be added for nonpayment thereof; 14 (2) Existing Encumbrances; (3) FF&E Financing Agreements; (4) After-Acquired Fee Mortgages; (5) the lien of the Mortgage Documents and any rights granted as provided therein; (6) Restricted Encumbrances; (7) the lien of the Trustee provided for by Section 8.07 of the Indenture; (8) any Working Capital Facility Lien; (9) liens created by the Senior Mortgage Documents; and (10) Capitalized Lease Obligations. "PERSON" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or any other entity or government or any agency or political subdivision thereof. "PREMISES" has the meaning set forth in Granting Clause Third. "RELEASED LAND" has the meaning stated in Section 2.05. "RELEASED FEE LAND" has the meaning stated in Section 2.06. "RESTORATION" has the meaning stated in Section 5.11(e). "RESTRICTED ENCUMBRANCES" means Leases permitted by and made in accordance with Section 5.13 of this Mortgage. "RIHF" shall mean Resorts International Hotel Financing, Inc., a Delaware corporation. "SENIOR GUARANTY MORTGAGE" has the meaning set forth in Section 1.01 of the Indenture. "SENIOR MORTGAGE" has the meaning set forth in Section 1.01 of the Indenture. "SENIOR MORTGAGE DOCUMENTS" has the meaning set forth in Section 1.01 of the Indenture. 15 "SERVICES AGREEMENT" has the meaning set forth in Section 1.01 of the Indenture. "SETTLEMENT COSTS" has the meaning stated in Section 5.20. "STATED MATURITY" when used with respect to a note means the date specified in such note as the fixed date on which the principal of such note is due and payable. "SUPERIOR INSTRUMENT REQUIREMENTS" means the applicable terms, conditions and provisions of (i) the Ground Leases with respect to the Leased Land; and (ii) Superior Mortgages with respect to the portion of the Trust Estate encumbered thereby. "SUPERIOR MORTGAGES" means, collectively, the Senior Mortgage, the Senior Guaranty Mortgage, any Working Capital Facility Lien and any After-Acquired Fee Mortgages. "TAKING" means the acquisition or condemnation by eminent domain of the whole or any part of the Premises, by a competent authority, or any public or quasi-public use or purpose. "TANGIBLE PERSONAL PROPERTY" has the meaning stated in Granting Clause Fifth. "TRUSTEE" means the Person named as the "Trustee" in the first paragraph of the Indenture and any successor thereto. "TRUST ESTATE" has the meaning stated in the habendum to the Granting Clauses. "TRUST INDENTURE ACT" has the meaning stated in Section 1.01 of the Indenture. "WORKING CAPITAL FACILITY" has the meaning stated in Section 1.01 of the Indenture. "WORKING CAPITAL FACILITY LIEN" has the meaning stated in Section 5.22(c) of this Mortgage. Section 1.02. NOTICES, ETC. (a) Any request, demand, authorization, direction, notice (including, without limitation, a notice of default), consent, waiver or other document provided or permitted by this Mortgage to be made upon, given or furnished to, or filed with, the Mortgagor or the Mortgagee (collectively, "Notices") shall be deemed given when either (i) delivered by hand or (ii) two days after sending by registered or certified mail, postage prepaid, addressed as follows: 16 To the Mortgagor: Resorts International Hotel, Inc. c/o Resorts International, Inc. 1133 Boardwalk Atlantic City, New Jersey 08401 Attention: Christopher D. Whitney If to Mortgagee: Resorts International Hotel Financing, Inc. c/o Resorts International, Inc. 1133 Boardwalk Atlantic City, New Jersey 08401 Attention: Christopher D. Whitney (b) By Notice to the Mortgagor, the Mortgagee and the Trustee, any party may designate additional or substitute address for Notices which, notwithstanding Subsection (a) above, shall be deemed given when received. Section 1.03. FORM AND CONTENT OF DOCUMENTS DELIVERED TO MORTGAGEE. Whenever 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 such matters in one or several documents. Any certificate or opinion of an Officer of the Mortgagor may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such Officer knows that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any 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 Mortgagor stating that the information with respect to such factual matters is in the possession of the Mortgagor, unless such counsel knows that the certificate or opinion or representations with respect to such matters are erroneous. If appropriate to the matter being opined upon and to the extent not prohibited by the Trust Indenture Act, any Opinion of Counsel may be subject to rights of creditors and the availability of equitable remedies. Whenever any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Mortgage, they may, but need not, be consolidated and form one instrument. 17 Whenever in this Mortgage, in connection with any application or certificate or report to the Mortgagee, it is provided that the Mortgagor shall deliver any document as a condition of the granting of such application, or as evidence of the Mortgagor's compliance with any term hereof, it is intended that the truth and accuracy, at the time of the granting of such application or at the effective date of such certificate or report (as the case may be), of the facts and opinions stated in such document shall in such case be conditions precedent to the right of the Mortgagor to have such application granted or to the sufficiency of such certificate or report. Section 1.04. COMPLIANCE CERTIFICATES AND OPINIONS. Upon any application or request by the Mortgagor to the Mortgagee to take any action under any provision of this Mortgage, the Mortgagor shall furnish to the Mortgagee an Officers' Certificate stating that all conditions precedent, if any, provided for in this Mortgage 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 Mortgage 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 Mortgage shall include: (a) a statement that each individual signing such certificate or opinion has read such condition or covenant and the definitions herein relating thereto; (b) 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; (c) 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 condition or covenant has been complied with; and (d) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. Section 1.05. EFFECT OF HEADINGS. The Article and Section headings herein are for convenience only and shall not affect the construction hereof. 18 Section 1.06. SUCCESSORS AND ASSIGNS; AMENDMENTS. (a) Subject to Section 4.02 hereof and Section 10.02 of the Indenture, this Mortgage shall be binding upon and inure to the benefit of the parties hereto and of the respective successors and assigns of the parties hereto to the same effect as if each such successor or assign were in each case named as a party to this Mortgage. (b) This Mortgage may not be modified, amended, discharged, released nor any of its provisions waived except by agreement in writing executed by the Mortgagor and the Mortgagee and in accordance with the provisions of this Mortgage and the Indenture. Section 1.07. SEPARABILITY CLAUSE. In case any provision in this Mortgage 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 1.08. BENEFITS OF MORTGAGE. Nothing in this Mortgage, express or implied, shall give to any Person, other than the parties hereto and their successors and assigns, any benefit or any legal or equitable right, remedy or claim under this Mortgage. Section 1.09. GOVERNING LAW. This Mortgage shall be deemed to be a contract under the laws of the State of New Jersey and shall be construed in accordance with and governed by the laws of the State of New Jersey. Section 1.10. [Reserved] Section 1.11. PROVISIONS REQUIRED BY INDENTURE. Whenever the provisions of this Mortgage and the provisions of the Indenture shall be inconsistent, the provisions of the Indenture shall govern. Section 1.12. RIGHTS OF THE TRUSTEE. So long as the Trustee is the Mortgagee hereunder, except as otherwise provided in Section 8.01 of the Indenture: (a) the Mortgagee 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, coupon or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) whenever in the administration of this Mortgage the Mortgagee shall deem it desirable that a matter be 19 proved or established prior to taking, suffering or omitting any action hereunder, the Mortgagee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate; (c) the Mortgagee 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 the Mortgagee hereunder in good faith and in reliance thereon; (d) the Mortgagee shall be under no obligation to exercise any of the rights or powers vested in it by this Mortgage at the request or direction of any Noteholder pursuant to the Indenture, unless such holder shall have offered to the Mortgagee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (e) the Mortgagee 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, or other paper or document but the Mortgagee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Mortgagee shall determine to make such further inquiry or investigation, it shall be entitled (subject to the express limitations with respect thereto contained in this Mortgage) to examine the books, records and premises of the Mortgagor, personally or by agent or attorney; (f) the Mortgagee may execute any of the trusts or power hereunder or perform any duties hereunder either directly or by or through agents or attorneys, and the Mortgagee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder; (g) the Mortgagee shall not be personally liable, in case of entry by it upon the Trust Estate, for debts contracted or liabilities or damages incurred in the management or operation of the Trust Estate; and (h) no provision of this Mortgage shall require the Mortgagee to expend or risk its own funds or otherwise incur any financial liability in the performance of its obligations hereunder, or in the exercise of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate 20 indemnity against such risk or liability is not reasonably assured to it. Section 1.13. MORTGAGE SUBJECT TO THE PROVISIONS OF THE ACT. Each provision of this Mortgage is subject to and shall be enforced in compliance with the provisions of the New Jersey Casino Control Act. This Mortgage shall not be transferred, assigned or amended without prior approval of the New Jersey Casino Control Commission. Section 1.14. DISCHARGE OF LIEN. If the Mortgagor shall pay or cause to be paid, or there shall otherwise be paid, to the Mortgagee all amounts required to be paid by the Mortgagor pursuant to the Note, and the conditions precedent for the Indenture to cease, determine and become null and void in accordance with Section 5.01 of the Indenture shall have occurred, the Mortgagee shall promptly cancel and discharge this Mortgage, and execute and deliver to the Mortgagor all such instruments as may be necessary, required or appropriate to evidence such discharge and satisfaction of such lien or liens. Section 1.15. GENERAL APPLICATION. (a) The assertion of any rights upon any Default shall be subject in each instance to the giving of any notice and the expiration of any grace period provided for in Section 3.01 as a condition to such Default making it an Event of Default, unless the Trust Indenture Act requires otherwise, in which case the Trust Indenture Act shall control. (b) For the purposes of this Mortgage, it is understood that an event which does not materially diminish the value of the Mortgagee's interest in the Trust Estate shall not be deemed an "impairment of security", as that phrase is used in this Mortgage. ARTICLE TWO RELEASE; OTHER EXCEPTED PROPERTY; SUBORDINATION Section 2.01. POSSESSION BY MORTGAGOR; DISPOSITIONS WITHOUT RELEASE. So long as there shall have been no acceleration of maturity of the Note under Section 3.02, the Mortgagor shall be suffered and permitted, with power freely and without let or hindrance on the part of the Mortgagee, subject to the provisions of this Mortgage and the Guaranty Mortgage, to possess, use, manage, operate and enjoy the Trust Estate and every part thereof and to collect, receive, use, invest and dispose of the rents, issues, tolls, profits, revenues and other income from the Trust Estate or any part hereof, to use, consume and dispose of any consumables, goods, wares and merchandise in the ordinary course of business of operating the Casino-Hotel and to adjust 21 and settle all matters relating to choses in action, leases and contracts. Section 2.02. OBSOLETE PROPERTY; TANGIBLE PERSONAL PROPERTY; LEASE MODIFICATIONS. The Mortgagor shall have the right, at any time and from time to time, unless an Event of Default shall have occurred and be continuing, without any release from or consent by the Mortgagee: (a) to sell or dispose of, free from the lien of this Mortgage, any Tangible Personal Property which, in its reasonable opinion, may have become obsolete or unfit for use or which is no longer necessary in the conduct of its businesses or the operation of the Trust Estate, and no purchaser of any such property shall be bound to inquire into any question affecting the Mortgagor's right to sell or otherwise dispose of the same, free from the lien of this Mortgage; (b) to alter, repair, replace, change the location (provided notice shall be given to Mortgagee as to any new location) or position of and add to any Tangible Personal Property; provided, however, that no change shall be made in the location of any such property subject to the lien of this Mortgage which would in any respect impair the security of this Mortgage upon such property; or (c) to renew, extend, surrender, terminate, modify or amend any leases of Tangible Personal Property, when, in the Mortgagor's reasonable opinion, it is prudent to do so. The Mortgagor shall retain any net cash proceeds (subject to the right to pay dividends or make cash distributions pursuant to Section 12.07 of the Indenture) received from the sale or disposition of any Tangible Personal Property under Subsection (a) of this Section 2.02, in the business of operating the Casino-Hotel. The Mortgagee shall be under no responsibility or duty with respect to the exercise of the rights of the Mortgagor under this Section 2.02 or the application of the proceeds of any sale or disposition of any Tangible Personal Property. 22 Section 2.03. OTHER EXCEPTED PROPERTY. Notwithstanding any provisions contained in this Mortgage or the Indenture to the contrary, including, without limitation, the provisions of Granting Clauses Fifth and Sixth and of Articles Two and Five hereof, if the Mortgagor acquires Tangible Personal Property and other items constituting operating assets, such as computer software subject to any FF&E Financing Agreement, or becomes the lessee under a lease for any of the same and if the document evidencing such FF&E Financing Agreement prohibits subordinate liens or the provisions of any such lease prohibits any assignment thereof by the lessee, and if any such prohibition is customary with respect to similar transactions of the lender or lessor, as the case may be, then the property so purchased or the lessee's interest in the lease, as the case may be, shall be deemed to be Excepted Property. If any such FF&E Financing Agreement permits subordinate liens then the Mortgagee agrees to execute and deliver to the Mortgagor, at the Mortgagor's expense, such documents as the holder of such FF&E Financing Agreement may reasonably request to evidence the subordination of the lien of this Mortgage to the lien of such FF&E Financing Agreement. Section 2.04. [Reserved] Section 2.05. RELEASED LAND. (a) Notwithstanding anything to the contrary herein contained, the Mortgagor shall have the right, at any time and from time to time, unless an Event of Default shall have occurred and be continuing, to convey all or any part of the Released Fee Land (the land to be so conveyed is hereinafter referred to as the "Released Land"), free from the lien of the Mortgage, provided that: (i) the Mortgagor furnishes the Mortgagee with an Officers' Certificate requesting the release of such property from the Trust Estate and stating (w) so long as the Released Land is owned or used by an Affiliate of the Mortgagor, the Released Land shall not be operated in a manner in competition with the operation of the Casino-Hotel as a casino, (x) that no permanent structures have been constructed on the Released Land, (y) that the Mortgagor is not required to hold the Released Land in order to maintain all Permits and in order to comply with the provisions of all material contracts to which the Mortgagor is a party or by which the Mortgagor is bound and either (A) the Mortgagor has made adequate provision to maintain all Permits and to comply with such contractual requirements by: (1) owning and using the 23 balance of the Trust Estate; (2) acquiring fee title to any real property that would enable Mortgagor to maintain all Permits and satisfy such contractual requirements; or (3) acquiring a Qualified Leasehold Interest in real property that would enable the Mortgagor to maintain such Permits and satisfy such contractual requirements; or (B) neither the requirements of such Permits nor such contracts require the Mortgagor to own the Released Land or use or operate any land in the manner in which the Released Land is intended to be used; or (C) such requirements have been waived, and (z) that such conveyance will not materially interfere with the operation of the Casino-Hotel; (ii) the Mortgagor delivers to the Mortgagee an Opinion of Counsel to the effect that the Mortgagor is not required to own and use the Released Land in order to maintain in good standing all Permits or by the provisions of any material contract to which the Mortgagor is a party or by which it is bound to own and use the Released Land; (iii) the Mortgagor delivers to the Mortgagee, if applicable, an endorsement to the Original Policy in accordance with Section 2.05(d); (iv) the Mortgagor delivers to the Mortgagee an executed counterpart of the instruments of conveyance in recordable form, which shall contain a covenant prohibiting the use of the Released Land by any Affiliate of the Mortgagor (A) as a casino or (B) in a manner in competition with the operation of the Casino-Hotel as a casino prior to the latest Stated Maturity Date of the Note; and (v) in the case of a conveyance or release described in (A) or (B) above, if the Released Land is being conveyed to an Affiliate of the Mortgagor, the cash consideration received by the Mortgagor for the Released Land shall not be less than the product of the Release Price multiplied by the area (in square feet) of the Released Land. (b) The Mortgagee shall, from time to time, promptly execute any written instrument in form reasonably satisfactory to the prospective purchaser to confirm the release of the Released Fee Land, upon receipt by the Mortgagee of an Officers' Certificate stating that the Mortgagor is entitled to such release by virtue of the Mortgagor's compliance with this Section 2.05 and, if applicable, Section 2.05 of the Guaranty Mortgage, PROVIDED, that the Mortgagee shall have no liability thereunder and all costs and expenses (including reasonable attorneys' fees) shall be paid by the Mortgagor. 24 Section 2.06. RELEASED FEE LAND. (a) Notwithstanding anything to the contrary herein contained, in the event the Mortgagor intends to exercise an option to acquire fee title to Leased Land under the provisions of any Ground Lease, the Mortgagor shall have the right, unless an Event of Default shall have occurred and be continuing, to have an Affiliate exercise such options(s) or for the Mortgagor to exercise such options(s) on behalf of an Affiliate and in connection therewith to cause fee simple title to the Leased Land or any part thereof to be conveyed to an Affiliate of the Mortgagor (provided that no portion of the purchase price of the Leased Land or part thereof is paid by Mortgagor), free from the lien of this Mortgage (the land to be so conveyed is hereinafter referred to as the "Released Fee Land"), provided that the Mortgagor furnishes the Mortgagee with the following: (i) an Officers' Certificate requesting the release of the Released Fee Land from the Trust Estate and stating that (A) the Mortgagor is not required to own the Released Fee Land in order to maintain all Permits and in order to comply with the provisions of all material contracts to which the Mortgagor is a party or by which the Mortgagor is bound, (B) such Affiliate has received all Permits necessary to own the Released Fee Land (including without limitation all approvals required by the Casino Control Commission of the State of New Jersey), (C) there has been delivered to the Mortgagor and the Mortgagee a true copy of an instrument executed by such Affiliate stating that (i) such Affiliate may only engage in the activity of owning the Released Fee Land and (ii) such Affiliate shall not convey the Released Fee Land to another Affiliate of the Mortgagor, unless such other Affiliate executes and delivers to the Mortgagor and the Mortgagee, the instruments that would have been required to be delivered pursuant to clause (C) if the Mortgagor conveyed the Released Fee Land to such other Affiliate (provided that this restriction shall only be effective until such time as this Mortgage shall be satisfied of record) and (D) the deed conveying the Released Fee Land to such Affiliate shall state that such conveyance is made subject to the terms, provisions and conditions of the applicable Ground Lease and that the fee and leasehold interests in the Released Fee Land shall not merge by reason of the Mortgagor and/or any Affiliate owning both the leasehold and fee estate therein, and that such estates shall always remain separate and distinct; (ii) an Opinion of Counsel to the effect that (A) the Mortgagor is not required to own the Released Fee Land in order to maintain in good standing all Permits or by the provisions of any material contract to which the 25 Mortgagor is a party or by which it is bound to own the Released Fee Land and (B) the instruments described in clause (C) of subparagraph (i) were duly executed by and are binding upon such Affiliate; and (iii) an endorsement to the Original Policy, confirming that no merger of the fee and leasehold estates in the Released Fee Land has resulted from such conveyance. In addition, simultaneously with such acquisition, the Affiliate and Mortgagor shall enter into an instrument in form and substance reasonably satisfactory to Mortgagee, amending the applicable Ground Lease to provide such mortgagee protections as are customary and to the extent reasonably required by Mortgagee, including, without limitation, (A) a covenant of the landlord not to terminate the Ground Lease for any reason whatsoever (including without limitation, due to any default by tenant of its obligations under such Ground Lease), and (B) an agreement by the landlord not to accept payment of any fixed or base rent from the tenant (and, if tendered by the Mortgagor, and agreement to return same to the Mortgagor) or any other charges payable thereunder at any time that an Event of Default shall have occurred and shall be continuing. (b) The Mortgagee shall, from time to time, promptly execute any written instrument in form reasonably satisfactory to the prospective purchaser to confirm the release of the Released Fee Land, upon receipt by the Mortgagee of an Officers' Certificate stating that the Mortgagor is entitled to such release by virtue of the Mortgagor's compliance with this Section 2.06, PROVIDED that the Mortgagee shall have no liability thereunder and all costs and expenses (including reasonable attorneys' fees) shall be paid by the Mortgagor. 26 Section 2.07. AFTER-ACQUIRED FEE MORTGAGES. (a) Notwithstanding anything contained herein to the contrary (i) if no Event of Default has occurred and is continuing and (ii) if the Mortgagor shall acquire Released Fee Land, then simultaneously with the acquisition thereof, the Mortgagor shall have the right to encumber such fee simple title with a mortgage (such mortgage and any refinancing thereof permitted by the Indenture is hereinafter referred to as an "After-Acquired Fee Mortgage"). The lien of this Mortgage on the Released Fee Land shall be subordinated to the lien of the After-Acquired Fee Mortgage on the Released Fee Land (and to the lien of other Superior Mortgages which shall become a lien thereon in accordance with the terms thereof), provided the following conditions are satisfied: (i) the After-Acquired Fee Mortgage encumbers the fee simple title to such real property and no other property; (ii) the indebtedness secured by the After-Acquired Fee Mortgage (A) does not exceed 75% of the cost to the Mortgagor of such fee simple title at the time of the acquisition and (B) satisfies the criteria set forth in Section 12.08 of the Indenture; (iii) in the event the After-Acquired Fee Mortgage encumbers fee simple title to the Leased Land or any part thereof, such After-Acquired Fee Mortgage contains provisions binding on the holder of the After-Acquired Fee Mortgage and its successors and assigns confirming the provisions of Section 5.21(d) of this Mortgage; (iv) the Released Fee Land is not being acquired from an Affiliate of the Mortgagor; (v) the After-Acquired Fee Mortgage and other loan documents shall contain a provision binding upon the holder of such After-Acquired Fee Mortgage and other loan documents that all insurance proceeds in the event of a Casualty and awards for Takings of less than the entire Released Fee Land shall be used for purposes of Restoration; and (vi) the Mortgagor delivers to the Mortgagee an Officers' Certificate requesting such subordination and certifying that the requirements of (i) through (v) above have been satisfied. (b) Anything contained in this Section 2.07 or elsewhere in this Mortgage to the contrary notwithstanding, the subordination of this Mortgage to any After-Acquired Fee Mortgage constituting a lien on Released Fee Land shall not be 27 self-operative but shall be effective only upon the execution and delivery by the Mortgagee of an instrument in writing effecting such subordination. The Mortgagee shall deliver such instrument of subordination on the following conditions: (x) the Mortgagee shall have received an Officers' Certificate confirming that the conditions of (i) through (vi) of paragraph (a) have been satisfied, together with a true and correct copy of the After- Acquired Fee Mortgage and all other instruments securing the indebtedness evidenced thereby and (y) the instrument of subordination shall specifically state that this Mortgage is being subordinated not with respect to the lien of this Mortgage on the Ground Lease or on the leasehold estate created thereby, but only with respect to the fee simple title to the Leased Land or applicable part thereof and only if and to the extent that the After-Acquired Fee Mortgage being subordinated to is subject and subordinate to the Ground Lease and the leasehold estate created thereby. ARTICLE THREE REMEDIES Section 3.01. EVENTS OF DEFAULT. "Event of Default," whenever used herein, means any one of following events (including any applicable notice requirement and any period of grace as specified in this Section 3.01) (whatever the reason for such event 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): (a) default in the payment of any interest on the Note when such interest becomes due and payable and continuance of such default for a period of 10 days after there has been given a written notice to the Mortgagor specifying such default and stating that such notice is a "Notice of Default" hereunder; or (b) default in the payment of the principal of any Note at its Maturity; or (c) an "Event of Default" as defined in Section 3.01 of the Guaranty Mortgage shall occur; or (d) default in the payment of any other sum due under the Note or this Mortgage and the continuance of such default for a period of 10 days after there has been given to the Mortgagor a written notice specifying such default and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; or (e) default in the performance, or breach, of any covenant of the Mortgagor in this Mortgage (other than a 28 covenant a default in the performance or breach of which is elsewhere in this Section specifically dealt with), and continuance of such default or breach for a period of 30 days after there has been given to the Mortgagor 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 (i) the default or breach is of such a nature that is curable but not susceptible of being cured with due diligence within such 30-day period (for reasons other than the lack of funds), (ii) the Mortgagor delivers an Officers' Certificate to the Mortgagee within such 30-day period stating (A) the applicability of the provisions of Clause (i) to such default or breach, (B) the Mortgagor's intention to remedy such default or breach with reasonable diligence and (C) the steps which the Mortgagor has undertaken to remedy such default or breach and (iii) the Mortgagor delivers to the Mortgagee additional Officers' Certificates every 30 days thereafter updating the information contained in the certificate described in Clause (ii), in which case such 30 day period shall be extended for such further period of time as may reasonably be required to cure the same, provided that the Mortgagor is then proceeding and thereafter continues to proceed to cure the same with reasonable diligence; or (f) an "Event of Default" as defined in Section 7.01 of the Indenture, shall occur; or (g) default by the Mortgagor under any of the terms of any Ground Lease which shall not be fully cured or waived prior to the expiration of any grace period contained in such Ground Lease, unless prior to the expiration of such grace period, the Mortgagor gives the Mortgagee an Officers' Certificate, an Opinion of Counsel and a true copy of the Injunction referred to below, which Certificate and Opinion state that (i) a court of competent jurisdiction has issued an injunction (which is in force and effect and has not been modified or reversed on appeal) tolling or staying the expiration of the grace period set forth in such Ground Lease with respect to such default, (ii) such injunction specifically provides that in addition to the tolling or stay describe in (i) above, such tolling or stay also applies to the Mortgagee for purposes of determining the duration and expiration of the periods during which the Mortgagee may exercise its rights under such Ground Lease (including without limitation, periods to cure lessee defaults and delivering a guarantee and the period during which the Mortgagee may elect to enter into a new lease thereunder), (iii) such injunction further provides that the tolling or stay under (i) and (ii) shall be effective until such time that the Mortgagee is personally served 29 with notice of the expiration of such injunction and (iv) the Mortgagee is named as a party in any action or proceeding involving such injunction and therefore entitled to notice of any modification or termination thereof; and, if such injunction is issued, then so long as such injunction remains in force and effect and the preceding provisions of this Section 3.01(g) have been complied with, the grace period referred to in the third line of this subparagraph (g) shall be deemed to mean the grace period after giving effect to any such tolling or stay in (i) above; or (h) default by the Mortgagor under any of the terms of any Superior Mortgage which default results in the acceleration of the maturity of such Superior Mortgage and which shall not be fully cured or waived prior to the expiration of any grace period contained in such Superior Mortgage, unless prior to the expiration of such grace period, the Mortgagor gives the Mortgagee an Officers' Certificate and an Opinion of Counsel and a true copy of the injunction referred to below, which Certificate and Opinion shall state (i) that a court of competent jurisdiction has issued an injunction (which is in force and effect and has not been modified or reversed on appeal) tolling or staying the expiration of the grace period set forth in such Superior Mortgage with respect to such default and (ii) the Mortgagee is named a party in any action or proceeding relating to such injunction and therefore is entitled to notice of any modification or termination thereof; and if such injunction is issued, then so long as such injunction remains in force and effect, and the preceding provisions of this Section 3.01(h) have been complied with, the grace period referred to in the third line of this subparagraph (h) shall be deemed to mean the grace period after giving effect to any such tolling or stay; or (i) any modification, amendment or supplement of any Ground Lease without the prior written consent of the Mortgage; or (j) any modification, amendment or supplement of any Superior Mortgage without the prior written consent of the Mortgagee, except to the extent that such modification, amendment or supplement is permitted by Section 5.22(b)(i) hereof; or (k) default in the performance, or breach, of any of the provisions of Article Four and the continuance of such default or breach for a period of 60 days after there has been given a written notice to the Mortgagor specifying that such notice is a "Notice of Default" hereunder; or 30 (l) any representation or warranty of the Mortgagor set forth in this Mortgage or in any notice, certificate, demand or request delivered to the Mortgagee pursuant to this Mortgage shall prove to be incorrect as of the time when made and the facts constituting such incorrectness impairs the Mortgagee's security and such impairment continues for a period of 30 days after there has been given to the Mortgagor a written notice specifying that such notice is a "Notice of Default" hereunder, unless (i) such impairment is curable, but not susceptible of cure within such 30-day period (for reasons other than lack of funds), (ii) the Mortgagor gives an Officers' Certificate to the Mortgagee within such 30-day period stating (A) the applicability of the provisions of (i) to such impairment, (B) the Mortgagor's intention to remedy the same with reasonable diligence and (C) the steps which the Mortgagor has undertaken to remedy such default or breach and (iii) the Mortgagor delivers to the Mortgagee additional Officers' Certificates every 30 days thereafter updating the information contained in the certificate described in (ii), in which case such 30-day period shall be extended for such further period of time as may reasonably be required to cure the same, provided that the Mortgagor is then proceeding and thereafter continues to proceed to cure the same with reasonable diligence. Section 3.02. DEMAND UNDER NOTE. If an Event of Default occurs and is continuing, then the Mortgagee may declare the Outstanding Amount of the Note to be due and payable immediately, by a notice in writing to the Mortgagor and upon any such declaration such principal shall become immediately due and payable. Section 3.03. APPLICATION OF MONEYS RECEIVED BY MORTGAGEE. Any moneys received by the Mortgagee pursuant to the provisions of this Article Three (including moneys received by the Trustee after any action or act by the Mortgagee under Section 3.10) shall be applied by the Mortgagee in accordance with the provisions of Section 7.06 of the Indenture. Section 3.04. RESTORATION OF RIGHTS AND REMEDIES. If the Mortgagee has instituted any proceeding to enforce any right or remedy under this Mortgage and such proceeding has been discontinued or abandoned for any reason or has been determined adversely to the Mortgagee, then and in every such case the Mortgagor and the Mortgagee shall, subject to any determination in such proceeding, be restored to its former position hereunder, and thereafter all rights and remedies of the Mortgagee shall continue as though no such proceeding had been instituted. 31 Section 3.05. RIGHTS AND REMEDIES CUMULATIVE. No right or remedy herein conferred upon or reserved to the Mortgagee 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 3.06. DELAY OR OMISSION NOT WAIVER. No delay or omission of the Mortgagee to exercise any right or remedy accruing upon an 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 Three by law to the Mortgagee may be exercised, from time to time, and as often as may be deemed expedient, by the Mortgagee. Section 3.07. UNDERTAKING FOR COSTS. If any action or proceeding shall be commenced (including, without limitation, an action to foreclose this Mortgage or to collect the indebtedness secured hereby) to which action or proceeding the Mortgagee is made or becomes a party, or in which it becomes necessary in the opinion of the Mortgagee to defend or uphold the lien of this Mortgage, the Mortgagor shall pay to Mortgagee all expenses, including reasonable attorneys' fees and expenses, incurred by the Mortgagee in connection therewith, together with interest at the rate then payable on the Note, from the date of payment less the net amount received by the Mortgagee or the Trustee, as their interests may appear under any title insurance policy, and, until paid, all such expenses, together with interest as aforesaid, shall be a lien on the Trust Estate. Section 3.08. WAIVER OF APPRAISEMENT AND OTHER LAWS. To the full extent that it may lawfully so agree, the Mortgagor will not at any time insist upon, plead, claim or take the benefit or advantage of, any appraisement, valuation, stay, extension or redemption law now or hereafter in force, in order to prevent or hinder the enforcement of this Mortgage or the absolute sale of the Trust Estate, or any part hereof, or the possession thereof by any purchaser at any sale under this Article Three; and the Mortgagor, for itself and all who may claim under it, so far as it or they now or hereafter may lawfully do so, hereby waives the benefit of all such laws. The Mortgagor, for itself and all who may claim under it, waives, to the extent that it may lawfully do so, all right to have the property in the Trust Estate marshalled upon any foreclosure hereof, and agrees that any court having jurisdiction to foreclose this Mortgage may order the sale of the Trust Estate as an entirety. 32 If any law in this Section 3.08 referred to and now in force, of which the Mortgagor or its successor or successors might take advantage despite this Section 3.08, shall hereafter be repealed or cease to be in force, such law shall not thereafter be deemed to constitute any part of the contract herein contained or to preclude the application of this Section 3.08. Section 3.09. ENTRY. The Mortgagor agrees that upon the occurrence of an Event of Default the Mortgagor, upon demand of the Mortgagee during the continuance thereof, shall forthwith surrender to the Mortgagee the actual possession of, and it shall be lawful for the Mortgagee by such officers or agents as it may appoint to enter and take possession of, the Trust Estate (and the books and papers of the Mortgagor), and to hold, operate and manage the Trust Estate (including the making of all needful repairs, and such alterations, additions and improvements as the Mortgagee shall deem wise) and to receive the rents, issues, tolls, profits, revenues and other income thereof, and, after deducting the costs and expenses of entering, taking possession, holding, operating and managing the Trust Estate, as well as payments for taxes, insurance and other proper charges upon the Trust Estate and reasonable compensation to itself, its agents and counsel, to apply the same as provided in Section 3.03, PROVIDED, HOWEVER, that the Mortgagee's rights under this Section 3.09 shall be subject to the provisions of the New Jersey Casino Control Act and Section 3.14. Whenever all that is then due upon the Note and under any of the terms of this Mortgage shall have been paid and all defaults hereunder shall have been made good, the Mortgagee shall surrender possession to the Mortgagor. Section 3.10. POWER OF SALE; SUITS FOR ENFORCEMENT. In case an Event of Default shall occur and be continuing, the Mortgagee, with or without entry, in its discretion may: (a) sell, subject to any mandatory requirements of applicable law, the Trust Estate as an entirety, or in such parcels, as the Mortgagee may determine, to the highest bidder at public auction at such place and at such time (which sale may be adjourned by the Mortgagee from time to time in its discretion by announcement at the time and place fixed for such sale, without further notice) and upon such terms as the Mortgagee may fix and briefly specify in a notice of sale to be published as required by law; or (b) proceed to protect and enforce its rights under this Mortgage by sale pursuant to judicial proceedings or by a suit, action or proceeding in equity or at law or otherwise, whether for the specific performance of any covenant or agreement contained in this Mortgage or in aid of the execution of any power granted in this Mortgage or for the foreclosure of this 33 Mortgage or for the enforcement of any other legal, equitable or other remedy, as the Mortgagee, being advised by counsel, shall deem most effectual to protect and enforce any of the rights of the Mortgagee; the failure to join tenants shall not be asserted as a defense to any foreclosure or proceeding to enforce the rights of the Mortgagee. Section 3.11. INCIDENT OF SALE. Upon any sale of any of the Trust Estate, whether made under the power of sale hereby given or pursuant to judicial proceedings, to the extent permitted by law: (a) the principal of and accrued interest on the Note, if not previously due, shall at once become and be immediately due and payable; (b) subject to the provisions of Section 3.14 and the receipt of any required prior approvals of the New Jersey Casino Control Commission, the Mortgagee may bid for and purchase the property offered for sale, and upon compliance with the terms of sale may hold, retain and possess and dispose of such property, without further accountability, and may, in paying the purchase money therefor, delivery any notes or claims for interest thereon in lieu of cash to the amount which shall, upon distribution of the net proceeds of such sale, be payable thereon, and such notes or claims for interest thereon, in case the amounts so payable thereon shall be less than the amount due thereon, shall be returned to the holders thereof after being appropriately stamped to show partial payment; (c) the Mortgagee may make and deliver to the purchaser or purchasers a good and sufficient deed, bill of sale and instrument of assignment and transfer of the property sold; (d) the Mortgagee is hereby irrevocably appointed the true and lawful attorney of the Mortgagor, in its name and stead, to make all necessary deeds, bills of sale and instruments of assignment and transfer of the property thus sold; and for that purpose it may execute all necessary deeds, bills of sale and instruments of assignment and transfer, and may substitute one or more persons, firms or corporations with like power, the Mortgagor hereby ratifying and confirming all that its attorney or such substitute or substitutes shall lawfully do by virtue hereof; but if so requested by the Mortgagee or by any purchaser, the Mortgagor shall ratify and confirm any such sale or transfer by executing and delivering to the Mortgagee or to such purchaser or purchasers all proper deeds, bills of sale, instruments 34 of assignment and transfer and releases as may be designated in any such request; (e) all right, title, interest, claim and demand whatsoever, either at law or in equity or otherwise, of the Mortgagor of, in and to the property so sold shall be divested and such sale shall be a perpetual bar both at law and in equity against the Mortgagor, its successors and assigns, and against any and all persons claiming or who may claim the property sold or any part thereof from, through or under the Mortgagor, its successors and assigns; and (f) the receipt of the Mortgagee or of the officer making such sale shall be a sufficient discharge to the purchaser or purchasers at such sale for his or their purchase money and such purchaser or purchasers and his or their assigns or personal representatives shall not, after paying such purchase money and receiving such receipt, be obliged to see to the application of such purchase money, or be in anywise answerable for any loss, misapplication or non-application thereof. Section 3.12. RECEIVER. Upon the occurrence of an Event of Default and commencement of judicial proceedings by the Mortgagee to enforce any right under this Mortgage, the Mortgagee shall be entitled, as against the Mortgagor, without notice or demand and without regard to the adequacy of the security for the Note or the solvency of the Mortgagor, to the appointment of a receiver of the Trust Estate, and of the rents, issues, profits, revenues and other income thereof, PROVIDED, HOWEVER, that the Mortgagee's rights under this Section 3.12 shall be subject to the provisions of the New Jersey Casino Control Act and Section 3.14 hereof. Section 3.13. SUITS TO PROTECT THE TRUST ESTATE. Upon 5 days' prior written notice to the Mortgagor (or such shorter period or without notice if deemed necessary and appropriate by the Mortgagee), the Mortgagee shall have power to institute and maintain such proceedings as it may deem necessary and appropriate to prevent any impairment of the Trust Estate by any acts which may be unlawful or in violation of this Mortgage and to protect its interests in the Trust Estate and in the rents, issues, profits, revenues and other income arising therefrom, including power to institute and maintain proceedings to restrain the enforcement of or compliance with any 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 hereunder or be materially prejudicial to the interests of the Mortgagee. Section 3.14. MANAGEMENT OF CASINO-HOTEL. Notwithstanding any provision of this Article Three to the 35 contrary, following an Event of Default and the taking of possession of the Trust Estate or any part thereof by the Mortgagee and/or the appointment of receiver of the Trust Estate or any part thereof, the Mortgagee or any such receiver shall be authorized, in addition to the rights and powers of the Mortgagee and such receiver set forth elsewhere in this Mortgage, to retain one or more experienced operators of hotels and/or casinos to manage the Casino-Hotel, PROVIDED that any such operator shall have all necessary legal qualifications, including all Permits, to manage the Casino-Hotel. ARTICLE FOUR CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE Section 4.01. CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER ONLY ON CERTAIN TERMS. The Mortgagor shall comply with all provisions applicable to the Mortgagor in Article Ten of the Indenture. Section 4.02. SUCCESSOR ENTITY SUBSTITUTED. Upon any consolidation or combination or any conveyance or transfer of the Trust Estate or any portion thereof in accordance with Section 10.01 of the Indenture, the successor entity formed by such consolidation or into which the Mortgagor is combined or to which such conveyance or transfer is made shall succeed to, and be substituted for, and may exercise every right and power of, the Mortgagor under this Mortgage with the same effect as if such successor entity had been named as the Mortgagor herein; PROVIDED, HOWEVER, that no such conveyance or transfer of the Trust Estate substantially as an entirety, unless such conveyance or transfer is in compliance with the provisions of Article Ten of the Indenture, shall have the effect of releasing the Person named as "the Mortgagor" in the first paragraph of this instrument or any successor entity which shall theretofore have become such in the manner prescribed in such Article Ten from its liability as obligor or maker of the Note. Section 4.03. LIMITATION ON SALES OF TRUST ESTATE. Except as otherwise expressly permitted by this Mortgage or the Indenture, the Mortgagor shall not sell, assign, lease, sublease, hypothecate, pledge, mortgage or otherwise transfer all or any part of the Trust Estate or any interest therein (including without limitation any interest in the Ground Leases). Without limiting the generality of the foregoing, the Mortgagor shall not separate, or attempt to separate, its ownership of its interest in the Ground Leases from its ownership of the buildings constituting the Casino-Hotel or any part thereof. 36 ARTICLE FIVE COVENANTS AND REPRESENTATIONS OF MORTGAGOR Section 5.01. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST. The Mortgagor will duly and punctually pay the principal of (and premium, if any) and interest on the Note in accordance with the terms of the Note and this Mortgage. Section 5.02. FF&E FINANCING AGREEMENTS. The Mortgagor covenants and agrees to comply with all of the terms and conditions set forth in any FF&E Financing Agreements before the expiration of any applicable notice and cure periods contained in the FF&E Financing Agreements. Section 5.03. LIMITATIONS ON LIENS. (a) The Mortgagor will not create, incur, suffer or permit to be created or incurred or to exist any mortgage, lien, charge or encumbrance on or pledge of any of the Trust Estate, other than (i) Permitted Encumbrances, (ii) liens on the Trust Estate in connection with indebtedness permitted by clauses (i), (ii), (iii), (iv) or (v) of Section 12.08(a) of the Indenture, and (iii) a building contract or a notice of intention filed by a mechanic, materialman or laborer under the New Jersey lien law. Without limiting the generality of the foregoing sentence but notwithstanding the provisions of the foregoing sentence, the Mortgagor shall not be deemed to have breached the provisions of the foregoing sentence by virtue of the existence of a lien for Impositions or mechanics liens so long as the Mortgagor is in good faith contesting the validity of the same in accordance with the provisions of Section 5.09 to the extent that the matters described in (i) and (ii) do not constitute a default under any Ground Lease or Superior Mortgage. (b) Mortgagee acknowledges that, contemporaneously with the execution and delivery of this Mortgage, it has assigned this Mortgage to the Trustee and that the Trustee is also the mortgagee under the Guaranty Mortgage, which Guaranty Mortgage creates a lien upon the same Trust Estate pari passu with the lien of this Mortgage. Mortgagee further acknowledges and agrees that whenever it is provided in the Guaranty Mortgage that the Mortgagor shall deliver any notice or document, or is require to make any payment thereunder, the delivery of such notice or document or the making of such payment pursuant to the terms of the Guaranty Mortgage shall also constitute the delivery of such notice or document or the making of such payment in satisfaction of the terms, conditions and provisions of this Mortgage to the same extent as the same constitutes satisfaction of the terms, conditions and provisions of the Guaranty Mortgage. Section 5.04. [Reserved] 37 Section 5.05. ACTIONS AND PROCEEDINGS. The Mortgagor hereby acknowledges the right of the Mortgagee, in the name of and on behalf of the Mortgagor, (a) to appear in and defend any action or proceeding brought with respect to the Trust Estate or any part thereof and (b) upon 5 days' prior written notice to the Mortgagor (or such shorter period or without notice if deemed necessary and appropriate by the Mortgage), to commence any action or proceeding to protect the interest of the Mortgagee in the Trust Estate. Section 5.06. WARRANTY OF LEASEHOLD ESTATE AND TITLE. The Mortgagor represents and warrants that as of the date hereof: (a) it is duly authorized under the laws of the State of New Jersey and all other applicable laws to execute and deliver this Mortgage, and all corporate action on its part necessary for the valid execution and delivery of this Mortgage has been duly and effectively taken; (b) it is the lawful owner and is lawfully seized and possessed of the Owned Land and all buildings and improvements thereon, free and clear of all liens, charges or encumbrances, other than the lien of the Mortgage Documents, any Working Capital Facility Lien and Existing Encumbrances; (c) it is the holder of and has good and marketable title to the leasehold interests and leasehold estates under the Ground Leases and to the Ground Leases, subject to no lien, encumbrance or charge other than the lien of the Mortgage Documents, any Working Capital Facility Lien and Existing Encumbrances; (d)(i) the Ground Leases are valid and subsisting demises of the Leased Land for the terms therein set forth, (ii) there are no defaults thereunder by any Lessor or the lessee as to which written notice has been given to or by the lessee, (iii) the Mortgagor has delivered true and correct copies of the Ground Leases and all modifications, amendments and supplements thereto, and (iv) each of the Ground Leases is in full force and effect and has not been modified, amended or supplemented, except as described on Schedule 2; (e) it has good title to the Operating Assets, subject to no lien, encumbrance or charge, other than the lien of the Mortgage Documents, any Working Capital Facility Lien and Existing Encumbrances; and (f) the Mortgagor has good and lawful right and authority to execute this Mortgage and to grant, bargain, sell, alien, convey, assign, transfer, hypothecate, 38 pledge, mortgage and confirm the Trust Estate as provided herein (including without limitation with respect to the Operating Assets and the Ground Leases, without the consent of any third party, other than governmental authorities but any applicable or necessary consent or approval of any such governmental authority has been given or waived at or prior to the execution and delivery of this Mortgage), and this Mortgage constitutes a valid third mortgage lien and third priority security interest in the Trust Estate PARI PASSU with the lien of the Guaranty Mortgage, subject only to Working Capital Facility Liens and Existing Encumbrances. The Mortgagor hereby does and will forever warrant and defend (x) the title to Trust Estate (including without limitation, its leasehold estates under the lessee's interests in the Ground Leases) (subject to Permitted Encumbrances) and (y) the priority of the lien of this Mortgage (subject to Permitted Encumbrances other than Restricted Encumbrances), against the claims and demands of all persons whomsoever, at the Mortgagor's sole cost and expense. Section 5.07. FURTHER ASSURANCES; RECORDING. The Mortgagor will, as provided in Section 5.13, from time to time subject its right, title and interest under all Leases to the lien of this Mortgage. The Mortgagor will cause this instrument and all other instruments of further assurance, including all financing statements and continuation statements covering security interests in personal property, to be promptly recorded, registered and filed, and at all times to be kept recorded, registered and filed, and will execute and file such financing statements and cause to be issued and filed such continuation statements, all in such manner and in such places as may be required by law or as requested by the Mortgagee to fully preserve and protect the rights of the Mortgagee as a secured party under the Uniform Commercial Code to all property comprising the Trust Estate (to the extent a grant of a security interest therein is governed by the Uniform Commercial Code) and to perfect, preserve and protect the lien of this Mortgage as a valid mortgage lien of record and a valid security interest on the Trust Estate subject to Permitted Encumbrances (other than Restricted Encumbrances). The Mortgagor will pay all filing or recording fees, and all expenses incident to the execution and delivery of this Mortgage, and any instrument of further assurance, and all federal, state, county and municipal stamp taxes and other taxes, duties, imposts, assessments and charges arising out of or in connection with the execution and delivery of the Note, this Mortgage, any financing statement or continuation statement with respect to the personal property constituting 39 part of the Trust Estate or any instrument of further assurance. Section 5.08. PAYMENT OF TAXES AND CERTAIN CLAIMS; MAINTENANCE OF PROPERTIES; COMPLIANCE WITH LEGAL REQUIREMENTS AND INSURANCE REQUIREMENTS. The Mortgagor will: (a)subject to the provisions of Section 5.09 relating to contests, pay or cause to be paid promptly (or when installments of the same shall become due and payable, if, by law or by agreement or arrangement with the applicable governmental agency or authority, the same may be paid in installments) before any fine, penalty, interest or cost may be added for nonpayment (but no later than when the same are payable by the Mortgagor pursuant to any Superior Instrument Requirement), all taxes (including, without limitation, real estate taxes, personal or other property taxes and all sales, value added, use and similar taxes), assessments (including, without limitation, all assessments for public improvements or benefits, whether or not commenced or completed prior to the date hereof and whether or not to be completed prior to the satisfaction of this Mortgage), water, sewer or other rents, rates and charges, excises, levies, license fees, permit fees, inspection fees and other authorization fees and other charges, in each case whether general or special, ordinary or extraordinary, or foreseen or unforeseen, of every character (including all interest, additions to tax and penalties thereon), that may be assessed, levied, confirmed or imposed on or in respect of or be a lien upon (1) the Trust Estate (including without limitation the Leased Land) or any part thereof or any rent therefrom or any estate, right or interest therein, or (2) any acquisition, occupancy, use, leasing, or possession of or activity conducted on the real property or any part thereof included in the Trust Estate or any gross receipts thereof or of the rent therefrom (all of the foregoing being referred to collectively as "Impositions"). Notwithstanding the foregoing or any other provision of this Mortgage, the Mortgagor shall not be required to pay any income, profits or revenue tax upon the income of the Mortgagee, the Trustee or any Noteholder nor any franchise, excise, corporate, estate, inheritance, succession, capital levy or transfer tax of the Mortgagee, the Trustee or the Noteholder nor any interest, additions to tax or penalties in respect thereof, unless such tax is imposed, levied or assessed in substitution for any Impositions that the Mortgagor is required to pay pursuant to this Section 5.08. The Mortgagor will deliver to the Mortgagee official receipts or other proof evidencing payments of any Impositions in accordance with the requirements of this Section 5.08. The Mortgagor shall 40 not be entitled to any credit for taxes or assessments paid against the Note; (b) except for such property which the Mortgagor may dispose of or replace pursuant to Section 2.02, maintain and keep all its properties used or useful in the conduct of its business (other than obsolete equipment), including, without limitation, the Casino-Hotel and all Tangible Personal Property, in such good repair, working order and condition, except for reasonable wear and use, and make or cause to be made all such needful and proper repairs, renewals and replacements thereto consistent with the standards of other casino-hotels in Atlantic City, New Jersey; (c) occupy and continuously operate the Casino-Hotel and keep the Casino-Hotel supplied with Tangible Personal Property, all in a manner consistent with the standards of other casino-hotels in Atlantic City, New Jersey (provided that nothing contained in this Section 5.08(c) shall be deemed to reduce the time period set forth in Section 3.01(f)); (d) subject to the provisions of Section 5.09 relating to contests, the Mortgagor at its sole expense will timely (1) comply with all Legal Requirements and Insurance Requirements, whether or not compliance therewith shall require structural changes in the buildings and improvements included in the Trust Estate or interfere with the use and enjoyment of the Trust Estate or any part thereof, (2) procure, maintain and comply with all permits and other authorizations required for (i) the use of the Casino as a gaming and gambling facility, (ii) the on-premises consumption of alcoholic beverages at the Casino-Hotel and (iii) any other use of the Trust Estate or any part thereof then being made, and for the proper erection, installation, operation and maintenance of the improvements or any part thereof, and (3) comply with any instruments of record at the time in force affecting the Trust Estate or any part thereof, if the failure to comply with the same would impair the Mortgagee's security hereunder. Without limiting the generality of the foregoing, the Mortgagor represents and warrants that at the time of the execution of this Mortgage, the Mortgagor is in compliance with the requirements of clauses (1), (2) and (3); (e) in the event of the passage after the date of this Mortgage of any law of the State of New Jersey, or any other governmental entity, changing in any way the laws now in force for the taxation of mortgages, or debts secured thereby, for state or local purposes, or the manner of the operation of any such taxes, so as to affect the interest of the Mortgagee, then and in such 41 event, the Mortgagor shall bear and pay the full amount of such taxes, provided that if for any reason payment by the Mortgagor of any such new or additional taxes would be unlawful or if the payment thereof would constitute usury or render the indebtedness secured hereby wholly or partially usurious under any of the terms or provisions of the Note, or this Mortgage, or otherwise, the Mortgagee may, at the Mortgagee's option, declare the whole sum secured by this Mortgage, with interest thereon, to be due and payable 90 days after notice of election thereof has been given by the Mortgagee, or the Mortgagee may, at the Mortgagee's option, pay that amount or portion of such taxes as renders the loan or indebtedness secured hereby unlawful or usurious, in which event the Mortgagor shall concurrently therewith pay the remaining lawful and nonusurious portion or balance of such taxes. Section 5.09. PERMITTED CONTESTS. The Mortgagor may, at its sole expense, contest by appropriate legal proceedings conducted in good faith and with due diligence, the amount or validity or application, in whole or in part of any Imposition or lien therefor or any Legal Requirement or Insurance Requirement or the application of any instrument of record affecting the Trust Estate or any part thereof or any claims of mechanics, materialmen, suppliers, or vendors or lien therefore, and may withhold payment of the same pending such proceedings if permitted by law, or make payment under protest, or defer compliance with any such Legal Requirement, any such Insurance Requirement or the terms of any such instrument, and the same shall not be a Default hereunder, provided that (a) in the case of any Impositions or lien therefor or any claims of mechanics, materialmen, suppliers or vendors or lien therefor, such proceedings shall suspend the collection thereof from each of the Mortgagor, the Mortgagee, the Trustee, the Noteholder and the Trust Estate, (b) neither the Trust Estate nor any interest therein would be in any danger of being sold, forfeited, or lost, (c) such action would not result in or constitute a default under any Ground Lease or Superior Mortgage, (d) in the case of a Legal Requirement, neither the Noteholder nor the Mortgagee shall be in any danger of any civil or any criminal liability, and the failure of the Mortgagor to comply with such Legal Requirement shall not affect the continuance in good standing of any Permit or result in the suspension, termination, non-renewal or material adverse modification of any permit, and (e) in the case of an Insurance Requirement, the failure of the Mortgagor to comply therewith shall not affect the validity of any insurance required to be maintained by the Mortgagor hereunder. Section 5.10. MECHANICS' AND OTHER LIENS. Without limiting the generality of the first sentence of Section 5.03 and notwithstanding the provisions of Section 5.03(a)(ii), the 42 Mortgagor will cause to be removed, either by payment, or bonding or otherwise, all claims and demands of mechanics, materialmen, laborers, and others which, if unpaid, might result in, or permit the creation of, a lien on the Premises and/or Trust Estate or any part thereof, or on the revenues, rents, issues, income and profits arising therefrom and in general will do or cause to be done everything necessary so that the lien hereof shall be fully preserved, at the cost of the Mortgagor, without expense to the Mortgagee. Section 5.11. INSURANCE. (a) The Mortgagor will, at its expense, maintain with Insurers: (1) insurance with respect to the Mortgagor's insurable properties constituting a part of the Trust Estate against loss or damage by fire, lightning, and other risks from time to time included under "all-risk" policies and against loss or damage by sprinkler leakage, water damage, collapse, malicious mischief and explosion in respect of any steam and pressure boiler and similar apparatus located on such insurable properties, in amounts at all times sufficient to prevent the Mortgagor from becoming a coinsurer within the terms of the applicable policies, but in any event such insurance shall be maintained in such insurable amounts not less than the greatest of the following (hereinafter referred to as the "Insurance Amount"): (i) 100% of the then full insurable value of such insurable properties, the term "full insurable value" to mean the actual replacement cost (excluding the costs of foundation, footing, excavation, paving, landscaping and other similar, non-insurable improvements) determined from time to time (but not less frequently than once in any 36 calendar months), by an Architect, contractor, appraiser, or an Insurer, (ii) the amount required to be maintained pursuant to the Superior Instrument Requirements; (2) war risk insurance as and when such insurance is obtainable from the United States of America or any agency thereof as promptly as reasonably practicable after the same becomes so obtainable, in an amount not less than the Insurance Amount, or in such lesser amount as may then be so obtainable; (3) public liability, including personal injury and property damage and comprehensive general liability connected with the possession, use, leasing, operation or condition of such insurable properties in such amounts as, in the Mortgagor's judgment, are prudent, considering the cost of such insurance, for personal injury and 43 property damage with respect to any one occurrence, which may be under an umbrella policy. Anything contained in this clause (3) to the contrary notwithstanding, the Superior Instrument Requirements with respect to the kinds and amount of insurance described in this clause (3) shall be satisfied by the Mortgagor; (4) appropriate workers' compensation insurance with respect to any work (to the extent the risks to be covered thereby are not already covered by other policies of insurance maintained by the Mortgagor) on or about such insurable properties; (5) business interruption insurance covering not less than 12 months of loss, provided that, at any time that the Mortgagor is renewing any policy for such insurance or taking out any new or replacement such policy covering a period of less than 12 months, the Mortgagor shall deliver to the Mortgagee an Officers' Certificate certifying that the period of coverage to be maintained by the Mortgagor under such policy is the maximum that can be maintained at rates determined by the Mortgagor to be reasonable for such coverage; (6) to the extent available, flood insurance in an amount not less than the Insurance Amount, or such lesser amount as may then be so obtainable; and (7) such other insurance with respect to such insurable properties against loss or damage of the kinds (i) from time to time customarily insured against by persons owning or using casino-hotels of comparable size in the boardwalk area of Atlantic City, New Jersey and (ii) required to be maintained pursuant to the Superior Instrument Requirements. Notwithstanding the foregoing, to the extent permitted by Superior Instrument Requirements, (i) the Mortgagor shall be permitted to maintain a deductible with respect to the insurance policies described in clauses (1), (2), (6) and (7) in an amount not to exceed (x) for the twelve month period commencing the date hereof, $100,000 with respect to the insurance policies described in clause (1), (2), (6) and (7) thereafter, the customary deductible (if any) with respect to the insurance maintained by casino-hotels of a similar size and value in Atlantic City, New Jersey (but in no event more than $1,000,000), (ii) the Mortgagor shall be permitted to maintain a $200,000 self insured retention under the general liability policy described in clause (3) and a deductible with respect to the other insurance policies described in clause (3) in an amount not to exceed the amount of deductible as is customarily maintained by casino-hotels of similar size in Atlantic City, New Jersey, (iii) the Mortgagor shall not reduce its insurance coverage for the matters described in clause (3) (which for purposes of 44 this paragraph means a reduction in single limits or an increase in deductible) unless and until the Mortgagor delivers to the Mortgagee an Officers' Certificate certifying (w) that the coverage the Mortgagor was theretofore maintaining cannot be maintained at rates determined by the Mortgagor to be reasonable for such coverage, (x) the amount of the proposed reduction, (y) the premium for the existing and the proposed reduced coverage, and (z) that the proposed deductible satisfied the criteria set forth in this clause (iii), and (iv) the Mortgagor shall be permitted to maintain a deductible with respect to the insurance policies described in clause (5) in the forms of and in an amount not to exceed the amount of deductible as is customarily maintained by casino-hotels of similar size in Atlantic City, New Jersey. (b) Each policy of insurance maintained by the Mortgagor pursuant to Subsection (a) of this Section 5.11 shall, (1) except in the case of workers' compensation insurance, name as additional insureds the Mortgagee and, to the extent required by the Superior Instrument Requirements, the Lessors and the holders of the Superior Mortgages, (2) provide that all insurance proceeds for losses, except in the case of public liability insurance and workers' compensation insurance or as otherwise provided in Subsections (d), (e) and (f) of this Section 5.11, be payable solely to the Mortgagee or such other party as is required to receive such proceeds under a Superior Mortgage, (3) except in the case of workers' compensation, include effective waivers (whether under the terms of any such policy or otherwise) by the insurer of all claims for insurance premiums against all lost payees and named insureds (other than the Mortgagor) and all rights of subrogation against any named insured, (4) except in the case of public liability and workers' compensation insurance, provide that any losses shall be payable notwithstanding (i) any act, failure to act, negligence of, or violation or breach of warranties, declarations or conditions contained in such policy by the Mortgagor or the Mortgagee or any other named insured or loss payee (including, without limitation, with respect to the Released Fee Land, the holders of any After-Acquired Fee Mortgages), (ii) the occupation or use of the insurable properties for purposes more hazardous than permitted by the terms of the policy, (iii) any foreclosure or other proceeding or notice of sale relating to the insurable properties or (iv) any change in the title to or ownership or possession of the insurable properties, (5) contain a non-contributory mortgagee clause in favor of the Mortgagee, and (6) provide that if all or any part of such policy is cancelled, terminated or expires, the insurer will forthwith give notice thereof to each named insured an loss payee and that no cancellation, reduction in amount or material change in coverage thereof shall be effective until at least 30 days after receipt by each named insured and loss payee of written notice thereof. 45 (c) The Mortgagor will deliver to the Mortgagee, (1) duplicate originals of all insurance policies that the Mortgagor is required to maintain pursuant to this Section 5.11 and (2) within 30 days after each reduction in insurance required to be maintained by the Mortgagor hereunder, an Officers' Certificate setting forth the particulars as to all such insurance policies and certifying that the same comply with the requirements of this Section 5.11, that all premiums or installments thereof then due thereon have been paid and that the same are in full force and effect. The Mortgagee shall not be responsible for effecting or renewing any insurance or for the responsibility or solvency of the insurers. (d) The Mortgagor shall give written notice to the Mortgagee immediately upon obtaining knowledge of any Casualty which (x) results in damage, loss or destruction in an amount in excess of $5,000,000 to any buildings or improvements on the Premises and/or any Tangible Personal Property or (y) pursuant to any Superior Instrument Requirement, would require the deposit of insurance proceeds with the Depositary, or action or proceeding with respect thereto. Whenever the Superior Instrument Requirements require or permit the selection of the Depositary by the Mortgagor, the Mortgagor shall select the Insurance Trustee as the Depositary. Within 30 days after any Casualty which results in any damage, loss or destruction in an amount in excess of $10,000,000 to any buildings or improvements of the Premises and/or any Tangible Personal Property, the Mortgagor shall deliver to the Mortgagee a certificate of an Architect stating whether, in such Architect's opinion, applicable Legal Requirements permit the Restoration of such buildings and improvements for the same uses and to the same size and quality in all material respects, as existed immediately prior to the Casualty (and if such certificate states the Legal Requirements do not permit such Restoration, such certificate shall describe the manner closest approximating such criteria to which the buildings and improvements could be so restored and shall be accompanied by a Certificate of Appraised Value dated not more than 10 days prior to delivery setting forth the Appraised Value immediately prior to the Casualty and the estimated Appraised Value immediately after the Restoration). If the Mortgagor is required to deliver such Certificates of Appraised Value and if based on such Certificates of Appraised Value immediately after Restoration, the aggregate Outstanding Amount of First Mortgage Debt immediately after such Restoration shall exceed the greater of (i) 66 2/3% of the Appraised Value immediately after such Restoration or (ii) the quotient of the Outstanding Amount of First Mortgage Debt immediately prior to such Casualty divided by the Appraised Value immediately prior to the Casualty multiplied by the Appraised Value immediately after such Restoration, then the proceeds of any insurance shall, at the election of Mortgagee, either be applied to Restoration as set forth in Subsections (e), (h) and (i) 46 below) or paid and delivered to the Mortgagee to the extent of the then Outstanding Amount of the Notes and any other interest or other sums due hereunder or thereunder to be applied to the satisfaction of the Mortgage to the extent proceeds are available for such purpose and provided that no additional sums are due to the Trustee or the Noteholders under the Notes or the Indenture, the balance of any net insurance proceeds shall be paid to the Mortgagor. Notwithstanding the foregoing sentence, if such Certificates of Appraised Values indicates that the Outstanding Amount of First Mortgage Debt immediately after such Restoration exceeds the greater of the two amounts determined pursuant to subclauses (i) and (ii) above, the proceeds of insurance will be made available for Restoration (subject to paragraphs, (e), (h) and (i) below) if the Mortgagor obtains an irrevocable commitment from a nationally recognized financial institution having a combined capital and surplus of at least $100,000,000, to supply, upon an acceleration under this Mortgage as a result of an Event of Default, funds to the Mortgagor as additions to capital in an amount equal to the Outstanding Amount of First Mortgage Debt in excess of the Appraised Value necessary to be paid down so that the Outstanding Amount of First Mortgage Debt will not exceed either of the two amounts determined pursuant to such clauses (i) and (ii), PROVIDED that such commitment may only be released if, upon an Appraisal at any time following completion of such Restoration, the aggregate Outstanding Amount of the First Mortgage Debt does not exceed 66-2/3% of the Appraised Value. (e) Subject to the provisions of Subsection (d) above, in case a Casualty occurs, the following shall apply: (1) if the cost of Restoration (as hereinafter defined) does not exceed the sum of $10,000,000, the net insurance proceeds shall be paid by the Mortgagee to the Mortgagor (unless the Superior Instrument Requirements provide that the same shall be paid to the Depositary); (2) if the cost of Restoration is $10,000,000 or more or if the Superior Instrument Requirements provide that the same shall be paid to the Depositary, the net insurance proceeds shall be paid by the Mortgagee to the Insurance Trustee (or other Depositary required by the Superior Instrument Requirements, provided that such Depositary holds such proceeds in trust for purposes of paying the costs of Restoration); (3) the Mortgagor shall commence with reasonable promptness under the circumstances and thereafter with due diligence proceed to perform and complete in a good and workmanlike manner the restoration, repair, replacement or rebuilding of the damage or destruction 47 resulting from the Casualty (all of which restoration, repair, replacement or rebuilding are referred to as the "Restoration") in accordance with the plans and specifications submitted to the Insurance Trustee, in conformance with all Legal Requirements and Superior Instrument Requirements, and in accordance with the further provisions of this Subsection (e), regardless of the extent of any such Casualty and whether or not net insurance proceeds, if any, shall be available or, if available, shall be sufficient, for the purpose of the Restoration (provided, however, that if the Mortgagor does not receive any net insurance proceeds within 30 days after any Casualty because the adjustment of the loss has not yet occurred, then the obligation of the Mortgagor to commence such Restoration shall be deferred until such proceeds are made available to the Mortgagor, provided that (i) Mortgagor delivers to the Mortgagee an Officers' Certificate certifying that the Mortgagor is diligently and continuously adjusting such loss with the Insurer, (ii) the Mortgagor delivers to the Mortgagee an Officers' Certificate within such 30-day period requesting the extension of such period, estimating the date on which such proceeds will be available and describing the Mortgagor's efforts to adjust such loss and certifying that such extension does not constitute a default or a breach of any of the provisions of any of the Ground Leases (or if so, such default or breach has been waived) and (iii) the Mortgagor delivers to the Mortgagee additional Officers' Certificates every 30 days thereafter updating the information contained in the certificate described in Clause (ii)). All Restoration work shall be performed in accordance with the applicable provisions of Section 5.12 and in conformance with all Superior Instrument Requirements, Legal Requirements and Insurance Requirements and, prior to commencing any Restoration, the Mortgagor shall obtain all Permits necessary in connection therewith, and shall obtain, and keep in full force and effect until the completion of such Restoration, such additional insurance as the Insurance Trustee and Superior Instrument Requirements may require. The plans and specifications for the Restoration shall be accompanied by a certificate of the Mortgagor and an Opinion of Counsel to the effect that upon the completion of the Restoration pursuant to the plans and specifications the Premises, and all buildings and improvements, thereon will comply with all superior Instrument Requirements, Legal Requirements and Insurance Requirements. Notwithstanding anything in this Section 5.11 to the contrary, if such Casualty is in an amount less than $5,000,000, the Mortgagor shall not be required to perform and complete such Restoration (unless the performance and completion of the Restoration is necessary in order for the Mortgagor to be in compliance with any term, provision or condition of this Mortgage 48 (other than this Section 5.11(e)) or any Superior Instrument Requirements; (4) Any insurance proceeds which the Mortgagor receives, shall be held by the Mortgagor in trust for the purpose of paying the cost of the Restoration, except as otherwise provided herein; (5) Any net insurance proceeds that the Insurance Trustee holds pursuant to this Subsection (e), shall be deposited in an interest-bearing investment reasonably designate by Mortgagor (to the extent the Mortgagor is permitted to designate such investment under the Superior Instrument Requirements) (and the interest thereon shall be added to such proceeds) and shall be paid by the Insurance Trustee in reimburse the Mortgagor for, or to make payment for, the Restoration, after the Insurance Trustee deducts therefrom the amount of any reasonable costs and expenses incurred in connection with the performance of its obligations under this Section 5.11. The Insurance Trustee shall make such payments not more frequently than once every 30 days upon the written request of the Mortgagor (unless more frequent payments are required by Superior Instrument Requirements), by paying to the Mortgagor or the persons named in the certificate described in Clause (6) of this Subsection (e) the respective amounts stated in such certificate from time to time as the Restoration progresses, provided the Mortgagor has complied with the requirements of this Subsection (e) and such payment is permitted by an applicable Superior Instrument Requirements. The Mortgagor's written request shall be accompanied by (i) the certificate described in Clause (6) of this Subsection (e) and (ii) a title company or official search, or other evidence reasonably acceptable to the Insurance Trustee, showing that there have not been filed with respect to the Premises, any vendor's, contractor's mechanic's, laborer's or materialman's statutory or similar lien which has not been discharged of record (or bonded against or secured by other security) or any other encumbrance irrespective of its priority (other than Permitted Encumbrances). (6) The certificate required by Clause (5) of this Subsection (e) shall (A) be an Officers' Certificate, countersigned by the Architect in charge of the Restoration with respect to the matters described in (i) and (v) below, (B) be dated not more than 10 days prior to such request and (C) set forth (in addition to any other requirements contained in any applicable Superior Instrument Requirements) that: (i) all of the Restoration work theretofore performed is in substantial compliance with the 49 plans and specifications theretofore submitted to the Insurance Trustee and in compliance with all Superior Instrument Requirements, Legal Requirements and Insurance Requirements; (ii) the sum then requested either has been paid by the Mortgagor or is justly due to contractors, subcontractors, materialmen, engineers, architects or other persons who have rendered services or furnished or contracted to deliver materials for the Restoration therein specified, and the names and addresses of such persons, a brief description of such services and materials and the several amounts so paid or due to each of such persons in respect thereof; (iii) no part of the amount requested has been or is the basis in any pervious or then pending request for the withdrawal of net insurance proceeds, and that the sum then requested does not exceed the value of the services and materials described in the certificate; (iv) except for the amount, if any, stated pursuant to Subclause (ii) of this Clause (6) in such certificate to be due for services or materials, and except for amounts in dispute and/or customary retainages, there is no outstanding indebtedness known to the person signing such certificate, after due inquiry, which is then due for labor, wages, materials, supplies or services in connection with such Restoration; and (v) the remaining cost, as estimated by the persons signing such certificate, of the Restoration in order to complete the same does not exceed the net insurance proceeds remaining in the hands of Insurance Trustee after payment of the sum requested in such certificate or if such estimated cost does exceed such insurance proceeds such certificate shall state the amount of any such deficiency. If the certificate states that such deficiency will exist, the Mortgagor shall deliver the amount of such deficiency in cash or cash equivalent to the Insurance Trustee simultaneously with the delivery of such certificate, which amount shall be deemed insurance proceeds for purposes of this Section 5.11(e); and (7) If net insurance proceeds shall be insufficient to pay the entire cost of the Restoration, then, after completion of the Restoration, the Mortgagor shall pay the deficiency. If all or any part of the net insurance proceeds are not used for the restoration in accordance 50 with this Subsection (e) (because such proceeds exceed the amount required to complete the Restoration), then upon completion of the Restoration in accordance with this Subsection (e), such amount not so used, if held by the Insurance Trustee, shall be paid to the Mortgagor (if permitted by Superior Instrument Requirements). (f) Provided that no Event of Default has occurred and is continuing, all net business interruption insurance proceeds shall be paid to the Mortgagor, to be segregated from the other funds of Mortgagor and held in trust by Mortgagor for the following purposes and in the following order of priority: (i) for the payment of Impositions and amounts due under the Ground Leases and Superior Mortgages; (ii) for debt service for the estimated period of Restoration (for purposes of this Section 5.11(f), interest and principal payments due on any payment date under the Note will deemed to accrue in equal daily installments beginning the day after the immediately preceding payment date and ending on such payment date); and (iii) for any expense incurred in connection with the operation or business of the Casino-Hotel. (g) The Mortgagor shall not take out separate insurance, concurrent in form or contributing in the event of loss with that required to be maintained pursuant to this Section 5.11, unless the same are permitted by Superior Instrument Requirements and the Mortgagee is included therein as a named insured, with loss payable to the Mortgagee and the Insurance Trustee pursuant to Section 5.11(b) hereof. The Mortgagor shall immediately notify the Mortgagee whenever any such separate insurance is taken out and shall promptly deliver to the Mortgagee a duplicate original of the policy of such insurance, a copy thereof certified by the insurer or a certificate thereof. (h) Subject to final adjustment by the insurer, insurance claims by reason of damage or destruction to any portion of the Trust Estate may be adjusted by the Mortgagor, but the Mortgagee shall have the right (but not the obligation) to join the Mortgagor in adjusting, and approving the adjustment of, any such loss except in the event of a loss where the amount of insurance reasonably anticipated to be received with respect to such loss is less than Five Million Dollars ($5,000,000), and the Mortgagor shall assist the Mortgagee in any such adjustment at the request of the Mortgagee. If the Mortgagee at its election as aforesaid joins the Mortgagor in any adjustment process, then the Mortgagee's approval of the adjustment shall not be unreasonably withheld; (i) Notwithstanding anything contained herein to the contrary, if an Event of Default shall have occurred and be continuing, the Mortgagee may, at its option, (A) refrain from paying to the Mortgagor or the Insurance Trustee any net insurance proceeds or (B) instruct the Insurance Trustee to 51 pay to the Mortgagee any insurance proceeds then held by the Insurance Trustee, as the case may be. Section 5.12. LIMITATIONS ON BUILDING DEMOLITION, ALTERATIONS, IMPROVEMENTS AND NEW CONSTRUCTION. The Mortgagor will not authorize, permit or make any demolition, alteration or improvement of any building included in the Trust Estate or any new construction on any part of the Trust Estate, except in conformity with and subject to the limitations hereinafter in this Section 5.12 set forth. Unless an Event of Default shall have occurred and be continuing, the Mortgagor shall have the right at all times to make or permit such alterations, improvements or new constructions, structural or otherwise (herein sometimes called collectively "alterations"), of or on the Trust Estate, to be made in all cases subject to the following conditions: (a) no alteration shall be undertaken or carried out except in conformity with all Superior Instrument Requirements, Legal Requirements and Insurance Requirements; (b) if the estimated cost of any alteration, together with other alterations that constitute a single construction plan or project (whether or not accomplished in several stages or procedures), exceeds $5,000,000, the building or buildings, as so improved or altered, upon completion of the work shall be of a value not less than the value of such building or buildings immediately prior to the making of such alterations; (c) any alteration which is structural in nature or involves an estimated cost of more than $5,000,000 shall be conducted under the supervision of an Architect, and no such alteration shall be undertaken until 10 days after there shall have been filed with the Mortgagee detailed plans and specifications and cost estimates therefor, stating that such plans and specification conform to all, prepared and approved in writing by such Architect and accompanied by a certificate of such Architect stating that such plans and specifications conform to all applicable provisions of this Section 5.12; (d) no alteration involving an estimated cost of more than $5,000,000 shall be undertaken until the Mortgagor has furnished to the Mortgagee, at the Mortgagor's sole cost and expense, a surety bond or bonds, covering performance, and labor and material payments with respect to the work to be so performed, naming the Mortgagee as obligee, issued by a responsible surety company, authorized to do business in the state of New Jersey, in a form generally and customarily used 52 by such surety in an amount equal to the estimated cost of construction of the work covered by the plans and specifications therefor, guaranteed and conditioned upon the performance and completion of such construction, substantially in conformity with the such plans and specifications and within a reasonable time, subject to delays by fire, strikes, lock-out, acts of God, inability to obtain labor or materials, governmental restrictions, enemy action, civil commotion or unavoidable Casualty or other similar causes beyond the control of the Mortgagor, free and clear of all liens, claims and liabilities for the cost of such alterations. In the event such surety bond or bonds shall be unobtainable the Mortgagor shall deliver to the Mortgagee security by cash, letter of credit or other guarantee, affording substantially the same protection as would such bond or bonds; (e) all work done in connection with any alterations shall be done promptly and in good and workmanlike manner. The work in connection with any alteration shall be prosecuted with reasonable dispatch, delays due to fire, strikes, lockouts, acts of God, inability to obtain labor or materials, governmental restrictions, enemy action, civil commotion or unavoidable casualty or similar causes beyond the control of the Mortgagor excepted; (f) if the estimated cost of alterations exceed $5,000,000, the Mortgagor shall have delivered to the Mortgagee (A) prior to the commencement of such alterations, additions or improvements copies of all Permits required for the commencement of such work together with a certificate of the Architect or an Opinion of Counsel to the effect that all Permits required for the commencement of such alterations have been obtained; and (B) within a reasonable period of time after the completion of the alterations, copies of all Permits required in connection with the completion thereof, together with either an Opinion of Counsel or a certificate of the Architect that all such Permits have been so obtained by the Mortgagor and that the Mortgagor has complied with all the requirements of this Section 5.12; (g) no alterations of any kind shall be made to any building which shall change the use or reduce the size or quality of the building in any material respect; and (h) no alterations costing in excess of $5,000,000, together with other alterations that constitute a single construction plan or project (whether or not accomplished in several stages or procedures), shall be made to any building if such alterations are not 53 expected to be completed at least 120 days prior to the maturity date of the Note (except if such alterations are required in order to comply with Legal Requirements or Superior Instrument Requirements). Section 5.13. LEASES. The Mortgagor shall not: (a) subject to the provisions of Section 5.13(d), enter into any Lease, or renew, modify, extend, terminate, or amend any Lease, except in the ordinary course of business of operating the Casino-Hotel; (b) receive or collect, or permit the receipt or collection of, any rental payments under any Lease more than one year in advance of the respective periods in respect of which they are to accrue, except that, in connection with the execution and delivery of any Lease or of any amendment to any Lease, rental payments thereunder may be collected and received in advance in an amount not in excess of three months' rent and/or a security deposit may be required thereunder in an amount not exceeding one year's rent; (c) collaterally assign, transfer or hypothecate (other than to the Mortgagee hereunder, to the mortgagee under the Guaranty Mortgage or to the holder of any Working Capital Facility Lien) any rental payment under any Lease whether then due or to accrue in the future, the interest of the Mortgagor as landlord under any Lease or the rents, issues or profits of the Trust Estate; (d) after the date hereof, enter into any Lease, or renew any Lease unless such Lease contains terms to the effect as follows: (1) the Lease and the rights of the tenants thereunder shall be subject and subordinate to the rights of the Mortgagee under this Mortgage, the mortgagee under the Guaranty Mortgage and the holders of any Superior Mortgage, (2) the Lease may be assigned by the landlord thereunder to the Mortgagee, (3) the rights and remedies of the tenant in respect of any obligations of the landlord thereunder shall be nonrecourse as to any assets of the landlord other than its equity in the building in which the leased premises are located or the proceeds thereof, (4) the rights of the tenant shall be subject and subordinate to the rights of the lessee 54 under any new lease entered into in the event of a termination of a Ground Lease; (e) modify any Lease with respect to the matters described in clauses (1) through (4) of paragraph (d). If the Mortgagor enters into a Lease (other than with any Affiliate of the Mortgagor) for a term of not less than 3 nor more than 10 years, the Mortgagee shall deliver a non-disturbance and attornment agreement substantially in the form of Schedule 4 hereto, following receipt of a certificate of a leasing broker (who is not an Affiliate of the Mortgagor or the broker involved in such transaction) experienced with respect to leases of commercial space in the Atlantic City area stating that the rent under the Lease is not less than fair market rent and that the other terms of the Lease are fair and reasonable in the commercial leasing market. The Mortgagor shall, upon demand, reimburse the Mortgagee for any costs and expenses (including reasonable attorney's fees) incurred by the Mortgagee in connection with the preparation, review and delivery of such non-disturbance and attornment agreements. Promptly after the execution and delivery hereof, the Mortgagor will cause the lessee under each Lease now in effect and promptly after each Lease is executed or becomes effective after the date of the execution and delivery hereof, the Mortgagor will cause the lessee under each such. Lease, to be duly notified in writing (unless the substance and effect of such notice shall be contained in such Lease) of the subjection of the owner's interest, as lessor, in and to such Lease to the lien of this Mortgage and of the name and address of the Mortgagee. Each such notice shall state that the lease of such lessee is a Lease as herein defined. If a new Mortgagee is at any time appointed hereunder or the address of the Mortgagee shall at any time be changed, the Mortgagor will cause each lessee under each Lease to be promptly notified in writing of the name address of such new Mortgagee or the new address of the Mortgagee. The Mortgagor will use reasonable efforts (but shall not be obligated to incur any expenditure other than de minimis amounts) to obtain from each lessee under each Lease to whom any notice is sent pursuant to this paragraph an acknowledgment of receipt of such notice, and the Mortgagor will promptly deliver to the Mortgagee, upon request, a copy of each such acknowledgment of receipt which it is able to obtain. The Mortgagee shall not be responsible for securing or causing the Mortgagor to secure any such acknowledgment. Nothing contained in this Section 5.13 shall limit the provisions of Section 4.04 hereof. Section 5.14. [Reserved] 55 Section 5.15. MAINTENANCE OF EXISTENCE OF THE MORTGAGOR. Subject to Article Four, the Mortgagor will do or cause to be done all things necessary to preserve and keep in full force and effect its existence as a corporation, and its rights (both statutory and under its articles of incorporation) and franchises. Section 5.16. TO KEEP BOOKS; INSPECTION BY MORTGAGEE. The Mortgagor will keep proper books of record and account in accordance with Section 12.05 of the Indenture. Section 5.17. ADVANCES BY MORTGAGEE. If the Mortgagor shall fail to perform any of its covenants in this Mortgage and such failure shall continue for 10 days following notice thereof given by the Mortgagee (or at any time, without notice, in case of emergency), the Mortgagee may (but is not obligated to), at any time and from time to time, take any action or make advances, to effect performance of any such covenant on behalf of the Mortgagor; and all moneys so used or advanced by the Mortgagee and all reasonable costs and expenses incurred by Mortgagee in connection therewith, together with interest on all of the same at the rate of interest set forth in the Note, shall be repaid by the Mortgagor upon demand and such advances shall be secured under this Mortgage prior to the Note. Section 5.18. WAIVER OF STAY, EXTENSION OR USURY LAWS. The Mortgagor covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any usury, stay or extension law or any other law which would prohibit or forgive the Mortgagor from paying all or any portion of the obligations evidenced by the Note as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may otherwise affect the covenants or the performance of this Mortgage; and the Mortgagor (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Mortgagee, but will suffer and permit the execution of every such power as though no such law had been enacted. Section 5.19. [Reserved] Section 5.20. EMINENT DOMAIN. (a) The Mortgagor shall give written notice to the Mortgagee immediately upon obtaining knowledge of any Taking affecting the Trust Estate. If the Taking (i) is estimated to result in an award of more than [$5,000,000] or (ii) the Taking would interfere with or adversely affect the operation of the Casino-Hotel in accordance with Legal Requirements then within 30 days after any such Taking, the Mortgagor shall 56 deliver to the Mortgagee a certificate of an Architect stating whether, in such Architect's opinion, applicable Legal Requirements permit the Restoration of any buildings and improvements for the same uses and the same size and quality in all material respects as existed immediately prior to the Taking (and if such certificate states that Legal Requirements do not permit such Restoration, such certificate shall describe the manner closest approximating such criteria to which the buildings and improvements could be so restored and shall be accompanied by a Certificate of Appraised Value dated not more than 10 days prior to delivery setting forth the Appraised Value immediately prior to the Taking and the estimated Appraised Value immediately after the permitted Restoration). If the Mortgagor is required to deliver such Certificates of Appraised Value and if based on such Certificates of Appraised Value immediately after Restoration, the aggregate Outstanding Amount of First Mortgage Debt immediately after such Restoration shall exceed the greater of (i) 66-2/3% of the Appraised Value immediately after such Restoration or (ii) the quotient of the Outstanding Amount of the First Mortgage Debt immediately prior to such Taking divided by the Appraised Value immediately prior to the Taking multiplied by the Appraised Value immediately after such Restoration, then the Taking shall be deemed a Taking of "the whole or substantially all of the Premises." Notwithstanding the foregoing sentence, if such Certificates of Appraised Value indicate that the Outstanding Amount of First Mortgage Debt immediately after such Restoration exceeds the greater of the two amounts determined pursuant to subclauses (i) and (ii) above, the Taking will not be deemed a Taking of "the whole or substantially all of the Premises", if the Mortgagor obtains an irrevocable commitment from a nationally recognized financial institution having a combined capital and surplus of at least [$100,000,000], to supply, upon an acceleration under this Mortgage as a result of an Event of Default, funds to the Mortgagor as additions to capital in an amount equal to the Outstanding Amount of First Mortgage Debt in excess of the Appraised Value necessary to be paid down so that the Outstanding Amount of First Mortgage Debt will not exceed either of the two amounts determined pursuant to such clauses (i) and (ii), PROVIDED that such commitment may only be released if, upon an Appraisal at any time following completion of such Restoration, the aggregate Outstanding Amount of the First Mortgage Debt does not exceed 66-2/3% of the Appraised Value. (b) If at any time there shall occur a Taking of less than the whole or substantially all of the Premises and the award or awards resulting therefrom payable to the Mortgagor (and not to any Lessor or the holder of any Superior Mortgage) (after there shall have been first deducted the fees and expenses incurred in connection with the termination, settlement and collection of such award or awards, including but not limited to reasonable counsel fees and expenses, 57 hereinafter referred to as "Settlement Costs") (i) shall not exceed the sum of [$10,000,000] (except to the extent that the Insurance trustee or a Depositary is required to hold such amount pursuant to a Superior Instrument Requirement), the entire amount of such award shall be paid to the Mortgagor; and (ii) if such award is [$10,000,000] or more, the entire amount of such award shall be paid to the Insurance Trustee (or other Depositary required by a Superior Mortgage, provided that such Depositary holds such award in trust for purposes of paying the cost of Restoration). In either event, such awards shall be applied to the cost of demolition, repair, Restoration and replacement of the Trust Estate to as nearly practicable to their uses, value and condition immediately prior to the Taking (except to the extent otherwise provided by Superior Instrument Requirements). The Mortgagor shall promptly commence and with due diligence perform that Restoration in accordance with clauses (3), (4) and (7) of Section 5.11(e) (after substituting the words "Taking" of "Casualty" and "award" for "not insurance proceeds"), at no cost to the Mortgagee. All claims or suits arising out of any Taking may be settled by the Mortgagor, except that the Mortgagee shall have the right (but not the obligation) to participate in such claim or suit, and not the obligation) to participate in such claim or suit, and to approve settlement thereof (and notwithstanding anything in the Ground Leases to the contrary, the Mortgagor shall not agree to any settlement or compromise of the amount of any such claim or suit), except a claim or suit where the amount reasonably anticipated to be received by the Mortgagor is less than $5,000,000. If the Mortgagee at its election as aforesaid joins such claim or suit, the Mortgagee's approval of such settlement shall not be unreasonably withheld. The Insurance Trustee shall promptly pay such sums as are received by it from such Taking from time to time in accordance with the procedures set forth in clauses (5) and (6) of Section 5.11(e) (after substituting the words "Taking" for "Casualty" and "award" for "net insurance proceeds"). (c) If at any time there shall occur a Taking of the whole or substantially all of the Premises, then the award payable to the Mortgagor shall not be applied to Restoration but shall instead be paid and delivered to the Trustee (subject to the rights of the Lessors under the Superior Leases and the holders of any Superior Mortgages) to the extent of the then Outstanding Amount of the Note and any other interest or other sums due hereunder or thereunder to be applied to the satisfaction of this Mortgage to the extent proceeds are available for such purpose and provided that no additional sums are due the Trustee or the Noteholder under the Note or the Indenture, the balance of any award shall be paid to the Mortgagor. (d) Notwithstanding anything contained herein to the contrary, if an Event of Default shall have occurred and 58 is continuing, the Mortgagee may, at its option, (A) refrain from paying to the Mortgagor or the Insurance Trustee any award or (B) instruct the Insurance Trustee to pay to the Mortgagee any award then held by the Insurance Trustee, as the case may be. Section 5.21. GROUND LEASES. (a) The Mortgagor covenants and agrees that it will do or cause to be done all things necessary to preserve and keep unimpaired the rights of the Mortgagor, as lessee under the Ground Lease, and to prevent any termination, surrender, cancellation, forfeiture or impairment thereof. The Mortgagor shall at all times fully perform and comply with all agreements, covenants, terms and conditions imposed upon or assumed by it as lessee under each of the Ground Leases (including without limitation the covenant to pay rent and all taxes, assessments and other charges mentioned therein) prior to the expiration of any notice and/or cure period provided in each such Ground Lease. Upon receipt by the Mortgagee from a Lessor of any written notice of default by the lessee thereunder, Mortgagee may rely thereon and take any action the Mortgagee deems necessary in its sole discretion to prevent or to cure any default by the Mortgagor in the performance of or compliance with any of the agreements, covenants, terms or conditions imposed upon or assumed by the Mortgagor as lessee under each of the Ground Leases, even though the existence of such default or the nature thereof be questioned or denied by the Mortgagor or by any party on behalf of the Mortgagor, provided that if the Mortgagor has theretofore delivered to the Mortgagee the Officers' Certificate, Opinion of Counsel and a copy of the injunction, all as described in Section 3.01(g), the Mortgagee shall not take any such action unless and until the Mortgagor and/or the Mortgagee no longer has the benefit of any tolling or stay referred to in Section 3.01(g). Without limiting the generality of Section 3.09 hereof, the Mortgagor hereby expressly grants to the Mortgagee, and agrees that the Mortgagee shall have, the absolute and immediate right to enter in and upon the Premises or any part thereof to such extent and as often as the Mortgagee, in its sole discretion, deems necessary or desirable for the purpose permitted by the immediately preceding sentence, subject only to applicable Legal Requirements. Subject to the preceding and without limiting the Mortgagee's other remedies under this Mortgage, the Mortgagee may pay and expend such sums of money as the Mortgagee in its sole discretion deems necessary for any such purpose, and the Mortgagor hereby agrees to pay to the Mortgagee, immediately and without demand, all such sums so paid and expended by the Mortgagee, together with interest thereon from the date of each such payment at the highest rate of interest set forth in the Note. All sums so paid and expended by the Mortgagee, and the interest thereon, shall be added to and be secured by the lien of this Mortgage. 59 (b) The Mortgagor further covenants and agrees: (i) it will not surrender any leasehold estate and interest hereinabove described, nor terminate or cancel any Ground Lease, and that it will not without the express written consent of the Mortgagee modify, change, supplement, alter or amend such Ground Leases either orally or in writing and, as further security for the repayment of the indebtedness secured hereby and for the performance of the covenants herein and in such Ground Leases contained, the Mortgagor hereby assigns to the Mortgagee all of its rights, privileges and prerogatives as lessee under such Ground Leases to terminate, cancel, modify, change, supplement, alter or amend such Ground Leases, and any such termination, cancellation, modification, change, supplement, alteration or amendment of such Ground Leases without the prior written consent thereto by Mortgagee shall be void and of no force and effect. Unless (1) an Event of Default has occurred and is continuing and (2) either (A) there has been an acceleration of maturity of the Note pursuant to Section 3.02 hereof or (B) the Mortgagee exercises its rights under Section 3.09 hereof, the Mortgagee shall have no right to terminate, cancel, modify, change, supplement, alter or amend the Ground Leases; (ii) solely for the benefit of the Mortgagee, Trustee, the Noteholders and no other person, no release or forbearance of any of the Mortgagor's obligations under such Ground Leases, pursuant to such Ground Leases or otherwise, shall release the Mortgagor from any of its obligations under this Mortgage, including its obligations with respect to the payment of rent as provided for in such Ground Leases and the performance of all of the terms, provisions, covenants, conditions and agreements contained in such Ground Leases, to be kept, performed and complied with by the lessee therein; (iii) unless the Mortgagee shall otherwise expressly consent in writing, the fee title to the Leased Land, the Mortgagor's interest in the improvements on the Leased Land and the leasehold estates shall not merge by and shall always remain separate and distinct, notwithstanding the union of such estates either in the Lessor or in the lessee, or in a third party by purchase or otherwise; (iv) the Mortgagor shall promptly notify the Mortgagee in writing of any request made by the Mortgagor, as lessee under each of the Ground Leases, or any of the Lessors, for arbitration proceedings pursuant to the Ground Leases and of the institution of any arbitration proceedings, as well as all proceedings thereunder. In addition, the Mortgagor shall promptly 60 deliver to the Mortgagee a copy of the determination of the arbitrators in each such arbitration proceeding. The Mortgagee shall have the right to participate in such arbitration proceedings in association with the Mortgagor or on its own behalf as an interested party in accordance with the terms of the Ground Leases; (v) the Mortgagor shall not consent to the subordination of any Ground Lease to any mortgage deed of trust or other lien of the fee interest of the Lessor; (vi) in the event (A) the Mortgagor exercises its option under any Ground Lease to purchase any portion of the Leased Land, the Mortgagor shall deliver a copy of its election to exercise such option within 5 days after the Mortgagor has delivered notice of such election to the Lessor or (B) the Mortgagor acquires fee simple title or any other estate, title or interest in the Leased Land, the Mortgagor shall promptly notify the Mortgagee of such acquisition and shall cause to be executed and recorded all such other and further assurances or other instruments in writing as may be required by law or, in the opinion of the Mortgagee, be reasonably desirable to carry out the intent and meaning of clause (x) of Granting Clause Second; (vii) within 5 days after the Mortgagor's receipt of any notice of any motion, application or effort to reject the Ground Lease by any Lessor or any trustee arising from or in connection with any case, proceeding or other action commenced or pending by or against any Lessor under the Code or any comparable provision contained in any present or future federal, state, local, foreign or other statute, law, rule or regulation, the Mortgagor shall give notice thereof to the Mortgagee. The Mortgagor hereby (A) assigns to the Mortgagee any and all of the Mortgagor's rights as lessee under Section 365(h) of the Code or any comparable provision contained in any present or future federal, state, local, foreign or other statute, law, rule or regulation ("Comparable Provision") and (B) covenants that it shall not elect to treat any Ground Lease as terminated pursuant to Section 365(h) of the Code or any Comparable Provision without the prior written consent of the Mortgagee and (C) agrees that any such election by the Mortgagor without such consent shall be null and void; (viii) without limiting the generality of the foregoing, the Mortgagor hereby unconditionally assigns, transfers and sets over to the Mortgagee all of the Mortgagor's claims and rights to the payment of damages arising from any rejection by Lessor of any Ground lease under the Code or any Comparable Provision. The Mortgagee shall have the right to proceed in its own name or in 61 the name of the Mortgagor in respect of any claim, suit, action or proceeding relating to the rejection of any Ground Lease, including, without limitation, the right to file and prosecute, in cooperation with the Mortgagor, any proofs of claim, complaints, motions, applications notices and other documents, in any case in respect of Lessor under the Code or any Comparable Provision. This assignment constitutes a present, irrevocable and unconditional assignment of the foregoing claims, rights and remedies, and shall continue in effect until all of the indebtedness and obligations secured by this Mortgage shall have been satisfied and discharged in full. Any amounts received by the Mortgagee in damages arising out of the rejection of any Ground Lease as aforesaid shall be applied first to all reasonable costs and expenses of the Mortgagee (including, without limitation, reasonable attorneys' fees) incurred in connection with the exercise of any of its rights or remedies under this Section 5.21, and thereafter as provided in Section 3.03 hereof; (ix) if there shall be filed by or against the Mortgagor a petition under the Code or any Comparable Provision and the Mortgagor, as lessee under the Ground Leases, shall determine to reject any or all of the Ground Leases the Mortgagor shall give the Mortgagee not less than 10 days' prior notice of the date on which the Mortgagor shall apply to the Bankruptcy Court or other judicial body with appropriate jurisdiction for authority to reject the lease. The Mortgagee shall have the right, but not the obligation, to serve upon the Mortgagor within such 10 day period a notice stating that (a) the Mortgagee demands that the Mortgagor assume and assign such Ground Lease(s) to the Mortgagee pursuant to Section 365 of the Code or any Comparable Provision and (b) the Mortgagee covenants to cure or provide adequate assurance of prompt cure of all defaults and provide adequate assurance of future performance under such Ground Lease(s). If the Mortgagee serves upon the Mortgagor the notice described in the preceding sentence, the Mortgagor shall not seek to reject such Ground Lease(s) and shall comply with the demand provided for in clause (a) of the preceding sentence within 30 days after the notice shall have been given subject to the performance by the Mortgagee of the covenant provided for in clause (b) of the preceding sentence. Effective upon the entry of an order for relief in respect of the Mortgagor under Chapter 7 of the Code or Any Comparable Provision the Mortgagor hereby assigns and transfers to the Mortgagee a non-exclusive right to apply to the Bankruptcy Court or other judicial body with appropriate jurisdiction for an order extending the period during which the Ground Lease may be rejected or assumed; 62 (x) the Mortgagor shall promptly give to the Mortgagee copies of (A) all notices of default or (B) any other communications or notices with respect to events which relate to the possible impairment of the security of this Mortgage, which it shall give or receive under the Ground Leases and shall promptly notify the Mortgagor of any default under any Ground lease on the part of the Lessor or the Mortgagor; (xi) the Mortgagor shall enforce the obligations of the Lessor under each Ground Lease, to the end that the Mortgagor may enjoy all of the rights granted to it under the Ground leases; and (xii) the Mortgagor shall notify the Mortgagee within 5 days after the transfer of a fee interest in the Leased Land or any portion thereof to or from an Affiliate. (c) The Mortgagor hereby represents and warrants that all fixed net rent, taxes and assessments, payable under the Ground Leases have been paid to the extent they were due and payable to the date hereof and that the Mortgagor has not received notice of its failure to pay any other amounts payable under the Ground Leases which have not been cured. (d) If both the Lessor's and lessee's estates under any of the Ground Leases or any portion thereof shall at any time become vested in one owner, this Mortgage and the lien created hereby shall nevertheless not be merged, extinguished, destroyed or terminated by application of the doctrine of merger and, in such event, Mortgagee shall continue to have all of the rights and privileges of the a leasehold mortgagee. (e) The Mortgagor hereby acknowledges that if any Ground Lease shall be terminated prior to the natural expiration of its term due to default by the lessee thereunder, and if pursuant to such Ground Lease, the Mortgagee or its designee shall acquire from the Lessor a new lease of the Leased land or any portion thereof, the Mortgagor shall have no right, title or interest in or to such lease or the leasehold estate created thereby, or the options therein contained. (f) Any leases for parking purposes hereafter entered into by the Mortgagor as lessee shall contain provisions permitting the assignment of the same to the Mortgagee and the Trustee and permitting assignment without the lessor's consent if this Mortgage is foreclosed. Section 5.22. SUPERIOR MORTGAGES. (a) The Mortgagor covenants and agrees that it will at all times fully perform and comply with all agreements, 63 covenants, terms and conditions imposed upon or assumed by it as mortgagor under the Superior Mortgages prior to the expiration of any notice and/or cure period provided in each such Superior Mortgage. If a notice of default has been given by the holder of any Superior Mortgage and the maturity of the indebtedness secured by such Superior Mortgage has been accelerated as a result thereof, the Mortgagee may rely thereon and take any action the Mortgagee deems necessary in its sole discretion to prevent or to cure any default by the Mortgagor in the performance of or compliance with any of the agreements, covenants, terms or conditions imposed upon or assumed by the Mortgagor as mortgagor under each of the Superior Mortgages even though the existence of such default or the nature thereof may be questioned or denied by the Mortgagor or by any party on behalf of the Mortgagor provided that if the Mortgagor has heretofore taken such actions as described in Section 3.01(h), the Mortgagee shall not take any such action unless and until the Mortgagor and/or the Mortgagee no longer has the benefit of any such tolling or stay referred to in Section 3.01(h). Without limiting the generality of Section 3.09 hereof, the Mortgagor hereby expressly grants to the Mortgagee, and agrees that upon such acceleration the Mortgagee shall have, the absolute and immediate right to enter in and upon the Premises or any part thereof to such extent and as often as the Mortgagee, in its sole discretion, deems necessary for the purpose permitted by the immediately preceding sentence, subject only to applicable Legal Requirements. The Mortgagee may (i) pay and expend such sums of money as the Mortgagee in its sole discretion deems necessary for any such purpose and (ii) in its sole discretion prepay any Superior Mortgage, and the Mortgagor hereby agrees to pay to the Mortgagee, immediately and without demand, all such sums referred to in (i) and (ii) above so paid and expended by the Mortgagee, together with interest thereon from the date of each such payment at the rate of interest set forth in the Note. All sums so paid and expended by the Mortgagee and the interest thereon shall be added to and be secured by the lien of this Mortgage. (b) The Mortgagor further covenants and agrees: (i) the Mortgagor shall not, without first obtaining the written consent of the Mortgagee in each instance: (A) modify any of the terms, covenants or conditions of any Superior Mortgage, and without limiting the foregoing, the Mortgagor shall not, without satisfying such conditions, enter into or obtain any agreement whereby the holder of any Superior Mortgage waives, postpones, extends, reduces or modifies the payment of the installment of principal or interest or any other item or amount now required to be paid under the terms of any Superior Mortgage or modifies any other provision thereof, or (B) acquire or permit or suffer any Affiliate of the Mortgagor to acquire any Superior 64 Mortgage or any interest therein. Notwithstanding anything in clause (A) to the contrary, the Mortgagor shall have the right to amend, supplement or modify any Superior Mortgage, if (x) the then outstanding principal balance of the indebtedness secured by such Superior Mortgage is not increased thereby, and (y) in the case of any After-Acquired Fee Mortgage, such amendment, supplement or agreement does not increase the property covered thereby; (ii) the Mortgagor shall timely pay and perform all of the obligations to be paid or performed by the mortgagor under each Superior Mortgage, the note secured thereby and any other instrument evidencing or securing the indebtedness owing to any holder of any Superior Mortgage; (iii) at any time, and from time to time, the Mortgagor shall upon request of the Mortgagee promptly use its reasonable efforts to obtain an estoppel certificate or letter addressed to the Mortgagee from holders of the Superior Mortgages, such certificate or letter to be in such form as the Mortgagee shall request; and (iv) the Mortgagor shall promptly give to the Mortgagee copies of (A) all notices of default or (B) any other notice or communication with respect to events which relate to the possible impairment of the security of this Mortgage, which it shall give or receive under the Superior Mortgages and shall promptly notify the Mortgagor of any default under any Superior Mortgages on the part of the Mortgagor. (c) The lien of this Mortgage in and to all or specified portions of the Trust Estate shall be subject and subordinate to any Existing Encumbrances, to the liens created by the Senior Mortgage Documents and any mortgage, assignment, security agreement, financing statement or other lien securing any Working Capital Facility (the "Working Capital Facility Lien") encumbering Mortgagor's interest in the affected portions of the Trust Estate or any part thereof. The foregoing provisions of this Section 5.22(c) shall be self-operative with respect to the liens created by the Senior Mortgage Documents and any Working Capital Facility Lien, and no further instrument shall be required to give effect to such subordination. Mortgagee shall, however, from time to time, execute instruments in form and substance reasonably satisfactory to the holder of the liens created by the Senior Mortgage Documents and the holder of the Working Capital Facility Lien, confirming such subordination and agreeing to such other matters reasonably required by the holders of such liens which do not, in the aggregate, 65 materially adversely reduce or impair the rights of Trustee under the Mortgage, and Mortgagor and others may rely conclusively thereon, provided that Mortgagee shall have no liability thereunder and all costs and expenses (including reasonable attorneys' fees) shall be paid by Mortgagor. (d) The lien of the Mortgage in and to all or specified portions of the Trust Estate shall be subject and subordinate to any Existing Encumbrances. The provisions of this Section 5.22(d) shall be self-operative, and no further instrument shall be required to give effect to such subordination. Section 5.23. MORTGAGE PARI PASSU WITH GUARANTY MORTGAGE. Notwithstanding recordation of this Mortgage in the Atlantic County, New Jersey Clerk's Office prior to the recordation of the Guaranty Mortgage, the lien of this Mortgage ranks PARI PASSU with, and not senior to, the lien created by the Guaranty Mortgage. ARTICLE SIX MISCELLANEOUS Section 6.01. COUNTERPARTS. This instrument may be executed in any number of counterparts, each of which as executed shall be deemed to be an original, but all such counterparts shall constitute one and the same instrument. Section 6.02. MODIFICATION. This Mortgage is subject to modification" within the meaning of N.J.S.A. 46:9-8.1 et seq., and this Mortgage shall have the benefit of the lien priority provisions of such statute. Such modification may include, without limitation, a change in the interest rate, maturity date or other terms and conditions of this Mortgage. THE MORTGAGOR DECLARES THAT THE MORTGAGOR HAS RECEIVED A TRUE COPY OF THIS MORTGAGE. IN WITNESS WHEREOF, the parties hereto have caused this Mortgage to be duly executed and attested, all as of the day and year first above written. RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation 66 ATTEST:______________________ By:_____________________________ Name: Name: Title: (Asst.) Secretary Title: (Vice) President RESORTS INTERNATIONAL HOTEL FINANCING, INC. ATTEST:______________________ By:_____________________________ Name: Name: Title: (Asst.) Secretary Title: (Vice) President 67 Exhibit E Assignment of Leases and Rents from Resorts International Hotel, Inc. to Resorts International Hotel Financing, Inc. NA932810100 - ASSIGNMENT OF RENTS (RIH JUNIOR PROMISSORY NOTE) GD&C DRAFT DATED 12/17/93 ============================================================================= ASSIGNMENT OF LEASES AND RENTS ________________ RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation, as Assignor, TO RESORTS INTERNATIONAL HOTEL FINANCING, INC., a Delaware corporation, as Assignee Dated as of _________________, 1994 ========================================================================== Prepared by:__________________________ D. Eric Remensperger, Esq. ASSIGNMENT OF LEASES AND RENTS THIS ASSIGNMENT made as of the ____ day of ____________, 1994, by RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation, having its principal office at c/o Resorts International, Inc., 1133 Boardwalk, Atlantic City, New Jersey ("ASSIGNOR") to RESORTS INTERNATIONAL HOTEL FINANCING, INC., a Delaware corporation, having its principal office at c/o Resorts International, Inc., 1133 Boardwalk, Atlantic City, New Jersey ("ASSIGNEE"). WITNESSETH: WHEREAS, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in order to secure: (i) the obligations of Assignor under a promissory note dated as of the date hereof made by Assignor to Assignee in the principal amount of $35,000,000 (as the same may be amended or restated from time to time, the "RIH JUNIOR PROMISSORY NOTE"), which note is secured by a Mortgage Securing RIH Junior Promissory Note dated as of the date hereof, between Assignor, as mortgagor, and Assignee, as mortgagee (the "MORTGAGE"; capitalized terms used and not otherwise defined herein shall have the meanings ascribed to those terms in the Mortgage); and (ii) the performance and observance of all of the provisions herein contained; NOW, THEREFORE, Assignor has and does hereby bargain, sell, transfer, assign, convey, set over and deliver unto Assignee, for the purposes set forth above (subject, however, to the rights of the holders of Superior Mortgages and other Existing Encumbrances), all leases or occupancy agreements wherein it is lessor concerning or affecting the use or occupancy of the certain real property owned or leased by Assignor, which real property is described on SCHEDULE 1 hereto and which real property, together with all buildings and improvements erected thereon, is hereinafter collectively referred to as the "PROPERTY", or any part thereof, now existing or which may be executed at any time in the future, and all amendments, extensions and renewals of such leases or occupancy agreements, and any of them, all of which are collectively referred to as the "LEASES", all rents and other income which may now or hereafter be or become due or owing under the Leases, and any of them, and any and all payments derived from or relating to the Leases to which Assignor is entitled, including but not limited to (a) claims for the recovery of damages done to the Property, (b) claims for damages resulting from acts of insolvency or acts of bankruptcy or otherwise, and (c) lump sum payments for the cancellation of Leases or the waiver of any obligation or term thereof prior to the expiration date; PROVIDED, HOWEVER, that no Excepted Property is conveyed hereby; it being intended hereby to establish a present and complete transfer unto Assignee of all of Assignor's right, title, interest and estate in and to the Leases and all the rents, payments and other income arising thereunder; PROVIDED, HOWEVER, that Assignor is hereby granted a license by Assignee to (i) collect all of such rents, payments and other income herein assigned which may become due during the life of this Assignment and (ii) enter into, renew, modify, extend, terminate, amend, collectively assign, transfer or hypothecate any or all of the Leases, in accordance with the provisions of Sections 4.04 and 5.13 of the Mortgage, each until an Event of Default under the Mortgage (an "EVENT OF DEFAULT") shall have occurred and be continuing. Upon the occurrence of an Event of Default, Assignor agrees to deposit with Assignee upon demand such of the Leases and the rents payable thereunder as may from time to time be designated by Assignee. Assignor hereby appoints Assignee the true and lawful attorney of Assignor with full power of substitution, and with power for Assignor and in the name of Assignor and/or in its name, place and stead, to demand, collect, receive and give receipts and complete acquittance for any and all other rents and other amounts herein assigned which may be or become due and payable under the Leases, and at its discretion to file any claim or take any other action or proceeding and make any settlement of any claims, either in its own name or in the name of Assignor or otherwise, which Assignee may deem necessary or desirable in order to collect and enforce the payment of any and all rents and other amounts herein assigned. No right shall be exercised by Assignee under this paragraph until an Event of Default has occurred. All lessees under the Leases are hereby expressly authorized and directed, after the occurrence, and during the continuance, of an Event of Default, to pay all rents and other sums herein assigned to Assignee or such nominee as Assignee may designate in writing delivered to and received by such lessees, who thereafter are expressly relieved of any and all duty, liability or obligation to Assignor in respect of all payments so made. Assignee is hereby vested with full power to use all measures, legal and equitable, deemed by it necessary or proper to enforce this Assignment and to collect the rents and other sums assigned hereunder. Assignee shall be under no obligation to exercise any of the rights or to press any of the claims assigned to it hereunder, or to perform or carry out any of the obligations of Assignor under any of the Leases, and does not assume any of the liabilities in connection with or arising or growing out of the covenants and agreements of Assignor in the Leases. It is further 2 understood that this Assignment shall not operate to place responsibility for the control, care, management or repair of Assignor's estates or interests in and to the Property, or parts thereof, upon Assignee, nor shall it operate to make Assignee liable for the carrying out of any of the terms and conditions of any of the Leases, or for any waste to Assignor's estates or interests in and to the Property by any lessee or sublessee of Assignor under any leases, or by any occupant of the Property, or by any party whatsoever or for any dangerous or defective condition of the Property or for any negligence in the management, upkeep, repair or control of Assignor's estates or interests in and to the Property resulting in loss or injury or death to any lessee, licensee, employee or stranger thereat. No right shall be exercised by Assignee under this paragraph until an Event of Default has occurred. Assignee hereby agrees promptly to remit to Assignor any amounts collected hereunder by Assignee which are in excess of those applied to pay in full the aforesaid liabilities and indebtedness at the time due. Nothing herein contained is intended to limit or reduce the rights of Assignee or the obligations of Assignor set forth in the Mortgage, but rather all of the terms, provisions and conditions of this Assignment are in addition to and in supplement of such rights and obligations. If any provision contained in this Assignment is in conflict with, or inconsistent with, any provision in the Mortgage, the provisions contained in the Mortgage shall govern and control. Upon the release of any portion of the Property from the lien of the Mortgage pursuant to Section 2.05 or 2.06 of the Mortgage, this Assignment shall be null and void with respect to those Leases (the "RELEASED LEASES") which cover exclusively the portion of the Property so released (and no other portion of the Property) and all estate, right, title and interest of Assignee in and to the Released Leases shall revert to Assignor, but in all other respects and for all other purposes, this Assignment shall remain in full force and effect. Assignee shall, from time to time, promptly execute any written instrument in form reasonably satisfactory to the proposed purchaser of a portion of the Property as aforesaid to confirm any reversion of Assignee's right, title and interest in the Released Leases effectuated in accordance with this paragraph, upon receipt by Assignee of an Officer's Certificate stating that Assignor is entitled to such reversion by virtue of the Mortgagor's compliance with the provisions of this paragraph and Section 2.05 or 2.06 of the Mortgage (as the case may be), provided that Assignee shall have no liability thereunder and all costs and expenses shall be paid by Assignor. 3 Assignee acknowledges that (i) contemporaneously with the execution and delivery of this Assignment, it has assigned this Assignment to U.S. Trust Company of California, N.A. ("Trustee"), as trustee under an Indenture of even date herewith among Assignor, Assignee and Trustee (the "Indenture"), and (ii) that the Trustee is also the assignee under an Assignment of Leases and Rents dated as of the date hereof from Assignor to Trustee securing the obligations of Assignor in respect of the Guaranty under and as defined in the Indenture (the "Other Assignment"), which assignment creates a lien on the Leases and rents and income due and owing thereunder PARI PASSU with the lien of this Assignment. Assignee further acknowledges and agrees that whenever it is provided in the Other Assignment that the Assignor shall deliver any notice or document, or is require to make any payment thereunder, the delivery of such notice or document or the making of such payment pursuant to the terms of such Other Assignment shall also constitute the delivery of such notice or document or the making of such payment in satisfaction of the terms, conditions and provisions of this Assignment to the same extent as the same constitutes satisfaction of the terms, conditions and provisions of the Other Assignment. Upon the termination of the Mortgage and the payment in full of the obligations secured thereby, this Assignment shall be and become null and void, and all estate, right, title and interest of Assignee in and to the Leases shall revert to Assignor and Assignee shall promptly cancel and discharge of record this Assignment and any financing statement filed in connection herewith and execute and deliver to Assignor all such instruments as may be appropriate to evidence such discharge and satisfaction of this Assignment (provided that Assignee shall have no liability hereunder or thereunder and all costs and expenses shall be paid by Assignor); otherwise, this Assignment shall remain in full force and effect as herein provided, shall inure to the benefit of Assignee and its successors and assigns, and shall be binding upon Assignor and its successors and assigns, and any subsequent holder of Assignor's right, title and interest and estate in and to the Property. This Assignment shall be governed by and construed under the internal laws of the State of New Jersey, without giving effect to the principles of conflicts of laws. This Assignment is subject to and shall be enforced in compliance with the provisions of the New Jersey Casino Control Act. This Assignment shall not be transferred, assigned or amended without the prior approval of the New Jersey Casino Control Commission. The rights and obligations of the Assignee hereunder are subject to the terms set forth in that certain Intercreditor Agreement dated as of the date hereof among 4 Assignor, Assignee, Fidelity Management and Trust Company, as trustee, Trustee and State Street Bank and Trust Company of Connecticut, National Association, as trustee (and such other parties that may from time to time become a party thereto). IN WITNESS WHEREOF, the parties hereto have caused this Assignment to be duly executed and attested, all as of the day and year first above written. RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation By:_____________________________ Name: Title: (Vice) President ATTEST:_________________________ Name: Title: (Asst.) Secretary RESORTS INTERNATIONAL HOTEL, FINANCING, INC., a Delaware corporation By:_____________________________ Name: Title: (Vice) President ATTEST:_________________________ Name: Title: (Asst.) Secretary 5 STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK) BE IT REMEMBERED that on ______________, 1994, before me, the subscriber, __________________, personally appeared _____________, who, being by me duly sworn on his oath, deposes and makes proof to my satisfaction, that he is the (Asst.) Secretary of RESORTS INTERNATIONAL HOTEL, INC., the corporation named in the within instrument; that ______________ is the (Vice) President of said corporation; that the execution, as well as the making of this instrument, has been duly authorized by a proper resolution of the board of directors of the said corporation; that deponent well knows the corporate seal of said corporation; and that the seal affixed to said instrument is the proper corporate seal and was thereto affixed and said instrument signed and delivered by said Vice President as and for the voluntary act and deed of said corporation. In presence of deponent who thereupon subscribed his name thereto as attesting witness; and deponent signed this proof to attest to the truth of these facts. _____________________________ [Name] Assistant Secretary Sworn to and subscribed before me, the date aforesaid ____________________________ Notary Public My commission expires:_____________________________ 6 STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK) BE IT REMEMBERED that on _________________, 1994, before me, the subscriber, __________________, personally appeared ___________________, who being by me duly sworn on his oath, deposes and makes proof to my satisfaction, that he is the Asst. Secretary of RESORTS INTERNATIONAL HOTEL FINANCING, INC., the corporation named in the within instrument; that ____________ is the Vice President of said corporation; that the execution, as well as the making of this instrument, has been duly authorized by a proper resolution of the board of directors of the said corporation; that deponent well knows the corporate seal of said corporation; and that the seal affixed to said instrument is the proper corporate seal and was thereto affixed and said instrument signed and delivered by said Vice President as and for the voluntary act and deed of said corporation. In presence of deponent who thereupon subscribed his name thereto as attesting witness; and deponent signed this proof to attest to the truth of these facts. __________________________ [Name] Secretary Sworn to and subscribed before me, the date aforesaid ____________________________ Notary Public My commission expires:_____________________________ 7 Exhibit F Mortgage securing Guaranty of Junior Mortgage Notes between Resorts International Hotel, Inc. and U.S. Trust Company of California, N.A. ------------------------------------ : NA932810097 - GUARANTY MORTGAGE : : JUNIOR NOTES : : GD&C DRAFT DATED 12/17/93 : ------------------------------------ MORTGAGE SECURING GUARANTY OF JUNIOR MORTGAGE NOTES by and between RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation, as Mortgagor, and U.S. Trust Company of California, N.A., a national banking association, as Mortgagee Dated as of ________ __, 1994 Prepared by:_______________________ D. Eric Remensperger After recording return to: Gibson, Dunn & Crutcher 200 Park Avenue New York, New York 10166 Attention: D. Eric Remensperger MORTGAGE SECURING GUARANTY OF JUNIOR MORTGAGE NOTES THIS MORTGAGE, dated as of ________ ___, 1994, between RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation ("Mortgagor"), and U.S. Trust Company of California, N.A., a national banking association having an address at 555 South Flower Street, Suite 2780, Los Angeles, California 90071 ("Mortgagee"), in its capacity as Trustee under that certain Indenture dated as of even date herewith (the "Indenture") among Mortgagor, Mortgagee and Resorts International Hotel Financing, Inc. ("RIHF"). WITNESSETH: In consideration of $10.00 in hand paid by Mortgagee to Mortgagor and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in order to secure (i) the Guaranty by Mortgagor of the payments of principal and interest due on the 11.375% Junior Mortgage Notes due 2004 in an aggregate principal amount of $35,000,000, issued pursuant to the provisions of the Indenture (defined therein, and hereinafter collectively referred to herein, as the "Notes"), in accordance with the terms and conditions of Article Fourth of the Indenture; and performance and observance of all of the provisions herein contained, Mortgagor has executed and delivered this Mortgage and has bargained, sold, aliened, mortgaged, pledged, released, conveyed and confirmed unto Mortgagee and its successors hereunder and assigns forever, all of its right, title and interest in, to and under any of the following described property: GRANTING CLAUSES GRANTING CLAUSE FIRST All the property, rights, title, interest, privileges and franchises particularly described in annexed Schedule 1 (the "Owned Land") which Schedule is hereby made a part of, and deemed to be described in, this Granting Clause as fully as if set forth in this Granting Clause at length. GRANTING CLAUSE SECOND All of the property, rights, title, interest, privileges and franchises of the Mortgagor as lessee in those certain leases (the "Ground Leases") particularly described in Schedule 2, which Schedule is hereby made a part of, and deemed to be described in, this Granting Clause as fully as if set forth in this Granting Clause at length, which Ground Leases cover the real property described in Schedule 2 (the "Leased Land") and in and to any and all modifications, extensions and renewals of the Ground Leases and all options set forth therein, together with (i) all credits, deposits, privileges and rights of the Mortgagor as lessee under the Ground Leases, now or at any time existing, (ii) the leaseholds and the leasehold estates created by the Ground Leases and (iii) all of the estates, rights, titles, claims or demands whatsoever of Mortgagor, either in law or in equity, in possession or in expectancy, of, in and to the Ground Leases and the Leased Land, together with (x) any and all other, further or additional title, estates, interests or rights which may at anytime be acquired by the Mortgagor in or to the Leased Land, and the Mortgagor expressly agrees that if the Mortgagor shall, at any time prior to payment in full of all indebtedness secured hereby, acquire fee simple title or any other greater estate to the Leased Land pursuant to the Ground Leases, or otherwise, the lien of this Mortgage shall attach, extend to, cover and be a lien upon such fee simple title or other greater estate and thereupon the lien of this Mortgage shall be prior to the lien of any mortgage or deed of trust placed on such acquired title, estate, interest or right subsequent to the date of this Mortgage (except as otherwise provided herein) and (y) any right to possession or statutory term of years derived from, or incident to, the Ground Leases pursuant to Section 365(h) of the U.S. Bankruptcy Code (the "Code") or any comparable provision contained in any present or future federal, state, local, foreign or other statute, law, rule or regulation. GRANTING CLAUSE THIRD All the rents, issues, profits, revenues and other income and proceeds of the property subjected or required to be subjected to the lien of this Mortgage, including, without limitation, the property described in Granting Clauses First, Second, and Sixth (such property is hereinafter collectively referred to as the "Premises") and all the estate, right, title and interest of every nature whatsoever of the Mortgagor in and to the same and every part thereof. The collective 2 metes and bounds description of the Owned Land and the Leased Land is set forth in annexed Schedule 3. GRANTING CLAUSE FOURTH All of the rights as lessor under Leases in effect on the date of execution of this Mortgage or hereafter entered into by the Mortgagor, if any, including extensions, renewals or amendments of all of the same, and the immediate and continuing right as security in accordance with an Assignment of Leases and Rents of even date herewith between Mortgagor and Mortgagee, and, after the occurrence of an Event of Default, to make claim for, collect, receive and receipt for (and to apply the same as provided herein) any and all rents, income, revenues, issues, profits, security and other sums of money payable or receivable thereunder or pursuant thereto, and all proceeds thereof, whether payable as rent, insurance proceeds, condemnation awards, security or otherwise and whether payable prior to or subsequent to the maturity date of the Notes, to receive and give notices and consents thereunder, to bring actions and proceedings thereunder or for the enforcement thereof, to make waivers and agreements, to take such action upon the happening of a default under any Lease, including the commencement, conduct and consummation of any proceedings at law or in equity as shall be permitted by any provision of any Lease, and to do any and all things which the Mortgagor or any lessor is or may become entitled to do under the Leases; provided, that the assignment made by this granting Clause Fourth shall not impair or diminish any obligation of the Mortgagor under the Leases, or shall any such obligation be imposed upon the Mortgagee. GRANTING CLAUSE FIFTH Without limiting the generality of the provisions of Granting Clause Third, the Mortgagor's rights, privileges and franchises in and to the following, to the extent of the Mortgagor's interest therein and thereto and to the extent assignable (collectively, "Operating Assets"): (a) bookings and receipts for the use of guest rooms, banquet facilities and meeting rooms at the Casino-Hotel; (b) all contracts respecting utility services for, and the maintenance, operations, or equipping of the Premises, including guaranties and warranties relating thereto; (c) the Permits; 3 (d) all contract rights, leases, concessions, trademarks, trade names, service marks, service names, logos, copyrights, warranties and other items of intangible personal property relating to the ownership or operation of the Casino-Hotel, including, without limitation, (1) telephone and other communication numbers, (2) all software licensing agreements as are required to operate computer software systems at the Casino-Hotel, all transferable proprietary interest in software required to operate the computer systems at the Casino Hotel and books and records relating to the software programs, and (3) lessee's interest under leases of Tangible Personal Property; (e) all agreements entered into by or on behalf of the Mortgagor or which have been assigned to the Mortgagor, for the design and construction, and for the equipping and furnishing, of the Casino-Hotel, including architect's agreements, engineering agreements, construction contracts, consulting agreements and agreements or purchase orders for all items of Tangible Personal Property and payment and performance bonds in favor of the Mortgagor in connection with the Trust Estate (and all warranties and guaranties thereunder and warranties and guaranties of any subcontractor and bond issued in connection with the work to be performed by any subcontractor); (f) the following personal property (the "Tangible Personal Property") now or hereafter acquired by the Mortgagor: (i) all furniture, furnishings, equipment, machinery, apparatus, appliances, fixtures and fittings and other articles of tangible personal property which are, or are to be located on, or used in connection with the operation of, the Casino-Hotel; (ii) all slot machines, electronic gaming devices, crap tables, blackjack tables, roulette tables, baccarat tables, and big six wheels, located or to be located in the Casino-Hotel, and all furnishings and equipment to be used in connection with the operation thereof; (iii) all cards, dice, gaming chips and placques, tokens, chip racks, dealing shoes, dice cups, dice sticks, layouts, paddles, roulette balls and other consumable supplies and items to be used 4 in connection with the gaming operations of the Casino-Hotel; (iv) all china, glassware, linens, kitchen utensils, silverware and uniforms, whether in use or held in reserve storage for future use, in connection with the operation of the Casino-Hotel, which are on hand or on order whether stored on-site or off-site; (v) all consumables and operating supplies of every kind and nature for use in all of the operating departments of the Casino-Hotel, or in the improvements now or hereafter located on any of the Owned Land, including without limitation, accounting supplies, guest supplies, forms, printing, stationery, food and beverage stock, bar supplies, laundry supplies and brochures to existing purchase orders; (vi) all sets and scenery, costumes, props and other items of tangible personal property on hand or on order for use in the production of shows in the showroom of the Casino-Hotel; and (vii) all cars, limousines, vans, buses, trucks and other vehicles owned or leased by the Mortgagor for use in Casino-Hotel operations, together with all equipment, parts and supplies used to service, repair, maintain and equip the foregoing; (g) all drawings, designs, plans and specifications prepared by the architects, interior designers, landscape designers and any other consultants for the development of the Premises, as amended from time to time; (h) any administrative and judicial proceedings initiated by the Mortgagor, or in which the Mortgagor has intervened, concerning the Casino-Hotel, and agreements, if any, which are the subject matter of such proceedings; (i) any customer lists utilized by the Mortgagor, including lists of transient guests and restaurant and bar patrons and "high roller" lists; and (j) all of the goodwill in connection with the operation of the Premises. 5 The Mortgagor and Mortgagee acknowledge that notwithstanding anything contained in this Mortgage to the contrary, the Mortgagor may share facilities, operations and employees with any other hotel owned by any Affiliate of the Mortgagor provided that (i) such sharing of facilities is permitted by all applicable Legal Requirements, (ii) terms on which such facilities are shared are not detrimental to the operations of the Casino-Hotel or the financial condition of the Mortgagor and (iii) the regular operation of the Casino-Hotel would not be materially impaired upon the separation of such facilities. The assignment made by this Granting Clause Fifth shall not impair or diminish any obligation of the Mortgagor with respect to the Operating Assets, nor shall any such obligation be imposed on the Mortgagee. GRANTING CLAUSE SIXTH (a) All of the Mortgagor's right, title and interest in and to all buildings and improvements of every kind and description now or hereafter erected or placed on the Owned Land and/or the Leased Land and all fixtures and articles of personal property now or hereafter attached to or contained in and used in connection with such buildings and improvements, including, but not limited to, all apparatus, furniture, furnishings, machinery, motors, elevators, fittings, radiators, cooking ranges, ice boxes, ice machines, printing presses, mirrors, bars, mechanical refrigerators, furnaces, coal and oil-burning apparatus, wall cabinets, machinery, generators, partitions, steam and hot water boilers, lighting and power plants, pipes, plumbing, radiators, sinks, bath tubs, water closets, gas and electrical fixtures, awnings, shades, screens, blinds, dishwashers, freezers, vacuum cleaning systems, office equipment and other furnishings, and all plumbing, heating, lighting, cooking, laundry, ventilating, incinerating, air-conditioning and sprinkler equipment or other fire prevention or extinguishing apparatus and material, and fixtures and appurtenances thereto; and all renewals or replacements thereof or articles in substitution therefor, whether or not the same are or shall be attached to the Owned Land, the Leased Land or to any such buildings and improvements thereon, in any manner; and 6 (b) All of the Mortgagor's right, title and interest in and to (i) the Leased Land, if the Mortgagor acquires the fee simple title to the Leased Land or any part thereof (subject to the provisions of Section 2.06 hereof), (ii) all air rights and rights to maintain supporting columns and all rights to construct and maintain bridges, and to create private rights of way over streets now or hereafter owned or enjoyed by the Mortgagor and appurtenant to the Owned Land or Leased Land, and (iii) all right, title and interest of Mortgagor as grantee or licensee in and to the following to the extent necessary for the use and enjoyment of the Owned Land or the Leased Land: (A) all those plots, pieces or parcels of land and air rights, more particularly described on Schedule 5, attached hereto and made a part hereof (the "Bridge Easement Parcels"), with respect to which Mortgagor has easements, licenses or other rights of possession or use pursuant to these certain easement and license agreements more particularly described on Schedule 5 (the "Bridge Easements"), (B) all those plots, pieces or parcels of land and air rights, more particularly described on Schedule 6 attached hereto and made a part hereof (the "Elevator Easement Parcels"), with respect to which Mortgagor has easements, licenses or other rights of possession or use pursuant to those certain license agreements more particularly described on Schedule 6 (the "Elevator Easements"), and; (C) all that plot, piece or parcel of land and air rights more particularly described on Schedule 7 attached hereto and made a part hereof (the "Turn-Around Easement Parcel") with respect to which Mortgagor has easements, licenses, or other rights of possession or use pursuant to that certain easement more particularly described on Schedule 7 (the "Turn-Around Easement"), (the Bridge Easement Parcels, the Elevator Easement Parcels and the Turn-Around Easement Parcel are collectively referred to herein as the "Easement Parcels"; and the Bridge Easements, the Elevator Easements and the Turn-Around Easement are collectively referred to as the "Easements"), together with all rights of way, privileges, liberties, tenements, hereditaments and appurtenances belonging or in any way appertaining to such estates, it being the intention hereof that all property, interests, rights and privileges and franchises pertaining to the Premises (other than Excepted Property) shall be as fully embraced within and subjected to the lien hereof as if such property were specifically described herein. To the extent the grant of a security interest in any portion of the Trust Estate is governed by the Uniform Commercial Code, this Mortgage is hereby deemed to be as well a security agreement under the Uniform Commercial Code for the purpose of creating hereby a security interest in all of the Mortgagor's right, title and interest in and to such property, securing the obligations secured hereby, for the benefit of the Mortgagee; * * * TOGETHER with all of the Mortgagor's right, title and interest in and to all mineral and water rights and any title or reversion, in and to the beds of the ways, streets, 7 avenues and alleys adjoining the Premises to the center line thereof and in and to all strips, gaps and gores adjoining the premises on all sides thereof; and TOGETHER with all of the Mortgagor's right, title and interest to and singular the tenements, hereditaments, easements, appurtenances, passages, water courses, riparian rights, other rights, liberties and privileges thereof or in any way appertaining to the Premises, including any other claim at law or in equity as well as any after-acquired title, franchise or license and the reversion and reversions and remainder and remainders thereof; and TOGETHER with all awards and other compensation heretofore or hereafter to be made to the present and all subsequent owners of the Trust Estate for any taking by eminent domain, either permanent or temporary, of all or any part of the Trust Estate or any easement or appurtenances thereof, including severance and consequential damage and change in grade of streets, all in accordance with and subject to the provisions of the Superior Instrument Requirements and Section 5.20; and TOGETHER with all proceeds of any unearned premiums on any insurance policies described in Section 5.11, and the right to receive and apply the proceeds of any insurance, judgments, or settlements made in lieu thereof, for damage to the Trust Estate or otherwise, all in accordance with and subject to the provisions of Section 5.11 and the Superior Instrument Requirements. EXCLUDING, with respect to all of the hereinabove granted property, rights, title, interest, privileges and franchises, the Excepted Property. TO HAVE AND TO HOLD all the Premises, Leases, Ground Leases, Operating Assets, Easements, properties, options, credits, deposits, rights, privileges and franchises of every kind and description, real, personal or mixed, granted hereby, bargained, sold, aliened, assigned, transferred, hypothecated, pledged, released, conveyed, mortgaged, or confirmed as aforesaid, or intended, agreed or covenanted so to be, together with all the appurtenances thereto appertaining (the Premises, Leases, Ground Leases, Operating Assets, Easements, properties, options, credits, deposits, rights, privileges and franchises, being herein collectively called the "Trust Estate") unto the Mortgagee and its successors and assigns forever. SUBJECT, HOWEVER, on the date hereof, to Existing Encumbrances and, after the date hereof, to Permitted Encumbrances. 8 SUBJECT, FURTHER, to the rights and obligations of the Mortgagee and the Noteholder as set forth in that certain Intercreditor Agreement dated as of the date hereof among RIH, RIHF, Mortgagee, Fidelity Management and Trust Company ("Fidelity"), as trustee under that certain note purchase agreement dated as of the date hereof among Fidelity, RIH and RIHF, and State Street Bank and Trust Company of Connecticut, National Association ("State Street"), as trustee under that certain indenture dated as of the date hereof among State Street, RIH and RIHF (and such other parties that may from time to time become a party thereto). BUT IN TRUST, NEVERTHELESS, for the Ratable Benefit and security of the Noteholders without any priority of any of the Notes over any other of the Notes. UPON CONDITION that, until the happening of an Event of Default and subject to the provisions of Article Two, the Mortgagor shall be permitted to possess and use the Trust Estate, and to receive and use the rents, issues, profits, revenues and other income of the Trust Estate. AND IT IS HEREBY COVENANTED AND DECLARED that the Trust Estate is to be held and applied by the Mortgagee, subject to the further covenants, conditions and trusts hereinafter set forth, and the Mortgagor does hereby covenant and agree to and with the Mortgagee, for the Ratable Benefit of the Noteholders as follows: ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION Section 1.01. DEFINITIONS. For all purposes of this Mortgage, except as otherwise expressly provided or unless the context otherwise requires: (a) the terms defined in this Article One have the meanings assigned to them in this Article One and include the plural as well as the singular; (b) all accounting terms not otherwise defined herein have the meanings assigned to them, and all computations herein provided for shall be made in accordance with generally accepted accounting principles consistently applied; and (c) the words "herein," "hereof" and "hereunder" and other words of similar import refer to this Mortgage 9 as a whole and not to any particular Article, Section or other subdivision. "AFFILIATE" has the meaning set forth in Section 1.01 of the Indenture. "AFTER-ACQUIRED FEE MORTGAGE" has the meaning set forth in Section 2.07. "ALTERATIONS" has the meaning set forth in Section 5.12. "APPRAISER" means an MAI appraiser (i.e., a Member in good standing of the American Institute of Real Estate Appraisers) who is (i) of recognized standing among appraisers of properties similar to the Casino-Hotel and (ii) experienced in the appraisals of properties of a similar size and scope to that of the Casino-Hotel, selected by the Mortgagor. "ASSIGNMENT OF LEASES AND RENTS" has the meaning stated in Section 1.01 of the Indenture. "CAPITALIZED LEASE OBLIGATION" has the meaning stated in Section 1.01 of the Indenture. "CASINO" means that portion of the Casino-Hotel used for gaming and related activities. "CASINO-HOTEL" means the casino and hotel complex and ancillary structures and facilities located on the Premises and furniture, fixtures and equipment at any time contained therein. "CASUALTY" means any act or occurrence of any kind or nature which results in damage, loss or destruction to any buildings or improvements on the Premises and/or Tangible Personal Property. "CODE" has the meaning stated in Granting Clause Second. "COMBINATION TRANSACTION" has the meaning stated in Section 10.01 of the Indenture. "DEFAULT" means the occurrence and continuance of an Event of Default or an event which, after notice or lapse of time or both, would become an Event of Default. "DEPOSITARY" means an Independent entity to which insurance proceeds or a condemnation award is paid to be held in trust for restoration pursuant to the provisions of a Ground Lease or Superior Mortgage. 10 "EVENT OF DEFAULT" has the meaning stated in Section 3.01. An Event of Default shall "exist" if an Event of Default shall have occurred and be continuing. "EXCEPTED PROPERTY" means: (1) subject to the provisions of the Assignment of Leases and Rents, any cash held by the Mortgagor from rents, issues, profits, revenues and other proceeds of the Trust Estate to the extent that such cash may be, but has not been, distributed or paid out in accordance with the Services Agreement or in accordance with the provisions of Section 12.07 of the Indenture; (2) all personal property owned by lessees under Leases and the personal property of any guests staying in the Hotel; (3) any property deemed to be Excepted Property pursuant to the provisions of Section 2.03 hereof; (4) Tangible Personal Property subject to an FF&E Financing Agreement; and (5) counterchecks and any other property the granting of a security interest in which is prohibited by the New Jersey Casino Control Act, N.J.S.A. 5:12-1 et seq., and the regulations promulgated thereunder. "EXISTING ENCUMBRANCES" means the matters set forth in Schedule 8. "FIRST MORTGAGE DEBT" means any financing secured by a Superior Mortgage secured by or imposing a lien on all or a portion of the Trust Estate on a parity with or senior to the lien of this Mortgage. "FF&E FINANCING AGREEMENT" means a purchase money lien upon any Tangible Personal Property and other items constituting Operating Assets, such as computer software, which are financed, purchased or leased by the Mortgagor, provided that, except as set forth on Schedule 3, the principal amount of the indebtedness secured by such lien shall not exceed eighty-five (85%) percent of the cost to the Mortgagor of such property at the time of acquisition. "GROUND LEASES" has the meaning stated in Granting Clause Second. "GUARANTY" has the meaning set forth in Article Fourteen of the Indenture. 11 "HOTEL" means that portion of the Casino-Hotel not included within the Casino. "IMPOSITIONS" has the meaning stated in Section 5.08. "INDENTURE" means that certain Indenture - 11.375% Junior Mortgage Notes due 2004, dated as of even date herewith among the Mortgagor, RIHF, as issuer, and Mortgagee, as trustee, as it may from time to time be supplemented, modified or amended by one or more trust indentures or other instruments supplemental thereto entered into pursuant to the applicable provisions thereof. "INDEPENDENT" when used with respect to any specified Person means such a Person who (a) is in fact independent, (b) does not have any direct financial interest or any material indirect financial interest in the Mortgagor or in any other obligor upon the Notes or in any Affiliate of the Mortgagor or of such other obligor and (c) is not connected with the Mortgagor or such other obligor or any Affiliate of the Mortgagor or such other obligor as an officer, employee, promoter, underwriter, trustee, partner, director or person performing similar functions. Whenever it is herein provided that any Independent Person's opinion or certificate shall be furnished to the Mortgagee, such opinion or certificate shall state that the signer has read this definition and that the signer is Independent within the meaning thereof. A Person who is performing or who has performed services as an independent contractor to any specified Person shall not be considered not Independent merely by reason of the fact that such Person is or has performed such services. "INSURANCE AMOUNT" has the meaning stated in Section 5.11(a)(1). "INSURANCE REQUIREMENTS" means all terms of any insurance policy covering or applicable to the Trust Estate or any part thereof, all requirements of the issuer of any such policy, and all orders, rules, regulations and other requirements of the National Board of Fire Underwriters (or any other body exercising similar functions) applicable to or affecting the Trust Estate or any part thereof or any use or condition of the Trust Estate or any other part thereof. "INSURANCE TRUSTEE" means the Trustee or, if the Trustee so elects, any bank, trust company or insurance company with net worth in excess of $100,000,000, designated by the Trustee. 12 "INSURER" means an insurance company or companies selected by the Mortgagor authorized to issue insurance in the State of New Jersey with an A.M. Best rating as high or higher than the rating of insurance companies insuring other casino-hotels in Atlantic City, New Jersey. "LEASE" means each lease or sublease demising all or any portion of the Owned Land, the Leased Land or the buildings or improvements thereon and made by the Mortgagor as lessor or sublessor, as the case may be, or any spaces in any building or buildings which constitute a part of the Trust Estate, including every agreement relating thereto or entered into in connection therewith and every guaranty of the performance and observance of the covenants, conditions and agreements to be performed by the lessee under any such lease. Notwithstanding the foregoing, the term "Lease" shall not include any transient room rentals. "LEASED LAND" has the meaning stated in Granting Clause Second. "LEGAL REQUIREMENTS" means all laws, statutes, codes, acts, ordinances, orders, judgments, decrees, injunctions, rules, regulations, permits, licenses, authorizations, directions and requirements (including, without limitation, the New Jersey Environment Cleanup Responsibility Act and the New Jersey Spill Compensation and Control Act of 1976) of all governments, departments, commissions, boards, courts, authorities, agencies, officials and officers, of governments, federal, state and municipal (including, without limitation, the New Jersey Department of Environmental Protection, the Atlantic City Bureau of Investigations, Division of Protection, the Atlantic City Bureau of Investigations, Division of Gaming Enforcement of the State of New Jersey, and the Casino Control Commission of the State of New Jersey), foreseen or unforeseen, ordinary or extraordinary, which now is or at any time hereafter becomes applicable to the Trust Estate or any part thereof, or any of the adjoining sidewalks, or the use of the Casino-Hotel as a gaming or gambling facility or any other use or condition of the Trust Estate or any part thereof. "LESSORS" means the lessors under the Ground Leases. "MATURITY" when used with respect to the Notes means the date on which the principal of such Notes becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration or prepayment or otherwise. 13 "MORTGAGE DOCUMENTS" has the meaning set forth in Section 1.01 of the Indenture. "MORTGAGOR" means the Person named as the "Mortgagor" in the first paragraph of this instrument until a successor entity shall have become such pursuant to the applicable provisions of this Mortgage, and thereafter, except to the extent otherwise contemplated by Section 4.02, "Mortgagor" shall mean such successor entity exclusively. "NOTEHOLDERS" has the meaning set forth in Section 1.01 of the Indenture. "NOTE MORTGAGE" means that certain Mortgage Securing RIH Junior Promissory Note dated as of the date hereof from Mortgagor to RIHF, which secures the RIH Junior Promissory Note (as defined in the Indenture), the lien of which shall be pari passu with the lien of this Mortgage. "NOTES" has the meaning set forth in the Preamble. "NOTICES" has the meaning stated in Section 1.02. "OFFICERS' CERTIFICATE" means a certificate signed by an officer of the Mortgagor and delivered to the Mortgagee. Whenever this Mortgage requires that an Officers' Certificate be signed also by an Architect or an Accountant or other expert, such Architect, Accountant or other expert may (except as otherwise expressly provided in this Mortgage) be in the general employ of the Mortgagor. "OPERATING ASSETS" has the meaning stated in Granting Clause Fifth. "OPINION OF COUNSEL" means a written opinion of counsel who may (except as otherwise expressly provided in this Mortgage) be an employee of the Mortgagor or an employee of an Affiliate of the Mortgagor. Unless otherwise specifically provided in this Mortgage, such counsel may rely, as to any state of facts not personally known to such counsel and relating to such opinions, on an Officers' Certificate to the extent not rejected by the Trustee and its counsel (which rejection shall not be unreasonably given). "ORIGINAL POLICY" means an ALTA Loan Policies of Title issued by [list title insurance companies], pursuant to Title Commitment No. ____________ redated to the date hereof. "OUTSTANDING AMOUNT" has the meaning stated in Section 1.01 of the Indenture. 14 "OWNED LAND" has the meaning stated in Granting Clause First. "PERMITS" means all licenses, franchises, statements of compliance, certificates of operation, certificates of occupancy and permits required for the lawful ownership, occupancy, operation and use of all or a material portion of the Premises whether held by the Mortgagor or any other Person (which may be temporary or permanent) (including, without limitation, those required for the use of the Casino-Hotel as a licensed casino facility), in accordance with all applicable Legal Requirements. "PERMITTED ENCUMBRANCES" means: (1) liens for taxes, assessments, or governmental charges not yet due and payable or if due and payable are not delinquent to the extent that any fine, penalty, interest or cost may be added for nonpayment thereof; (2) Existing Encumbrances; (3) FF&E Financing Agreements; (4) After-Acquired Fee Mortgages; (5) the lien of the Mortgage Documents and any rights granted as provided therein; (6) Restricted Encumbrances; (7) the lien of the Trustee provided for by Section 8.07 of the Indenture; (8) any Working Capital Facility Lien; (9) liens created by the Senior Mortgage Documents; and (10) Capitalized Lease Obligations. "PERSON" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or any other entity or government or any agency or political subdivision thereof. "PREMISES" has the meaning set forth in Granting Clause Third. "RATABLE BENEFIT" has the meaning stated in Section 1.01 of the Indenture. 15 "RELEASED LAND" has the meaning stated in Section 2.05. "RELEASED FEE LAND" has the meaning stated in Section 2.06. "RESTORATION" has the meaning stated in Section 5.11(e). "RESTRICTED ENCUMBRANCES" means Leases permitted by and made in accordance with Section 5.13 of this Mortgage. "RIHF" shall mean Resorts International Hotel Financing, Inc., a Delaware corporation. "SENIOR GUARANTY MORTGAGE" has the meaning stated in Section 1.01 of the Indenture. "SENIOR MORTGAGE" has the meaning stated in Section 1.01 of the Indenture. "SENIOR MORTGAGE DOCUMENTS" has the meaning stated in Section 1.01 of the Indenture. "SERVICES AGREEMENT" has the meaning set forth in Section 1.01 of the Indenture. "STATED MATURITY" when used with respect to a note means the date specified in such note as the fixed date on which the principal of such note is due and payable. "SUPERIOR INSTRUMENT REQUIREMENTS" means the applicable terms, conditions and provisions of (i) the Ground Leases with respect to the Leased Land; and (ii) Superior Mortgages with respect to the portion of the Trust Estate encumbered thereby. "SUPERIOR MORTGAGES" means, collectively, the Senior Mortgage, the Senior Guaranty Mortgage, any Working Capital Facility Lien and any After-Acquired Fee Mortgages. "TAKING" means the acquisition or condemnation by eminent domain of the whole or any part of the Premises, by a competent authority, for any public or quasi-public use or purpose. "TANGIBLE PERSONAL PROPERTY" has the meaning stated in Granting Clause Fifth. 16 "TRUSTEE" means the Person named as the "Trustee" in the first paragraph of the Indenture and any successor thereto. "TRUST ESTATE" has the meaning stated in the habendum to the Granting Clauses. "TRUST INDENTURE ACT" has the meaning stated in Section 1.01 of the Indenture. "WORKING CAPITAL FACILITY" has the meaning stated in Section 1.01 of the Indenture. "WORKING CAPITAL FACILITY LIEN" has the meaning stated in Section 5.22(c) of this Mortgage. Section 1.02. NOTICES, ETC. (a) Any request, demand, authorization, direction, notice (including, without limitation, a notice of default), consent, waiver or other document provided or permitted by this Mortgage to be made upon, given or furnished to, or filed with, the Mortgagor or the Mortgagee (collectively, "Notices") shall be deemed given when either (i) delivered by hand or (ii) two days after sending by registered or certified mail, postage prepaid, addressed as follows: To the Mortgagor: Resorts International Hotel, Inc. c/o Resorts International, Inc. 1133 Boardwalk Atlantic City, New Jersey 08401 Attention: Christopher D. Whitney If to Mortgagee: U.S. Trust Company of California, N.A. 555 South Flower Street, Suite 2780 Los Angeles, California 90071 Attention: Corporate Trust Department (b) By Notice to the Mortgagor, the Mortgagee and the Trustee, any party may designate additional or substitute address for Notices which, notwithstanding Subsection (a) above, shall be deemed given when received. Section 1.03. FORM AND CONTENT OF DOCUMENTS DELIVERED TO MORTGAGEE. Whenever 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 17 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 such matters in one or several documents. Any certificate or opinion of an Officer of the Mortgagor may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such Officer knows that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any 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 Mortgagor stating that the information with respect to such factual matters is in the possession of the Mortgagor, unless such counsel knows that the certificate or opinion or representations with respect to such matters are erroneous. If appropriate to the matter being opined upon and to the extent not prohibited by the Trust Indenture Act, any Opinion of Counsel may be subject to rights of creditors and the availability of equitable remedies. Whenever any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Mortgage, they may, but need not, be consolidated and form one instrument. Whenever in this Mortgage, in connection with any application or certificate or report to the Mortgagee, it is provided that the Mortgagor shall deliver any document as a condition of the granting of such application, or as evidence of the Mortgagor's compliance with any term hereof, it is intended that the truth and accuracy, at the time of the granting of such application or at the effective date of such certificate or report (as the case may be), of the facts and opinions stated in such document shall in such case be conditions precedent to the right of the Mortgagor to have such application granted or to the sufficiency of such certificate or report. Section 1.04. COMPLIANCE CERTIFICATES AND OPINIONS. Upon any application or request by the Mortgagor to the Mortgagee to take any action under any provision of this Mortgage, the Mortgagor shall furnish to the Mortgagee an Officers' Certificate stating that all conditions precedent, if any, provided for in this Mortgage 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 18 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 Mortgage 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 Mortgage shall include: (a) a statement that each individual signing such certificate or opinion has read such condition or covenant and the definitions herein relating thereto; (b) 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; (c) 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 condition or covenant has been complied with; and (d) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. Section 1.05. EFFECT OF HEADINGS. The Article and Section headings herein are for convenience only and shall not affect the construction hereof. Section 1.06. SUCCESSORS AND ASSIGNS; AMENDMENTS. (a) Subject to Section 4.02 hereof and Section 10.02 of the Indenture, this Mortgage shall be binding upon and inure to the benefit of the parties hereto and of the respective successors and assigns of the parties hereto to the same effect as if each such successor or assign were in each case named as a party to this Mortgage. (b) This Mortgage may not be modified, amended, discharged, released nor any of its provisions waived except by agreement in writing executed by the Mortgagor and the Mortgagee and in accordance with the provisions of this Mortgage and the Indenture. Section 1.07. SEPARABILITY CLAUSE. In case any provision in this Mortgage shall be invalid, illegal or unenforceable, the validity, legality and enforceability of 19 the remaining provisions shall not in any way be affected or impaired thereby. Section 1.08. BENEFITS OF MORTGAGE. Nothing in this Mortgage or in the Guaranty, express or implied, shall give to any Person, other than the parties hereto and their successors and assigns, any benefit or any legal or equitable right, remedy or claim under this Mortgage. Section 1.09. GOVERNING LAW. This Mortgage shall be deemed to be a contract under the laws of the State of New Jersey and shall be construed in accordance with and governed by the laws of the State of New Jersey. Section 1.10. [Reserved] Section 1.11. PROVISIONS REQUIRED BY INDENTURE. Whenever the provisions of this Mortgage and the provisions of the Indenture shall be inconsistent, the provisions of the Indenture shall govern. Section 1.12. RIGHTS OF THE TRUSTEE. So long as the Trustee is the Mortgagee hereunder, except as otherwise provided in Section 8.01 of the Indenture: (a) the Mortgagee 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, coupon or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) whenever in the administration of this Mortgage the Mortgagee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Mortgagee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate; (c) the Mortgagee 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 the Mortgagee hereunder in good faith and in reliance thereon; 2 (d) the Mortgagee shall be under no obligation to exercise any of the rights or powers vested in it by this Mortgage at the request or direction of any Noteholder pursuant to the Indenture, unless such holder shall have offered to the Mortgagee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (e) the Mortgagee 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, or other paper or document but the Mortgagee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Mortgagee shall determine to make such further inquiry or investigation, it shall be entitled (subject to the express limitations with respect thereto contained in this Mortgage) to examine the books, records and premises of the Mortgagor, personally or by agent or attorney; (f) the Mortgagee may execute any of the trusts or power hereunder or perform any duties hereunder either directly or by or through agents or attorneys, and the Mortgagee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder; (g) the Mortgagee shall not be personally liable, in case of entry by it upon the Trust Estate, for debts contracted or liabilities or damages incurred in the management or operation of the Trust Estate; and (h) no provision of this Mortgage shall require the Mortgagee to expend or risk its own funds or otherwise incur any financial liability in the performance of its obligations hereunder, or in the exercise 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. 2 Section 1.13. MORTGAGE SUBJECT TO THE PROVISIONS OF THE ACT. Each provision of this Mortgage is subject to and shall be enforced in compliance with the provisions of the New Jersey Casino Control Act. This Mortgage shall not be transferred, assigned or amended without the prior approval of the New Jersey Casino Control Commission. Section 1.14. DISCHARGE OF LIEN. If the Mortgagor shall pay or cause to be paid, or there shall otherwise be paid, to the Mortgagee all amounts required to be paid by the Mortgagor pursuant to the Guaranty, or the Note Mortgage and the Notes, and the conditions precedent for the Indenture to cease, determine and become null and void in accordance with Section 5.01 of the Indenture shall have occurred, the Mortgagee shall promptly cancel and discharge this Mortgage, and execute and deliver to the Mortgagor all such instruments as may be necessary, required or appropriate to evidence such discharge and satisfaction of such lien or liens. Section 1.15. GENERAL APPLICATION. (a) The assertion of any rights upon any Default shall be subject in each instance to the giving of any notice and the expiration of any grace period provided for in Section 3.01 as a condition to such Default making it an Event of Default, unless the Trust Indenture Act requires otherwise, in which case the Trust Indenture Act shall control. (b) For the purposes of this Mortgage, it is understood that an event which does not materially diminish the value of the Mortgagee's interest in the Trust Estate 22 shall not be deemed an "impairment of security", as that phrase is used in this Mortgage. ARTICLE TWO RELEASE; OTHER EXCEPTED PROPERTY; SUBORDINATION Section 2.01. POSSESSION BY MORTGAGOR; DISPOSITIONS WITHOUT RELEASE. So long as there shall have been no demand for payment under the Guaranty pursuant to Section 3.02 of this Mortgage, the Mortgagor shall be suffered and permitted, with power freely and without let or hindrance on the part of the Mortgagee, subject to the provisions of this Mortgage and the Note Mortgage, to possess, use, manage, operate and enjoy the Trust Estate and every part thereof and to collect, receive, use, invest and dispose of the rents, issues, tolls, profits, revenues and other income from the Trust Estate or any part hereof, to use, consume and dispose of any consumables, goods, wares and merchandise in the ordinary course of business of operating the Casino-Hotel and to adjust and settle all matters relating to choses in action, leases and contracts. Section 2.02. OBSOLETE PROPERTY; TANGIBLE PERSONAL PROPERTY; LEASE MODIFICATIONS. The Mortgagor shall have the right, at any time and from time to time, unless an Event of Default shall have occurred and be continuing, without any release from or consent by the Mortgagee: (a) to sell or dispose of, free from the lien of this Mortgage, any Tangible Personal Property which, in its reasonable opinion, may have become obsolete or unfit for use or which is no longer necessary in the conduct of its businesses or the operation of the Trust Estate, and no purchaser of any such property shall be bound to inquire into any question affecting the Mortgagor's right to sell or otherwise dispose of the same, free from the lien of this Mortgage; (b) to alter, repair, replace, change the location (provided notice shall be given to Mortgagee as to any new location) or position of and add to any Tangible Personal Property; provided, however, that no change shall be made in the location of any such property subject to the lien of this Mortgage which would in any respect impair the security of this Mortgage upon such property; or (c) to renew, extend, surrender, terminate, modify or amend any leases of Tangible Personal Property, when, 23 in the Mortgagor's reasonable opinion, it is prudent to do so. The Mortgagor shall retain any net cash proceeds (subject to the right to pay dividends or make cash distributions pursuant to Section 12.07 of the Indenture) received from the sale or disposition of any Tangible Personal Property under Subsection (a) of this Section 2.02, in the business of operating the Casino-Hotel. The Mortgagee shall be under no responsibility or duty with respect to the exercise of the rights of the Mortgagor under this Section 2.02 or the application of the proceeds of any sale or disposition of any Tangible Personal Property. The Mortgagee shall, from time to time, promptly execute any written instrument in form satisfactory to it to confirm the propriety of any action taken by the Mortgagor under this Section 2.02, provided that the conditions set forth in Section 2.02 of the Note Mortgage have been satisfied. Section 2.03. OTHER EXCEPTED PROPERTY. Notwithstanding any provisions contained in this Mortgage or the Indenture to the contrary, including, without limitation, the provisions of Granting Clauses Fifth and Sixth and of Articles Two and Five hereof, if the Mortgagor acquires Tangible Personal Property and other items constituting operating assets, such as computer software subject to any FF&E Financing Agreement, or becomes the lessee under a lease for any of the same and if the document evidencing such FF&E Financing Agreement prohibits subordinate liens or the provisions of any such lease prohibits any assignment thereof by the lessee, and if any such prohibition is customary with respect to similar transactions of the lender or lessor, as the case may be, then the property so purchased or the lessee's interest in the lease, as the case may be, shall be deemed to be Excepted Property. If any such FF&E Financing Agreement permits subordinate liens then the Mortgagee agrees to execute and deliver to the Mortgagor, at the Mortgagor's expense, such documents as the holder of such FF&E Financing Agreement may reasonably request to evidence the subordination of the lien of this Mortgage to the lien of such FF&E Financing Agreement. Section 2.04. [Reserved] Section 2.05. RELEASED LAND. (a) Notwithstanding anything to the contrary herein contained, the Mortgagor shall have the right, at any time and 24 from time to time, unless an Event of Default shall have occurred and be continuing, to convey all or any part of the Released Fee Land (the land to be so conveyed is hereinafter referred to as the "Released Land"), free from the lien of the Mortgage, provided that the conditions set forth in Section 2.05(a) of the Note Mortgage have been satisfied. (b) The Mortgagee shall, from time to time, promptly execute any written instrument in form reasonably satisfactory to the prospective purchaser to confirm the release of the Released Fee Land, upon receipt by the Mortgagee of an Officers' Certificate stating that the Mortgagor is entitled to such release by virtue of the Mortgagor's compliance with this Section 2.05 and, if applicable, Section 2.05 of the Note Mortgage, provided, that the Mortgagee shall have no liability thereunder and all costs and expenses (including reasonable attorneys' fees) shall be paid by the Mortgagor. Section 2.06. RELEASED FEE LAND. (a) Notwithstanding anything to the contrary herein contained, in the event the Mortgagor intends to exercise an option to acquire fee title to Leased Land under the provisions of any Ground Lease, the Mortgagor shall have the right, unless an Event of Default shall have occurred and be continuing, to have an Affiliate exercise such options(s) or for the Mortgagor to exercise such options(s) on behalf of an Affiliate and in connection therewith to cause fee simple title to the Leased Land or any part thereof to be conveyed to an Affiliate of the Mortgagor (provided that no portion of the purchase price of the Leased Land or part thereof is paid by Mortgagor), free from the lien of this Mortgage (the land to be so conveyed is hereinafter referred to as the "Released Fee Land"), provided that the Mortgagor furnishes the Mortgagee with the following: (i) an Officers' Certificate requesting the release of the Released Fee Land from the Trust Estate and stating that (A) the Mortgagor is not required to own the Released Fee Land in order to maintain all Permits and in order to comply with the provisions of all material contracts to which the Mortgagor is a party or by which the Mortgagor is bound, (B) such Affiliate has received all Permits necessary to own the Released Fee Land (including without limitation all approvals required by the Casino Control Commission of the State of New Jersey), (C) there has been delivered to the Mortgagor and the Mortgagee a true copy of an instrument executed by such Affiliate stating that (i) such Affiliate may only engage in the activity of owning the Released Fee Land and (ii) such Affiliate shall not convey the Released Fee Land to another Affiliate of the Mortgagor, 25 unless such other Affiliate executes and delivers to the Mortgagor and the Mortgagee, the instruments that would have been required to be delivered pursuant to clause (C) if the Mortgagor conveyed the Released Fee Land to such other Affiliate (provided that this restriction shall only be effective until such time as this Mortgage shall be satisfied of record) and (D) the deed conveying the Released Fee Land to such Affiliate shall state that such conveyance is made subject to the terms, provisions and conditions of the applicable Ground Lease and that the fee and leasehold interests in the Released Fee Land shall not merge by reason of the Mortgagor and/or any Affiliate owning both the leasehold and fee estate therein, and that such estates shall always remain separate and distinct; (ii) an Opinion of Counsel to the effect that (A) the Mortgagor is not required to own the Released Fee Land in order to maintain in good standing all Permits or by the provisions of any material contract to which the Mortgagor is a party or by which it is bound to own the Released Fee Land and (B) the instruments described in clause (C) of subparagraph (i) were duly executed by and are binding upon such Affiliate; and (iii) an endorsement to the Original Policy, confirming that no merger of the fee and leasehold estates in the Released Fee Land has resulted from such conveyance. In addition, simultaneously with such acquisition, the Affiliate and Mortgagor shall enter into an instrument in form and substance reasonably satisfactory to Mortgagee, amending the applicable Ground Lease to provide such mortgagee protections as are customary and to the extent reasonably required by Mortgagee, including, without limitation, (A) a covenant of the landlord not to terminate the Ground Lease for any reason whatsoever (including without limitation, due to any default by tenant of its obligations under such Ground Lease), and (B) an agreement by the landlord not to accept payment of any fixed or base rent from the tenant (and, if tendered by the Mortgagor, an agreement to return same to the Mortgagor) or any other charges payable thereunder at any time that an Event of Default shall have occurred and shall be continuing. (b) The Mortgagee shall, from time to time, promptly execute any written instrument in form reasonably satisfactory to the prospective purchaser to confirm the release of the Released Fee Land, upon receipt by the Mortgagee of an Officers' Certificate stating that the Mortgagor is entitled to such release by virtue of the 26 Mortgagor's compliance with this Section 2.06, PROVIDED that the Mortgagee shall have no liability thereunder and all costs and expenses (including reasonable attorneys' fees) shall be paid by the Mortgagor. Section 2.07. AFTER-ACQUIRED FEE MORTGAGES. (a) Notwithstanding anything contained herein to the contrary (i) if no Event of Default has occurred and is continuing and (ii) if the Mortgagor shall acquire Released Fee Land, then simultaneously with the acquisition thereof, the Mortgagor shall have the right to encumber such fee simple title with a mortgage (such mortgage and any refinancing thereof permitted by the Indenture is hereinafter referred to as an "After-Acquired Fee Mortgage"). The lien of this Mortgage on the Released Fee Land shall be subordinated to the lien of the After-Acquired Fee Mortgage on the Released Fee Land (and to the lien of other Superior Mortgages which shall become a lien thereon in accordance with the terms thereof), provided the following conditions are satisfied: (i) the After-Acquired Fee Mortgage encumbers the fee simple title to such real property and no other property; (ii) the indebtedness secured by the After-Acquired Fee Mortgage (A) does not exceed 75% of the cost to the Mortgagor of such fee simple title at the time of the acquisition and (B) satisfies the criteria set forth in Section 12.08 of the Indenture; (iii) in the event the After-Acquired Fee Mortgage encumbers fee simple title to the Leased Land or any part thereof, such After-Acquired Fee Mortgage contains provisions binding on the holder of the After-Acquired Fee Mortgage and its successors and assigns confirming the provisions of Section 5.21(d) of this Mortgage; (iv) the Released Fee Land is not being acquired from an Affiliate of the Mortgagor; (v) the After-Acquired Fee Mortgage and other loan documents shall contain a provision binding upon the holder of such After-Acquired Fee Mortgage and other loan documents that all insurance proceeds in the event of a Casualty and awards for Takings of less than the entire Released Fee Land shall be used for purposes of Restoration; and (vi) the Mortgagor delivers to the Mortgagee an Officers' Certificate requesting such subordination and 27 certifying that the requirements of (i) through (v) above have been satisfied. (b) Anything contained in this Section 2.07 or elsewhere in this Mortgage to the contrary notwithstanding, the subordination of this Mortgage to any After-Acquired Fee Mortgage constituting a lien on Released Fee Land shall not be self-operative but shall be effective only upon the execution and delivery by the Mortgagee of an instrument in writing effecting such subordination. The Mortgagee shall deliver such instrument of subordination on the following conditions: (x) the Mortgagee shall have received an Officers' Certificate confirming that the conditions of (i) through (vi) of paragraph (a) have been satisfied, together with a true and correct copy of the After-Acquired Fee Mortgage and all other instruments securing the indebtedness evidenced thereby and (y) the instrument of subordination shall specifically state that this Mortgage is being subordinated not with respect to the lien of this Mortgage on the Ground Lease or on the leasehold estate created thereby, but only with respect to the fee simple title to the Leased Land or applicable part thereof and only if and to the extent that the After-Acquired Fee Mortgage being subordinated to is subject and subordinate to the Ground Lease and the leasehold estate created thereby. ARTICLE THREE REMEDIES Section 3.01. EVENTS OF DEFAULT. "Event of Default," whenever used herein, means any one of following events (including any applicable notice requirement and any period of grace as specified in this Section 3.01) (whatever the reason for such event 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): (a) default by the Mortgagor under the Guaranty and continuance of such default for a period of 10 days after there has been given a written notice to the Mortgagor specifying such default and stating that such notice is a "Notice of Default" hereunder; or (b) an "Event of Default," as defined in Section 3.01 of the Note Mortgage, shall occur; or (c) default in the performance, or breach, of any of the provisions of Article Four and the continuance of such default or breach for a period of 60 days after there has been given a written notice to the Mortgagor 28 specifying that such notice is a "Notice of Default" hereunder; or (d) any representation or warranty of the Mortgagor set forth in this Mortgage shall prove to be incorrect as of the time when made and the facts constituting such incorrectness impairs the Mortgagee's security and such impairment continues for a period of 30 days, unless such impairment is curable, but not susceptible of cure within such 30-day period (for reasons other than lack of funds), provided that the conditions set forth in Section 3.01(l) of the Note Mortgage have been satisfied. Section 3.02. DEMAND UNDER THE GUARANTY. If an Event of Default occurs and is continuing, and the Mortgagee has declared the Outstanding Amount of the Note to be due and payable immediately pursuant to Section 3.02 of the Note Mortgage, then the Mortgagee may declare all obligations under the Guaranty to be due and payable immediately. Section 3.03. APPLICATION OF MONEYS RECEIVED BY MORTGAGEE. Any moneys received by the Mortgagee pursuant to the provisions of this Article Three (including moneys received by the Trustee after any action or act by the Mortgagee under Section 3.10) shall be applied by the Mortgagee in accordance with the provisions of Section 7.06 of the Indenture. Section 3.04. RESTORATION OF RIGHTS AND REMEDIES. If the Mortgagee has instituted any proceeding to enforce any right or remedy under this Mortgage and such proceeding has been discontinued or abandoned for any reason or has been determined adversely to the Mortgagee, then and in every such case the Mortgagor and the Mortgagee shall, subject to any determination in such proceeding, be restored to its former position hereunder, and thereafter all rights and remedies of the Mortgagee shall continue as though no such proceeding had been instituted. Section 3.05. RIGHTS AND REMEDIES CUMULATIVE. No right or remedy herein conferred upon or reserved to the Mortgagee 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. 29 Section 3.06. DELAY OR OMISSION NOT WAIVER. No delay or omission of the Mortgagee to exercise any right or remedy accruing upon an 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 Three by law to the Mortgagee may be exercised, from time to time, and as often as may be deemed expedient, by the Mortgagee. Section 3.07. UNDERTAKING FOR COSTS. If any action or proceeding shall be commenced (including, without limitation, an action to foreclose this Mortgage or to collect under the Guaranty secured hereby) to which action or proceeding the Mortgagee is made or becomes a party, or in which it becomes necessary in the opinion of the Mortgagee to defend or uphold the lien of this Mortgage, then, to the extent it has not already done so pursuant to the terms of Section 3.07 of the Note Mortgage, the Mortgagor shall pay to Mortgagee all expenses, including reasonable attorneys' fees and expenses, incurred by the Mortgagee in connection therewith, together with interest at the rate then payable on the Notes, from the date of payment less the net amount received by the Mortgagee or the Trustee, as their interests may appear under any title insurance policy, and, until paid, all such expenses, together with interest as aforesaid, shall be a lien on the Trust Estate. Section 3.08. WAIVER OF APPRAISEMENT AND OTHER LAWS. To the full extent that it may lawfully so agree, the Mortgagor will not at any time insist upon, plead, claim or take the benefit or advantage of, any appraisement, valuation, stay, extension or redemption law now or hereafter in force, in order to prevent or hinder the enforcement of this Mortgage or the absolute sale of the Trust Estate, or any part hereof, or the possession thereof by any purchaser at any sale under this Article Three; and the Mortgagor, for itself and all who may claim under it, so far as it or they now or hereafter may lawfully do so, hereby waives the benefit of all such laws. The Mortgagor, for itself and all who may claim under it, waives, to the extent that it may lawfully do so, all right to have the property in the Trust Estate marshalled upon any foreclosure hereof, and agrees that any court having jurisdiction to foreclose this Mortgage may order the sale of the Trust Estate as an entirety. If any law in this Section 3.08 referred to and now in force, of which the Mortgagor or its successor or successors might take advantage despite this Section 3.08, shall hereafter be repealed or cease to be in force, such law shall not thereafter be deemed to constitute any part of the 30 contract herein contained or to preclude the application of this Section 3.08. Section 3.09. ENTRY. The Mortgagor agrees that upon the occurrence of an Event of Default the Mortgagor, upon demand of the Mortgagee during the continuance thereof, shall forthwith surrender to the Mortgagee the actual possession of, and it shall be lawful for the Mortgagee by such officers or agents as it may appoint to enter and take possession of, the Trust Estate (and the books and papers of the Mortgagor), and to hold, operate and manage the Trust Estate (including the making of all needful repairs, and such alterations, additions and improvements as the Mortgagee shall deem wise) and to receive the rents, issues, tolls, profits, revenues and other income thereof, and, after deducting the costs and expenses of entering, taking possession, holding, operating and managing the Trust Estate, as well as payments for taxes, insurance and other proper charges upon the Trust Estate and reasonable compensation to itself, its agents and counsel, to apply the same as provided in Section 3.03, PROVIDED, HOWEVER, that the Mortgagee's rights under this Section 3.09 shall be subject to the provisions of the New Jersey Casino Control Act and Section 3.14. Whenever all that is then due upon the Note and under any of the terms of this Mortgage shall have been paid and all defaults hereunder shall have been made good, the Mortgagee shall surrender possession to the Mortgagor. Section 3.10. POWER OF SALE; SUITS FOR ENFORCEMENT. In case an Event of Default shall occur and be continuing, the Mortgagee, with or without entry, in its discretion may: (a) sell, subject to any mandatory requirements of applicable law, the Trust Estate as an entirety, or in such parcels, as the Mortgagee may determine, to the highest bidder at public auction at such place and at such time (which sale may be adjourned by the Mortgagee from time to time in its discretion by announcement at the time and place fixed for such sale, without further notice) and upon such terms as the Mortgagee may fix and briefly specify in a notice of sale to be published as required by law; or (b) proceed to protect and enforce its rights under this Mortgage by sale pursuant to judicial proceedings or by a suit, action or proceeding in equity or at law or otherwise, whether for the specific performance of any covenant or agreement contained in this Mortgage or in aid of the execution of any power granted in this Mortgage or for the foreclosure of this Mortgage or for the enforcement of any other legal, equitable or other remedy, as the Mortgagee, being advised by counsel, shall deem most effectual to protect 31 and enforce any of the rights of the Mortgagee; the failure to join tenants shall not be asserted as a defense to any foreclosure or proceeding to enforce the rights of the Mortgagee. Section 3.11. INCIDENT OF SALE. Upon any sale of any of the Trust Estate, whether made under the power of sale hereby given or pursuant to judicial proceedings, to the extent permitted by law: (a) all obligations owing under the Guaranty, if not previously due, shall at once become and be immediately due and payable; (b) subject to the provisions of Section 3.14 and the receipt of any required prior approvals of the New Jersey Casino Control Commission, the Mortgagee may bid for and purchase the property offered for sale, and upon compliance with the terms of sale may hold, retain and possess and dispose of such property, without further accountability, and may, in paying the purchase money therefor, delivery any notes or claims for interest thereon in lieu of cash to the amount which shall, upon distribution of the net proceeds of such sale, be payable thereon, and such notes or claims for interest thereon, in case the amounts so payable thereon shall be less than the amount due thereon, shall be returned to the holders thereof after being appropriately stamped to show partial payment; (c) the Mortgagee may make and deliver to the purchaser or purchasers a good and sufficient deed, bill of sale and instrument of assignment and transfer of the property sold; (d) the Mortgagee is hereby irrevocably appointed the true and lawful attorney of the Mortgagor, in its name and stead, to make all necessary deeds, bills of sale and instruments of assignment and transfer of the property thus sold; and for that purpose it may execute all necessary deeds, bills of sale and instruments of assignment and transfer, and may substitute one or more persons, firms or corporations with like power, the Mortgagor hereby ratifying and confirming all that its attorney or such substitute or substitutes shall lawfully do by virtue hereof; but if so requested by the Mortgagee or by any purchaser, the Mortgagor shall ratify and confirm any such sale or transfer by executing and delivering to the Mortgagee or to such purchaser or purchasers all proper deeds, bills of sale, instruments of assignment and transfer and releases as may be designated in any such request; 32 (e) all right, title, interest, claim and demand whatsoever, either at law or in equity or otherwise, of the Mortgagor of, in and to the property so sold shall be divested and such sale shall be a perpetual bar both at law and in equity against the Mortgagor, its successors and assigns, and against any and all persons claiming or who may claim the property sold or any part thereof from, through or under the Mortgagor, its successors and assigns; and (f) the receipt of the Mortgagee or of the officer making such sale shall be a sufficient discharge to the purchaser or purchasers at such sale for his or their purchase money and such purchaser or purchasers and his or their assigns or personal representatives shall not, after paying such purchase money and receiving such receipt, be obliged to see to the application of such purchase money, or be in anywise answerable for any loss, misapplication or non-application thereof. Section 3.12. RECEIVER. Upon the occurrence of an Event of Default and commencement of judicial proceedings by the Mortgagee to enforce any right under this Mortgage, the Mortgagee shall be entitled, as against the Mortgagor, without notice or demand and without regard to the adequacy of the security for the Guaranty or the solvency of the Mortgagor, to the appointment of a receiver of the Trust Estate, and of the rents, issues, profits, revenues and other income thereof, PROVIDED, HOWEVER, that the Mortgagee's rights under this Section 3.12 shall be subject to the provisions of the New Jersey Casino Control Act and Section 3.14 hereof. Section 3.13. SUITS TO PROTECT THE TRUST ESTATE. Upon 5 days' prior written notice to the Mortgagor (or such shorter period or without notice if deemed necessary and appropriate by the Mortgagee), the Mortgagee shall have power to institute and maintain such proceedings as it may deem necessary and appropriate to prevent any impairment of the Trust Estate by any acts which may be unlawful or in violation of this Mortgage and to protect its interests in the Trust Estate and in the rents, issues, profits, revenues and other income arising therefrom, including power to institute and maintain proceedings to restrain the enforcement of or compliance with any 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 hereunder or be materially prejudicial to the interests of the Mortgagee. Section 3.14. MANAGEMENT OF CASINO-HOTEL. Notwithstanding any provision of this Article Three to the 33 contrary, following an Event of Default and the taking of possession of the Trust Estate or any part thereof by the Mortgagee and/or the appointment of receiver of the Trust Estate or any part thereof, the Mortgagee or any such receiver shall be authorized, in addition to the rights and powers of the Mortgagee and such receiver set forth elsewhere in this Mortgage, to retain one or more experienced operators of hotels and/or casinos to manage the Casino-Hotel, PROVIDED that any such operator shall have all necessary legal qualifications, including all Permits, to manage the Casino-Hotel. ARTICLE FOUR CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE Section 4.01. CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER ONLY ON CERTAIN TERMS. The Mortgagor shall comply with all provisions applicable to the Mortgagor in Article Ten of the Indenture. Section 4.02. SUCCESSOR ENTITY SUBSTITUTED. Upon any consolidation or combination or any conveyance or transfer of the Trust Estate or any portion thereof in accordance with Section 10.01 of the Indenture, the successor entity formed by such consolidation or into which the Mortgagor is combined or to which such conveyance or transfer is made shall succeed to, and be substituted for, and may exercise every right and power of, the Mortgagor under this Mortgage with the same effect as if such successor entity had been named as the Mortgagor herein; PROVIDED, HOWEVER, that no such conveyance or transfer of the Trust Estate substantially as an entirety, unless such conveyance or transfer is in compliance with the provisions of Article Ten of the Indenture, shall have the effect of releasing the Person named as "the Mortgagor" in the first paragraph of this instrument or any successor entity which shall theretofore have become such in the manner prescribed in such Article Ten from its liability as guarantor. Section 4.03. LIMITATION ON SALES OF TRUST ESTATE. Except as otherwise expressly permitted by this Mortgage or the Indenture, the Mortgagor shall not sell, assign, lease, sublease, hypothecate, pledge, mortgage or otherwise transfer all or any part of the Trust Estate or any interest therein (including without limitation any interest in the Ground Leases). Without limiting the generality of the foregoing, the Mortgagor shall not separate, or attempt to separate, its ownership of its interest in the Ground Leases from its ownership of the buildings constituting the Casino-Hotel or any part thereof. 34 ARTICLE FIVE COVENANTS AND REPRESENTATIONS OF MORTGAGOR Section 5.01. [Reserved] Section 5.02. FF&E FINANCING AGREEMENTS. The Mortgagor covenants and agrees to comply with all of the terms and conditions set forth in any FF&E Financing Agreements before the expiration of any applicable notice and cure periods contained in the FF&E Financing Agreements. Section 5.03. LIMITATIONS ON LIENS. The Mortgagor will not create, incur, suffer or permit to be created or incurred or to exist any mortgage, lien, charge or encumbrance on or pledge of any of the Trust Estate, other than (i) Permitted Encumbrances, (ii) liens on the Trust Estate in connection with indebtedness permitted by clauses (i), (ii), (iii), (iv) or (v) of Section 12.08(a) of the Indenture, and (iii) a building contract or a notice of intention filed by a mechanic, materialman or laborer under the New Jersey lien law. Without limiting the generality of the foregoing sentence but notwithstanding the provisions of the foregoing sentence, the Mortgagor shall not be deemed to have breached the provisions of the foregoing sentence by virtue of the existence of a lien for Impositions or mechanics liens so long as the Mortgagor is in good faith contesting the validity of the same in accordance with the provisions of Section 5.09 to the extent that the matters described in (i) and (ii) do not constitute a default under any Ground Lease or Superior Mortgage. Section 5.04. [Reserved] Section 5.05. ACTIONS AND PROCEEDINGS. The Mortgagor hereby acknowledges the right of the Mortgagee, in the name of and on behalf of the Mortgagor, (a) to appear in and defend any action or proceeding brought with respect to the Trust Estate or any part thereof and (b) upon 5 days' prior written notice to the Mortgagor (or such shorter period or without notice if deemed necessary and appropriate by the Mortgage), to commence any action or proceeding to protect the interest of the Mortgagee in the Trust Estate. Section 5.06. WARRANTY OF LEASEHOLD ESTATE AND TITLE. The Mortgagor represents and warrants that as of the date hereof: (a) it is duly authorized under the laws of the State of New Jersey and all other applicable laws to 35 execute and deliver this Mortgage, and all corporate action on its part necessary for the valid execution and delivery of this Mortgage has been duly and effectively taken; (b) it is the lawful owner and is lawfully seized and possessed of the Owned Land and all buildings and improvements thereon, free and clear of all liens, charges or encumbrances, other than the lien of the Mortgage Documents, any Working Capital Facility Lien and Existing Encumbrances; (c) it is the holder of and has good and marketable title to the leasehold interests and leasehold estates under the Ground Leases and to the Ground Leases, subject to no lien, encumbrance or charge other than the lien of the Mortgage Documents, any Working Capital Facility Lien and Existing Encumbrances; (d) (i) the Ground Leases are valid and subsisting demises of the Leased Land for the terms therein set forth, (ii) there are no defaults thereunder by any Lessor or the lessee as to which written notice has been given to or by the lessee, (iii) the Mortgagor has delivered true and correct copies of the Ground Leases and all modifications, amendments and supplements thereto, and (iv) each of the Ground Leases is in full force and effect and has not been modified, amended or supplemented, except as described on Schedule 2; (e) it has good title to the Operating Assets, subject to no lien, encumbrance or charge, other than the lien of the Mortgage Documents, any Working Capital Facility Lien and Existing Encumbrances; and (f) the Mortgagor has good and lawful right and authority to execute this Mortgage and to grant, bargain, sell, alien, convey, assign, transfer, hypothecate, pledge, mortgage and confirm the Trust Estate as provided herein (including without limitation with respect to the Operating Assets and the Ground Leases, without the consent of any third party, other than governmental authorities but any applicable or necessary consent or approval of any such governmental authority has been given or waived at or prior to the execution and delivery of this Mortgage), and this Mortgage constitutes a valid third mortgage lien and third priority security interest in the Trust Estate PARI PASSU with the lien of the Note Mortgage, subject only to Working Capital Facility Liens and Existing Encumbrances. 36 The Mortgagor hereby does and will forever warrant and defend (x) the title to Trust Estate (including without limitation, its leasehold estates under the lessee's interests in the Ground Leases) (subject to Permitted Encumbrances) and (y) the priority of the lien of this Mortgage (subject to Permitted Encumbrances other than Restricted Encumbrances), against the claims and demands of all persons whomsoever, at the Mortgagor's sole cost and expense. Section 5.07. FURTHER ASSURANCES; RECORDING. The Mortgagor will, as provided in Section 5.13, from time to time subject its right, title and interest under all Leases to the lien of this Mortgage. The Mortgagor will cause this instrument and all other instruments of further assurance, including all financing statements and continuation statements covering security interests in personal property, to be promptly recorded, registered and filed, and at all times to be kept recorded, registered and filed, and will execute and file such financing statements and cause to be issued and filed such continuation statements, all in such manner and in such places as may be required by law or as requested by the Mortgagee to fully preserve and protect the rights of the Mortgagee as a secured party under the Uniform Commercial Code to all property comprising the Trust Estate (to the extent a grant of a security interest therein is governed by the Uniform Commercial Code) and to perfect, preserve and protect the lien of this Mortgage as a valid mortgage lien of record and a valid security interest on the Trust Estate subject to Permitted Encumbrances (other than Restricted Encumbrances). The Mortgagor will pay all filing or recording fees, and all expenses incident to the execution and delivery of this Mortgage, and any instrument of further assurance, and all federal, state, county and municipal stamp taxes and other taxes, duties, imposts, assessments and charges arising out of or in connection with the execution and delivery of this Mortgage, any financing statement or continuation statement with respect to the personal property constituting part of the Trust Estate or any instrument of further assurance. Section 5.08. PAYMENT OF TAXES AND CERTAIN CLAIMS; COMPLIANCE WITH LEGAL REQUIREMENTS AND INSURANCE REQUIREMENTS. The Mortgagor will: (a) subject to the provisions of Section 5.09 relating to contests, pay or cause to be paid promptly (or when installments of the same shall become due and payable, if, by law or by agreement or arrangement with the applicable governmental agency or authority, the same 37 may be paid in installments) before any fine, penalty, interest or cost may be added for nonpayment (but no later than when the same are payable by the Mortgagor pursuant to any Superior Instrument Requirement), all taxes (including, without limitation, real estate taxes, personal or other property taxes and all sales, value added, use and similar taxes), assessments (including, without limitation, all assessments for public improvements or benefits, whether or not commenced or completed prior to the date hereof and whether or not to be completed prior to the satisfaction of this Mortgage), water, sewer or other rents, rates and charges, excises, levies, license fees, permit fees, inspection fees and other authorization fees and other charges, in each case whether general or special, ordinary or extraordinary, or foreseen or unforeseen, of every character (including all interest, additions to tax and penalties thereon), that may be assessed, levied, confirmed or imposed on or in respect of or be a lien upon (1) the Trust Estate (including without limitation the Leased Land) or any part thereof or any rent therefrom or any estate, right or interest therein, or (2) any acquisition, occupancy, use, leasing, or possession of or activity conducted on the real property or any part thereof included in the Trust Estate or any gross receipts thereof or of the rent therefrom (all of the foregoing being referred to collectively as "Impositions"). Notwithstanding the foregoing or any other provision of this Mortgage, the Mortgagor shall not be required to pay any income, profits or revenue tax upon the income of the Mortgagee, the Trustee or the Noteholders nor any franchise, excise, corporate, estate, inheritance, succession, capital levy or transfer tax of the Mortgagee, the Trustee or the Noteholders nor any interest, additions to tax or penalties in respect thereof, unless such tax is imposed, levied or assessed in substitution for any Impositions that the Mortgagor is required to pay pursuant to this Section 5.08. The Mortgagor will deliver to the Mortgagee official receipts or other proof evidencing payments of any Impositions in accordance with the requirements of this Section 5.08. The Mortgagor shall not be entitled to any credit for taxes or assessments paid against the Guaranty; (b) except for such property which the Mortgagor may dispose of or replace pursuant to Section 2.02, maintain and keep all its properties used or useful in the conduct of its business (other than obsolete equipment), including, without limitation, the Casino-Hotel and all Tangible Personal Property, in such good repair, working order and condition, except for reasonable wear and use, and make or cause to be made all 38 such needful and proper repairs, renewals and replacements thereto consistent with the standards of other casino-hotels in Atlantic City, New Jersey; (c) occupy and continuously operate the Casino-Hotel and keep the Casino-Hotel supplied with Tangible Personal Property, all in a manner consistent with the standards of other casino-hotels in Atlantic City, New Jersey (provided that nothing contained in this Section 5.08(c) shall be deemed to reduce the time period set forth in Section 3.01(f)); (d) subject to the provisions of Section 5.09 relating to contests, the Mortgagor at its sole expense will timely (1) comply with all Legal Requirements and Insurance Requirements, whether or not compliance therewith shall require structural changes in the buildings and improvements included in the Trust Estate or interfere with the use and enjoyment of the Trust Estate or any part thereof, (2) procure, maintain and comply with all permits and other authorizations required for (i) the use of the Casino as a gaming and gambling facility, (ii) the on-premises consumption of alcoholic beverages at the Casino-Hotel and (iii) any other use of the Trust Estate or any part thereof then being made, and for the proper erection, installation, operation and maintenance of the improvements or any part thereof, and (3) comply with any instruments of record at the time in force affecting the Trust Estate or any part thereof, if the failure to comply with the same would impair the Mortgagee's security hereunder. Without limiting the generality of the foregoing, the Mortgagor represents and warrants that at the time of the execution of this Mortgage, the Mortgagor is in compliance with the requirements of clauses (1), (2) and (3); (e) in the event of the passage after the date of this Mortgage of any law of the State of New Jersey, or any other governmental entity, changing in any way the laws now in force for the taxation of mortgages, or debts secured thereby, for state or local purposes, or the manner of the operation of any such taxes, so as to affect the interest of the Mortgagee, then and in such event, the Mortgagor shall bear and pay the full amount of such taxes, provided that if for any reason payment by the Mortgagor of any such new or additional taxes would be unlawful or if the payment thereof would constitute usury or render the indebtedness secured hereby wholly or partially usurious under any of the terms or provisions of the Note, or this Mortgage, or otherwise, the Mortgagee may, at the Mortgagee's option, declare the whole sum secured by this Mortgage, with interest 39 thereon, to be due and payable 90 days after notice of election thereof has been given by the Mortgagee, or the Mortgagee may, at the Mortgagee's option, pay that amount or portion of such taxes as renders the loan or indebtedness secured hereby unlawful or usurious, in which event the Mortgagor shall concurrently therewith pay the remaining lawful and nonusurious portion or balance of such taxes. Section 5.09. PERMITTED CONTESTS. The Mortgagor may, at its sole expense, contest by appropriate legal proceedings conducted in good faith and with due diligence, the amount or validity or application, in whole or in part of any Imposition or lien therefor or any Legal Requirement or Insurance Requirement or the application of any instrument of record affecting the Trust Estate or any part thereof or any claims of mechanics, materialmen, suppliers, or vendors or lien therefore, and may withhold payment of the same pending such proceedings if permitted by law, or make payment under protest, or defer compliance with any such Legal Requirement, any such Insurance Requirement or the terms of any such instrument, and the same shall not be a Default hereunder, provided that (a) in the case of any Impositions or lien therefor or any claims of mechanics, materialmen, suppliers or vendors or lien therefor, such proceedings shall suspend the collection thereof from each of the Mortgagor, the Mortgagee, the Trustee, the Noteholders and the Trust Estate, (b) neither the Trust Estate nor any interest therein would be in any danger of being sold, forfeited, or lost, (c) such action would not result in or constitute a default under any Ground Lease or Superior Mortgage, (d) in the case of a Legal Requirement, neither the Noteholders nor the Mortgagee shall be in any danger of any civil or any criminal liability, and the failure of the Mortgagor to comply with such Legal Requirement shall not affect the continuance in good standing of any Permit or result in the suspension, termination, non-renewal or material adverse modification of any permit, and (e) in the case of an Insurance Requirement, the failure of the Mortgagor to comply therewith shall not affect the validity of any insurance required to be maintained by the Mortgagor hereunder. Section 5.10. MECHANICS' AND OTHER LIENS. Without limiting the generality of the first sentence of Section 5.03 and notwithstanding the provisions of Section 5.03(a)(ii), the Mortgagor will cause to be removed, either by payment, or bonding or otherwise, all claims and demands of mechanics, materialmen, laborers, and others which, if unpaid, might result in, or permit the creation of, a lien on the Premises and/or Trust Estate or any part thereof, or on the revenues, rents, issues, income and profits arising therefrom and in general will do or cause to be done everything necessary so 40 that the lien hereof shall be fully preserved, at the cost of the Mortgagor, without expense to the Mortgagee. Section 5.11. INSURANCE. (a) The Mortgagor will, at its expense, maintain with Insurers: (1) insurance with respect to the Mortgagor's insurable properties constituting a part of the Trust Estate against loss or damage by fire, lightning, and other risks from time to time included under "all-risk" policies and against loss or damage by sprinkler leakage, water damage, collapse, malicious mischief and explosion in respect of any steam and pressure boiler and similar apparatus located on such insurable properties, in amounts at all times sufficient to prevent the Mortgagor from becoming a coinsurer within the terms of the applicable policies, but in any event such insurance shall be maintained in such insurable amounts not less than the greatest of the following (hereinafter referred to as the "Insurance Amount"): (i) 100% of the then full insurable value of such insurable properties, the term "full insurable value" to mean the actual replacement cost (excluding the costs of foundation, footing, excavation, paving, landscaping and other similar, non-insurable improvements) determined from time to time (but not less frequently than once in any 36 calendar months), by an Architect, contractor, appraiser, or an Insurer, or (ii) the amount required to be maintained pursuant to the Superior Instrument Requirements; (2) war risk insurance as and when such insurance is obtainable from the United States of America or any agency thereof as promptly as reasonably practicable after the same becomes so obtainable, in an amount not less than the Insurance Amount, or in such lesser amount as may then be so obtainable; (3) public liability, including personal injury and property damage and comprehensive general liability connected with the possession, use, leasing, operation or condition of such insurable properties in such amounts as, in the Mortgagor's judgment, are prudent, considering the cost of such insurance, for personal injury and property damage with respect to any one occurrence, which may be under an umbrella policy. Anything contained in this clause (3) to the contrary notwithstanding, the Superior Instrument Requirements with respect to the 41 kinds and amount of insurance described in this clause (3) shall be satisfied by the Mortgagor; (4) appropriate workers' compensation insurance with respect to any work (to the extent the risks to be covered thereby are not already covered by other policies of insurance maintained by the Mortgagor) on or about such insurable properties; (5) business interruption insurance covering not less than 12 months of loss, provided that, at any time that the Mortgagor is renewing any policy for such insurance or taking out any new or replacement such policy covering a period of less than 12 months, the Mortgagor shall deliver to the Mortgagee an Officers' Certificate certifying that the period of coverage to be maintained by the Mortgagor under such policy is the maximum that can be maintained at rates determined by the Mortgagor to be reasonable for such coverage; (6) to the extent available, flood insurance in an amount not less than the Insurance Amount, or such lesser amount as may then be so obtainable; and (7) such other insurance with respect to such insurable properties against loss or damage of the kinds (i) from time to time customarily insured against by persons owning or using casino-hotels of comparable size in the boardwalk area of Atlantic City, New Jersey and (ii) required to be maintained pursuant to the Superior Instrument Requirements. Notwithstanding the foregoing, to the extent permitted by Superior Instrument Requirements, (i) the Mortgagor shall be permitted to maintain a deductible with respect to the insurance policies described in clauses (1), (2), (6) and (7) in an amount not to exceed (x) for the twelve month period commencing the date hereof, $100,000 with respect to the insurance policies described in clause (1), (2), (6) and (7) thereafter, the customary deductible (if any) with respect to the insurance maintained by casino-hotels of a similar size and value in Atlantic City, New Jersey (but in no event more than $1,000,000), (ii) the Mortgagor shall be permitted to maintain a $200,000 self insured retention under the general liability policy described in clause (3) and a deductible with respect to the other insurance policies described in clause (3) in an amount not to exceed the amount of deductible as is customarily maintained by casino-hotels of similar size in Atlantic City, New Jersey, (iii) the Mortgagor shall not reduce its insurance coverage for the matters described in clause (3) (which for purposes of this paragraph means a reduction in single limits or an increase in deductible) unless and until the Mortgagor 42 delivers to the Mortgagee an Officers' Certificate certifying (w) that the coverage the Mortgagor was theretofore maintaining cannot be maintained at rates determined by the Mortgagor to be reasonable for such coverage, (x) the amount of the proposed reduction, (y) the premium for the existing and the proposed reduced coverage, and (z) that the proposed deductible satisfied the criteria set forth in this clause (iii), and (iv) the Mortgagor shall be permitted to maintain a deductible with respect to the insurance policies described in clause (5) in the forms of and in an amount not to exceed the amount of deductible as is customarily maintained by casino-hotels of similar size in Atlantic City, New Jersey. (b) Each policy of insurance maintained by the Mortgagor pursuant to Subsection (a) of this Section 5.11 shall, (1) except in the case of workers' compensation insurance, name as additional insureds the Mortgagee, in both its individual and fiduciary capacities, and, to the extent required by the Superior Instrument Requirements, the Lessors and the holders of the Superior Mortgages, (2) provide that all insurance proceeds for losses, except in the case of public liability insurance and workers' compensation insurance or as otherwise provided in Subsections (d), (e) and (f) of this Section 5.11, be payable solely to the Mortgagee or such other party as is required to receive such proceeds under a Superior Mortgage, (3) except in the case of workers' compensation, include effective waivers (whether under the terms of any such policy or otherwise) by the insurer of all claims for insurance premiums against all lost payees and named insureds (other than the Mortgagor) and all rights of subrogation against any named insured, (4) except in the case of public liability and workers' compensation insurance, provide that any losses shall be payable notwithstanding (i) any act, failure to act, negligence of, or violation or breach of warranties, declarations or conditions contained in such policy by the Mortgagor or the Mortgagee or any other named insured or loss payee (including, without limitation, with respect to the Released Fee Land, the holders of any After-Acquired Fee Mortgages), (ii) the occupation or use of the insurable properties for purposes more hazardous than permitted by the terms of the policy, (iii) any foreclosure or other proceeding or notice of sale relating to the insurable properties or (iv) any change in the title to or ownership or possession of the insurable properties, (5) contain a non-contributory mortgagee clause in favor of the Mortgagee, and (6) provide that if all or any part of such policy is cancelled, terminated or expires, the insurer will forthwith give notice thereof to each named insured and loss payee and that no cancellation, reduction in amount or material change in coverage thereof shall be effective until at least 30 days after receipt by each named insured and loss payee of written notice thereof. 43 (c) The Mortgagor will deliver to the Mortgagee, (1) duplicate originals of all insurance policies that the Mortgagor is required to maintain pursuant to this Section 5.11 and (2) within 30 days after each reduction in insurance required to be maintained by the Mortgagor hereunder, an Officers' Certificate setting forth the particulars as to all such insurance policies and certifying that the same comply with the requirements of this Section 5.11, that all premiums or installments thereof then due thereon have been paid and that the same are in full force and effect. The Mortgagee shall not be responsible for effecting or renewing any insurance or for the responsibility or solvency of the insurers. (d) The Mortgagor shall give written notice to the Mortgagee immediately upon obtaining knowledge of any Casualty which (x) results in damage, loss or destruction in an amount in excess of [$5,000,000] to any buildings or improvements on the Premises and/or any Tangible Personal Property or (y) pursuant to any Superior Instrument Requirement, would require the deposit of insurance proceeds with the Depositary, or action or proceeding with respect thereto. Whenever the Superior Instrument Requirements require or permit the selection of the Depositary by the Mortgagor, the Mortgagor shall select the Insurance Trustee as the Depositary. Within 30 days after any Casualty which results in any damage, loss or destruction in an amount in excess of $10,000,000 to any buildings or improvements of the Premises and/or any Tangible Personal Property, the Mortgagor shall deliver to the Mortgagee a certificate of an Architect stating whether, in such Architect's opinion, applicable Legal Requirements permit the Restoration of such buildings and improvements for the same uses and to the same size and quality in all material respects, as existed immediately prior to the Casualty (and if such certificate states the Legal Requirements do not permit such Restoration, such certificate shall describe the manner closest approximating such criteria to which the buildings and improvements could be so restored and shall be accompanied by a Certificate of Appraised Value dated not more than 10 days prior to delivery setting forth the Appraised Value immediately prior to the Casualty and the estimated Appraised Value immediately after the Restoration). If the Mortgagor is required to deliver such Certificates of Appraised Value and if based on such Certificates of Appraised Value immediately after Restoration, the aggregate Outstanding Amount of First Mortgage Debt immediately after such Restoration shall exceed the greater of (i) 66 2/3% of the Appraised Value immediately after such Restoration or (ii) the quotient of the Outstanding Amount of First Mortgage Debt immediately prior to such Casualty divided by the Appraised Value immediately prior to the Casualty multiplied by the Appraised Value immediately 44 after such Restoration, then the proceeds of any insurance shall, at the election of Mortgagee, either be applied to Restoration as set forth in Subsections (e), (h) and (i) below) or paid and delivered to the Mortgagee to the extent of the then Outstanding Amount of the Note and any other interest or other sums due hereunder or thereunder to be applied to the satisfaction of the Mortgage to the extent proceeds are available for such purpose and provided that no additional sums are due to the Trustee or the Noteholder under the Indenture, the balance of any net insurance proceeds shall be paid to the Mortgagor. Notwithstanding the foregoing sentence, if such Certificates of Appraised Values indicates that the Outstanding Amount of First Mortgage Debt immediately after such Restoration exceeds the greater of the two amounts determined pursuant to subclauses (i) and (ii) above, the proceeds of insurance will be made available for Restoration (subject to paragraphs, (e), (h) and (i) below) if the Mortgagor obtains an irrevocable commitment from a nationally recognized financial institution having a combined capital and surplus of at least $100,000,000, to supply, upon an acceleration under this Mortgage as a result of an Event of Default, funds to the Mortgagor as additions to capital in an amount equal to the Outstanding Amount of First Mortgage Debt in excess of the Appraised Value necessary to be paid down so that the Outstanding Amount of First Mortgage Debt will not exceed either of the two amounts determined pursuant to such clauses (i) and (ii), PROVIDED that such commitment may only be released if, upon an Appraisal at any time following completion of such Restoration, the aggregate Outstanding Amount of the First Mortgage Debt does not exceed 66- 2/3% of the Appraised Value. (e) Subject to the provisions of Subsection (d) above, in case a Casualty occurs, the following shall apply: (1) if the cost of Restoration (as hereinafter defined) does not exceed the sum of $10,000,000, the net insurance proceeds shall be paid by the Mortgagee to the Mortgagor (unless the Superior Instrument Requirements provide that the same shall be paid to the Depositary); (2) if the cost of Restoration is $10,000,000 or more or if the Superior Instrument Requirements provide that the same shall be paid to the Depositary, the net insurance proceeds shall be paid by the Mortgagee to the Insurance Trustee (or other Depositary required by the Superior Instrument Requirements, provided that such Depositary holds such proceeds in trust for purposes of paying the costs of Restoration); 45 (3) the Mortgagor shall commence with reasonable promptness under the circumstances and thereafter with due diligence proceed to perform and complete in a good and workmanlike manner the restoration, repair, replacement or rebuilding of the damage or destruction resulting from the Casualty (all of which restoration, repair, replacement or rebuilding are referred to as the "Restoration") in accordance with the plans and specifications submitted to the Insurance Trustee, in conformance with all Legal Requirements and Superior Instrument Requirements, and in accordance with the further provisions of this Subsection (e), regardless of the extent of any such Casualty and whether or not net insurance proceeds, if any, shall be available or, if available, shall be sufficient, for the purpose of the Restoration (provided, however, that if the Mortgagor does not receive any net insurance proceeds within 30 days after any Casualty because the adjustment of the loss has not yet occurred, then the obligation of the Mortgagor to commence such Restoration shall be deferred until such proceeds are made available to the Mortgagor, provided that (i) Mortgagor delivers to the Mortgagee an Officers' Certificate certifying that the Mortgagor is diligently and continuously adjusting such loss with the Insurer, (ii) the Mortgagor delivers to the Mortgagee an Officers' Certificate within such 30-day period requesting the extension of such period, estimating the date on which such proceeds will be available and describing the Mortgagor's efforts to adjust such loss and certifying that such extension does not constitute a default or a breach of any of the provisions of any of the Ground Leases (or if so, such default or breach has been waived) and (iii) the Mortgagor delivers to the Mortgagee additional Officers' Certificates every 30 days thereafter updating the information contained in the certificate described in Clause (ii)). All Restoration work shall be performed in accordance with the applicable provisions of Section 5.12 and in conformance with all Superior Instrument Requirements, Legal Requirements and Insurance Requirements and, prior to commencing any Restoration, the Mortgagor shall obtain all Permits necessary in connection therewith, and shall obtain, and keep in full force and effect until the completion of such Restoration, such additional insurance as the Insurance Trustee and Superior Instrument Requirements may require. The plans and specifications for the Restoration shall be accompanied by a certificate of the Mortgagor and an Opinion of Counsel to the effect that upon the completion of the Restoration pursuant to the plans and specifications the Premises, and all buildings and improvements, thereon will comply with all superior Instrument Requirements, Legal Requirements and Insurance 46 Requirements. Notwithstanding anything in this Section 5.11 to the contrary, if such Casualty is in an amount less than $5,000,000, the Mortgagor shall not be required to perform and complete such Restoration (unless the performance and completion of the Restoration is necessary in order for the Mortgagor to be in compliance with any term, provision or condition of this Mortgage (other than this Section 5.11(e)) or any Superior Instrument Requirements; (4) Any insurance proceeds which the Mortgagor receives, shall be held by the Mortgagor in trust for the purpose of paying the cost of the Restoration, except as otherwise provided herein; (5) Any net insurance proceeds that the Insurance Trustee holds pursuant to this Subsection (e), shall be deposited in an interest-bearing investment reasonably designated by Mortgagor (to the extent the Mortgagor is permitted to designate such investment under the Superior Instrument Requirements) (and the interest thereon shall be added to such proceeds) and shall be paid by the Insurance Trustee to reimburse the Mortgagor for, or to make payment for, the Restoration, after the Insurance Trustee deducts therefrom the amount of any reasonable costs and expenses incurred in connection with the performance of its obligations under this Section 5.11. The Insurance Trustee shall make such payments not more frequently than once every 30 days upon the written request of the Mortgagor (unless more frequent payments are required by Superior Instrument Requirements), by paying to the Mortgagor or the persons named in the certificate described in Clause (6) of this Subsection (e) the respective amounts stated in such certificate from time to time as the Restoration progresses, provided the Mortgagor has complied with the requirements of this Subsection (e) and such payment is permitted by an applicable Superior Instrument Requirements. The Mortgagor's written request shall be accompanied by (i) the certificate described in Clause (6) of this Subsection (e) and (ii) a title company or official search, or other evidence reasonably acceptable to the Insurance Trustee, showing that there have not been filed with respect to the Premises, any vendor's, contractor's, mechanic's, laborer's or materialman's statutory or similar lien which has not been discharged of record (or bonded against or secured by other security) or any other encumbrance irrespective of its priority (other than Permitted Encumbrances). (6) The certificate required by Clause (5) of this Subsection (e) shall (A) be an Officers' Certificate, 47 countersigned by the Architect in charge of the Restoration with respect to the matters described in (i) and (v) below, (B) be dated not more than 10 days prior to such request and (C) set forth (in addition to any other requirements contained in any applicable Superior Instrument Requirements) that: (i) all of the Restoration work theretofore performed is in substantial compliance with the plans and specifications theretofore submitted to the Insurance Trustee and in compliance with all Superior Instrument Requirements, Legal Requirements and Insurance Requirements; (ii) the sum then requested either has been paid by the Mortgagor or is justly due to contractors, subcontractors, materialmen, engineers, architects or other persons who have rendered services or furnished or contracted to deliver materials for the Restoration therein specified, and the names and addresses of such persons, a brief description of such services and materials and the several amounts so paid or due to each of such persons in respect thereof; (iii) no part of the amount requested has been or is the basis in any pervious or then pending request for the withdrawal of net insurance proceeds, and that the sum then requested does not exceed the value of the services and materials described in the certificate; (iv) except for the amount, if any, stated pursuant to Subclause (ii) of this Clause (6) in such certificate to be due for services or materials, and except for amounts in dispute and/or customary retainages, there is no outstanding indebtedness known to the person signing such certificate, after due inquiry, which is then due for labor, wages, materials, supplies or services in connection with such Restoration; and (v) the remaining cost, as estimated by the persons signing such certificate, of the Restoration in order to complete the same does not exceed the net insurance proceeds remaining in the hands of Insurance Trustee after payment of the sum requested in such certificate or if such estimated cost does exceed such insurance proceeds such certificate shall state the amount of any such deficiency. If the certificate states that such deficiency will exist, the Mortgagor shall deliver the amount of 48 such deficiency in cash or cash equivalent to the Insurance Trustee simultaneously with the delivery of such certificate, which amount shall be deemed insurance proceeds for purposes of this Section 5.11(e); and (7) If net insurance proceeds shall be insufficient to pay the entire cost of the Restoration, then, after completion of the Restoration, the Mortgagor shall pay the deficiency. If all or any part of the net insurance proceeds are not used for the Restoration in accordance with this Subsection (e) (because such proceeds exceed the amount required to complete the Restoration), then upon completion of the Restoration in accordance with this Subsection (e), such amount not so used, if held by the Insurance Trustee, shall be paid to the Mortgagor (if permitted by Superior Instrument Requirements). (f) Provided that no Event of Default has occurred and is continuing, all net business interruption insurance proceeds shall be paid to the Mortgagor, to be segregated from the other funds of Mortgagor and held in trust by Mortgagor for the following purposes and in the following order of priority: (i) for the payment of Impositions and amounts due under the Ground Leases and Superior Mortgages; (ii) for debt service for the estimated period of Restoration (for purposes of this Section 5.11(f), interest and principal payments due on any payment date under the Notes will deemed to accrue in equal daily installments beginning the day after the immediately preceding payment date and ending on such payment date); and (iii) for any expense incurred in connection with the operation or business of the Casino-Hotel. (g) The Mortgagor shall not take out separate insurance, concurrent in form or contributing in the event of loss with that required to be maintained pursuant to this Section 5.11, unless the same are permitted by Superior Instrument Requirements and the Mortgagee is included therein as a named insured, with loss payable to the Mortgagee and the Insurance Trustee pursuant to Section 5.11(b) hereof. The Mortgagor shall immediately notify the Mortgagee whenever any such separate insurance is taken out and shall promptly deliver to the Mortgagee a duplicate original of the policy of such insurance, a copy thereof certified by the insurer or a certificate thereof. (h) Subject to final adjustment by the insurer, insurance claims by reason of damage or destruction to any portion of the Trust Estate may adjusted by the Mortgagor, but the Mortgagee shall have the right (but not the obligation) to join the Mortgagor in adjusting, and approving the adjustment of, any such loss except in the event of a loss where the amount of insurance reasonably anticipated 49 to be received with respect to such loss is less than Five Million Dollars ($5,000,000), and the Mortgagor shall assist the Mortgagee in any such adjustment at the request of the Mortgagee. If the Mortgagee at its election as aforesaid joins the Mortgagor in any adjustment process, then the Mortgagee's approval of the adjustment shall not be unreasonably withheld; (i) Notwithstanding anything contained herein to the contrary, if an Event of Default shall have occurred and be continuing, the Mortgagee may, at its option, (A) refrain from paying to the Mortgagor or the Insurance Trustee any net insurance proceeds or (B) instruct the Insurance Trustee to pay to the Mortgagee any insurance proceeds then held by the Insurance Trustee, as the case may be. Section 5.12. LIMITATIONS ON BUILDING DEMOLITION, ALTERATIONS, IMPROVEMENTS AND NEW CONSTRUCTION. The Mortgagor will not authorize, permit or make any demolition, alteration or improvement of any building included in the Trust Estate or any new construction on any part of the Trust Estate, except in conformity with and subject to the limitations hereinafter in this Section 5.12 set forth. Unless an Event of Default shall have occurred and be continuing, the Mortgagor shall have the right at all times to make or permit such alterations, improvements or new constructions, structural or otherwise (herein sometimes called collectively "alterations"), of or on the Trust Estate, to be made in all cases subject to the conditions set forth in Section 5.12 of the Note Mortgage. Section 5.13. LEASES. The Mortgagor shall not: (a) subject to the provisions of Section 5.13(d), enter into any Lease, or renew, modify, extend, terminate, or amend any Lease, except in the ordinary course of business of operating the Casino-Hotel; (b) receive or collect, or permit the receipt or collection of, any rental payments under any Lease more than one year in advance of the respective periods in respect of which they are to accrue, except that, in connection with the execution and delivery of any Lease or of any amendment to any Lease, rental payments thereunder may be collected and received in advance in an amount not in excess of three months' rent and/or a security deposit may be required thereunder in an amount not exceeding one year's rent; (c) collaterally assign, transfer or hypothecate (other than to the Mortgagee hereunder, to 50 the mortgagee under the Note Mortgage or to the holder of any Working Capital Facility Lien) any rental payment under any Lease whether then due or to accrue in the future, the interest of the Mortgagor as landlord under any Lease or the rents, issues or profits of the Trust Estate; (d) after the date hereof, enter into any Lease, or renew any Lease unless such Lease contains terms to the effect as follows: (1) the Lease and the rights of the tenants thereunder shall be subject and subordinate to the rights of the Mortgagee under this Mortgage, the mortgagee under the Note Mortgage and the holders of any Superior Mortgage, (2) the Lease may be assigned by the landlord thereunder to the Mortgagee, (3) the rights and remedies of the tenant in respect of any obligations of the landlord thereunder shall be nonrecourse as to any assets of the landlord other than its equity in the building in which the leased premises are located or the proceeds thereof, (4) the rights of the tenant shall be subject and subordinate to the rights of the lessee under any new lease entered into in the event of a termination of a Ground Lease; (e) modify any Lease with respect to the matters described in clauses (1) through (4) of paragraph (d). If the Mortgagor enters into a Lease (other than with any Affiliate of the Mortgagor) for a term of not less than 3 nor more than 10 years, the Mortgagee shall deliver a non-disturbance and attornment agreement substantially in the form of Schedule 4 hereto, following receipt of a certificate of a leasing broker (who is not an Affiliate of the Mortgagor or the broker involved in such transaction) experienced with respect to leases of commercial space in the Atlantic City area stating that the rent under the Lease is not less than fair market rent and that the other terms of the Lease are fair and reasonable in the commercial leasing market. The Mortgagor shall, upon demand, reimburse the Mortgagee for any costs and expenses (including reasonable attorney's fees) incurred by the Mortgagee in connection with the preparation, review and delivery of such non-disturbance and attornment agreements. 51 Promptly after the execution and delivery hereof, the Mortgagor will cause the lessee under each Lease now in effect and promptly after each Lease is executed or becomes effective after the date of the execution and delivery hereof, the Mortgagor will cause the lessee under each such Lease, to be duly notified in writing (unless the substance and effect of such notice shall be contained in such Lease) of the subjection of the owner's interest, as lessor, in and to such Lease to the lien of this Mortgage and of the name and address of the Mortgagee. Each such notice shall state that the lease of such lessee is a Lease as herein defined. If a new Mortgagee is at any time appointed hereunder or the address of the Mortgagee shall at any time be changed, the Mortgagor will cause each lessee under each Lease to be promptly notified in writing of the name and address of such new Mortgagee or the new address of the Mortgagee. The Mortgagor will use reasonable efforts (but shall not be obligated to incur any expenditure other than de minimis amounts) to obtain from each lessee under each Lease to whom any notice is sent pursuant to this paragraph an acknowledgment of receipt of such notice, and the Mortgagor will promptly deliver to the Mortgagee, upon request, a copy of each such acknowledgment of receipt which it is able to obtain. The Mortgagee shall not be responsible for securing or causing the Mortgagor to secure any such acknowledgment. Nothing contained in this Section 5.13 shall limit the provisions of Section 4.04 hereof. Section 5.14. [Reserved] Section 5.15. MAINTENANCE OF EXISTENCE OF THE MORTGAGOR. Subject to Article Four, the Mortgagor will do or cause to be done all things necessary to preserve and keep in full force and effect its existence as a corporation, and its rights (both statutory and under its articles of incorporation) and franchises. Section 5.16. TO KEEP BOOKS; INSPECTION BY MORTGAGEE. The Mortgagor will keep proper books of record and account in accordance with Section 12.05 of the Indenture. Section 5.17. ADVANCES BY MORTGAGEE. If the Mortgagor shall fail to perform any of its covenants in this Mortgage and such failure shall continue for 10 days following notice thereof given by the Mortgagee (or at any time, without notice, in case of emergency), the Mortgagee may (but is not obligated to), at any time and from time to time, take any action or make advances, to effect performance of any such covenant on behalf of the Mortgagor; and all moneys so used or advanced by the Mortgagee and all reasonable costs and 52 expenses incurred by Mortgagee in connection therewith, together with interest on all of the same at the rate of interest set forth in the Notes, shall be repaid by the Mortgagor upon demand and such advances shall be secured under this Mortgage prior to the Guaranty. Section 5.18. WAIVER OF STAY, EXTENSION OR USURY LAWS. The Mortgagor covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any usury, stay or extension law or any other law which would prohibit or forgive the Mortgagor from paying all or any portion of the obligations under the Guaranty as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may otherwise affect the covenants or the performance of this Mortgage; and the Mortgagor (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Mortgagee, but will suffer and permit the execution of every such power as though no such law had been enacted. Section 5.19. [Reserved] Section 5.20. EMINENT DOMAIN. The Mortgagor shall satisfy the provisions of Section 5.20 of the Note Mortgage upon obtaining knowledge of any Taking affecting the Trust Estate. Section 5.21. GROUND LEASES. (a) The Mortgagor covenants and agrees that it will do or cause to be done all things necessary to preserve and keep unimpaired the rights of the Mortgagor, as lessee under the Ground Lease, and to prevent any termination, surrender, cancellation, forfeiture or impairment thereof. The Mortgagor shall at all times fully perform and comply with all agreements, covenants, terms and conditions imposed upon or assumed by it as lessee under each of the Ground Leases (including without limitation the covenant to pay rent and all taxes, assessments and other charges mentioned therein) prior to the expiration of any notice and/or cure period provided in each such Ground Lease. Upon receipt by the Mortgagee from a Lessor of any written notice of default by the lessee thereunder, Mortgagee may rely thereon and take any action the Mortgagee deems necessary in its sole discretion to prevent or to cure any default by the Mortgagor in the performance of or compliance with any of the agreements, covenants, terms or conditions imposed upon or assumed by the Mortgagor as lessee under each of the Ground Leases, even though the existence of such default or the nature thereof be questioned or denied by 53 the Mortgagor or by any party on behalf of the Mortgagor, provided that if the Mortgagor has theretofore delivered to the Mortgagee the Officers' Certificate, Opinion of Counsel and a copy of the injunction, all as described in Section 3.01(g), the Mortgagee shall not take any such action unless and until the Mortgagor and/or the Mortgagee no longer has the benefit of any tolling or stay referred to in Section 3.01(g). Without limiting the generality of Section 3.09 hereof, the Mortgagor hereby expressly grants to the Mortgagee, and agrees that the Mortgagee shall have, the absolute and immediate right to enter in and upon the Premises or any part thereof to such extent and as often as the Mortgagee, in its sole discretion, deems necessary or desirable for the purpose permitted by the immediately preceding sentence, subject only to applicable Legal Requirements. Subject to the preceding and without limiting the Mortgagee's other remedies under this Mortgage, the Mortgagee may pay and expend such sums of money as the Mortgagee in its sole discretion deems necessary for any such purpose, and the Mortgagor hereby agrees to pay to the Mortgagee, immediately and without demand, all such sums so paid and expended by the Mortgagee, together with interest thereon from the date of each such payment at the highest rate of interest set forth in the Notes. All sums so paid and expended by the Mortgagee, and the interest thereon, shall be added to and be secured by the lien of this Mortgage. (b) The Mortgagor further covenants and agrees: (i) it will not surrender any leasehold estate and interest hereinabove described, nor terminate or cancel any Ground Lease, and that it will not without the express written consent of the Mortgagee modify, change, supplement, alter or amend such Ground Leases either orally or in writing and, as further security for the repayment of the indebtedness secured hereby and for the performance of the covenants herein and in such Ground Leases contained, the Mortgagor hereby assigns to the Mortgagee all of its rights, privileges and prerogatives as lessee under such Ground Leases to terminate, cancel, modify, change, supplement, alter or amend such Ground Leases, and any such termination, cancellation, modification, change, supplement, alteration or amendment of such Ground Leases without the prior written consent thereto by Mortgagee shall be void and of no force and effect. Unless (1) an Event of Default has occurred and is continuing and (2) either (A) there has been an acceleration of maturity of the Notes pursuant to Section 3.02 of the Note Mortgage or (B) the Mortgagee exercises its rights under Section 3.09 hereof, the Mortgagee shall have no right to terminate, cancel, modify, change, supplement, alter or amend the Ground Leases; 54 (ii) solely for the benefit of the Mortgagee, Trustee, the Noteholders and no other person, no release or forbearance of any of the Mortgagor's obligations under such Ground Leases, pursuant to such Ground Leases or otherwise, shall release the Mortgagor from any of its obligations under this Mortgage, including its obligations with respect to the payment of rent as provided for in such Ground Leases and the performance of all of the terms, provisions, covenants, conditions and agreements contained in such Ground Leases, to be kept, performed and complied with by the lessee therein; (iii) unless the Mortgagee shall otherwise expressly consent in writing, the fee title to the Leased Land, the Mortgagor's interest in the improvements on the Leased Land and the leasehold estates shall not merge by and shall always remain separate and distinct, notwithstanding the union of such estates either in the Lessor or in the lessee, or in a third party by purchase or otherwise; (iv) the Mortgagor shall promptly notify the Mortgagee in writing of any request made by the Mortgagor, as lessee under each of the Ground Leases, or any of the Lessors, for arbitration proceedings pursuant to the Ground Leases and of the institution of any arbitration proceedings, as well as all proceedings thereunder. In addition, the Mortgagor shall promptly deliver to the Mortgagee a copy of the determination of the arbitrators in each such arbitration proceeding. The Mortgagee shall have the right to participate in such arbitration proceedings in association with the Mortgagor or on its own behalf as an interested party in accordance with the terms of the Ground Leases; (v) the Mortgagor shall not consent to the subordination of any Ground Lease to any mortgage deed of trust or other lien of the fee interest of the Lessor; (vi) in the event (A) the Mortgagor exercises its option under any Ground Lease to purchase any portion of the Leased Land, the Mortgagor shall deliver a copy of its election to exercise such option within 5 days after the Mortgagor has delivered notice of such election to the Lessor or (B) the Mortgagor acquires fee simple title or any other estate, title or interest in the Leased Land, the Mortgagor shall promptly notify the Mortgagee of such acquisition and shall cause to be executed and recorded all such other and further assurances or other instruments in writing as may be required by law or, in the opinion of the Mortgagee, be reasonably 55 desirable to carry out the intent and meaning of clause (x) of Granting Clause Second; (vii) within 5 days after the Mortgagor's receipt of any notice of any motion, application or effort to reject the Ground Lease by any Lessor or any trustee arising from or in connection with any case, proceeding or other action commenced or pending by or against any Lessor under the Code or any comparable provision contained in any present or future federal, state, local, foreign or other statute, law, rule or regulation, the Mortgagor shall give notice thereof to the Mortgagee. The Mortgagor hereby (A) assigns to the Mortgagee any and all of the Mortgagor's rights as lessee under Section 365(h) of the Code or any comparable provision contained in any present or future federal, state, local, foreign or other statute, law, rule or regulation ("Comparable Provision") and (B) covenants that it shall not elect to treat any Ground Lease as terminated pursuant to Section 365(h) of the Code or any Comparable Provision without the prior written consent of the Mortgagee and (C) agrees that any such election by the Mortgagor without such consent shall be null and void; (viii) without limiting the generality of the foregoing, the Mortgagor hereby unconditionally assigns, transfers and sets over to the Mortgagee all of the Mortgagor's claims and rights to the payment of damages arising from any rejection by Lessor of any Ground lease under the Code or any Comparable Provision. The Mortgagee shall have the right to proceed in its own name or in the name of the Mortgagor in respect of any claim, suit, action or proceeding relating to the rejection of any Ground Lease, including, without limitation, the right to file and prosecute, in cooperation with the Mortgagor, any proofs of claim, complaints, motions, applications notices and other documents, in any case in respect of Lessor under the Code or any Comparable Provision. This assignment constitutes a present, irrevocable and unconditional assignment of the foregoing claims, rights and remedies, and shall continue in effect until all of the indebtedness and obligations secured by this Mortgage shall have been satisfied and discharged in full. Any amounts received by the Mortgagee in damages arising out of the rejection of any Ground Lease as aforesaid shall be applied first to all reasonable costs and expenses of the Mortgagee (including, without limitation, reasonable attorneys' fees) incurred in connection with the exercise of any of its rights or remedies under this Section 5.21, and thereafter as provided in Section 3.03 hereof; 56 (ix) if there shall be filed by or against the Mortgagor a petition under the Code or any Comparable Provision and the Mortgagor, as lessee under the Ground Leases, shall determine to reject any or all of the Ground Leases the Mortgagor shall give the Mortgagee not less than 10 days' prior notice of the date on which the Mortgagor shall apply to the Bankruptcy Court or other judicial body with appropriate jurisdiction for authority to reject the lease. The Mortgagee shall have the right, but not the obligation, to serve upon the Mortgagor within such 10 day period a notice stating that (a) the Mortgagee demands that the Mortgagor assume and assign such Ground Lease(s) to the Mortgagee pursuant to Section 365 of the Code or any Comparable Provision and (b) the Mortgagee covenants to cure or provide adequate assurance of prompt cure of all defaults and provide adequate assurance of future performance under such Ground Lease(s). If the Mortgagee serves upon the Mortgagor the notice described in the preceding sentence, the Mortgagor shall not seek to reject such Ground Lease(s) and shall comply with the demand provided for in clause (a) of the preceding sentence within 30 days after the notice shall have been given subject to the performance by the Mortgagee of the covenant provided for in clause (b) of the preceding sentence. Effective upon the entry of an order for relief in respect of the Mortgagor under Chapter 7 of the Code or Any Comparable Provision the Mortgagor hereby assigns and transfers to the Mortgagee a non-exclusive right to apply to the Bankruptcy Court or other judicial body with appropriate jurisdiction for an order extending the period during which the Ground Lease may be rejected or assumed; (x) the Mortgagor shall promptly give to the Mortgagee copies of (A) all notices of default or (B) any other communications or notices with respect to events which relate to the possible impairment of the security of this Mortgage, which it shall give or receive under the Ground Leases and shall promptly notify the Mortgagor of any default under any Ground Lease on the part of the Lessor or the Mortgagor; (xi) the Mortgagor shall enforce the obligations of the Lessor under each Ground Lease, to the end that the Mortgagor may enjoy all of the rights granted to it under the Ground Leases; and (xii) the Mortgagor shall notify the Mortgagee within 5 days after the transfer of a fee interest in the Leased Land or any portion thereof to or from an Affiliate. 57 (c) The Mortgagor hereby represents and warrants that all fixed net rent, taxes and assessments, payable under the Ground Leases have been paid to the extent they were due and payable to the date hereof and that the Mortgagor has not received notice of its failure to pay any other amounts payable under the Ground Leases which have not been cured. (d) If both the Lessor's and Lessee's estates under any of the Ground Leases or any portion thereof shall at any time become vested in one owner, this Mortgage and the lien created hereby shall nevertheless not be merged, extinguished, destroyed or terminated by application of the doctrine of merger and, in such event, Mortgagee shall continue to have all of the rights and privileges of the leasehold mortgagee. (e) The Mortgagor hereby acknowledges that if any Ground Lease shall be terminated prior to the natural expiration of its term due to default by the Lessee thereunder, and if pursuant to such Ground Lease, the Mortgagee or its designee shall acquire from the Lessor a new lease of the Leased land or any portion thereof, the Mortgagor shall have no right, title or interest in or to such lease or the leasehold estate created thereby, or the options therein contained. (f) Any leases for parking purposes hereafter entered into by the Mortgagor as lessee shall contain provisions permitting the assignment of the same to the Mortgagee and the Trustee and permitting assignment without the lessor's consent if this Mortgage is foreclosed. Section 5.22. SUPERIOR MORTGAGES. (a) The Mortgagor covenants and agrees that it will at all times fully perform and comply with all agreements, covenants, terms and conditions imposed upon or assumed by it as mortgagor under the Superior Mortgages prior to the expiration of any notice and/or cure period provided in each such Superior Mortgage. If a notice of default has been given by the holder of any Superior Mortgage and the maturity of the indebtedness secured by such Superior Mortgage has been accelerated as a result thereof, the Mortgagee may rely thereon and take any action the Mortgagee deems necessary in its sole discretion to prevent or to cure any default by the Mortgagor in the performance of or compliance with any of the agreements, covenants, terms or conditions imposed upon or assumed by the Mortgagor as mortgagor under each of the Superior Mortgages even though the existence of such default or the nature thereof may be questioned or denied by the Mortgagor or by any party on behalf of the Mortgagor provided that if the Mortgagor has heretofore taken such actions as 58 described in Section 3.01(h), the Mortgagee shall not take any such action unless and until the Mortgagor and/or the Mortgagee no longer has the benefit of any such tolling or stay referred to in Section 3.01(h). Without limiting the generality of Section 3.09 hereof, the Mortgagor hereby expressly grants to the Mortgagee, and agrees that upon such acceleration the Mortgagee shall have, the absolute and immediate right to enter in and upon the Premises or any part thereof to such extent and as often as the Mortgagee, in its sole discretion, deems necessary for the purpose permitted by the immediately preceding sentence, subject only to applicable Legal Requirements. The Mortgagee may (i) pay and expend such sums of money as the Mortgagee in its sole discretion deems necessary for any such purpose and (ii) in its sole discretion prepay any Superior Mortgage, and the Mortgagor hereby agrees to pay to the Mortgagee, immediately and without demand, all such sums referred to in (i) and (ii) above so paid and expended by the Mortgagee, together with interest thereon from the date of each such payment at the rate of interest set forth in the Note. All sums so paid and expended by the Mortgagee and the interest thereon shall be added to and be secured by the lien of this Mortgage. (b) The Mortgagor further covenants and agrees: (i) the Mortgagor shall not, without first satisfying the conditions set forth in Section 5.22(b)(i) of the Note Mortgage: (A) modify any of the terms, covenants or conditions of any Superior Mortgage, and without limiting the foregoing, the Mortgagor shall not, without satisfying such conditions, enter into or obtain any agreement whereby the holder of any Superior Mortgage waives, postpones, extends, reduces or modifies the payment of the installment of principal or interest or any other item or amount now required to be paid under the terms of any Superior Mortgage or modifies any other provision thereof, or (B) acquire or permit or suffer any Affiliate of the Mortgagor to acquire any Superior Mortgage or any interest therein. Notwithstanding anything in clause (A) to the contrary, the Mortgagor shall have the right to amend, supplement or modify any Superior Mortgage, if (x) the then outstanding principal balance of the indebtedness secured by such Superior Mortgage is not increased thereby, and (y) in the case of any After-Acquired Fee Mortgage, such amendment, supplement or agreement does not increase the property covered thereby; (ii) the Mortgagor shall timely pay and perform all of the obligations to be paid or performed by the Mortgagor under each Superior Mortgage, the note secured thereby and any other instrument evidencing or 59 securing the indebtedness owing to any holder of any Superior Mortgage; (iii) at any time, and from time to time, the Mortgagor shall upon request of the Mortgagee promptly use its reasonable efforts to obtain an estoppel certificate or letter addressed to the Mortgagee from holders of the Superior Mortgages, such certificate or letter to be in such form as the Mortgagee shall request; and (iv) the Mortgagor shall promptly give to the Mortgagee copies of (A) all notices of default or (B) any other notice or communication with respect to events which relate to the possible impairment of the security of this Mortgage, which it shall give or receive under the Superior Mortgages and shall promptly notify the Mortgagor of any default under any Superior Mortgages on the part of the Mortgagor. (c) The lien of this Mortgage in and to all or specified portions of the Trust Estate shall be subject and subordinate to any Existing Encumbrances, the liens created by the Senior Mortgage Documents and any mortgage, assignment, security agreement, financing statement or other lien securing any Working Capital Facility (the "Working Capital Facility Lien") encumbering Mortgagor's interest in the affected portions of the Trust Estate or any part thereof. The foregoing provisions of this Section 5.22(c) shall be self-operative with respect to the liens created by the Senior Mortgage Note Documents and any Working Capital Facility Lien, and no further instrument shall be required to give effect to such subordination. Mortgagee shall, however, from time to time, execute instruments in form and substance reasonably satisfactory to the holder of the Working Capital Facility Lien, confirming such subordination and agreeing to such other matters reasonably required by the holder of the liens created by the Senior Mortgage Documents and the holders of such liens which do not, in the aggregate, materially adversely reduce or impair the rights of Trustee under the Mortgage, and Mortgagor and others may rely conclusively thereon, provided that Mortgagee shall have no liability thereunder and all costs and expenses (including reasonable attorneys' fees) shall be paid by Mortgagor. (d) The lien of the Mortgage in and to all or specified portions of the Trust Estate shall be subject and subordinate to any Existing Encumbrances. The provisions of this Section 5.22(d) shall be self-operative, and no further instrument shall be required to give effect to such subordination. 60 Section 5.23. MORTGAGE PARI PASSU WITH NOTE MORTGAGE. Notwithstanding recordation of this Mortgage in the Atlantic County, New Jersey Clerk's Office after the recordation of the Note Mortgage, the lien of this Mortgage ranks PARI PASSU with, and not junior to, the lien created by the Note Mortgage. ARTICLE SIX MISCELLANEOUS Section 6.01. ACTION UNDER NOTE MORTGAGE. Mortgagee acknowledges that it is the assignee of the Note Mortgage, which Note Mortgage creates a lien upon the Trust Estate which is PARI PASSU with the lien of this Mortgage. Mortgagee further acknowledges and agrees that whenever it is provided in the Note Mortgage that the Mortgagor shall deliver any notice or document, or is required to make any payment thereunder, the delivery of such notice or document or the making of such payment pursuant to the terms of the Note Mortgage shall also constitute the delivery of such notice or document or the making of such payment in satisfaction of the terms, conditions and provisions of this Mortgage to the same extent as the same constitutes satisfaction of the terms, conditions and provisions of the Note Mortgage. Section 6.02. COUNTERPARTS. This instrument may be executed in any number of counterparts, each of which as executed shall be deemed to be an original, but all such counterparts shall constitute one and the same instrument. Section 6.03. MODIFICATION. This Mortgage is subject to "modification" within the meaning of N.J.S.A. 46:9-8.1 et seq., and this Mortgage shall have the benefit of the lien priority provisions of such statute. Such modification may include, without limitation, a change in the interest rate, maturity date or other terms and conditions of this Mortgage. THE MORTGAGOR DECLARES THAT THE MORTGAGOR HAS RECEIVED A TRUE COPY OF THIS MORTGAGE. IN WITNESS WHEREOF, the parties hereto have caused this Mortgage to be duly executed and attested, all as of the day and year first above written. 61 RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation By:_____________________________ Name: Title: (Vice) President ATTEST:_________________________ Name: Title: (Asst.) Secretary U.S. TRUST COMPANY OF CALIFORNIA, N.A. By:_____________________________ Name: Title: (Vice) President ATTEST:_________________________ Name: Title: (Asst.) Secretary 62 Exhibit G Intercreditor Agreement Terms Exhibit G Outline of Material Terms of the Intercreditor Agreement for Resorts International, Inc. Subject Credit Senior Secured Loan due July 15, 2002 (the Facilities "Senior Facility"); Senior Mortgage Notes due [March] 15, 2003 (the "Senior Mortgage Notes"); Junior Mortgage Notes due June 15, 2004 (the "Junior Mortgage Notes"); and Any other credit facilities which may be required by the Indentures for the Senior Facility, the Senior Mortgage Notes or the Junior Mortgage Notes to be included in the Intercreditor Agreement (the "Additional Facilities," and together with the Senior Facility, the Senior Mortgage Notes and the Junior Mortgage Notes, the "Credit Facilities") Creditor Parties Senior Facility Trustee; Senior Mortgage Note Trustee; Junior Mortgage Note Trustee; and any lenders (or trustees or agents on behalf of any lenders) which provide Additional Facilities (collectively, the "Trustees") Each Creditor Party, by its execution of the Intercreditor Agreement (whether directly or through its trustee or agent), acknowledges the making of the other Credit Facilities and the intended uses of proceeds thereof and waives any right to object to any contemporaneous or existing Credit Facility as having constituted a fraudulent conveyance. Classification of Initial Designations:Credit Facilities Class 1 Facilities: Senior Facility, all guarantees thereof and all intercompany obligations pledged as collateral therefor. Class 2 Facilities: Senior Mortgage Notes, all guarantees thereof and all intercompany obligations pledged as collateral therefor. Class 3 Facilities: Junior Mortgage Notes, all guarantees thereof and all intercompany obligations pledged as collateral therefor. Subsequent Designations - as indicated on the signature page(s) to be executed by the lenders (or any trustees or agents on behalf of any lenders) which provide Additional Facilities and consented to by all other parties at such time. Borrower Parties Resorts International Hotel Financing, Inc. ("RIHF"), as borrower under the Secured Facilities; Resorts International Hotel, Inc. ("RIH") as guarantor under the Secured Facilities and issuer of the secured intercompany notes to RIHF collaterally assigned to each respective Trustee; Resorts International, Inc. ("RII"), as guarantor under the Senior Facility and issuer of any intercompany notes which may be issued to RIH; and [GRI, Inc. ("GRI", and together with RIHF, RIH and RII, the "Borrower Parties") as guarantor under the Senior Facility and issuer of any intercompany notes which may be issued to RIH.]1* The Borrower Parties will execute the Intercreditor Agreement principally for the purposes of (i) acknowledging the relative rights of and relationships among the Secured Facilities established therein and (ii) agreeing not to take any actions, including making any payments, inconsistent therewith. - ------------------- * Subject to discussion on structure 2 Relative Priorities Liens: Notwithstanding the time of filing, recording or perfecting of the Security Documents (which will be defined to include the Mortgages and other liens and encumbrances): Each Lien created on behalf of a Class 1 Facility shall be (i) pari passu with any other Lien created on behalf of any other Class 1 Facility and (ii) senior to any Lien created on behalf of any Class 2 Facility or Class 3 Facility. Each Lien created on behalf of a Class 2 Facility shall be (i) pari passu with any other Lien created on behalf of any other Class 2 Facility, (ii) senior to any Lien created on behalf of any Class 3 Facility and (iii) junior to any Lien created on behalf of any Class 1 Facility. Each Lien created on behalf of a Class 3 Facility shall be (i) pari passu with any other Lien created on behalf of any other Class 3 Facility, and (ii) junior to any Lien created on behalf of any Class 1 Facility or Class 2 Facility. Subrogation To be waived by all guarantors. Mortgage Default Each Class 3 Creditor shall notify each Cure Provisions Class 2 Creditor and each Class 1 Creditor of any Default or Event of Default under its respective Class 3 Facility or the Mortgage or other Security Documents securing its facility, and promptly shall send to each Class 2 Creditor and each Class 1 Creditor copies of all notices of default and all notices relating to cure and/or grace periods under such Class 3 Facility or the Mortgage or other Security Documents securing its facility. Each Class 2 Creditor shall notify each Class 1 Creditor and each Class 3 Creditor of any Default or Event of 3 Default under its respective Class 2 Facility or the Mortgage or other Security Documents securing its facility, and promptly shall send to each Class 1 Creditor and each Class 3 Creditor copies of all notices of default and all notices relating to cure and/or grace periods under such Class 2 Facility or the Mortgage or other Security Documents securing its facility. Each Class 1 Creditor shall notify each Class 2 Creditor and each Class 3 Creditor of any Default or Event of Default under its respective Class 1 Facility or the Mortgage or other Security Documents securing its facility, and promptly shall send to each Class 2 Creditor and each Class 3 Creditor copies of all notices of default and all notices relating to cure and/or grace periods under such Class 1 Facility or the Mortgage or other Security Documents securing its facility. In addition, each Trustee will be obligated to notify all other Trustees prior to exercising any remedies with respect to any shared collateral. Application of Proceeds from dispositions of Proceeds collateral, insurance proceeds, condemnation awards and similar amounts will be applied in accordance with relative priorities of Liens. Representations and Each party to the Intercreditor Warranties Agreement will make appropriate representations, including those relating to its corporate existence, power and authority, as well as to the validity and enforceability of the Intercreditor Agreement. Amendments Intercreditor Agreement may not be amended except pursuant to a writing executed by all parties thereto. Amendments for the sole purpose of adding permitted parties may be executed by the Trustees without the consent of 4 the creditors for whom they serve if all conditions precedent to the incurrence of such indebtedness have been satisfied. Amendments to sections [ ] and [ ] may be executed by the Trustees only with the approval of 100% of the creditors for whom they serve and amendments to sections [ ] and [ ] may be executed by the Trustees only with the approval of 66 2/3% of the creditors for whom they serve. Third Party Each party to the Intercreditor Beneficiarie Agreement will acknowledge that such agreement is being entered into for the benefit of the lenders under the Credit Facilities and their respective successors and assigns, each of whom is a direct intended third-party beneficiary. Certain Specific performance; no waivers; Miscellaneous cooperation and further assurances. Provisions Governing Law New York EX-4 6 EXHIBIT 4.22 NA932230075 - GUARANTY MORTGAGE GD&C DRAFT DATED 12/17/93 MORTGAGE SECURING GUARANTY OF MORTGAGE NOTES by and between RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation, as Mortgagor, and STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION a national banking association, as Mortgagee Dated as of ________ __, 1994 Prepared by:_______________________ D. Eric Remensperger After recording return to: Gibson, Dunn & Crutcher 200 Park Avenue New York, New York 10166 Attention: D. Eric Remensperger MORTGAGE SECURING GUARANTY OF MORTGAGE NOTES ----------------- THIS MORTGAGE, dated as of ________ ___, 1994, between RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation ("Mortgagor"), and STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, a national banking association having an address at 750 Main Street, Suite 1114 Hartford, Connecticut 06103 ("Mortgagee"), in its capacity as Trustee under that certain Indenture dated as of even date herewith (the "Indenture") among Mortgagor, Mortgagee and Resorts International Hotel Financing, Inc. ("RIHF"). WITNESSETH: In consideration of $10.00 in hand paid by Mortgagee to Mortgagor and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in order to secure (i) the Guaranty by Mortgagor of the payments of principal and interest due on the 11% Mortgage Notes due 2003 in an aggregate principal amount of $125,000,000, issued pursuant to the provisions of the Indenture (defined therein, and hereinafter collectively referred to herein, as the "Notes"), in accordance with the terms and conditions of Article Fourth of the Indenture; and performance and observance of all of the provisions herein contained, Mortgagor has executed and delivered this Mortgage and has bargained, sold, aliened, mortgaged, pledged, released, conveyed and confirmed unto Mortgagee and its successors hereunder and assigns forever, all of its right, title and interest in, to and under any of the following described property: GRANTING CLAUSES GRANTING CLAUSE FIRST All the property, rights, title, interest, privileges and franchises particularly described in annexed Schedule 1 (the "Owned Land") which Schedule is hereby made a part of, and deemed to be described in, this Granting Clause as fully as if set forth in this Granting Clause at length. GRANTING CLAUSE SECOND All of the property, rights, title, interest, privileges and franchises of the Mortgagor as lessee in those certain leases (the "Ground Leases") particularly described in Schedule 2, which Schedule is hereby made a part of, and deemed to be described in, this Granting Clause as fully as if set forth in this Granting Clause at length, which Ground Leases cover the real property described in Schedule 2 (the "Leased Land") and in and to any and all modifications, extensions and renewals of the Ground Leases and all options set EX-4 7 EXHIBIT 4.23 NA932010185 - MORTGAGE SECURING RIH PROMISSORY NOTE GD&C DRAFT DATED 12/17/93 MORTGAGE SECURING RIH PROMISSORY NOTE by and between RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation, as Mortgagor, and RESORTS INTERNATIONAL HOTEL FINANCING, INC. a Delaware corporation, as Mortgagee Dated as of ________ __, 1994 Prepared by:_______________________ D. Eric Remensperger After recording return to: Gibson, Dunn & Crutcher 200 Park Avenue New York, New York 10166 Attention: D. Eric Remensperger MORTGAGE SECURING RIH PROMISSORY NOTE THIS MORTGAGE, dated as of ________ ___, 1994, between RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation ("Mortgagor"), and RESORTS INTERNATIONAL HOTEL FINANCING, INC., a Delaware corporation ("RIHF"), having an address at c/o Resorts International, Inc., 1133 Boardwalk, Atlantic City, New Jersey 08401 (RIHF, or its successors or assigns which shall than be the Noteholder (as hereinafter defined), being referred to herein as "Mortgagee"). WITNESSETH: In consideration of $10.00 in hand paid by Mortgagee to Mortgagor and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in order to (i) the payment of the principal amount (and premium, if any) of the secured promissory note by Mortgagor to Mortgagee in the principal amount of $125,000,000 as amended and restated the date hereof (hereinafter collectively referred to as the "Note"), in lawful money of the United States, to be paid in accordance with the provisions thereof (and all renewals, extensions, and modifications thereof) all of which are hereby made an integral part hereof as though set forth at length herein; (ii) payment of interest (including interest on all overdue principal and premium, if any) becoming due under the provisions of the Note; (iii) payment by Mortgagor to Mortgagee of all sums expended or advanced by Mortgagee pursuant to any term or provision of this Mortgage; (iv) performance of each covenant, term, condition and agreement of Mortgagor herein or in the Note contained; (v) all costs and expenses, including reasonable counsel fees and expenses as provided in Section 3.07, which may arise in respect of the Note and this Mortgage or of the obligations secured hereby; and (vi) performance and observance of all of the provisions herein contained, Mortgagor has executed and delivered this Mortgage and has bargained, sold, aliened, mortgaged, pledged, released, conveyed and confirmed unto Mortgagee and its successors hereunder and assigns forever, all of its right, title and interest in, to and under any of the following described property: GRANTING CLAUSES GRANTING CLAUSE FIRST All the property, rights, title, interest, privileges and franchises particularly described in annexed Schedule 1 (the "Owned Land") which Schedule is hereby made a part of, and deemed to be described in, this Granting Clause as fully as if set forth in this Granting Clause at length. GRANTING CLAUSE SECOND All of the property, rights, title, interest, privileges and franchises of the Mortgagor as lessee in those certain leases (the "Ground Leases") particularly described in Schedule 2, which Schedule is hereby made a part of, and deemed to be described in, this Granting Clause as fully as if set forth in this Granting Clause at length, which Ground Leases cover the real property described in such Schedule 2 (the "Leased Land") and in and to any and all modifications, extensions andrenewals of the Ground Leases and all options set forth therein, together with (i) all credits, deposits, privileges and rights of the Mortgagor as lessee under the Ground Leases, now or at any time existing, (ii) the leaseholds and the leasehold estates created by the Ground Leases and (iii) all of the estates, rights, titles, claims or demands whatsoever of Mortgagor, either in law or in equity, in possession or in expectancy, of, in and to the Ground Leases and the Leased Land, together with (x) any and all other, further or additional title, estates, interests or rights which may at anytime be acquired by the Mortgagor in or to the Leased Land, and the Mortgagor expressly agrees that if the Mortgagor shall, at any time prior to payment in full of all indebtedness secured hereby, acquire fee simple title or any other greater estate to the Leased Land pursuant to the Ground Leases, or otherwise, the lien of this Mortgage shall attach, extend to, cover and be a lien upon such fee simple title or other greater estate and thereupon the lien of this Mortgage shall be prior to the lien of any mortgage or deed of trust placed on such acquired title, estate, interest or right subsequent to the date of this Mortgage and (y) any right to possession or statutory term of years derived from, or incident to, the Ground Leases pursuant to Section 365(h) of the U.S. Bankruptcy Code (the "Code") or any comparable provision contained in any present or future federal, state, local, foreign or other statute, law, rule or regulation. 3 GRANTING CLAUSE THIRD All the rents, issues, profits, revenues and other income and proceeds of the property subjected or required to be subjected to the lien of this Mortgage, including, without limitation, the property described in Granting Clauses First, Second, and Sixth (such property is hereinafter collectively referred to as the "Premises") and all the estate, right, title and interest of every nature whatsoever of the Mortgagor in and to the same and every part thereof. The collective metes and bounds description of the Owned Land and the Leased Land is set forth in annexed Schedule 3. GRANTING CLAUSE FOURTH All of the rights as lessor under Leases in effect on the date of execution of this Mortgage or hereafter entered into by the Mortgagor, if any, including extensions, renewals or amendments of all of the same, and the immediate and continuing right as security in accordance with an Assignment of Leases and Rents of even date herewith between Mortgagor and Mortgagee, and, after the occurrence of an Event of Default, to make claim for, collect, receive and receipt for (and to apply the same as provided herein) any and all rents, income, revenues, issues, profits, security and other sums of money payable or receivable thereunder or pursuant thereto, and all proceeds thereof, whether payable as rent, insurance proceeds, condemnation awards, security or otherwise and whether payable prior to or subsequent to the maturity date of the Note, to receive and give notices and consents thereunder, to bring actions and proceedings thereunder or for the enforcement thereof, to make waivers and agreements, to take such action upon the happening of a default under any Lease, including the commencement, conduct and consummation of any proceedings at law or in equity as shall be permitted by any provision of any Lease, and to do any and all things which the Mortgagor or any lessor is or may become entitled to do under the Leases; provided, that the assignment made by this granting Clause Fourth shall not impair or diminish any obligation of the Mortgagor under the Leases, or shall any such obligation be imposed upon the Mortgagee. GRANTING CLAUSE FIFTH Without limiting the generality of the provisions of Granting Clause Third, the Mortgagor's rights, privileges and franchises in and to the following, to the extent of the Mortgagor's interest therein and thereto and to the extent assignable (collectively, "Operating Assets"): 4 (a) bookings and receipts for the use of guest rooms, banquet facilities and meeting rooms at the Casino-Hotel; (b) all contracts respecting utility services for, and the maintenance, operations, or equipping of the Premises, including guaranties and warranties relating thereto; (c) the Permits; (d) all contract rights, leases, concessions, trademarks, trade names, service marks, service names, logos, copyrights, warranties and other items of intangible personal property relating to the ownership or operation of the Casino-Hotel, including, without limitation, (1) telephone and other communication numbers, (2) all software licensing agreements as are required to operate computer software systems at the Casino-Hotel, all transferable proprietary interest in software required to operate the computer systems at the Casino Hotel and books and records relating to the software programs, and (3) lessee's interest under leases of Tangible Personal Property; (e) all agreements entered into by or on behalf of the Mortgagor or which have been assigned to the Mortgagor, for the design and construction, and for the equipping and furnishing, of the Casino-Hotel, including architect's agreements, engineering agreements, construction contracts, consulting agreements and agreements or purchase orders for all items of Tangible Personal Property and payment and performance bonds in favor of the Mortgagor in connection with the Trust Estate (and all warranties and guaranties thereunder and warranties and guaranties of any subcontractor and bond issued in connection with the work to be performed by any subcontractor); (f) the following personal property (the "Tangible Personal Property") now or hereafter acquired by the Mortgagor: (i) all furniture, furnishings, equipment, machinery, apparatus, appliances, fixtures and fittings and other articles of tangible personal property which are, or are to be located on, or used in connection with the operation of, the Casino-Hotel; (ii) all slot machines, electronic gaming devices, crap tables, blackjack tables, roulette tables, baccarat tables, and big six 5 wheels, located or to be located in the Casino-Hotel, and all furnishings and equipment to be used in connection with the operation thereof; (iii) all cards, dice, gaming chips and placques, tokens, chip racks, dealing shoes, dice cups, dice sticks, layouts, paddles, roulette balls and other consumable supplies and items to be used in connection with the gaming operations of the Casino-Hotel; (iv) all china, glassware, linens, kitchen utensils, silverware and uniforms, whether in use or held in reserve storage for future use, in connection with the operation of the Casino-Hotel, which are on hand or on order whether stored on-site or off-site; (v) all consumables and operating supplies of every kind and nature for use in all of the operating departments of the Casino-Hotel, or in the improvements now or hereafter located on any of the Owned Land, including without limitation, accounting supplies, guest supplies, forms, printing, stationery, food and beverage stock, bar supplies, laundry supplies and brochures to existing purchase orders; (vi) all sets and scenery, costumes, props and other items of tangible personal property on hand or on order for use in the production of shows in the showroom of the Casino-Hotel; and (vii) all cars, limousines, vans, buses, trucks and other vehicles owned or leased by the Mortgagor for use in Casino-Hotel operations, together with all equipment, parts and supplies used to service, repair, maintain and equip the foregoing; (g) all drawings, designs, plans and specifications prepared by the architects, interior designers, landscape designers and any other consultants for the development of the Premises, as amended from time to time; (h)any administrative and judicial proceedings initiated by the Mortgagor, or in which the Mortgagor has intervened, concerning the Casino-Hotel, and agreements, if any, which are the subject matter of such proceedings; 6 (i) any customer lists utilized by the Mortgagor, including lists of transient guests and restaurant and bar patrons and "high roller" lists; and (j) all of the goodwill in connection with the operation of the Premises. EX-4 8 EXHIBIT 4.24 NA932280131 - MORTGAGE ASSIGNMENT GD&C DRAFT DATED 12/17/93 ============================================================================== ASSIGNMENT OF AGREEMENTS ________________ RESORTS INTERNATIONAL HOTEL FINANCING, INC., a Delaware corporation, as Assignor, TO STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION a national banking association, as Assignee Dated as of _________________, 1994 ============================================================================== Prepared by:__________________________ D. Eric Remensperger, Esq. ASSIGNMENT OF AGREEMENTS THIS ASSIGNMENT made as of the ___ day of ___________, 1994, by RESORTS INTERNATIONAL HOTEL FINANCING, INC., a Delaware corporation ("ASSIGNOR"), having an address at c/o Resorts International, Inc., 1133 Boardwalk, Atlantic City, New Jersey 08401, to STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, a national banking association, having an address at 750 Main Street, Suite 1114, Hartford, Connecticut 06103, in its capacity as Trustee ("Assignee"), under that certain Indenture dated as of even date herewith (the "INDENTURE") among Assignor, Assignee and Resorts International Hotel, Inc., a New Jersey corporation ("MORTGAGOR"). WITNESSETH: WHEREAS, in partial repayment of certain inter-company debt owed by Mortgagor to Resorts International, Inc., a Delaware corporation ("RII"), Mortgagor has issued to RII a secured promissory note on the date hereof in the principal amount of $125,000,000 (as the same may be amended or restated from time to time, the "RIH PROMISSORY NOTE"), which note is secured by a Mortgage Securing RIH Promissory Note of even date (the "MORTGAGE"), which Mortgage encumbers certain real property owned or leased by Mortgagor as more specifically described on SCHEDULE 1 hereto together with all buildings and improvements erected thereon (collectively, the "PROPERTY"); and WHEREAS, RII has transferred the RIH Promissory Note and the Mortgage to Assignor in exchange for 11% Mortgage Notes due 2003 (the "NOTES") in an aggregate principal amount of $125,000,000, which Notes were issued pursuant to the Indenture; and WHEREAS, as further security for the obligations of Mortgagor under the RIH Promissory Note, Mortgagor has executed and delivered (i) an Assignment of Operating Assets and (ii) an Assignment of Leases and Rents, each in favor of Assignor (as assignee of RII) and each dated as of the date hereof (said Assignments and the Mortgage collectively referred to herein as the "RIH PROMISSORY NOTE MORTGAGE DOCUMENTS"), pursuant to which Mortgagor granted a security interest in specified personal property, assigned certain other rights and assigned all right, title and interest of Mortgagor in leases and rents to Assignor, all as security for the performance and observance of obligations of Mortgagor under the RIH Promissory Note; and WHEREAS, the rights and obligations of the Assignee hereunder are subject to the terms set forth in that certain Intercreditor Agreement dated as of the date hereof among Assignor, Assignee, Mortgagor, Fidelity Management and Trust Company, as trustee, and U.S. Trust Company of California, N.A., as trustee (and such other parties that may from time to time become a party thereto); and WHEREAS, in order to secure payment of the Notes and all other payments due to the holder(s) from time to time of the Notes (collectively, the "HOLDERS") or the Trustee under the Indenture, Assignor has agreed to execute this Assignment and to be bound by its terms; NOW, THEREFORE, THIS ASSIGNMENT FURTHER WITNESSETH: That Assignor in consideration of the purchase of the Notes by the Holders, Ten Dollars ($10.00) lawful money of the United States of America duly paid to Assignor by Assignee at or before the execution and delivery of these presents and for other good and valuable consideration, the receipt of which are hereby acknowledged, does hereby sell, assign and transfer unto Assignee and unto its successors and to its assigns forever, for its benefit and for the benefit of the Holders, and does hereby grant to Assignee a security interest in and to all of Assignor's estate, right, title and interest in, to and under any and all of the following described property, rights and interests (collectively, the "ASSIGNED PROPERTIES"): GRANTING CLAUSE FIRST All right, title and interest of Assignor in and to the RIH Promissory Note, including all renewals, extensions, modifications and replacements of the same, and without limiting the generality of the foregoing, the present, continuing and future right to make claim for, collect or cause to be collected, receive or cause to be received directly from Mortgagor thereunder, all payments of principal, interest and other sums of money payable thereunder. GRANTING CLAUSE SECOND All right, title and interest of Assignor in and to the RIH Promissory Note Mortgage Documents, including all extensions, renewals, modifications, supplements and replacements of the same. 2 TO HAVE AND TO HOLD all said properties, rights and interests unto Assignee and its successors and assigns forever. THIS ASSIGNMENT FURTHER WITNESSETH, that Assignor hereby agrees and covenants with Assignee as follows: ARTICLE ONE PARTICULAR COVENANTS OF ASSIGNOR Section 1.01. PERFORMANCE OF COVENANTS. Assignor represents, warrants and covenants that it is duly authorized to enter into this Assignment, and to grant and convey a lien on and security interest in the Assigned Properties to Assignee in the manner and to the extent herein set forth and that all action on its part required for the execution and delivery of this Assignment has been duly and effectively taken. Section 1.02. FURTHER ACTION REQUIRED. (a) Assignor covenants that it will, from time to time, execute and deliver such further instruments and take such further actions as may be required to carry out the purposes of this Assignment. (b) Assignor hereby appoints Assignee as its lawful attorney-in-fact (such power being coupled with an interest) in the name of Assignor or Assignee or both to execute any instruments or to take any actions to enforce all rights, powers and remedies of Assignor under or pursuant to the Assigned Properties. (c) Nothing contained herein shall limit the rights of Assignee contained in the Mortgage or the Indenture. (d) Until this Assignment is discharged in accordance with Section 5.01 hereof, no amendment, waiver, modification, discharge, release, enforcement or satisfaction by Assignor of any of the rights or remedies under the Assigned Properties shall be effective without the prior consent and approval of Assignee, and Assignor shall have no power or authority to take any such action without such consent and approval. ARTICLE TWO OBLIGATIONS TO ASSIGNEE Section 2.01. CONTINUING OBLIGATIONS. (a) Assignee shall have no obligation, duty or liability with respect to the Assigned Properties or any of 3 them (other than those specifically assumed in its capacity as Trustee pursuant to the Indenture). (b) Assignor shall at all times remain liable to observe and perform all of its covenants and obligations, if any, under the Assigned Properties, and does hereby agree to indemnify and hold harmless Assignee, its successors and assigns, from any liability, loss, damage or expense it or they may incur under the Assigned Properties or by reason of this Assignment. ARTICLE THREE PAYMENTS Section 3.01. PAYMENTS. All Revenues (as hereinafter defined) due and to become due under or pursuant to the Assigned Properties shall be paid by Mortgagor directly to Assignee at the address set forth in Section 6.02 hereof. Neither Assignor nor Assignee shall have the right, without Mortgagor's prior written consent, to instruct Mortgagor to pay Revenues to Assignor or in any manner or to any party other than directly to Assignee. Section 3.02. MORTGAGOR'S ACKNOWLEDGMENT. Mortgagor hereby joins in the execution of this Assignment to acknowledge (a) the assignment by Assignor to Assignee of Assignor's right, title and interest in, to and under the Assigned Properties, (b) Mortgagor's agreement to make payment of all Revenues under the Assigned Properties directly to Assignee at the address set forth in this Assignment, and (c) the right of Assignee to exercise or enforce in its own name, in the name of Assignor, or both, all of the rights, powers and remedies of Assignor in, to and under the Assigned Properties. Section 3.03. REVENUES. As used herein, the term "REVENUES" shall mean (a) all amounts paid or payable by Mortgagor under the RIH Promissory Note or the RIH Promissory Note Mortgage Documents, and (b) the net proceeds realized upon or as a result of the enforcement of any mortgage lien or security interest granted under the Assigned Properties or this Assignment or upon or as a result of the exercise of any right or remedy under the Assigned Properties or this Assignment. Section 3.04. CONFIRMATION. Assignor hereby agrees, and Mortgagor hereby acknowledges, that Mortgagor may rely exclusively on Assignee's directive that Assignee is entitled to take action under this Assignment. 4 ARTICLE FOUR DEFAULT PROVISIONS AND REMEDIES Section 4.01. ENFORCEMENT OF REMEDIES. (a) Upon the occurrence of any default under the Indenture or the Assigned Properties, or any of them (each, a "DEFAULT"), not cured within the applicable grace period after the applicable notice provision, if any, has been satisfied (each called an "EVENT OF DEFAULT"), Assignee may, at its option, (i) proceed directly to protect and enforce its rights and the rights of any Holders under this Assignment or pursuant to the Assigned Properties, or any one of them, by such suits, actions or special proceedings in equity or at law, or by proceedings in the office of any board or officer having jurisdiction, either for the specific performance of any covenant or agreement contained herein, or in the Assigned Properties, or any of them, or in aid of execution of any power granted herein or pursuant to the Assigned Properties, or any one of them, or for the enforcement of any proper legal or equitable remedy, including, without limitation, foreclosure of the Mortgage and/or the sale of the collateral or part thereof secured thereby at such foreclosure sale, subject to statutory and other legal requirements, as Assignee shall deem most effective to protect and enforce such rights, and Assignor hereby appoints Assignee as its lawful attorney-in-fact (such power being coupled with an interest) in the name of Assignor or Assignee or both to effectuate such foreclosure and/or sale of such collateral or part thereof; or (ii) instruct, direct and cause Assignor to effectuate the foregoing on behalf of and for the benefit of Assignee and the Holders, it being further understood that Mortgagor joins in the execution of this Assignment in order to acknowledge its agreement to promptly and duly execute and deliver any and all documents and take any and all actions required by Assignee in order to permit Assignee to foreclose and/or sell such collateral or part thereof, and obtain the benefits of this Assignment, as aforesaid. (b) Upon the occurrence of any Event of Default, Assignee shall be entitled to sue for, enforce payment of and receive any and all amounts then and at any time remaining due from Assignor or Mortgagor for principal and interest on the RIH Promissory Note, or other sums due under the RIH Promissory Note Mortgage Documents, as the case may be, or otherwise under any of the provisions of the Assigned Properties, or any of them, with interest interest on overdue payments of such principal, at the rate set forth in the RIH Promissory Note, from the date of Default to the date of such payment, together with any and all fees, costs and expenses of collection (including reasonable attorneys' fees and court costs), subject to statutory and other legal requirements. 5 (c) Regardless of the occurrence of an Event of Default, upon five days' written notice to Mortgagor (or such shorter period or without notice if deemed necessary and appropriate by Assignee), Assignee may institute and maintain or cause in the name of Assignor or Assignee or both to be instituted and maintained such suits and proceedings as it may be advised by its counsel shall be necessary and appropriate to prevent any impairment of the Assigned Properties, or any of them, and to protect its interests in the Assigned Properties, and in the rents, issues, rights, revenues and other income arising therefrom, including power to institute and maintain proceedings to restrain the enforcement or compliance with any 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 hereunder or would be materially prejudicial to the interests of Assignee. (d) Nothing contained in this Article Four is intended to grant Assignee any greater remedies and rights than those allowed to Assignor in the respective Assigned Properties. In the event of any conflict between the remedies and rights contained in any of the Assigned Properties and the remedies and rights contained in this Article Four, then the remedies and rights set forth in the applicable Assigned Property shall govern. ARTICLE FIVE DISCHARGE OF ASSIGNMENT Section 5.01. DISCHARGE OF ASSIGNMENT. If Assignor shall pay or cause to be paid, or there shall otherwise be paid, to Assignee and/or the Holders' all amounts required to be paid by Assignor pursuant to the Indenture and the Notes, and the conditions precedent for the Indenture shall cease, determine and become null and void in accordance with Section 5.01 of the Indenture, Assignee shall promptly cancel and discharge of record this Assignment and any financing statements filed in connection herewith and execute and deliver to Assignor and to Mortgagor all such instruments as may be appropriate to evidence such discharge and satisfaction of said lien or liens, and Assignee shall pay over or deliver to Assignor all other moneys and securities held by it pursuant to this Assignment, which are not required for the payment of (a) principal and redemption price, if applicable, of and interest on, the Notes, and (b) all other amounts required to be paid by Assignor pursuant to the Indenture and the Notes. 6 ARTICLE SIX MISCELLANEOUS PROVISIONS Section 6.01. BINDING SUCCESSORS AND ASSIGNS. All of the covenants, stipulations, obligations and agreements contained in this Assignment shall be binding upon and inure to the benefit of Assignor, Assignee and Mortgagor (to the extent applicable to Mortgagor) and their respective successors and assigns. Section 6.02. NOTICES. (a) Any request, notice, demand, authorization, direction, request or other instrument authorized or required by this Assignment to be given to or filed with Assignor, Assignee or Mortgagor (collectively, "NOTICES") shall be deemed given when either (i) delivered by hand or (ii) five days after sending by registered or certified mail, postage prepaid, in either case addressed as follows: If to Assignor, at: Resorts International Hotel Financing, Inc. c/o Resorts International, Inc. 1133 Boardwalk Atlantic City, New Jersey 08401 Attention: Christopher D. Whitney If to Assignee, at: State Street Bank and Trust Company of Connecticut, National Association 750 Main Street Suite 1114 Hartford, Connecticut 06103 Attention: Corporate Trust Department If to Mortgagor, at: Resorts International Hotel, Inc. c/o Resorts International, Inc. 1133 Boardwalk Atlantic City, New Jersey 08401 Attention: Christopher D. Whitney (b) By Notice to Mortgagor, Assignor and/or Assignee, given as provided above, any party may designate additional or substitute addresses for Notices, which shall, notwithstanding Section 6.02(a), be deemed given with received. Section 6.03. PARTIAL INVALIDITY. In case any one or more of the provisions of this Assignment shall for any reason be held to be illegal or invalid, such illegality or 7 invalidity shall not affect any other provision of this Assignment, but this Assignment shall be construed and enforced at the time as if such illegal or invalid provisions had not been contained herein or therein, nor shall such illegality or invalidity or any application thereof affect any legal and valid application herein or thereof from time to time. Section 6.04. APPLICABLE LAW. This Assignment shall be governed by and construed under the internal laws of the State of New Jersey, without giving effect to the principles of conflicts of law. Section 6.05. NO AMENDMENT. For so long as the Notes shall remain outstanding, the Assigned Properties may not be modified, amended or terminated except in accordance with the provisions of the Indenture or the Assigned Properties. Section 6.07. CASINO CONTROL ACT. Each of the provisions of this Assignment is subject to and shall be enforced in compliance with the provisions of the New Jersey Casino Control Act. This Agreement shall not be transferred, assigned or amended without prior approval of the New Jersey Casino Control Commission. IN WITNESS WHEREOF, Assignor, Assignees and Mortgagor have executed this Assignment Agreement as of the date first above written. RESORTS INTERNATIONAL HOTEL FINANCING, INC. Attest: _________________________________________ By:_____________________________ President RESORTS INTERNATIONAL HOTEL, INC. Attest: _________________________________________ By:______________________________ President 8 STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION Attest: _______________________________________ By:______________________________ Title 9 STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK ) BE IT REMEMBERED that on ______________, 1994, before me, the subscriber, __________________, personally appeared _______________, who, being by me duly sworn on his oath, deposes and makes proof to my satisfaction, that he is the Asst. Secretary of Resorts International Hotel Financing, Inc., the corporation named in the within instrument; that __________________ is the Vice President of said Corporation; that the execution, as well as the making of this instrument, has been duly authorized by a proper resolution of the board of directors of the said corporation; that deponent well knows the corporate seal of said corporation; and that the seal affixed to said instrument is the proper corporate seal and was thereto affixed and said instrument signed and delivered by said Vice President as and for the voluntary act and deed of said corporation. In presence of deponent who thereupon subscribed his name thereto as attesting witness; and deponent signed this proof to attest to the truth of these facts. ____________________________ [Name] [Assistant] Secretary Sworn to and subscribed before me, the date aforesaid ____________________________ Notary Public My commission expires: ____________________________ 10 STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK ) BE IT REMEMBERED that on _________________, 1994, before me, the subscriber, __________________, personally appeared ___________________, who being by me duly sworn on his oath, deposes and makes proof to my satisfaction, that he is the Asst. Secretary of STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, the corporation named in the within instrument; that ____________ is the Vice President of said corporation; that the execution, as well as the making of this instrument, has been duly authorized by a proper resolution of the board of directors of the said corporation; that deponent well knows the corporate seal of said corporation; and that the seal affixed to said instrument is the proper corporate seal and was thereto affixed and said instrument signed and delivered by said Vice President as and for the voluntary act and deed of said corporation. In presence of deponent who thereupon subscribed his name thereto as attesting witness; and deponent signed this proof to attest to the truth of these facts. ____________________________ [Name] [Assistant] Secretary Sworn to and subscribed before me, the date aforesaid ____________________________ Notary Public My commission expires: ____________________________ 11 STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK ) BE IT REMEMBERED that on _________________, 1994, before me, the subscriber, __________________, personally appeared ___________________, who being by me duly sworn on his oath, deposes and makes proof to my satisfaction, that he is the Asst. Secretary of Resorts International Hotel, Inc., the corporation named in the within instrument; that ______________ is the Vice President of said corporation; that the execution, as well as the making of this instrument, has been duly authorized by a proper resolution of the board of directors of the said corporation; that deponent well knows the corporate seal of said corporation; and that the seal affixed to said instrument is the proper corporate seal and was thereto affixed and said instrument signed and delivered by said Vice President as and for the voluntary act and deed of said corporation. In presence of deponent who thereupon subscribed his name thereto as attesting witness; and deponent signed this proof to attest to the truth of these facts. ____________________________ [Name] [Assistant] Secretary Sworn to and subscribed before me, the date aforesaid ____________________________ Notary Public My commission expires: ____________________________ 12 EX-4 9 EXHIBIT 4.25 NA932380094 - ASSIGNMENT OF RENTS (RIH PROMISSORY NOTE) GD&C DRAFT DATED 12/17/93 =============================================================================== ASSIGNMENT OF LEASES AND RENTS ________________ RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation, as Assignor, TO RESORTS INTERNATIONAL HOTEL FINANCING, INC., a Delaware corporation, as Assignee Dated as of _________________, 1994 ============================================================================== Prepared by:__________________________ D. Eric Remensperger, Esq. ASSIGNMENT OF LEASES AND RENTS THIS ASSIGNMENT made as of the ____ day of ____________, 1994, by RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation, having its principal office at c/o Resorts International, Inc., 1133 Boardwalk, Atlantic City, New Jersey ("ASSIGNOR") to RESORTS INTERNATIONAL HOTEL FINANCING, INC., a Delaware corporation, having its principal office at c/o Resorts International, Inc., 1133 Boardwalk, Atlantic City, New Jersey ("ASSIGNEE"). WITNESSETH: WHEREAS, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in order to secure: (i) the obligations of Assignor under a secured promissory note dated as of the date hereof made by Assignor to Assignee in the principal amount of $125,000,000 (as the same may be amended or restated from time to time, the "RIH PROMISSORY NOTE"), which note is secured by a Mortgage Securing RIH Promissory Note dated as of the date hereof, between Assignor, as mortgagor, and Assignee, as mortgagee (the "MORTGAGE"; capitalized terms used and not otherwise defined herein shall have the meanings ascribed to those terms in the Mortgage); and (ii) the performance and observance of all of the provisions herein contained; NOW, THEREFORE, Assignor has and does hereby bargain, sell, transfer, assign, convey, set over and deliver unto Assignee, for the purposes set forth above (subject, however, to the rights of the holders of Superior Mortgages and other Existing Encumbrances), all leases or occupancy agreements wherein it is lessor concerning or affecting the use or occupancy of the certain real property owned or leased by Assignor, which real property is described on SCHEDULE 1 hereto and which real property, together with all buildings and improvements erected thereon, is hereinafter collectively referred to as the "PROPERTY", or any part thereof, now existing or which may be executed at any time in the future, and all amendments, extensions and renewals of such leases or occupancy agreements, and any of them, all of which are collectively referred to as the "LEASES", all rents and other income which may now or hereafter be or become due or owing under the Leases, and any of them, and any and all payments derived from or relating to the Leases to which Assignor is entitled, including but not limited to (a) claims for the recovery of damages done to the Property, (b) claims for damages resulting from acts of insolvency or acts of bankruptcy or otherwise, and (c) lump sum payments for the cancellation of Leases or the waiver of any obligation or term thereof prior to the expiration date; PROVIDED, HOWEVER, that no Excepted Property is conveyed hereby; it being intended hereby to establish a present and complete transfer unto Assignee of all of Assignor's right, title, interest and estate in and to the Leases and all the rents, payments and other income arising thereunder; PROVIDED, HOWEVER, that Assignor is hereby granted a license by Assignee to (i) collect all of such rents, payments and other income herein assigned which may become due during the life of this Assignment and (ii) enter into, renew, modify, extend, terminate, amend, collectively assign, transfer or hypothecate any or all of the Leases, in accordance with the provisions of Sections 4.04 and 5.13 of the Mortgage, each until an Event of Default under the Mortgage (an "EVENT OF DEFAULT") shall have occurred and be continuing. Upon the occurrence of an Event of Default, Assignor agrees to deposit with Assignee upon demand such of the Leases and the rents payable thereunder as may from time to time be designated by Assignee. Assignor hereby appoints Assignee the true and lawful attorney of Assignor with full power of substitution, and with power for Assignor and in the name of Assignor and/or in its name, place and stead, to demand, collect, receive and give receipts and complete acquittance for any and all other rents and other amounts herein assigned which may be or become due and payable under the Leases, and at its discretion to file any claim or take any other action or proceeding and make any settlement of any claims, either in its own name or in the name of Assignor or otherwise, which Assignee may deem necessary or desirable in order to collect and enforce the payment of any and all rents and other amounts herein assigned. No right shall be exercised by Assignee under this paragraph until an Event of Default has occurred. All lessees under the Leases are hereby expressly authorized and directed, after the occurrence, and during the continuance, of an Event of Default, to pay all rents and other sums herein assigned to Assignee or such nominee as Assignee may designate in writing delivered to and received by such lessees, who thereafter are expressly relieved of any and all duty, liability or obligation to Assignor in respect of all payments so made. Assignee is hereby vested with full power to use all measures, legal and equitable, deemed by it necessary or proper to enforce this Assignment and to collect the rents and other sums assigned hereunder. Assignee shall be under no obligation to exercise any of the rights or to press any of the claims assigned to it hereunder, or to perform or carry out any of the obligations of Assignor under any of the Leases, and does not assume any of the liabilities in connection with or arising or growing out of the covenants and agreements of Assignor in the Leases. It is further 2 understood that this Assignment shall not operate to place responsibility for the control, care, management or repair of Assignor's estates or interests in and to the Property, or parts thereof, upon Assignee, nor shall it operate to make Assignee liable for the carrying out of any of the terms and conditions of any of the Leases, or for any waste to Assignor's estates or interests in and to the Property by any lessee or sublessee of Assignor under any leases, or by any occupant of the Property, or by any party whatsoever or for any dangerous or defective condition of the Property or for any negligence in the management, upkeep, repair or control of Assignor's estates or interests in and to the Property resulting in loss or injury or death to any lessee, licensee, employee or stranger thereat. No right shall be exercised by Assignee under this paragraph until an Event of Default has occurred. Assignee hereby agrees promptly to remit to Assignor any amounts collected hereunder by Assignee which are in excess of those applied to pay in full the aforesaid liabilities and indebtedness at the time due. Nothing herein contained is intended to limit or reduce the rights of Assignee or the obligations of Assignor set forth in the Mortgage, but rather all of the terms, provisions and conditions of this Assignment are in addition to and in supplement of such rights and obligations. If any provision contained in this Assignment is in conflict with, or inconsistent with, any provision in the Mortgage, the provisions contained in the Mortgage shall govern and control. Upon the release of any portion of the Property from the lien of the Mortgage pursuant to Section 2.05 or 2.06 of the Mortgage, this Assignment shall be null and void with respect to those Leases (the "RELEASED LEASES") which cover exclusively the portion of the Property so released (and no other portion of the Property) and all estate, right, title and interest of Assignee in and to the Released Leases shall revert to Assignor, but in all other respects and for all other purposes, this Assignment shall remain in full force and effect. Assignee shall, from time to time, promptly execute any written instrument in form reasonably satisfactory to the proposed purchaser of a portion of the Property as aforesaid to confirm any reversion of Assignee's right, title and interest in the Released Leases effectuated in accordance with this paragraph, upon receipt by Assignee of an Officer's Certificate stating that Assignor is entitled to such reversion by virtue of the Mortgagor's compliance with the provisions of this paragraph and Section 2.05 or 2.06 of the Mortgage (as the case may be), provided that Assignee shall have no liability thereunder and all costs and expenses shall be paid by Assignor. 3 Assignee acknowledges that (i) contemporaneously with the execution and delivery of this Assignment, it has assigned this Assignment to State Street Bank and Trust Company of Connecticut, National Association ("Trustee"), as trustee under an Indenture of even date herewith among Assignor, Assignee and Trustee (the "Indenture"), and (ii) that the Trustee is also the assignee under an Assignment of Leases and Rents dated as of the date hereof from Assignor to Trustee securing the obligations of Assignor in respect of the Guaranty under and as defined in the Indenture (the "Other Assignment"), which assignment creates a lien on the Leases and rents and income due and owing thereunder PARI PASSU with the lien of this Assignment. Assignee further acknowledges and agrees that whenever it is provided in the Other Assignment that the Assignor shall deliver any notice or document, or is required to make any payment thereunder, the delivery of such notice or document or the making of such payment pursuant to the terms of such Other Assignment shall also constitute the delivery of such notice or document or the making of such payment in satisfaction of the terms, conditions and provisions of this Assignment to the same extent as the same constitutes satisfaction of the terms, conditions and provisions of the Other Assignment. Upon the termination of the Mortgage and the payment in full of the obligations secured thereby, this Assignment shall be and become null and void, and all estate, right, title and interest of Assignee in and to the Leases shall revert to Assignor and Assignee shall promptly cancel and discharge of record this Assignment and any financing statement filed in connection herewith and execute and deliver to Assignor all such instruments as may be appropriate to evidence such discharge and satisfaction of this Assignment (provided that Assignee shall have no liability hereunder or thereunder and all costs and expenses shall be paid by Assignor); otherwise, this Assignment shall remain in full force and effect as herein provided, shall inure to the benefit of Assignee and its successors and assigns, and shall be binding upon Assignor and its successors and assigns, and any subsequent holder of Assignor's right, title and interest and estate in and to the Property. This Assignment shall be governed by and construed under the internal laws of the State of New Jersey, without giving effect to the principles of conflicts of laws. This Assignment is subject to and shall be enforced in compliance with the provisions of the New Jersey Casino Control Act. This Assignment shall not be transferred, assigned or amended without prior approval of the New Jersey Casino Control Commission. The rights and obligations of the Assignee hereunder are subject to the terms set forth in that certain 4 Intercreditor Agreement dated as of the date hereof among Assignor, Assignee, Fidelity Management and Trust Company, as trustee, Trustee and U.S. Trust Company of California, N.A., as trustee (and such other parties that may from time to time become a party thereto). IN WITNESS WHEREOF, the parties hereto have caused this Assignment to be duly executed and attested, all as of the day and year first above written. RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation By:_____________________________ Name: Title: (Vice) President ATTEST:_________________________ Name: Title: (Asst.) Secretary RESORTS INTERNATIONAL HOTEL, FINANCING, INC., a Delaware corporation By:_____________________________ Name: Title: (Vice) President ATTEST:_________________________ Name: Title: (Asst.) Secretary 5 STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK ) BE IT REMEMBERED that on ______________, 1994, before me, the subscriber, __________________, personally appeared _____________, who, being by me duly sworn on his oath, deposes and makes proof to my satisfaction, that he is the (Asst.) Secretary of RESORTS INTERNATIONAL HOTEL, INC., the corporation named in the within instrument; that ______________ is the (Vice) President of said corporation; that the execution, as well as the making of this instrument, has been duly authorized by a proper resolution of the board of directors of the said corporation; that deponent well knows the corporate seal of said corporation; and that the seal affixed to said instrument is the proper corporate seal and was thereto affixed and said instrument signed and delivered by said Vice President as and for the voluntary act and deed of said corporation. In presence of deponent who thereupon subscribed his name thereto as attesting witness; and deponent signed this proof to attest to the truth of these facts. _____________________________ [Name] Assistant Secretary Sworn to and subscribed before me, the date aforesaid ____________________________ Notary Public My commission expires:_____________________________ 6 STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK ) BE IT REMEMBERED that on _________________, 1994, before me, the subscriber, __________________, personally appeared ___________________, who being by me duly sworn on his oath, deposes and makes proof to my satisfaction, that he is the Asst. Secretary of RESORTS INTERNATIONAL HOTEL FINANCING, INC., the corporation named in the within instrument; that ____________ is the Vice President of said corporation; that the execution, as well as the making of this instrument, has been duly authorized by a proper resolution of the board of directors of the said corporation; that deponent well knows the corporate seal of said corporation; and that the seal affixed to said instrument is the proper corporate seal and was thereto affixed and said instrument signed and delivered by said Vice President as and for the voluntary act and deed of said corporation. In presence of deponent who thereupon subscribed his name thereto as attesting witness; and deponent signed this proof to attest to the truth of these facts. __________________________ [Name] Secretary Sworn to and subscribed before me, the date aforesaid ____________________________ Notary Public My commission expires:_____________________________ 7 EX-4 10 EXHIBIT 4.26 NA932040103 - ASSIGNMENT OF RENTS (GUARANTY) GD&C DRAFT DATED 12/17/93 - ----------------------------------------------------------------------------- ASSIGNMENT OF LEASES AND RENTS ________________ RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation, as Assignor, TO STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION a national banking association, as Assignee Dated as of _________________, 1994 - ----------------------------------------------------------------------------- Prepared by:__________________________ D. Eric Remensperger, Esq. ASSIGNMENT OF LEASES AND RENTS THIS ASSIGNMENT made as of the ___ day of ___________, 1994, by RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation ("ASSIGNOR"), having an address at c/o Resorts International, Inc., 1133 Boardwalk, Atlantic City, New Jersey 08401 to STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, a national banking association ("ASSIGNEE"), having an address at 750 Main Street Suite 1114 Hartford Connecticut 06103, in its capacity as Trustee under that certain Indenture dated as of even date herewith (the "INDENTURE"), among Assignor, Assignee and Resorts International Hotel Financing, Inc., a Delaware corporation ("RIHF"). WITNESSETH: WHEREAS, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and in order to secure: (i) Assignor's guarantee of the payments of principal and interest due on the 11% Mortgage Notes due 2003 in an aggregate principal amount of $125,000,000, issued by RIHF pursuant to the provisions of the Indenture and of the performance of certain of RIHF's obligations, all in accordance with the terms and provisions of Article Fourteen of the Indenture; and (ii) the performance and observance of all of the provisions herein contained (capitalized terms used and not otherwise defined herein shall have the respective meanings ascribed to those terms in that certain Mortgage Securing Guaranty of Mortgage Notes dated as of even date herewith, between Assignor, as mortgagor, and Assignee, as mortgagee (the "MORTGAGE")); NOW, THEREFORE, Assignor has and does hereby bargain, sell, transfer, assign, convey, set over and deliver unto Assignee, for the purposes set forth above (subject, however, to the rights of the holders of Superior Mortgages and other Existing Encumbrances), all leases or occupancy agreements wherein it is lessor concerning or affecting the use or occupancy of certain real property owned or leased by Assignor, which real property is described on SCHEDULE 1 hereto and which real property, together with all buildings and improvements erected thereon, is hereinafter collectively referred to as the "PROPERTY", or any part thereof, now existing or which may be executed at any time in the future, and all amendments, extensions and renewals of such leases or occupancy agreements, and any of them, all of which are collectively referred to as the "LEASES", all rents and other income which may now or hereafter be or become due or owing under the Leases, and any of them, and any and all payments derived from or relating to the Leases to which Assignor is entitled, including but not limited to (a) claims for the recovery of damages done to the Property, (b) claims for damages resulting from acts of insolvency or acts of bankruptcy or otherwise, and (c) lump sum payments for the cancellation of Leases or the waiver of any obligation or term thereof prior to the expiration date; PROVIDED, HOWEVER, that no Excepted Property is conveyed hereby; it being intended hereby to establish a present and complete transfer unto Assignee of all of Assignor's right, title, interest and estate in and to the Leases and all the rents, payments and other income arising thereunder; PROVIDED, HOWEVER, that Assignor is hereby granted a license by Assignee to (i) collect all of such rents, payments and other income herein assigned which may become due during the life of this Assignment and (ii) enter into, renew, modify, extend, terminate, amend, collectively assign, transfer or hypothecate any or all of the Leases, in accordance with the provisions of Sections 4.04 and 5.13 of the Mortgage, each until an Event of Default under the Mortgage (an "EVENT OF DEFAULT") shall have occurred and be continuing. Upon the occurrence of an Event of Default, Assignor agrees to deposit with Assignee upon demand such of the Leases and the rents payable thereunder as may from time to time be designated by Assignee. Assignor hereby appoints Assignee the true and lawful attorney of Assignor with full power of substitution, and with power for Assignor and in the name of Assignor and/or in its name, place and stead, to demand, collect, receive and give receipts and complete acquittance for any and all other rents and other amounts herein assigned which may be or become due and payable under the Leases, and at its discretion to file any claim or take any other action or proceeding and make any settlement of any claims, either in its own name or in the name of Assignor or otherwise, which Assignee may deem necessary or desirable in order to collect and enforce the payment of any and all rents and other amounts herein assigned. No right shall be exercised by Assignee under this paragraph until an Event of Default has occurred. All lessees under the Leases are hereby expressly authorized and directed, after the occurrence, and during the continuance, of an Event of Default, to pay all rents and other sums herein assigned to Assignee or such nominee as Assignee may designate in writing delivered to and received by such lessees, who thereafter are expressly relieved of any and all duty, liability or obligation to Assignor in respect of all payments so made. Assignee is hereby vested with full power to use all measures, legal and equitable, deemed by it necessary or proper to enforce this Assignment and to collect the rents and other sums assigned hereunder. Assignee shall be under no obligation to exercise any of the rights or to press any of 2 the claims assigned to it hereunder, or to perform or carry out any of the obligations of Assignor under any of the Leases, and does not assume any of the liabilities in connection with or arising or growing out of the covenants and agreements of Assignor in the Leases. It is further understood that this Assignment shall not operate to place responsibility for the control, care, management or repair of Assignor's estates or interests in and to the Property, or parts thereof, upon Assignee, nor shall it operate to make Assignee liable for the carrying out of any of the terms and conditions of any of the Leases, or for any waste to Assignor's estates or interests in and to the Property by any lessee or sublessee of Assignor under any leases, or by any occupant of the Property, or by any party whatsoever or for any dangerous or defective condition of the Property or for any negligence in the management, upkeep, repair or control of Assignor's estates or interests in and to the Property resulting in loss or injury or death to any lessee, licensee, employee or stranger thereat. No right shall be exercised by Assignee under this paragraph until an Event of Default has occurred. Assignee hereby agrees promptly to remit to Assignor any amounts collected hereunder by Assignee which are in excess of those applied to pay in full the aforesaid liabilities and indebtedness at the time due. Nothing herein contained is intended to limit or reduce the rights of Assignee or the obligations of Assignor set forth in the Mortgage, but rather all of the terms, provisions and conditions of this Assignment are in addition to and in supplement of such rights and obligations. If any provision contained in this Assignment is in conflict with, or inconsistent with, any provision in the Mortgage, the provisions contained in the Mortgage shall govern and control. Upon the release of any portion of the Property from the lien of the Mortgage pursuant to Section 2.05 or 2.06 of the Mortgage, this Assignment shall be null and void with respect to those Leases (the "RELEASED LEASES") which cover exclusively the portion of the Property so released (and no other portion of the Property) and all estate, right, title and interest of Assignee in and to the Released Leases shall revert to Assignor, but in all other respects and for all other purposes, this Assignment shall remain in full force and effect. Assignee shall, from time to time, promptly execute any written instrument in form reasonably satisfactory to the proposed purchaser of a portion of the Property as aforesaid to confirm any reversion of Assignee's right, title and interest in the Released Leases effectuated in accordance with this paragraph, upon receipt by Assignee of an Officer's Certificate stating that Assignor is entitled to such 3 reversion by virtue of the Mortgagor's compliance with the provisions of this paragraph and Section 2.05 or 2.06 of the Mortgage (as the case may be), provided that Assignee shall have no liability thereunder and all costs and expenses shall be paid by Assignor. Upon the termination of the Mortgage and the payment in full of the obligations secured thereby, this Assignment shall be and become null and void, and all estate, right, title and interest of Assignee in and to the Leases shall revert to Assignor and Assignee shall promptly cancel and discharge of record this Assignment and any financing statement filed in connection herewith and execute and deliver to Assignor all such instruments as may be appropriate to evidence such discharge and satisfaction of this Assignment (provided that Assignee shall have no liability hereunder or thereunder and all costs and expenses shall be paid by Assignor); otherwise, this Assignment shall remain in full force and effect as herein provided, shall inure to the benefit of Assignee and its successors and assigns, and shall be binding upon Assignor and its successors and assigns, and any subsequent holder of Assignor's right, title and interest and estate in and to the Property. This Assignment shall be governed by and construed under the internal laws of the State of New Jersey, without giving effect to the principles of conflicts of laws. This Assignment is subject to and shall be enforced in compliance with the provisions of the New Jersey Casino Control Act. This Assignment shall not be transferred, assigned or amended without the prior approval of the New Jersey Casino Control Commission. The rights and obligations of the Assignee hereunder are subject to the terms set forth in that certain Intercreditor Agreement dated as of the date hereof among Assignor, RIHF, Assignee, Fidelity Management and Trust Company, as trustee, and U.S. Trust Company of California, N.A., as trustee (and such other parties that may from time to time become a party thereto). 4 IN WITNESS WHEREOF, the parties hereto have caused this Assignment to be duly executed and attested, all as of the day and year first above written. RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation By:_____________________________ Name: Title: (Vice) President ATTEST:_________________________ Name: Title: (Asst.) Secretary STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION By:_____________________________ Name: Title: (Vice) President ATTEST:_________________________ Name: Title: (Asst.) Secretary 5 STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK ) BE IT REMEMBERED that on ______________, 1994, before me, the subscriber, __________________, personally appeared _______________, who, being by me duly sworn on his oath, deposes and makes proof to my satisfaction, that he is the (Asst.) Secretary of RESORTS INTERNATIONAL HOTEL, INC., the corporation named in the within instrument; that _________________ is the (Vice) President of said Corporation; that the execution, as well as the making of this instrument, has been duly authorized by a proper resolution of the board of directors of the said corporation; that deponent well knows the corporate seal of said corporation; and that the seal affixed to said instrument is the proper corporate seal and was thereto affixed and said instrument signed and delivered by said Vice President as and for the voluntary act and deed of said corporation. In presence of deponent who thereupon subscribed his name thereto as attesting witness; and deponent signed this proof to attest to the truth of these facts. _____________________________ [Name] Assistant Secretary Sworn to and subscribed before me, the date aforesaid ____________________________ Notary Public My commission expires:_____________________________ 6 STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK ) BE IT REMEMBERED that on _________________, 1994, before me, the subscriber, __________________, personally appeared ___________________, who being by me duly sworn on his oath, deposes and makes proof to my satisfaction, that he is the Asst. Secretary of STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, the corporation named in the within instrument; that ____________ is the Vice President of said corporation; that the execution, as well as the making of this instrument, has been duly authorized by a proper resolution of the board of directors of the said corporation; that deponent well knows the corporate seal of said corporation; and that the seal affixed to said instrument is the proper corporate seal and was thereto affixed and said instrument signed and delivered by said Vice President as and for the voluntary act and deed of said corporation. In presence of deponent who thereupon subscribed his name thereto as attesting witness; and deponent signed this proof to attest to the truth of these facts. __________________________ [Name] Secretary Sworn to and subscribed before me, the date aforesaid ____________________________ Notary Public My commission expires:_____________________________ 7 EX-4 11 EXHIBIT 4.27 NA932810103 - ASSIGNMENT OF ASSETS (RIH JUNIOR PROMISSORY NOTE) GD&C DRAFT DATED 12/17/93 - ------------------------------------------------------------------------- ASSIGNMENT OF OPERATING ASSETS ________________ RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation, as Assignor, TO RESORTS INTERNATIONAL HOTEL FINANCING, INC., a Delaware corporation, as Assignee Dated as of _________________, 1994 - ----------------------------------------------------------------------------- Prepared by:__________________________ D. Eric Remensperger, Esq. ASSIGNMENT OF OPERATING ASSETS THIS ASSIGNMENT made as of the ____ day of ____________, 1994, by RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation, having its principal office at c/o Resorts International, Inc., 1133 Boardwalk, Atlantic City, New Jersey ("ASSIGNOR"), to RESORTS INTERNATIONAL HOTEL FINANCING, INC., a Delaware corporation, having its principal office at c/o Resorts International, Inc., 1133 Boardwalk, Atlantic City, New Jersey ("ASSIGNEE"). WITNESSETH: WHEREAS, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in order to secure: (i) the obligations of Assignor under a promissory note dated as of the date hereof made by Assignor to Assignee in the principal amount of $35,000,000 (as the same may be amended or restated from time to time, the "RIH JUNIOR PROMISSORY NOTE"), which note is secured by a Mortgage Securing RIH Junior Promissory Note dated as of the date hereof, between Assignor, as mortgagor, and Assignee, as mortgagee (the "MORTGAGE"; capitalized terms used and not otherwise defined herein shall have the meanings ascribed to those terms in the Mortgage) which mortgage encumbers certain real property owned or leased by Assignor and described on SCHEDULE 1 hereto together with all buildings and improvements erected thereon (collectively, the "PROPERTY"); and (ii) the performance and observance of all of the provisions herein contained; NOW, THEREFORE, Assignor has and does hereby bargain, sell, transfer, assign, convey, set over and deliver unto Assignee, for the purposes set forth above (subject, however, to the rights of the holders of Superior Mortgages), all of Mortgagor's right, title and interest in and to the Operating Assets (other than Excepted Property), now existing or hereafter acquired (including without limitation, to the extent assignable, with respect to the bookings, contracts, Permits, leases, licenses and agreements constituting a part of the Operating Assets (collectively, the "OPERATING AGREEMENTS"), all Operating Agreements now existing or which may be executed at any time in the future, and all amendments, extensions and renewals of the Operating Agreements, and any of them, and all rents and other income which may now or hereafter be or become receivable under the Operating Agreements, and any of them); it being intended hereby to establish a present and complete transfer unto Assignee of all of Assignor's right, title, interest and estate in and to the Operating Agreements and all the Income (as hereinafter defined) arising thereunder; PROVIDED, HOWEVER, that Assignor is hereby granted a license by Assignee so long as there neither shall have been an acceleration of maturity of the Note pursuant to Section 3.02 of the Mortgage nor an exercise by the Mortgagee of its rights under Section 3.09 of the Mortgage (either being hereinafter referred to as an "ACCELERATION EVENT"), to (a) possess, use, manage, operate, enjoy and, subject to and in accordance with the terms of the Mortgage, dispose of the Operating Assets or any part thereof and to collect, receive, use, invest and dispose of the rents, issues, tolls, profits, revenues and other income therefrom (collectively, the "INCOME"), (b) use, consume and dispose of any consumables, goods, wares and merchandise in the ordinary course of business of operating the Casino-Hotel and (c) adjust and settle all matters relating to choses in action, leases and contracts. Upon the occurrence of an Acceleration Event, Assignor agrees to deposit with Assignee upon demand such of the Operating Agreements, Operating Assets and receipts and revenues therefrom as may from time to time be designated by Assignee. Assignor hereby appoints Assignee the true and lawful attorney of Assignor with full power of substitution, and with power for Assignor and in the name of Assignor and/or in its name, place and stead, to possess, use, manage and enjoy the Operating Assets or any part thereof and to collect, receive, use, invest, dispose of and give complete acquittance for any and all Income herein assigned which may be or become due and payable under the Operating Agreements, to use, consume and dispose of any consumable goods, wares and merchandise and to adjust and settle all matters relating to choses in action, leases and contracts, and at its discretion to file any claim or take any other action or proceeding and make any settlement of any claims, either in its own name or in the name of Assignor or otherwise, which Assignee may deem necessary or desirable in order to collect and enforce the rights herein assigned. No rights shall be exercised by Assignee under this paragraph until an Acceleration Event has occurred. All parties to the Operating Agreements are hereby expressly authorized and directed, after the occurrence of an Acceleration Event, to pay all amounts payable to Assignor thereunder to Assignee or such nominee as Assignee may designate in writing delivered to and received by such parties, who thereafter are expressly relieved of any and all duty, liability or obligation to Assignor in respect of all payments so made. Assignee acknowledges that (i) contemporaneously with the execution and delivery of this Assignment, it has assigned this Assignment to The Chase Manhattan Bank (National Association) ("Trustee"), as trustee under an Indenture of even date herewith among Assignor, Assignee and Trustee (the 2 "Indenture"), and (ii) that the Trustee is also the assignee under an Assignment of Operating Assets dated as of the date hereof from Assignor to Trustee securing the obligations of Assignor in respect of the Guaranty under and as defined in the Indenture (the "Other Assignment"), which assignment creates a lien on the Operating Agreements, Operating Assets and receipts and revenues therefrom PARI PASSU with the lien of this Assignment. Assignee further acknowledges and agrees that whenever it is provided in the Other Assignment that the Assignor shall deliver any notice or document, or is require to make any payment thereunder, the delivery of such notice or document or the making of such payment pursuant to the terms of such Other Assignment shall also constitute the delivery of such notice or document or the making of such payment in satisfaction of the terms, conditions and provisions of this Assignment to the same extent as the same constitutes satisfaction of the terms, conditions and provisions of the Other Assignment. Assignee is hereby vested with full power to use all measures, legal and equitable, deemed by it necessary or proper to enforce this Agreement, to collect all Income and to exercise all other rights provided for hereunder. Assignee shall be under no obligation to press any of the rights or claims assigned to it hereunder, or to perform or carry out any of the obligations of Assignor under any of the Operating Agreements and does not assume any of the liabilities in connection with or arising or growing out of the covenants and agreements of Assignor in the Operating Agreements. It is further understood that this Assignment shall not operate to place responsibility for the control, care, management or repair of Assignor's estates or interests in and to the Operating Assets, or parts thereof, upon Assignee, nor shall it operate to make Assignee liable for the carrying out of any of the terms and conditions of any of the Operating Agreements, or for any negligence in the management, upkeep, repair or control of Assignor's estates or interests in and to the Operating Assets resulting in loss or injury or death to any lessee, licensee, employee or stranger thereat. No rights shall be exercised by Assignee under this paragraph until an Acceleration Event has occurred. For purposes of this Assignment, the term "OPERATING ASSETS" shall exclude (i) any Tangible Personal Property, and (ii) other items constituting Operating Assets or leases, which are Excepted Property. Assignee hereby agrees promptly to remit to Assignor any amounts collected hereunder by Assignee which are in excess of those applied to pay in full the aforesaid liabilities and indebtedness at the time due. 3 IT IS AGREED that, to the extent the grant of a security interest in the Operating Assets is governed by the provisions of the Uniform Commercial Code, this Assignment is hereby agreed to be a "Security Agreement" under such Code, and Assignor hereby grants to Assignee a security interest in the Operating Assets. Assignor shall at any time and from time to time execute and deliver such additional security agreements, financing statements and continuation statements, and shall take all such actions, as may be necessary to perfect Assignee's interest under this Assignment as a secured party under the Uniform Commercial Code. IT IS FURTHER AGREED that the rights and benefits created hereunder supplement and are not in substitution for the liens created by the Mortgage with respect to the Operating Assets and that nothing contained herein shall limit or affect the rights of Assignee under the Mortgage. Upon the release of any portion of the Property from the lien of the Mortgage pursuant to Section 2.05 of the Mortgage (other than (i) the release of the fee interest in and to the Leased Land or any portion thereof, or (ii) if the Mortgagor obtains a Qualified Leasehold Interest with respect to such portion of the Property), this Assignment shall be null and void with respect to those Operating Assets (the "RELEASED ASSETS") which theretofore have exclusively been used by Assignor with respect to the portion of the Property so released (and no other portion of the Property) and all estate, right, title and interest of Assignee in and to the Released Assets shall revert to Assignor, but in all other respects and for all other purposes, this Assignment shall remain in full force and effect. Assignee shall, from time to time, promptly execute any written instrument in form reasonably satisfactory to the proposed purchaser of such portion of the Property to confirm any reversion of Assignee's right, title and interest in the Released Assets effectuated pursuant to the immediately preceding sentence, upon receipt by Assignee of an Officer's Certificate stating that Assignor is entitled to such reversion by virtue of the Mortgagor's compliance with the provisions of this paragraph and Section 2.05 of the Mortgage, provided that Assignee shall have no liability thereunder and all costs and expenses shall be paid by Assignor. Upon the termination of the Mortgage Documents and the payment in full of the principal sum, interest and other Indebtedness secured thereby, this Assignment shall be and become null and void, and all estate, right, title and interest of Assignee in and to the Operating Assets shall revert to Assignor and Assignee shall promptly cancel and discharge of record this Assignment and any financing 4 statement filed in connection herewith and execute and deliver to Assignor all such instruments as may be appropriate to evidence such discharge and satisfaction of this Assignment (provided that Assignee shall have no liability hereunder or thereunder and all costs and expenses shall be paid by Assignor); otherwise, this Assignment shall remain in full force and effect as herein provided, shall inure to the benefit of Assignee and its successors and assigns, and shall be binding upon Assignor and its successors and assigns, and any subsequent holder of Assignor's right, title, interest and estate in and to the Property. This Assignment shall be governed by and construed under the internal laws of the State of New Jersey, without giving effect to the principles of conflicts of laws. This Assignment is subject to and shall be enforced in compliance with the provisions of the New Jersey Casino Control Act. This Assignment shall not be transferred, assigned or amended without the prior approval of the New Jersey Casino Control Commission. The rights and obligations of the Assignee hereunder are subject to the terms set forth in that certain Intercreditor Agreement dated as of the date hereof among Assignor, Assignee, Fidelity Management and Trust Company, as trustee, State Street Bank and Trust Company of Connecticut, National Association, as trustee, and The Chase Manhattan Bank (National Association), as trustee (and such other parties that may from time to time become a party thereto). 5 IN WITNESS WHEREOF, Assignor and Assignee have caused this Assignment to be duly executed, all as of the date first above set forth. WITNESSES: ASSIGNOR: RESORTS INTERNATIONAL HOTEL, INC. _____________________________ By:_________________________ Name: Title: ASSIGNEE: RESORTS INTERNATIONAL HOTEL FINANCING, INC. _______________________________ By:_________________________ Name: Title: 6 STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK ) BE IT REMEMBERED that on ______________, 1994, before me, the subscriber, __________________, personally appeared ____________, who, being by me duly sworn on his oath, deposes and makes proof to my satisfaction, that he is the (Asst.) Secretary of RESORTS INTERNATIONAL HOTEL, INC., the corporation named in the within instrument; that ____________ is the (Vice) President of said Corporation; that the execution, as well as the making of this instrument, has been duly authorized by a proper resolution of the board of directors of the said corporation; that deponent well knows the corporate seal of said corporation; and that the seal affixed to said instrument is the proper corporate seal and was thereto affixed and said instrument signed and delivered by said Vice President as and for the voluntary act and deed of said corporation. In presence of deponent who thereupon subscribed his name thereto as attesting witness; and deponent signed this proof to attest to the truth of these facts. _____________________________ [Name] Assistant Secretary Sworn to and subscribed before me, the date aforesaid ____________________________ Notary Public My commission expires:_____________________________ 7 STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK ) BE IT REMEMBERED that on _________________, 1994, before me, the subscriber, __________________, personally appeared ___________________, who being by me duly sworn on his oath, deposes and makes proof to my satisfaction, that he is the Asst. Secretary of RESORTS INTERNATIONAL HOTEL FINANCING, INC., the corporation named in the within instrument; that ____________ is the Vice President of said corporation; that the execution, as well as the making of this instrument, has been duly authorized by a proper resolution of the board of directors of the said corporation; that deponent well knows the corporate seal of said corporation; and that the seal affixed to said instrument is the proper corporate seal and was thereto affixed and said instrument signed and delivered by said Vice President as and for the voluntary act and deed of said corporation. In presence of deponent who thereupon subscribed his name thereto as attesting witness; and deponent signed this proof to attest to the truth of these facts. __________________________ [Name] Assistant Secretary Sworn to and subscribed before me, the date aforesaid ____________________________ Notary Public My commission expires:_____________________ 8 EX-4 12 EXHIBIT 4.28 NA932380087 - ASSIGNMENT OF ASSETS (GUARANTY) GD&C DRAFT DATED 12/17/93 ============================================================================ ASSIGNMENT OF OPERATING ASSETS ________________ RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation, as Assignor, TO STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION a national banking association, as Assignee Dated as of _________________, 1994 =========================================================================== Prepared by:__________________________ D. Eric Remensperger, Esq. ASSIGNMENT OF OPERATING ASSETS THIS ASSIGNMENT made as of the ___ day of ___________, 1994, by RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation ("ASSIGNOR"), having an address at c/o Resorts International, Inc. 1133 Boardwalk, Atlantic City, New Jersey 08401, to STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, a national banking association ("ASSIGNEE"), having an address at 750 Main Street, Suite 1114, Hartford, Connecticut 06103, in its capacity as Trustee under that certain Indenture dated as of even date herewith (the "INDENTURE"), among Assignor, Assignee and Resorts International Hotel Financing, Inc., a Delaware corporation ("RIHF"). WITNESSETH: WHEREAS, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and in order to secure: (i) Assignor's guarantee of the payments of principal and interest due on the 11% Mortgage Notes due 2003 in an aggregate principal amount of $125,000,000, issued by RIHF pursuant to the provisions of the Indenture and of the performance of certain of RIHF's obligations, all in accordance with the terms and provisions of Article Fourteen of the Indenture; and (ii) the performance and observance of all of the provisions herein contained (capitalized terms used and not otherwise defined herein shall have the respective meanings ascribed to those terms in that certain Mortgage Securing Guaranty of Mortgage Notes dated as of even date herewith, between Assignor, as mortgagor, and Assignee, as mortgagee (the "MORTGAGE")); NOW, THEREFORE, Assignor has and does hereby bargain, sell, transfer, assign, convey, set over and deliver unto Assignee, for the purposes set forth above (subject, however, to the rights of the holders of Superior Mortgages), all of Mortgagor's right, title and interest in and to the Operating Assets (other than Excepted Property), now existing or hereafter acquired (including without limitation, to the extent assignable, with respect to the bookings, contracts, Permits, leases, licenses and agreements constituting a part of the Operating Assets (collectively, the "OPERATING AGREEMENTS"), all Operating Agreements now existing or which may be executed at any time in the future, and all amendments, extensions and renewals of the Operating Agreements, and any of them, and all rents and other income which may now or hereafter be or become receivable under the Operating Agreements, and any of them); it being intended hereby to establish a present and complete transfer unto Assignee of all of Assignor's right, title, interest and estate in and to the Operating Agreements and all the Income (as hereinafter defined) arising thereunder; PROVIDED, HOWEVER, that Assignor is hereby granted a license by Assignee so long as there neither shall have been an acceleration of maturity of the Note pursuant to Section 3.02 of the Mortgage nor an exercise by the Mortgagee of its rights under Section 3.09 of the Mortgage (either being hereinafter referred to as an "ACCELERATION EVENT"), to (a) possess, use, manage, operate, enjoy and, subject to and in accordance with the terms of the Mortgage, dispose of the Operating Assets or any part thereof and to collect, receive, use, invest and dispose of the rents, issues, tolls, profits, revenues and other income therefrom (collectively, the "INCOME"), (b) use, consume and dispose of any consumables, goods, wares and merchandise in the ordinary course of business of operating the Casino-Hotel and (c) adjust and settle all matters relating to choses in action, leases and contracts. Upon the occurrence of an Acceleration Event, Assignor agrees to deposit with Assignee upon demand such of the Operating Agreements, Operating Assets and receipts and revenues therefrom as may from time to time be designated by Assignee. Assignor hereby appoints Assignee the true and lawful attorney of Assignor with full power of substitution, and with power for Assignor and in the name of Assignor and/or in its name, place and stead, to possess, use, manage and enjoy the Operating Assets or any part thereof and to collect, receive, use, invest, dispose of and give complete acquittance for any and all Income herein assigned which may be or become due and payable under the Operating Agreements, to use, consume and dispose of any consumable goods, wares and merchandise and to adjust and settle all matters relating to choses in action, leases and contracts, and at its discretion to file any claim or take any other action or proceeding and make any settlement of any claims, either in its own name or in the name of Assignor or otherwise, which Assignee may deem necessary or desirable in order to collect and enforce the rights herein assigned. No rights shall be exercised by Assignee under this paragraph until an Acceleration Event has occurred. All parties to the Operating Agreements are hereby expressly authorized and directed, after the occurrence of an Acceleration Event, to pay all amounts payable to Assignor thereunder to Assignee or such nominee as Assignee may designate in writing delivered to and received by such parties, who thereafter are expressly relieved of any and all duty, liability or obligation to Assignor in respect of all payments so made. Assignee is hereby vested with full power to use all measures, legal and equitable, deemed by it necessary or proper to enforce this Agreement, to collect all Income and to exercise all other rights provided for hereunder. Assignee 2 shall be under no obligation to press any of the rights or claims assigned to it hereunder, or to perform or carry out any of the obligations of Assignor under any of the Operating Agreements and does not assume any of the liabilities in connection with or arising or growing out of the covenants and agreements of Assignor in the Operating Agreements. It is further understood that this Assignment shall not operate to place responsibility for the control, care, management or repair of Assignor's estates or interests in and to the Operating Assets, or parts thereof, upon Assignee, nor shall it operate to make Assignee liable for the carrying out of any of the terms and conditions of any of the Operating Agreements, or for any negligence in the management, upkeep, repair or control of Assignor's estates or interests in and to the Operating Assets resulting in loss or injury or death to any lessee, licensee, employee or stranger thereat. No rights shall be exercised by Assignee under this paragraph until an Acceleration Event has occurred. For purposes of this Assignment, the term "OPERATING ASSETS" shall exclude (i) any Tangible Personal Property, and (ii) other items constituting Operating Assets or leases, which are Excepted Property. Assignee hereby agrees promptly to remit to Assignor any amounts collected hereunder by Assignee which are in excess of those applied to pay in full the aforesaid liabilities and indebtedness at the time due. IT IS AGREED that, to the extent the grant of a security interest in the Operating Assets is governed by the provisions of the Uniform Commercial Code, this Assignment is hereby agreed to be a "Security Agreement" under such Code, and Assignor hereby grants to Assignee a security interest in the Operating Assets. Assignor shall at any time and from time to time execute and deliver such additional security agreements, financing statements and continuation statements, and shall take all such actions, as may be necessary to perfect Assignee's interest under this Assignment as a secured party under the Uniform Commercial Code. IT IS FURTHER AGREED that the rights and benefits created hereunder supplement and are not in substitution for the liens created by the Mortgage with respect to the Operating Assets and that nothing contained herein shall limit or affect the rights of Assignee under the Mortgage. Upon the release of any portion of the Property from the lien of the Mortgage pursuant to Section 2.05 of the Mortgage (other than (i) the release of the fee interest in and to the Leased Land or any portion thereof, or (ii) if the Mortgagor obtains a Qualified Leasehold Interest with respect 3 to such portion of the Property), this Assignment shall be null and void with respect to those Operating Assets (the "RELEASED ASSETS") which theretofore have exclusively been used by Assignor with respect to the portion of the Property so released (and no other portion of the Property) and all estate, right, title and interest of Assignee in and to the Released Assets shall revert to Assignor, but in all other respects and for all other purposes, this Assignment shall remain in full force and effect. Assignee shall, from time to time, promptly execute any written instrument in form reasonably satisfactory to the proposed purchaser of such portion of the Property to confirm any reversion of Assignee's right, title and interest in the Released Assets effectuated pursuant to the immediately preceding sentence, upon receipt by Assignee of an Officer's Certificate stating that Assignor is entitled to such reversion by virtue of the Mortgagor's compliance with the provisions of this paragraph and Section 2.05 of the Mortgage, provided that Assignee shall have no liability thereunder and all costs and expenses shall be paid by Assignor. Upon the termination of the Mortgage Documents and the payment in full of the principal sum, interest and other Indebtedness secured thereby, this Assignment shall be and become null and void, and all estate, right, title and interest of Assignee in and to the Operating Assets shall revert to Assignor and Assignee shall promptly cancel and discharge of record this Assignment and any financing statement filed in connection herewith and execute and deliver to Assignor all such instruments as may be appropriate to evidence such discharge and satisfaction of this Assignment (provided that Assignee shall have no liability hereunder or thereunder and all costs and expenses shall be paid by Assignor); otherwise, this Assignment shall remain in full force and effect as herein provided, shall inure to the benefit of Assignee and its successors and assigns, and shall be binding upon Assignor and its successors and assigns, and any subsequent holder of Assignor's right, title, interest and estate in and to the Property. This Assignment shall be governed by and construed under the internal laws of the State of New Jersey, without giving effect to the principles of conflicts of laws. This Assignment is subject to and shall be enforced in compliance with the provisions of the New Jersey Casino Control Act. This Assignment shall not be transferred, assigned or amended without the prior approval of the New Jersey Casino Control Commission. The rights and obligations of the Assignee hereunder are subject to the terms set forth in that certain Intercreditor Agreement dated as of the date hereof among Assignor, RIHF, Assignee, Fidelity Management and Trust 4 Company, as trustee, and State Street Bank and Trust Company of Connecticut (National Association), as trustee (and such other parties that may from time to time become a party thereto). 5 IN WITNESS WHEREOF, Assignor and Assignee have caused this Assignment to be duly executed, all as of the date first above set forth. WITNESSES: ASSIGNOR: RESORTS INTERNATIONAL HOTEL, INC. __________________________________ By:_________________________ Name: Title: ASSIGNEE: STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION __________________________________ By:_________________________ Name: Title: 6 STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK) BE IT REMEMBERED that on ______________, 1994, before me, the subscriber, __________________, personally appeared _______________, who, being by me duly sworn on his oath, deposes and makes proof to my satisfaction, that he is the (Asst.) Secretary of RESORTS INTERNATIONAL HOTEL, INC., the corporation named in the within instrument; that ____________ is the (Vice) President of said Corporation; that the execution, as well as the making of this instrument, has been duly authorized by a proper resolution of the board of directors of the said corporation; that deponent well knows the corporate seal of said corporation; and that the seal affixed to said instrument is the proper corporate seal and was thereto affixed and said instrument signed and delivered by said Vice President as and for the voluntary act and deed of said corporation. In presence of deponent who thereupon subscribed his name thereto as attesting witness; and deponent signed this proof to attest to the truth of these facts. _____________________________ [Name] Assistant Secretary Sworn to and subscribed before me, the date aforesaid ____________________________ Notary Public My commission expires:_____________________________ STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK) BE IT REMEMBERED that on _________________, 1994, before me, the subscriber, __________________, personally appeared ___________________, who being by me duly sworn on his oath, deposes and makes proof to my satisfaction, that he is the Asst. Secretary of STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, the corporation named in the within instrument; that ____________ is the Vice President of said corporation; that the execution, as well as the making of this instrument, has been duly authorized by a proper resolution of the board of directors of the said corporation; that deponent well knows the corporate seal of said corporation; and that the seal affixed to said instrument is the proper corporate seal and was thereto affixed and said instrument signed and delivered by said Vice President as and for the voluntary act and deed of said corporation. In presence of deponent who thereupon subscribed his name thereto as attesting witness; and deponent signed this proof to attest to the truth of these facts. _________________________ [Name] Secretary Sworn to and subscribed before me, the date aforesaid ____________________________ Notary Public My commission expires:_____________________________ 8 EX-4 13 EXHIBIT 4.29 ------------------------------------ : NA932810097 - GUARANTY MORTGAGE : : JUNIOR NOTES : : GD&C DRAFT DATED 12/17/93 : ------------------------------------ MORTGAGE SECURING GUARANTY OF JUNIOR MORTGAGE NOTES by and between RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation, as Mortgagor, and U.S. Trust Company of California, N.A., a national banking association, as Mortgagee Dated as of ________ __, 1994 Prepared by:_______________________ D. Eric Remensperger After recording return to: Gibson, Dunn & Crutcher 200 Park Avenue New York, New York 10166 Attention: D. Eric Remensperger MORTGAGE SECURING GUARANTY OF JUNIOR MORTGAGE NOTES THIS MORTGAGE, dated as of ________ ___, 1994, between RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation ("Mortgagor"), and U.S. Trust Company of California, N.A., a national banking association having an address at 555 South Flower Street, Suite 2780, Los Angeles, California 90071 ("Mortgagee"), in its capacity as Trustee under that certain Indenture dated as of even date herewith (the "Indenture") among Mortgagor, Mortgagee and Resorts International Hotel Financing, Inc. ("RIHF"). WITNESSETH: In consideration of $10.00 in hand paid by Mortgagee to Mortgagor and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in order to secure (i) the Guaranty by Mortgagor of the payments of principal and interest due on the 11.375% Junior Mortgage Notes due 2004 in an aggregate principal amount of $35,000,000, issued pursuant to the provisions of the Indenture (defined therein, and hereinafter collectively referred to herein, as the "Notes"), in accordance with the terms and conditions of Article Fourth of the Indenture; and performance and observance of all of the provisions herein contained, Mortgagor has executed and delivered this Mortgage and has bargained, sold, aliened, mortgaged, pledged, released, conveyed and confirmed unto Mortgagee and its successors hereunder and assigns forever, all of its right, title and interest in, to and under any of the following described property: GRANTING CLAUSES GRANTING CLAUSE FIRST All the property, rights, title, interest, privileges and franchises particularly described in annexed Schedule 1 (the "Owned Land") which Schedule is hereby made a part of, and deemed to be described in, this Granting Clause as fully as if set forth in this Granting Clause at length. GRANTING CLAUSE SECOND All of the property, rights, title, interest, privileges and franchises of the Mortgagor as lessee in those certain leases (the "Ground Leases") particularly described in Schedule 2, which Schedule is hereby made a part of, and deemed to be described in, this Granting Clause as fully as if set forth in this Granting Clause at length, which Ground Leases cover the real property described in Schedule 2 (the "Leased Land") and in and to any and all modifications, extensions and renewals of the Ground Leases and all options set forth therein, together with (i) all credits, deposits, privileges and rights of the Mortgagor as lessee under the Ground Leases, now or at any time existing, (ii) the leaseholds and the leasehold estates created by the Ground Leases and (iii) all of the estates, rights, titles, claims or demands whatsoever of Mortgagor, either in law or in equity, in possession or in expectancy, of, in and to the Ground Leases and the Leased Land, together with (x) any and all other, further or additional title, estates, interests or rights which may at anytime be acquired by the Mortgagor in or to the Leased Land, and the Mortgagor expressly agrees that if the Mortgagor shall, at any time prior to payment in full of all indebtedness secured hereby, acquire fee simple title or any other greater estate to the Leased Land pursuant to the Ground Leases, or otherwise, the lien of this Mortgage shall attach, extend to, cover and be a lien upon such fee simple title or other greater estate and thereupon the lien of this Mortgage shall be prior to the lien of any mortgage or deed of trust placed on such acquired title, estate, interest or right subsequent to the date of this Mortgage (except as otherwise provided herein) and (y) any right to possession or statutory term of years derived from, or incident to, the Ground Leases pursuant to Section 365(h) of the U.S. Bankruptcy Code (the "Code") or any comparable provision contained in any present or future federal, state, local, foreign or other statute, law, rule or regulation. GRANTING CLAUSE THIRD All the rents, issues, profits, revenues and other income and proceeds of the property subjected or required to be subjected to the lien of this Mortgage, including, without limitation, the property described in Granting Clauses First, Second, and Sixth (such property is hereinafter collectively referred to as the "Premises") and all the estate, right, title and interest of every nature whatsoever of the Mortgagor in and to the same and every part thereof. The collective 2 metes and bounds description of the Owned Land and the Leased Land is set forth in annexed Schedule 3. GRANTING CLAUSE FOURTH All of the rights as lessor under Leases in effect on the date of execution of this Mortgage or hereafter entered into by the Mortgagor, if any, including extensions, renewals or amendments of all of the same, and the immediate and continuing right as security in accordance with an Assignment of Leases and Rents of even date herewith between Mortgagor and Mortgagee, and, after the occurrence of an Event of Default, to make claim for, collect, receive and receipt for (and to apply the same as provided herein) any and all rents, income, revenues, issues, profits, security and other sums of money payable or receivable thereunder or pursuant thereto, and all proceeds thereof, whether payable as rent, insurance proceeds, condemnation awards, security or otherwise and whether payable prior to or subsequent to the maturity date of the Notes, to receive and give notices and consents thereunder, to bring actions and proceedings thereunder or for the enforcement thereof, to make waivers and agreements, to take such action upon the happening of a default under any Lease, including the commencement, conduct and consummation of any proceedings at law or in equity as shall be permitted by any provision of any Lease, and to do any and all things which the Mortgagor or any lessor is or may become entitled to do under the Leases; provided, that the assignment made by this granting Clause Fourth shall not impair or diminish any obligation of the Mortgagor under the Leases, or shall any such obligation be imposed upon the Mortgagee. GRANTING CLAUSE FIFTH Without limiting the generality of the provisions of Granting Clause Third, the Mortgagor's rights, privileges and franchises in and to the following, to the extent of the Mortgagor's interest therein and thereto and to the extent assignable (collectively, "Operating Assets"): (a) bookings and receipts for the use of guest rooms, banquet facilities and meeting rooms at the Casino-Hotel; (b) all contracts respecting utility services for, and the maintenance, operations, or equipping of the Premises, including guaranties and warranties relating thereto; (c) the Permits; 3 (d) all contract rights, leases, concessions, trademarks, trade names, service marks, service names, logos, copyrights, warranties and other items of intangible personal property relating to the ownership or operation of the Casino-Hotel, including, without limitation, (1) telephone and other communication numbers, (2) all software licensing agreements as are required to operate computer software systems at the Casino-Hotel, all transferable proprietary interest in software required to operate the computer systems at the Casino Hotel and books and records relating to the software programs, and (3) lessee's interest under leases of Tangible Personal Property; (e) all agreements entered into by or on behalf of the Mortgagor or which have been assigned to the Mortgagor, for the design and construction, and for the equipping and furnishing, of the Casino-Hotel, including architect's agreements, engineering agreements, construction contracts, consulting agreements and agreements or purchase orders for all items of Tangible Personal Property and payment and performance bonds in favor of the Mortgagor in connection with the Trust Estate (and all warranties and guaranties thereunder and warranties and guaranties of any subcontractor and bond issued in connection with the work to be performed by any subcontractor); (f) the following personal property (the "Tangible Personal Property") now or hereafter acquired by the Mortgagor: (i) all furniture, furnishings, equipment, machinery, apparatus, appliances, fixtures and fittings and other articles of tangible personal property which are, or are to be located on, or used in connection with the operation of, the Casino-Hotel; (ii) all slot machines, electronic gaming devices, crap tables, blackjack tables, roulette tables, baccarat tables, and big six wheels, located or to be located in the Casino-Hotel, and all furnishings and equipment to be used in connection with the operation thereof; (iii) all cards, dice, gaming chips and placques, tokens, chip racks, dealing shoes, dice cups, dice sticks, layouts, paddles, roulette balls and other consumable supplies and items to be used 4 in connection with the gaming operations of the Casino-Hotel; (iv) all china, glassware, linens, kitchen utensils, silverware and uniforms, whether in use or held in reserve storage for future use, in connection with the operation of the Casino-Hotel, which are on hand or on order whether stored on-site or off-site; (v) all consumables and operating supplies of every kind and nature for use in all of the operating departments of the Casino-Hotel, or in the improvements now or hereafter located on any of the Owned Land, including without limitation, accounting supplies, guest supplies, forms, printing, stationery, food and beverage stock, bar supplies, laundry supplies and brochures to existing purchase orders; (vi) all sets and scenery, costumes, props and other items of tangible personal property on hand or on order for use in the production of shows in the showroom of the Casino-Hotel; and (vii) all cars, limousines, vans, buses, trucks and other vehicles owned or leased by the Mortgagor for use in Casino-Hotel operations, together with all equipment, parts and supplies used to service, repair, maintain and equip the foregoing; (g) all drawings, designs, plans and specifications prepared by the architects, interior designers, landscape designers and any other consultants for the development of the Premises, as amended from time to time; (h) any administrative and judicial proceedings initiated by the Mortgagor, or in which the Mortgagor has intervened, concerning the Casino-Hotel, and agreements, if any, which are the subject matter of such proceedings; (i) any customer lists utilized by the Mortgagor, including lists of transient guests and restaurant and bar patrons and "high roller" lists; and (j) all of the goodwill in connection with the operation of the Premises. 5 The Mortgagor and Mortgagee acknowledge that notwithstanding anything contained in this Mortgage to the contrary, the Mortgagor may share facilities, operations and employees with any other hotel owned by any Affiliate of the Mortgagor provided that (i) such sharing of facilities is permitted by all applicable Legal Requirements, (ii) terms on which such facilities are shared are not detrimental to the operations of the Casino-Hotel or the financial condition of the Mortgagor and (iii) the regular operation of the Casino-Hotel would not be materially impaired upon the separation of such facilities. The assignment made by this Granting Clause Fifth shall not impair or diminish any obligation of the Mortgagor with respect to the Operating Assets, nor shall any such obligation be imposed on the Mortgagee. GRANTING CLAUSE SIXTH (a) All of the Mortgagor's right, title and interest in and to all buildings and improvements of every kind and description now or hereafter erected or placed on the Owned Land and/or the Leased Land and all fixtures and articles of personal property now or hereafter attached to or contained in and used in connection with such buildings and improvements, including, but not limited to, all apparatus, furniture, furnishings, machinery, motors, elevators, fittings, radiators, cooking ranges, ice boxes, ice machines, printing presses, mirrors, bars, mechanical refrigerators, furnaces, coal and oil-burning apparatus, wall cabinets, machinery, generators, partitions, steam and hot water boilers, lighting and power plants, pipes, plumbing, radiators, sinks, bath tubs, water closets, gas and electrical fixtures, awnings, shades, screens, blinds, dishwashers, freezers, vacuum cleaning systems, office equipment and other furnishings, and all plumbing, heating, lighting, cooking, laundry, ventilating, incinerating, air-conditioning and sprinkler equipment or other fire prevention or extinguishing apparatus and material, and fixtures and appurtenances thereto; and all renewals or replacements thereof or articles in substitution therefor, whether or not the same are or shall be attached to the Owned Land, the Leased Land or to any such buildings and improvements thereon, in any manner; and 6 (b) All of the Mortgagor's right, title and interest in and to (i) the Leased Land, if the Mortgagor acquires the fee simple title to the Leased Land or any part thereof (subject to the provisions of Section 2.06 hereof), (ii) all air rights and rights to maintain supporting columns and all rights to construct and maintain bridges, and to create private rights of way over streets now or hereafter owned or enjoyed by the Mortgagor and appurtenant to the Owned Land or Leased Land, and (iii) all right, title and interest of Mortgagor as grantee or licensee in and to the following to the extent necessary for the use and enjoyment of the Owned Land or the Leased Land: (A) all those plots, pieces or parcels of land and air rights, more particularly described on Schedule 5, attached hereto and made a part hereof (the "Bridge Easement Parcels"), with respect to which Mortgagor has easements, licenses or other rights of possession or use pursuant to these certain easement and license agreements more particularly described on Schedule 5 (the "Bridge Easements"), (B) all those plots, pieces or parcels of land and air rights, more particularly described on Schedule 6 attached hereto and made a part hereof (the "Elevator Easement Parcels"), with respect to which Mortgagor has easements, licenses or other rights of possession or use pursuant to those certain license agreements more particularly described on Schedule 6 (the "Elevator Easements"), and; (C) all that plot, piece or parcel of land and air rights more particularly described on Schedule 7 attached hereto and made a part hereof (the "Turn-Around Easement Parcel") with respect to which Mortgagor has easements, licenses, or other rights of possession or use pursuant to that certain easement more particularly described on Schedule 7 (the "Turn-Around Easement"), (the Bridge Easement Parcels, the Elevator Easement Parcels and the Turn-Around Easement Parcel are collectively referred to herein as the "Easement Parcels"; and the Bridge Easements, the Elevator Easements and the Turn-Around Easement are collectively referred to as the "Easements"), together with all rights of way, privileges, liberties, tenements, hereditaments and appurtenances belonging or in any way appertaining to such estates, it being the intention hereof that all property, interests, rights and privileges and franchises pertaining to the Premises (other than Excepted Property) shall be as fully embraced within and subjected to the lien hereof as if such property were specifically described herein. To the extent the grant of a security interest in any portion of the Trust Estate is governed by the Uniform Commercial Code, this Mortgage is hereby deemed to be as well a security agreement under the Uniform Commercial Code for the purpose of creating hereby a security interest in all of the Mortgagor's right, title and interest in and to such property, securing the obligations secured hereby, for the benefit of the Mortgagee; * * * TOGETHER with all of the Mortgagor's right, title and interest in and to all mineral and water rights and any title or reversion, in and to the beds of the ways, streets, 7 avenues and alleys adjoining the Premises to the center line thereof and in and to all strips, gaps and gores adjoining the premises on all sides thereof; and TOGETHER with all of the Mortgagor's right, title and interest to and singular the tenements, hereditaments, easements, appurtenances, passages, water courses, riparian rights, other rights, liberties and privileges thereof or in any way appertaining to the Premises, including any other claim at law or in equity as well as any after-acquired title, franchise or license and the reversion and reversions and remainder and remainders thereof; and TOGETHER with all awards and other compensation heretofore or hereafter to be made to the present and all subsequent owners of the Trust Estate for any taking by eminent domain, either permanent or temporary, of all or any part of the Trust Estate or any easement or appurtenances thereof, including severance and consequential damage and change in grade of streets, all in accordance with and subject to the provisions of the Superior Instrument Requirements and Section 5.20; and TOGETHER with all proceeds of any unearned premiums on any insurance policies described in Section 5.11, and the right to receive and apply the proceeds of any insurance, judgments, or settlements made in lieu thereof, for damage to the Trust Estate or otherwise, all in accordance with and subject to the provisions of Section 5.11 and the Superior Instrument Requirements. EXCLUDING, with respect to all of the hereinabove granted property, rights, title, interest, privileges and franchises, the Excepted Property. TO HAVE AND TO HOLD all the Premises, Leases, Ground Leases, Operating Assets, Easements, properties, options, credits, deposits, rights, privileges and franchises of every kind and description, real, personal or mixed, granted hereby, bargained, sold, aliened, assigned, transferred, hypothecated, pledged, released, conveyed, mortgaged, or confirmed as aforesaid, or intended, agreed or covenanted so to be, together with all the appurtenances thereto appertaining (the Premises, Leases, Ground Leases, Operating Assets, Easements, properties, options, credits, deposits, rights, privileges and franchises, being herein collectively called the "Trust Estate") unto the Mortgagee and its successors and assigns forever. SUBJECT, HOWEVER, on the date hereof, to Existing Encumbrances and, after the date hereof, to Permitted Encumbrances. 8 SUBJECT, FURTHER, to the rights and obligations of the Mortgagee and the Noteholder as set forth in that certain Intercreditor Agreement dated as of the date hereof among RIH, RIHF, Mortgagee, Fidelity Management and Trust Company ("Fidelity"), as trustee under that certain note purchase agreement dated as of the date hereof among Fidelity, RIH and RIHF, and State Street Bank and Trust Company of Connecticut, National Association ("State Street"), as trustee under that certain indenture dated as of the date hereof among State Street, RIH and RIHF (and such other parties that may from time to time become a party thereto). BUT IN TRUST, NEVERTHELESS, for the Ratable Benefit and security of the Noteholders without any priority of any of the Notes over any other of the Notes. UPON CONDITION that, until the happening of an Event of Default and subject to the provisions of Article Two, the Mortgagor shall be permitted to possess and use the Trust Estate, and to receive and use the rents, issues, profits, revenues and other income of the Trust Estate. AND IT IS HEREBY COVENANTED AND DECLARED that the Trust Estate is to be held and applied by the Mortgagee, subject to the further covenants, conditions and trusts hereinafter set forth, and the Mortgagor does hereby covenant and agree to and with the Mortgagee, for the Ratable Benefit of the Noteholders as follows: ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION Section 1.01. DEFINITIONS. For all purposes of this Mortgage, except as otherwise expressly provided or unless the context otherwise requires: (a) the terms defined in this Article One have the meanings assigned to them in this Article One and include the plural as well as the singular; (b) all accounting terms not otherwise defined herein have the meanings assigned to them, and all computations herein provided for shall be made in accordance with generally accepted accounting principles consistently applied; and (c) the words "herein," "hereof" and "hereunder" and other words of similar import refer to this Mortgage 9 as a whole and not to any particular Article, Section or other subdivision. "AFFILIATE" has the meaning set forth in Section 1.01 of the Indenture. "AFTER-ACQUIRED FEE MORTGAGE" has the meaning set forth in Section 2.07. "ALTERATIONS" has the meaning set forth in Section 5.12. "APPRAISER" means an MAI appraiser (i.e., a Member in good standing of the American Institute of Real Estate Appraisers) who is (i) of recognized standing among appraisers of properties similar to the Casino-Hotel and (ii) experienced in the appraisals of properties of a similar size and scope to that of the Casino-Hotel, selected by the Mortgagor. "ASSIGNMENT OF LEASES AND RENTS" has the meaning stated in Section 1.01 of the Indenture. "CAPITALIZED LEASE OBLIGATION" has the meaning stated in Section 1.01 of the Indenture. "CASINO" means that portion of the Casino-Hotel used for gaming and related activities. "CASINO-HOTEL" means the casino and hotel complex and ancillary structures and facilities located on the Premises and furniture, fixtures and equipment at any time contained therein. "CASUALTY" means any act or occurrence of any kind or nature which results in damage, loss or destruction to any buildings or improvements on the Premises and/or Tangible Personal Property. "CODE" has the meaning stated in Granting Clause Second. "COMBINATION TRANSACTION" has the meaning stated in Section 10.01 of the Indenture. "DEFAULT" means the occurrence and continuance of an Event of Default or an event which, after notice or lapse of time or both, would become an Event of Default. "DEPOSITARY" means an Independent entity to which insurance proceeds or a condemnation award is paid to be held in trust for restoration pursuant to the provisions of a Ground Lease or Superior Mortgage. 10 "EVENT OF DEFAULT" has the meaning stated in Section 3.01. An Event of Default shall "exist" if an Event of Default shall have occurred and be continuing. "EXCEPTED PROPERTY" means: (1) subject to the provisions of the Assignment of Leases and Rents, any cash held by the Mortgagor from rents, issues, profits, revenues and other proceeds of the Trust Estate to the extent that such cash may be, but has not been, distributed or paid out in accordance with the Services Agreement or in accordance with the provisions of Section 12.07 of the Indenture; (2) all personal property owned by lessees under Leases and the personal property of any guests staying in the Hotel; (3) any property deemed to be Excepted Property pursuant to the provisions of Section 2.03 hereof; (4) Tangible Personal Property subject to an FF&E Financing Agreement; and (5) counterchecks and any other property the granting of a security interest in which is prohibited by the New Jersey Casino Control Act, N.J.S.A. 5:12-1 et seq., and the regulations promulgated thereunder. "EXISTING ENCUMBRANCES" means the matters set forth in Schedule 8. "FIRST MORTGAGE DEBT" means any financing secured by a Superior Mortgage secured by or imposing a lien on all or a portion of the Trust Estate on a parity with or senior to the lien of this Mortgage. "FF&E FINANCING AGREEMENT" means a purchase money lien upon any Tangible Personal Property and other items constituting Operating Assets, such as computer software, which are financed, purchased or leased by the Mortgagor, provided that, except as set forth on Schedule 3, the principal amount of the indebtedness secured by such lien shall not exceed eighty-five (85%) percent of the cost to the Mortgagor of such property at the time of acquisition. "GROUND LEASES" has the meaning stated in Granting Clause Second. "GUARANTY" has the meaning set forth in Article Fourteen of the Indenture. 11 "HOTEL" means that portion of the Casino-Hotel not included within the Casino. "IMPOSITIONS" has the meaning stated in Section 5.08. "INDENTURE" means that certain Indenture - 11.375% Junior Mortgage Notes due 2004, dated as of even date herewith among the Mortgagor, RIHF, as issuer, and Mortgagee, as trustee, as it may from time to time be supplemented, modified or amended by one or more trust indentures or other instruments supplemental thereto entered into pursuant to the applicable provisions thereof. "INDEPENDENT" when used with respect to any specified Person means such a Person who (a) is in fact independent, (b) does not have any direct financial interest or any material indirect financial interest in the Mortgagor or in any other obligor upon the Notes or in any Affiliate of the Mortgagor or of such other obligor and (c) is not connected with the Mortgagor or such other obligor or any Affiliate of the Mortgagor or such other obligor as an officer, employee, promoter, underwriter, trustee, partner, director or person performing similar functions. Whenever it is herein provided that any Independent Person's opinion or certificate shall be furnished to the Mortgagee, such opinion or certificate shall state that the signer has read this definition and that the signer is Independent within the meaning thereof. A Person who is performing or who has performed services as an independent contractor to any specified Person shall not be considered not Independent merely by reason of the fact that such Person is or has performed such services. "INSURANCE AMOUNT" has the meaning stated in Section 5.11(a)(1). "INSURANCE REQUIREMENTS" means all terms of any insurance policy covering or applicable to the Trust Estate or any part thereof, all requirements of the issuer of any such policy, and all orders, rules, regulations and other requirements of the National Board of Fire Underwriters (or any other body exercising similar functions) applicable to or affecting the Trust Estate or any part thereof or any use or condition of the Trust Estate or any other part thereof. "INSURANCE TRUSTEE" means the Trustee or, if the Trustee so elects, any bank, trust company or insurance company with net worth in excess of $100,000,000, designated by the Trustee. 12 "INSURER" means an insurance company or companies selected by the Mortgagor authorized to issue insurance in the State of New Jersey with an A.M. Best rating as high or higher than the rating of insurance companies insuring other casino-hotels in Atlantic City, New Jersey. "LEASE" means each lease or sublease demising all or any portion of the Owned Land, the Leased Land or the buildings or improvements thereon and made by the Mortgagor as lessor or sublessor, as the case may be, or any spaces in any building or buildings which constitute a part of the Trust Estate, including every agreement relating thereto or entered into in connection therewith and every guaranty of the performance and observance of the covenants, conditions and agreements to be performed by the lessee under any such lease. Notwithstanding the foregoing, the term "Lease" shall not include any transient room rentals. "LEASED LAND" has the meaning stated in Granting Clause Second. "LEGAL REQUIREMENTS" means all laws, statutes, codes, acts, ordinances, orders, judgments, decrees, injunctions, rules, regulations, permits, licenses, authorizations, directions and requirements (including, without limitation, the New Jersey Environment Cleanup Responsibility Act and the New Jersey Spill Compensation and Control Act of 1976) of all governments, departments, commissions, boards, courts, authorities, agencies, officials and officers, of governments, federal, state and municipal (including, without limitation, the New Jersey Department of Environmental Protection, the Atlantic City Bureau of Investigations, Division of Protection, the Atlantic City Bureau of Investigations, Division of Gaming Enforcement of the State of New Jersey, and the Casino Control Commission of the State of New Jersey), foreseen or unforeseen, ordinary or extraordinary, which now is or at any time hereafter becomes applicable to the Trust Estate or any part thereof, or any of the adjoining sidewalks, or the use of the Casino-Hotel as a gaming or gambling facility or any other use or condition of the Trust Estate or any part thereof. "LESSORS" means the lessors under the Ground Leases. "MATURITY" when used with respect to the Notes means the date on which the principal of such Notes becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration or prepayment or otherwise. 13 "MORTGAGE DOCUMENTS" has the meaning set forth in Section 1.01 of the Indenture. "MORTGAGOR" means the Person named as the "Mortgagor" in the first paragraph of this instrument until a successor entity shall have become such pursuant to the applicable provisions of this Mortgage, and thereafter, except to the extent otherwise contemplated by Section 4.02, "Mortgagor" shall mean such successor entity exclusively. "NOTEHOLDERS" has the meaning set forth in Section 1.01 of the Indenture. "NOTE MORTGAGE" means that certain Mortgage Securing RIH Junior Promissory Note dated as of the date hereof from Mortgagor to RIHF, which secures the RIH Junior Promissory Note (as defined in the Indenture), the lien of which shall be pari passu with the lien of this Mortgage. "NOTES" has the meaning set forth in the Preamble. "NOTICES" has the meaning stated in Section 1.02. "OFFICERS' CERTIFICATE" means a certificate signed by an officer of the Mortgagor and delivered to the Mortgagee. Whenever this Mortgage requires that an Officers' Certificate be signed also by an Architect or an Accountant or other expert, such Architect, Accountant or other expert may (except as otherwise expressly provided in this Mortgage) be in the general employ of the Mortgagor. "OPERATING ASSETS" has the meaning stated in Granting Clause Fifth. "OPINION OF COUNSEL" means a written opinion of counsel who may (except as otherwise expressly provided in this Mortgage) be an employee of the Mortgagor or an employee of an Affiliate of the Mortgagor. Unless otherwise specifically provided in this Mortgage, such counsel may rely, as to any state of facts not personally known to such counsel and relating to such opinions, on an Officers' Certificate to the extent not rejected by the Trustee and its counsel (which rejection shall not be unreasonably given). "ORIGINAL POLICY" means an ALTA Loan Policies of Title issued by [list title insurance companies], pursuant to Title Commitment No. ____________ redated to the date hereof. "OUTSTANDING AMOUNT" has the meaning stated in Section 1.01 of the Indenture. 14 "OWNED LAND" has the meaning stated in Granting Clause First. "PERMITS" means all licenses, franchises, statements of compliance, certificates of operation, certificates of occupancy and permits required for the lawful ownership, occupancy, operation and use of all or a material portion of the Premises whether held by the Mortgagor or any other Person (which may be temporary or permanent) (including, without limitation, those required for the use of the Casino-Hotel as a licensed casino facility), in accordance with all applicable Legal Requirements. "PERMITTED ENCUMBRANCES" means: (1) liens for taxes, assessments, or governmental charges not yet due and payable or if due and payable are not delinquent to the extent that any fine, penalty, interest or cost may be added for nonpayment thereof; (2) Existing Encumbrances; (3) FF&E Financing Agreements; (4) After-Acquired Fee Mortgages; (5) the lien of the Mortgage Documents and any rights granted as provided therein; (6) Restricted Encumbrances; (7) the lien of the Trustee provided for by Section 8.07 of the Indenture; (8) any Working Capital Facility Lien; (9) liens created by the Senior Mortgage Documents; and (10) Capitalized Lease Obligations. "PERSON" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or any other entity or government or any agency or political subdivision thereof. "PREMISES" has the meaning set forth in Granting Clause Third. "RATABLE BENEFIT" has the meaning stated in Section 1.01 of the Indenture. 15 "RELEASED LAND" has the meaning stated in Section 2.05. "RELEASED FEE LAND" has the meaning stated in Section 2.06. "RESTORATION" has the meaning stated in Section 5.11(e). "RESTRICTED ENCUMBRANCES" means Leases permitted by and made in accordance with Section 5.13 of this Mortgage. "RIHF" shall mean Resorts International Hotel Financing, Inc., a Delaware corporation. "SENIOR GUARANTY MORTGAGE" has the meaning stated in Section 1.01 of the Indenture. "SENIOR MORTGAGE" has the meaning stated in Section 1.01 of the Indenture. "SENIOR MORTGAGE DOCUMENTS" has the meaning stated in Section 1.01 of the Indenture. "SERVICES AGREEMENT" has the meaning set forth in Section 1.01 of the Indenture. "STATED MATURITY" when used with respect to a note means the date specified in such note as the fixed date on which the principal of such note is due and payable. "SUPERIOR INSTRUMENT REQUIREMENTS" means the applicable terms, conditions and provisions of (i) the Ground Leases with respect to the Leased Land; and (ii) Superior Mortgages with respect to the portion of the Trust Estate encumbered thereby. "SUPERIOR MORTGAGES" means, collectively, the Senior Mortgage, the Senior Guaranty Mortgage, any Working Capital Facility Lien and any After-Acquired Fee Mortgages. "TAKING" means the acquisition or condemnation by eminent domain of the whole or any part of the Premises, by a competent authority, for any public or quasi-public use or purpose. "TANGIBLE PERSONAL PROPERTY" has the meaning stated in Granting Clause Fifth. 16 "TRUSTEE" means the Person named as the "Trustee" in the first paragraph of the Indenture and any successor thereto. "TRUST ESTATE" has the meaning stated in the habendum to the Granting Clauses. "TRUST INDENTURE ACT" has the meaning stated in Section 1.01 of the Indenture. "WORKING CAPITAL FACILITY" has the meaning stated in Section 1.01 of the Indenture. "WORKING CAPITAL FACILITY LIEN" has the meaning stated in Section 5.22(c) of this Mortgage. Section 1.02. NOTICES, ETC. (a) Any request, demand, authorization, direction, notice (including, without limitation, a notice of default), consent, waiver or other document provided or permitted by this Mortgage to be made upon, given or furnished to, or filed with, the Mortgagor or the Mortgagee (collectively, "Notices") shall be deemed given when either (i) delivered by hand or (ii) two days after sending by registered or certified mail, postage prepaid, addressed as follows: To the Mortgagor: Resorts International Hotel, Inc. c/o Resorts International, Inc. 1133 Boardwalk Atlantic City, New Jersey 08401 Attention: Christopher D. Whitney If to Mortgagee: U.S. Trust Company of California, N.A. 555 South Flower Street, Suite 2780 Los Angeles, California 90071 Attention: Corporate Trust Department (b) By Notice to the Mortgagor, the Mortgagee and the Trustee, any party may designate additional or substitute address for Notices which, notwithstanding Subsection (a) above, shall be deemed given when received. Section 1.03. FORM AND CONTENT OF DOCUMENTS DELIVERED TO MORTGAGEE. Whenever 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 17 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 such matters in one or several documents. Any certificate or opinion of an Officer of the Mortgagor may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such Officer knows that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any 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 Mortgagor stating that the information with respect to such factual matters is in the possession of the Mortgagor, unless such counsel knows that the certificate or opinion or representations with respect to such matters are erroneous. If appropriate to the matter being opined upon and to the extent not prohibited by the Trust Indenture Act, any Opinion of Counsel may be subject to rights of creditors and the availability of equitable remedies. Whenever any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Mortgage, they may, but need not, be consolidated and form one instrument. Whenever in this Mortgage, in connection with any application or certificate or report to the Mortgagee, it is provided that the Mortgagor shall deliver any document as a condition of the granting of such application, or as evidence of the Mortgagor's compliance with any term hereof, it is intended that the truth and accuracy, at the time of the granting of such application or at the effective date of such certificate or report (as the case may be), of the facts and opinions stated in such document shall in such case be conditions precedent to the right of the Mortgagor to have such application granted or to the sufficiency of such certificate or report. Section 1.04. COMPLIANCE CERTIFICATES AND OPINIONS. Upon any application or request by the Mortgagor to the Mortgagee to take any action under any provision of this Mortgage, the Mortgagor shall furnish to the Mortgagee an Officers' Certificate stating that all conditions precedent, if any, provided for in this Mortgage 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 18 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 Mortgage 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 Mortgage shall include: (a) a statement that each individual signing such certificate or opinion has read such condition or covenant and the definitions herein relating thereto; (b) 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; (c) 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 condition or covenant has been complied with; and (d) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. Section 1.05. EFFECT OF HEADINGS. The Article and Section headings herein are for convenience only and shall not affect the construction hereof. Section 1.06. SUCCESSORS AND ASSIGNS; AMENDMENTS. (a) Subject to Section 4.02 hereof and Section 10.02 of the Indenture, this Mortgage shall be binding upon and inure to the benefit of the parties hereto and of the respective successors and assigns of the parties hereto to the same effect as if each such successor or assign were in each case named as a party to this Mortgage. (b) This Mortgage may not be modified, amended, discharged, released nor any of its provisions waived except by agreement in writing executed by the Mortgagor and the Mortgagee and in accordance with the provisions of this Mortgage and the Indenture. Section 1.07. SEPARABILITY CLAUSE. In case any provision in this Mortgage shall be invalid, illegal or unenforceable, the validity, legality and enforceability of 19 the remaining provisions shall not in any way be affected or impaired thereby. Section 1.08. BENEFITS OF MORTGAGE. Nothing in this Mortgage or in the Guaranty, express or implied, shall give to any Person, other than the parties hereto and their successors and assigns, any benefit or any legal or equitable right, remedy or claim under this Mortgage. Section 1.09. GOVERNING LAW. This Mortgage shall be deemed to be a contract under the laws of the State of New Jersey and shall be construed in accordance with and governed by the laws of the State of New Jersey. Section 1.10. [Reserved] Section 1.11. PROVISIONS REQUIRED BY INDENTURE. Whenever the provisions of this Mortgage and the provisions of the Indenture shall be inconsistent, the provisions of the Indenture shall govern. Section 1.12. RIGHTS OF THE TRUSTEE. So long as the Trustee is the Mortgagee hereunder, except as otherwise provided in Section 8.01 of the Indenture: (a) the Mortgagee 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, coupon or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) whenever in the administration of this Mortgage the Mortgagee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Mortgagee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate; (c) the Mortgagee 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 the Mortgagee hereunder in good faith and in reliance thereon; 2 (d) the Mortgagee shall be under no obligation to exercise any of the rights or powers vested in it by this Mortgage at the request or direction of any Noteholder pursuant to the Indenture, unless such holder shall have offered to the Mortgagee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (e) the Mortgagee 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, or other paper or document but the Mortgagee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Mortgagee shall determine to make such further inquiry or investigation, it shall be entitled (subject to the express limitations with respect thereto contained in this Mortgage) to examine the books, records and premises of the Mortgagor, personally or by agent or attorney; (f) the Mortgagee may execute any of the trusts or power hereunder or perform any duties hereunder either directly or by or through agents or attorneys, and the Mortgagee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder; (g) the Mortgagee shall not be personally liable, in case of entry by it upon the Trust Estate, for debts contracted or liabilities or damages incurred in the management or operation of the Trust Estate; and (h) no provision of this Mortgage shall require the Mortgagee to expend or risk its own funds or otherwise incur any financial liability in the performance of its obligations hereunder, or in the exercise 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. 2 Section 1.13. MORTGAGE SUBJECT TO THE PROVISIONS OF THE ACT. Each provision of this Mortgage is subject to and shall be enforced in compliance with the provisions of the New Jersey Casino Control Act. This Mortgage shall not be transferred, assigned or amended without the prior approval of the New Jersey Casino Control Commission. Section 1.14. DISCHARGE OF LIEN. If the Mortgagor shall pay or cause to be paid, or there shall otherwise be paid, to the Mortgagee all amounts required to be paid by the Mortgagor pursuant to the Guaranty, or the Note Mortgage and the Notes, and the conditions precedent for the Indenture to cease, determine and become null and void in accordance with Section 5.01 of the Indenture shall have occurred, the Mortgagee shall promptly cancel and discharge this Mortgage, and execute and deliver to the Mortgagor all such instruments as may be necessary, required or appropriate to evidence such discharge and satisfaction of such lien or liens. Section 1.15. GENERAL APPLICATION. (a) The assertion of any rights upon any Default shall be subject in each instance to the giving of any notice and the expiration of any grace period provided for in Section 3.01 as a condition to such Default making it an Event of Default, unless the Trust Indenture Act requires otherwise, in which case the Trust Indenture Act shall control. (b) For the purposes of this Mortgage, it is understood that an event which does not materially diminish the value of the Mortgagee's interest in the Trust Estate 22 shall not be deemed an "impairment of security", as that phrase is used in this Mortgage. ARTICLE TWO RELEASE; OTHER EXCEPTED PROPERTY; SUBORDINATION Section 2.01. POSSESSION BY MORTGAGOR; DISPOSITIONS WITHOUT RELEASE. So long as there shall have been no demand for payment under the Guaranty pursuant to Section 3.02 of this Mortgage, the Mortgagor shall be suffered and permitted, with power freely and without let or hindrance on the part of the Mortgagee, subject to the provisions of this Mortgage and the Note Mortgage, to possess, use, manage, operate and enjoy the Trust Estate and every part thereof and to collect, receive, use, invest and dispose of the rents, issues, tolls, profits, revenues and other income from the Trust Estate or any part hereof, to use, consume and dispose of any consumables, goods, wares and merchandise in the ordinary course of business of operating the Casino-Hotel and to adjust and settle all matters relating to choses in action, leases and contracts. Section 2.02. OBSOLETE PROPERTY; TANGIBLE PERSONAL PROPERTY; LEASE MODIFICATIONS. The Mortgagor shall have the right, at any time and from time to time, unless an Event of Default shall have occurred and be continuing, without any release from or consent by the Mortgagee: (a) to sell or dispose of, free from the lien of this Mortgage, any Tangible Personal Property which, in its reasonable opinion, may have become obsolete or unfit for use or which is no longer necessary in the conduct of its businesses or the operation of the Trust Estate, and no purchaser of any such property shall be bound to inquire into any question affecting the Mortgagor's right to sell or otherwise dispose of the same, free from the lien of this Mortgage; (b) to alter, repair, replace, change the location (provided notice shall be given to Mortgagee as to any new location) or position of and add to any Tangible Personal Property; provided, however, that no change shall be made in the location of any such property subject to the lien of this Mortgage which would in any respect impair the security of this Mortgage upon such property; or (c) to renew, extend, surrender, terminate, modify or amend any leases of Tangible Personal Property, when, 23 in the Mortgagor's reasonable opinion, it is prudent to do so. The Mortgagor shall retain any net cash proceeds (subject to the right to pay dividends or make cash distributions pursuant to Section 12.07 of the Indenture) received from the sale or disposition of any Tangible Personal Property under Subsection (a) of this Section 2.02, in the business of operating the Casino-Hotel. The Mortgagee shall be under no responsibility or duty with respect to the exercise of the rights of the Mortgagor under this Section 2.02 or the application of the proceeds of any sale or disposition of any Tangible Personal Property. The Mortgagee shall, from time to time, promptly execute any written instrument in form satisfactory to it to confirm the propriety of any action taken by the Mortgagor under this Section 2.02, provided that the conditions set forth in Section 2.02 of the Note Mortgage have been satisfied. Section 2.03. OTHER EXCEPTED PROPERTY. Notwithstanding any provisions contained in this Mortgage or the Indenture to the contrary, including, without limitation, the provisions of Granting Clauses Fifth and Sixth and of Articles Two and Five hereof, if the Mortgagor acquires Tangible Personal Property and other items constituting operating assets, such as computer software subject to any FF&E Financing Agreement, or becomes the lessee under a lease for any of the same and if the document evidencing such FF&E Financing Agreement prohibits subordinate liens or the provisions of any such lease prohibits any assignment thereof by the lessee, and if any such prohibition is customary with respect to similar transactions of the lender or lessor, as the case may be, then the property so purchased or the lessee's interest in the lease, as the case may be, shall be deemed to be Excepted Property. If any such FF&E Financing Agreement permits subordinate liens then the Mortgagee agrees to execute and deliver to the Mortgagor, at the Mortgagor's expense, such documents as the holder of such FF&E Financing Agreement may reasonably request to evidence the subordination of the lien of this Mortgage to the lien of such FF&E Financing Agreement. Section 2.04. [Reserved] Section 2.05. RELEASED LAND. (a) Notwithstanding anything to the contrary herein contained, the Mortgagor shall have the right, at any time and 24 from time to time, unless an Event of Default shall have occurred and be continuing, to convey all or any part of the Released Fee Land (the land to be so conveyed is hereinafter referred to as the "Released Land"), free from the lien of the Mortgage, provided that the conditions set forth in Section 2.05(a) of the Note Mortgage have been satisfied. (b) The Mortgagee shall, from time to time, promptly execute any written instrument in form reasonably satisfactory to the prospective purchaser to confirm the release of the Released Fee Land, upon receipt by the Mortgagee of an Officers' Certificate stating that the Mortgagor is entitled to such release by virtue of the Mortgagor's compliance with this Section 2.05 and, if applicable, Section 2.05 of the Note Mortgage, provided, that the Mortgagee shall have no liability thereunder and all costs and expenses (including reasonable attorneys' fees) shall be paid by the Mortgagor. Section 2.06. RELEASED FEE LAND. (a) Notwithstanding anything to the contrary herein contained, in the event the Mortgagor intends to exercise an option to acquire fee title to Leased Land under the provisions of any Ground Lease, the Mortgagor shall have the right, unless an Event of Default shall have occurred and be continuing, to have an Affiliate exercise such options(s) or for the Mortgagor to exercise such options(s) on behalf of an Affiliate and in connection therewith to cause fee simple title to the Leased Land or any part thereof to be conveyed to an Affiliate of the Mortgagor (provided that no portion of the purchase price of the Leased Land or part thereof is paid by Mortgagor), free from the lien of this Mortgage (the land to be so conveyed is hereinafter referred to as the "Released Fee Land"), provided that the Mortgagor furnishes the Mortgagee with the following: (i) an Officers' Certificate requesting the release of the Released Fee Land from the Trust Estate and stating that (A) the Mortgagor is not required to own the Released Fee Land in order to maintain all Permits and in order to comply with the provisions of all material contracts to which the Mortgagor is a party or by which the Mortgagor is bound, (B) such Affiliate has received all Permits necessary to own the Released Fee Land (including without limitation all approvals required by the Casino Control Commission of the State of New Jersey), (C) there has been delivered to the Mortgagor and the Mortgagee a true copy of an instrument executed by such Affiliate stating that (i) such Affiliate may only engage in the activity of owning the Released Fee Land and (ii) such Affiliate shall not convey the Released Fee Land to another Affiliate of the Mortgagor, 25 unless such other Affiliate executes and delivers to the Mortgagor and the Mortgagee, the instruments that would have been required to be delivered pursuant to clause (C) if the Mortgagor conveyed the Released Fee Land to such other Affiliate (provided that this restriction shall only be effective until such time as this Mortgage shall be satisfied of record) and (D) the deed conveying the Released Fee Land to such Affiliate shall state that such conveyance is made subject to the terms, provisions and conditions of the applicable Ground Lease and that the fee and leasehold interests in the Released Fee Land shall not merge by reason of the Mortgagor and/or any Affiliate owning both the leasehold and fee estate therein, and that such estates shall always remain separate and distinct; (ii) an Opinion of Counsel to the effect that (A) the Mortgagor is not required to own the Released Fee Land in order to maintain in good standing all Permits or by the provisions of any material contract to which the Mortgagor is a party or by which it is bound to own the Released Fee Land and (B) the instruments described in clause (C) of subparagraph (i) were duly executed by and are binding upon such Affiliate; and (iii) an endorsement to the Original Policy, confirming that no merger of the fee and leasehold estates in the Released Fee Land has resulted from such conveyance. In addition, simultaneously with such acquisition, the Affiliate and Mortgagor shall enter into an instrument in form and substance reasonably satisfactory to Mortgagee, amending the applicable Ground Lease to provide such mortgagee protections as are customary and to the extent reasonably required by Mortgagee, including, without limitation, (A) a covenant of the landlord not to terminate the Ground Lease for any reason whatsoever (including without limitation, due to any default by tenant of its obligations under such Ground Lease), and (B) an agreement by the landlord not to accept payment of any fixed or base rent from the tenant (and, if tendered by the Mortgagor, an agreement to return same to the Mortgagor) or any other charges payable thereunder at any time that an Event of Default shall have occurred and shall be continuing. (b) The Mortgagee shall, from time to time, promptly execute any written instrument in form reasonably satisfactory to the prospective purchaser to confirm the release of the Released Fee Land, upon receipt by the Mortgagee of an Officers' Certificate stating that the Mortgagor is entitled to such release by virtue of the 26 Mortgagor's compliance with this Section 2.06, PROVIDED that the Mortgagee shall have no liability thereunder and all costs and expenses (including reasonable attorneys' fees) shall be paid by the Mortgagor. Section 2.07. AFTER-ACQUIRED FEE MORTGAGES. (a) Notwithstanding anything contained herein to the contrary (i) if no Event of Default has occurred and is continuing and (ii) if the Mortgagor shall acquire Released Fee Land, then simultaneously with the acquisition thereof, the Mortgagor shall have the right to encumber such fee simple title with a mortgage (such mortgage and any refinancing thereof permitted by the Indenture is hereinafter referred to as an "After-Acquired Fee Mortgage"). The lien of this Mortgage on the Released Fee Land shall be subordinated to the lien of the After-Acquired Fee Mortgage on the Released Fee Land (and to the lien of other Superior Mortgages which shall become a lien thereon in accordance with the terms thereof), provided the following conditions are satisfied: (i) the After-Acquired Fee Mortgage encumbers the fee simple title to such real property and no other property; (ii) the indebtedness secured by the After-Acquired Fee Mortgage (A) does not exceed 75% of the cost to the Mortgagor of such fee simple title at the time of the acquisition and (B) satisfies the criteria set forth in Section 12.08 of the Indenture; (iii) in the event the After-Acquired Fee Mortgage encumbers fee simple title to the Leased Land or any part thereof, such After-Acquired Fee Mortgage contains provisions binding on the holder of the After-Acquired Fee Mortgage and its successors and assigns confirming the provisions of Section 5.21(d) of this Mortgage; (iv) the Released Fee Land is not being acquired from an Affiliate of the Mortgagor; (v) the After-Acquired Fee Mortgage and other loan documents shall contain a provision binding upon the holder of such After-Acquired Fee Mortgage and other loan documents that all insurance proceeds in the event of a Casualty and awards for Takings of less than the entire Released Fee Land shall be used for purposes of Restoration; and (vi) the Mortgagor delivers to the Mortgagee an Officers' Certificate requesting such subordination and 27 certifying that the requirements of (i) through (v) above have been satisfied. (b) Anything contained in this Section 2.07 or elsewhere in this Mortgage to the contrary notwithstanding, the subordination of this Mortgage to any After-Acquired Fee Mortgage constituting a lien on Released Fee Land shall not be self-operative but shall be effective only upon the execution and delivery by the Mortgagee of an instrument in writing effecting such subordination. The Mortgagee shall deliver such instrument of subordination on the following conditions: (x) the Mortgagee shall have received an Officers' Certificate confirming that the conditions of (i) through (vi) of paragraph (a) have been satisfied, together with a true and correct copy of the After-Acquired Fee Mortgage and all other instruments securing the indebtedness evidenced thereby and (y) the instrument of subordination shall specifically state that this Mortgage is being subordinated not with respect to the lien of this Mortgage on the Ground Lease or on the leasehold estate created thereby, but only with respect to the fee simple title to the Leased Land or applicable part thereof and only if and to the extent that the After-Acquired Fee Mortgage being subordinated to is subject and subordinate to the Ground Lease and the leasehold estate created thereby. ARTICLE THREE REMEDIES Section 3.01. EVENTS OF DEFAULT. "Event of Default," whenever used herein, means any one of following events (including any applicable notice requirement and any period of grace as specified in this Section 3.01) (whatever the reason for such event 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): (a) default by the Mortgagor under the Guaranty and continuance of such default for a period of 10 days after there has been given a written notice to the Mortgagor specifying such default and stating that such notice is a "Notice of Default" hereunder; or (b) an "Event of Default," as defined in Section 3.01 of the Note Mortgage, shall occur; or (c) default in the performance, or breach, of any of the provisions of Article Four and the continuance of such default or breach for a period of 60 days after there has been given a written notice to the Mortgagor 28 specifying that such notice is a "Notice of Default" hereunder; or (d) any representation or warranty of the Mortgagor set forth in this Mortgage shall prove to be incorrect as of the time when made and the facts constituting such incorrectness impairs the Mortgagee's security and such impairment continues for a period of 30 days, unless such impairment is curable, but not susceptible of cure within such 30-day period (for reasons other than lack of funds), provided that the conditions set forth in Section 3.01(l) of the Note Mortgage have been satisfied. Section 3.02. DEMAND UNDER THE GUARANTY. If an Event of Default occurs and is continuing, and the Mortgagee has declared the Outstanding Amount of the Note to be due and payable immediately pursuant to Section 3.02 of the Note Mortgage, then the Mortgagee may declare all obligations under the Guaranty to be due and payable immediately. Section 3.03. APPLICATION OF MONEYS RECEIVED BY MORTGAGEE. Any moneys received by the Mortgagee pursuant to the provisions of this Article Three (including moneys received by the Trustee after any action or act by the Mortgagee under Section 3.10) shall be applied by the Mortgagee in accordance with the provisions of Section 7.06 of the Indenture. Section 3.04. RESTORATION OF RIGHTS AND REMEDIES. If the Mortgagee has instituted any proceeding to enforce any right or remedy under this Mortgage and such proceeding has been discontinued or abandoned for any reason or has been determined adversely to the Mortgagee, then and in every such case the Mortgagor and the Mortgagee shall, subject to any determination in such proceeding, be restored to its former position hereunder, and thereafter all rights and remedies of the Mortgagee shall continue as though no such proceeding had been instituted. Section 3.05. RIGHTS AND REMEDIES CUMULATIVE. No right or remedy herein conferred upon or reserved to the Mortgagee 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. 29 Section 3.06. DELAY OR OMISSION NOT WAIVER. No delay or omission of the Mortgagee to exercise any right or remedy accruing upon an 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 Three by law to the Mortgagee may be exercised, from time to time, and as often as may be deemed expedient, by the Mortgagee. Section 3.07. UNDERTAKING FOR COSTS. If any action or proceeding shall be commenced (including, without limitation, an action to foreclose this Mortgage or to collect under the Guaranty secured hereby) to which action or proceeding the Mortgagee is made or becomes a party, or in which it becomes necessary in the opinion of the Mortgagee to defend or uphold the lien of this Mortgage, then, to the extent it has not already done so pursuant to the terms of Section 3.07 of the Note Mortgage, the Mortgagor shall pay to Mortgagee all expenses, including reasonable attorneys' fees and expenses, incurred by the Mortgagee in connection therewith, together with interest at the rate then payable on the Notes, from the date of payment less the net amount received by the Mortgagee or the Trustee, as their interests may appear under any title insurance policy, and, until paid, all such expenses, together with interest as aforesaid, shall be a lien on the Trust Estate. Section 3.08. WAIVER OF APPRAISEMENT AND OTHER LAWS. To the full extent that it may lawfully so agree, the Mortgagor will not at any time insist upon, plead, claim or take the benefit or advantage of, any appraisement, valuation, stay, extension or redemption law now or hereafter in force, in order to prevent or hinder the enforcement of this Mortgage or the absolute sale of the Trust Estate, or any part hereof, or the possession thereof by any purchaser at any sale under this Article Three; and the Mortgagor, for itself and all who may claim under it, so far as it or they now or hereafter may lawfully do so, hereby waives the benefit of all such laws. The Mortgagor, for itself and all who may claim under it, waives, to the extent that it may lawfully do so, all right to have the property in the Trust Estate marshalled upon any foreclosure hereof, and agrees that any court having jurisdiction to foreclose this Mortgage may order the sale of the Trust Estate as an entirety. If any law in this Section 3.08 referred to and now in force, of which the Mortgagor or its successor or successors might take advantage despite this Section 3.08, shall hereafter be repealed or cease to be in force, such law shall not thereafter be deemed to constitute any part of the 30 contract herein contained or to preclude the application of this Section 3.08. Section 3.09. ENTRY. The Mortgagor agrees that upon the occurrence of an Event of Default the Mortgagor, upon demand of the Mortgagee during the continuance thereof, shall forthwith surrender to the Mortgagee the actual possession of, and it shall be lawful for the Mortgagee by such officers or agents as it may appoint to enter and take possession of, the Trust Estate (and the books and papers of the Mortgagor), and to hold, operate and manage the Trust Estate (including the making of all needful repairs, and such alterations, additions and improvements as the Mortgagee shall deem wise) and to receive the rents, issues, tolls, profits, revenues and other income thereof, and, after deducting the costs and expenses of entering, taking possession, holding, operating and managing the Trust Estate, as well as payments for taxes, insurance and other proper charges upon the Trust Estate and reasonable compensation to itself, its agents and counsel, to apply the same as provided in Section 3.03, PROVIDED, HOWEVER, that the Mortgagee's rights under this Section 3.09 shall be subject to the provisions of the New Jersey Casino Control Act and Section 3.14. Whenever all that is then due upon the Note and under any of the terms of this Mortgage shall have been paid and all defaults hereunder shall have been made good, the Mortgagee shall surrender possession to the Mortgagor. Section 3.10. POWER OF SALE; SUITS FOR ENFORCEMENT. In case an Event of Default shall occur and be continuing, the Mortgagee, with or without entry, in its discretion may: (a) sell, subject to any mandatory requirements of applicable law, the Trust Estate as an entirety, or in such parcels, as the Mortgagee may determine, to the highest bidder at public auction at such place and at such time (which sale may be adjourned by the Mortgagee from time to time in its discretion by announcement at the time and place fixed for such sale, without further notice) and upon such terms as the Mortgagee may fix and briefly specify in a notice of sale to be published as required by law; or (b) proceed to protect and enforce its rights under this Mortgage by sale pursuant to judicial proceedings or by a suit, action or proceeding in equity or at law or otherwise, whether for the specific performance of any covenant or agreement contained in this Mortgage or in aid of the execution of any power granted in this Mortgage or for the foreclosure of this Mortgage or for the enforcement of any other legal, equitable or other remedy, as the Mortgagee, being advised by counsel, shall deem most effectual to protect 31 and enforce any of the rights of the Mortgagee; the failure to join tenants shall not be asserted as a defense to any foreclosure or proceeding to enforce the rights of the Mortgagee. Section 3.11. INCIDENT OF SALE. Upon any sale of any of the Trust Estate, whether made under the power of sale hereby given or pursuant to judicial proceedings, to the extent permitted by law: (a) all obligations owing under the Guaranty, if not previously due, shall at once become and be immediately due and payable; (b) subject to the provisions of Section 3.14 and the receipt of any required prior approvals of the New Jersey Casino Control Commission, the Mortgagee may bid for and purchase the property offered for sale, and upon compliance with the terms of sale may hold, retain and possess and dispose of such property, without further accountability, and may, in paying the purchase money therefor, delivery any notes or claims for interest thereon in lieu of cash to the amount which shall, upon distribution of the net proceeds of such sale, be payable thereon, and such notes or claims for interest thereon, in case the amounts so payable thereon shall be less than the amount due thereon, shall be returned to the holders thereof after being appropriately stamped to show partial payment; (c) the Mortgagee may make and deliver to the purchaser or purchasers a good and sufficient deed, bill of sale and instrument of assignment and transfer of the property sold; (d) the Mortgagee is hereby irrevocably appointed the true and lawful attorney of the Mortgagor, in its name and stead, to make all necessary deeds, bills of sale and instruments of assignment and transfer of the property thus sold; and for that purpose it may execute all necessary deeds, bills of sale and instruments of assignment and transfer, and may substitute one or more persons, firms or corporations with like power, the Mortgagor hereby ratifying and confirming all that its attorney or such substitute or substitutes shall lawfully do by virtue hereof; but if so requested by the Mortgagee or by any purchaser, the Mortgagor shall ratify and confirm any such sale or transfer by executing and delivering to the Mortgagee or to such purchaser or purchasers all proper deeds, bills of sale, instruments of assignment and transfer and releases as may be designated in any such request; 32 (e) all right, title, interest, claim and demand whatsoever, either at law or in equity or otherwise, of the Mortgagor of, in and to the property so sold shall be divested and such sale shall be a perpetual bar both at law and in equity against the Mortgagor, its successors and assigns, and against any and all persons claiming or who may claim the property sold or any part thereof from, through or under the Mortgagor, its successors and assigns; and (f) the receipt of the Mortgagee or of the officer making such sale shall be a sufficient discharge to the purchaser or purchasers at such sale for his or their purchase money and such purchaser or purchasers and his or their assigns or personal representatives shall not, after paying such purchase money and receiving such receipt, be obliged to see to the application of such purchase money, or be in anywise answerable for any loss, misapplication or non-application thereof. Section 3.12. RECEIVER. Upon the occurrence of an Event of Default and commencement of judicial proceedings by the Mortgagee to enforce any right under this Mortgage, the Mortgagee shall be entitled, as against the Mortgagor, without notice or demand and without regard to the adequacy of the security for the Guaranty or the solvency of the Mortgagor, to the appointment of a receiver of the Trust Estate, and of the rents, issues, profits, revenues and other income thereof, PROVIDED, HOWEVER, that the Mortgagee's rights under this Section 3.12 shall be subject to the provisions of the New Jersey Casino Control Act and Section 3.14 hereof. Section 3.13. SUITS TO PROTECT THE TRUST ESTATE. Upon 5 days' prior written notice to the Mortgagor (or such shorter period or without notice if deemed necessary and appropriate by the Mortgagee), the Mortgagee shall have power to institute and maintain such proceedings as it may deem necessary and appropriate to prevent any impairment of the Trust Estate by any acts which may be unlawful or in violation of this Mortgage and to protect its interests in the Trust Estate and in the rents, issues, profits, revenues and other income arising therefrom, including power to institute and maintain proceedings to restrain the enforcement of or compliance with any 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 hereunder or be materially prejudicial to the interests of the Mortgagee. Section 3.14. MANAGEMENT OF CASINO-HOTEL. Notwithstanding any provision of this Article Three to the 33 contrary, following an Event of Default and the taking of possession of the Trust Estate or any part thereof by the Mortgagee and/or the appointment of receiver of the Trust Estate or any part thereof, the Mortgagee or any such receiver shall be authorized, in addition to the rights and powers of the Mortgagee and such receiver set forth elsewhere in this Mortgage, to retain one or more experienced operators of hotels and/or casinos to manage the Casino-Hotel, PROVIDED that any such operator shall have all necessary legal qualifications, including all Permits, to manage the Casino-Hotel. ARTICLE FOUR CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE Section 4.01. CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER ONLY ON CERTAIN TERMS. The Mortgagor shall comply with all provisions applicable to the Mortgagor in Article Ten of the Indenture. Section 4.02. SUCCESSOR ENTITY SUBSTITUTED. Upon any consolidation or combination or any conveyance or transfer of the Trust Estate or any portion thereof in accordance with Section 10.01 of the Indenture, the successor entity formed by such consolidation or into which the Mortgagor is combined or to which such conveyance or transfer is made shall succeed to, and be substituted for, and may exercise every right and power of, the Mortgagor under this Mortgage with the same effect as if such successor entity had been named as the Mortgagor herein; PROVIDED, HOWEVER, that no such conveyance or transfer of the Trust Estate substantially as an entirety, unless such conveyance or transfer is in compliance with the provisions of Article Ten of the Indenture, shall have the effect of releasing the Person named as "the Mortgagor" in the first paragraph of this instrument or any successor entity which shall theretofore have become such in the manner prescribed in such Article Ten from its liability as guarantor. Section 4.03. LIMITATION ON SALES OF TRUST ESTATE. Except as otherwise expressly permitted by this Mortgage or the Indenture, the Mortgagor shall not sell, assign, lease, sublease, hypothecate, pledge, mortgage or otherwise transfer all or any part of the Trust Estate or any interest therein (including without limitation any interest in the Ground Leases). Without limiting the generality of the foregoing, the Mortgagor shall not separate, or attempt to separate, its ownership of its interest in the Ground Leases from its ownership of the buildings constituting the Casino-Hotel or any part thereof. 34 ARTICLE FIVE COVENANTS AND REPRESENTATIONS OF MORTGAGOR Section 5.01. [Reserved] Section 5.02. FF&E FINANCING AGREEMENTS. The Mortgagor covenants and agrees to comply with all of the terms and conditions set forth in any FF&E Financing Agreements before the expiration of any applicable notice and cure periods contained in the FF&E Financing Agreements. Section 5.03. LIMITATIONS ON LIENS. The Mortgagor will not create, incur, suffer or permit to be created or incurred or to exist any mortgage, lien, charge or encumbrance on or pledge of any of the Trust Estate, other than (i) Permitted Encumbrances, (ii) liens on the Trust Estate in connection with indebtedness permitted by clauses (i), (ii), (iii), (iv) or (v) of Section 12.08(a) of the Indenture, and (iii) a building contract or a notice of intention filed by a mechanic, materialman or laborer under the New Jersey lien law. Without limiting the generality of the foregoing sentence but notwithstanding the provisions of the foregoing sentence, the Mortgagor shall not be deemed to have breached the provisions of the foregoing sentence by virtue of the existence of a lien for Impositions or mechanics liens so long as the Mortgagor is in good faith contesting the validity of the same in accordance with the provisions of Section 5.09 to the extent that the matters described in (i) and (ii) do not constitute a default under any Ground Lease or Superior Mortgage. Section 5.04. [Reserved] Section 5.05. ACTIONS AND PROCEEDINGS. The Mortgagor hereby acknowledges the right of the Mortgagee, in the name of and on behalf of the Mortgagor, (a) to appear in and defend any action or proceeding brought with respect to the Trust Estate or any part thereof and (b) upon 5 days' prior written notice to the Mortgagor (or such shorter period or without notice if deemed necessary and appropriate by the Mortgage), to commence any action or proceeding to protect the interest of the Mortgagee in the Trust Estate. Section 5.06. WARRANTY OF LEASEHOLD ESTATE AND TITLE. The Mortgagor represents and warrants that as of the date hereof: (a) it is duly authorized under the laws of the State of New Jersey and all other applicable laws to 35 execute and deliver this Mortgage, and all corporate action on its part necessary for the valid execution and delivery of this Mortgage has been duly and effectively taken; (b) it is the lawful owner and is lawfully seized and possessed of the Owned Land and all buildings and improvements thereon, free and clear of all liens, charges or encumbrances, other than the lien of the Mortgage Documents, any Working Capital Facility Lien and Existing Encumbrances; (c) it is the holder of and has good and marketable title to the leasehold interests and leasehold estates under the Ground Leases and to the Ground Leases, subject to no lien, encumbrance or charge other than the lien of the Mortgage Documents, any Working Capital Facility Lien and Existing Encumbrances; (d) (i) the Ground Leases are valid and subsisting demises of the Leased Land for the terms therein set forth, (ii) there are no defaults thereunder by any Lessor or the lessee as to which written notice has been given to or by the lessee, (iii) the Mortgagor has delivered true and correct copies of the Ground Leases and all modifications, amendments and supplements thereto, and (iv) each of the Ground Leases is in full force and effect and has not been modified, amended or supplemented, except as described on Schedule 2; (e) it has good title to the Operating Assets, subject to no lien, encumbrance or charge, other than the lien of the Mortgage Documents, any Working Capital Facility Lien and Existing Encumbrances; and (f) the Mortgagor has good and lawful right and authority to execute this Mortgage and to grant, bargain, sell, alien, convey, assign, transfer, hypothecate, pledge, mortgage and confirm the Trust Estate as provided herein (including without limitation with respect to the Operating Assets and the Ground Leases, without the consent of any third party, other than governmental authorities but any applicable or necessary consent or approval of any such governmental authority has been given or waived at or prior to the execution and delivery of this Mortgage), and this Mortgage constitutes a valid third mortgage lien and third priority security interest in the Trust Estate PARI PASSU with the lien of the Note Mortgage, subject only to Working Capital Facility Liens and Existing Encumbrances. 36 The Mortgagor hereby does and will forever warrant and defend (x) the title to Trust Estate (including without limitation, its leasehold estates under the lessee's interests in the Ground Leases) (subject to Permitted Encumbrances) and (y) the priority of the lien of this Mortgage (subject to Permitted Encumbrances other than Restricted Encumbrances), against the claims and demands of all persons whomsoever, at the Mortgagor's sole cost and expense. Section 5.07. FURTHER ASSURANCES; RECORDING. The Mortgagor will, as provided in Section 5.13, from time to time subject its right, title and interest under all Leases to the lien of this Mortgage. The Mortgagor will cause this instrument and all other instruments of further assurance, including all financing statements and continuation statements covering security interests in personal property, to be promptly recorded, registered and filed, and at all times to be kept recorded, registered and filed, and will execute and file such financing statements and cause to be issued and filed such continuation statements, all in such manner and in such places as may be required by law or as requested by the Mortgagee to fully preserve and protect the rights of the Mortgagee as a secured party under the Uniform Commercial Code to all property comprising the Trust Estate (to the extent a grant of a security interest therein is governed by the Uniform Commercial Code) and to perfect, preserve and protect the lien of this Mortgage as a valid mortgage lien of record and a valid security interest on the Trust Estate subject to Permitted Encumbrances (other than Restricted Encumbrances). The Mortgagor will pay all filing or recording fees, and all expenses incident to the execution and delivery of this Mortgage, and any instrument of further assurance, and all federal, state, county and municipal stamp taxes and other taxes, duties, imposts, assessments and charges arising out of or in connection with the execution and delivery of this Mortgage, any financing statement or continuation statement with respect to the personal property constituting part of the Trust Estate or any instrument of further assurance. Section 5.08. PAYMENT OF TAXES AND CERTAIN CLAIMS; COMPLIANCE WITH LEGAL REQUIREMENTS AND INSURANCE REQUIREMENTS. The Mortgagor will: (a) subject to the provisions of Section 5.09 relating to contests, pay or cause to be paid promptly (or when installments of the same shall become due and payable, if, by law or by agreement or arrangement with the applicable governmental agency or authority, the same 37 may be paid in installments) before any fine, penalty, interest or cost may be added for nonpayment (but no later than when the same are payable by the Mortgagor pursuant to any Superior Instrument Requirement), all taxes (including, without limitation, real estate taxes, personal or other property taxes and all sales, value added, use and similar taxes), assessments (including, without limitation, all assessments for public improvements or benefits, whether or not commenced or completed prior to the date hereof and whether or not to be completed prior to the satisfaction of this Mortgage), water, sewer or other rents, rates and charges, excises, levies, license fees, permit fees, inspection fees and other authorization fees and other charges, in each case whether general or special, ordinary or extraordinary, or foreseen or unforeseen, of every character (including all interest, additions to tax and penalties thereon), that may be assessed, levied, confirmed or imposed on or in respect of or be a lien upon (1) the Trust Estate (including without limitation the Leased Land) or any part thereof or any rent therefrom or any estate, right or interest therein, or (2) any acquisition, occupancy, use, leasing, or possession of or activity conducted on the real property or any part thereof included in the Trust Estate or any gross receipts thereof or of the rent therefrom (all of the foregoing being referred to collectively as "Impositions"). Notwithstanding the foregoing or any other provision of this Mortgage, the Mortgagor shall not be required to pay any income, profits or revenue tax upon the income of the Mortgagee, the Trustee or the Noteholders nor any franchise, excise, corporate, estate, inheritance, succession, capital levy or transfer tax of the Mortgagee, the Trustee or the Noteholders nor any interest, additions to tax or penalties in respect thereof, unless such tax is imposed, levied or assessed in substitution for any Impositions that the Mortgagor is required to pay pursuant to this Section 5.08. The Mortgagor will deliver to the Mortgagee official receipts or other proof evidencing payments of any Impositions in accordance with the requirements of this Section 5.08. The Mortgagor shall not be entitled to any credit for taxes or assessments paid against the Guaranty; (b) except for such property which the Mortgagor may dispose of or replace pursuant to Section 2.02, maintain and keep all its properties used or useful in the conduct of its business (other than obsolete equipment), including, without limitation, the Casino-Hotel and all Tangible Personal Property, in such good repair, working order and condition, except for reasonable wear and use, and make or cause to be made all 38 such needful and proper repairs, renewals and replacements thereto consistent with the standards of other casino-hotels in Atlantic City, New Jersey; (c) occupy and continuously operate the Casino-Hotel and keep the Casino-Hotel supplied with Tangible Personal Property, all in a manner consistent with the standards of other casino-hotels in Atlantic City, New Jersey (provided that nothing contained in this Section 5.08(c) shall be deemed to reduce the time period set forth in Section 3.01(f)); (d) subject to the provisions of Section 5.09 relating to contests, the Mortgagor at its sole expense will timely (1) comply with all Legal Requirements and Insurance Requirements, whether or not compliance therewith shall require structural changes in the buildings and improvements included in the Trust Estate or interfere with the use and enjoyment of the Trust Estate or any part thereof, (2) procure, maintain and comply with all permits and other authorizations required for (i) the use of the Casino as a gaming and gambling facility, (ii) the on-premises consumption of alcoholic beverages at the Casino-Hotel and (iii) any other use of the Trust Estate or any part thereof then being made, and for the proper erection, installation, operation and maintenance of the improvements or any part thereof, and (3) comply with any instruments of record at the time in force affecting the Trust Estate or any part thereof, if the failure to comply with the same would impair the Mortgagee's security hereunder. Without limiting the generality of the foregoing, the Mortgagor represents and warrants that at the time of the execution of this Mortgage, the Mortgagor is in compliance with the requirements of clauses (1), (2) and (3); (e) in the event of the passage after the date of this Mortgage of any law of the State of New Jersey, or any other governmental entity, changing in any way the laws now in force for the taxation of mortgages, or debts secured thereby, for state or local purposes, or the manner of the operation of any such taxes, so as to affect the interest of the Mortgagee, then and in such event, the Mortgagor shall bear and pay the full amount of such taxes, provided that if for any reason payment by the Mortgagor of any such new or additional taxes would be unlawful or if the payment thereof would constitute usury or render the indebtedness secured hereby wholly or partially usurious under any of the terms or provisions of the Note, or this Mortgage, or otherwise, the Mortgagee may, at the Mortgagee's option, declare the whole sum secured by this Mortgage, with interest 39 thereon, to be due and payable 90 days after notice of election thereof has been given by the Mortgagee, or the Mortgagee may, at the Mortgagee's option, pay that amount or portion of such taxes as renders the loan or indebtedness secured hereby unlawful or usurious, in which event the Mortgagor shall concurrently therewith pay the remaining lawful and nonusurious portion or balance of such taxes. Section 5.09. PERMITTED CONTESTS. The Mortgagor may, at its sole expense, contest by appropriate legal proceedings conducted in good faith and with due diligence, the amount or validity or application, in whole or in part of any Imposition or lien therefor or any Legal Requirement or Insurance Requirement or the application of any instrument of record affecting the Trust Estate or any part thereof or any claims of mechanics, materialmen, suppliers, or vendors or lien therefore, and may withhold payment of the same pending such proceedings if permitted by law, or make payment under protest, or defer compliance with any such Legal Requirement, any such Insurance Requirement or the terms of any such instrument, and the same shall not be a Default hereunder, provided that (a) in the case of any Impositions or lien therefor or any claims of mechanics, materialmen, suppliers or vendors or lien therefor, such proceedings shall suspend the collection thereof from each of the Mortgagor, the Mortgagee, the Trustee, the Noteholders and the Trust Estate, (b) neither the Trust Estate nor any interest therein would be in any danger of being sold, forfeited, or lost, (c) such action would not result in or constitute a default under any Ground Lease or Superior Mortgage, (d) in the case of a Legal Requirement, neither the Noteholders nor the Mortgagee shall be in any danger of any civil or any criminal liability, and the failure of the Mortgagor to comply with such Legal Requirement shall not affect the continuance in good standing of any Permit or result in the suspension, termination, non-renewal or material adverse modification of any permit, and (e) in the case of an Insurance Requirement, the failure of the Mortgagor to comply therewith shall not affect the validity of any insurance required to be maintained by the Mortgagor hereunder. Section 5.10. MECHANICS' AND OTHER LIENS. Without limiting the generality of the first sentence of Section 5.03 and notwithstanding the provisions of Section 5.03(a)(ii), the Mortgagor will cause to be removed, either by payment, or bonding or otherwise, all claims and demands of mechanics, materialmen, laborers, and others which, if unpaid, might result in, or permit the creation of, a lien on the Premises and/or Trust Estate or any part thereof, or on the revenues, rents, issues, income and profits arising therefrom and in general will do or cause to be done everything necessary so 40 that the lien hereof shall be fully preserved, at the cost of the Mortgagor, without expense to the Mortgagee. Section 5.11. INSURANCE. (a) The Mortgagor will, at its expense, maintain with Insurers: (1) insurance with respect to the Mortgagor's insurable properties constituting a part of the Trust Estate against loss or damage by fire, lightning, and other risks from time to time included under "all-risk" policies and against loss or damage by sprinkler leakage, water damage, collapse, malicious mischief and explosion in respect of any steam and pressure boiler and similar apparatus located on such insurable properties, in amounts at all times sufficient to prevent the Mortgagor from becoming a coinsurer within the terms of the applicable policies, but in any event such insurance shall be maintained in such insurable amounts not less than the greatest of the following (hereinafter referred to as the "Insurance Amount"): (i) 100% of the then full insurable value of such insurable properties, the term "full insurable value" to mean the actual replacement cost (excluding the costs of foundation, footing, excavation, paving, landscaping and other similar, non-insurable improvements) determined from time to time (but not less frequently than once in any 36 calendar months), by an Architect, contractor, appraiser, or an Insurer, or (ii) the amount required to be maintained pursuant to the Superior Instrument Requirements; (2) war risk insurance as and when such insurance is obtainable from the United States of America or any agency thereof as promptly as reasonably practicable after the same becomes so obtainable, in an amount not less than the Insurance Amount, or in such lesser amount as may then be so obtainable; (3) public liability, including personal injury and property damage and comprehensive general liability connected with the possession, use, leasing, operation or condition of such insurable properties in such amounts as, in the Mortgagor's judgment, are prudent, considering the cost of such insurance, for personal injury and property damage with respect to any one occurrence, which may be under an umbrella policy. Anything contained in this clause (3) to the contrary notwithstanding, the Superior Instrument Requirements with respect to the 41 kinds and amount of insurance described in this clause (3) shall be satisfied by the Mortgagor; (4) appropriate workers' compensation insurance with respect to any work (to the extent the risks to be covered thereby are not already covered by other policies of insurance maintained by the Mortgagor) on or about such insurable properties; (5) business interruption insurance covering not less than 12 months of loss, provided that, at any time that the Mortgagor is renewing any policy for such insurance or taking out any new or replacement such policy covering a period of less than 12 months, the Mortgagor shall deliver to the Mortgagee an Officers' Certificate certifying that the period of coverage to be maintained by the Mortgagor under such policy is the maximum that can be maintained at rates determined by the Mortgagor to be reasonable for such coverage; (6) to the extent available, flood insurance in an amount not less than the Insurance Amount, or such lesser amount as may then be so obtainable; and (7) such other insurance with respect to such insurable properties against loss or damage of the kinds (i) from time to time customarily insured against by persons owning or using casino-hotels of comparable size in the boardwalk area of Atlantic City, New Jersey and (ii) required to be maintained pursuant to the Superior Instrument Requirements. Notwithstanding the foregoing, to the extent permitted by Superior Instrument Requirements, (i) the Mortgagor shall be permitted to maintain a deductible with respect to the insurance policies described in clauses (1), (2), (6) and (7) in an amount not to exceed (x) for the twelve month period commencing the date hereof, $100,000 with respect to the insurance policies described in clause (1), (2), (6) and (7) thereafter, the customary deductible (if any) with respect to the insurance maintained by casino-hotels of a similar size and value in Atlantic City, New Jersey (but in no event more than $1,000,000), (ii) the Mortgagor shall be permitted to maintain a $200,000 self insured retention under the general liability policy described in clause (3) and a deductible with respect to the other insurance policies described in clause (3) in an amount not to exceed the amount of deductible as is customarily maintained by casino-hotels of similar size in Atlantic City, New Jersey, (iii) the Mortgagor shall not reduce its insurance coverage for the matters described in clause (3) (which for purposes of this paragraph means a reduction in single limits or an increase in deductible) unless and until the Mortgagor 42 delivers to the Mortgagee an Officers' Certificate certifying (w) that the coverage the Mortgagor was theretofore maintaining cannot be maintained at rates determined by the Mortgagor to be reasonable for such coverage, (x) the amount of the proposed reduction, (y) the premium for the existing and the proposed reduced coverage, and (z) that the proposed deductible satisfied the criteria set forth in this clause (iii), and (iv) the Mortgagor shall be permitted to maintain a deductible with respect to the insurance policies described in clause (5) in the forms of and in an amount not to exceed the amount of deductible as is customarily maintained by casino-hotels of similar size in Atlantic City, New Jersey. (b) Each policy of insurance maintained by the Mortgagor pursuant to Subsection (a) of this Section 5.11 shall, (1) except in the case of workers' compensation insurance, name as additional insureds the Mortgagee, in both its individual and fiduciary capacities, and, to the extent required by the Superior Instrument Requirements, the Lessors and the holders of the Superior Mortgages, (2) provide that all insurance proceeds for losses, except in the case of public liability insurance and workers' compensation insurance or as otherwise provided in Subsections (d), (e) and (f) of this Section 5.11, be payable solely to the Mortgagee or such other party as is required to receive such proceeds under a Superior Mortgage, (3) except in the case of workers' compensation, include effective waivers (whether under the terms of any such policy or otherwise) by the insurer of all claims for insurance premiums against all lost payees and named insureds (other than the Mortgagor) and all rights of subrogation against any named insured, (4) except in the case of public liability and workers' compensation insurance, provide that any losses shall be payable notwithstanding (i) any act, failure to act, negligence of, or violation or breach of warranties, declarations or conditions contained in such policy by the Mortgagor or the Mortgagee or any other named insured or loss payee (including, without limitation, with respect to the Released Fee Land, the holders of any After-Acquired Fee Mortgages), (ii) the occupation or use of the insurable properties for purposes more hazardous than permitted by the terms of the policy, (iii) any foreclosure or other proceeding or notice of sale relating to the insurable properties or (iv) any change in the title to or ownership or possession of the insurable properties, (5) contain a non-contributory mortgagee clause in favor of the Mortgagee, and (6) provide that if all or any part of such policy is cancelled, terminated or expires, the insurer will forthwith give notice thereof to each named insured and loss payee and that no cancellation, reduction in amount or material change in coverage thereof shall be effective until at least 30 days after receipt by each named insured and loss payee of written notice thereof. 43 (c) The Mortgagor will deliver to the Mortgagee, (1) duplicate originals of all insurance policies that the Mortgagor is required to maintain pursuant to this Section 5.11 and (2) within 30 days after each reduction in insurance required to be maintained by the Mortgagor hereunder, an Officers' Certificate setting forth the particulars as to all such insurance policies and certifying that the same comply with the requirements of this Section 5.11, that all premiums or installments thereof then due thereon have been paid and that the same are in full force and effect. The Mortgagee shall not be responsible for effecting or renewing any insurance or for the responsibility or solvency of the insurers. (d) The Mortgagor shall give written notice to the Mortgagee immediately upon obtaining knowledge of any Casualty which (x) results in damage, loss or destruction in an amount in excess of [$5,000,000] to any buildings or improvements on the Premises and/or any Tangible Personal Property or (y) pursuant to any Superior Instrument Requirement, would require the deposit of insurance proceeds with the Depositary, or action or proceeding with respect thereto. Whenever the Superior Instrument Requirements require or permit the selection of the Depositary by the Mortgagor, the Mortgagor shall select the Insurance Trustee as the Depositary. Within 30 days after any Casualty which results in any damage, loss or destruction in an amount in excess of $10,000,000 to any buildings or improvements of the Premises and/or any Tangible Personal Property, the Mortgagor shall deliver to the Mortgagee a certificate of an Architect stating whether, in such Architect's opinion, applicable Legal Requirements permit the Restoration of such buildings and improvements for the same uses and to the same size and quality in all material respects, as existed immediately prior to the Casualty (and if such certificate states the Legal Requirements do not permit such Restoration, such certificate shall describe the manner closest approximating such criteria to which the buildings and improvements could be so restored and shall be accompanied by a Certificate of Appraised Value dated not more than 10 days prior to delivery setting forth the Appraised Value immediately prior to the Casualty and the estimated Appraised Value immediately after the Restoration). If the Mortgagor is required to deliver such Certificates of Appraised Value and if based on such Certificates of Appraised Value immediately after Restoration, the aggregate Outstanding Amount of First Mortgage Debt immediately after such Restoration shall exceed the greater of (i) 66 2/3% of the Appraised Value immediately after such Restoration or (ii) the quotient of the Outstanding Amount of First Mortgage Debt immediately prior to such Casualty divided by the Appraised Value immediately prior to the Casualty multiplied by the Appraised Value immediately 44 after such Restoration, then the proceeds of any insurance shall, at the election of Mortgagee, either be applied to Restoration as set forth in Subsections (e), (h) and (i) below) or paid and delivered to the Mortgagee to the extent of the then Outstanding Amount of the Note and any other interest or other sums due hereunder or thereunder to be applied to the satisfaction of the Mortgage to the extent proceeds are available for such purpose and provided that no additional sums are due to the Trustee or the Noteholder under the Indenture, the balance of any net insurance proceeds shall be paid to the Mortgagor. Notwithstanding the foregoing sentence, if such Certificates of Appraised Values indicates that the Outstanding Amount of First Mortgage Debt immediately after such Restoration exceeds the greater of the two amounts determined pursuant to subclauses (i) and (ii) above, the proceeds of insurance will be made available for Restoration (subject to paragraphs, (e), (h) and (i) below) if the Mortgagor obtains an irrevocable commitment from a nationally recognized financial institution having a combined capital and surplus of at least $100,000,000, to supply, upon an acceleration under this Mortgage as a result of an Event of Default, funds to the Mortgagor as additions to capital in an amount equal to the Outstanding Amount of First Mortgage Debt in excess of the Appraised Value necessary to be paid down so that the Outstanding Amount of First Mortgage Debt will not exceed either of the two amounts determined pursuant to such clauses (i) and (ii), PROVIDED that such commitment may only be released if, upon an Appraisal at any time following completion of such Restoration, the aggregate Outstanding Amount of the First Mortgage Debt does not exceed 66- 2/3% of the Appraised Value. (e) Subject to the provisions of Subsection (d) above, in case a Casualty occurs, the following shall apply: (1) if the cost of Restoration (as hereinafter defined) does not exceed the sum of $10,000,000, the net insurance proceeds shall be paid by the Mortgagee to the Mortgagor (unless the Superior Instrument Requirements provide that the same shall be paid to the Depositary); (2) if the cost of Restoration is $10,000,000 or more or if the Superior Instrument Requirements provide that the same shall be paid to the Depositary, the net insurance proceeds shall be paid by the Mortgagee to the Insurance Trustee (or other Depositary required by the Superior Instrument Requirements, provided that such Depositary holds such proceeds in trust for purposes of paying the costs of Restoration); 45 (3) the Mortgagor shall commence with reasonable promptness under the circumstances and thereafter with due diligence proceed to perform and complete in a good and workmanlike manner the restoration, repair, replacement or rebuilding of the damage or destruction resulting from the Casualty (all of which restoration, repair, replacement or rebuilding are referred to as the "Restoration") in accordance with the plans and specifications submitted to the Insurance Trustee, in conformance with all Legal Requirements and Superior Instrument Requirements, and in accordance with the further provisions of this Subsection (e), regardless of the extent of any such Casualty and whether or not net insurance proceeds, if any, shall be available or, if available, shall be sufficient, for the purpose of the Restoration (provided, however, that if the Mortgagor does not receive any net insurance proceeds within 30 days after any Casualty because the adjustment of the loss has not yet occurred, then the obligation of the Mortgagor to commence such Restoration shall be deferred until such proceeds are made available to the Mortgagor, provided that (i) Mortgagor delivers to the Mortgagee an Officers' Certificate certifying that the Mortgagor is diligently and continuously adjusting such loss with the Insurer, (ii) the Mortgagor delivers to the Mortgagee an Officers' Certificate within such 30-day period requesting the extension of such period, estimating the date on which such proceeds will be available and describing the Mortgagor's efforts to adjust such loss and certifying that such extension does not constitute a default or a breach of any of the provisions of any of the Ground Leases (or if so, such default or breach has been waived) and (iii) the Mortgagor delivers to the Mortgagee additional Officers' Certificates every 30 days thereafter updating the information contained in the certificate described in Clause (ii)). All Restoration work shall be performed in accordance with the applicable provisions of Section 5.12 and in conformance with all Superior Instrument Requirements, Legal Requirements and Insurance Requirements and, prior to commencing any Restoration, the Mortgagor shall obtain all Permits necessary in connection therewith, and shall obtain, and keep in full force and effect until the completion of such Restoration, such additional insurance as the Insurance Trustee and Superior Instrument Requirements may require. The plans and specifications for the Restoration shall be accompanied by a certificate of the Mortgagor and an Opinion of Counsel to the effect that upon the completion of the Restoration pursuant to the plans and specifications the Premises, and all buildings and improvements, thereon will comply with all superior Instrument Requirements, Legal Requirements and Insurance 46 Requirements. Notwithstanding anything in this Section 5.11 to the contrary, if such Casualty is in an amount less than $5,000,000, the Mortgagor shall not be required to perform and complete such Restoration (unless the performance and completion of the Restoration is necessary in order for the Mortgagor to be in compliance with any term, provision or condition of this Mortgage (other than this Section 5.11(e)) or any Superior Instrument Requirements; (4) Any insurance proceeds which the Mortgagor receives, shall be held by the Mortgagor in trust for the purpose of paying the cost of the Restoration, except as otherwise provided herein; (5) Any net insurance proceeds that the Insurance Trustee holds pursuant to this Subsection (e), shall be deposited in an interest-bearing investment reasonably designated by Mortgagor (to the extent the Mortgagor is permitted to designate such investment under the Superior Instrument Requirements) (and the interest thereon shall be added to such proceeds) and shall be paid by the Insurance Trustee to reimburse the Mortgagor for, or to make payment for, the Restoration, after the Insurance Trustee deducts therefrom the amount of any reasonable costs and expenses incurred in connection with the performance of its obligations under this Section 5.11. The Insurance Trustee shall make such payments not more frequently than once every 30 days upon the written request of the Mortgagor (unless more frequent payments are required by Superior Instrument Requirements), by paying to the Mortgagor or the persons named in the certificate described in Clause (6) of this Subsection (e) the respective amounts stated in such certificate from time to time as the Restoration progresses, provided the Mortgagor has complied with the requirements of this Subsection (e) and such payment is permitted by an applicable Superior Instrument Requirements. The Mortgagor's written request shall be accompanied by (i) the certificate described in Clause (6) of this Subsection (e) and (ii) a title company or official search, or other evidence reasonably acceptable to the Insurance Trustee, showing that there have not been filed with respect to the Premises, any vendor's, contractor's, mechanic's, laborer's or materialman's statutory or similar lien which has not been discharged of record (or bonded against or secured by other security) or any other encumbrance irrespective of its priority (other than Permitted Encumbrances). (6) The certificate required by Clause (5) of this Subsection (e) shall (A) be an Officers' Certificate, 47 countersigned by the Architect in charge of the Restoration with respect to the matters described in (i) and (v) below, (B) be dated not more than 10 days prior to such request and (C) set forth (in addition to any other requirements contained in any applicable Superior Instrument Requirements) that: (i) all of the Restoration work theretofore performed is in substantial compliance with the plans and specifications theretofore submitted to the Insurance Trustee and in compliance with all Superior Instrument Requirements, Legal Requirements and Insurance Requirements; (ii) the sum then requested either has been paid by the Mortgagor or is justly due to contractors, subcontractors, materialmen, engineers, architects or other persons who have rendered services or furnished or contracted to deliver materials for the Restoration therein specified, and the names and addresses of such persons, a brief description of such services and materials and the several amounts so paid or due to each of such persons in respect thereof; (iii) no part of the amount requested has been or is the basis in any pervious or then pending request for the withdrawal of net insurance proceeds, and that the sum then requested does not exceed the value of the services and materials described in the certificate; (iv) except for the amount, if any, stated pursuant to Subclause (ii) of this Clause (6) in such certificate to be due for services or materials, and except for amounts in dispute and/or customary retainages, there is no outstanding indebtedness known to the person signing such certificate, after due inquiry, which is then due for labor, wages, materials, supplies or services in connection with such Restoration; and (v) the remaining cost, as estimated by the persons signing such certificate, of the Restoration in order to complete the same does not exceed the net insurance proceeds remaining in the hands of Insurance Trustee after payment of the sum requested in such certificate or if such estimated cost does exceed such insurance proceeds such certificate shall state the amount of any such deficiency. If the certificate states that such deficiency will exist, the Mortgagor shall deliver the amount of 48 such deficiency in cash or cash equivalent to the Insurance Trustee simultaneously with the delivery of such certificate, which amount shall be deemed insurance proceeds for purposes of this Section 5.11(e); and (7) If net insurance proceeds shall be insufficient to pay the entire cost of the Restoration, then, after completion of the Restoration, the Mortgagor shall pay the deficiency. If all or any part of the net insurance proceeds are not used for the Restoration in accordance with this Subsection (e) (because such proceeds exceed the amount required to complete the Restoration), then upon completion of the Restoration in accordance with this Subsection (e), such amount not so used, if held by the Insurance Trustee, shall be paid to the Mortgagor (if permitted by Superior Instrument Requirements). (f) Provided that no Event of Default has occurred and is continuing, all net business interruption insurance proceeds shall be paid to the Mortgagor, to be segregated from the other funds of Mortgagor and held in trust by Mortgagor for the following purposes and in the following order of priority: (i) for the payment of Impositions and amounts due under the Ground Leases and Superior Mortgages; (ii) for debt service for the estimated period of Restoration (for purposes of this Section 5.11(f), interest and principal payments due on any payment date under the Notes will deemed to accrue in equal daily installments beginning the day after the immediately preceding payment date and ending on such payment date); and (iii) for any expense incurred in connection with the operation or business of the Casino-Hotel. (g) The Mortgagor shall not take out separate insurance, concurrent in form or contributing in the event of loss with that required to be maintained pursuant to this Section 5.11, unless the same are permitted by Superior Instrument Requirements and the Mortgagee is included therein as a named insured, with loss payable to the Mortgagee and the Insurance Trustee pursuant to Section 5.11(b) hereof. The Mortgagor shall immediately notify the Mortgagee whenever any such separate insurance is taken out and shall promptly deliver to the Mortgagee a duplicate original of the policy of such insurance, a copy thereof certified by the insurer or a certificate thereof. (h) Subject to final adjustment by the insurer, insurance claims by reason of damage or destruction to any portion of the Trust Estate may adjusted by the Mortgagor, but the Mortgagee shall have the right (but not the obligation) to join the Mortgagor in adjusting, and approving the adjustment of, any such loss except in the event of a loss where the amount of insurance reasonably anticipated 49 to be received with respect to such loss is less than Five Million Dollars ($5,000,000), and the Mortgagor shall assist the Mortgagee in any such adjustment at the request of the Mortgagee. If the Mortgagee at its election as aforesaid joins the Mortgagor in any adjustment process, then the Mortgagee's approval of the adjustment shall not be unreasonably withheld; (i) Notwithstanding anything contained herein to the contrary, if an Event of Default shall have occurred and be continuing, the Mortgagee may, at its option, (A) refrain from paying to the Mortgagor or the Insurance Trustee any net insurance proceeds or (B) instruct the Insurance Trustee to pay to the Mortgagee any insurance proceeds then held by the Insurance Trustee, as the case may be. Section 5.12. LIMITATIONS ON BUILDING DEMOLITION, ALTERATIONS, IMPROVEMENTS AND NEW CONSTRUCTION. The Mortgagor will not authorize, permit or make any demolition, alteration or improvement of any building included in the Trust Estate or any new construction on any part of the Trust Estate, except in conformity with and subject to the limitations hereinafter in this Section 5.12 set forth. Unless an Event of Default shall have occurred and be continuing, the Mortgagor shall have the right at all times to make or permit such alterations, improvements or new constructions, structural or otherwise (herein sometimes called collectively "alterations"), of or on the Trust Estate, to be made in all cases subject to the conditions set forth in Section 5.12 of the Note Mortgage. Section 5.13. LEASES. The Mortgagor shall not: (a) subject to the provisions of Section 5.13(d), enter into any Lease, or renew, modify, extend, terminate, or amend any Lease, except in the ordinary course of business of operating the Casino-Hotel; (b) receive or collect, or permit the receipt or collection of, any rental payments under any Lease more than one year in advance of the respective periods in respect of which they are to accrue, except that, in connection with the execution and delivery of any Lease or of any amendment to any Lease, rental payments thereunder may be collected and received in advance in an amount not in excess of three months' rent and/or a security deposit may be required thereunder in an amount not exceeding one year's rent; (c) collaterally assign, transfer or hypothecate (other than to the Mortgagee hereunder, to 50 the mortgagee under the Note Mortgage or to the holder of any Working Capital Facility Lien) any rental payment under any Lease whether then due or to accrue in the future, the interest of the Mortgagor as landlord under any Lease or the rents, issues or profits of the Trust Estate; (d) after the date hereof, enter into any Lease, or renew any Lease unless such Lease contains terms to the effect as follows: (1) the Lease and the rights of the tenants thereunder shall be subject and subordinate to the rights of the Mortgagee under this Mortgage, the mortgagee under the Note Mortgage and the holders of any Superior Mortgage, (2) the Lease may be assigned by the landlord thereunder to the Mortgagee, (3) the rights and remedies of the tenant in respect of any obligations of the landlord thereunder shall be nonrecourse as to any assets of the landlord other than its equity in the building in which the leased premises are located or the proceeds thereof, (4) the rights of the tenant shall be subject and subordinate to the rights of the lessee under any new lease entered into in the event of a termination of a Ground Lease; (e) modify any Lease with respect to the matters described in clauses (1) through (4) of paragraph (d). If the Mortgagor enters into a Lease (other than with any Affiliate of the Mortgagor) for a term of not less than 3 nor more than 10 years, the Mortgagee shall deliver a non-disturbance and attornment agreement substantially in the form of Schedule 4 hereto, following receipt of a certificate of a leasing broker (who is not an Affiliate of the Mortgagor or the broker involved in such transaction) experienced with respect to leases of commercial space in the Atlantic City area stating that the rent under the Lease is not less than fair market rent and that the other terms of the Lease are fair and reasonable in the commercial leasing market. The Mortgagor shall, upon demand, reimburse the Mortgagee for any costs and expenses (including reasonable attorney's fees) incurred by the Mortgagee in connection with the preparation, review and delivery of such non-disturbance and attornment agreements. 51 Promptly after the execution and delivery hereof, the Mortgagor will cause the lessee under each Lease now in effect and promptly after each Lease is executed or becomes effective after the date of the execution and delivery hereof, the Mortgagor will cause the lessee under each such Lease, to be duly notified in writing (unless the substance and effect of such notice shall be contained in such Lease) of the subjection of the owner's interest, as lessor, in and to such Lease to the lien of this Mortgage and of the name and address of the Mortgagee. Each such notice shall state that the lease of such lessee is a Lease as herein defined. If a new Mortgagee is at any time appointed hereunder or the address of the Mortgagee shall at any time be changed, the Mortgagor will cause each lessee under each Lease to be promptly notified in writing of the name and address of such new Mortgagee or the new address of the Mortgagee. The Mortgagor will use reasonable efforts (but shall not be obligated to incur any expenditure other than de minimis amounts) to obtain from each lessee under each Lease to whom any notice is sent pursuant to this paragraph an acknowledgment of receipt of such notice, and the Mortgagor will promptly deliver to the Mortgagee, upon request, a copy of each such acknowledgment of receipt which it is able to obtain. The Mortgagee shall not be responsible for securing or causing the Mortgagor to secure any such acknowledgment. Nothing contained in this Section 5.13 shall limit the provisions of Section 4.04 hereof. Section 5.14. [Reserved] Section 5.15. MAINTENANCE OF EXISTENCE OF THE MORTGAGOR. Subject to Article Four, the Mortgagor will do or cause to be done all things necessary to preserve and keep in full force and effect its existence as a corporation, and its rights (both statutory and under its articles of incorporation) and franchises. Section 5.16. TO KEEP BOOKS; INSPECTION BY MORTGAGEE. The Mortgagor will keep proper books of record and account in accordance with Section 12.05 of the Indenture. Section 5.17. ADVANCES BY MORTGAGEE. If the Mortgagor shall fail to perform any of its covenants in this Mortgage and such failure shall continue for 10 days following notice thereof given by the Mortgagee (or at any time, without notice, in case of emergency), the Mortgagee may (but is not obligated to), at any time and from time to time, take any action or make advances, to effect performance of any such covenant on behalf of the Mortgagor; and all moneys so used or advanced by the Mortgagee and all reasonable costs and 52 expenses incurred by Mortgagee in connection therewith, together with interest on all of the same at the rate of interest set forth in the Notes, shall be repaid by the Mortgagor upon demand and such advances shall be secured under this Mortgage prior to the Guaranty. Section 5.18. WAIVER OF STAY, EXTENSION OR USURY LAWS. The Mortgagor covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any usury, stay or extension law or any other law which would prohibit or forgive the Mortgagor from paying all or any portion of the obligations under the Guaranty as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may otherwise affect the covenants or the performance of this Mortgage; and the Mortgagor (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Mortgagee, but will suffer and permit the execution of every such power as though no such law had been enacted. Section 5.19. [Reserved] Section 5.20. EMINENT DOMAIN. The Mortgagor shall satisfy the provisions of Section 5.20 of the Note Mortgage upon obtaining knowledge of any Taking affecting the Trust Estate. Section 5.21. GROUND LEASES. (a) The Mortgagor covenants and agrees that it will do or cause to be done all things necessary to preserve and keep unimpaired the rights of the Mortgagor, as lessee under the Ground Lease, and to prevent any termination, surrender, cancellation, forfeiture or impairment thereof. The Mortgagor shall at all times fully perform and comply with all agreements, covenants, terms and conditions imposed upon or assumed by it as lessee under each of the Ground Leases (including without limitation the covenant to pay rent and all taxes, assessments and other charges mentioned therein) prior to the expiration of any notice and/or cure period provided in each such Ground Lease. Upon receipt by the Mortgagee from a Lessor of any written notice of default by the lessee thereunder, Mortgagee may rely thereon and take any action the Mortgagee deems necessary in its sole discretion to prevent or to cure any default by the Mortgagor in the performance of or compliance with any of the agreements, covenants, terms or conditions imposed upon or assumed by the Mortgagor as lessee under each of the Ground Leases, even though the existence of such default or the nature thereof be questioned or denied by 53 the Mortgagor or by any party on behalf of the Mortgagor, provided that if the Mortgagor has theretofore delivered to the Mortgagee the Officers' Certificate, Opinion of Counsel and a copy of the injunction, all as described in Section 3.01(g), the Mortgagee shall not take any such action unless and until the Mortgagor and/or the Mortgagee no longer has the benefit of any tolling or stay referred to in Section 3.01(g). Without limiting the generality of Section 3.09 hereof, the Mortgagor hereby expressly grants to the Mortgagee, and agrees that the Mortgagee shall have, the absolute and immediate right to enter in and upon the Premises or any part thereof to such extent and as often as the Mortgagee, in its sole discretion, deems necessary or desirable for the purpose permitted by the immediately preceding sentence, subject only to applicable Legal Requirements. Subject to the preceding and without limiting the Mortgagee's other remedies under this Mortgage, the Mortgagee may pay and expend such sums of money as the Mortgagee in its sole discretion deems necessary for any such purpose, and the Mortgagor hereby agrees to pay to the Mortgagee, immediately and without demand, all such sums so paid and expended by the Mortgagee, together with interest thereon from the date of each such payment at the highest rate of interest set forth in the Notes. All sums so paid and expended by the Mortgagee, and the interest thereon, shall be added to and be secured by the lien of this Mortgage. (b) The Mortgagor further covenants and agrees: (i) it will not surrender any leasehold estate and interest hereinabove described, nor terminate or cancel any Ground Lease, and that it will not without the express written consent of the Mortgagee modify, change, supplement, alter or amend such Ground Leases either orally or in writing and, as further security for the repayment of the indebtedness secured hereby and for the performance of the covenants herein and in such Ground Leases contained, the Mortgagor hereby assigns to the Mortgagee all of its rights, privileges and prerogatives as lessee under such Ground Leases to terminate, cancel, modify, change, supplement, alter or amend such Ground Leases, and any such termination, cancellation, modification, change, supplement, alteration or amendment of such Ground Leases without the prior written consent thereto by Mortgagee shall be void and of no force and effect. Unless (1) an Event of Default has occurred and is continuing and (2) either (A) there has been an acceleration of maturity of the Notes pursuant to Section 3.02 of the Note Mortgage or (B) the Mortgagee exercises its rights under Section 3.09 hereof, the Mortgagee shall have no right to terminate, cancel, modify, change, supplement, alter or amend the Ground Leases; 54 (ii) solely for the benefit of the Mortgagee, Trustee, the Noteholders and no other person, no release or forbearance of any of the Mortgagor's obligations under such Ground Leases, pursuant to such Ground Leases or otherwise, shall release the Mortgagor from any of its obligations under this Mortgage, including its obligations with respect to the payment of rent as provided for in such Ground Leases and the performance of all of the terms, provisions, covenants, conditions and agreements contained in such Ground Leases, to be kept, performed and complied with by the lessee therein; (iii) unless the Mortgagee shall otherwise expressly consent in writing, the fee title to the Leased Land, the Mortgagor's interest in the improvements on the Leased Land and the leasehold estates shall not merge by and shall always remain separate and distinct, notwithstanding the union of such estates either in the Lessor or in the lessee, or in a third party by purchase or otherwise; (iv) the Mortgagor shall promptly notify the Mortgagee in writing of any request made by the Mortgagor, as lessee under each of the Ground Leases, or any of the Lessors, for arbitration proceedings pursuant to the Ground Leases and of the institution of any arbitration proceedings, as well as all proceedings thereunder. In addition, the Mortgagor shall promptly deliver to the Mortgagee a copy of the determination of the arbitrators in each such arbitration proceeding. The Mortgagee shall have the right to participate in such arbitration proceedings in association with the Mortgagor or on its own behalf as an interested party in accordance with the terms of the Ground Leases; (v) the Mortgagor shall not consent to the subordination of any Ground Lease to any mortgage deed of trust or other lien of the fee interest of the Lessor; (vi) in the event (A) the Mortgagor exercises its option under any Ground Lease to purchase any portion of the Leased Land, the Mortgagor shall deliver a copy of its election to exercise such option within 5 days after the Mortgagor has delivered notice of such election to the Lessor or (B) the Mortgagor acquires fee simple title or any other estate, title or interest in the Leased Land, the Mortgagor shall promptly notify the Mortgagee of such acquisition and shall cause to be executed and recorded all such other and further assurances or other instruments in writing as may be required by law or, in the opinion of the Mortgagee, be reasonably 55 desirable to carry out the intent and meaning of clause (x) of Granting Clause Second; (vii) within 5 days after the Mortgagor's receipt of any notice of any motion, application or effort to reject the Ground Lease by any Lessor or any trustee arising from or in connection with any case, proceeding or other action commenced or pending by or against any Lessor under the Code or any comparable provision contained in any present or future federal, state, local, foreign or other statute, law, rule or regulation, the Mortgagor shall give notice thereof to the Mortgagee. The Mortgagor hereby (A) assigns to the Mortgagee any and all of the Mortgagor's rights as lessee under Section 365(h) of the Code or any comparable provision contained in any present or future federal, state, local, foreign or other statute, law, rule or regulation ("Comparable Provision") and (B) covenants that it shall not elect to treat any Ground Lease as terminated pursuant to Section 365(h) of the Code or any Comparable Provision without the prior written consent of the Mortgagee and (C) agrees that any such election by the Mortgagor without such consent shall be null and void; (viii) without limiting the generality of the foregoing, the Mortgagor hereby unconditionally assigns, transfers and sets over to the Mortgagee all of the Mortgagor's claims and rights to the payment of damages arising from any rejection by Lessor of any Ground lease under the Code or any Comparable Provision. The Mortgagee shall have the right to proceed in its own name or in the name of the Mortgagor in respect of any claim, suit, action or proceeding relating to the rejection of any Ground Lease, including, without limitation, the right to file and prosecute, in cooperation with the Mortgagor, any proofs of claim, complaints, motions, applications notices and other documents, in any case in respect of Lessor under the Code or any Comparable Provision. This assignment constitutes a present, irrevocable and unconditional assignment of the foregoing claims, rights and remedies, and shall continue in effect until all of the indebtedness and obligations secured by this Mortgage shall have been satisfied and discharged in full. Any amounts received by the Mortgagee in damages arising out of the rejection of any Ground Lease as aforesaid shall be applied first to all reasonable costs and expenses of the Mortgagee (including, without limitation, reasonable attorneys' fees) incurred in connection with the exercise of any of its rights or remedies under this Section 5.21, and thereafter as provided in Section 3.03 hereof; 56 (ix) if there shall be filed by or against the Mortgagor a petition under the Code or any Comparable Provision and the Mortgagor, as lessee under the Ground Leases, shall determine to reject any or all of the Ground Leases the Mortgagor shall give the Mortgagee not less than 10 days' prior notice of the date on which the Mortgagor shall apply to the Bankruptcy Court or other judicial body with appropriate jurisdiction for authority to reject the lease. The Mortgagee shall have the right, but not the obligation, to serve upon the Mortgagor within such 10 day period a notice stating that (a) the Mortgagee demands that the Mortgagor assume and assign such Ground Lease(s) to the Mortgagee pursuant to Section 365 of the Code or any Comparable Provision and (b) the Mortgagee covenants to cure or provide adequate assurance of prompt cure of all defaults and provide adequate assurance of future performance under such Ground Lease(s). If the Mortgagee serves upon the Mortgagor the notice described in the preceding sentence, the Mortgagor shall not seek to reject such Ground Lease(s) and shall comply with the demand provided for in clause (a) of the preceding sentence within 30 days after the notice shall have been given subject to the performance by the Mortgagee of the covenant provided for in clause (b) of the preceding sentence. Effective upon the entry of an order for relief in respect of the Mortgagor under Chapter 7 of the Code or Any Comparable Provision the Mortgagor hereby assigns and transfers to the Mortgagee a non-exclusive right to apply to the Bankruptcy Court or other judicial body with appropriate jurisdiction for an order extending the period during which the Ground Lease may be rejected or assumed; (x) the Mortgagor shall promptly give to the Mortgagee copies of (A) all notices of default or (B) any other communications or notices with respect to events which relate to the possible impairment of the security of this Mortgage, which it shall give or receive under the Ground Leases and shall promptly notify the Mortgagor of any default under any Ground Lease on the part of the Lessor or the Mortgagor; (xi) the Mortgagor shall enforce the obligations of the Lessor under each Ground Lease, to the end that the Mortgagor may enjoy all of the rights granted to it under the Ground Leases; and (xii) the Mortgagor shall notify the Mortgagee within 5 days after the transfer of a fee interest in the Leased Land or any portion thereof to or from an Affiliate. 57 (c) The Mortgagor hereby represents and warrants that all fixed net rent, taxes and assessments, payable under the Ground Leases have been paid to the extent they were due and payable to the date hereof and that the Mortgagor has not received notice of its failure to pay any other amounts payable under the Ground Leases which have not been cured. (d) If both the Lessor's and Lessee's estates under any of the Ground Leases or any portion thereof shall at any time become vested in one owner, this Mortgage and the lien created hereby shall nevertheless not be merged, extinguished, destroyed or terminated by application of the doctrine of merger and, in such event, Mortgagee shall continue to have all of the rights and privileges of the leasehold mortgagee. (e) The Mortgagor hereby acknowledges that if any Ground Lease shall be terminated prior to the natural expiration of its term due to default by the Lessee thereunder, and if pursuant to such Ground Lease, the Mortgagee or its designee shall acquire from the Lessor a new lease of the Leased land or any portion thereof, the Mortgagor shall have no right, title or interest in or to such lease or the leasehold estate created thereby, or the options therein contained. (f) Any leases for parking purposes hereafter entered into by the Mortgagor as lessee shall contain provisions permitting the assignment of the same to the Mortgagee and the Trustee and permitting assignment without the lessor's consent if this Mortgage is foreclosed. Section 5.22. SUPERIOR MORTGAGES. (a) The Mortgagor covenants and agrees that it will at all times fully perform and comply with all agreements, covenants, terms and conditions imposed upon or assumed by it as mortgagor under the Superior Mortgages prior to the expiration of any notice and/or cure period provided in each such Superior Mortgage. If a notice of default has been given by the holder of any Superior Mortgage and the maturity of the indebtedness secured by such Superior Mortgage has been accelerated as a result thereof, the Mortgagee may rely thereon and take any action the Mortgagee deems necessary in its sole discretion to prevent or to cure any default by the Mortgagor in the performance of or compliance with any of the agreements, covenants, terms or conditions imposed upon or assumed by the Mortgagor as mortgagor under each of the Superior Mortgages even though the existence of such default or the nature thereof may be questioned or denied by the Mortgagor or by any party on behalf of the Mortgagor provided that if the Mortgagor has heretofore taken such actions as 58 described in Section 3.01(h), the Mortgagee shall not take any such action unless and until the Mortgagor and/or the Mortgagee no longer has the benefit of any such tolling or stay referred to in Section 3.01(h). Without limiting the generality of Section 3.09 hereof, the Mortgagor hereby expressly grants to the Mortgagee, and agrees that upon such acceleration the Mortgagee shall have, the absolute and immediate right to enter in and upon the Premises or any part thereof to such extent and as often as the Mortgagee, in its sole discretion, deems necessary for the purpose permitted by the immediately preceding sentence, subject only to applicable Legal Requirements. The Mortgagee may (i) pay and expend such sums of money as the Mortgagee in its sole discretion deems necessary for any such purpose and (ii) in its sole discretion prepay any Superior Mortgage, and the Mortgagor hereby agrees to pay to the Mortgagee, immediately and without demand, all such sums referred to in (i) and (ii) above so paid and expended by the Mortgagee, together with interest thereon from the date of each such payment at the rate of interest set forth in the Note. All sums so paid and expended by the Mortgagee and the interest thereon shall be added to and be secured by the lien of this Mortgage. (b) The Mortgagor further covenants and agrees: (i) the Mortgagor shall not, without first satisfying the conditions set forth in Section 5.22(b)(i) of the Note Mortgage: (A) modify any of the terms, covenants or conditions of any Superior Mortgage, and without limiting the foregoing, the Mortgagor shall not, without satisfying such conditions, enter into or obtain any agreement whereby the holder of any Superior Mortgage waives, postpones, extends, reduces or modifies the payment of the installment of principal or interest or any other item or amount now required to be paid under the terms of any Superior Mortgage or modifies any other provision thereof, or (B) acquire or permit or suffer any Affiliate of the Mortgagor to acquire any Superior Mortgage or any interest therein. Notwithstanding anything in clause (A) to the contrary, the Mortgagor shall have the right to amend, supplement or modify any Superior Mortgage, if (x) the then outstanding principal balance of the indebtedness secured by such Superior Mortgage is not increased thereby, and (y) in the case of any After-Acquired Fee Mortgage, such amendment, supplement or agreement does not increase the property covered thereby; (ii) the Mortgagor shall timely pay and perform all of the obligations to be paid or performed by the Mortgagor under each Superior Mortgage, the note secured thereby and any other instrument evidencing or 59 securing the indebtedness owing to any holder of any Superior Mortgage; (iii) at any time, and from time to time, the Mortgagor shall upon request of the Mortgagee promptly use its reasonable efforts to obtain an estoppel certificate or letter addressed to the Mortgagee from holders of the Superior Mortgages, such certificate or letter to be in such form as the Mortgagee shall request; and (iv) the Mortgagor shall promptly give to the Mortgagee copies of (A) all notices of default or (B) any other notice or communication with respect to events which relate to the possible impairment of the security of this Mortgage, which it shall give or receive under the Superior Mortgages and shall promptly notify the Mortgagor of any default under any Superior Mortgages on the part of the Mortgagor. (c) The lien of this Mortgage in and to all or specified portions of the Trust Estate shall be subject and subordinate to any Existing Encumbrances, the liens created by the Senior Mortgage Documents and any mortgage, assignment, security agreement, financing statement or other lien securing any Working Capital Facility (the "Working Capital Facility Lien") encumbering Mortgagor's interest in the affected portions of the Trust Estate or any part thereof. The foregoing provisions of this Section 5.22(c) shall be self-operative with respect to the liens created by the Senior Mortgage Note Documents and any Working Capital Facility Lien, and no further instrument shall be required to give effect to such subordination. Mortgagee shall, however, from time to time, execute instruments in form and substance reasonably satisfactory to the holder of the Working Capital Facility Lien, confirming such subordination and agreeing to such other matters reasonably required by the holder of the liens created by the Senior Mortgage Documents and the holders of such liens which do not, in the aggregate, materially adversely reduce or impair the rights of Trustee under the Mortgage, and Mortgagor and others may rely conclusively thereon, provided that Mortgagee shall have no liability thereunder and all costs and expenses (including reasonable attorneys' fees) shall be paid by Mortgagor. (d) The lien of the Mortgage in and to all or specified portions of the Trust Estate shall be subject and subordinate to any Existing Encumbrances. The provisions of this Section 5.22(d) shall be self-operative, and no further instrument shall be required to give effect to such subordination. 60 Section 5.23. MORTGAGE PARI PASSU WITH NOTE MORTGAGE. Notwithstanding recordation of this Mortgage in the Atlantic County, New Jersey Clerk's Office after the recordation of the Note Mortgage, the lien of this Mortgage ranks PARI PASSU with, and not junior to, the lien created by the Note Mortgage. ARTICLE SIX MISCELLANEOUS Section 6.01. ACTION UNDER NOTE MORTGAGE. Mortgagee acknowledges that it is the assignee of the Note Mortgage, which Note Mortgage creates a lien upon the Trust Estate which is PARI PASSU with the lien of this Mortgage. Mortgagee further acknowledges and agrees that whenever it is provided in the Note Mortgage that the Mortgagor shall deliver any notice or document, or is required to make any payment thereunder, the delivery of such notice or document or the making of such payment pursuant to the terms of the Note Mortgage shall also constitute the delivery of such notice or document or the making of such payment in satisfaction of the terms, conditions and provisions of this Mortgage to the same extent as the same constitutes satisfaction of the terms, conditions and provisions of the Note Mortgage. Section 6.02. COUNTERPARTS. This instrument may be executed in any number of counterparts, each of which as executed shall be deemed to be an original, but all such counterparts shall constitute one and the same instrument. Section 6.03. MODIFICATION. This Mortgage is subject to "modification" within the meaning of N.J.S.A. 46:9-8.1 et seq., and this Mortgage shall have the benefit of the lien priority provisions of such statute. Such modification may include, without limitation, a change in the interest rate, maturity date or other terms and conditions of this Mortgage. THE MORTGAGOR DECLARES THAT THE MORTGAGOR HAS RECEIVED A TRUE COPY OF THIS MORTGAGE. IN WITNESS WHEREOF, the parties hereto have caused this Mortgage to be duly executed and attested, all as of the day and year first above written. 61 RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation By:_____________________________ Name: Title: (Vice) President ATTEST:_________________________ Name: Title: (Asst.) Secretary U.S. TRUST COMPANY OF CALIFORNIA, N.A. By:_____________________________ Name: Title: (Vice) President ATTEST:_________________________ Name: Title: (Asst.) Secretary 62 EX-4 14 EXHIBIT 4.30 NA932810086 - NOTE MORTGAGE RIH JUNIOR PROMISSORY NOTE GD&C DRAFT DATED 12/17/93 MORTGAGE SECURING RIH JUNIOR PROMISSORY NOTE by and between RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation, as Mortgagor, and RESORTS INTERNATIONAL HOTEL FINANCING, INC. a Delaware corporation, as Mortgagee Dated as of ________ __, 1994 Prepared by:_______________________ D. Eric Remensperger After recording return to: Gibson, Dunn & Crutcher 200 Park Avenue New York, New York 10166 Attention: D. Eric Remensperger MORTGAGE SECURING RIH JUNIOR PROMISSORY NOTE THIS MORTGAGE, dated as of ________ ___, 1994, between RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation ("Mortgagor"), and RESORTS INTERNATIONAL HOTEL FINANCING, INC., a Delaware corporation ("RIHF"), having an address at c/o Resorts International, Inc., 1133 Boardwalk, Atlantic City, New Jersey 08401 (RIHF, or its successors or assigns which shall than be the Noteholder (as hereinafter defined), being referred to herein as "Mortgagee"). WITNESSETH: In consideration of $10.00 in hand paid by Mortgagee to Mortgagor and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in order to secure (i) the payment of the principal amount (and premium, if any) of the secured junior promissory note by Mortgagor to Mortgagee in the principal amount of $35,000,000 as amended and restated the date hereof (hereinafter collectively referred to as the "Note"), in lawful money of the United States, to be paid in accordance with the provisions thereof (and all renewals, extensions, and modifications thereof) all of which are hereby made an integral part hereof as though set forth at length herein; (ii) payment of interest (including interest on all overdue principal and premium, if any) becoming due under the provisions of the Note; (iii) payment by Mortgagor to Mortgagee of all sums expended or advanced by Mortgagee pursuant to any term or provision of this Mortgage; (iv) performance of each covenant, term, condition and agreement of Mortgagor herein or in the Note contained; (v) all costs and expenses, including reasonable counsel fees and expenses as provided in Section 3.07, which may arise in respect of the Note and this Mortgage or of the obligations secured hereby; and (vi) performance and observance of all of the provisions herein contained, Mortgagor has executed and delivered this Mortgage and has bargained, sold, aliened, mortgaged, pledged, released, conveyed and confirmed unto Mortgagee and its successors hereunder and assigns forever, all of its right, title and interest in, to and under any of the following described property: GRANTING CLAUSES GRANTING CLAUSE FIRST All the property, rights, title, interest, privileges and franchises particularly described in annexed Schedule 1 (the "Owned Land") which Schedule is hereby made a part of, and deemed to be described in, this Granting Clause as fully as if set forth in this Granting Clause at length. GRANTING CLAUSE SECOND All of the property, rights, title, interest, privileges and franchises of the Mortgagor as lessee in those certain leases (the "Ground Leases") particularly described in Schedule 2, which Schedule is hereby made a part of, and deemed to be described in, this Granting Clause as fully as if set forth in this Granting Clause at length, which Ground Leases cover the real property described in such Schedule 2 (the "Leased Land") and in and to any and all modifications, extensions and renewals of the Ground Leases and all options set forth therein, together with (i) all credits, deposits, privileges and rights of the Mortgagor as lessee under the Ground Leases, now or at any time existing, (ii) the leaseholds and the leasehold estates created by the Ground Leases and (iii) all of the estates, rights, titles, claims or demands whatsoever of Mortgagor, either in law or in equity, in possession or in expectancy, of, in and to the Ground Leases and the Leased Land, together with (x) any and all other, further or additional title, estates, interests or rights which may at anytime be acquired by the Mortgagor in or to the Leased Land, and the Mortgagor expressly agrees that if the Mortgagor shall, at any time prior to payment in full of all indebtedness secured hereby, acquire fee simple title or any other greater estate to the Leased Land pursuant to the Ground Leases, or otherwise, the lien of this Mortgage shall attach, extend to, cover and be a lien upon such fee simple title or other greater estate and thereupon the lien of this Mortgage shall be prior to the lien of any mortgage or deed of trust placed on such acquired title, estate, interest or right subsequent to the date of this Mortgage (except as otherwise provided herein) and (y) any right to possession or statutory term of years derived from, or incident to, the Ground Leases pursuant to Section 365(h) of the U.S. Bankruptcy Code (the "Code") or any comparable provision contained in any present or future federal, state, local, foreign or other statute, law, rule or regulation. 2 GRANTING CLAUSE THIRD All the rents, issues, profits, revenues and other income and proceeds of the property subjected or required to be subjected to the lien of this Mortgage, including, without limitation, the property described in Granting Clauses First, Second, and Sixth (such property is hereinafter collectively referred to as the "Premises") and all the estate, right, title and interest of every nature whatsoever of the Mortgagor in and to the same and every part thereof. The collective metes and bounds description of the Owned Land and the Leased Land is set forth in annexed Schedule 3. GRANTING CLAUSE FOURTH All of the rights as lessor under Leases in effect on the date of execution of this Mortgage or hereafter entered into by the Mortgagor, if any, including extensions, renewals or amendments of all of the same, and the immediate and continuing right as security in accordance with an Assignment of Leases and Rents of even date herewith between Mortgagor and Mortgagee, and, after the occurrence of an Event of Default, to make claim for, collect, receive and receipt for (and to apply the same as provided herein) any and all rents, income, revenues, issues, profits, security and other sums of money payable or receivable thereunder or pursuant thereto, and all proceeds thereof, whether payable as rent, insurance proceeds, condemnation awards, security or otherwise and whether payable prior to or subsequent to the maturity date of the Note, to receive and give notices and consents thereunder, to bring actions and proceedings thereunder or for the enforcement thereof, to make waivers and agreements, to take such action upon the happening of a default under any Lease, including the commencement, conduct and consummation of any proceedings at law or in equity as shall be permitted by any provision of any Lease, and to do any and all things which the Mortgagor or any lessor is or may become entitled to do under the Leases; provided, that the assignment made by this granting Clause Fourth shall not impair or diminish any obligation of the Mortgagor under the Leases, or shall any such obligation be imposed upon the Mortgagee. GRANTING CLAUSE FIFTH Without limiting the generality of the provisions of Granting Clause Third, the Mortgagor's rights, privileges and franchises in and to the following, to the extent of the Mortgagor's interest therein and thereto and to the extent assignable (collectively, "Operating Assets"): 3 (a) bookings and receipts for the use of guest rooms, banquet facilities and meeting rooms at the Casino-Hotel; (b) all contracts respecting utility services for, and the maintenance, operations, or equipping of the Premises, including guaranties and warranties relating thereto; (c) the Permits; (d) all contract rights, leases, concessions, trademarks, trade names, service marks, service names, logos, copyrights, warranties and other items of intangible personal property relating to the ownership or operation of the Casino-Hotel, including, without limitation, (1) telephone and other communication numbers, (2) all software licensing agreements as are required to operate computer software systems at the Casino-Hotel, all transferable proprietary interest in software required to operate the computer systems at the Casino Hotel and books and records relating to the software programs, and (3) lessee's interest under leases of Tangible Personal Property; (e) all agreements entered into by or on behalf of the Mortgagor or which have been assigned to the Mortgagor, for the design and construction, and for the equipping and furnishing, of the Casino-Hotel, including architect's agreements, engineering agreements, construction contracts, consulting agreements and agreements or purchase orders for all items of Tangible Personal Property and payment and performance bonds in favor of the Mortgagor in connection with the Trust Estate (and all warranties and guaranties thereunder and warranties and guaranties of any subcontractor and bond issued in connection with the work to be performed by any subcontractor); (f) the following personal property (the "Tangible Personal Property") now or hereafter acquired by the Mortgagor: (i) all furniture, furnishings, equipment, machinery, apparatus, appliances, fixtures and fittings and other articles of tangible personal property which are, or are to be located on, or used in connection with the operation of, the Casino-Hotel; (ii) all slot machines, electronic gaming devices, crap tables, blackjack tables, roulette tables, baccarat tables, and big six wheels, located or to be located in the Casino-Hotel, and all 4 furnishings and equipment to be used in connection with the operation thereof; (iii) all cards, dice, gaming chips and placques, tokens, chip racks, dealing shoes, dice cups, dice sticks, layouts, paddles, roulette balls and other consumable supplies and items to be used in connection with the gaming operations of the Casino-Hotel; (iv) all china, glassware, linens, kitchen utensils, silverware and uniforms, whether in use or held in reserve storage for future use, in connection with the operation of the Casino-Hotel, which are on hand or on order whether stored on-site or off-site; (v) all consumables and operating supplies of every kind and nature for use in all of the operating departments of the Casino-Hotel, or in the improvements now or hereafter located on any of the Owned Land, including without limitation, accounting supplies, guest supplies, forms, printing, stationery, food and beverage stock, bar supplies, laundry supplies and brochures to existing purchase orders; (vi) all sets and scenery, costumes, props and other items of tangible personal property on hand or on order for use in the production of shows in the showroom of the Casino-Hotel; and (vii) all cars, limousines, vans, buses, trucks and other vehicles owned or leased by the Mortgagor for use in Casino-Hotel operations, together with all equipment, parts and supplies used to service, repair, maintain and equip the foregoing; (g) all drawings, designs, plans and specifications prepared by the architects, interior designers, landscape designers and any other consultants for the development of the Premises, as amended from time to time; (h) any administrative and judicial proceedings initiated by the Mortgagor, or in which the Mortgagor has intervened, concerning the Casino-Hotel, and agreements, if any, which are the subject matter of such proceedings; (i) any customer lists utilized by the Mortgagor, including lists of transient guests and restaurant and bar patrons and "high roller" lists; and 5 (j) all of the goodwill in connection with the operation of the Premises. The Mortgagor and Mortgagee acknowledge that notwithstanding anything contained in this Mortgage to the contrary, the Mortgagor may share facilities, operations and employees with any other hotel owned by any Affiliate of the Mortgagor provided that (i) such sharing of facilities is permitted by all applicable Legal Requirements, (ii) terms on which such facilities are shared are not detrimental to the operations of the Casino-Hotel or the financial condition of the Mortgagor and (iii) the regular operation of the Casino-Hotel would not be materially impaired upon the separation of such facilities. The assignment made by this Granting Clause Fifth shall not impair or diminish any obligation of the Mortgagor with respect to the Operating Assets, nor shall any such obligation be imposed on the Mortgagee. GRANTING CLAUSE SIXTH (a) All of the Mortgagor's right, title and interest in and to all buildings and improvements of every kind and description now or hereafter erected or placed on the Owned Land and/or the Leased Land and all fixtures and articles of personal property now or hereafter attached to or contained in and used in connection with such buildings and improvements, including, but not limited to, all apparatus, furniture, furnishings, machinery, motors, elevators, fittings, radiators, cooking ranges, ice boxes, ice machines, printing presses, mirrors, bars, mechanical refrigerators, furnaces, coal and oil-burning apparatus, wall cabinets, machinery, generators, partitions, steam and hot water boilers, lighting and power plants, pipes, plumbing, radiators, sinks, bath tubs, water closets, gas and electrical fixtures, awnings, shades, screens, blinds, dishwashers, freezers, vacuum cleaning systems, office equipment and other furnishings, and all plumbing, heating, lighting, cooking, laundry, ventilating, incinerating, air-conditioning and sprinkler equipment or other fire prevention or extinguishing apparatus and material, and fixtures and appurtenances thereto; and all renewals or replacements thereof or articles in substitution therefor, whether or not the same are or shall be attached to the Owned Land, the Leased Land or to any such buildings and improvements thereon, in any manner; and 6 (b) All of the Mortgagor's right, title and interest in and to (i) the Leased Land, if the Mortgagor acquires the fee simple title to the Leased Land or any part thereof (subject to the provisions of Section 2.06 hereof), (ii) all air rights and rights to maintain supporting columns and all rights to construct and maintain bridges, and to create private rights of way over streets now or hereafter owned or enjoyed by the Mortgagor and appurtenant to the Owned Land or Leased Land, and (iii) all right, title and interest of Mortgagor as grantee or licensee in and to the following to the extent necessary for the use and enjoyment of the Owned Land or the Leased Land: (A) all those plots, pieces or parcels of land and air rights, more particularly described on Schedule 5, attached hereto and made a part hereof (the "Bridge Easement Parcels"), with respect to which Mortgagor has easements, licenses or other rights of possession or use pursuant to these certain easement and license agreements more particularly described on Schedule 5 (the "Bridge Easements"), (B) all those plots, pieces or parcels of land and air rights, more particularly described on Schedule 6 attached hereto and made a part hereof (the "Elevator Easement Parcels"), with respect to which Mortgagor has easements, licenses or other rights of possession or use pursuant to those certain license agreements more particularly described on Schedule 6 (the "Elevator Easements"), and; (C) all that plot, piece or parcel of land and air rights more particularly described on Schedule 7 attached hereto and made a part hereof (the "Turn-Around Easement Parcel") with respect to which Mortgagor has easements, licenses, or other rights of possession or use pursuant to that certain easement more particularly described on Schedule 7 (the "Turn-Around Easement"), (the Bridge Easement Parcels, the Elevator Easement Parcels and the Turn-Around Easement Parcel are collectively referred to herein as the "Easement Parcels"; and the Bridge Easements, the Elevator Easements and the Turn-Around Easement are collectively referred to as the "Easements"), together with all rights of way, privileges, liberties, tenements, hereditaments and appurtenances belonging or in any way appertaining to such estates, it being the intention hereof that all property, interests, rights and privileges and franchises pertaining to the Premises (other than Excepted Property) shall be as fully embraced within and subjected to the lien hereof as if such property were specifically described herein. To the extent the grant of a security interest in any portion of the Trust Estate is governed by the Uniform Commercial Code, this Mortgage is hereby deemed to be as well a security agreement under the Uniform Commercial Code for the purpose of creating hereby a security interest in all of the Mortgagor's right, title and interest in and to such property, securing the obligations secured hereby, for the benefit of the Mortgagee; * * * TOGETHER with all of the Mortgagor's right, title and interest in and to all mineral and water rights and any title or reversion, in and to the beds of the ways, streets, avenues and alleys adjoining the Premises to the center line 7 thereof and in and to all strips, gaps and gores adjoining the premises on all sides thereof; and TOGETHER with all of the Mortgagor's right, title and interest to and singular the tenements, hereditaments, easements, appurtenances, passages, water courses, riparian rights, other rights, liberties and privileges thereof or in any way appertaining to the Premises, including any other claim at law or in equity as well as any after-acquired title, franchise or license and the reversion and reversions and remainder and remainders thereof; and TOGETHER with all awards and other compensation heretofore or hereafter to be made to the present and all subsequent owners of the Trust Estate for any taking by eminent domain, either permanent or temporary, of all or any part of the Trust Estate or any easement or appurtenances thereof, including severance and consequential damage and change in grade of streets, all in accordance with and subject to the provisions of the Superior Instrument Requirements and Section 5.20; and TOGETHER with all proceeds of any unearned premiums on any insurance policies described in Section 5.11, and the right to receive and apply the proceeds of any insurance, judgments, or settlements made in lieu thereof, for damage to the Trust Estate or otherwise, all in accordance with and subject to the provisions of Section 5.11 and the Superior Instrument Requirements. EXCLUDING, with respect to all of the hereinabove granted property, rights, title, interest, privileges and franchises, the Excepted Property. TO HAVE AND TO HOLD all the Premises, Leases, Ground Leases, Operating Assets, Easements, properties, options, credits, deposits, rights, privileges and franchises of every kind and description, real, personal or mixed, granted hereby, bargained, sold, aliened, assigned, transferred, hypothecated, pledged, released, conveyed, mortgaged, or confirmed as aforesaid, or intended, agreed or covenanted so to be, together with all the appurtenances thereto appertaining (the Premises, Leases, Ground Leases, Operating Assets, Easements, properties, options, credits, deposits, rights, privileges and franchises, being herein collectively called the "Trust Estate") unto the Mortgagee and its successors and assigns forever. SUBJECT, HOWEVER, on the date hereof, to Existing Encumbrances and, after the date hereof, to Permitted Encumbrances. SUBJECT, FURTHER, to the rights and obligations of the Mortgagee and the Noteholder as set forth in that certain 8 Intercreditor Agreement dated as of the date hereof among RIH, RIHF, Trustee, Fidelity Management and Trust Company ("Fidelity"), as trustee under that certain note purchase agreement dated as of the date hereof among Fidelity, RIH and RIHF, and State Street Bank and Trust Company of Connecticut, National Association ("State Street"), as trustee under that certain indenture dated as of the date hereof among State Street, RIH and RIHF (and such other parties that may from time to time become a party thereto). BUT IN TRUST, NEVERTHELESS, for the benefit and security of the Noteholder. UPON CONDITION that, until the happening of an Event of Default and subject to the provisions of Article Two, the Mortgagor shall be permitted to possess and use the Trust Estate, and to receive and use the rents, issues, profits, revenues and other income of the Trust Estate. AND IT IS HEREBY COVENANTED AND DECLARED that the Trust Estate is to be held and applied by the Mortgagee, subject to the further covenants, conditions and trusts hereinafter set forth, and the Mortgagor does hereby covenant and agree to and with the Mortgagee, for the benefit of the holder of the Note as follows: ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION Section 1.01. DEFINITIONS. For all purposes of this Mortgage, except as otherwise expressly provided or unless the context otherwise requires: (a) the terms defined in this Article One have the meanings assigned to them in this Article One and include the plural as well as the singular; (b) all accounting terms not otherwise defined herein have the meanings assigned to them, and all computations herein provided for shall be made in accordance with generally accepted accounting principles consistently applied; and (c) the words "herein," "hereof" and "hereunder" and other words of similar import refer to this Mortgage as a whole and not to any particular Article, Section or other subdivision. "AFFILIATE" has the meaning set forth in Section 1.01 of the Indenture. 9 "AFTER-ACQUIRED FEE MORTGAGE" has the meaning set forth in Section 2.07. "ALTERATIONS" has the meaning set forth in Section 5.12. "APPRAISER" means an MAI appraiser (i.e., a Member in good standing of the American Institute of Real Estate Appraisers) who is (i) of recognized standing among appraisers of properties similar to the Casino-Hotel and (ii) experienced in the appraisals of properties of a similar size and scope to that of the Casino-Hotel, selected by the Mortgagor. "ASSIGNMENT OF LEASES AND RENTS" has the meaning stated in Section 1.01 of the Indenture. "CAPITALIZED LEASE OBLIGATION" has the meaning stated in Section 1.01 of the Indenture. "CASINO" means that portion of the Casino-Hotel used for gaming and related activities. "CASINO-HOTEL" means the casino and hotel complex and ancillary structures and facilities located on the Premises and furniture, fixtures and equipment at any time contained therein. "CASUALTY" means any act or occurrence of any kind or nature which results in damage, loss or destruction to any buildings or improvements on the Premises and/or Tangible Personal Property. "CODE" has the meaning stated in Granting Clause Second. "COMBINATION TRANSACTION" has the meaning stated in Section 10.01 of the Indenture. "DEFAULT" means the occurrence and continuance of an Event of Default or an event which, after notice or lapse of time or both, would become an Event of Default. "DEPOSITARY" means an Independent entity to which insurance proceeds or a condemnation award is paid to be held in trust for restoration pursuant to the provisions of a Ground Lease or Superior Mortgage. "EVENT OF DEFAULT" has the meaning stated in Section 3.01. An Event of Default shall "exist" if an Event of Default shall have occurred and be continuing. "EXCEPTED PROPERTY" means: 10 (1) subject to the provisions of the Assignment of Leases and Rents, any cash held by the Mortgagor from rents, issues, profits, revenues and other proceeds of the Trust Estate to the extent that such cash may be, but has not been, distributed or paid out in accordance with the Services Agreement or in accordance with the provisions of Section 12.07 the Indenture; (2) all personal property owned by lessees under Leases and the personal property of any guests staying in the Hotel; (3) any property deemed to be Excepted Property pursuant to the provisions of Section 2.03 hereof; (4) Tangible Personal Property subject to an FF&E Financing Agreement; and (5) counterchecks and any other property the granting of a security interest in which is prohibited by the New Jersey Casino Control Act, N.J.S.A. 5:12-1 et seq., and the regulations promulgated thereunder. "EXISTING ENCUMBRANCES" means the matters set forth in Schedule 8. "FIRST MORTGAGE DEBT" means any financing secured by a Superior Mortgage secured by or imposing a lien on all or a portion of the Trust Estate on a parity with or senior to the lien of this Mortgage. "FF&E FINANCING AGREEMENT" means a purchase money lien upon any Tangible Personal Property and other items constituting Operating Assets, such as computer software, which are financed, purchased or leased by the Mortgagor, provided that, except as set forth on Schedule 3, the principal amount of the indebtedness secured by such lien shall not exceed eighty-five (85%) percent of the cost to the Mortgagor of such property at the time of acquisition. "GROUND LEASES" has the meaning stated in Granting Clause Second. "GUARANTY MORTGAGE" means that certain Mortgage Securing Guaranty of Junior Mortgage Notes dated as of the date hereof from Mortgagor to U.S. Trust Company of California, N.A., a national banking association, which secures the Notes (as defined in the Indenture), the lien of which shall be PARI PASSU with the lien of this Mortgage. "HOTEL" means that portion of the Casino-Hotel not included within the Casino. 11 "IMPOSITIONS" has the meaning stated in Section 5.08. "INDENTURE" means that certain Indenture - 11.375% Junior Mortgage Notes due 2004, dated as of even date herewith among the Mortgagor, RIHF, as issuer, and U.S. Trust Company of California, N.A., as trustee, as it may from time to time be supplemented, modified or amended by one or more trust indentures or other instruments supplemental thereto entered into pursuant to the applicable provisions thereof. "INDEPENDENT" when used with respect to any specified Person means such a Person who (a) is in fact independent, (b) does not have any direct financial interest or any material indirect financial interest in the Mortgagor or in any other obligor upon the Note or in any Affiliate of the Mortgagor or of such other obligor and (c) is not connected with the Mortgagor or such other obligor or any Affiliate of the Mortgagor or such other obligor as an officer, employee, promoter, underwriter, trustee, partner, director or person performing similar functions. Whenever it is herein provided that any Independent Person's opinion or certificate shall be furnished to the Mortgagee, such opinion or certificate shall state that the signer has read this definition and that the signer is Independent within the meaning thereof. A Person who is performing or who has performed services as an independent contractor to any specified Person shall not be considered not Independent merely by reason of the fact that such Person is or has performed such services. "INSURANCE AMOUNT" has the meaning stated in Section 5.11(a)(1). "INSURANCE REQUIREMENTS" means all terms of any insurance policy covering or applicable to the Trust Estate or any part thereof, all requirements of the issuer of any such policy, and all orders, rules, regulations and other requirements of the National Board of Fire Underwriters (or any other body exercising similar functions) applicable to or affecting the Trust Estate or any part thereof or any use or condition of the Trust Estate or any other part thereof. "INSURANCE TRUSTEE" means the Trustee or, if the Trustee so elects, any bank, trust company or insurance company with net worth in excess of $100,000,000, designated by the Trustee. "INSURER" means an insurance company or companies selected by the Mortgagor authorized to issue insurance in the State of New Jersey with an A.M. Best rating as high or higher than the rating of insurance companies insuring other casino-hotels in Atlantic City, New Jersey. 12 "LEASE" means each lease or sublease demising all or any portion of the Owned Land, the Leased Land or the buildings or improvements thereon and made by the Mortgagor as lessor or sublessor, as the case may be, or any spaces in any building or buildings which constitute a part of the Trust Estate, including every agreement relating thereto or entered into in connection therewith and every guaranty of the performance and observance of the covenants, conditions and agreements to be performed by the lessee under any such lease. Notwithstanding the foregoing, the term "Lease" shall not include any transient room rentals. "LEASED LAND" has the meaning stated in Granting Clause Second. "LEGAL REQUIREMENTS" means all laws, statutes, codes, acts, ordinances, orders, judgments, decrees, injunctions, rules, regulations, permits, licenses, authorizations, directions and requirements (including, without limitation, the New Jersey Environment Cleanup Responsibility Act and the New Jersey Spill Compensation and Control Act of 1976) of all governments, departments, commissions, boards, courts, authorities, agencies, officials and officers, of governments, federal, state and municipal (including, without limitation, the New Jersey Department of Environmental Protection, the Atlantic City Bureau of Investigations, Division of Protection, the Atlantic City Bureau of Investigations, Division of Gaming Enforcement of the State of New Jersey, and the Casino Control Commission of the State of New Jersey), foreseen or unforeseen, ordinary or extraordinary, which now is or at any time hereafter becomes applicable to the Trust Estate or any part thereof, or any of the adjoining sidewalks, or the use of the Casino-Hotel as a gaming or gambling facility or any other use or condition of the Trust Estate or any part thereof. "LESSORS" means the lessors under the Ground Leases. "MATURITY" when used with respect to the Note means the date on which the principal of such Note becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration or prepayment or otherwise. "MORTGAGE DOCUMENTS" has the meaning set forth in Section 1.01 of the Indenture. "MORTGAGOR" means the Person named as the "Mortgagor" in the first paragraph of this instrument until a successor entity shall have become such pursuant to the applicable provisions of this Mortgage, and thereafter, except to the extent otherwise contemplated by Section 4.02, "Mortgagor" shall mean such successor entity exclusively. 13 "NOTEHOLDER" shall mean the holder or holders of the Note. "NOTE" has the meaning set forth in the Preamble. "NOTICES" has the meaning stated in Section 1.02. "OFFICERS' CERTIFICATE" means a certificate signed by an officer of the Mortgagor and delivered to the Mortgagee. Whenever this Mortgage requires that an Officers' Certificate be signed also by an Architect or an Accountant or other expert, such Architect, Accountant or other expert may (except as otherwise expressly provided in this Mortgage) be in the general employ of the Mortgagor. "OPERATING ASSETS" has the meaning stated in Granting Clause Fifth. "OPINION OF Counsel" means a written opinion of counsel who may (except as otherwise expressly provided in this Mortgage) be an employee of the Mortgagor or an employee of an Affiliate of the Mortgagor. Unless otherwise specifically provided in this Mortgage, such counsel may rely, as to any state of facts not personally known to such counsel and relating to such opinions, on an Officers' Certificate to the extent not rejected by the Trustee and its counsel (which rejection shall not be unreasonably given). "ORIGINAL POLICY" means an ALTA Loan Policies of Title issued by [list title insurance companies], pursuant to Title Commitment No. ____________ redated to the date hereof. "OUTSTANDING AMOUNT" has the meaning stated in Section 1.01 of the Indenture. "OWNED LAND" has the meaning stated in Granting Clause First. "PERMITS" means all licenses, franchises, statements of compliance, certificates of operation, certificates of occupancy and permits required for the lawful ownership, occupancy, operation and use of all or a material portion of the Premises whether held by the Mortgagor or any other Person (which may be temporary or permanent) (including, without limitation, those required for the use of the Casino-Hotel as a licensed casino facility), in accordance with all applicable Legal Requirements. "PERMITTED ENCUMBRANCES" means: (1) liens for taxes, assessments, or governmental charges not yet due and payable or if due and payable are not delinquent to the extent that any fine, penalty, interest or cost may be added for nonpayment thereof; 14 (2) Existing Encumbrances; (3) FF&E Financing Agreements; (4) After-Acquired Fee Mortgages; (5) the lien of the Mortgage Documents and any rights granted as provided therein; (6) Restricted Encumbrances; (7) the lien of the Trustee provided for by Section 8.07 of the Indenture; (8) any Working Capital Facility Lien; (9) liens created by the Senior Mortgage Documents; and (10) Capitalized Lease Obligations. "PERSON" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or any other entity or government or any agency or political subdivision thereof. "PREMISES" has the meaning set forth in Granting Clause Third. "RELEASED LAND" has the meaning stated in Section 2.05. "RELEASED FEE LAND" has the meaning stated in Section 2.06. "RESTORATION" has the meaning stated in Section 5.11(e). "RESTRICTED ENCUMBRANCES" means Leases permitted by and made in accordance with Section 5.13 of this Mortgage. "RIHF" shall mean Resorts International Hotel Financing, Inc., a Delaware corporation. "SENIOR GUARANTY MORTGAGE" has the meaning set forth in Section 1.01 of the Indenture. "SENIOR MORTGAGE" has the meaning set forth in Section 1.01 of the Indenture. "SENIOR MORTGAGE DOCUMENTS" has the meaning set forth in Section 1.01 of the Indenture. 15 "SERVICES AGREEMENT" has the meaning set forth in Section 1.01 of the Indenture. "SETTLEMENT COSTS" has the meaning stated in Section 5.20. "STATED MATURITY" when used with respect to a note means the date specified in such note as the fixed date on which the principal of such note is due and payable. "SUPERIOR INSTRUMENT REQUIREMENTS" means the applicable terms, conditions and provisions of (i) the Ground Leases with respect to the Leased Land; and (ii) Superior Mortgages with respect to the portion of the Trust Estate encumbered thereby. "SUPERIOR MORTGAGES" means, collectively, the Senior Mortgage, the Senior Guaranty Mortgage, any Working Capital Facility Lien and any After-Acquired Fee Mortgages. "TAKING" means the acquisition or condemnation by eminent domain of the whole or any part of the Premises, by a competent authority, or any public or quasi-public use or purpose. "TANGIBLE PERSONAL PROPERTY" has the meaning stated in Granting Clause Fifth. "TRUSTEE" means the Person named as the "Trustee" in the first paragraph of the Indenture and any successor thereto. "TRUST ESTATE" has the meaning stated in the habendum to the Granting Clauses. "TRUST INDENTURE ACT" has the meaning stated in Section 1.01 of the Indenture. "WORKING CAPITAL FACILITY" has the meaning stated in Section 1.01 of the Indenture. "WORKING CAPITAL FACILITY LIEN" has the meaning stated in Section 5.22(c) of this Mortgage. Section 1.02. NOTICES, ETC. (a) Any request, demand, authorization, direction, notice (including, without limitation, a notice of default), consent, waiver or other document provided or permitted by this Mortgage to be made upon, given or furnished to, or filed with, the Mortgagor or the Mortgagee (collectively, "Notices") shall be deemed given when either (i) delivered by hand or (ii) two days after sending by registered or certified mail, postage prepaid, addressed as follows: 16 To the Mortgagor: Resorts International Hotel, Inc. c/o Resorts International, Inc. 1133 Boardwalk Atlantic City, New Jersey 08401 Attention: Christopher D. Whitney If to Mortgagee: Resorts International Hotel Financing, Inc. c/o Resorts International, Inc. 1133 Boardwalk Atlantic City, New Jersey 08401 Attention: Christopher D. Whitney (b) By Notice to the Mortgagor, the Mortgagee and the Trustee, any party may designate additional or substitute address for Notices which, notwithstanding Subsection (a) above, shall be deemed given when received. Section 1.03. FORM AND CONTENT OF DOCUMENTS DELIVERED TO MORTGAGEE. Whenever 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 such matters in one or several documents. Any certificate or opinion of an Officer of the Mortgagor may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such Officer knows that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any 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 Mortgagor stating that the information with respect to such factual matters is in the possession of the Mortgagor, unless such counsel knows that the certificate or opinion or representations with respect to such matters are erroneous. If appropriate to the matter being opined upon and to the extent not prohibited by the Trust Indenture Act, any Opinion of Counsel may be subject to rights of creditors and the availability of equitable remedies. Whenever any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Mortgage, they may, but need not, be consolidated and form one instrument. 17 Whenever in this Mortgage, in connection with any application or certificate or report to the Mortgagee, it is provided that the Mortgagor shall deliver any document as a condition of the granting of such application, or as evidence of the Mortgagor's compliance with any term hereof, it is intended that the truth and accuracy, at the time of the granting of such application or at the effective date of such certificate or report (as the case may be), of the facts and opinions stated in such document shall in such case be conditions precedent to the right of the Mortgagor to have such application granted or to the sufficiency of such certificate or report. Section 1.04. COMPLIANCE CERTIFICATES AND OPINIONS. Upon any application or request by the Mortgagor to the Mortgagee to take any action under any provision of this Mortgage, the Mortgagor shall furnish to the Mortgagee an Officers' Certificate stating that all conditions precedent, if any, provided for in this Mortgage 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 Mortgage 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 Mortgage shall include: (a) a statement that each individual signing such certificate or opinion has read such condition or covenant and the definitions herein relating thereto; (b) 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; (c) 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 condition or covenant has been complied with; and (d) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. Section 1.05. EFFECT OF HEADINGS. The Article and Section headings herein are for convenience only and shall not affect the construction hereof. 18 Section 1.06. SUCCESSORS AND ASSIGNS; AMENDMENTS. (a) Subject to Section 4.02 hereof and Section 10.02 of the Indenture, this Mortgage shall be binding upon and inure to the benefit of the parties hereto and of the respective successors and assigns of the parties hereto to the same effect as if each such successor or assign were in each case named as a party to this Mortgage. (b) This Mortgage may not be modified, amended, discharged, released nor any of its provisions waived except by agreement in writing executed by the Mortgagor and the Mortgagee and in accordance with the provisions of this Mortgage and the Indenture. Section 1.07. SEPARABILITY CLAUSE. In case any provision in this Mortgage 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 1.08. BENEFITS OF MORTGAGE. Nothing in this Mortgage, express or implied, shall give to any Person, other than the parties hereto and their successors and assigns, any benefit or any legal or equitable right, remedy or claim under this Mortgage. Section 1.09. GOVERNING LAW. This Mortgage shall be deemed to be a contract under the laws of the State of New Jersey and shall be construed in accordance with and governed by the laws of the State of New Jersey. Section 1.10. [Reserved] Section 1.11. PROVISIONS REQUIRED BY INDENTURE. Whenever the provisions of this Mortgage and the provisions of the Indenture shall be inconsistent, the provisions of the Indenture shall govern. Section 1.12. RIGHTS OF THE TRUSTEE. So long as the Trustee is the Mortgagee hereunder, except as otherwise provided in Section 8.01 of the Indenture: (a) the Mortgagee 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, coupon or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) whenever in the administration of this Mortgage the Mortgagee shall deem it desirable that a matter be 19 proved or established prior to taking, suffering or omitting any action hereunder, the Mortgagee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate; (c) the Mortgagee 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 the Mortgagee hereunder in good faith and in reliance thereon; (d) the Mortgagee shall be under no obligation to exercise any of the rights or powers vested in it by this Mortgage at the request or direction of any Noteholder pursuant to the Indenture, unless such holder shall have offered to the Mortgagee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (e) the Mortgagee 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, or other paper or document but the Mortgagee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Mortgagee shall determine to make such further inquiry or investigation, it shall be entitled (subject to the express limitations with respect thereto contained in this Mortgage) to examine the books, records and premises of the Mortgagor, personally or by agent or attorney; (f) the Mortgagee may execute any of the trusts or power hereunder or perform any duties hereunder either directly or by or through agents or attorneys, and the Mortgagee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder; (g) the Mortgagee shall not be personally liable, in case of entry by it upon the Trust Estate, for debts contracted or liabilities or damages incurred in the management or operation of the Trust Estate; and (h) no provision of this Mortgage shall require the Mortgagee to expend or risk its own funds or otherwise incur any financial liability in the performance of its obligations hereunder, or in the exercise of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate 20 indemnity against such risk or liability is not reasonably assured to it. Section 1.13. MORTGAGE SUBJECT TO THE PROVISIONS OF THE ACT. Each provision of this Mortgage is subject to and shall be enforced in compliance with the provisions of the New Jersey Casino Control Act. This Mortgage shall not be transferred, assigned or amended without prior approval of the New Jersey Casino Control Commission. Section 1.14. DISCHARGE OF LIEN. If the Mortgagor shall pay or cause to be paid, or there shall otherwise be paid, to the Mortgagee all amounts required to be paid by the Mortgagor pursuant to the Note, and the conditions precedent for the Indenture to cease, determine and become null and void in accordance with Section 5.01 of the Indenture shall have occurred, the Mortgagee shall promptly cancel and discharge this Mortgage, and execute and deliver to the Mortgagor all such instruments as may be necessary, required or appropriate to evidence such discharge and satisfaction of such lien or liens. Section 1.15. GENERAL APPLICATION. (a) The assertion of any rights upon any Default shall be subject in each instance to the giving of any notice and the expiration of any grace period provided for in Section 3.01 as a condition to such Default making it an Event of Default, unless the Trust Indenture Act requires otherwise, in which case the Trust Indenture Act shall control. (b) For the purposes of this Mortgage, it is understood that an event which does not materially diminish the value of the Mortgagee's interest in the Trust Estate shall not be deemed an "impairment of security", as that phrase is used in this Mortgage. ARTICLE TWO RELEASE; OTHER EXCEPTED PROPERTY; SUBORDINATION Section 2.01. POSSESSION BY MORTGAGOR; DISPOSITIONS WITHOUT RELEASE. So long as there shall have been no acceleration of maturity of the Note under Section 3.02, the Mortgagor shall be suffered and permitted, with power freely and without let or hindrance on the part of the Mortgagee, subject to the provisions of this Mortgage and the Guaranty Mortgage, to possess, use, manage, operate and enjoy the Trust Estate and every part thereof and to collect, receive, use, invest and dispose of the rents, issues, tolls, profits, revenues and other income from the Trust Estate or any part hereof, to use, consume and dispose of any consumables, goods, wares and merchandise in the ordinary course of business of operating the Casino-Hotel and to adjust 21 and settle all matters relating to choses in action, leases and contracts. Section 2.02. OBSOLETE PROPERTY; TANGIBLE PERSONAL PROPERTY; LEASE MODIFICATIONS. The Mortgagor shall have the right, at any time and from time to time, unless an Event of Default shall have occurred and be continuing, without any release from or consent by the Mortgagee: (a) to sell or dispose of, free from the lien of this Mortgage, any Tangible Personal Property which, in its reasonable opinion, may have become obsolete or unfit for use or which is no longer necessary in the conduct of its businesses or the operation of the Trust Estate, and no purchaser of any such property shall be bound to inquire into any question affecting the Mortgagor's right to sell or otherwise dispose of the same, free from the lien of this Mortgage; (b) to alter, repair, replace, change the location (provided notice shall be given to Mortgagee as to any new location) or position of and add to any Tangible Personal Property; provided, however, that no change shall be made in the location of any such property subject to the lien of this Mortgage which would in any respect impair the security of this Mortgage upon such property; or (c) to renew, extend, surrender, terminate, modify or amend any leases of Tangible Personal Property, when, in the Mortgagor's reasonable opinion, it is prudent to do so. The Mortgagor shall retain any net cash proceeds (subject to the right to pay dividends or make cash distributions pursuant to Section 12.07 of the Indenture) received from the sale or disposition of any Tangible Personal Property under Subsection (a) of this Section 2.02, in the business of operating the Casino-Hotel. The Mortgagee shall be under no responsibility or duty with respect to the exercise of the rights of the Mortgagor under this Section 2.02 or the application of the proceeds of any sale or disposition of any Tangible Personal Property. 22 Section 2.03. OTHER EXCEPTED PROPERTY. Notwithstanding any provisions contained in this Mortgage or the Indenture to the contrary, including, without limitation, the provisions of Granting Clauses Fifth and Sixth and of Articles Two and Five hereof, if the Mortgagor acquires Tangible Personal Property and other items constituting operating assets, such as computer software subject to any FF&E Financing Agreement, or becomes the lessee under a lease for any of the same and if the document evidencing such FF&E Financing Agreement prohibits subordinate liens or the provisions of any such lease prohibits any assignment thereof by the lessee, and if any such prohibition is customary with respect to similar transactions of the lender or lessor, as the case may be, then the property so purchased or the lessee's interest in the lease, as the case may be, shall be deemed to be Excepted Property. If any such FF&E Financing Agreement permits subordinate liens then the Mortgagee agrees to execute and deliver to the Mortgagor, at the Mortgagor's expense, such documents as the holder of such FF&E Financing Agreement may reasonably request to evidence the subordination of the lien of this Mortgage to the lien of such FF&E Financing Agreement. Section 2.04. [Reserved] Section 2.05. RELEASED LAND. (a) Notwithstanding anything to the contrary herein contained, the Mortgagor shall have the right, at any time and from time to time, unless an Event of Default shall have occurred and be continuing, to convey all or any part of the Released Fee Land (the land to be so conveyed is hereinafter referred to as the "Released Land"), free from the lien of the Mortgage, provided that: (i) the Mortgagor furnishes the Mortgagee with an Officers' Certificate requesting the release of such property from the Trust Estate and stating (w) so long as the Released Land is owned or used by an Affiliate of the Mortgagor, the Released Land shall not be operated in a manner in competition with the operation of the Casino-Hotel as a casino, (x) that no permanent structures have been constructed on the Released Land, (y) that the Mortgagor is not required to hold the Released Land in order to maintain all Permits and in order to comply with the provisions of all material contracts to which the Mortgagor is a party or by which the Mortgagor is bound and either (A) the Mortgagor has made adequate provision to maintain all Permits and to comply with such contractual requirements by: (1) owning and using the 23 balance of the Trust Estate; (2) acquiring fee title to any real property that would enable Mortgagor to maintain all Permits and satisfy such contractual requirements; or (3) acquiring a Qualified Leasehold Interest in real property that would enable the Mortgagor to maintain such Permits and satisfy such contractual requirements; or (B) neither the requirements of such Permits nor such contracts require the Mortgagor to own the Released Land or use or operate any land in the manner in which the Released Land is intended to be used; or (C) such requirements have been waived, and (z) that such conveyance will not materially interfere with the operation of the Casino-Hotel; (ii) the Mortgagor delivers to the Mortgagee an Opinion of Counsel to the effect that the Mortgagor is not required to own and use the Released Land in order to maintain in good standing all Permits or by the provisions of any material contract to which the Mortgagor is a party or by which it is bound to own and use the Released Land; (iii) the Mortgagor delivers to the Mortgagee, if applicable, an endorsement to the Original Policy in accordance with Section 2.05(d); (iv) the Mortgagor delivers to the Mortgagee an executed counterpart of the instruments of conveyance in recordable form, which shall contain a covenant prohibiting the use of the Released Land by any Affiliate of the Mortgagor (A) as a casino or (B) in a manner in competition with the operation of the Casino-Hotel as a casino prior to the latest Stated Maturity Date of the Note; and (v) in the case of a conveyance or release described in (A) or (B) above, if the Released Land is being conveyed to an Affiliate of the Mortgagor, the cash consideration received by the Mortgagor for the Released Land shall not be less than the product of the Release Price multiplied by the area (in square feet) of the Released Land. (b) The Mortgagee shall, from time to time, promptly execute any written instrument in form reasonably satisfactory to the prospective purchaser to confirm the release of the Released Fee Land, upon receipt by the Mortgagee of an Officers' Certificate stating that the Mortgagor is entitled to such release by virtue of the Mortgagor's compliance with this Section 2.05 and, if applicable, Section 2.05 of the Guaranty Mortgage, PROVIDED, that the Mortgagee shall have no liability thereunder and all costs and expenses (including reasonable attorneys' fees) shall be paid by the Mortgagor. 24 Section 2.06. RELEASED FEE LAND. (a) Notwithstanding anything to the contrary herein contained, in the event the Mortgagor intends to exercise an option to acquire fee title to Leased Land under the provisions of any Ground Lease, the Mortgagor shall have the right, unless an Event of Default shall have occurred and be continuing, to have an Affiliate exercise such options(s) or for the Mortgagor to exercise such options(s) on behalf of an Affiliate and in connection therewith to cause fee simple title to the Leased Land or any part thereof to be conveyed to an Affiliate of the Mortgagor (provided that no portion of the purchase price of the Leased Land or part thereof is paid by Mortgagor), free from the lien of this Mortgage (the land to be so conveyed is hereinafter referred to as the "Released Fee Land"), provided that the Mortgagor furnishes the Mortgagee with the following: (i) an Officers' Certificate requesting the release of the Released Fee Land from the Trust Estate and stating that (A) the Mortgagor is not required to own the Released Fee Land in order to maintain all Permits and in order to comply with the provisions of all material contracts to which the Mortgagor is a party or by which the Mortgagor is bound, (B) such Affiliate has received all Permits necessary to own the Released Fee Land (including without limitation all approvals required by the Casino Control Commission of the State of New Jersey), (C) there has been delivered to the Mortgagor and the Mortgagee a true copy of an instrument executed by such Affiliate stating that (i) such Affiliate may only engage in the activity of owning the Released Fee Land and (ii) such Affiliate shall not convey the Released Fee Land to another Affiliate of the Mortgagor, unless such other Affiliate executes and delivers to the Mortgagor and the Mortgagee, the instruments that would have been required to be delivered pursuant to clause (C) if the Mortgagor conveyed the Released Fee Land to such other Affiliate (provided that this restriction shall only be effective until such time as this Mortgage shall be satisfied of record) and (D) the deed conveying the Released Fee Land to such Affiliate shall state that such conveyance is made subject to the terms, provisions and conditions of the applicable Ground Lease and that the fee and leasehold interests in the Released Fee Land shall not merge by reason of the Mortgagor and/or any Affiliate owning both the leasehold and fee estate therein, and that such estates shall always remain separate and distinct; (ii) an Opinion of Counsel to the effect that (A) the Mortgagor is not required to own the Released Fee Land in order to maintain in good standing all Permits or by the provisions of any material contract to which the 25 Mortgagor is a party or by which it is bound to own the Released Fee Land and (B) the instruments described in clause (C) of subparagraph (i) were duly executed by and are binding upon such Affiliate; and (iii) an endorsement to the Original Policy, confirming that no merger of the fee and leasehold estates in the Released Fee Land has resulted from such conveyance. In addition, simultaneously with such acquisition, the Affiliate and Mortgagor shall enter into an instrument in form and substance reasonably satisfactory to Mortgagee, amending the applicable Ground Lease to provide such mortgagee protections as are customary and to the extent reasonably required by Mortgagee, including, without limitation, (A) a covenant of the landlord not to terminate the Ground Lease for any reason whatsoever (including without limitation, due to any default by tenant of its obligations under such Ground Lease), and (B) an agreement by the landlord not to accept payment of any fixed or base rent from the tenant (and, if tendered by the Mortgagor, and agreement to return same to the Mortgagor) or any other charges payable thereunder at any time that an Event of Default shall have occurred and shall be continuing. (b) The Mortgagee shall, from time to time, promptly execute any written instrument in form reasonably satisfactory to the prospective purchaser to confirm the release of the Released Fee Land, upon receipt by the Mortgagee of an Officers' Certificate stating that the Mortgagor is entitled to such release by virtue of the Mortgagor's compliance with this Section 2.06, PROVIDED that the Mortgagee shall have no liability thereunder and all costs and expenses (including reasonable attorneys' fees) shall be paid by the Mortgagor. 26 Section 2.07. AFTER-ACQUIRED FEE MORTGAGES. (a) Notwithstanding anything contained herein to the contrary (i) if no Event of Default has occurred and is continuing and (ii) if the Mortgagor shall acquire Released Fee Land, then simultaneously with the acquisition thereof, the Mortgagor shall have the right to encumber such fee simple title with a mortgage (such mortgage and any refinancing thereof permitted by the Indenture is hereinafter referred to as an "After-Acquired Fee Mortgage"). The lien of this Mortgage on the Released Fee Land shall be subordinated to the lien of the After-Acquired Fee Mortgage on the Released Fee Land (and to the lien of other Superior Mortgages which shall become a lien thereon in accordance with the terms thereof), provided the following conditions are satisfied: (i) the After-Acquired Fee Mortgage encumbers the fee simple title to such real property and no other property; (ii) the indebtedness secured by the After-Acquired Fee Mortgage (A) does not exceed 75% of the cost to the Mortgagor of such fee simple title at the time of the acquisition and (B) satisfies the criteria set forth in Section 12.08 of the Indenture; (iii) in the event the After-Acquired Fee Mortgage encumbers fee simple title to the Leased Land or any part thereof, such After-Acquired Fee Mortgage contains provisions binding on the holder of the After-Acquired Fee Mortgage and its successors and assigns confirming the provisions of Section 5.21(d) of this Mortgage; (iv) the Released Fee Land is not being acquired from an Affiliate of the Mortgagor; (v) the After-Acquired Fee Mortgage and other loan documents shall contain a provision binding upon the holder of such After-Acquired Fee Mortgage and other loan documents that all insurance proceeds in the event of a Casualty and awards for Takings of less than the entire Released Fee Land shall be used for purposes of Restoration; and (vi) the Mortgagor delivers to the Mortgagee an Officers' Certificate requesting such subordination and certifying that the requirements of (i) through (v) above have been satisfied. (b) Anything contained in this Section 2.07 or elsewhere in this Mortgage to the contrary notwithstanding, the subordination of this Mortgage to any After-Acquired Fee Mortgage constituting a lien on Released Fee Land shall not be 27 self-operative but shall be effective only upon the execution and delivery by the Mortgagee of an instrument in writing effecting such subordination. The Mortgagee shall deliver such instrument of subordination on the following conditions: (x) the Mortgagee shall have received an Officers' Certificate confirming that the conditions of (i) through (vi) of paragraph (a) have been satisfied, together with a true and correct copy of the After- Acquired Fee Mortgage and all other instruments securing the indebtedness evidenced thereby and (y) the instrument of subordination shall specifically state that this Mortgage is being subordinated not with respect to the lien of this Mortgage on the Ground Lease or on the leasehold estate created thereby, but only with respect to the fee simple title to the Leased Land or applicable part thereof and only if and to the extent that the After-Acquired Fee Mortgage being subordinated to is subject and subordinate to the Ground Lease and the leasehold estate created thereby. ARTICLE THREE REMEDIES Section 3.01. EVENTS OF DEFAULT. "Event of Default," whenever used herein, means any one of following events (including any applicable notice requirement and any period of grace as specified in this Section 3.01) (whatever the reason for such event 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): (a) default in the payment of any interest on the Note when such interest becomes due and payable and continuance of such default for a period of 10 days after there has been given a written notice to the Mortgagor specifying such default and stating that such notice is a "Notice of Default" hereunder; or (b) default in the payment of the principal of any Note at its Maturity; or (c) an "Event of Default" as defined in Section 3.01 of the Guaranty Mortgage shall occur; or (d) default in the payment of any other sum due under the Note or this Mortgage and the continuance of such default for a period of 10 days after there has been given to the Mortgagor a written notice specifying such default and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; or (e) default in the performance, or breach, of any covenant of the Mortgagor in this Mortgage (other than a 28 covenant a default in the performance or breach of which is elsewhere in this Section specifically dealt with), and continuance of such default or breach for a period of 30 days after there has been given to the Mortgagor 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 (i) the default or breach is of such a nature that is curable but not susceptible of being cured with due diligence within such 30-day period (for reasons other than the lack of funds), (ii) the Mortgagor delivers an Officers' Certificate to the Mortgagee within such 30-day period stating (A) the applicability of the provisions of Clause (i) to such default or breach, (B) the Mortgagor's intention to remedy such default or breach with reasonable diligence and (C) the steps which the Mortgagor has undertaken to remedy such default or breach and (iii) the Mortgagor delivers to the Mortgagee additional Officers' Certificates every 30 days thereafter updating the information contained in the certificate described in Clause (ii), in which case such 30 day period shall be extended for such further period of time as may reasonably be required to cure the same, provided that the Mortgagor is then proceeding and thereafter continues to proceed to cure the same with reasonable diligence; or (f) an "Event of Default" as defined in Section 7.01 of the Indenture, shall occur; or (g) default by the Mortgagor under any of the terms of any Ground Lease which shall not be fully cured or waived prior to the expiration of any grace period contained in such Ground Lease, unless prior to the expiration of such grace period, the Mortgagor gives the Mortgagee an Officers' Certificate, an Opinion of Counsel and a true copy of the Injunction referred to below, which Certificate and Opinion state that (i) a court of competent jurisdiction has issued an injunction (which is in force and effect and has not been modified or reversed on appeal) tolling or staying the expiration of the grace period set forth in such Ground Lease with respect to such default, (ii) such injunction specifically provides that in addition to the tolling or stay describe in (i) above, such tolling or stay also applies to the Mortgagee for purposes of determining the duration and expiration of the periods during which the Mortgagee may exercise its rights under such Ground Lease (including without limitation, periods to cure lessee defaults and delivering a guarantee and the period during which the Mortgagee may elect to enter into a new lease thereunder), (iii) such injunction further provides that the tolling or stay under (i) and (ii) shall be effective until such time that the Mortgagee is personally served 29 with notice of the expiration of such injunction and (iv) the Mortgagee is named as a party in any action or proceeding involving such injunction and therefore entitled to notice of any modification or termination thereof; and, if such injunction is issued, then so long as such injunction remains in force and effect and the preceding provisions of this Section 3.01(g) have been complied with, the grace period referred to in the third line of this subparagraph (g) shall be deemed to mean the grace period after giving effect to any such tolling or stay in (i) above; or (h) default by the Mortgagor under any of the terms of any Superior Mortgage which default results in the acceleration of the maturity of such Superior Mortgage and which shall not be fully cured or waived prior to the expiration of any grace period contained in such Superior Mortgage, unless prior to the expiration of such grace period, the Mortgagor gives the Mortgagee an Officers' Certificate and an Opinion of Counsel and a true copy of the injunction referred to below, which Certificate and Opinion shall state (i) that a court of competent jurisdiction has issued an injunction (which is in force and effect and has not been modified or reversed on appeal) tolling or staying the expiration of the grace period set forth in such Superior Mortgage with respect to such default and (ii) the Mortgagee is named a party in any action or proceeding relating to such injunction and therefore is entitled to notice of any modification or termination thereof; and if such injunction is issued, then so long as such injunction remains in force and effect, and the preceding provisions of this Section 3.01(h) have been complied with, the grace period referred to in the third line of this subparagraph (h) shall be deemed to mean the grace period after giving effect to any such tolling or stay; or (i) any modification, amendment or supplement of any Ground Lease without the prior written consent of the Mortgage; or (j) any modification, amendment or supplement of any Superior Mortgage without the prior written consent of the Mortgagee, except to the extent that such modification, amendment or supplement is permitted by Section 5.22(b)(i) hereof; or (k) default in the performance, or breach, of any of the provisions of Article Four and the continuance of such default or breach for a period of 60 days after there has been given a written notice to the Mortgagor specifying that such notice is a "Notice of Default" hereunder; or 30 (l) any representation or warranty of the Mortgagor set forth in this Mortgage or in any notice, certificate, demand or request delivered to the Mortgagee pursuant to this Mortgage shall prove to be incorrect as of the time when made and the facts constituting such incorrectness impairs the Mortgagee's security and such impairment continues for a period of 30 days after there has been given to the Mortgagor a written notice specifying that such notice is a "Notice of Default" hereunder, unless (i) such impairment is curable, but not susceptible of cure within such 30-day period (for reasons other than lack of funds), (ii) the Mortgagor gives an Officers' Certificate to the Mortgagee within such 30-day period stating (A) the applicability of the provisions of (i) to such impairment, (B) the Mortgagor's intention to remedy the same with reasonable diligence and (C) the steps which the Mortgagor has undertaken to remedy such default or breach and (iii) the Mortgagor delivers to the Mortgagee additional Officers' Certificates every 30 days thereafter updating the information contained in the certificate described in (ii), in which case such 30-day period shall be extended for such further period of time as may reasonably be required to cure the same, provided that the Mortgagor is then proceeding and thereafter continues to proceed to cure the same with reasonable diligence. Section 3.02. DEMAND UNDER NOTE. If an Event of Default occurs and is continuing, then the Mortgagee may declare the Outstanding Amount of the Note to be due and payable immediately, by a notice in writing to the Mortgagor and upon any such declaration such principal shall become immediately due and payable. Section 3.03. APPLICATION OF MONEYS RECEIVED BY MORTGAGEE. Any moneys received by the Mortgagee pursuant to the provisions of this Article Three (including moneys received by the Trustee after any action or act by the Mortgagee under Section 3.10) shall be applied by the Mortgagee in accordance with the provisions of Section 7.06 of the Indenture. Section 3.04. RESTORATION OF RIGHTS AND REMEDIES. If the Mortgagee has instituted any proceeding to enforce any right or remedy under this Mortgage and such proceeding has been discontinued or abandoned for any reason or has been determined adversely to the Mortgagee, then and in every such case the Mortgagor and the Mortgagee shall, subject to any determination in such proceeding, be restored to its former position hereunder, and thereafter all rights and remedies of the Mortgagee shall continue as though no such proceeding had been instituted. 31 Section 3.05. RIGHTS AND REMEDIES CUMULATIVE. No right or remedy herein conferred upon or reserved to the Mortgagee 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 3.06. DELAY OR OMISSION NOT WAIVER. No delay or omission of the Mortgagee to exercise any right or remedy accruing upon an 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 Three by law to the Mortgagee may be exercised, from time to time, and as often as may be deemed expedient, by the Mortgagee. Section 3.07. UNDERTAKING FOR COSTS. If any action or proceeding shall be commenced (including, without limitation, an action to foreclose this Mortgage or to collect the indebtedness secured hereby) to which action or proceeding the Mortgagee is made or becomes a party, or in which it becomes necessary in the opinion of the Mortgagee to defend or uphold the lien of this Mortgage, the Mortgagor shall pay to Mortgagee all expenses, including reasonable attorneys' fees and expenses, incurred by the Mortgagee in connection therewith, together with interest at the rate then payable on the Note, from the date of payment less the net amount received by the Mortgagee or the Trustee, as their interests may appear under any title insurance policy, and, until paid, all such expenses, together with interest as aforesaid, shall be a lien on the Trust Estate. Section 3.08. WAIVER OF APPRAISEMENT AND OTHER LAWS. To the full extent that it may lawfully so agree, the Mortgagor will not at any time insist upon, plead, claim or take the benefit or advantage of, any appraisement, valuation, stay, extension or redemption law now or hereafter in force, in order to prevent or hinder the enforcement of this Mortgage or the absolute sale of the Trust Estate, or any part hereof, or the possession thereof by any purchaser at any sale under this Article Three; and the Mortgagor, for itself and all who may claim under it, so far as it or they now or hereafter may lawfully do so, hereby waives the benefit of all such laws. The Mortgagor, for itself and all who may claim under it, waives, to the extent that it may lawfully do so, all right to have the property in the Trust Estate marshalled upon any foreclosure hereof, and agrees that any court having jurisdiction to foreclose this Mortgage may order the sale of the Trust Estate as an entirety. 32 If any law in this Section 3.08 referred to and now in force, of which the Mortgagor or its successor or successors might take advantage despite this Section 3.08, shall hereafter be repealed or cease to be in force, such law shall not thereafter be deemed to constitute any part of the contract herein contained or to preclude the application of this Section 3.08. Section 3.09. ENTRY. The Mortgagor agrees that upon the occurrence of an Event of Default the Mortgagor, upon demand of the Mortgagee during the continuance thereof, shall forthwith surrender to the Mortgagee the actual possession of, and it shall be lawful for the Mortgagee by such officers or agents as it may appoint to enter and take possession of, the Trust Estate (and the books and papers of the Mortgagor), and to hold, operate and manage the Trust Estate (including the making of all needful repairs, and such alterations, additions and improvements as the Mortgagee shall deem wise) and to receive the rents, issues, tolls, profits, revenues and other income thereof, and, after deducting the costs and expenses of entering, taking possession, holding, operating and managing the Trust Estate, as well as payments for taxes, insurance and other proper charges upon the Trust Estate and reasonable compensation to itself, its agents and counsel, to apply the same as provided in Section 3.03, PROVIDED, HOWEVER, that the Mortgagee's rights under this Section 3.09 shall be subject to the provisions of the New Jersey Casino Control Act and Section 3.14. Whenever all that is then due upon the Note and under any of the terms of this Mortgage shall have been paid and all defaults hereunder shall have been made good, the Mortgagee shall surrender possession to the Mortgagor. Section 3.10. POWER OF SALE; SUITS FOR ENFORCEMENT. In case an Event of Default shall occur and be continuing, the Mortgagee, with or without entry, in its discretion may: (a) sell, subject to any mandatory requirements of applicable law, the Trust Estate as an entirety, or in such parcels, as the Mortgagee may determine, to the highest bidder at public auction at such place and at such time (which sale may be adjourned by the Mortgagee from time to time in its discretion by announcement at the time and place fixed for such sale, without further notice) and upon such terms as the Mortgagee may fix and briefly specify in a notice of sale to be published as required by law; or (b) proceed to protect and enforce its rights under this Mortgage by sale pursuant to judicial proceedings or by a suit, action or proceeding in equity or at law or otherwise, whether for the specific performance of any covenant or agreement contained in this Mortgage or in aid of the execution of any power granted in this Mortgage or for the foreclosure of this 33 Mortgage or for the enforcement of any other legal, equitable or other remedy, as the Mortgagee, being advised by counsel, shall deem most effectual to protect and enforce any of the rights of the Mortgagee; the failure to join tenants shall not be asserted as a defense to any foreclosure or proceeding to enforce the rights of the Mortgagee. Section 3.11. INCIDENT OF SALE. Upon any sale of any of the Trust Estate, whether made under the power of sale hereby given or pursuant to judicial proceedings, to the extent permitted by law: (a) the principal of and accrued interest on the Note, if not previously due, shall at once become and be immediately due and payable; (b) subject to the provisions of Section 3.14 and the receipt of any required prior approvals of the New Jersey Casino Control Commission, the Mortgagee may bid for and purchase the property offered for sale, and upon compliance with the terms of sale may hold, retain and possess and dispose of such property, without further accountability, and may, in paying the purchase money therefor, delivery any notes or claims for interest thereon in lieu of cash to the amount which shall, upon distribution of the net proceeds of such sale, be payable thereon, and such notes or claims for interest thereon, in case the amounts so payable thereon shall be less than the amount due thereon, shall be returned to the holders thereof after being appropriately stamped to show partial payment; (c) the Mortgagee may make and deliver to the purchaser or purchasers a good and sufficient deed, bill of sale and instrument of assignment and transfer of the property sold; (d) the Mortgagee is hereby irrevocably appointed the true and lawful attorney of the Mortgagor, in its name and stead, to make all necessary deeds, bills of sale and instruments of assignment and transfer of the property thus sold; and for that purpose it may execute all necessary deeds, bills of sale and instruments of assignment and transfer, and may substitute one or more persons, firms or corporations with like power, the Mortgagor hereby ratifying and confirming all that its attorney or such substitute or substitutes shall lawfully do by virtue hereof; but if so requested by the Mortgagee or by any purchaser, the Mortgagor shall ratify and confirm any such sale or transfer by executing and delivering to the Mortgagee or to such purchaser or purchasers all proper deeds, bills of sale, instruments 34 of assignment and transfer and releases as may be designated in any such request; (e) all right, title, interest, claim and demand whatsoever, either at law or in equity or otherwise, of the Mortgagor of, in and to the property so sold shall be divested and such sale shall be a perpetual bar both at law and in equity against the Mortgagor, its successors and assigns, and against any and all persons claiming or who may claim the property sold or any part thereof from, through or under the Mortgagor, its successors and assigns; and (f) the receipt of the Mortgagee or of the officer making such sale shall be a sufficient discharge to the purchaser or purchasers at such sale for his or their purchase money and such purchaser or purchasers and his or their assigns or personal representatives shall not, after paying such purchase money and receiving such receipt, be obliged to see to the application of such purchase money, or be in anywise answerable for any loss, misapplication or non-application thereof. Section 3.12. RECEIVER. Upon the occurrence of an Event of Default and commencement of judicial proceedings by the Mortgagee to enforce any right under this Mortgage, the Mortgagee shall be entitled, as against the Mortgagor, without notice or demand and without regard to the adequacy of the security for the Note or the solvency of the Mortgagor, to the appointment of a receiver of the Trust Estate, and of the rents, issues, profits, revenues and other income thereof, PROVIDED, HOWEVER, that the Mortgagee's rights under this Section 3.12 shall be subject to the provisions of the New Jersey Casino Control Act and Section 3.14 hereof. Section 3.13. SUITS TO PROTECT THE TRUST ESTATE. Upon 5 days' prior written notice to the Mortgagor (or such shorter period or without notice if deemed necessary and appropriate by the Mortgagee), the Mortgagee shall have power to institute and maintain such proceedings as it may deem necessary and appropriate to prevent any impairment of the Trust Estate by any acts which may be unlawful or in violation of this Mortgage and to protect its interests in the Trust Estate and in the rents, issues, profits, revenues and other income arising therefrom, including power to institute and maintain proceedings to restrain the enforcement of or compliance with any 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 hereunder or be materially prejudicial to the interests of the Mortgagee. Section 3.14. MANAGEMENT OF CASINO-HOTEL. Notwithstanding any provision of this Article Three to the 35 contrary, following an Event of Default and the taking of possession of the Trust Estate or any part thereof by the Mortgagee and/or the appointment of receiver of the Trust Estate or any part thereof, the Mortgagee or any such receiver shall be authorized, in addition to the rights and powers of the Mortgagee and such receiver set forth elsewhere in this Mortgage, to retain one or more experienced operators of hotels and/or casinos to manage the Casino-Hotel, PROVIDED that any such operator shall have all necessary legal qualifications, including all Permits, to manage the Casino-Hotel. ARTICLE FOUR CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE Section 4.01. CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER ONLY ON CERTAIN TERMS. The Mortgagor shall comply with all provisions applicable to the Mortgagor in Article Ten of the Indenture. Section 4.02. SUCCESSOR ENTITY SUBSTITUTED. Upon any consolidation or combination or any conveyance or transfer of the Trust Estate or any portion thereof in accordance with Section 10.01 of the Indenture, the successor entity formed by such consolidation or into which the Mortgagor is combined or to which such conveyance or transfer is made shall succeed to, and be substituted for, and may exercise every right and power of, the Mortgagor under this Mortgage with the same effect as if such successor entity had been named as the Mortgagor herein; PROVIDED, HOWEVER, that no such conveyance or transfer of the Trust Estate substantially as an entirety, unless such conveyance or transfer is in compliance with the provisions of Article Ten of the Indenture, shall have the effect of releasing the Person named as "the Mortgagor" in the first paragraph of this instrument or any successor entity which shall theretofore have become such in the manner prescribed in such Article Ten from its liability as obligor or maker of the Note. Section 4.03. LIMITATION ON SALES OF TRUST ESTATE. Except as otherwise expressly permitted by this Mortgage or the Indenture, the Mortgagor shall not sell, assign, lease, sublease, hypothecate, pledge, mortgage or otherwise transfer all or any part of the Trust Estate or any interest therein (including without limitation any interest in the Ground Leases). Without limiting the generality of the foregoing, the Mortgagor shall not separate, or attempt to separate, its ownership of its interest in the Ground Leases from its ownership of the buildings constituting the Casino-Hotel or any part thereof. 36 ARTICLE FIVE COVENANTS AND REPRESENTATIONS OF MORTGAGOR Section 5.01. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST. The Mortgagor will duly and punctually pay the principal of (and premium, if any) and interest on the Note in accordance with the terms of the Note and this Mortgage. Section 5.02. FF&E FINANCING AGREEMENTS. The Mortgagor covenants and agrees to comply with all of the terms and conditions set forth in any FF&E Financing Agreements before the expiration of any applicable notice and cure periods contained in the FF&E Financing Agreements. Section 5.03. LIMITATIONS ON LIENS. (a) The Mortgagor will not create, incur, suffer or permit to be created or incurred or to exist any mortgage, lien, charge or encumbrance on or pledge of any of the Trust Estate, other than (i) Permitted Encumbrances, (ii) liens on the Trust Estate in connection with indebtedness permitted by clauses (i), (ii), (iii), (iv) or (v) of Section 12.08(a) of the Indenture, and (iii) a building contract or a notice of intention filed by a mechanic, materialman or laborer under the New Jersey lien law. Without limiting the generality of the foregoing sentence but notwithstanding the provisions of the foregoing sentence, the Mortgagor shall not be deemed to have breached the provisions of the foregoing sentence by virtue of the existence of a lien for Impositions or mechanics liens so long as the Mortgagor is in good faith contesting the validity of the same in accordance with the provisions of Section 5.09 to the extent that the matters described in (i) and (ii) do not constitute a default under any Ground Lease or Superior Mortgage. (b) Mortgagee acknowledges that, contemporaneously with the execution and delivery of this Mortgage, it has assigned this Mortgage to the Trustee and that the Trustee is also the mortgagee under the Guaranty Mortgage, which Guaranty Mortgage creates a lien upon the same Trust Estate pari passu with the lien of this Mortgage. Mortgagee further acknowledges and agrees that whenever it is provided in the Guaranty Mortgage that the Mortgagor shall deliver any notice or document, or is require to make any payment thereunder, the delivery of such notice or document or the making of such payment pursuant to the terms of the Guaranty Mortgage shall also constitute the delivery of such notice or document or the making of such payment in satisfaction of the terms, conditions and provisions of this Mortgage to the same extent as the same constitutes satisfaction of the terms, conditions and provisions of the Guaranty Mortgage. Section 5.04. [Reserved] 37 Section 5.05. ACTIONS AND PROCEEDINGS. The Mortgagor hereby acknowledges the right of the Mortgagee, in the name of and on behalf of the Mortgagor, (a) to appear in and defend any action or proceeding brought with respect to the Trust Estate or any part thereof and (b) upon 5 days' prior written notice to the Mortgagor (or such shorter period or without notice if deemed necessary and appropriate by the Mortgage), to commence any action or proceeding to protect the interest of the Mortgagee in the Trust Estate. Section 5.06. WARRANTY OF LEASEHOLD ESTATE AND TITLE. The Mortgagor represents and warrants that as of the date hereof: (a) it is duly authorized under the laws of the State of New Jersey and all other applicable laws to execute and deliver this Mortgage, and all corporate action on its part necessary for the valid execution and delivery of this Mortgage has been duly and effectively taken; (b) it is the lawful owner and is lawfully seized and possessed of the Owned Land and all buildings and improvements thereon, free and clear of all liens, charges or encumbrances, other than the lien of the Mortgage Documents, any Working Capital Facility Lien and Existing Encumbrances; (c) it is the holder of and has good and marketable title to the leasehold interests and leasehold estates under the Ground Leases and to the Ground Leases, subject to no lien, encumbrance or charge other than the lien of the Mortgage Documents, any Working Capital Facility Lien and Existing Encumbrances; (d)(i) the Ground Leases are valid and subsisting demises of the Leased Land for the terms therein set forth, (ii) there are no defaults thereunder by any Lessor or the lessee as to which written notice has been given to or by the lessee, (iii) the Mortgagor has delivered true and correct copies of the Ground Leases and all modifications, amendments and supplements thereto, and (iv) each of the Ground Leases is in full force and effect and has not been modified, amended or supplemented, except as described on Schedule 2; (e) it has good title to the Operating Assets, subject to no lien, encumbrance or charge, other than the lien of the Mortgage Documents, any Working Capital Facility Lien and Existing Encumbrances; and (f) the Mortgagor has good and lawful right and authority to execute this Mortgage and to grant, bargain, sell, alien, convey, assign, transfer, hypothecate, 38 pledge, mortgage and confirm the Trust Estate as provided herein (including without limitation with respect to the Operating Assets and the Ground Leases, without the consent of any third party, other than governmental authorities but any applicable or necessary consent or approval of any such governmental authority has been given or waived at or prior to the execution and delivery of this Mortgage), and this Mortgage constitutes a valid third mortgage lien and third priority security interest in the Trust Estate PARI PASSU with the lien of the Guaranty Mortgage, subject only to Working Capital Facility Liens and Existing Encumbrances. The Mortgagor hereby does and will forever warrant and defend (x) the title to Trust Estate (including without limitation, its leasehold estates under the lessee's interests in the Ground Leases) (subject to Permitted Encumbrances) and (y) the priority of the lien of this Mortgage (subject to Permitted Encumbrances other than Restricted Encumbrances), against the claims and demands of all persons whomsoever, at the Mortgagor's sole cost and expense. Section 5.07. FURTHER ASSURANCES; RECORDING. The Mortgagor will, as provided in Section 5.13, from time to time subject its right, title and interest under all Leases to the lien of this Mortgage. The Mortgagor will cause this instrument and all other instruments of further assurance, including all financing statements and continuation statements covering security interests in personal property, to be promptly recorded, registered and filed, and at all times to be kept recorded, registered and filed, and will execute and file such financing statements and cause to be issued and filed such continuation statements, all in such manner and in such places as may be required by law or as requested by the Mortgagee to fully preserve and protect the rights of the Mortgagee as a secured party under the Uniform Commercial Code to all property comprising the Trust Estate (to the extent a grant of a security interest therein is governed by the Uniform Commercial Code) and to perfect, preserve and protect the lien of this Mortgage as a valid mortgage lien of record and a valid security interest on the Trust Estate subject to Permitted Encumbrances (other than Restricted Encumbrances). The Mortgagor will pay all filing or recording fees, and all expenses incident to the execution and delivery of this Mortgage, and any instrument of further assurance, and all federal, state, county and municipal stamp taxes and other taxes, duties, imposts, assessments and charges arising out of or in connection with the execution and delivery of the Note, this Mortgage, any financing statement or continuation statement with respect to the personal property constituting 39 part of the Trust Estate or any instrument of further assurance. Section 5.08. PAYMENT OF TAXES AND CERTAIN CLAIMS; MAINTENANCE OF PROPERTIES; COMPLIANCE WITH LEGAL REQUIREMENTS AND INSURANCE REQUIREMENTS. The Mortgagor will: (a)subject to the provisions of Section 5.09 relating to contests, pay or cause to be paid promptly (or when installments of the same shall become due and payable, if, by law or by agreement or arrangement with the applicable governmental agency or authority, the same may be paid in installments) before any fine, penalty, interest or cost may be added for nonpayment (but no later than when the same are payable by the Mortgagor pursuant to any Superior Instrument Requirement), all taxes (including, without limitation, real estate taxes, personal or other property taxes and all sales, value added, use and similar taxes), assessments (including, without limitation, all assessments for public improvements or benefits, whether or not commenced or completed prior to the date hereof and whether or not to be completed prior to the satisfaction of this Mortgage), water, sewer or other rents, rates and charges, excises, levies, license fees, permit fees, inspection fees and other authorization fees and other charges, in each case whether general or special, ordinary or extraordinary, or foreseen or unforeseen, of every character (including all interest, additions to tax and penalties thereon), that may be assessed, levied, confirmed or imposed on or in respect of or be a lien upon (1) the Trust Estate (including without limitation the Leased Land) or any part thereof or any rent therefrom or any estate, right or interest therein, or (2) any acquisition, occupancy, use, leasing, or possession of or activity conducted on the real property or any part thereof included in the Trust Estate or any gross receipts thereof or of the rent therefrom (all of the foregoing being referred to collectively as "Impositions"). Notwithstanding the foregoing or any other provision of this Mortgage, the Mortgagor shall not be required to pay any income, profits or revenue tax upon the income of the Mortgagee, the Trustee or any Noteholder nor any franchise, excise, corporate, estate, inheritance, succession, capital levy or transfer tax of the Mortgagee, the Trustee or the Noteholder nor any interest, additions to tax or penalties in respect thereof, unless such tax is imposed, levied or assessed in substitution for any Impositions that the Mortgagor is required to pay pursuant to this Section 5.08. The Mortgagor will deliver to the Mortgagee official receipts or other proof evidencing payments of any Impositions in accordance with the requirements of this Section 5.08. The Mortgagor shall 40 not be entitled to any credit for taxes or assessments paid against the Note; (b) except for such property which the Mortgagor may dispose of or replace pursuant to Section 2.02, maintain and keep all its properties used or useful in the conduct of its business (other than obsolete equipment), including, without limitation, the Casino-Hotel and all Tangible Personal Property, in such good repair, working order and condition, except for reasonable wear and use, and make or cause to be made all such needful and proper repairs, renewals and replacements thereto consistent with the standards of other casino-hotels in Atlantic City, New Jersey; (c) occupy and continuously operate the Casino-Hotel and keep the Casino-Hotel supplied with Tangible Personal Property, all in a manner consistent with the standards of other casino-hotels in Atlantic City, New Jersey (provided that nothing contained in this Section 5.08(c) shall be deemed to reduce the time period set forth in Section 3.01(f)); (d) subject to the provisions of Section 5.09 relating to contests, the Mortgagor at its sole expense will timely (1) comply with all Legal Requirements and Insurance Requirements, whether or not compliance therewith shall require structural changes in the buildings and improvements included in the Trust Estate or interfere with the use and enjoyment of the Trust Estate or any part thereof, (2) procure, maintain and comply with all permits and other authorizations required for (i) the use of the Casino as a gaming and gambling facility, (ii) the on-premises consumption of alcoholic beverages at the Casino-Hotel and (iii) any other use of the Trust Estate or any part thereof then being made, and for the proper erection, installation, operation and maintenance of the improvements or any part thereof, and (3) comply with any instruments of record at the time in force affecting the Trust Estate or any part thereof, if the failure to comply with the same would impair the Mortgagee's security hereunder. Without limiting the generality of the foregoing, the Mortgagor represents and warrants that at the time of the execution of this Mortgage, the Mortgagor is in compliance with the requirements of clauses (1), (2) and (3); (e) in the event of the passage after the date of this Mortgage of any law of the State of New Jersey, or any other governmental entity, changing in any way the laws now in force for the taxation of mortgages, or debts secured thereby, for state or local purposes, or the manner of the operation of any such taxes, so as to affect the interest of the Mortgagee, then and in such 41 event, the Mortgagor shall bear and pay the full amount of such taxes, provided that if for any reason payment by the Mortgagor of any such new or additional taxes would be unlawful or if the payment thereof would constitute usury or render the indebtedness secured hereby wholly or partially usurious under any of the terms or provisions of the Note, or this Mortgage, or otherwise, the Mortgagee may, at the Mortgagee's option, declare the whole sum secured by this Mortgage, with interest thereon, to be due and payable 90 days after notice of election thereof has been given by the Mortgagee, or the Mortgagee may, at the Mortgagee's option, pay that amount or portion of such taxes as renders the loan or indebtedness secured hereby unlawful or usurious, in which event the Mortgagor shall concurrently therewith pay the remaining lawful and nonusurious portion or balance of such taxes. Section 5.09. PERMITTED CONTESTS. The Mortgagor may, at its sole expense, contest by appropriate legal proceedings conducted in good faith and with due diligence, the amount or validity or application, in whole or in part of any Imposition or lien therefor or any Legal Requirement or Insurance Requirement or the application of any instrument of record affecting the Trust Estate or any part thereof or any claims of mechanics, materialmen, suppliers, or vendors or lien therefore, and may withhold payment of the same pending such proceedings if permitted by law, or make payment under protest, or defer compliance with any such Legal Requirement, any such Insurance Requirement or the terms of any such instrument, and the same shall not be a Default hereunder, provided that (a) in the case of any Impositions or lien therefor or any claims of mechanics, materialmen, suppliers or vendors or lien therefor, such proceedings shall suspend the collection thereof from each of the Mortgagor, the Mortgagee, the Trustee, the Noteholder and the Trust Estate, (b) neither the Trust Estate nor any interest therein would be in any danger of being sold, forfeited, or lost, (c) such action would not result in or constitute a default under any Ground Lease or Superior Mortgage, (d) in the case of a Legal Requirement, neither the Noteholder nor the Mortgagee shall be in any danger of any civil or any criminal liability, and the failure of the Mortgagor to comply with such Legal Requirement shall not affect the continuance in good standing of any Permit or result in the suspension, termination, non-renewal or material adverse modification of any permit, and (e) in the case of an Insurance Requirement, the failure of the Mortgagor to comply therewith shall not affect the validity of any insurance required to be maintained by the Mortgagor hereunder. Section 5.10. MECHANICS' AND OTHER LIENS. Without limiting the generality of the first sentence of Section 5.03 and notwithstanding the provisions of Section 5.03(a)(ii), the 42 Mortgagor will cause to be removed, either by payment, or bonding or otherwise, all claims and demands of mechanics, materialmen, laborers, and others which, if unpaid, might result in, or permit the creation of, a lien on the Premises and/or Trust Estate or any part thereof, or on the revenues, rents, issues, income and profits arising therefrom and in general will do or cause to be done everything necessary so that the lien hereof shall be fully preserved, at the cost of the Mortgagor, without expense to the Mortgagee. Section 5.11. INSURANCE. (a) The Mortgagor will, at its expense, maintain with Insurers: (1) insurance with respect to the Mortgagor's insurable properties constituting a part of the Trust Estate against loss or damage by fire, lightning, and other risks from time to time included under "all-risk" policies and against loss or damage by sprinkler leakage, water damage, collapse, malicious mischief and explosion in respect of any steam and pressure boiler and similar apparatus located on such insurable properties, in amounts at all times sufficient to prevent the Mortgagor from becoming a coinsurer within the terms of the applicable policies, but in any event such insurance shall be maintained in such insurable amounts not less than the greatest of the following (hereinafter referred to as the "Insurance Amount"): (i) 100% of the then full insurable value of such insurable properties, the term "full insurable value" to mean the actual replacement cost (excluding the costs of foundation, footing, excavation, paving, landscaping and other similar, non-insurable improvements) determined from time to time (but not less frequently than once in any 36 calendar months), by an Architect, contractor, appraiser, or an Insurer, (ii) the amount required to be maintained pursuant to the Superior Instrument Requirements; (2) war risk insurance as and when such insurance is obtainable from the United States of America or any agency thereof as promptly as reasonably practicable after the same becomes so obtainable, in an amount not less than the Insurance Amount, or in such lesser amount as may then be so obtainable; (3) public liability, including personal injury and property damage and comprehensive general liability connected with the possession, use, leasing, operation or condition of such insurable properties in such amounts as, in the Mortgagor's judgment, are prudent, considering the cost of such insurance, for personal injury and 43 property damage with respect to any one occurrence, which may be under an umbrella policy. Anything contained in this clause (3) to the contrary notwithstanding, the Superior Instrument Requirements with respect to the kinds and amount of insurance described in this clause (3) shall be satisfied by the Mortgagor; (4) appropriate workers' compensation insurance with respect to any work (to the extent the risks to be covered thereby are not already covered by other policies of insurance maintained by the Mortgagor) on or about such insurable properties; (5) business interruption insurance covering not less than 12 months of loss, provided that, at any time that the Mortgagor is renewing any policy for such insurance or taking out any new or replacement such policy covering a period of less than 12 months, the Mortgagor shall deliver to the Mortgagee an Officers' Certificate certifying that the period of coverage to be maintained by the Mortgagor under such policy is the maximum that can be maintained at rates determined by the Mortgagor to be reasonable for such coverage; (6) to the extent available, flood insurance in an amount not less than the Insurance Amount, or such lesser amount as may then be so obtainable; and (7) such other insurance with respect to such insurable properties against loss or damage of the kinds (i) from time to time customarily insured against by persons owning or using casino-hotels of comparable size in the boardwalk area of Atlantic City, New Jersey and (ii) required to be maintained pursuant to the Superior Instrument Requirements. Notwithstanding the foregoing, to the extent permitted by Superior Instrument Requirements, (i) the Mortgagor shall be permitted to maintain a deductible with respect to the insurance policies described in clauses (1), (2), (6) and (7) in an amount not to exceed (x) for the twelve month period commencing the date hereof, $100,000 with respect to the insurance policies described in clause (1), (2), (6) and (7) thereafter, the customary deductible (if any) with respect to the insurance maintained by casino-hotels of a similar size and value in Atlantic City, New Jersey (but in no event more than $1,000,000), (ii) the Mortgagor shall be permitted to maintain a $200,000 self insured retention under the general liability policy described in clause (3) and a deductible with respect to the other insurance policies described in clause (3) in an amount not to exceed the amount of deductible as is customarily maintained by casino-hotels of similar size in Atlantic City, New Jersey, (iii) the Mortgagor shall not reduce its insurance coverage for the matters described in clause (3) (which for purposes of 44 this paragraph means a reduction in single limits or an increase in deductible) unless and until the Mortgagor delivers to the Mortgagee an Officers' Certificate certifying (w) that the coverage the Mortgagor was theretofore maintaining cannot be maintained at rates determined by the Mortgagor to be reasonable for such coverage, (x) the amount of the proposed reduction, (y) the premium for the existing and the proposed reduced coverage, and (z) that the proposed deductible satisfied the criteria set forth in this clause (iii), and (iv) the Mortgagor shall be permitted to maintain a deductible with respect to the insurance policies described in clause (5) in the forms of and in an amount not to exceed the amount of deductible as is customarily maintained by casino-hotels of similar size in Atlantic City, New Jersey. (b) Each policy of insurance maintained by the Mortgagor pursuant to Subsection (a) of this Section 5.11 shall, (1) except in the case of workers' compensation insurance, name as additional insureds the Mortgagee and, to the extent required by the Superior Instrument Requirements, the Lessors and the holders of the Superior Mortgages, (2) provide that all insurance proceeds for losses, except in the case of public liability insurance and workers' compensation insurance or as otherwise provided in Subsections (d), (e) and (f) of this Section 5.11, be payable solely to the Mortgagee or such other party as is required to receive such proceeds under a Superior Mortgage, (3) except in the case of workers' compensation, include effective waivers (whether under the terms of any such policy or otherwise) by the insurer of all claims for insurance premiums against all lost payees and named insureds (other than the Mortgagor) and all rights of subrogation against any named insured, (4) except in the case of public liability and workers' compensation insurance, provide that any losses shall be payable notwithstanding (i) any act, failure to act, negligence of, or violation or breach of warranties, declarations or conditions contained in such policy by the Mortgagor or the Mortgagee or any other named insured or loss payee (including, without limitation, with respect to the Released Fee Land, the holders of any After-Acquired Fee Mortgages), (ii) the occupation or use of the insurable properties for purposes more hazardous than permitted by the terms of the policy, (iii) any foreclosure or other proceeding or notice of sale relating to the insurable properties or (iv) any change in the title to or ownership or possession of the insurable properties, (5) contain a non-contributory mortgagee clause in favor of the Mortgagee, and (6) provide that if all or any part of such policy is cancelled, terminated or expires, the insurer will forthwith give notice thereof to each named insured an loss payee and that no cancellation, reduction in amount or material change in coverage thereof shall be effective until at least 30 days after receipt by each named insured and loss payee of written notice thereof. 45 (c) The Mortgagor will deliver to the Mortgagee, (1) duplicate originals of all insurance policies that the Mortgagor is required to maintain pursuant to this Section 5.11 and (2) within 30 days after each reduction in insurance required to be maintained by the Mortgagor hereunder, an Officers' Certificate setting forth the particulars as to all such insurance policies and certifying that the same comply with the requirements of this Section 5.11, that all premiums or installments thereof then due thereon have been paid and that the same are in full force and effect. The Mortgagee shall not be responsible for effecting or renewing any insurance or for the responsibility or solvency of the insurers. (d) The Mortgagor shall give written notice to the Mortgagee immediately upon obtaining knowledge of any Casualty which (x) results in damage, loss or destruction in an amount in excess of $5,000,000 to any buildings or improvements on the Premises and/or any Tangible Personal Property or (y) pursuant to any Superior Instrument Requirement, would require the deposit of insurance proceeds with the Depositary, or action or proceeding with respect thereto. Whenever the Superior Instrument Requirements require or permit the selection of the Depositary by the Mortgagor, the Mortgagor shall select the Insurance Trustee as the Depositary. Within 30 days after any Casualty which results in any damage, loss or destruction in an amount in excess of $10,000,000 to any buildings or improvements of the Premises and/or any Tangible Personal Property, the Mortgagor shall deliver to the Mortgagee a certificate of an Architect stating whether, in such Architect's opinion, applicable Legal Requirements permit the Restoration of such buildings and improvements for the same uses and to the same size and quality in all material respects, as existed immediately prior to the Casualty (and if such certificate states the Legal Requirements do not permit such Restoration, such certificate shall describe the manner closest approximating such criteria to which the buildings and improvements could be so restored and shall be accompanied by a Certificate of Appraised Value dated not more than 10 days prior to delivery setting forth the Appraised Value immediately prior to the Casualty and the estimated Appraised Value immediately after the Restoration). If the Mortgagor is required to deliver such Certificates of Appraised Value and if based on such Certificates of Appraised Value immediately after Restoration, the aggregate Outstanding Amount of First Mortgage Debt immediately after such Restoration shall exceed the greater of (i) 66 2/3% of the Appraised Value immediately after such Restoration or (ii) the quotient of the Outstanding Amount of First Mortgage Debt immediately prior to such Casualty divided by the Appraised Value immediately prior to the Casualty multiplied by the Appraised Value immediately after such Restoration, then the proceeds of any insurance shall, at the election of Mortgagee, either be applied to Restoration as set forth in Subsections (e), (h) and (i) 46 below) or paid and delivered to the Mortgagee to the extent of the then Outstanding Amount of the Notes and any other interest or other sums due hereunder or thereunder to be applied to the satisfaction of the Mortgage to the extent proceeds are available for such purpose and provided that no additional sums are due to the Trustee or the Noteholders under the Notes or the Indenture, the balance of any net insurance proceeds shall be paid to the Mortgagor. Notwithstanding the foregoing sentence, if such Certificates of Appraised Values indicates that the Outstanding Amount of First Mortgage Debt immediately after such Restoration exceeds the greater of the two amounts determined pursuant to subclauses (i) and (ii) above, the proceeds of insurance will be made available for Restoration (subject to paragraphs, (e), (h) and (i) below) if the Mortgagor obtains an irrevocable commitment from a nationally recognized financial institution having a combined capital and surplus of at least $100,000,000, to supply, upon an acceleration under this Mortgage as a result of an Event of Default, funds to the Mortgagor as additions to capital in an amount equal to the Outstanding Amount of First Mortgage Debt in excess of the Appraised Value necessary to be paid down so that the Outstanding Amount of First Mortgage Debt will not exceed either of the two amounts determined pursuant to such clauses (i) and (ii), PROVIDED that such commitment may only be released if, upon an Appraisal at any time following completion of such Restoration, the aggregate Outstanding Amount of the First Mortgage Debt does not exceed 66-2/3% of the Appraised Value. (e) Subject to the provisions of Subsection (d) above, in case a Casualty occurs, the following shall apply: (1) if the cost of Restoration (as hereinafter defined) does not exceed the sum of $10,000,000, the net insurance proceeds shall be paid by the Mortgagee to the Mortgagor (unless the Superior Instrument Requirements provide that the same shall be paid to the Depositary); (2) if the cost of Restoration is $10,000,000 or more or if the Superior Instrument Requirements provide that the same shall be paid to the Depositary, the net insurance proceeds shall be paid by the Mortgagee to the Insurance Trustee (or other Depositary required by the Superior Instrument Requirements, provided that such Depositary holds such proceeds in trust for purposes of paying the costs of Restoration); (3) the Mortgagor shall commence with reasonable promptness under the circumstances and thereafter with due diligence proceed to perform and complete in a good and workmanlike manner the restoration, repair, replacement or rebuilding of the damage or destruction 47 resulting from the Casualty (all of which restoration, repair, replacement or rebuilding are referred to as the "Restoration") in accordance with the plans and specifications submitted to the Insurance Trustee, in conformance with all Legal Requirements and Superior Instrument Requirements, and in accordance with the further provisions of this Subsection (e), regardless of the extent of any such Casualty and whether or not net insurance proceeds, if any, shall be available or, if available, shall be sufficient, for the purpose of the Restoration (provided, however, that if the Mortgagor does not receive any net insurance proceeds within 30 days after any Casualty because the adjustment of the loss has not yet occurred, then the obligation of the Mortgagor to commence such Restoration shall be deferred until such proceeds are made available to the Mortgagor, provided that (i) Mortgagor delivers to the Mortgagee an Officers' Certificate certifying that the Mortgagor is diligently and continuously adjusting such loss with the Insurer, (ii) the Mortgagor delivers to the Mortgagee an Officers' Certificate within such 30-day period requesting the extension of such period, estimating the date on which such proceeds will be available and describing the Mortgagor's efforts to adjust such loss and certifying that such extension does not constitute a default or a breach of any of the provisions of any of the Ground Leases (or if so, such default or breach has been waived) and (iii) the Mortgagor delivers to the Mortgagee additional Officers' Certificates every 30 days thereafter updating the information contained in the certificate described in Clause (ii)). All Restoration work shall be performed in accordance with the applicable provisions of Section 5.12 and in conformance with all Superior Instrument Requirements, Legal Requirements and Insurance Requirements and, prior to commencing any Restoration, the Mortgagor shall obtain all Permits necessary in connection therewith, and shall obtain, and keep in full force and effect until the completion of such Restoration, such additional insurance as the Insurance Trustee and Superior Instrument Requirements may require. The plans and specifications for the Restoration shall be accompanied by a certificate of the Mortgagor and an Opinion of Counsel to the effect that upon the completion of the Restoration pursuant to the plans and specifications the Premises, and all buildings and improvements, thereon will comply with all superior Instrument Requirements, Legal Requirements and Insurance Requirements. Notwithstanding anything in this Section 5.11 to the contrary, if such Casualty is in an amount less than $5,000,000, the Mortgagor shall not be required to perform and complete such Restoration (unless the performance and completion of the Restoration is necessary in order for the Mortgagor to be in compliance with any term, provision or condition of this Mortgage 48 (other than this Section 5.11(e)) or any Superior Instrument Requirements; (4) Any insurance proceeds which the Mortgagor receives, shall be held by the Mortgagor in trust for the purpose of paying the cost of the Restoration, except as otherwise provided herein; (5) Any net insurance proceeds that the Insurance Trustee holds pursuant to this Subsection (e), shall be deposited in an interest-bearing investment reasonably designate by Mortgagor (to the extent the Mortgagor is permitted to designate such investment under the Superior Instrument Requirements) (and the interest thereon shall be added to such proceeds) and shall be paid by the Insurance Trustee in reimburse the Mortgagor for, or to make payment for, the Restoration, after the Insurance Trustee deducts therefrom the amount of any reasonable costs and expenses incurred in connection with the performance of its obligations under this Section 5.11. The Insurance Trustee shall make such payments not more frequently than once every 30 days upon the written request of the Mortgagor (unless more frequent payments are required by Superior Instrument Requirements), by paying to the Mortgagor or the persons named in the certificate described in Clause (6) of this Subsection (e) the respective amounts stated in such certificate from time to time as the Restoration progresses, provided the Mortgagor has complied with the requirements of this Subsection (e) and such payment is permitted by an applicable Superior Instrument Requirements. The Mortgagor's written request shall be accompanied by (i) the certificate described in Clause (6) of this Subsection (e) and (ii) a title company or official search, or other evidence reasonably acceptable to the Insurance Trustee, showing that there have not been filed with respect to the Premises, any vendor's, contractor's mechanic's, laborer's or materialman's statutory or similar lien which has not been discharged of record (or bonded against or secured by other security) or any other encumbrance irrespective of its priority (other than Permitted Encumbrances). (6) The certificate required by Clause (5) of this Subsection (e) shall (A) be an Officers' Certificate, countersigned by the Architect in charge of the Restoration with respect to the matters described in (i) and (v) below, (B) be dated not more than 10 days prior to such request and (C) set forth (in addition to any other requirements contained in any applicable Superior Instrument Requirements) that: (i) all of the Restoration work theretofore performed is in substantial compliance with the 49 plans and specifications theretofore submitted to the Insurance Trustee and in compliance with all Superior Instrument Requirements, Legal Requirements and Insurance Requirements; (ii) the sum then requested either has been paid by the Mortgagor or is justly due to contractors, subcontractors, materialmen, engineers, architects or other persons who have rendered services or furnished or contracted to deliver materials for the Restoration therein specified, and the names and addresses of such persons, a brief description of such services and materials and the several amounts so paid or due to each of such persons in respect thereof; (iii) no part of the amount requested has been or is the basis in any pervious or then pending request for the withdrawal of net insurance proceeds, and that the sum then requested does not exceed the value of the services and materials described in the certificate; (iv) except for the amount, if any, stated pursuant to Subclause (ii) of this Clause (6) in such certificate to be due for services or materials, and except for amounts in dispute and/or customary retainages, there is no outstanding indebtedness known to the person signing such certificate, after due inquiry, which is then due for labor, wages, materials, supplies or services in connection with such Restoration; and (v) the remaining cost, as estimated by the persons signing such certificate, of the Restoration in order to complete the same does not exceed the net insurance proceeds remaining in the hands of Insurance Trustee after payment of the sum requested in such certificate or if such estimated cost does exceed such insurance proceeds such certificate shall state the amount of any such deficiency. If the certificate states that such deficiency will exist, the Mortgagor shall deliver the amount of such deficiency in cash or cash equivalent to the Insurance Trustee simultaneously with the delivery of such certificate, which amount shall be deemed insurance proceeds for purposes of this Section 5.11(e); and (7) If net insurance proceeds shall be insufficient to pay the entire cost of the Restoration, then, after completion of the Restoration, the Mortgagor shall pay the deficiency. If all or any part of the net insurance proceeds are not used for the restoration in accordance 50 with this Subsection (e) (because such proceeds exceed the amount required to complete the Restoration), then upon completion of the Restoration in accordance with this Subsection (e), such amount not so used, if held by the Insurance Trustee, shall be paid to the Mortgagor (if permitted by Superior Instrument Requirements). (f) Provided that no Event of Default has occurred and is continuing, all net business interruption insurance proceeds shall be paid to the Mortgagor, to be segregated from the other funds of Mortgagor and held in trust by Mortgagor for the following purposes and in the following order of priority: (i) for the payment of Impositions and amounts due under the Ground Leases and Superior Mortgages; (ii) for debt service for the estimated period of Restoration (for purposes of this Section 5.11(f), interest and principal payments due on any payment date under the Note will deemed to accrue in equal daily installments beginning the day after the immediately preceding payment date and ending on such payment date); and (iii) for any expense incurred in connection with the operation or business of the Casino-Hotel. (g) The Mortgagor shall not take out separate insurance, concurrent in form or contributing in the event of loss with that required to be maintained pursuant to this Section 5.11, unless the same are permitted by Superior Instrument Requirements and the Mortgagee is included therein as a named insured, with loss payable to the Mortgagee and the Insurance Trustee pursuant to Section 5.11(b) hereof. The Mortgagor shall immediately notify the Mortgagee whenever any such separate insurance is taken out and shall promptly deliver to the Mortgagee a duplicate original of the policy of such insurance, a copy thereof certified by the insurer or a certificate thereof. (h) Subject to final adjustment by the insurer, insurance claims by reason of damage or destruction to any portion of the Trust Estate may be adjusted by the Mortgagor, but the Mortgagee shall have the right (but not the obligation) to join the Mortgagor in adjusting, and approving the adjustment of, any such loss except in the event of a loss where the amount of insurance reasonably anticipated to be received with respect to such loss is less than Five Million Dollars ($5,000,000), and the Mortgagor shall assist the Mortgagee in any such adjustment at the request of the Mortgagee. If the Mortgagee at its election as aforesaid joins the Mortgagor in any adjustment process, then the Mortgagee's approval of the adjustment shall not be unreasonably withheld; (i) Notwithstanding anything contained herein to the contrary, if an Event of Default shall have occurred and be continuing, the Mortgagee may, at its option, (A) refrain from paying to the Mortgagor or the Insurance Trustee any net insurance proceeds or (B) instruct the Insurance Trustee to 51 pay to the Mortgagee any insurance proceeds then held by the Insurance Trustee, as the case may be. Section 5.12. LIMITATIONS ON BUILDING DEMOLITION, ALTERATIONS, IMPROVEMENTS AND NEW CONSTRUCTION. The Mortgagor will not authorize, permit or make any demolition, alteration or improvement of any building included in the Trust Estate or any new construction on any part of the Trust Estate, except in conformity with and subject to the limitations hereinafter in this Section 5.12 set forth. Unless an Event of Default shall have occurred and be continuing, the Mortgagor shall have the right at all times to make or permit such alterations, improvements or new constructions, structural or otherwise (herein sometimes called collectively "alterations"), of or on the Trust Estate, to be made in all cases subject to the following conditions: (a) no alteration shall be undertaken or carried out except in conformity with all Superior Instrument Requirements, Legal Requirements and Insurance Requirements; (b) if the estimated cost of any alteration, together with other alterations that constitute a single construction plan or project (whether or not accomplished in several stages or procedures), exceeds $5,000,000, the building or buildings, as so improved or altered, upon completion of the work shall be of a value not less than the value of such building or buildings immediately prior to the making of such alterations; (c) any alteration which is structural in nature or involves an estimated cost of more than $5,000,000 shall be conducted under the supervision of an Architect, and no such alteration shall be undertaken until 10 days after there shall have been filed with the Mortgagee detailed plans and specifications and cost estimates therefor, stating that such plans and specification conform to all, prepared and approved in writing by such Architect and accompanied by a certificate of such Architect stating that such plans and specifications conform to all applicable provisions of this Section 5.12; (d) no alteration involving an estimated cost of more than $5,000,000 shall be undertaken until the Mortgagor has furnished to the Mortgagee, at the Mortgagor's sole cost and expense, a surety bond or bonds, covering performance, and labor and material payments with respect to the work to be so performed, naming the Mortgagee as obligee, issued by a responsible surety company, authorized to do business in the state of New Jersey, in a form generally and customarily used 52 by such surety in an amount equal to the estimated cost of construction of the work covered by the plans and specifications therefor, guaranteed and conditioned upon the performance and completion of such construction, substantially in conformity with the such plans and specifications and within a reasonable time, subject to delays by fire, strikes, lock-out, acts of God, inability to obtain labor or materials, governmental restrictions, enemy action, civil commotion or unavoidable Casualty or other similar causes beyond the control of the Mortgagor, free and clear of all liens, claims and liabilities for the cost of such alterations. In the event such surety bond or bonds shall be unobtainable the Mortgagor shall deliver to the Mortgagee security by cash, letter of credit or other guarantee, affording substantially the same protection as would such bond or bonds; (e) all work done in connection with any alterations shall be done promptly and in good and workmanlike manner. The work in connection with any alteration shall be prosecuted with reasonable dispatch, delays due to fire, strikes, lockouts, acts of God, inability to obtain labor or materials, governmental restrictions, enemy action, civil commotion or unavoidable casualty or similar causes beyond the control of the Mortgagor excepted; (f) if the estimated cost of alterations exceed $5,000,000, the Mortgagor shall have delivered to the Mortgagee (A) prior to the commencement of such alterations, additions or improvements copies of all Permits required for the commencement of such work together with a certificate of the Architect or an Opinion of Counsel to the effect that all Permits required for the commencement of such alterations have been obtained; and (B) within a reasonable period of time after the completion of the alterations, copies of all Permits required in connection with the completion thereof, together with either an Opinion of Counsel or a certificate of the Architect that all such Permits have been so obtained by the Mortgagor and that the Mortgagor has complied with all the requirements of this Section 5.12; (g) no alterations of any kind shall be made to any building which shall change the use or reduce the size or quality of the building in any material respect; and (h) no alterations costing in excess of $5,000,000, together with other alterations that constitute a single construction plan or project (whether or not accomplished in several stages or procedures), shall be made to any building if such alterations are not 53 expected to be completed at least 120 days prior to the maturity date of the Note (except if such alterations are required in order to comply with Legal Requirements or Superior Instrument Requirements). Section 5.13. LEASES. The Mortgagor shall not: (a) subject to the provisions of Section 5.13(d), enter into any Lease, or renew, modify, extend, terminate, or amend any Lease, except in the ordinary course of business of operating the Casino-Hotel; (b) receive or collect, or permit the receipt or collection of, any rental payments under any Lease more than one year in advance of the respective periods in respect of which they are to accrue, except that, in connection with the execution and delivery of any Lease or of any amendment to any Lease, rental payments thereunder may be collected and received in advance in an amount not in excess of three months' rent and/or a security deposit may be required thereunder in an amount not exceeding one year's rent; (c) collaterally assign, transfer or hypothecate (other than to the Mortgagee hereunder, to the mortgagee under the Guaranty Mortgage or to the holder of any Working Capital Facility Lien) any rental payment under any Lease whether then due or to accrue in the future, the interest of the Mortgagor as landlord under any Lease or the rents, issues or profits of the Trust Estate; (d) after the date hereof, enter into any Lease, or renew any Lease unless such Lease contains terms to the effect as follows: (1) the Lease and the rights of the tenants thereunder shall be subject and subordinate to the rights of the Mortgagee under this Mortgage, the mortgagee under the Guaranty Mortgage and the holders of any Superior Mortgage, (2) the Lease may be assigned by the landlord thereunder to the Mortgagee, (3) the rights and remedies of the tenant in respect of any obligations of the landlord thereunder shall be nonrecourse as to any assets of the landlord other than its equity in the building in which the leased premises are located or the proceeds thereof, (4) the rights of the tenant shall be subject and subordinate to the rights of the lessee 54 under any new lease entered into in the event of a termination of a Ground Lease; (e) modify any Lease with respect to the matters described in clauses (1) through (4) of paragraph (d). If the Mortgagor enters into a Lease (other than with any Affiliate of the Mortgagor) for a term of not less than 3 nor more than 10 years, the Mortgagee shall deliver a non-disturbance and attornment agreement substantially in the form of Schedule 4 hereto, following receipt of a certificate of a leasing broker (who is not an Affiliate of the Mortgagor or the broker involved in such transaction) experienced with respect to leases of commercial space in the Atlantic City area stating that the rent under the Lease is not less than fair market rent and that the other terms of the Lease are fair and reasonable in the commercial leasing market. The Mortgagor shall, upon demand, reimburse the Mortgagee for any costs and expenses (including reasonable attorney's fees) incurred by the Mortgagee in connection with the preparation, review and delivery of such non-disturbance and attornment agreements. Promptly after the execution and delivery hereof, the Mortgagor will cause the lessee under each Lease now in effect and promptly after each Lease is executed or becomes effective after the date of the execution and delivery hereof, the Mortgagor will cause the lessee under each such. Lease, to be duly notified in writing (unless the substance and effect of such notice shall be contained in such Lease) of the subjection of the owner's interest, as lessor, in and to such Lease to the lien of this Mortgage and of the name and address of the Mortgagee. Each such notice shall state that the lease of such lessee is a Lease as herein defined. If a new Mortgagee is at any time appointed hereunder or the address of the Mortgagee shall at any time be changed, the Mortgagor will cause each lessee under each Lease to be promptly notified in writing of the name address of such new Mortgagee or the new address of the Mortgagee. The Mortgagor will use reasonable efforts (but shall not be obligated to incur any expenditure other than de minimis amounts) to obtain from each lessee under each Lease to whom any notice is sent pursuant to this paragraph an acknowledgment of receipt of such notice, and the Mortgagor will promptly deliver to the Mortgagee, upon request, a copy of each such acknowledgment of receipt which it is able to obtain. The Mortgagee shall not be responsible for securing or causing the Mortgagor to secure any such acknowledgment. Nothing contained in this Section 5.13 shall limit the provisions of Section 4.04 hereof. Section 5.14. [Reserved] 55 Section 5.15. MAINTENANCE OF EXISTENCE OF THE MORTGAGOR. Subject to Article Four, the Mortgagor will do or cause to be done all things necessary to preserve and keep in full force and effect its existence as a corporation, and its rights (both statutory and under its articles of incorporation) and franchises. Section 5.16. TO KEEP BOOKS; INSPECTION BY MORTGAGEE. The Mortgagor will keep proper books of record and account in accordance with Section 12.05 of the Indenture. Section 5.17. ADVANCES BY MORTGAGEE. If the Mortgagor shall fail to perform any of its covenants in this Mortgage and such failure shall continue for 10 days following notice thereof given by the Mortgagee (or at any time, without notice, in case of emergency), the Mortgagee may (but is not obligated to), at any time and from time to time, take any action or make advances, to effect performance of any such covenant on behalf of the Mortgagor; and all moneys so used or advanced by the Mortgagee and all reasonable costs and expenses incurred by Mortgagee in connection therewith, together with interest on all of the same at the rate of interest set forth in the Note, shall be repaid by the Mortgagor upon demand and such advances shall be secured under this Mortgage prior to the Note. Section 5.18. WAIVER OF STAY, EXTENSION OR USURY LAWS. The Mortgagor covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any usury, stay or extension law or any other law which would prohibit or forgive the Mortgagor from paying all or any portion of the obligations evidenced by the Note as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may otherwise affect the covenants or the performance of this Mortgage; and the Mortgagor (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Mortgagee, but will suffer and permit the execution of every such power as though no such law had been enacted. Section 5.19. [Reserved] Section 5.20. EMINENT DOMAIN. (a) The Mortgagor shall give written notice to the Mortgagee immediately upon obtaining knowledge of any Taking affecting the Trust Estate. If the Taking (i) is estimated to result in an award of more than [$5,000,000] or (ii) the Taking would interfere with or adversely affect the operation of the Casino-Hotel in accordance with Legal Requirements then within 30 days after any such Taking, the Mortgagor shall 56 deliver to the Mortgagee a certificate of an Architect stating whether, in such Architect's opinion, applicable Legal Requirements permit the Restoration of any buildings and improvements for the same uses and the same size and quality in all material respects as existed immediately prior to the Taking (and if such certificate states that Legal Requirements do not permit such Restoration, such certificate shall describe the manner closest approximating such criteria to which the buildings and improvements could be so restored and shall be accompanied by a Certificate of Appraised Value dated not more than 10 days prior to delivery setting forth the Appraised Value immediately prior to the Taking and the estimated Appraised Value immediately after the permitted Restoration). If the Mortgagor is required to deliver such Certificates of Appraised Value and if based on such Certificates of Appraised Value immediately after Restoration, the aggregate Outstanding Amount of First Mortgage Debt immediately after such Restoration shall exceed the greater of (i) 66-2/3% of the Appraised Value immediately after such Restoration or (ii) the quotient of the Outstanding Amount of the First Mortgage Debt immediately prior to such Taking divided by the Appraised Value immediately prior to the Taking multiplied by the Appraised Value immediately after such Restoration, then the Taking shall be deemed a Taking of "the whole or substantially all of the Premises." Notwithstanding the foregoing sentence, if such Certificates of Appraised Value indicate that the Outstanding Amount of First Mortgage Debt immediately after such Restoration exceeds the greater of the two amounts determined pursuant to subclauses (i) and (ii) above, the Taking will not be deemed a Taking of "the whole or substantially all of the Premises", if the Mortgagor obtains an irrevocable commitment from a nationally recognized financial institution having a combined capital and surplus of at least [$100,000,000], to supply, upon an acceleration under this Mortgage as a result of an Event of Default, funds to the Mortgagor as additions to capital in an amount equal to the Outstanding Amount of First Mortgage Debt in excess of the Appraised Value necessary to be paid down so that the Outstanding Amount of First Mortgage Debt will not exceed either of the two amounts determined pursuant to such clauses (i) and (ii), PROVIDED that such commitment may only be released if, upon an Appraisal at any time following completion of such Restoration, the aggregate Outstanding Amount of the First Mortgage Debt does not exceed 66-2/3% of the Appraised Value. (b) If at any time there shall occur a Taking of less than the whole or substantially all of the Premises and the award or awards resulting therefrom payable to the Mortgagor (and not to any Lessor or the holder of any Superior Mortgage) (after there shall have been first deducted the fees and expenses incurred in connection with the termination, settlement and collection of such award or awards, including but not limited to reasonable counsel fees and expenses, 57 hereinafter referred to as "Settlement Costs") (i) shall not exceed the sum of [$10,000,000] (except to the extent that the Insurance trustee or a Depositary is required to hold such amount pursuant to a Superior Instrument Requirement), the entire amount of such award shall be paid to the Mortgagor; and (ii) if such award is [$10,000,000] or more, the entire amount of such award shall be paid to the Insurance Trustee (or other Depositary required by a Superior Mortgage, provided that such Depositary holds such award in trust for purposes of paying the cost of Restoration). In either event, such awards shall be applied to the cost of demolition, repair, Restoration and replacement of the Trust Estate to as nearly practicable to their uses, value and condition immediately prior to the Taking (except to the extent otherwise provided by Superior Instrument Requirements). The Mortgagor shall promptly commence and with due diligence perform that Restoration in accordance with clauses (3), (4) and (7) of Section 5.11(e) (after substituting the words "Taking" of "Casualty" and "award" for "not insurance proceeds"), at no cost to the Mortgagee. All claims or suits arising out of any Taking may be settled by the Mortgagor, except that the Mortgagee shall have the right (but not the obligation) to participate in such claim or suit, and not the obligation) to participate in such claim or suit, and to approve settlement thereof (and notwithstanding anything in the Ground Leases to the contrary, the Mortgagor shall not agree to any settlement or compromise of the amount of any such claim or suit), except a claim or suit where the amount reasonably anticipated to be received by the Mortgagor is less than $5,000,000. If the Mortgagee at its election as aforesaid joins such claim or suit, the Mortgagee's approval of such settlement shall not be unreasonably withheld. The Insurance Trustee shall promptly pay such sums as are received by it from such Taking from time to time in accordance with the procedures set forth in clauses (5) and (6) of Section 5.11(e) (after substituting the words "Taking" for "Casualty" and "award" for "net insurance proceeds"). (c) If at any time there shall occur a Taking of the whole or substantially all of the Premises, then the award payable to the Mortgagor shall not be applied to Restoration but shall instead be paid and delivered to the Trustee (subject to the rights of the Lessors under the Superior Leases and the holders of any Superior Mortgages) to the extent of the then Outstanding Amount of the Note and any other interest or other sums due hereunder or thereunder to be applied to the satisfaction of this Mortgage to the extent proceeds are available for such purpose and provided that no additional sums are due the Trustee or the Noteholder under the Note or the Indenture, the balance of any award shall be paid to the Mortgagor. (d) Notwithstanding anything contained herein to the contrary, if an Event of Default shall have occurred and 58 is continuing, the Mortgagee may, at its option, (A) refrain from paying to the Mortgagor or the Insurance Trustee any award or (B) instruct the Insurance Trustee to pay to the Mortgagee any award then held by the Insurance Trustee, as the case may be. Section 5.21. GROUND LEASES. (a) The Mortgagor covenants and agrees that it will do or cause to be done all things necessary to preserve and keep unimpaired the rights of the Mortgagor, as lessee under the Ground Lease, and to prevent any termination, surrender, cancellation, forfeiture or impairment thereof. The Mortgagor shall at all times fully perform and comply with all agreements, covenants, terms and conditions imposed upon or assumed by it as lessee under each of the Ground Leases (including without limitation the covenant to pay rent and all taxes, assessments and other charges mentioned therein) prior to the expiration of any notice and/or cure period provided in each such Ground Lease. Upon receipt by the Mortgagee from a Lessor of any written notice of default by the lessee thereunder, Mortgagee may rely thereon and take any action the Mortgagee deems necessary in its sole discretion to prevent or to cure any default by the Mortgagor in the performance of or compliance with any of the agreements, covenants, terms or conditions imposed upon or assumed by the Mortgagor as lessee under each of the Ground Leases, even though the existence of such default or the nature thereof be questioned or denied by the Mortgagor or by any party on behalf of the Mortgagor, provided that if the Mortgagor has theretofore delivered to the Mortgagee the Officers' Certificate, Opinion of Counsel and a copy of the injunction, all as described in Section 3.01(g), the Mortgagee shall not take any such action unless and until the Mortgagor and/or the Mortgagee no longer has the benefit of any tolling or stay referred to in Section 3.01(g). Without limiting the generality of Section 3.09 hereof, the Mortgagor hereby expressly grants to the Mortgagee, and agrees that the Mortgagee shall have, the absolute and immediate right to enter in and upon the Premises or any part thereof to such extent and as often as the Mortgagee, in its sole discretion, deems necessary or desirable for the purpose permitted by the immediately preceding sentence, subject only to applicable Legal Requirements. Subject to the preceding and without limiting the Mortgagee's other remedies under this Mortgage, the Mortgagee may pay and expend such sums of money as the Mortgagee in its sole discretion deems necessary for any such purpose, and the Mortgagor hereby agrees to pay to the Mortgagee, immediately and without demand, all such sums so paid and expended by the Mortgagee, together with interest thereon from the date of each such payment at the highest rate of interest set forth in the Note. All sums so paid and expended by the Mortgagee, and the interest thereon, shall be added to and be secured by the lien of this Mortgage. 59 (b) The Mortgagor further covenants and agrees: (i) it will not surrender any leasehold estate and interest hereinabove described, nor terminate or cancel any Ground Lease, and that it will not without the express written consent of the Mortgagee modify, change, supplement, alter or amend such Ground Leases either orally or in writing and, as further security for the repayment of the indebtedness secured hereby and for the performance of the covenants herein and in such Ground Leases contained, the Mortgagor hereby assigns to the Mortgagee all of its rights, privileges and prerogatives as lessee under such Ground Leases to terminate, cancel, modify, change, supplement, alter or amend such Ground Leases, and any such termination, cancellation, modification, change, supplement, alteration or amendment of such Ground Leases without the prior written consent thereto by Mortgagee shall be void and of no force and effect. Unless (1) an Event of Default has occurred and is continuing and (2) either (A) there has been an acceleration of maturity of the Note pursuant to Section 3.02 hereof or (B) the Mortgagee exercises its rights under Section 3.09 hereof, the Mortgagee shall have no right to terminate, cancel, modify, change, supplement, alter or amend the Ground Leases; (ii) solely for the benefit of the Mortgagee, Trustee, the Noteholders and no other person, no release or forbearance of any of the Mortgagor's obligations under such Ground Leases, pursuant to such Ground Leases or otherwise, shall release the Mortgagor from any of its obligations under this Mortgage, including its obligations with respect to the payment of rent as provided for in such Ground Leases and the performance of all of the terms, provisions, covenants, conditions and agreements contained in such Ground Leases, to be kept, performed and complied with by the lessee therein; (iii) unless the Mortgagee shall otherwise expressly consent in writing, the fee title to the Leased Land, the Mortgagor's interest in the improvements on the Leased Land and the leasehold estates shall not merge by and shall always remain separate and distinct, notwithstanding the union of such estates either in the Lessor or in the lessee, or in a third party by purchase or otherwise; (iv) the Mortgagor shall promptly notify the Mortgagee in writing of any request made by the Mortgagor, as lessee under each of the Ground Leases, or any of the Lessors, for arbitration proceedings pursuant to the Ground Leases and of the institution of any arbitration proceedings, as well as all proceedings thereunder. In addition, the Mortgagor shall promptly 60 deliver to the Mortgagee a copy of the determination of the arbitrators in each such arbitration proceeding. The Mortgagee shall have the right to participate in such arbitration proceedings in association with the Mortgagor or on its own behalf as an interested party in accordance with the terms of the Ground Leases; (v) the Mortgagor shall not consent to the subordination of any Ground Lease to any mortgage deed of trust or other lien of the fee interest of the Lessor; (vi) in the event (A) the Mortgagor exercises its option under any Ground Lease to purchase any portion of the Leased Land, the Mortgagor shall deliver a copy of its election to exercise such option within 5 days after the Mortgagor has delivered notice of such election to the Lessor or (B) the Mortgagor acquires fee simple title or any other estate, title or interest in the Leased Land, the Mortgagor shall promptly notify the Mortgagee of such acquisition and shall cause to be executed and recorded all such other and further assurances or other instruments in writing as may be required by law or, in the opinion of the Mortgagee, be reasonably desirable to carry out the intent and meaning of clause (x) of Granting Clause Second; (vii) within 5 days after the Mortgagor's receipt of any notice of any motion, application or effort to reject the Ground Lease by any Lessor or any trustee arising from or in connection with any case, proceeding or other action commenced or pending by or against any Lessor under the Code or any comparable provision contained in any present or future federal, state, local, foreign or other statute, law, rule or regulation, the Mortgagor shall give notice thereof to the Mortgagee. The Mortgagor hereby (A) assigns to the Mortgagee any and all of the Mortgagor's rights as lessee under Section 365(h) of the Code or any comparable provision contained in any present or future federal, state, local, foreign or other statute, law, rule or regulation ("Comparable Provision") and (B) covenants that it shall not elect to treat any Ground Lease as terminated pursuant to Section 365(h) of the Code or any Comparable Provision without the prior written consent of the Mortgagee and (C) agrees that any such election by the Mortgagor without such consent shall be null and void; (viii) without limiting the generality of the foregoing, the Mortgagor hereby unconditionally assigns, transfers and sets over to the Mortgagee all of the Mortgagor's claims and rights to the payment of damages arising from any rejection by Lessor of any Ground lease under the Code or any Comparable Provision. The Mortgagee shall have the right to proceed in its own name or in 61 the name of the Mortgagor in respect of any claim, suit, action or proceeding relating to the rejection of any Ground Lease, including, without limitation, the right to file and prosecute, in cooperation with the Mortgagor, any proofs of claim, complaints, motions, applications notices and other documents, in any case in respect of Lessor under the Code or any Comparable Provision. This assignment constitutes a present, irrevocable and unconditional assignment of the foregoing claims, rights and remedies, and shall continue in effect until all of the indebtedness and obligations secured by this Mortgage shall have been satisfied and discharged in full. Any amounts received by the Mortgagee in damages arising out of the rejection of any Ground Lease as aforesaid shall be applied first to all reasonable costs and expenses of the Mortgagee (including, without limitation, reasonable attorneys' fees) incurred in connection with the exercise of any of its rights or remedies under this Section 5.21, and thereafter as provided in Section 3.03 hereof; (ix) if there shall be filed by or against the Mortgagor a petition under the Code or any Comparable Provision and the Mortgagor, as lessee under the Ground Leases, shall determine to reject any or all of the Ground Leases the Mortgagor shall give the Mortgagee not less than 10 days' prior notice of the date on which the Mortgagor shall apply to the Bankruptcy Court or other judicial body with appropriate jurisdiction for authority to reject the lease. The Mortgagee shall have the right, but not the obligation, to serve upon the Mortgagor within such 10 day period a notice stating that (a) the Mortgagee demands that the Mortgagor assume and assign such Ground Lease(s) to the Mortgagee pursuant to Section 365 of the Code or any Comparable Provision and (b) the Mortgagee covenants to cure or provide adequate assurance of prompt cure of all defaults and provide adequate assurance of future performance under such Ground Lease(s). If the Mortgagee serves upon the Mortgagor the notice described in the preceding sentence, the Mortgagor shall not seek to reject such Ground Lease(s) and shall comply with the demand provided for in clause (a) of the preceding sentence within 30 days after the notice shall have been given subject to the performance by the Mortgagee of the covenant provided for in clause (b) of the preceding sentence. Effective upon the entry of an order for relief in respect of the Mortgagor under Chapter 7 of the Code or Any Comparable Provision the Mortgagor hereby assigns and transfers to the Mortgagee a non-exclusive right to apply to the Bankruptcy Court or other judicial body with appropriate jurisdiction for an order extending the period during which the Ground Lease may be rejected or assumed; 62 (x) the Mortgagor shall promptly give to the Mortgagee copies of (A) all notices of default or (B) any other communications or notices with respect to events which relate to the possible impairment of the security of this Mortgage, which it shall give or receive under the Ground Leases and shall promptly notify the Mortgagor of any default under any Ground lease on the part of the Lessor or the Mortgagor; (xi) the Mortgagor shall enforce the obligations of the Lessor under each Ground Lease, to the end that the Mortgagor may enjoy all of the rights granted to it under the Ground leases; and (xii) the Mortgagor shall notify the Mortgagee within 5 days after the transfer of a fee interest in the Leased Land or any portion thereof to or from an Affiliate. (c) The Mortgagor hereby represents and warrants that all fixed net rent, taxes and assessments, payable under the Ground Leases have been paid to the extent they were due and payable to the date hereof and that the Mortgagor has not received notice of its failure to pay any other amounts payable under the Ground Leases which have not been cured. (d) If both the Lessor's and lessee's estates under any of the Ground Leases or any portion thereof shall at any time become vested in one owner, this Mortgage and the lien created hereby shall nevertheless not be merged, extinguished, destroyed or terminated by application of the doctrine of merger and, in such event, Mortgagee shall continue to have all of the rights and privileges of the a leasehold mortgagee. (e) The Mortgagor hereby acknowledges that if any Ground Lease shall be terminated prior to the natural expiration of its term due to default by the lessee thereunder, and if pursuant to such Ground Lease, the Mortgagee or its designee shall acquire from the Lessor a new lease of the Leased land or any portion thereof, the Mortgagor shall have no right, title or interest in or to such lease or the leasehold estate created thereby, or the options therein contained. (f) Any leases for parking purposes hereafter entered into by the Mortgagor as lessee shall contain provisions permitting the assignment of the same to the Mortgagee and the Trustee and permitting assignment without the lessor's consent if this Mortgage is foreclosed. Section 5.22. SUPERIOR MORTGAGES. (a) The Mortgagor covenants and agrees that it will at all times fully perform and comply with all agreements, 63 covenants, terms and conditions imposed upon or assumed by it as mortgagor under the Superior Mortgages prior to the expiration of any notice and/or cure period provided in each such Superior Mortgage. If a notice of default has been given by the holder of any Superior Mortgage and the maturity of the indebtedness secured by such Superior Mortgage has been accelerated as a result thereof, the Mortgagee may rely thereon and take any action the Mortgagee deems necessary in its sole discretion to prevent or to cure any default by the Mortgagor in the performance of or compliance with any of the agreements, covenants, terms or conditions imposed upon or assumed by the Mortgagor as mortgagor under each of the Superior Mortgages even though the existence of such default or the nature thereof may be questioned or denied by the Mortgagor or by any party on behalf of the Mortgagor provided that if the Mortgagor has heretofore taken such actions as described in Section 3.01(h), the Mortgagee shall not take any such action unless and until the Mortgagor and/or the Mortgagee no longer has the benefit of any such tolling or stay referred to in Section 3.01(h). Without limiting the generality of Section 3.09 hereof, the Mortgagor hereby expressly grants to the Mortgagee, and agrees that upon such acceleration the Mortgagee shall have, the absolute and immediate right to enter in and upon the Premises or any part thereof to such extent and as often as the Mortgagee, in its sole discretion, deems necessary for the purpose permitted by the immediately preceding sentence, subject only to applicable Legal Requirements. The Mortgagee may (i) pay and expend such sums of money as the Mortgagee in its sole discretion deems necessary for any such purpose and (ii) in its sole discretion prepay any Superior Mortgage, and the Mortgagor hereby agrees to pay to the Mortgagee, immediately and without demand, all such sums referred to in (i) and (ii) above so paid and expended by the Mortgagee, together with interest thereon from the date of each such payment at the rate of interest set forth in the Note. All sums so paid and expended by the Mortgagee and the interest thereon shall be added to and be secured by the lien of this Mortgage. (b) The Mortgagor further covenants and agrees: (i) the Mortgagor shall not, without first obtaining the written consent of the Mortgagee in each instance: (A) modify any of the terms, covenants or conditions of any Superior Mortgage, and without limiting the foregoing, the Mortgagor shall not, without satisfying such conditions, enter into or obtain any agreement whereby the holder of any Superior Mortgage waives, postpones, extends, reduces or modifies the payment of the installment of principal or interest or any other item or amount now required to be paid under the terms of any Superior Mortgage or modifies any other provision thereof, or (B) acquire or permit or suffer any Affiliate of the Mortgagor to acquire any Superior 64 Mortgage or any interest therein. Notwithstanding anything in clause (A) to the contrary, the Mortgagor shall have the right to amend, supplement or modify any Superior Mortgage, if (x) the then outstanding principal balance of the indebtedness secured by such Superior Mortgage is not increased thereby, and (y) in the case of any After-Acquired Fee Mortgage, such amendment, supplement or agreement does not increase the property covered thereby; (ii) the Mortgagor shall timely pay and perform all of the obligations to be paid or performed by the mortgagor under each Superior Mortgage, the note secured thereby and any other instrument evidencing or securing the indebtedness owing to any holder of any Superior Mortgage; (iii) at any time, and from time to time, the Mortgagor shall upon request of the Mortgagee promptly use its reasonable efforts to obtain an estoppel certificate or letter addressed to the Mortgagee from holders of the Superior Mortgages, such certificate or letter to be in such form as the Mortgagee shall request; and (iv) the Mortgagor shall promptly give to the Mortgagee copies of (A) all notices of default or (B) any other notice or communication with respect to events which relate to the possible impairment of the security of this Mortgage, which it shall give or receive under the Superior Mortgages and shall promptly notify the Mortgagor of any default under any Superior Mortgages on the part of the Mortgagor. (c) The lien of this Mortgage in and to all or specified portions of the Trust Estate shall be subject and subordinate to any Existing Encumbrances, to the liens created by the Senior Mortgage Documents and any mortgage, assignment, security agreement, financing statement or other lien securing any Working Capital Facility (the "Working Capital Facility Lien") encumbering Mortgagor's interest in the affected portions of the Trust Estate or any part thereof. The foregoing provisions of this Section 5.22(c) shall be self-operative with respect to the liens created by the Senior Mortgage Documents and any Working Capital Facility Lien, and no further instrument shall be required to give effect to such subordination. Mortgagee shall, however, from time to time, execute instruments in form and substance reasonably satisfactory to the holder of the liens created by the Senior Mortgage Documents and the holder of the Working Capital Facility Lien, confirming such subordination and agreeing to such other matters reasonably required by the holders of such liens which do not, in the aggregate, 65 materially adversely reduce or impair the rights of Trustee under the Mortgage, and Mortgagor and others may rely conclusively thereon, provided that Mortgagee shall have no liability thereunder and all costs and expenses (including reasonable attorneys' fees) shall be paid by Mortgagor. (d) The lien of the Mortgage in and to all or specified portions of the Trust Estate shall be subject and subordinate to any Existing Encumbrances. The provisions of this Section 5.22(d) shall be self-operative, and no further instrument shall be required to give effect to such subordination. Section 5.23. MORTGAGE PARI PASSU WITH GUARANTY MORTGAGE. Notwithstanding recordation of this Mortgage in the Atlantic County, New Jersey Clerk's Office prior to the recordation of the Guaranty Mortgage, the lien of this Mortgage ranks PARI PASSU with, and not senior to, the lien created by the Guaranty Mortgage. ARTICLE SIX MISCELLANEOUS Section 6.01. COUNTERPARTS. This instrument may be executed in any number of counterparts, each of which as executed shall be deemed to be an original, but all such counterparts shall constitute one and the same instrument. Section 6.02. MODIFICATION. This Mortgage is subject to modification" within the meaning of N.J.S.A. 46:9-8.1 et seq., and this Mortgage shall have the benefit of the lien priority provisions of such statute. Such modification may include, without limitation, a change in the interest rate, maturity date or other terms and conditions of this Mortgage. THE MORTGAGOR DECLARES THAT THE MORTGAGOR HAS RECEIVED A TRUE COPY OF THIS MORTGAGE. IN WITNESS WHEREOF, the parties hereto have caused this Mortgage to be duly executed and attested, all as of the day and year first above written. RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation 66 ATTEST:______________________ By:_____________________________ Name: Name: Title: (Asst.) Secretary Title: (Vice) President RESORTS INTERNATIONAL HOTEL FINANCING, INC. ATTEST:______________________ By:_____________________________ Name: Name: Title: (Asst.) Secretary Title: (Vice) President 67 EX-4 15 EXHIBIT 4.31 NA932810098 - JUNIOR MORTGAGE ASSIGNMENT GD&C DRAFT DATED 12/17/93 ============================================================================== ASSIGNMENT OF AGREEMENTS ________________ RESORTS INTERNATIONAL HOTEL FINANCING, INC., a Delaware corporation, as Assignor, TO U.S. TRUST COMPANY OF CALIFORNIA, N.A., a national banking association, as Assignee Dated as of _________________, 1994 =============================================================================== Prepared by:__________________________ D. Eric Remensperger, Esq. ASSIGNMENT OF AGREEMENTS THIS ASSIGNMENT made as of the ___ day of ___________, 1994, by RESORTS INTERNATIONAL HOTEL FINANCING, INC., a Delaware corporation ("ASSIGNOR"), having an address at c/o Resorts International, Inc., 1133 Boardwalk, Atlantic City, New Jersey 08401, to U. S. TRUST COMPANY OF CALIFORNIA, N.A. a national banking association, having an address at 555 South Flower Street, Suite 2780 Los Angeles, California 90071, in its capacity as Trustee ("ASSIGNEE"), under that certain Indenture dated as of even date herewith (the "INDENTURE") among Assignor, Assignee and Resorts International Hotel, Inc., a New Jersey corporation ("MORTGAGOR"). WITNESSETH: WHEREAS, in partial repayment of certain inter-company debt owed by Mortgagor to Resorts International, Inc., a Delaware corporation ("RII"), Mortgagor has issued to RII a promissory note on the date hereof in the principal amount of $35,000,000 (as the same may be amended or restated from time to time, the "RIH JUNIOR PROMISSORY NOTE"), which note is secured by a Mortgage Securing RIH Junior Promissory Note dated as of the date hereof (the "MORTGAGE"), which Mortgage encumbers certain real property owned or leased by Mortgagor as more specifically described on SCHEDULE 1 hereto together with all buildings and improvements erected thereon (collectively, the "PROPERTY"); and WHEREAS, RII has transferred the RIH Junior Promissory Note and the Mortgage to Assignor in exchange for 11.375% Junior Mortgage Notes due 2004 (the "NOTES") in an aggregate principal amount of $35,000,000, which Notes were issued pursuant to the Indenture; and WHEREAS, as further security for the obligations of Mortgagor under the RIH Junior Promissory Note, Mortgagor has executed and delivered (i) an Assignment of Operating Assets and (ii) an Assignment of Leases and Rents, each in favor of Assignor (as assignee of RII) and each dated as of the date hereof (said Assignments and the Mortgage collectively referred to herein as the "RIH JUNIOR PROMISSORY NOTE MORTGAGE DOCUMENTS"), pursuant to which Mortgagor granted a security interest in specified personal property, assigned certain other rights and assigned all right, title and interest of Mortgagor in leases and rents to Assignor, all as security for the performance and observance of obligations of Mortgagor under the RIH Junior Promissory Note; and WHEREAS, the rights and obligations of the Assignee hereunder are subject to the terms set forth in that certain Intercreditor Agreement dated as of the date hereof among Assignor, Assignee, Mortgagor, Fidelity Management and Trust Company, as trustee, and State Street Bank and Trust Company of Connecticut, National Association, as trustee (and such other parties that may from time to time become a party thereto); and WHEREAS, in order to secure payment of the Notes and all other payments due to the holder(s) from time to time of the Notes (collectively, the "HOLDERS") or the Trustee under the Indenture, Assignor has agreed to execute this Assignment and to be bound by its terms; NOW, THEREFORE, THIS ASSIGNMENT FURTHER WITNESSETH: That Assignor in consideration of the purchase of the Notes by the Holders, Ten Dollars ($10.00) lawful money of the United States of America duly paid to Assignor by Assignee at or before the execution and delivery of these presents and for other good and valuable consideration, the receipt of which are hereby acknowledged, does hereby sell, assign and transfer unto Assignee and unto its successors and to its assigns forever, for its benefit and for the benefit of the Holders, and does hereby grant to Assignee a security interest in and to all of Assignor's estate, right, title and interest in, to and under any and all of the following described property, rights and interests (collectively, the "ASSIGNED PROPERTIES"): GRANTING CLAUSE FIRST All right, title and interest of Assignor in and to the RIH Junior Promissory Note, including all renewals, extensions, modifications and replacements of the same, and without limiting the generality of the foregoing, the present, continuing and future right to make claim for, collect or cause to be collected, receive or cause to be received directly from Mortgagor thereunder, all payments of principal, interest and other sums of money payable thereunder. GRANTING CLAUSE SECOND All right, title and interest of Assignor in and to the RIH Junior Promissory Note Mortgage Documents, including 2 all extensions, renewals, modifications, supplements and replacements of the same. TO HAVE AND TO HOLD all said properties, rights and interests unto Assignee and its successors and assigns forever. THIS ASSIGNMENT FURTHER WITNESSETH, that Assignor hereby agrees and covenants with Assignee as follows: ARTICLE ONE PARTICULAR COVENANTS OF ASSIGNOR Section 1.01. PERFORMANCE OF COVENANTS. Assignor represents, warrants and covenants that it is duly authorized to enter into this Assignment, and to grant and convey a lien on and security interest in the Assigned Properties to Assignee in the manner and to the extent herein set forth and that all action on its part required for the execution and delivery of this Assignment has been duly and effectively taken. Section 1.02. FURTHER ACTION REQUIRED. (a) Assignor covenants that it will, from time to time, execute and deliver such further instruments and take such further actions as may be required to carry out the purposes of this Assignment. (b) Assignor hereby appoints Assignee as its lawful attorney-in-fact (such power being coupled with an interest) in the name of Assignor or Assignee or both to execute any instruments or to take any actions to enforce all rights, powers and remedies of Assignor under or pursuant to the Assigned Properties. (c) Nothing contained herein shall limit the rights of Assignee contained in the Mortgage or the Indenture. (d) Until this Assignment is discharged in accordance with Section 5.01 hereof, no amendment, waiver, modification, discharge, release, enforcement or satisfaction by Assignor of any of the rights or remedies under the Assigned Properties shall be effective without the prior consent and approval of Assignee, and Assignor shall have no power or authority to take any such action without such consent and approval. ARTICLE TWO OBLIGATIONS TO ASSIGNEE Section 2.01. CONTINUING OBLIGATIONS. 3 (a) Assignee shall have no obligation, duty or liability with respect to the Assigned Properties or any of them (other than those specifically assumed in its capacity as Trustee pursuant to the Indenture). (b) Assignor shall at all times remain liable to observe and perform all of its covenants and obligations, if any, under the Assigned Properties, and does hereby agree to indemnify and hold harmless Assignee, its successors and assigns, from any liability, loss, damage or expense it or they may incur under the Assigned Properties or by reason of this Assignment. ARTICLE THREE PAYMENTS Section 3.01. PAYMENTS. All Revenues (as hereinafter defined) due and to become due under or pursuant to the Assigned Properties shall be paid by Mortgagor directly to Assignee at the address set forth in Section 6.02 hereof. Neither Assignor nor Assignee shall have the right, without Mortgagor's prior written consent, to instruct Mortgagor to pay Revenues to Assignor or in any manner or to any party other than directly to Assignee. Section 3.02. MORTGAGOR'S ACKNOWLEDGMENT. Mortgagor hereby joins in the execution of this Assignment to acknowledge (a) the assignment by Assignor to Assignee of Assignor's right, title and interest in, to and under the Assigned Properties, (b) Mortgagor's agreement to make payment of all Revenues under the Assigned Properties directly to Assignee at the address set forth in this Assignment, and (c) the right of Assignee to exercise or enforce in its own name, in the name of Assignor, or both, all of the rights, powers and remedies of Assignor in, to and under the Assigned Properties. Section 3.03. REVENUES. As used herein, the term "REVENUES" shall mean (a) all amounts paid or payable by Mortgagor under the RIH Junior Promissory Note or the RIH Junior Promissory Note Mortgage Documents, and (b) the net proceeds realized upon or as a result of the enforcement of any mortgage lien or security interest granted under the Assigned Properties or this Assignment or upon or as a result of the exercise of any right or remedy under the Assigned Properties or this Assignment. Section 3.04. CONFIRMATION. Assignor hereby agrees, and Mortgagor hereby acknowledges, that Mortgagor may rely exclusively on Assignee's directive that Assignee is entitled to take action under this Assignment. 4 ARTICLE FOUR DEFAULT PROVISIONS AND REMEDIES Section 4.01. ENFORCEMENT OF REMEDIES. (a) Upon the occurrence of any default under the Indenture or the Assigned Properties, or any of them (each, a "DEFAULT"), not cured within the applicable grace period after the applicable notice provision, if any, has been satisfied (each called an "EVENT OF DEFAULT"), Assignee may, at its option, (i) proceed directly to protect and enforce its rights and the rights of any Holders under this Assignment or pursuant to the Assigned Properties, or any one of them, by such suits, actions or special proceedings in equity or at law, or by proceedings in the office of any board or officer having jurisdiction, either for the specific performance of any covenant or agreement contained herein, or in the Assigned Properties, or any of them, or in aid of execution of any power granted herein or pursuant to the Assigned Properties, or any one of them, or for the enforcement of any proper legal or equitable remedy, including, without limitation, foreclosure of the Mortgage and/or the sale of the collateral or part thereof secured thereby at such foreclosure sale, subject to statutory and other legal requirements, as Assignee shall deem most effective to protect and enforce such rights, and Assignor hereby appoints Assignee as its lawful attorney-in-fact (such power being coupled with an interest) in the name of Assignor or Assignee or both to effectuate such foreclosure and/or sale of such collateral or part thereof; or (ii) instruct, direct and cause Assignor to effectuate the foregoing on behalf of and for the benefit of Assignee and the Holders, it being further understood that Mortgagor joins in the execution of this Assignment in order to acknowledge its agreement to promptly and duly execute and deliver any and all documents and take any and all actions required by Assignee in order to permit Assignee to foreclose and/or sell such collateral or part thereof, and obtain the benefits of this Assignment, as aforesaid. (b) Upon the occurrence of any Event of Default, Assignee shall be entitled to sue for, enforce payment of and receive any and all amounts then and at any time remaining due from Assignor or Mortgagor for principal and interest on the RIH Junior Promissory Note, or other sums due under the RIH Junior Promissory Note Mortgage Documents, as the case may be, or otherwise under any of the provisions of the Assigned Properties, or any of them, with interest on overdue payments of such principal, at the rate set forth in the RIH Junior Promissory Note, from the date of Default to the date of such payment, together with any and all fees, costs and expenses of collection (including reasonable attorneys' fees and court costs), subject to statutory and other legal requirements. 5 (c) Regardless of the occurrence of an Event of Default, upon five days' written notice to Mortgagor (or such shorter period or without notice if deemed necessary and appropriate by Assignee), Assignee may institute and maintain or cause in the name of Assignor or Assignee or both to be instituted and maintained such suits and proceedings as it may be advised by its counsel shall be necessary and appropriate to prevent any impairment of the Assigned Properties, or any of them, and to protect its interests in the Assigned Properties, and in the rents, issues, rights, revenues and other income arising therefrom, including power to institute and maintain proceedings to restrain the enforcement or compliance with any 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 hereunder or would be materially prejudicial to the interests of Assignee. (d) Nothing contained in this Article Four is intended to grant Assignee any greater remedies and rights than those allowed to Assignor in the respective Assigned Properties. In the event of any conflict between the remedies and rights contained in any of the Assigned Properties and the remedies and rights contained in this Article Four, then the remedies and rights set forth in the applicable Assigned Property shall govern. ARTICLE FIVE DISCHARGE OF ASSIGNMENT Section 5.01. DISCHARGE OF ASSIGNMENT. If Assignor shall pay or cause to be paid, or there shall otherwise be paid, to Assignee and/or the Holders' all amounts required to be paid by Assignor pursuant to the Indenture and the Notes, and the conditions precedent for the Indenture shall cease, determine and become null and void in accordance with Section 5.01 of the Indenture, Assignee shall promptly cancel and discharge of record this Assignment and any financing statements filed in connection herewith and execute and deliver to Assignor and to Mortgagor all such instruments as may be appropriate to evidence such discharge and satisfaction of said lien or liens, and Assignee shall pay over or deliver to Assignor all other moneys and securities held by it pursuant to this Assignment, which are not required for the payment of (a) principal and redemption price, if applicable, of and interest on, the Notes, and (b) all other amounts required to be paid by Assignor pursuant to the Indenture and the Notes. 6 ARTICLE SIX MISCELLANEOUS PROVISIONS Section 6.01. BINDING SUCCESSORS AND ASSIGNS. All of the covenants, stipulations, obligations and agreements contained in this Assignment shall be binding upon and inure to the benefit of Assignor, Assignee and Mortgagor (to the extent applicable to Mortgagor) and their respective successors and assigns. Section 6.02. NOTICES. (a) Any request, notice, demand, authorization, direction, request or other instrument authorized or required by this Assignment to be given to or filed with Assignor, Assignee or Mortgagor (collectively, "NOTICES") shall be deemed given when either (i) delivered by hand or (ii) five days after sending by registered or certified mail, postage prepaid, in either case addressed as follows: If to Assignor, at: Resorts International Hotel Financing, Inc. c/o Resorts International, Inc. 1133 Boardwalk Atlantic City, New Jersey 08401 Attention: Christopher D. Whitney If to Assignee, at: U.S. TRUST COMPANY OF CALIFORNIA, N.A. 555 South Flower Street Suite 2780 Los Angeles, California 90071 Attention: Corporate Trust Department If to Mortgagor, at: Resorts International Hotel, Inc. c/o Resorts International, Inc. 1133 Boardwalk Atlantic City, New Jersey 08401 Attention: Christopher D. Whitney (b) By Notice to Mortgagor, Assignor and/or Assignee, given as provided above, any party may designate additional or substitute addresses for Notices, which shall, notwithstanding Section 6.02(a), be deemed given with received. Section 6.03. PARTIAL INVALIDITY. In case any one or more of the provisions of this Assignment shall for any 7 reason be held to be illegal or invalid, such illegality or invalidity shall not affect any other provision of this Assignment, but this Assignment shall be construed and enforced at the time as if such illegal or invalid provisions had not been contained herein or therein, nor shall such illegality or invalidity or any application thereof affect any legal and valid application herein or thereof from time to time. Section 6.04. APPLICABLE LAW. This Assignment shall be governed by and construed under the internal laws of the State of New Jersey, without giving effect to the principles of conflicts of law. Section 6.05. NO AMENDMENT. For so long as the Notes shall remain outstanding, the Assigned Properties may not be modified, amended or terminated except in accordance with the provisions of the Indenture or the Assigned Properties. Section 6.07. CASINO CONTROL ACT. Each of the provisions of this Assignment is subject to and shall be enforced in compliance with the provisions of the New Jersey Casino Control Act. This Agreement shall not be transferred, assigned or amended without prior approval of the New Jersey Casino Control Commission. IN WITNESS WHEREOF, Assignor, Assignees and Mortgagor have executed this Assignment Agreement as of the date first above written. RESORTS INTERNATIONAL HOTEL FINANCING, INC. Attest: _________________________________ By:_______________________________ President RESORTS INTERNATIONAL HOTEL, INC. Attest: _________________________________ By:_______________________________ President 8 U.S. TRUST COMPANY OF CALIFORNIA, N.A. Attest: ___________________________________ By:_________________________________ Title 9 STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK) BE IT REMEMBERED that on ______________, 1994, before me, the subscriber, __________________, personally appeared _______________, who, being by me duly sworn on his oath, deposes and makes proof to my satisfaction, that he is the Asst. Secretary of U.S. TRUST COMPANY OF CALIFORNIA, N.A., the corporation named in the within instrument; that __________________ is the Vice President of said Corporation; that the execution, as well as the making of this instrument, has been duly authorized by a proper resolution of the board of directors of the said corporation; that deponent well knows the corporate seal of said corporation; and that the seal affixed to said instrument is the proper corporate seal and was thereto affixed and said instrument signed and delivered by said Vice President as and for the voluntary act and deed of said corporation. In presence of deponent who thereupon subscribed his name thereto as attesting witness; and deponent signed this proof to attest to the truth of these facts. ____________________________ [Name] [Assistant] Secretary Sworn to and subscribed before me, the date aforesaid ____________________________ Notary Public My commission expires: ____________________________ 10 STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK) BE IT REMEMBERED that on _________________, 1994, before me, the subscriber, __________________, personally appeared ___________________, who being by me duly sworn on his oath, deposes and makes proof to my satisfaction, that he is the Asst. Secretary of Resorts International Hotel, Inc., the corporation named in the within instrument; that ____________ is the Vice President of said Corporation; that the execution, as well as the making of this instrument, has been duly authorized by a proper resolution of the board of directors of the said corporation; that deponent well knows the corporate seal of said corporation; and that the seal affixed to said instrument is the proper corporate seal and was thereto affixed and said instrument signed and delivered by said Vice President as and for the voluntary act and deed of said corporation. In presence of deponent who thereupon subscribed his name thereto as attesting witness; and deponent signed this proof to attest to the truth of these facts. ____________________________ [Name] [Assistant] Secretary Sworn to and subscribed before me, the date aforesaid ____________________________ Notary Public My commission expires: ____________________________ 11 STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK) BE IT REMEMBERED that on _________________, 1994, before me, the subscriber, __________________, personally appeared ___________________, who being by me duly sworn on his oath, deposes and makes proof to my satisfaction, that he is the Asst. Secretary of Resorts International Hotel, Inc., the corporation named in the within instrument; that ______________ is the Vice President of said corporation; that the execution, as well as the making of this instrument, has been duly authorized by a proper resolution of the board of directors of the said corporation; that deponent well knows the corporate seal of said corporation; and that the seal affixed to said instrument is the proper corporate seal and was thereto affixed and said instrument signed and delivered by said Vice President as and for the voluntary act and deed of said corporation. In presence of deponent who thereupon subscribed his name thereto as attesting witness; and deponent signed this proof to attest to the truth of these facts. ____________________________ [Name] [Assistant] Secretary Sworn to and subscribed before me, the date aforesaid ____________________________ Notary Public My commission expires: ____________________________ 12 EX-4 16 EXHIBIT 4.32 NA932810100 - ASSIGNMENT OF RENTS (RIH JUNIOR PROMISSORY NOTE) GD&C DRAFT DATED 12/17/93 ============================================================================= ASSIGNMENT OF LEASES AND RENTS ________________ RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation, as Assignor, TO RESORTS INTERNATIONAL HOTEL FINANCING, INC., a Delaware corporation, as Assignee Dated as of _________________, 1994 ========================================================================== Prepared by:__________________________ D. Eric Remensperger, Esq. ASSIGNMENT OF LEASES AND RENTS THIS ASSIGNMENT made as of the ____ day of ____________, 1994, by RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation, having its principal office at c/o Resorts International, Inc., 1133 Boardwalk, Atlantic City, New Jersey ("ASSIGNOR") to RESORTS INTERNATIONAL HOTEL FINANCING, INC., a Delaware corporation, having its principal office at c/o Resorts International, Inc., 1133 Boardwalk, Atlantic City, New Jersey ("ASSIGNEE"). WITNESSETH: WHEREAS, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in order to secure: (i) the obligations of Assignor under a promissory note dated as of the date hereof made by Assignor to Assignee in the principal amount of $35,000,000 (as the same may be amended or restated from time to time, the "RIH JUNIOR PROMISSORY NOTE"), which note is secured by a Mortgage Securing RIH Junior Promissory Note dated as of the date hereof, between Assignor, as mortgagor, and Assignee, as mortgagee (the "MORTGAGE"; capitalized terms used and not otherwise defined herein shall have the meanings ascribed to those terms in the Mortgage); and (ii) the performance and observance of all of the provisions herein contained; NOW, THEREFORE, Assignor has and does hereby bargain, sell, transfer, assign, convey, set over and deliver unto Assignee, for the purposes set forth above (subject, however, to the rights of the holders of Superior Mortgages and other Existing Encumbrances), all leases or occupancy agreements wherein it is lessor concerning or affecting the use or occupancy of the certain real property owned or leased by Assignor, which real property is described on SCHEDULE 1 hereto and which real property, together with all buildings and improvements erected thereon, is hereinafter collectively referred to as the "PROPERTY", or any part thereof, now existing or which may be executed at any time in the future, and all amendments, extensions and renewals of such leases or occupancy agreements, and any of them, all of which are collectively referred to as the "LEASES", all rents and other income which may now or hereafter be or become due or owing under the Leases, and any of them, and any and all payments derived from or relating to the Leases to which Assignor is entitled, including but not limited to (a) claims for the recovery of damages done to the Property, (b) claims for damages resulting from acts of insolvency or acts of bankruptcy or otherwise, and (c) lump sum payments for the cancellation of Leases or the waiver of any obligation or term thereof prior to the expiration date; PROVIDED, HOWEVER, that no Excepted Property is conveyed hereby; it being intended hereby to establish a present and complete transfer unto Assignee of all of Assignor's right, title, interest and estate in and to the Leases and all the rents, payments and other income arising thereunder; PROVIDED, HOWEVER, that Assignor is hereby granted a license by Assignee to (i) collect all of such rents, payments and other income herein assigned which may become due during the life of this Assignment and (ii) enter into, renew, modify, extend, terminate, amend, collectively assign, transfer or hypothecate any or all of the Leases, in accordance with the provisions of Sections 4.04 and 5.13 of the Mortgage, each until an Event of Default under the Mortgage (an "EVENT OF DEFAULT") shall have occurred and be continuing. Upon the occurrence of an Event of Default, Assignor agrees to deposit with Assignee upon demand such of the Leases and the rents payable thereunder as may from time to time be designated by Assignee. Assignor hereby appoints Assignee the true and lawful attorney of Assignor with full power of substitution, and with power for Assignor and in the name of Assignor and/or in its name, place and stead, to demand, collect, receive and give receipts and complete acquittance for any and all other rents and other amounts herein assigned which may be or become due and payable under the Leases, and at its discretion to file any claim or take any other action or proceeding and make any settlement of any claims, either in its own name or in the name of Assignor or otherwise, which Assignee may deem necessary or desirable in order to collect and enforce the payment of any and all rents and other amounts herein assigned. No right shall be exercised by Assignee under this paragraph until an Event of Default has occurred. All lessees under the Leases are hereby expressly authorized and directed, after the occurrence, and during the continuance, of an Event of Default, to pay all rents and other sums herein assigned to Assignee or such nominee as Assignee may designate in writing delivered to and received by such lessees, who thereafter are expressly relieved of any and all duty, liability or obligation to Assignor in respect of all payments so made. Assignee is hereby vested with full power to use all measures, legal and equitable, deemed by it necessary or proper to enforce this Assignment and to collect the rents and other sums assigned hereunder. Assignee shall be under no obligation to exercise any of the rights or to press any of the claims assigned to it hereunder, or to perform or carry out any of the obligations of Assignor under any of the Leases, and does not assume any of the liabilities in connection with or arising or growing out of the covenants and agreements of Assignor in the Leases. It is further 2 understood that this Assignment shall not operate to place responsibility for the control, care, management or repair of Assignor's estates or interests in and to the Property, or parts thereof, upon Assignee, nor shall it operate to make Assignee liable for the carrying out of any of the terms and conditions of any of the Leases, or for any waste to Assignor's estates or interests in and to the Property by any lessee or sublessee of Assignor under any leases, or by any occupant of the Property, or by any party whatsoever or for any dangerous or defective condition of the Property or for any negligence in the management, upkeep, repair or control of Assignor's estates or interests in and to the Property resulting in loss or injury or death to any lessee, licensee, employee or stranger thereat. No right shall be exercised by Assignee under this paragraph until an Event of Default has occurred. Assignee hereby agrees promptly to remit to Assignor any amounts collected hereunder by Assignee which are in excess of those applied to pay in full the aforesaid liabilities and indebtedness at the time due. Nothing herein contained is intended to limit or reduce the rights of Assignee or the obligations of Assignor set forth in the Mortgage, but rather all of the terms, provisions and conditions of this Assignment are in addition to and in supplement of such rights and obligations. If any provision contained in this Assignment is in conflict with, or inconsistent with, any provision in the Mortgage, the provisions contained in the Mortgage shall govern and control. Upon the release of any portion of the Property from the lien of the Mortgage pursuant to Section 2.05 or 2.06 of the Mortgage, this Assignment shall be null and void with respect to those Leases (the "RELEASED LEASES") which cover exclusively the portion of the Property so released (and no other portion of the Property) and all estate, right, title and interest of Assignee in and to the Released Leases shall revert to Assignor, but in all other respects and for all other purposes, this Assignment shall remain in full force and effect. Assignee shall, from time to time, promptly execute any written instrument in form reasonably satisfactory to the proposed purchaser of a portion of the Property as aforesaid to confirm any reversion of Assignee's right, title and interest in the Released Leases effectuated in accordance with this paragraph, upon receipt by Assignee of an Officer's Certificate stating that Assignor is entitled to such reversion by virtue of the Mortgagor's compliance with the provisions of this paragraph and Section 2.05 or 2.06 of the Mortgage (as the case may be), provided that Assignee shall have no liability thereunder and all costs and expenses shall be paid by Assignor. 3 Assignee acknowledges that (i) contemporaneously with the execution and delivery of this Assignment, it has assigned this Assignment to U.S. Trust Company of California, N.A. ("Trustee"), as trustee under an Indenture of even date herewith among Assignor, Assignee and Trustee (the "Indenture"), and (ii) that the Trustee is also the assignee under an Assignment of Leases and Rents dated as of the date hereof from Assignor to Trustee securing the obligations of Assignor in respect of the Guaranty under and as defined in the Indenture (the "Other Assignment"), which assignment creates a lien on the Leases and rents and income due and owing thereunder PARI PASSU with the lien of this Assignment. Assignee further acknowledges and agrees that whenever it is provided in the Other Assignment that the Assignor shall deliver any notice or document, or is require to make any payment thereunder, the delivery of such notice or document or the making of such payment pursuant to the terms of such Other Assignment shall also constitute the delivery of such notice or document or the making of such payment in satisfaction of the terms, conditions and provisions of this Assignment to the same extent as the same constitutes satisfaction of the terms, conditions and provisions of the Other Assignment. Upon the termination of the Mortgage and the payment in full of the obligations secured thereby, this Assignment shall be and become null and void, and all estate, right, title and interest of Assignee in and to the Leases shall revert to Assignor and Assignee shall promptly cancel and discharge of record this Assignment and any financing statement filed in connection herewith and execute and deliver to Assignor all such instruments as may be appropriate to evidence such discharge and satisfaction of this Assignment (provided that Assignee shall have no liability hereunder or thereunder and all costs and expenses shall be paid by Assignor); otherwise, this Assignment shall remain in full force and effect as herein provided, shall inure to the benefit of Assignee and its successors and assigns, and shall be binding upon Assignor and its successors and assigns, and any subsequent holder of Assignor's right, title and interest and estate in and to the Property. This Assignment shall be governed by and construed under the internal laws of the State of New Jersey, without giving effect to the principles of conflicts of laws. This Assignment is subject to and shall be enforced in compliance with the provisions of the New Jersey Casino Control Act. This Assignment shall not be transferred, assigned or amended without the prior approval of the New Jersey Casino Control Commission. The rights and obligations of the Assignee hereunder are subject to the terms set forth in that certain Intercreditor Agreement dated as of the date hereof among 4 Assignor, Assignee, Fidelity Management and Trust Company, as trustee, Trustee and State Street Bank and Trust Company of Connecticut, National Association, as trustee (and such other parties that may from time to time become a party thereto). IN WITNESS WHEREOF, the parties hereto have caused this Assignment to be duly executed and attested, all as of the day and year first above written. RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation By:_____________________________ Name: Title: (Vice) President ATTEST:_________________________ Name: Title: (Asst.) Secretary RESORTS INTERNATIONAL HOTEL, FINANCING, INC., a Delaware corporation By:_____________________________ Name: Title: (Vice) President ATTEST:_________________________ Name: Title: (Asst.) Secretary 5 STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK) BE IT REMEMBERED that on ______________, 1994, before me, the subscriber, __________________, personally appeared _____________, who, being by me duly sworn on his oath, deposes and makes proof to my satisfaction, that he is the (Asst.) Secretary of RESORTS INTERNATIONAL HOTEL, INC., the corporation named in the within instrument; that ______________ is the (Vice) President of said corporation; that the execution, as well as the making of this instrument, has been duly authorized by a proper resolution of the board of directors of the said corporation; that deponent well knows the corporate seal of said corporation; and that the seal affixed to said instrument is the proper corporate seal and was thereto affixed and said instrument signed and delivered by said Vice President as and for the voluntary act and deed of said corporation. In presence of deponent who thereupon subscribed his name thereto as attesting witness; and deponent signed this proof to attest to the truth of these facts. _____________________________ [Name] Assistant Secretary Sworn to and subscribed before me, the date aforesaid ____________________________ Notary Public My commission expires:_____________________________ 6 STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK) BE IT REMEMBERED that on _________________, 1994, before me, the subscriber, __________________, personally appeared ___________________, who being by me duly sworn on his oath, deposes and makes proof to my satisfaction, that he is the Asst. Secretary of RESORTS INTERNATIONAL HOTEL FINANCING, INC., the corporation named in the within instrument; that ____________ is the Vice President of said corporation; that the execution, as well as the making of this instrument, has been duly authorized by a proper resolution of the board of directors of the said corporation; that deponent well knows the corporate seal of said corporation; and that the seal affixed to said instrument is the proper corporate seal and was thereto affixed and said instrument signed and delivered by said Vice President as and for the voluntary act and deed of said corporation. In presence of deponent who thereupon subscribed his name thereto as attesting witness; and deponent signed this proof to attest to the truth of these facts. __________________________ [Name] Secretary Sworn to and subscribed before me, the date aforesaid ____________________________ Notary Public My commission expires:_____________________________ 7 EX-4 17 EXHIBIT 4.33 NA932810102 - ASSIGNMENT OF RENTS (JUNIOR GUARANTY) GD&C DRAFT DATED 12/17/93 - ------------------------------------------------------------------------------- ASSIGNMENT OF LEASES AND RENTS ________________ RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation, as Assignor, TO U.S. TRUST COMPANY OF CALIFORNIA, N.A. a national banking association, as Assignee Dated as of _________________, 1994 - ------------------------------------------------------------------------------- Prepared by:__________________________ D. Eric Remensperger, Esq. ASSIGNMENT OF LEASES AND RENTS THIS ASSIGNMENT made as of the ___ day of ___________, 1994, by RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation ("ASSIGNOR"), having an address at c/o Resorts International, Inc., 1133 Boardwalk, Atlantic City, New Jersey 08401 to U.S. TRUST COMPANY OF CALIFORNIA, N.A., a national banking association ("ASSIGNEE"), having an address at 555 South Flower Street, Suite 2780 Los Angeles California 90071, in its capacity as Trustee under that certain Indenture dated as of even date herewith (the "INDENTURE"), among Assignor, Assignee and Resorts International Hotel Financing, Inc., a Delaware corporation ("RIHF"). WITNESSETH: WHEREAS, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and in order to secure: (i) Assignor's guarantee of the payments of principal and interest due on the 11.375% Junior Mortgage Notes due 2004 in an aggregate principal amount of $35,000,000, issued by RIHF pursuant to the provisions of the Indenture and of the performance of certain of RIHF's obligations, all in accordance with the terms and provisions of Article Fourteen of the Indenture; and (ii) the performance and observance of all of the provisions herein contained (capitalized terms used and not otherwise defined herein shall have the respective meanings ascribed to those terms in that certain Mortgage Securing Guaranty of Junior Mortgage Notes dated as of even date herewith, between Assignor, as mortgagor, and Assignee, as mortgagee (the "MORTGAGE")); NOW, THEREFORE, Assignor has and does hereby bargain, sell, transfer, assign, convey, set over and deliver unto Assignee, for the purposes set forth above (subject, however, to the rights of the holders of Superior Mortgages and other Existing Encumbrances), all leases or occupancy agreements wherein it is lessor concerning or affecting the use or occupancy of certain real property owned or leased by Assignor, which real property is described on SCHEDULE 1 hereto and which real property, together with all buildings and improvements erected thereon, is hereinafter collectively referred to as the "PROPERTY", or any part thereof, now existing or which may be executed at any time in the future, and all amendments, extensions and renewals of such leases or occupancy agreements, and any of them, all of which are collectively referred to as the "LEASES", all rents and other income which may now or hereafter be or become due or owing under the Leases, and any of them, and any and all payments derived from or relating to the Leases to which Assignor is entitled, including but not limited to (a) claims for the recovery of damages done to the Property, (b) claims for damages resulting from acts of insolvency or acts of bankruptcy or otherwise, and (c) lump sum payments for the cancellation of Leases or the waiver of any obligation or term thereof prior to the expiration date; PROVIDED, HOWEVER, that no Excepted Property is conveyed hereby; it being intended hereby to establish a present and complete transfer unto Assignee of all of Assignor's right, title, interest and estate in and to the Leases and all the rents, payments and other income arising thereunder; PROVIDED, HOWEVER, that Assignor is hereby granted a license by Assignee to (i) collect all of such rents, payments and other income herein assigned which may become due during the life of this Assignment and (ii) enter into, renew, modify, extend, terminate, amend, collectively assign, transfer or hypothecate any or all of the Leases, in accordance with the provisions of Sections 4.04 and 5.13 of the Mortgage, each until an Event of Default under the Mortgage (an "EVENT OF DEFAULT") shall have occurred and be continuing. Upon the occurrence of an Event of Default, Assignor agrees to deposit with Assignee upon demand such of the Leases and the rents payable thereunder as may from time to time be designated by Assignee. Assignor hereby appoints Assignee the true and lawful attorney of Assignor with full power of substitution, and with power for Assignor and in the name of Assignor and/or in its name, place and stead, to demand, collect, receive and give receipts and complete acquittance for any and all other rents and other amounts herein assigned which may be or become due and payable under the Leases, and at its discretion to file any claim or take any other action or proceeding and make any settlement of any claims, either in its own name or in the name of Assignor or otherwise, which Assignee may deem necessary or desirable in order to collect and enforce the payment of any and all rents and other amounts herein assigned. No right shall be exercised by Assignee under this paragraph until an Event of Default has occurred. All lessees under the Leases are hereby expressly authorized and directed, after the occurrence, and during the continuance, of an Event of Default, to pay all rents and other sums herein assigned to Assignee or such nominee as Assignee may designate in writing delivered to and received by such lessees, who thereafter are expressly relieved of any and all duty, liability or obligation to Assignor in respect of all payments so made. Assignee is hereby vested with full power to use all measures, legal and equitable, deemed by it necessary or proper to enforce this Assignment and to collect the rents and other sums assigned hereunder. Assignee shall be under no obligation to exercise any of the rights or to press any of 2 the claims assigned to it hereunder, or to perform or carry out any of the obligations of Assignor under any of the Leases, and does not assume any of the liabilities in connection with or arising or growing out of the covenants and agreements of Assignor in the Leases. It is further understood that this Assignment shall not operate to place responsibility for the control, care, management or repair of Assignor's estates or interests in and to the Property, or parts thereof, upon Assignee, nor shall it operate to make Assignee liable for the carrying out of any of the terms and conditions of any of the Leases, or for any waste to Assignor's estates or interests in and to the Property by any lessee or sublessee of Assignor under any leases, or by any occupant of the Property, or by any party whatsoever or for any dangerous or defective condition of the Property or for any negligence in the management, upkeep, repair or control of Assignor's estates or interests in and to the Property resulting in loss or injury or death to any lessee, licensee, employee or stranger thereat. No right shall be exercised by Assignee under this paragraph until an Event of Default has occurred. Assignee hereby agrees promptly to remit to Assignor any amounts collected hereunder by Assignee which are in excess of those applied to pay in full the aforesaid liabilities and indebtedness at the time due. Nothing herein contained is intended to limit or reduce the rights of Assignee or the obligations of Assignor set forth in the Mortgage, but rather all of the terms, provisions and conditions of this Assignment are in addition to and in supplement of such rights and obligations. If any provision contained in this Assignment is in conflict with, or inconsistent with, any provision in the Mortgage, the provisions contained in the Mortgage shall govern and control. Upon the release of any portion of the Property from the lien of the Mortgage pursuant to Section 2.05 or 2.06 of the Mortgage, this Assignment shall be null and void with respect to those Leases (the "RELEASED LEASES") which cover exclusively the portion of the Property so released (and no other portion of the Property) and all estate, right, title and interest of Assignee in and to the Released Leases shall revert to Assignor, but in all other respects and for all other purposes, this Assignment shall remain in full force and effect. Assignee shall, from time to time, promptly execute any written instrument in form reasonably satisfactory to the proposed purchaser of a portion of the Property as aforesaid to confirm any reversion of Assignee's right, title and interest in the Released Leases effectuated in accordance with this paragraph, upon receipt by Assignee of an Officer's Certificate stating that Assignor is entitled to such 3 reversion by virtue of the Mortgagor's compliance with the provisions of this paragraph and Section 2.05 or 2.06 of the Mortgage (as the case may be), provided that Assignee shall have no liability thereunder and all costs and expenses shall be paid by Assignor. Upon the termination of the Mortgage and the payment in full of the obligations secured thereby, this Assignment shall be and become null and void, and all estate, right, title and interest of Assignee in and to the Leases shall revert to Assignor and Assignee shall promptly cancel and discharge of record this Assignment and any financing statement filed in connection herewith and execute and deliver to Assignor all such instruments as may be appropriate to evidence such discharge and satisfaction of this Assignment (provided that Assignee shall have no liability hereunder or thereunder and all costs and expenses shall be paid by Assignor); otherwise, this Assignment shall remain in full force and effect as herein provided, shall inure to the benefit of Assignee and its successors and assigns, and shall be binding upon Assignor and its successors and assigns, and any subsequent holder of Assignor's right, title and interest and estate in and to the Property. This Assignment shall be governed by and construed under the internal laws of the State of New Jersey, without giving effect to the principles of conflicts of laws. This Assignment is subject to and shall be enforced in compliance with the provisions of the New Jersey Casino Control Act. This Assignment shall not be transferred, assigned or amended without the prior approval of the New Jersey Casino Control Commission. The rights and obligations of the Assignee hereunder are subject to the terms set forth in that certain Intercreditor Agreement dated as of the date hereof among Assignor, RIHF, Assignee, Fidelity Management and Trust Company, as trustee, and State Street Bank and Trust Company of Connecticut, National Association, as trustee (and such other parties that may from time to time become a party thereto). 4 IN WITNESS WHEREOF, the parties hereto have caused this Assignment to be duly executed and attested, all as of the day and year first above written. RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation By:_____________________________ Name: Title: (Vice) President ATTEST:_________________________ Name: Title: (Asst.) Secretary U.S. TRUST COMPANY OF CALIFORNIA, N.A. By:_____________________________ Name: Title: (Vice) President ATTEST:_________________________ Name: Title: (Asst.) Secretary 5 STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK ) BE IT REMEMBERED that on ______________, 1994, before me, the subscriber, __________________, personally appeared _______________, who, being by me duly sworn on his oath, deposes and makes proof to my satisfaction, that he is the (Asst.) Secretary of RESORTS INTERNATIONAL HOTEL, INC., the corporation named in the within instrument; that _________________ is the (Vice) President of said Corporation; that the execution, as well as the making of this instrument, has been duly authorized by a proper resolution of the board of directors of the said corporation; that deponent well knows the corporate seal of said corporation; and that the seal affixed to said instrument is the proper corporate seal and was thereto affixed and said instrument signed and delivered by said Vice President as and for the voluntary act and deed of said corporation. In presence of deponent who thereupon subscribed his name thereto as attesting witness; and deponent signed this proof to attest to the truth of these facts. _____________________________ [Name] Assistant Secretary Sworn to and subscribed before me, the date aforesaid ____________________________ Notary Public My commission expires:_____________________________ 6 STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK ) BE IT REMEMBERED that on _________________, 1994, before me, the subscriber, __________________, personally appeared ___________________, who being by me duly sworn on his oath, deposes and makes proof to my satisfaction, that he is the Asst. Secretary of U.S. TRUST COMPANY OF CALIFORNIA (N.A.), the corporation named in the within instrument; that ____________ is the Vice President of said corporation; that the execution, as well as the making of this instrument, has been duly authorized by a proper resolution of the board of directors of the said corporation; that deponent well knows the corporate seal of said corporation; and that the seal affixed to said instrument is the proper corporate seal and was thereto affixed and said instrument signed and delivered by said Vice President as and for the voluntary act and deed of said corporation. In presence of deponent who thereupon subscribed his name thereto as attesting witness; and deponent signed this proof to attest to the truth of these facts. __________________________ [Name] Secretary Sworn to and subscribed before me, the date aforesaid ____________________________ Notary Public My commission expires:_____________________________ 7 EX-4 18 EXHIBIT 4.34 NA932280122 - ASSIGNMENT OF ASSETS (RIH PROMISSORY NOTE) GD&C DRAFT DATED 12/17/93 ============================================================================= ASSIGNMENT OF OPERATING ASSETS ________________ RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation, as Assignor, TO RESORTS INTERNATIONAL HOTEL FINANCING, INC., a Delaware corporation, as Assignee Dated as of _________________, 1994 ========================================================================== Prepared by:__________________________ D. Eric Remensperger, Esq. ASSIGNMENT OF OPERATING ASSETS THIS ASSIGNMENT made as of the ____ day of ____________, 1994, by RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation, having its principal office at c/o Resorts International, Inc., 1133 Boardwalk, Atlantic City, New Jersey ("ASSIGNOR"), to RESORTS INTERNATIONAL HOTEL FINANCING, INC., a Delaware corporation, having its principal office at c/o Resorts International, Inc., 1133 Boardwalk, Atlantic City, New Jersey ("ASSIGNEE"). WITNESSETH: WHEREAS, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in order to secure: (i) the obligations of Assignor under a secured promissory note dated as of the date hereof made by Assignor to Assignee in the principal amount of $125,000,000 (as the same may be amended or restated from time to time, the "RIH PROMISSORY NOTE"), which note is secured by a Mortgage Securing RIH Promissory Note dated as of the date hereof, between Assignor, as mortgagor, and Assignee, as mortgagee (the "MORTGAGE"; capitalized terms used and not otherwise defined herein shall have the meanings ascribed to those terms in the Mortgage) which mortgage encumbers certain real property owned or leased by Assignor and described on SCHEDULE 1 hereto together with all buildings and improvements erected thereon (collectively, the "PROPERTY"); and (ii) the performance and observance of all of the provisions herein contained; NOW, THEREFORE, Assignor has and does hereby bargain, sell, transfer, assign, convey, set over and deliver unto Assignee, for the purposes set forth above (subject, however, to the rights of the holders of Superior Mortgages), all of Mortgagor's right, title and interest in and to the Operating Assets (other than Excepted Property), now existing or hereafter acquired (including without limitation, to the extent assignable, with respect to the bookings, contracts, Permits, leases, licenses and agreements constituting a part of the Operating Assets (collectively, the "OPERATING AGREEMENTS"), all Operating Agreements now existing or which may be executed at any time in the future, and all amendments, extensions and renewals of the Operating Agreements, and any of them, and all rents and other income which may now or hereafter be or become receivable under the Operating Agreements, and any of them); it being intended hereby to establish a present and complete transfer unto Assignee of all of Assignor's right, title, interest and estate in and to the Operating Agreements and all the Income (as hereinafter defined) arising thereunder; PROVIDED, HOWEVER, that Assignor is hereby granted a license by Assignee so long as there neither shall have been an acceleration of maturity of the Note pursuant to Section 3.02 of the Mortgage nor an exercise by the Mortgagee of its rights under Section 3.09 of the Mortgage (either being hereinafter referred to as an "ACCELERATION EVENT"), to (a) possess, use, manage, operate, enjoy and, subject to and in accordance with the terms of the Mortgage, dispose of the Operating Assets or any part thereof and to collect, receive, use, invest and dispose of the rents, issues, tolls, profits, revenues and other income therefrom (collectively, the "INCOME"), (b) use, consume and dispose of any consumables, goods, wares and merchandise in the ordinary course of business of operating the Casino-Hotel and (c) adjust and settle all matters relating to choses in action, leases and contracts. Upon the occurrence of an Acceleration Event, Assignor agrees to deposit with Assignee upon demand such of the Operating Agreements, Operating Assets and receipts and revenues therefrom as may from time to time be designated by Assignee. Assignor hereby appoints Assignee the true and lawful attorney of Assignor with full power of substitution, and with power for Assignor and in the name of Assignor and/or in its name, place and stead, to possess, use, manage and enjoy the Operating Assets or any part thereof and to collect, receive, use, invest, dispose of and give complete acquittance for any and all Income herein assigned which may be or become due and payable under the Operating Agreements, to use, consume and dispose of any consumable goods, wares and merchandise and to adjust and settle all matters relating to choses in action, leases and contracts, and at its discretion to file any claim or take any other action or proceeding and make any settlement of any claims, either in its own name or in the name of Assignor or otherwise, which Assignee may deem necessary or desirable in order to collect and enforce the rights herein assigned. No rights shall be exercised by Assignee under this paragraph until an Acceleration Event has occurred. All parties to the Operating Agreements are hereby expressly authorized and directed, after the occurrence of an Acceleration Event, to pay all amounts payable to Assignor thereunder to Assignee or such nominee as Assignee may designate in writing delivered to and received by such parties, who thereafter are expressly relieved of any and all duty, liability or obligation to Assignor in respect of all payments so made. Assignee acknowledges that (i) contemporaneously with the execution and delivery of this Assignment, it has assigned this Assignment to State Street Bank and Trust Company of Connecticut, National Association ("Trustee"), as trustee under an Indenture of even date herewith among 2 Assignor, Assignee and Trustee (the "Indenture"), and (ii) that the Trustee is also the assignee under an Assignment of Operating Assets dated as of the date hereof from Assignor to Trustee securing the obligations of Assignor in respect of the Guaranty under and as defined in the Indenture (the "Other Assignment"), which assignment creates a lien on the Operating Agreements, Operating Assets and receipts and revenues therefrom PARI PASSU with the lien of this Assignment. Assignee further acknowledges and agrees that whenever it is provided in the Other Assignment that the Assignor shall deliver any notice or document, or is require to make any payment thereunder, the delivery of such notice or document or the making of such payment pursuant to the terms of such Other Assignment shall also constitute the delivery of such notice or document or the making of such payment in satisfaction of the terms, conditions and provisions of this Assignment to the same extent as the same constitutes satisfaction of the terms, conditions and provisions of the Other Assignment. Assignee is hereby vested with full power to use all measures, legal and equitable, deemed by it necessary or proper to enforce this Agreement, to collect all Income and to exercise all other rights provided for hereunder. Assignee shall be under no obligation to press any of the rights or claims assigned to it hereunder, or to perform or carry out any of the obligations of Assignor under any of the Operating Agreements and does not assume any of the liabilities in connection with or arising or growing out of the covenants and agreements of Assignor in the Operating Agreements. It is further understood that this Assignment shall not operate to place responsibility for the control, care, management or repair of Assignor's estates or interests in and to the Operating Assets, or parts thereof, upon Assignee, nor shall it operate to make Assignee liable for the carrying out of any of the terms and conditions of any of the Operating Agreements, or for any negligence in the management, upkeep, repair or control of Assignor's estates or interests in and to the Operating Assets resulting in loss or injury or death to any lessee, licensee, employee or stranger thereat. No rights shall be exercised by Assignee under this paragraph until an Acceleration Event has occurred. For purposes of this Assignment, the term "OPERATING ASSETS" shall exclude (i) any Tangible Personal Property, and (ii) other items constituting Operating Assets or leases, which are Excepted Property. Assignee hereby agrees promptly to remit to Assignor any amounts collected hereunder by Assignee which are in excess of those applied to pay in full the aforesaid liabilities and indebtedness at the time due. 3 IT IS AGREED that, to the extent the grant of a security interest in the Operating Assets is governed by the provisions of the Uniform Commercial Code, this Assignment is hereby agreed to be a "Security Agreement" under such Code, and Assignor hereby grants to Assignee a security interest in the Operating Assets. Assignor shall at any time and from time to time execute and deliver such additional security agreements, financing statements and continuation statements, and shall take all such actions, as may be necessary to perfect Assignee's interest under this Assignment as a secured party under the Uniform Commercial Code. IT IS FURTHER AGREED that the rights and benefits created hereunder supplement and are not in substitution for the liens created by the Mortgage with respect to the Operating Assets and that nothing contained herein shall limit or affect the rights of Assignee under the Mortgage. Upon the release of any portion of the Property from the lien of the Mortgage pursuant to Section 2.05 of the Mortgage (other than (i) the release of the fee interest in and to the Leased Land or any portion thereof, or (ii) if the Mortgagor obtains a Qualified Leasehold Interest with respect to such portion of the Property), this Assignment shall be null and void with respect to those Operating Assets (the "RELEASED ASSETS") which theretofore have exclusively been used by Assignor with respect to the portion of the Property so released (and no other portion of the Property) and all estate, right, title and interest of Assignee in and to the Released Assets shall revert to Assignor, but in all other respects and for all other purposes, this Assignment shall remain in full force and effect. Assignee shall, from time to time, promptly execute any written instrument in form reasonably satisfactory to the proposed purchaser of such portion of the Property to confirm any reversion of Assignee's right, title and interest in the Released Assets effectuated pursuant to the immediately preceding sentence, upon receipt by Assignee of an Officer's Certificate stating that Assignor is entitled to such reversion by virtue of the Mortgagor's compliance with the provisions of this paragraph and Section 2.05 of the Mortgage, provided that Assignee shall have no liability thereunder and all costs and expenses shall be paid by Assignor. Upon the termination of the Mortgage Documents and the payment in full of the principal sum, interest and other Indebtedness secured thereby, this Assignment shall be and become null and void, and all estate, right, title and interest of Assignee in and to the Operating Assets shall revert to Assignor and Assignee shall promptly cancel and discharge of record this Assignment and any financing statement filed in connection herewith and execute and deliver 4 to Assignor all such instruments as may be appropriate to evidence such discharge and satisfaction of this Assignment (provided that Assignee shall have no liability hereunder or thereunder and all costs and expenses shall be paid by Assignor); otherwise, this Assignment shall remain in full force and effect as herein provided, shall inure to the benefit of Assignee and its successors and assigns, and shall be binding upon Assignor and its successors and assigns, and any subsequent holder of Assignor's right, title, interest and estate in and to the Property. This Assignment shall be governed by and construed under the internal laws of the State of New Jersey, without giving effect to the principles of conflicts of laws. This Assignment is subject to and shall be enforced in compliance with the provisions of the New Jersey Casino Control Act. This Assignment shall not be transferred, assigned or amended without the prior approval of the New Jersey Casino Control Commission. The rights and obligations of the Assignee hereunder are subject to the terms set forth in that certain Intercreditor Agreement dated as of the date hereof among Assignor, Assignee, Fidelity Management and Trust Company, as trustee, Trustee and State Street Bank and Trust Company of Connecticut, National Association, as trustee, (and such other parties that may from time to time become a party thereto). 5 IN WITNESS WHEREOF, Assignor and Assignee have caused this Assignment to be duly executed, all as of the date first above set forth. WITNESSES: ASSIGNOR: RESORTS INTERNATIONAL HOTEL, INC. ________________________________ By:_________________________ Name: Title: ASSIGNEE: RESORTS INTERNATIONAL HOTEL FINANCING, INC. _________________________________ By:_________________________ Name: Title: 6 STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK) BE IT REMEMBERED that on ______________, 1994, before me, the subscriber, __________________, personally appeared ____________, who, being by me duly sworn on his oath, deposes and makes proof to my satisfaction, that he is the (Asst.) Secretary of RESORTS INTERNATIONAL HOTEL, INC., the corporation named in the within instrument; that ____________ is the (Vice) President of said Corporation; that the execution, as well as the making of this instrument, has been duly authorized by a proper resolution of the board of directors of the said corporation; that deponent well knows the corporate seal of said corporation; and that the seal affixed to said instrument is the proper corporate seal and was thereto affixed and said instrument signed and delivered by said Vice President as and for the voluntary act and deed of said corporation. In presence of deponent who thereupon subscribed his name thereto as attesting witness; and deponent signed this proof to attest to the truth of these facts. _____________________________ [Name] Assistant Secretary Sworn to and subscribed before me, the date aforesaid ____________________________ Notary Public My commission expires:_____________________________ STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK) BE IT REMEMBERED that on _________________, 1994, before me, the subscriber, __________________, personally appeared ___________________, who being by me duly sworn on his oath, deposes and makes proof to my satisfaction, that he is the Asst. Secretary of RESORTS INTERNATIONAL HOTEL FINANCING, INC., the corporation named in the within instrument; that ____________ is the Vice President of said corporation; that the execution, as well as the making of this instrument, has been duly authorized by a proper resolution of the board of directors of the said corporation; that deponent well knows the corporate seal of said corporation; and that the seal affixed to said instrument is the proper corporate seal and was thereto affixed and said instrument signed and delivered by said Vice President as and for the voluntary act and deed of said corporation. In presence of deponent who thereupon subscribed his name thereto as attesting witness; and deponent signed this proof to attest to the truth of these facts. __________________________ [Name] Assistant Secretary Sworn to and subscribed before me, the date aforesaid ____________________________ Notary Public My commission expires:_____________________ EX-4 19 EXHIBIT 4.35 NA932810105 - ASSIGNMENT OF ASSETS (JUNIOR GUARANTY) GD&C DRAFT DATED 12/17/93 ============================================================================== ASSIGNMENT OF OPERATING ASSETS ________________ RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation, as Assignor, TO U.S. TRUST COMPANY OF CALIFORNIA, N.A. a national banking association, as Assignee Dated as of _________________, 1994 ============================================================================== Prepared by:__________________________ D. Eric Remensperger, Esq. ASSIGNMENT OF OPERATING ASSETS THIS ASSIGNMENT made as of the ___ day of ___________, 1994, by RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation ("ASSIGNOR"), having an address at c/o Resorts International, Inc. 1133 Boardwalk, Atlantic City, New Jersey 08401, to U.S. TRUST COMPANY OF CALIFORNIA, N.A., a National banking association ("ASSIGNEE"), having an address at 555 South Flower Street Suite 2700, Los Angeles, California 90071 in its capacity as Trustee under that certain Indenture dated as of even date herewith (the "INDENTURE"), among Assignor, Assignee and Resorts International Hotel Financing, Inc., a Delaware corporation ("RIHF"). WITNESSETH: WHEREAS, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and in order to secure: (i) Assignor's guarantee of the payments of principal and interest due on the 11.375% Junior Mortgage Notes due 2004 in an aggregate principal amount of $35,000,000, issued by RIHF pursuant to the provisions of the Indenture and of the performance of certain of RIHF's obligations, all in accordance with the terms and provisions of Article Fourteen of the Indenture; and (ii) the performance and observance of all of the provisions herein contained (capitalized terms used and not otherwise defined herein shall have the respective meanings ascribed to those terms in that certain Mortgage Securing Guaranty of Junior Mortgage Notes dated as of even date herewith, between Assignor, as mortgagor, and Assignee, as mortgagee (the "MORTGAGE")); NOW, THEREFORE, Assignor has and does hereby bargain, sell, transfer, assign, convey, set over and deliver unto Assignee, for the purposes set forth above (subject, however, to the rights of the holders of Superior Mortgages), all of Mortgagor's right, title and interest in and to the Operating Assets (other than Excepted Property), now existing or hereafter acquired (including without limitation, to the extent assignable, with respect to the bookings, contracts, Permits, leases, licenses and agreements constituting a part of the Operating Assets (collectively, the "OPERATING AGREEMENTS"), all Operating Agreements now existing or which may be executed at any time in the future, and all amendments, extensions and renewals of the Operating Agreements, and any of them, and all rents and other income which may now or hereafter be or become receivable under the Operating Agreements, and any of them); it being intended hereby to establish a present and complete transfer unto Assignee of all of Assignor's right, title, interest and estate in and to the Operating Agreements and all the Income (as hereinafter defined) arising thereunder; PROVIDED, HOWEVER, that Assignor is hereby granted a license by Assignee so long as there neither shall have been an acceleration of maturity of the Note pursuant to Section 3.02 of the Mortgage nor an exercise by the Mortgagee of its rights under Section 3.09 of the Mortgage (either being hereinafter referred to as an "ACCELERATION EVENT"), to (a) possess, use, manage, operate, enjoy and, subject to and in accordance with the terms of the Mortgage, dispose of the Operating Assets or any part thereof and to collect, receive, use, invest and dispose of the rents, issues, tolls, profits, revenues and other income therefrom (collectively, the "INCOME"), (b) use, consume and dispose of any consumables, goods, wares and merchandise in the ordinary course of business of operating the Casino-Hotel and (c) adjust and settle all matters relating to choses in action, leases and contracts. Upon the occurrence of an Acceleration Event, Assignor agrees to deposit with Assignee upon demand such of the Operating Agreements, Operating Assets and receipts and revenues therefrom as may from time to time be designated by Assignee. Assignor hereby appoints Assignee the true and lawful attorney of Assignor with full power of substitution, and with power for Assignor and in the name of Assignor and/or in its name, place and stead, to possess, use, manage and enjoy the Operating Assets or any part thereof and to collect, receive, use, invest, dispose of and give complete acquittance for any and all Income herein assigned which may be or become due and payable under the Operating Agreements, to use, consume and dispose of any consumable goods, wares and merchandise and to adjust and settle all matters relating to choses in action, leases and contracts, and at its discretion to file any claim or take any other action or proceeding and make any settlement of any claims, either in its own name or in the name of Assignor or otherwise, which Assignee may deem necessary or desirable in order to collect and enforce the rights herein assigned. No rights shall be exercised by Assignee under this paragraph until an Acceleration Event has occurred. All parties to the Operating Agreements are hereby expressly authorized and directed, after the occurrence of an Acceleration Event, to pay all amounts payable to Assignor thereunder to Assignee or such nominee as Assignee may designate in writing delivered to and received by such parties, who thereafter are expressly relieved of any and all duty, liability or obligation to Assignor in respect of all payments so made. Assignee is hereby vested with full power to use all measures, legal and equitable, deemed by it necessary or proper to enforce this Agreement, to collect all Income and to exercise all other rights provided for hereunder. Assignee 2 shall be under no obligation to press any of the rights or claims assigned to it hereunder, or to perform or carry out any of the obligations of Assignor under any of the Operating Agreements and does not assume any of the liabilities in connection with or arising or growing out of the covenants and agreements of Assignor in the Operating Agreements. It is further understood that this Assignment shall not operate to place responsibility for the control, care, management or repair of Assignor's estates or interests in and to the Operating Assets, or parts thereof, upon Assignee, nor shall it operate to make Assignee liable for the carrying out of any of the terms and conditions of any of the Operating Agreements, or for any negligence in the management, upkeep, repair or control of Assignor's estates or interests in and to the Operating Assets resulting in loss or injury or death to any lessee, licensee, employee or stranger thereat. No rights shall be exercised by Assignee under this paragraph until an Acceleration Event has occurred. For purposes of this Assignment, the term "OPERATING ASSETS" shall exclude (i) any Tangible Personal Property, and (ii) other items constituting Operating Assets or leases, which are Excepted Property. Assignee hereby agrees promptly to remit to Assignor any amounts collected hereunder by Assignee which are in excess of those applied to pay in full the aforesaid liabilities and indebtedness at the time due. IT IS AGREED that, to the extent the grant of a security interest in the Operating Assets is governed by the provisions of the Uniform Commercial Code, this Assignment is hereby agreed to be a "Security Agreement" under such Code, and Assignor hereby grants to Assignee a security interest in the Operating Assets. Assignor shall at any time and from time to time execute and deliver such additional security agreements, financing statements and continuation statements, and shall take all such actions, as may be necessary to perfect Assignee's interest under this Assignment as a secured party under the Uniform Commercial Code. IT IS FURTHER AGREED that the rights and benefits created hereunder supplement and are not in substitution for the liens created by the Mortgage with respect to the Operating Assets and that nothing contained herein shall limit or affect the rights of Assignee under the Mortgage. Upon the release of any portion of the Property from the lien of the Mortgage pursuant to Section 2.05 of the Mortgage (other than (i) the release of the fee interest in and to the Leased Land or any portion thereof, or (ii) if the Mortgagor obtains a Qualified Leasehold Interest with respect 3 to such portion of the Property), this Assignment shall be null and void with respect to those Operating Assets (the "RELEASED ASSETS") which theretofore have exclusively been used by Assignor with respect to the portion of the Property so released (and no other portion of the Property) and all estate, right, title and interest of Assignee in and to the Released Assets shall revert to Assignor, but in all other respects and for all other purposes, this Assignment shall remain in full force and effect. Assignee shall, from time to time, promptly execute any written instrument in form reasonably satisfactory to the proposed purchaser of such portion of the Property to confirm any reversion of Assignee's right, title and interest in the Released Assets effectuated pursuant to the immediately preceding sentence, upon receipt by Assignee of an Officer's Certificate stating that Assignor is entitled to such reversion by virtue of the Mortgagor's compliance with the provisions of this paragraph and Section 2.05 of the Mortgage, provided that Assignee shall have no liability thereunder and all costs and expenses shall be paid by Assignor. Upon the termination of the Mortgage Documents and the payment in full of the principal sum, interest and other Indebtedness secured thereby, this Assignment shall be and become null and void, and all estate, right, title and interest of Assignee in and to the Operating Assets shall revert to Assignor and Assignee shall promptly cancel and discharge of record this Assignment and any financing statement filed in connection herewith and execute and deliver to Assignor all such instruments as may be appropriate to evidence such discharge and satisfaction of this Assignment (provided that Assignee shall have no liability hereunder or thereunder and all costs and expenses shall be paid by Assignor); otherwise, this Assignment shall remain in full force and effect as herein provided, shall inure to the benefit of Assignee and its successors and assigns, and shall be binding upon Assignor and its successors and assigns, and any subsequent holder of Assignor's right, title, interest and estate in and to the Property. This Assignment shall be governed by and construed under the internal laws of the State of New Jersey, without giving effect to the principles of conflicts of laws. This Assignment is subject to and shall be enforced in compliance with the provisions of the New Jersey Casino Control Act. This Assignment shall not be transferred, assigned or amended without the prior approval of the New Jersey Casino Control Commission. The rights and obligations of the Assignee hereunder are subject to the terms set forth in that certain Intercreditor Agreement dated as of the date hereof among Assignor, RIHF, Assignee, Fidelity Management and Trust 4 Company, as trustee, and State Street Bank and Trust Company of Connecticut, National Association, as trustee (and such other parties that may from time to time become a party thereto). IN WITNESS WHEREOF, Assignor and Assignee have caused this Assignment to be duly executed, all as of the date first above set forth. WITNESSES: ASSIGNOR: RESORTS INTERNATIONAL HOTEL, INC. __________________________ By:_________________________ Name: Title: ASSIGNEE: U.S. TRUST COMPANY OF CALIFORNIA, N.A. ___________________________ By:_________________________ Name: Title: 5 STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK ) BE IT REMEMBERED that on ______________, 1994, before me, the subscriber, __________________, personally appeared _______________, who, being by me duly sworn on his oath, deposes and makes proof to my satisfaction, that he is the (Asst.) Secretary of RESORTS INTERNATIONAL HOTEL, INC., the corporation named in the within instrument; that ____________ is the (Vice) President of said Corporation; that the execution, as well as the making of this instrument, has been duly authorized by a proper resolution of the board of directors of the said corporation; that deponent well knows the corporate seal of said corporation; and that the seal affixed to said instrument is the proper corporate seal and was thereto affixed and said instrument signed and delivered by said Vice President as and for the voluntary act and deed of said corporation. In presence of deponent who thereupon subscribed his name thereto as attesting witness; and deponent signed this proof to attest to the truth of these facts. _____________________________ [Name] Assistant Secretary Sworn to and subscribed before me, the date aforesaid ____________________________ Notary Public My commission expires:_____________________________ STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK ) BE IT REMEMBERED that on _________________, 1994, before me, the subscriber, __________________, personally appeared ___________________, who being by me duly sworn on his oath, deposes and makes proof to my satisfaction, that he is the Asst. Secretary of U.S. TRUST COMPANY OF CALIFORNIA, N.A., the corporation named in the within instrument; that ____________ is the Vice President of said corporation; that the execution, as well as the making of this instrument, has been duly authorized by a proper resolution of the board of directors of the said corporation; that deponent well knows the corporate seal of said corporation; and that the seal affixed to said instrument is the proper corporate seal and was thereto affixed and said instrument signed and delivered by said Vice President as and for the voluntary act and deed of said corporation. In presence of deponent who thereupon subscribed his name thereto as attesting witness; and deponent signed this proof to attest to the truth of these facts. __________________________ [Name] Secretary Sworn to and subscribed before me, the date aforesaid ____________________________ Notary Public My commission expires:_____________________________ 7 EX-10 20 EXHIBIT 10.45 NOTE A UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re RESORTS INTERNATIONAL, INC., a Delaware corporation, and GGRI, INC., a Delaware corporation, formerly known as Griffin Resorts, Inc., Debtors. Case Nos. _______________ and _______________ Jointly Administered Under Case No. _________________ Chapter 11 BALLOT TO (1) VOTE TO ACCEPT OR REJECT THE JOINT PLAN OF REORGANIZATION PROPOSED BY RESORTS INTERNATIONAL, INC. GGRI, INC., RESORTS INTERNATIONAL HOTEL INC., RESORTS INTERNATIONAL HOTEL FINANCING, INC., AND P. I. RESORTS LIMITED AND (2) ELECT TO CONSENT TO RELEASE OF OLD SECURITY DOCUMENTS RESORTS INTERNATIONAL, INC. SERIES A NOTES BALLOT RESORTS INTERNATIONAL, INC. SENIOR SECURED REDEEMABLE NOTES DUE APRIL 15, 1994, SERIES A (RII CLASS 2 AND GRI CLASS 2) PLEASE READ AND FOLLOW THE ATTACHED VOTING INSTRUCTIONS CAREFULLY BEFORE COMPLETING THIS BALLOT. PLEASE COMPLETE, SIGN AND DATE THIS BALLOT AND PROMPTLY RETURN IT IN THE ENCLOSED PREPAID RETURN ENVELOPE. THIS BALLOT MUST BE RECEIVED BY HILL AND KNOWLTON, INC. (THE "SOLICITATION AGENT") BY 5:00 P.M., NEW YORK CITY TIME, ON __________________ (THE "VOTING DEADLINE"). IF YOU SIGN THIS BALLOT BUT FAIL TO INDICATE AN ACCEPTANCE OR REJECTION OF THE PLAN, THIS BALLOT WILL BE DEEMED AND COUNTED AS AN ACCEPTANCE OF THE PLAN. ALSO, IF YOU SIGN THIS BALLOT BUT FAIL TO INDICATE WHETHER YOU AGREE OR REFUSE TO CONSENT TO THE RELEASE OF THE OLD SECURITY DOCUMENTS, THIS BALLOT WILL BE DEEMED AND COUNTED AS A CONSENT TO THE RELEASE OF THE OLD SECURITY DOCUMENTS. Resorts International, Inc. ("RII"), GGRI, Inc. ("GRI"), Resorts International Hotel, Inc.("RIH"), Resorts International Hotel Financing, Inc. ("RIHF") and P. I. Resorts Limited ("PIRL") are soliciting your vote with respect to the prepackaged joint plan of reorganization SERIES A BALLOT under chapter 11 of the Bankruptcy Code for RII and GRI (collectively, the "Debtors" or the "Company") which has been proposed by RII, GRI, RIH, RIHF and PIRL (the "Plan") and is attached as Appendix A to the accompanying Information Statement/Prospectus dated December __, 1993 (the "Information Statement"). This Ballot is to be used by registered record owners and beneficial owners of Resorts Senior Secured Redeemable Notes due April 15, 1994, Series A (the "Series A Notes"). Record holders/beneficial owners of Series A Notes are also beneficiaries of the GRI Guaranty (as defined in the Plan). This Ballot is to be used to vote with respect to the Plan both as record holders/beneficial owners of Series A Notes and as beneficiaries of the GRI Guaranty and of the Series A Notes. Please read the Information Statement carefully before you vote. TO INDICATE YOUR VOTE, COMPLETE THIS BALLOT IN ACCORDANCE WITH THE ATTACHED INSTRUCTIONS. ITEM 1: AMOUNT OF SERIES A NOTES. The undersigned (the "Claimant") is as of January 10, 1994 (the "Voting Record Date") the registered record holder or the beneficial owner of Series A Notes in the principal amount of $__________, or such lesser or greater principal amount as may be reflected in the records available to the Debtors (the "Ballot Amount"). If you are a beneficial owner, the Ballot Amount should include only the amount of Series A Notes held in account(s) with the bank or broker which transmitted this Ballot to you. If you hold other Series A Notes in record name or in one or more accounts with other banks or brokers, such Series A Notes should be voted separately on the ballots received from such other banks or brokers, or with respect to record name Series A Ballots, by you, in accordance with the attached instructions. If you are a beneficial owner and do not know your Ballot Amount, please contact your bank or broker immediately. ITEM 2: VOTES WITH RESPECT TO THE PLAN AND RELEASE ELECTION. As explained in the instructions, you are entitled to three separate votes in connection with the Plan: (i) with respect to your Old Series Notes Claim (as defined in the instructions hereto), you may vote to accept or reject the Plan; (ii) with respect to your GRI Guaranty Claim (as defined in the instructions hereto), you may vote to accept or reject the Plan; and (iii) you may elect to consent to the release of the Old Security Documents (as defined in and) as contemplated by the Plan. Please read the attached instructions carefully and then complete each of Items 2A, 2B and 2C. SERIES A BALLOT 2 PLEASE COMPLETE EACH OF THE FOLLOWING SECTIONS: A. OLD SERIES NOTES CLAIM. Please vote to accept or reject the Plan. YOUR FAILURE TO MARK EITHER CHOICE WILL BE DEEMED AND COUNTED AS AN ACCEPTANCE. --------------------------------------------------------- THE PLAN --------------------------------------------------------- The undersigned Claimant votes the Ballot Amount with respect to its Old Series Notes Claim to (please check one): __ ACCEPT THE PLAN __ REJECT THE PLAN ------------------------------------------------------------ B. GRI Guaranty Claim. Please vote to accept or reject the Plan. YOUR FAILURE TO MARK EITHER CHOICE WILL BE DEEMED AND COUNTED AS AN ACCEPTANCE. ------------------------------------------------------------- THE PLAN -------------------------------------------------------------- The undersigned Claimant votes the Ballot Amount with respect to its GRI Guaranty Claim to (please check one): __ ACCEPT THE PLAN __ REJECT THE PLAN -------------------------------------------------------------- SERIES A BALLOT 3 C. ELECTION TO CONSENT TO RELEASE OF THE OLD SECURITY DOCUMENTS Please check whether you consent to the release of the Old Security Documents. PLEASE NOTE THAT A CONDITION PRECEDENT TO CONSUMMATION TO THE PLAN IS THE RELEASE AND TERMINATION OF THE OLD SECURITY DOCUMENTS. YOUR FAILURE TO MARK EITHER CHOICE WILL BE DEEMED AND COUNTED AS A CONSENT. ------------------------------------------------------- RELEASE OF OLD SECURITY DOCUMENTS ------------------------------------------------------- __ I consent to the release of the Old Security Documents. __ I do NOT consent to the release of the Old Security Documents. --------------------------------------------------------- ITEM 3: CERTIFICATION AS TO OLD SERIES NOTES. The Resorts Senior Secured Redeemable Notes due April 15, 1994 were issued in two series: Series A and Series B. Collectively, these two series of notes are referred to as the Old Series Notes. By returning this Ballot, the undersigned Claimant certifies that it has not submitted any other Ballots for Old Series Notes (either Series A or Series B) except as specified in the table immediately below. Please note that you must submit a separate Ballot for any Series A Notes that you hold in record name or that are held on your behalf by a broker or bank (or agent thereof). If you have submitted any other Ballot with respect to Old Series Notes, Series A or Series B, please provide the information required by this Item 3 in the following table (please use additional sheets of paper if necessary): - -------------------------------------------------------------------------------- Account Number Series* Name of Holder** (if applicable) Principal Amount - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- * Please specify the series (A or B) of Old Series Notes for which other Ballots were submitted. ** Insert your name if the Old Series Note is held by you in record name or, if held in street name, insert the name of the broker or bank (or agent thereof). SERIES A BALLOT 4 ITEM 4: OTHER CERTIFICATIONS. By returning this Ballot, the undersigned Claimant certifies: (a) that it has not submitted any other Ballots for Old Series Notes (Series A or Series B) that are inconsistent with the votes to accept or reject the Plan and the decision with respect to the consent to the release of the Old Security Documents as set forth herein or that, if such other Ballots have been submitted for Old Series Notes, such earlier Ballots are hereby revoked; (b) that it has been provided with a copy of the Information Statement relating to the Plan and all related solicitation materials; (c) that it understands that if this Ballot is validly executed and returned without indicating any acceptance or rejection of the Plan (for either the Old Series Notes Claim or the GRI Guaranty Claim), IT WILL BE COUNTED AS A VOTE ACCEPTING THE PLAN WITH RESPECT BOTH TO THE Old SERIES NOTES CLAIM AND THE GRI GUARANTY CLAIM; (d) that it understands that if this Ballot is validly executed and returned without indicating a consent or a refusal to consent to the release of the Old Security Documents, IT WILL BE COUNTED AS A CONSENT TO THE RELEASE OF THE OLD SECURITY DOCUMENTS; AND (e) that it is the registered record holder or beneficial owner of the Series A Notes set forth in Item 1 and has full power and authority to vote to accept or reject the Plan. The undersigned Claimant also acknowledges that this solicitation is subject to all the terms and conditions set forth in the Information Statement relating to the Plan. SERIES A BALLOT 5 YOU ARE URGED TO VOTE ON THE PLAN AND TO INDICATE WHETHER YOU CONSENT TO THE RELEASE OF THE OLD SECURITY DOCUMENTS. Name of Creditor: ______________________________________ (Print or Type) By:___________________________________ (Signature of Creditor or Authorized Agent) Print Name of Signatory:______________________________ Title:__________________________________ (If Appropriate) Street Address:__________________________ _________________________________________ City, State and Zip Code Telephone Number:_______________________ ________________________________________ Social Security or Federal Tax I.D. No. (Optional) Date Completed:_________________________ YOUR VOTE MUST BE RECEIVED BY HILL AND KNOWLTON, INC., 420 LEXINGTON AVENUE, NEW YORK, NEW YORK 10017 (ATTN: RESORTS BALLOT SOLICITATION GROUP), BY 5:00 P.M., NEW YORK CITY TIME, ON ___________________, 1994 OR YOUR VOTE WILL NOT BE COUNTED. IF YOU HOLD IN STREET NAME, PLEASE ALLOW SUFFICIENT ADDITIONAL TIME FOR PROCESSING OF YOUR VOTE BY YOUR BANK OR BROKER, OR ITS AGENT. SERIES A BALLOT 6 VOTING INFORMATION AND INSTRUCTIONS FOR SERIES A NOTES BALLOT RESORTS INTERNATIONAL, INC. SENIOR SECURED REDEEMABLE NOTES DUE APRIL 15, 1994, SERIES A (RII CLASS 2 AND GRI CLASS 2) 1. Resorts International, Inc. ("RII") and GGRI, Inc. ("GRI") (collectively, the Debtors), and Resorts International Hotel, Inc.("RIH"), Resorts International Hotel Financing, Inc. ("RIHF"), and P. I. Resorts Limited ("PIRL") are soliciting your vote with respect to the Joint Plan of Reorganization under Chapter 11 of the Bankruptcy Code Proposed by Resorts International, Inc., GGRI, Inc., Resorts International Hotel, Inc., Resorts International Hotel Financing, Inc. and P. I. Resorts Limited (the "Plan"), a copy of which is attached as Appendix A to the accompanying Information Statement/Prospectus dated January __, 1994 (the "Information Statement"). PLEASE REVIEW THE INFORMATION STATEMENT CAREFULLY BEFORE YOU VOTE. 2. The Plan can be confirmed by the Bankruptcy Court and thereby made binding on you if it is accepted by the holders of two-thirds in amount and more than one-half in number of claims in each class and the holders of two-thirds in amount of equity interests in each class voting on such plan. In the event the requisite acceptances are not obtained, the Bankruptcy Court may nevertheless confirm the Plan if at least one impaired class of creditors votes to accept the Plan and the Bankruptcy Court finds that the Plan accords fair and equitable treatment to and does not discriminate unfairly against the class or classes rejecting it. 3. The Resorts Senior Secured Redeemable Notes due April 15, 1994 were issued in two series: Series A and Series B. Collectively, these two series of notes are referred to as the Old Series Notes. Under the Plan, all Claims arising from Old Series Notes, regardless of series, are classified in a single class (RII Class 2). For purposes of voting with respect to the Plan, Claimants who hold both Series A Notes and Series B Notes are treated as having a single "Old Series Notes Claim" (in the aggregate principal amount of the Claimant's Series A Notes and Series B Notes). Additionally, record holders/beneficial owners of Old Series Notes (regardless of series) are also beneficiaries of the GRI Guaranty (as defined in the Plan) which secured RII's obligations under the Old Series Notes. As a result of the GRI Guaranty, record holders/beneficial owners of Old Series Notes also hold Claims against GRI ("GRI Guaranty Claims"). A Claimant's GRI Guaranty Claim is classified separately from its Old Series Notes Claim in GRI Class 2. As a result, for purposes of voting with respect to the Plan, a record holder/beneficial owner of Old Series Notes is entitled to a separate vote on the Plan with respect to its GRI Guaranty Claim. 4. Finally, RII and GRI are soliciting your consent to release the Old Security Documents under which the liens on the property securing the Old Series Notes were granted or created. The Old Security Documents, in effect, pledge RIH's assets (including the Resorts International Hotel) to secure the Old Series Notes. Under the Plan, these same assets are pledged to secure the new debt obligations to be issued to you. Pursuant to the Old Series Note Indenture, to effectuate such termination and SERIES A BALLOT 7 release consensually, the record holders of at least 66 2/3% in aggregate principal amount of the outstanding Old Series Notes and the record holders of at least a majority in aggregate principal amount of each series of the Old Series Notes must execute consents. Accordingly, RII and GRI are seeking consents from the holders of Old Series Notes. If insufficient consents are received from holders of Old Series Notes to effectuate such termination and release consensually, RII and GRI intend to request the Bankruptcy Court to order the release of the Old Security Documents; however, no assurance can be given that such an order will be entered. In no event will the consents to release the Old Security Documents be used to effectuate the termination and release of the Old Security Documents in the absence of the confirmation and consummation of the Plan. If RII and GRI fail to receive the Requisite Acceptances, notwithstanding receipt of sufficient consents to release and terminate the Old Security Documents pursuant to the Old Series Note Indenture, such consents will only be used in the event that RII and GRI continue to pursue confirmation and consummation of the Plan. In the event that RII and GRI elect or are required to resolicit Acceptances of the Plan, however, they reserve the right not to resolicit with respect to the consents to release the Old Security Documents and to use consents received from the initial Solicitation. 5. Accordingly, this Ballot requests three separate votes from the record holders/beneficial owners of Series A Notes. Each record holder/beneficial owner of Series A Notes has the right to vote with respect to TWO Claims, its Old Series Notes Claim and its GRI Guaranty Claim. Therefore, first, you must vote with respect to your Old Series Notes Claim to accept or reject your treatment under the Plan. Second, you must vote with respect to your GRI Guaranty Claim to accept or reject your treatment under the Plan. Third, you must vote whether to consent to the release of the Old Security Documents (as defined in the Plan). IF YOU DO NOT CONSENT TO THE RELEASE OF THE OLD SECURITY DOCUMENTS, THE PLAN MAY NOT BE CONFIRMABLE AND THE TRANSACTIONS THEREUNDER MAY NOT BE IMPLEMENTED. 6. For your vote to be counted, you must complete the Ballot, and sign and return it to the address set forth on the enclosed prepaid return envelope. Ballots must be received by Hill and Knowlton, Inc. (the "Solicitation Agent") no later than 5:00 p.m., New York City time, on _____________, 1994 (the "Voting Deadline"). If you received a return envelope addressed to your broker or bank (or agent thereof), be sure to return your Ballot early enough for your vote to be processed and then forwarded to and received by the Solicitation Agent by the Voting Deadline. 7. If you are a beneficial owner and your broker or bank accepts facsimiles, your Ballot may be transmitted by facsimile to the appropriate telephone number provided by your broker or bank (or agent thereof). If you are a record holder, Ballots may be submitted by facsimile to Hill and Knowlton at the appropriate number set forth below. In either case, Ballots transmitted by facsimile must be received by the Solicitation Agent no later than the Voting Deadline. For inspection purposes, the original of any telecopied Ballot should be delivered to your broker or bank (or agent thereof) or to Hill and Knowlton, whichever is applicable, so as to be received no later than fifteen (15) days after the Voting Deadline. ITEM 1 Insert the Ballot Amount in Item 1 of the Ballot. The "Ballot Amount"is the principal amount of Series A Notes held by you as the registered record holder or the beneficial owner thereof. If you are a beneficial owner, the Ballot Amount should include only the amount of Series A Notes held in account(s) with the bank or broker which transmitted this Ballot to you. If you hold other Series A Notes in record name or in one or more accounts with other banks or brokers, such Series A Notes must be voted separately on the ballots received from such other banks or brokers, or in the case of record name Series A Notes, by you, in accordance with the instructions for Item 2 set forth below. If you are a SERIES A BALLOT 8 beneficial owner and do not know your Ballot Amount, please contact your bank or broker immediately. ITEM 2 (i) In the appropriate boxes in Item 2, indicate your votes with respect to (a) your Old Series Note Claim, (b) your GRI Guaranty Claim and (c) your decision whether to consent to the release of the Old Security Documents. (ii) You may vote differently on the Plan with respect to your Old Series Notes Claim and your GRI Guaranty Claim. If, however, you cast a vote on the Plan with respect to only one of these two Claims, you will be deemed to have voted identically with respect to the other Claim. Additionally, any VALIDLY EXECUTED Ballot which does not indicate acceptance or rejection of the Plan with respect to either the Old Series Notes Claim or the GRI Guaranty Claim WILL BE DEEMED AN ACCEPTANCE OF THE PLAN WITH RESPECT TO BOTH CLAIMS. There can be no assurance, however, that the Bankruptcy Court will permit unmarked Ballots to be counted. Accordingly, you are encouraged to both execute your Ballot and to indicate in the appropriate boxes in Item 2 your votes with respect to the Plan. (iii) Although you may vote differently on the Plan with respect to your Old Series Notes Claim (RII Class 2) and your GRI Guaranty Claim (GRI Class 2), you must vote your entire Claim Amount with respect to each Claim to accept or reject the Plan. Also if you hold Old Series Notes in multiple accounts, you must vote all of your claims within a single class under the Plan to accept or reject the Plan. Thus, you may not split your vote on the Plan in any way (either on a single Ballot or on multiple Ballots) with respect to your Old Series Notes Claim or your GRI Guaranty Claim. If you are a record holder/beneficial owner of Series B Notes as well as Series A Notes, you must also vote your Old Series Notes Claim represented by this Ballot consistently with any Ballot you submit with respect to your Series B Notes. (iv) Furthermore, any VALIDLY EXECUTED Ballot which does not indicate whether the holder consents or refuses to consent to the release of the Old Security Documents WILL BE DEEMED AND COUNTED AS A CONSENT TO THE RELEASE OF THE OLD SECURITY DOCUMENTS, REGARDLESS OF HOW THE HOLDER MAY HAVE VOTED ITS CLAIMS WITH RESPECT TO THE PLAN. Please note that a condition precedent to consummation to the Plan is the release and termination of the Old Security Documents. As with the vote to accept or reject the Plan, you may not split your vote with respect to the consent to release of the Old Security Documents in any way (either on a single Ballot or on multiple Ballots). (v) A Ballot that partially accepts and partially rejects the Plan with respect to either of the record holder/beneficial owner's two Claims or splits its vote with respect to the election to consent to the release of the Old Security Documents will not be counted. Additionally, any prior Ballots submitted by you as a record holder/beneficial owner of Old Series Notes (for the Series A Notes represented by this Ballot, other Series A Notes or Series B Notes) will not be counted to the extent that the votes indicated by those prior Ballots are inconsistent with the votes indicated on this Ballot within a single class of claims or with respect to the decision as to whether to consent to the release of the Old Security Documents. If multiple Ballots are received from an individual Claimant for the same Claim prior to the Voting Deadline that are inconsistent with respect to the votes to accept or reject the Plan and the decision regarding the consent to the release of the Old Security Documents, the last ballot received shall supersede and revoke any earlier received ballot. SERIES A BALLOT 9 ITEM 3 In Item 3 of the Ballot, insert the requested information for all Old Series Notes held by you either as record holder or beneficial owner for which other Ballots have been submitted. ITEM 4 Please review and certify as to the matter set forth in Item 4 and execute the Ballot in the space provided. This Ballot must be returned in sufficient time to allow it to be received by the Solicitation Agent by no later than 5:00 p.m., New York City time, on ___________, 1994. If you believe you have received the wrong ballot, please contact the Solicitation Agent or your broker or bank immediately. The Ballot attached hereto is not a letter of transmittal and may not be used for any purpose other than to vote to (i) accept or reject the Plan and (ii) elect to consent to the release of the Old Security Documents. Accordingly, at this time, holders should not surrender certificates representing their securities, and neither the Debtors nor the Solicitation Agent will accept delivery of any such certificates surrendered together with this Ballot. The remittance of your securities for exchange pursuant to the Plan may only be made by your broker or bank (or agent thereof) or, in the case of registered record holders, by you, and will only be accepted if certificates representing your securities (in proper form for transfer) are delivered together with a letter of transmittal which will be furnished to your broker or bank (or agent thereof) or you (in the case of registered record holders) as provided under the Plan or as notified following confirmation of the Plan by the Bankruptcy Court. Moreover, the Ballot does not constitute and shall not be deemed a proof of claim or interest or an assertion of a claim or interest. PLEASE MAIL YOUR BALLOT PROMPTLY! IF YOU HAVE ANY QUESTIONS REGARDING THIS BALLOT OR THE VOTING PROCEDURES, PLEASE CALL THE SOLICITATION AGENT: HILL AND KNOWLTON, INC. ATTN: RESORTS BALLOT SOLICITATION GROUP 420 LEXINGTON AVENUE NEW YORK, NEW YORK 10017 (212) 210-8850 SERIES A BALLOT 10 For your information, the Plan divides creditors and equity interest holders of RII and GRI into the following classes: RII CREDITORS AND EQUITY INTEREST HOLDERS Class 1.* Priority Claims Class 2. Old Series Notes Claims Class 3.* Showboat Notes Claims Class 4.* Secured Claims Class 5.* RII Unsecured Claims Class 6.* Paradise Subsidiary Claims Class 7. RII Equity Interests Class 8. 1990 Stock Option Plan Interests GRI CREDITORS AND EQUITY INTEREST HOLDERS Class 1.* Priority Claims Class 2. GRI Guaranty Claims Class 3.* GRI Unsecured Claims Class 4. RII Intercompany Claim Class 5. GRI Equity Interest * Unimpaired or otherwise deemed to accept or reject the Plan. SERIES A BALLOT 11 EX-10 21 EXHIBIT 10.46 UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re RESORTS INTERNATIONAL, INC., a Delaware corporation, and GGRI, INC., a Delaware corporation, formerly known as Griffin Resorts, Inc., Debtors. Case Nos. _______________ and _______________ Jointly Administered Under Case No. _________________ Chapter 11 BALLOT TO VOTE TO ACCEPT OR REJECT THE JOINT PLAN OF REORGANIZATION PROPOSED BY RESORTS INTERNATIONAL, INC., GGRI, INC., RESORTS INTERNATIONAL HOTEL INC., RESORTS INTERNATIONAL HOTEL FINANCING, INC., AND P. I. RESORTS LIMITED RESORTS INTERNATIONAL, INC. COMMON STOCK BALLOT RESORTS INTERNATIONAL, INC. COMMON STOCK, PAR VALUE $.01 PER SHARE (RII CLASS 7) PLEASE READ AND FOLLOW THE ATTACHED VOTING INSTRUCTIONS CAREFULLY BEFORE COMPLETING THIS BALLOT. PLEASE COMPLETE, SIGN AND DATE THIS BALLOT AND PROMPTLY RETURN IT IN THE ENCLOSED PREPAID RETURN ENVELOPE. THIS BALLOT MUST BE RECEIVED BY HILL AND KNOWLTON, INC. (THE "SOLICITATION AGENT") BY 5:00 P.M., NEW YORK CITY TIME, ON __________________ (THE "VOTING DEADLINE"). IF YOU SIGN THIS BALLOT BUT FAIL TO INDICATE AN ACCEPTANCE OR REJECTION OF THE PLAN, THIS BALLOT WILL BE DEEMED AND COUNTED AS AN ACCEPTANCE OF THE PLAN. Resorts International, Inc. ("RII"), GGRI, Inc. ("GRI"), Resorts International Hotel, Inc.("RIH"), Resorts International Hotel Financing, Inc. ("RIHF"), and P. I. Resorts Limited ("PIRL") are soliciting your vote with respect to the prepackaged joint plan of reorganization under chapter 11 of the Bankruptcy Code for RII and GRI (collectively, the "Debtors" or the "Company") which has been proposed by RII, GRI, RIH, RIHF and PIRL (the "Plan") and is attached as Appendix A to the accompanying Information Statement/Prospectus dated January___, 1994 (the "Information Statement"). This Ballot is to be used by registered record owners and Beneficial Owners (as defined herein) of shares of Resorts International, Inc. Common Stock, par value $.01 per share (the "Common Stock") to vote with respect to the Plan. Please read the Information Statement carefully before you vote. TO INDICATE YOUR VOTE, COMPLETE THIS BALLOT IN ACCORDANCE WITH THE ATTACHED INSTRUCTIONS. ITEM 1: AMOUNT OF COMMON STOCK. The undersigned (the "Interest Holder") is as of January 10, 1994 ("the Voting Record Date") the registered record holder or the beneficial owner of Common Stock in the amount of ____________ shares, or such lesser or greater number of shares as may be reflected in the records available to the Debtors (the "Interest"). If you are a beneficial owner, the Interest amount requested above should include only the amount of Common Stock held in account(s) with the bank or broker which transmitted this Ballot to you. If you hold other shares of Common Stock in record name or in one or more accounts with other banks or brokers, such shares of Common Stock should be voted separately on the ballots received from such other banks or brokers, or with respect to record name shares of Common Stock, by you, in accordance with the attached instructions. If you are a beneficial owner and do not know the amount of your Interest, please contact your bank or broker immediately. ITEM 2: VOTE WITH RESPECT TO THE PLAN. Please vote to accept or reject the Plan. YOUR FAILURE TO MARK EITHER CHOICE WILL BE DEEMED AND COUNTED AS AN ACCEPTANCE. -------------------------------------------------- THE PLAN -------------------------------------------------- The undersigned Interest Holder votes all of its Common Stock Interest to (please check one): __ ACCEPT __ REJECT -------------------------------------------------- 2 ITEM 3: CERTIFICATION AS TO COMMON STOCK. By returning this Ballot, the undersigned Interest Holder certifies that it has not submitted any other Ballots for the Common Stock, except as specified in the table immediately below. - -------------------------------------------------------------------------------- ACCOUNT NUMBER NAME OF HOLDER* (IF APPLICABLE) NUMBER OF SHARES - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- * Insert your name if the shares of Common Stock are held by you in record name or, if held in street name, insert the name of the broker or bank (or agent thereof). ITEM 4: OTHER CERTIFICATIONS. By returning this Ballot, the undersigned Interest Holder certifies: (a) that it has not submitted any other Ballots for Common Stock or that, if any other Ballots have been submitted for Common Stock, such earlier Ballots are hereby revoked; (b) that it has been provided with a copy of the Information Statement relating to the Plan and all related solicitation materials; (c) that it understands that if this Ballot is validly executed and returned without indicating an acceptance or rejection of the Plan, IT WILL BE COUNTED AS A VOTE ACCEPTING THE PLAN; and (d) that it is the registered record holder or Beneficial Owner of the Common Stock set forth in Item 1 and has full power and authority to vote to accept or reject the Plan. The undersigned Interest Holder also acknowledges that this solicitation is subject to all the terms and conditions set forth in the Information Statement relating to the Plan. 3 YOU ARE URGED TO VOTE ON THE PLAN. Name of Interest Holder: _____________________________________________ (Print or Type) By:__________________________________________ (Signature of Holder or Authorized Agent) Print Name of Signatory:___________________________________ Title:_______________________________________ (If Appropriate) Street Address:______________________________ _____________________________________________ City, State and Zip Code Telephone Number: _(___)_____________________ _____________________________________________ Social Security or Federal Tax I.D. No. (Optional) Date Completed:______________________________ YOUR VOTE MUST BE RECEIVED BY HILL AND KNOWLTON, INC., 420 LEXINGTON AVENUE, NEW YORK, NEW YORK 10017 (ATTN: RESORTS BALLOT SOLICITATION GROUP), BY 5:00 P.M., NEW YORK CITY TIME, ON ________________________ OR YOUR VOTE WILL NOT BE COUNTED. IF YOU HOLD IN STREET NAME, PLEASE ALLOW SUFFICIENT ADDITIONAL TIME FOR PROCESSING OF YOUR VOTE BY YOUR BANK OR BROKER, OR ITS AGENT. 4 VOTING INFORMATION AND INSTRUCTIONS FOR RESORTS INTERNATIONAL, INC. COMMON STOCK BALLOT RESORTS INTERNATIONAL, INC. COMMON STOCK, PAR VALUE $.01 PER SHARE (RII CLASS 7) 1. Resorts International, Inc. ("RII") and GGRI, Inc. ("GGRI") (collectively, the Debtors), Resorts International Hotel, Inc.("RIH"), Resorts International Hotel Financing, Inc. ("RIHF"), and P. I. Resorts Limited ("PIRL") are soliciting your vote with respect to the Joint Plan of Reorganization under Chapter 11 of the Bankruptcy Code Proposed by Resorts International, Inc., GGRI, Inc., Resorts International Hotel, Inc., Resorts International Hotel Financing, Inc., and P. I. Resorts Limited (the "Plan"), a copy of which is attached as Appendix A to the accompanying Information Statement/Prospectus dated January __, 1994 (the "Information Statement"). PLEASE REVIEW THE INFORMATION STATEMENT CAREFULLY BEFORE YOU VOTE. 2. The Plan can be confirmed by the Bankruptcy Court and thereby made binding on you if it is accepted by the holders of two-thirds in amount and more than one-half in number of claims or interests in each class and the holders of two-thirds in amount of equity interests in each class voting on such plan. In the event the requisite acceptances are not obtained, the Bankruptcy Court may nevertheless confirm the Plan if at least one impaired class of creditors votes to accept the Plan and the Bankruptcy Court finds that the Plan accords fair and equitable treatment to and does not discriminate unfairly against the class or classes rejecting it. 3. This Ballot requests that you, as a record holder/Beneficial Owner of Common Stock, vote to accept or reject your treatment under the Plan. For your vote to be counted, you must complete the Ballot and sign and return it to the address set forth on the enclosed prepaid return envelope. Ballots must be received by Hill and Knowlton, Inc. (the "Solicitation Agent") no later than 5:00 p.m., New York City time, on ________________, 1994 (the "Voting Deadline"). If you received a return envelope addressed to your broker or bank (or agent thereof), be sure to return your ballot early enough for your vote to be processed and then forwarded to and received by the Solicitation Agent by the Voting Deadline. 4. If you are a beneficial owner and your broker or bank accepts facsimiles, your Ballot may be transmitted by facsimile to the appropriate telephone number provided by your broker or bank (or agent thereof). If you are a record holder, Ballots may be submitted by facsimile to Hill and Knowlton at the appropriate number set forth below. In either case, Ballots transmitted by facsimile must be received by the Solicitation Agent no later than the Voting Deadline. For inspection purposes, the original of any telecopied Ballot should be delivered to your broker or bank (or agent thereof) or to Hill and Knowlton, whichever is applicable, so as to be received no later than fifteen (15) days after the Voting Deadline. ITEM 1 Insert the Interest amount in Item 1 of the Ballot. 5 ITEM 2 (i) Indicate your vote with respect to the Plan in the appropriate box in Item 2. (ii) Any VALIDLY EXECUTED Ballot which does not indicate acceptance or rejection of the Plan WILL BE DEEMED AND COUNTED AS AN ACCEPTANCE OF THE PLAN. There can be no assurance, however, that the Bankruptcy Court will permit unmarked Ballots to be counted. Accordingly, you are encouraged to both execute your Ballot and to indicate in the box in Item 2 your vote with respect to the Plan. (iii) You must vote all of your Interest to accept or reject the Plan. If you hold Common Stock in multiple accounts, you must vote all of your Common Stock Interest to accept or reject the Plan. Thus, you may not split your vote on the Plan in any way (either on a single Ballot or on multiple Ballots) with respect to your Common Stock Interest. (iv) A Ballot that partially accepts and partially rejects the Plan will not be counted. Additionally, any prior Ballots submitted by you as a record holder/beneficial owner of Common Stock will not be counted to the extent that the votes indicated by those prior Ballots are inconsistent with the votes indicated on this Ballot. If multiple Ballots are received from an individual Interest holder with respect to that holder's RII Common Stock prior to the Voting Deadline that are inconsistent with respect to the vote to accept or reject the Plan, the last ballot received shall supersede and revoke any earlier received ballot. ITEM 3 In Item 3 of the Ballot, insert the requested information for all 1990 Stock Options held by you either as record holder or beneficial owner for which other Ballots have been submitted. ITEM 4 Please review and certify as to the matters set forth in Item 4 and execute the Ballot in the space provided. This Ballot must be returned in sufficient time to allow it to be received by the Solicitation Agent by no later than 5:00 p.m., New York City time, on ______________. If you believe you have received the wrong ballot, please contact the Solicitation Agent or your broker or bank immediately. 7. The Ballot attached hereto is not a letter of transmittal and may not be used for any purpose other than to vote to accept or reject the Plan. Accordingly, at this time, holders should not surrender certificates representing their securities, and neither the Debtors nor the Solicitation Agent will accept delivery of any such certificates surrendered together with this Ballot. The remittance of your securities for exchange pursuant to the Plan may only be made by your broker or bank (or agent thereof) or, in the case of registered record holders, by you, and will only be accepted if certificates representing your securities (in proper form for transfer) are delivered together with a letter of transmittal which will be furnished to your broker or bank (or agent thereof) or you (in the case of registered record holders) as provided under the Plan or as notified following confirmation of the Plan by the Bankruptcy Court. Moreover, the Ballot does not constitute and shall not be deemed a proof of claim or interest or an assertion of a claim or interest. 6 PLEASE MAIL YOUR BALLOT PROMPTLY! --------------------------------- IF YOU HAVE ANY QUESTIONS REGARDING THIS BALLOT OR THE VOTING PROCEDURES, PLEASE CALL THE SOLICITATION AGENT: HILL AND KNOWLTON, INC. ATTN: RESORTS BALLOT SOLICITATION GROUP 420 LEXINGTON AVENUE NEW YORK, NEW YORK 10017 (212) 210-8850 7 For your information, the Plan divides creditors and equity interest holders of RII and GRI into the following classes: RII CREDITORS AND EQUITY INTEREST HOLDERS Class 1.* Priority Claims Class 2. Series Notes Claims Class 3.* Showboat Notes Claims Class 4.* Secured Claims Class 5.* RII Unsecured Claims Class 6.* Paradise Subsidiary Claims Class 7. RII Equity Interests Class 8. 1990 Stock Option Plan Interests GRI CREDITORS AND EQUITY INTEREST HOLDERS Class 1.* Priority Claims Class 2. GRI Guaranty Claims Class 3.* GRI Unsecured Claims Class 4. RII Intercompany Claim Class 5. GRI Equity Interest * Unimpaired or otherwise deemed to accept or reject the Plan. 8 EX-10 22 EXHIBIT 10.47 EXHIBIT 10.47 UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re RESORTS INTERNATIONAL, INC., a Delaware corporation, and GGRI, INC., a Delaware corporation, formerly known as Griffin Resorts, Inc., Debtors. Case Nos. _______________ and _______________ Jointly Administered Under Case No. _________________ Chapter 11 BALLOT TO VOTE TO ACCEPT OR REJECT THE JOINT PLAN OF REORGANIZATION PROPOSED BY RESORTS INTERNATIONAL, INC., GGRI, INC., RESORTS INTERNATIONAL HOTEL INC., RESORTS INTERNATIONAL HOTEL FINANCING, INC., AND P. I. RESORTS LIMITED RESORTS INTERNATIONAL, INC. STOCK OPTION BALLOT STOCK OPTIONS ISSUED PURSUANT TO RESORTS INTERNATIONAL, INC. SENIOR MANAGEMENT STOCK OPTION PLAN (RII CLASS 8) PLEASE READ AND FOLLOW THE ATTACHED VOTING INSTRUCTIONS CAREFULLY BEFORE COMPLETING THIS BALLOT. PLEASE COMPLETE, SIGN AND DATE THIS BALLOT AND PROMPTLY RETURN IT IN THE ENCLOSED PREPAID RETURN ENVELOPE. THIS BALLOT MUST BE RECEIVED BY HILL AND KNOWLTON, INC. (THE "SOLICITATION AGENT") BY 5:00 P.M., NEW YORK CITY TIME, ON __________________ (THE "VOTING DEADLINE"). IF YOU SIGN THIS BALLOT BUT FAIL TO INDICATE AN ACCEPTANCE OR REJECTION OF THE PLAN, THIS BALLOT WILL BE DEEMED AND COUNTED AS AN ACCEPTANCE OF THE PLAN. Resorts International, Inc. ("RII"), GGRI, Inc. ("GRI"), Resorts International Hotel, Inc.("RIH"), Resorts International Hotel Financing, Inc. ("RIHF"), and P. I. Resorts Limited ("PIRL") are soliciting your vote with respect to the prepackaged joint plan of reorganization under chapter 11 of the Bankruptcy Code for RII and GRI (collectively, the "Debtors" or the "Company") which has been proposed by RII, GRI, RIH, RIHF and PIRL (the "Plan") and is attached as Appendix A to the accompanying Information Statement/Prospectus dated January ____, 1994 (the "Information Statement"). This Ballot is to be used by registered record holders of stock options ("1990 Stock Options") issued pursuant to the Resorts International, Inc. Senior Management Stock Option Plan, dated as of September 17, 1990 (the "1990 Stock Option Plan") to vote with respect to the Plan. Please read the Information Statement carefully before you vote. TO INDICATE YOUR VOTE, COMPLETE THIS BALLOT IN ACCORDANCE WITH THE ATTACHED INSTRUCTIONS. ITEM 1: AMOUNT OF STOCK OPTIONS. The undersigned (the "Interest Holder") is as of January 10, 1993 (the Voting Record Date") the registered record holder or the beneficial owner of 1990 Stock Options in the amount of ____________ options, or such lesser or greater number of options as may be reflected in the records available to the Debtors (the "Interest"). ITEM 2: VOTE WITH RESPECT TO THE PLAN. Please vote to accept or reject the Plan: ----------------------------------------------------- THE PLAN ----------------------------------------------------- The undersigned Interest Holder votes all of its 1990 Stock Option Interest to (please check one): __ ACCEPT __ REJECT ----------------------------------------------------- 2 ITEM 3: CERTIFICATION AS TO 1990 STOCK OPTIONS. By returning this Ballot, the undersigned Interest Holder certifies that it has not submitted any other Ballots for the 1990 Stock Options, except as specified in the table immediately below. If applicable to you, please provide the information required by this Item 3 in the following table (please use additional sheets of paper if necessary): - -------------------------------------------------------------------------------- ACCOUNT NUMBER NAME OF HOLDER* (IF APPLICABLE) NUMBER OF SHARES - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- * Insert your name if the 1990 Stock Options are held by you in record name or, if held in street name, insert the name of the broker or bank (or agent thereof). ITEM 4: OTHER CERTIFICATIONS. By returning this Ballot, the undersigned Interest Holder certifies: (a) that it has not submitted any other Ballots for 1990 Stock Options or that, if any other Ballots have been submitted for 1990 Stock Options, such earlier Ballots are hereby revoked; (b) that it has been provided with a copy of the Information Statement relating to the Plan and all related solicitation materials; (c) that it understands that if this Ballot is validly executed and returned without indicating an acceptance or rejection of the Plan, IT WILL BE COUNTED AS A VOTE ACCEPTING THE PLAN; and (d) that it is the registered record holder or beneficial owner of the 1990 Stock Options set forth in Item 1 and has full power and authority to vote to accept or reject the Plan. The undersigned Interest Holder also acknowledges that this solicitation is subject to all the terms and conditions set forth in the Information Statement relating to the Plan. 3 YOU ARE URGED TO VOTE ON THE PLAN. Name of Interest Holder: _____________________________________________ (Print or Type) By:__________________________________________ (Signature of Holder or Authorized Agent) Print Name of Signatory:___________________________________ Title:_______________________________________ (If Appropriate) Street Address:______________________________ _____________________________________________ City, State and Zip Code Telephone Number: _(___)_____________________ _____________________________________________ Social Security or Federal Tax I.D. No. (Optional) Date Completed:______________________________ YOUR VOTE MUST BE RECEIVED BY HILL AND KNOWLTON, INC., 420 LEXINGTON AVENUE, NEW YORK, NEW YORK 10017 (ATTN: RESORTS BALLOT SOLICITATION GROUP), BY 5:00 P.M., NEW YORK CITY TIME, ON ________________________ OR YOUR VOTE WILL NOT BE COUNTED. 4 VOTING INFORMATION AND INSTRUCTIONS FOR RESORTS INTERNATIONAL, INC. STOCK OPTIONS BALLOT STOCK OPTIONS ISSUED PURSUANT TO RESORTS INTERNATIONAL, INC. SENIOR MANAGMENT STOCK OPTION PLAN (RII CLASS 8) 1. Resorts International, Inc. ("RII") and GGRI, Inc. ("GRI") (collectively, the Debtors), Resorts International Hotel, Inc.("RIH"), Resorts International Hotel Financing, Inc. ("RIHF"), and P. I. Resorts Limited ("PIRL") are soliciting your vote with respect to the Joint Plan of Reorganization under Chapter 11 of the Bankruptcy Code Proposed by Resorts International, Inc., GGRI, Inc., Resorts International Hotel, Inc., Resorts International Hotel Financing, Inc., and P. I. Resorts Limited (the "Plan"), a copy of which is attached as Appendix A to the accompanying Information Statement/Prospectus dated January ____, 1994 (the "Information Statement"). PLEASE REVIEW THE INFORMATION STATEMENT CAREFULLY BEFORE YOU VOTE. 2. The Plan can be confirmed by the Bankruptcy Court and thereby made binding on you if it is accepted by the holders of two-thirds in amount and more than one-half in number of claims or interests in each class and the holders of two-thirds in amount of equity interests in each class voting on such plan. In the event the requisite acceptances are not obtained, the Bankruptcy Court may nevertheless confirm the Plan if at least one impaired class of creditors votes to accept the Plan and the Bankruptcy Court finds that the Plan accords fair and equitable treatment to and does not discriminate unfairly against the class or classes rejecting it. 3. This Ballot requests that you, as a record holder of stock options ("1990 Stock Options") issued pursuant to the Resorts International, Inc. Senior Management Stock Option Plan, dated as of September 17, 1990 (the "1990 Stock Option Plan"), vote to accept or reject your treatment under the Plan. For your vote to be counted, you must complete the Ballot, and sign and return it to the address set forth on the enclosed prepaid return envelope. Ballots must be received by Hill and Knowlton, Inc. (the "Solicitation Agent") no later than 5:00 p.m., New York City time, on ________________ (the "Voting Deadline"). If you received a return envelope addressed to your broker or bank (or agent thereof), be sure to return your ballot early enough for your vote to be processed and then forwarded to and received by the Solicitation Agent by the Voting Deadline. 4. If you are a beneficial owner and your broker or bank accepts facsimiles, your Ballot may be transmitted by facsimile to the appropriate telephone number provided by your broker or bank (or agent thereof). If you are a record holder, Ballots may be submitted by facsimile to Hill and Knowlton at the appropriate number set forth below. In either case, Ballots transmitted by facsimile must be received by the Solicitation Agent no later than the Voting Deadline. For inspection purposes, the original of any telecopied Ballot should be delivered to your broker or bank (or agent thereof) or to Hill and Knowlton, whichever is applicable, so as to be received no later than fifteen (15) days after the Voting Deadline. ITEM 1 Insert the Interest amount in Item 1 of the Ballot. 5 ITEM 2 (i) Indicate your vote with respect to the Plan in the appropriate box in Item 2. (ii) You must vote all of your Interest to accept or reject the Plan. A Ballot that partially accepts and partially rejects the Plan will not be counted. Additionally, any prior Ballots submitted by you as a record holder/beneficial owner of 1990 Stock Options will not be counted. If multiple Ballots are received from an individual Interest holder with respect to that holder's 1990 Stock Options prior to the Voting Deadline, the last ballot received shall supersede and revoke any earlier received ballot. (iii) Any VALIDLY EXECUTED Ballot which does not indicate acceptance or rejection of the Plan WILL BE DEEMED AND COUNTED AS AN ACCEPTANCE OF THE PLAN. There can be no assurance, however, that the Bankruptcy Court will permit unmarked Ballots to be counted. Accordingly, you are encouraged to both execute your Ballot and to indicate in the box in Item 2 your vote with respect to the Plan. ITEM 3 In Item 3 of the Ballot, insert the requested information for all 1990 Stock Options held by you either as record holder or beneficial owner for which other Ballots have been submitted. ITEM 4 Please review and certify as to the matters set forth in Item 4 and execute the Ballot in the space provided. This Ballot must be returned in sufficient time to allow it to be received by the Solicitation Agent by no later than 5:00 p.m., New York City time, on ______________. If you believe you have received the wrong ballot, please contact the Solicitation Agent or your broker or bank immediately. The Ballot attached hereto is not a letter of transmittal and may not be used for any purpose other than to vote to accept or reject the Plan. Accordingly, at this time, holders should not surrender certificates representing their securities, and neither the Debtors nor the Solicitation Agent will accept delivery of any such certificates surrendered together with this Ballot. The remittance of your securities for exchange pursuant to the Plan may only be made by your broker or bank (or agent thereof) or, in the case of registered record holders, by you, and will only be accepted if certificates representing your securities (in proper form for transfer) are delivered together with a letter of transmittal which will be furnished to your broker or bank (or agent thereof) or you (in the case of registered record holders) as provided under the Plan or as notified following confirmation of the Plan by the Bankruptcy Court. Moreover, the Ballot does not constitute and shall not be deemed a proof of claim or interest or an assertion of a claim or interest. PLEASE MAIL YOUR BALLOT PROMPTLY! IF YOU HAVE ANY QUESTIONS REGARDING THIS BALLOT OR THE VOTING PROCEDURES, PLEASE CALL THE SOLICITATION AGENT: HILL AND KNOWLTON, INC. ATTN: RESORTS BALLOT SOLICITATION GROUP 420 LEXINGTON AVENUE NEW YORK, NEW YORK 10017 (212) 210-8850 6 For your information, the Plan divides creditors and equity interest holders of RII and GRI into the following classes: RII CREDITORS AND EQUITY INTEREST HOLDERS Class 1.* Priority Claims Class 2. Series Notes Claims Class 3.* Showboat Notes Claims Class 4.* Secured Claims Class 5.* RII Unsecured Claims Class 6.* Paradise Subsidiary Claims Class 7. RII Equity Interests Class 8. 1990 Stock Option Plan Interests GRI CREDITORS AND EQUITY INTEREST HOLDERS Class 1.* Priority Claims Class 2. GRI Guaranty Claims Class 3.* GRI Unsecured Claims Class 4. RII Intercompany Claim Class 5. GRI Equity Interest * Unimpaired or otherwise deemed to accept or reject the Plan. 7 EX-10 23 EXHIBIT 10.48 UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re RESORTS INTERNATIONAL, INC., a Delaware corporation, and GGRI, INC., a Delaware corporation, formerly known as Griffin Resorts, Inc., Debtors. Case Nos. _______________ and _______________ Jointly Administered Under Case No. _________________ Chapter 11 MASTER BALLOT TO CAST VOTES TO ACCEPT OR REJECT THE JOINT PLAN OF REORGANIZATION PROPOSED BY RESORTS INTERNATIONAL, INC., GGRI, INC., RESORTS INTERNATIONAL HOTEL INC., RESORTS INTERNATIONAL HOTEL FINANCING, INC., AND P. I. RESORTS LIMITED RESORTS INTERNATIONAL, INC. COMMON STOCK MASTER BALLOT RESORTS INTERNATIONAL, INC. COMMON STOCK, PAR VALUE $.01 PER SHARE (RII CLASS 7) Resorts International, Inc. ("RII"), GGRI, Inc. ("GRI"), Resorts International Hotel, Inc.("RIH"), Resorts International Hotel Financing, Inc. ("RIHF"), and P. I. Resorts Limited ("PIRL") are soliciting the votes of your beneficial owners with respect to the prepackaged joint plan of reorganization under chapter 11 of the Bankruptcy Code for RII and GRI (collectively, the "Debtors" or the "Company") which is proposed by RII, GRI, RIH, RIHF and PIRL (the "Plan") and is attached as Appendix A to the accompanying Information Statement/Prospectus dated January ___, 1994 (the "Information Statement"). Please read the Information Statement carefully before you vote. This Resorts International, Inc. Common Stock Master Ballot (the "Master Ballot") may not be used for any purpose other than for casting votes to accept or reject the Plan. This Master Ballot is to be used by brokers, proxy intermediaries, or other nominees for casting votes on the Plan on behalf of beneficial owners of shares of Resorts International, Inc. Common Stock, par value $.01 per share (the "Common Stock"). The record date (the "Voting Record Date") for purposes of determining which holders of Common Stock are eligible to vote on the Plan is January 10, 1994. Only holders of Common Stock in whose names such securities are registered on the books of the Company on the Voting Record Date or any person who has obtained a properly completed proxy from such person are eligible to cast Master Ballots relating to the Plan. Holders of Common Stock who purchased such securities or whose purchase of such securities is registered after the Voting Record Date who wish to vote on the Plan must arrange with their seller to receive a proxy from the holder of record on such date. A validly executed ballot submitted by a holder which does not indicate whether such holder accepts or rejects the Plan is deemed to be and should be counted as an acceptance of the Plan. PLEASE READ AND FOLLOW THE ATTACHED INSTRUCTIONS CAREFULLY. COMPLETE, SIGN AND DATE THIS MASTER BALLOT AND ARRANGE FOR ITS DELIVERY SO THAT IT IS RECEIVED BY HILL AND KNOWLTON, INC. (THE "SOLICITATION AGENT") BY 5:00 P.M., NEW YORK CITY TIME, ON __________________, 1994 (THE "VOTING DEADLINE"). 2 ITEM 1: TABULATION OF VOTES WITH RESPECT TO THE PLAN. A beneficial owner may not split its vote on the Plan. A beneficial owner must vote its entire Interest Amount to accept or reject the Plan. Also if such beneficial owner holds RII Common Stock in multiple accounts, it must vote all of its interests within a single class under the Plan to accept or reject the Plan. Thus, a beneficial owner may not split its vote on the Plan in any way (either on a single Ballot or on multiple Ballots) with respect to its RII Common Stock Interest. A Resorts International, Inc. Common Stock Ballot (the "Ballot") received from a beneficial owner that partially accepts and partially rejects the Plan should not be counted. For purposes of computing the vote, each voting beneficial owner should be deemed to have voted the full amount of its claim according to your records. Additionally, a validly executed Ballot which does not indicate either an acceptance or rejection of the Plan should be counted as a vote for the Plan. The undersigned certifies that ________ (INSERT THE NUMBER OF DIFFERENT BENEFICIAL OWNERS) beneficial owners of Common Stock in the aggregate amount of __________ shares, as identified by their respective customer account numbers set forth below, have delivered to the undersigned Ballots casting votes to ACCEPT the Plan. The undersigned certifies that _________ (INSERT THE NUMBER OF DIFFERENT BENEFICIAL OWNERS) beneficial owners of Common Stock in the aggregate amount of __________ shares, as identified by their respective customer account numbers set forth below, have delivered to the undersigned Ballots casting votes to REJECT the Plan. ITEM 2: BENEFICIAL OWNER INFORMATION. The undersigned certifies that attached hereto is a true and accurate schedule of the beneficial owners of Common Stock, as identified by their respective customer account numbers and numbers of shares of Common Stock voted, that have delivered Ballots for the Common Stock to the undersigned. (Please complete Table A or attach the information requested by this Item 2 in the format of Table A.) ITEM 3: ADDITIONAL BALLOTS SUBMITTED BY BENEFICIAL OWNERS. The undersigned certifies that it has transcribed the information, if any, provided in Item 3 of each Ballot for the Common Stock received from a beneficial owner. (Please complete Table B or attach the information requested by this Item 3 in the format of Table B.) 3 ITEM 4: CERTIFICATIONS. By signing this Master Ballot, the undersigned certifies that each beneficial owner of the Common Stock whose votes are being transmitted by this Master Ballot has been provided with a copy of the Information Statement (as defined in the instructions hereto) relating to the Plan and all related solicitation materials. A record of the voting instructions received from each beneficial owner will remain on file with the undersigned (and be subject to inspection by the Bankruptcy Court) until the Effective Date of the Plan (or such other date as may be required by Court order). By signing this Master Ballot, the undersigned certifies that it is the registered or record owner of the shares of Common Stock set forth in Item 1 and/or has full power and authority to vote to accept or reject the Plan. The undersigned also acknowledges that this solicitation is subject to all the terms and conditions set forth in the Information Statement relating to the Plan. Name of Record or Registered Holder: _____________________________________________ (Print or Type) Signature:___________________________________ By:__________________________________________ (Print or Type Name) Title:_______________________________________ (If Appropriate) Address:_____________________________________ Street _____________________________________________ City, State and Zip Code Telephone Number: _(__)______________________ _____________________________________________ Social Security or Federal Tax I.D. No.(Optional) Date Completed:______________________________ THIS MASTER BALLOT MUST BE RECEIVED BY HILL AND KNOWLTON, INC., 420 LEXINGTON AVENUE, NEW YORK, NEW YORK 10017 (ATTN: RESORTS BALLOT SOLICITATION GROUP), BY 5:00 P.M., NEW YORK CITY TIME, ON __________________________ OR THE VOTES TRANSMITTED HEREBY WILL NOT BE COUNTED. 4 TABLE A BENEFICIAL OWNER INFORMATION (RII CLASS 7) - -------------------------------------------------------------------------------- INSERT NUMBER OF SHARES OF COMMON STOCK VOTED - -------------------------------------------------------------------------------- CUSTOMER ACCOUNT NO. ACCEPT THE PLAN REJECT THE PLAN - -------------------------------------------------------------------------------- 1. - -------------------------------------------------------------------------------- 2. - -------------------------------------------------------------------------------- 3. - -------------------------------------------------------------------------------- 4. - -------------------------------------------------------------------------------- 5. - -------------------------------------------------------------------------------- 6. - -------------------------------------------------------------------------------- 7. - -------------------------------------------------------------------------------- 8. - -------------------------------------------------------------------------------- 9. - -------------------------------------------------------------------------------- 10. - -------------------------------------------------------------------------------- 5 TABLE B TRANSCRIPTION OF INFORMATION FROM ITEM 3 OF BALLOTS SUBMITTED BY BENEFICIAL OWNERS - -------------------------------------------------------------------------------- CUSTOMER ACCOUNT NUMBER YOUR CUSTOMER OF OTHER ACCOUNT ACCOUNT NUMBER NAME OF HOLDER (IF APPLICABLE) NUMBER OF SHARES - -------------------------------------------------------------------------------- 1. - -------------------------------------------------------------------------------- 2. - -------------------------------------------------------------------------------- 3. - -------------------------------------------------------------------------------- 4. - -------------------------------------------------------------------------------- 5. - -------------------------------------------------------------------------------- 6. - -------------------------------------------------------------------------------- 7. - -------------------------------------------------------------------------------- 8. - -------------------------------------------------------------------------------- 9. - -------------------------------------------------------------------------------- 10. - -------------------------------------------------------------------------------- 11. - -------------------------------------------------------------------------------- 12. - -------------------------------------------------------------------------------- 13. - -------------------------------------------------------------------------------- 14. - -------------------------------------------------------------------------------- 6 INSTRUCTIONS FOR COMMON STOCK MASTER BALLOT RESORTS INTERNATIONAL, INC. COMMON STOCK, PAR VALUE $.01 PER SHARE (RII CLASS 7) 1. Resorts International, Inc. ("RII"), GGRI, Inc. ("GRI"), Resorts International Hotel, Inc.("RIH"), Resorts International Hotel Financing, Inc. ("RIHF"), and P. I. Resorts Limited ("PIRL") are soliciting the votes of your Beneficial Owners (as defined herein) with respect to the prepackaged joint plan of reorganization under chapter 11 of the Bankruptcy Code for RII and GRI (collectively, the "Debtors") which is proposed by RII, GRI, RIH, RIHF and PIRL (the "Plan") attached as Appendix A to the accompanying Information Statement/Prospectus dated January___, 1994 (the "Information Statement"). 2. This Master Ballot related to the Plan requests that you compile information with respect to the decisions to be made by the holders of Common Stock to accept or reject their treatment under the Plan. This Master Ballot is to be used by brokers, proxy intermediaries or other nominees for casting votes to accept or reject the Plan on behalf of Beneficial Owners (as defined herein) of Common Stock. 3. You should deliver a Resorts International, Inc. Common Stock Ballot (the "Ballot") and other documents relating to the Plan including the Information Statement (collectively, the "Solicitation Materials") to each beneficial owner of the Common Stock, and take any action required to enable each such beneficial owner to vote the Common Stock. With regard to any Ballots returned to you, you must either (i) forward such Ballots to the Solicitation Agent (as defined herein) indicating the appropriate authority to vote on each such Ballot submitted or (ii)(a) retain such Ballots in your files and transfer the requested information from each such Ballot onto the attached Master Ballot or your computer generated version of the Master Ballot which indicates identical information, (b) execute the Master Ballot and (c) arrange for facsimile and/or delivery of such Master Ballot, as provided below, to Hill and Knowlton, Inc. (the "Solicitation Agent"), 420 Lexington Avenue, New York, New York 10017 (Attn: Resorts Ballot Solicitation Group). Please keep any records of the voting instructions received from beneficial owners until the Effective Date of the Plan (or such other date as may be required by Court order). 4. If you are both the registered owner and beneficial owner of Common Stock and you wish to vote such Common Stock, you may return either a Ballot or a Master Ballot for such Common Stock. 5. Multiple Master Ballots may be completed and delivered to the Solicitation Agent. Votes reflected by these multiple Master Ballots will be counted except to the extent that they are duplicative of other Master Ballots; if two or more Master Ballots are inconsistent, the latest Master Ballot that is received shall, to the extent of such inconsistency, supersede and revoke any prior Master Ballot. If more than one Master Ballot is submitted and the later Master Ballot(s) supplements rather than replaces earlier Master Ballot(s), please mark the subsequent Master Ballot(s) with the words "Additional Vote" or such other language as you customarily use to indicate an additional vote that is not meant to revoke an earlier vote. 6. A computer generated version of the Master Ballot prepared by a bank, brokerage firm or its agent will be acceptable. 7 7. If a Master Ballot must be completed by you, please complete, sign and return this Master Ballot so that it is received by the Solicitation Agent no later than 5:00 p.m., New York City time, on _______________ (the "Voting Deadline"). Master Ballots may be transmitted by facsimile. Master Ballots transmitted by facsimile must be received by Hill and Knowlton at (212)_______________ no later than the Voting Deadline. For inspection purposes the original of any telecopied Master Ballot should be delivered to Hill and Knowlton so as to be received no later than fifteen (15)days after the Voting Deadline. Please contact the Solicitation Agent in order to arrange for delivery of the completed Master Ballot to its offices. 8. To complete the Master Ballot properly, please take the following steps: ITEM 1: Provide appropriate information for each of the items in Item 1 of the Master Ballot. ITEM 2: Item 2 of the Master Ballot requests information for each individual beneficial owner for whom you hold Common Stock in your name or in street name. To identify such beneficial owners without disclosing their names, please use the customer account number assigned by you to each such beneficial owner. Please note that Item 2 of the Master Ballot requests information which would be obtained from Item 2 of the Ballot returned to you by your customers. ITEM 3: Transfer the information regarding additional votes provided in Item 3 of the Ballot to Item 3 of the Master Ballot. ITEM 4: (a) Sign and date your Master Ballot; (b) If you are completing this Master Ballot on behalf of another entity, kindly state your relationship with such entity; and (c) Provide your name and mailing address. IF YOU RETURN A MASTER BALLOT, PLEASE RETAIN IN YOUR FILES ANY RECORDS OF THE VOTING INSTRUCTIONS RECEIVED FROM THE BENEFICIAL OWNERS UNTIL THE EFFECTIVE DATE OF THE PLAN (OR SUCH OTHER DATE AS MAY BE REQUIRED BY COURT ORDER). 8 No fees or commissions or other remuneration will be payable to any broker, dealer or other person for soliciting Ballots accepting the Plans. We will, however, upon request, reimburse you for customary mailing and handling expenses incurred by you in forwarding the Ballots and other enclosed materials to your clients. We will also pay all transfer taxes, if any, applicable to the transfer and exchange of securities pursuant to and following confirmation of the Plans. PLEASE DELIVER THIS MASTER BALLOT PROMPTLY! IF YOU HAVE ANY QUESTIONS REGARDING THIS BALLOT OR THE VOTING PROCEDURES, PLEASE CALL THE SOLICITATION AGENT: HILL AND KNOWLTON, INC. ATTN: RESORTS BALLOT SOLICITATION GROUP 420 LEXINGTON AVENUE NEW YORK, NEW YORK 10017 (212) 210-8850. NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENT SHALL CONSTITUTE AUTHORITY FOR YOU OR ANY OTHER PERSON TO ACT AS THE AGENT OF THE DEBTORS OR THE SOLICITATION AGENT, OR AUTHORIZE YOU OR ANY PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENTS ON BEHALF OF ANY OF THEM WITH RESPECT TO THE PLAN, EXCEPT FOR THE STATEMENTS CONTAINED IN THE DOCUMENTS ENCLOSED HEREWITH. 9 EX-10 24 EXHIBIT 10.49 UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re RESORTS INTERNATIONAL, INC., a Delaware corporation, and GGRI, INC., a Delaware corporation, formerly known as Griffin Resorts, Inc., Debtors. Case Nos. _______________ and _______________ Jointly Administered Under Case No. _________________ Chapter 11 MASTER BALLOT TO (1) CAST VOTES TO ACCEPT OR REJECT THE JOINT PLAN OF REORGANIZATION PROPOSED BY RESORTS INTERNATIONAL, INC., GGRI, INC., RESORTS INTERNATIONAL HOTEL INC., RESORTS INTERNATIONAL HOTEL FINANCING, INC., AND P. I. RESORTS LIMITED AND (2) ELECT TO CONSENT TO RELEASE OF OLD SECURITY DOCUMENTS RESORTS INTERNATIONAL, INC. SERIES A NOTES MASTER BALLOT RESORTS INTERNATIONAL, INC. SENIOR SECURED REDEEMABLE NOTES DUE APRIL 15, 1994, SERIES B (RII CLASS 2 AND GRI CLASS 2) Resorts International, Inc. ("RII"), GGRI, Inc. ("GRI"), Resorts International Hotel, Inc. ("RIH"), Resorts International Hotel Financing, Inc. ("RIHF"), and P. I. Resorts Limited ("PIRL") are soliciting the votes of your Beneficial Owners (as defined herein) with respect to the prepackaged joint plan of reorganization under chapter 11 of the Bankruptcy Code for RII and GRI (collectively, the "Debtors" or the "Company") which is proposed by RII, GRI, RIH, RIHF and PIRL (the "Plan") and is attached as Appendix A to the accompanying Information Statement/Prospectus dated January __, 1994 (the "Information Statement"). Please read the Information Statement carefully before you vote. This Resorts International, Inc. Series A Notes Master Ballot (the "Master Ballot") may not be used for any purpose other than for (1) casting votes to accept or reject the Plan and (2) indicating elections to consent to the release of the Old Security Documents (as defined in the Plan). This Master Ballot is to be used by brokers, proxy intermediaries, or other nominees for casting votes and electing to consent, to release of the Old Security Documents on behalf of beneficial owners of Resorts Senior Secured Redeemable Notes due April 15, 1994, Series A (the "Series A Notes") and beneficiaries of the GRI Guaranty (as defined in the Plan). SERIES A MASTER BALLOT 1 The record date (the "Voting Record Date") for purposes of determining which holders of Series A Notes (and beneficiaries of the GRI Guaranty) are eligible to vote on the Plan is January 10, 1994 and to make the election with respect to the release of the Old Security Documents. Only holders of Series A Notes in whose names such securities are registered on the books of the Company on the Voting Record Date or any person who has obtained a properly completed proxy from such person are eligible to cast Master Ballots relating to the Plan and the release of the Old Security Documents. Holders of Series A Notes who purchased such securities or whose purchase of such securities is registered after the Voting Record Date who wish to vote on the Plan and the release of the Old Security Documents must arrange with their seller to receive a proxy from the holder of record on such date. A validly executed ballot submitted by a holder which does not indicate whether such holder accepts or rejects the Plan is deemed to be and should be counted as an acceptance of the Plan. Similarly, a validly executed ballot submitted by a holder which does not indicate whether consent is given or denied with respect to the release of the Old Security Documents is deemed to be and should be counted as a consent to the release of the Old Security Documents. PLEASE READ AND FOLLOW THE ATTACHED INSTRUCTIONS CAREFULLY. COMPLETE, SIGN AND DATE THIS MASTER BALLOT AND ARRANGE FOR ITS DELIVERY SO THAT IT IS RECEIVED BY HILL AND KNOWLTON, INC. (THE "SOLICITATION AGENT") BY 5:00 P.M., NEW YORK CITY TIME, ON __________________, 1994 (THE "VOTING DEADLINE"). SERIES A MASTER BALLOT 2 ITEM 1: TABULATION OF (1) VOTES WITH RESPECT TO THE PLAN AND (2) RELEASE ELECTION. Please note that each beneficial owner of Old Series Notes has the right to vote to accept or reject the Plan with respect to TWO Claims, its Old Series Note Claim (as defined in the instructions hereto) and its GRI Guaranty Claim (as defined in the instructions hereto). With respect to each of these two claims, each beneficial owner of Series A Notes who votes must vote its entire claim on each separate issue voted below. A beneficial owner may vote differently on the Plan with respect to its Old Series Note Claim and its GRI Guaranty Claim. If, however, a beneficial owner casts a vote on the Plan with respect to either of its Old Series Note Claim or its GRI Guaranty Claim, but not with respect to both of such claims, the beneficial owner should be deemed to have voted identically with respect to both of such claims. Furthermore, A BENEFICIAL OWNER THAT SUBMITS A VALIDLY EXECUTED BALLOT WHICH FAILS TO INDICATE WHETHER SUCH BENEFICIAL OWNER ACCEPTS OR REJECTS THE PLAN WITH RESPECT TO BOTH ITS OLD SERIES NOTE CLAIM AND ITS GRI GUARANTY CLAIM SHOULD BE COUNTED AS AN ACCEPTANCE OF THE PLAN WITH RESPECT TO BOTH ITS OLD SERIES NOTE CLAIM AND ITS GRI GUARANTY CLAIM. Furthermore, any VALIDLY EXECUTED Ballot which does not indicate whether the beneficial owner consents or refuses to consent to the release of the Old Security Documents SHOULD BE COUNTED AS A CONSENT TO THE RELEASE OF THE OLD SECURITY DOCUMENTS, REGARDLESS OF THE HOW THE BENEFICIAL OWNER MAY HAVE VOTED ITS CLAIMS WITH RESPECT TO THE PLAN. Although a beneficial owner may vote differently on the Plan with respect to your Old Series Notes Claim (RII Class 2) and your GRI Guaranty Claim (GRI Class 2), a beneficial owner may not split its vote on the Plan with respect to its Old Series Note Claim, its GRI Guaranty Claim or its election with respect to the consent to release of the Old Security Documents. A beneficial owner must vote its entire Claim Amount with respect to each Claim to accept or reject the Plan. Also if such beneficial owner holds Series A Notes in multiple accounts, it must vote all of its claims within a single class under the Plan to accept or reject the Plan. Thus, a beneficial owner may not split its vote on the Plan in any way (either on a single Ballot or on multiple Ballots) with respect to its Old Series Notes Claim, GRI Guaranty Claim or its election with respect to the consent to release of the Old Security Documents. If any beneficial owner is a record holder/beneficial owner of Series B Notes as well as Series A Notes, it must vote its Old Series Notes Claim represented by this Ballot consistently with any Ballot submitted with respect to its Series B Notes. Accordingly, a Series B Note Holder Ballot (the "Ballot") received from a beneficial owner that partially accepts and partially rejects the Plan with respect to either of the beneficial owner's two claims or splits its vote with respect to the election to consent to the release of the Old Security Documents should not be counted. For purposes of computing the vote, each voting beneficial owner should be deemed to have voted the full amount of its claim according to your records. A. THE PLAN. i. OLD SERIES NOTE CLAIMS (RII CLASS 2 CLAIMS). SERIES A MASTER BALLOT 3 The undersigned certifies that ________ (INSERT THE NUMBER OF DIFFERENT BENEFICIAL OWNERS) beneficial owners of Series A Notes in the aggregate principal amount of $__________, as identified by their respective customer account numbers set forth below, have delivered to the undersigned Ballots casting votes with respect to their Old Series Note Claims to ACCEPT the Plan. The undersigned certifies that _________ (INSERT THE NUMBER OF DIFFERENT BENEFICIAL OWNERS) beneficial owners of Series A Notes in the aggregate principal amount of $__________, as identified by their respective customer account numbers set forth below, have delivered to the undersigned Ballots casting votes with respect to their Old Series Note Claims to REJECT the Plan. ii. GRI GUARANTY CLAIMS (GRI CLASS 2 CLAIMS). The undersigned certifies that ________ (INSERT THE NUMBER OF DIFFERENT BENEFICIAL OWNERS) beneficial owners of Series A Notes in the aggregate principal amount of $__________, as identified by their respective customer account numbers set forth below, have delivered to the undersigned Ballots casting votes with respect to their GRI Guaranty Claims to ACCEPT the Plan. The undersigned certifies that _________ (INSERT THE NUMBER OF DIFFERENT BENEFICIAL OWNERS) beneficial owners of Series A Notes in the aggregate principal amount of $__________, as identified by their respective customer account numbers set forth below, have delivered to the undersigned Ballots casting votes with respect to their GRI Guaranty Claims to REJECT the Plan. B. CONSENT TO RELEASE AND TERMINATE OLD SECURITY DOCUMENTS ELECTIONS A BENEFICIAL OWNER'S BALLOT WHICH FAILS TO INDICATE WHETHER CONSENT IS GIVEN OR DENIED WITH RESPECT TO THE RELEASE OF THE OLD SECURITY DOCUMENTS SHOULD BE COUNTED AS IF AFFIRMATIVE CONSENT HAD BEEN GIVEN, REGARDLESS OF HOW SUCH BENEFICIAL OWNER VOTED ITS CLAIMS WITH RESPECT TO THE PLAN. The undersigned certifies that ________ (INSERT NUMBER OF DIFFERENT BENEFICIAL OWNERS) beneficial owners of Series A Notes, as identified by their respective customer account numbers set forth below, have delivered to the undersigned Ballots electing to consent to the release of the Old Security Documents. ITEM 2: BENEFICIAL OWNER INFORMATION. The undersigned certifies that attached hereto is a true and accurate schedule of the beneficial owners of Series A Notes, as identified by their respective customer account numbers and dollar amounts of Series B Notes voted, that have delivered Ballots for the Series A Notes to the undersigned. (Please complete Table A or attach the information requested by this Item 2 in the format of Table A.) SERIES A MASTER BALLOT 4 ITEM 3: ADDITIONAL BALLOTS SUBMITTED BY BENEFICIAL OWNERS. The undersigned certifies that it has transcribed the information, if any, provided in Item 3 of each Ballot for the Series A Notes received from a beneficial owner. (Please complete Table B or attach the information requested by this Item 3 in the format of Table B.) ITEM 4: CERTIFICATIONS. By signing this Master Ballot, the undersigned certifies that each beneficial owner of the Series A Notes whose votes are being transmitted by this Master Ballot has been provided with a copy of the Information Statement (as defined in the instructions hereto) relating to the Plan and all related solicitation materials. A record of the voting instructions received from each beneficial owner will remain on file with the undersigned (and be subject to inspection by the Court) until the Effective Date of the Plan (or such other date as may be required by Court order). SERIES A MASTER BALLOT 5 By signing this Master Ballot, the undersigned certifies that it is the registered or record owner of the Series A Notes set forth in Item 1 and/or has full power and authority to vote to accept or reject the Plan and elect to consent to the release of the Old Security Documents. The undersigned also acknowledges that this solicitation is subject to all the terms and conditions set forth in the Information Statement relating to the Plan. Name of Record or Registered Holder: __________________________________________ (Print or Type) Signature:_________________________________ By:________________________________________ (Print or Type Name) Title:_____________________________________ (If Appropriate) Address:____________________________________ Street ___________________________________________ City, State and Zip Code Telephone Number: _(__)___________________ ___________________________________________ Social Security or Federal Tax I.D. No.(Optional) Date Completed:______________________________ THIS MASTER BALLOT MUST BE RECEIVED BY HILL AND KNOWLTON, INC., 420 LEXINGTON AVENUE, NEW YORK, NEW YORK 10017 (ATTN: RESORTS BALLOT SOLICITATION GROUP), BY 5:00 P.M., NEW YORK CITY TIME, ON __________________________ OR THE VOTES TRANSMITTED HEREBY WILL NOT BE COUNTED. SERIES A MASTER BALLOT 6 TABLE A.1 BENEFICIAL OWNER INFORMATION (RII CLASS 2 and GRI CLASS 2) VOTES REGARDING PLAN - -------------------------------------------------------------------------------- INSERT DOLLAR AMOUNT OF SERIES A NOTES VOTED -------------------------------------------- - -------------------------------------------------------------------------------- OLD SERIES NOTE CLAIM GRI GUARANTY CLAIM - -------------------------------------------------------------------------------- CUSTOMER ACCOUNT NO. ACCEPT THE PLAN REJECT THE PLAN ACCEPT THE PLAN REJECT THE PLAN - -------------------------------------------------------------------------------- 1. - -------------------------------------------------------------------------------- 2. - -------------------------------------------------------------------------------- 3. - -------------------------------------------------------------------------------- 4. - -------------------------------------------------------------------------------- 5. - -------------------------------------------------------------------------------- 6. - -------------------------------------------------------------------------------- 7. - -------------------------------------------------------------------------------- 8. - -------------------------------------------------------------------------------- 9. - -------------------------------------------------------------------------------- 10. - -------------------------------------------------------------------------------- SERIES A MASTER BALLOT 7 TABLE A.2 BENEFICIAL OWNER INFORMATION (RII CLASS 2 and GRI CLASS 2) CONSENTS TO RELEASE OLD SECURITY DOCUMENTS - -------------------------------------------------------------------------------- INSERT DOLLAR AMOUNT OF SERIES B NOTES VOTED -------------------------------------------- - -------------------------------------------------------------------------------- CUSTOMER ACCOUNT NO. CONSENT TO RELEASE DO NOT CONSENT TO RELEASE - -------------------------------------------------------------------------------- 1. - -------------------------------------------------------------------------------- 2. - -------------------------------------------------------------------------------- 3. - -------------------------------------------------------------------------------- 4. - -------------------------------------------------------------------------------- 5. - -------------------------------------------------------------------------------- 6. - -------------------------------------------------------------------------------- 7. - -------------------------------------------------------------------------------- 8. - -------------------------------------------------------------------------------- 9. - -------------------------------------------------------------------------------- 10. - -------------------------------------------------------------------------------- SERIES A MASTER BALLOT 8 TABLE B TRANSCRIPTION OF INFORMATION FROM ITEM 3 OF BALLOTS SUBMITTED BY BENEFICIAL OWNERS - -------------------------------------------------------------------------------- YOUR CUSTOMER CUSTOMER ACCOUNT NUMBER ACCOUNT NUMBER NAME OF HOLDER OF OTHER ACCOUNT (IF APPLICABLE) PRINCIPAL AMOUNT - -------------------------------------------------------------------------------- 1. - -------------------------------------------------------------------------------- 2. - -------------------------------------------------------------------------------- 3. - -------------------------------------------------------------------------------- 4. - -------------------------------------------------------------------------------- 5. - -------------------------------------------------------------------------------- 6. - -------------------------------------------------------------------------------- 7. - -------------------------------------------------------------------------------- 8. - -------------------------------------------------------------------------------- 9. - -------------------------------------------------------------------------------- 10. - -------------------------------------------------------------------------------- 11. - -------------------------------------------------------------------------------- 12. - -------------------------------------------------------------------------------- 13. - -------------------------------------------------------------------------------- 14. - -------------------------------------------------------------------------------- SERIES A BALLOT 9 INSTRUCTIONS FOR OLD SERIES NOTES MASTER BALLOT ----------------------------------------------- RESORTS INTERNATIONAL, INC. SENIOR SECURED REDEEMABLE NOTES DUE APRIL 15, 1994, SERIES A (RII CLASS 2 AND GRI CLASS 2) 1. Resorts International, Inc. ("RII"), GGRI, Inc. ("GRI"), Resorts International Hotel, Inc.("RIH"), Resorts International Hotel Financing, Inc. ("RIHF") and P. I. Resorts Limited ("PIRL") are soliciting the votes of your beneficial owners (as defined herein) with respect to the joint plan of reorganization under Chapter 11 of the Bankruptcy Code for RII and GRI (collectively, the "Debtors" or the "Company") which is proposed by RII, GRI, RIH, RIHF and PIRL (the "Plan") attached as Appendix A to the accompanying Information Statement/Prospectus dated January___, 1994 (the "Information Statement"). 2. The Resorts Senior Secured Redeemable Notes due April 15, 1994 were issued in two series: Series A and Series B. Collectively, these two series of notes are referred to as the Old Series Notes. Under the Plan, all Claims arising from Old Series Notes, regardless of series, are classified in a single class (RII Class 2). For purposes of voting with respect to the Plan, Claimants who hold both Series A Notes and Series B Notes are treated as having a single "Old Series Notes Claim" (in the aggregate principal amount of the Claimant's Series A Notes and Series B Notes). Additionally, record holders/beneficial owners of Old Series Notes (regardless of series) are also beneficiaries of the GRI Guaranty (as defined in the Plan) which secured RII's obligations under the Old Series Notes. As a result of the GRI Guaranty, record holders/beneficial owners of Old Series Notes also hold Claims against GRI ("GRI Guaranty Claims"). A Claimant's GRI Guaranty Claim is classified separately from its Old Series Notes Claim in GRI Class 2. As a result, for purposes of voting with respect to the Plan, a record holder/beneficial owner of Old Series Notes is entitled to a separate vote on the Plan with respect to its GRI Guaranty Claim. 3. RII and GRI are also soliciting consents of the holders of Old Series Notes to release the Old Security Documents under which the liens on the property securing the Old Series Notes were granted or created. The Old Security Documents, in effect, pledge RIH's assets (including the Resorts International Hotel) to secure the Old Series Notes. Under the Plan, these same assets are pledged to secure the new debt obligations to be issued under the Plan. Pursuant to the Old Series Note Indenture, to effectuate such termination and release consensually, the record holders of at least 66 2/3% in aggregate principal amount of the outstanding Old Series Notes and the record holders of at least a majority in aggregate principal amount of each series of the Old Series Notes must execute consents. Accordingly, RII and GRI are seeking consents from the holders of Old Series Notes. 4. This Master Ballot related to the Plan requests that you compile information with respect to three votes to be made by the holders of Series A Notes. First, holders of Series A Notes must vote with respect to their Old Series Note Claims to accept or reject their treatment under the Plan. Second, holders of Series A Notes must vote with respect to their GRI Guaranty Claims to accept or reject their treatment under the Plan. Third, holders of Series A Notes must vote whether to consent to the release of the Old Security Documents (as defined in the Plan). 5. This Master Ballot is to be used by brokers, proxy intermediaries or other nominees for casting votes to accept or reject the Plan and for consenting to the release SERIES A MASTER BALLOT 10 of the Old Security Documents on behalf of beneficial owners (as defined herein) of Old Series Notes. 6. You should deliver a Series A Note Holder Ballot and other documents relating to the Plan including the Information Statement (collectively, the "Solicitation Materials") to each beneficial owner of the Series A Notes, and take any action required to enable each such beneficial owner to vote the Series A Notes. With regard to any Series A Note Holder Ballots returned to you, you must either (i) forward such Ballots to the Solicitation Agent (as defined herein) indicating the appropriate authority to vote on each such Ballot submitted or (ii)(a) retain such Ballots in your files and transfer the requested information from each such Ballot onto the attached Master Ballot or your computer generated version of the Master Ballot which indicates identical information, (b) execute the Master Ballot and (c) arrange for facsimile and/or delivery of such Master Ballot, as provided in paragraph 8 below to Hill and Knowlton, Inc. (the "Solicitation Agent"), 420 Lexington Avenue, New York, New York 10017 (Attn: Resorts Ballot Solicitation Group). Please keep any records of the voting instructions received from beneficial owners until the Effective Date of the Plan (or such other date as may be required by Court order). 7. If you are both the registered owner and beneficial owner of Series A Notes and you wish to vote such Series A Notes, you may return either a Ballot or a Master Ballot for such Series A Notes. 8. Multiple Master Ballots may be completed and delivered to the Solicitation Agent. Votes reflected by these multiple Master Ballots will be counted except to the extent that they are duplicative of other Master Ballots; if two or more Master Ballots are inconsistent, the latest Master Ballot that is received shall, to the extent of such inconsistency, supersede and revoke any prior Master Ballot. If more than one Master Ballot is submitted and the later Master Ballot(s) supplements rather than replaces earlier Master Ballot(s), please mark the subsequent Master Ballot(s) with the words "Additional Vote" or such other language as you customarily use to indicate an additional vote that is not meant to revoke an earlier vote. 9. A computer generated version of the Master Ballot prepared by a bank, brokerage firm or its agent will be acceptable. 10. If a Master Ballot must be completed by you, please complete, sign and return this Master Ballot so that it is received by the Solicitation Agent no later than 5:00 p.m., New York City Time, on _______________ (the "Voting Deadline"). Master Ballots may be transmitted by facsimile. Master Ballots transmitted by facsimile must be received by Hill and Knowlton at (212)_______________ no later than the Voting Deadline. For inspection purposes the original of any telecopied Master Ballot should be delivered to Hill and Knowlton so as to be received no later than fifteen (15) days after the Voting Deadline. Please contact the Solicitation Agent in order to arrange for delivery of the completed Master Ballot to its offices. 11. To complete the Master Ballot properly, please take the following steps: ITEM 1: SERIES A MASTER BALLOT 11 Provide appropriate information for each of the items in Item 1 of the Master Ballot. ITEM 2: Item 2 of the Master Ballot requests information for each individual beneficial owner for whom you hold Series A Notes in your name or in street name. To identify such beneficial owners without disclosing their names, please use the customer account number assigned by you to each such beneficial owner. Please note that Item 2 of the Master Ballot requests information which would be obtained from Item 2 of the Series A Note Holder Ballot returned to you by your customers. ITEM 3: Transfer the information regarding additional votes provided in Item 3 of the Series B Note Holder Ballot to Item 3 of the Master Ballot. ITEM 4: (a) Sign and date your Master Ballot; (b) If you are completing this Master Ballot on behalf of another entity, kindly state your relationship with such entity; and (c) Provide your name and mailing address. IF YOU RETURN A MASTER BALLOT, PLEASE RETAIN IN YOUR FILES ANY RECORDS OF THE VOTING INSTRUCTIONS RECEIVED FROM THE BENEFICIAL OWNERS UNTIL THE EFFECTIVE DATE OF THE PLAN (OR SUCH OTHER DATE AS MAY BE REQUIRED BY COURT ORDER). No fees or commissions or other remuneration will be payable to any broker, dealer or other person for soliciting Ballots accepting the Plans. We will, however, upon request, reimburse you for customary mailing and handling expenses incurred by you in forwarding the Ballots and other enclosed materials to your clients. We will also pay all transfer taxes, if any, applicable to the transfer and exchange of securities pursuant to and following confirmation of the Plan. PLEASE DELIVER THIS MASTER BALLOT PROMPTLY! IF YOU HAVE ANY QUESTIONS REGARDING THIS BALLOT OR THE VOTING PROCEDURES, PLEASE CALL THE SOLICITATION AGENT: HILL AND KNOWLTON, INC. ATTN: RESORTS BALLOT SOLICITATION GROUP 420 LEXINGTON AVENUE NEW YORK, NEW YORK 10017 (212) 210-8850. NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENT SHALL CONSTITUTE AUTHORITY FOR YOU OR ANY OTHER PERSON TO ACT AS THE AGENT OF THE PROPONENTS OR THE SOLICITATION AGENT, OR AUTHORIZE YOU OR ANY PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENTS ON BEHALF OF ANY OF THEM WITH RESPECT TO THE SERIES A MASTER BALLOT 12 PLAN, EXCEPT FOR THE STATEMENTS CONTAINED IN THE DOCUMENTS ENCLOSED HEREWITH. SERIES A MASTER BALLOT 13 EX-10 25 EXHIBIT 10.50 UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re RESORTS INTERNATIONAL, INC., a Delaware corporation, and GGRI, INC., a Delaware corporation, formerly known as Griffin Resorts, Inc., Debtors. Case Nos. _______________ and _______________ Jointly Administered Under Case No. _________________ Chapter 11 BALLOT TO (1) VOTE TO ACCEPT OR REJECT THE JOINT PLAN OF REORGANIZATION PROPOSED BY RESORTS INTERNATIONAL, INC. GGRI, INC., RESORTS INTERNATIONAL HOTEL INC., RESORTS INTERNATIONAL HOTEL FINANCING, INC., AND P. I. RESORTS LIMITED AND (2) ELECT TO CONSENT TO RELEASE OF OLD SECURITY DOCUMENTS RESORTS INTERNATIONAL, INC. SERIES B NOTES BALLOT RESORTS INTERNATIONAL, INC. SENIOR SECURED REDEEMABLE NOTES DUE APRIL 15, 1994, SERIES B (RII CLASS 2 AND GRI CLASS 2) PLEASE READ AND FOLLOW THE ATTACHED VOTING INSTRUCTIONS CAREFULLY BEFORE COMPLETING THIS BALLOT. PLEASE COMPLETE, SIGN AND DATE THIS BALLOT AND PROMPTLY RETURN IT IN THE ENCLOSED PREPAID RETURN ENVELOPE. THIS BALLOT MUST BE RECEIVED BY HILL AND KNOWLTON, INC. (THE "SOLICITATION AGENT") BY 5:00 P.M., NEW YORK CITY TIME, ON __________________ (THE "VOTING DEADLINE"). IF YOU SIGN THIS BALLOT BUT FAIL TO INDICATE AN ACCEPTANCE OR REJECTION OF THE PLAN, THIS BALLOT WILL BE DEEMED AND COUNTED AS AN ACCEPTANCE OF THE PLAN. ALSO, IF YOU SIGN THIS BALLOT BUT FAIL TO INDICATE WHETHER YOU AGREE OR REFUSE TO CONSENT TO THE RELEASE OF THE OLD SECURITY DOCUMENTS, THIS BALLOT WILL BE DEEMED AND COUNTED AS A CONSENT TO THE RELEASE OF THE OLD SECURITY DOCUMENTS. Resorts International, Inc. ("RII"), GGRI, Inc. ("GRI"), Resorts International Hotel, Inc.("RIH"), Resorts International Hotel Financing, Inc. ("RIHF") and P. I. Resorts Limited ("PIRL") are soliciting your vote with respect to the prepackaged joint plan of reorganization SERIES B BALLOT under chapter 11 of the Bankruptcy Code for RII and GRI (collectively, the "Debtors" or the "Company") which has been proposed by RII, GRI, RIH, RIHF and PIRL (the "Plan") and is attached as Appendix A to the accompanying Information Statement/Prospectus dated December __, 1993 (the "Information Statement"). This Ballot is to be used by registered record owners and beneficial owners of Resorts Senior Secured Redeemable Notes due April 15, 1994, Series B (the "Series B Notes"). Record holders/beneficial owners of Series B Notes are also beneficiaries of the GRI Guaranty (as defined in the Plan). This Ballot is to be used to vote with respect to the Plan both as record holders/beneficial owners of Series B Notes and as beneficiaries of the GRI Guaranty and of the Series B Notes. Please read the Information Statement carefully before you vote. TO INDICATE YOUR VOTE, COMPLETE THIS BALLOT IN ACCORDANCE WITH THE ATTACHED INSTRUCTIONS. ITEM 1: AMOUNT OF SERIES B NOTES. The undersigned (the "Claimant") is as of January 10, 1994 (the "Voting Record Date") the registered record holder or the beneficial owner of Series B Notes in the principal amount of $__________, or such lesser or greater principal amount as may be reflected in the records available to the Debtors (the "Ballot Amount"). If you are a beneficial owner, the Ballot Amount should include only the amount of Series B Notes held in account(s) with the bank or broker which transmitted this Ballot to you. If you hold other Series B Notes in record name or in one or more accounts with other banks or brokers, such Series B Notes should be voted separately on the ballots received from such other banks or brokers, or with respect to record name Series B Ballots, by you, in accordance with the attached instructions. If you are a beneficial owner and do not know your Ballot Amount, please contact your bank or broker immediately. ITEM 2: VOTES WITH RESPECT TO THE PLAN AND RELEASE ELECTION. As explained in the instructions, you are entitled to three separate votes in connection with the Plan: (i) with respect to your Old Series Notes Claim (as defined in the instructions hereto), you may vote to accept or reject the Plan; (ii) with respect to your GRI Guaranty Claim (as defined in the instructions hereto), you may vote to accept or reject the Plan; and (iii) you may elect to consent to the release of the Old Security Documents (as defined in and) as contemplated by the Plan. Please read the attached instructions carefully and then complete each of Items 2A, 2B and 2C. SERIES B BALLOT 2 PLEASE COMPLETE EACH OF THE FOLLOWING SECTIONS: A. OLD SERIES NOTES CLAIM. Please vote to accept or reject the Plan. YOUR FAILURE TO MARK EITHER CHOICE WILL BE DEEMED AND COUNTED AS AN ACCEPTANCE. - -------------------------------------------------------------------------------- THE PLAN - -------------------------------------------------------------------------------- The undersigned Claimant votes the Ballot Amount with respect to its Old Series Notes Claim to (please check one): __ ACCEPT THE PLAN __ REJECT THE PLAN - -------------------------------------------------------------------------------- B. GRI GUARANTY CLAIM. Please vote to accept or reject the Plan. YOUR FAILURE TO MARK EITHER CHOICE WILL BE DEEMED AND COUNTED AS AN ACCEPTANCE. - -------------------------------------------------------------------------------- THE PLAN - -------------------------------------------------------------------------------- The undersigned Claimant votes the Ballot Amount with respect to its GRI Guaranty Claim to (please check one): __ ACCEPT THE PLAN __ REJECT THE PLAN - -------------------------------------------------------------------------------- SERIES B BALLOT 3 C. ELECTION TO CONSENT TO RELEASE OF THE OLD SECURITY DOCUMENTS Please check whether you consent to the release of the Old Security Documents. PLEASE NOTE THAT A CONDITION PRECEDENT TO CONSUMMATION TO THE PLAN IS THE RELEASE AND TERMINATION OF THE OLD SECURITY DOCUMENTS. YOUR FAILURE TO MARK EITHER CHOICE WILL BE DEEMED AND COUNTED AS A CONSENT. - -------------------------------------------------------------------------------- RELEASE OF OLD SECURITY DOCUMENTS - -------------------------------------------------------------------------------- __ I consent to the release of the Old Security Documents. __ I do NOT consent to the release of the Old Security Documents. - -------------------------------------------------------------------------------- ITEM 3: CERTIFICATION AS TO OLD SERIES NOTES. The Resorts Senior Secured Redeemable Notes due April 15, 1994 were issued in two series: Series A and Series B. Collectively, these two series of notes are referred to as the Old Series Notes. By returning this Ballot, the undersigned Claimant certifies that it has not submitted any other Ballots for Old Series Notes (either Series A or Series B) except as specified in the table immediately below. Please note that you must submit a separate Ballot for any Series A Notes that you hold in record name or that are held on your behalf by a broker or bank (or agent thereof). If you have submitted any other Ballot with respect to Old Series Notes, Series A or Series B, please provide the information required by this Item 3 in the following table (please use additional sheets of paper if necessary): - -------------------------------------------------------------------------------- ACCOUNT NUMBER SERIES* NAME OF HOLDER** (IF APPLICABLE) PRINCIPAL AMOUNT - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- * Please specify the series (A or B) of Old Series Notes for which other Ballots were submitted. SERIES B BALLOT 4 ** Insert your name if the Old Series Note is held by you in record name or, if held in street name, insert the name of the broker or bank (or agent thereof). SERIES B BALLOT 5 ITEM 4: OTHER CERTIFICATIONS. By returning this Ballot, the undersigned Claimant certifies: (a) that it has not submitted any other Ballots for Old Series Notes (Series A or Series B) that are inconsistent with the votes to accept or reject the Plan and the decision with respect to the consent to the release of the Old Security Documents as set forth herein or that, if such other Ballots have been submitted for Old Series Notes, such earlier Ballots are hereby revoked; (b) that it has been provided with a copy of the Information Statement relating to the Plan and all related solicitation materials; (c) that it understands that if this Ballot is validly executed and returned without indicating any acceptance or rejection of the Plan (for either the Old Series Notes Claim or the GRI Guaranty Claim), IT WILL BE COUNTED AS A VOTE ACCEPTING THE PLAN WITH RESPECT BOTH TO THE OLD SERIES NOTES CLAIM AND THE GRI GUARANTY CLAIM; (d) that it understands that if this Ballot is validly executed and returned without indicating a consent or a refusal to consent to the release of the Old Security Documents, IT WILL BE COUNTED AS A CONSENT TO THE RELEASE OF THE OLD SECURITY DOCUMENTS; AND (e) that it is the registered record holder or beneficial owner of the Series B Notes set forth in Item 1 and has full power and authority to vote to accept or reject the Plan. The undersigned Claimant also acknowledges that this solicitation is subject to all the terms and conditions set forth in the Information Statement relating to the Plan. SERIES B BALLOT 6 YOU ARE URGED TO VOTE ON THE PLAN AND TO INDICATE WHETHER YOU CONSENT TO THE RELEASE OF THE OLD SECURITY DOCUMENTS. Name of Creditor: ________________________________________ (Print or Type) By:_____________________________________ (Signature of Creditor or Authorized Agent) Print Name of Signatory:______________________________ Title:__________________________________ (If Appropriate) Street Address:_________________________ ________________________________________ City, State and Zip Code Telephone Number:_______________________ ________________________________________ Social Security or Federal Tax I.D. No. (Optional) Date Completed:_________________________ YOUR VOTE MUST BE RECEIVED BY HILL AND KNOWLTON, INC., 420 LEXINGTON AVENUE, NEW YORK, NEW YORK 10017 (ATTN: RESORTS BALLOT SOLICITATION GROUP), BY 5:00 P.M., NEW YORK CITY TIME, ON ___________________, 1994 OR YOUR VOTE WILL NOT BE COUNTED. IF YOU HOLD IN STREET NAME, PLEASE ALLOW SUFFICIENT ADDITIONAL TIME FOR PROCESSING OF YOUR VOTE BY YOUR BANK OR BROKER, OR ITS AGENT. SERIES B BALLOT 7 VOTING INFORMATION AND INSTRUCTIONS FOR SERIES B NOTES BALLOT RESORTS INTERNATIONAL, INC. SENIOR SECURED REDEEMABLE NOTES DUE APRIL 15, 1994, SERIES A (RII CLASS 2 AND GRI CLASS 2) 1. Resorts International, Inc. ("RII") and GGRI, Inc. ("GRI") (collectively, the Debtors), and Resorts International Hotel, Inc.("RIH"), Resorts International Hotel Financing, Inc. ("RIHF"), and P. I. Resorts Limited ("PIRL") are soliciting your vote with respect to the Joint Plan of Reorganization under Chapter 11 of the Bankruptcy Code Proposed by Resorts International, Inc., GGRI, Inc., Resorts International Hotel, Inc., Resorts International Hotel Financing, Inc. and P. I. Resorts Limited (the "Plan"), a copy of which is attached as Appendix A to the accompanying Information Statement/Prospectus dated January __, 1994 (the "Information Statement"). PLEASE REVIEW THE INFORMATION STATEMENT CAREFULLY BEFORE YOU VOTE. 2. The Plan can be confirmed by the Bankruptcy Court and thereby made binding on you if it is accepted by the holders of two-thirds in amount and more than one-half in number of claims in each class and the holders of two-thirds in amount of equity interests in each class voting on such plan. In the event the requisite acceptances are not obtained, the Bankruptcy Court may nevertheless confirm the Plan if at least one impaired class of creditors votes to accept the Plan and the Bankruptcy Court finds that the Plan accords fair and equitable treatment to and does not discriminate unfairly against the class or classes rejecting it. 3. The Resorts Senior Secured Redeemable Notes due April 15, 1994 were issued in two series: Series A and Series B. Collectively, these two series of notes are referred to as the Old Series Notes. Under the Plan, all Claims arising from Old Series Notes, regardless of series, are classified in a single class (RII Class 2). For purposes of voting with respect to the Plan, Claimants who hold both Series A Notes and Series B Notes are treated as having a single "Old Series Notes Claim" (in the aggregate principal amount of the Claimant's Series A Notes and Series B Notes). Additionally, record holders/beneficial owners of Old Series Notes (regardless of series) are also beneficiaries of the GRI Guaranty (as defined in the Plan) which secured RII's obligations under the Old Series Notes. As a result of the GRI Guaranty, record holders/beneficial owners of Old Series Notes also hold Claims against GRI ("GRI Guaranty Claims"). A Claimant's GRI Guaranty Claim is classified separately from its Old Series Notes Claim in GRI Class 2. As a result, for purposes of voting with respect to the Plan, a record holder/beneficial owner of Old Series Notes is entitled to a separate vote on the Plan with respect to its GRI Guaranty Claim. 4. Finally, RII and GRI are soliciting your consent to release the Old Security Documents under which the liens on the property securing the Old Series Notes were granted or created. The Old Security Documents, in effect, pledge RIH's assets (including the Resorts International Hotel) to secure the Old Series Notes. Under the Plan, these same assets are pledged to secure the new debt obligations to be issued to you. Pursuant to the Old Series Note Indenture, to effectuate such termination and release consensually, the record holders of at least 66 2/3% in aggregate principal amount of the outstanding Old Series Notes and the record holders of at least a majority in aggregate principal amount of each series of the Old Series Notes must execute consents. Accordingly, RII and GRI are seeking consents from the holders of Old Series Notes. If insufficient consents are received from holders of Old Series Notes to effectuate such termination and SERIES B BALLOT 8 release consensually, RII and GRI intend to request the Bankruptcy Court to order the release of the Old Security Documents; however, no assurance can be given that such an order will be entered. In no event will the consents to release the Old Security Documents be used to effectuate the termination and release of the Old Security Documents in the absence of the confirmation and consummation of the Plan. If RII and GRI fail to receive the Requisite Acceptances, notwithstanding receipt of sufficient consents to release and terminate the Old Security Documents pursuant to the Old Series Note Indenture, such consents will only be used in the event that RII and GRI continue to pursue confirmation and consummation of the Plan. In the event that RII and GRI elect or are required to resolicit Acceptances of the Plan, however, they reserve the right not to resolicit with respect to the consents to release the Old Security Documents and to use consents received from the initial Solicitation. 5. Accordingly, this Ballot requests three separate votes from the record holders/beneficial owners of Series B Notes. Each record holder/ beneficial owner of Series B Notes has the right to vote with respect to TWO Claims, its Old Series Notes Claim and its GRI Guaranty Claim. Therefore, first, you must vote with respect to your Old Series Notes Claim to accept or reject your treatment under the Plan. Second, you must vote with respect to your GRI Guaranty Claim to accept or reject your treatment under the Plan. Third, you must vote whether to consent to the release of the Old Security Documents (as defined in the Plan). IF YOU DO NOT CONSENT TO THE RELEASE OF THE OLD SECURITY DOCUMENTS, THE PLAN MAY NOT BE CONFIRMABLE AND THE TRANSACTIONS THEREUNDER MAY NOT BE IMPLEMENTED. 6. For your vote to be counted, you must complete the Ballot, and sign and return it to the address set forth on the enclosed prepaid return envelope. Ballots must be received by Hill and Knowlton, Inc. (the "Solicitation Agent") no later than 5:00 p.m., New York City time, on _____________, 1994 (the "Voting Deadline"). If you received a return envelope addressed to your broker or bank (or agent thereof), be sure to return your Ballot early enough for your vote to be processed and then forwarded to and received by the Solicitation Agent by the Voting Deadline. 7. If you are a beneficial owner and your broker or bank accepts facsimiles, your Ballot may be transmitted by facsimile to the appropriate telephone number provided by your broker or bank (or agent thereof). If you are a record holder, Ballots may be submitted by facsimile to Hill and Knowlton at the appropriate number set forth below. In either case, Ballots transmitted by facsimile must be received by the Solicitation Agent no later than the Voting Deadline. For inspection purposes, the original of any telecopied Ballot should be delivered to your broker or bank (or agent thereof) or to Hill and Knowlton, whichever is applicable, so as to be received no later than fifteen (15) days after the Voting Deadline. ITEM 1 Insert the Ballot Amount in Item 1 of the Ballot. The "Ballot Amount"is the principal amount of Series B Notes held by you as the registered record holder or the beneficial owner thereof. If you are a beneficial owner, the Ballot Amount should include only the amount of Series B Notes held in account(s) with the bank or broker which transmitted this Ballot to you. If you hold other Series B Notes in record name or in one or more accounts with other banks or brokers, such Series B Notes must be voted separately on the ballots received from such other banks or brokers, or in the case of record name Series B Notes, by you, in accordance with the instructions for Item 2 set forth below. If you are a SERIES B BALLOT 9 beneficial owner and do not know your Ballot Amount, please contact your bank or broker immediately. ITEM 2 (i) In the appropriate boxes in Item 2, indicate your votes with respect to (a) your Old Series Note Claim, (b) your GRI Guaranty Claim and (c) your decision whether to consent to the release of the Old Security Documents. (ii) You may vote differently on the Plan with respect to your Old Series Notes Claim and your GRI Guaranty Claim. If, however, you cast a vote on the Plan with respect to only one of these two Claims, you will be deemed to have voted identically with respect to the other Claim. Additionally, any VALIDLY EXECUTED Ballot which does not indicate acceptance or rejection of the Plan with respect to either the Old Series Notes Claim or the GRI Guaranty Claim WILL BE DEEMED AN ACCEPTANCE OF THE PLAN WITH RESPECT TO BOTH CLAIMS. There can be no assurance, however, that the Bankruptcy Court will permit unmarked Ballots to be counted. Accordingly, you are encouraged to both execute your Ballot and to indicate in the appropriate boxes in Item 2 your votes with respect to the Plan. (iii) Although you may vote differently on the Plan with respect to your Old Series Notes Claim (RII Class 2) and your GRI Guaranty Claim (GRI Class 2), you must vote your entire Claim Amount with respect to each Claim to accept or reject the Plan. Also if you hold Old Series Notes in multiple accounts, you must vote all of your claims within a single class under the Plan to accept or reject the Plan. Thus, you may not split your vote on the Plan in any way (either on a single Ballot or on multiple Ballots) with respect to your Old Series Notes Claim or your GRI Guaranty Claim. If you are a record holder/beneficial owner of Series A Notes as well as Series B Notes, you must also vote your Old Series Notes Claim represented by this Ballot consistently with any Ballot you submit with respect to your Series A Notes. (iv) Furthermore, any VALIDLY EXECUTED Ballot which does not indicate whether the holder consents or refuses to consent to the release of the Old Security Documents WILL BE DEEMED AND COUNTED AS A CONSENT TO THE RELEASE OF THE OLD SECURITY DOCUMENTS, REGARDLESS OF HOW THE HOLDER MAY HAVE VOTED ITS CLAIMS WITH RESPECT TO THE PLAN. Please note that a condition precedent to consummation to the Plan is the release and termination of the Old Security Documents. As with the vote to accept or reject the Plan, you may not split your vote with respect to the consent to release of the Old Security Documents in any way (either on a single Ballot or on multiple Ballots). (v) A Ballot that partially accepts and partially rejects the Plan with respect to either of the record holder/beneficial owner's two Claims or splits its vote with respect to the election to consent to the release of the Old Security Documents will not be counted. Additionally, any prior Ballots submitted by you as a record holder/beneficial owner of Old Series Notes (for the Series B Notes represented by this Ballot, other Series B Notes or Series A Notes) will not be counted to the extent that the votes indicated by those prior Ballots are inconsistent with the votes indicated on this Ballot within a single class of claims or with respect to the decision as to whether to consent to the release of the Old Security Documents. If multiple Ballots are received from an individual Claimant for the same Claim prior to the Voting Deadline that are inconsistent with respect to the votes to accept or reject the Plan and the decision regarding the consent to the release of the Old Security Documents, the last ballot received shall supersede and revoke any earlier received ballot. SERIES B BALLOT 10 ITEM 3 In Item 3 of the Ballot, insert the requested information for all Old Series Notes held by you either as record holder or beneficial owner for which other Ballots have been submitted. ITEM 4 Please review and certify as to the matter set forth in Item 4 and execute the Ballot in the space provided. This Ballot must be returned in sufficient time to allow it to be received by the Solicitation Agent by no later than 5:00 p.m., New York City time, on ___________, 1994. If you believe you have received the wrong ballot, please contact the Solicitation Agent or your broker or bank immediately. The Ballot attached hereto is not a letter of transmittal and may not be used for any purpose other than to vote to (i) accept or reject the Plan and (ii) elect to consent to the release of the Old Security Documents. Accordingly, at this time, holders should not surrender certificates representing their securities, and neither the Debtors nor the Solicitation Agent will accept delivery of any such certificates surrendered together with this Ballot. The remittance of your securities for exchange pursuant to the Plan may only be made by your broker or bank (or agent thereof) or, in the case of registered record holders, by you, and will only be accepted if certificates representing your securities (in proper form for transfer) are delivered together with a letter of transmittal which will be furnished to your broker or bank (or agent thereof) or you (in the case of registered record holders) as provided under the Plan or as notified following confirmation of the Plan by the Bankruptcy Court. Moreover, the Ballot does not constitute and shall not be deemed a proof of claim or interest or an assertion of a claim or interest. PLEASE MAIL YOUR BALLOT PROMPTLY! IF YOU HAVE ANY QUESTIONS REGARDING THIS BALLOT OR THE VOTING PROCEDURES, PLEASE CALL THE SOLICITATION AGENT: HILL AND KNOWLTON, INC. ATTN: RESORTS BALLOT SOLICITATION GROUP 420 LEXINGTON AVENUE NEW YORK, NEW YORK 10017 (212) 210-8850 SERIES B BALLOT 11 For your information, the Plan divides creditors and equity interest holders of RII and GRI into the following classes: RII CREDITORS AND EQUITY INTEREST HOLDERS Class 1.* Priority Claims Class 2. Old Series Notes Claims Class 3.* Showboat Notes Claims Class 4.* Secured Claims Class 5.* RII Unsecured Claims Class 6.* Paradise Subsidiary Claims Class 7. RII Equity Interests Class 8. 1990 Stock Option Plan Interests GRI CREDITORS AND EQUITY INTEREST HOLDERS Class 1.* Priority Claims Class 2. GRI Guaranty Claims Class 3.* GRI Unsecured Claims Class 4. RII Intercompany Claim Class 5. GRI Equity Interest * Unimpaired or otherwise deemed to accept or reject the Plan. SERIES B BALLOT 12 EX-10 26 EXHIBIT 10.51 UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re RESORTS INTERNATIONAL, INC., a Delaware corporation, and GGRI, INC., a Delaware corporation, formerly known as Griffin Resorts, Inc., Debtors. Case Nos. _______________ and _______________ Jointly Administered Under Case No. _________________ Chapter 11 MASTER BALLOT TO (1) CAST VOTES TO ACCEPT OR REJECT THE JOINT PLAN OF REORGANIZATION PROPOSED BY RESORTS INTERNATIONAL, INC. GGRI, INC., RESORTS INTERNATIONAL HOTEL INC., RESORTS INTERNATIONAL HOTEL FINANCING, INC., AND P. I. RESORTS LIMITED AND (2) ELECT TO CONSENT TO RELEASE OF OLD SECURITY DOCUMENTS RESORTS INTERNATIONAL, INC. SERIES B NOTES MASTER BALLOT RESORTS INTERNATIONAL, INC. SENIOR SECURED REDEEMABLE NOTES DUE APRIL 15, 1994, SERIES B (RII CLASS 2 AND GRI CLASS 2) Resorts International, Inc. ("RII"), GGRI, Inc. ("GRI"), Resorts International Hotel, Inc.("RIH"), Resorts International Hotel Financing, Inc. ("RIHF"), and P. I. Resorts Limited("PIRL") are soliciting the votes of your Beneficial Owners (as defined herein) with respect to the prepackaged joint plan of reorganization under chapter 11 of the Bankruptcy Code for RII and GRI (collectively, the "Debtors" or the "Company") which is proposed by RII, GRI, RIH, RIHF and PIRL (the "Plan") and is attached as Appendix A to the accompanying Information Statement/Prospectus dated January __, 1994 (the "Information Statement"). Please read the Information Statement carefully before you vote. This Resorts International, Inc. Series B Notes Master Ballot (the "Master Ballot") may not be used for any purpose other than for (1) casting votes to accept or reject the Plan and (2) indicating elections to consent to the release of the Old Security Documents (as defined in the Plan). This Master Ballot is to be used by brokers, proxy intermediaries, or other nominees for casting votes and electing to consent to release of the Old Security Documents on behalf of beneficial owners of Resorts Senior Secured Redeemable Notes due April 15, 1994, Series B (the "Series B Notes") and beneficiaries of the GRI Guaranty (as defined in the Plan). SERIES B MASTER BALLOT 1 The record date (the "Voting Record Date") for purposes of determining which holders of Series B Notes (and beneficiaries of the GRI Guaranty) are eligible to vote on the Plan is January 10, 1994 and to make the election with respect to the release of the Old Security Documents. Only holders of Series B Notes in whose names such securities are registered on the books of the Company on the Voting Record Date or any person who has obtained a properly completed proxy from such person are eligible to cast Master Ballots relating to the Plan and the release of the Old Security Documents. Holders of Series B Notes who purchased such securities or whose purchase of such securities is registered after the Voting Record Date who wish to vote on the Plan and the release of the Old Security Documents must arrange with their seller to receive a proxy from the holder of record on such date. A validly executed ballot submitted by a holder which does not indicate whether such holder accepts or rejects the Plan is deemed to be and should be counted as an acceptance of the Plan. Similarly, a validly executed ballot submitted by a holder which does not indicate whether consent is given or denied with respect to the release of the Old Security Documents is deemed to be and should be counted as a consent to the release of the Old Security Documents. PLEASE READ AND FOLLOW THE ATTACHED INSTRUCTIONS CAREFULLY. COMPLETE, SIGN AND DATE THIS MASTER BALLOT AND ARRANGE FOR ITS DELIVERY SO THAT IT IS RECEIVED BY HILL AND KNOWLTON, INC. (THE "SOLICITATION AGENT") BY 5:00 P.M., NEW YORK CITY TIME, ON __________________, 1994 (THE "VOTING DEADLINE"). SERIES B MASTER BALLOT 2 ITEM 1: TABULATION OF (1) VOTES WITH RESPECT TO THE PLAN AND (2) RELEASE ELECTION. Please note that each beneficial owner of Old Series Notes has the right to vote to accept or reject the Plan with respect to two Claims, its Old Series Note Claim (as defined in the instructions hereto) and its GRI Guaranty Claim (as defined in the instructions hereto) and its GRI Guaranty Claim (as defined in the instructions hereto). With respect to each of these two claims, each beneficial owner of Series B Notes who votes must vote its entire claim on each separate issue voted below. A beneficial owner may vote differently on the Plan with respect to its Old Series Note Claim and its GRI Guaranty Claim. If, however, a beneficial owner casts a vote on the Plan with respect to either of its Old Series Note Claim or its GRI Guaranty Claim, but not with respect to both of such claims, the beneficial owner should be deemed to have voted identically with respect to both of such claims. Furthermore, a beneficial owner that submits a validly executed ballot which fails to indicate whether such beneficial owner accepts or rejects the Plan with respect to both its Old Series Note Claim and its GRI Guaranty Claim should be counted as an acceptance of the Plan with respect to both its Old Series Note Claim and its GRI Guaranty Claim. Furthermore, any validly executed Ballot which does not indicate whether the beneficial owner consents or refuses to consent to the release of the Old Security Documents should be counted as a consent to the release of the Old Security Documents, regardless of the how the beneficial owner may have voted its Claims with respect to the Plan. Although a beneficial owner may vote differently on the Plan with respect to your Old Series Notes Claim (RII Class 2) and your GRI Guaranty Claim (GRI Class 2), a beneficial owner may not split its vote on the Plan with respect to its Old Series Note Claim, its GRI Guaranty Claim or its election with respect to the consent to release of the Old Security Documents. A beneficial owner must vote its entire Claim Amount with respect to each Claim to accept or reject the Plan. Also if such beneficial owner holds Series B Notes in multiple accounts, it must vote all of its claims within a single class under the Plan to accept or reject the Plan. Thus, a beneficial owner may not split its vote on the Plan in any way (either on a single Ballot or on multiple Ballots) with respect to its Old Series Notes Claim, GRI Guaranty Claim or its election with respect to the consent to release of the Old Security Documents. If any beneficial owner is a record holder/beneficial owner of Series B Notes as well as Series A Notes, it must vote its Old Series Notes Claim represented by this Ballot consistently with any Ballot submitted with respect to its Series B Notes. Accordingly, a Series B Note Holder Ballot (the "Ballot") received from a beneficial owner that partially accepts and partially rejects the Plan with respect to either of the beneficial owner's two claims or splits its vote with respect to the election to consent to the release of the Old Security Documents should not be counted. For purposes of computing the vote, each voting beneficial owner should be deemed to have voted the full amount of its claim according to your records. A. THE PLAN. i. Old Series Note Claims (RII Class 2 Claims). SERIES B MASTER BALLOT 3 The undersigned certifies that ________ (INSERT THE NUMBER OF DIFFERENT BENEFICIAL OWNERS) beneficial owners of Series B Notes in the aggregate principal amount of $__________, as identified by their respective customer account numbers set forth below, have delivered to the undersigned Ballots casting votes with respect to their Old Series Note Claims to ACCEPT the Plan. The undersigned certifies that _________ (INSERT THE NUMBER OF DIFFERENT BENEFICIAL OWNERS) beneficial owners of Series B Notes in the aggregate principal amount of $__________, as identified by their respective customer account numbers set forth below, have delivered to the undersigned Ballots casting votes with respect to their Old Series Note Claims to REJECT the Plan. ii. GRI GUARANTY CLAIMS (GRI CLASS 2 CLAIMS). The undersigned certifies that ________ (INSERT THE NUMBER OF DIFFERENT BENEFICIAL OWNERS) beneficial owners of Series B Notes in the aggregate principal amount of $__________, as identified by their respective customer account numbers set forth below, have delivered to the undersigned Ballots casting votes with respect to their GRI Guaranty Claims to ACCEPT the Plan. The undersigned certifies that _________ (INSERT THE NUMBER OF DIFFERENT BENEFICIAL OWNERS) beneficial owners of Series B Notes in the aggregate principal amount of $__________, as identified by their respective customer account numbers set forth below, have delivered to the undersigned Ballots casting votes with respect to their GRI Guaranty Claims to REJECT the Plan. B. CONSENT TO RELEASE AND TERMINATE OLD SECURITY DOCUMENTS ELECTIONS A BENEFICIAL OWNER'S BALLOT WHICH FAILS TO INDICATE WHETHER CONSENT IS GIVEN OR DENIED WITH RESPECT TO THE RELEASE OF THE OLD SECURITY DOCUMENTS SHOULD BE COUNTED AS IF AFFIRMATIVE CONSENT HAD BEEN GIVEN, REGARDLESS OF HOW SUCH BENEFICIAL OWNER VOTED ITS CLAIMS WITH RESPECT TO THE PLAN. The undersigned certifies that ________ (INSERT NUMBER OF DIFFERENT BENEFICIAL OWNERS) beneficial owners of Series B Notes, as identified by their respective customer account numbers set forth below, have delivered to the undersigned Ballots electing to consent to the release of the Old Security Documents. ITEM 2: BENEFICIAL OWNER INFORMATION. The undersigned certifies that attached hereto is a true and accurate schedule of the beneficial owners of Series B Notes, as identified by their respective customer account numbers and dollar amounts of Series B Notes voted, that have delivered Ballots for the Series B Notes to the undersigned. (Please complete Table A or attach the information requested by this Item 2 in the format of Table A.) SERIES B MASTER BALLOT 4 ITEM 3: ADDITIONAL BALLOTS SUBMITTED BY BENEFICIAL OWNERS. The undersigned certifies that it has transcribed the information, if any, provided in Item 3 of each Ballot for the Series B Notes received from a beneficial owner. (Please complete Table B or attach the information requested by this Item 3 in the format of Table B.) ITEM 4: CERTIFICATIONS. By signing this Master Ballot, the undersigned certifies that each beneficial owner of the Series B Notes whose votes are being transmitted by this Master Ballot has been provided with a copy of the Information Statement (as defined in the instructions hereto) relating to the Plan and all related solicitation materials. A record of the voting instructions received from each beneficial owner will remain on file with the undersigned (and be subject to inspection by the Court) until the Effective Date of the Plan (or such other date as may be required by Court order). SERIES B MASTER BALLOT 5 By signing this Master Ballot, the undersigned certifies that it is the registered or record owner of the Series B Notes set forth in Item 1 and/or has full power and authority to vote to accept or reject the Plan and elect to consent to the release of the Old Security Documents. The undersigned also acknowledges that this solicitation is subject to all the terms and conditions set forth in the Information Statement relating to the Plan. Name of Record or Registered Holder: _____________________________________________ (Print or Type) Signature:___________________________________ By:__________________________________________ (Print or Type Name) Title:_______________________________________ (If Appropriate) Address:_____________________________________ Street _____________________________________________ City, State and Zip Code Telephone Number: _(__)______________________ _____________________________________________ Social Security or Federal Tax I.D. No. (Optional) Date Completed:______________________________ THIS MASTER BALLOT MUST BE RECEIVED BY HILL AND KNOWLTON, INC., 420 LEXINGTON AVENUE, NEW YORK, NEW YORK 10017 (ATTN: RESORTS BALLOT SOLICITATION GROUP), BY 5:00 P.M., NEW YORK CITY TIME, ON __________________________ OR THE VOTES TRANSMITTED HEREBY WILL NOT BE COUNTED. SERIES B MASTER BALLOT 6 TABLE A.1 BENEFICIAL OWNER INFORMATION (RII CLASS 2 and GRI CLASS 2) VOTES REGARDING PLAN - -------------------------------------------------------------------------------- INSERT DOLLAR AMOUNT OF SERIES B NOTES VOTED - -------------------------------------------------------------------------------- Old Series Note Claim GRI Guaranty Claim - -------------------------------------------------------------------------------- Customer Account No. Accept the Plan Reject the Plan Accept the Plan Reject the Plan - -------------------------------------------------------------------------------- 1. - -------------------------------------------------------------------------------- 2. - -------------------------------------------------------------------------------- 3. - -------------------------------------------------------------------------------- 4. - -------------------------------------------------------------------------------- 5. - -------------------------------------------------------------------------------- 6. - -------------------------------------------------------------------------------- 7. - -------------------------------------------------------------------------------- 8. - -------------------------------------------------------------------------------- 9. - -------------------------------------------------------------------------------- 10. - -------------------------------------------------------------------------------- SERIES B MASTER BALLOT 7 TABLE A.2 BENEFICIAL OWNER INFORMATION (RII CLASS 2 and GRI CLASS 2) CONSENTS TO RELEASE OLD SECURITY DOCUMENTS - -------------------------------------------------------------------------------- INSERT DOLLAR AMOUNT OF SERIES B NOTES VOTED - -------------------------------------------------------------------------------- Customer Account No. Consent to Release Do Not Consent to Release - -------------------------------------------------------------------------------- 1. - -------------------------------------------------------------------------------- 2. - -------------------------------------------------------------------------------- 3. - -------------------------------------------------------------------------------- 4. - -------------------------------------------------------------------------------- 5. - -------------------------------------------------------------------------------- 6. - -------------------------------------------------------------------------------- 7. - -------------------------------------------------------------------------------- 8. - -------------------------------------------------------------------------------- 9. - -------------------------------------------------------------------------------- 10. - -------------------------------------------------------------------------------- SERIES B MASTER BALLOT 8 TABLE B TRANSCRIPTION OF INFORMATION FROM ITEM 3 OF BALLOTS SUBMITTED BY BENEFICIAL OWNERS - -------------------------------------------------------------------------------- Customer Account Number Your Customer of Other Account Account Number Name of Holder (if applicable) Principal Amount - -------------------------------------------------------------------------------- 1. - -------------------------------------------------------------------------------- 2. - -------------------------------------------------------------------------------- 3. - -------------------------------------------------------------------------------- 4. - -------------------------------------------------------------------------------- 5. - -------------------------------------------------------------------------------- 6. - -------------------------------------------------------------------------------- 7. - -------------------------------------------------------------------------------- 8. - -------------------------------------------------------------------------------- 9. - -------------------------------------------------------------------------------- 10. - -------------------------------------------------------------------------------- 11. - -------------------------------------------------------------------------------- 12. - -------------------------------------------------------------------------------- 13. - -------------------------------------------------------------------------------- 14. - -------------------------------------------------------------------------------- SERIES B MASTER BALLOT 9 INSTRUCTIONS FOR OLD SERIES NOTES MASTER BALLOT RESORTS INTERNATIONAL, INC. SENIOR SECURED REDEEMABLE NOTES DUE APRIL 15, 1994, SERIES B (RII CLASS 2 AND GRI CLASS 2) 1. Resorts International, Inc. ("RII"), GGRI, Inc. ("GRI"), Resorts International Hotel, Inc.("RIH"), Resorts International Hotel Financing, Inc. ("RIHF") and P. I. Resorts Limited ("PIRL") are soliciting the votes of your beneficial owners (as defined herein) with respect to the joint plan of reorganization under Chapter 11 of the Bankruptcy Code for RII and GRI (collectively, the "Debtors" or the "Company") which is proposed by RII, GRI, RIH, RIHF and PIRL (the "Plan") attached as Appendix A to the accompanying Information Statement/Prospectus dated January___, 1994 (the "Information Statement"). 2. The Resorts Senior Secured Redeemable Notes due April 15, 1994 were issued in two series: Series A and Series B. Collectively, these two series of notes are referred to as the Old Series Notes. Under the Plan, all Claims arising from Old Series Notes, regardless of series, are classified in a single class (RII Class 2). For purposes of voting with respect to the Plan, Claimants who hold both Series A Notes and Series B Notes are treated as having a single "Old Series Notes Claim" (in the aggregate principal amount of the Claimant's Series A Notes and Series B Notes). Additionally, record holders/beneficial owners of Old Series Notes (regardless of series) are also beneficiaries of the GRI Guaranty (as defined in the Plan) which secured RII's obligations under the Old Series Notes. As a result of the GRI Guaranty, record holders/beneficial owners of Old Series Notes also hold Claims against GRI ("GRI Guaranty Claims"). A Claimant's GRI Guaranty Claim is classified separately from its Old Series Notes Claim in GRI Class 2. As a result, for purposes of voting with respect to the Plan, a record holder/beneficial owner of Old Series Notes is entitled to a separate vote on the Plan with respect to its GRI Guaranty Claim. 3. RII and GRI are also soliciting consents of the holders of Old Series Notes to release the Old Security Documents under which the liens on the property securing the Old Series Notes were granted or created. The Old Security Documents, in effect, pledge RIH's assets (including the Resorts International Hotel) to secure the Old Series Notes. Under the Plan, these same assets are pledged to secure the new debt obligations to be issued under the Plan. Pursuant to the Old Series Note Indenture, to effectuate such termination and release consensually, the record holders of at least 66 2/3% in aggregate principal amount of the outstanding Old Series Notes and the record holders of at least a majority in aggregate principal amount of each series of the Old Series Notes must execute consents. Accordingly, RII and GRI are seeking consents from the holders of Old Series Notes. 4. This Master Ballot related to the Plan requests that you compile information with respect to three votes to be made by the holders of Series B Notes. First, holders of Series B Notes must vote with respect to their Old Series Note Claims to accept or reject their treatment under the Plan. Second, holders of Series B Notes must vote with respect to their GRI Guaranty Claims to accept or reject their treatment under the Plan. Third, holders of Series B Notes must vote whether to consent to the release of the Old Security Documents (as defined in the Plan). 5. This Master Ballot is to be used by brokers, proxy intermediaries or other nominees for casting votes to accept or reject the Plan and for consenting to the release SERIES B MASTER BALLOT 10 of the Old Security Documents on behalf of beneficial owners (as defined herein) of Old Series Notes. 6. You should deliver an Series B Note Holder Ballot and other documents relating to the Plan including the Information Statement (collectively, the "Solicitation Materials") to each beneficial owner of the Series B Notes, and take any action required to enable each such beneficial owner to vote the Series B Notes. With regard to any Series B Note Holder Ballots returned to you, you must either (i) forward such Ballots to the Solicitation Agent (as defined herein) indicating the appropriate authority to vote on each such Ballot submitted or (ii)(a) retain such Ballots in your files and transfer the requested information from each such Ballot onto the attached Master Ballot or your computer generated version of the Master Ballot which indicates identical information, (b) execute the Master Ballot and (c) arrange for facsimile and/or delivery of such Master Ballot, as provided in paragraph 8 below to Hill and Knowlton, Inc. (the "Solicitation Agent"), 420 Lexington Avenue, New York, New York 10017 (Attn: Resorts Ballot Solicitation Group). Please keep any records of the voting instructions received from beneficial owners until the Effective Date of the Plan (or such other date as may be required by Court order). 7. If you are both the registered owner and beneficial owner of Series B Notes and you wish to vote such Series B Notes, you may return either a Ballot or a Master Ballot for such Series B Notes. 8. Multiple Master Ballots may be completed and delivered to the Solicitation Agent. Votes reflected by these multiple Master Ballots will be counted except to the extent that they are duplicative of other Master Ballots; if two or more Master Ballots are inconsistent, the latest Master Ballot that is received shall, to the extent of such inconsistency, supersede and revoke any prior Master Ballot. If more than one Master Ballot is submitted and the later Master Ballot(s) supplements rather than replaces earlier Master Ballot(s), please mark the subsequent Master Ballot(s) with the words "Additional Vote" or such other language as you customarily use to indicate an additional vote that is not meant to revoke an earlier vote. 9. A computer generated version of the Master Ballot prepared by a bank, brokerage firm or its agent will be acceptable. Master Ballots may be transmitted by facsimile. Master Ballots transmitted by facsimile must be received by Hill and Knowlton at (212) ________ no later than the Voting Deadline. For inspection purposes the original of any telecopied Master Ballot should be delivered to Hill and Knowlton so as to be received no later than fifteen (15) days after the Voting Deadline. 10. If a Master Ballot must be completed by you, please complete, sign and return this Master Ballot so that it is received by the Solicitation Agent no later than 5:00 p.m., New York City Time, on _______________ (the "Voting Deadline"). Please contact the Solicitation Agent in order to arrange for delivery of the completed Master Ballot to its offices. 11. To complete the Master Ballot properly, please take the following steps: ITEM 1: SERIES B MASTER BALLOT 11 Provide appropriate information for each of the items in Item 1 of the Master Ballot. ITEM 2: Item 2 of the Master Ballot requests information for each individual beneficial owner for whom you hold Series B Notes in your name or in street name. To identify such beneficial owners without disclosing their names, please use the customer account number assigned by you to each such beneficial owner. Please note that Item 2 of the Master Ballot requests information which would be obtained from Item 2 of the Series B Note Holder Ballot returned to you by your customers. ITEM 3: Transfer the information regarding additional votes provided in Item 3 of the Series Note B Holder Ballot to Item 3 of the Master Ballot. ITEM 4: (a) Sign and date your Master Ballot; (b) If you are completing this Master Ballot on behalf of another entity, kindly state your relationship with such entity; and (c) Provide your name and mailing address. IF YOU RETURN A MASTER BALLOT, PLEASE RETAIN IN YOUR FILES ANY RECORDS OF THE VOTING INSTRUCTIONS RECEIVED FROM THE BENEFICIAL OWNERS UNTIL THE EFFECTIVE DATE OF THE PLAN (OR SUCH OTHER DATE AS MAY BE REQUIRED BY COURT ORDER). No fees or commissions or other remuneration will be payable to any broker, dealer or other person for soliciting Ballots accepting the Plans. We will, however, upon request, reimburse you for customary mailing and handling expenses incurred by you in forwarding the Ballots and other enclosed materials to your clients. We will also pay all transfer taxes, if any, applicable to the transfer and exchange of securities pursuant to and following confirmation of the Plan. PLEASE DELIVER THIS MASTER BALLOT PROMPTLY! ------------------------------------------- IF YOU HAVE ANY QUESTIONS REGARDING THIS BALLOT OR THE VOTING PROCEDURES, PLEASE CALL THE SOLICITATION AGENT: HILL AND KNOWLTON, INC. ATTN: RESORTS BALLOT SOLICITATION GROUP 420 LEXINGTON AVENUE NEW YORK, NEW YORK 10017 (212) 210-8850. NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENT SHALL CONSTITUTE AUTHORITY FOR YOU OR ANY OTHER PERSON TO ACT AS THE AGENT OF THE PROPONENTS OR THE SOLICITATION AGENT, OR AUTHORIZE YOU OR ANY PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENTS ON BEHALF OF ANY OF THEM WITH RESPECT TO THE SERIES B MASTER BALLOT 12 PLAN, EXCEPT FOR THE STATEMENTS CONTAINED IN THE DOCUMENTS ENCLOSED HEREWITH. SERIES B MASTER BALLOT 13 EX-10 27 EXHIBIT 10.53 RESORTS INTERNATIONAL, INC. 1133 BOARDWALK ATLANTA CITY, NEW JERSEY 08401-7329 October 11, 1993 Fidelity Management and Research Company (as investment adviser to certain funds and accounts) 82 Devonshire Street Boston, Massachusetts 02109 TCW Special Credits (as manager of certain funds and accounts) 865 South Figueroa Street Suite 1800 Los Angeles, California 90017 Re: CONSENT RIGHTS Reference is made to that certain Purchase Agreement, dated the date hereof, by and between Resorts International, Inc. ("RII") and Sun International Hotels Limited ("SIHL") (the "Purchase Agreement"), that certain Standby Distribution Agreement, to be executed and delivered on or before October 16, 1993, by and between RII and Paradise Island Resorts Limited ("PIRL") (the "Standby Agreement") and RII's Reorganization Plan (as defined in each of the Purchase Agreement and the Standby Agreement). Unless otherwise indicated, the capitalized terms used herein have the same meaning assigned to such terms in the Standby Agreement. If, and only if, at any time prior to the Effective Date under the Reorganization Plan, or the Closing Date under either the Purchase Agreement or the Standby Agreement, as applicable, Fidelity and TCW shall cease to beneficially own an aggregate of at least twenty percent (20%) of the aggregate principal amount of the outstanding Old Series Notes, then all the rights of consent, approval, acceptance or direction granted to Fidelity and TCW under the Reorganization Plan, the Purchase Agreement or the Standby Agreement, as applicable, shall thereupon cease to exist; PROVIDED, HOWEVER, that nothing herein shall limit or otherwise prejudice in any manner any rights which Fidelity and TCW may have under the Bankruptcy Code and the Bankruptcy Rules. In addition, if either of Fidelity or TCW shall cease to beneficially own any Old Series Notes whatsoever (but the other retains an aggregate of at least twenty percent (20%) of the aggregate principal amount of the outstanding Old Series Notes), then the rights described above shall be extinguished solely as to the person ceasing to own any such Old Series Notes, without prejudice to the rights of the other hereunder. The foregoing is without prejudice to the rights of each of Fidelity and TCW under that certain letter agreement among Fidelity, TCW, RII, GRI, SIHL and Sun International Investments Limited setting forth the terms and conditions under which funds managed by Fidelity and TCW will vote Old Series Notes beneficially owned by them for acceptance of the Reorganization Plan. If the foregoing accurately sets forth the arrangements among us, please so indicate by signing this letter below. Very truly yours, RESORTS INTERNATIONAL, INC. By: /s/ Christopher D. Whitney __________________________________ ACCEPTED AND AGREED: Fidelity Management and research Company (as investment adviser to certain funds and accounts) By: /s/ Judy Mencher ______________________________________ TCW Special Credits (as manager of certain funds and accounts) By: TCW Asset Management Co., its managing partner By: /s/ Bruce Karsh __________________________________ By: /s/ Richard Masson __________________________________ ACKNOWLEDGED AND AGREED TO: Sun International Hotels Limited By: /s/ Howard Kerzner ______________________________________ 2 EX-10 28 EXHIBIT 10.54 RESORTS INTERNATIONAL, INC. Revised Term Sheet for 11.0% Senior Secured Loan due 2002 Issuer Resorts International Hotel Financing, Inc. ("RIHF" or "Issuer"). Guarantors Resorts International Hotel, Inc. ("RIH") and, if any proceeds are loaned by RIH to RII, Resorts International, Inc. ("RII"). Issue Senior Secured Loan due 2002. Principal Up to $20 million. Availability Available in one borrowing during the twelve months following the effective date of the Plan of Reorganization of RII and GGRI, Inc. Maturity July 15, 2002 (approx. 8 years). Interest 11.0% payable semi-annually in cash on January 15th and July 15th on the basis of a 360-day year consisting of twelve 30-day months. Interest will accrue on the principal amount advanced from the date of drawdown. Security - A secured promissory note from RIH in an aggregate principal amount of $20 million (the "RIH Note") payable in amounts and at times necessary to pay the principal of and interest on the RIHF Senior Facility Note issued pursuant to the Senior Facility Indenture (the "Indenture"), with a collateral assignment of the mortgage, assignment of leases and rents and assignment of operating assets securing such note. The mortgage securing the RIH Note will be a first priority lien on all property and improvements of Merv Griffin's Resorts Casino Hotel in Atlantic City, New Jersey. - The guarantee of RIH will be secured by a first mortgage, an assignment of leases and rents and an assignment of operating assets (in form and substance similar to the mortgage, assignment of leases and rents and assignment of assets securing the 11% Senior Mortgage Notes due 2003 (the "Senior Mortgage Notes")) which mortgage shall be PARI PASSU with the liens created by the mortgage documents securing the RIH Note. - If any proceeds are loaned by RIH to RII, the collateral securing RIH's guarantee will include the promissory note by RII evidencing such loan. Rank Senior as to payment of all principal, interest, premiums, fees and expenses to all debt, including Senior Mortgage Notes and Junior Mortgage Notes. Mandatory Redemption Upon the merger or consolidation of RIH or GGRI, Inc. or a sale of assets by RIH; provided that such a merger or consolidation shall be permitted without mandatory redemption only if (i) all tests applicable to the Senior Mortgage Notes are satisfied, and (ii) the surviving entity assumes all obligations of its predecessor under the Indenture. Optional Redemption At any time during a period ending on the third anniversary of the funding date at 103% of par. At any time thereafter at par. Open Market Purchases Authorized, in accordance with the Indenture (on terms similar to those set forth in the indenture for the Senior Mortgage Notes). Indenture Modifications Requirement of two-thirds of outstanding principal amount (on terms similar to those set forth in the indenture for the Senior Mortgage Notes). Use of Proceeds Advances will be made to RIHF and must be loaned by RIHF to RIH. No further restrictions. Conditions to Advances Execution of an Indenture reasonably satisfactory to Purchaser based generally upon the indenture for the Senior Mortgage Notes (except as described herein or as agreed); no defaults or Events of Default under and as defined in the Indenture and the indenture for the Senior Mortgage Notes or Junior Mortgage Notes; and effectiveness of a registration statement covering Purchaser's public resale of the Notes by Purchaser (see "Registration", below). Indenture Covenants Payments of principal and interest; corporate existence; quarterly and annual financial reports; compliance certificates and notice of defaults; limitation on dividends and restricted payments. In addition, RII shall be limited as to debt incurrence so that it may (i) issue the intercompany notes contemplated hereby, and (ii) incur additional indebtedness to the extent that RII's Pro Forma Consolidated Interest Coverage Ratio for the four full fiscal quarters next preceding the date such additional indebtedness is proposed to be incurred would have been less than or equal to ____, determined on a pro forma basis (including pro forma for the intended application of the net proceeds of such indebtedness) as if such additional indebtedness had been outstanding at the beginning of such four quarter period. Cross-Defaults The Senior Facility loan will contain cross defaults to the Senior Mortgage Notes and the Junior Mortgage Notes and cross-acceleration provisions similar to those set forth in the indenture for the Senior Mortgage Notes. Registration As a condition to the advance of funds hereunder, Issuer, RII, RIH and GGRI, Inc. shall take such actions as may be necessary to ensure that all notes issued to Purchaser in respect of the Senior Facility loan may be re-sold publicly by Purchaser, without restriction under the Securities Act of 1933, as amended, immediately following the issuance thereof, provided such re-sale occurs within 180 days thereafter. EX-10 29 EXHIBIT 10.59 ================================================================= STANDBY DISTRIBUTION AGREEMENT between RESORTS INTERNATIONAL, INC. and P. I. RESORTS LIMITED ----------------------------------------- Dated as of October __, 1993 ------------------------------------------ Purchase of Stock of Resorts International (Bahamas) 1984 Limited, and certain assets of RII Paradise Subsidiaries ================================================================= TABLE OF CONTENTS ----------------- ARTICLE I Definitions . . . . . . . . . . . . . . . . 2 SECTION 1.01. Definitions . . . . . . . . . . . . . . . . 2 ARTICLE II Purchase and Sale of the Shares and the RII Paradise Assets . . . . . . . . 3 SECTION 2.01. Transfer of the Shares . . . . . . . . . . 3 SECTION 2.02. Purchase and Sale of the Shares, the RII Real Estate Assets and the RII Paradise Assets . . . . . . . . . . . . . . 3 SECTION 2.03. Delivery of Certificates and Other Instruments of Transfer . . . . . . . . . . 3 SECTION 2.04. Purchase Price . . . . . . . . . . . . . . 4 SECTION 2.05. Preparation of the Closing Date Balance Sheet and Operations Statement; Adjustments . . . . . . . . . . . . . . . . 4 SECTION 2.06. Closing . . . . . . . . . . . . . . . . . . 6 SECTION 2.07. Third-Party Consents . . . . . . . . . . . 6 SECTION 2.08. Further Assurances . . . . . . . . . . . . 7 SECTION 2.09. Power of Attorney, etc . . . . . . . . . . 8 ARTICLE III Assumption of Certain Liabilities . . . . . 9 SECTION 3.01. Assumed Liabilities . . . . . . . . . . . . 9 SECTION 3.02. Liabilities Not Assumed . . . . . . . . . . 9 SECTION 3.03. No Successor . . . . . . . . . . . . . . . 10 SECTION 3.04. Indemnification . . . . . . . . . . . . . . 10 ARTICLE IV Representations and Warranties of RII . . . 11 SECTION 4.01. Incorporation of Representations and Warranties. . . . . . . . . . . . . . 11 SECTION 4.02. Organization and Good Standing of Buyer . . . . . . . . . . . . . . . . . . . 12 SECTION 4.03. Authorization of Buyer . . . . . . . . . . 12 SECTION 4.04. Buyer: No Conflict; Required Filings and Consents . . . . . . . . . . . 12 SECTION 4.05. Buyer Shares . . . . . . . . . . . . . . . 13 ARTICLE V Additional Agreements . . . . . . . . . . . 14 SECTION 5.01. Conduct of Paradise Island Business Pending the Closing . . . . . . . . . . . . 14 SECTION 5.02. Securities Laws . . . . . . . . . . . . . . 14 SECTION 5.03. Documents and Motions to be Filed by RII and GRI . . . . . . . . . . . . . . . . 15 SECTION 5.04. Reorganization Proceedings . . . . . . . . 15 SECTION 5.05. Access to Information. . . . . . . . . . 16 SECTION 5.06. Notification of Certain Matters . . . . . . 16 SECTION 5.07. Further Action; Reasonable Efforts . . . . 17 SECTION 5.08. Employee Benefit Matters . . . . . . . . . 17 SECTION 5.09. Bulk Transfer Laws . . . . . . . . . . . . 19 SECTION 5.10. Intercompany Accounts, Contracts Guaranties and Indebtedness . . . . . . . . 19 SECTION 5.11. Reorganization Plan Solicitation Documents . . . . . . . . . . . . . . . . . 20 SECTION 5.12. Reorganization Proceedings . . . . . . . . 20 SECTION 5.13. Airline Governmental Consents . . . . . . . 21 SECTION 5.14. Comfort Letter . . . . . . . . . . . . . . 22 SECTION 5.15. Attorneys Fees . . . . . . . . . . . . . . 22 SECTION 5.16. Transfer Taxes . . . . . . . . . . . . . . 22 SECTION 5.17. Actions on Behalf of Buyer; Knowledge of Buyer . . . . . . . . . . . . . . . . . 22 SECTION 5.18. Articles of Association . . . . . . . . . . 23 SECTION 5.19. Representations and Warranties . . . . . . 23 SECTION 5.20. Operation of Buyer and Buyer Subsidiaries . . . . . . . . . . . . . . . 23 SECTION 5.21. Insurance Proceeds . . . . . . . . . . . . 23 SECTION 5.22. Acquisition Proposals . . . . . . . . . . . 24 ARTICLE VI Conditions to the Closing . . . . . . . . 24 SECTION 6.01. Conditions to Obligations of Buyer . . . . 24 SECTION 6.02. Conditions to Obligations of RII . . . . . 27 ARTICLE VII Survival and Indemnification . . . . . . . 27 SECTION 7.01. Survival of Representations . . . . . . . . 27 SECTION 7.02. Indemnification by RII . . . . . . . . . . 28 SECTION 7.03. Notice, etc. . . . . . . . . . . . . . . . 28 SECTION 7.04. Reimbursement of Costs . . . . . . . . . . 29 SECTION 7.05. Time Limitations . . . . . . . . . . . . . 29 SECTION 7.06. Sole and Exclusive Remedy . . . . . . . . . 29 ARTICLE VIII Termination, Amendment And Waiver . . . . . 30 SECTION 8.01. Termination . . . . . . . . . . . . . . . . 30 SECTION 8.02. Rights of Termination . . . . . . . . . . . 31 SECTION 8.03. Effect of Termination . . . . . . . . . . 31 SECTION 8.04. Waiver . . . . . . . . . . . . . . . . . . 31 SECTION 8.05. Amendments . . . . . . . . . . . . . . . . 32 ARTICLE IX General Provisions . . . . . . . . . . . . 32 SECTION 9.01. Notices . . . . . . . . . . . . . . . . . . 32 SECTION 9.02. Entire Agreement; Assignment . . . . . . . 33 SECTION 9.03. Parties in Interest . . . . . . . . . . . . 34 SECTION 9.04. GOVERNING LAW . . . . . . . . . . . . . . . 34 SECTION 9.05. Headings . . . . . . . . . . . . . . . . . 34 SECTION 9.06. Counterparts . . . . . . . . . . . . . . . 34 SECTION 9.07. Specific Performance . . . . . . . . . . . 34 SECTION 9.08. JURISDICTION . . . . . . . . . . . . . . . 34 SECTION 9.09. Knowledge or Consents . . . . . . . . . . . 35 SECTION 9.10. Rights of Fidelity and TCW . . . . . . . . 35 EXHIBITS Exhibit A Comfort Letter Exhibit B Articles of Association of Buyer Exhibit C Form of Opinion of Gibson, Dunn & Crutcher Exhibit D Management Agreement STANDBY DISTRIBUTION AGREEMENT STANDBY DISTRIBUTION AGREEMENT dated as of October __, 1993 (this "Agreement"), between RESORTS INTERNATIONAL, INC., a Delaware corporation ("RII"), and P.I. RESORTS LIMITED, a Bahamian corporation ("Buyer"). WHEREAS, RII has entered into that certain Purchase Agreement, dated as of October __, 1993 (the "Sun Purchase Agreement"), by and between RII and Sun International Hotels Limited ("SIHL") providing for the sale of the Shares to SIHL on the terms and conditions set forth therein; WHEREAS, in connection with the proposed sale of the Shares to SIHL, the Sun Purchase Agreement further contemplates that SIHL will cause certain subsidiaries thereof to acquire the RII Real Estate Assets from RII and the RII Paradise Assets from the RII Paradise Subsidiaries on the terms and conditions set forth therein; WHEREAS, Buyer is, as of the date hereof, a wholly- owned subsidiary of RII; WHEREAS, if and only if the transactions contemplated by the Sun Purchase Agreement are not consummated in accordance with the terms thereof and the Sun Purchase Agreement is terminated in accordance with the terms thereof, Buyer desires to acquire the Shares from RII, and RII desires to sell the Shares to Buyer on the terms and conditions set forth herein (such purchase, the "Stock Acquisition"); WHEREAS, in connection with the Stock Acquisition, Buyer desires to cause the Buyer Subsidiaries to acquire the RII Real Estate Assets from RII and the RII Paradise Assets from the RII Paradise Subsidiaries, and RII desires to sell the RII Real Estate Assets and to cause the RII Paradise Subsidiaries to sell the RII Paradise Assets to the Buyer Subsidiaries on the terms and conditions set forth herein (such purchase, the "Asset Acquisition"); WHEREAS, in connection with the Stock Acquisition and the Asset Acquisition (collectively, the "Acquisitions"), RII and GRI will file the Reorganization Plan with the Bankruptcy Court, providing, INTER ALIA, under certain terms and conditions to be set forth in the Reorganization Plan (including the condition that the Sun Purchase Agreement shall have terminated in accordance with the terms thereof), for the (i) sale of the Shares to Buyer, (ii) sale of the RII Paradise Assets and the RII Real Estate Assets to the Buyer Subsidiaries, (iii) distribution to holders of the Old Series Notes (as defined in the Reorganization Plan) of RII of the Buyer Shares and (iv) the other distributions to holders of the Old Series Notes of RII to be made pursuant to the Reorganization Plan; WHEREAS, the respective Boards of Directors of each of RII and Buyer deem it advisable and in the best interests of such corporations that, if the Sun Purchase Agreement terminates in accordance with its terms, the Stock Acquisition and Asset Acquisition occur upon the terms and subject to the conditions set forth herein and in the Reorganization Plan; NOW, THEREFORE, in consideration of the premises and the mutual covenants, agreements, representations and warranties herein contained, and subject to the conditions hereinafter set forth, and for the purpose of prescribing the terms and conditions of the Stock Acquisition and Asset Acquisition, if the Sun Purchase Agreement terminates in accordance with its terms, the parties hereto agree as follows: ARTICLE I DEFINITIONS SECTION 1.01. DEFINITIONS. Capitalized terms used but not defined herein shall have the meanings ascribed to those terms in Appendix A to the Sun Purchase Agreement or elsewhere in the Sun Purchase Agreement, except that (a) all references to "Buyer" therein and herein shall be deemed to refer to Paradise Island Resorts Limited, (b) all references therein and herein to "Buyer Subsidiaries" shall be deemed to refer to direct or indirect wholly-owned Subsidiaries of Paradise Island Resorts Limited to be formed to buy the RII Paradise Assets from the RII Paradise Subsidiaries and the RII Real Estate Assets from RII, (c) all references herein to the "Closing" shall be deemed to refer to the closing of the Acquisitions under this Agreement and (d) as otherwise expressly required by the context hereof. 2 ARTICLE II PURCHASE AND SALE OF THE SHARES AND THE RII PARADISE ASSETS SECTION 2.01. TRANSFER OF THE SHARES. Prior to Closing, RII may, with the consent of Fidelity and TCW, cause GRI to transfer the Shares to RII in a transaction reasonably acceptable to Fidelity and TCW and their counsel. SECTION 2.02. PURCHASE AND SALE OF THE SHARES, THE RII REAL ESTATE ASSETS AND THE RII PARADISE ASSETS. On the terms and subject to the conditions of this Agreement, on the Closing Date (a) RII agrees to sell, transfer and deliver, or cause GRI to sell, transfer and deliver, to Buyer, and Buyer agrees to purchase and accept from RII or GRI, as applicable, the Shares, free and clear of all Encumbrances, other than those Encumbrances arising from acts of Buyer or its Affiliates from and after (but not prior to) the Closing and (b) RII shall, and shall cause each RII Paradise Subsidiary to, sell, convey, assign, transfer and deliver to a Buyer Subsidiary designated by Buyer, and Buyer shall cause each such Buyer Subsidiary to purchase and accept from RII and each such RII Paradise Subsidiary, all right, title and interest of RII in the RII Real Estate Assets and all right, title and interest of each such RII Paradise Subsidiary in the RII Paradise Assets, free and clear of all Encumbrances except Permitted Encumbrances and those Encumbrances arising from acts of Buyer or its Affiliates from and after (but not prior to) the Closing. SECTION 2.03. DELIVERY OF CERTIFICATES AND OTHER INSTRUMENTS OF TRANSFER. On the Closing Date (a) RII or GRI, as applicable, shall deliver to Buyer certificates representing the Shares together with stock powers executed in blank and (b) RII shall, and shall cause the RII Paradise Subsidiaries to, deliver to the Buyer Subsidiaries such specific assignments, bills of sale (to be in a form reasonably satisfactory to Fidelity, TCW and RII), endorsements, deeds and other good and sufficient instruments of conveyance and transfer, in form and substance reasonably satisfactory to Fidelity and TCW and their counsel, as shall be effective to vest in the Buyer Subsidiaries title to all the RII Paradise Assets and the RII Real Estate Assets. All right, title and interest of RII in the RII Real Estate Assets and of the RII Paradise 3 Subsidiaries in the RII Paradise Assets shall pass and delivery of the RII Real Estate Assets and the RII Paradise Assets shall take place in such location or locations as Fidelity, TCW and RII shall determine. SECTION 2.04. PURCHASE PRICE. As consideration for the transfer of the Shares, the RII Real Estate Assets and the RII Paradise Assets (the "Purchase Price"), Buyer shall cause on the Closing Date (a) the 5,000,000 Ordinary Shares, par value $.01 per share, of Buyer (the "Buyer Shares") to be delivered, on behalf of RII and the RII Paradise Subsidiaries, to the Disbursing Agent designated pursuant to the Reorganization Plan or pursuant to an order of the Bankruptcy Court for purposes of making distributions thereunder to the holders of the Old Series Notes of RII and (b) the Buyer Subsidiaries to assume the Assumed Liabilities in accordance with Article III hereof. The Purchase Price shall be allocated as set forth on Schedule 2.04 to the Sun Purchase Agreement. SECTION 2.05. PREPARATION OF THE CLOSING DATE BALANCE SHEET AND OPERATIONS STATEMENT; ADJUSTMENTS. (a) Within 45 days after the Closing Date, RII shall cause to be prepared, in accordance with the books and records of account of the Paradise Island Business and a physical inventory, and shall deliver, an audited balance sheet for the Paradise Island Business as of the Closing Date (the "Preliminary Closing Date Balance Sheet") and an audited statement of operations for the Paradise Island Business for the period beginning at 12:01 a.m. on January 1, 1994, and ending at the close of business on the Closing Date (the "Preliminary Closing Date Operations Statement"), accompanied by an opinion of Ernst & Young thereon to the effect that such balance sheet and statement of operations present fairly in all material respects the financial position and results of operation of the Paradise Island Business at such date and for such period in conformity with GAAP and the preparation of the June 30 Balance Sheet and the statement of operations for the six months ending June 30, 1993. Representatives of Buyer's auditors, which will be a nationally- recognized firm of independent accountants, shall be entitled to review the scope of the audit in advance thereof as well as the work of Ernst & Young as it progresses and all drafts of the Preliminary Closing Date Balance Sheet and the Preliminary Closing Date Operations Statement. Within 10 days after the delivery to Buyer of the Preliminary Closing Date Balance Sheet and the Preliminary Closing Date Operations Statement, Buyer shall 4 notify RII if it disagrees in any respect with such Preliminary Closing Date Balance Sheet or Preliminary Closing Date Operations Statement. If Buyer does disagree, Buyer and RII shall promptly attempt to settle such disagreement. If Buyer and RII are unable to resolve such disagreement within 7 days after such notice, such disagreement shall be referred to the Accounting Arbitrator for a determination, which shall be final and binding on the parties hereto for all purposes of this Agreement. The fees of the Accounting Arbitrator shall be allocated between Buyer and RII by the Accounting Arbitrator based on its good faith view as to which party's positions were more reasonable. The Preliminary Closing Date Balance Sheet and Preliminary Closing Date Operations Statement as agreed to by the parties or as adjusted pursuant to the determination of the Accounting Arbitrator are herein referred to as the "Closing Date Balance Sheet" and the "Closing Date Operations Statement". Buyer and RII agree that if prior to 35 days after the Closing Date there has not been a resolution of the dispute (the "Union Contract Dispute") between the Company and the Bahamas Hotel Catering and Allied Workers Union (the "Union") with respect to amounts claimed by the Union to be owed by the Company through December 31, 1993, under the collective bargaining agreement dated as of January 7, 1990, between the Bahamas Hotel Employers Association and the Union, then RII and Buyer shall agree as to the amount they believe it would reasonably take to settle the Union Contract Dispute (the "Union Contract Dispute Amount"). If Buyer and Seller are unable to agree on the Union Contract Dispute Amount by the fortieth day after the Closing Date, then the Union Contract Arbitrator shall determine such amount prior to the sixtieth day after the Closing Date, and such determination shall be final and binding on the parties hereto. The Union Contract Dispute Amount, as agreed to by the parties or determined by the Union Contract Arbitrator, shall appear on the Preliminary Closing Date Balance Sheet and the Closing Date Balance Sheet as a Current Liability. Prior to the Closing Date, RII shall, as between the parties, control the resolution of the Union Contract Dispute; PROVIDED, HOWEVER, RII shall consult with Fidelity and TCW with respect thereto and allow a representative of Fidelity or TCW to be present when reasonable in all material negotiations in connection therewith. (b) Within three Business Days after the Closing Date, Buyer and RII shall jointly prepare a cash statement setting forth the amount of Adjusted Cash of the Paradise 5 Island Business as of the Closing Date. If the Adjusted Cash of the Paradise Island Business shown on such cash statement shall be less than the Target Adjusted Cash, on the fourth Business Day after the Closing Date RII shall pay to Buyer the difference in immediately available funds. (c) If the Adjusted Working Capital of the Paradise Island Business plus any Adjusted Cash in excess of $5 million shown on the Closing Date Balance Sheet shall be greater than the Target Adjusted Working Capital plus the EBITDA Adjustment, on the Adjustment Date (as defined below) Buyer shall pay to RII the difference in immediately available funds, together with interest on such amount at the Applicable Rate from and including the Closing Date to but excluding the Adjustment Date. If the Adjusted Working Capital of the Paradise Island Business plus any Adjusted Cash in excess of $5 million shown on the Closing Date Balance Sheet shall be less than the Targeted Adjusted Working Capital plus the EBITDA Adjustment, on the Adjustment Date RII shall pay to Buyer the difference in immediately available funds, together with interest on such amount at the Applicable Rate from and including the Closing Date to but excluding the Adjustment Date. For purposes of the foregoing, "Adjustment Date" shall mean (i) if Buyer does not disagree in any respect with the Preliminary Closing Date Balance Sheet, the 10th day following Buyer's receipt of the Preliminary Closing Date Balance Sheet or (ii) if Buyer shall disagree in any respect with the Preliminary Closing Date Balance Sheet, the third Business Day following either the resolution of such disagreement by the parties or a final determination by the Accounting Arbitrator in accordance with Section 2.05(a). SECTION 2.06. CLOSING. The Closing of the transactions contemplated by this Agreement shall take place at the offices of Gibson Dunn & Crutcher, 200 Park Avenue, New York, New York, on a date to be agreed upon by RII, Fidelity and TCW, as promptly as practicable following the satisfaction or waiver of all of the conditions set forth in Article VI hereof, but in no event later than 10 Business Days thereafter. SECTION 2.07. THIRD-PARTY CONSENTS. To the extent that any Contract relating to the RII Paradise Assets to be assumed by a Buyer Subsidiary for which assignment to such Buyer Subsidiary is provided for herein is not assignable without the consent of another party (a "Non-Assignable Contract"), this Agreement shall not constitute an assignment or an 6 attempted assignment thereof if such assignment or attempted assignment would constitute a breach thereof. RII and Buyer agree to use their best efforts (without the payment of money) to obtain the consent of such other party to the assignment of any such Contract to the relevant Buyer Subsidiary in all cases in which such consent is or may be required for such assignment. If any such consent shall not be obtained, RII agrees to cooperate with Buyer in any reasonable arrangement (at the cost and for the account of such Buyer Subsidiary) designed to provide for the relevant Buyer Subsidiary the benefits intended to be assigned to such Buyer Subsidiary under the relevant Contract, including enforcement of any and all rights of the relevant RII Paradise Subsidiary against the other party thereto arising out of the breach or cancellation thereof by such other party or otherwise. If and to the extent that such arrangement cannot be made, except as provided in the next sentence, neither Buyer nor any Buyer Subsidiary shall have any obligation with respect to any such Contract. If PIA is unable to assign to a designated Buyer Subsidiary the Ft. Lauderdale Ground Space Lease (Hangar) with Broward County, Florida (the "Hangar Lease"), or is otherwise unable to arrange for such designated Buyer Subsidiary to obtain the benefits of the Hangar Lease, then (i) PIA shall use its reasonable best efforts to sub-lease the Hangar Lease and (ii) Buyer and PIA shall each be responsible for 50% of the obligations of lessee under the Hangar Lease and shall each be entitled to receive 50% of the proceeds relating to any sublease of the Hangar Lease. SECTION 2.08. FURTHER ASSURANCES. From and after the Closing, upon request of Buyer, RII shall, and shall cause any of its Affiliates formerly owning an interest in the Paradise Island Assets to, execute, acknowledge and deliver all such further acts, assurances, deeds, assignments, transfers, conveyances and other instruments and papers as may be reasonably required to sell, assign, transfer, convey and deliver (at Buyer's expense, unless otherwise provided in this Agreement) to and vest in Buyer, the Company or its Subsidiaries or the Buyer Subsidiaries, as the case may be, and more fully protect their respective right, title and interest in and employment of, the Shares and all the Paradise Island Assets and the RII Real Estate Assets and as otherwise may be appropriate to carry out the transactions contemplated in this Agreement. (b) From and after the Closing, upon request of RII, Buyer shall, and shall cause any of the Buyer 7 Subsidiaries or any Subsidiaries of Buyer to, execute, acknowledge and deliver all such further acts, assurance, assumptions and other instruments and papers as may be reasonably required (i) in respect of the assumption by the Buyer Subsidiaries of the Assumed Liabilities, and (ii) as otherwise may be appropriate to carry out the transactions contemplated in this Agreement. SECTION 2.09. POWER OF ATTORNEY, ETC. (a) Effective on the Closing Date, RII shall cause each RII Paradise Subsidiary to constitute and appoint, and will cause any Affiliate owning an interest in any RII Paradise Assets to constitute and appoint, the applicable Buyer Subsidiary designated by Buyer and its successors, legal representatives and assigns, the true and lawful attorneys of such RII Paradise Subsidiary and such Affiliates, with full power of substitution, in the name of such RII Paradise Subsidiary and such Affiliates, but on behalf of and for the benefit of such Buyer Subsidiary and its successors, legal representatives and assigns, and at the expense of such Buyer Subsidiary: (i) to demand and receive from time to time any and all of the RII Paradise Assets and to make endorsements and give receipts and releases for and in respect of the same and any part thereof; (ii) to institute, prosecute, compromise and settle any and all proceedings at law, in equity or otherwise that any Buyer Subsidiary and its successors, legal representatives or assigns may deem proper in order to collect, assert or enforce any claim, right or title of any kind in or to the RII Paradise Assets; (iii) to defend or compromise any or all actions, suits or proceedings in respect of any of the RII Paradise Assets; and (iv) to do all such acts and things in relation to the matters set forth in the preceding clauses (i) through (iii) as each such Buyer Subsidiary and its successors, legal representatives or assigns shall deem desirable. RII hereby agrees that the appointment to be hereby made and the powers to be hereby granted are coupled with an interest and are and shall be irrevocable by it in any manner or for any reason. RII shall cause each RII Paradise Subsidiary to deliver to the applicable Buyer Subsidiary designated by Buyer at Closing an acknowledged power of attorney to the foregoing effect executed by each such RII Paradise Subsidiary and any Affiliate selling any of the Paradise Island Assets. Buyer agrees to indemnify and hold RII and its Affiliates harmless from and against any Losses resulting from Buyer's improper use of the power of attorney described in this Section 2.09(a). 8 (b) Effective upon the Closing Date Buyer and the Buyer Subsidiaries shall have the right to receive and open all mail, packages and other communications which relate to the Paradise Island Business addressed to any of the RII Paradise Subsidiaries. RII agrees promptly to deliver to Buyer and the Buyer Subsidiaries any mail, packages or other communications received directly or indirectly by RII or any of its Affiliates that relate to the Paradise Island Business. Buyer and the Buyer Subsidiaries shall have the right and authority to collect, for its own account, all receivables and other items which shall be transferred or are intended to be transferred to Buyer and the Buyer Subsidiaries as provided in this Agreement, and to endorse with the name of RII or any of its Affiliates any checks or drafts received on account of any such receivables or other items, and RII shall promptly transfer or deliver, or cause its Affiliates to transfer or deliver, to Buyer and the Buyer Subsidiaries any cash or other property received directly or indirectly by RII or any of its Affiliates in respect of such receivables or other items including any amounts payable as interest. Buyer and the Buyer Subsidiaries shall promptly deliver to RII packages and other communications received by them which relate to RII or any of its Affiliates but do not relate to the Paradise Island Business. ARTICLE III ASSUMPTION OF CERTAIN LIABILITIES SECTION 3.01. ASSUMED LIABILITIES. Buyer shall cause designated Buyer Subsidiaries to severally assume on the Closing Date the Assumed Liabilities, and shall cause each designated Buyer Subsidiary to execute an Assumption Agreement relating to the Assumed Liabilities assumed by such designated Buyer Subsidiary. On the Closing Date, Buyer shall assume the obligations of RII under Sections 7.02(a)(vi) and (vii) of the Sun Purchase Agreement. SECTION 3.02. LIABILITIES NOT ASSUMED. Except for the Assumed Liabilities and as provided in Section 3.04 and the last sentence of Section 3.01, neither Buyer nor any Buyer Subsidiary, pursuant to this Agreement or the Assumption Agreements or otherwise, assumes, agrees to perform, pay, discharge or indemnify RII or any of its Affiliates against, or otherwise agrees to have any responsibility for, any liabilities or obligations of RII, 9 GRI or any RII Paradise Subsidiary, fixed, contingent or otherwise, known or unknown, relating to or arising out of the RII Paradise Assets, whether arising prior to, on or after the Closing. SECTION 3.03. NO SUCCESSOR. It is expressly understood that the parties intend that neither the Buyer nor any Buyer Subsidiary shall be considered a successor to any RII Paradise Subsidiary and that neither Buyer nor any Buyer Subsidiary shall have any liability except as otherwise provided in this Agreement or the Assumption Agreements. Without limiting the generality of the foregoing, neither Buyer nor any Buyer Subsidiary, pursuant to this Agreement, the Assumption Agreements or otherwise, assumes (a) any liability for or obligation with respect to (i) any Indebtedness of RII or its Affiliates or (ii) any Taxes relating to RII or its Affiliates (except Assumed Taxes), (b) any liabilities or obligations owed to RII or any of its Affiliates (except for liabilities owed to RII or any of its Affiliates under this Agreement or any agreements, certificates or other instruments delivered by Buyer or the Buyer Subsidiaries pursuant to this Agreement), and (c) any liabilities that do not constitute Assumed Liabilities. SECTION 3.04. INDEMNIFICATION. (a) From and after the Closing Date, RII and the RII Paradise Subsidiaries shall indemnify Buyer, the Buyer Subsidiaries and their respective Affiliates (each a "Buyer Indemnified Party") against, and hold them harmless from, any Losses with respect to the ownership, use or operation of the RII Paradise Assets prior to the Closing Date (other than the Assumed Liabilities), which any Buyer Indemnified Party may be requested to pay, perform or discharge at any time. No Buyer Indemnified Party shall be entitled to indemnification under this Section 3.04(a) until the date on which the aggregate amount of the claims made by Buyer Indemnified Parties is at least equal to $25,000, at which time claims may be asserted by any Buyer Indemnified Party against the indemnifying parties regardless of amount. (b) From and after the Closing Date, Buyer and the Buyer Subsidiaries shall indemnify RII, the RII Paradise Subsidiaries and their respective Affiliates (each an "RII Indemnified Party") against, and hold them harmless from, any Losses with respect to (i) the Assumed Liabilities, (ii) the ownership, use or operation of the RII Paradise Assets on or after the Closing Date, (iii) any liability or 10 obligation of the Company or any of its Subsidiaries (fixed, contingent or otherwise, known or unknown (except to the extent such liability or obligation was incurred after the date of this Agreement and in breach of Section 5.01)), which any RII Indemnified Party may be requested to pay, perform or discharge at any time and (iv) the obligations assumed by Buyer as contemplated by the last sentence of Section 3.01 hereof to pay any Buyer Expense Reimbursement to SIHL under the Sun Purchase Agreement. No RII Indemnified Party shall be entitled to indemnification under this Section 3.04(b) until the date on which the aggregate amount of the claims made by RII Indemnified Parties is at least equal to $25,000, at which time claims may be asserted by any RII Indemnified Party against the indemnifying parties regardless of the amount. (c) The provisions of Sections 7.03 and 7.04 shall apply to any indemnification under this Section 3.04. (d) The indemnification obligations of the applicable parties under this Section 3.04 shall constitute the sole and exclusive remedies of the applicable Buyer Indemnified Parties and RII Indemnified Parties, as the case may be, with respect to the matters described in this Section 3.04. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF RII RII represents and warrants to Buyer as follows: SECTION 4.01. INCORPORATION OF REPRESENTATIONS AND WARRANTIES. Each of the representations and warranties made by RII to SIHL in Sections 4.01, 4.02, 4.03, 4.04, 4.13, 4.16 and 4.22 of the Sun Purchase Agreement (but not any other representations or warranties contained in Article IV thereof) is hereby made by RII in favor of Buyer for all purposes as if such representations and warranties were fully set forth herein; PROVIDED, HOWEVER, that any such representation or warranty relating to the delivery of documents, information schedules or other materials to Buyer shall not be deemed to be satisfied hereunder unless and until RII shall have delivered such documents, information schedules or other materials to Fidelity and TCW; and PROVIDED, FURTHER, that for purposes of this Agreement clause (iii) of Section 4.03(b) of the Sun Purchase 11 Agreement shall be deemed to have been stricken in its entirety and replaced by the following: "(iii) consents and approvals required to be obtained by Buyer or RII from the government of the Commonwealth of The Bahamas in order to effectuate the transactions contemplated hereby, to operate the Paradise Island Business or to permit the public trading of the Buyer Shares when they are distributed in accordance with the Reorganization Plan, including without limitation any approvals for exchange controls required to be received from the Exchange Control Department of the Central Bank of The Bahamas (the "Bahamas Exchange Control Approval")". SECTION 4.02. ORGANIZATION AND GOOD STANDING OF BUYER. Buyer is, and each of the Buyer Subsidiaries will be at Closing, a corporation duly organized, validly existing and in good standing under the laws of the Commonwealth of the Bahamas. SECTION 4.03. AUTHORIZATION OF BUYER. Buyer has all necessary corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder. The execution and delivery of this Agreement by Buyer and the purchase of the Shares by Buyer have been, and the purchase of the RII Paradise Assets by the Buyer Subsidiaries will be at Closing, duly and validly authorized by all necessary corporate action on the part of Buyer and the Buyer Subsidiaries and no other corporate proceedings or shareholder actions on the part of Buyer or the Buyer Subsidiaries are or will be necessary to authorize this Agreement or to purchase the Shares and the RII Paradise Assets. This Agreement has been duly and validly executed and delivered by Buyer and, assuming the due authorization, execution and delivery by RII, constitutes the legal, valid and binding obligation of Buyer, enforceable against Buyer in accordance with its terms (subject as to enforcement to applicable bankruptcy, reorganization, insolvency, fraudulent transfer and moratorium and similar laws from time to time in effect affecting creditors' rights generally and to legal and equitable limitations on availability of specific performance and other equitable remedies). SECTION 4.04. BUYER: NO CONFLICT; REQUIRED FILINGS AND CONSENTS. (a) The execution and delivery of this Agreement by Buyer does not (and in the case of the Buyer Subsidiaries will not at Closing), and the performance of this Agreement by Buyer and each Buyer Subsidiary will not, (i) conflict with or violate the memorandum of association or articles of association or equivalent 12 organizational documents of Buyer or any Buyer Subsidiary, (ii) conflict with or violate any law, rule, regulation, order, judgment or decree applicable to Buyer or any Buyer Subsidiary or by which any of them or their properties is bound or affected or (iii) result in any breach of or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, or result in the creation of any Encumbrance on any of the property or assets of Buyer or any Buyer Subsidiary pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which Buyer or any Buyer Subsidiary is a party or by which any of them or their properties is bound or affected, except, in the case of this clause (iii) and clause (ii) above, for any such breaches, defaults or other occurrences which would not, individually or in the aggregate, have a Material Adverse Effect. (b) The execution and delivery of this Agreement by Buyer does not, and the performance of this Agreement by Buyer will not, require any consent, approval, authorization or permit of, or filing with or notification to, any Governmental Authority except for (i) the Confirmation Order, (ii) required filings under the HSR Act, (iii) the Airline Governmental Consents, (iv) the Governmental Consents and (v) where failure to obtain such consents, approvals, authorizations or permits, or to make such filings or notifications, would not prevent or materially delay consummation of the transactions contemplated hereby, or otherwise prevent Buyer from performing its obligations under this Agreement. SECTION 4.05. BUYER SHARES. The authorized capital stock of Buyer consists of 25,000,000 Ordinary Shares, $.01 par value per share, of which two shares are duly authorized and validly issued and outstanding, fully paid and non-assessable (the "Founder's Shares") and 10,000,000 Preference Shares, $.01 par value per share, of which no shares are issued and outstanding. As of the date hereof, RII is the registered holder of one of the Founder's Shares. RII is the sole beneficial owner of both of the Founder's Shares. The Buyer Shares upon issuance and delivery in accordance with the terms of this Agreement will be duly authorized, validly issued and outstanding, fully paid and non-assessable. The Founder's Share has not been, and the Buyer Shares will not be, issued in violation of, 13 and are not subject to, any preemptive or subscription rights. Except as set forth above, there are no shares of capital stock or other equity securities of Buyer outstanding. Except for the agreements and instruments described in Schedule 4.16(a) of the Sun Purchase Agreement, there are no outstanding warrants, options, agreements, convertible or exchangeable securities or other commitments (other than this Agreement) pursuant to which RII or any of its Affiliates is or may become obligated to issue, sell, purchase, return or redeem any shares of capital stock or other securities of Buyer or any Subsidiary of Buyer, and there are not any equity securities of Buyer or any Subsidiary of Buyer reserved for issuance for any purpose (other than the Buyer Shares). Prior to the Closing, RII will have caused Buyer to form, under the laws of the Commonwealth of The Bahamas, the Buyer Subsidiaries, and there will be one Buyer Subsidiary to purchase the assets of each RII Paradise Subsidiary hereunder. At the Closing, Buyer directly will have good and valid title to all of the outstanding shares of capital stock of each Subsidiary of Buyer, free and clear of Encumbrances, and all such shares will be duly authorized and validly issued and outstanding, fully paid and non-assessable. Buyer does not directly or indirectly own any capital stock of or other equity interests in any corporation, partnership or other entity other than the Buyer Subsidiaries. ARTICLE V ADDITIONAL AGREEMENTS SECTION 5.01. CONDUCT OF PARADISE ISLAND BUSINESS PENDING THE CLOSING. Each of the covenants and agreements made by RII to SIHL in Section 6.01 of the Sun Purchase Agreement is hereby made by RII in favor of Buyer for all purposes as if such covenants and agreements were fully set forth herein; PROVIDED, HOWEVER, that any consents required to be obtained from Buyer thereunder shall not be deemed to have been granted unless and until Fidelity and TCW shall have consented thereto in writing. SECTION 5.02. SECURITIES LAWS. Each of RII and Buyer shall make all filings under the Securities Act and the Exchange Act necessitated by the provisions of this Agreement. RII shall cause the Buyer Shares to be registered under the Exchange Act and listed on the American 14 Stock Exchange or authorized for quotation on the NASDAQ National Market System. SECTION 5.03. DOCUMENTS AND MOTIONS TO BE FILED BY RII AND GRI. (a) Promptly upon completion of the Reorganization Plan Solicitation and in no event later than February 15, 1994, RII and GRI shall commence the Bankruptcy Cases. Notwithstanding anything to the contrary, RII and GRI shall not be under any obligation to commence the Bankruptcy Cases unless and until RII and GRI shall have received in the Reorganization Plan Solicitation the requisite number of acceptances from impaired creditors and the requisite number of consents to terminate the Old Security Documents (as defined in the Reorganization Plan). (b) Promptly upon the commencement of the Bankruptcy Cases, and in no event later than five Business Days thereafter, RII and GRI shall (i) file the Disclosure Statement and the Reorganization Plan and the certification of votes for acceptance or rejection of the Reorganization Plan with the Bankruptcy Court and (ii) seek from the Bankruptcy Court and take all steps necessary to obtain a hearing at the earliest practicable date for approval of the Disclosure Statement and confirmation of the Reorganization Plan. (c) RII shall use its reasonable best efforts to file the Registration Statement with the SEC as soon as possible. SECTION 5.04. REORGANIZATION PROCEEDINGS. (i) RII shall, and shall cause GRI to, seek confirmation of the Reorganization Plan by the Bankruptcy Court using the acceptances of the Reorganization Plan received by RII and GRI pursuant to the Reorganization Plan Solicitation, (ii) RII shall, and shall cause GRI to, comply in all material respects with the Bankruptcy Code and all other laws, rules, regulations, decrees and orders promulgated thereunder in connection with obtaining confirmation of the Reorganization Plan, (iii) RII shall, and shall cause GRI to, use its best efforts to obtain, and shall, and shall cause GRI to, refrain from knowingly taking any action that would be likely to prevent, materially impede or result in the revocation of, (A) the entry by the Bankruptcy Court of the Confirmation Order and (B) the vesting upon the date on which the Reorganization Plan shall become effective of (y) the property of each of RII and GRI in the reorganized entities and (z) the property dealt with by the 15 Reorganization Plan in the recipients thereof under the Reorganization Plan, in each case free and clear of all claims and interests of creditors and equity securityholders except as provided in and in accordance with the Reorganization Plan and (iv) RII shall not, and shall cause GRI not to, consent to any amendment or supplement to, or modification of, the Reorganization Plan or the Disclosure Statement that purports to change in any material respect the terms or conditions of the transactions contemplated by this Agreement without the prior written consent of Fidelity and TCW. SECTION 5.05. ACCESS TO INFORMATION. From the date hereof to the Closing Date, RII shall, and shall cause its Affiliates, officers, directors, employees, auditors and other agents to, (i) afford the officers, employees, auditors and other agents of Fidelity and TCW reasonable access at all reasonable times to its officers, employees, agents, properties, offices, plants and other facilities and to all books and records, and shall furnish Fidelity and TCW with all financial, operating and other data and information with respect to the Paradise Island Business as Fidelity and TCW, through their officers, employees or agents, may reasonably request and (ii) furnish, and cause the officers and employees of RII and its Affiliates to furnish, to Fidelity and TCW and their authorized representatives such additional financial and operating data and other information regarding the Paradise Island Assets and the Paradise Island Business as Fidelity or TCW shall from time to time reasonably request including, without limitation, all monthly or other interim financial and operating reports relating to the Paradise Island Business prepared by or for officers of RII and its Affiliates. Without limiting the foregoing, RII agrees to provide representatives of Fidelity and TCW with offices in Paradise Island and Miami and such representatives shall be given adequate prior notice (if time permits) of and allowed to attend all material meetings of RII and its Subsidiaries relating to the Paradise Island Business. Notwithstanding the foregoing, RII shall not be obligated to provide Fidelity or TCW or any of their authorized representatives with any material confidential information or any material nonpublic information unless Fidelity and TCW shall have entered into reasonable confidentiality arrangements with respect to such confidential or nonpublic information, subject to reasonable and customary exceptions. SECTION 5.06. NOTIFICATION OF CERTAIN MATTERS. RII shall give prompt notice to Fidelity and TCW of (i) the 16 occurrence or non-occurrence of any event the occurrence or non- occurrence of which would be likely to cause a representation or warranty contained in this Agreement to be untrue or inaccurate in any material respect and (ii) any failure of RII or Buyer to comply with or satisfy in any material respect any covenant, condition or agreement to be complied with or satisfied by it hereunder; PROVIDED, HOWEVER, that the delivery of any notice pursuant to this Section 5.06 shall not limit, increase or otherwise affect the remedies available hereunder to the party receiving such notice. SECTION 5.07. FURTHER ACTION; REASONABLE EFFORTS. Upon the terms and subject to the conditions hereof, each of RII and Buyer shall use all reasonable best efforts (without undue expense) to take or cause to be taken all appropriate action and to do or cause to be done all things reasonably necessary, proper or advisable under applicable laws and regulations to consummate and make effective the transactions contemplated hereby and by the Reorganization Plan, including, without limitation, using all reasonable efforts to obtain all licenses, permits, consents, approvals, authorizations, qualifications and orders of Governmental Authorities and parties to Material Contracts as are necessary for the consummation of the transactions contemplated hereby and by the Reorganization Plan and to fulfill the conditions to the Closing. SECTION 5.08. EMPLOYEE BENEFIT MATTERS. (a) As of the Closing Date, Buyer shall cause the Buyer Subsidiaries to offer employment to each person employed by the RII Paradise Subsidiaries whose primary functions relate to the operation of the Paradise Island Business and each person set forth on Schedule 6.09 to the Sun Purchase Agreement (a "Paradise Employee"), except that Buyer may designate in writing within 60 days from the date of this Agreement up to 40 Paradise Employees to whom it does not wish to offer employment (the "Excluded Employees"). Schedule 6.09(a) to the Sun Purchase Agreement generally describes severance benefits for Paradise Island Employees and sets forth a list of each Paradise Employee and the salary as of the date hereof and the employment commencement date of each such Paradise Employee. The Buyer Subsidiaries shall not be required to offer employment to any Excluded Employee and RII hereby agrees that all obligations, including obligations under any Benefit Plan or similar employee benefits, to such Excluded Employees shall remain the responsibility solely of RII. RII shall cooperate with 17 and assist Buyer in any reasonable manner in hiring Paradise Employees (other than any Excluded Employee). Buyer agrees that, for a period of one year from the Closing Date, Buyer will not, without the written consent of RII, employ any Excluded Employees, as consultants or otherwise. Any Paradise Employee who becomes an employee of Buyer or the Buyer Subsidiaries shall be referred to herein as a "Continuing Employee". (b) Buyer shall have no obligation to maintain or assume obligations under any Benefit Plan, or to provide any employee benefits, other than the obligations contained in this subsection. Within 90 days from the date of this Agreement, Buyer shall determine whether it shall offer Continuing Employees a 401(k) plan. If Buyer determines to offer Continuing Employees a 401(k) plan, then on or prior to the Closing, Buyer shall sponsor, or cause one or more of its Affiliates to sponsor, a plan (the "Successor Plan") that is qualified under Section 401 of the Code, under which there is established a trust (the "Successor Trust") that is exempt under Section 501 of the Code, to which the following transfers shall be made. As promptly as practical after the Closing Date, RII shall take all actions necessary to transfer to the Successor Trust the account balances in the Resorts Retirement Savings Plan (the "Savings Plan") of all Continuing Employees. Such transfers shall be made solely in cash or, where applicable, in cash plus any loan from an account to a Continuing Employee that satisfies the requirements of ERISA and the Code. The transfer of the account balances referred to above shall take place upon receipt by RII of either (x) a copy of a favorable determination letter or letters from the IRS that the Successor Plan is qualified under Section 401 of the Code and the Successor Trust is exempt from taxation under Section 501 of the Code or (y) an opinion of counsel to Buyer, on which RII is entitled to rely and which is reasonably satisfactory to RII, that the Successor Plan is qualified under Section 401 of the Code and the Successor Trust is exempt from taxation under Section 501 of the Code. (c) Schedule 6.09(c) to the Sun Purchase Agreement sets forth a list of the officers and directors of the Company or any of its Subsidiaries who are not directly involved in the business and operations of the Company and its Subsidiaries. On the Closing Date, RII shall cause to be delivered to Buyer duly signed (i) resignations (with respect to their entire association with or employment by the Company or any of its Subsidiaries) effective as of the 18 Closing Date of all such officers and directors and (ii) releases of such officers and directors releasing the Company and its Subsidiaries of all obligations and liabilities relating to such resignations. (d) RII and Buyer agree to cooperate in making all appropriate filings and taking all appropriate actions required to implement this Section 5.08. SECTION 5.09. BULK TRANSFER LAWS. RII shall cause each RII Paradise Subsidiary to comply in all material respects with the provisions of any so-called Bulk Transfer Law of all states of the United States in which any of the RII Paradise Assets subject to any such Bulk Transfer Law are located in connection with the sale of the RII Subsidiary Assets to the Buyer Subsidiaries. RII represents and warrants to Buyer that the list of creditors to be provided by RII pursuant to such Bulk Transfer Laws will, to RII's knowledge, contain the names and business addresses of all creditors of the RII Paradise Subsidiaries, with the amounts of credit listed when known, and also the names of all persons who are known to RII to assert claims against any RII Paradise Subsidiary even though such claims are disputed, and that such list will be true, correct and complete in all material respects and will comply in all material respects with such Bulk Transfer Laws. As promptly as practicable after the Closing, RII shall pay and discharge when known all amounts so listed (other than Assumed Liabilities and claims disputed in good faith). SECTION 5.10. INTERCOMPANY ACCOUNTS, CONTRACTS GUARANTIES AND INDEBTEDNESS. On or prior to the Closing Date, the net amount of all Indebtedness between RII and any of its Affiliates (other than the Company and any Subsidiary of the Company), on the one hand, and the Company and any Subsidiary of the Company, on the other hand, shall be cancelled or contributed to the capital of the relevant entity. On or prior to the Closing Date, RII shall cause the Company and each Subsidiary of the Company not to have any Indebtedness, except for Indebtedness disclosed on Schedule 4.06(b) to the Sun Purchase Agreement. On or prior to the Closing Date, RII shall terminate or cause to be terminated all Contracts between and among RII and its Affiliates and any of the Company, the Subsidiaries of 19 the Company and the RII Paradise Subsidiaries (to the extent such Contracts relate to the Paradise Island Business), and shall cancel or cause to be cancelled all guarantees and security interests given by the Company, the Subsidiaries of the Company or the RII Paradise Subsidiaries on behalf of RII or any of its Affiliates. On or prior to the Closing Date, RII shall cancel or cause to be cancelled (a) all liens held by RII or any of its Affiliates on any of the Paradise Island Assets and (b) all liens held by the Company or any of its Subsidiaries on any of the assets of RII or any of its Affiliates (other than the Paradise Island Assets) and (c) all liens on any of the Paradise Island Assets relating to Indebtedness, except any such liens disclosed on Schedule 4.06(b) to the Sun Purchase Agreement. SECTION 5.11. REORGANIZATION PLAN SOLICITATION DOCUMENTS. RII shall use its reasonable best efforts to prepare each of the Registration Statement and the Disclosure Statement so that they shall not (i) at the time the Disclosure Statement is first mailed, (ii) at the time the Registration Statement becomes effective, (iii) on the date of the Bankruptcy Court's hearing with respect to the Disclosure Statement, (iv) on the date of the confirmation of the Reorganization Plan by the Bankruptcy Court or (v) at the Closing, contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. Notwithstanding the foregoing, RII makes no such covenant with respect to any information included in the Registration Statement or the Disclosure Statement that was supplied in writing to RII by Fidelity or TCW (or any representative of Fidelity or TCW) specifically for use therein. If, at any time prior to the Closing Date, any event relating to RII or any of its Affiliates, officers or directors should be discovered by RII or any of its Affiliates which is required by the Bankruptcy Court to be set forth in a supplement to the Disclosure Statement, RII will prepare, file with (and, if required, use its best efforts to have approved by) the SEC and the Bankruptcy Court and dissemi- nate any such supplements. RII shall use its reasonable best efforts to ensure that the Registration Statement and the Disclosure Statement did, or shall, as the case may be, comply as to form in all material respects with the requirements of the Securities Act, the Exchange Act and the Bankruptcy Code and all other laws, rules, regulations, decrees and orders promulgated thereunder. SECTION 5.12. REORGANIZATION PROCEEDINGS. Neither RII nor GRI will knowingly take any action, or fail to take any action, which could reasonably be expected to prevent, materially impede or result in the revocation of 20 the confirmation of the Reorganization Plan (as provided in Section 1144 of the Bankruptcy Code). SECTION 5.13. AIRLINE GOVERNMENTAL CONSENTS. In the ----------------------------- event the Airline Governmental Consents are not obtained before the Closing Date, RII and Buyer agree that until the earlier of the date such Airline Governmental Consents are obtained and one year after the Closing Date, RII and Buyer will enter into a service agreement pursuant to which RII or a Subsidiary of RII will, through PIA, operate scheduled air service equivalent to that currently operated by PIA, such scheduled air service to be operated for the account of Buyer. Such service agreement will be mutually agreed upon by RII and Buyer and shall generally provide that Buyer will receive all revenues generated by PIA in its provision of that scheduled air service operated for the account of the Buyer. Such service agreement shall further provide that Buyer will be responsible for all expenses related to such scheduled air service. RII will be responsible for procuring all other services for the airline, including flight crews, maintenance and catering services, and will receive a commercially reasonable fee for its participation in such arrangement. In addition, Buyer would indemnify RII and its Subsidiaries against any losses and liabilities arising from its participation in such lease arrangement other than losses or liabilities arising from the gross negligence or willful misconduct of the indemnified party. This Agreement may not be terminated and, assuming RII has otherwise used its reasonable best efforts (without the payment of money) to assist Buyer in obtaining the Airline Governmental Consents, a breach of this Agreement shall not be deemed to have occurred as a result of a failure to obtain the Airline Governmental Consents or because RII is prohibited by any governmental agency from complying with this Section 5.13. This Agreement may not be terminated nor shall a condition to Closing fail to be satisfied as a result of RII and Buyer failing to enter into the service agreement referred to above; PROVIDED, HOWEVER, that if RII and Buyer shall fail to enter into the service agreement referred to above, Fidelity and TCW shall be entitled, in their discretion, (a) to cause RII to sell all or substantially all of the assets of PIA or all of the issued and outstanding capital stock of PIA to a third party purchaser designated by Fidelity and TCW on terms negotiated by Fidelity and TCW and reasonably acceptable to RII (in lieu of selling such assets to a Buyer Subsidiary), and, as determined by Fidelity and TCW, to pay, or direct the payment of, the purchase price payable in connection with 21 any such sale either to Buyer or to the Disbursing Agent designated pursuant to the Reorganization Plan or pursuant to an order of the Bankruptcy Court for purposes of making distributions thereunder to the holders of Old Series Notes of RII or (b) to make alternative arrangements, reasonably acceptable to RII, pursuant to which a third party manager shall enter into a service agreement with RII and Buyer and shall operate scheduled air service, through PIA, for the account of Buyer until the earlier of the date the Airline Governmental Consents are obtained and one year after the Closing Date, and to cause RII to execute such documents or take such actions as may be reasonably required to effectuate such alternative arrangements (provided that either of such alternative arrangements shall not result in any out-of-pocket costs or expenses, other than DE MINIMIS costs or expenses, that would not have been incurred hereunder), to RII or any of its Affiliates after the Closing Date). SECTION 5.14. COMFORT LETTER. RII shall cause Ernst & Young to deliver to Buyer a comfort letter dated a date not more than five Business Days before November 30, 1993, which Comfort Letter shall be in the form of Exhibit A. SECTION 5.15. ATTORNEYS FEES. In any action by any party to enforce the terms of this Agreement, the prevailing party shall be entitled to receive reimbursement of all of its reasonable attorneys fees and expenses incurred in such action. SECTION 5.16. TRANSFER TAXES. Any sales, transfer (including any real property transfer) and other Taxes (excluding gross or net income taxes), including without limitation any documentary stamp tax, and any filing, recording or other fees applicable to the conveyance and transfer pursuant to the provisions of this Agreement of the Shares, the RII Real Estate Assets and the Paradise Island Assets (collectively, the "Transfer Taxes"), shall be borne and paid by RII. The provisions of this Section shall survive the Closing of this Agreement. SECTION 5.17. ACTIONS ON BEHALF OF BUYER; KNOWLEDGE OF BUYER. RII shall not cause Buyer to take any actions in respect of any amendments to or waivers or actions under this Agreement except as are agreed to or directed by Fidelity and TCW, and Fidelity and TCW may, in their reasonable judgment, cause Buyer to take any actions 22 that Buyer may take under this Agreement; PROVIDED, HOWEVER, that Fidelity and TCW shall not act so as to prevent Buyer from performing any of its affirmative obligations, agreements or covenants hereunder. No knowledge of any facts shall be imputed to the Buyer under this Agreement unless such facts are known to Fidelity and TCW. SECTION 5.18. ARTICLES OF ASSOCIATION. The Articles of Association of Buyer are attached hereto as Exhibit B, and RII shall cause such Articles to remain in full force and effect and not to be amended prior to or on the Closing unless consent thereto shall be granted by Fidelity and TCW. SECTION 5.19. REPRESENTATIONS AND WARRANTIES. If any representation or warranty contained in Article IV shall be, or shall become, inaccurate or shall be breached by RII at any time prior to Closing, RII will, promptly upon discovering such inaccuracy or breach, (i) notify Fidelity and TCW and (ii) use its best efforts to cure such breach or inaccuracy as soon as is reasonably practicable and prior to the Closing. SECTION 5.20. OPERATION OF BUYER AND BUYER SUBSIDIARIES. RII agrees that, since their respective inceptions and as of the Closing Date, (a) neither Buyer nor any of the Buyer Subsidiaries shall have engaged in any activity or business other than those relating to the implementation of this Agreement and preparation relating thereto, in each case as shall have been agreed to in writing by Fidelity and TCW, and (b) neither Buyer nor any of the Buyer Subsidiaries shall have Indebtedness. SECTION 5.21. INSURANCE PROCEEDS. If any of the Paradise Island Assets are destroyed or damaged or taken in condemnation, the insurance proceeds or condemnation award with respect thereto shall be a Paradise Island Asset. At the Closing, RII shall pay to Buyer any such insurance proceeds or condemnation awards received by RII on or prior to the Closing and shall assign to or assert for the benefit of Buyer all of its rights against any insurance companies, governmental entities and others with respect to such damage, destruction or condemnation. If and to the extent that there is available insurance under policies maintained by RII or its Subsidiaries in respect of any Assumed Liability, except for any such insurance proceeds with respect to which the insured is directly or indirectly self- insured or has agreed to indemnify the insurer, RII shall 23 cause such insurance to be applied toward the payment of such Assumed Liability. SECTION 5.22. ACQUISITION PROPOSALS. Neither RII nor any of its Affiliates shall propose or support before the Bankruptcy Court any proposal for the sale or disposition of the Paradise Island Business, other than the Acquisitions or as contemplated by the Sun Purchase Agreement, without the prior written consent of Fidelity and TCW. ARTICLE VI CONDITIONS TO THE CLOSING SECTION 6.01. CONDITIONS TO OBLIGATIONS OF BUYER. The obligations of Buyer to effect the Closing shall be subject to the prior fulfillment of each of the following conditions: (a) REPRESENTATIONS AND WARRANTIES; AGREEMENTS AND COVENANTS. (i) Each of the representations and warranties of RII contained in Section 4.02, 4.03, 4.04 and 4.05 hereof and each of the representations and warranties incorporated from the Sun Purchase Agreement pursuant to Section 4.01 qualified as to materiality shall be true and correct in all respects and those not so qualified shall be true and correct in all material res- pects, in each case when made and as of the Closing Date, (ii) RII shall not have failed to comply with the covenants in Sections 5.01 and 5.09, where such failures in the aggregate would have a Material Adverse Effect, (iii) RII shall have complied in all respects with the covenants contained in Sections 5.10 and 5.20, (iv) except for the covenants contained in Sections 5.03, 5.04, 5.11 and 5.12, each of the other agreements and covenants contained in this Agreement and in any certificate or agreement by RII delivered pursuant hereto to be performed or complied with by RII, at or before Closing, shall have been duly performed or complied with in all material respects, PROVIDED, HOWEVER, that a breach of Section 5.06 would not constitute a failure of a condition hereunder, if the representation, warranty or covenant in question would not have resulted in a failure of a condition hereunder, and (v) Buyer shall have received a certificate of RII, signed by a Vice President thereof as to the fulfillment of the conditions set forth in the foregoing clauses (i), (ii), (iii) and (iv). 24 (b) SUN PURCHASE AGREEMENT. The Sun Purchase Agreement shall have been terminated in accordance with its terms. (c) HSR ACT. Any waiting period (and any extension thereof) applicable to the consummation of the transactions contemplated hereby under the HSR Act shall have expired or been terminated. (d) CONFIRMATION OF THE REORGANIZATION PLAN AND ENTRY OF THE CONFIRMATION ORDER; CONSUMMATION OF THE REORGANIZATION PLAN. The Confirmation Order shall have been entered by the Bankruptcy Court and the Effective Date (as defined in the Reorganization Plan) shall have occurred, or there shall be no unsatisfied conditions to the occurrence of the Effective Date other than the Closing, and such Confirmation Order shall be in full force and effect and shall not then be stayed. (e) GOVERNMENTAL CONSENTS. All Governmental Consents shall have been received on or prior to the Closing Date. (f) NO INJUNCTIONS. There shall not be in effect any injunction or restraining order issued by a court of competent jurisdiction against the consummation of the sale and purchase of the Shares, the RII Real Estate Assets and the RII Paradise Assets pursuant to this Agreement. (g) BANKRUPTCY; INSOLVENCY; ETC. No proceeding shall have been instituted or consented to by or against any of the Company, any of its Subsidiaries or any RII Paradise Subsidiary seeking to adjudicate any of them a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief or composition of any of their debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of any order for relief or the appointment of a receiver, trustee, custodian or other similar official for any of them or any substantial part of any of their property, and such proceeding shall not have been dismissed or terminated within 60 days of the commencement thereof. (h) OPINIONS. Buyer shall have received an opinion of Gibson, Dunn & Crutcher, counsel to RII, in form and content reasonably acceptable to Fidelity and TCW, as to matters set forth on Exhibit C hereto and opinions of 25 Florida counsel reasonably acceptable to Buyer and Harry B. Sands & Co. in form and content reasonably acceptable to Fidelity and TCW. (i) RESIGNATIONS. Buyer shall have received resignations and releases of all officers and directors of the Company and its Subsidiaries who are not directly involved in the business and operations of the Company and its Subsidiaries in accordance with Section 5.08(c). (j) SECURITY DOCUMENTS. The agreements listed in Schedule 4.16 to the Sun Purchase Agreement shall not be in full force and effect. (k) MANAGEMENT AGREEMENT. At the election of Buyer, RII and Buyer shall have entered into a Management Agreement in substantially the form attached hereto as Exhibit D, and all conditions under the Management Agreement shall have been satisfied by RII or waived by Buyer. (l) REGISTRATION RIGHTS AGREEMENT. RII and Buyer shall have taken such action, including granting such registration rights, as may be necessary to ensure that all shares of the capital stock of Buyer issued upon consummation of the transactions contemplated hereby may be re-sold publicly, without restriction under the Securities Act by the recipients thereof following the disbursement of such shares by the Disbursing Agent as contemplated by Section 2.04. (m) SUN SECURITY INTEREST. RII shall have caused Buyer to have granted a security interest to Sun International Investments Limited as contemplated by Section 7.02(b) of the Sun Purchase Agreement (the "Permitted Sun Lien"), and RII shall have caused Buyer to assume its obligations to pay the Buyer Expense Reimbursement to SIHL pursuant to Sections 7.02(a)(vi) and (vii) of the Sun Purchase Agreement. (n) ADDITIONAL TIME. If Fidelity and TCW reasonably shall have determined that it is necessary and appropriate for the time of the Closing to be extended (including without limitation to allow time for the completion of their due diligence investigation of the Paradise Island Business) beyond the date when the other conditions set forth in this Section 6.01 have been satisfied, a reasonable period of additional time (not to 26 exceed 30 days) shall have elapsed from the date when such other conditions were satisfied. SECTION 6.02. CONDITIONS TO OBLIGATIONS OF RII. The obligations of RII to effect the Closing shall be subject to the prior fulfillment of each of the following conditions: (a) HSR ACT. Any waiting period (and any extension thereof) applicable to the consummation of the transactions contemplated hereby under the HSR Act shall have expired or been terminated. (B) CONFIRMATION OF THE REORGANIZATION PLAN AND ENTRY OF THE CONFIRMATION ORDER; CONSUMMATION OF THE REORGANIZATION PLAN. The Confirmation Order shall have been entered by the Bankruptcy Court and the Effective Date (as defined in the Reorganization Plan) shall have occurred, or there shall be no unsatisfied conditions to the occurrence of the Effective Date other than the Closing, and such Confirmation Order shall be in full force and effect and shall not then been stayed. (c) CONSENTS. All Governmental Consents shall have been received on or prior to the Closing Date. (d) NO INJUNCTIONS. There shall not be in effect any injunction or restraining order issued by a court of competent jurisdiction against the consummation of the sale and purchase of the Shares, the RII Real Estate Assets and the RII Paradise Assets pursuant to this Agreement. (e) SUN PURCHASE AGREEMENT. The Sun Purchase Agreement shall have been terminated in accordance with its terms. (f) SECURITY DOCUMENTS. The agreements listed in Schedule 4.16 to the Sun Purchase Agreement shall not be in full force and effect. ARTICLE VII SURVIVAL AND INDEMNIFICATION SECTION 7.01. SURVIVAL OF REPRESENTATIONS. The representations and warranties of RII set forth in Sections 4.02, 4.03, 4.04 and 4.05 hereof and the representations and 27 warranties incorporated from Sections 4.01, 4.02, 4.03(a), 4.04, 4.16(a) and 4.22 of the Sun Purchase Agreement (the "Surviving Representations") and the covenants and agreements contained in this Agreement (except the covenants contained in Sections 5.11 and 5.12 which shall not survive the Closing), and the covenants and agreements contained in any agreements, certificates or other instruments delivered pursuant to this Agreement, shall survive the Closing and shall remain in full force and effect, regardless of any investigation made by or on behalf of any party, but subject to all limitations and other provisions contained in this Agreement or any agreements, certificates or other instruments delivered pursuant to this Agreement. All representations and warranties set forth herein and in any agreements, certificates or other instruments delivered pursuant hereto (other than the Surviving Representations) shall not survive the Closing and shall not remain in full force and effect; PROVIDED, HOWEVER, that no representation or warranty shall be deemed not to have survived the Closing if any breach or inaccuracy thereof was knowingly or fraudulently concealed by RII or any of its Subsidiaries prior to the Closing and such breach or inaccuracy was not actually known to TCW and Fidelity prior to the Closing. SECTION 7.02. INDEMNIFICATION BY RII. Subject to the other provisions of this Article VII, RII hereby agrees to indemnify and hold Buyer and its Affiliates harmless from and against any and all claims, damages, liabilities, liens, losses or other obligations whatsoever, together with reasonable costs and expenses, including reasonable fees and disbursements of counsel and expenses of investigation (collectively, "Losses"), arising out of, based upon or caused by the inaccuracy of any representation or the breach of any warranty of RII contained in the Surviving Representations. SECTION 7.03. NOTICE, ETC. Each indemnified party agrees to give the indemnifying party prompt written notice of any action, claim, demand, discovery of fact, proceeding or suit (collectively, "Claims") for which such indemnified party intends to assert a right to indemnification under this Agreement; PROVIDED, HOWEVER, that failure to give such notification shall not affect the indemnified party's entitlement to indemnification hereunder except to the extent that the indemnifying party shall have been actually prejudiced as a result of such failure. The indemnifying party shall have the sole right to defend, settle or otherwise dispose of any Claim, on such terms as 28 the indemnifying party, in its sole discretion, shall deem appropriate; PROVIDED, HOWEVER, that (i) the indemnified party may participate in the defense of any claim pursuant to which the indemnified party could become subject to injunctive or other equitable relief or the business of the indemnified party could be materially and adversely affected in any manner (such participation in the defense of any claim to be at the indemnified party's expense unless the use of separate counsel arises by reason of a material conflict of interest between the indemnifying party and the indemnified party in connection with the defense of such claim) and (ii) the indemnifying party shall obtain the written consent of the indemnified party, which shall not be unreasonably withheld or delayed, prior to ceasing to defend, settling or otherwise disposing of any such Claim, or taking any course of action or omitting to take a permitted course of action with respect thereto, if as a result thereof the indemnified party would become subject to injunctive or other equitable relief. SECTION 7.04. REIMBURSEMENT OF COSTS. The costs and expenses, including reasonable fees and disbursements of counsel and expenses of investigation, incurred by any indemnified party in connection with any claim for which the indemnified party is entitled to indemnification hereunder shall be reimbursed on a quarterly basis by the indemnifying party. SECTION 7.05. TIME LIMITATIONS. Notwithstanding anything to the contrary contained herein, each party's obligation to indemnify or otherwise hold harmless the other party and its Affiliates for any Loss arising out of, based upon or caused by the inaccuracy or breach of any Surviving Representation shall, terminate at 11:59 p.m. New York City time, on the later of March 31, 1995 or the first anniversary of the Closing Date; PROVIDED, HOWEVER, that claims pending on, or asserted prior to such date may continue to be asserted and shall be indemnified against. SECTION 7.06. SOLE AND EXCLUSIVE REMEDY. The indemnification obligations of the applicable parties under Section 7.02 hereof shall constitute the sole and exclusive remedies of the indemnified party with respect to the matters described in Section 7.02. 29 ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER SECTION 8.01. TERMINATION. This Agreement may be terminated at any time prior to the Closing Date, notwithstanding the fact that votes may have been received pursuant to the Reorganization Plan Solicitation: (a) by mutual written consent of RII and Buyer at any time prior to entry the Confirmation Order; (b) in the event that a proposal for the sale of the Paradise Island Business by RII or GRI, other than the Acquisitions or the transactions contemplated by the Sun Purchase Agreement, is approved by the Bankruptcy Court this Agreement will automatically be deemed terminated without the necessity of providing written notice notwithstanding any provision to the contrary herein; (c) by Buyer, if a Material Adverse Effect occurs as a result of any fire, flood, hurricane, accident, explosion or other calamity or casualty or any strike, labor disturbance, riot, act of God or public enemy, or the institution of condemnation proceedings affecting any material portion of the Real Property or Improvements (a "Force Majeure Event"), PROVIDED, HOWEVER, that Buyer shall not have the right to terminate this Agreement in the event that the loss caused by the Force Majeure Event (including the present value of lost profits) is less than $20 million and there is adequate insurance to cover such loss; (d) by Buyer, if Buyer reasonably determines that RII will not be able to deliver good title free and clear of encumbrances other than Permitted Encumbrances and the Permitted Sun Lien, to a material portion of the Paradise Island Business or the Shares by September 30, 1994; (e) by Buyer, if as a result of a breach of RII of its covenant to operate the Paradise Island Business in the ordinary course contained in Section 5.01, a Material Adverse Effect has occurred; (f) by Buyer, if the Sun Purchase Agreement shall have been terminated by SIHL, after November 30, 1993, pursuant to Section 6.14(b)(iii) thereof on account of any matter arising or occurring on or before November 30, 1993 (x) which was known by RII or any of its Affiliates or which 30 would have been known by RII or any of its Affiliates had they not been grossly negligent or (y) which was fraudulently or knowingly concealed from SIHL by RII or any of its Affiliates; (g) by Buyer, if in Fidelity's and TCW's reasonable judgment (based on the advice of legal counsel), the consummation of the transactions contemplated hereby could be expected to result in the incurrence of any personal liabilities by the holders of Buyer's capital stock by virtue of their status as shareholders (and expressly not including any losses resulting solely from a decline in the economic value of such capital stock); PROVIDED, HOWEVER, that in the event of a good faith dispute concerning whether Buyer is entitled to terminate the Agreement under this subparagraph (g), the matter shall be submitted to a court of competent jurisdiction for resolution, and the determination of such court shall be final and binding upon the parties; (h) by Buyer, if RII or any of its Affiliates shall have breached the covenant set forth in Section 5.22 hereof; or (i) in the event that the sale of the Paradise Island Business by RII and the RII Paradise Subsidiaries to SIHL is consummated pursuant to the Sun Purchase Agreement, this Agreement will automatically be deemed terminated without the necessity of providing written notice notwithstanding any provision to the contrary herein. SECTION 8.02. RIGHTS OF TERMINATION. The right of termination hereunder may be exercised by Buyer or RII, as the case may be, only by giving written notice, signed on behalf of such party to the other party. A right of termination may be exercised on Buyer's behalf only by Fidelity and TCW. SECTION 8.03. EFFECT OF TERMINATION. In the event of the termination of this Agreement pursuant to Section 8.01, this Agreement shall forthwith become void and have no effect, but no such termination shall prejudice any party's rights and remedies against the other for breaches of obligations under this Agreement. SECTION 8.04. WAIVER. Subject to Section 5.17, at any time prior to the Closing Date, any party hereto may (a) extend the time for the performance of any of the obligations or other 31 acts of the other party hereto, (b) waive any inaccuracies in the representations and warranties contained herein or in any document delivered pursuant hereto and (c) waive compliance with any of the agreements or conditions contained herein. Any such extension or waiver shall be valid if set forth in an instrument in writing signed by the party to be bound thereby. The failure of any party to assert any of its rights hereunder shall not constitute a waiver of any such rights. The rights of Buyer hereunder may be exercised on its behalf only by Fidelity and TCW. SECTION 8.05. AMENDMENTS. The parties hereto may, by written agreement signed by such parties, modify any of the covenants or agreements or extend the time for any performance of any of the obligations contained in this Agreement or any document delivered pursuant to this Agreement. No such written agreement shall be signed on behalf of Buyer or shall be valid without the written consent thereto of Fidelity and TCW. ARTICLE IX GENERAL PROVISIONS SECTION 9.01. NOTICES. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by cable, telecopy, telegram or telex or by registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the following addresses (or at such other address for a party as shall be specified by like notice): if to Buyer: Paradise Island Resorts Limited c/o Resorts International, Inc. 1133 Boardwalk Atlantic City, NJ 08401 Attention: Christopher D. Whitney, Esq. 32 with a copies to: Fidelity Management and Research Company 82 Devonshire Street Boston, MA 02109 Attention: Judy Mencher, Esq. Trust Company of the West 865 South Figueora Street Suite 1800 Los Angeles, CA 90017 Attention: Bruce Karsh Weil, Gotshal & Manges 767 Fifth Avenue New York, NY 10153 Attention: Bruce R. Zirinsky, Esq. if to RII: Resorts International, Inc. 1133 Boardwalk Atlantic City, NJ 08401 Attention: Christopher D. Whitney, Esq. with a copy to: Gibson, Dunn & Crutcher 200 Park Avenue New York, NY 10166 Attention: Steven R. Finley, Esq. SECTION 9.02. ENTIRE AGREEMENT; ASSIGNMENT. This Agreement constitutes the entire agreement among the parties with respect to the subject matter hereof and supersedes all prior agreements and undertakings, both written and oral, among the parties with respect to the subject matter hereof. This Agreement shall not be assigned by operation of law or otherwise, except that Buyer may assign all or any of its rights and obligations hereunder to any wholly owned Subsidiary of Buyer upon the execution of a written instrument whereby such assignee agrees to assume all of the assignor's obligations hereunder and be bound by all the terms and conditions of this Agreement; PROVIDED, that no such assignment shall relieve the assigning party of its 33 obligations hereunder if such assignee does not perform such obligations. SECTION 9.03. PARTIES IN INTEREST. This Agreement shall be binding upon and inure solely to the benefit of each party hereto, and, except to the extent that consent or approval of Fidelity and TCW may be required hereunder (E.G., Sections 5.17, 8.02, 8.04 and 8.05 hereof), nothing in this Agreement, express or implied, is intended to or shall confer upon any other person any rights, benefits or remedies of any nature whatsoever under or by reason of this Agreement. SECTION 9.04. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICTS OF LAW THEREOF. SECTION 9.05. HEADINGS. The descriptive headings contained in this Agreement are included for convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement. SECTION 9.06. COUNTERPARTS. This Agreement may be executed in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. SECTION 9.07. SPECIFIC PERFORMANCE. The parties hereto agree that irreparable damage would occur in the event any of the provisions of this Agreement were not to be performed in accordance with the terms hereof and that the parties shall be entitled to specific performance of the terms hereof, in addition to any other remedy at law or equity. SECTION 9.08. JURISDICTION. THE PARTIES HEREBY WAIVE ANY OBJECTION THEY MAY HAVE TO PERSONAL JURISDICTION AND VENUE IN THE U.S. DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND, WHERE NO DIVERSITY OR OTHER SUBJECT MATTER JURISDICTION EXISTS IN SUCH U.S. DISTRICT COURT, THE PARTIES WAIVE SUCH OBJECTIONS IN ANY COURT OF THE STATE OF NEW YORK LOCATED IN THE COUNTY OF NEW YORK, AS TO LITIGATION RELATING TO THIS AGREEMENT. BUYER HEREBY IRREVOCABLY APPOINTS AND DESIGNATES AS ITS LAWFUL 34 AGENT AND ATTORNEY FOR RECEIPT AND SERVICE OF PROCESS IN ANY ACTION ARISING OR TAKEN HEREUNDER BY RII THE PRENTICE-HALL CORPORATION SYSTEM, INC., 15 COLUMBUS CIRCLE, NEW YORK, NEW YORK 10023. SECTION 9.09. KNOWLEDGE OR CONSENTS. For the purpose of this Agreement (including the Schedules hereto), unless the context otherwise expressly requires, whenever a document or matter is subject to the "approval", "consent", "satisfaction" or "acceptance" (including any variation of such terms) of any party to this Agreement or Fidelity or TCW, such person, shall not unreasonably withhold or delay its approval, consent, satisfaction or acceptance of such document or matter; PROVIDED, HOWEVER, that the foregoing is without prejudice to RII's right to seek approval, consent, satisfaction or acceptance of any documents or matters from the Bankruptcy Court (in Fidelity's and TCW's stead) upon a showing by RII, and a finding by the Bankruptcy Court, that any consent, approval, satisfaction or acceptance is being unreasonably withheld by Fidelity or TCW. For the purpose of this Agreement (including the Schedules hereto) and subject to Section 5.17 hereof, unless the context otherwise expressly requires, "knowledge" with respect to any person (other than an individual) shall mean the knowledge of an executive officer, director, partner, executor or trustee of such person. SECTION 9.10. RIGHTS OF FIDELITY AND TCW. If, and only if, at any time prior to the Closing Date, Fidelity and TCW shall cease to beneficially own an aggregate of at least twenty percent (20%) of the aggregate principal amount of the outstanding Old Series Notes, then all the rights of consent, approval, acceptance or direction granted to Fidelity and TCW hereunder shall thereupon cease to exist; PROVIDED, HOWEVER, that nothing in this Section 9.10 shall limit or otherwise prejudice in any manner any rights which Fidelity and TCW may have under the Bankruptcy Code and the Bankruptcy Rules. In addition, if either of Fidelity or TCW shall cease to beneficially own any Old Series Notes whatsoever (but the other retains an aggregate of at least twenty percent (20%) of the aggregate principal amount of the outstanding Old Series Notes), then the rights described above shall be extinguished solely as to the person ceasing to own any such Old Series Notes, without prejudice to the rights of the other hereunder. 35 IN WITNESS WHEREOF, Buyer and RII have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized. RESORTS INTERNATIONAL, INC. By: /s/ Christopher D. Whitney ____________________________ Name: Christopher D. Whitney Title: Executive Vice President, Chief of Staff P.I. RESORTS LIMITED By: /s/ Christopher D. Whitney ____________________________ Name: Christopher D. Whitney Title: President 36 EXHIBIT A COMFORT LETTER EXHIBIT A [Letterhead of Ernst & Young] [ ], 1993 Paradise Island --------------- Dear Sirs, We have performed the procedures requested by you, as described below, with respect to the Purchase Agreement (the "Purchase Agreement") dated August [ ], 1993, among Resorts International, Inc. ("RII") a Delaware corporation and Sun International Hotels Limited ("Sun") a Bahamian corporation. The Purchase Agreement provides for the Stock Acquisition and the Asset Acquisition (in each case as defined in the Purchase Agreement and, together, the "Acquisitions"). This letter is solely to assist Sun with the proposed Acquisition and is not to be used for any other purpose. The procedures that we performed, and our findings are summarized as follows: 1. We are independent certified public accountants with respect to (RII and the RII Paradise Subsidiaries) under the standards of the American Institute of Certified Public Accountants (Code of Professional Ethics Rule 101 and related interpretations). 2. We have audited the combined statements of operations in respect of the Paradise Island Business for the three fiscal years ending December 31, 1992, and the combined balance sheets in respect of the Paradise Island Business as of December 31, 1990, December 31, 1991 and December 31, 1992. These financial statements and our report with respect thereto dated [ ] are included as Exhibit A to this letter. We have not audited any financial statements as of any date or for any period subsequent to December 31, 1992. Therefore, save as set forth in this letter, we are unable to and do not express any opinion on any unaudited interim financial statements as of any date or for any period subsequent to December 31, 1992. 3. For the purposes of this letter we have read the 1993 minutes of meetings of the shareholders and the boards of directors of RII and each of the RII Paradise Subsidiaries as set forth in the minute books of those companies as at the date hereof, officials of RII and of the RII Paradise Subsidiaries having advised us that the minutes of all such meetings through that data were set forth therein. In addition, with respect to the six month period ended June 30, 1993, we have: (a) read the unaudited combined statement of operations in respect of the Paradise Island Business for the fiscal quarters ending March 31, 1993 and June 30, 1993 and the unaudited combined balance sheets in respect of the Paradise Island Business as of March 31, 1993 and June 30, 1993. These financial statements are included as Exhibit B to this letter; and (b) made inquiries of certain officials of RII and the RII Paradise Subsidiaries who have responsibility for financial and accounting matters regarding whether the unaudited financial statements referred to in paragraph (a) have been prepared on a basis consistent with that of the audited financial statements referred to in paragraph 2. 4. With respect to the monthly periods ended July 31, August 31 and September 30, 1993 we have: (a) read the unaudited combined statement of operations in respect of the Paradise Island Business for each of the calendar months ending July 31, August 31, and September 30, 1993 and the unaudited balance sheets in respect of the Paradise Island Business as of July 31, August 31 and September 30, 1993. These financial statements are included as Exhibit C to this letter; and (b) made inquiries of certain officials of RII and the RII Paradise Subsidiaries who have responsibility for financial and accounting matters regarding whether the unaudited financial statements referred to in paragraph (a) have been prepared on a basis consistent with that of the audited financial statements referred to in paragraph 2. 5. Nothing came in our attention as a result of the foregoing procedures in paragraphs 3 or 4 above that caused us to believe that: (a) the unaudited combined financial statements referred to in Paragraphs 3(a) and 4(a) are not in conformity with GAAP applied on a consistent basis throughout the period covered or were not prepared on a basis consistent with that of the audited financial statements referred to in paragraph 2 [except for ]; or (b) at each of June 30, July 31, August 31 and September 30, 1993 (i) there was any decrease in net current assets or in fixed assets other than normal depreciation or increases in long-term liabilities or contingencies as compared with amounts shown in the December 31, 1992 audited balance sheet or (ii) there were any decreases, as compared with the corresponding period in the preceding year, in the amount of operating revenues or income [except for ]. 6. Officials of RII and RII paradise Subsidiaries have advised us that no financial statements as of any date or for any period subsequent to [September 30,] 1993, are available; accordingly, the procedures carried out by us with respect to changes in financial statement items after [September 30,] 1993, have, of necessity, been even more limited than those with respect to the periods ending [September 30,] 1993. We have made inquiries of certain officials of RII and the RII Paradise Subsidiaries who have responsibility for financial and accounting matters regarding whether: (a) there was any decrease as at [ ], 1993, in net current assets or in fixed assets other than normal depreciation or increases in long-term liabilities or contingencies as compared with amounts shown on the [September 30,] 1993, unaudited combined balance sheet; (b) for the period from [September 30,] 1993 to [ ], 1993, there were any decreases, as compared with the corresponding period in the preceding year, in the amount of operating revenues or income; or (c) there were any liabilities or obligations incurred since [September 30,] 1993, other than liabilities and obligations incurred in the ordinary course of business consistent with past practice, not shown or adequately provided for in the [September 30,] 1993 unaudited combined balance sheet. 7. On the basis of the procedures referred to in paragraph 6 and our reading of the minutes as described in paragraph 3, nothing came to our attention that caused us to believe that there was any such change or decrease, or any such liabilities or obligations, as is mentioned in paragraph 6 except for [ ]. Very truly yours, Sun International Hotels Limited [ ] EXHIBIT B ARTICLES OF ASSOCIATION OF BUYER P.I. RESORTS LIMITED AMENDED AND RESTATED ARTICLES OF ASSOCIATION (ADOPTED ON 15TH, DECEMBER 1993) PRELIMINARY AND CONSTRUCTION 1. The Articles contained in the First Schedule to the Companies Act shall not apply to the Company. 2. (1) In these Articles, except where the subject or context otherwise requires: "Articles" means the articles of association of the Company on the date hereof as the same may be amended from time to time; the "board" means the directors or any of them acting as the board of directors of the Company; "Closing Date" shall mean the date the Company acquires the Paradise Island assets of Resorts International Inc.; "Commonwealth" means the Commonwealth of The Bahamas; "Companies Act" means the Companies Act 1992 including any modification or re-enactment thereof for the time being in force; "Company" means P. I. Resorts Limited, the company to which these Articles apply; "director" means a director of the Company; "dollar" or "$" means the lawful currency of the United States of America; "holder" means, in relation to any shares, the member whose name is entered in the register of members as the holder of such shares; "Ordinary Shares" means the Ordinary Shares of $0.01 each of the Company having the rights set forth in these Articles; "Preference Shares" means the Preference Shares of $0.01 each of the Company having the rights set forth in these Articles; "secretary" means the secretary of the Company and includes a joint, assistant, deputy or temporary secretary and any other person appointed to perform the duties of the secretary; and "shares" means shares in the Company including the Ordinary Shares and the Preference Shares. (2) Save as aforesaid or as otherwise defined herein any words or expressions defined in the Companies Act (but excluding any modification thereof not in force at the date of adoption of these Articles) shall, if not inconsistent with the subject or the context, bear the same meaning in these Articles. (3) For the purposes of these Articles, references to writing include references to any visible substitute for writing and to anything partly in one form and partly in another form; words denoting the singular number include the plural number and vice versa; words denoting the masculine gender include the feminine gender and vice versa; and references to persons include references to bodies corporate. 3. In addition to the registered office of the Company in the Commonwealth, which shall be at such place as the directors shall from time to time appoint, the Company may have an office for the transaction of business at any other place, and meetings of the Company or of the directors may be held either within or without the Commonwealth at such place as the directors may determine. SHARES 4. The authorized share capital of the Company at the date of adoption of these Articles is $350,000 divided into 35,000,000 Ordinary Shares of $0.01 each and 10,000,000 Preference Shares of $0.01 each, having the rights set forth in these Articles. The Preference Shares may be issued by the Directors from time to time in one or more Series having such rights as the board may by resolution determine. All the shares of the Company shall be in registered form, shall be fully paid for at the time of issuance and shall be nonassessable. 2 5. Without prejudice to any special rights previously conferred on the holders of existing shares in the Company, any shares in the Company may be issued with such preferred, deferred or other special rights or such restrictions, whether in regard to dividend, voting, return of share capital or otherwise, as the board may from time to time by resolution determine. Preference Shares may be voting, non-voting or voting only for specific purposes or in specific circumstances; PROVIDED, HOWEVER that the Company shall be prohibited from issuing any non-voting Preference Shares which are not entitled to at least one vote per share in the specific case where an event of default in the payment of dividends has occurred with respect to such shares. 6. Where at any time the share capital is divided into different classes or series of shares, the rights attached to any class or series (unless otherwise provided by the terms of issue of the shares of the class or series) may only be varied or abrogated with the sanction of a resolution of the board and either (i) the consent in writing of the holders of a majority in nominal value of the issued shares of the class or series or (ii) the sanction of a resolution of members holding shares of that class or series passed at a separate general meeting of the holders of the shares of that class or series. CERTIFICATES 7. Every person whose name is entered as a member in the register of members shall, without payment, be entitled to a certificate under the common seal of the Company specifying the share or shares held by him and the amount paid up thereon, provided that in respect of a share or shares held jointly by several persons the Company shall not be bound to issue more than one certificate, and delivery of a certificate for a share to one of several joint holders shall be sufficient delivery to all. 8. A share certificate defaced, lost or destroyed may be renewed or replaced on payment of such fee, if any, as may be prescribed, and on such terms, if any, as to evidence and indemnity as the directors think fit. 3 PURCHASE OF SHARES 9. Subject to and in accordance with the provisions of the Companies Act and without prejudice to any relevant special rights attached to any class or series of shares, the Company may, with the agreement of the holders of the relevant shares, purchase any of its own shares of any class or series (including redeemable shares) at any price (whether at par or above or below par), and any shares to be so purchased may be selected by the Company in any manner whatsoever. TRANSFER AND TRANSMISSION OF SHARES 10. Subject to Article 11, the instrument of transfer of any share in the Company shall be executed by the transferor (or its duly authorized agent), and the transferor shall be deemed to remain the holder of the share until the name of the transferee is entered in the register of members in respect thereof. 11. Shares in the Company shall be transferred in any usual or common form. The transfer agent for the Company or the Company's board may determine if a form of transfer is usual or common in the case of any question or dispute concerning a transfer. 12. The board may: (a) decline to register a transfer of shares unless the instrument of transfer is accompanied by the certificate or certificates of the shares to which it relates, and such other evidence as the board may reasonably require to show the right of the transferor to make the transfer; and (b) suspend the registration of transfers during the fourteen days immediately preceding the ordinary general meeting in each year. 13. The executors or administrators of a deceased sole holder of a share shall be the only persons recognized by the Company as having any title to the share. In the case of a share registered in the names of two or more holders, the survivors or the executors or administrators of 4 the deceased survivor shall be the only persons recognized by the Company as having any title to the share. 14. Any person becoming entitled to a share in consequence of the death or bankruptcy of a member shall, upon such evidence being produced as may from time to time be required by the board, have the right, either to be registered as a member in respect of the share or, instead of being registered himself, to make such transfer of the share as the deceased or bankrupt person could have made; but the directors shall, in either case, have the same right to decline or suspend registration as they would have had in the case of a transfer of the share by the deceased or bankrupt person before the death or bankruptcy. 15. A person becoming entitled to a share by reason of the death or bankruptcy of the holder shall be entitled to the same dividends and other advantages to which he would be entitled if he were the registered holder of the share, except that he shall not, before being registered as a member in respect of the share, be entitled in respect of it to exercise any right conferred by membership in relation to meetings of the Company. ALTERATION OF CAPITAL 16. The Company may, by a resolution of the holders of Ordinary Shares, increase the share capital by such sum to be divided into shares of such amount as the resolution shall prescribe. 17. The Company may, by resolution of the board (and the holders of the Ordinary Shares, if and to the extent required by the Companies Act): (a) consolidate and divide its share capital into shares of larger amount than its existing shares; (b) subdivide its existing shares, or any of them or divide the whole or any part of its share capital into shares of smaller amount than is fixed by the Articles; or (c) reduce its share capital in any manner and with and subject to any incident authorized and consent required by law. 5 GENERAL MEETINGS 18. The statutory general meeting of the Company shall be held within the period required by Section 70 of the Companies Act. 19. (1) A general meeting shall be held once in every year at such time (not being more than fifteen months after the holding of the last preceding general meeting) and at such place as may be prescribed by the board. (2) In default of a general meeting so held, a general meeting shall be held in the month next following and may be convened by any two or more members holding Ordinary Shares carrying at least one-tenth of the votes of all members entitled to vote at general meetings, in the same manner as nearly as possible as that in which meetings are to be convened by the directors and any such meetings shall be held at such place as the members convening the meeting may designate in the notice thereof. 20. The above-mentioned general meetings shall be called annual general meetings; all other general meetings shall be called extraordinary. 21. The board may, whenever it thinks fit, convene an extraordinary general meeting, and extraordinary general meetings shall also be convened by the board on the requisition, in accordance with Section 71 of the Companies Act, of members of the Company holding not less than one-tenth of the paid-up capital of the Company, or, in default, may be convened by such requisitionists, as provided by Section 71(3) of the Companies Act. PROCEEDINGS AT GENERAL MEETINGS 22. (1) Thirty-days' notice at the least (exclusive of the day on which the notice is served or deemed to be served, but inclusive of the day for which notice is given) specifying the place, the day and the hour of meeting and, in case of special business, the general nature of that business, shall be given in the manner hereinafter mentioned, or in such other manner, if any, as may be prescribed by the Company in general meeting, to such persons as are under the Articles entitled to receive such notices from the Company. 6 (2) Every notice convening a general meeting shall include a statement having reasonable prominence that a member entitled to attend and vote is entitled to appoint a proxy to attend and vote instead of him, and that a proxy need not also be a member. 23. All business shall be deemed special that is transacted at an extraordinary meeting, as shall all that is transacted at an ordinary meeting with the exception of (i) sanctioning a dividend, (ii) the consideration of the accounts, balance-sheets and the ordinary report of the directors and auditors, (iii) election of directors and other officers in the place of those retiring by rotation and (iv) the fixing of the remuneration of the auditors. 24. No business shall be transacted by any general meeting unless a quorum of members is present at the time when the meeting proceeds to business; save as herein otherwise provided, members present in person or by proxy holding at least a majority of the then outstanding of Ordinary Shares shall be a quorum. 25. Where within half an hour from the time appointed for the meeting a quorum is not present, the meeting, if convened upon the requisition of members, shall be dissolved; in any other case it shall stand adjourned to the same day in the next week, at the same time and place and where at the adjourned meeting a quorum is not present within half an hour from the time appointed for the meeting, the members present shall be a quorum. 26. The chairman, if any, of the board shall preside as chairman at every general meeting of the Company. 27. Where there is no such chairman or at any meeting he is not present within fifteen minutes after the time appointed for holding the meeting or at which he is unwilling to act as chairman, the directors in office prior to such meeting who are present shall choose someone of their number to be chairman. 28. (1) The chairman may, with the consent of any meeting at which a quorum is present (and shall if so directed by the meeting), adjourn the meeting from time to time and from place to place, but no business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment takes place. 7 (2) When a meeting is adjourned for ten days or more, notice of the adjourned meeting shall be given as in the case of any original meeting. (3) Save as aforesaid, it shall not be necessary to give any notice of an adjournment or of the business to be transacted at an adjourned meeting. 29. At any general meeting a resolution put to the vote of the meeting shall be decided on a voice call or show of hands, unless a poll is (before or on the declaration of the result of the show of hands) demanded by at least two members present in person or by proxy holding Ordinary Shares carrying at least one-tenth of the votes of all members entitled to vote at the meeting or by the chairman and unless a poll is so demanded, a declaration by the chairman that a resolution has, on a voice call or show of hands, been carried or carried unanimously or by a particular majority or lost, and an entry to that effect in the book of the proceedings of the Company, shall be conclusive evidence of the fact, without proof of the number or proportion of the votes recorded in favor of or against that resolution. 30. If a poll is duly demanded it shall be taken in such manner as the chairman directs, and the results of the poll shall be deemed to be the resolution of the meeting at which the poll is demanded. 31. The demand for a poll may, before the poll is taken, be withdrawn but only with the consent of the chairman and a demand so withdrawn shall not be taken to have invalidated the result of the voice call or show of hands taking place before the demand was made. VOTES OF MEMBERS 32. Every member shall have one vote for each Ordinary Share of which he is the holder. Voting rights of Preference Shares (if any) shall be as specified in accordance with Article 5. 33. In the case of joint holders of the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders; and for this purpose seniority shall be determined by the order in which the names stand in the register of members. 8 34. A member of unsound mind, or in respect of whom an order has been made by any court having jurisdiction with respect to persons of unsound mind, may vote, whether on a voice call, show of hands or on a poll, by his committee or other person in the nature of a committee appointed by that court. PROXIES 35. (1) The instrument appointing a proxy shall be in writing under the hand of the appointer or his attorney duly authorized in writing or, if the appointer is a corporation, either under the common seal or under the hand of an officer or attorney so authorized. (2) An instrument appointing a proxy may be in the following form or in any other form which the board may approve: "I of being a member of P. I. Resorts Limited, hereby appoint of as my proxy to vote for me and on my behalf at the general meeting of the Company to be held on the day of and at any adjournment thereof." 36. The instrument appointing a proxy and the power of attorney or other authority, if any, under which it is signed or a certified copy of that power or authority shall be deposited at the registered office of the Company not less than forty-eight hours before the holding of the meeting at which the person named in the instrument proposes to vote, or shall be delivered to the Company at such meeting, and in default the instrument of proxy shall not be treated as valid. 37. A vote given in accordance with the terms of an instrument of proxy shall be valid notwithstanding the previous death or insanity of the principal or revocation of the instrument of proxy, or the authority under which the instrument of proxy was executed, or transfer of the shares in respect of which the vote is given, provided no transfer shall have been received at the registered office of the Company before the meeting or adjourned meeting at which the instrument or proxy is used. 9 CORPORATE REPRESENTATIVES 38. Any body corporate which is a member of the Company may by resolution of its directors or other governing body or by authority to be given under seal or under the hand of an officer duly authorized by it authorize such person as it thinks fit to act as its representative at any meeting of the Company or at any separate meeting of the holders of any class or series of shares and such authority may be general or in respect of specific meetings. A person so authorized shall be entitled to exercise the same power on behalf of the grantor of the authority as the grantor could exercise if it were an individual member of the Company and the grantor shall for the purposes of these Articles be deemed to be present in person at any such meeting if a person so authorized is present at it. CLASS MEETINGS SERIES MEETINGS 39. All provisions of these Articles relating to general meetings of the Company shall apply mutatis mutandis to every separate meeting of the holders of any class or series of shares in the capital of the Company. DIRECTORS 40. Unless otherwise determined by a resolution of the members, the number of the directors shall be five. 41. The directors shall be appointed and may be removed in accordance with the Companies Act. 42. It shall be presumed that it is in the best interests of the Company to allow directors to participate in meetings of the board or of committees thereof by telephonic communication and otherwise as set forth in Article 56 and, accordingly, it shall be a term of appointment of each director that he irrevocable consents to the holding of such meetings in the manner set forth in Article 56. 43. The directors of the Company holding office immediately following the Closing Date shall hold office until the date of the annual general meeting to be held in 1997. At the annual general meeting held in 1997 and at each subsequent annual general meeting, directors shall be appointed by resolution of the holders of Ordinary Shares in 10 accordance with these Articles (including provisions as to nomination) and any director so appointed (and any director appointed to fill a vacancy in the directors prior to the next annual general meeting) shall hold office until the date of the next annual general meeting of the Company, or if later the date his successor shall be duly elected and qualified. EXECUTIVE DIRECTORS 44. The board may appoint one or more of its body to be the holder of any one or more executive office (except that of auditor) under the Company and may enter into an agreement or arrangement with any director for his employment by the Company or for the provision by him of any services outside the scope of the ordinary duties of a director. Any such appointment, agreement or arrangement may be made upon such terms, including terms as to remuneration, as the board determines, and any remuneration which is so determined may be in addition to or in lieu of any ordinary remuneration as a director. The board may revoke or vary any such appointment but without prejudice to any rights or claims which the person whose appointment is revoked or varied may have against the Company by reason thereof. 45. Any appointment of a director to an executive office shall terminate if he ceases to be a director but without prejudice to any rights or claims which he may have against the Company by reason of the termination of such appointment. A director appointed to an executive office shall not ipso facto cease to be a director if his appointment to such executive officer terminates. 46. The emoluments of any director holding executive office for his services as such shall be determined by the board, and may be of any description, and (without limiting the generality of the foregoing) may include admission to or continuance of membership of any scheme (including any share acquisition scheme) or fund instituted or established or financed or contributed to by the Company for the provision of pensions, life assurance or other benefits for employees or their dependents, or the payment of a pension or other benefits to him or his dependents on or after retirement or death, apart from membership of any such scheme or fund. 11 POWERS AND DUTIES OF THE BOARD 47. The business of the Company shall be managed by the board, which may exercise all such powers of the Company as are not by the Companies Act or by these Articles, required to be exercised by the Company in general meeting, subject nevertheless to these Articles (including in particular Article 68 for so long as it is in effect) and to the Companies Act. PROCEEDINGS OF DIRECTORS 48. (1) The directors may meet together for the dispatch of business, adjourn and otherwise regulate their meetings, as they think fit. (2) Questions arising at any meeting shall be decided by a majority of votes. (3) A director may, and the secretary on the requisition of a director shall, at any time summon a meeting of the directors. Directors shall be given reasonable notice (which, except in the case of emergencies shall be not less than three business days) of the time and place appointed for such meeting of the directors, which notice may be waived by any or all directors at any time before or after such meeting. 49. The quorum necessary for the transaction of the business of the directors may be fixed by the directors and unless so fixed shall be three. 50. The continuing directors may act notwithstanding any vacancy in their body, but, if and so long as their number is reduced below the number fixed by or pursuant to the Articles as the necessary quorum of directors, the continuing directors may act for the purpose of summoning a general meeting of the Company, but for no other purpose. 51. The directors may elect a chairman of their meetings and determine the period for which he is to hold office; but if no such chairman is elected or if at any meeting the chairman is not present within five minutes after the time appointed for holding the same, the directors present may choose one of their number to be chairman of the meeting. 12 52. The directors may delegate any of their powers to committees consisting of such members of the Company or members of their body as they think fit; any committee so formed shall in the exercise of the powers so delegated conform to any regulations that may be imposed on them by the directors. 53. A committee may elect a chairman of their meetings; if no such chairman is elected or if at any meeting the chairman is not present within five minutes after the time appointed for holding the same, the members present may choose one of their number to be chairman of the meeting. 54. (1) A committee shall meet and adjourn as determined by the board and otherwise as they think proper. (2) Questions arising at any meeting shall be determined by a majority of votes of the members present. 55. A resolution in writing signed by a simple majority of the directors entitled to vote on that resolution at a meeting of the board or of the members of an existing committee of the board with authority to consider and act on the matter (not being less than the number of directors required to form a quorum of the board) shall be as valid and effectual as if it had been passed at a meeting of the board or (as the case may be) a committee of the board duly convened and held and for this purpose a resolution may consist of several documents to the same effect, each signed by one or more directors. 56. A meeting of the board or of a committee of the board may, if all the directors consent, consist of a conference between directors who are not all in one place, but of whom each is able (directly or by telephonic communication) to speak to each of the others, and to be heard and recognized by each of the others. A director taking part in such a conference shall be deemed to be present in person at the meeting and shall be entitled to vote or be counted in a quorum accordingly. Such a meeting shall be deemed to take place where the largest group of those participating in the conference is assembled, or, if there is no such group, where the chairman of the meeting then is. The word meeting in these Articles shall be construed accordingly. 13 57. The board shall cause minutes to be made in books provided for the purpose: (a) of all appointments of officers made by the board; (b) of the names of the directors or members present at each meeting of the directors and of any committee of the directors; and (c) of all resolutions and proceedings at all meetings of the Company and of the board or committees of the board. POWERS OF ATTORNEY 58. The board may from time to time and at any time by power of attorney appoint any company, firm or person or body of persons, whether nominated directly or indirectly by the board, to be the attorney or attorneys of the Company for such purposes and with such powers, authorities and discretions (not exceeding those vested in or exercisable by the board under these Articles) and for such period and subject to such conditions as they may think fit, and any such powers of attorney may contain such provisions for the protection and convenience of persons dealing with any such attorney as the board may think fit and may also authorize any such attorney to delegate all or any of the powers, authorities and discretions vested in him. THE SEAL 59. The seal of the Company shall not be affixed to any instrument except by the authority of a resolution of the directors, and in the presence of at least two directors and of the secretary or such other person as the directors may appoint for the purpose; and those two directors and secretary or other person as aforesaid shall sign every instrument to which the seal of the Company is so affixed in their presence. The Company is hereby authorized to adopt and use an official seal in accordance with the provisions of Section 26 of the Companies Act. 14 DIVIDENDS AND RESERVE 60. The board may from time to time declare and pay to the members of the Company such quarterly dividends as appear to the directors to be justified by the profits of the Company. 61. No dividend shall be paid otherwise than out of profits or surplus available for the purpose in accordance with the Companies Act. 62. The directors may, before recommending any dividend, set aside out of the profits of the Company such sums as they think proper as a reserve or reserves which shall, at the discretion of the directors, be applicable for meeting contingencies or for equalizing dividends or for any other purpose to which the profits of the Company may be properly applied, and pending such application may, at the like discretion, either be employed in the business of the Company or be invested in such investments (other than shares of the Company), as the directors may from time to time think fit. 63. Where several persons are registered as joint holders of any share any one of them may give effectual receipts for any dividend payable on the share. 64. No dividend shall bear interest against the Company. ACCOUNTS 65. The directors shall cause true accounts to be kept: (a) of the sums of money received and expended by the Company and the matter in respect of which such receipt and expenditure takes place; and (b) of the assets and liabilities of the Company. 66. The books of account shall be kept at the registered office of the Company or at such other place or places as the directors think fit and shall always be open to the inspection of the directors. 15 67. The directors shall from time to time determine whether and to what extent and at what time and places and under what conditions or regulation the accounts and books of the Company or any of them shall be open to the inspection of members not being directors, and no member (not being a director) shall have any right of inspecting any account or book or document of the Company except as conferred by statute or authorized by the directors or by the Company in general meeting. 68. Once at least in every year the directors shall lay before the Company in general meeting a profit and loss account for the period since the preceding account or (in the case of the first account) since the incorporation of the Company, made up to a date not more than six months before such meeting. 69. (1) A balance-sheet shall be made out in every year and laid before the Company in general meeting made up to a date not more than six months before such meeting. (2) The balance-sheet shall be accompanied by a report of the board as to the state of the Company's affairs and the amount which they recommend to be paid by way of dividend and the amount, if any, which they propose to carry to a reserve fund. 70. A copy of the balance-sheet and report shall, seven days previous to the meeting, be sent to the persons entitled to receive notices of general meetings in the manner in which notices are to be given hereunder. NOTICES 71. (1) A notice may be given by the Company to any member either personally or by sending it by post to him to his registered address. (2) Where a notice is sent by post, service of the notice shall be deemed to be effected by properly addressing, pre-paying and posting a letter (by air-mail if to an address outside the country from which it is sent) containing the notice and, unless the contrary is proved, to have been effected three days after posting (or seven days if sent to an address outside the country from which it is sent). 16 72. A notice may be given by the Company to the joint holders of a share by giving the notice to the joint holder named first in the register in respect of the share. 73. A notice may be given by the Company to the persons entitled to a share in consequence of the death or bankruptcy of a member by sending it through the post in a pre- paid letter addressed to them by name or by the title of representatives of the deceased, or trustees of the bankrupt, or by any like description, at the address, if any, supplied for the purpose by the persons claiming to be so entitled, or (until such an address has been so supplied) by giving the notice in any manner in which the same might have been given if the death or bankruptcy has not occurred. 74. Notice of every general meeting shall be given in some manner hereinbefore authorized to the members of the Company, including any person entitled to a share in consequence of the death or bankruptcy of a member, who, but for his death or bankruptcy, would be entitled to receive notice of the meeting and to very director. No other persons shall be entitled to receive notice of general meetings. INDEMNITY 75. The Company shall, subject to the provisions of Article 79, indemnity to the fullest extent permitted by the Companies Act any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative and whether external or internal to the Company by reason of the fact that he is or was a director or officer of the Company, or is or was serving at the request of the Company as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such suit, action or proceeding if he acted in good faith and in a manner which he reasonably believed to be in, or not opposed to, the best interests of the Company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe that his conduct was unlawful. 76. Subject to Article 79, expenses incurred by a director or officer in defending a civil or criminal action, 17 suit or proceeding shall be paid by the Company in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of the director or officer to repay such amount if it shall ultimately be determined that he is not entitled under Article 75 to be indemnified by the Company in respect of such expenses. 77. The board shall from time to time cause the Company to purchase and maintain insurance from reputable insurance carriers on behalf of any person who is or was a director or officer of the Company, or is or was serving at the request of the Company as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such with reasonable limits and subject to reasonable and customary deductibles, for so long as such insurance is available from such carriers. 78. The Company's indemnification under Article 76 of any person who is or was serving, at the request of the Company as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, shall be reduced by amounts such person receives as indemnification (i) under any policy of insurance purchased and maintained on his behalf by the Company, (ii) from such other corporation, partnership, joint venture, trust or other enterprise, or (iii) under any other applicable indemnification provision. 79. (a) It shall be a condition of the Company's obligation to indemnify or advance expenses under Articles 75 and 76 that the person asserting, or proposing to assert, the right to be indemnified, promptly after receipt of notice of commencement of any action, suit or proceeding in respect of which a claim for indemnification is or is to be made against the Company notify the Company of the commencement of such action, suit or proceeding, including therewith a copy of all papers served and the name of counsel retained or to be retained by such person in connection with such action, suit or proceeding, and thereafter to keep the Company timely and fully apprised of all developments and proceedings in connection with such action, suit or proceeding or as the Company shall request; and the fees and expenses of any counsel retained by a person asserting, or proposing to assert, the right to be indemnified under 18 Article 75 shall be at the expense of such person unless the counsel retained shall have been approved by the Company in writing, which approval shall not be unreasonably withheld. (b) If a claim for indemnification and advancement of expenses under Articles 75 and 76 is not paid in full by the Company within forty five (45) days after a written claim therefor has been received by the Company, the claimant may at any time thereafter bring suit against the Company to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled to be paid also the expenses of prosecuting such claim. 80. To the fullest extent permitted by the Companies Act as it exists on the date hereof or as it may hereafter be amended, no director or officer of the Company shall be liable to the Company or its members for monetary or other damages for breach of fiduciary duty as a director or officer. 81. The provisions of Articles 75 to 80 shall continue as to, and for the benefit of, a person who has ceased to be a director or officer and shall inure to the benefit of the heirs, executors and administrators of such a person. 82. No amendment to or repeal of the provisions of Articles 75 to 80 shall apply to or have any effect on the eligibility for, or entitlement to, indemnification, advancement of expenses and the other rights provided by, or granted pursuant to, Articles 75 to 80 for or with respect to any acts or omissions of any director or officer occurring prior to any such amendment or repeal. 19 EXHIBIT C SUBORDINATION PROVISIONS EXHIBIT C All opinions set forth below shall be delivered in customary form and in reliance, where customary, on typical certificates and certified copies of documents: (i) RII is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware; (ii) RII has all necessary corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder; (iii) the execution and delivery of this Agreement by RII, and the sale of the Shares and the RII Real Estate Assets by RII, have been duly and validly authorized by all necessary corporate action on the part of RII, and no other corporate proceedings or shareholder actions on the part of RII are necessary to authorize this Agreement and the sale of the Shares and the RII Real Estate Assets; (iv) this Agreement has been duly and validly executed and delivered by RII, and this Agreement constitutes the legal, valid and binding obligation of RII, enforceable against RII in accordance with its terms (subject as to enforcement to applicable bankruptcy, reorganization, insolvency, fraudulent transfer and moratorium and similar laws from time to time in effect affecting creditors' rights generally and to legal and equitable limitations on availability of specific performance and other equitable remedies); (v) the execution and delivery of this Agreement by RII does not, and the performance of this Agreement by RII will not, (A) conflict with or violate the certificate of incorporation or bylaws of RII, (B) to the actual knowledge of such counsel, conflict with or violate any law, rule, regulation, order judgment or decree applicable to RII; (vi) assuming that Buyer has purchased the Shares for value in good faith and without notice of any adverse claim, good and valid title to the Shares will pass to Buyer, free and clear of any adverse claim; and (vii) as of the Closing Date, the order of the Bankruptcy Court confirming the sale of the Shares by RII to Buyer has been duly entered, is in full force and effect and has not been stayed. [Subject to changes to reflect GRI as the transferor of the Shares, if applicable] EXHIBIT D MANAGEMENT AGREEMENT INTERIM MANAGEMENT AGREEMENT INTERIM MANAGEMENT AGREEMENT, dated as of this _____ day of ______, 199_, by and between P.I. Resorts Limited, a Bahamas corporation ("OWNER"), and Resorts International, Inc., a Delaware corporation ("MANAGER"). W I T N E S S E T H : - - - - - - - - - - WHEREAS, Owner owns and operates, directly and through subsidiaries, certain businesses in the leisure, resort and related industries on Paradise Island in The Bahamas and in the State of Florida, as more particularly described on EXHIBIT "A" attached hereto and made a part hereof (collectively, the "BUSINESSES"); and WHEREAS, Owner desires to engage and employ Manager to perform, and Manager desires to perform (or cause to be performed), certain management services respecting the operation of the Businesses (collectively, the "SERVICES"); and WHEREAS, the parties hereto are entering into this Agreement in accordance with the Plan of Reorganization (the "PLAN") confirmed by the bankruptcy court for the District of New Jersey in the bankruptcy case styled In re: RESORTS INTERNATIONAL, INC. and GRIFFIN RESORTS, INC., (Case Nos. ___________ and _________; Jointly Administered Under Case No. _______________________________. NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, and other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: 1. MANAGEMENT. Owner hereby engages and employs Manager to act as its exclusive agent to oversee the day-to-day management of the business and affairs of the Businesses and to provide the Services detailed in paragraph 2(c) hereof in connection with the Businesses, and Manager hereby accepts such engagement and employment, on and subject to the terms and conditions hereinafter set forth. 2. RESPONSIBILITIES OF THE PARTIES. (a) STANDARDS. With respect to the operation of the Businesses, Manager shall manage and maintain the Businesses in a manner reasonably consistent with the standards and procedures exercised by other first class operators of businesses comparable (in terms of type, class and quality) to the Businesses, in the same or similar competitive markets as the Businesses. For purposes hereof such management standard is hereinafter referred to as the "MANAGEMENT STANDARD". (b) NO INTERFERENCE. Owner hereby agrees that, except to the extent otherwise provided in this Agreement, 2 Manager shall have exclusive control of and responsibility for the operation of the Businesses during the Term (as hereinafter defined). Manager agrees that, in connection with its performance hereunder, Manager shall not knowingly take any action which would cause Owner to violate any material term of any of the loan indentures described in SCHEDULE "1" attached hereto (collectively, the "INDENTURES"; and the trustees thereunder, together with their successors in trust and assigns, the "TRUSTEES"). Manager further agrees that no action which Owner or any of the Trustees shall take under and in accordance with the provisions of the Indentures or the Security Instruments (as defined in the Indentures, and as such agreements are in effect on the date hereof) shall constitute a breach by Owner of this Agreement, notwithstanding that the same may constitute an interference with or disturbance of management within the contemplation of these provisions; provided, however, that if and to the extent that such action by Owner or the Trustees shall constitute an interference with or disturbance of management within the contemplation of these provisions, then Manager shall be relieved of such management obligation hereunder so interfered with or disturbed. 3 (c) SERVICES. Manager covenants and agrees to perform, or cause to be performed, consistent with the Management Standard, the following Services in connection with the Businesses: (i) PERMITS. Manager, on behalf of and with the cooperation of Owner, shall oversee the obtaining of and maintenance of all necessary licenses, findings of suitability, approvals and permits required by any law, rule or regulation of any applicable national, state or local authorities having jurisdiction over the Businesses (the "APPLICABLE GOVERNMENTAL AUTHORITIES"), as may be required for the operation of the hotel and casino Businesses as hotel and casino businesses including, without limitation, gaming, liquor, bar, restaurant, sign and hotel licenses and any permits required in connection with any refurbishing or expansion of such Businesses, and for the operation of the airline and other Businesses to permit the same to be operated in a manner similar to their current operation. Manager shall comply with the rules, regulations and orders of the Applicable Governmental Authorities and with any conditions set out in any such licenses and permits issued by any such authorities and, with the cooperation of Owner, shall provide any information, report or access to records 4 reasonably required by the Applicable Governmental Authorities. (ii) PERSONNEL. Except as otherwise expressly provided herein, all personnel employed at the Businesses shall be employees of Owner. Manager shall hire, terminate, advance, demote, supervise, direct the work of and determine the compensation and other benefits (except for the establishment of any new employee pension and profit-sharing plans, which shall be proposed by Manager and shall be subject to the approval of the Board of Directors of Owner, not to be unreasonably withheld or delayed, it being understood that any employee pension and profit-sharing plans in existence as of the date hereof have been approved by the Board of Directors of Owner) of all personnel working at the Businesses, in all events consistent with the then current Annual Budget (hereinafter defined); PROVIDED, HOWEVER, that Manager will not enter into any employment contracts with any employees for a period that exceeds the Initial Term (as hereinafter defined) or the then current Term of this Agreement, as the case may be, or any material employee contracts or benefit arrangements (I.E., any such contract or arrangement involving an annual compensation (including salary and bonuses) of more than $125,000), unless first approved by 5 the Board of Directors of Owner. Manager agrees that employees' wages, benefits and conditions of employment (inclusive of any discretionary employee bonuses granted from time to time by Manager) shall be granted by Manager consistent with the Management Standard and the then current Annual Budget. The parties hereto agree that all wages, bonuses, compensation and benefits (including, without limitation, severance and termination pay) of personnel at the Businesses, and state and federal withholding, social security and similar employee related taxes, are the exclusive obligation of Owner and that Manager shall furnish to Owner such information as shall be required by Owner in order for Owner to satisfy such obligation. Manager shall be responsible for the training of all personnel and shall cooperate with all personnel in their efforts to obtain and maintain key employee, casino employee or casino hotel employee licenses issued by the Applicable Governmental Authorities, if such are required, and Manager will hire only persons with valid employee licenses, if under the rules and regulations of the Applicable Governmental Authorities, such employee licenses are a condition of employment. The employees necessary to discharge Manager's obligations and responsibilities hereunder (I.E. those 6 providing management related services) shall be employees of Manager (or its affiliates) ("MANAGER EMPLOYEES") and shall be hired, paid and discharged by Manager in its reasonable discretion; provided, however, that if Owner (exercising reasonable judgment, in good faith) shall request Manager to terminate the management responsibilities of any Manager Employee in respect of the Businesses, then Manager shall effect such termination. Manager, in its sole discretion, shall determine, consistent with the Management Standard and the then current Annual Budget, the number of Manager Employees necessary to discharge Manager's obligations and responsibilities hereunder. The salaries and other compensation arrangements of Manager Employees shall be the responsibility of Manager and, except to the extent provided in paragraph 7(a) below, Manager shall not have any right of reimbursement from Owner in respect thereof. (iii) SALES AND PROMOTIONS. Manager shall formulate, coordinate and implement promotion, marketing and sales programs, and shall cause the Businesses to participate in promotional, marketing and sales campaigns and, as appropriate, activities involving complimentary rooms and food and beverages to bona fide travel agents, tourist officials and airlines representatives, and to all other individuals and entities whatsoever which, in 7 Manager's reasonable discretion consistent with the Management Standard, is deemed to be beneficial to the Businesses. Credit facilities shall be granted by Manager in its reasonable discretion and in accordance with the Management Standard and the then current Annual Budget; provided, however, that except for extending credit for the purchase of goods, services, gaming or entertainment in the ordinary course of the Businesses, and except as otherwise required or permitted herein, Manager shall not be authorized to make any loans or extensions of credit for or on behalf of Owner without the prior approval of the Board of Directors of Owner. (iv) BOOKS AND RECORDS. Consistent with the Management Standard, Manager shall maintain, or cause to be maintained, a complete accounting system for and on behalf of Owner in connection with its management of the Businesses. The books and records shall be kept in accordance with generally accepted accounting principles consistently applied and in accordance with the uniform system of accounts for hotels and casinos and otherwise consistent with the system of accounts required by GAAP for the applicable Business. Such books and records shall be kept on the basis of a [________] fiscal year. Books and 8 accounts shall be maintained at the Businesses or at the principal office of Manager with a duplicate copy thereof at the respective principal office of each of the Businesses. Owner shall have the right and privilege of examining and copying said books and records, including all daily reports prepared by Manager for internal use at the Businesses, at reasonable times during regular business hours. Manager shall comply with all requirements with respect to internal controls and accounting and shall prepare and provide all required reports under the rules and regulations of the Applicable Governmental Authorities. (v) AUDITS AND AUDITORS. Manager shall cooperate with and assist Owner's auditors in connection with the audit of the Businesses to be performed by such auditors as at the end of each fiscal year of Owner occurring after the date hereof and at least three (3) copies thereof shall be furnished to each party as soon as available to permit Owner to meet any public reporting requirements as may be applicable to it, and in no event later than 90 days following the end of such fiscal year of Owner. Any change in public auditors during the Term of this Agreement shall be subject to the prior written approval of Owner. 9 (vi) INTERIM STATEMENTS. On or before the 30th day of each month, Manager shall furnish to Owner an operating statement for the preceding calendar month for each of the Businesses, detailing the gross revenues received from all sources, opening and closing balances in each of the Management Accounts (as hereinafter defined) (including account designation and name of and location of depositaries), guest room occupancy percentages, average room rates, and expenses incurred, including estimated compensation and other amounts, if any, that may be due or payable to Manager and including a report and computation of sums due and payable to Owner. The gross revenue detail shall include specific details concerning on all gaming revenues (including total drop). Adjustments predicated on the annual audited statements for the Businesses shall be made during the first month following completion of the annual audit. (vii) BANK ACCOUNTS. (A) MANAGEMENT ACCOUNTS. Consistent with the Management Standard, Manager shall establish such operating accounts as Manager deems necessary or appropriate for the operation of the Businesses. Manager, in the future, may establish additional operating accounts with, or change existing operating accounts to, one or more banks, 10 savings and loans, or money market mutual funds as it may designate. Such accounts shall be styled "____________ -[type of account]" (e.g. operations, payroll, etc.), and all such accounts shall provide that Manager's designees shall be the only parties authorized to draw upon such accounts (the "MANAGEMENT ACCOUNTS"). Manager agrees that it will not use any Management Accounts as compensating balances related to the extension of credit to Manager or grant any right of set-off or bankers' lien on any such accounts in respect of any amounts owed by Manager to such depositaries. Manager shall seek to obtain reasonable rates of interest for the Management Accounts, with due regard to the financial stability of and services offered by the depositaries with which such accounts are kept; provided, however, that, Manager shall not be responsible for the amount, if any, of such interest or the solvency of such depositories. All depositories shall be subject to Owner's prior approval. The parties agree that all funds held from time to time in the Management Accounts are solely the property of Owner, and upon the expiration or termination of this Agreement for any reason, Manager shall cease to have authority, and shall cease, to withdraw funds from any of the Management Accounts and, upon notice to the institution(s) maintaining the Management Accounts (1) 11 Manager's designees shall be removed as signatories to the Management Accounts, and (2) Owner's designees shall become the sole signatories to the Management Accounts. Manager, when such Management Accounts first are established, shall use reasonable efforts to obtain the written confirmation of the institution maintaining such accounts that the procedure set forth in the previous sentence is agreed to, and shall be implemented, by such institution, and in the absence of such confirmation shall obtain Owner's written authorization to maintain accounts with such institution. It is understood and agreed that Manager may maintain petty cash funds at the Businesses and make payments therefrom as the same are customarily made in the hotel and casino business. Following the furnishing to Owner of interim statements pursuant to subparagraph 2(c)(vi) hereof, from time to time Manager shall direct, and Owner may direct, that sums be transferred from the Management Accounts to such accounts as may be established by Owner (and with respect to which Manager shall not have access) to the extent that such funds are in excess of amounts that Manager, consistent with the Management Standard, or Owner, deems reasonably necessary for the operation of the Businesses. 12 (B) OPERATING CAPITAL. If Owner fails or delays in furnishing funds to cover operating deficits, Owner shall indemnify and hold harmless Manager with respect to claims of third parties which may arise out of or relate to, directly or indirectly, the Businesses and such failure or delay in funding such deficits. (viii) TAXES AND INSURANCE. Throughout the Term, Owner shall furnish Manager with copies of all tax statements and insurance policies and all financing documents (including notes and mortgages) relating to the Businesses. Manager shall assist Owner's accountants in the preparation of all federal and state income and sales tax returns of Owner to the extent such returns relate to the Businesses and in connection with any inquiries or audits by Applicable Governmental Authorities. Manager will also assist Owner in procuring and maintaining liability, property and such other insurance in at least such amounts and covering such risks as is currently maintained with respect to the Businesses and in such additional amounts and covering such additional risks, if any, as Manager or Owner reasonably determines is necessary in connection with the operation of the Businesses, with responsible and reputable insurance companies or associations. All such insurance policies shall name Manager as an additional insured and all 13 insurers thereon shall be required to issue to Manager and Owner a certificate of insurance providing that such insurer shall deliver to Manager and Owner reasonable prior notice of termination of any such policy or the coverage provided thereby and, if and to the extent the same shall be available without adversely affecting Owner's coverage and without additional premiums or charges, waiving the rights of such insurer, if any, of subrogation against Manager and Owner. Without in any way diminishing Owner's responsibility hereunder, Manager is hereby authorized and directed to pay from the Management Accounts all taxes and fees including, without limitation, withholding taxes and insurance premiums, and all other items of expense relating to the ownership or operation of the Businesses. (ix) CONCESSIONS. Manager shall consummate, if in Manager's reasonable discretion it deems the same to be in the best interest of the Businesses, in the name of and for the benefit of Owner, reasonable arms-length arrangements and leases with concessionaires, licensees, tenants and other intended users of any facilities related to the Businesses; provided, however, that no concession, license or tenancy shall be granted for a period beyond the Initial Term or the then current Term. Copies of all such 14 arrangements shall be furnished to Owner upon Owner's request therefor. (x) ANNUAL BUDGET. Manager shall be obligated to furnish Owner for Owner's approval, an annual budget (the "ANNUAL BUDGET"), at least thirty (30) days prior to the end of each fiscal year of Owner. Each Annual Budget shall detail all costs, expenses and reserves reasonably anticipated by Manager or contemplated in this Agreement, for the next succeeding fiscal year. Manager, without the prior approval of Owner, shall not incur expenditures in excess of or other than those provided in the Annual Budget as approved by Owner. The Annual Budget may be amended from time to time with Owner's approval, which approval may be granted or withheld by Owner in Owner's sole discretion. If Owner shall not have approved an Annual Budget for a new fiscal year, then the last approved Annual Budget shall be deemed to be approved as the then current Annual Budget until expressly superseded. (xi) EXPENSES. All costs, expenses, funding or operating deficits and working capital, taxes, insurance premiums and other obligations and liabilities of Owner hereunder ("OWNER'S FINANCIAL OBLIGATIONS") shall be the sole and exclusive financial responsibility and obligation of Owner, except for those instances herein where it is 15 expressly and specifically stated that such item shall be the responsibility of Manager. It is understood that statements herein indicating that Manager shall furnish, provide or otherwise supply, present or contribute items or Services hereunder shall not be interpreted or construed to mean that Manager is liable or responsible to fund or pay for such items or services, except in those instances mentioned above. Except for petty cash funds which Manager maintains at the Businesses and except as may be disbursed to Owner pursuant to subparagraph 2(c)(vii)(A) hereof, all funds derived from the ownership and operation of the Businesses shall be deposited and held in the Management Accounts until disbursed to pay and discharge Owner's Financial Obligations as set forth below, subject to the laws, rules and regulations of the Applicable Governmental Authorities: (A) With respect to Owner's Financial Obligations, the same shall be funded and/or paid for as follows: (1) first, from monies which may be available in Management Accounts (subject to the provisions of subparagraph 2(c)(vii)(A) hereof) maintained for the respective Business giving rise to such Owner's Financial Obligation; (2) second, if such Management Accounts do not contain monies sufficient 16 to fund and/or pay such Owner's Financial Obligations, and other Management Accounts have funds which exceed the requirements of the Businesses for which such accounts are maintained, then from such other Management Accounts, and (3) third, if Management Accounts do not contain monies sufficient to fund and/or pay Owner's Financial Obligations, then Owner shall be obligated to fund and pay such deficits within thirty (30) days after written request therefor by Manager or if Owner fails or delays in furnishing funds to cover such deficits as aforesaid (by unreasonable failure to approve or delay in approving budgets in a timely manner or otherwise), (x) Owner shall indemnify and hold harmless Manager with respect to any liability to third parties however arising which may arise out of or relate to, directly or indirectly, such failure or delay in funding such deficits, and (y) Manager shall have the option (but not the obligation) to terminate this Agreement in accordance with subparagraph 8(b)(iii) hereof. (B) It is understood and agreed that Manager shall have no obligation or duty to fund and/or pay for any of Owner's Financial Obligations from its own funds except in those instances herein where it is 17 expressly and specifically stated that such item shall be the obligation of Manager. (xii) MATERIAL AGREEMENTS. Manager, as exclusive agent for Owner, is authorized to make and enter into any agreements (including, without limitation, agreement with Manager's affiliates, provided such agreements are upon "market" terms no more onerous to Owner or favorable to such affiliates than would be the case if Owner contracted with third parties regarding the same) as are, in Manager's reasonable discretion, necessary or desirable for the operation, supply and maintenance of the Businesses, as required by this Agreement. Manager shall be required to obtain the reasonable approval of the Board of Directors of Owner before entering into any agreement not contemplated by the approved Annual Budget involving (a) any material structural repair or rehabilitation of the Businesses in excess of $100,000; (b) any fundamental change in the character of the Businesses; or (c) any other agreement (other than employment contracts or benefit arrangements, the approval of which shall be governed by the provisions of subparagraph 2(c)(ii)(A) hereof) involving the payment of more than $100,000 over the term thereof. Manager shall not enter into any agreement involving the incurrence of debt obligations on behalf of Owner or with 18 respect to the operations of the Businesses, in excess of $100,000 in any single case or in excess of $500,000 in the aggregate, over any amounts therefor set forth in the approved Annual Budget, without obtaining the prior approval of the Board of Directors of Owner. (xiii) FUTURE CONSTRUCTION AND CAPITAL EXPENDITURES BUDGET. Construction plans and specifications for the refurbishment and modernization of the Businesses and the capital expenditures budget for the cost thereof shall be prepared by or at the direction of Manager and shall be submitted to the Board of Directors of Owner for its approval. All additions and/or material modifications to the Businesses subsequent to the date hereof will be constructed by a general contractor with hotel/casino construction experience chosen by Manager, subject to the Owner's prior approval, to perform under Manager's supervision and control. Unless expressly waived by Owner in writing, Manager shall require that said general contractor post completion, performance and payment bonds prior to the commencement of any such construction. Owner shall pay all costs associated with improvements, refurbishments, additions and material modifications to the Businesses undertaken and completed in accordance with the then current Annual Budget or any supplemental budget 19 therefor and title with respect thereto shall be in the name of Owner. Proposals in connection with any other capital expenditures to be incurred in connection with the operation of the Businesses that are in excess of 2% in any single case or in excess of 5% in the aggregate over any amounts therefor set forth in the approved Annual Budget shall be submitted to the Board of Directors of Owner for its approval. (xiv) CAPITAL REPLACEMENT AND ADDITIONS. Owner and Manager recognize the necessity of a program of replacement of tangible personal property (other than construction materials which shall be subject to subparagraph 2(c)(xiii) hereof) and the need to cause the Businesses to continue to be furnished and maintained in accordance with the standards described herein. All costs of purchases of tangible personal property pursuant to this paragraph 2(c)(xiv) shall be in accordance with the then current Annual Budget or any supplemental budget therefor approved by Owner and shall be paid by Owner within 30 days of receipt of an invoice therefor from Manager, with title thereto being taken in the name of Owner. Such purchases are subject to Owner's prior approval to the extent that any single purchase exceeds the line item therefor in the Annual 20 Budget by more than $10,000 or by more than $100,000 in the aggregate for all such purchases. (xv) LEGAL MATTERS. Manager shall coordinate and manage all legal matters and licensing activities with respect to the Businesses, including, without limitation, the preparation of required filings and reports to the Applicable Governmental Authorities, including the Securities and Exchange Commission, and Owner's stockholders and bondholders, which filings and reports shall be submitted to Owner for review and approval prior to filing or distribution. In connection with such legal matters, Manager, as exclusive agent for and on behalf of Owner, shall have the right to engage such legal counsel as it determines, in its reasonable discretion, is necessary. Manager shall obtain the reasonable approval of the Board of Directors of Owner prior to the settlement of any material claim, action or proceeding with respect to any of the Businesses or prior to taking significant action in connection with any material litigation matter (I.E., any settlement or litigation matter involving a payment in excess of $100,000 net of insurance proceeds in respect of such matter or which would substantially affect the operations or assets of the Businesses). 21 (xvi) ADDITIONAL CONSENTS AND APPROVALS. In acting hereunder in all matters relative to this Agreement, and in approving or consenting to any matter hereunder not otherwise specifically provided for, Owner and Manager shall each act in good faith and in a commercially reasonable manner. 3. INTELLECTUAL PROPERTY. (a) ACKNOWLEDGMENTS. Manager (i) acknowledges Owner's exclusive right, title and interest in and to the trademarks, tradenames and service marks presently utilized, and hereafter developed and utilized, in connection with the Businesses (collectively, the "MARKS"); and (ii) agrees not to do knowingly any act that will impair or affect the strength of the Marks, the continuity of the registration of the Marks, Owner's ownership of the Marks or the goodwill associated with the Marks. Manager agrees to render whatever reasonable assistance Owner may require, at the expense of Owner, in the procurement and maintenance of registrations of the Marks in the United States Patent and Trademark Office and in other jurisdictions. (b) QUALITY OF SERVICES. (i) Manager agrees that the services and goods provided in connection with the Marks shall be consistent with the Management Standard. 22 (ii) Manager agrees that it will permit Owner and/or its designated representatives reasonable access to the Businesses, at the expense of Owner, to enable Owner to determine whether the services and goods offered by Manager in connection with the Marks conform to the Management Standard and this Agreement. (c) MARKING. (i) Manager shall apply the appropriate legend or registration symbol, as instructed by Owner in writing, indicating the status of each of the Marks in connection with all signs, tags, labels, containers, packaging, advertising, promotional and display materials containing or referred to the Marks. (ii) Manager agrees to submit to Owner repre- sentative samples of new advertising and promotional materials and signage bearing the Marks at least fifteen (15) days before their first publication or display. Owner shall be deemed to have no objection to the material submitted if such objections are not communicated to Manager in writing within ten (10) business days after receipt of such material. (d) INFRINGEMENT. (i) If Manager receives information to the effect that any third party is using the Marks, or any 23 similar trademark, in connection with the operation of casinos, hotels or other businesses similar to the Businesses, it shall provide Owner with prompt written notice of such fact. (ii) In the event of any infringement of the Marks, Manager shall render all reasonable assistance to Owner, at Owner's expense, and will join as a co-party with Owner at Owner's reasonable request and expense in the event that Owner desires to protect or proceed against such infringement. However, Manager shall not incur any expense in connection with any such proceedings without Owner's express written permission. Any recovery in connection with such a proceeding shall be for the sole benefit of Owner. (e) ENFORCEMENT. The failure or delay of Owner in any one or more instances to enforce one or more of the terms and conditions of this Article 3, or to exercise any right or privilege under this Article 3 or the waiver of any breach of the terms and conditions contained in this Article 3, shall not be construed thereafter as a waiver of any such terms, conditions, rights or privileges and the same and all other terms, conditions, rights or privileges under this Article 3 shall continue and remain in full force and effect as though no such failure or delay had occurred. 24 (f) SOFTWARE. Manager acknowledges Owner's exclusive right, title and interest in and to the proprietary (I.E. non third party owned) software presently utilized, and hereafter developed and utilized, in connection with the Businesses (collectively, the "SOFTWARE"). Owner hereby grants to Manager a non-exclusive license (the "SOFTWARE LICENSE") to use, exclusively in connection with the operation of the Businesses and the activities at any or all of the Businesses, the software listed on SCHEDULE "2" hereto (the "SOFTWARE", which Manager hereby warrants to be all of the software currently being used in connection with, and which is material to the operation of, the Businesses as currently being operated. No right is hereby granted, and Manager specifically disclaims, any right to decompile, disassemble, reverse engineer, copy (except for backup purposes), transfer or sublicense (collectively, the "DISALLOWED USES") the Software. Upon the occurrence of a Disallowed Use, Owner shall provide Manager with notice thereof in writing and, if such Disallowed Use is not cured within ten (10) days after such notice, Owner shall have the right to terminate the Software License immediately. If Manager determines that modifications or changes to the Software are necessary or desirable, Manager shall advise Owner in writing with 25 respect thereto. Any such modifications or changes shall be subject to Owner's prior approval, which approval shall not be unreasonably withheld or delayed beyond thirty (30) days after its submission to Owner. Such modifications or changes shall be made by Manager, within a reasonable period of time, and Owner shall retain all right, title and interest thereto. Owner makes no warranty of merchantability or fitness for a particular purpose or for any purpose as to the Software. 4. REPRESENTATIONS AND WARRANTIES OF MANAGER. Manager represents and warrants to Owner as follows: (a) ORGANIZATION. Manager is a corporation duly organized, validly existing and in good standing under the law of the State of Delaware, and has the full corporate power and authority to enter into and perform its obligations under this Agreement. (b) AUTHORIZATION OF AGREEMENT. The execution, delivery and performance of this Agreement has been duly authorized and approved by all necessary corporate action on the part of Manager, and this Agreement has been duly executed and delivered by Manager and constitutes the legal, valid and binding obligation of Manager, enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, 26 reorganization, moratorium and similar laws affecting creditors' rights and remedies generally and subject, as to enforceability, to general principles of equity. The execution, delivery and performance of this Agreement by Manager does not and will not conflict with any law, rule or regulation of the Applicable Governmental Authorities. (c) LITIGATION. There are no judicial or admin istrative actions, proceedings or investigations pending or, to the best of Manager's knowledge, threatened against Manager that question the validity of this Agreement or any action taken or to be taken by Manager in connection with this Agreement and that, if adversely determined, would have a material adverse effect upon Manager's ability to perform its obligations under this Agreement. (d) CONSENTS AND APPROVALS. No authorization, consent, approval, license, finding of suitability, exemption from or filing or registration with any court or governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, including, without limitation, the Applicable Governmental Authorities, is or will be necessary as a condition to the valid execution, delivery or performance by Manager of this Agreement, other than such authorizations, consents, approvals, licenses, findings of suitability, exemptions, filings or 27 registrations as have been obtained and are in full force and effect. 5. REPRESENTATIONS AND WARRANTIES OF OWNER. Owner represents and warrants to Manager as follows: (a) OWNER'S ORGANIZATION. Owner is a corporation duly organized, validly existing and in good standing under the laws of The Bahamas and has the full corporate power and authority to enter into and perform its obligations under this Agreement. (b) AUTHORIZATION OF AGREEMENT. The execution, delivery and performance of this Agreement has been duly authorized and approved by all necessary corporate action on the part of Owner, and this Agreement has been duly executed and delivered by Owner and constitutes the legal, valid and binding obligation of Owner, enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors' rights and remedies generally and subject, as to enforceability, to general principles of equity. The execution, delivery and performance of this Agreement by Owner does not and will not conflict with any law, rule or regulation of the Applicable Governmental Authorities. 28 (c) CONSENTS AND APPROVALS. No authorization, consent, approval, license, finding of suitability, exemption from or filing or registration with any court or governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, including, without limitation, the Applicable Governmental Authorities, is or will be necessary as a condition to the valid execution, delivery or performance by Owner of this Agreement, other than such authorizations, consents, approvals, licenses, findings of suitability, exemptions, filings or registrations as have been obtained and are in full force and effect. 6. NO JOINT VENTURE. It is expressly understood and agreed that Manager is being employed by Owner as an independent contractor to provide, or cause to be provided, supervisory management and consulting services in respect of the Businesses and not as a partner or joint venturer of Owner. All purchases and acquisitions of every kind and character by Manager on behalf of Owner shall be property of Owner and all debts and liabilities incurred by Manager within the scope of the authority granted and permitted hereunder in the course of its management and operation of the Businesses shall be debts and liabilities of Owner only, and Manager shall not be liable therefor for its own 29 account, except as specifically stated to the contrary herein. 7. COMPENSATION. (a) During the Initial Term, as compensation for the Services to be rendered by Manager hereunder, Owner shall pay to Manager an annual fee (the "MANAGEMENT FEE") equal to the sum of (x) 3% of the gross revenue from the Business for such period (the "PERCENTAGE FEE"), plus (y) Manager's reasonable costs incurred during such period in connection with the rendering of the Management Services (including out of pocket costs and employee wages and benefits) ("COSTS"). For purposes of this Section 7, the term "gross revenue" shall mean the aggregate gross revenues of Owner from the conduct of the Business, computed in accordance with United States generally accepted accounting principles consistently applied, including those set forth in the AICPA Accounting and Auditing Guide for Casinos. (b) Commencing on the first anniversary of the date hereof, if Manager shall continue to provide the Management Services beyond the Initial Term, then Owner shall pay to Manager a management fee for such services (the "ANNUAL FEE") shall be an amount equal to (x) 3% of gross revenue from the Businesses (the "ANNUAL PERCENTAGE FEE") for such period, plus (y) Costs for such period. 30 (c) The Percentage Fee and the Annual Percentage Fee shall be payable in twelve equal monthly installments in arrears on the last business day of each calendar month during the balance of the term hereof, based upon an estimate utilizing gross revenue for the Initial Term, with an appropriate adjustment made within 90 days after the expiration of the then current annual period. Costs shall be reimbursed monthly. 8. TERM AND TERMINATION EVENTS. (a) The initial term of this Agreement (the "INITIAL TERM"), shall commence on the date hereof (the "COMMENCEMENT DATE"), and shall terminate on the day immediately preceding the first (1st) anniversary of the Commencement Date. Thereafter, this Agreement shall be automatically renewed from year-to-year unless notice of intent not to renew is delivered by either party to this Agreement to the other party at least six (6) months prior to the expiration of the Initial Term or any subsequent term (the Initial Period, and each one year period thereafter, as the case may be, being referred to as the then current "TERM"). (b) This Agreement may be terminated under any of the following circumstances (a "TERMINATION"): 31 (i) at any time upon the mutual written consent of Owner and Manager; (ii) automatically, as to any of the Businesses upon a sale of such Business; (iii) by Manager ninety (90) days after the delivery of a notice by Manager to Owner and the Trustees following a breach by Owner of a material term hereof and Owner's failure to cure such breach within such 90 day period; provided, however, that Manager shall not have the right to terminate this Agreement if such breach is the direct result of a wrongful act or failure to act by Manager or any of its affiliates; or (iv) by Owner immediately after the delivery of a notice of Termination by Owner to Manager in the event that Owner reasonably determines that there is cause for such termination, which, for purposes hereof, shall include a determination that Manager, in the exercise of its duties hereunder and pursuant to the terms hereof, committed fraud or finds that Manager has com- mitted willful misconduct or gross negligence; (v) by Owner, upon thirty (30) days prior written notice to Manager, for any reason whatsoever; (vi) Notwithstanding anything to the contrary contained in this paragraph 8(b), the Trustees may 32 assign Owner's rights and obligations under this Agreement in respect of any of the Businesses, to a purchaser of such Business following the occurrence of an Event of Default under any of the Indentures in accordance with the terms of the Security Instruments, subject to the prior written consent of Manager, which consent shall not be unreasonably withheld or delayed, in which case this Agreement shall not terminate but shall continue in full force and effect in all respects. (c) If Manager continues to perform the Services pursuant to this Agreement during any period following the delivery of a termination notice as provided in this paragraph 8(b) and prior to the actual Termination hereof, Manager shall continue to earn the compensation called for in this Agreement during such period. In no event shall Owner, the Trustees, the holders of the Notes or their successors or assigns be liable to Manager or for any amounts owed by or damages recoverable against Owner hereunder and Manager's recourse for the same shall be limited solely to a recovery from and against the assets of Owner comprising the Businesses. (d) Upon a Termination of this Agreement, the parties hereto shall account to each other with respect to all uncompleted business and Manager shall promptly deliver 33 to Owner any books, records, instruments or other documentation relating to the Businesses and Owner in Manager's possession or under Manager's control. The provisions of Articles 3, 7, 12 and 13 hereof shall survive the Termination of this Agreement. 9. TERMINATION FEE. In the event that this Agreement is terminated pursuant to paragraph 8(b) hereof, a termination fee (the "TERMINATION FEE") shall be payable by Owner to Manager as follows: (a) TERMINATION BY MUTUAL CONSENT OR FOR MISCONDUCT. In the event that this Agreement is terminated in accordance with subparagraphs 8(b)(i) or 8(b)(iv) hereof, no Termination Fee shall be payable by Owner to Manager. (b) TERMINATION UPON A SALE OF THE BUSINESSES. In the event that this Agreement is terminated upon a sale of any of the Businesses, other than a foreclosure sale following an Event of Default under any of the Indentures, a Termination Fee equal to (x) $1,000,000 plus (y) Costs theretofore incurred and remaining unreimbursed, shall be payable by Owner to Manager immediately upon such Termination. (c) TERMINATION UPON A BREACH BY OWNER OR AT OWNER'S DISCRETION WITHOUT CAUSE. In the event this Agreement is terminated in accordance with subparagraphs 34 8(b)(iii) or 8(b)(v) hereof, a Termination Fee equal to (x) $1,000,000 plus (y) Costs theretofore incurred and remaining unreimbursed, shall be payable by Owner to Manager immediately upon such Termination, subject to the condition that if this Agreement is terminated in accordance with subparagraph 8(b)(iii) hereof, at the request of the Trustees, Manager shall continue to perform its obligations hereunder for a period of up to one hundred fifty (150) days following such Termination provided Owner continues to pay to Manager the monthly installments of the Percentage Fee or the Annual Percentage Fee and reimburse Costs on a timely basis. 10. COOPERATION UPON TERMINATION. Upon the non -renewal or termination of this Agreement, Manager shall cause its affiliates to release and waive all rights, claims, interests and relationships they may have pursuant to any contract, principle or partnership law or otherwise, to control, retain, or discharge any matter of management with respect to the Businesses, or any other benefit thereunder or in connection therewith. Manager shall peacefully vacate and surrender possession to Owner, and shall fully cooperate in the prompt and efficient transfer of the management of the Businesses from Manager to Owner or a person or entity acceptable to Owner. In connection with 35 the foregoing, Manager shall act in good faith to avoid any breach or disruption of any contract involving the Businesses or the lapse of any insurance policy covering or pertaining to the Businesses. 11. TRANSFER OF PERMITS AND GOVERNMENTAL LICENSES UPON TERMINATION. To the extent permissible under applicable law, upon termination or expiration of this Agreement, Manager shall cooperate in the transfer of any and all permits, licenses or similar authorizations issued by any governmental body relating to the operation or management of any or all of the Businesses to the new manager. 12. EXCULPATION AND INDEMNIFICATION. (a) (i) Manager, its affiliates and each of their respective officers, partners, directors, employees and agents shall indemnify and hold harmless Owner and any person who has acquired an interest in Owner, against and from all claims, demands, actions, suits or proceedings, civil, criminal, administrative or investigative, losses sustained or liabilities incurred, including monetary damages, as a result of (x) the willful misconduct or gross negligence of Manager, its affiliates and their respective officers, partners, directors, employees or agents, or (y) a 36 breach by Manager of or default by Manager under this Agreement. (ii) In the event that any legal proceedings shall be instituted or any claim or demand shall be asserted by any person in respect of which payment may be sought by Owner under the provisions of this paragraph 12(a), Owner promptly shall cause written notice of the assertion of any such proceeding or claim of which it has actual knowledge to be forwarded to Manager. Upon receipt of such notice, Manager shall have the right, at its option and at its own expense, to be represented by counsel of its choice, and to participate in any such proceeding with counsel of its choice; PROVIDED, HOWEVER, that no settlement shall be made without prior written consent of the Owner. The indemnitee and Owner agree to cooperate fully with each other in connection with the defense, negotiation or settlement of any such legal proceeding, claim or demand. (b) (i) Subject to the provisions of subparagraph 12(b)(ii) hereof, Owner shall indemnify and hold harmless Manager, its affiliates and any of their respective officers, partners, directors, employees and agents, from and against any and all losses, claims, damages, liabilities, expenses (including reasonable legal fees and expenses), judgments, fines, set- tlements and other 37 amounts arising from any and all claims, demands, actions, suits or proceedings, civil, criminal, administrative or investigative, in which any of them may be involved, or threatened to be involved, as a party or otherwise, which relates to, or arises out of (x) the willful misconduct or gross negligence of Owner, its employees or representatives, (y) a breach by Owner of or default by Owner under this Agreement, or (z) the performance of any duties and services for or on behalf of Owner pursuant to the terms of this Agreement, regardless of whether the such indemnitee continues to be Manager, an affiliate thereof or an officer, partner, director, employee or agent of Manager or its affiliates at the time any such liability or expense is paid or incurred, and regardless of whether the liability or expense accrued at or relates to, in whole or in part, any time before, on or after the date hereof. (ii) An indemnitee shall not be entitled to indemnification under this paragraph 12(b) with respect to any claim, issue or matter in respect of which it has committed fraud, willful breach of this Agreement, gross negligence or willful or wanton misconduct. (iii) In the event that any legal proceedings shall be instituted or any claim or demand shall be asserted by any person in respect of which payment may be sought by 38 an indemnitee under the provisions of this paragraph 12(b), the indemnitee promptly shall cause written notice of the assertion of any such proceeding or claim of which it has actual knowledge to be forwarded to Owner. Upon receipt of such notice, Owner shall have the right, at its option and at its own expense, to be represented by counsel of its choice, which must be reasonably satisfactory to the indemnitee, and to defend against, negotiate, settle or otherwise deal with any proceeding, claim or demand which relates to any loss, liability, damage or deficiency indemnified against hereunder; PROVIDED, HOWEVER, that no settlement shall be made without prior written consent of the indemnitee, not to be unreasonably withheld, conditioned or delayed; and PROVIDED FURTHER, that the indemnitee may participate in any such proceeding with counsel of its choice and at its expense. The indemnitee and Owner agree to cooperate fully with each other in connection with the defense, negotiation or settlement of any such legal proceeding, claim or demand. (iv) The indemnification provided by this paragraph 12(b) shall be in addition to any other rights to which an indemnitee may be entitled under any agreement, bylaw or vote of the Board of Directors of Owner or as a matter of law or otherwise, both as to action in the 39 indemnitee's capacity as Manager, an affiliate thereof or an officer, partner, director, employee or agent of Manager or its affiliates and as to action in any other capacity, shall continue as to an indemnitee who has ceased to serve in such capacity and shall inure to the benefit of the heirs, successors, assigns and administrators of an indemnitee. (v) The provisions of this Article 12 shall survive the termination of this Agreement. 13. GOVERNMENTAL LAWS. Notwithstanding anything to the contrary contained in this Agreement, this Agreement shall be deemed to include all provisions required by the casino and gaming authorities of The Commonwealth of The Bahamas and the regulations promulgated thereunder (the "ACT"), and shall be conditioned upon the approval of the Applicable Governmental Authorities. To the extent that any term or provision contained in this Agreement shall be inconsistent with the Act, the provisions of the Act shall govern. All provisions of the Act, to the extent required by law to be included in this Agreement, are incorporated herein by reference as if fully restated in this Agreement. 14. NOTICES. All notices, demands, approvals, requests or other communications which may be or are required to be given, served or sent by any party to the other parties, shall be in writing and shall be delivered 40 personally or by certified mail, return receipt requested, to the other party's address as follows: if to Owner to: c/o __________________________ ______________________________ ______________________________ Attention: __________________ if to Manager to: ______________________________ ______________________________ ______________________________ Attention: __________________ Any party may change the name and/or address by written notice given in each instance to the other parties. Notices shall be deemed given when delivered personally, or, if sent by certified mail, the earlier of (a) three (3) business days after mailing or (b) when received. 15. SEVERABILITY. If any term or provision of this Agreement or the application thereof to any person or circumstance shall be invalid or unenforceable, to any extent, the remainder of this Agreement, or the application of such term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby, and each term and provision of this Agreement shall be valid and be enforced to the fullest extent permitted by law. 41 16. GOVERNING LAW. This Agreement shall be construed and enforced in accordance with the laws of the State of New York without regard to its conflict of laws provisions. 17. ASSIGNMENT. This Agreement and/or right to receive payments hereunder shall not be assigned by Owner or Manager without the prior written approval of the other in each instance; PROVIDED, HOWEVER, that Owner may assign its rights under this Agreement to a purchaser of the Businesses and the Trustees may assign the Owner's rights under this Agreement to a purchaser of the Businesses in a foreclosure sale following an Event of Default under any of the Indentures as provided in the Security Instruments. 18. SUCCESSORS AND ASSIGNS. Subject to the provisions of Section 17 hereof, all of the covenants, conditions and obligations contained in this Agreement shall be binding upon and inure to the benefit of the respective successors and permitted assigns of Owner and Manager to the same extent as if each such successor and permitted assign were in each case named as a party to this Agreement. 19. ENTIRE AGREEMENT; AMENDMENT. This Agreement constitutes the sole understanding of the parties with respect to the matters provided for herein and supersedes any previous agreements and understandings between the parties 42 with respect to the subject matter hereof. No amendment, modification or alteration of the terms or provisions of this Agreement shall be binding unless the same shall be in writing and duly executed by the parties hereto. 20. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original and all of which shall constitute the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this Management Agreement to be duly executed by an authorized representative thereof, all as of the day and year first above written. P.I. RESORTS LIMITED By: _____________________ Name: Title: RESORTS INTERNATIONAL, INC. By: _____________________ Name: Title: 43 EXHIBIT "A" For purposes hereof the "Businesses" shall mean all of the operations and properties conducted and owned by RII and its affiliates relating primarily to Paradise Island, the Bahamas, including, without limitation, the Paradise Island Resort & Casino, Ocean Club Golf & Tennis Resort, Paradise Beach Resort, Paradise Island Airlines, a short take-off and landing airport facility at the southeast corner of Paradise Island and approximately 219 acres of undeveloped land on Paradise Island (including approximately 120 acres of waterfront property) not used in the operation of the resorts on Paradise Island, approximately 1675 acres of undeveloped and partially developed land on Grand Bahama Island, approximately 561 acres on Andros Island and other similarly related assets not currently used actively in the Paradise Island operations. 44 SCHEDULE "1" INDENTURES ---------- 45 [GD&C Draft -- 12/30/93] [NA932010.156] -------------------------------------------- RESORTS INTERNATIONAL HOTEL FINANCING, INC., Issuer, RESORTS INTERNATIONAL HOTEL, INC., Guarantor, and STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, Trustee, -------------------------------------------- I N D E N T U R E Dated as of [ ], 1994 -------------------------------------------- 11% MORTGAGE NOTES DUE 2003 -------------------------------------------- CROSS-REFERENCE TABLE Section of Trust Indenture Act of 1939 Section of Indenture - -------------------------------------- -------------------- 310(a)(1). . . . . . . . . . . . . . . . . . . . . . . . . .8.08; 8.09 (a)(2). . . . . . . . . . . . . . . . . . . . . . . . . .8.09 (a)(3). . . . . . . . . . . . . . . . . . . . . . . . . .8.14(b) (a)(4). . . . . . . . . . . . . . . . . . . . . . . . . .Not Applicable (b) . . . . . . . . . . . . . . . . . . . . . . . . . . .8.08 (c) . . . . . . . . . . . . . . . . . . . . . . . . . . .Not Applicable 311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . .8.13 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . .8.13 (c) . . . . . . . . . . . . . . . . . . . . . . . . . . .Not Applicable 312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . .9.01; 9.02(a) (b) . . . . . . . . . . . . . . . . . . . . . . . . . . .9.02(b) (c) . . . . . . . . . . . . . . . . . . . . . . . . . . .9.02(c) 313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . .9.03(a) (b) . . . . . . . . . . . . . . . . . . . . . . . . . . .9.03(a) (c) . . . . . . . . . . . . . . . . . . . . . . . . . . .9.03(a) (d) . . . . . . . . . . . . . . . . . . . . . . . . . . .9.03(b) 314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . .9.04 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . .6.02 (c)(1). . . . . . . . . . . . . . . . . . . . . . . . . .1.06 (c)(2). . . . . . . . . . . . . . . . . . . . . . . . . .1.06 (c)(3). . . . . . . . . . . . . . . . . . . . . . . . . .9.04(c); 12.07(i) (d) . . . . . . . . . . . . . . . . . . . . . . . . . . .6.02 (e) . . . . . . . . . . . . . . . . . . . . . . . . . . .1.06 (f) . . . . . . . . . . . . . . . . . . . . . . . . . . .Not Applicable 315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . .8.01(a) (b) . . . . . . . . . . . . . . . . . . . . . . . . . . .8.02 (c) . . . . . . . . . . . . . . . . . . . . . . . . . . .8.01(b) (d) . . . . . . . . . . . . . . . . . . . . . . . . . . .8.01(c) (e) . . . . . . . . . . . . . . . . . . . . . . . . . . .7.14 316(a)(l)(A) . . . . . . . . . . . . . . . . . . . . . . . .7.12(b) (a)(l)(B) . . . . . . . . . . . . . . . . . . . . . . . .7.13 (a)(2). . . . . . . . . . . . . . . . . . . . . . . . . .Not Applicable (b) . . . . . . . . . . . . . . . . . . . . . . . . . . .7.08 317(a)(l). . . . . . . . . . . . . . . . . . . . . . . . . .7.03 (a)(2). . . . . . . . . . . . . . . . . . . . . . . . . .7.04 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . .12.03 318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . .1.07 - ------------------------- Note: This Cross-Reference Table shall not be deemed, for any purpose, to be a part of this Indenture. TABLE OF CONTENTS ----------------- Page ---- ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION Section 1.01. Definitions.. . . . . . . . . . . . . . . . . . . . 1 Section 1.02. Acts of Noteholders. . . . . . . . . . . . . . . . 16 Section 1.03. Notices, etc., to Trustee, RIH, the Company, Casino Control Commission and Director of Gaming Enforcement.. . . . . . . . . . . . . . . . . . . . 18 Section 1.04. Notices to Noteholders; Waiver. . . . . . . . . . . 19 Section 1.05. Form and Contents of Documents Delivered to Trustee.. . . . . . . . . . . . . . . . . . . . . . 20 Section 1.06. Compliance Certificates and Opinions. . . . . . . . 21 Section 1.07. Conflict with Trust Indenture Act.. . . . . . . . . 21 Section 1.08. Effect of Headings and Table of Contents. . . . . . 22 Section 1.09. Successors and Assigns. . . . . . . . . . . . . . . 22 Section 1.10. Separability Clause.. . . . . . . . . . . . . . . . 22 Section 1.11. Benefits of Indenture.. . . . . . . . . . . . . . . 22 Section 1.12. Governing Law.. . . . . . . . . . . . . . . . . . . 22 Section 1.13. Casino Control Act. . . . . . . . . . . . . . . . . 22 Section 1.14. General Application.. . . . . . . . . . . . . . . . 22 (i) Page ---- ARTICLE TWO NOTE FORM Section 2.01. Form Generally. . . . . . . . . . . . . . . . . . . 23 Section 2.02. Form of Notes.. . . . . . . . . . . . . . . . . . . 24 Section 2.03. Form of Trustee's Certificate of Authentication.. . 28 Section 2.04. Form of the Guaranty. . . . . . . . . . . . . . . . 29 ARTICLE THREE THE NOTES Section 3.01. General Title.. . . . . . . . . . . . . . . . . . . 29 Section 3.02. Form and Denominations. . . . . . . . . . . . . . . 30 Section 3.03. Execution, Authentication, Delivery and Dating. . . . . . . . . . . . . . . . . . . . . . . 30 Section 3.04. Temporary Notes.. . . . . . . . . . . . . . . . . . 30 Section 3.05. Registration, Transfer and Exchange.. . . . . . . . 31 Section 3.06. Mutilated, Destroyed, Lost and Stolen Notes.. . . . 32 Section 3.07. Payment of Interest on Notes; Interest Rights Preserved.. . . . . . . . . . . . . . . . . . . . . 33 Section 3.08. Persons Deemed Owners.. . . . . . . . . . . . . . . 34 Section 3.09. Cancellation. . . . . . . . . . . . . . . . . . . . 34 Section 3.10. Term and Form.. . . . . . . . . . . . . . . . . . . 35 Section 3.11. Exchangeability.. . . . . . . . . . . . . . . . . . 35 Section 3.12. Redemption. . . . . . . . . . . . . . . . . . . . . 35 Section 3.13. Authentication and Delivery of Original Issue.. . . . . . . . . . . . . . . . . . . . . . . 36 (ii) Page ---- ARTICLE FOUR GUARANTY Section 4.01. Guaranty. . . . . . . . . . . . . . . . . . . . . . 36 Section 4.02. Execution and Delivery of Guaranty. . . . . . . . . 37 Section 4.03 Mortgage Securing Guaranty. . . . . . . . . . . . . 38 ARTICLE FIVE SATISFACTION AND DISCHARGE Section 5.01. Payment of Indebtedness; Satisfaction and Discharge of Indenture. . . . . . . . . . . . . . . 39 Section 5.02. Application of Deposited Money. . . . . . . . . . . 40 Section 5.03. Repayment to the Company. . . . . . . . . . . . . . 40 ARTICLE SIX SECURITY Section 6.01. Assignment Agreement. . . . . . . . . . . . . . . . 41 Section 6.02. Recording, Etc. . . . . . . . . . . . . . . . . . . 42 Section 6.03. Custody of Mortgage Documents.. . . . . . . . . . . 43 Section 6.04. Suits to Protect the Trust Estate and Mortgage Documents. . . . . . . . . . . . . . . . . 44 ARTICLE SEVEN REMEDIES Section 7.01. Events of Default.. . . . . . . . . . . . . . . . . 44 Section 7.02. Acceleration of Maturity; Rescission and Annulment.. . . . . . . . . . . . . . . . . . . . . 48 Section 7.03. Covenant to Pay Trustee Amounts Due on Notes and Right of Trustee to Judgment. . . . . . . . . . 49 Section 7.04. Trustee May File Proofs of Claim. . . . . . . . . . 50 Section 7.05. Trustee May Enforce Claims Without Possession of Notes. . . . . . . . . . . . . . . . . . . . . . 51 (iii) Page ---- Section 7.06. Application of Money Collected. . . . . . . . . . . 51 Section 7.07. Limitation on Suits.. . . . . . . . . . . . . . . . 52 Section 7.08. Unconditional Right of Noteholders to Receive Principal and Interest. . . . . . . . . . . . . . . 53 Section 7.09. Restoration of Rights and Remedies. . . . . . . . . 53 Section 7.10. Rights and Remedies Cumulative. . . . . . . . . . . 53 Section 7.11. Delay or Omission Not Waiver. . . . . . . . . . . . 54 Section 7.12. Other Rights. . . . . . . . . . . . . . . . . . . . 54 Section 7.13. Waiver of Past Defaults.. . . . . . . . . . . . . . 54 Section 7.14. Undertaking for Costs.. . . . . . . . . . . . . . . 55 Section 7.15. Enforcement.. . . . . . . . . . . . . . . . . . . . 55 Section 7.16. Management of Casino-Hotel. . . . . . . . . . . . . 56 ARTICLE EIGHT THE TRUSTEE Section 8.01. Certain Duties and Responsibilities. . . . . . . 56 Section 8.02. Notice of Defaults.. . . . . . . . . . . . . . . 58 Section 8.03. Certain Rights of Trustee. . . . . . . . . . . . 58 Section 8.04. Not Responsible for Recitals or Issuance of Notes or Application of Proceeds.. . . . . . . . 60 Section 8.05. May Hold Notes.. . . . . . . . . . . . . . . . . 60 Section 8.06. Money Held in Trust. . . . . . . . . . . . . . . 60 Section 8.07. Compensation and Reimbursement.. . . . . . . . . 60 Section 8.08. Disqualification; Conflicting Interests. . . . . 61 Section 8.09. Corporate Trustee Required; Eligibility. . . . . 61 (iv) Page ---- Section 8.10. Resignation and Removal; Appointment of Successor. . . . . . . . . . . . . . . . . . . . 62 Section 8.11. Acceptance of Appointment by Successor.. . . . . 64 Section 8.12. Merger, Conversion, Consolidation or Succession to Business.. . . . . . . . . . . . . 64 Section 8.13. Preferential Collection of Claims Against Company. . . . . . . . . . . . . . . . . . . . . 64 Section 8.14. Co-trustees and Separate Trustees. . . . . . . . 65 Section 8.15. Appointment of Authenticating Agent. . . . . . . 66 ARTICLE NINE NOTEHOLDERS' LISTS AND REPORTS BY TRUSTEE Section 9.01. Company to Furnish Trustee Semi-Annual Lists of Noteholders.. . . . . . . . . . . . . . . . . 67 Section 9.02. Preservation of Information; Communications to Noteholders.. . . . . . . . . . . . . . . . . 68 Section 9.03. Reports by Trustee.. . . . . . . . . . . . . . . 68 ARTICLE TEN CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE Section 10.01. Consolidation, Merger, Conveyance or Transfer Only on Certain Terms. . . . . . . . . . . . . . 70 Section 10.02. Successor Entity Substituted.. . . . . . . . . . 72 Section 10.03. Successor Management of Casino-Hotel.. . . . . . 73 Section 10.04. Limitation on Sales of Trust Estate. . . . . . . 73 Section 10.05 RIH Sale . . . . . . . . . . . . . . . . . . . . 73 ARTICLE ELEVEN AMENDMENTS, SUPPLEMENTS AND WAIVER Section 11.01. Without Consent of Noteholders.. . . . . . . . . 73 Section 11.02. With Consent of Noteholders. . . . . . . . . . . 74 (v) Page ---- Section 11.03. Execution of Amendments and Supplements. . . . . 76 Section 11.04. Effect of Amendment or Supplement. . . . . . . . 76 Section 11.05. Conformity with Trust Indenture Act. . . . . . . 76 Section 11.06. Reference in Notes to Amendment or Supplement. . 76 ARTICLE TWELVE COVENANTS Section 12.01. Payment of Principal and Interest. . . . . . . . 77 Section 12.02. Maintenance of Office or Agency. . . . . . . . . 77 Section 12.03. Money for Security Payments to Be Held in Trust. 78 Section 12.04. Corporate Existence. . . . . . . . . . . . . . . 79 Section 12.05. To Keep Books; Inspection by Trustee.. . . . . . 80 Section 12.06. Reports and Compliance Certificates. . . . . . . 80 Section 12.07. Limitations and Dividends and Restricted Payments.. . . . . . . . . . . . . . . . . . . . 82 Section 12.08. Limitations on Additional Indebtedness and Issuance of Notes. . . . . . . . . . . . . . . . 83 Section 12.09. Limitations on Repayment of Subordinated Indebtedness.. . . . . . . . . . . . . . . . . . 84 Section 12.10. Limitation on Certain Transactions.. . . . . . . 85 Section 12.11. Restriction of Activities. . . . . . . . . . . . 85 Section 12.12. Limitation on Subsidiaries Consolidated Group. . 86 Section 12.13. Limitations on Liens.. . . . . . . . . . . . . . 86 Section 12.14. Compliance with Laws.. . . . . . . . . . . . . . 87 Section 12.15. Payment of Taxes and Other Claims. . . . . . . . 87 Section 12.16. Maintenance of Properties. . . . . . . . . . . . 87 (vi) Page ---- Section 12.17. Insurance. . . . . . . . . . . . . . . . . . . . 88 Section 12.18. Waiver of Stay, Extension or Usury Laws. . . . . 88 Section 12.19. Appointment to Fill a Vacancy in Office of Trustee. . . . . . . . . . . . . . . . . . . . . 89 Section 12.20. Validity of Liens. . . . . . . . . . . . . . . . 89 Section 12.21. Transactions with Stockholders and Affiliates. . 89 ARTICLE THIRTEEN REDEMPTION OF NOTES Section 13.01. General Applicability of Article.. . . . . . . . 90 Section 13.02. Election to Redeem; Notice to Trustee. . . . . . 90 Section 13.03. Selection by Trustee of Notes to Be Redeemed.. . 90 Section 13.04. Notice of Redemption.. . . . . . . . . . . . . . 90 Section 13.05. Deposit of Redemption Price. . . . . . . . . . . 91 Section 13.06. Notes Payable on Redemption Date.. . . . . . . . 91 Section 13.07. Notes Redeemed in Part.. . . . . . . . . . . . . 92 Section 13.08. Redemption Pursuant to Casino Control Act. . . . 92 ARTICLE FOURTEEN DEFEASANCE Section 14.01. Discharge of the Indenture and Defeasance of the Securities.. . . . . . . . . . . . . . . . . 93 Section 14.02. Application of Deposited Money.. . . . . . . . . 94 Section 14.03. Repayment to the Company.. . . . . . . . . . . . 94 (vii) TABLE OF EXHIBITS ----------------- Exhibits Document -------- -------- Exhibit A RIH Promissory Note Exhibit B Assignment Agreement from Resorts International Hotel Financing, Inc. Exhibit C Subordination Provisions Exhibit D Mortgage securing RIH Promissory Note between Resorts International Hotel, Inc. and Resorts International Hotel Financing, Inc. Exhibit E Assignment of Leases and Rents from Resorts International Hotel, Inc. to Resorts International Hotel Financing, Inc. Exhibit F Mortgage securing Guaranty of Mortgage Notes between Resorts International Hotel, Inc. and State Street Bank and Trust Company of Connecticut, National Association, as Trustee Exhibit G Intercreditor Agreement Terms INDENTURE THIS INDENTURE dated as of [ ], 1994, among Resorts International Hotel Financing, Inc., a Delaware corporation (the "Company"), Resorts International Hotel, Inc., a New Jersey corporation ("RIH"), and State Street Bank and Trust Company of Connecticut, National Association, a national banking association, as trustee (together with its successors as such trustee, the "Trustee"). PRELIMINARY STATEMENT The capitalized terms used in this Indenture which are not otherwise defined herein have the meanings set forth in Article I. The Company has duly authorized the creation, execution and delivery of its 11% Mortgage Notes due 2003 (the "Notes"), issuable in accordance with the terms hereof, and RIH has duly authorized the guaranty of the Company's obligations under this Indenture, and, to secure the Notes and to provide therefor, each of the Company and RIH has duly authorized the execution and delivery of this Indenture. All things have been done which are necessary to make the Notes, when executed by the Company and authenticated and delivered by the Trustee hereunder and duly issued by the Company, the valid obligations of the Company, and to constitute this Indenture a valid agreement of the Company and RIH, in accordance with the terms of the Notes and this Indenture. THEREFORE, for and in consideration of the premises and the purchase or acceptance of the Notes by the Holders thereof, RIH and the Company do hereby covenant and agree to and with the Trustee, for the Ratable Benefit of all Holders of the Notes thereto appertaining, as follows: ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION Section 1.01. DEFINITIONS. For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires: (a) the terms defined in this Article One have the meanings assigned to them in this Article One and include the plural as well as the singular; (b) 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; (c) all accounting terms not otherwise defined herein have the meanings assigned to them, and all computations herein provided for shall be made, in accordance with GAAP consistently applied; and (d) 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. "ACCOUNTANT" means a Person engaged in the practice of accounting who (except as otherwise expressly provided in this Indenture) may be employed by or affiliated with the Company or RIH. "ACT" when used with respect to any Noteholder or Noteholders has the meaning stated in Section 1.02(a). "AFFILIATE" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person, and, with respect to any specified natural Person, any other Person having a relationship by blood, marriage or adoption not more remote than first cousin with such specified Person. For purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing; PROVIDED, HOWEVER, that, except as may be required under the TIA, the term "Affiliate" shall not include, with respect to the Company or RIH, any of Fidelity Management & Research Company, TCW Special Credits or funds or accounts managed or advised by either of them. "AFTER-ACQUIRED FEE MORTGAGE DEBT" means any Indebtedness secured by an After-Acquired Fee Mortgage. "AFTER-ACQUIRED FEE MORTGAGE" has the meaning stated in Section 2.07 of the Mortgage. "ASSIGNMENT AGREEMENT" means the Assignment of Agreements dated as of the date hereof, providing for the assignment of the RIH Promissory Note and other Mortgage Documents to the Trustee by the Company, and acknowledgment thereof by RIH, a copy of which is attached hereto as Exhibit B. "ASSIGNMENT OF LEASES AND RENTS" means the Assignment of Leases and Rents dated as of the date hereof, from RIH to the Company securing the RIH Promissory Note, a copy of which is attached hereto as Exhibit E. "AUTHENTICATING AGENT" means any Person named as Authenticating Agent for the Notes in accordance with the provisions of this Indenture until a successor Authenticating Agent becomes such pursuant thereto, and thereafter Authenticating Agent shall mean such successor. "AUTHORIZED SIGNATURE" means the signatures of the chairman of the board, the president or a Vice President and of the treasurer, an assistant treasurer, the controller, an assistant controller, the secretary or an assistant secretary of the Company or RIH, as the case may be. "CAPITALIZED LEASE OBLIGATION" means, with respect to any Person, any lease of any property (whether real, personal or mixed) by such Person as lessee which, in conformity with GAAP consistently applied, is accounted for as a capitalized lease on the balance sheet of such Person. "CASE" means, collectively, the bankruptcy cases involving RII and GRI in the United States Bankruptcy Court for the District of Delaware. "CASINO" means that portion of the Casino-Hotel used for gaming and related activities. "CASINO-HOTEL" means the casino and hotel complex and ancillary structures and facilities located on the Premises and furniture, fixtures and equipment at any time contained therein. "CASINO CONTROL ACT" means the New Jersey Casino Control Act and the regulations promulgated thereunder, as amended. "CASINO CONTROL COMMISSION" means the New Jersey Casino Control Commission, as from time to time constituted, or if at any time after the execution of this Indenture such Commission is not existing and performing the duties theretofore assigned to it, then the body performing such duties at such time. "COMBINATION TRANSACTION" has the meaning stated in Section 10.01. 3 "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 instrument such Commission is not existing and performing the duties theretofore assigned to it under the TIA, then the body performing such duties at such time. "COMPANY" means the Person named as the "Company" in the first paragraph of this instrument until a successor entity shall have become such pursuant to the applicable provisions of this Indenture, and thereafter, except to the extent otherwise contemplated by Section 10.02, "Company" shall mean such successor entity exclusively. "COMPANY CONSENT", "COMPANY ORDER" and "COMPANY REQUEST" mean, respectively, a written consent, order or request signed with an Authorized Signature and delivered to the Trustee. "CONSOLIDATED CASH FLOW" means, with respect to any Person for any period, an amount equal to the sum of (i) the consolidated net income (or loss) of such Person for such period determined in accordance with GAAP consistently applied, excluding interest income, interest expense and gains or losses from extraordinary or nonrecurring items, plus (ii) all amounts deducted in computing such consolidated net income (or loss) in respect of depreciation and amortization, plus (iii) non-cash charges arising from the reduction of CRDA Deposits to market value, minus (iv) taxes based upon or measured by income which are payable in cash, minus (v) CRDA Deposits. "CONSOLIDATED INTEREST CHARGES" means, with respect to any Person for any period, the consolidated interest expense (not including the non-cash amortization of discount on the original issuance of (a) the RIH Promissory Note, (b) any intercompany indebtedness of RIH issued in connection with Indebtedness represented by the Junior Mortgage Facility and (c) any intercompany indebtedness of RIH issued in connection with Indebtedness represented by the Working Capital Facility), whether payable in cash or in-kind (and with respect to RIH, including, without limitation, the interest paid or accrued (without duplication) on (i) the RIH Promissory Note, (ii) any intercompany indebtedness of RIH issued in connection with Indebtedness represented by the Junior Mortgage Facility and (iii) any intercompany indebtedness of RIH issued in connection with Indebtedness represented by the Working Capital Facility), without deduction for interest income (other than cash interest income received from RII in payment of its interest cost on any Working Capital Facility), in each case for such Person and 4 its consolidated Subsidiaries for such period determined in accordance with GAAP consistently applied. "CONSOLIDATED INTEREST COVERAGE RATIO" shall mean, at any date of calculation thereof, the ratio of (a) Consolidated Cash Flow of RIH and its consolidated Subsidiaries for the immediately preceding four consecutive fiscal quarters to (b) Consolidated Interest Charges of RIH and its consolidated Subsidiaries for such period. "CONSOLIDATED NET INCOME" means, with respect to any Person for any period, an amount equal to consolidated net income (or loss) of such Person for such period determined in accordance with GAAP consistently applied, minus (a) federal and state taxes based upon or measured by income which are payable in cash, plus (b) non-cash charges arising from federal and state taxes based upon or measured by income. "CRDA DEPOSITS" means (a) the quarterly deposits made by RIH to the Casino Reinvestment Development Authority in an amount equal to 1.25% of RIH's gross revenue in order to satisfy its investment obligation pursuant to the Casino Control Act, and (b) the amounts invested in qualified investments in lieu of any of the quarterly deposits (or portion thereof) referred to in clause (a) above. "CRDA DISPUTE" means the dispute existing on the date hereof between RIH and the New Jersey Casino Reinvestment Development Authority regarding CRDA Deposits and New Jersey Casino Reinvestment Authority Notes, which dispute involves an amount of approximately $30,000,000. "DEFAULT" means the occurrence and continuance of an Event of Default or an event which, after notice or lapse of time or both, would become an Event of Default. "DEFAULTED INTEREST" has the meaning stated in Section 3.07. "EFFECTIVE DATE" means the date on which the prepackaged plan of reorganization of RII and GRI becomes effective. "EVENT OF DEFAULT" has the meaning stated in Section 7.01. An Event of Default shall "exist" if an Event of Default shall have occurred and be continuing. "EXCHANGE ACT" means the Securities and Exchange Act of 1934, as amended. "EXISTING ENCUMBRANCES" has the meaning stated in Section 1.01 of the Mortgage. 5 "FAIR MARKET VALUE" of any Notes means (a) the average of the closing sales price of the Notes for the 30 trading days immediately prior to the date of determination of such value on the largest national securities exchange on which such Notes shall have traded on such trading days, or (b) if no such sales of such Notes occurred during such 30-day period or if the Notes are not so listed but are traded in the over-the-counter market with quotations available in the National Association of Securities Dealers Automated Quotation System ("NASDAQ"), the average of the means between the "bid" and "asked" prices on such national securities exchange or as quoted on NASDAQ, as the case may be, during such 30-day period, or (c) if the Notes are not traded on a national securities exchange or quoted on NASDAQ, the fair market value of such Notes as of the date of determination as determined by agreement of two nationally recognized Independent investment banking firms, one to be chosen by the Company and the other by the Holder of the Notes being valued, with the costs of each such firm being the responsibility of the Person selecting such firm. If such firms cannot agree upon such fair market value, such firms shall select a third nationally recognized Independent investment banking firm, which shall determine such fair market value, the costs of such third firm being shared equally by the Company and such Holder. "F,F&E FINANCING AGREEMENT" has the meaning stated in Section 1.01 of the Mortgage. "GAAP" means United States generally accepted accounting principles. "GRI" means GGRI, Inc., a Delaware corporation. "GROUND LEASES" has the meaning stated in Granting Clause Second of the Mortgage. "GUARANTY" means the guaranty contained in Article Four. "GUARANTY MORTGAGE" means the Mortgage securing Guaranty of Mortgage Notes dated as of the date hereof, between RIH, as mortgagor, and the Trustee, as mortgagee, securing the Guaranty, a copy of which is attached hereto as Exhibit F. "HOTEL" means that portion of the Casino-Hotel not included within the Casino. "INDEBTEDNESS" means, as applied to any Person, without duplication, any indebtedness, exclusive of deferred taxes, (a) in respect of borrowed money (whether or not the recourse of the lender is to the whole of the assets of such Person or only to a portoin thereof); (b) evidenced by bonds, 6 notes, debentures or similar instruments or letters of credit; (c) representing the balance deferred and unpaid of the purchase price of any property, if and to the extent such indebtedness would appear as a liability upon a balance sheet of such Person prepared in accordance with GAAP (but excluding trade accounts payable arising in the ordinary course of business that are not overdue by more than 90 days or are being contested by such Person in good faith); (d) any Capitalized Lease Obligations (other than, with respect to RIH or the Company, the Ground Leases) of such Person; and (e) Indebtedness of others guaranteed by such Person, including, without limitation, every obligation of such Person (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or to purchase (or to advance or supply funds for the purchase of) any security for the payment of such Indebtedness, (ii) to purchase property, securities or services for the purpose of assuring the holder of such Indebtedness of the payment of such Indebtedness, or (iii) to maintain working capital, equity capital or other financial sta tement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness; PROVIDED, HOWEVER, that the guaranty by any Person shall not include endorsements by such Person for collection or deposit, in either case in the ordinary course of business. The term "INDEBTEDNESS" does not include: (1) any of the types of indebtedness described in clauses (a) through (e) above (inclusive) owed by the Company to RIH or any of their Subsidiaries, by RIH to the Company or any of their Subsidiaries or by any such Subsidiary to RIH, the Company or any other such Subsidiary (including, without limitation, the RIH Promissory Note and the RIH Junior Promissory Note); (2) the Guaranty, the Junior Guaranty and the Working Capital Facility Guaranty; (3) matters relating to the CRDA Dispute, New Jersey Casino Reinvestment Development Authority Notes or the CRDA Deposits; and (4) any payments made by the Company or RIH under the RII Management Agreement, the RII Tax Sharing Agreement or the Services Agreement. "INDENTURE" means this instrument as originally executed or as it may from time to time be supplemented, modified or amended by one or more indentures or other instruments supplemental hereto entered into pursuant to the applicable provisions thereof. "INDEPENDENT" when used with respect to any specified Person means such a Person who (a) is in fact independent, (b) does not have any direct financial interest or any material indirect financial interest in the Company or in any other obligor upon the Notes or in any Affiliate of the Company or of such other obligor and (c) is not connected with the Company or such other obligor or any Affiliate of the Company or such other obligor as an officer, employee, promoter, underwriter, trustee, partner, director or person 7 performing similar functions. Whenever it is herein provided that any Independent Person's opinion or certificate shall be furnished to the Trustee, such Person shall be appointed by a Company Order, and such opinion or certificate shall state that the signer has read this definition and that the signer is Independent within the meaning hereof. A Person who is performing or who has performed services as an independent contractor to any specified Person shall not be considered not Independent merely by reason of the fact that such Person is or has performed such services. "INTERCREDITOR AGREEMENT" means the Intercreditor Agreement dated as of the date hereof, among the Trustee, the trustee under the Junior Mortgage Note Indenture and such other parties that may from time to time become a party thereto, which shall incorporate the terms set forth in Exhibit G. "INTEREST PAYMENT DATE" means the date on which an installment of interest on the Notes is due and payable. "JUNIOR ASSIGNMENT OF LEASES AND RENTS" means the Assignment of Leases and Rents dated as of the date hereof, from RIH to the Company securing the RIH Junior Promissory Note. "JUNIOR GUARANTY" means any guaranty of the Junior Mortgage Facility by RIH, including, without limitation, the guaranty of the Junior Mortgage Notes due 2004 by RIH contained in Article Four of the Junior Mortgage Note Indenture. "JUNIOR GUARANTY MORTGAGE" means the Mortgage securing the Guaranty of Junior Mortgage Notes dated as of the date hereof, between RIH, as mortgagor, and U.S. Trust Company, N.A., as mortgagee, securing the Junior Guaranty. "JUNIOR MORTGAGE" means the Mortgage securing the RIH Junior Promissory Note dated as of the date hereof, between the Company, as successor mortgagee, and RIH, as mortgagor. "JUNIOR MORTGAGE DOCUMENTS" means (a) the Junior Mortgage, the Junior Guaranty Mortgage, the RIH Junior Promissory Note, the Junior Assignment of Leases and Rents and any other security document to which either RIH or the Company is a party relating to the Junior Mortgage Notes, which is executed and delivered pursuant to or in connection with the Junior Mortgage, the Junior Guaranty Mortgage or the Junior Assignment Agreement, and (b) any mortgage, deed of trust, guaranty, promissory note, collateral assignment agreement, assignment of leases and rents, assignment of operating assets 8 and any other security document to which either RIH or the Company is a party relating to the Junior Mortgage Facility. "JUNIOR MORTGAGE FACILITY" means the Junior Mortgage Notes and any secured or unsecured facility or facilities entered into by RIH or the Company providing for the making of loans to RIH or the Company on a revolving or term basis, or the issuance of notes, debentures or bonds by RIH or the Company, as such agreement, indenture or instrument may be amended, supplemented or modified from time to time, or any refinancing thereof, in an aggregate principal amount up to $35,000,000 plus additional notes, debentures or bonds issued in payment of interest accrued on outstanding notes, debentures or bonds; PROVIDED, HOWEVER, that the lender or lenders thereunder (or any trustee or agent acting on behalf of such lender or lenders) shall have executed an intercreditor agreement covering the matters set forth on Exhibit G. The liens, if any, securing the Junior Mortgage Facility shall be PARI PASSU with the lien of the Junior Mortgage and the Junior Guaranty Mortgage. The term "JUNIOR MORTGAGE FACILITY" does not include the Junior Guaranty. "JUNIOR MORTGAGE NOTE INDENTURE" means the Indenture dated as of the date hereof, among the Company, RIH and U.S. Trust Company of California, N.A., as trustee, pursuant to which the Junior Mortgage Notes were issued, as originally executed or as it may from time to time be supplemented, modified or amended by one or more indentures or other instruments supplemental thereto entered pursuant to the applicable provisions thereof. "JUNIOR MORTGAGE NOTES" means the 11.375% Junior Mortgage Notes due 2004 of the Company issued pursuant to the Junior Mortgage Note Indenture, including, without limitation, any Additional Notes (as defined in the Junior Mortgage Note Indenture). "LEGAL REQUIREMENTS" has the meaning stated in Section 1.01 of the Mortgage. "MATURITY" when used with respect to any Note means the date on which the principal (or any portion thereof) of such Note becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration or call for redemption or otherwise. "MORTGAGE" means the Mortgage securing the RIH Promissory Note dated as of the date hereof, between the Company, as successor mortgagee, and RIH, as mortgagor. "MORTGAGE DEBT" means, at any point in time, the RIH Promissory Note, the RIH Junior Promissory Note and any 9 secured Indebtedness outstanding under any Working Capital Facility. "MORTGAGE DOCUMENTS" means the Mortgage, the Guaranty Mortgage, the RIH Promissory Note, the Assignment of Leases and Rents and any other security document to which either RIH or the Company is a party relating to the Notes, which is executed and delivered pursuant to or in connection with the Mortgage, the Guaranty Mortgage or the Assignment Agreement. "NATIONAL ACCOUNTANTS" has the meaning stated in Section 12.06(a). "NEW JERSEY CASINO REINVESTMENT DEVELOPMENT AUTHORITY NOTES" shall mean bonds issued by the Casino Reinvestment Development Authority, a public authority created under the Casino Control Act. "NON-RECOURSE INDEBTEDNESS" means indebtedness incurred in connection with the acquisition, purchase, improvement or development of property or assets (other than the Trust Estate) used by the Company, RIH or any Subsidiary of RIH or the Company to engage in the casino business, the hotel business or related or ancillary business or purpose and which is secured only by such assets and without recourse to RIH, the Company or any Subsidiary of RIH or the Company or the Trust Estate for such indebtedness. "NOTEHOLDER" or "HOLDER" means a Person in whose name a Note is registered in the Note Register. "NOTE REGISTER" and "NOTE REGISTRAR" have the respective meanings stated in Section 3.05. "NOTES" has the meaning stated in the Preliminary Statement of this instrument and more particularly includes any Note authenticated and delivered hereunder. The term "Notes" does not include the Guaranty. "OFFICER" of the Company or RIH means any Person authorized to execute an Authorized Signature. "OFFICERS' CERTIFICATE" delivered by the Company or RIH means a certificate signed with an Authorized Signature and delivered to the Trustee. Whenever this Indenture requires that an Officers' Certificate be signed also by an Accountant or other expert, such Accountant or other expert may (except as otherwise expressly provided in this Indenture) be in the general employ of the Company or RIH. "OPINION OF COUNSEL" means a written opinion of counsel who may (except as otherwise expressly provided in 10 this Indenture) be an employee of the Company or RIH. Unless otherwise specifically provided in this Indenture, such counsel may rely as to any statement of facts not personally known to such counsel and relating to such opinion on an Officers' Certificate, to the extent not rejected by the Trustee and its counsel (which rejection shall not be unreasonably given). "OUTSTANDING" when used with respect to Notes means, as of the date of determination, all Notes theretofore authenticated and delivered under this Indenture, except: (a) Notes theretofore canceled by the Trustee or delivered to the Trustee for cancellation; (b) Notes for whose payment or redemption money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent in trust for the Holders of such Notes; (c) Notes in exchange for or in lieu of which other Notes have been authenticated and delivered under this Indenture; and (d) Notes alleged to have been destroyed, lost or stolen which have been paid as provided in Section 3.06; PROVIDED, HOWEVER, that in determining whether the Holders of the requisite principal amount of Notes Outstanding have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Notes owned by the Company or any other obligor upon the Notes or any Affiliate of the Company or of such other obligor shall be disregarded and deemed not to be Outstanding. In determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Notes which the Trustee actually knows to be so owned shall be so disregarded. "OUTSTANDING AMOUNT" of any Indebtedness at any time means the principal amount outstanding of such Indebtedness at such time. "PAYING AGENT" means any Person now or hereafter authorized by the Company to pay the principal of or interest on any Notes on behalf of the Company. "PERMITS" has the meaning stated in Section 1.01 of the Mortgage. "PERMITTED ENCUMBRANCES" has the meaning stated in Section 1.01 of the Mortgage. 11 "PERSON" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or any other entity or government or any agency or political subdivision thereof. "PLACE OF PAYMENT" when used with respect to the Notes means a city or any political subdivision thereof in which the Company is by this Indenture required to maintain an office or agency for the payment of the principal of or interest on the Notes. "PLAN" means the Plan of Reorganization of RII and GRI dated [ ], 1994. "PREDECESSOR NOTES" of any particular Note means every previous Note evidencing all or a portion of the same debt as that evidenced by such particular Note; and, for purposes of this definition, any Note authenticated and delivered under Section 3.06 in lieu of a lost, destroyed or stolen Note shall be deemed to evidence the same debt as the lost, destroyed or stolen Note. "PREMISES" has the meaning stated in Granting Clause Third of the Mortgage. "RATABLE BENEFIT" means, for any class or classes of Indebtedness at any time, in proportion to the total Outstanding Amount of such class or classes held by each holder thereof at such time. "REDEMPTION DATE" when used with respect to any Note to be redeemed means the date fixed for such redemption pursuant to this Indenture. 12 "REDEMPTION PRICE" when used with respect to any Note to be redeemed means the price at which it is to be redeemed pursuant to this Indenture. It does not include installments of interest due on or before the Redemption Date. "REGULAR RECORD DATE" for the interest payable on any Interest Payment Date on the Notes means the date specified in the provisions of this Indenture. "RESPONSIBLE OFFICER" means any Vice President, any Assistant Vice President or any other officer or assistant officer of the Trustee assigned by the Trustee to administer its corporate trust matters. "RESTRICTED PAYMENT" means (a) any declaration or payment of any dividend or the making of any distribution to holders of capital stock of RIH or the Company or any Subsidiary of RIH or the Company in respect of such capital stock (other than to RIH or the Company or a direct or indirect wholly owned Subsidiary of RIH or the Company), (b) any purchase, redemption or other acquisition or retirement for value of any capital stock (or warrants, rights or options to acquire any capital stock or Indebtedness convertible into or exchangeable for any capital stock) of RIH or the Company or any Subsidiary of RIH or the Company (other than purchases, redemptions, acquisitions or retirement solely from RIH or the Company or a direct or indirect wholly owned Subsidiary of RIH or the Company); PROVIDED, HOWEVER, that any such purchase, redemption or other acquisition or retirement that is required by the Casino Control Commission or under the Casino Control Act shall not constitute a Restricted Payment. The term "Restricted Payment" also shall not include any loan or advance to RII of all or any portion of the proceeds of the Indebtedness represented by the Working Capital Facility. "RIH" means the person named as "RIH" in the first paragraph of this instrument until a successor entity shall have become such pursuant to the applicable provisions of the Indenture, and thereafter, except to the extent otherwise 13 contemplated by Section 10.02, "RIH" shall mean such successor entity exclusively. "RIH JUNIOR PROMISSORY NOTE" means, collectively, the secured junior promissory note, dated the date hereof, made by RIH in the principal amount of $35,000,000, plus any additional junior promissory notes, issued in connection with the payment of interest accrued on outstanding Junior Mortgage Notes, payable to the order of the Company, a copy of which is attached to the Junior Mortgage Note Indenture as Exhibit A. "RIH SALE" means (a) a consolidation, combination or merger involving RIH and any other Person, (b) a sale, assignment, conveyance or transfer or RIH's interest in the Trust Estate, substantially as an entirety, to any other Person or group of Persons in one transaction or a series of related transactions, or (c) any transaction as a result of which RIH ceases to be a direct or indirect wholly owned Subsidiary of RII; provided, however, that nay of the transactions described in clauses (a), (b), and (c) above shall not constitute an RIH Sale if the other party or parties to the transaction consists of only one or more of the following Persons: the Company provided, further, however, that notwithstanding any other provision of this definition, if the primary effect of any of the aforesaid transactions is the redemption of the Notes, then such transaction shall not be considered to be a RIH Sale. "RIH PROMISSORY NOTE" means the secured promissory note, amended and restated as of the date hereof, made by RIH in the principal amount of $125,000,000 payable to the order of the Company, a copy of which is attached hereto as Exhibit A. "RIHF SENIOR FACILITY" means the senior secured note facility contemplated by the purchase agreement dated as of the date hereof, among the Company, RIH, RII and funds managed by Fidelity Management and Research Company, which allows the Company to borrow up to $20,000,000 in aggregate principal amount through the issuance of RIHF Senior Facility Notes. The term "RIHF SENIOR FACILITY" does not include the Working Capital Facility Guaranty. "RIHF SENIOR FACILITY NOTES" means, collectively, the notes executed and delivered by the Company under the RIHF Senior Facility. "RII" means Resorts International, Inc., a Delaware corporation. "RII MANAGEMENT CONTRACT" means the Management Contract dated as of the date hereof, between RII and RIH 14 pursuant to which RII provides certain management services to RIH for an annual fee of 3% of the gross revenues of RIH. "RII TAX SHARING AGREEMENT" means the Tax Sharing Agreement dated as of the date hereof between RII and RIH pursuant to which (i) RIH will not make any payments to RII or any other Affiliate in respect of taxes, other than to reimburse RII for any cash payments actually made by RII in respect of any federal, state or local income or alternative minimum taxes arising from the earnings or operations of RIH; PROVIDED, HOWEVER, that RIH shall not be required to reimburse RII for cash payments in respect of federal, state or local income or alternative minimum taxes that would not have been owed but for the reduction, if any, of the amount of the consolidated net operating loss carryforwards or consolidated current losses of the affiliated group of which RII is a common parent which resulted from the inclusion in the consolidated return filed for such group for any taxable year ending after the Effective Date of the income of any entity other than RIH, other than income directly attributable to the consummation of the Plan, including but not limited to the transfer of the stock of RIB (as defined in the Plan) and the assets of the U.S. Paradise Island Subsidiaries (as defined in the Plan), and (ii) RIH will be entitled to any refund (plus the interest thereon) of any taxes for which RIH is required to reimburse RII. "SERVICES AGREEMENT" means the Services Agreement dated as of September 17, 1992, between RII, RIH and The Griffin Group, Inc. "SPECIAL RECORD DATE" for the payment of any Defaulted Interest on Notes means a date fixed by the Trustee pursuant to Section 3.07. "STATED MATURITY" when used with respect to any Note means the date specified in such Note as the fixed date on which the principal of such Note is due and payable. "SUBSIDIARY" of any Person means a corporation more than 50% of the outstanding voting stock of which is owned, directly or indirectly, by such Person or one or more Subsidiaries of such Person. "TIA" or "TRUST INDENTURE ACT" means the Trust Indenture Act of 1939, as amended. "TRUSTEE" means the Person named as the "Trustee" in the first paragraph of this instrument until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter Trustee shall mean such successor Trustee. 15 "TRUST ESTATE" has the meaning stated in the Granting Clauses to the Mortgage. "U.S. GOVERNMENT OBLIGATIONS" has the meaning stated in Section 14.01. "U.S. LEGAL TENDER" means such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts, PROVIDED that for purposes of Article Fourteen, U.S. Legal Tender includes wire transfer payable in U.S. Legal Tender. "VICE PRESIDENT" when used with respect to the Company, RIH or the Trustee means any vice president, whether or not designated by a number or a word added to the title. "WORKING CAPITAL FACILITY" means the RIHF Senior Facility (and the RIHF Senior Facility Notes issued thereunder) and any other secured or unsecured facility or facilities entered into by RIH and/or the Company providing for the making of working capital loans to RIH or the Company (with RII [and GRI] as a guarantor[s] thereunder) on a revolving or term basis, or the issuance of notes, debentures or bonds by RIH, the Company or RII, as such agreement may be amended, supplemented or modified from time to time, or any refinancing thereof, in an aggregate principal amount up to $20,000,000; PROVIDED, HOWEVER, that the lender or lenders thereunder (or any trustee or agent acting on behalf of such lender or lenders) shall have executed an intercreditor agreement covering the matters set forth on Exhibit G. The liens, if any, securing the Working Capital Facility may be senior to the lien of the Mortgage, the Guaranty Mortgage, the Junior Mortgage and the Junior Guaranty Mortgage. The term "WORKING CAPITAL FACILITY" does not include the Working Capital Facility Guaranty. "WORKING CAPITAL FACILITY MORTGAGE DOCUMENTS" means any mortgage, deed of trust, guaranty, promissory note, collateral assignment agreement, assignment of leases and rents, assignment of operating assets and any other security document to which either RIH or the Company is a party relating to the Working Capital Facility. "WORKING CAPITAL FACILITY GUARANTY" means any guaranty of the Working Capital Facility by RIH, including, without limitation, the guaranty of the RIHF Senior Facility Notes. Section 1.02. ACTS OF NOTEHOLDERS. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Noteholders may be embodied 16 in and evidenced by one or more instruments of substantially similar tenor signed by such Noteholders in person or by an agent 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 Noteholders 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 Company and (subject to Section 8.01(c)) in favor of the Trustee, if made in the manner provided in this Section 1.02. (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 the certificate of any 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. Whenever such execution is by an officer of a corporation or a member of a partnership on behalf of such corporation or partnership, such certificate or affidavit shall also constitute sufficient proof of his authority. (c) The fact and date of execution of any such instrument or writing and the authority of any Person executing the same may also be proved in any other manner which the Trustee deems sufficient; and the Trustee may in any instance require further proof with respect to any of the matters referred to in this Section 1.02. (d) The ownership of Notes shall be proved by the Note Register. (e) Any request, demand, authorization, direction, notice, consent, waiver or other action by the Holder of any Note shall bind every future Holder of the same Note and the Holder of every Note issued upon the transfer thereof or in exchange therefor or in lieu thereof, in respect of anything done 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 Note. (f) The Company may, in the circumstances permitted by the Trust Indenture Act, set any day as the record date for the purpose of determining the holder of Outstanding Notes entitled to give or take any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by this Indenture to be given or taken by holders of Notes. With regard to any record date set pursuant to this 17 Section 1.02(f) the holders of Outstanding Notes on such record date (or their duly appointed agents), and only such Persons, shall be entitled to give or take the relevant action, whether or not such Persons remain holders after such record date. (g) Until a waiver or consent becomes effective, such waiver or consent by a Holder is a continuing waiver or consent by the Holder and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder's Note, even if notation of the waiver or consent is not made on any Note. However, any such Holder or subsequent Holder may, until such waiver or consent becomes effective, revoke the waiver or consent as to his Note or portion of his Note. Such revocation shall be effective only if the Trustee receives the notice of such revocation before the date on which the waiver or consent has become effective. Section 1.03. NOTICES, ETC., TO TRUSTEE, RIH, THE COMPANY, CASINO CONTROL COMMISSION AND DIRECTOR OF GAMING ENFORCEMENT. (a) Any request, demand, authorization, direction, notice (including, without limitation, a notice of default), consent, waiver or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with, the Company, RIH, the Trustee, the Casino Control Commission or the Director of the Division of Gaming Enforcement be deemed given when either (i) delivered by hand or (ii) two days after sending by registered or certified mail, postage prepaid, in either case, addressed as follows: To the Company: Resorts International Hotel Financing, Inc. c/o Resorts International, Inc. 1133 Boardwalk Atlantic City, New Jersey 08401 Attn.: Secretary To RIH: Resorts International Hotel, Inc. c/o Resorts International, Inc. 1133 Boardwalk Atlantic City, New Jersey 08401 Attn.: Secretary 18 To the Trustee: State Street Bank and Trust Company of Connecticut, National Association 750 Main Street Hartford, Connecticut 06103 Attn.: Corporate Trust Department To Casino Control Commission: New Jersey Casino Control Commission Arcade Building Tennessee Avenue & Boardwalk Atlantic City, New Jersey 08401 Attn.: Chairman To Director of Division of Gaming Enforcement: New Jersey Division of Gaming Enforcement 140 E. Front Street CN 047 Trenton, New Jersey 08625 Attn.: Director (b) By notice to the Company, RIH, the Trustee, Casino Control Commission and/or Director of the Division of Gaming Enforcement, given as provided above, any party may designate additional or substitute addresses for such notices, which, notwithstanding Section 1.03(a), shall be deemed given when received. Section 1.04. NOTICES TO NOTEHOLDERS; WAIVER. Where this Indenture provides for notice to Noteholders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each Holder of such Notes, at the address of such Holder as it appears in the Note Register, not later than the latest date, and not earlier than the earliest date, prescribed for the provision of such notice. In any case where notice to Noteholders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Noteholder shall affect the sufficiency of such notice with respect to other Noteholders. 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 Noteholders 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. 19 In case, by reason of the suspension of regular mail service, or by reason of any other cause, it shall be impracticable to give such notice by mail, then such notification may be given by any other method that the Trustee shall consider to be reasonable and shall be deemed to be a sufficient giving of such notice for every purpose hereunder. Section 1.05. FORM AND CONTENTS OF DOCUMENTS DELIVERED TO TRUSTEE. Whenever 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 such matters in one or several documents. Any certificate or opinion of an Officer of the Company or of RIH may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such Officer knows that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any 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 RIH stating that the information with respect to such factual matters is in the possession of the Company or RIH, unless such counsel knows that the certificate or opinion or representations with respect to such matters are erroneous. If appropriate to the matter being opined upon and to the extent not prohibited by the TIA, any Opinion of Counsel may be subject to rights of creditors and the availability of equitable remedies. Whenever 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. Whenever in this Indenture, in connection with any application or certificate or report to the Trustee, it is provided that the Company or RIH shall deliver any document as a condition of the granting of such application, or as evidence of the Company's or RIH's compliance with any term hereof, it is intended that the truth and accuracy, at the time of the granting of such application or at the effective date of such certificate or report (as the case may be), of the facts and opinions stated in such document shall in such case be conditions precedent to the right of the Company or 20 RIH to have such application granted or to the sufficiency of such certificate or report. Section 1.06. COMPLIANCE CERTIFICATES AND OPINIONS. Upon any application or request by the Company or RIH to the Trustee to take any action under any provision of this Indenture or any Mortgage Document, the Company or RIH shall furnish to the Trustee an Officers' Certificate stating that all conditions precedent, if any, provided for in this Indenture or such Mortgage Document 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 or any Mortgage Document shall include: (a) a statement that each individual signing such certificate or opinion has read such condition or covenant and the definitions herein relating thereto; (b) 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; (c) 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 condition or covenant has been complied with; and (d) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. Section 1.07. CONFLICT WITH TRUST INDENTURE ACT. If any provision hereof or of the Mortgage Documents or the Assignment Agreement limits, qualifies or conflicts with another provision hereof or of the Mortgage Documents or the Assignment Agreement which is required to be included herein or therein by any of the provisions of the TIA, such required provision shall control. 21 Section 1.08. EFFECT OF HEADINGS AND TABLE OF CONTENTS. The Article and Section headings herein and in the Table of Contents are for convenience only and shall not affect the construction hereof. Section 1.09. SUCCESSORS AND ASSIGNS. All covenants and agreements in this Indenture by the Company or RIH shall, subject to Section 10.02, bind its successors and assigns, whether so expressed or not. Section 1.10. SEPARABILITY CLAUSE. In case any provision in this Indenture or in the Notes 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 1.11. BENEFITS OF INDENTURE. Nothing in this Indenture or in the Notes, express or implied, shall give to any Person other than the parties hereto and their successors hereunder, any separate trustee or co-trustee appointed under Section 8.14 and the Holders of Notes, any benefit or any legal or equitable right, remedy or claim under this Indenture. Section 1.12. GOVERNING LAW. This Indenture and each Note shall be deemed to be a contract under the laws of the State of New York and shall be construed in accordance with and governed by the internal laws of the State of New York. Section 1.13. CASINO CONTROL ACT. Each of the provisions of this Indenture is subject to and shall be enforced in compliance with the provisions of the Casino Control Act, unless such provisions are in conflict with the TIA, in which case the TIA shall control. Section 1.14. GENERAL APPLICATION. (a) The assertion of any rights upon any Default shall be subject in each instance to the giving of any notice and the expiration of any grace period provided for in Section 7.01 as a condition to such Default becoming an Event of Default, unless the TIA requires otherwise, in which case the TIA shall control. 22 (b) For the purposes of this Indenture, it is understood that an event which does not materially diminish the value of the Trustee's interest in the Trust Estate shall not be deemed an impairment of security, as that phrase is used in this Indenture. (c) This Indenture may not be used to interpret another indenture, loan or debt agreement of the Company, other than the Mortgage and the Guaranty Mortgage. Any such indenture, loan or debt agreement may not be used to interpret this Indenture. (d) In the event of a conflict between any provision of this Indenture and any provision of a Mortgage Document, the provision of this Indenture shall prevail. ARTICLE TWO NOTE FORM Section 2.01. FORM GENERALLY. The Notes and the Trustee's certificate of authentication shall be substantially in the forms set forth in this Article Two, 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 Notes as evidenced by their execution thereof. Any portion of the text of any Note may be set forth on the reverse thereof. The definitive Notes shall be printed, lithographed or engraved or produced by any combination of these methods or produced in any other manner permitted by the rules of any securities exchange on which the Notes may be listed, all as determined by the officers executing such Notes as evidenced by their execution thereof. 23 Section 2.02. FORM OF NOTES. The form of the Notes shall be substantially as follows: [Face of Notes] RESORTS INTERNATIONAL HOTEL FINANCING, INC. 11% MORTGAGE NOTE DUE 2003 No.______________ $________________ Resorts International Hotel Financing, Inc., a Delaware corporation (hereinafter called the "Company", which term includes any successor entity under the Indenture referred to on the reverse), for value received, hereby promises to pay to ______________, or registered assigns, on September 15, 2003 the sum of __________ Dollars (or so much thereof as shall not have been paid upon prior redemption) and to pay interest (computed on the basis of a 360-day year of twelve 30-day months based on the actual number of days elapsed) thereon from [ ], 1994 [the Effective Date], or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually at March 15 and September 15 in each year (commencing September 15, 1994), at the rate of 11% per annum, until the principal hereof is paid or made available for payment. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in said Indenture, be paid to the Person in whose name this Note (or one or more Predecessor Notes) is registered at the close of business on the Regular Record Date for such interest, which shall be the first day (whether or not a business day) of the calendar month of 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 may be paid to the Person in whose name this Note (or one or more Predecessor Notes) 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 thereof being given to Noteholders not less than ten 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 Notes of this series may be listed and upon such notice as may be required by such exchange, all as more fully provided in said Indenture. The principal of and interest on this Note shall be payable at the corporate trust office of the Trustee, as defined on the reverse, or at an office or agency of the Company in the Borough of Manhattan, City and State of New York. All such payments shall be made in such coin or 24 currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. At the option of the Company, payment of interest may be made by check mailed to the address of the Person entitled thereto as such address shall appear on the Note Register. Unless the certificate of authentication hereon has been executed by the Trustee or the Authenticating Agent by manual signature, this Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. THIS NOTE SHALL BE DEEMED TO BE A CONTRACT UNDER THE LAWS OF THE STATE OF NEW YORK AND SHALL BE CONSTRUE IN ACCORDANCE WITH AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK. IN WITNESS WHEREOF, the Company has caused this Note to be executed. RESORTS INTERNATIONAL HOTEL FINANCING, INC. Dated: ______________________ By:________________________ Attest:______________________ [Back of Notes] This Note is one of a duly authorized issue of Notes of the Company designated as "11% Mortgage Notes due 2003" (the "Notes"), issued under an Indenture dated as of __________ __, 1994 (the "Indenture"), among the Company, Resorts International Hotel, Inc., a New Jersey corporation, as guarantor ("RIH"), and State Street Bank and Trust Company of Connecticut, National Association, a national banking association, as Trustee (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 description of the nature and extent of the security, the respective rights thereunder of the Holders of the Notes, the Trustee and the Company and the terms upon which the Notes are, and are to be, authenticated and delivered. Payment of principal and interest (including interest on overdue principal) and performance of all obligations under the Indenture is guaranteed by RIH (the "Guaranty"). The Notes are secured by an assignment of one or more secured senior promissory notes of RIH, which owns and 25 operates the property known as Merv Griffin's Resorts Casino Hotel, and of a mortgage on the Trust Estate made by RIH (the "Mortgage"). Additionally, the Guaranty is secured by a separate direct mortgage of the Trust Estate made by RIH to the Trustee (the "Guaranty Mortgage"). All terms in this Note defined in the Indenture shall have the same meaning herein as therein. The lien of the Mortgage is pari passu with the lien of the Guaranty Mortgage, junior to the lien securing payment of the RIHF Senior Facility Notes and any other secured Working Capital Facility and junior to the lien (if any) securing the Working Capital Facility Guaranty. The Notes may be redeemed at the option of the Company, as a whole or from time to time in part, on or after the fifth anniversary of the Effective Date on notice as provided in the Indenture, at par together with interest accrued and unpaid thereon to the date fixed for redemption. In the event of an RIH Sale, all the Notes shall be redeemed by the Company, whether such RIH Sale occurs before, on or after the fifth anniversary of the Effective Date, at par together with interest, if any, accrued and unpaid thereon to the Redemption Date; PROVIDED, HOWEVER, that such obligation of the Company to redeem the Notes in the event of a proposed RIH Sale shall cease to exist if the Holders of not less than 66-2/3% in Outstanding Amount of the Outstanding Notes have consented to such proposed RIH Sale. Notwithstanding the foregoing, each Holder by accepting a Note agrees that if the Casino Control Commission does not waive the qualification requirement as to the Holder (whether the record owner or beneficial owner) of this Note and requires that the Holder be qualified under the Casino Control Act, then, in such event, the Holder must qualify under the Casino Control Act. If the Holder does not so qualify, the Holder must dispose of its interest in this Note, within 30 days after the Company's receipt of notice of such finding, or the Company may repurchase this Note at the lower of the Holder's original cost and the Fair Market Value of this Note, plus accrued interest thereon to the date of such repurchase. Commencing on the date the Casino Control Commission serves notice upon either RIH or the Company that any Holder is disqualified, it shall be unlawful for any such disqualified Holder: (i) to receive any dividends or interest upon this Note; (ii) to exercise, directly or through any trustee or nominee, any right conferred by this Note; or (iii) to receive any remuneration in any form from either the Company or RIH for services rendered or otherwise. It is provided in the Indenture that Notes of a denomination larger than $1,000 may be redeemed in part ($1,000 or a multiple thereof) and that upon any partial 26 redemption of any such Note the same shall be surrendered in exchange for one or more new Notes in authorized form for the unredeemed portion of principal. Notes (or portions thereof as aforesaid) for whose redemption and payment provision is made in accordance with the Indenture shall thereupon cease to be entitled to the lien of the Indenture and the Mortgage and shall cease to bear interest from and after the date fixed for redemption. If an Event of Default shall occur, the principal of the Notes and all accrued and unpaid interest thereon may become or be declared due and payable in the manner and with the effect provided in the Indenture. The Indenture permits, with certain exceptions as therein provided, the amendment thereto and the modification of the rights and obligations of the Company and the rights of the Holders of the Notes under the Indenture at any time by the Company with the consent of the Holders of a majority or 66-2/3%, as the case may be, in aggregate Outstanding Amount of the Notes at the time Outstanding affected by such modification. The Indenture also contains provisions permitting the Holders of specified percentages in Outstanding Amount of Notes at the time Outstanding on behalf of the Holders of all the Notes to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Note shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note issued upon the transfer hereof or in exchange hereof or in lieu hereof, in respect of anything done or offered to be done by the Trustee in the Company in reliance thereon, whether or not notation of such action is made upon this Note. The Company may, in the circumstances permitted by the Trust Indenture Act, set any day as the record date for the purpose of determining the holders of Outstanding Notes entitled to give or take any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by the Indenture to be given or taken by holders of Notes. With regard to any such record date, the holders of Outstanding Notes on such record date (or their duly appointed agents), and only such Persons, shall be entitled to give or take the relevant action, whether or not such Persons remain holders after such record date. No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and interest on this Note at the times, places and rates, and in the coin or currency, herein prescribed. 27 As provided in the Indenture and subject to certain limitations therein set forth, this Note is transferable on the Note Register of the Company, upon surrender of this Note for transfer at the corporate trust office of the Trustee, or at an office or agency of the Company in the Borough of Manhattan, City and State of New York, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Note Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Notes, of authorized denominations and for the same aggregate principal amount will be issued to the designated transferee or transferees. The Notes are issuable only as registered Notes without coupons in denominations of $1,000 and integral multiples thereof. As provided in the Indenture, and subject to certain limitations therein set forth, Notes are exchangeable for a like aggregate principal amount of Notes of a different authorized denomination, as requested by the Holder surrendering the same. No service charge shall be made for any transfer or exchange hereinbefore referred to, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. The Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Note is registered as the owner hereof for the purpose of receiving payment as herein provided and for all other purposes, whether or not this Note be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. Section 2.03. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION. This is one of the Notes referred to in the within-mentioned Indenture. STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, as Trustee By:__________________________ Authorized Signature 28 Section 2.04. FORM OF THE GUARANTY. The form of the Guaranty of RIH shall be substantially as follows and shall appear on the reverse of each Note: GUARANTY OF RESORTS INTERNATIONAL HOTEL, INC. For value received, Resorts International Hotel, Inc., a New Jersey corporation, hereby unconditionally guarantees, as more fully set forth in Article Four of the Indenture, to the Holder of this Note the payment of the principal of and interest on this Note in the amounts and at the time when due and interest on the overdue principal and interest, if any, of this Note, if lawful, and the payment or performance of all other obligations of the Company to the Holder or the Trustee, all in accordance with and subject to the terms and limitations of this Note and Article Four of the Indenture, the foregoing Guaranty being a guaranty of payment and not of collectibility and being absolute and in no way conditional or contingent. This Guaranty will not become effective until the Trustee or the Authenticating Agent signs the certificate of authentication on such Note. As more fully described in the Indenture, this Guaranty is secured by a mortgage of the Trust Estate made by RIH to the Trustee. RESORTS INTERNATIONAL HOTEL, INC. Dated:__________________________ By:_______________________________ Attest:_________________________ ARTICLE THREE THE NOTES Section 3.01. GENERAL TITLE. The general title of the Notes shall be "11% Mortgage Notes due 2003". 29 Section 3.02. FORM AND DENOMINATIONS. The form of the Notes shall be as provided by the provisions of this Indenture. The Notes shall be issuable only in registered form and in such denominations as shall be provided in the provisions of this Indenture. The Notes shall be of the denominations of $1,000 and any integral multiple thereof. Section 3.03. EXECUTION, AUTHENTICATION, DELIVERY AND DATING. The Notes shall be executed on behalf of the Company by its chairman of the board, vice chairman of the board, its president, or one of its Vice Presidents and attested to by an Officer of the Company other than an Officer who has executed the Notes. The signature of any of these Persons on the Notes may be manual or facsimile. Notes bearing the manual or facsimile signatures of individuals who were at any time Officers of the Company shall bind the Company, notwithstanding that such individuals or any of them shall have ceased to be such prior to the authentication and delivery of such Notes. At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Notes executed by the Company to the Trustee for authentication and the Trustee shall authenticate and deliver such Notes as in this Indenture provided and not otherwise. All Notes shall be dated the date of their authentication. No Note shall be secured by, or be entitled to any lien, right or benefit under, this Indenture or be valid or obligatory for any purpose, unless there appears on such Note a certificate of authentication substantially in the form provided for herein, executed by the Trustee or the Authenticating Agent by manual signature, and such certificate upon any Note shall be conclusive evidence, and the only evidence, that such Note has been duly authenticated and delivered hereunder. Section 3.04. TEMPORARY NOTES. Pending the preparation of definitive Notes, the Company may execute, and upon Company Request the Trustee shall authenticate and deliver, temporary Notes which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any denomination, substantially of the tenor of the definitive Notes in lieu of which they are issued, in registered form, without coupons, with provision for registration as to principal and with such appropriate insertions, omissions, substitutions and other variations as 30 the Officers executing such Notes may determine, as evidenced by their execution of such Notes. If temporary Notes are issued, the Company will cause definitive Notes to be prepared without unreasonable delay. After the preparation of definitive Notes, the temporary Notes shall be exchangeable for definitive Notes upon surrender of the temporary Notes at the office or agency of the Company in a Place of Payment therefor, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Notes, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a like principal amount of definitive Notes of authorized denominations. Until so exchanged, temporary Outstanding Notes shall in all respects be entitled to the security and benefits of this Indenture. Section 3.05. REGISTRATION, TRANSFER AND EXCHANGE. The Company shall cause to be kept at one of the offices or agencies maintained by the Company as provided in Section 12.02 a register (herein sometimes referred to as the "Note Register") in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Notes and registration of transfers of Notes entitled to be registered or transferred as herein provided. The Trustee is hereby appointed "Note Registrar" for the purpose of registering Notes and transfers of Notes as herein provided. Upon surrender for transfer of any Note at the office or agency of the Company in a Place of Payment therefor, the Company shall execute and, upon request of the Company, the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Notes of any authorized denominations and of a like aggregate principal amount. The Trustee has no obligation to determine that any Note has been properly transferred and may conclusively rely on instructions given by the Company pursuant to this Section 3.05. All Notes surrendered upon any exchange or transfer provided for in this Indenture shall be promptly canceled by the Trustee and thereafter disposed of as directed by a Company Request. All Notes issued upon any transfer or exchange of Notes shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same security and benefits under this Indenture, as the Notes surrendered upon such transfer or exchange. 31 Every Note presented or surrendered for transfer, exchange or discharge from registration shall (if so required by the Company or the Note Registrar) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Note Registrar duly executed, by the Holder thereof or his attorney duly authorized in writing. No service charge shall be made for any registration, discharge from registration, transfer or exchange of Notes, 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 transfer or exchange of Notes, other than exchanges under Section 3.04 or 11.06 not involving any transfer. The Company shall not be required (i) to issue, transfer or exchange any Note during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption of Notes under Section 13.04 and ending at the close of business on the day of such mailing, or (ii) to transfer or exchange any Note so selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part. Section 3.06. MUTILATED, DESTROYED, LOST AND STOLEN NOTES. If (a) any mutilated Note is surrendered to the Trustee, or the Company and the Trustee receive evidence to their satisfaction of the destruction, loss or theft of any Note and (b) 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 Note has been acquired by a bona fide purchaser, the Company shall execute and upon its request the Trustee shall authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Note, a new Note of like tenor and principal amount, bearing a number not contemporaneously outstanding. In case any such mutilated, destroyed, lost or stolen Note has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Note, pay such Note. Upon the issuance of any new Note under this Section 3.06, 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 connected therewith. 32 Every new Note issued pursuant to this Section 3.06 in lieu of any destroyed, lost or stolen Note shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Note shall be at any time enforceable by anyone, and shall be entitled to all the security and benefits of this Indenture equally and ratably with all other Notes. The provisions of this Section 3.06 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 Notes. Section 3.07. PAYMENT OF INTEREST ON NOTES; INTEREST RIGHTS PRESERVED. Interest on any Note 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 that Note (or one or more Predecessor Notes) is registered at the close of business on the Regular Record Date for such interest specified in the provisions of this Indenture. Any interest on any Note which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date ("Defaulted Interest") shall forthwith cease to be payable to the Holder on the relevant Regular Record Date solely by virtue of such Holder having been such Holder; and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in subsection (a) or (b) below: (a) The Company may elect to make payment of any Defaulted Interest on the Notes to the Persons in whose names such Notes (or their respective Predecessor Record Date for the payment of such Defaulted Interest Notes) are registered at the close of business on a Special, 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 Note and the date of the proposed payment (which date shall be such as will enable the Trustee to comply with the next sentence hereof), 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 provided in this subsection (a) and not to be deemed part of the Trust Estate. Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which 33 shall be not more than 15 nor less than ten days prior to the date of the proposed payment and not less than ten 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 mailed, first-class postage prepaid, to each Holder of a Note at his address as it appears in the Note Register not less than ten days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been mailed as aforesaid, such Defaulted Interest shall be paid to the Persons in whose names the Notes (or their respective Predecessor Notes) are registered on such Special Record Date and shall no longer be payable pursuant to subsection (b) of this Section 3.07. (b) The Company may make payment of any Defaulted Interest on the Notes in any other lawful manner not inconsistent with the requirements of any securities exchange in which the Notes 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 subsection (b), such payment shall be deemed practicable by the Trustee. Subject to the foregoing provisions of this Section 3.07, each Note delivered under this Indenture upon transfer of or in exchange for or in lieu of any other Note shall carry all the rights to interest accrued and unpaid, and to accrue, which were carried by such other Note. Section 3.08. PERSONS DEEMED OWNERS. The Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name any Note is registered as the owner of such Note for the purpose of receiving payment of principal of, and interest on, such Note and for all other purposes whatsoever whether or not such Note be overdue, and, to the extent permitted by law, neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. Section 3.09. CANCELLATION. All Notes surrendered for payment, redemption, transfer, exchange or conversion, if surrendered to the Trustee, shall be promptly canceled by it, and, if surrendered to any Person other than the Trustee, shall be delivered to the Trustee and, if not already canceled, shall be promptly canceled by it. The Company shall deliver to the Trustee for 34 cancellation any Notes previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever, and all Notes so delivered shall be promptly canceled by the Trustee. No Note shall be authenticated in lieu of or in exchange for any Note canceled as provided in this Section 3.09, except as expressly provided by this Indenture. All canceled Notes held by the Trustee shall be disposed of as directed by a Company Request. Section 3.10. TERM AND FORM. The Stated Maturity of the Notes shall be September 15, 2003. The aggregate principal amount of Notes that may be authenticated, delivered and outstanding is limited to $125,000,000. The Notes shall bear interest from [ ], 1994 [the Effective Date] or from the most recent Interest Payment Date to which interest has been paid or duly provided for, payable semi-annually on March 15 and September 15 each year, commencing September 15, 1994. The Notes shall bear interest at the rate of 11% per annum until the principal thereof shall become due and payable, and at the rate of 14% per annum on any overdue principal and, to the extent permitted by law, overdue interest. Interest shall be computed on the basis of a 360-day year of twelve 30-day months based on the actual number of days elapsed. The principal and the Redemption Price of the Notes and interest on the Notes on each Interest Payment Date shall be payable at a Place of Payment, and, in addition to any other lawful means of such payment, may be paid by check payable to the order of the Noteholder. The Regular Record Date referred to in Section 3.07 for the payment of the interest on the Notes payable, and punctually paid or duly provided for, on any Interest Payment Date shall be the first day (whether or not a business day) of the calendar month of such Interest Payment Date. Section 3.11. EXCHANGEABILITY. Subject to Section 3.05, all Notes shall be fully interchangeable with other Notes, and, upon surrender at the office or agency of the Company in a Place of Payment therefor, all Notes shall be exchangeable for other Notes of a different authorized denomination or denominations, as requested by the Holder surrendering the same. The Company will execute, and the Trustee shall authenticate and deliver, Notes whenever the same are required for any such exchange. Section 3.12. REDEMPTION. The Company may, at its option, redeem, in accordance with Article Thirteen, all or from time to time any 35 part of the Notes on or after the fifth anniversary of the Effective Date, at par together, in each case, with interest, if any, accrued and unpaid thereon to the Redemption Date. In the event of an RIH Sale, all the Notes shall be redeemed by the Company whether such RIH Sale occurs before, on or after the fifth anniversary of the Effective Date, at par together with interest, if any, accrued and unpaid thereon to the Redemption Date; PROVIDED, HOWEVER, that such obligation of the Company to redeem the Notes in the event of a proposed RIH Sale shall cease to exist if the Holders of not less than 66-2/3% in Outstanding Amount of the Outstanding Notes have consented to such proposed RIH Sale. Section 3.13. AUTHENTICATION AND DELIVERY OF ORIGINAL ISSUE. Forthwith upon the execution and delivery of this Indenture, Notes up to an aggregate principal amount of $125,000,000 may be executed by the Company and delivered to the Trustee for authentication, and shall thereupon be authenticated and delivered by the Trustee upon Company Order, without any further action by the Company. ARTICLE FOUR GUARANTY Section 4.01. GUARANTY. RIH hereby guarantees (such guaranty to be referred to herein as the "Guaranty") to each Holder of a Note 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 Notes or the obligations of the Company hereunder or thereunder, that: (a) the principal of and interest on the Notes will be promptly paid in the amounts and at the times when due, whether at the maturity or Interest Payment Date, by acceleration, call for redemption or otherwise, and interest on the overdue principal, if any, of the Notes, and all other obligations of the Company to the Holders or the Trustee hereunder or thereunder will be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and (b) in case of any extension of time of payment or renewal of any Notes or payment or performance of any of such other obligations, that 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 for whatever reason, RIH will be obligated to pay the same immediately. RIH hereby agrees that its obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Notes or 36 this Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Notes with respect to any provisions hereof or thereof, any releases of collateral, any delays in obtaining or realizing upon or failures to obtain or realize upon collateral, the recovery of any judgment against the Company, any action to enforce the same or any other circumstances which might otherwise constitute a legal or equitable discharge or defense of a guarantor. This Guaranty is a guaranty of payment and not of collectibility, and is secured by the Guaranty Mortgage, as described therein. RIH hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest, notice and all demands whatsoever and covenants that this Guaranty will not be discharged except by complete performance of the obligations contained in the Notes and this Indenture. If any Noteholder or the Trustee is required by any court or otherwise to return to either RIH or the Company, or any custodian, trustee, liquidator or other similar official acting in relation to either RIH or the Company, any amount paid by either RIH or the Company to the Trustee or such Noteholder, this Guaranty, to the extent theretofore discharged, shall be reinstated in full force and effect. RIH agrees that it shall not be entitled to, and hereby irrevocably waives, any right of subrogation in relation to the Company in respect of any obligations guaranteed hereby. RIH further agrees that, as between RIH, on the one hand, and the Holders and the Trustee, on the other hand, (i) the maturity of the obligations guaranteed hereby may be accelerated as provided in Section 7.02 for the purposes of this Guaranty, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (ii) in the event of any declaration of acceleration of such obligations as provided in Section 7.02, such obligations (whether or not due and payable) shall forthwith become due and payable by RIH for the purpose of this Guaranty. Section 4.02. EXECUTION AND DELIVERY OF GUARANTY. To evidence its Guaranty set forth in Section 4.01, RIH hereby agrees to execute its Guaranty substantially in the form set forth in Section 2.04, to be endorsed on each Note authenticated and delivered by the Trustee and that this Indenture shall be executed on behalf of RIH by an Authorized Signature. RIH hereby agrees that its Guaranty set forth in Section 4.01 shall remain in full force and effect notwithstanding any failure to endorse on each Note a notation of such Guaranty; PROVIDED, HOWEVER, that the Trustee or the 37 Authenticating Agent has signed the certificate of authentication on such Note. If an Officer whose signature is on this Indenture no longer holds that office at the time the Trustee authenticates a Note on which a Guaranty is endorsed, the Guaranty shall be valid nevertheless. The delivery of any Note by the Trustee, after the authentication thereof hereunder, shall constitute due delivery of the Guaranty set forth in this Indenture on behalf of RIH. Section 4.03 MORTGAGE SECURING GUARANTY. In order to secure the due and punctual payment of all amounts which may ever become owing under the Guaranty, when and as the same shall be due and payable, and performance of all other obligations of RIH to the Holders or the Trustee under the Guaranty, according to the terms hereof, RIH has mortgaged and encumbered all of its right, title and interest in and to the Trust Estate to the Trustee pursuant to the Guaranty Mortgage. RIH has the full right, power and authority to grant, bargain, sell, release, convey, hypothecate, assign, mortgage, pledge, transfer and confirm the property constituting the Trust Estate, in the manner and form done, or intended to be done, in the Guaranty Mortgage, free and clear of all liens, pledges, charges and encumbrances, whatsoever, except for the items described in clauses (a) through (d) (inclusive) of Section 12.13, and (a) will forever warrant and defend the title to the same against the claims of all Persons whatsoever in accordance with the terms of the Guaranty Mortgage, (b) will execute, acknowledge and deliver to the Trustee such further instruments as the Trustee may require or request, and (c) will do or cause to be done all such acts and things as may be reasonably necessary or proper, or as may be required by the Trustee (other than obtaining a loan title insurance policy or title policy endorsement pertaining to the Guaranty Mortgage), to assure and confirm to the Trustee its interest in the Trust Estate and the right, title and interest in and to the Guaranty Mortgage, so as to render the same available for the security and benefit of this Guaranty secured thereby, according to the intent and purposes herein expressed. The Guaranty Mortgage creates and vests in the Trustee a direct and valid lien, which lien is senior to the lien securing payment of the Junior Mortgage Facility, senior to any lien securing the Junior Guaranty, PARI PASSU with the lien of the Mortgage, junior to the lien securing payment of the RIHF Senior Facility Notes and any other secured Working Capital Facility and junior to any lien securing the Working Capital Facility Guaranty. To the extent that any security interest in the Trust Estate or the Guaranty Mortgage is deemed to be 38 granted and to be governed by the Uniform Commercial Code, the Guaranty Mortgage is deemed to be a security agreement. ARTICLE FIVE SATISFACTION AND DISCHARGE Section 5.01. PAYMENT OF INDEBTEDNESS; SATISFACTION AND DISCHARGE OF INDENTURE. Whenever the following conditions exist, namely: (a) all Notes theretofore authenticated and delivered have been canceled by the Trustee or delivered to the Trustee for cancellation, excluding, however, (1) Notes for the payment of which money has theretofore been deposited in trust with the Trustee or a Paying Agent (other than the Company) or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust as provided in Section 12.03, (2) Notes alleged to have been destroyed, lost or stolen which have been replaced or paid as provided in Section 3.06, except for any such Note which, prior to the satisfaction and discharge of this Indenture, has been presented to the Trustee with a claim of ownership and enforceability by the Holder thereof and where enforceability has not been determined adversely against such Holder by a court of competent jurisdiction, and (3) other than any Notes excluded by clauses (1) and (2) of this Section 5.01(a), Notes which have become due and payable, Notes which will become due and payable at their Stated Maturity within one year and Notes which have been or 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, provided the Company, in the case of such Notes, has deposited or caused to be deposited with the Trustee in trust for the purpose an amount sufficient to pay and discharge the entire indebtedness on such Notes for principal and interest to the date of maturity thereof in the case of Notes which have become due and payable or to the Stated Maturity or Redemption Date, as the case may be; 39 (b) the Company or RIH has paid or caused to be paid all other sums payable hereunder by the Company; and (c) the Company or RIH has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each of which shall state that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with; then this Indenture and the lien, rights and interests created hereby shall cease, terminate and become null and void (except as to any surviving rights of transfer or exchange of Notes herein or therein provided for and any right to receive payments of principal and interest as provided in Section 5.01(a)(3)) and the Trustee and each co-trustee and separate trustee, if any, then acting as such hereunder shall, at the expense of the Company, execute and deliver a termination statement prepared by the Company in form reasonably satisfactory to the Trustee and such instruments of satisfaction and discharge as may be necessary and pay, assign, transfer and deliver to the Company or upon Company Order all cash, securities and other personal property then held by it hereunder, other than pursuant to Section 5.01(a)(3). In the absence of satisfaction of all of the above conditions, the payment of all Outstanding Notes shall not render this Indenture inoperative. Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Section 8.07 shall survive. Section 5.02. APPLICATION OF DEPOSITED MONEY. Money deposited with the Trustee pursuant to Section 5.01 shall constitute a separate trust fund for the benefit of the Persons entitled thereto. Subject to the provisions of Section 12.03, such money shall be applied by the Trustee to the payment (either directly or through any Paying Agent, as the Trustee may determine) to the Persons entitled thereto, of the principal and interest for whose payment such money has been deposited with the Trustee. Section 5.03. REPAYMENT TO THE COMPANY. The Trustee and any Paying Agent shall promptly pay to the Company upon request any excess money or securities held by them at any time. 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, or interest on, any Note and remaining unclaimed for two years 40 after such principal or interest has become due and payable shall be paid to the Company on its request, or (if then held by the Company) shall be dis- charged from such trust, unless otherwise required by mandatory provisions of applicable escheat or abandoned or unclaimed property law, and the Holder of such Note 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 regard to such 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 ex- pense 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 City of new York, State of New York, or mailed to each such Holder, or both, 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 or mailing, as the case may be, any unclaimed balance of such money then remaining will be paid to the Company. ARTICLE SIX SECURITY Section 6.01. ASSIGNMENT AGREEMENT. In order to secure the due and punctual payment of the principal of and interest on the Notes, when and as the same shall be due and payable, whether at Maturity or at an Interest Payment Date, by acceleration, call for redemption or otherwise, of the Notes and performance of all other obligations of the Company to the Holders or the Trustee under this Indenture, according to the terms hereof, the Company has made an assignment of all of its right, title and interest in and to the Mortgage Documents (other than the Guaranty Mortgage) to the Trustee pursuant to the Assignment Agreement. RIH has the full right, power and authority to grant, bargain, sell, release, convey, hypothecate, assign, mortgage, pledge, transfer and confirm the property constituting the Trust Estate, in the manner and form done, or intended to be done, in the Mortgage Documents, and the Company has the full right, power and authority to grant, bargain, sell, release, re-convey, assign, transfer and confirm, absolutely, all of its right, title and interest in and to the Mortgage Documents, in each case free and clear of all liens, pledges, charges and encumbrances, whatsoever, except for the items described in clauses (a) through (d) (inclusive) of Section 12.13, and (a) each will forever warrant and defend the title to the same 41 against the claims of all persons whatsoever in accordance with the terms of the Mortgage Documents and the Assignment Agreement, (b) each will execute, acknowledge and deliver to the Trustee such further assignments, transfers, assurances or other instruments as the Trustee may require or request, and (c) each will do or cause to be done all such acts and things as may be reasonably necessary or proper, or as may be required by the Trustee, to assure and confirm to the Trustee its interest in the Trust Estate and the right, title and interest in and to the Mortgage Documents, so as to render the same available for the security and benefit of this Indenture and of the Notes secured hereby, according to the intent and purposes herein expressed. The Mortgage Documents (other than the Guaranty Mortgage) and the Assignment Agreement together create and vest in the Trustee a direct and valid lien, which is PARI PASSU with the Guaranty Mortgage, junior to the lien securing payment of the RIHF Senior Facility Notes and any other secured Working Capital Facility and junior to any lien securing payment of the Working Capital Facility Guaranty, on the property constituting the Trust Estate and the interest in the Mortgage Documents which they purport to create. To the extent that any security interest in the Trust Estate or the Mortgage Documents are deemed to be granted and to be governed by the Uniform Commercial Code, the Mortgage and the Assignment Agreement are deemed to be security agreements. Section 6.02. RECORDING, ETC. The Company will cause, at its own expense, the Assignment Agreement, the Mortgage Documents, this Indenture and all amendments or supplements thereto, to be registered, recorded and filed and/or re-recorded, refiled and renewed in such manner and in such place or places, if any, as may be required by law in order fully to preserve and protect the lien of the Mortgage Documents and the Assignment Agreement on all parts of the Trust Estate and the Mortgage Documents and the interest in the RIH Promissory Note and to effectuate and preserve the security of the Noteholders and all rights of the Trustee. The Company shall furnish to the Trustee: (a) promptly after the execution and delivery of this Indenture or other instrument of further assurance or amendment, including any supplemental indenture, an Opinion or Opinions of Counsel either (1) stating that, in the opinion of such counsel, this Indenture, the Mortgage Documents and the assignment to the Trustee of the Mortgage Documents intended to be made by the Assignment Agreement and all other instruments of further assurance or amendment have been properly recorded, registered and filed to the extent necessary to make effective the liens intended to be created by the 42 Mortgage Documents and the Assignment Agreement, and reciting the details of such action or referring to prior Opinions of Counsel in which such details are given, and stating that as to the Mortgage Documents and the Assignment Agreement such recording, registering and filing are the only recordings, registerings and filings necessary to give notice thereof and that no re-recordings, re-registerings or re-filings are necessary to maintain such notice, and further stating that all financing statements and continuation statements have been executed and filed that are necessary fully to preserve and protect the rights of the Noteholders and the Trustee hereunder and under the Mortgage Documents and the Assignment Agreement, or (2) stating that, in the opinion of such counsel, no such action is necessary to make such liens and assignments effective; and (b) within 60 days after June 30 in each year beginning with the year 1995, an Opinion or Opinions of Counsel, dated as of such date, either (1) stating that, in the opinion of such counsel, such action has been taken with respect to the recording, registering, filing, re-recording, re-registering and re-filing of all supplemental indentures, financing statements, continuation statements or other instruments of further assurance as is necessary to maintain the liens of the Mortgage Documents and the assignment of the Mortgage Documents to the Trustee made by the Assignment Agreement and reciting the details of such action or referring to prior Opinions of Counsel in which such details are given, and stating that all financing statements and continuation statements have been executed and filed that are necessary fully to preserve and protect the rights of the Noteholders and the Trustee hereunder and under the Mortgage Documents and the Assignment Agreement, or (2) stating that, in the opinion of such counsel, no such action is necessary to maintain such liens and assignments. The Company and RIH shall cause TIA SECTION 314(d) relating to the release of property from the liens of the Mortgage to be complied with. Any certificate or opinion required by TIA SECTION 314(d) may be made by an Officer of the Company or RIH, unless otherwise required by TIA SECTION 314(d). Section 6.03. CUSTODY OF MORTGAGE DOCUMENTS. The Trustee shall hold in its possession the Mortgage Documents, except as it from time to time may be required for actions, suits or proceedings relating to the Mortgage Documents or for the purpose of enforcing or realizing upon any right or value thereby represented. The Trustee may, from time to time, in its sole discretion, for 43 the purpose of convenient location of the Mortgage Documents, appoint one or more agents to hold physical custody, for the account of the Trustee, of the Mortgage Documents. Section 6.04. SUITS TO PROTECT THE TRUST ESTATE AND MORTGAGE DOCUMENTS. Upon five days' prior written notice to the Company (or such shorter period or without notice if deemed necessary and appropriate by the Trustee), the Trustee shall have the power, but not the obligation to institute and to maintain such suits and proceedings as it may deem necessary or appropriate to prevent any impairment of the Trust Estate by any acts which may be unlawful or in violation of the Mortgage Documents, the Assignment Agreement or this Indenture, and such suits and proceedings as the Trustee may deem necessary or appropriate to preserve or protect its interest and the interests of the Noteholders in the Trust Estate and the Mortgage Documents and the principal, interest, issues, 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 result in an impairment of security hereunder or be materially prejudicial to the interests of the Noteholders or of the Trustee). The Trustee shall also have authority to exercise any rights or powers conferred on the Trustee as the holder of the Note. ARTICLE SEVEN REMEDIES Section 7.01. EVENTS OF DEFAULT. "EVENT OF DEFAULT", whenever used herein, means any one of the following events (including any applicable notice requirement and any period of grace as specified in this Section 7.01) (whatever the reason for such event 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): (a) default in the payment of any interest upon any Note when such interest becomes due and payable and continuance of such default (the deposit with the Trustee pursuant to Section 3.07 of funds sufficient to make such interest payment in full being deemed to cure any such 44 default for the purposes hereof) for a period of ten days; or (b) default in the payment of all or any portion of the principal of any Note at its Maturity; or (c) default in the performance or breach of any covenant of the Company or RIH in this Indenture (other than a covenant a default in the performance or breach of which is elsewhere in this Section 7.01 specifically dealt with), the Assignment Agreement or any of the Mortgage Documents and continuance of such default or breach for a period of 30 days (or such shorter or longer cure period, if any, as may be specified in respect of such default or breach in the Assignment Agreement or the applicable Mortgage Document, as the case may be), and (other than with respect to Sections 12.07, 12.08, 12.09, 12.10, 12.11, 12.12, 12.13 or 12.21) after there has been given (i) to the Company by the Trustee or (ii) to the Company and the Trustee by the Holders of at least 25% in Outstanding Amount of the Outstanding Notes, 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; PROVIDED, HOWEVER, that, if such default or breach is of a covenant set forth in Section 12.02, 12.04, 12.05, 12.11, 12.13 or 12.21, and if such default or breach is of such a nature that is curable but is not susceptible of being cured with due diligence within such 30-day period (or such shorter or longer cure period) (for reasons other than lack of funds), then such period shall be extended for such further period of time as may reasonably be required to cure such default or breach, so long as (i) RIH delivers an Officers' Certificate to the Trustee within such period stating (A) the applicability of the provisions of this proviso to such default or breach, (B) the Company's or RIH's intention to remedy such default or breach with reasonable diligence and (C) the steps which the Company or RIH has undertaken to remedy such default or breach, and (ii) RIH delivers to the Trustee additional Officers' Certificates every 30 days thereafter updating the information contained in the certificate described in clause (i) above, in which case such period shall be extended for such further period of time as may reasonably be required to cure such default or breach, provided that the Company or RIH is then proceeding and thereafter continues to proceed to cure such default or breach with reasonable diligence; PROVIDED FURTHER, HOWEVER, that such additional period of time shall not in any case exceed 60 days; or (d) a proceeding or case shall be commenced, without the application or consent of the Company or RIH, 45 in any court of competent jurisdiction, seeking (i) its liquidation, reorganization, dissolution or winding-up, or the composition or readjustment of its debts, (ii) the appointment of a trustee, receiver, custodian, liquidator or the like of the Company or RIH or of all or any substantial part of its assets, or (iii) similar relief in respect of the Company or RIH under any law relating to bankruptcy, insolvency, reorganization, winding-up, or composition or adjustment of debts, and such proceeding or case shall continue undismissed, or an order, judgment or decree approving or ordering any of the foregoing shall be entered and continue unstayed and in effect, for a period of 60 consecutive days; or (e) the commencement by the Company or RIH of a voluntary case under the federal bankruptcy laws or any other applicable federal or state law, or the consent or acquiescence by any of them to the filing of any such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee or sequestrator (or other similar official) of the Company or RIH or any substantial part of any of their property, or the making by any of them of an assignment for the benefit of creditors, or the taking of action by the Company or RIH in furtherance of any such action; or (f) the revocation, suspension or involuntary loss of any Permit which results in the cessation of a substantial portion of the operations of the Casino-Hotel for a period of more than 90 consecutive days; or (g) (i) a default by the Company, RIH or any of their Subsidiaries under any Indebtedness (other than the Indebtedness represented by the Working Capital Facility and the Junior Mortgage Facility) in an aggregate principal amount in excess of $5,000,000, which default results in the acceleration of the maturity of any such Indebtedness under the evidence of indebtedness, indenture or other instrument governing such Indebtedness; PROVIDED, HOWEVER, that, if such default under such evidence of indebtedness, indenture or other instrument shall be cured by the obligor, or be waived by the holders of such Indebtedness, in each case as may be permitted by such evidence of indebtedness, indenture or other instrument and in each case resulting in rescission of such acceleration thereunder, then the Event of Default hereunder by reason of such default shall be deemed likewise to have been thereupon cured or waived; or (ii) a default by the Company, RIH or any of their Subsidiaries under any Indebtedness represented by the Working Capital Facility or the Junior Mortgage Facility, the effect of which default (after the expiration of any applicable notice or grace periods) is to permit the 46 holder or holders of any such Indebtedness represented by the Working Capital Facility or the Junior Mortgage Facility in an aggregate principal amount in excess of $5,000,000 (or a trustee or agent on behalf of such holder or holders) to cause the acceleration of the maturity of such Indebtedness represented by the Working Capital Facility or the Junior Mortgage Facility under the evidence of indebtedness, indenture or other instrument governing such Indebtedness; PROVIDED, HOWEVER, that if such default under such evidence of indebtedness, indenture or other instrument shall be cured by the obligor, or be waived by the holders of such Indebtedness, in each case as may be permitted by such evidence of indebtedness, indenture or other instrument (and, if such default resulted in the acceleration of the maturity of such Indebtedness, such acceleration shall have been rescinded thereunder) then the Event of Default hereunder by reason of such default shall be deemed likewise to have been thereupon cured or waived; or (iii) the existence of a final judgment of a court of competent jurisdiction in an amount in excess of $3,000,000 against the Company, RIH or the Trust Estate, which judgment has not been satisfied or otherwise provided for, for a period of 30 days (during which execution shall not be effectively stayed) following the date on which such judgment becomes a lien against the Trust Estate or any part thereof (unless the lawsuit in question was commenced without effective service of process upon either the Company or RIH in which case such 30-day period shall not commence until the Company or RIH receives notice of such final judgment); or (iv) the existence of a final judgment of a court of competent jurisdiction in an amount in excess of $15,000,000 against the Company, RIH or the Trust Estate, which judgment has not been satisfied or otherwise provided for, for a period of 60 days (during which execution shall not be effectively stayed) following the date of such final judgment; or (v) the existence of a final judgment of a court of competent jurisdiction, regardless of amount, against the Company, RIH or the Trust Estate, which judgment has not been satisfied or otherwise provided for, for a period of 60 days (during which execution shall not be effectively stayed) following the date of such final judgment, if such judgment, by itself or upon recordation or other action of the judgment creditor, imposes or would impose a lien on the Trust Estate or any part thereof senior to the lien of the Mortgage; or (h) default in the performance, or breach, of any covenant of the Company or RIH in Article Ten; or 47 (i) the existence of a judgment of a court of competent jurisdiction in an amount in excess of $3,000,000 against RIH regarding the CRDA Dispute, which judgment has not been stayed, satisfied or otherwise provided for, for a period of 30 days (during which execution shall not be effectively stayed) (unless the lawsuit in question was commenced without effective service of process upon RIH in which case such 30-day period shall not commence until RIH receives notice of such final judgment); or (j) if RII fails to pay or discharge or cause to be paid or discharged, within 30 days before the same shall become delinquent, all taxes levied or imposed upon RII; PROVIDED, HOWEVER, that no Event of Default or Default shall be deemed to exist hereunder with respect to any tax liability not paid or discharged by RII if and to the extent that the amount, applicability or validity of such tax liabilities is being contested in good faith by appropriate proceedings if adequate reserves therefor have been established in accordance with GAAP; PROVIDED FURTHER, HOWEVER, that this clause (j) shall not apply to amounts due with respect to any period during which neither the Company, RIH nor any of their Subsidiaries is included in RII's consolidated group for federal income tax purposes. No action, event, claim, liability or judgment regarding the CRDA Dispute shall constitute a Default or an Event of Default under this Section 7.01 unless and until a judgment shall have been entered against RIH which constitutes an Event of Default pursuant to clause (i) of this Section 7.01. Section 7.02. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT. If an Event of Default (other than one referred to in clause (d) or (e) of Section 7.01) occurs and is continuing, then and in every such case the Trustee or the Holders of not less than 25% in Outstanding Amount of the Notes Outstanding may declare the Outstanding Amount and all accrued interest of all the Notes to be due and payable immediately, by a notice in writing to the Company (and to the Trustee, if given by any Noteholders), and upon any such declaration such Outstanding Amount shall become immediately due and payable. If an Event of Default referred to in clause (d) or (e) of Section 7.01 occurs, then the Outstanding Amount of all the Notes shall automatically become immediately due and payable without presentment, demand, protest or other formalities of any kind, all of which are hereby expressly waived by the Company. 48 At any time after such a declaration of acceleration has been made, but before any judgment or decree for payment of money due on any Notes has been obtained by the Trustee as hereinafter provided in this Article Seven, the Holders of a majority in Outstanding Amount of the Notes may, by written notice to the Company and the Trustee, rescind and annul such declaration and its consequences if: (a) the Company has deposited with the Trustee a sum sufficient to pay: (1) all overdue installments of interest on all Notes, (2) the principal of any Notes which have become due otherwise than by such declaration of acceleration and interest thereon at the rate or rates prescribed therefor in the Notes, and (3) 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 (b) all Events of Default, other than the non-payment of the Outstanding Amount of Notes which have become due solely by such declaration of acceleration, have been cured, or have been waived as provided in Section 7.13. No such rescission and annulment shall affect any subsequent default or impair any right consequent thereon. Section 7.03. COVENANT TO PAY TRUSTEE AMOUNTS DUE ON NOTES AND RIGHT OF TRUSTEE TO JUDGMENT. The Company covenants that, if: (a) default is made in the payment of any interest on any Note when such interest becomes due and payable, and such default continues for a period of 10 days (the deposit with the Trustee during such 10 day period pursuant to Section 3.07 of funds sufficient to make such interest payment in full being deemed to cure any such default for the purposes hereof), or (b) default is made in the payment of the principal of any Note at its Maturity, then, upon demand of the Trustee, the Company will pay to the Trustee for the benefit of the Holders of such Notes, the whole amount then due and payable on such Notes for principal and interest, with interest at the rate prescribed therefor in 49 the Notes on overdue principal 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 and as trustee of an express trust, shall be entitled to sue for and recover judgment against the Company, RIH and any other obligor on the Notes for the whole amount so due and unpaid. The Trustee shall be entitled to institute such suit either before, after or during the pendency of any proceedings for the enforcement of this Indenture or of the Mortgage Documents or of the Assignment Agreement, but only after the occurrence of an Event of Default. Subject to the Intercreditor Agreement, in the case of a foreclosure of the Mortgage and a sale of the Trust Estate and application of the proceeds as provided in Section 7.06, the Trustee, in its own name and as trustee of an express trust, shall be entitled to enforce payment of, and to receive, all amounts then remaining due and unpaid upon the Notes, for the benefit of the Holders thereof, and shall be entitled to recover judgment for any portion of the same remaining unpaid, with interest as aforesaid. No recovery of any such judgment upon any property of the Company shall affect or impair the security provided by this Indenture and the Assignment Agreement or the lien of the Mortgage upon the Trust Estate or any rights, powers or remedies of the Holders of the Notes. Section 7.04. 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 RIH or any other obligor upon the Notes or the property of the Company or RIH or of such other obligor or their creditors, the Trustee (irrespective of whether the principal (or any portion thereof) of the Notes 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 or interest) shall be entitled and empowered, by intervention in such proceeding or otherwise, (a) to file and prove a claim for the whole amount of principal and interest owing and unpaid in respect of the Outstanding Notes 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 50 advances of the Trustee, its agents and counsel) and of the Noteholders allowed in such judicial proceeding, and (b) 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 other similar official in any such judicial proceeding is hereby authorized by each Noteholder 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 Noteholders, to pay to the Trustee any amount due to 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 8.07. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Noteholder any plan of reorganization, arrangement, adjustment or compensation affecting the Notes or the rights of any Holder thereof, or to authorize the Trustee to vote on the claim of any Noteholder in any such proceeding. Section 7.05. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF NOTES. All rights of action and claims under this Indenture, the Notes, the Assignment Agreement or the Mortgage Documents may be prosecuted and enforced by the Trustee without the possession of any of the Notes or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust. 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 Notes in respect of which such judgment has been recovered. Section 7.06. APPLICATION OF MONEY COLLECTED. Subject to the Intercreditor Agreement, any money collected by the Trustee pursuant to this Article Seven or pursuant to Article Three or Section 5.11 or 5.20 of the Mortgage which is not required to be paid to the Mortgagor thereunder shall be applied in the following order, at the date or dates fixed by the Trustee and upon such date interest shall cease to accrue, and, in case of the distribution of such money on account of principal upon presentation of the Notes, and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid: 51 (a) FIRST: To the payment of all amounts due the Trustee under Section 8.07; (b) SECOND: To the payment of the whole amount then due upon the Outstanding Notes, for principal and interest, in respect of which or for the benefit of which such money has been collected, with interest (to the extent that such interest has been collected by the Trustee or a sum sufficient therefor has been so collected and payment thereof is legally enforceable at the respective rate or rates prescribed therefor in the Notes) on overdue principal; and in case such proceeds shall be insufficient to pay in full the whole amount so due and unpaid upon such Notes, then first, payment of accrued but unpaid interest (with interest thereon as aforesaid), and second, to outstanding principal, in each case, ratably according to the aggregate amount so due; and (c) THIRD: To the payment of the remainder, if any, to the Company or to whomever may be lawfully entitled to receive the same or as a court of competent jurisdiction may direct. Section 7.07. LIMITATION ON SUITS. No Holder of any Note shall have any right to institute any proceeding, judicial or otherwise, under or with respect to this Indenture, the Assignment Agreement or the Mortgage Documents, or for the appointment of a receiver or trustee or for any other remedy hereunder, unless: (a) such Holder has previously given written notice to the Trustee of a continuing Event of Default; (b) the Holders of not less than 25% in Outstanding Amount of the Outstanding Notes 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; (c) 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; (d) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and (e) no direction inconsistent with such written request has been given to the Trustee during such 60-day 52 period by the Holder of a majority in Outstanding Amount of the Outstanding Notes; it being understood and intended that no one or more Holders of Notes shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture, the Assignment Agreement or the Mortgage Documents, to affect, disturb or prejudice the right of any other Holders of Notes, or to obtain or to seek to obtain priority or preference over any other Holders or to enforce any right under this Indenture, the Assignment Agreement or the Mortgage Documents, except in the manner herein and therein provided and for the Ratable Benefit of all Notes. Section 7.08. UNCONDITIONAL RIGHT OF NOTEHOLDERS TO RECEIVE PRINCIPAL AND INTEREST. Notwithstanding any other provision in this Indenture, the Holder of any Note shall have the right, which is absolute and unconditional, to receive payment of the principal of and interest on such Note on the Stated Maturity or Interest Payment Dates expressed in such Note (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 7.09. RESTORATION OF RIGHTS AND REMEDIES. If the Trustee or any Noteholder has instituted any proceeding to enforce any right or remedy under this Indenture, the Assignment Agreement or the Mortgage Documents and such proceeding has been discontinued or abandoned for any reason or has been determined adversely to the Trustee or to such Noteholder, then and in every such case the Company, the Trustee and the Noteholders shall, subject to any determination in such proceeding, be restored to their former positions hereunder, and thereafter all rights and remedies of the Trustee and the Noteholders shall continue as though no such proceeding had been instituted. Section 7.10. RIGHTS AND REMEDIES CUMULATIVE. No right or remedy herein conferred upon or reserved to the Trustee or to the Noteholders 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. 53 Section 7.11. DELAY OR OMISSION NOT WAIVER. No delay or omission of the Trustee or of any Holder of any Note to exercise any right or remedy accruing upon an 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 Seven or by law to the Trustee or to the Noteholders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Noteholders, as the case may be. Section 7.12. OTHER RIGHTS. Subject to Section 8.03(e), the Holders of a majority in Outstanding Amount of the Outstanding Notes shall have the right, during the continuance of an Event of Default, (a) to require the Trustee to proceed to enforce this Indenture, either by judicial proceedings for the enforcement of the payment of the Notes by the foreclosure of the Mortgage and exercise of any remedies under the Mortgage Documents and the Assignment Agreement and the sale of the Trust Estate or otherwise or, at the election of the Trustee, by the exercise of the power of entry and/or sale conferred by the Mortgage; and (b) 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 upon the Trustee hereunder, provided that (1) such direction shall not be in conflict with any rule of law or this Indenture or any applicable Mortgage Document or the Assignment Agreement; (2) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction; and (3) the Trustee shall not be required to determine if any action so directed would be unjustly prejudicial to the Holders not taking part in such direction. Section 7.13. WAIVER OF PAST DEFAULTS. Before any judgment or decree for payment of money due has been obtained by the Trustee as provided in this Article Seven, the Holders of not less than 66-2/3% in Outstanding Amount of the Outstanding Notes may, by Act of such Noteholders delivered to the Trustee and the Company, on 54 behalf of the Holders of all the Notes waive any past Default hereunder and its consequences, except a Default (a) in the payment of the principal of or interest on any Note, or (b) in respect of a covenant or provision hereof which under Article Eleven cannot be modified or amended without the consent of the Holder of each Outstanding Note affected. Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or impair any right subsequent thereon. Section 7.14. UNDERTAKING FOR COSTS. All parties to this Indenture agree, and each Holder of any Note by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, the Assignment Agreement or the Mortgage Documents, or in any suit against the Trustee for any action taken or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to the merits and good faith of the claim or defense made by such party litigant; but the provisions of this Section 7.14 shall not apply to any suit instituted by the Trustee, to any suit instituted by any Noteholders, or group of Noteholders, holding in the aggregate more than 10% in Outstanding Amount of the Outstanding Notes, or to any suit instituted by any Noteholder for the enforcement of the payment of the principal of or interest on any Note on or after the Stated Maturity expressed in such Note (or, in the case of redemption, on or after the Redemption Date) or the relevant Interest Payment Date. Section 7.15. ENFORCEMENT. In case an Event of Default shall occur and be continuing, the Trustee, in it discretion may, subject to the provisions of Section 7.12, proceed to protect and enforce its rights and the rights of the Noteholders under this Indenture by a suit, action or proceeding in equity or at law or otherwise, whether for the specific performance of any covenant or agreement contained in this Indenture or in aid of the execution of any power granted in this Indenture or for the enforcement of any other legal, equitable or other remedy, 55 as the Trustee, being advised by counsel, shall deem most effectual to protect and enforce any of the rights of the Trustee or the Noteholders hereunder. In case an Event of Default shall occur and be continuing under the Mortgage, the Trustee, as assignee of the Mortgage Documents, in its discretion may, subject to the provisions of Section 7.12, proceed to enforce its rights under the Mortgage Documents and the Assignment Agreement. Section 7.16. MANAGEMENT OF CASINO-HOTEL. Notwithstanding any provision of this Article Seven to the contrary, (a) following an Event of Default under the Mortgage and the taking of possession of the Trust Estate by the Trustee and/or the appointment of a receiver of the Trust Estate or any part thereof, the Trustee or any such receiver shall be authorized, in addition to the rights and power of the Trustee and such receiver set forth elsewhere in this Indenture, the Assignment Agreement and the Mortgage Documents, to retain one or more experienced operators of hotels and/or casinos to manage and operate the Casino-Hotel on behalf of the Noteholders, provided that any such operator shall have all necessary legal qualifications, including all Permits, to manage the Casino-Hotel; and (b) no Noteholder shall have any right to take possession of, operate or manage all or any portion of the Casino-Hotel, individually or as a member of a group, unless such Noteholder shall have all necessary legal qualifications, including all Permits, to do so and shall otherwise be qualified to be retained to manage the Casino-Hotel under subsection (a) of this Section 7.16. ARTICLE EIGHT THE TRUSTEE Section 8.01. CERTAIN DUTIES AND RESPONSIBILITIES. (a) Except during the continuance of an Event of Default, (1) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture and the Mortgage Documents, and no implied covenants or obligations shall be read into this Indenture and the Mortgage Documents against the Trustee; and 56 (2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture or the Mortgage Documents; but in the case of any such certificates or opinions which by any provision hereof or thereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture and the Mortgage Documents. (b) In case an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture or the Mortgage Document, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person's own affairs. (c) No provision of this Indenture or any Mortgage Document shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that (1) this Section 8.01(c) shall not be construed to limit the effect of Section 8.01(a); (2) the Trustee shall not be liable for any error of judgment made in good faith by it, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; (3) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of not less than a majority in Outstanding Amount of the Outstanding Notes relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture or any Mortgage Document; and (4) no provision of this Indenture shall require the Trustee 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. 57 (d) Whether or not therein expressly so provided, every provision of this Indenture and the Mortgage Documents relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section 8.01. Section 8.02. NOTICE OF DEFAULTS. Within 45 days after the occurrence of any Default hereunder of which a Responsible Officer of the Trustee has actual knowledge, the Trustee shall transmit by mail to all Holders of Notes as their names and addresses appear in the Note Register, 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 interest on any Note, 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 determine that the withholding of such notice is in the best interests of the Noteholders. Section 8.03. CERTAIN RIGHTS OF TRUSTEE. Except as otherwise provided in Section 8.01: (a) 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, coupon, 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; (b) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order; (c) 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; (d) 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 58 the Trustee hereunder in good faith and in reliance thereon; (e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture or any of the Mortgage Documents at the request or direction of any of the Noteholders pursuant to this Indenture, unless such Noteholders shall have offered to the Trustee reasonable security or indemnity reasonably satisfactory to the Trustee against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (f) 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, 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 and RIH, personally or by agent or attorney; (g) 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; (h) the Trustee shall not be deemed to have knowledge of and shall not be required to take any action with respect to any Event of Default (other than an Event of Default described in Section 7.01(a) and (b) or any event which would, with the giving of notice or the passage of time or both, constitute an Event of Default, unless the Trustee shall have actual knowledge of such event or shall have been notified in writing of such event by Noteholders holding in the aggregate more than 25% in Outstanding Amount of the Outstanding Notes; (i) subject to Section 8.01(c), the Trustee shall not be personally liable, in case of entry by it upon the Trust Estate, for debts contracted or liabilities or damages incurred in the management or operation of the Trust Estate; and (j) in addition to and not in limitation of its other powers hereunder, the Trustee shall have such power and authority as may be necessary to enter into and 59 accept delivery of any document as may be necessary to effect on behalf of the Holders of the Notes the subordination of the indebtedness in respect of the Notes to any secured Working Capital Facility (in accordance with the provisions of the Mortgage), and upon written request of the Company, the Trustee shall enter into such agreements on behalf of the holders of the Notes. Section 8.04. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF NOTES OR APPLICATION OF PROCEEDS. The recitals contained herein and in the Notes, except in a certificate of authentication on the Notes, shall be taken as the statements of the Company, and the Trustee assumes no responsibility for their correctness. The Trustee makes no representation as to the validity or sufficiency of this Indenture, the Notes or the Mortgage Documents. The Trustee shall not be accountable for the use or application by the Company of Notes or the proceeds thereof or of any money paid to the Company or by a Company Order under any provision hereof. Section 8.05. MAY HOLD NOTES. The Trustee, any Paying Agent, Note Registrar, Authenticating Agent or any other agent of the Company, in its individual or any other capacity, may become the owner or pledgee of Notes and, subject to Sections 8.08 and 8.13, if operative, may otherwise deal with the Company with the same rights it would have if it were not Trustee, Paying Agent, Note Registrar, Authenticating Agent or such other agent. Section 8.06. MONEY HELD IN TRUST. 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 agreed with the Company. Section 8.07. COMPENSATION AND REIMBURSEMENT. The Company agrees: (a) to pay to the Trustee from time to time reasonable compensation for all services rendered by it hereunder and under the Mortgage Documents (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (b) except as otherwise expressly provided herein and in the Mortgage Documents, to reimburse the Trustee 60 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 the Trustee's negligence or bad faith; and (c) 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 Indenture or the trust created hereunder or the performance of its duties hereunder, including the reasonable costs and expenses of defending itself against or investigating any claim or liability in con- nection with the exercise or performance of any of its powers or duties hereunder (including reasonable attorneys' fees and expenses). As security for the performance of the obligations of the Company and RIH under this Section 8.07, the Trustee shall be secured under this Indenture and the Mortgage Documents by a lien prior to the Mortgage upon all property and funds held or collected by the Trustee, and for the payment of such compensation, expenses, reimbursements and indemnity the Trustee shall have the right to use and apply any money held by it pursuant hereto. Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company and RIH under this Section 8.07 shall survive. Section 8.08. DISQUALIFICATION; CONFLICTING INTERESTS. This Indenture shall always have a Trustee who satisfies the requirements of TIA SECTION 310(a)(l) and SECTION 310(a)(5). The Trustee shall comply with TIA SECTION 310(b) including the second sentence of TIA SECTION 310(b)(9). Section 8.09. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY. There shall at all times be a Trustee hereunder which shall be a corporation organized and doing business under the law of the United States of America or of any state, authorized under such laws to exercise corporate trust powers, having (or in the case of a corporation included in a bank holding company system, the related bank holding company having) a combined capital and surplus of at least $100,000,000, subject to supervision or examination by federal or state authority. In addition, if the Trustee is a 61 corporation included in a bank holding company system, the Trustee, independently of such bank holding company, shall meet the capital requirements of TIA SECTION 310(a)(2). The Trustee shall comply with TIA SECTION 310(b); provided, however, that there shall be excluded from the operation of TIA SECTION 310(b)(1) any indenture or indentures under which other securities, or certificates of interest or participation in other securities, of the Company are outstanding, if the requirements for such exclusion set forth in TIA SECTION 310(b)(1) are met. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of such supervising or examining authority, then for the purposes of this Section 8.09, 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 8.09, it shall resign immediately in the manner and with the effect hereinafter specified in this Article Eight. Section 8.10. 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 Eight shall become effective until the acceptance of appointment by the successor Trustee under Section 8.11. (b) The Trustee may resign at any time by giving written notice thereof to the Company. If an instrument of acceptance by a successor Trustee 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) The Trustee may be removed at any time by Act of the Holders of a majority in Outstanding Amount of the Outstanding Notes, delivered to the Trustee and to the Company. (d) If at any time: (1) the Trustee shall fail to comply with Section 8.08 after written request therefor by the Company or by any Noteholder who is a bona fide Holder of a Note, or (2) the Trustee shall cease to be eligible under Section 8.09 and shall fail to resign after written request therefor by the Company or by any Noteholder who is a bona fide Holder of a Note, or 62 (3) 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, (i) the Company by a Company Order may remove the Trustee, or (ii) subject to Section 7.14, any Noteholder who is a bona fide Holder of a Note 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 the Trustee for any cause, the Company, by a Company Order, shall promptly appoint a successor Trustee. In case all or substantially all of the Trust Estate shall be in the possession of a receiver or trustee lawfully appointed, such receiver or trustee, by written instrument, may similarly appoint a successor to fill such vacancy until a new Trustee shall be so appointed by the Noteholders. If, within one year after such resignation, removal or incapacity or the occurrence of such vacancy, a successor Trustee shall be appointed by Act of the Holders of a majority in Outstanding Amount of the Outstanding Notes 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 or by such receiver or trustee. If no successor Trustee shall have been so appointed by the Company or the Noteholders and accepted appointment in the manner hereinafter provided, subject to Section 7.14, any Noteholder who is a bona fide Holder of a Note may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee. (f) The Company shall give written notice of each resignation and each removal of the Trustee and each appointment of a successor Trustee to each Noteholder by mailing such notice by first-class mail, postage prepaid, to each Noteholder as such Noteholder's name and address appear in the Note Register; provided, however, that failure of the Company to give such notice shall not affect the resignation or removal of such Trustee. Each notice shall include the name of the successor Trustee and the address of its principal corporate trust office. 63 Section 8.11. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR. Every successor Trustee appointed hereunder shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall became effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the estates, properties, 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 conveying and transferring to such successor Trustee all the estates, properties, 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, subject nevertheless to its lien, if any, provided for in Section 8.07. 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 estates, properties, 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 Eight. Section 8.12. 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 Eight, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Notes 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 Notes so authenticated with the same effect as if such successor Trustee had itself authenticated such Notes. Section 8.13. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY. The Trustee will comply with TIA SECTION 311(a). A Trustee 6 who has resigned or been removed shall be subject to TIA SECTION 311(a) to the extent indicated. Section 8.14. CO-TRUSTEES AND SEPARATE TRUSTEES. At any time or times, for the purpose of meeting the legal requirements of the TIA or of any jurisdiction in which any of the Trust Estate may at the time be located or in which it shall be necessary or desirable for the Trustee to act, the Company and the Trustee shall have power to appoint, and, upon the written request of the Trustee or of the Holders of at least 25% in Outstanding Amount of the Notes Outstanding, the Company shall for such purpose join with the Trustee in the execution, delivery and performance of all instruments and agreements necessary or proper to appoint, one or more Persons approved by the Trustee either to act as co-trustee, jointly with the Trustee, of all or any part of the Mortgage Documents or of the Trust Estate covered by such Mortgage Documents, or to act as separate trustee of any such property, in either case with such powers as may be provided in the instrument of appointment, and to vest in such Person or Persons in the capacity aforesaid, any property, title, right or power deemed necessary or desirable, subject to the other provisions of this Section 8.14. If the Company does not join in such appointment within 15 days after the receipt by it of a request so to do, or in case an Event of Default has occurred and is continuing, the Trustee alone shall have power to make such appointment. Should any written instrument from the Company be required by any co-trustee or separate trustee so appointed for more fully confirming to such co-trustee or separate trustee such property, title, right or power, any and all such instruments shall, on request, be executed, acknowledged and delivered by the Company within three business days of such request. Every co-trustee or separate trustee shall, to the extent permitted by law, but to such extent only, be appointed subject to the following terms, namely: (a) the Notes shall be authenticated and delivered, and all rights, powers, duties and obligations hereunder in respect of the custody of securities, cash and other personal property held by, or required to be deposited or pledged with, the Trustee hereunder, shall be exercised solely, by the Trustee; (b) the rights, powers, duties and obligations hereby conferred or imposed upon the Trustee in respect of any property covered by such appointment shall be conferred or imposed upon and exercised or performed by the Trustee or by the Trustee and such co-trustee or 6 separate trustee jointly, as shall be provided in the instrument appointing such co-trustee or separate trustee, except to the extent that under any law of any jurisdiction in which any particular act is to be performed, the Trustee shall be incompetent or unqualified to perform such act, in which event such rights, powers, duties and obligations shall be exercised and performed by such co-trustee or separate trustee; (c) the Trustee, at any time, by an instrument in writing executed by it may accept the resignation of or remove any co-trustee or separate trustee appointed under this Section 8.14. A successor to any co-trustee or separate trustee so resigned or removed may be appointed in the manner provided in this Section 8.14; (d) the Trustee, or any other such trustee hereunder, shall not be personally liable by reason of any act or omission of any co-trustee or separate trustee hereunder, and no co-trustee or separate trustee hereunder shall be personally liable by reason of any act or omission of the Trustee, or any other such trustee hereunder; (e) any Act of Noteholders delivered to the Trustee shall be deemed to have been delivered to each such co-trustee and separate trustee; and (f) any co-trustee or separate trustee appointed hereunder shall be entitled to compensation and indemnification from the Company under Section 8.07 hereunder and shall be entitled to all such other rights and protections afforded the Trustee hereunder. Section 8.15 APPOINTMENT OF AUTHENTICATING AGENT. Upon the request of the Company, the Trustee shall appoint an Authenticating Agent with power to act on its behalf and subject to its direction in the authentication and delivery of the Notes designated for such authentication by the Company and containing provisions therein for such authentication in connection with transfers and exchanges under Sections 3.04, 3.05, 3.06 and 13.07, as fully to all intents and purposes as though the Authenticating Agent had been expressly authorized by those Sections to authenticate and deliver such Notes. For all purposes of this Indenture, the authentication and delivery of Notes by the Authenticating Agent pursuant to this Section 8.15 shall be deemed to be the authentication and delivery of Notes "by the Trustee". Such Authenticating Agent shall at all times be a bank or trust company having its principal office in the Borough of Manhattan, City and State of New York, and shall at all times be a corporation organized and doing business under the laws 66 of the United States or of any State with a combined capital and surplus of at least $50,000,000 and authorized under such laws to exercise corporate trust powers and subject to supervision or examination by federal or state authority. If such corporation publishes reports of condition at least annually pursuant to law or the requirements of such authority, then for the purposes of this Section 8.15 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. Any corporation into which any Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, consolidation or conversion to which any Authenticating Agent shall be a party, or any corporation succeeding to the corporate trust business of any Authenticating Agent, shall be the successor of the Authenticating Agent hereunder, if such successor corporation is otherwise eligible under this Section 8.15, without the execution or filing of any further act on the part of the parties hereto or the Authenticating Agent or such successor corporation. Any Authenticating Agent may at any time resign by giving written notice of resignation to the Trustee and the Company. The Trustee may at any time terminate the agency of any Authenticating Agent by giving written notice of termination to such Authenticating Agent and the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time any Authenticating Agent shall cease to be eligible under this Section 8.15, the Trustee shall promptly appoint a successor Authenticating Agent, and shall give written notice of such appointment to the Company. The Company agrees to pay to the Authenticating Agent from time to time reasonable compensation for its services. The provisions of Sections 3.10, 8.04 and 8.05 shall be applicable to any Authenticating Agent. ARTICLE NINE NOTEHOLDERS' LISTS AND REPORTS BY TRUSTEE Section 9.01. COMPANY TO FURNISH TRUSTEE SEMI-ANNUAL LISTS OF NOTEHOLDERS. The Company will furnish or cause to be furnished to the Trustee semi-annually, not less than 45 days nor more than 67 60 days after each date (month and day) specified as a semi-annual Interest Payment Date for the Notes (whether or not any Notes are then Outstanding), and at such other times as the Trustee may request in writing, within 60 days after receipt by the Company of any such request, a list in such form as the Trustee may reasonably require containing all the information in the possession or control of the Company, or any of its Paying Agents other than the Trustee, as to the names and addresses of the Holders of Notes, obtained since the date as of which the next previous list, if any, was furnished, excluding from any such list the names and addresses received by the Trustee in its capacity as Note Registrar. Any such list may be dated as of a date not more than 15 days prior to the time such information is furnished and need not include information received after such date. Section 9.02. PRESERVATION OF INFORMATION; COMMUNICATIONS TO NOTEHOLDERS. (a) The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders of Notes (1) contained in the most recent list furnished to the Trustee as provided in Section 9.01, (2) received by the Trustee in the capacity of Paying Agent (if so acting) hereunder or (3) received by the Trustee in its capacity as Note Registrar. The Trustee may destroy any list furnished to it as provided in Section 9.01 upon receipt of a new list so furnished. (b) Holders may communicate pursuant to TIA SECTION 312(b) with other Holders with respect to their rights under this Indenture or the Notes. The Company, the Trustee, the Note Registrar and any other Person shall have the protection of TIA SECTION 312(c). (c) Every Holder of Notes, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee nor any Paying Agent shall be held accountable by reason of the disclosure of any such information as to the names and addresses of the Holders of Notes in accordance with Section 9.02(b), regardless of the source from which information was derived, and that the Trustee shall not be held accountable by reason of mailing any material pursuant to a request made under Section 9.02(b). Section 9.03. REPORTS BY TRUSTEE. (a) Within 60 days after each May 15 beginning with May 15, 1995, the Trustee shall transmit to each Noteholder a report dated as of such May 15 that complies with TIA SECTION 313(a). The Trustee shall also comply with TIA SECTION 313(b) and SECTION 313(c). 68 (b) A copy of each such report shall, at the time of such transmission to Noteholders, be filed by the Trustee with any stock exchange on which the Notes are listed and also with the Commission. The Company will notify the Trustee when the Notes are listed on any stock exchange. (c) The Trustee will provide the Casino Control Commission and the Director of the Division of Gaming Enforcement of New Jersey with: (1) copies of all notices, reports and other written communications which the Trustee gives to Noteholders; (2) a list of Noteholders promptly after the original issuance of the Notes and a list of Noteholders annualy on December 1 of each year, or such other time as requested by the Casino Control Commission or Director of Division of Gaming Enforcement; (3) notice of any Event of Default under this Indenture or of any event, occurrence or condition actually known by the Trustee which, with the giving of notice or lapse of time or both would constitute an Event of Default under this Indenture (including the Guaranty), the RIH Promissory Note or the Mortgage Documents (as such term is defined in such instruments), any acceleration of the Indebtedness evidenced or secured hereby or thereby, the institution of any legal actions or proceedings before any court or governmental authority in respect of this Indenture (including the Guaranty) or the Mortgage Documents, the entering into or taking possession of any property constituting the Trust Estate and any rescission, annulment or waiver in respect of an Event of Default under any instruments described in this clause (3); (4) notice of the removal or resignation of the Trustee; (5) notice of any transfer or assignment of rights under this Indenture (including the Guaranty) (but not in respect of the Notes) or the Mortgage Documents after a Responsible Officer of the Trustee becomes aware of the same; and (6) a copy of any amendment to the Notes, this Indenture (including the Guaranty) or the Mortgage Documents immediately; 69 provided however, that the Trustee shall not be liable to any Person (other than the Casino Control Commission and the Director of the Division of Gaming Enforcement of New Jersey) for any failure to provide any of the above- mentioned documents to the Casino Control Commission and the Director of the Division of Gaming Enforcement of New Jersey. The notice specified in Section 9.03 (c) above shall be in writing and, except as set forth below, shall be given immediately after the Trustee has actual knowledge of any circumstances requiring such notice. In the case of any notice in respect of any Default or Event of Default under any instrument described in Section 9.03(c), such notice shall be accompanied by a copy of any notice from the Holders of Notes, or a representative thereof or the Trustee, to the defaulting Person and, if accompanied by any such notice to the defaulting Person, shall be given simultaneously with the giving of any such notice to the defaulting Person. In the case of any legal actions or proceedings, such notice shall be accompanied by a copy of the complaint or other initial pleading or document. The Trustee and its Responsible Officers shall cooperate with the Casino Control Commission and the Director of the Division of Gaming Enforcement of New Jersey in order to provide such Commission and Director with information and documentation relevant to compliance with Section 9.03(c) above and as otherwise required by the Casino Control Act. The expiration date of the current gaming Permit held by RIH is February 26, 1994. Subsequent gaming Permits held by RIH are scheduled to expire every two years on February 26th, commencing February 26, 1996 unless and until the Trustee is advised otherwise. RIH will advise the Trustee of any change in such expiration date within five business days of knowledge thereof. ARTICLE TEN CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE Section 10.01. CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER ONLY ON CERTAIN TERMS. Neither the Company nor RIH shall consolidate, combine or merge with or into any other Person or permit any other Person to consolidate, combine or merge with or into the Company or RIH, as the case may be; and neither the Company with respect to its assets nor RIH with respect to the Trust 70 Estate shall sell, assign, convey or transfer its interest in such assets or the Trust Estate, as the case may be, substantially as an entirety (and notwithstanding anything to the contrary contained herein (including the proviso at the end of this sentence, but subject to Section 10.05), but subject to the provisions of the Mortgage regarding dispositions of the Trust Estate, neither the Company with respect to its assets nor RIH with respect to the Trust Estate may sell, assign, convey or transfer such assets or the Trust Estate, as the case may be, other than substantially as an entirety) to any other Person or group of Persons in one transaction or a series of related transactions, or permit any other Person or group of Persons to convey or transfer all or substantially all of its assets, subject to liabilities other than DE MINIMIS liabilities, to the Company or RIH; and the Company and RIH shall not transfer, convey, sell or otherwise dispose of to any other Person, or issue to any Person, any equity interest in the Company or RIH, as the case may be (each of the aforesaid transactions described in this Section 10.01 is referred to herein as a "Combination Transaction"); PROVIDED, HOWEVER, that (i) the Company may engage in a Combination Transaction in which the only other party or parties is RIH or a direct or indirect wholly owned Subsidiary of the Company or RIH, and (ii) the Company or RIH may engage in any other Combination Transaction (either independently or at the same time as other Combination Transactions), subject to the following with respect to each such Combination Transaction: (a) the conditions set forth in Section 10.03 are satisfied; (b) in the event the Company or RIH shall consolidate, combine or merge with or into another Person or sell, assign, convey or transfer its interest in its assets or in the Trust Estate, as the case may be, substantially as an entirety (but not less than substantially as an entirety) to another Person in one transaction or a series of related transactions, the entity which is formed by or survives such consolidation, combination or merger or the Person to which such assets or the Trust Estate are conveyed or transferred: (1) shall be organized and existing under the laws of the United States of America, any state thereof, or the District of Columbia; (2) shall expressly assume, by an indenture supplemental hereto, in form reasonably satisfactory to the Trustee, executed and delivered to the Trustee, the performance and observance of every covenant, obligation and condition of this Indenture 71 to be performed or observed by the Company or RIH, whichever the case may be; (3) shall expressly assume, by an instrument executed and delivered to the Trustee, in form reasonably satisfactory to the Trustee, the due and punctual performance of every covenant, obligation and condition of the Mortgage Documents and Assignment Agreement to be performed by the Company or RIH, whichever the case may be; and (4) immediately after and giving effect to such transaction could incur at least $1.00 of additional Indebtedness under Section 12.08; (c) immediately after giving effect to such transaction, no Event of Default, or Default hereunder or under the Mortgage shall have occurred and be continuing; (d) such Combination Transaction shall be on such terms as shall not impair the lien and security and priority hereof or of the Mortgage Documents or of the Assignment Agreement and the rights and powers of the Trustee and the Holders of the Notes hereunder and thereunder; and (e) the Company or RIH, as the case may be, shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each of which shall state that such Combination Transaction and such supplemental indenture comply with this Article Ten and that all conditions precedent herein provided for relating to such transaction have been complied with. Section 10.02. SUCCESSOR ENTITY SUBSTITUTED. Upon any consolidation, combination or merger or any conveyance or transfer of an interest in the assets of the Company or in the Trust Estate permitted by Section 10.01, the successor entity formed by such consolidation or into which the Company or RIH is combined or to which such conveyance or transfer is made shall succeed to, and be substituted for, and may exercise every right and power of, and shall be bound by every obligation and liability of, the Company or RIH, whichever the case may be, under this Indenture with the same effect as if such successor entity had been named as the Company or RIH herein; PROVIDED, HOWEVER, that no such consolidation or combination involving the Company or RIH, unless such transaction is in compliance with the provisions of this Article Ten, shall have the effect of releasing the Person named as "the Company" or "RIH", as the case may be, in the first paragraph of this instrument, or any successor entity which shall theretofore have become such in the manner 72 prescribed in this Article Ten, from its liability as obligor and maker on the RIH Promissory Note or any of the Notes. Section 10.03. SUCCESSOR MANAGEMENT OF CASINO-HOTEL. Neither the Company nor RIH shall engage in any Combination Transaction unless, immediately following such Combination Transaction, (a) RIH (or any successor entity) shall be eligible for and shall meet all relevant Legal Requirements, including holding all permits, required for the normal operation of the business of owning and operating the Casino-Hotel, and (b) RIH (or any successor entity) shall be controlled by a Person that is, or shall retain to manage the Casino-Hotel one or more Persons that are, experienced in the operation and management of casino-hotels. Section 10.04. LIMITATION ON SALES OF TRUST ESTATE. Except as otherwise expressly permitted by the Mortgage and this Indenture, neither the Company nor RIH shall sell, assign, lease, sublease, hypothecate, pledge, mortgage or otherwise transfer all or any part of the assets of the Company or the Trust Estate or any interest therein (including, without limitation, any interest in the Ground Leases). Without limiting the generality of the foregoing, RIH shall not separate, or attempt to separate, its ownership of its interest in the Ground Leases from the ownership of the buildings constituting the Casino-Hotel or any part thereof. Section 10.05 RIH SALE. The foregoing provisions of this Article Ten shall not apply in connection with an RIH Sale. ARTICLE ELEVEN AMENDMENTS, SUPPLEMENTS AND WAIVER Section 11.01. WITHOUT CONSENT OF NOTEHOLDERS. Without the consent of the Holders of any Notes, the parties hereto may from time to time amend or supplement this Indenture, the Assignment Agreement, the Notes or the Mortgage Documents, as long as the form of such amendment or supplement is satisfactory to the Trustee, for any of the following purposes: (a) to correct or amplify the description of the Trust Estate or better to assure, convey and confirm unto the Trustee the assignment of the Mortgage Documents; or 73 (b) to add additional conditions, limitations and restrictions thereafter to be observed to the conditions, limitations and restrictions on the authorized amount, terms of issue, authentication and delivery of Notes as herein set forth; or (c) to comply with Article Ten; or (d) to add to the covenants of the Company for the benefit of the Holders of all Notes or to surrender any right or power herein conferred upon the Company; or (e) to cure any ambiguity, defect or inconsistency in any of the enumerated documents, provided such action shall not adversely affect the interests of the Holders of the Notes; or (f) to modify, eliminate or add to the provisions of this Indenture to such extent as shall be necessary to effect the qualification of this Indenture under the TIA or under any similar federal statute hereafter enacted, and to add to this Indenture such other provisions as may be expressly permitted by the TIA, EXCLUDING, HOWEVER, the provisions referred to in TIA SECTION 316(a)(2) as in effect at the date as of which this instrument was executed or any corresponding provision in any similar federal statute hereafter enacted; or (g) to effectuate any subordination contemplated in Section 8.03(i); or (h) to comply with the requirements of the Casino Control Act. The terms of any such enumerated document entered into pursuant to this Section 11.01 shall be subject to prior approval of the Casino Control Commission in consultation with the New Jersey Division of Gaming Enforcement. Section 11.02. WITH CONSENT OF NOTEHOLDERS. With the consent of the Holders of not less than 66-2/3% in Outstanding Amount of the Notes then Outstanding, by Act of such Holders delivered to the Company and the Trustee, the parties hereto may amend or supplement this Indenture, the Mortgage Documents, the Assignment Agreement or the Notes, provided that the form of such amendment or supplement is reasonably satisfactory to the Trustee. The Holders of 66-2/3% in Outstanding Amount of the Notes then Outstanding may waive compliance by the Company or RIH with any provision of this Indenture, the Mortgage Documents, the Assignment Agreement or the Notes, except a default in the payment of principal of or interest on any Note, without notice to any 74 Noteholder. Without the consent of the Holder of each Outstanding Note affected thereby, an amendment, supplement or waiver, including a waiver pursuant to Section 7.13, may not: (a) change the Stated Maturity of the principal of, or any installment of interest on, any Note, or reduce the principal amount thereof or the interest thereon or the amount payable upon the redemption thereof, or change any Place of Payment where, or the coin or currency in which, any Note, or the interest thereon, is payable, or impair the right to institute suit for the enforcement of any such payment on or after the Stated Maturity thereof (or, in the case of redemption, on or after the Redemption Date); or (b) reduce the percentage in Outstanding Amount of the Outstanding Notes, the consent of whose Holders is required for any amendment, supplement or waiver; or (c) modify or alter the provisions of the proviso to the definition of the term Outstanding; or (d) modify any of the provisions of this Section or Section 7.13, except to increase any percentage provided thereby or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Note affected thereby; or (e) permit the creation of any lien ranking prior to the lien of the Mortgage (except for such liens expressly permitted pursuant to Section 12.13). In determining whether to execute any amendment or supplement, subject to Sections 11.02(a) through (e), the Trustee may in its discretion determine whether or not any Notes would be affected by any such amendment or supplement and any such determination shall be conclusive upon the Holders of all Notes, whether theretofore or thereafter authenticated and delivered hereafter. The Trustee shall not be liable for any such determination made in good faith. It shall not be necessary for any Act of Noteholders under this Section to approve the particular form of any proposed amendment, supplement or waiver, but it shall be sufficient if such Act shall approve the substance thereof. In connection with any amendment, supplement or waiver under this Indenture, the Company or RIH may, but shall not be obligated to, offer to any Holder who consents to such amendment, supplement or waiver, or to all Holders, at the discretion of the Company or RIH,consideration for such Holder's consent to such amendment,supplement or waiver. The terms of any such enumerated document entered into pursuant to 75 this Section 11.02 shall be subject to the prior approval of the Casino Control Commission in consultation with the New Jersey Division of Gaming Enforecement. Section 11.03. EXECUTION OF AMENDMENTS AND SUPPLEMENTS. In executing, or accepting the additional trusts created by, any amendment or supplement permitted by this Article or the modification thereby of the trusts already created by this Indenture, the Trustee shall be entitled to receive from the Company, and, subject to Section 8.01(c), shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such amendment or supplement is authorized or permitted by this Indenture. The Trustee may, but shall not, except to the extent required in the case of a supplemental indenture entered into under Section 11.01(e), be obligated to, enter into any such amendment or supplement which affects the Trustee's own rights, duties or immunities under this Indenture or otherwise. Section 11.04. EFFECT OF AMENDMENT OR SUPPLEMENT. Upon the execution of any amendment or supplement under this Article, every Holder of Notes theretofore or thereafter authenticated and delivered hereunder shall be bound thereby. Section 11.05. CONFORMITY WITH TRUST INDENTURE ACT. Every supplemental indenture executed pursuant to this Article shall conform to the requirements of the TIA and Casino Control Act as then in effect. Section 11.06. REFERENCE IN NOTES TO AMENDMENT OR SUPPLEMENT. In the absence of a direction from the Company, Notes authenticated and delivered after the execution of any amendment or supplement pursuant to this Article may, and if required by the Trustee shall, bear a notation in form approved by the Trustee as to any matter provided for in such amendment or supplement. If the Company shall so determine, new Notes so modified as to conform, in the opinion of the Trustee and the Company, to any such amendment or supplement may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for Outstanding Notes. 76 ARTICLE TWELVE COVENANTS Section 12.01. PAYMENT OF PRINCIPAL AND INTEREST. The Company will duly and punctually pay or cause to be paid the principal of and interest on each of the Notes at the place or places, at the respective times and in the manner provided in the Notes and this Indenture. Each installment of interest on the Notes may be paid by mailing checks for such interest payable to or upon the written order of the Holders of Notes entitled thereto, to such address and in such name as they shall appear on the Note Register. Any installment of principal and interest shall be considered paid on the date it is due if the Trustee or Paying Agent (other than the Company or a Subsidiary of the Company or any Affiliate thereof) holds on that date money in immediately available funds designated exclusively for and sufficient to pay the installment and the Trustee and/or the Paying Agent has not received instructions from the Company not to make such payment or is not prohibited from paying such money to the Noteholders pursuant to the terms of this Indenture. The Company shall pay interest (including post-petition interest in any proceeding under any applicable bankruptcy law) to the extent legally permitted on overdue principal at the rate set forth in the Notes; and it shall pay interest (including post-petition interest in any proceeding under any applicable bankruptcy law) on unpaid interest otherwise payable under the first clause of this sentence at the same rate to the extent legally permitted. Section 12.02. MAINTENANCE OF OFFICE OR AGENCY. The Company will maintain, in the Borough of Manhattan, the City of New York, State of New York, an office or agency where Notes may be presented or surrendered for payment, where Notes may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Company in respect of the Notes and this Indenture may be served. The Company initially appoints the Trustee as its agent for presentation or surrender of Notes for payment or registration, transfer or exchange. The Trustee (or its corporate parent) will maintain an office in the Borough of Manhattan, the City of New York, State of New York, for such purposes. The Company may from time to time designate one or more other offices or agencies (in or outside the City of New York, State of New York) where the Notes may be presented or surrendered for any or all such purposes, and may from time to 77 time rescind such designations; 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 Borough of Manhattan, the City of New York, State of New York, for such purposes as stated in this Section 12.02. The Company will give prompt written notice to the Trustee of any such designation and any change in the location of any such office or agency. If at any time the Company shall fail to maintain such an 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 principal corporate trust office of the Trustee, and the Company hereby appoints the Trustee its agent to receive all such presentations, surrenders, notices and demands. Section 12.03. 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, or interest on, any of the Notes, segregate and hold in trust for the benefit of the Persons entitled thereto a sum, sufficient to pay the principal or interest so becoming due until such sums shall be paid or issued to such Persons or otherwise disposed of as herein provided, and will promptly notify the Trustee of such action or any failure so to act. The Company will, on or before each due date of the principal of or interest on, any Notes, deposit with a Paying Agent a sum in same day funds, sufficient to pay the principal or interest so becoming due, such sum, as the case may be, to be held in trust for the benefit of the Persons entitled to such principal 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: (a) hold all sums received by it as such agent for the payment of the principal of or interest on Notes (whether such sums have been paid to it by the Company or by any other obligor on the Notes) 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; 78 (b) promptly give the Trustee notice of any failure by the Company (or any other obligor upon the Notes) to make any payment of the principal of, or interest on, the Notes when the same shall be due and payable; and (c) at any time during the continuance of any such failure, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent. 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, or interest on, any Note and remaining unclaimed for two years after such principal or interest has become due and payable shall be paid to the Company on its request, or (if then held by the Company) shall be discharged from such trust, unless otherwise required by mandatory provisions of applicable escheat or abandoned or unclaimed property law, 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 regard to such 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 City of New York, State of New York, or mailed to each such Holder, or both, 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 or mailing, as the case may be, any unclaimed balance of such money then remaining will be paid to the Company. Section 12.04. CORPORATE EXISTENCE. Subject to Article Ten, each of the Company and RIH will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence and the corporate existence of each of its Subsidiaries in accordance with the respective organizational documents of the Company, RIH and each such Subsidiary and the rights (charter and statutory), licenses, permits, approvals and governmental franchises of it and each of its Subsidiaries necessary to the conduct of its and their respective businesses, including, without limitation, all licenses, permits, approvals and franchises necessary to assure the continued operation of RIH's gaming operations at the Casino-Hotel; PROVIDED, HOWEVER, any direct or indirect wholly owned subsidiary of RIH may consolidate with, merge into or transfer or distribute all or part of its properties and assets to RIH or the Company or as otherwise provided in Section 10.01. 79 Section 12.05. TO KEEP BOOKS; INSPECTION BY TRUSTEE. The Company and RIH will each keep proper books of record and account, in which full and correct entries shall be made of all material dealings or transactions of or in relation to the Notes and the properties, business and affairs of the Company and RIH in accordance with GAAP. The Company and RIH will at any and all times, upon the written request of the Trustee and at the expense of RIH, permit the Trustee by its representatives to inspect the Casino-Hotel and the books of account, records, reports and other papers of the Company and RIH, and to make copies and extracts therefrom, and will afford and procure a reasonable opportunity to make any such inspection (provided that the Company and RIH shall have received reasonable advance notice of such inspection and that any such inspection shall not unreasonably interfere with the business operations of the Company and RIH). The Company and RIH will furnish to the Trustee any and all information as the Trustee may reasonably request with respect to the performance by the Company and RIH of their covenants in this indenture. Section 12.06. REPORTS AND COMPLIANCE CERTIFICATES. (a) RIH shall furnish or cause to be furnished to the Trustee, within 105 days after each fiscal year of RIH: (i) a copy of annual audited financial statements of RIH prepared in conformity with GAAP, accompanied by a report of Ernst & Young or of another firm of independent certified public accountants of recognized national standing selected by RIH (the "National Accountants"), together with a certificate from such National Accountants stating that their audit examination has included a review of the terms of this Indenture and that the National Accountants have not become aware of any Event of Default or that a Default has occurred and is continuing, and if they have become aware of any such Event of Default or Default, describing it; PROVIDED, HOWEVER, that the National Accountants shall not be liable to any Person for any failure to discover any Event of Default or Default in connection with such review; and (ii) a copy of annual unaudited financial statements of RIH, including notes to such financial statements and corresponding management's discussion and analysis, in form and substance comparable to that which would be required to be filed with the Commission in an Annual Report on Form 10-K under the Exchange Act, prepared in the same manner as the audited financial statements referred to in clause (i) of this Section 12.06(a), signed by a proper accounting officer of RIH. RIH contemporaneously with the furnishing of such audited financial statements to the Trustee under clause (i) this Section 12.06(a), RIH shall mail copies of such audited financial statements to the Holders (which need not include the certificate referred to in such clause (i)). 80 (b) RIH shall furnish or cause to be furnished to the Trustee, within 60 days after each quarter of each fiscal year of RIH, except the final quarter of such fiscal year, a copy of unaudited financial statements of RIH prepared on a consistent basis with the audited financial statements referred to in clause (i) of Section 12.06(a), signed by a proper accounting officer of RIH and consisting of at least a balance sheet as at the close of such quarter and statements of operations and cash flow for such quarter and for the period from the beginning of such fiscal year to the close of such quarter, including notes to such financial statements and corresponding management's discussion and analysis, in form and substance comparable to that which would be required to be filed with the Commission in a Quarterly Report on Form 10-Q under the Exchange Act. RIH contemporaneously with the furnishing of such unaudited financial statements to the Trustee under this Section 12.06(b), RIH shall mail copies of such unaudited financial statements to the Holders (which need not be signed by a proper accounting officer of RIH). (c) RIH shall furnish or cause to be furnished to the Trustee, contemporaneously with the furnishing of a copy of the annual financial statements and of the quarterly financial statements referred to in Section 12.06(a) and Section 12.06(b), an Officers' Certificate dated the date of such annual financial statement or such quarterly financial statements to the effect that no Default or Event of Default has occurred and is continuing, or, if there is any such Default or Event of Default, describing it and the steps, if any, being taken to cure it. (d) RIH shall furnish or cause to be furnished to the Trustee, copies of each filing and report made by RIH or the Company with the Commission pursuant to the reporting and filing requirements of Section 13 or 15(d) of the Exchange Act, within 15 days after RIH or the Company, as applicable, is required to file the same. (e) RIH agrees that, if RIH becomes exempt from the Commission reporting and filing requirements of Section 13 or 15(d) of the Exchange Act, RIH shall prepare such periodic reports as it would otherwise have been required to file with the Commission and (i) at its own expense, cause all such periodic reports to be filed with the Commission, the Trustee and any exchange upon which the Notes then are listed, in each case on the date when such periodic report would have been required to be filed with the Commission under Section 13 or 15(d) of the Exchange Act, if either of such provisions were applicable, and (ii) keep copies of such periodic reports available at its office and promptly provide any Person who so requests with a copy of any such periodic report, at the Company's expense. 81 (f) Each of the Company and RIH shall comply with the provisions of SECTION 314(a) of the Trust Indenture Act. (g) The Company shall deliver to the Trustee, promptly upon becoming aware of any Default or Event of Default (but in no event later than five business days thereafter) in the performance of any covenant or agreement of the Company contained in this Indenture or any of the Mortgage Documents, an Officers' Certificate specifying with particularity such event. Section 12.07. LIMITATIONS AND DIVIDENDS AND RESTRICTED PAYMENTS. (a) The Company hereby covenants that, on and after the date of this Indenture, it will not, directly or indirectly, make, or permit any Subsidiary of the Company to make, any Restricted Payment. (b) RIH hereby covenants that, on or after the date of this Indenture,it will not, directly or indirectly make, or permit any Subsidiary of RIH to make, any Restricted Payment; PROVIDED, HOWEVER, that: (i) if RIH's Consolidated Interest Coverage Ratio, as certified to the Trustee by an Officers' Certificate, calculated at the time of the declaration of the dividend or distribution is equal to or exceeds two, then RIH may declare and pay cash dividends or make cash distributions in respect of any class of capital stock of RIH in an amount not to exceed in the aggregate with any other such cash dividends or distributions declared or made from and after the date hereof, 50 percent of RIH's Consolidated Net Income from and after the date hereof; and (ii) if (1) RIH's Consolidated Interest Coverage Ratio, as certified to the Trustee by an Officer's Certificate, calculated at the time of the declaration of the dividend or distribution is equal to or exceeds two, and (2) RIH has cash in excess of the amount required to pay interest on the Notes and the Junior Mortgage Notes on the next Interest Payment Date plus $20,000,000, then RIH may declare and pay cash dividends or make cash distributions in respect of any class of capital stock of RIH in an amount not to exceed such excess cash amount. (c) The Company and RIH will not, and will not permit any of their respective Subsidiaries to, create or otherwise cause or suffer to exist or become effective any encumbrance or restriction of any kind on the ability of any Subsidiary of RIH or the Company: (i) to pay dividends or make any other distribution on the capital stock of such Subsidiary that is owned by RIH, the Company or a wholly owned Subsidiary of the Company or RIH, as applicable; (ii) to pay any Indebtedness owed by such Subsidiary to RIH, the Company or any wholly owned Subsidiary of the Company or RIH, as 82 applicable; (iii) to make loans or advances to RIH, the Company or any wholly owned Subsidiary of the Company or RIH, as applicable; or (iv) to transfer any of its property or assets to the Company, RIH or any wholly owned Subsidiary of the Company or RIH, as applicable, except (A) any restrictions existing on or prior to the date hereof, or in connection with agreements in effect, or entered into, on the date hereof, or any permitted amendments, renewals, refundings, refinancings or extensions thereof; PROVIDED, HOWEVER, that the terms and conditions of any such amendments, renewals, refundings, refinancings or extensions are no more restrictive with respect to the matters set forth in clauses (i) through (iv) of this Section 12.07(c) than the agreements being amended, refunded, renewed, refinanced or extended; (B) any restrictions or encumbrances existing or arising pursuant to the terms of Indebtedness of a Person outstanding at the time such Person becomes a Subsidiary of the Company or RIH and not incurred in connection with, or in contemplation of, such Person becoming a Subsidiary of the Company or RIH or any permitted amendments, renewals, refinancings or extensions thereof; PROVIDED, HOWEVER, that the terms and conditions of any such amendments, renewals, refundings, refinancings or extensions are no more restrictive with respect to the matters set forth in clauses (i) through (iv) of this Section 12.07(c) than the agreements being amended, renewed, refunded, refinanced or extended; (c) encumbrances or restrictions existing under or by reason of applicable law or regulation (including, without limitation, the Casino Control Act) or this Indenture; (d) customary provisions restricting assignment of contracts or subletting or assignment of any lease governing a leasehold interest of any Subsidiary of the Company or RIH; or (e) net worth maintenance requirements imposed by any governmental authority. Section 12.08. LIMITATIONS ON ADDITIONAL INDEBTEDNESS AND ISSUANCE OF NOTES. (a) The Company and RIH shall not, and shall not permit any of their respective Subsidiaries to, directly or indirectly, incur, issue, assume, guarantee or otherwise become directly or indirectly liable with respect to, including, without limitation, through any merger or consolidation to which the Company, RIH or any of their respective Subsidiaries is a party or through any other acquisition of any such Subsidiary (collectively, "incur"), or have outstanding, any Indebtedness other than, without duplication, the following: (i) the Notes; (ii) Indebtedness represented by the Junior Mortgage Facility; 83 (iii) Indebtedness represented by the Working Capital Facility; (iv) Indebtedness represented by Capitalized Lease Obligations in an amount not in excess of $5,000,000 in the aggregate at any time outstanding; (v) Indebtedness represented by F,F&E Financing Agreements in an amount not in excess of $10,000,000 in the aggregate at any time outstanding; (vi) unsecured Indebtedness in an amount not in excess of $5,000,000 in the aggregate at any time outstanding that is subordinated and junior to the Junior Mortgage Notes at least to the extent set forth in the Subordination Provisions attached hereto as Exhibit C and which Indebtedness does not have any requirements for amortization payments, mandatory redemption or sinking fund payments prior to the stated maturity of the Junior Mortgage Notes and does not provide for the payment of interest in cash at any time when the most recent installment of interest on the Junior Mortgage Notes was not paid in cash; (vii) Non-Recourse Indebtedness in an amount not in excess of $25,000,000 in the aggregate at any time outstanding; (viii) After-Acquired Fee Mortgage Debt in an amount not in excess of $3,000,000 in the aggregate at any time outstanding; and (ix) Intercompany advances between RIH, the Company or any of their direct or indirect Subsidiaries on the one hand, and RII, on the other hand, in an in excess of $1,000,000 in the aggregate at any time outstanding. (b) The Company and RIH shall not permit any of their respective Subsidiaries to issue (other than to the Company, RIH or a direct or indirect wholly owned Subsidiary of the Company or RIH) any capital stock which has voting rights or has a preference as to any distribution over its common stock. Section 12.09. LIMITATIONS ON REPAYMENT OF SUBORDINATED INDEBTEDNESS. Neither the Company nor RIH shall, and neither the Company nor RIH shall permit any Subsidiary to, directly or indirectly, purchase, redeem, defease (including, but not 84 limited to, in-substance or legal defeasance) or otherwise acquire or retire for value prior to the stated maturity of, or prior to any scheduled mandatory redemption or sinking fund payment with respect to (collectively, to "repay" or a "repayment"), the principal of any Indebtedness of the Company, RIH or any Subsidiary of the Company or RIH which is subordinated (whether pursuant to its terms or by operation of law) in right of payment to the Notes; PROVIDED, HOWEVER, that this Section 12.09 shall not apply with respect to the Indebtedness represented by the Junior Mortgage Facility. Section 12.10. LIMITATION ON CERTAIN TRANSACTIONS. Each of the Company and RIH covenants that it will not, and will not permit any Subsidiary to, repurchase any Notes in the open market if an Event of Default shall have occurred and shall be continuing hereunder, under the Junior Mortgage Note Indenture or under the Senior Facility Note Indenture. Section 12.11. RESTRICTION OF ACTIVITIES. (a) RIH shall not, on or after the date of execution of this Indenture, until the date that is 91 days after the payment in full by the Company of the principal of (and interest, if any, on) all Outstanding Notes, engage in any business or investment activities other than those necessary for, incident to, connected with or arising out of acquiring, financing, owning and operating the Casino-Hotel or additional hotels or casinos or related or ancillary businesses. (b) Neither the Company nor RIH shall make any loans to any Affiliate or any other Person other than (i) Indebtedness of the type described in clause (ix) of Section 12.08(a), and (ii) loans to RII from the proceeds of the Indebtedness represented by the Working Capital Facility; PROVIDED, HOWEVER, that RIH shall have the right to make loans to employees of RIH actively involved in the operation of the Casino-Hotel or to engage in credit transactions in the operation of the Casino-Hotel, if such loans or credit transactions are in the ordinary course of business of operating a casino-hotel. (c) The Company shall not engage in any business (and shall not have any Subsidiaries) other than (i) to 85 collect principal, interest (and any interest on overdue principal and interest) and other amounts under any intercompany notes or guaranties made to the order of or otherwise in favor of the Company, (ii) to preserve its rights under this Indenture and the Mortgage Documents and otherwise to comply with its obligations thereunder and under the Notes, (iii) to do or cause to be done all things necessary or appropriate to protect the Trust Estate, (iv) to preserve its rights under the Junior Mortgage Indenture and the Junior Mortgage Documents and otherwise to comply with its obligations thereunder and under the Junior Mortgage Notes, (v) to issue the Indebtedness represented by any other Junior Mortgage Facility Notes, (vi) to issue Indebtedness represented by the Working Capital Facility; (vii) to preserve its rights under the Working Capital Facility and otherwise comply with its obligations under the Working Capital Facility, (viii) to incur any other Indebtedness permitted under this Indenture, (ix) to do all such acts and deeds necessary in connection with the Junior Mortgage Facility and the documents and instruments relating thereto and in connection with the Working Capital Facility and the documents and instruments relating thereto, (x) to declare, issue and pay dividends on, or make any redemptions or repurchases of, the Company's capital stock as contemplated by its Certificate of Incorporation (to the extent permitted hereby) and otherwise to comply with and perform the provisions of its Certificate of Incorporation and By-laws, and (xi) to do such further acts and deeds to effectuate any of the matters listed in the foregoing clauses of this Section 12.11(c). Section 12.12. LIMITATION ON SUBSIDIARIES CONSOLIDATED GROUP. The Company and RIH shall not have any Subsidiaries except the Subsidiaries existing on the date of this Indenture and Subsidiaries acquired by the Company or RIH in transactions not prohibited by the other provisions of this Indenture which are and shall at all times be wholly owned (directly or indirectly) by the Company or RIH. Section 12.13. LIMITATIONS ON LIENS. Neither the Company nor RIH will create, incur, suffer to exist or permit to be created or incurred any mortgage, lien, charge or encumbrance on or pledge of the Mortgage Documents or any of the Trust Estate, other than (a) the lien of the Mortgage Documents and the Assignment Agreement, (b) liens on the Trust Estate in connection with Indebtedness permitted by clauses (i), (ii), (iii), (iv) or (v) of Section 12.08(a), (c) other Permitted Encumbrances on the Trust Estate, and (d) a notice of intention or building contract filed by a mechanic, materialman or laborer under the New Jersey lien law. Without limiting the generality of the 86 previous sentence, but notwithstanding the provisions of such sentence, RIH shall not be deemed to have breached such provisions by virtue of the existence of liens for Impositions (as defined in the Mortgage) or mechanics' liens so long as RIH is in good faith contesting the validity of such liens in accordance with the provisions of Section 5.09 of the Mortgage. Section 12.14. COMPLIANCE WITH LAWS. Each of the Company and RIH shall comply, and shall cause each of its Subsidiaries to comply, with the Casino Control Act and all other applicable statutes (including, without limitation, ERISA), rules, regulations, orders and restrictions of the United States of America, states and municipalities, and of any governmental department, commission, board, regulatory authority, bureau, agency and instrumentality of the foregoing in respect of the conduct of its business and the ownership of its properties and assets, including, without limitation, the Trust Estate, except such as are being contested in good faith by appropriate proceedings in accordance with the Mortgage Documents (to the extent applicable) and except for such non-compliances as will not in the aggregate have a material adverse effect on the business, properties, operations or financial condition of the Company, RIH or their respective Subsidiaries. Section 12.15. PAYMENT OF TAXES AND OTHER CLAIMS. The Company or RIH shall 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, RIH or any of their respective Subsidiaries or upon the Trust Estate or any portion thereof or upon the income, profits or property of the Company, RIH or any of their respective Subsidiaries, and (b) all lawful claims for labor, materials and supplies which, if unpaid, will by law become a Lien upon the Trust Estate or upon any other property of the Company, RIH or any of their respective Subsidiaries; PROVIDED, HOWEVER, that the Company and RIH shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessments, charge or claim the amount, applicability or validity of which is being contested in good faith by appropriate proceedings in accordance with the Mortgage Documents (to the extent applicable) if adequate reserves therefor have been established in accordance with GAAP. Section 12.16. MAINTENANCE OF PROPERTIES. Each of the Company and RIH shall cause the Trust Estate and all other properties (other than obsolete 87 equipment) owned by or leased to it or any of its Subsidiaries, and used or useful in the conduct of its business or the business of the Company, RIH or such Subsidiary to be maintained and kept in good condition, repair and working order, except for reasonable wear and use, and will cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as required by the Mortgage Documents or, to the extent not governed by the Mortgage Documents, as in the reasonable judgment of the Board of Directors of RII may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times. Section 12.17. INSURANCE. Each of the Company and RIH shall maintain, and shall cause each of its Subsidiaries to maintain, with financially sound and reputable insurers, appropriate insurance on each of their respective properties and businesses against liabilities, casualties, risks and contingencies of the type and in amounts required by the Mortgage Documents or, to the extent not governed by the Mortgage Documents, as customarily maintained by corporations and other entities engaged in the same or similar businesses and similarly situated; PROVIDED, HOWEVER, that any such insurer shall be qualified to do business in the jurisdiction where the insured property is located. Section 12.18. WAIVER OF STAY, EXTENSION OR USURY LAWS. Each of the Company and RIH covenants (to the extent that it may lawfully do so) that it will not, and will not cause or permit any of its Subsidiaries to, at any time insist upon, or plead, or in any manner whatsoever claim, and will resist any and all efforts to be compelled to take the benefit or advantage of, any stay or extension law or any usury law or other law that would prohibit or forgive the Company or RIH from paying all or any portion of the principal of, or premium, if any, and interest on the Notes or the RIH Promissory Note or the Guaranty as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Indenture or the RIH Promissory Note or the Guaranty; and (to the extent that it may lawfully do so) the Company and RIH hereby expressly waive all benefit or advantage of any such law, and covenant that they will not hinder, delay or impede the execution of any power granted to the Trustee herein and in the Mortgage Documents, but will suffer and permit the execution of every such power as though no such law had been enacted. 88 Section 12.19. APPOINTMENT TO FILL A VACANCY IN OFFICE OF TRUSTEE. The Company, whenever necessary to avoid or fill a vacancy in the office of Trustee, will appoint, in the manner provided in Section 8.10, a Trustee, so that there shall at all times be a Trustee hereunder. Section 12.20. VALIDITY OF LIENS. Each of the Company and RIH represents and warrants that it has, and covenants that it shall continue to have, full corporate power and lawful authority to grant, release, convey, assign, transfer, mortgage, pledge, hypothecate and otherwise create the lien on the Trust Estate; and the Company and RIH shall warrant, preserve and defend the interest of the Trustee in and to the Trust Estate against the claims of all Persons, except as otherwise expressly permitted by the Mortgage Documents or this Indenture, and will take all action necessary to maintain and preserve the lien on the Trust Estate contemplated therein. Section 12.21. TRANSACTIONS WITH STOCKHOLDERS AND AFFILIATES. Each of the Company and RIH covenants that it shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, enter into or permit to exist any transaction (including, without limitation, the purchase, sale, lease or exchange of any property or the rendering of any service) with any Affiliate of the Company or RIH or with any Affiliate of any such holder, unless (a) such transaction is upon fair and reasonable terms which are no less favorable to the Company or such Subsidiary, as the case may be, than would be available in an arm's-length transaction with an unrelated person and (b) if over $250,000, such transaction is determined in the good faith judgment of a majority of the members of the Board of Directors of either (i) RII, so long as RII owns, directly or indirectly, a majority of the outstanding capital stock of RIH, directly or indirectly, or (ii) RIH, to be in the best interests of the Company, RIH or such Subsidiary as applicable; PROVIDED, HOWEVER, that this provision shall not apply to (A) any agreements, documents, instruments or transactions entered into in connection with the RIHF Senior Facility Notes, (B) the Services Agreement, (C) the RII Management Contract, or (D) the RII Tax Sharing Agreement. 89 ARTICLE THIRTEEN REDEMPTION OF NOTES Section 13.01. GENERAL APPLICABILITY OF ARTICLE. Notes which are redeemable before their Stated Maturity shall be redeemable in accordance with their terms and in accordance with this Article. Section 13.02. ELECTION TO REDEEM; NOTICE TO TRUSTEE. The election of the Company to redeem any Notes shall be evidenced by a Company Order. Redemption of any Notes shall not take place earlier than 15 days after the corporate action taken to authorize the redemption. In case of any redemption at the election of the Company of less than all the Outstanding Notes, 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 Notes to be redeemed. Section 13.03. SELECTION BY TRUSTEE OF NOTES TO BE REDEEMED. If less than all the Outstanding Notes are to be redeemed, the particular Notes to be redeemed shall be selected by a random, automated selection process or pro rata, as deemed appropriate by the Trustee, not more than 60 days prior to the Redemption Date by the Trustee from the Outstanding Notes which have not previously been called for redemption, and such selection method may provide for the selection for redemption of portions (equal to the greater of $1,000 and the smallest authorized denomination of the Notes of such series, or a multiple thereof) of the principal of Notes of a denomination larger than $1,000. The Trustee shall promptly notify the Company in writing of the Notes selected for redemption and, in the case of any Note 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 the redemption of Notes shall relate, in the case of any Note redeemed or to be redeemed only in part, to the portion of the principal of such Note which has been or is to be redeemed. Section 13.04. NOTICE OF REDEMPTION. Notice of redemption shall be given by the Company or, at the Company's request, by the Trustee in the name and 90 at the expense of the Company by first-class mail, postage prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption Date, to each Holder of Notes of such series to be redeemed, at his address appearing in the Note Register. Any notice which is mailed in the manner herein provided shall be conclusively presumed to have been duly given, whether or not the Holder receives the notice. In any case, failure to duly give notice by mail, or any defect in the notice to the Holder of any Notes designated for redemption in whole or in part, shall not affect the validity of the proceedings for the redemption of any other Notes. All notices of redemption shall state: (a) the Redemption Date; (b) the Redemption Price; (c) the principal amount of Notes to be redeemed, and, if less than all outstanding Notes are to be redeemed, the identification (and, in the case of partial redemption, the respective principal amounts) of the Notes to be redeemed; (d) that on the Redemption Date, the Redemption Price of each of the Notes to be redeemed will become due and payable and that the interest thereon shall cease to accrue from and after such date; and (e) the place or places where the Notes to be redeemed are to be surrendered for payment of the Redemption Price. Section 13.05. 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 12.03) an amount of money sufficient to pay the Redemption Price of all the Notes which are to be redeemed on that date. Such money shall be held in trust for the benefit of the Persons entitled to such Redemption Price and shall not be deemed to be part of the Trust Estate. Section 13.06. NOTES PAYABLE ON REDEMPTION DATE. Notice of redemption having been given as aforesaid, the Notes so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified and from and after such date (unless the Company 91 shall default in the payment of the Redemption Price) such Notes shall cease to bear interest. Upon surrender of any such Note for redemption in accordance with said notice, such Note shall be paid by the Company at the Redemption Price. Installments of interest due on or prior to the Redemption Date shall be payable to the Holders of the Notes registered as such on the relevant Record Dates according to the terms of such Notes and the provisions of Section 3.07. If any Note called for redemption shall not be so paid upon surrender thereof for redemption, the principal shall, until paid, bear interest from the Redemption Date at the rate prescribed therefor in the Note. Section 13.07. NOTES REDEEMED IN PART. Any Note which is to be redeemed only in part shall be surrendered at a Place of Payment therefor (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 his attorney duly authorized in writing) and the Company shall execute and the Trustee shall authenticate and deliver to the Holder of such Note, without service charge, a new Note or Notes of any authorized denomination or denominations as requested by such Holder in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Note so surrendered. Section 13.08. REDEMPTION PURSUANT TO CASINO CONTROL ACT. Notwithstanding the provisions of this Article Thirteen, if the Casino Control Commission does not waive the qualification requirements as to any Noteholder (whether the record owner or beneficial owner) and requires that such Noteholder be qualified under the Casino Control Act, then, in such event, such Noteholder must qualify under such Act. If a Noteholder does not so qualify, the Noteholder must dispose of its interest in the Notes, within 30 days after the Company's receipt of notice of such finding, or the Company may repurchase such Notes at the lower of the Outstanding Amount and the Fair Market Value of such Notes, plus accrued interest to the date of such repurchase. Commencing on the date the Casino Control Commission serves notice upon either RIH or the Company that any Holder is disqualified, it shall be unlawful for any such disqualified Holder: (i) to receive any dividends or interest upon this Note; (ii) to exercise, directly or through any trustee or nominee, any right conferred by this Note; or (iii) to receive any remuneration in any form from either the Company or RIH for services rendered or otherwise. 92 ARTICLE FOURTEEN DEFEASANCE Section 14.01. DISCHARGE OF THE INDENTURE AND DEFEASANCE OF THE SECURITIES. The Company shall be deemed to have paid and discharged the entire Indebtedness on the Notes and the provisions of this Indenture (except as to any surviving rights of transfer or exchange of Notes herein or therein provided for and any right to receive payments of principal and interest as provided in this Section 14.01), if: (1) The Company irrevocably deposits in trust with the Trustee, pursuant to an irrevocable trust and security agreement in form and substance reasonably satisfactory to the Trustee, U.S. Legal Tender or direct non-callable obligations of, or non-callable obligations guaranteed as to timely payment by, the United States of America for the payment of which obligation or guarantee the full faith and credit of the United States of America is pledged ("U.S. Government Obligations") maturing as to principal and interest in such amounts and at such times as are sufficient, without consideration of the reinvestment of such interest and after payment of all Federal, state and local taxes or other charges or assessments in respect thereof payable by the Trustee, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof (in form and substance reasonably satisfactory to the Trustee) delivered to the Trustee, to pay reasonable compensation to the Trustee under Section 8.07 and the principal of and interest on the outstanding Notes on the dates on which any such payments are due and payable in accordance with the terms of the Indenture and of the Notes; (2) Such deposits shall not cause the Trustee to have a conflicting interest as defined in and for purposes of the TIA; (3) Such deposit will not result in a Default under this Indenture; (4) The Company shall deliver to the Trustee an Opinion of Counsel, or a private ruling of the Internal Revenue Service, in form and substance satisfactory to the Trustee, to the effect that Holders of the Notes will not recognize income, gain or loss for Federal income tax purposes as a result of such deposit and the defeasance contemplated hereby and will be subject to Federal income tax in the same amounts and in 93 the same manner and at the same times as would have been the case if such deposit and defeasance had not occurred; (5) The deposit shall not result in the Company, the Trustee or the trust becoming or being deemed to be an "investment company" under the Investment Company Act of 1940, as amended; (6) The Holders shall have a perfected security interest under applicable law in the U.S. Legal Tender or U.S. Government Obligations deposited pursuant to Section 14.01(1); and (7) The Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent specified herein relating to the defeasance contemplated by this Section 14.01 have been complied with. If all or any portion of the Notes are to be redeemed through such irrevocable trust, the Company must make arrangements satisfactory to the Trustee, at the time of such deposit, for the giving of the notice of such redemption or redemptions by the Trustee in the name and at the expense of the Company. The Trustee and each co-trustee and separate trustee, if any, then acting as such hereunder shall, at the expense of the Company, execute and deliver a termination statement and such instruments of satisfaction and discharge as may be necessary and pay, assign, transfer and deliver to the Company or upon Company Order all cash, securities and other personal property then held by it hereunder, other than pursuant to this Section 14.01. Section 14.02. APPLICATION OF DEPOSITED MONEY. U.S. Legal Tender or U.S. Government Obligations deposited with the Trustee pursuant to Section 14.01 shall be applied by the Trustee in accordance with Section 5.02. Section 14.03. REPAYMENT TO THE COMPANY. The Trustee and the Paying Agent shall promptly pay to the Company upon request any excess money or securities held by them at any time in accordance with the provisions of Section 5.03. 94 ____________________ This instrument may be executed in any number of counterparts or with counterpart signatures, each of which as executed shall be deemed to be an original, but all such counterparts shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed and attested, all as of the day and year first above written. RESORTS INTERNATIONAL HOTEL FINANCING, INC. Attest: By: ------------------------- -------------------------- Name: Title: RESORTS INTERNATIONAL HOTEL, INC. Attest: By: _________________________ __________________________ Name: Title: STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, as Trustee Attest: By: _________________________ __________________________ Name: Title: 95 STATE OF NEW YORK : : ss COUNTY OF NEW YORK : I certify that on ___________, 1993, ____________________ personally came before me, and he acknowledged under oath, to my satisfaction, that: (a) he is the ______________ of Resorts International Hotel Financing, Inc., the corporation named in this document; (b) he is the attesting witness to the signing of this document by the proper corporate officer who is ___________________ of Resorts International Hotel Financing Inc.; (c) this document was signed and delivered by the corporation as its voluntary act duly authorized by a proper resolution of its Board of Directors; (d) he knows the proper seal of the corporation which was affixed to this document; and (e) he signed this proof to attest to the truth of these facts. ________________________________ Signed and sworn to before me on _________, 1993. _____________________________ Notary Public of the State of New York STATE OF NEW YORK : : ss COUNTY OF NEW YORK : I certify that on ___________, 1993, _________________ personally came before me, and this person acknowledged under oath, to my satisfaction, that: (a) this person is the ________________ of Resorts International Hotel, Inc., the corporation named in this document; (b) this person is the attesting witness to the signing of this document by the proper corporate officer who is ______________________, the __________________________ of Resorts International Hotel, Inc.; (c) this document was signed and delivered by the corporation by its voluntary act duly authorized by a proper resolution of its Board of Directors; (d) this person knows the proper seal of the corporation which was affixed to this document; and (e) this person signed this proof to attest to the truth of these facts. -------------------------------- Signed and sworn to before me on _________, 1993. - ----------------------------- Notary Public [seal] STATE OF NEW YORK : : ss COUNTY OF NEW YORK : I certify that on ________, 1993, ________________ personally came before me, and this person acknowledged under oath, to my satisfaction, that: (a) this person is the _________________ of State Street Bank and Trust Company of Connecticut, National Association, a national banking association named in this document; (b) this person is the attesting witness to the signing of this document by the proper corporate officer who is __________________, the __________________________ of State Street Bank and Trust Company of Connecticut, National Association; (c) this document was signed and delivered by the corporation by its voluntary act duly authorized by a proper resolution of its Board of Directors; (d) this person knows the proper seal of the corporation which was affixed to this document; and (e) this person signed this proof to attest to the truth of these facts. -------------------------------- Signed and sworn to before me on _________, 1993. - ----------------------------- Notary Public Exhibit A RIH Promissory Note EXHIBIT A AMENDED AND RESTATED SECURED PROMISSORY NOTE $125,000,000 [ ], 1994 WHEREAS, in partial repayment of certain inter- company debt owed by Resorts International Hotel, Inc., a New Jersey corporation ("RIH"), to Resorts International, Inc., a Delaware corporation ("RII"), RIH has issued to RII a promissory note on the date hereof in the principal amount of $125,000,000 (as the same may be amended or restated from time to time, the "Note"), which Note is secured by a Mortgage Securing RIH Promissory Note dated as of the date hereof (the "Mortgage"), by RIH, as mortgagor which Mortgage encumbers certain real property owned or leased by RIH together with all buildings and improvements erected thereon (collectively, the "Property"); and WHEREAS, RII has transferred the Note and the Mortgage to RIHF in exchange for 11% Mortgage Notes due 2003 (the "Notes") in an aggregate principal amount of $125,000,000, which Notes were issued pursuant to that certain Indenture dated as of even date herewith (the "Indenture") among RIHF, as issuer, RIH, as guarantor, and State Street Bank and Trust Company of Connecticut, National Association, as trustee (the "Trustee"); and WHEREAS, RIHF has requested RIH to amend and restate the Note; NOW, THEREFORE, RIH agrees to amend and restate the Note as follows: RIH, for value received hereby promises to pay to the order of RIHF (RIHF and any subsequent holder of this Note being herein referred to as the "Payee"), the principal sum of One Hundred Twenty-Five Million Dollars ($125,000,000), or such other principal sum as shall be outstanding hereunder, on September 15, 2003 (the "Maturity Date") in accordance with the provisions hereof, with interest on such principal sum from time to time outstanding, computed from [ ], 1994 [the Effective Date], in semi-annual installments of interest on March 15 and September 15 of each year, commencing 1 initially on September 15, 1994, at a rate of 11% per annum on the unpaid balance hereof, until the principal hereof is paid in full. Payments of principal and interest on this Note shall be made at [address of the Payee], or at such other address as the Payee may designate in writing. Interest will be computed on the basis of a 360-day year of twelve 30-day months, based on the actual number of days elapsed. Principal and interest shall be paid in money of the United States that at the time of payment is legal tender for public and private debts. l.(a) This Note shall be prepaid (i) in connection with, but only to the extent of, any redemption of the Notes of RIHF issued pursuant to the Indenture (all prepayments of this Note are hereinafter referred to as "Prepayments"), and/or (ii) by the surrender to the Trustee of the principal amount of any Notes purchased or otherwise acquired by RIH or the Company (as defined in the Indenture) other than pursuant to the redemption provisions of the Notes and surrendered to the Trustee for cancellation in accordance with the provisions of the Notes or the Indenture (it being expressly understood that the same Notes shall reduce the principal amount of this Note only once). Each Prepayment under clause (i) above shall be made at the time that payment is required or permitted to be made by the Company to the Trustee under the Indenture in respect of any redemption of Notes. Each Prepayment under clause (ii) above shall be deemed to be made at the time of surrender of such Notes for cancellation. Each Prepayment of this Note pursuant to clause (i) above shall be in an amount equal to the aggregate amount paid to holders of Notes on account of the redemption thereof (other than interest), together with accrued and unpaid interest on the amount of the reduction in the principal amount of this Note as a result of such Prepayment. The principal amount of this Note shall be reduced as a result of such prepayment in an amount equal to the aggregate principal amount of the Notes so redeemed or surrendered. (b) Except as set forth in Section 1(a), this Note may not be prepaid in whole or in part. 2. RIH shall pay interest on overdue principal and prepayment premium at the rate of 14% per annum. 3. This Note is secured by the Mortgage on the Property. 4. If (i) RIH defaults in the payment of interest when the same becomes due and payable and the default continues for a period of ten days following receipt of a notice from the Payee or the Trustee specifying such default 2 and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; (ii) RIH defaults in the payment of the principal or any part thereof when the same becomes due and payable at Maturity (as defined in the Mortgage); (iii) there shall occur any other Event of Default under the Mortgage or any other Note (as defined in the Mortgage); or (iv) there shall occur any other Event of Default under the Indenture, then on the happening of any such event, the Payee may declare the entire Outstanding Amount (as defined in the Indenture) of this Note and all accrued and unpaid interest thereon and all sums due under Section 5 of this Note and the Mortgage (collectively, the "Debt") to become immediately due and payable. 5. RIH hereby waives presentment and demand for payment, notice of dishonor, protest and notice of protest of this Note and agrees to pay all costs of collection when incurred, including reasonable attorneys' fees, which costs may be added to the amount due under this Note and be receivable therewith, and to perform and comply with each of the terms, covenants and provisions contained in this Note and the Mortgage on the part of RIH to be observed or performed. Except as expressly provided herein, no release of any security for the principal sum due under this Note or extension of time for payment of this Note, or any installment hereof, and no alteration, amendment or waiver of any provision of this Note or the Mortgage shall release, discharge, modify, change or affect the liability of RIH under this Note or the Mortgage. 6. RIH covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any usury, stay or extension law or any other law which would prohibit or forgive RIH from paying all or any portion of the interest on this Note, wherever enacted, now or at any time hereafter in force, or which may otherwise affect the covenants or the performance of this Note or the Mortgage; and RIH (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Payee, but will suffer and permit the execution of every such power as though no such law had been enacted. 7. This Note shall be deemed to be a contract under the laws of the State of New York and shall be construed in accordance with and governed by the internal laws of the State of New York. 8. This Note may not be changed or terminated orally, but only by an agreement in writing signed by the 3 party against whom enforcement of such change or termination is sought. 9. RIH shall not claim any credit or deduction from the interest or principal due hereunder by reason of payment of any tax assessed upon the Property. 10. Whenever the provisions of this Note and the provisions of the Indenture shall be inconsistent, the provisions of the Indenture shall govern. 11. This Note is subject to and shall be enforced in compliance with the provisions of the New Jersey Casino Control Act. This Note shall not be transferred, assigned or amended without the prior approval of the New Jersey Casino Control Commission. 12. Whenever used herein, the singular number shall include the plural, the plural the singular, and the words "Payee" and "RIH" shall include their respective successors and assigns. IN WITNESS WHEREOF, RIH has duly executed this Note as of the day and year first above written. RESORTS INTERNATIONAL HOTEL, INC. By: _____________________________ Name: Title: 4 STATE OF NEW YORK ) )ss. COUNTY OF NEW YORK ) BE IT REMEMBERED, that on this [ ] day of [ ], 1994, before me, the subscriber, a Notary public of the State of New York, personally appeared [ ], [ ] of RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation, and he acknowledged that he signed, sealed and delivered the same as his voluntary act and deed and the act and deed of said RESORTS INTERNATIONAL HOTEL, INC., and that he received a true copy of the within instrument on behalf of said corporation. Notary Public of the State of New York [Seal] 5 Exhibit B Assignment Agreement from Resorts International Hotel Financing, Inc. NA932280131 - MORTGAGE ASSIGNMENT GD&C DRAFT DATED 12/17/93 ============================================================================== ASSIGNMENT OF AGREEMENTS ________________ RESORTS INTERNATIONAL HOTEL FINANCING, INC., a Delaware corporation, as Assignor, TO STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION a national banking association, as Assignee Dated as of _________________, 1994 ============================================================================== Prepared by:__________________________ D. Eric Remensperger, Esq. ASSIGNMENT OF AGREEMENTS THIS ASSIGNMENT made as of the ___ day of ___________, 1994, by RESORTS INTERNATIONAL HOTEL FINANCING, INC., a Delaware corporation ("ASSIGNOR"), having an address at c/o Resorts International, Inc., 1133 Boardwalk, Atlantic City, New Jersey 08401, to STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, a national banking association, having an address at 750 Main Street, Suite 1114, Hartford, Connecticut 06103, in its capacity as Trustee ("Assignee"), under that certain Indenture dated as of even date herewith (the "INDENTURE") among Assignor, Assignee and Resorts International Hotel, Inc., a New Jersey corporation ("MORTGAGOR"). WITNESSETH: WHEREAS, in partial repayment of certain inter-company debt owed by Mortgagor to Resorts International, Inc., a Delaware corporation ("RII"), Mortgagor has issued to RII a secured promissory note on the date hereof in the principal amount of $125,000,000 (as the same may be amended or restated from time to time, the "RIH PROMISSORY NOTE"), which note is secured by a Mortgage Securing RIH Promissory Note of even date (the "MORTGAGE"), which Mortgage encumbers certain real property owned or leased by Mortgagor as more specifically described on SCHEDULE 1 hereto together with all buildings and improvements erected thereon (collectively, the "PROPERTY"); and WHEREAS, RII has transferred the RIH Promissory Note and the Mortgage to Assignor in exchange for 11% Mortgage Notes due 2003 (the "NOTES") in an aggregate principal amount of $125,000,000, which Notes were issued pursuant to the Indenture; and WHEREAS, as further security for the obligations of Mortgagor under the RIH Promissory Note, Mortgagor has executed and delivered (i) an Assignment of Operating Assets and (ii) an Assignment of Leases and Rents, each in favor of Assignor (as assignee of RII) and each dated as of the date hereof (said Assignments and the Mortgage collectively referred to herein as the "RIH PROMISSORY NOTE MORTGAGE DOCUMENTS"), pursuant to which Mortgagor granted a security interest in specified personal property, assigned certain other rights and assigned all right, title and interest of Mortgagor in leases and rents to Assignor, all as security for the performance and observance of obligations of Mortgagor under the RIH Promissory Note; and WHEREAS, the rights and obligations of the Assignee hereunder are subject to the terms set forth in that certain Intercreditor Agreement dated as of the date hereof among Assignor, Assignee, Mortgagor, Fidelity Management and Trust Company, as trustee, and U.S. Trust Company of California, N.A., as trustee (and such other parties that may from time to time become a party thereto); and WHEREAS, in order to secure payment of the Notes and all other payments due to the holder(s) from time to time of the Notes (collectively, the "HOLDERS") or the Trustee under the Indenture, Assignor has agreed to execute this Assignment and to be bound by its terms; NOW, THEREFORE, THIS ASSIGNMENT FURTHER WITNESSETH: That Assignor in consideration of the purchase of the Notes by the Holders, Ten Dollars ($10.00) lawful money of the United States of America duly paid to Assignor by Assignee at or before the execution and delivery of these presents and for other good and valuable consideration, the receipt of which are hereby acknowledged, does hereby sell, assign and transfer unto Assignee and unto its successors and to its assigns forever, for its benefit and for the benefit of the Holders, and does hereby grant to Assignee a security interest in and to all of Assignor's estate, right, title and interest in, to and under any and all of the following described property, rights and interests (collectively, the "ASSIGNED PROPERTIES"): GRANTING CLAUSE FIRST All right, title and interest of Assignor in and to the RIH Promissory Note, including all renewals, extensions, modifications and replacements of the same, and without limiting the generality of the foregoing, the present, continuing and future right to make claim for, collect or cause to be collected, receive or cause to be received directly from Mortgagor thereunder, all payments of principal, interest and other sums of money payable thereunder. GRANTING CLAUSE SECOND All right, title and interest of Assignor in and to the RIH Promissory Note Mortgage Documents, including all extensions, renewals, modifications, supplements and replacements of the same. 2 TO HAVE AND TO HOLD all said properties, rights and interests unto Assignee and its successors and assigns forever. THIS ASSIGNMENT FURTHER WITNESSETH, that Assignor hereby agrees and covenants with Assignee as follows: ARTICLE ONE PARTICULAR COVENANTS OF ASSIGNOR Section 1.01. PERFORMANCE OF COVENANTS. Assignor represents, warrants and covenants that it is duly authorized to enter into this Assignment, and to grant and convey a lien on and security interest in the Assigned Properties to Assignee in the manner and to the extent herein set forth and that all action on its part required for the execution and delivery of this Assignment has been duly and effectively taken. Section 1.02. FURTHER ACTION REQUIRED. (a) Assignor covenants that it will, from time to time, execute and deliver such further instruments and take such further actions as may be required to carry out the purposes of this Assignment. (b) Assignor hereby appoints Assignee as its lawful attorney-in-fact (such power being coupled with an interest) in the name of Assignor or Assignee or both to execute any instruments or to take any actions to enforce all rights, powers and remedies of Assignor under or pursuant to the Assigned Properties. (c) Nothing contained herein shall limit the rights of Assignee contained in the Mortgage or the Indenture. (d) Until this Assignment is discharged in accordance with Section 5.01 hereof, no amendment, waiver, modification, discharge, release, enforcement or satisfaction by Assignor of any of the rights or remedies under the Assigned Properties shall be effective without the prior consent and approval of Assignee, and Assignor shall have no power or authority to take any such action without such consent and approval. ARTICLE TWO OBLIGATIONS TO ASSIGNEE Section 2.01. CONTINUING OBLIGATIONS. (a) Assignee shall have no obligation, duty or liability with respect to the Assigned Properties or any of 3 them (other than those specifically assumed in its capacity as Trustee pursuant to the Indenture). (b) Assignor shall at all times remain liable to observe and perform all of its covenants and obligations, if any, under the Assigned Properties, and does hereby agree to indemnify and hold harmless Assignee, its successors and assigns, from any liability, loss, damage or expense it or they may incur under the Assigned Properties or by reason of this Assignment. ARTICLE THREE PAYMENTS Section 3.01. PAYMENTS. All Revenues (as hereinafter defined) due and to become due under or pursuant to the Assigned Properties shall be paid by Mortgagor directly to Assignee at the address set forth in Section 6.02 hereof. Neither Assignor nor Assignee shall have the right, without Mortgagor's prior written consent, to instruct Mortgagor to pay Revenues to Assignor or in any manner or to any party other than directly to Assignee. Section 3.02. MORTGAGOR'S ACKNOWLEDGMENT. Mortgagor hereby joins in the execution of this Assignment to acknowledge (a) the assignment by Assignor to Assignee of Assignor's right, title and interest in, to and under the Assigned Properties, (b) Mortgagor's agreement to make payment of all Revenues under the Assigned Properties directly to Assignee at the address set forth in this Assignment, and (c) the right of Assignee to exercise or enforce in its own name, in the name of Assignor, or both, all of the rights, powers and remedies of Assignor in, to and under the Assigned Properties. Section 3.03. REVENUES. As used herein, the term "REVENUES" shall mean (a) all amounts paid or payable by Mortgagor under the RIH Promissory Note or the RIH Promissory Note Mortgage Documents, and (b) the net proceeds realized upon or as a result of the enforcement of any mortgage lien or security interest granted under the Assigned Properties or this Assignment or upon or as a result of the exercise of any right or remedy under the Assigned Properties or this Assignment. Section 3.04. CONFIRMATION. Assignor hereby agrees, and Mortgagor hereby acknowledges, that Mortgagor may rely exclusively on Assignee's directive that Assignee is entitled to take action under this Assignment. 4 ARTICLE FOUR DEFAULT PROVISIONS AND REMEDIES Section 4.01. ENFORCEMENT OF REMEDIES. (a) Upon the occurrence of any default under the Indenture or the Assigned Properties, or any of them (each, a "DEFAULT"), not cured within the applicable grace period after the applicable notice provision, if any, has been satisfied (each called an "EVENT OF DEFAULT"), Assignee may, at its option, (i) proceed directly to protect and enforce its rights and the rights of any Holders under this Assignment or pursuant to the Assigned Properties, or any one of them, by such suits, actions or special proceedings in equity or at law, or by proceedings in the office of any board or officer having jurisdiction, either for the specific performance of any covenant or agreement contained herein, or in the Assigned Properties, or any of them, or in aid of execution of any power granted herein or pursuant to the Assigned Properties, or any one of them, or for the enforcement of any proper legal or equitable remedy, including, without limitation, foreclosure of the Mortgage and/or the sale of the collateral or part thereof secured thereby at such foreclosure sale, subject to statutory and other legal requirements, as Assignee shall deem most effective to protect and enforce such rights, and Assignor hereby appoints Assignee as its lawful attorney-in-fact (such power being coupled with an interest) in the name of Assignor or Assignee or both to effectuate such foreclosure and/or sale of such collateral or part thereof; or (ii) instruct, direct and cause Assignor to effectuate the foregoing on behalf of and for the benefit of Assignee and the Holders, it being further understood that Mortgagor joins in the execution of this Assignment in order to acknowledge its agreement to promptly and duly execute and deliver any and all documents and take any and all actions required by Assignee in order to permit Assignee to foreclose and/or sell such collateral or part thereof, and obtain the benefits of this Assignment, as aforesaid. (b) Upon the occurrence of any Event of Default, Assignee shall be entitled to sue for, enforce payment of and receive any and all amounts then and at any time remaining due from Assignor or Mortgagor for principal and interest on the RIH Promissory Note, or other sums due under the RIH Promissory Note Mortgage Documents, as the case may be, or otherwise under any of the provisions of the Assigned Properties, or any of them, with interest interest on overdue payments of such principal, at the rate set forth in the RIH Promissory Note, from the date of Default to the date of such payment, together with any and all fees, costs and expenses of collection (including reasonable attorneys' fees and court costs), subject to statutory and other legal requirements. 5 (c) Regardless of the occurrence of an Event of Default, upon five days' written notice to Mortgagor (or such shorter period or without notice if deemed necessary and appropriate by Assignee), Assignee may institute and maintain or cause in the name of Assignor or Assignee or both to be instituted and maintained such suits and proceedings as it may be advised by its counsel shall be necessary and appropriate to prevent any impairment of the Assigned Properties, or any of them, and to protect its interests in the Assigned Properties, and in the rents, issues, rights, revenues and other income arising therefrom, including power to institute and maintain proceedings to restrain the enforcement or compliance with any 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 hereunder or would be materially prejudicial to the interests of Assignee. (d) Nothing contained in this Article Four is intended to grant Assignee any greater remedies and rights than those allowed to Assignor in the respective Assigned Properties. In the event of any conflict between the remedies and rights contained in any of the Assigned Properties and the remedies and rights contained in this Article Four, then the remedies and rights set forth in the applicable Assigned Property shall govern. ARTICLE FIVE DISCHARGE OF ASSIGNMENT Section 5.01. DISCHARGE OF ASSIGNMENT. If Assignor shall pay or cause to be paid, or there shall otherwise be paid, to Assignee and/or the Holders' all amounts required to be paid by Assignor pursuant to the Indenture and the Notes, and the conditions precedent for the Indenture shall cease, determine and become null and void in accordance with Section 5.01 of the Indenture, Assignee shall promptly cancel and discharge of record this Assignment and any financing statements filed in connection herewith and execute and deliver to Assignor and to Mortgagor all such instruments as may be appropriate to evidence such discharge and satisfaction of said lien or liens, and Assignee shall pay over or deliver to Assignor all other moneys and securities held by it pursuant to this Assignment, which are not required for the payment of (a) principal and redemption price, if applicable, of and interest on, the Notes, and (b) all other amounts required to be paid by Assignor pursuant to the Indenture and the Notes. 6 ARTICLE SIX MISCELLANEOUS PROVISIONS Section 6.01. BINDING SUCCESSORS AND ASSIGNS. All of the covenants, stipulations, obligations and agreements contained in this Assignment shall be binding upon and inure to the benefit of Assignor, Assignee and Mortgagor (to the extent applicable to Mortgagor) and their respective successors and assigns. Section 6.02. NOTICES. (a) Any request, notice, demand, authorization, direction, request or other instrument authorized or required by this Assignment to be given to or filed with Assignor, Assignee or Mortgagor (collectively, "NOTICES") shall be deemed given when either (i) delivered by hand or (ii) five days after sending by registered or certified mail, postage prepaid, in either case addressed as follows: If to Assignor, at: Resorts International Hotel Financing, Inc. c/o Resorts International, Inc. 1133 Boardwalk Atlantic City, New Jersey 08401 Attention: Christopher D. Whitney If to Assignee, at: State Street Bank and Trust Company of Connecticut, National Association 750 Main Street Suite 1114 Hartford, Connecticut 06103 Attention: Corporate Trust Department If to Mortgagor, at: Resorts International Hotel, Inc. c/o Resorts International, Inc. 1133 Boardwalk Atlantic City, New Jersey 08401 Attention: Christopher D. Whitney (b) By Notice to Mortgagor, Assignor and/or Assignee, given as provided above, any party may designate additional or substitute addresses for Notices, which shall, notwithstanding Section 6.02(a), be deemed given with received. Section 6.03. PARTIAL INVALIDITY. In case any one or more of the provisions of this Assignment shall for any reason be held to be illegal or invalid, such illegality or 7 invalidity shall not affect any other provision of this Assignment, but this Assignment shall be construed and enforced at the time as if such illegal or invalid provisions had not been contained herein or therein, nor shall such illegality or invalidity or any application thereof affect any legal and valid application herein or thereof from time to time. Section 6.04. APPLICABLE LAW. This Assignment shall be governed by and construed under the internal laws of the State of New Jersey, without giving effect to the principles of conflicts of law. Section 6.05. NO AMENDMENT. For so long as the Notes shall remain outstanding, the Assigned Properties may not be modified, amended or terminated except in accordance with the provisions of the Indenture or the Assigned Properties. Section 6.07. CASINO CONTROL ACT. Each of the provisions of this Assignment is subject to and shall be enforced in compliance with the provisions of the New Jersey Casino Control Act. This Agreement shall not be transferred, assigned or amended without prior approval of the New Jersey Casino Control Commission. IN WITNESS WHEREOF, Assignor, Assignees and Mortgagor have executed this Assignment Agreement as of the date first above written. RESORTS INTERNATIONAL HOTEL FINANCING, INC. Attest: _________________________________________ By:_____________________________ President RESORTS INTERNATIONAL HOTEL, INC. Attest: _________________________________________ By:______________________________ President 8 STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION Attest: _______________________________________ By:______________________________ Title 9 STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK ) BE IT REMEMBERED that on ______________, 1994, before me, the subscriber, __________________, personally appeared _______________, who, being by me duly sworn on his oath, deposes and makes proof to my satisfaction, that he is the Asst. Secretary of Resorts International Hotel Financing, Inc., the corporation named in the within instrument; that __________________ is the Vice President of said Corporation; that the execution, as well as the making of this instrument, has been duly authorized by a proper resolution of the board of directors of the said corporation; that deponent well knows the corporate seal of said corporation; and that the seal affixed to said instrument is the proper corporate seal and was thereto affixed and said instrument signed and delivered by said Vice President as and for the voluntary act and deed of said corporation. In presence of deponent who thereupon subscribed his name thereto as attesting witness; and deponent signed this proof to attest to the truth of these facts. ____________________________ [Name] [Assistant] Secretary Sworn to and subscribed before me, the date aforesaid ____________________________ Notary Public My commission expires: ____________________________ 10 STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK ) BE IT REMEMBERED that on _________________, 1994, before me, the subscriber, __________________, personally appeared ___________________, who being by me duly sworn on his oath, deposes and makes proof to my satisfaction, that he is the Asst. Secretary of STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, the corporation named in the within instrument; that ____________ is the Vice President of said corporation; that the execution, as well as the making of this instrument, has been duly authorized by a proper resolution of the board of directors of the said corporation; that deponent well knows the corporate seal of said corporation; and that the seal affixed to said instrument is the proper corporate seal and was thereto affixed and said instrument signed and delivered by said Vice President as and for the voluntary act and deed of said corporation. In presence of deponent who thereupon subscribed his name thereto as attesting witness; and deponent signed this proof to attest to the truth of these facts. ____________________________ [Name] [Assistant] Secretary Sworn to and subscribed before me, the date aforesaid ____________________________ Notary Public My commission expires: ____________________________ 11 STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK ) BE IT REMEMBERED that on _________________, 1994, before me, the subscriber, __________________, personally appeared ___________________, who being by me duly sworn on his oath, deposes and makes proof to my satisfaction, that he is the Asst. Secretary of Resorts International Hotel, Inc., the corporation named in the within instrument; that ______________ is the Vice President of said corporation; that the execution, as well as the making of this instrument, has been duly authorized by a proper resolution of the board of directors of the said corporation; that deponent well knows the corporate seal of said corporation; and that the seal affixed to said instrument is the proper corporate seal and was thereto affixed and said instrument signed and delivered by said Vice President as and for the voluntary act and deed of said corporation. In presence of deponent who thereupon subscribed his name thereto as attesting witness; and deponent signed this proof to attest to the truth of these facts. ____________________________ [Name] [Assistant] Secretary Sworn to and subscribed before me, the date aforesaid ____________________________ Notary Public My commission expires: ____________________________ 12 EXHIBIT C SUBORDINATION PROVISIONS A. SUBORDINATION. Anything herein to the contrary notwithstanding, the Subordinated Debt, including principal, premium, if any, and interest, shall be subordinate and junior to the extent set forth in subparagraphs (i) to (v), inclusive, below, to all Senior Indebtedness. (i) If the Company (as defined in this Exhibit C) shall default in the payment of any principal of or interest on any Senior Indebtedness when the same becomes due and payable, whether at maturity or at a date fixed for prepayment or by declaration of acceleration or otherwise, then, unless and until such default shall have been remedied by payment in full in cash or waived or shall have ceased to exist or all amounts then due and payable in respect of Senior Indebtedness shall have been paid in full or provision shall have been made for such payment in cash, no holder of the Subordinated Debt shall accept or receive any direct or indirect payment (in cash, property, by set-off or otherwise) of or on account of any Subordinated Debt. (ii) In the event of any insolvency, bankruptcy, liquidation, reorganization or other similar proceedings, or any receivership proceedings in connection therewith, relative to the Company, and in the event of any proceedings for voluntary liquidation, dissolution or other winding up of the Company, whether or not involving insolvency or bankruptcy proceedings, then all Senior Indebtedness shall first be paid in full in cash, or such payment shall have been provided for in cash, before any payment of or on account of principal or interest is made by the Company upon the Subordinated Debt. (iii) In any of the proceedings referred to in subparagraph (ii) above, any payment or distribution of any kind or character, whether in cash, property, stock or obligations, which may be payable or deliverable by the Company in respect of the Subordinated Debt shall be paid or delivered directly to the holders of Senior Indebtedness (or to a banking institution selected by the court or Person making the payment or delivery or designated by any holder of Senior Indebtedness) for application in payment thereof in accordance with the priorities then existing among such holders, unless and until all principal of and interest on all Senior Indebtedness shall have been paid in full in cash or such payment shall have been provided for; PROVIDED, HOWEVER, that no such delivery shall be made to holders of Senior Indebtedness of stock or obligations which are issued pursuant to reorganization proceedings or dissolution or liquidation proceedings, or upon any merger, consolidation, sale, lease, transfer or other disposal not prohibited by the provisions of the Subordinated Debt, by the Company, as reorganized, or by the corporation succeeding to the Company or acquiring its property and assets, if such stock or obligations are subordinate and junior (whether by law or agreement) at least to the extent provided in this Section ___ to the payment of all Senior Indebtedness then outstanding and to the payment of any stock or obligations which are issued in exchange or substitution for any Senior Indebtedness then outstanding. (iv) Upon the occurrence and continuance of any Default Subordination Event (other than under circumstances when the terms of subparagraph (ii) above are applicable), no holder of the Subordinated Debt shall accept or receive any direct or indirect payment (in cash, property, by set-off or otherwise) of or on account of any indebtedness in respect of the Subordinated Debt during the Applicable Stand-Still Period; PROVIDED, HOWEVER, that in the case of any payment on or in respect of any Subordinated Debt which would (in the absence of any such Default Subordination Event) have been due and payable on any date (a "Scheduled Payment Date") during such Applicable Stand-Still Period, the provisions of this subparagraph (iv) shall not prevent such payment (a "Scheduled Payment") on or after the date (the "Deferred Maturity Date") immediately following the termination of such Applicable Stand-Still Period. Notwithstanding the foregoing provisions of this subparagraph (iv), the failure by the Company to make a Scheduled Payment on a Scheduled Payment Date during an Applicable Stand-Still Period shall nevertheless constitute an Event of Default. (v) If any payment or distribution of any character, whether in cash, securities or other property, shall be received by any holder of Subordinated Debt in contravention of any of the terms of this Section ___ and before all the Senior Indebtedness shall have been paid in full, such payment or distribution shall be received in trust for the benefit of the holders of the Senior Indebtedness at the time outstanding in accordance with the priorities then existing among such holders, and shall forthwith be paid over or delivered and transferred to the holders of Senior Indebtedness. B. OBLIGATION OF OBLIGORS UNCONDITIONAL. The provisions of this Section ___ are for the purpose of defining the relative rights of the holders of Senior Indebtedness on the one hand, and the holders of the Subordinated Debt on the other hand, against the Company and its property; and nothing herein shall impair, as between the Company and the holders of the Subordinated Debt, the obligation of the Company, which is unconditional and absolute, to pay to the holders thereof the principal thereof and premium, if any, and interest thereon in accordance with their terms and the provisions hereof, nor shall anything herein prevent the holders of the Subordinated Debt from exercising all remedies otherwise permitted by applicable law or hereunder upon default hereunder or under the Subordinated Debt (including, without limitation, the right to demand payment and sue for performance hereof and of the Subordinated Debt and to accelerate the maturity thereof as provided in Section ___), subject to the rights, if any, under this Section ___ of holders of Senior Indebtedness to receive cash, property, stock or obligations otherwise payable or deliverable by the Company to the holders of the Subordinated Debt; PROVIDED, HOWEVER, that upon the commencement and during the continuance of an Applicable Stand-Still Period the holders of the Subordinated Debt, to the extent they are otherwise entitled to do so, will not accelerate the maturity of the Subordinated Debt or pursue any other remedy to enforce payment thereof or initiate any bankruptcy or insolvency proceeding relative to the Company unless and until the earlier of (i) the end of such Applicable Stand-Still Period and (ii) the acceleration of the Senior Indebtedness related to such Applicable Stand-Still Period. C. SUBROGATION. Upon payment in full of Senior Indebtedness, the holders of the Subordinated Debt shall be subrogated to the rights of the holders of the Senior Indebtedness to receive payments or distributions of assets of the Company made on Senior Indebtedness until the principal of and premium, if any, and interest on the Subordinated Debt shall be paid in full, and, for the purposes of such subrogation, no payments to the holders of Senior Indebtedness of any cash, property, stock or obligations to which the holders of the Subordinated Debt would be entitled except for the provisions of subparagraph (iii) of Section A above shall, as between the Company, its creditors (other than the holders of the Senior Indebtedness) and the holders of the Subordinated Debt, be deemed to be a payment by the Company to or on account of the Senior Indebtedness. D. DEFINITIONS. "COMPANY" means RIH, the Company or any of their respective subsidiaries, as the case may be. "DEFAULT SUBORDINATION EVENT" means the existence of all of the following: (i) an event of default shall have occurred and be continuing in respect of the Senior Indebtedness, (ii) the holders of the Subordinated Debt shall have received a notice from or on behalf of any holder of Senior Indebtedness specifying that such event of default has occurred and is continuing and that such notice constitutes a "Default Subordination Notice", and (iii) no other Default Subordination Notice shall have been delivered by or on behalf of any holder of Senior Indebtedness within the 365-day period immediately preceding the giving of such notice. The "APPLICABLE STAND-STILL PERIOD" relating to any Default Subordination Event shall be deemed to continue until the event of default under the Senior Indebtedness giving rise thereto shall have been cured (by payment or otherwise) or waived or a period of 180 days shall have elapsed from the giving of the Default Subordination Notice relating thereto, in any such case whichever shall be the shorter period. "SENIOR INDEBTEDNESS" shall mean and include all obligations (whether now outstanding or hereafter incurred), for the payment of which the Company is responsible or liable as obligor, guarantor or otherwise, including, without limitation, principal, interest, premium, fees, expenses and indemnities, whether now owing or hereafter incurred (including any interest accruing subsequent to the commencement of a proceeding described in Section 7.04, regardless of whether the claims of holders of such payment obligations for such interest are allowed in any such proceeding). Exhibit D Mortgage securing RIH Promissory Note between Resorts International Hotel, Inc, and Resorts International Hotel Financing, Inc. NA932010185 - MORTGAGE SECURING RIH PROMISSORY NOTE GD&C DRAFT DATED 12/17/93 MORTGAGE SECURING RIH PROMISSORY NOTE by and between RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation, as Mortgagor, and RESORTS INTERNATIONAL HOTEL FINANCING, INC. a Delaware corporation, as Mortgagee Dated as of ________ __, 1994 Prepared by:_______________________ D. Eric Remensperger After recording return to: Gibson, Dunn & Crutcher 200 Park Avenue New York, New York 10166 Attention: D. Eric Remensperger MORTGAGE SECURING RIH PROMISSORY NOTE THIS MORTGAGE, dated as of ________ ___, 1994, between RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation ("Mortgagor"), and RESORTS INTERNATIONAL HOTEL FINANCING, INC., a Delaware corporation ("RIHF"), having an address at c/o Resorts International, Inc., 1133 Boardwalk, Atlantic City, New Jersey 08401 (RIHF, or its successors or assigns which shall than be the Noteholder (as hereinafter defined), being referred to herein as "Mortgagee"). WITNESSETH: In consideration of $10.00 in hand paid by Mortgagee to Mortgagor and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in order to (i) the payment of the principal amount (and premium, if any) of the secured promissory note by Mortgagor to Mortgagee in the principal amount of $125,000,000 as amended and restated the date hereof (hereinafter collectively referred to as the "Note"), in lawful money of the United States, to be paid in accordance with the provisions thereof (and all renewals, extensions, and modifications thereof) all of which are hereby made an integral part hereof as though set forth at length herein; (ii) payment of interest (including interest on all overdue principal and premium, if any) becoming due under the provisions of the Note; (iii) payment by Mortgagor to Mortgagee of all sums expended or advanced by Mortgagee pursuant to any term or provision of this Mortgage; (iv) performance of each covenant, term, condition and agreement of Mortgagor herein or in the Note contained; (v) all costs and expenses, including reasonable counsel fees and expenses as provided in Section 3.07, which may arise in respect of the Note and this Mortgage or of the obligations secured hereby; and (vi) performance and observance of all of the provisions herein contained, Mortgagor has executed and delivered this Mortgage and has bargained, sold, aliened, mortgaged, pledged, released, conveyed and confirmed unto Mortgagee and its successors hereunder and assigns forever, all of its right, title and interest in, to and under any of the following described property: GRANTING CLAUSES GRANTING CLAUSE FIRST All the property, rights, title, interest, privileges and franchises particularly described in annexed Schedule 1 (the "Owned Land") which Schedule is hereby made a part of, and deemed to be described in, this Granting Clause as fully as if set forth in this Granting Clause at length. GRANTING CLAUSE SECOND All of the property, rights, title, interest, privileges and franchises of the Mortgagor as lessee in those certain leases (the "Ground Leases") particularly described in Schedule 2, which Schedule is hereby made a part of, and deemed to be described in, this Granting Clause as fully as if set forth in this Granting Clause at length, which Ground Leases cover the real property described in such Schedule 2 (the "Leased Land") and in and to any and all modifications, extensions andrenewals of the Ground Leases and all options set forth therein, together with (i) all credits, deposits, privileges and rights of the Mortgagor as lessee under the Ground Leases, now or at any time existing, (ii) the leaseholds and the leasehold estates created by the Ground Leases and (iii) all of the estates, rights, titles, claims or demands whatsoever of Mortgagor, either in law or in equity, in possession or in expectancy, of, in and to the Ground Leases and the Leased Land, together with (x) any and all other, further or additional title, estates, interests or rights which may at anytime be acquired by the Mortgagor in or to the Leased Land, and the Mortgagor expressly agrees that if the Mortgagor shall, at any time prior to payment in full of all indebtedness secured hereby, acquire fee simple title or any other greater estate to the Leased Land pursuant to the Ground Leases, or otherwise, the lien of this Mortgage shall attach, extend to, cover and be a lien upon such fee simple title or other greater estate and thereupon the lien of this Mortgage shall be prior to the lien of any mortgage or deed of trust placed on such acquired title, estate, interest or right subsequent to the date of this Mortgage and (y) any right to possession or statutory term of years derived from, or incident to, the Ground Leases pursuant to Section 365(h) of the U.S. Bankruptcy Code (the "Code") or any comparable provision contained in any present or future federal, state, local, foreign or other statute, law, rule or regulation. 3 GRANTING CLAUSE THIRD All the rents, issues, profits, revenues and other income and proceeds of the property subjected or required to be subjected to the lien of this Mortgage, including, without limitation, the property described in Granting Clauses First, Second, and Sixth (such property is hereinafter collectively referred to as the "Premises") and all the estate, right, title and interest of every nature whatsoever of the Mortgagor in and to the same and every part thereof. The collective metes and bounds description of the Owned Land and the Leased Land is set forth in annexed Schedule 3. GRANTING CLAUSE FOURTH All of the rights as lessor under Leases in effect on the date of execution of this Mortgage or hereafter entered into by the Mortgagor, if any, including extensions, renewals or amendments of all of the same, and the immediate and continuing right as security in accordance with an Assignment of Leases and Rents of even date herewith between Mortgagor and Mortgagee, and, after the occurrence of an Event of Default, to make claim for, collect, receive and receipt for (and to apply the same as provided herein) any and all rents, income, revenues, issues, profits, security and other sums of money payable or receivable thereunder or pursuant thereto, and all proceeds thereof, whether payable as rent, insurance proceeds, condemnation awards, security or otherwise and whether payable prior to or subsequent to the maturity date of the Note, to receive and give notices and consents thereunder, to bring actions and proceedings thereunder or for the enforcement thereof, to make waivers and agreements, to take such action upon the happening of a default under any Lease, including the commencement, conduct and consummation of any proceedings at law or in equity as shall be permitted by any provision of any Lease, and to do any and all things which the Mortgagor or any lessor is or may become entitled to do under the Leases; provided, that the assignment made by this granting Clause Fourth shall not impair or diminish any obligation of the Mortgagor under the Leases, or shall any such obligation be imposed upon the Mortgagee. GRANTING CLAUSE FIFTH Without limiting the generality of the provisions of Granting Clause Third, the Mortgagor's rights, privileges and franchises in and to the following, to the extent of the Mortgagor's interest therein and thereto and to the extent assignable (collectively, "Operating Assets"): 4 (a) bookings and receipts for the use of guest rooms, banquet facilities and meeting rooms at the Casino-Hotel; (b) all contracts respecting utility services for, and the maintenance, operations, or equipping of the Premises, including guaranties and warranties relating thereto; (c) the Permits; (d) all contract rights, leases, concessions, trademarks, trade names, service marks, service names, logos, copyrights, warranties and other items of intangible personal property relating to the ownership or operation of the Casino-Hotel, including, without limitation, (1) telephone and other communication numbers, (2) all software licensing agreements as are required to operate computer software systems at the Casino-Hotel, all transferable proprietary interest in software required to operate the computer systems at the Casino Hotel and books and records relating to the software programs, and (3) lessee's interest under leases of Tangible Personal Property; (e) all agreements entered into by or on behalf of the Mortgagor or which have been assigned to the Mortgagor, for the design and construction, and for the equipping and furnishing, of the Casino-Hotel, including architect's agreements, engineering agreements, construction contracts, consulting agreements and agreements or purchase orders for all items of Tangible Personal Property and payment and performance bonds in favor of the Mortgagor in connection with the Trust Estate (and all warranties and guaranties thereunder and warranties and guaranties of any subcontractor and bond issued in connection with the work to be performed by any subcontractor); (f) the following personal property (the "Tangible Personal Property") now or hereafter acquired by the Mortgagor: (i) all furniture, furnishings, equipment, machinery, apparatus, appliances, fixtures and fittings and other articles of tangible personal property which are, or are to be located on, or used in connection with the operation of, the Casino-Hotel; (ii) all slot machines, electronic gaming devices, crap tables, blackjack tables, roulette tables, baccarat tables, and big six 5 wheels, located or to be located in the Casino-Hotel, and all furnishings and equipment to be used in connection with the operation thereof; (iii) all cards, dice, gaming chips and placques, tokens, chip racks, dealing shoes, dice cups, dice sticks, layouts, paddles, roulette balls and other consumable supplies and items to be used in connection with the gaming operations of the Casino-Hotel; (iv) all china, glassware, linens, kitchen utensils, silverware and uniforms, whether in use or held in reserve storage for future use, in connection with the operation of the Casino-Hotel, which are on hand or on order whether stored on-site or off-site; (v) all consumables and operating supplies of every kind and nature for use in all of the operating departments of the Casino-Hotel, or in the improvements now or hereafter located on any of the Owned Land, including without limitation, accounting supplies, guest supplies, forms, printing, stationery, food and beverage stock, bar supplies, laundry supplies and brochures to existing purchase orders; (vi) all sets and scenery, costumes, props and other items of tangible personal property on hand or on order for use in the production of shows in the showroom of the Casino-Hotel; and (vii) all cars, limousines, vans, buses, trucks and other vehicles owned or leased by the Mortgagor for use in Casino-Hotel operations, together with all equipment, parts and supplies used to service, repair, maintain and equip the foregoing; (g) all drawings, designs, plans and specifications prepared by the architects, interior designers, landscape designers and any other consultants for the development of the Premises, as amended from time to time; (h)any administrative and judicial proceedings initiated by the Mortgagor, or in which the Mortgagor has intervened, concerning the Casino-Hotel, and agreements, if any, which are the subject matter of such proceedings; 6 (i) any customer lists utilized by the Mortgagor, including lists of transient guests and restaurant and bar patrons and "high roller" lists; and (j) all of the goodwill in connection with the operation of the Premises. The Mortgagor and Mortgagee acknowledge that notwithstanding anything contained in this Mortgage to the contrary, the Mortgagor may share facilities, operations and employees with any other hotel owned by any Affiliate of the Mortgagor provided that (i) such sharing of facilities is permitted by all applicable Legal Requirements, (ii) terms on which such facilities are shared are not detrimental to the operations of the Casino-Hotel or the financial condition of the Mortgagor and (iii) the regular operation of the Casino-Hotel would not be materially impaired upon the separation of such facilities. The assignment made by this Granting Clause Fifth shall not impair or diminish any obligation of the Mortgagor with respect to the Operating Assets, nor shall any such obligation be imposed on the Mortgagee. GRANTING CLAUSE SIXTH (a) All of the Mortgagor's right, title and interest in and to all buildings and improvements of every kind and description now or hereafter erected or placed on the Owned Land and/or the Leased Land and all fixtures and articles of personal property now or hereafter attached to or contained in and used in connection with such buildings and improvements, including, but not limited to, all apparatus, furniture, furnishings, machinery, motors, elevators, fittings, radiators, cooking ranges, ice boxes, ice machines, printing presses, mirrors, bars, mechanical refrigerators, furnaces, coal and oil-burning apparatus, wall cabinets, machinery, generators, partitions, steam and hot water boilers, lighting and power plants, pipes, plumbing, radiators, sinks, bath tubs, water closets, gas and electrical fixtures, awnings, shades, screens, blinds, dishwashers, freezers, vacuum cleaning systems, office equipment and other furnishings, and all plumbing, heating, lighting, cooking, laundry, ventilating, incinerating, air-conditioning and sprinkler equipment or other fire prevention or extinguishing apparatus and material, and fixtures and appurtenances thereto; and all renewals or replacements thereof or articles in substitution therefor, whether or not the same are or shall be attached to the Owned Land, the Leased Land or to any such buildings and improvements thereon, in any manner and 7 (b) All of the Mortgagor's right, title and interest in and to (i) the Leased Land, if the Mortgagor acquires the fee simple title to the Leased Land or any part thereof (subject to the provisions Section 2.06 hereof), (ii) all air rights and rights to maintain supporting columns and all rights to construct and maintain bridges, and to create private rights of way over streets now or hereafter owned or enjoyed by the Mortgagor and appurtenant to the Owned Land or Leased Land, and (iii) all right, title and interest of Mortgagor as grantee or licensee in and to the following to the extent necessary for the use and enjoyment of the Owned Land or the Leased Land: (A) all those plots, pieces or parcels of land and air rights, more particularly described on Schedule 5, attached hereto and made a part hereof (the "Bridge Easement Parcels"), with respect to which Mortgagor has easements, licenses or other rights of possession or use pursuant to these certain easement and license agreements more particularly described on Schedule 5 (the "Bridge Easements"), (B) all those plots, pieces or parcels of land and air rights, more particularly described on Schedule 6 attached hereto and made a part hereof (the "Elevator Easement Parcels"), with respect to which Mortgagor has easements, licenses or other rights of possession or use pursuant to those certain license agreements more particularly described on Schedule 6 (the "Elevator Easements"), and; (C) all that plot, piece or parcel of land and air rights more particularly described on Schedule 7 attached hereto and made a part hereof (the "Turn-Around Easement Parcel") with respect to which Mortgagor has easements, licenses, or other rights of possession or use pursuant to that certain easement more particularly described on Schedule 7 (the "Turn-Around Easement"), (the Bridge Easement Parcels, the Elevator Easement Parcels and the Turn-Around Easement Parcel are collectively referred to herein as the "Easement Parcels"; and the Bridge Easements, the Elevator Easements and the Turn-Around Easement are collectively referred to as the "Easements"), together with all rights of way, privileges, liberties, tenements, hereditaments and ppurtenances belonging or in any way appertaining to such estates, it being the intention hereof that all property, interests, rights and privileges and franchises pertaining to the Premises (other than Excepted Property) shall be as fully embraced within and subjected to the lien hereof as if such property were specifically described herein. To the extent the grant of a security interest in any portion of the Trust Estate is governed by the Uniform Commercial Code, this Mortgage is hereby deemed to be as well a security agreement under the Uniform Commercial Code for the purpose of creating hereby a security interest in all of the Mortgagor's right, title and interest in and to such property, securing the obligations secured hereby, for the benefit of the Mortgagee. 8 TOGETHER with all of the Mortgagor's right, title and interest in and to all mineral and water rights and any title or reversion, in and to the beds of the ways, streets, avenues and alleys adjoining the Premises to the center line thereof and in and to all strips, gaps and gores adjoining the premises on all sides thereof; and TOGETHER with all of the Mortgagor's right, title and interest to and singular the tenements, hereditaments, easements, appurtenances, passages, water courses, riparian rights, other rights, liberties and privileges thereof or in any way appertaining to the Premises, including any other claim at law or in equity as well as any after-acquired title, franchise or license and the reversion and reversions and remainder and remainders thereof; and TOGETHER with all awards and other compensation heretofore or hereafter to be made to the present and all subsequent owners of the Trust Estate for any taking by eminent domain, either permanent or temporary, of all or any part of the Trust Estate or any easement or appurtenances thereof, including severance and consequential damage and change in grade of streets, all in accordance with and subject to the provisions of the Superior Instrument Requirements and Section 5.20; and TOGETHER with all proceeds of any unearned premiums on any insurance policies described in Section 5.11, and the right to receive and apply the proceeds of any insurance, judgments, or settlements made in lieu thereof, for damage to the Trust Estate or otherwise, all in accordance with and subject to the provisions of Section 5.11 and the Superior Instrument Requirements. EXCLUDING, with respect to all of the hereinabove granted property, rights, title, interest, privileges and franchises, the Excepted Property. TO HAVE AND TO HOLD all the Premises, Leases, Ground Leases, Operating Assets, Easements, properties, options, credits, deposits, rights, privileges and franchises of every kind and description, real, personal or mixed, granted hereby, bargained, sold, aliened, assigned, transferred, hypothecated, pledged, released, conveyed, mortgaged, or confirmed as aforesaid, or intended, agreed or covenanted so to be, together with all the appurtenances thereto appertaining (the Premises, Leases, Ground Leases, Operating Assets, Easements, properties, options, credits, deposits, rights, privileges and franchises, being herein collectively called the "Trust Estate") unto the Mortgagee and its successors and assigns forever. 9 SUBJECT, HOWEVER, on the date hereof, to Existing Encumbrances and, after the date hereof, to Permitted Encumbrances. SUBJECT, FURTHER, to the rights and obligations of the Mortgagee and the Noteholder as set forth in that certain Intercreditor Agreement dated as of the date hereof among RIH, RIHF, Trustee, Fidelity Management and Trust Company ("Fidelity"), as trustee under that certain note purchase agreement dated as of the date hereof among Fidelity, RIH and RIHF, and U.S. Trust of California, N.A.,("U.S. Trust"), as trustee under that certain indenture dated as of the date hereof among U.S. Trust, RIH and RIHF (and such other parties that may from time to time become a party thereto). BUT IN TRUST, NEVERTHELESS, for the benefit and security of the Noteholder. UPON CONDITION that, until the happening of an Event of Default and subject to the provisions of Article Two, the Mortgagor shall be permitted to possess and use the Trust Estate, and to receive and use the rents, issues, profits, revenues and other income of the Trust Estate. AND IT IS HEREBY COVENANTED AND DECLARED that the Trust Estate is to be held and applied by the Mortgagee, subject to the further covenants, conditions and trusts hereinafter set forth, and the Mortgagor does hereby covenant and agree to and with the Mortgagee, for the benefit of the holder of the Note as follows: ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION Section 1.01. DEFINITIONS. For all purposes of this Mortgage, except as otherwise expressly provided or unless the context otherwise requires: (a) the terms defined in this Article One have the meanings assigned to them in this Article One and include the plural as well as the singular; (b) all accounting terms not otherwise defined herein have the meanings assigned to them, and all computations herein provided for shall be made in accordance with generally accepted accounting principles consistently applied; and 10 (c) the words "herein," "hereof" and "hereunder" and other words of similar import refer to this Mortgage as a whole and not to any particular Article, Section or other subdivision. "AFFILIATE" has the meaning set forth in Section 1.01 of the Indenture. "AFTER-ACQUIRED FEE MORTGAGE" has the meaning set forth in Section 2.07. "ALTERATIONS" has the meaning set forth in Section 5.12. "APPRAISER" means an MAI appraiser (i.e., a Member in good standing of the American Institute of Real Estate Appraisers) who is (i) of recognized standing among appraisers of properties similar to the Casino-Hotel and (ii) experienced in the appraisals of properties of a similar size and scope to that of the Casino-Hotel, selected by the Mortgagor. "ASSIGNMENT OF LEASES AND RENTS" has the meaning stated in Section 1.01 of the Indenture. "CAPITALIZED LEASE OBLIGATION" has the meaning stated in Section 1.01 of the Indenture. "CASINO" means that portion of the Casino-Hotel used for gaming and related activities. "CASINO-HOTEL" means the casino and hotel complex and ancillary structures and facilities located on the Premises and furniture, fixtures and equipment at any time contained therein. "CASUALTY" means any act or occurrence of any kind or nature which results in damage, loss or destruction to any buildings or improvements on the Premises and/or Tangible Personal Property. "CODE" has the meaning stated in Granting Clause Second. "COMBINATION TRANSACTION" has the meaning stated in Section 10.01 of the Indenture. "DEFAULT" means the occurrence and continuance of an Event of Default or an event which, after notice or lapse of time or both, would become an Event of Default. "DEPOSITARY" means an Independent entity to which insurance proceeds or a condemnation award is paid to be 11 held in trust for restoration pursuant to the provisions of a Ground Lease or Superior Mortgage. "EVENT OF DEFAULT" has the meaning stated in Section 3.01. An Event of Default shall "exist" if an Event of Default shall have occurred and be continuing. "EXCEPTED PROPERTY" means: (1) subject to the provisions of the Assignment of Leases and Rents, any cash held by the Mortgagor from rents, issues, profits, revenues and other proceed of the Trust Estate to the extent that such cash may be, but has not been, distributed or paid out in accordance with the Services Agreement or in accordance with the provisions of Section 12.07 the Indenture; (2) all personal property owned by lessees under Leases and the personal property of any guests staying in the Hotel; (3) any property deemed to be Excepted Property pursuant to the provisions of Section 2.03 hereof; (4) Tangible Personal Property subject to an FF&E Financing Agreement; and (5) counterchecks and any other property the granting of a security interest in which is prohibited by the New Jersey Casino Control Act, N.J.S.A. 5:12-1 ET SEQ., and the regulations promulgated thereunder. "EXISTING ENCUMBRANCES" means the matters set forth in Schedule 8. "FIRST MORTGAGE DEBT" means any financing secured by a Superior Mortgage secured by or imposing a lien on all or a portion of the Trust Estate on a parity with or senior to the lien of this Mortgage. "FF&E FINANCING AGREEMENT" means a purchase money lien upon any Tangible Personal Property and other items constituting Operating Assets, such as computer software, which are financed, purchased or leased by the Mortgagor, provided that, except as set forth on Schedule 3, the principal amount of the indebtedness secured by such lien shall not exceed eighty-five (85%) percent of the cost to the Mortgagor of such property at the time of acquisition. "GROUND LEASES" has the meaning stated in Granting Clause Second. 12 "GUARANTY MORTGAGE" means that certain Mortgage Securing Guaranty of Mortgage Notes dated as of the date hereof from Mortgagor to State Street Bank and Trust Company of Connecticut, National Association, a national banking association, which secures the Notes (as defined in the Indenture), the lien of which shall be PARI PASSU with the lien of this Mortgage. "HOTEL" means that portion of the Casino-Hotel not included within the Casino. "IMPOSITIONS" has the meaning stated in Section 5.08. "INDENTURE" means that certain Indenture - 11% Mortgage Notes due 2003, dated as of even date herewith among the Mortgagor, RIHF, as issuer, and State Street Bank and Trust Company of Connecticut, National Association, as trustee, as it may from time to time be supplemented, modified or amended by one or more trust indentures or other instruments supplemental thereto entered into pursuant to the applicable provisions thereof. "INDEPENDENT" when used with respect to any specified Person means such a Person who (a) is in fact independent, (b) does not have any direct financial interest or any material indirect financial interest in the Mortgagor or in any other obligor upon the Note or in any Affiliate of the Mortgagor or of such other obligor and (c) is not connected with the Mortgagor or such other obligor or any Affiliate of the Mortgagor or such other obligor as an officer, employee, promoter, underwriter, trustee, partner, director or person performing similar functions. Whenever it is herein provided that any Independent Person's opinion or certificate shall be furnished to the Mortgagee, such opinion or certificate shall state that the signer has read this definition and that the signer is Independent within the meaning thereof. A Person who is performing or who has performed services as an independent contractor to any specified Person shall not be considered not Independent merely by reason of the fact that such Person is or has performed such services. "INSURANCE AMOUNT" has the meaning stated in Section 5.11(a)(1). "INSURANCE REQUIREMENTS" means all terms of any insurance policy covering or applicable to the Trust Estate or any part thereof, all requirements of the issuer of any such policy, and all orders, rules, regulations and other requirements of the National Board of Fire Underwriters (or any other body exercising similar functions) applicable to or affecting the Trust Estate or any part thereof or any use or condition of the Trust Estate or any other part thereof. 13 "INSURANCE TRUSTEE" means the Trustee or, if the Trustee so elects, any bank, trust company or insurance company with net worth in excess of $100,000,000, designated by the Trustee. "INSURER" means an insurance company or companies selected by the Mortgagor authorized to issue insurance in the State of New Jersey with an A.M. Best rating as high or higher than the rating of insurance companies insuring other casino-hotels in Atlantic City, New Jersey. "LEASE" means each lease or sublease demising all or any portion of the Owned Land, the Leased Land or the buildings or improvements thereon and made by the Mortgagor as lessor or sublessor, as the case may be, or any spaces in any building or buildings which constitute a part of the Trust Estate, including every agreement relating thereto or entered into in connection therewith and every guaranty of the performance and observance of the covenants, conditions and agreements to be performed by the lessee under any such lease. Notwithstanding the foregoing, the term "Lease" shall not include any transient room rentals. "LEASED LAND" has the meaning stated in Granting Clause Second. "LEGAL REQUIREMENTS" means all laws, statutes, codes, acts, ordinances, orders, judgments, decrees, injunctions, rules, regulations, permits, licenses, authorizations, directions and requirements (including, without limitation, the New Jersey Environment Cleanup Responsibility Act and the New Jersey Spill Compensation and Control Act of 1976) of all governments, departments, commissions, boards, courts, authorities, agencies, officials and officers, of governments, federal, state and municipal (including, without limitation, the New Jersey Department of Environmental Protection, the Atlantic City Bureau of Investigations, Division of Protection, the Atlantic City Bureau of Investigations, Division of Gaming Enforcement of the State of New Jersey, and the Casino Control Commission of the State of New Jersey), foreseen or unforeseen, ordinary or extraordinary, which now is or at any time hereafter becomes applicable to the Trust Estate or any part thereof, or any of the adjoining sidewalks, or the use of the Casino-Hotel as a gaming or gambling facility or any other use or condition of the Trust Estate or any part thereof. "LESSORS" means the lessors under the Ground Leases. "MATURITY" when used with respect to the Note means the date on which the principal of such Note becomes due and payable as therein or herein provided, whether at 14 the Stated Maturity or by declaration of acceleration or prepayment or otherwise. "MORTGAGE DOCUMENTS" has the meaning set forth in Section 1.01 of the Indenture. "MORTGAGOR" means the Person named as the "Mortgagor" in the first paragraph of this instrument until a successor entity shall have become such pursuant to the applicable provisions of this Mortgage, and thereafter, except to the extent otherwise contemplated by Section 4.02, "Mortgagor" shall mean such successor entity exclusively. "NOTEHOLDER" shall mean the holder or holders of the Note. "NOTE" has the meaning set forth in the Preamble. "NOTICES" has the meaning stated in Section 1.02. "OFFICERS' CERTIFICATE" means a certificate signed by an officer of the Mortgagor and delivered to the Mortgagee. Whenever this Mortgage requires that an Officers' Certificate be signed also by an Architect or an Accountant or other expert, such Architect, Accountant or other expert may (except as otherwise expressly provided in this Mortgage) be in the general employ of the Mortgagor. "OPERATING ASSETS" has the meaning stated in Granting Clause Fifth. "OPINION OF COUNSEL" means a written opinion of counsel who may (except as otherwise expressly provided in this Mortgage) be an employee of the Mortgagor or an employee of an Affiliate of the Mortgagor. Unless otherwise specifically provided in this Mortgage, such counsel may rely, as to any state of facts not personally known to such counsel and relating to such opinions, on an Officers' Certificate to the extent not rejected by the Trustee and its counsel (which rejection shall not be unreasonably given). "ORIGINAL POLICY" means an ALTA Loan Policies of Title issued by [list title insurance companies], pursuant to Title Commitment No. ____________ redated to the date hereof. "OUTSTANDING AMOUNT" has the meaning stated in Section 1.01 of the Indenture. "OWNED LAND" has the meaning stated in Granting Clause First. 15 "PERMITS" means all licenses, franchises, statements of compliance, certificates of operation, certificates of occupancy and permits required for the lawful ownership, occupancy, operation and use of all or a material portion of the Premises whether held by the Mortgagor or any other Person (which may be temporary or permanent) (including, without limitation, those required for the use of the Casino-Hotel as a licensed casino facility), in accordance with all applicable Legal Requirements. "PERMITTED ENCUMBRANCES" means: (1) liens for taxes, assessments, or governmental charges not yet due and payable or if due and payable are not delinquent to the extent that any fine, penalty, interest or cost may be added for nonpayment thereof; (2) Existing Encumbrances; (3) FF&E Financing Agreements; (4) After-Acquired Fee Mortgages; (5) the lien of the Mortgage Documents and any rights granted as provided therein; (6) Restricted Encumbrances; (7) the lien of the Trustee provided for by Section 8.07 of the Indenture; (8) any Working Capital Facility Lien; and (9) Capitalized Lease Obligations. "PERSON" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or any other entity or government or any agency or political subdivision thereof. "PREMISES" has the meaning set forth in Granting Clause Third. "RELEASED LAND" has the meaning stated in Section 2.05. "RELEASED FEE LAND" has the meaning stated in Section 2.06. "RESTORATION" has the meaning stated in Section 5.11(e). 16 "RESTRICTED ENCUMBRANCES" means Leases permitted by and made in accordance with Section 5.13 of this Mortgage. "RIHF" shall mean Resorts International Hotel Financing, Inc., a Delaware corporation. "SERVICES AGREEMENT" has the meaning set forth in Section 1.01 of the Indenture. "SETTLEMENT COSTS" has the meaning stated in Section 5.20. "STATED MATURITY" when used with respect to a note means the date specified in such note as the fixed date on which the principal of such note is due and payable. "SUPERIOR INSTRUMENT REQUIREMENTS" means the applicable terms, conditions and provisions of (i) the Ground Leases with respect to the Leased Land; and (ii) Superior Mortgages with respect to the portion of the Trust Estate encumbered thereby. "SUPERIOR MORTGAGES" means, collectively, any Working Capital Facility Lien and any After-Acquired Fee Mortgages. "TAKING" means the acquisition or condemnation by eminent domain of the whole or any part of the Premises, by a competent authority, for any public or quasi-public use or purpose. "TANGIBLE PERSONAL PROPERTY" has the meaning stated in Granting Clause Fifth. "TRUSTEE" means the Person named as the "Trustee" in the first paragraph of the Indenture and any successor thereto. "TRUST ESTATE" has the meaning stated in the habendum to the Granting Clauses. "TRUST INDENTURE ACT" has the meaning stated in Section 1.01 of the Indenture. "WORKING CAPITAL FACILITY" has the meaning stated in Section 1.01 of the Indenture. "WORKING CAPITAL FACILITY LIEN" has the meaning stated in Section 5.22(c) of this Mortgage. Section 1.02. NOTICES, ETC. 17 (a) Any request, demand, authorization, direction, notice (including, without limitation, a notice of default), consent, waiver or other document provided or permitted by this Mortgage to be made upon, given or furnished to, or filed with, the Mortgagor or the Mortgagee (collectively, "Notices") shall be deemed given when either (i) delivered by hand or (ii) two days after sending by registered or certified mail, postage prepaid, addressed as follows: To the Mortgagor: Resorts International Hotel, Inc. c/o Resorts International, Inc. 1133 Boardwalk Atlantic City, New Jersey 08401 Attention: Christopher D. Whitney If to Mortgagee: Resorts International Hotel Financing, Inc. c/o Resorts International, Inc. 1133 Boardwalk Atlantic City, New Jersey 08401 Attention: Christopher D. Whitney (b) By Notice to the Mortgagor, the Mortgagee and the Trustee, any party may designate additional or substitute address for Notices which, notwithstanding Subsection (a) above, shall be deemed given when received. Section 1.03. FORM AND CONTENT OF DOCUMENTS DELIVERED TO MORTGAGEE. Whenever 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 such matters in one or several documents. Any certificate or opinion of an Officer of the Mortgagor may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such Officer knows that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any 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 Mortgagor stating that the information with respect to such factual matters is in the possession of the Mortgagor, unless such counsel knows that the certificate or opinion or representations with respect to such matters are 18 erroneous. If appropriate to the matter being opined upon and to the extent not prohibited by the Trust Indenture Act, any Opinion of Counsel may be subject to rights of creditors and the availability of equitable remedies. Whenever any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Mortgage, they may, but need not, be consolidated and form one instrument. Whenever in this Mortgage, in connection with any application or certificate or report to the Mortgagee, it is provided that the Mortgagor shall deliver any document as a condition of the granting of such application, or as evidence of the Mortgagor's compliance with any term hereof, it is intended that the truth and accuracy, at the time of the granting of such application or at the effective date of such certificate or report (as the case may be), of the facts and opinions stated in such document shall in such case be conditions precedent to the right of the Mortgagor to have such application granted or to the sufficiency of such certificate or report. Section 1.04. COMPLIANCE CERTIFICATES AND OPINIONS. Upon any application or request by the Mortgagor to the Mortgagee to take any action under any provision of this Mortgage, the Mortgagor shall furnish to the Mortgagee an Officers' Certificate stating that all conditions precedent, if any, provided for in this Mortgage 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 Mortgage 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 Mortgage shall include: (a) a statement that each individual signing such certificate or opinion has read such condition or covenant and the definitions herein relating thereto; (b) 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; (c) a statement that, in the opinion of each such individual, he has made such 19 examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such condition or covenant has been complied with; and (d) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. Section 1.05. EFFECT OF HEADINGS. The Article and Section headings herein are for convenience only and shall not affect the construction hereof. Section 1.06. SUCCESSORS AND ASSIGNS; AMENDMENTS. (a) Subject to Section 4.02 hereof and Section 10.02 of the Indenture, this Mortgage shall be binding upon and inure to the benefit of the parties hereto and of the respective successors and assigns of the parties hereto to the same effect as if each such successor or assign were in each case named as a party to this Mortgage. (b) This Mortgage may not be modified, amended, discharged, released nor any of its provisions waived except by agreement in writing executed by the Mortgagor and the Mortgagee and in accordance with the provisions of this Mortgage and the Indenture. Section 1.07. SEPARABILITY CLAUSE. In case any provision in this Mortgage 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 1.08. BENEFITS OF MORTGAGE. Nothing in this Mortgage, express or implied, shall give to any Person, other than the parties hereto and their successors and assigns, any benefit or any legal or equitable right, remedy or claim under this Mortgage. Section 1.09. GOVERNING LAW. This Mortgage shall be deemed to be a contract under the laws of the State of New Jersey and shall be construed in accordance with and governed by the laws of the State of New Jersey. Section 1.10. [Reserved] Section 1.11. PROVISIONS REQUIRED BY INDENTURE. Whenever the provisions of this Mortgage and the provisions of the Indenture shall be inconsistent, the provisions of the Indenture shall govern. Section 1.12. RIGHTS OF THE TRUSTEE. So long as the Trustee is the holder of a security interest in this 20 Mortgage and the Note by an assignment from Mortgagee to Trustee, except as otherwise provided in Section 8.01 of the Indenture: (a) the Mortgagee 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, coupon or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) whenever in the administration of this Mortgage the Mortgagee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Mortgagee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate; (c) the Mortgagee 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 the Mortgagee hereunder in good faith and in reliance thereon; (d) the Mortgagee shall be under no obligation to exercise any of the rights or powers vested in it by this Mortgage at the request or direction of any Noteholder pursuant to the Indenture, unless such holder shall have offered to the Mortgagee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (e) the Mortgagee 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, or other paper or document but the Mortgagee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Mortgagee shall determine to make such further inquiry or investigation, it shall be entitled (subject to the express limitations with respect thereto contained in this Mortgage) to examine the books, records and premises of the Mortgagor, personally or by agent or attorney; (f) the Mortgagee may execute any of the trusts or power hereunder or perform any duties hereunder either directly or by or through agents or attorneys, and the Mortgagee shall not be responsible for any 21 misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder; (g) the Mortgagee shall not be personally liable, in case of entry by it upon the Trust Estate, for debts contracted or liabilities or damages incurred in the management or operation of the Trust Estate; and (h) no provision of this Mortgage shall require the Mortgagee to expend or risk its own funds or otherwise incur any financial liability in the performance of its obligations hereunder, or in the exercise 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. Section 1.13. MORTGAGE SUBJECT TO THE PROVISIONS OF THE ACT. Each provision of this Mortgage is subject to and shall be enforced in compliance with the provisions of the New Jersey Casino Control Act. This Mortgage shall not be transferred, assigned or amended without prior approval of the New Jersey Casino Control Commission. Section 1.14. DISCHARGE OF LIEN. If the Mortgagor shall pay or cause to be paid, or there shall otherwise be paid, to the Mortgagee all amounts required to be paid by the Mortgagor pursuant to the Note, and the conditions precedent for the Indenture to cease, determine and become null and void in accordance with Section 5.01 of the Indenture shall have occurred, the Mortgagee shall promptly cancel and discharge this Mortgage, and execute and deliver to the Mortgagor all such instruments as may be necessary, required or appropriate to evidence such discharge and satisfaction of such lien or liens. Section 1.15. GENERAL APPLICATION. (a) The assertion of any rights upon any Default shall be subject in each instance to the giving of any notice and the expiration of any grace period provided for in Section 3.01 as a condition to such Default making it an Event of Default, unless the Trust Indenture Act requires otherwise, in which case the Trust Indenture Act shall control. (b) For the purposes of this Mortgage, it is understood that an event which does not materially diminish the value of the Mortgagee's interest in the Trust Estate shall not be deemed an "impairment of security", as that phrase is used in this Mortgage. 22 ARTICLE TWO RELEASE; OTHER EXCEPTED PROPERTY; SUBORDINATION Section 2.01. POSSESSION BY MORTGAGOR; DISPOSITIONS WITHOUT RELEASE. So long as there shall have been no acceleration of maturity of the Note under Section 3.02, the Mortgagor shall be suffered and permitted, with power freely and without let or hindrance on the part of the Mortgagee, subject to the provisions of this Mortgage and the Guaranty Mortgage, to possess, use, manage, operate and enjoy the Trust Estate and every part thereof and to collect, receive, use, invest and dispose of the rents, issues, tolls, profits, revenues and other income from the Trust Estate or any part hereof, to use, consume and dispose of any consumables, goods, wares and merchandise in the ordinary course of business of operating the Casino-Hotel and to adjust and settle all matters relating to choses in action, leases and contracts. Section 2.02. OBSOLETE PROPERTY; TANGIBLE PERSONAL PROPERTY; LEASE MODIFICATIONS. The Mortgagor shall have the right, at any time and from time to time, unless an Event of Default shall have occurred and be continuing, without any release from or consent by the Mortgagee: (a) to sell or dispose of, free from the lien of this Mortgage, any Tangible Personal Property which, in its reasonable opinion, may have become obsolete or unfit for use or which is no longer necessary in the conduct of its businesses or the operation of the Trust Estate, and no purchaser of any such property shall be bound to inquire into any question affecting the Mortgagor's right to sell or otherwise dispose of the same, free from the lien of this Mortgage; (b)to alter, repair, replace, change the location (provided notice shall be given to Mortgagee as to any new location) or position of and add to any Tangible Personal Property; provided, however, that no change shall be made in the location of any such property subject to the lien pf this Mortgage which would in any respect impair the security of this Mortgage upon such property; or (c) to renew, extend, surrender, terminate, modify or amend any leases of Tangible Personal Property, when, in the Mortgagor's reasonable opinion, it is prudent to do so. The Mortgagor shall retain any net cash proceeds (subject to the right to pay dividends or make cash distributions pursuant to Section 12.07 of the Indenture) received from the sale or disposition of any Tangible 23 Personal Property under Subsection (a) of this Section 2.02, in the business of operating the Casino-Hotel. The Mortgagee shall be under no responsibility or duty with respect to the exercise of the rights of the Mortgagor under this Section 2.02 or the application of the proceeds of any sale or disposition of any Tangible Personal Property. Section 2.03. OTHER EXCEPTED PROPERTY. Notwithstanding any provisions contained in this Mortgage or the Indenture to the contrary, including, without limitation, the provisions of Granting Clauses Fifth and Sixth and of Articles Two and Five hereof, if the Mortgagor acquires Tangible Personal Property and other items constituting operating assets, such as computer software subject to any FF&E Financing Agreement, or becomes the lessee under a lease for any of the same and if the document evidencing such F&E Financing Agreement prohibits subordinate liens or the provisions of any such lease prohibits any assignment thereof by the lessee, and if any such prohibition is customary with respect to similar transactions of the lender or lessor, as the case may be, then the property so purchased or the lessee's interest in the lease, as the case may be, shall be deemed to be Excepted Property. If any such FF&E Financing Agreement permits subordinate liens then the Mortgagee agrees to execute and deliver to the Mortgagor, at the Mortgagor's expense, such documents as the holder of such FF&E Financing Agreement may reasonably request to evidence the subordination of the lien of this Mortgage to the lien of such FF&E Financing Agreement. Section 2.04. [Reserved] Section 2.05. RELEASED LAND. (a) Notwithstanding anything to the contrary herein contained, the Mortgagor shall have the right, at any time and from time to time, unless an Event of Default shall have occurred and be continuing, to convey all or any part 24 of the Released Fee Land (the land to be so conveyed is hereinafter referred to as the "Released Land"), free from the lien of the Mortgage, provided that: (i) the Mortgagor furnishes the Mortgagee with an Officers' Certificate requesting the release of such property from the Trust Estate and stating (w) so long as the Released Land is owned or used by an Affiliate of the Mortgagor, the Released Land shall not be operated in a manner in competition with the operation of the Casino-Hotel as a casino, (x) that no permanent structures have been constructed on the Released Land, (y) that the Mortgagor is not required to hold the Released Land in, order to maintain all Permits and in order to comply with the provisions of all material contracts to which the Mortgagor is a party or by which the Mortgagor is bound and either (A) the Mortgagor has made adequate provision to maintain all Permits and to comply with such contractual requirements by: (1) owning and using the balance of the Trust Estate; (2) acquiring fee title to any real property that would enable Mortgagor to maintain all Permits and satisfy such contractual requirements; or (3) acquiring a Qualified Leasehold Interest in real property that would enable the Mortgagor to maintain such Permits and satisfy such contractual requirements; or (B) neither the requirements of such Permits nor such contracts require the Mortgagor to own the Released Land or use or operate any land in the manner in which the Released Land is intended to be used; or (C) such requirements have been waived, and (z) that such conveyance will not materially interfere with the operation of the Casino-Hotel; (ii) the Mortgagor delivers to the Mortgagee an Opinion of Counsel to the effect that the Mortgagor is not required to own and use the Released Land in order to maintain in good standing all Permits or by the provisions of any material contract to which the Mortgagor is a party or by which it is bound to own and use the Released Land; (iii) the Mortgagor delivers to the Mortgagee, if applicable, an endorsement to the Original Policy in accordance with Section 2.05(d); (iv) the Mortgagor delivers to the Mortgagee an executed counterpart of the instruments of conveyance in recordable form, which shall contain a covenant prohibiting the use of the Released Land by any Affiliate of the Mortgagor (A) as a casino or (B) in a manner in competition with the operation of 25 the Casino-Hotel as a casino prior to the latest Stated Maturity Date of the Note; and (v) in the case of a conveyance or release described in (A) or (B) above, if the Released Land is being conveyed to an Affiliate of the Mortgagor, the cash consideration received by the Mortgagor for the Released Land shall not be less than the product of the Release Price multiplied by the area (in square feet) of the Released Land. (b) The Mortgagee shall, from time to time, promptly execute any written instrument in form reasonably satisfactory to the prospective purchaser to confirm the release of the Released Fee Land, upon receipt by the Mortgagee of an Officers' Certificate stating that the Mortgagor is entitled to such release by virtue of the Mortgagor's compliance with this Section 2.05 (and, if applicable, Section 2.05 of the Guaranty Mortgage), PROVIDED, that the Mortgagee shall have no liability thereunder and all costs and expenses (including reasonable attorneys' fees) shall be paid by the Mortgagor. Section 2.06. RELEASED FEE LAND. (a) Notwithstanding anything to the contrary herein contained, in the event the Mortgagor intends to exercise an option to acquire fee title to Leased Land under the provisions of any Ground Lease, the Mortgagor shall have the right, unless an Event of Default shall have occurred and be continuing, to have an Affiliate exercise such options(s) or for the Mortgagor to exercise such options(s) on behalf of an Affiliate and in connection therewith to cause fee simple title to the Leased Land or any part thereof to be conveyed to an Affiliate of the Mortgagor (provided that no portion of the purchase price of the Leased Land or part thereof is paid by Mortgagor), free from the lien of this Mortgage (the land to be so conveyed is hereinafter referred to as the "Released Fee Land"), provided that the Mortgagor furnishes the Mortgagee with the following: (i) an Officers' Certificate requesting the release of the Released Fee Land from the Trust Estate and stating that (A) the Mortgagor is not required to own the Released Fee Land in order to maintain all Permits and in order to comply with the provisions of all material contracts to which the Mortgagor is a party or by which the Mortgagor is bound, (B) such Affiliate has received all Permits necessary to own the Released Fee Land (including without limitation all approvals required by the Casino Control Commission of the State of New Jersey), (C) there has been delivered to the Mortgagor and the Mortgagee a true copy of an instrument executed by such Affiliate stating that 26 (i) such Affiliate may only engage in the activity of owning the Released Fee Land and (ii) such Affiliate shall not convey the Released Fee Land to another Affiliate of the Mortgagor, unless such other Affiliate executes and delivers to the Mortgagor and the Mortgagee, the instruments that would have been required to be delivered pursuant to clause (C) if the Mortgagor conveyed the Released Fee Land to such other Affiliate (provided that this restriction shall only be effective until such time as this Mortgage shall be satisfied of record) and (D) the deed conveying the Released Fee Land to such Affiliate shall state that such conveyance is made subject to the terms, provisions and conditions of the applicable Ground Lease and that the fee and leasehold interests in the Released Fee Land shall not merge by reason of the Mortgagor and/or any Affiliate owning both the leasehold and fee estate therein, and that such estates shall always remain separate and distinct; (ii) an Opinion of Counsel to the effect that (A) the Mortgagor is not required to own the Released Fee Land in order to maintain in good standing all Permits or by the provisions of any material contract to which the Mortgagor is a party or by which it is bound to own the Released Fee Land and (B) the instruments described in clause (C) of subparagraph (i) were duly executed by and are binding upon such Affiliate; and (iii) an endorsement to the Original Policy, confirming that no merger of the fee and leasehold estates in the Released Fee Land has resulted from such conveyance. In addition, simultaneously with such acquisition, the Affiliate and Mortgagor shall enter into an instrument in form and substance reasonably satisfactory to Mortgagee, amending the applicable Ground Lease to provide such mortgagee protections as are customary and to the extent reasonably required by Mortgagee, including, without limitation, (A) a covenant of the landlord not to terminate the Ground Lease for any reason whatsoever (including without limitation, due to any default by tenant of its obligations under such Ground Lease), and (B) an agreement by the landlord not to accept payment of any fixed or base rent from the tenant (and, if tendered by the Mortgagor, and agreement to return same to the Mortgagor) or any other charges payable thereunder at any time that an Event of Default shall have occurred and shall be continuing. (b) The Mortgagee shall, from time to time, promptly execute any written instrument in form reasonably satisfactory to the prospective purchaser to confirm the 27 release of the Released Fee Land, upon receipt by the Mortgagee of an Officers' Certificate stating that the Mortgagor is entitled to such release by virtue of the Mortgagor's compliance with this Section 2.06, PROVIDED that the Mortgagee shall have no liability thereunder and all costs and expenses (including reasonable attorneys' fees) shall be paid by the Mortgagor. Section 2.07. AFTER-ACQUIRED FEE MORTGAGES. (a) Notwithstanding anything contained herein to the contrary (i) if no Event of Default has occurred and is continuing and (ii) if the Mortgagor shall acquire Released Fee Land, then simultaneously with the acquisition thereof, the Mortgagor shall have the right to encumber such fee simple title with a mortgage (such mortgage and any refinancing thereof permitted by the Indenture is hereinafter referred to as an "After-Acquired Fee Mortgage"). The lien of this Mortgage on the Released Fee Land shall be subordinated to the lien of the After-Acquired Fee Mortgage on the Released Fee Land (and to the lien of other Superior Mortgages which shall become a lien thereon in accordance with the terms thereof), provided the following conditions are satisfied: (i) the After-Acquired Fee Mortgage encumbers the fee simple title to such real property and no other property; (ii) the indebtedness secured by the After-Acquired Fee Mortgage (A) does not exceed 75% of the cost to the Mortgagor of such fee simple title at the time of the acquisition and (B) satisfies the criteria set forth in Section 12.08 of the Indenture; (iii) in the event the After-Acquired Fee Mortgage encumbers fee simple title to the Leased Land or any part thereof, such After-Acquired Fee Mortgage contains provisions binding on the holder of the After-Acquired Fee Mortgage and its successors and assigns confirming the provisions of Section 5.21(d) of this Mortgage; (iv) the Released Fee Land is not being acquired from an Affiliate of the Mortgagor; (v) the After-Acquired Fee Mortgage and other loan documents shall contain a provision binding upon the holder of such After-Acquired Fee Mortgage and other loan documents that all insurance proceeds in the event of a Casualty and awards for Takings of less than the entire Released Fee Land shall be used for purposes of Restoration; and 28 (vi) the Mortgagor delivers to the Mortgagee an Officers' Certificate requesting such subordination and certifying that the requirements of (i) through (v) above have been satisfied. (b) Anything contained in this Section 2.07 or elsewhere in this Mortgage to the contrary notwithstandi, the subordination of this Mortgage to any After-Acquired Fee Mortgage constituting a lien on Released Fee Land shall not be self-operative but shall be effective only upon the execution and delivery by the Mortgagee of an instrument in writing effecting such subordination. The Mortgagee shall deliver such instrument of subordination on the following conditions: (x) the Mortgagee shall have received an Officers' Certificate confirming that the conditions of (i) through (vi) of paragraph (a) have been satisfied, together with a true and correct copy of the After-Acquired Fee Mortgage and all other instruments securing the indebtedness evidenced thereby and (y) the instrument of subordination shall specifically state that this Mortgage is being subordinated not with respect to the lien of this Mortgage on the Ground Lease or on the leasehold estate created thereby, but only with respect to the fee simple title to the Leased Land or applicable part thereof and only if and to the extent that the After-Acquired Fee Mortgage being subordinated to is subject and subordinate to the Ground Lease and the leasehold estate created thereby. ARTICLE THREE REMEDIES Section 3.01. EVENTS OF DEFAULT. "Event of Default," whenever used herein, means any one of following events (including any applicable notice requirement and any period of grace as specified in this Section 3.01) (whatever the reason for such event 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): (a) default in the payment of any interest on the Note when such interest becomes due and payable and continuance of such default for a period of 10 days after there has been given a written notice to the Mortgagor specifying such default and stating that such notice is a "Notice of Default" hereunder; or (b) default in the payment of the principal of any Note at its Maturity; or 29 (c) an "Event of Default" as defined in Section 3.01 of the Guaranty Mortgage shall occur; or (d) default in the payment of any other sum due under the Note or this Mortgage and the continuance of such default for a period of 10 days after there has been given to the Mortgagor a written notice specifying such default and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; or (e) default in the performance, or breach, of any covenant of the Mortgagor in this Mortgage (other than a covenant a default in the performance or breach of which is elsewhere in this Section specifically dealt with), and continuance of such default or breach for a period of 30 days after there has been given to the Mortgagor 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 (i) the default or breach is of such a nature that is curable but not susceptible of being cured with due diligence within such 30-day period (for reasons other than the lack of funds), (ii) the Mortgagor delivers an Officers' Certificate to the Mortgagee within such 30-day period stating (A) the applicability of the provisions of Clause (i) to such default or breach, (B) the Mortgagor's intention to remedy such default or breach with reasonable diligence and (C) the steps which the Mortgagor has undertaken to remedy such default or breach and (iii) the Mortgagor delivers to the Mortgagee additional Officers' Certificates every 30 days thereafter updating the information contained in the certificate described in Clause (ii), in which case such 30 day period shall be extended for such further period of time as may reasonably be required to cure the same, provided that the Mortgagor is then proceeding and thereafter continues to proceed to cure the same with reasonable diligence; or (f) an "Event of Default" as defined in Section 7.01 of the Indenture, shall occur; or (g) default by the Mortgagor under any of the terms of any Ground Lease which shall not be fully cured or waived prior to the expiration of any grace period contained in such Ground Lease, unless prior to the expiration of such grace period, the Mortgagor gives the Mortgagee an Officers' Certificate, an Opinion of Counsel and a true copy of the Injunction referred to below, which Certificate and Opinion state that (i) a court of competent jurisdiction has issued an injunction (which is in force and effect and has not been modified or reversed on appeal) tolling or staying 30 the expiration of the grace period set forth in such Ground Lease with respect to such default, (ii) such injunction specifically provides that in addition to the tolling or stay describe in (i) above, such tolling or stay also applies to the Mortgagee for purposes of determining the duration and expiration of the periods during which the Mortgagee may exercise its rights under such Ground Lease (including without limitation, periods to cure lessee defaults and delivering a guarantee and the period during which the Mortgagee may elect to enter into a new lease thereunder), (iii) such injunction further provides that the tolling or stay under (i) and (ii) shall be effective until such time that the Mortgagee is personally served with notice of the expiration of such injunction and (iv) the Mortgagee is named as a party in any action or proceeding involving such injunction and therefore entitled to notice of any modification or termination thereof; and, if such injunction is issued, then so long as such injunction remains in force and effect and the preceding provisions of this Section 3.01(g) have been complied with, the grace period referred to in the third line of this subparagraph (g) shall be deemed to mean the grace period after giving effect to any such tolling or stay in (i) above; or (h) default by the Mortgagor under any of the terms of any Superior Mortgage which default results in the acceleration of the maturity of such Superior Mortgage and which shall not be fully cured or waived prior to the expiration of any grace period contained in such Superior Mortgage, unless prior to the expiration of such grace period, the Mortgagor gives the Mortgagee an Officers' Certificate and an Opinion of Counsel and a true copy of the injunction referred to below, which Certificate and Opinion shall state (i) that a court of competent jurisdiction has issued an injunction (which is in force and effect and has not been modified or reversed on appeal) tolling or staying the expiration of the grace period set forth in such Superior Mortgage with respect to such default and (ii) the Mortgagee is named a party in any action or proceeding relating to such injunction and therefore is entitled to notice of any modification or termination thereof; and if such injunction is issued, then so long as such injunction remains in force and effect, and the preceding provisions of this Section 3.01(h) have been complied with, the grace period referred to in the third line of this subparagraph (h) shall be deemed to mean the grace period after giving effect to any such tolling or stay; or 31 (i) any modification, amendment or supplement of any Ground Lease without the prior written consent of the Mortgage; or (j) any modification, amendment or supplement of any Superior Mortgage without the prior written consent of the Mortgagee, except to the extent that such modification, amendment or supplement is permitted by Section 5.22(b)(i) hereof; or (k) default in the performance, or breach, of any of the provisions of Article Four and the continuance of such default or breach for a period of 60 days after there has been given a written notice to the Mortgagor specifying that such notice is a "Notice of Default" hereunder; or (l) any representation or warranty of the Mortgagor set forth in this Mortgage or in any notice, certificate, demand or request delivered to the Mortgagee pursuant to this Mortgage shall prove to be incorrect as of the time when made and the facts constituting such incorrectness impairs the Mortgagee's security and such impairment continues for a period of 30 days after there has been given to the Mortgagor a written notice specifying that such notice is a "Notice of Default" hereunder, unless (i) such impairment is curable, but not susceptible of cure within such 30-day period (for reasons other than lack of funds), (ii) the Mortgagor gives an Officers' Certificate to the Mortgagee within such 30-day period stating (A) the applicability of the provisions of (i) to such impairment, (B) the Mortgagor's intention to remedy the same with reasonable diligence and (C) the steps which the Mortgagor has undertaken to remedy such default or breach and (iii) the Mortgagor delivers to the Mortgagee additional Officers' Certificates every 30 days thereafter updating the information contained in the certificate described in (ii), in which case such 30-day period shall be extended for such further period of time as may reasonably be required to cure the same, provided that the Mortgagor is then proceeding and thereafter continues to proceed to cure the same with reasonable diligence. Section 3.02. DEMAND UNDER NOTE. If an Event of Default occurs and is continuing, then the Mortgagee may declare the Outstanding Amount of the Note to be due and payable immediately, by a notice in writing to the Mortgagor and upon any such declaration such principal shall become immediately due and payable. Section 3.03. APPLICATION OF MONEYS RECEIVED BY MORTGAGEE. Any moneys received by the Mortgagee pursuant to 32 the provisions of this Article Three (including moneys received by the Trustee after any action or act by the Mortgagee under Section 3.10) shall be applied by the Mortgagee in accordance with the provisions of Section 7.06 of the Indenture. Section 3.04. RESTORATION OF RIGHTS AND REMEDIES. If the Mortgagee has instituted any proceeding to enforce any right or remedy under this Mortgage and such proceeding has been discontinued or abandoned for any reason or has been determined adversely to the Mortgagee, then and in every such case the Mortgagor and the Mortgagee shall, subject to any determination in such proceeding, be restored to its former position hereunder, and thereafter all rights and remedies of the Mortgagee shall continue as though no such proceeding had been instituted. Section 3.05. RIGHTS AND REMEDIES CUMULATIVE. No right or remedy herein conferred upon or reserved to the Mortgagee 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 3.06. DELAY OR OMISSION NOT WAIVER. No delay or omission of the Mortgagee to exercise any right or remedy accruing upon an 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 Three by law to the Mortgagee may be exercised, from time to time, and as often as may be deemed expedient, by the Mortgagee. Section 3.07. UNDERTAKING FOR COSTS. If any action or proceeding shall be commenced (including, without limitation, an action to foreclose this Mortgage or to collect the indebtedness secured hereby) to which action or proceeding the Mortgagee is made or becomes a party, or in which it becomes necessary in the opinion of the Mortgagee to defend or uphold the lien of this Mortgage, the Mortgagor shall pay to Mortgagee all expenses, including reasonable attorneys' fees and expenses, incurred by the Mortgagee in connection therewith, together with interest at the rate then payable on the Note, from the date of payment less the net amount received by the Mortgagee or the Trustee, as their interests may appear under any title insurance policy, and, until paid, all such expenses, together with interest as aforesaid, shall be a lien on the Trust Estate. 33 Section 3.08. WAIVER OF APPRAISEMENT AND OTHER LAWS. To the full extent that it may lawfully so agree, the Mortgagor will not at any time insist upon, plead, claim or take the benefit or advantage of, any appraisement, valuation, stay, extension or redemption law now or hereafter in force, in order to prevent or hinder the enforcement of this Mortgage or the absolute sale of the Trust Estate, or any part hereof, or the possession thereof by any purchaser at any sale under this Article Three; and the Mortgagor, for itself and all who may claim under it, so far as it or they now or hereafter may lawfully do so, hereby waives the benefit of all such laws. The Mortgagor, for itself and all who may claim under it, waives, to the extent that it may lawfully do so, all right to have the property in the Trust Estate marshalled upon any foreclosure hereof, and agrees that any court having jurisdiction to foreclose this Mortgage may order the sale of the Trust Estate as an entirety. If any law in this Section 3.08 referred to and now in force, of which the Mortgagor or its successor or successors might take advantage despite this Section 3.08, shall hereafter be repealed or cease to be in force, such law shall not thereafter be deemed to constitute any part of the contract herein contained or to preclude the application of this Section 3.08. Section 3.09. ENTRY. The Mortgagor agrees that upon the occurrence of an Event of Default the Mortgagor, upon demand of the Mortgagee during the continuance thereof, shall forthwith surrender to the Mortgagee the actual possession of, and it shall be lawful for the Mortgagee by such officers or agents as it may appoint to enter and take possession of, the Trust Estate (and the books and papers of the Mortgagor), and to hold, operate and manage the Trust Estate (including the making of all needful repairs, and such alterations, additions and improvements as the Mortgagee shall deem wise) and to receive the rents, issues, tolls, profits, revenues and other income thereof, and, after deducting the costs and expenses of entering, taking possession, holding, operating and managing the Trust Estate, as well as payments for taxes, insurance and other proper charges upon the Trust Estate and reasonable compensation to itself, its agents and counsel, to apply the same as provided in Section 3.03, PROVIDED, HOWEVER, that the Mortgagee's rights under this Section 3.09 shall be subject to the provisions of the New Jersey Casino Control Act and Section 3.14. Whenever all that is then due upon the Note and under any of the terms of this Mortgage shall have been paid and all defaults hereunder shall have been made good, the Mortgagee shall surrender possession to the Mortgagor. 34 Section 3.10. POWER OF SALE; SUITS FOR ENFORCEMENT. In case an Event of Default shall occur and be continuing, the Mortgagee, with or without entry, in its discretion may: (a) sell, subject to any mandatory requirements of applicable law, the Trust Estate as an entirety, or in such parcels, as the Mortgagee may determine, to the highest bidder at public auction at such place and at such time (which sale may be adjourned by the Mortgagee from time to time in its discretion by announcement at the time and place fixed for such sale, without further notice) and upon such terms as the Mortgagee may fix and briefly specify in a notice of sale to be published as required by law; or (b) proceed to protect and enforce its rights under this Mortgage by sale pursuant to judicial proceedings or by a suit, action or proceeding in equity or at law or otherwise, whether for the specific performance of any covenant or agreement contained in this Mortgage or in aid of the execution of any power granted in this Mortgage or for the foreclosure of this Mortgage or for the enforcement of any other legal, equitable or other remedy, as the Mortgagee, being advised by counsel, shall deem most effectual to protect and enforce any of the rights of the Mortgagee; the failure to join tenants shall not be asserted as a defense to any foreclosure or proceeding to enforce the rights of the Mortgagee. Section 3.11. INCIDENT OF SALE. Upon any sale of any of the Trust Estate, whether made under the power of sale hereby given or pursuant to judicial proceedings, to the extent permitted by law: (a) the principal of and accrued interest on the Note, if not previously due, shall at once become and be immediately due and payable; (b) subject to the provisions of Section 3.14 and the receipt of any required prior approvals of the New Jersey Casino Control Commission, the Mortgagee may bid for and purchase the property offered for sale, and upon compliance with the terms of sale may hold, retain and possess and dispose of such property, without further accountability, and may, in paying the purchase money therefor, delivery any notes or claims for interest thereon in lieu of cash to the amount which shall, upon distribution of the net proceeds of such sale, be payable thereon, and such notes or claims for interest thereon, in case the amounts so payable thereon shall be less than the amount due thereon, 35 shall be returned to the holders thereof after being appropriately stamped to show partial payment; (c) the Mortgagee may make and deliver to the purchaser or purchasers a good and sufficient deed, bill of sale and instrument of assignment and transfer of the property sold; (d) the Mortgagee is hereby irrevocably appointed the true and lawful attorney of the Mortgagor, in its name and stead, to make all necessary deeds, bills of sale and instruments of assignment and transfer of the property thus sold; and for that purpose it may execute all necessary deeds, bills of sale and instruments of assignment and transfer, and may substitute one or more persons, firms or corporations with like power, the Mortgagor hereby ratifying and confirming all that its attorney or such substitute or substitutes shall lawfully do by virtue hereof; but if so requested by the Mortgagee or by any purchaser, the Mortgagor shall ratify and confirm any such sale or transfer by executing and delivering to the Mortgagee or to such purchaser or purchasers all proper deeds, bills of sale, instruments of assignment and transfer and releases as may be designated in any such request; (e) all right, title, interest, claim and demand whatsoever, either at law or in equity or otherwise, of the Mortgagor of, in and to the property so sold shall be divested and such sale shall be a perpetual bar both at law and in equity against the Mortgagor, its successors and assigns, and against any and all persons claiming or who may claim the property sold or any part thereof from, through or under the Mortgagor, its successors and assigns; and (f) the receipt of the Mortgagee or of the officer making such sale shall be a sufficient discharge to the purchaser or purchasers at such sale for his or their purchase money and such purchaser or purchasers and his or their assigns or personal representatives shall not, after paying such purchase money and receiving such receipt, be obliged to see to the application of such purchase money, or be in anywise answerable for any loss, misapplication or non-application thereof. Section 3.12. RECEIVER. Upon the occurrence of an Event of Default and commencement of judicial proceedings by the Mortgagee to enforce any right under this Mortgage, the Mortgagee shall be entitled, as against the Mortgagor, without notice or demand and without regard to the adequacy of the security for the Note or the solvency of the 36 Mortgagor, to the appointment of a receiver of the Trust Estate, and of the rents, issues, profits, revenues and other income thereof, PROVIDED, HOWEVER, that the Mortgagee's rights under this Section 3.12 shall be subject to the provisions of the New Jersey Casino Control Act and Section 3.14 hereof. Section 3.13. SUITS TO PROTECT THE TRUST ESTATE. Upon 5 days' prior written notice to the Mortgagor (or such shorter period or without notice if deemed necessary and appropriate by the Mortgagee), the Mortgagee shall have power to institute and maintain such proceedings as it may deem necessary and appropriate to prevent any impairment of the Trust Estate by any acts which may be unlawful or in violation of this Mortgage and to protect its interests in the Trust Estate and in the rents, issues, profits, revenues and other income arising therefrom, including power to institute and maintain proceedings to restrain the enforcement of or compliance with any 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 hereunder or be materially prejudicial to the interests of the Mortgagee. Section 3.14. MANAGEMENT OF CASINO-HOTEL. Notwithstanding any provision of this Article Three to the contrary, following an Event of Default and the taking of possession of the Trust Estate or any part thereof by the Mortgagee and/or the appointment of receiver of the Trust Estate or any part thereof, the Mortgagee or any such receiver shall be authorized, in addition to the rights and powers of the Mortgagee and such receiver set forth elsewhere in this Mortgage, to retain one or more experienced operators of hotels and/or casinos to manage the Casino-Hotel, PROVIDED that any such operator shall have all necessary legal qualifications, including all Permits, to manage the Casino-Hotel. ARTICLE FOUR CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE Section 4.01. CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER ONLY ON CERTAIN TERMS. The Mortgagor shall comply with all provisions applicable to the Mortgagor in Article Ten of the Indenture. Section 4.02. SUCCESSOR ENTITY SUBSTITUTED. Upon any consolidation or combination or any conveyance or transfer of the Trust Estate or any portion thereof in accordance with Section 10.01 of the Indenture, the 37 successor entity formed by such consolidation or into which the Mortgagor is combined or to which such conveyance or transfer is made shall succeed to, and be substituted for, and may exercise every right and power of, the Mortgagor under this Mortgage with the same effect as if such successor entity had been named as the Mortgagor herein; PROVIDED, HOWEVER, that no such conveyance or transfer of the Trust Estate substantially as an entirety, unless such conveyance or transfer is in compliance with the provisions of Article Ten of the Indenture, shall have the effect of releasing the Person named as "the Mortgagor" in the first paragraph of this instrument or any successor entity which shall theretofore have become such in the manner prescribed in such Article Ten from its liability as obligor or maker of the Note. Section 4.03. LIMITATION ON SALES OF TRUST ESTATE. Except as otherwise expressly permitted by this Mortgage or the Indenture, the Mortgagor shall not sell, assign, lease, sublease, hypothecate, pledge, mortgage or otherwise transfer all or any part of the Trust Estate or any interest therein (including without limitation any interest in the Ground Leases). Without limiting the generality of the foregoing, the Mortgagor shall not separate, or attempt to separate, its ownership of its interest in the Ground Leases from its ownership of the buildings constituting the Casino-Hotel or any part thereof. ARTICLE FIVE COVENANTS AND REPRESENTATIONS OF MORTGAGOR Section 5.01. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST. The Mortgagor will duly and punctually pay the principal of (and premium, if any) and interest on the Note in accordance with the terms of the Note and this Mortgage. Section 5.02. FF&E FINANCING AGREEMENTS. The Mortgagor covenants and agrees to comply with all of the terms and conditions set forth in any FF&E Financing Agreements before the expiration of any applicable notice and cure periods contained in the FF&E Financing Agreements. Section 5.03. LIMITATIONS ON LIENS. (a) The Mortgagor will not create, incur, suffer or permit to be created or incurred or to exist any mortgage, lien, charge or encumbrance on or pledge of any of the Trust Estate, other than (i) Permitted Encumbrances, (ii) liens on the Trust Estate in connection with indebtedness permitted by clauses (i), (ii), (iii), (iv) or (v) of Section 12.08(a) of the Indenture, and (iii) a building contract or a notice of intention filed by a 38 mechanic, materialman or laborer under the New Jersey lien law. Without limiting the generality of the foregoing sentence but notwithstanding the provisions of the foregoing sentence, the Mortgagor shall not be deemed to have breached the provisions of the foregoing sentence by virtue of the existence of a lien for Impositions or mechanics liens so long as the Mortgagor is in good faith contesting the validity of the same in accordance with the provisions of Section 5.09 to the extent that the matters described in (i) and (ii) do not constitute a default under any Ground Lease or Superior Mortgage. (b) Mortgagee acknowledges that, contemporaneously with the execution and delivery of this Mortgage, it has assigned this Mortgage to the Trustee and that the Trustee is also the mortgagee under the Guaranty Mortgage, which Guaranty Mortgage creates a lien upon the same Trust Estate PARI PASSU with the lien of this Mortgage. Mortgagee further acknowledges and agrees that whenever it is provided in the Guaranty Mortgage that the Mortgagor shall deliver any notice or document, or is require to make any payment thereunder, the delivery of such notice or document or the making of such payment pursuant to the terms of the Guaranty Mortgage shall also constitute the delivery of such notice or document or the making of such payment in satisfaction of the terms, conditions and provisions of this Mortgage to the same extent as the same constitutes satisfaction of the terms, conditions and provisions of the Guaranty Mortgage. Section 5.04. [Reserved] Section 5.05. ACTIONS AND PROCEEDINGS. The Mortgagor hereby acknowledges the right of the Mortgagee, in the name of and on behalf of the Mortgagor, (a) to appear in and defend any action or proceeding brought with respect to the Trust Estate or any part thereof and (b) upon 5 days' prior written notice to the Mortgagor (or such shorter period or without notice if deemed necessary and appropriate by the Mortgage), to commence any action or proceeding to protect the interest of the Mortgagee in the Trust Estate. Section 5.06. WARRANTY OF LEASEHOLD ESTATE AND TITLE. The Mortgagor represents and warrants that as of the date hereof: (a) it is duly authorized under the laws of the State of New Jersey and all other applicable laws to execute and deliver this Mortgage, and all corporate action on its part necessary for the valid execution and delivery of this Mortgage has been duly and effectively taken; 39 (b) it is the lawful owner and is lawfully seized and possessed of the Owned Land and all buildings and improvements thereon, free and clear of all liens, charges or encumbrances, other than the lien of the Mortgage Documents, any Working Capital Facility Lien and Existing Encumbrances; (c) it is the holder of and has good and marketable title to the leasehold interests and leasehold estates under the Ground Leases and to the Ground Leases, subject to no lien, encumbrance or charge other than the lien of the Mortgage Documents, any Working Capital Facility Lien and Existing Encumbrances; (d) (i) the Ground Leases are valid and subsisting demises of the Leased Land for the terms therein set forth, (ii) there are no defaults thereunder by any Lessor or the lessee as to which written notice has been given to or by the lessee, (iii) the Mortgagor has delivered true and correct copies of the Ground Leases and all modifications, amendments and supplements thereto, and (iv) each of the Ground Leases is in full force and effect and has not been modified, amended or supplemented, except as described on Schedule 2; (e) it has good title to the Operating Assets, subject to no lien, encumbrance or charge, other than the lien of the Mortgage Documents, any Working Capital Facility Lien and Existing Encumbrances; and (f) the Mortgagor has good and lawful right and authority to execute this Mortgage and to grant, bargain, sell, alien, convey, assign, transfer, hypothecate, pledge, mortgage and confirm the Trust Estate as provided herein (including without limitation with respect to the Operating Assets and the Ground Leases, without the consent of any third party, other than governmental authorities but any applicable or necessary consent or approval of any such governmental authority has been given or waived at or prior to the execution and delivery of this Mortgage), and this Mortgage constitutes a valid second mortgage lien and second priority security interest in the Trust Estate PARI PASSU with the lien of the Guaranty Mortgage, subject only to Working Capital Facility Liens and Existing Encumbrances. The Mortgagor hereby does and will forever warrant and defend (x) the title to Trust Estate (including without limitation, its leasehold estates under the lessee's interests in the Ground Leases) (subject to Permitted Encumbrances) and (y) the priority of the lien of this 40 Mortgage (subject to Permitted Encumbrances other than Restricted Encumbrances), against the claims and demands of all persons whomsoever, at the Mortgagor's sole cost and expense. Section 5.07. FURTHER ASSURANCES; RECORDING. The Mortgagor will, as provided in Section 5.13, from time to time subject its right, title an interest under all Leases to the lien of this Mortgage. The Mortgagor will cause this instrument and all other instruments of further assurance, including all financing statements and continuation statements covering security interests in personal property, to be promptly recorded, registered and filed, and at all times to be kept recorded, registered and filed, and will execute and file such financing statements and cause to be issued and filed such continuation statements, all in such manner and in such places as may be required by law or as requested by the Mortgagee to fully preserve and protect the rights of the Mortgagee as a secured party under the Uniform Commercial Code to all property comprising the Trust Estate (to the extent a grant of a security interest therein is governed by the Uniform Commercial Code) and to perfect, preserve and protect the lien of this Mortgage as a valid mortgage lien of record and a valid security interest on the Trust Estate subject to Permitted Encumbrances (other than Restricted Encumbrances). The Mortgagor will pay all filing or recording fees, and all expenses incident to the execution and delivery of this Mortgage, and any instrument of further assurance, and all federal, state, county and municipal stamp taxes and other taxes, duties, mposts, assessments and charges arising out of or in connection with the execution and delivery of the Note, this Mortgage, any financing statement or continuation statement with respect to the personal property constituting part of the Trust Estate or any instrument of further assurance. Section 5.08. PAYMENT OF TAXES AND CERTAIN CLAIMS; MAINTENANCE OF PROPERTIES; COMPLIANCE WITH LEGAL REQUIREMENTS AND INSURANCE REQUIREMENTS. The Mortgagor will: (a) subject to the provisions of Section 5.09 relating to contests, pay or cause to be paid promptly (or when installments of the same shall become due and payable, if, by law or by agreement or arrangement with the applicable governmental agency or authority, the same may be paid in installments) before any fine, penalty, interest or cost may be added for nonpayment (but no later than when the same are payable by the Mortgagor dpursuant to any Superior Instrument 41 Requirement), all taxes (including, without limitation, real estate taxes, personal or other property taxes and all sales, value added, use and similar taxes), assessments (including, without limitation, all assessments for public improvements or benefits, whether or not commenced or completed prior to the date hereof and whether or not to be completed prior to the satisfaction of this Mortgage), water, sewer or other rents, rates and charges, excises, levies, license fees, permit fees, inspection fees and other authorization fees and other charges, in each case whether general or special, ordinary or extraordinary, or foreseen or unforeseen, of every character (including all interest, additions to tax and penalties thereon), that may be assessed, levied, confirmed or imposed on or in respect of or be a lien upon (1) the Trust Estate (including without limitation the Leased Land) or any part thereof or any rent therefrom or any estate, right or interest therein, or (2) any acquisition, occupancy, use, leasing, or possession of or activity conducted on the real property or any part thereof included in the Trust Estate or any gross receipts thereof or of the rent therefrom (all of the foregoing being referred to collectively as "Impositions"). Notwithstanding the foregoing or any other provision of this Mortgage, the Mortgagor shall not be required to pay any income, profits or revenue tax upon the income of the Mortgagee, the Trustee or any Noteholder nor any franchise, excise, corporate, estate, inheritance, succession, capital levy or transfer tax of the Mortgagee, the Trustee or the Noteholder nor any interest, additions to tax or penalties in respect thereof, unless such tax is imposed, levied or assessed n substitution for any Impositions that the Mortgagor is required to pay pursuant to this Section 5.08. The Mortgagor will deliver to the Mortgagee official receipts or other proof evidencing payments of any Impositions in accordance with the requirements of this Section 5.08. The Mortgagor shall not be entitled to any credit for taxes or assessments paid against the Note; (b) except for such property which the Mortgagor may dispose of or replace pursuant to Section 2.02, maintain and keep all its properties used or useful in the conduct of its business (other than obsolete equipment), including, without limitation, the Casino-Hotel and all Tangible Personal Property, in such good repair, working order and condition, except for reasonable wear and use, and make or cause to be made all such needful and proper repairs, renewals and replacements thereto consistent with the standards of other casino-hotels in Atlantic City, New Jersey; 42 (c) occupy and continuously operate the Casino-Hotel and keep the Casino-Hotel supplied with Tangible Personal Property, all in a manner consistent with the standards of other casino-hotels in Atlantic City, New Jersey (provided that nothing contained in this Section 5.08(c) shall be deemed to reduce the time period set forth in Section 3.01(f)); (d) subject to the provisions of Section 5.09 relating to contests, the Mortgagor at its sole expense will timely (1) comply with all Legal Requirements and Insurance Requirements, whether or not compliance therewith shall require structural changes in the buildings and improvements included in the Trust Estate or interfere with the use and enjoyment of the Trust Estate or any part thereof, (2) procure, maintain and comply with all permits and other authorizations required for (i) the use of the Casino as a gaming and gambling facility, (ii) the on-premises consumption of alcoholic beverages at the Casino-Hotel and (iii) any other use of the Trust Estate or any part thereof then being made, and for the proper erection, installation, operation and maintenance of the improvements or any part thereof, and (3) comply with any instruments of record at the time in force affecting the Trust Estate or any part thereof, if the failure to comply with the same would impair the Mortgagee's security hereunder. Without limiting the generality of the foregoing, the Mortgagor represents and warrants that at the time of the execution of this Mortgage, the Mortgagor is in compliance with the requirements of clauses (1), (2) and (3); (e) in the event of the passage after the date of this Mortgage of any law of the State of New Jersey, or any other governmental entity, changing in any way the laws now in force for the taxation of mortgages, or debts secured thereby, for state or local purposes, or the manner of the operation of any such taxes, so as to affect the interest of the Mortgagee, then and in such event, the Mortgagor shall bear and pay the full amount of such taxes, provided that if for any reason payment by the Mortgagor of any such new or additional taxes would be unlawful or if the payment thereof would constitute usury or render the indebtedness secured hereby wholly or partially usurious under any of the terms or provisions of the Note, or this Mortgage, or otherwise, the Mortgagee may, at the Mortgagee's option, declare the whole sum secured by this Mortgage, with interest thereon, to be due and payable 90 days after notice of election thereof has been given by the Mortgagee, or the Mortgagee may, at the Mortgagee's option, pay that amount or portion of such taxes as renders the loan or 43 indebtedness secured hereby unlawful or usurious, in which event the Mortgagor shall concurrently therewith pay the remaining lawful and nonusurious portion or balance of such taxes. Section 5.09. PERMITTED CONTESTS. The Mortgagor may, at its sole expense, contest by appropriate legal proceedings conducted in good faith and with due diligence, the amount or validity or application, in whole or in part of any Imposition or lien therefor or any Legal Requirement or Insurance Requirement or the application of any instrument of record affecting the Trust Estate or any part thereof or any claims of mechanics, materialmen, suppliers, or vendors or lien therefore, and may withhold payment of the same pending such proceedings if permitted by law, or make payment under protest, or defer compliance with any such Legal Requirement, any such Insurance Requirement or the terms of any such instrument, and the same shall not be a Default hereunder, provided that (a) in the case of any Impositions or lien therefor or any claims of mechanics, materialmen, suppliers or vendors or lien therefor, such proceedings shall suspend the collection thereof from each of the Mortgagor, the Mortgagee, the Trustee, the Noteholder and the Trust Estate, (b) neither the Trust Estate nor any interest therein would be in any danger of being sold, forfeited, or lost, (c) such action would not result in or constitute a default under any Ground Lease or Superior Mortgage, (d) in the case of a Legal Requirement, neither the Noteholder nor the Mortgagee shall be in any danger of any civil or any criminal liability, and the failure of the Mortgagor to comply with such Legal Requirement shall not affect the continuance in good standing of any Permit or result in the suspension, termination, non-renewal or material adverse modification of any permit, and (e) in the case of an Insurance Requirement, the failure of the Mortgagor to comply therewith shall not affect the validity of any insurance required to be maintained by the Mortgagor hereunder. Section 5.10. MECHANICS' AND OTHER LIENS. Without limiting the generality of the first sentence of Section 5.03 and notwithstanding the provisions of Section 5.03(a)(ii), the Mortgagor will cause to be removed, either by payment, or bonding or otherwise, all claims and demands of mechanics, materialmen, laborers, and others which, if unpaid, might result in, or permit the creation of, a lien on the Premises and/or Trust Estate or any part thereof, or on the revenues, rents, issues, income and profits arising therefrom and in general will do or cause to be done everything necessary so that the lien hereof shall be fully preserved, at the cost of the Mortgagor, without expense to the Mortgagee. 44 Section 5.11. INSURANCE. (a) The Mortgagor will, at its expense, maintain with Insurers: (1) insurance with respect to the Mortgagor's insurable properties constituting a part of the Trust Estate against loss or damage by fire, lightning, and other risks from time to time included under "all-risk" policies and against loss or damage by sprinkler leakage, water damage, collapse, malicious mischief and explosion in respect of any steam and pressure boiler and similar apparatus located on such insurable properties, in amounts at all times sufficient to prevent the Mortgagor from becoming a coinsurer within the terms of the applicable policies, but in any event such insurance shall be maintained in such insurable amounts not less than the greatest of the following (hereinafter referred to as the "Insurance Amount"): (i) 100% of the then full insurable value of such insurable properties, the term "full insurable value" to mean the actual replacement cost (excluding the costs of foundation, footing, excavation, paving, landscaping and other similar, non-insurable improvements) determined from time to time (but not less frequently than once in any 36 calendar months), by an Architect, contractor, appraiser, or an Insurer, or (ii) the amount required to be maintained pursuant to the Superior Instrument Requirements; (2) war risk insurance as and when such insurance is obtainable from the United States of America or any agency thereof as promptly as reasonably practicable after the same becomes so obtainable, in an amount not less than the Insurance Amount, or in such lesser amount as may then be so obtainable; (3) public liability, including personal injury and property damage and comprehensive general liability connected with the possession, use, leasing, operation or condition of such insurable properties in such amounts as, in the Mortgagor's judgment, are prudent, considering the cost of such insurance, for personal injury and property damage with respect to any one occurrence, which may be under an umbrella policy. Anything contained in this clause (3) to the contrary notwithstanding, the Superior Instrument Requirements with respect to the kinds and amount of insurance described in this clause (3) shall be satisfied by the Mortgagor; 45 (4) appropriate workers' compensation insurance with respect to any work (to the extent the risks to be covered thereby are not already covered by other policies of insurance maintained by the Mortgagor) on or about such insurable properties; (5) business interruption insurance covering not less than 12 months of loss, provided that at any time that the Mortgagor is renewing any policy for such insurance or taking out any new or replacement such policy covering a period of less than 12 months, the Mortgagor shall deliver to the Mortgagee an Officers' Certificate certifying that the period of coverage to be maintained by the Mortgagor under such policy is the maximum that can be maintained at rates determined by the Mortgagor to be reasonable for such coverage; (6) to the extent available, flood insurance in an amount not less than the Insurance Amount, or such lesser amount as may then be so obtainable; and (7) such other insurance with respect to such insurable properties against loss or damage of the kinds (i) from time to time customarily insured against by persons owning or using casino-hotels of comparable size in the boardwalk area of Atlantic City, New Jersey and (ii) required to be maintained pursuant to the Superior Instrument Requirements. Notwithstanding the foregoing, to the extent permitted by Superior Instrument Requirements, (i) the Mortgagor shall be permitted to maintain a deductible with respect to the insurance policies described in clauses (1), (2), (6) and (7) in an amount not to exceed (x) for the twelve month period commencing the date hereof, $100,000 with respect to the insurance policies described in clause (1), (2), (6) and (7) thereafter, the customary deductible (if any) with respect to the insurance maintained by casino-hotels of a similar size and value in Atlantic City, New Jersey (but in no event more than $1,000,000, (ii) the Mortgagor shall be permitted to maintain a $200,000 self insured retention under the general liability policy described in clause (3) and a deductible with respect to the other insurance policies described in clause (3) in an amount not to exceed the amount of deductible as is customarily maintained by casino-hotels of similar size in Atlantic City, New Jersey, (iii) the Mortgagor shall not reduce its insurance coverage for the matters described in clause (3) (which for purposes of this paragraph means a reduction in single limits or an increase in deductible) unless and until the Mortgagor delivers to the Mortgagee an Officers' Certificate certifying (w) that the coverage the Mortgagor was theretofore maintaining cannot be maintained atrates determined by the Mortgagor to be reasonable for such coverage, (x) the amount of the proposed reduction, (y) 46 the premium for the existing and the proposed reduced coverage, and (z) that the proposed deductible satisfied the criteria set forth in this clause (iii), and (iv) the Mortgagor shall be permitted to maintain a deductible with respect to the insurance policies described in clause (5) in the forms of and in an amount not to exceed the amount of deductible as is customarily maintained by casino-hotels of similar size in Atlantic City, New Jersey. (b) Each policy of insurance maintained by the Mortgagor pursuant to Subsection (a) of this Section 5.11 shall, (1) except in the case of workers' compensation insurance, name as additional insureds the Mortgagee and, to the extent required by the Superior Instrument Requirements, the Lessors and the holders of the Superior Mortgages, (2) provide that all insurance proceeds for losses, except in the case of public liability insurance and workers' compensation insurance or as otherwise provided in Subsections (d), (e) and (f) of this Section 5.11, be payable solely to the Mortgagee or such other party as is required to receive such proceeds under a Superior Mortgage, (3) except in the case of workers' compensation, include effective waivers (whether under the terms of any such policy or otherwise) by the insurer of all claims for insurance premiums against all lost payees and named insureds (other than the Mortgagor) and all rights of subrogation against any named insured, (4) except in the case of public liability and workers' compensation insurance, provide that any losses shall be payable notwithstanding (i) any act, failure to act, negligence of, or violation or breach of warranties, declarations or conditions contained in such policy by the Mortgagor or the Mortgagee or any other named insured or loss payee (including, without limitation, with respect to the Released Fee Land, the holders of any After-Acquired Fee Mortgages), (ii) the occupation or use of the insurable properties for purposes more hazardous than permitted by the terms of the policy, (iii) any foreclosure or other proceeding or notice of sale relating to the insurable properties or (iv) any change in the title to or ownership or possession of the insurable properties, (5) contain a non-contributory mortgagee clause in favor of the Mortgagee, and (6) provide that if all or any part of such policy is cancelled, terminated or expires, the insurer will forthwith give notice thereof to each named insured an loss payee and that no cancellation, reduction in amount or material change in coverage thereof shall be effective until at least 30 days after receipt by each named insured and loss payee of written notice thereof. (c) The Mortgagor will deliver to the Mortgagee, (1) duplicate originals of all insurance policies that the Mortgagor is required to maintain pursuant to this Section 5.11 and (2) within 30 days after each reduction in insurance required to be maintained by the Mortgagor 47 hereunder, an Officers' Certificate setting forth the articulars as to all such insurance policies and certifying that the same comply with the requirements of this Section 5.11, that all premiums or installments thereof then due thereon have been paid and that the same are in full force and effect. The Mortgagee shall not be responsible for effecting or renewing any insurance or for the responsibility or solvency of the insurers. (d) The Mortgagor shall give written notice to the Mortgagee immediately upon obtaining knowledge of any Casualty which (x) results in damage, loss or destruction in an amount in excess of $5,000,000 to any buildings or improvements on the Premises and/or any Tangible Personal Property or (y) pursuant to any Superior Instrument Requirement, would require the deposit of insurance proceeds with the Depositary, or action or proceeding with respect thereto. Whenever the Superior Instrument Requirements require or permit the selection of the Depositary by the Mortgagor, the Mortgagor shall select the Insurance Trustee as the Depositary. Within 30 days after any Casualty which results in any damage, loss or destruction in an amount in excess of $10,000,000 to any buildings or improvements of the Premises and/or any Tangible Personal Property, the Mortgagor shall deliver to the Mortgagee a certificate of an Architect stating whether, in such Architect's opinion, applicable Legal Requirements permit the Restoration of such buildings and improvements for the same uses and to the same size and quality in all material respects, as existed immediately prior to the Casualty (and if such certificate states the Legal Requirements do not permit such Restoration, such certificate shall describe the manner closest approximating such criteria to which the buildings and improvements could be so restored and shall be accompanied by a Certificate of Appraised Value dated not more than 10 days prior to delivery setting forth the Appraised Value immediately prior to the Casualty and the estimated Appraised Value immediately after the Restoration). If the Mortgagor is required to deliver such Certificates of Appraised Value and if based on such Certificates of Appraised Value immediately after Restoration, the aggregate Outstanding Amount of First Mortgage Debt immediately after such Restoration shall exceed the greater of (i) 66 2/3% of the Appraised Value immediately after such Restoration or (ii) the quotient of the Outstanding Amount of First Mortgage Debt immediately prior to such Casualty divided by the Appraised Value immediately prior to the Casualty multiplied by the Appraised Value immediately after such Restoration, then the proceeds of any insurance shall, at the election of Mortgagee, either be applied to Restoration as set forth in Subsections (e), (h) and (i) below) or paid and delivered to the Mortgagee to the extent of the then Outstanding Amount of the Notes and any other interest or other sums due 48 hereunder or thereunder to be applied to the satisfaction of the Mortgage to the extent proceeds are available for such purpose and provided that no additional sums are due to the Trustee or the Noteholders under the Notes or the Indenture, the balance of any net insurance proceeds shall be paid to the Mortgagor. Notwithstanding the foregoing sentence, if such Certificates of Appraised Values indicates that the Outstanding Amount of First Mortgage Debt immediately after such Restoration exceeds the greater of the two amounts determined pursuant to subclauses (i) and (ii) above, the proceeds of insurance will be made available for Restoration (subject to paragraphs (e), (h) and (i) below) if the Mortgagor obtains an irrevocable commitment from a nationally recognized financial institution having a combined capital and surplus of at least $100,000,000, to supply, upon an acceleration under this Mortgage as a result of an Event of Default, funds to the Mortgagor as additions to capital in an amount equal to the Outstanding Amount of First Mortgage Debt in excess of the Appraised Value necessary to be paid down so that the Outstanding Amount of First Mortgage Debt will not exceed either of the two amounts determined pursuant to such clauses (i) and (ii), PROVIDED that such commitment may only be released if, upon an Appraisal at any time following completion of such Restoration, the aggregate Outstanding Amount of the First Mortgage Debt does not exceed 66-2/3% of the Appraised Value. (e) Subject to the provisions of Subsection (d) above, in case a Casualty occurs, the following shall apply: (1) if the cost of Restoration (as hereinafter defined) does not exceed the sum of $10,000,000, the net insurance proceeds shall be paid by the Mortgagee to the Mortgagor (unless the Superior Instrument Requirements provide that the same shall be paid to the Depositary); (2) if the cost of Restoration is $10,000,000 or more or if the Superior Instrument Requirements provide that the same shall be paid to the Depositary, the net insurance proceeds shall be paid by the Mortgagee to the Insurance Trustee (or other Depositary required by the Superior Instrument Requirements, provided that such Depositary holds such proceeds in trust for purposes of paying the costs of Restoration); (3) the Mortgagor shall commence with reasonable promptness under the circumstances and thereafter with due diligence proceed to perform and complete in a good and workmanlike manner the restoration, repair, replacement or rebuilding of the damage or destruction resulting from the Casualty (all of which restoration, repair, replacement or rebuilding are referred to as 49 the "Restoration") in accordance with the plans and specifications submitted to the Insurance Trustee, in conformance with all Legal Requirements and Superior Instrument Requirements, and in accordance with the further provisions of this Subsection (e), regardless of the extent of any such Casualty and whether or not net insurance proceeds, if any, shall be available or, if available, shall be sufficient, for the purpose of the Restoration (provided, however, that if the Mortgagor does not receive any net insurance proceeds within 30 days after any Casualty because the adjustment of the loss has not yet occurred, then the obligation of the Mortgagor to commence such Restoration shall be deferred until such proceeds are made available to the Mortgagor, provided that (i) Mortgagor delivers to the Mortgagee an Officer's Certificate certifying that the Mortgagor is diligently and continuously adjusting such loss with the Insurer, (ii) the Mortgagor delivers to the Mortgagee an Officers' Certificate within such 30-day period requesting the extension of such period, estimating the date on which such proceeds will be available and describing the Mortgagor's efforts to adjust such loss and certifying that such extension does not constitute a default or a breach of any of the provisions of any of the Ground Leases (or if so, such default or breach has been waived) and (iii) the Mortgagor delivers to the Mortgagee additional Officers' Certificates every 30 days thereafter updating the information contained in the certificate described in Clause (ii)). All Restoration work shall be performed in accordance with the applicable provisions of Section 5.12 and in conformance with all Superior Instrument Requirements, Legal Requirements and Insurance Requirements and, prior to commencing any Restoration, the Mortgagor shall obtain all Permits necessary in connection therewith, and shall obtain, and keep in full force and effect until the completion of such Restoration, such additional insurance as the Insurance Trustee and Superior Instrument Requirements may require. The plans and specifications for the Restoration shall be accompanied by a certificate of the Mortgagor and an Opinion of Counsel to the effect that upon the completion of the Restoration pursuant to the plans and specifications the Premises, and all buildings and improvements, thereon will comply with all superior Instrument Requirements, Legal Requirements and Insurance Requirements. Notwithstanding anything in this Section 5.11 to the contrary, if such Casualty is in an amount less than $5,000,000, the Mortgagor shall not be required to perform and complete such Restoration (unless the performance and completion of the Restoration is necessary in order for the Mortgagor to be in compliance with any term, provision or condition of 50 this Mortgage (other than this Section 5.11(e)) or any Superior Instrument Requirements; (4) Any insurance proceeds which the Mortgagor receives, shall be held by the Mortgagor in trust for the purpose of paying the cost of the Restoration, except as otherwise provided herein; (5) Any net insurance proceeds that the Insurance Trustee holds pursuant to this Subsection (e), shall be deposited in an interest-bearing investment reasonably designate by Mortgagor (to the extent the Mortgagor is permitted to designate such investment under the Superior Instrument Requirements) (and the interest thereon shall be added to such proceeds) and shall be paid by the Insurance Trustee in reimburse the Mortgagor for, or to make payment for, the Restoration, after the Insurance Trustee deducts therefrom the amount of any reasonable costs and expenses incurred in connection with the performance of its obligations under this Section 5.11. The Insurance Trustee shall make such payments not more frequently than once every 30 days upon the written request of the Mortgagor (unless more frequent payments are required by Superior Instrument Requirements), by paying to the Mortgagor or the persons named in the certificate described in Clause (6) of this Subsection (e) the respective amounts stated in such certificate from time to time as the Restoration progresses, provided the Mortgagor has complied with the requirements of this Subsection (e) and such payment is permitted by an applicable Superior Instrument Requirements. The Mortgagor's written request shall be accompanied by (i) the certificate described in Clause (6) of this Subsection (e) and (ii) a title company or official search, or other evidence reasonably acceptable to the Insurance Trustee, showing that there have not been filed with respect to the Premises, any vendor's, contractor's mechanic's, laborer's or materialman's statutory or similar lien which has not been discharged of record (or bonded against or secured by other security) or any other encumbrance irrespective of its priority (other than Permitted Encumbrances). (6) The certificate required by Clause (5) of this Subsection (e) shall (A) be an Officers' Certificate, countersigned by the Architect in charge of the Restoration with respect to the matters described in (i) and (v) below, (B) be dated not more than 10 days prior to such request and (C) set forth (in addition to any other requirements contained in any applicable Superior Instrument Requirements) that: 51 (i) all of the Restoration work theretofore performed is in substantial compliance with the plans and specifications theretofore submitted to the Insurance Trustee and in compliance with all Superior Instrument Requirements, Legal Requirements and Insurance Requirements; (ii) the sum then requested either has been paid by the Mortgagor or is justly due to contractors, subcontractors, materialmen, engineers, architects or other persons who have rendered services or furnished or contracted to deliver materials for the Restoration therein specified, and the names and addresses of such persons, a brief description of such services and materials and the several amounts so paid or due to each of such persons in respect thereof; (iii) no part of the amount requested has been or is the basis in any pervious or then pending request for the withdrawal of net insurance proceeds, and that the sum then requested does not exceed the value of the services and materials described in the certificate; (iv) except for the amount, if any, stated pursuant to Subclause (ii) of this Clause (6) in such certificate to be due for services or materials, and except for amounts in dispute and/or customary retainages, there is no outstanding indebtedness known to the person signing such certificate, after due inquiry, which is then due for labor, wages, materials, supplies or services in connection with such Restoration; and (v) the remaining cost, as estimated by the persons signing such certificate, of the Restoration in order to complete the same does not exceed the net insurance proceeds remaining in the hands of Insurance Trustee after payment of the sum requested in such certificate or if such estimated cost does exceed such insurance proceeds such certificate shall state the amount of any such deficiency. If the certificate states that such deficiency will exist, the Mortgagor shall deliver the amount of such deficiency in cash or cash equivalent to the Insurance Trustee simultaneously with the delivery of such certificate, which amount shall be deemed insurance proceeds for purposes of this Section 5.11(e); and 52 (7) If net insurance proceeds shall be insufficient to pay the entire cost of the Restoration, then, after completion of the Restoration, the Mortgagor shall pay the deficiency. If all or any part of the net insurance proceeds are not used for the restoration in accordance with this Subsection (e) (because such proceeds exceed the amount required to complete the Restoration), then upon completion of the Restoration in accordance with this Subsection (e), such amount not so used, if held by the Insurance Trustee, shall be paid to the Mortgagor (if permitted by Superior Instrument Requirements). (f) Provided that no Event of Default has occurred and is continuing, all net business interruption insurance proceeds shall be paid to the Mortgagor, to be segregated from the other funds of Mortgagor and held in trust by Mortgagor for the following purposes and in the following order of priority: (i) for the payment of Impositions and amounts due under the Ground Leases and Superior Mortgages; (ii) for debt service for the estimated period of Restoration (for purposes of this Section 5.11(f), interest and principal payments due on any payment date under the Note will deemed to accrue in equal daily installments beginning the day after the immediately preceding payment date and ending on such payment date); and (iii) for any expense incurred in connection with the operation or business of the Casino-Hotel. (g) The Mortgagor shall not take out separate insurance, concurrent in form or contributing in the event of loss with that required to be maintained pursuant to this Section 5.11, unless the same are permitted by Superior Instrument Requirements and the Mortgagee is included therein as a named insured, with loss payable to the Mortgagee and the Insurance Trustee pursuant to Section 5.11(b) hereof. The Mortgagor shall immediately notify the Mortgagee whenever any such separate insurance is taken out and shall promptly deliver to the Mortgagee a duplicate original of the policy of such insurance, a copy thereof certified by the insurer or a certificate thereof. (h) Subject to final adjustment by the insurer, insurance claims by reason of damage or destruction to any portion of the Trust Estate may be adjusted by the Mortgagor, but the Mortgagee shall have the right (but not the obligation) to join the Mortgagor in adjusting, and approving the adjustment of, any such loss except in the event of a loss where the amount of insurance reasonably anticipated to be received with respect to such loss is less than Five Million Dollars ($5,000,000), and the Mortgagor shall assist the Mortgagee in any such adjustment at the request of the Mortgagee. If the Mortgagee at its election as aforesaid joins the Mortgagor in any adjustment process, 53 then the Mortgagee's approval of the adjustment shall not be unreasonably withheld; (i) Notwithstanding anything contained herein to the contrary, if an Event of Default shall have occurred and be continuing, the Mortgagee may, at its option, (A) refrain from paying to the Mortgagor or the Insurance Trustee any net insurance proceeds or (B) instruct the Insurance Trustee to pay to the Mortgagee any insurance proceeds then held by the Insurance Trustee, as the case may be. Section 5.12. LIMITATIONS ON BUILDING DEMOLITION, ALTERATIONS, IMPROVEMENTS AND NEW CONSTRUCTION. The Mortgagor will not authorize, permit or make any demolition, alteration or improvement of any building included in the Trust Estate or any new construction on any part of the Trust Estate, except in conformity with and subject to the limitations hereinafter in this Section 5.12 set forth. Unless an Event of Default shall have occurred and be continuing, the Mortgagor shall have the right at all times to make or permit such alterations, improvements or new constructions, structural or otherwise (herein sometimes called collectively "alterations"), of or on the Trust Estate, to be made in all cases subject to the following conditions: (a) no alteration shall be undertaken or carried out except in conformity with all Superior Instrument Requirements, Legal Requirements and Insurance Requirements; (b) if the estimated cost of any alteration, together with other alterations that constitute a single construction plan or project (whether or not accomplished in several stages or procedures), exceeds [$5,000,000], the building or buildings, as so improved or altered, upon completion of the work shall be of a value not less than the value of such building or buildings immediately prior to the making of such alterations; (c) any alteration which is structural in nature or involves an estimated cost of more than [$5,000,000] shall be conducted under the supervision of an Architect, and no such alteration shall be undertaken until 10 days after there shall have been filed with the Mortgagee detailed plans and specifications and cost estimates therefor, stating that such plans and specification conform to all, prepared and approved in writing by such Architect and accompanied by a certificate of such Architect stating that such plans and specifications conform to all applicable provisions of this Section 5.12; 54 (d) no alteration involving an estimated cost of more than $5,000,000 shall be undertaken until the Mortgagor has furnished to the Mortgagee, at the Mortgagor's sole cost and expense, a surety bond or bonds, covering performance, and labor and material payments with respect to the work to be so performed, naming the Mortgagee as obligee, issued by a responsible surety company, authorized to do business in the state of New Jersey, in a form generally and customarily used by such surety in an amount equal to the estimated cost of construction of the work covered by the plans and specifications therefor, guaranteed and conditioned upon the performance and completion of such construction, substantially in conformity with the such plans and specifications and within a reasonable time, subject to delays by fire, strikes, lock-out, acts of God, inability to obtain labor or materials, governmental restrictions, enemy action, civil commotion or unavoidable Casualty or other similar causes beyond the control of the Mortgagor, free and clear of all liens, claims and liabilities for the cost of such alterations. In the event such surety bond or bonds shall be unobtainable the Mortgagor shall deliver to the Mortgagee security by cash, letter of credit or other guarantee, affording substantially the same protection as would such bond or bonds; (e) all work done in connection with any alterations shall be done promptly and in good and workmanlike manner. The work in connection with any alteration shall be prosecuted with reasonable dispatch, delays due to fire, strikes, lockouts, acts of God, inability to obtain labor or materials, governmental restrictions, enemy action, civil commotion or unavoidable casualty or similar causes beyond the control of the Mortgagor excepted; (f) if the estimated cost of alterations exceed $5,000,000, the Mortgagor shall have delivered to the Mortgagee (A) prior to the commencement of such alterations, additions or improvements copies of all Permits required for the commencement of such work together with a certificate of the Architect or an Opinion of Counsel to the effect that all Permits required for the commencement of such alterations have been obtained; and (B) within a reasonable period of time after the completion of the alterations, copies of all Permits required in connection with the completion thereof, together with either an Opinion of Counsel or a certificate of the Architect that all such Permits have been so obtained by the Mortgagor and that the Mortgagor has complied with all the requirements of this Section 5.12; 55 (g) no alterations of any kind shall be made to any building which shall change the use or reduce the size or quality of the building in any material respect; and (h) no alterations costing in excess of $5,000,000, together with other alterations that constitute a single construction plan or project (whether or not accomplished in several stages or procedures), shall be made to any building if such alterations are not expected to be completed at least 120 days prior to the maturity date of the Note (except if such alterations are required in order to comply with Legal Requirements or Superior Instrument Requirements). Section 5.13. LEASES. The Mortgagor shall not: (a) subject to the provisions of Section 5.13(d), enter into any Lease, or renew, modify, extend, terminate, or amend any Lease, except in the ordinary course of business of operating the Casino-Hotel; (b) receive or collect, or permit the receipt or collection of, any rental payments under any Lease more than one year in advance of the respective periods in respect of which they are to accrue, except that, in connection with the execution and delivery of any Lease or of any amendment to any Lease, rental payments thereunder may be collected and received in advance in an amount not in excess of three months' rent and/or a security deposit may be required thereunder in an amount not exceeding one year's rent; (c) collaterally assign, transfer or hypothecate (other than to the Mortgagee hereunder, to the mortgagee under the Guaranty Mortgage or to the holder of any Working Capital Facility Lien) any rental payment under any Lease whether then due or to accrue in the future, the interest of the Mortgagor as landlord under any Lease or the rents, issues or profits of the Trust Estate; (d) after the date hereof, enter into any Lease, or renew any Lease unless such Lease contains terms to the effect as follows: (1) the Lease and the rights of the tenants thereunder shall be subject and subordinate to the rights of the Mortgagee under this Mortgage, the mortgagee under the Guaranty Mortgage and the holders of any Superior Mortgage, 56 (2) the Lease may be assigned by the landlord thereunder to the Mortgagee, (3) the rights and remedies of the tenant in respect of any obligations of the landlord thereunder shall be nonrecourse as to any assets of the landlord other than its equity in the building in which the leased premises are located or the proceeds thereof, (4) the rights of the tenant shall be subject and subordinate to the rights of the lessee under any new lease entered into in the event of a termination of a Ground Lease; (e) modify any Lease with respect to the matters described in clauses (1) through (4) of paragraph (d). If the Mortgagor enters into a Lease (other than with any Affiliate of the Mortgagor) for a term of not less than 3 nor more than 10 years, the Mortgagee shall deliver a non-disturbance and attornment agreement substantially in the form of Schedule 4 hereto, following receipt of a certificate of a leasing broker (who is not an Affiliate of the Mortgagor or the broker involved in such transaction) experienced with respect to leases of commercial space in the Atlantic City area stating that the rent under the Lease is not less than fair market rent and that the other terms of the Lease are fair and reasonable in the commercial leasing market. The Mortgagor shall, upon demand, reimburse the Mortgagee for any costs and expenses (including reasonable attorney's fees) incurred by the Mortgagee in connection with the preparation. review and delivery of such non-disturbance and attornment agreements. Promptly after the execution and delivery hereof, the Mortgagor will cause the lessee under each Lease now in effect and promptly after each Lease is executed or becomes effective after the date of the execution and delivery hereof, the Mortgagor will cause the lessee under each such Lease, to be duly notified in writing (unless the substance and effect of such notice shall be contained in such Lease) of the subjection of the owner's interest, as lessor, in and to such Lease to the lien of this Mortgage and of the name and address of the Mortgagee. Each such notice shall state that the lease of such lessee is a Lease as herein defined. If a new Mortgagee is at any time appointed hereunder or the address of the Mortgagee shall at any time be changed, the Mortgagor will cause each lessee under each Lease to be promptly notified in writing of the name address of such new Mortgagee or the new address of the Mortgagee. The Mortgagor will use reasonable efforts (but shall not be obligated to ncur any expenditure other than DE MINIMIS 57 amounts) to obtain from each lessee under each Lease to whomany notice is sent pursuant to this paragraph an acknowledgment of receipt of such notice, and the Mortgagor will promptly deliver to the Mortgagee, upon request, a copy of each such acknowledgment of receipt which it is able to obtain. The Mortgagee shall not be responsible for securing or causing the Mortgagor to secure any such acknowledgment. Nothing contained in this Section 5.13 shall limit the provisions of Section 4.04 hereof. Section 5.14. [Reserved] Section 5.15. MAINTENANCE OF EXISTENCE OF THE MORTGAGOR. Subject to Article Four, the Mortgagor will do or cause to be done all things necessary to preserve and keep in full force and effect its existence as a corporation, and its rights (both statutory and under its articles of incorporation) and franchises. Section 5.16. TO KEEP BOOKS; INSPECTION BY MORTGAGEE. The Mortgagor will keep proper books of record and account in accordance with Section 12.05 of the Indenture. Section 5.17. ADVANCES BY MORTGAGEE. If the Mortgagor shall fail to perform any of its covenants in this Mortgage and such failure shall continue for 10 days following notice thereof given by the Mortgagee (or at any time, without notice, in case of emergency), the Mortgagee may (but is not obligated to), at any time and from time to time, take any action or make advances, to effect performance of any such covenant on behalf of the Mortgagor; and all moneys so used or advanced by the Mortgagee and all reasonable costs and expenses incurred by Mortgagee in connection therewith, together with interest on all of the same at the rate of interest set forth in the Note, shall be repaid by the Mortgagor upon demand and such advances shall be secured under this Mortgage prior to the Note. Section 5.18. WAIVER OF STAY, EXTENSION OR USURY LAWS. The Mortgagor covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any usury, stay or extension law or any other law which would prohibit or forgive the Mortgagor from paying all or any portion of the obligations evidenced by the Note as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may otherwise affect the covenants or the performance of this Mortgage; and the Mortgagor (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Mortgagee, but 58 will suffer and permit the execution of every such power as though no such law had been enacted. Section 5.19. [Reserved] Section 5.20. EMINENT DOMAIN. (a) The Mortgagor shall give written notice to the Mortgagee immediately upon obtaining knowledge of any Taking affecting the Trust Estate. If the Taking (i) is estimated to result in an award of more than $5,000,000 or (ii) the Taking would interfere with or adversely affect the operation of the Casino-Hotel in accordance with Legal Requirements then within 30 days after any such Taking, the Mortgagor shall deliver to the Mortgagee a certificate of an Architect stating whether, in such Architect's opinion, applicable Legal Requirements permit the Restoration of any buildings and improvements for the same uses and the same size and quality in all material respects as existed immediately prior to the Taking (and if such certificate states that Legal Requirements do not permit such Restoration, such certificate shall describe the manner closest approximating such criteria to which the buildings and improvements could be so restored and shall be accompanied by a Certificate of Appraised Value dated not more than 10 days prior to delivery setting forth the Appraised Value immediately prior to the Taking and the estimated Appraised Value immediately after the permitted Restoration). If the Mortgagor is required to deliver such Certificates of Appraised Value and if based on such Certificates of Appraised Value immediately after Restoration, the aggregate Outstanding Amount of First Mortgage Debt immediately after such Restoration shall exceed the greater of (i) 66-2/3% of the Appraised Value immediately after such Restoration or (ii) the quotient of the Outstanding Amount of the First Mortgage Debt immediately prior to such Taking divided by the Appraised Value immediately prior to the Taking multiplied by the Appraised Value immediately after such Restoration, then the Taking shall be deemed a Taking of "the whole or substantially all of the Premises." Notwithstanding the foregoing sentence, if such Certificates of Appraised Value indicate that the Outstanding Amount of First Mortgage Debt immediately after such Restoration exceeds the greater of the two amounts determined pursuant to subclauses (i) and (ii) above, the Taking will not be deemed a Taking of "the whole or substantially all of the Premises", if the Mortgagor obtains an irrevocable commitment from a nationally recognized financial institution having a combined capital and surplus of at least $100,000,000, to supply, upon an acceleration under this Mortgage as a result of an Event of Default, funds to the Mortgagor as additions to capital in an amount equal to the Outstanding Amount of First Mortgage Debt in excess of the Appraised Value 59 necessary to be paid down so that the Outstanding Amount of First Mortgage Debt will not exceed either of the two amounts determined pursuant to such clauses (i) and (ii), PROVIDED that such commitment may only be released if, upon an Appraisal at any time following completion of such Restoration, the aggregate Outstanding Amount of the First Mortgage Debt does not exceed 66-2/3% of the Appraised Value. (b) If at any time there shall occur a Taking of less than the whole or substantially all of the Premises and the award or awards resulting therefrom payable to the Mortgagor (and not to any Lessor or the holder of any Superior Mortgage) (after there shall have been first deducted the fees and expenses incurred in connection with the termination, settlement and collection of such award or awards, including but not limited to reasonable counsel fees and expenses, hereinafter referred to as "Settlement Costs") (i) shall not exceed the sum of $10,000,000 (except to the extent that the Insurance Trustee or a Depositary is required to hold such amount pursuant to a Superior Instrument Requirement), the entire amount of such award shall be paid to the Mortgagor; and (ii) if such award is $10,000,000 or more, the entire amount of such award shall be paid to the Insurance Trustee (or other Depositary required by a Superior Mortgage, provided that such Depositary holds such award in trust for purposes of paying the cost of Restoration). In either event, such awards shall be applied to the cost of demolition, repair, Restoration and replacement of the Trust Estate to as nearly practicable to their uses, value and condition immediately prior to the Taking (except to the extent otherwise provided by Superior Instrument Requirements). The Mortgagor shall promptly commence and with due diligence perform that Restoration in accordance with clauses (3), (4) and (7) of Section 5.11(e) (after substituting the words "Taking" of "Casualty" and "award" for "not insurance proceeds"), at no cost to the Mortgagee. All claims or suits arising out of any Taking may be settled by the Mortgagor, except that the Mortgagee shall have the right (but not the obligation) to participate in such claim or suit, and not the obligation) to participate in such claim or suit, and to approve settlement thereof (and notwithstanding anything in the Ground Leases to the contrary, the Mortgagor shall not agree to any settlement or compromise of the amount of any such claim or suit), except a claim or suit where the amount reasonably anticipated to be received by the Mortgagor is less than $5,000,000. If the Mortgagee at its election as aforesaid joins such claim or suit, the Mortgagee's approval of such settlement shall not be unreasonably withheld. The Insurance Trustee shall promptly pay such sums as are received by it from such Taking from time to time in accordance with the procedures set forth in clauses (5) and (6) of Section 5.11(e) (after substituting the words 60 "Taking" for "Casualty" and "award" for "net insurance proceeds"). (c) If at any time there shall occur a Taking of the whole or substantially all of the Premises, then the award payable to the Mortgagor shall not be applied to Restoration but shall instead be paid and delivered to the Trustee (subject to the rights of the Lessors under the Superior Leases and the holders of any Superior Mortgages) to the extent of the then Outstanding Amount of the Note and any other interest or other sums due hereunder or thereunder to be applied to the satisfaction of this Mortgage to the extent proceeds are available for such purpose and provided that no additional sums are due the Trustee or the Noteholder under the Note or the Indenture, the balance of any award shall be paid to the Mortgagor. (d) Notwithstanding anything contained herein to the contrary, if an Event of Default shall have occurred and is continuing, the Mortgagee may, at its option, (A) refrain from paying to the Mortgagor or the Insurance Trustee any award or (B) instruct the Insurance Trustee to pay to the Mortgagee any award then held by the Insurance Trustee, as the case may be. Section 5.21. GROUND LEASES. (a) The Mortgagor covenants and agrees that it will do or cause to be done all things necessary to preserve and keep unimpaired the rights of the Mortgagor, as lessee under the Ground Lease, and to prevent any termination, surrender, cancellation, forfeiture or impairment thereof. The Mortgagor shall at all times fully perform and comply with all agreements, covenants, terms and conditions imposed upon or assumed by it as lessee under each of the Ground Leases (including without limitation the covenant to pay rent and all taxes, assessments and other charges mentioned therein) prior to the expiration of any notice and/or cure period provided in each such Ground Lease. Upon receipt by the Mortgagee from a Lessor of any written notice of default by the lessee thereunder, Mortgagee may rely thereon and take any action the Mortgagee deems necessary in its sole discretion to prevent or to cure any default by the Mortgagor in the performance of or compliance with any of the agreements, covenants, terms or conditions imposed upon or assumed by the Mortgagor as lessee under each of the Ground Leases, even though the existence of such default or the nature thereof be questioned or denied by the Mortgagor or by any party on behalf of the Mortgagor, provided that if the Mortgagor has theretofore delivered to the Mortgagee the Officers' Certificate, Opinion of Counsel and a copy of the injunction, all as described in Section 3.01(g), the Mortgagee shall not take any such action unless and until the Mortgagor and/or the Mortgagee no longer has the benefit 61 of any tolling or stay referred to in Section 3.01(g). Without limiting the generality of Section 3.09 hereof, the Mortgagor hereby expressly grants to the Mortgagee, and agrees that the Mortgagee shall have, the absolute and immediate right to enter in and upon the Premises or any part thereof to such extent and as often as the Mortgagee, in its sole discretion, deems necessary or desirable for the purpose permitted by the immediately preceding sentence, subject only to applicable Legal Requirements. Subject to the preceding and without limiting the Mortgagee's other remedies under this Mortgage, the Mortgagee may pay and expend such sums of money as the Mortgagee in its sole discretion deems necessary for any such purpose, and the Mortgagor hereby agrees to pay to the Mortgagee, immediately and without demand, all such sums so paid and expended by the Mortgagee, together with interest thereon from the date of each such payment at the highest rate of interest set forth in the Note. All sums so paid and expended by the Mortgagee, and the interest thereon, shall be added to and be secured by the lien of this Mortgage. (b) The Mortgagor further covenants and agrees: (i)it will not surrender any leasehold estate and interest hereinabove described, nor terminate or cancel any Ground Lease, and that it will not without the express written consent of the Mortgagee modify, change, supplement, alter or amend such Ground Leases either orally or in writing and, as further security for the repayment of the indebtedness secured hereby and for the performance of the covenants herein and in such Ground Leases contained, the Mortgagor hereby assigns to the Mortgagee all of its rights, privileges and prerogatives as lessee under such Ground Leases to terminate, cancel, modify, change, supplement, alter or amend such Ground Leases, and any such termination, cancellation, modification, change, supplement, alteration or amendment of such Ground Leases without the prior written consent thereto by Mortgagee shall be void and of no force and effect. Unless (1) an Event of Default has occurred and is continuing and (2) either (A) there has been an acceleration of maturity of the Note pursuant to Section 3.02 hereof or (B) the Mortgagee exercises its rights under Section 3.09 hereof, the Mortgagee shall have no right to terminate, cancel, modify, change, supplement, alter or amend the Ground Leases; (ii) solely for the benefit of the Mortgagee, Trustee, the Noteholders and no other person, no release or forbearance of any of the Mortgagor's obligations under such Ground Leases, pursuant to such Ground Leases or otherwise, shall release the Mortgagor from any of its obligations under this Mortgage, 62 including its obligations with respect to the payment of rent as provided for in such Ground Leases and the performance of all of the terms, provisions, covenants, conditions and agreements contained in such Ground Leases, to be kept, performed and complied with by the lessee therein; (iii) unless the Mortgagee shall otherwise expressly consent in writing, the fee title to the Leased Land, the Mortgagor's interest in the improvements on the Leased Land and the leasehold estates shall not merge by and shall always remain separate and distinct, notwithstanding the union of such estates either in the Lessor or in the lessee, or in a third party by purchase or otherwise; (iv) the Mortgagor shall promptly notify the Mortgagee in writing of any request made by the Mortgagor, as lessee under each of the Ground Leases, or any of the Lessors, for arbitration proceedings pursuant to the Ground Leases and of the institution of any arbitration proceedings, as well as all proceedings thereunder. In addition, the Mortgagor shall promptly deliver to the Mortgagee a copy of the determination of the arbitrators in each such arbitration proceeding. The Mortgagee shall have the right to participate in such arbitration proceedings in association with the Mortgagor or on its own behalf as an interested party in accordance with the terms of the Ground Leases; (v) the Mortgagor shall not consent to the subordination of any Ground Lease to any mortgage deed of trust or other lien of the fee interest of the Lessor; (vi) in the event (A) the Mortgagor exercises its option under any Ground Lease to purchase any portion of the Leased Land, the Mortgagor shall deliver a copy of its election to exercise such option within 5 days after the Mortgagor has delivered notice of such election to the Lessor or (B) the Mortgagor acquires fee simple title or any other estate, title or interest in the Leased Land, the Mortgagor shall promptly notify the Mortgagee of such acquisition and shall cause to be executed and recorded all such other and further assurances or other instruments in writing as may be required by law or, in the opinion of the Mortgagee, be reasonably desirable to carry out the intent and meaning of clause (x) of Granting Clause Second; (vii) within 5 days after the Mortgagor's receipt of any notice of any motion, application or effort to reject the Ground Lease by any Lessor or any 63 trustee arising from or in connection with any case, proceeding or other action commenced or pending by or against any Lessor under the Code or any comparable provision contained in any present or future federal, state, local, foreign or other statute, law, rule or regulation, the Mortgagor shall give notice thereof to the Mortgagee. The Mortgagor hereby (A) assigns to the Mortgagee any and all of the Mortgagor's rights as lessee under Section 365(h) of the Code or any comparable provision contained in any present or future federal, state, local, foreign or other statute, law, rule or regulation ("Comparable Provision") and (B) covenants that it shall not elect to treat any Ground Lease as terminated pursuant to Section 365(h) of the Code or any Comparable Provision without the prior written consent of the Mortgagee and (C) agrees that any such election by the Mortgagor without such consent shall be null and void; (viii) without limiting the generality of the foregoing, the Mortgagor hereby unconditionally assigns, transfers and sets over to the Mortgagee all of the Mortgagor's claims and rights to the payment of damages arising from any rejection by Lessor of any Ground lease under the Code or any Comparable Provision. The Mortgagee shall have the right to proceed in its own name or in the name of the Mortgagor in respect of any claim, suit, action or proceeding relating to the rejection of any Ground Lease, including, without limitation, the right to file and prosecute, in cooperation with the Mortgagor, any proofs of claim, complaints, motions, applications notices and other documents, in any case in respect of Lessor under the Code or any Comparable Provision. This assignment constitutes a present, irrevocable and unconditional assignment of the foregoing claims, rights and remedies, and shall continue in effect until all of the indebtedness and obligations secured by this Mortgage shall have been satisfied and discharged in full. Any amounts received by the Mortgagee in damages arising out of the rejection of any Ground Lease as aforesaid shall be applied first to all reasonable costs and expenses of the Mortgagee (including, without limitation, reasonable attorneys' fees) incurred in connection with the exercise of any of its rights or remedies under this Section 5.21, and thereafter as provided in Section 3.03 hereof; (ix) if there shall be filed by or against the Mortgagor a petition under the Code or any Comparable Provision and the Mortgagor, as lessee under the Ground Leases, shall determine to reject any or all of the Ground Leases the Mortgagor shall give the Mortgagee not less than 10 days' prior notice of the 64 date on which the Mortgagor shall apply to the Bankruptcy Court or other judicial body with appropriate jurisdiction for authority to reject the lease. The Mortgagee shall have the right, but not the obligation, to serve upon the Mortgagor within such 10 day period a notice stating that (a) the Mortgagee demands that the Mortgagor assume and assign such Ground Lease(s) to the Mortgagee pursuant to Section 365 of the Code or any Comparable Provision and (b) the Mortgagee covenants to cure or provide adequate assurance of prompt cure of all defaults and provide adequate assurance of future performance under such Ground Lease(s). If the Mortgagee serves upon the Mortgagor the notice described in the preceding sentence, the Mortgagor shall not seek to reject such Ground Lease(s) and shall comply with the demand provided for in clause (a) of the preceding sentence within 30 days after the notice shall have been given subject to the performance by the Mortgagee of the covenant provided for in clause (b) of the preceding sentence. Effective upon the entry of an order for relief in respect of the Mortgagor under Chapter 7 of the Code or Any Comparable Provision the Mortgagor hereby assigns and transfers to the Mortgagee a non-exclusive right to apply to the Bankruptcy Court or other judicial body with appropriate jurisdiction for an order extending the period during which the Ground Lease may be rejected or assumed; (x) the Mortgagor shall promptly give to the Mortgagee copies of (A) all notices of default or (B) any other communications or notices with respect to events which relate to the possible impairment of the security of this Mortgage, which it shall give or receive under the Ground Leases and shall promptly notify the Mortgagor of any default under any Ground lease on the part of the Lessor or the Mortgagor; (xi) the Mortgagor shall enforce the obligations of the Lessor under each Ground Lease, to the end that the Mortgagor may enjoy all of the rights granted to it under the Ground leases; and (xii) the Mortgagor shall notify the Mortgagee within 5 days after the transfer of a fee interest in the Leased Land or any portion thereof to or from an Affiliate. (c) The Mortgagor hereby represents and warrants that all fixed net rent, taxes and assessments, payable under the Ground Leases have been paid to the extent they were due and payable to the date hereof and that the Mortgagor has not received notice of its failure to pay any 65 other amounts payable under the Ground Leases which have not been cured. (d) If both the Lessor's and lessee's estates under any of the Ground Leases or any portion thereof shall at any time become vested in one owner, this Mortgage and the lien created hereby shall nevertheless not be merged, extinguished, destroyed or terminated by application of the doctrine of merger and, in such event, Mortgagee shall continue to have all of the rights and privileges of the a leasehold mortgagee. (e) The Mortgagor hereby acknowledges that if any Ground Lease shall be terminated prior to the natural expiration of its term due to default by the lessee thereunder, and if pursuant to such Ground Lease, the Mortgagee or its designee shall acquire from the Lessor a new lease of the Leased land or any portion thereof, the Mortgagor shall have no right, title or interest in or to such lease or the leasehold estate created thereby, or the options therein contained. (f) Any leases for parking purposes hereafter entered into by the Mortgagor as lessee shall contain provisions permitting the assignment of the same to the Mortgagee and the Trustee and permitting assignment without the lessor's consent if this Mortgage is foreclosed. Section 5.22. SUPERIOR MORTGAGES. (a) The Mortgagor covenants and agrees that it will at all times fully perform and comply with all agreements, covenants, terms and conditions imposed upon or assumed by it as mortgagor under the Superior Mortgages prior to the expiration of any notice and/or cure period provided in each such Superior Mortgage. If a notice of default has been given by the holder of any Superior Mortgage and the maturity of the indebtedness secured by such Superior Mortgage has been accelerated as a result thereof, the Mortgagee may rely thereon and take any action the Mortgagee deems necessary in its sole discretion to prevent or to cure any default by the Mortgagor in the performance of or compliance with any of the agreements, covenants, terms or conditions imposed upon or assumed by the Mortgagor as mortgagor under each of the Superior Mortgages even though the existence of such default or the nature thereof may be questioned or denied by the Mortgagor or by any party on behalf of the Mortgagor provided that if the Mortgagor has heretofore taken such actions as described in Section 3.01(h), the Mortgagee shall not take any such action unless and until the Mortgagor and/or the Mortgagee no longer has the benefit of any such tolling or stay referred to in Section 3.01(h). Without limiting the generality of Section 3.09 hereof, the Mortgagor hereby 66 expressly grants to the Mortgagee, and agrees that upon such acceleration the Mortgagee shall have, the absolute and immediate right to enter in and upon the Premises or any part thereof to such extent and as often as the Mortgagee, in its sole discretion, deems necessary for the purpose permitted by the immediately preceding sentence, subject only to applicable Legal Requirements. The Mortgagee may (i) pay and expend such sums of money as the Mortgagee in its sole discretion deems necessary for any such purpose and (ii) in its sole discretion prepay any Superior Mortgage, and the Mortgagor hereby agrees to pay to the Mortgagee, immediately and without demand, all such sums referred to in (i) and (ii) above so paid and expended by the Mortgagee, together with interest thereon from the date of each such payment at the rate of interest set forth in the Note. All sums so paid and expended by the Mortgagee and the interest thereon shall be added to and be secured by the lien of this Mortgage. (b) The Mortgagor further covenants and agrees: (i) the Mortgagor shall not, without first obtaining the written consent of the Mortgagee in each instance: (A) modify any of the terms, covenants or conditions of any Superior Mortgage, and without limiting the foregoing, the Mortgagor shall not, without satisfying such conditions, enter into or obtain any agreement whereby the holder of any Superior Mortgage waives, postpones, extends, reduces or modifies the payment of the installment of principal or interest or any other item or amount now required to be paid under the terms of any Superior Mortgage or modifies any other provision thereof, or (B) acquire or permit or suffer any Affiliate of the Mortgagor to acquire any Superior Mortgage or any interest therein. Notwithstanding anything in clause (A) to the contrary, the Mortgagor shall have the right to amend, supplement or modify any Superior Mortgage, if (x) the then outstanding principal balance of the indebtedness secured by such Superior Mortgage is not increased thereby, and (y) in the case of any After-Acquired Fee Mortgage, such amendment, supplement or agreement does not increase the property covered thereby; (ii) the Mortgagor shall timely pay and perform all of the obligations to be paid or performed by the mortgagor under each Superior Mortgage, the note secured thereby and any other instrument evidencing or securing the indebtedness owing to any holder of any Superior Mortgage; (iii) at any time, and from time to time, the Mortgagor shall upon request of the Mortgagee promptly use its reasonable efforts to obtain an 67 estoppel certificate or letter addressed to the Mortgagee from holders of the Superior Mortgages, such certificate or letter to be in such form as the Mortgagee shall request; and (iv) the Mortgagor shall promptly give to the Mortgagee copies of (A) all notices of default or (B) any other notice or communication with respect to events which relate to the possible impairment of the security of this Mortgage, which it shall give or receive under the Superior Mortgages and shall promptly notify the Mortgagor of any default under any Superior Mortgages on the part of the Mortgagor. (c) The lien of this Mortgage in and to all or specified portions of the Trust Estate shall be subject and subordinate to any Existing Encumbrances and any mortgage, assignment, security agreement, financing statement or other lien securing any Working Capital Facility (the "Working Capital Facility Lien") encumbering Mortgagor's interest in the affected portions of the Trust Estate or any part thereof. The foregoing provisions of this Section 5.22(c) shall be self- operative with respect to Existing Encumbrances and shall be self-operative with respect to any Working Capital Facility Lien, and no further instrument shall be required to give effect to such subordination. Mortgagee shall, however, from time to time, execute instruments in form and substance reasonably satisfactory to the holder of the Working Capital Facility Lien, confirming such subordination and agreeing to such other matters reasonably required by the holder of the Working Capital Facility Lien which do not, in the aggregate, materially adversely reduce or impair the rights of Trustee under the Mortgage, and Mortgagor and others may rely conclusively thereon, provided that Mortgagee shall have no liability thereunder and all costs and expenses (including reasonable attorneys' fees) shall be paid by Mortgagor. (d) The lien of the Mortgage in and to all or specified portions of the Trust Estate shall be subject and subordinate to any Existing Encumbrances. The provisions of this Section 5.22(d) shall be self-operative, and no further instrument shall be required to give effect to such subordination. Section 5.23. MORTGAGE PARI PASSU WITH GUARANTY MORTGAGE. Notwithstanding recordation of this Mortgage in the Atlantic County, New Jersey Clerk's Office prior to the recordation of the Guaranty Mortgage, the lien of this Mortgage ranks PARI PASSU with, and not senior to, the lien reated by the Guaranty Mortgage. 68 ARTICLE SIX MISCELLANEOUS Section 6.01. COUNTERPARTS. This instrument may be executed in any number of counterparts, each of which as executed shall be deemed to be an original, but all such counterparts shall constitute one and the same instrument. Section 6.02. MODIFICATION. This Mortgage is subject to "modification" within the meaning of N.J.S.A. 46:9-8.1 ET SEQ., and this Mortgage shall have the benefit of the lien priority provisions of such statute. Such modification may include, without limitation, a change in the interest rate, maturity date or other terms and conditions of this Mortgage. THE MORTGAGOR DECLARES THAT THE MORTGAGOR HAS RECEIVED A TRUE COPY OF THIS MORTGAGE. IN WITNESS WHEREOF, the parties hereto have caused this Mortgage to be duly executed and attested, all as of the day and year first above written. RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation ATTEST:______________________ By:_____________________________ Name: Name: Title: (Asst.) Secretary Title: (Vice) President RESORTS INTERNATIONAL HOTEL FINANCING, INC. ATTEST:______________________ By:_____________________________ Name: Name: Title: (Asst.) Secretary Title: (Vice) President Exhibit E Assignment of Leases and Rents from Resorts International Hotel, Inc. to Resorts International Hotel Financing, Inc. NA932230075 - GUARANTY MORTGAGE GD&C DRAFT DATED 12/17/93 MORTGAGE SECURING GUARANTY OF MORTGAGE NOTES by and between RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation, as Mortgagor, and STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION a national banking association, as Mortgagee Dated as of ________ __, 1994 Prepared by:_______________________ D. Eric Remensperger After recording return to: Gibson, Dunn & Crutcher 200 Park Avenue New York, New York 10166 Attention: D. Eric Remensperger MORTGAGE SECURING GUARANTY OF MORTGAGE NOTES ----------------- THIS MORTGAGE, dated as of ________ ___, 1994, between RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation ("Mortgagor"), and STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, a national banking association having an address at 750 Main Street, Suite 1114 Hartford, Connecticut 06103 ("Mortgagee"), in its capacity as Trustee under that certain Indenture dated as of even date herewith (the "Indenture") among Mortgagor, Mortgagee and Resorts International Hotel Financing, Inc. ("RIHF"). WITNESSETH: In consideration of $10.00 in hand paid by Mortgagee to Mortgagor and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in order to secure (i) the Guaranty by Mortgagor of the payments of principal and interest due on the 11% Mortgage Notes due 2003 in an aggregate principal amount of $125,000,000, issued pursuant to the provisions of the Indenture (defined therein, and hereinafter collectively referred to herein, as the "Notes"), in accordance with the terms and conditions of Article Fourth of the Indenture; and performance and observance of all of the provisions herein contained, Mortgagor has executed and delivered this Mortgage and has bargained, sold, aliened, mortgaged, pledged, released, conveyed and confirmed unto Mortgagee and its successors hereunder and assigns forever, all of its right, title and interest in, to and under any of the following described property: GRANTING CLAUSES GRANTING CLAUSE FIRST All the property, rights, title, interest, privileges and franchises particularly described in annexed Schedule 1 (the "Owned Land") which Schedule is hereby made a part of, and deemed to be described in, this Granting Clause as fully as if set forth in this Granting Clause at length. GRANTING CLAUSE SECOND All of the property, rights, title, interest, privileges and franchises of the Mortgagor as lessee in those certain leases (the "Ground Leases") particularly described in Schedule 2, which Schedule is hereby made a part of, and deemed to be described in, this Granting Clause as fully as if set forth in this Granting Clause at length, which Ground Leases cover the real property described in Schedule 2 (the "Leased Land") and in and to any and all modifications, extensions and renewals of the Ground Leases and all options set forth therein, together with (i) all credits, deposits, privileges and rights of the Mortgagor as lessee under the Ground Leases, now or at any time existing, (ii) the leaseholds and the leasehold estates created by the Ground Leases and (iii) all of the estates, rights, titles, claims or demands whatsoever of Mortgagor, either in law or in equity, in possession or in expectancy, of, in and to the Ground Leases and the Leased Land, together with (x) any and all other, further or additional title, estates, interests or rights which may at anytime be acquired by the Mortgagor in or to the Leased Land, and the Mortgagor expressly agrees that if the Mortgagor shall, at any time prior to payment in full of all indebtedness secured hereby, acquire fee simple title or any other greater estate to the Leased Land pursuant to the Ground Leases, or otherwise, the lien of this Mortgage shall attach, extend to, cover and be a lien upon such fee simple title or other greater estate and thereupon the lien of this Mortgage shall be prior to the lien of any mortgage or deed of trust placed on such acquired title, estate, interest or right subsequent to the date of this Mortgage and (y) any right to possession or statutory term of years derived from, or incident to, the Ground Leases pursuant to Section 365(h) of the U.S. Bankruptcy Code (the "Code") or any comparable provision contained in any present or future federal, state, local, foreign or other statute, law, rule or regulation. GRANTING CLAUSE THIRD All the rents, issues, profits, revenues and other income and proceeds of the property subjected or required to be subjected to the lien of this Mortgage, including, without limitation, the property described in Granting Clauses First, Second, and Sixth (such property is hereinafter collectively referred to as the "Premises") and all the estate, right, title and interest of every nature whatsoever of the Mortgagor in and to the same and every part thereof. The collective metes and bounds description of the Owned Land and the Leased Land is set forth in annexed Schedule 3. 2 GRANTING CLAUSE FOURTH All of the rights as lessor under Leases in effect on the date of execution of this Mortgage or hereafter entered into by the Mortgagor, if any, including extensions, renewals or amendments of all of the same, and the immediate and continuing right as security in accordance with an Assignment of Leases and Rents of even date herewith between Mortgagor and Mortgagee, and, after the occurrence of an Event of Default, to make claim for, collect, receive and receipt for (and to apply the same as provided herein) any and all rents, income, revenues, issues, profits, security and other sums of money payable or receivable thereunder or pursuant thereto, and all proceeds thereof, whether payable as rent, insurance proceeds, condemnation awards, security or otherwise and whether payable prior to or subsequent to the maturity date of the Notes, to receive and give notices and consents thereunder, to bring actions and proceedings thereunder or for the enforcement thereof, to make waivers and agreements, to take such action upon the happening of a default under any Lease, including the commencement, conduct and consummation of any proceedings at law or in equity as shall be permitted by any provision of any Lease, and to do any and all things which the Mortgagor or any lessor is or may become entitled to do under the Leases; provided, that the assignment made by this granting Clause Fourth shall not impair or diminish any obligation of the Mortgagor under the Leases, or shall any such obligation be imposed upon the Mortgagee. GRANTING CLAUSE FIFTH Without limiting the generality of the provisions of Granting Clause Third, the Mortgagor's rights, privileges and franchises in and to the following, to the extent of the Mortgagor's interest therein and thereto and to the extent assignable (collectively, "Operating Assets"): (a) bookings and receipts for the use of guest rooms, banquet facilities and meeting rooms at the Casino-Hotel; (b) all contracts respecting utility services for, and the maintenance, operations, or equipping of the Premises, including guaranties and warranties relating thereto; (c) the Permits; (d) all contract rights, leases, concessions, trademarks, trade names, service marks, service names, logos, copyrights, warranties and other items of 3 intangible personal property relating to the ownership or operation of the Casino-Hotel, including, without limitation, (1) telephone and other communication numbers, (2) all software licensing agreements as are required to operate computer software systems at the Casino-Hotel, all transferable proprietary interest in software required to operate the computer systems at the Casino Hotel and books and records relating to the software programs, and (3) lessee's interest under leases of Tangible Personal Property; (e) all agreements entered into by or on behalf of the Mortgagor or which have been assigned to the Mortgagor, for the design and construction, and for the equipping and furnishing, of the Casino-Hotel, including architect's agreements, engineering agreements, construction contracts, consulting agreements and agreements or purchase orders for all items of Tangible Personal Property and payment and performance bonds in favor of the Mortgagor in connection with the Trust Estate (and all warranties and guaranties thereunder and warranties and guaranties of any subcontractor and bond issued in connection with the work to be performed by any subcontractor); (f) the following personal property (the "Tangible Personal Property") now or hereafter acquired by the Mortgagor: (i) all furniture, furnishings, equipment, machinery, apparatus, appliances, fixtures and fittings and other articles of tangible personal property which are, or are to be located on, or used in connection with the operation of, the Casino-Hotel; (ii) all slot machines, electronic gaming devices, crap tables, blackjack tables, roulette tables, baccarat tables, and big six wheels, located or to be located in the Casino-Hotel, and all furnishings and equipment to be used in connection with the operation thereof; (iii) all cards, dice, gaming chips and placques, tokens, chip racks, dealing shoes, dice cups, dice sticks, layouts, paddles, roulette balls and other consumable supplies and items to be used in connection with the gaming operations of the Casino-Hotel; (iv) all china, glassware, linens, kitchen utensils, silverware and uniforms, whether 4 in use or held in reserve storage for future use, in connection with the operation of the Casino-Hotel, which are on hand or on order whether stored on-site or off-site; (v) all consumables and operating supplies of every kind and nature for use in all of the operating departments of the Casino-Hotel, or in the improvements now or hereafter located on any of the Owned Land, including without limitation, accounting supplies, guest supplies, forms, printing, stationery, food and beverage stock, bar supplies, laundry supplies and brochures to existing purchase orders; (vi) all sets and scenery, costumes, props and other items of tangible personal property on hand or on order for use in the production of shows in the showroom of the Casino-Hotel; and (vii) all cars, limousines, vans, buses, trucks and other vehicles owned or leased by the Mortgagor for use in Casino-Hotel operations, together with all equipment, parts and supplies used to service, repair, maintain and equip the foregoing; (g) all drawings, designs, plans and specifications prepared by the architects, interior designers, landscape designers and any other consultants for the development of the Premises, as amended from time to time; (h) any administrative and judicial proceedings initiated by the Mortgagor, or in which the Mortgagor has intervened, concerning the Casino-Hotel, and agreements, if any, which are the subject matter of such proceedings; (i) any customer lists utilized by the Mortgagor, including lists of transient guests and restaurant and bar patrons and "high roller" lists; and (j) all of the goodwill in connection with the operation of the Premises. The Mortgagor and Mortgagee acknowledge that notwithstanding anything contained in this Mortgage to the contrary, the Mortgagor may share facilities, operations and employees with any other hotel owned by any Affiliate of the Mortgagor provided that (i) such sharing of facilities is permitted by all applicable Legal Requirements, (ii) terms on 5 which such facilities are shared are not detrimental to the operations of the Casino-Hotel or the financial condition of the Mortgagor and (iii) the regular operation of the Casino-Hotel would not be materially impaired upon the separation of such facilities. The assignment made by this Granting Clause Fifth shall not impair or diminish any obligation of the Mortgagor with respect to the Operating Assets, nor shall any such obligation be imposed on the Mortgagee. GRANTING CLAUSE SIXTH (a) All of the Mortgagor's right, title and interest in and to all buildings and improvements of every kind and description now or hereafter erected or placed on the Owned Land and/or the Leased Land and all fixtures and articles of personal property now or hereafter attached to or contained in and used in connection with such buildings and improvements, including, but not limited to, all apparatus, furniture, furnishings, machinery, motors, elevators, fittings, radiators, cooking ranges, ice boxes, ice machines, printing presses, mirrors, bars, mechanical refrigerators, furnaces, coal and oil-burning apparatus, wall cabinets, machinery, generators, partitions, steam and hot water boilers, lighting and power plants, pipes, plumbing, radiators, sinks, bath tubs, water closets, gas and electrical fixtures, awnings, shades, screens, blinds, dishwashers, freezers, vacuum cleaning systems, office equipment and other furnishings, and all plumbing, heating, lighting, cooking, laundry, ventilating, incinerating, air-conditioning and sprinkler equipment or other fire prevention or extinguishing apparatus and material, and fixtures and appurtenances thereto; and all renewals or replacements thereof or articles in substitution therefor, whether or not the same are or shall be attached to the Owned Land, the Leased Land or to any such buildings and improvements thereon, in any manner; and (b) All of the Mortgagor's right, title and interest in and to (i) the Leased Land, if the Mortgagor acquires the fee simple title to the Leased Land or any part thereof (subject to the provisions of Section 2.06 hereof), (ii) all air rights and rights to maintain supporting columns 6 and all rights to construct and maintain bridges, and to create private rights of way over streets now or hereafter owned or enjoyed by the Mortgagor and appurtenant to the Owned Land or Leased Land, and (iii) all right, title and interest of Mortgagor as grantee or licensee in and to the following to the extent necessary for the use and enjoyment of the Owned Land or the Leased Land: (A) all those plots, pieces or parcels of land and air rights, more particularly described on Schedule 5, attached hereto and made a part hereof (the "Bridge Easement Parcels"), with respect to which Mortgagor has easements, licenses or other rights of possession or use pursuant to these certain easement and license agreements more particularly described on Schedule 5 (the "Bridge Easements"), (B) all those plots, pieces or parcels of land and air rights, more particularly described on Schedule 6 attached hereto and made a part hereof (the "Elevator Easement Parcels"), with respect to which Mortgagor has easements, licenses or other rights of possession or use pursuant to those certain license agreements more particularly described on Schedule 6 (the "Elevator Easements"), and; (C) all that plot, piece or parcel of land and air rights more particularly described on Schedule 7 attached hereto and made a part hereof (the "Turn-Around Easement Parcel") with respect to which Mortgagor has easements, licenses, or other rights of possession or use pursuant to that certain easement more particularly described on Schedule 7 (the "Turn-Around Easement"), (the Bridge Easement Parcels, the Elevator Easement Parcels and the Turn-Around Easement Parcel are collectively referred to herein as the "Easement Parcels"; and the Bridge Easements, the Elevator Easements and the Turn-Around Easement are collectively referred to as the "Easements"), together with all rights of way, privileges, liberties, tenements, hereditaments and appurtenances belonging or in any way appertaining to such estates, it being the intention hereof that all property, interests, rights and privileges and franchises pertaining to the Premises (other than Excepted Property) shall be as fully embraced within and subjected to the lien hereof as if such property were specifically described herein. To the extent the grant of a security interest in any portion of the Trust Estate is governed by the Uniform Commercial Code, this Mortgage is hereby deemed to be as well a security agreement under the Uniform Commercial Code for the purpose of creating hereby a security interest in all of the Mortgagor's right, title and interest in and to such property, securing the obligations secured hereby, for the benefit of the Mortgagee. * * * TOGETHER with all of the Mortgagor's right, title and interest in and to all mineral and water rights and any title or reversion, in and to the beds of the ways, streets, avenues and alleys adjoining the Premises to the center line thereof and in and to all strips, gaps and gores adjoining the premises on all sides thereof; and TOGETHER with all of the Mortgagor's right, title and interest to and singular the tenements, hereditaments, easements, appurtenances, passages, water courses, riparian rights, other rights, liberties and privileges thereof or in 7 any way appertaining to the Premises, including any other claim at law or in equity as well as any after-acquired title, franchise or license and the reversion and reversions and remainder and remainders thereof; and TOGETHER with all awards and other compensation heretofore or hereafter to be made to the present and all subsequent owners of the Trust Estate for any taking by eminent domain, either permanent or temporary, of all or any part of the Trust Estate or any easement or appurtenances thereof, including severance and consequential damage and change in grade of streets, all in accordance with and subject to the provisions of the Superior Instrument Requirements and Section 5.20; and TOGETHER with all proceeds of any unearned premiums on any insurance policies described in Section 5.11, and the right to receive and apply the proceeds of any insurance, judgments, or settlements made in lieu thereof, for damage to the Trust Estate or otherwise, all in accordance with and subject to the provisions of Section 5.11 and the Superior Instrument Requirements. EXCLUDING, with respect to all of the hereinabove granted property, rights, title, interest, privileges and franchises, the Excepted Property. TO HAVE AND TO HOLD all the Premises, Leases, Ground Leases, Operating Assets, Easements, properties, options, credits, deposits, rights, privileges and franchises of every kind and description, real, personal or mixed, granted hereby, bargained, sold, aliened, assigned, transferred, hypothecated, pledged, released, conveyed, mortgaged, or confirmed as aforesaid, or intended, agreed or covenanted so to be, together with all the appurtenances thereto appertaining (the Premises, Leases, Ground Leases, Operating Assets, Easements, properties, options, credits, deposits, rights, privileges and franchises, being herein collectively called the "Trust Estate") unto the Mortgagee and its successors and assigns forever. SUBJECT, HOWEVER, on the date hereof, to Existing Encumbrances and, after the date hereof, to Permitted Encumbrances. SUBJECT, FURTHER, to the rights and obligations of the Mortgagee and the Noteholder as set forth in that certain Intercreditor Agreement dated as of the date hereof among RIH, RIHF, Mortgagee, Fidelity Management and Trust Company ("Fidelity"), as trustee under that certain note purchase agreement dated as of the date hereof among Fidelity, RIH and RIHF, and 8 U.S. Trust Company of California, N.A. ("U.S. Trust"), as trustee under that certain indenture dated as of the date hereof among U.S. Trust, RIH and RIHF (and such other parties that may from time to time become a party thereto). BUT IN TRUST, NEVERTHELESS, for the Ratable Benefit and security of the Noteholders without any priority of any of the Notes over any other of the Notes. UPON CONDITION that, until the happening of an Event of Default and subject to the provisions of Article Two, the Mortgagor shall be permitted to possess and use the Trust Estate, and to receive and use the rents, issues, profits, revenues and other income of the Trust Estate. AND IT IS HEREBY COVENANTED AND DECLARED that the Trust Estate is to be held and applied by the Mortgagee, subject to the further covenants, conditions and trusts hereinafter set forth, and the Mortgagor does hereby covenant and agree to and with the Mortgagee, for the Ratable Benefit of the Noteholders as follows: ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION Section 1.01. DEFINITIONS. For all purposes of this Mortgage, except as otherwise expressly provided or unless the context otherwise requires: (a) the terms defined in this Article One have the meanings assigned to them in this Article One and include the plural as well as the singular; (b) all accounting terms not otherwise defined herein have the meanings assigned to them, and all computations herein provided for shall be made in accordance with generally accepted accounting principles consistently applied; and (c) the words "herein," "hereof" and "hereunder" and other words of similar import refer to this Mortgage as a whole and not to any particular Article, Section or other subdivision. "AFFILIATE" has the meaning set forth in Section 1.01 of the Indenture. 9 "AFTER-ACQUIRED FEE MORTGAGE" has the meaning set forth in Section 2.07. "ALTERATIONS" has the meaning set forth in Section 5.12. "APPRAISER" means an MAI appraiser (i.e., a Member in good standing of the American Institute of Real Estate Appraisers) who is (i) of recognized standing among appraisers of properties similar to the Casino-Hotel and (ii) experienced in the appraisals of properties of a similar size and scope to that of the Casino-Hotel, selected by the Mortgagor. "ASSIGNMENT OF LEASES AND RENTS" has the meaning stated in Section 1.01 of the Indenture. "CAPITALIZED LEASE OBLIGATION" has the meaning stated in Section 1.01 of the Indenture. "CASINO" means that portion of the Casino-Hotel used for gaming and related activities. "CASINO-HOTEL" means the casino and hotel complex and ancillary structures and facilities located on the Premises and furniture, fixtures and equipment at any time contained therein. "CASUALTY" means any act or occurrence of any kind or nature which results in damage, loss or destruction to any buildings or improvements on the Premises and/or Tangible Personal Property. "CODE" has the meaning stated in Granting Clause Second. "COMBINATION TRANSACTION" has the meaning stated in Section 10.01 of the Indenture. "DEFAULT" means the occurrence and continuance of an Event of Default or an event which, after notice or lapse of time or both, would become an Event of Default. "DEPOSITARY" means an Independent entity to which insurance proceeds or a condemnation award is paid to be held in trust for restoration pursuant to the provisions of a Ground Lease or Superior Mortgage. "EVENT OF DEFAULT" has the meaning stated in Section 3.01. An Event of Default shall "exist" if an Event of Default shall have occurred and be continuing. "EXCEPTED PROPERTY" means: 10 (1) subject to the provisions of the Assignment of Leases and Rents, any cash held by the Mortgagor from rents, issues, profits, revenues and other proceeds of the Trust Estate to the extent that such cash may be, but has not been, distributed or paid out in accordance with the Services Agreement or in accordance with the provisions of Section 12.07 the Indenture; (2) all personal property owned by lessees under Leases and the personal property of any guests staying in the Hotel; (3) any property deemed to be Excepted Property pursuant to the provisions of Section 2.03 hereof; (4) Tangible Personal Property subject to an FF&E Financing Agreement; and (5) counterchecks and any other property the granting of a security interest in which is prohibited by the New Jersey Casino Control Act, N.J.S.A. 5:12-1 ET SEQ., and the regulations promulgated thereunder. "EXISTING ENCUMBRANCES" means the matters set forth in Schedule 8. "FIRST MORTGAGE DEBT" means any financing secured by a Superior Mortgage secured by or imposing a lien on all or a portion of the Trust Estate on a parity with or senior to the lien of this Mortgage. "FF&E FINANCING AGREEMENT" means a purchase money lien upon any Tangible Personal Property and other items constituting Operating Assets, such as computer software, which are financed, purchased or leased by the Mortgagor, provided that, except as set forth on Schedule 3, the principal amount of the indebtedness secured by such lien shall not exceed eighty-five (85%) percent of the cost to the Mortgagor of such property at the time of acquisition. "GROUND LEASES" has the meaning stated in Granting Clause Second. "GUARANTY" has the meaning set forth in Article Fourteen of the Indenture. "HOTEL" means that portion of the Casino-Hotel not included within the Casino. "IMPOSITIONS" has the meaning stated in Section 5.08. 11 "INDENTURE" means that certain Indenture - 11% Mortgage Notes due 2003, dated as of even date herewith among the Mortgagor, RIHF, as issuer, and Mortgagee, as trustee, as it may from time to time be supplemented, modified or amended by one or more trust indentures or other instruments supplemental thereto entered into pursuant to the applicable provisions thereof. "INDEPENDENT" when used with respect to any specified Person means such a Person who (a) is in fact independent, (b) does not have any direct financial interest or any material indirect financial interest in the Mortgagor or in any other obligor upon the Notes or in any Affiliate of the Mortgagor or of such other obligor and (c) is not connected with the Mortgagor or such other obligor or any Affiliate of the Mortgagor or such other obligor as an officer, employee, promoter, underwriter, trustee, partner, director or person performing similar functions. Whenever it is herein provided that any Independent Person's opinion or certificate shall be furnished to the Mortgagee, such opinion or certificate shall state that the signer has read this definition and that the signer is Independent within the meaning thereof. A Person who is performing or who has performed services as an independent contractor to any specified Person shall not be considered not Independent merely by reason of the fact that such Person is or has performed such services. "INSURANCE AMOUNT" has the meaning stated in Section 5.11(a)(1). "INSURANCE REQUIREMENTS" means all terms of any insurance policy covering or applicable to the Trust Estate or any part thereof, all requirements of the issuer of any such policy, and all orders, rules, regulations and other requirements of the National Board of Fire Underwriters (or any other body exercising similar functions) applicable to or affecting the Trust Estate or any part thereof or any use or condition of the Trust Estate or any other part thereof. "INSURANCE TRUSTEE" means the Trustee or, if the Trustee so elects, any bank, trust company or insurance company with net worth in excess of $100,000,000, designated by the Trustee. "INSURER" means an insurance company or companies selected by the Mortgagor authorized to issue insurance in the State of New Jersey with an A.M. Best rating as high or higher than the rating of insurance companies insuring other casino-hotels in Atlantic City, New Jersey. 12 "LEASE" means each lease or sublease demising all or any portion of the Owned Land, the Leased Land or the buildings or improvements thereon and made by the Mortgagor as lessor or sublessor, as the case may be, or any spaces in any building or buildings which constitute a part of the Trust Estate, including every agreement relating thereto or entered into in connection therewith and every guaranty of the performance and observance of the covenants, conditions and agreements to be performed by the lessee under any such lease. Notwithstanding the foregoing, the term "Lease" shall not include any transient room rentals. "LEASED LAND" has the meaning stated in Granting Clause Second. "LEGAL REQUIREMENTS" means all laws, statutes, codes, acts, ordinances, orders, judgments, decrees, injunctions, rules, regulations, permits, licenses, authorizations, directions and requirements (including, without limitation, the New Jersey Environment Cleanup Responsibility Act and the New Jersey Spill Compensation and Control Act of 1976) of all governments, departments, commissions, boards, courts, authorities, agencies, officials and officers, of governments, federal, state and municipal (including, without limitation, the New Jersey Department of Environmental Protection, the Atlantic City Bureau of Investigations, Division of Protection, the Atlantic City Bureau of Investigations, Division of Gaming Enforcement of the State of New Jersey, and the Casino Control Commission of the State of New Jersey), foreseen or unforeseen, ordinary or extraordinary, which now is or at any time hereafter becomes applicable to the Trust Estate or any part thereof, or any of the adjoining sidewalks, or the use of the Casino-Hotel as a gaming or gambling facility or any other use or condition of the Trust Estate or any part thereof. "LESSORS" means the lessors under the Ground Leases. "MATURITY" when used with respect to the Notes means the date on which the principal of such Notes becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration or prepayment or otherwise. "MORTGAGE DOCUMENTS" has the meaning set forth in Section 1.01 of the Indenture. "MORTGAGOR" means the Person named as the "Mortgagor" in the first paragraph of this instrument until a successor entity shall have become such pursuant to the applicable provisions of this Mortgage, and thereafter, except 13 to the extent otherwise contemplated by Section 4.02, "Mortgagor" shall mean such successor entity exclusively. "NOTEHOLDERS" has the meaning set forth in Section 1.01 of the Indenture. "NOTE MORTGAGE" means that certain Mortgage Securing RIH Promissory Note dated as of the date hereof from Mortgagor to RIHF, which secures the RIH Promissory Note (as defined in the Indenture), the lien of which shall be PARI PASSU with the lien of this Mortgage. "NOTES" has the meaning set forth in the Preamble. "NOTICES" has the meaning stated in Section 1.02. "OFFICERS' CERTIFICATE" means a certificate signed by an officer of the Mortgagor and delivered to the Mortgagee. Whenever this Mortgage requires that an Officers' Certificate be signed also by an Architect or an Accountant or other expert, such Architect, Accountant or other expert may (except as otherwise expressly provided in this Mortgage) be in the general employ of the Mortgagor. "OPERATING ASSETS" has the meaning stated in Granting Clause Fifth. "OPINION OF COUNSEL" means a written opinion of counsel who may (except as otherwise expressly provided in this Mortgage) be an employee of the Mortgagor or an employee of an Affiliate of the Mortgagor. Unless otherwise specifically provided in this Mortgage, such counsel may rely, as to any state of facts not personally known to such counsel and relating to such opinions, on an Officers' Certificate to the extent not rejected by the Trustee and its counsel (which rejection shall not be unreasonably given). "ORIGINAL POLICY" means an ALTA Loan Policies of Title issued by [list title insurance companies], pursuant to Title Commitment No. ____________ redated to the date hereof. "OUTSTANDING AMOUNT" has the meaning stated in Section 1.01 of the Indenture. "OWNED LAND" has the meaning stated in Granting Clause First. "PERMITS" means all licenses, franchises, statements of compliance, certificates of operation, certificates of occupancy and permits required for the lawful ownership, occupancy, operation and use of all or a material portion of the Premises whether held by the Mortgagor or any other Person 14 (which may be temporary or permanent) (including, without limitation, those required for the use of the Casino-Hotel as a licensed casino facility), in accordance with all applicable Legal Requirements. "PERMITTED ENCUMBRANCES" means: (1) liens for taxes, assessments, or governmental charges not yet due and payable or if due and payable are not delinquent to the extent that any fine, penalty, interest or cost may be added for nonpayment thereof; (2) Existing Encumbrances; (3) FF&E Financing Agreements; (4) After-Acquired Fee Mortgages; (5) the lien of the Mortgage Documents and any rights granted as provided therein; (6) Restricted Encumbrances; (7) the lien of the Trustee provided for by Section 8.07 of the Indenture; (8) any Working Capital Facility Lien; and (9) Capitalized Lease Obligations. "PERSON" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or any other entity or government or any agency or political subdivision thereof. "PREMISES" has the meaning set forth in Granting Clause Third. "RATABLE BENEFIT" has the meaning stated in Section 1.01 of the Indenture. "RELEASED LAND" has the meaning stated in Section 2.05. "RELEASED FEE LAND" has the meaning stated in Section 2.06. "RESTORATION" has the meaning stated in Section 5.11(e). "RESTRICTED ENCUMBRANCES" means Leases permitted by and made in accordance with Section 5.13 of this Mortgage. 15 "RIHF" shall mean Resorts International Hotel Financing, Inc., a Delaware corporation. "SERVICES AGREEMENT" has the meaning set forth in Section 1.01 of the Indenture. "STATED MATURITY" when used with respect to a note means the date specified in such note as the fixed date on which the principal of such note is due and payable. "SUPERIOR INSTRUMENT REQUIREMENTS" means the applicable terms, conditions and provisions of (i) the Ground Leases with respect to the Leased Land; and (ii) Superior Mortgages with respect to the portion of the Trust Estate encumbered thereby. "SUPERIOR MORTGAGES" means, collectively, any Working Capital Facility Lien and any After-Acquired Fee Mortgages. "TAKING" means the acquisition or condemnation by eminent domain of the whole or any part of the Premises, by a competent authority, for any public or quasi-public use or purpose. "TANGIBLE PERSONAL PROPERTY" has the meaning stated in Granting Clause Fifth. "TRUSTEE" means the Person named as the "Trustee" in the first paragraph of the Indenture and any successor thereto. "TRUST ESTATE" has the meaning stated in the habendum to the Granting Clauses. "TRUST INDENTURE ACT" has the meaning stated in Section 1.01 of the Indenture. "WORKING CAPITAL FACILITY" has the meaning stated in Section 1.01 of the Indenture. "WORKING CAPITAL FACILITY LIEN" has the meaning stated in Section 5.22(c) of this Mortgage. Section 1.02. NOTICES, ETC. (a) Any request, demand, authorization, direction, notice (including, without limitation, a notice of default), consent, waiver or other document provided or permitted by this Mortgage to be made upon, given or furnished to, or filed with, the Mortgagor or the Mortgagee (collectively, "Notices") shall be deemed given when either (i) delivered by hand or 16 (ii) two days after sending by registered or certified mail, postage prepaid, addressed as follows: To the Mortgagor: Resorts International Hotel, Inc. c/o Resorts International, Inc. 1133 Boardwalk Atlantic City, New Jersey 08401 Attention: Christopher D. Whitney If to Mortgagee: State Street Bank and Trust Company of Connecticut, National Association 750 Main Street, Suite 1114 Hartford, Connecticut Attention: Corporate Trust Department (b) By Notice to the Mortgagor, the Mortgagee and the Trustee, any party may designate additional or substitute address for Notices which, notwithstanding Subsection (a) above, shall be deemed given when received. Section 1.03. FORM AND CONTENT OF DOCUMENTS DELIVERED TO MORTGAGEE. Whenever 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 such matters in one or several documents. Any certificate or opinion of an Officer of the Mortgagor may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such Officer knows that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any 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 Mortgagor stating that the information with respect to such factual matters is in the possession of the Mortgagor, unless such counsel knows that the certificate or opinion or representations with respect to such matters are erroneous. If appropriate to the matter being opined upon and to the extent not prohibited by the Trust Indenture Act, any Opinion of Counsel may be subject to rights of creditors and the availability of equitable remedies. 17 Whenever any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Mortgage, they may, but need not, be consolidated and form one instrument. Whenever in this Mortgage, in connection with any application or certificate or report to the Mortgagee, it is provided that the Mortgagor shall deliver any document as a condition of the granting of such application, or as evidence of the Mortgagor's compliance with any term hereof, it is intended that the truth and accuracy, at the time of the granting of such application or at the effective date of such certificate or report (as the case may be), of the facts and opinions stated in such document shall in such case be conditions precedent to the right of the Mortgagor to have such application granted or to the sufficiency of such certificate or report. Section 1.04. COMPLIANCE CERTIFICATES AND OPINIONS. Upon any application or request by the Mortgagor to the Mortgagee to take any action under any provision of this Mortgage, the Mortgagor shall furnish to the Mortgagee an Officers' Certificate stating that all conditions precedent, if any, provided for in this Mortgage 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 Mortgage 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 Mortgage shall include: (a) a statement that each individual signing such certificate or opinion has read such condition or covenant and the definitions herein relating thereto; (b) 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; (c) 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 condition or covenant has been complied with; and 18 (d) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. Section 1.05. EFFECT OF HEADINGS. The Article and Section headings herein are for convenience only and shall not affect the construction hereof. Section 1.06. SUCCESSORS AND ASSIGNS; AMENDMENTS. (a) Subject to Section 4.02 hereof and Section 10.02 of the Indenture, this Mortgage shall be binding upon and inure to the benefit of the parties hereto and of the respective successors and assigns of the parties hereto to the same effect as if each such successor or assign were in each case named as a party to this Mortgage. (b) This Mortgage may not be modified, amended, discharged, released nor any of its provisions waived except by agreement in writing executed by the Mortgagor and the Mortgagee and in accordance with the provisions of this Mortgage and the Indenture. Section 1.07. SEPARABILITY CLAUSE. In case any provision in this Mortgage 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 1.08. BENEFITS OF MORTGAGE. Nothing in this Mortgage or in the Guaranty, express or implied, shall give to any Person, other than the parties hereto and their successors and assigns, any benefit or any legal or equitable right, remedy or claim under this Mortgage. Section 1.09. GOVERNING LAW. This Mortgage shall be deemed to be a contract under the laws of the State of New Jersey and shall be construed in accordance with and governed by the laws of the State of New Jersey. Section 1.10. [Reserved] Section 1.11. PROVISIONS REQUIRED BY INDENTURE. Whenever the provisions of this Mortgage and the provisions of the Indenture shall be inconsistent, the provisions of the Indenture shall govern. Section 1.12. RIGHTS OF THE TRUSTEE. So long as the Trustee is the Mortgagee hereunder, except as otherwise provided in Section 8.01 of the Indenture: (a) the Mortgagee 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, coupon or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) whenever in the administration of this Mortgage the Mortgagee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Mortgagee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate; (c) the Mortgagee 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 the Mortgagee hereunder in good faith and in reliance thereon; (d) the Mortgagee shall be under no obligation to exercise any of the rights or powers vested in it by this Mortgage at the request or direction of any Noteholder pursuant to the Indenture, unless such holder shall have offered to the Mortgagee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (e) the Mortgagee 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, or other paper or document but the Mortgagee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Mortgagee shall determine to make such further inquiry or investigation, it shall be entitled (subject to the express limitations with respect thereto contained in this Mortgage) to examine the books, records and premises of the Mortgagor, personally or by agent or attorney; (f) the Mortgagee may execute any of the trusts or power hereunder or perform any duties hereunder either directly or by or through agents or attorneys, and the Mortgagee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder; (g) the Mortgagee shall not be personally liable, in case of entry by it upon the Trust Estate, for debts contracted or liabilities or damages incurred in the management or operation of the Trust Estate; and (h) no provision of this Mortgage shall require the Mortgagee to expend or risk its own funds or otherwise incur any financial liability in the performance of its obligations hereunder, or in the exercise 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. Section 1.13. MORTGAGE SUBJECT TO THE PROVISIONS OF THE ACT. Each provision of this Mortgage is 19 subject to and shall be enforced in compliance with the provisions of the New Jersey Casino Control Act. This Mortgage shall not be transferred, assigned or amended without prior approval of the New Jersey Casino Control Commission. Section 1.14. DISCHARGE OF LIEN. If the Mortgagor shall pay or cause to be paid, or there shall otherwise be paid, to the Mortgagee all amounts required to be paid by the Mortgagor pursuant to the Guaranty, or the Note Mortgage and the Notes, and the conditions precedent for the Indenture to cease, determine and become null and void in accordance with Section 5.01 of the Indenture shall have occurred, the Mortgagee shall promptly cancel and discharge this Mortgage, and execute and deliver to the Mortgagor all such instruments as may be necessary, required or appropriate to evidence such discharge and satisfaction of such lien or liens. Section 1.15. GENERAL APPLICATION. (a) The assertion of any rights upon any Default shall be subject in each instance to the giving of any notice and the expiration of any grace period provided for in Section 3.01 as a condition to such Default making it an Event of Default, unless the Trust Indenture Act requires otherwise, in which case the Trust Indenture Act shall control. (b) For the purposes of this Mortgage, it is understood that an event which does not materially diminish the value of the Mortgagee's interest in the Trust Estate shall not be deemed an "impairment of security", as that phrase is used in this Mortgage. ARTICLE TWO RELEASE; OTHER EXCEPTED PROPERTY; SUBORDINATION Section 2.01. POSSESSION BY MORTGAGOR; DISPOSITIONS WITHOUT RELEASE. So long as there shall have been no demand for payment under the Guaranty pursuant to Section 3.02 of this Mortgage, the Mortgagor shall be suffered and permitted, with power freely and without let or hindrance on the part of the Mortgagee, subject to the provisions of this Mortgage and the Note Mortgage, to possess, use, manage, operate and enjoy the Trust Estate and every part thereof and to collect, receive, use, invest and dispose of the rents, issues, tolls, profits, revenues and other income from the Trust Estate or any part hereof, to use, consume and dispose of any consumables, goods, wares and merchandise in the ordinary course of business of operating the Casino-Hotel and to adjust and settle all matters relating to choses in action, leases and contracts. 20 Section 2.02. OBSOLETE PROPERTY; TANGIBLE PERSONAL PROPERTY; LEASE MODIFICATIONS. The Mortgagor shall have the right, at any time and from time to time, unless an Event of Default shall have occurred and be continuing, without any release from or consent by the Mortgagee: (a) to sell or dispose of, free from the lien of this Mortgage, any Tangible Personal Property which, in its reasonable opinion, may have become obsolete or unfit for use or which is no longer necessary in the conduct of its businesses or the operation of the Trust Estate, and no purchaser of any such property shall be bound to inquire into any question affecting the Mortgagor's right to sell or otherwise dispose of the same, free from the lien of this Mortgage; (b) to alter, repair, replace, change the location (provided notice shall be given to Mortgagee as to any new location) or position of and add to any Tangible Personal Property; provided, however, that no change shall be made in the location of any such property subject to the lien of this Mortgage which would in any respect impair the security of this Mortgage upon such property; or (c) to renew, extend, surrender, terminate, modify or amend any leases of Tangible Personal Property, when, in the Mortgagor's reasonable opinion, it is prudent to do so. The Mortgagor shall retain any net cash proceeds (subject to the right to pay dividends or make cash distributions pursuant to Section 12.07 of the Indenture) received from the sale or disposition of any Tangible Personal Property under Subsection (a) of this Section 2.02, in the business of operating the Casino-Hotel. The Mortgagee shall be under no responsibility or duty with respect to the exercise of the rights of the Mortgagor under this Section 2.02 or the application of the proceeds of any sale or disposition of any Tangible Personal Property. Section 2.03. OTHER EXCEPTED PROPERTY. Notwithstanding any provisions contained in this Mortgage or 21 the Indenture to the contrary, including, without limitation, the provisions of Granting Clauses Fifth and Sixth and of Articles Two and Five hereof, if the Mortgagor acquires Tangible Personal Property and other items constituting operating assets, such as computer software subject to any FF&E Financing Agreement, or becomes the lessee under a lease for any of the same and if the document evidencing such FF&E Financing Agreement prohibits subordinate liens or the provisions of any such lease prohibits any assignment thereof by the lessee, and if any such prohibition is customary with respect to similar transactions of the lender or lessor, as the case may be, then the property so purchased or the lessee's interest in the lease, as the case may be, shall be deemed to be Excepted Property. If any such FF&E Financing Agreement permits subordinate liens then the Mortgagee agrees to execute and deliver to the Mortgagor, at the Mortgagor's expense, such documents as the holder of such FF&E Financing Agreement may reasonably request to evidence the subordination of the lien of this Mortgage to the lien of such FF&E Financing Agreement. Section 2.04. [Reserved] Section 2.05. RELEASED LAND. (a) Notwithstanding anything to the contrary herein contained, the Mortgagor shall have the right, at any time and from time to time, unless an Event of Default shall have occurred and be continuing, to convey all or any part of the Released Fee Land (the land to be so conveyed is hereinafter referred to as the "Released Land"), free from the lien of the Mortgage, provided that the conditions set forth in Section 2.05(a) of the Note Mortgage have been satisfied. (b) The Mortgagee shall, from time to time, promptly execute any written instrument in form reasonably satisfactory to the prospective purchaser to confirm the release of the Released Fee Land, upon receipt by the Mortgagee of an Officers' Certificate stating that the Mortgagor is entitled to such release by virtue of the Mortgagor's compliance with this Section 2.05 and, if applicable, Section 2.05 of the Note Mortgage, PROVIDED, that the Mortgagee shall have no liability thereunder and all costs and expenses (including reasonable attorneys' fees) shall be paid by the Mortgagor. Section 2.06. RELEASED FEE LAND. (a) Notwithstanding anything to the contrary herein contained, in the event the Mortgagor intends to exercise an option to acquire fee title to Leased Land under the provisions of any Ground Lease, the Mortgagor shall have the right, unless an Event of Default shall have occurred and be 22 continuing, to have an Affiliate exercise such options(s) or for the Mortgagor to exercise such options(s) on behalf of an Affiliate and in connection therewith to cause fee simple title to the Leased Land or any part thereof to be conveyed to an Affiliate of the Mortgagor (provided that no portion of the purchase price of the Leased Land or part thereof is paid by Mortgagor), free from the lien of this Mortgage (the land to be so conveyed is hereinafter referred to as the "Released Fee Land"), provided that the Mortgagor furnishes the Mortgagee with the following: (i) an Officers' Certificate requesting the release of the Released Fee Land from the Trust Estate and stating that (A) the Mortgagor is not required to own the Released Fee Land in order to maintain all Permits and in order to comply with the provisions of all material contracts to which the Mortgagor is a party or by which the Mortgagor is bound, (B) such Affiliate has received all Permits necessary to own the Released Fee Land (including without limitation all approvals required by the Casino Control Commission of the State of New Jersey), (C) there has been delivered to the Mortgagor and the Mortgagee a true copy of an instrument executed by such Affiliate stating that (i) such Affiliate may only engage in the activity of owning the Released Fee Land and (ii) such Affiliate shall not convey the Released Fee Land to another Affiliate of the Mortgagor, unless such other Affiliate executes and delivers to the Mortgagor and the Mortgagee, the instruments that would have been required to be delivered pursuant to clause (C) if the Mortgagor conveyed the Released Fee Land to such other Affiliate (provided that this restriction shall only be effective until such time as this Mortgage shall be satisfied of record) and (D) the deed conveying the Released Fee Land to such Affiliate shall state that such conveyance is made subject to the terms, provisions and conditions of the applicable Ground Lease and that the fee and leasehold interests in the Released Fee Land shall not merge by reason of the Mortgagor and/or any Affiliate owning both the leasehold and fee estate therein, and that such estates shall always remain separate and distinct; (ii) an Opinion of Counsel to the effect that (A) the Mortgagor is not required to own the Released Fee Land in order to maintain in good standing all Permits or by the provisions of any material contract to which the Mortgagor is a party or by which it is bound to own the Released Fee Land and (B) the instruments described in clause (C) of subparagraph (i) were duly executed by and are binding upon such Affiliate; and 23 (iii) an endorsement to the Original Policy, confirming that no merger of the fee and leasehold estates in the Released Fee Land has resulted from such conveyance. In addition, simultaneously with such acquisition, the Affiliate and Mortgagor shall enter into an instrument in form and substance reasonably satisfactory to Mortgagee, amending the applicable Ground Lease to provide such mortgagee protections as are customary and to the extent reasonably required by Mortgagee, including, without limitation, (A) a covenant of the landlord not to terminate the Ground Lease for any reason whatsoever (including without limitation, due to any default by tenant of its obligations under such Ground Lease), and (B) an agreement by the landlord not to accept payment of any fixed or base rent from the tenant (and, if tendered by the Mortgagor, and agreement to return same to the Mortgagor) or any other charges payable thereunder at any time that an Event of Default shall have occurred and shall be continuing. (b) The Mortgagee shall, from time to time, promptly execute any written instrument in form reasonably satisfactory to the prospective purchaser to confirm the release of the Released Fee Land, upon receipt by the Mortgagee of an Officers' Certificate stating that the Mortgagor is entitled to such release by virtue of the Mortgago's compliance with this Section 2.06, PROVIDED that the Mortgagee shall have no liability thereunder and all costs and expenses (including reasonable attorneys' fees) shall be paid by the Mortgagor. Section 2.07. AFTER-ACQUIRED FEE MORTGAGES. (a) Notwithstanding anything contained herein to the contrary (i) if no Event of Default has occurred and is continuing and (ii) if the Mortgagor shall acquire Released Fee Land, then simultaneously with the acquisition thereof, the Mortgagor shall have the right to encumber such fee simple title with a mortgage (such mortgage and any refinancing thereof permitted by the Indenture is hereinafter referred to as an "After-Acquired Fee Mortgage"). The lien of this Mortgage on the Released Fee Land shall be subordinated to the lien of the After-Acquired Fee Mortgage on the Released Fee Land (and to the lien of other Superior Mortgages which shall become a lien thereon in accordance with the terms thereof), provided the following conditions are satisfied: (i) the After-Acquired Fee Mortgage encumbers the fee simple title to such real property and no other property; 24 (ii) the indebtedness secured by the After-Acquired Fee Mortgage (A) does not exceed 75% of the cost to the Mortgagor of such fee simple title at the time of the acquisition and (B) satisfies the criteria set forth in Section 12.08 of the Indenture; (iii) in the event the After-Acquired Fee Mortgage encumbers fee simple title to the Leased Land or any part thereof, such After-Acquired Fee Mortgage contains provisions binding on the holder of the After-Acquired Fee Mortgage and its successors and assigns confirming the provisions of Section 5.21(d) of this Mortgage; (iv) the Released Fee Land is not being acquired from an Affiliate of the Mortgagor; (v) the After-Acquired Fee Mortgage and other loan documents shall contain a provision binding upon the holder of such After-Acquired Fee Mortgage and other loan documents that all insurance proceeds in the event of a Casualty and awards for Takings of less than the entire Released Fee Land shall be used for purposes of Restoration; and (vi) the Mortgagor delivers to the Mortgagee an Officers' Certificate requesting such subordination and certifying that the requirements of (i) through (v) above have been satisfied. (b) Anything contained in this Section 2.07 or elsewhere in this Mortgage to the contrary notwithstanding, the subordination of this Mortgage to any After-Acquired Fee Mortgage constituting a lien on Released Fee Land shall not be self-operative but shall be effective only upon the execution and delivery by the Mortgagee of an instrument in writing effecting such subordination. The Mortgagee shall deliver such instrument of subordination on the following conditions: (x) the Mortgagee shall have received an Officers' Certificate confirming that the conditions of (i) through (vi) of paragraph (a) have been satisfied, together with a true and correct copy of the After-Acquired Fee Mortgage and all other instruments securing the indebtedness evidenced thereby and (y) the instrument of subordination shall specifically state that this Mortgage is being subordinated not with respect to the lien of this Mortgage on the Ground Lease or on the leasehold estate created thereby, but only with respect to the fee simple title to the Leased Land or applicable part thereof and only if and to the extent that the After-Acquired Fee Mortgage being subordinated to is subject and subordinate to the Ground Lease and the leasehold estate created thereby. 25 ARTICLE THREE REMEDIES Section 3.01. EVENTS OF DEFAULT. "Event of Default," whenever used herein, means any one of following events (including any applicable notice requirement and any period of grace as specified in this Section 3.01) (whatever the reason for such event 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): (a) default by the Mortgagor under the Guaranty and continuance of such default for a period of 10 days after there has been given a written notice to the Mortgagor specifying such default and stating that such notice is a "Notice of Default" hereunder; or (b) an "Event of Default," as defined in Section 3.01 of the Note Mortgage, shall occur; or (c) default in the performance, or breach, of any of the provisions of Article Four and the continuance of such default or breach for a period of 60 days after there has been given a written notice to the Mortgagor specifying that such notice is a "Notice of Default" hereunder; or (d) any representation or warranty of the Mortgagor set forth in this Mortgage shall prove to be incorrect as of the time when made and the facts constituting such incorrectness impairs the Mortgagee's security and such impairment continues for a period of 30 days, unless such impairment is curable, but not susceptible of cure within such 30-day period (for reasons other than lack of funds), provided that the conditions set forth in Section 3.01(l) of the Note Mortgage have been satisfied. Section 3.02. DEMAND UNDER THE GUARANTY. If an Event of Default occurs and is continuing, and the Mortgagee has declared the Outstanding Amount of the Note to be due and payable immediately pursuant to Section 3.02 of the Note Mortgage, then the Mortgagee may declare all obligations under the Guaranty to be due and payable immediately. Section 3.03. APPLICATION OF MONEYS RECEIVED BY MORTGAGEE. Any moneys received by the Mortgagee pursuant to the provisions of this Article Three (including moneys received by the Trustee after any action or act by the Mortgagee under Section 3.10) shall be applied by the 26 Mortgagee in accordance with the provisions of Section 7.06 of the Indenture. Section 3.04. RESTORATION OF RIGHTS AND REMEDIES. If the Mortgagee has instituted any proceeding to enforce any right or remedy under this Mortgage and such proceeding has been discontinued or abandoned for any reason or has been determined adversely to the Mortgagee, then and in every such case the Mortgagor and the Mortgagee shall, subject to any determination in such proceeding, be restored to its former position hereunder, and thereafter all rights and remedies of the Mortgagee shall continue as though no such proceeding had been instituted. Section 3.05. RIGHTS AND REMEDIES CUMULATIVE. No right or remedy herein conferred upon or reserved to the Mortgagee 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 3.06. DELAY OR OMISSION NOT WAIVER. No delay or omission of the Mortgagee to exercise any right or remedy accruing upon an 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 Three by law to the Mortgagee may be exercised, from time to time, and as often as may be deemed expedient, by the Mortgagee. Section 3.07. UNDERTAKING FOR COSTS. If any action or proceeding shall be commenced (including, without limitation, an action to foreclose this Mortgage or to collect under the Guaranty secured hereby) to which action or proceeding the Mortgagee is made or becomes a party, or in which it becomes necessary in the opinion of the Mortgagee to defend or uphold the lien of this Mortgage, then, to the extent it has not already done so pursuant to the terms of Section 3.07 of the Note Mortgage, the Mortgagor shall pay to Mortgagee all expenses, including reasonable attorneys' fees and expenses, incurred by the Mortgagee in connection therewith, together with interest at the rate then payable on the Notes, from the date of payment less the net amount received by the Mortgagee or the Trustee, as their interests may appear under any title insurance policy, and, until paid, all such expenses, together with interest as aforesaid, shall be a lien on the Trust Estate. 27 Section 3.08. WAIVER OF APPRAISEMENT AND OTHER LAWS. To the full extent that it may lawfully so agree, the Mortgagor will not at any time insist upon, plead, claim or take the benefit or advantage of, any appraisement, valuation, stay, extension or redemption law now or hereafter in force, in order to prevent or hinder the enforcement of this Mortgage or the absolute sale of the Trust Estate, or any part hereof, or the possession thereof by any purchaser at any sale under this Article Three; and the Mortgagor, for itself and all who may claim under it, so far as it or they now or hereafter may lawfully do so, hereby waives the benefit of all such laws. The Mortgagor, for itself and all who may claim under it, waives, to the extent that it may lawfully do so, all right to have the property in the Trust Estate marshalled upon any foreclosure hereof, and agrees that any court having jurisdiction to foreclose this Mortgage may order the sale of the Trust Estate as an entirety. If any law in this Section 3.08 referred to and now in force, of which the Mortgagor or its successor or successors might take advantage despite this Section 3.08, shall hereafter be repealed or cease to be in force, such law shall not thereafter be deemed to constitute any part of the contract herein contained or to preclude the application of this Section 3.08. Section 3.09. ENTRY. The Mortgagor agrees that upon the occurrence of an Event of Default the Mortgagor, upon demand of the Mortgagee during the continuance thereof, shall forthwith surrender to the Mortgagee the actual possession of, and it shall be lawful for the Mortgagee by such officers or agents as it may appoint to enter and take possession of, the Trust Estate (and the books and papers of the Mortgagor), and to hold, operate and manage the Trust Estate (including the making of all needful repairs, and such alterations, additions and improvements as the Mortgagee shall deem wise) and to receive the rents, issues, tolls, profits, revenues and other income thereof, and, after deducting the costs and expenses of entering, taking possession, holding, operating and managing the Trust Estate, as well as payments for taxes, insurance and other proper charges upon the Trust Estate and reasonable compensation to itself, its agents and counsel, to apply the same as provided in Section 3.03, PROVIDED, HOWEVER, that the Mortgagee's rights under this Section 3.09 shall be subject to the provisions of the New Jersey Casino Control Act and Section 3.14. Whenever all that is then due upon the Note and under any of the terms of this Mortgage shall have been paid and all defaults hereunder shall have been made good, the Mortgagee shall surrender possession to the Mortgagor. 28 Section 3.10. POWER OF SALE; SUITS FOR ENFORCEMENT. In case an Event of Default shall occur and be continuing, the Mortgagee, with or without entry, in its discretion may: (a) sell, subject to any mandatory requirements of applicable law, the Trust Estate as an entirety, or in such parcels, as the Mortgagee may determine, to the highest bidder at public auction at such place and at such time (which sale may be adjourned by the Mortgagee from time to time in its discretion by announcement at the time and place fixed for such sale, without further notice) and upon such terms as the Mortgagee may fix and briefly specify in a notice of sale to be published as required by law; or (b) proceed to protect and enforce its rights under this Mortgage by sale pursuant to judicial proceedings or by a suit, action or proceeding in equity or at law or otherwise, whether for the specific performance of any covenant or agreement contained in this Mortgage or in aid of the execution of any power granted in this Mortgage or for the foreclosure of this Mortgage or for the enforcement of any other legal, equitable or other remedy, as the Mortgagee, being advised by counsel, shall deem most effectual to protect and enforce any of the rights of the Mortgagee; the failure to join tenants shall not be asserted as a defense to any foreclosure or proceeding to enforce the rights of the Mortgagee. Section 3.11. INCIDENT OF SALE. Upon any sale of any of the Trust Estate, whether made under the power of sale hereby given or pursuant to judicial proceedings, to the extent permitted by law: (a) all obligations owing under the Guaranty, if not previously due, shall at once become and be immediately due and payable; (b) subject to the provisions of Section 3.14 and the receipt of any required prior approvals of the New Jersey Casino Control Commission, the Mortgagee may bid for and purchase the property offered for sale, and upon compliance with the terms of sale may hold, retain and possess and dispose of such property, without further accountability, and may, in paying the purchase money therefor, delivery any notes or claims for interest thereon in lieu of cash to the amount which shall, upon distribution of the net proceeds of such sale, be payable thereon, and such notes or claims for interest thereon, in case the amounts so payable thereon shall be less than the amount due thereon, shall be returned to the holders 29 thereof after being appropriately stamped to show partial payment; (c) the Mortgagee may make and deliver to the purchaser or purchasers a good and sufficient deed, bill of sale and instrument of assignment and transfer of the property sold; (d) the Mortgagee is hereby irrevocably appointed the true and lawful attorney of the Mortgagor, in its name and stead, to make all necessary deeds, bills of sale and instruments of assignment and transfer of the property thus sold; and for that purpose it may execute all necessary deeds, bills of sale and instruments of assignment and transfer, and may substitute one or more persons, firms or corporations with like power, the Mortgagor hereby ratifying and confirming all that its attorney or such substitute or substitutes shall lawfully do by virtue hereof; but if so requested by the Mortgagee or by any purchaser, the Mortgagor shall ratify and confirm any such sale or transfer by executing and delivering to the Mortgagee or to such purchaser or purchasers all proper deeds, bills of sale, instruments of assignment and transfer and releases as may be designated in any such request; (e) all right, title, interest, claim and demand whatsoever, either at law or in equity or otherwise, of the Mortgagor of, in and to the property so sold shall be divested and such sale shall be a perpetual bar both at law and in equity against the Mortgagor, its successors and assigns, and against any and all persons claiming or who may claim the property sold or any part thereof from, through or under the Mortgagor, its successors and assigns; and (f) the receipt of the Mortgagee or of the officer making such sale shall be a sufficient discharge to the purchaser or purchasers at such sale for his or their purchase money and such purchaser or purchasers and his or their assigns or personal representatives shall not, after paying such purchase money and receiving such receipt, be obliged to see to the application of such purchase money, or be in anywise answerable for any loss, misapplication or non-application thereof. Section 3.12. RECEIVER. Upon the occurrence of an Event of Default and commencement of judicial proceedings by the Mortgagee to enforce any right under this Mortgage, the Mortgagee shall be entitled, as against the Mortgagor, without notice or demand and without regard to the adequacy of the security for the Guaranty or the solvency of the Mortgagor, to 30 the appointment of a receiver of the Trust Estate, and of the rents, issues, profits, revenues and other income thereof, PROVIDED, HOWEVER, that the Mortgagee's rights under this Section 3.12 shall be subject to the provisions of the New Jersey Casino Control Act and Section 3.14 hereof. Section 3.13. SUITS TO PROTECT THE TRUST ESTATE. Upon 5 days' prior written notice to the Mortgagor (or such shorter period or without notice if deemed necessary and appropriate by the Mortgagee), the Mortgagee shall have power to institute and maintain such proceedings as it may deem necessary and appropriate to prevent any impairment of the Trust Estate by any acts which may be unlawful or in violation of this Mortgage and to protect its interests in the Trust Estate and in the rents, issues, profits, revenues and other income arising therefrom, including power to institute and maintain proceedings to restrain the enforcement of or compliance with any 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 hereunder or be materially prejudicial to the interests of the Mortgagee. Section 3.14. MANAGEMENT OF CASINO-HOTEL. Notwithstanding any provision of this Article Three to the contrary, following an Event of Default and the taking of possession of the Trust Estate or any part thereof by the Mortgagee and/or the appointment of receiver of the Trust Estate or any part thereof, the Mortgagee or any such receiver shall be authorized, in addition to the rights and powers of the Mortgagee and such receiver set forth elsewhere in this Mortgage, to retain one or more experienced operators of hotels and/or casinos to manage the Casino-Hotel, PROVIDED that any such operator shall have all necessary legal qualifications, including all Permits, to manage the Casino-Hotel. ARTICLE FOUR CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE Section 4.01. CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER ONLY ON CERTAIN TERMS. The Mortgagor shall comply with all provisions applicable to the Mortgagor in Article Ten of the Indenture. Section 4.02. SUCCESSOR ENTITY SUBSTITUTED. Upon any consolidation or combination or any conveyance or transfer of the Trust Estate or any portion thereof in accordance with Section 10.01 of the Indenture, the successor entity formed 31 by such consolidation or into which the Mortgagor is combined or to which such conveyance or transfer is made shall succeed to, and be substituted for, and may exercise every right and power of, the Mortgagor under this Mortgage with the same effect as if such successor entity had been named as the Mortgagor herein; PROVIDED, HOWEVER, that no such conveyance or transfer of the Trust Estate substantially as an entirety, unless such conveyance or transfer is in compliance with the provisions of Article Ten of the Indenture, shall have the effect of releasing the Person named as "the Mortgagor" in the first paragraph of this instrument or any successor entity which shall theretofore have become such in the manner prescribed in such Article Ten from its liability as guarantor. Section 4.03. LIMITATION ON SALES OF TRUST ESTATE. Except as otherwise expressly permitted by this Mortgage or the Indenture, the Mortgagor shall not sell, assign, lease, sublease, hypothecate, pledge, mortgage or otherwise transfer all or any part of the Trust Estate or any interest therein (including without limitation any interest in the Ground Leases). Without limiting the generality of the foregoing, the Mortgagor shall not separate, or attempt to separate, its ownership of its interest in the Ground Leases from its ownership of the buildings constituting the Casino-Hotel or any part thereof. ARTICLE FIVE COVENANTS AND REPRESENTATIONS OF MORTGAGOR Section 5.01. [Reserved] Section 5.02. FF&E FINANCING AGREEMENTS. The Mortgagor covenants and agrees to comply with all of the terms and conditions set forth in any FF&E Financing Agreements before the expiration of any applicable notice and cure periods contained in the FF&E Financing Agreements. Section 5.03. LIMITATIONS ON LIENS. The Mortgagor will not create, incur, suffer or permit to be created or incurred or to exist any mortgage, lien, charge or encumbrance on or pledge of any of the Trust Estate, other than (i) Permitted Encumbrances, (ii) liens on the Trust Estate in connection with indebtedness permitted by clauses (i), (ii), (iii), (iv) or (v) of Section 12.08(a) of the Indenture, and (iii) a building contract or a notice of intention filed by a mechanic, materialman or laborer under the New Jersey lien law. Without limiting the generality of the foregoing sentence but notwithstanding the provisions of the foregoing sentence, the Mortgagor shall not be deemed to have breached the provisions of the foregoing sentence by virtue of the 32 existence of a lien for Impositions or mechanics liens so long as the Mortgagor is in good faith contesting the validity of the same in accordance with the provisions of Section 5.09 to the extent that the matters described in (i) and (ii) do not constitute a default under any Ground Lease or Superior Mortgage. Section 5.04. [Reserved] Section 5.05. ACTIONS AND PROCEEDINGS. The Mortgagor hereby acknowledges the right of the Mortgagee, in the name of and on behalf of the Mortgagor, (a) to appear in and defend any action or proceeding brought with respect to the Trust Estate or any part thereof and (b) upon 5 days' prior written notice to the Mortgagor (or such shorter period or without notice if deemed necessary and appropriate by the Mortgage), to commence any action or proceeding to protect the interest of the Mortgagee in the Trust Estate. Section 5.06. WARRANTY OF LEASEHOLD ESTATE AND TITLE. The Mortgagor represents and warrants that as of the date hereof: (a) it is duly authorized under the laws of the State of New Jersey and all other applicable laws to execute and deliver this Mortgage, and all corporate action on its part necessary for the valid execution and delivery of this Mortgage has been duly and effectively taken; (b) it is the lawful owner and is lawfully seized and possessed of the Owned Land and all buildings and improvements thereon, free and clear of all liens, charges or encumbrances, other than the lien of the Mortgage Documents, any Working Capital Facility Lien and Existing Encumbrances; (c) it is the holder of and has good and marketable title to the leasehold interests and leasehold estates under the Ground Leases and to the Ground Leases, subject to no lien, encumbrance or charge other than the lien of the Mortgage Documents, any Working Capital Facility Lien and Existing Encumbrances; (d) (i) the Ground Leases are valid and subsisting demises of the Leased Land for the terms therein set forth, (ii) there are no defaults thereunder by any Lessor or the lessee as to which written notice has been given to or by the lessee, (iii) the Mortgagor has delivered true and correct copies of the Ground Leases and all modifications, amendments and supplements thereto, and (iv) each of the Ground Leases is in full 33 force and effect and has not been modified, amended or supplemented, except as described on Schedule 2; (e) it has good title to the Operating Assets, subject to no lien, encumbrance or charge, other than the lien of the Mortgage Documents, any Working Capital Facility Lien and Existing Encumbrances; and (f) the Mortgagor has good and lawful right and authority to execute this Mortgage and to grant, bargain, sell, alien, convey, assign, transfer, hypothecate, pledge, mortgage and confirm the Trust Estate as provided herein (including without limitation with respect to the Operating Assets and the Ground Leases, without the consent of any third party, other than governmental authorities but any applicable or necessary consent or approval of any such governmental authority has been given or waived at or prior to the execution and delivery of this Mortgage), and this Mortgage constitutes a valid second mortgage lien and second priority security interest in the Trust Estate PARI PASSU with the lien of the Note Mortgage, subject only to Working Capital Facility Liens and Existing Encumbrances. The Mortgagor hereby does and will forever warrant and defend (x) the title to Trust Estate (including without limitation, its leasehold estates under the lessee's interests in the Ground Leases) (subject to Permitted Encumbrances) and (y) the priority of the lien of this Mortgage (subject to Permitted Encumbrances other than Restricted Encumbrances), against the claims and demands of all persons whomsoever, at the Mortgagor's sole cost and expense. Section 5.07. FURTHER ASSURANCES; RECORDING. The Mortgagor will, as provided in Section 5.13, from time to time subject its right, title and interest under all Leases to the lien of this Mortgage. The Mortgagor will cause this instrument and all other instruments of further assurance, including all financing statements and continuation statements covering security interests in personal property, to be promptly recorded, registered and filed, and at all times to be kept recorded, registered and filed, and will execute and file such financing statements and cause to be issued and filed such continuation statements, all in such manner and in such places as may be required by law or as requested by the Mortgagee to fully preserve and protect the rights of the Mortgagee as a secured party under the Uniform Commercial Code to all property comprising the Trust Estate (to the extent a grant of a security interest therein is governed by the Uniform Commercial Code) and to perfect, preserve and protect the lien 34 of this Mortgage as a valid mortgage lien of record and a valid security interest on the Trust Estate subject to Permitted Encumbrances (other than Restricted Encumbrances). The Mortgagor will pay all filing or recording fees, and all expenses incident to the execution and delivery of this Mortgage, and any instrument of further assurance, and all federal, state, county and municipal stamp taxes and other taxes, duties, imposts, assessments and charges arising out of or in connection with the execution and delivery of this Mortgage, any financing statement or continuation statement with respect to the personal property constituting part of the Trust Estate or any instrument of further assurance. Section 5.08. PAYMENT OF TAXES AND CERTAIN CLAIMS; COMPLIANCE WITH LEGAL REQUIREMENTS AND INSURANCE REQUIREMENTS. The Mortgagor will: (a) subject to the provisions of Section 5.09 relating to contests, pay or cause to be paid promptly (or when installments of the same shall become due and payable, if, by law or by agreement or arrangement with the applicable governmental agency or authority, the same may be paid in installments) before any fine, penalty, interest or cost may be added for nonpayment (but no later than when the same are payable by the Mortgagor pursuant to any Superior Instrument Requirement), all taxes (including, without limitation, real estate taxes, personal or other property taxes and all sales, value added, use and similar taxes), assessments (including, without limitation, all assessments for public improvements or benefits, whether or not commenced or completed prior to the date hereof and whether or not to be completed prior to the satisfaction of this Mortgage), water, sewer or other rents, rates and charges, excises, levies, license fees, permit fees, inspection fees and other authorization fees and other charges, in each case whether general or special, ordinary or extraordinary, or foreseen or unforeseen, of every character (including all interest, additions to tax and penalties thereon), that may be assessed, levied, confirmed or imposed on or in respect of or be a lien upon (1) the Trust Estate (including without limitation the Leased Land) or any part thereof or any rent therefrom or any estate, right or interest therein, or (2) any acquisition, occupancy, use, leasing, or possession of or activity conducted on the real property or any part thereof included in the Trust Estate or any gross receipts thereof or of the rent therefrom (all of the foregoing being referred to collectively as "Impositions"). Notwithstanding the foregoing or any other provision of this Mortgage, the Mortgagor shall not be required to pay any income, 35 profits or revenue tax upon the income of the Mortgagee, the Trustee or the Noteholders nor any franchise, excise, corporate, estate, inheritance, succession, capital levy or transfer tax of the Mortgagee, the Trustee or the Noteholders nor any interest, additions to tax or penalties in respect thereof, unless such tax is imposed, levied or assessed in substitution for any Impositions that the Mortgagor is required to pay pursuant to this Section 5.08. The Mortgagor will deliver to the Mortgagee official receipts or other proof evidencing payments of any Impositions in accordance with the requirements of this Section 5.08. The Mortgagor shall not be entitled to any credit for taxes or assessments paid against the Guaranty; (b) except for such property which the Mortgagor may dispose of or replace pursuant to Section 2.02, maintain and keep all its properties used or useful in the conduct of its business (other than obsolete equipment), including, without limitation, the Casino-Hotel and all Tangible Personal Property, in such good repair, working order and condition, except for reasonable wear and use, and make or cause to be made all such needful and proper repairs, renewals and replacements thereto consistent with the standards of other casino-hotels in Atlantic City, New Jersey; (c) occupy and continuously operate the Casino-Hotel and keep the Casino-Hotel supplied with Tangible Personal Property, all in a manner consistent with the standards of other casino-hotels in Atlantic City, New Jersey (provided that nothing contained in this Section 5.08(c) shall be deemed to reduce the time period set forth in Section 3.01(f)); (d) subject to the provisions of Section 5.09 relating to contests, the Mortgagor at its sole expense will timely (1) comply with all Legal Requirements and Insurance Requirements, whether or not compliance therewith shall require structural changes in the buildings and improvements included in the Trust Estate or interfere with the use and enjoyment of the Trust Estate or any part thereof, (2) procure, maintain and comply with all permits and other authorizations required for (i) the use of the Casino as a gaming and gambling facility, (ii) the on-premises consumption of alcoholic beverages at the Casino-Hotel and (iii) any other use of the Trust Estate or any part thereof then being made, and for the proper erection, installation, operation and maintenance of the improvements or any part thereof, and (3) comply with any instruments of record at the time in force affecting the Trust Estate or any part thereof, if 36 the failure to comply with the same would impair the Mortgagee's security hereunder. Without limiting the generality of the foregoing, the Mortgagor represents and warrants that at the time of the execution of this Mortgage, the Mortgagor is in compliance with the requirements of clauses (1), (2) and (3); (e) in the event of the passage after the date of this Mortgage of any law of the State of New Jersey, or any other governmental entity, changing in any way the laws now in force for the taxation of mortgages, or debts secured thereby, for state or local purposes, or the manner of the operation of any such taxes, so as to affect the interest of the Mortgagee, then and in such event, the Mortgagor shall bear and pay the full amount of such taxes, provided that if for any reason payment by the Mortgagor of any such new or additional taxes would be unlawful or if the payment thereof would constitute usury or render the indebtedness secured hereby wholly or partially usurious under any of the terms or provisions of the Note, or this Mortgage, or otherwise, the Mortgagee may, at the Mortgagee's option, declare the whole sum secured by this Mortgage, with interest thereon, to be due and payable 90 days after notice of election thereof has been given by the Mortgagee, or the Mortgagee may, at the Mortgagee's option, pay that amount or portion of such taxes as renders the loan or indebtedness secured hereby unlawful or usurious, in which event the Mortgagor shall concurrently therewith pay the remaining lawful and nonusurious portion or balance of such taxes. Section 5.09. PERMITTED CONTESTS. The Mortgagor may, at its sole expense, contest by appropriate legal proceedings conducted in good faith and with due diligence, the amount or validity or application, in whole or in part of any Imposition or lien therefor or any Legal Requirement or Insurance Requirement or the application of any instrument of record affecting the Trust Estate or any part thereof or any claims of mechanics, materialmen, suppliers, or vendors or lien therefore, and may withhold payment of the same pending such proceedings if permitted by law, or make payment under protest, or defer compliance with any such Legal Requirement, any such Insurance Requirement or the terms of any such instrument, and the same shall not be a Default hereunder, provided that (a) in the case of any Impositions or lien therefor or any claims of mechanics, materialmen, suppliers or vendors or lien therefor, such proceedings shall suspend the collection thereof from each of the Mortgagor, the Mortgagee, the Trustee, the Noteholders and the Trust Estate, (b) neither the Trust Estate nor any interest therein would be in any danger of being sold, forfeited, or lost, (c) such action 37 would not result in or constitute a default under any Ground Lease or Superior Mortgage, (d) in the case of a Legal Requirement, neither the Noteholders nor the Mortgagee shall be in any danger of any civil or any criminal liability, and the failure of the Mortgagor to comply with such Legal Requirement shall not affect the continuance in good standing of any Permit or result in the suspension, termination, non-renewal or material adverse modification of any permit, and (e) in the case of an Insurance Requirement, the failure of the Mortgagor to comply therewith shall not affect the validity of any insurance required to be maintained by the Mortgagor hereunder. Section 5.10. MECHANICS' AND OTHER LIENS. Without limiting the generality of the first sentence of Section 5.03 and notwithstanding the provisions of Section 5.03(a)(ii), the Mortgagor will cause to be removed, either by payment, or bonding or otherwise, all claims and demands of mechanics, materialmen, laborers, and others which, if unpaid, might result in, or permit the creation of, a lien on the Premises and/or Trust Estate or any part thereof, or on the revenues, rents, issues, income and profits arising therefrom and in general will do or cause to be done everything necessary so that the lien hereof shall be fully preserved, at the cost of the Mortgagor, without expense to the Mortgagee. Section 5.11. INSURANCE. (a) The Mortgagor will, at its expense, maintain with Insurers: (1) insurance with respect to the Mortgagor's insurable properties constituting a part of the Trust Estate against loss or damage by fire, lightning, and other risks from time to time included under "all-risk" policies and against loss or damage by sprinkler leakage, water damage, collapse, malicious mischief and explosion in respect of any steam and pressure boiler and similar apparatus located on such insurable properties, in amounts at all times sufficient to prevent the Mortgagor from becoming a coinsurer within the terms of the applicable policies, but in any event such insurance shall be maintained in such insurable amounts not less than the greatest of the following (hereinafter referred to as the "Insurance Amount"): (i) 100% of the then full insurable value of such insurable properties, the term "full insurable value" to mean the actual replacement cost (excluding the costs of foundation, footing, excavation, paving, landscaping and other similar, non-insurable improvements) determined from time to time (but not less frequently than once in any 36 calendar months), by an Architect, contractor, appraiser, or an Insurer, or 38 (ii) the amount required to be maintained pursuant to the Superior Instrument Requirements; (2) war risk insurance as and when such insurance is obtainable from the United States of America or any agency thereof as promptly as reasonably practicable after the same becomes so obtainable, in an amount not less than the Insurance Amount, or in such lesser amount as may then be so obtainable; (3) public liability, including personal injury and property damage and comprehensive general liability connected with the possession, use, leasing, operation or condition of such insurable properties in such amounts as, in the Mortgagor's judgment, are prudent, considering the cost of such insurance, for personal injury and property damage with respect to any one occurrence, which may be under an umbrella policy. Anything contained in this clause (3) to the contrary notwithstanding, the Superior Instrument Requirements with respect to the kinds and amount of insurance described in this clause (3) shall be satisfied by the Mortgagor; (4) appropriate workers' compensation insurance with respect to any work (to the extent the risks to be covered thereby are not already covered by other policies of insurance maintained by the Mortgagor) on or about such insurable properties; (5) business interruption insurance covering not less than 12 months of loss, provided that, at any time that the Mortgagor is renewing any policy for such insurance or taking out any new or replacement such policy covering a period of less than 12 months, the Mortgagor shall deliver to the Mortgagee an Officers' Certificate certifying that the period of coverage to be maintained by the Mortgagor under such policy is the maximum that can be maintained at rates determined by the Mortgagor to be reasonable for such coverage; (6) to the extent available, flood insurance in an amount not less than the Insurance Amount, or such lesser amount as may then be so obtainable; and (7) such other insurance with respect to such insurable properties against loss or damage of the kinds (i) from time to time customarily insured against by persons owning or using casino-hotels of comparable size in the boardwalk area of Atlantic City, New Jersey and 39 (ii) required to be maintained pursuant to the Superior Instrument Requirements. Notwithstanding the foregoing, to the extent permitted by Superior Instrument Requirements, (i) the Mortgagor shall be permitted to maintain a deductible with respect to the insurance policies described in clauses (1), (2), (6) and (7) in an amount not to exceed (x) for the twelve month period commencing the date hereof, $100,000 with respect to the insurance policies described in clause (1), (2), (6) and (7) thereafter, the customary deductible (if any) with respect to the insurance maintained by casino-hotels of a similar size and value in Atlantic City, New Jersey (but in no event more than $1,000,000), (ii) the Mortgagor shall be permitted to maintain a $200,000 self insured retention under the general liability policy described in clause (3) and a deductible with respect to the other insurance policies described in clause (3) in an amount not to exceed the amount of deductible as is customarily maintained by casino-hotels of similar size in Atlantic City, New Jersey, (iii) the Mortgagor shall not reduce its insurance coverage for the matters described in clause (3) (which for purposes of this paragraph means a reduction in single limits or an increase in deductible) unless and until the Mortgagor delivers to the Mortgagee an Officers' Certificate certifying (w) that the coverage the Mortgagor was theretofore maintaining cannot be maintained at rates determined by the Mortgagor to be reasonable for such coverage, (x) the amount of the proposed reduction, (y) the premium for the existing and the proposed reduced coverage, and (z) that the proposed deductible satisfied the criteria set forth in this clause (iii), and (iv) the Mortgagor shall be permitted to maintain a deductible with respect to the insurance policies described in clause (5) in the forms of and in an amount not to exceed the amount of deductible as is customarily maintained by casino-hotels of similar size in Atlantic City, New Jersey. (b) Each policy of insurance maintained by the Mortgagor pursuant to Subsection (a) of this Section 5.11 shall, (1) except in the case of workers' compensation insurance, name as additional insureds the Mortgagee, in both its individual and fiduciary capacities, and, to the extent required by the Superior Instrument Requirements, the Lessors and the holders of the Superior Mortgages, (2) provide that all insurance proceeds for losses, except in the case of public liability insurance and workers' compensation insurance or as otherwise provided in Subsections (d), (e) and (f) of this Section 5.11, be payable solely to the Mortgagee or such other party as is required to receive such proceeds under a Superior Mortgage, (3) except in the case of workers' compensation, include effective waivers (whether under the terms of any such policy or otherwise) by the insurer of all claims for insurance premiums against all lost payees and named insureds (other than the Mortgagor) and all rights of subrogation against any named insured, (4) except in the case of public liability and 40 workers' compensation insurance, provide that any losses shall be payable notwithstanding (i) any act, failure to act, negligence of, or violation or breach of warranties, declarations or conditions contained in such policy by the Mortgagor or the Mortgagee or any other named insured or loss payee (including, without limitation, with respect to the Released Fee Land, the holders of any After-Acquired Fee Mortgages), (ii) the occupation or use of the insurable properties for purposes more hazardous than permitted by the terms of the policy, (iii) any foreclosure or other proceeding or notice of sale relating to the insurable properties or (iv) any change in the title to or ownership or possession of the insurable properties, (5) contain a non-contributory mortgagee clause in favor of the Mortgagee, and (6) provide that if all or any part of such policy is cancelled, terminated or expires, the insurer will forthwith give notice thereof to each named insured an loss payee and that no cancellation, reduction in amount or material change in coverage thereof shall be effective until at least 30 days after receipt by each named insured and loss payee of written notice thereof. (c) The Mortgagor will deliver to the Mortgagee, (1) duplicate originals of all insurance policies that the Mortgagor is required to maintain pursuant to this Section 5.11 and (2) within 30 days after each reduction in insurance required to be maintained by the Mortgagor hereunder, an Officers' Certificate setting forth the particulars as to all such insurance policies and certifying that the same comply with the requirements of this Section 5.11, that all premiums or installments thereof then due thereon have been paid and that the same are in full force and effect. The Mortgagee shall not be responsible for effecting or renewing any insurance or for the responsibility or solvency of the insurers. (d) The Mortgagor shall give written notice to the Mortgagee immediately upon obtaining knowledge of any Casualty which (x) results in damage, loss or destruction in an amount in excess of $5,000,000 to any buildings or improvements on the Premises and/or any Tangible Personal Property or (y) pursuant to any Superior Instrument Requirement, would require the deposit of insurance proceeds with the Depositary, or action or proceeding with respect thereto. Whenever the Superior Instrument Requirements require or permit the selection of the Depositary by the Mortgagor, the Mortgagor shall select the Insurance Trustee as the Depositary. Within 30 days after any Casualty which results in any damage, loss or destruction in an amount in excess of $10,000,000 to any buildings or improvements of the Premises and/or any Tangible Personal Property, the Mortgagor shall deliver to the Mortgagee a certificate of an Architect stating whether, in such Architect's opinion, applicable Legal Requirements permit 41 the Restoration of such buildings and improvements for the same uses and to the same size and quality in all material respects, as existed immediately prior to the Casualty (and if such certificate states the Legal Requirements do not permit such Restoration, such certificate shall describe the manner closest approximating such criteria to which the buildings and improvements could be so restored and shall be accompanied by a Certificate of Appraised Value dated not more than 10 days prior to delivery setting forth the Appraised Value immediately prior to the Casualty and the estimated Appraised Value immediately after the Restoration). If the Mortgagor is required to deliver such Certificates of Appraised Value and if based on such Certificates of Appraised Value immediately after Restoration, the aggregate Outstanding Amount of First Mortgage Debt immediately after such Restoration shall exceed the greater of (i) 66 2/3% of the Appraised Value immediately after such Restoration or (ii) the quotient of the Outstanding Amount of First Mortgage Debt immediately prior to such Casualty divided by the Appraised Value immediately prior to the Casualty multiplied by the Appraised Value immediately after such Restoration, then the proceeds of any insurance shall, at the election of Mortgagee, either be applied to Restoration as set forth in Subsections (e), (h) and (i) below) or paid and delivered to the Mortgagee to the extent of the then Outstanding Amount of the Note and any other interest or other sums due hereunder or thereunder to be applied to the satisfaction of the Mortgage to the extent proceeds are available for such purpose and provided that no additional sums are due to the Trustee or the Noteholder under the Indenture, the balance of any net insurance proceeds shall be paid to the Mortgagor. Notwithstanding the foregoing sentence, if such Certificates of Appraised Values indicates that the Outstanding Amount of First Mortgage Debt immediately after such Restoration exceeds the greater of the two amounts determined pursuant to subclauses (i) and (ii) above, the proceeds of insurance will be made available for Restoration (subject to paragraphs, (e), (h) and (i) below) if the Mortgagor obtains an irrevocable commitment from a nationally recognized financial institution having a combined capital and surplus of at least $100,000,000, to supply, upon an acceleration under this Mortgage as a result of an Event of Default, funds to the Mortgagor as additions to capital in an amount equal to the Outstanding Amount of First Mortgage Debt in excess of the Appraised Value necessary to be paid down so that the Outstanding Amount of First Mortgage Debt will not exceed either of the two amounts determined pursuant to such clauses (i) and (ii), PROVIDED that such commitment may only be released if, upon an Appraisal at any time following completion of such Restoration, the aggregate Outstanding Amount of the First Mortgage Debt does not exceed 66-2/3% of the Appraised Value. 42 (e) Subject to the provisions of Subsection (d) above, in case a Casualty occurs, the following shall apply: (1) if the cost of Restoration (as hereinafter defined) does not exceed the sum of $10,000,000, the net insurance proceeds shall be paid by the Mortgagee to the Mortgagor (unless the Superior Instrument Requirements provide that the same shall be paid to the Depositary); (2) if the cost of Restoration is $10,000,000 or more or if the Superior Instrument Requirements provide that the same shall be paid to the Depositary, the net insurance proceeds shall be paid by the Mortgagee to the Insurance Trustee (or other Depositary required by the Superior Instrument Requirements, provided that such Depositary holds such proceeds in trust for purposes of paying the costs of Restoration); (3) the Mortgagor shall commence with reasonable promptness under the circumstances and thereafter with due diligence proceed to perform and complete in a good and workmanlike manner the restoration, repair, replacement or rebuilding of the damage or destruction resulting from the Casualty (all of which restoration, repair, replacement or rebuilding are referred to as the "Restoration") in accordance with the plans and specifications submitted to the Insurance Trustee, in conformance with all Legal Requirements and Superior Instrument Requirements, and in accordance with the further provisions of this Subsection (e), regardless of the extent of any such Casualty and whether or not net insurance proceeds, if any, shall be available or, if available, shall be sufficient, for the purpose of the Restoration (provided, however, that if the Mortgagor does not receive any net insurance proceeds within 30 days after any Casualty because the adjustment of the loss has not yet occurred, then the obligation of the Mortgagor to commence such Restoration shall be deferred until such proceeds are made available to the Mortgagor, provided that (i) Mortgagor delivers to the Mortgagee an Officers' Certificate certifying that the Mortgagor is diligently and continuously adjusting such loss with the Insurer, (ii) the Mortgagor delivers to the Mortgagee an Officers' Certificate within such 30-day period requesting the extension of such period, estimating the date on which such proceeds will be available and describing the Mortgagor's efforts to adjust such loss and certifying that such extension does not constitute a default or a breach of any of the provisions of any of the Ground Leases (or if so, such default or breach has been waived) and (iii) the Mortgagor delivers to the Mortgagee additional Officers' Certificates every 30 days thereafter updating the 43 information contained in the certificate described in Clause (ii)). All Restoration work shall be performed in accordance with the applicable provisions of Section 5.12 and in conformance with all Superior Instrument Requirements, Legal Requirements and Insurance Requirements and, prior to commencing any Restoration, the Mortgagor shall obtain all Permits necessary in connection therewith, and shall obtain, and keep in full force and effect until the completion of such Restoration, such additional insurance as the Insurance Trustee and Superior Instrument Requirements may require. The plans and specifications for the Restoration shall be accompanied by a certificate of the Mortgagor and an Opinion of Counsel to the effect that upon the completion of the Restoration pursuant to the plans and specifications the Premises, and all buildings and improvements, thereon will comply with all superior Instrument Requirements, Legal Requirements and Insurance Requirements. Notwithstanding anything in this Section 5.11 to the contrary, if such Casualty is in an amount less than $5,000,000, the Mortgagor shall not be required to perform and complete such Restoration (unless the performance and completion of the Restoration is necessary in order for the Mortgagor to be in compliance with any term, provision or condition of this Mortgage (other than this Section 5.11(e)) or any Superior Instrument Requirements; (4) Any insurance proceeds which the Mortgagor receives, shall be held by the Mortgagor in trust for the purpose of paying the cost of the Restoration, except as otherwise provided herein; (5) Any net insurance proceeds that the Insurance Trustee holds pursuant to this Subsection (e), shall be deposited in an interest-bearing investment reasonably designate by Mortgagor (to the extent the Mortgagor is permitted to designate such investment under the Superior Instrument Requirements) (and the interest thereon shall be added to such proceeds) and shall be paid by the Insurance Trustee in reimburse the Mortgagor for, or to make payment for, the Restoration, after the Insurance Trustee deducts therefrom the amount of any reasonable costs and expenses incurred in connection with the performance of its obligations under this Section 5.11. The Insurance Trustee shall make such payments not more frequently than once every 30 days upon the written request of the Mortgagor (unless more frequent payments are required by Superior Instrument Requirements), by paying to the Mortgagor or the persons named in the certificate described in Clause (6) of this Subsection (e) the respective amounts stated in such certificate 44 from time to time as the Restoration progresses, provided the Mortgagor has complied with the requirements of this Subsection (e) and such payment is permitted by an applicable Superior Instrument Requirements. The Mortgagor's written request shall be accompanied by (i) the certificate described in Clause (6) of this Subsection (e) and (ii) a title company or official search, or other evidence reasonably acceptable to the Insurance Trustee, showing that there have not been filed with respect to the Premises, any vendor's, contractor's mechanic's, laborer's or materialman's statutory or similar lien which has not been discharged of record (or bonded against or secured by other security) or any other encumbrance irrespective of its priority (other than Permitted Encumbrances). (6) The certificate required by Clause (5) of this Subsection (e) shall (A) be an Officers' Certificate, countersigned by the Architect in charge of the Restoration with respect to the matters described in (i) and (v) below, (B) be dated not more than 10 days prior to such request and (C) set forth (in addition to any other requirements contained in any applicable Superior Instrument Requirements) that: (i) all of the Restoration work theretofore performed is in substantial compliance with the plans and specifications theretofore submitted to the Insurance Trustee and in compliance with all Superior Instrument Requirements, Legal Requirements and Insurance Requirements; (ii) the sum then requested either has been paid by the Mortgagor or is justly due to contractors, subcontractors, materialmen, engineers, architects or other persons who have rendered services or furnished or contracted to deliver materials for the Restoration therein specified, and the names and addresses of such persons, a brief description of such services and materials and the several amounts so paid or due to each of such persons in respect thereof; (iii) no part of the amount requested has been or is the basis in any pervious or then pending request for the withdrawal of net insurance proceeds, and that the sum then requested does not exceed the value of the services and materials described in the certificate; (iv) except for the amount, if any, stated pursuant to Subclause (ii) of this Clause (6) in 45 such certificate to be due for services or materials, and except for amounts in dispute and/or customary retainages, there is no outstanding indebtedness known to the person signing such certificate, after due inquiry, which is then due for labor, wages, materials, supplies or services in connection with such Restoration; and (v) the remaining cost, as estimated by the persons signing such certificate, of the Restoration in order to complete the same does not exceed the net insurance proceeds remaining in the hands of Insurance Trustee after payment of the sum requested in such certificate or if such estimated cost does exceed such insurance proceeds such certificate shall state the amount of any such deficiency. If the certificate states that such deficiency will exist, the Mortgagor shall deliver the amount of such deficiency in cash or cash equivalent to the Insurance Trustee simultaneously with the delivery of such certificate, which amount shall be deemed insurance proceeds for purposes of this Section 5.11(e); and (7) If net insurance proceeds shall be insufficient to pay the entire cost of the Restoration, then, after completion of the Restoration, the Mortgagor shall pay the deficiency. If all or any part of the net insurance proceeds are not used for the restoration in accordance with this Subsection (e) (because such proceeds exceed the amount required to complete the Restoration), then upon completion of the Restoration in accordance with this Subsection (e), such amount not so used, if held by the Insurance Trustee, shall be paid to the Mortgagor (if permitted by Superior Instrument Requirements). (f) Provided that no Event of Default has occurred and is continuing, all net business interruption insurance proceeds shall be paid to the Mortgagor, to be segregated from the other funds of Mortgagor and held in trust by Mortgagor for the following purposes and in the following order of priority: (i) for the payment of Impositions and amounts due under the Ground Leases and Superior Mortgages; (ii) for debt service for the estimated period of Restoration (for purposes of this Section 5.11(f), interest and principal payments due on any payment date under the Notes will deemed to accrue in equal daily installments beginning the day after the immediately preceding payment date and ending on such payment date); and (iii) for any expense incurred in connection with the operation or business of the Casino-Hotel. 46 (g) The Mortgagor shall not take out separate insurance, concurrent in form or contributing in the event of loss with that required to be maintained pursuant to this Section 5.11, unless the same are permitted by Superior Instrument Requirements and the Mortgagee is included therein as a named insured, with loss payable to the Mortgagee and the Insurance Trustee pursuant to Section 5.11(b) hereof. The Mortgagor shall immediately notify the Mortgagee whenever any such separate insurance is taken out and shall promptly deliver to the Mortgagee a duplicate original of the policy of such insurance, a copy thereof certified by the insurer or a certificate thereof. (h) Subject to final adjustment by the insurer, insurance claims by reason of damage or destruction to any portion of the Trust Estate may be adjusted by the Mortgagor, but the Mortgagee shall have the right (but not the obligation) to join the Mortgagor in adjusting, and approving the adjustment of, any such loss except in the event of a loss where the amount of insurance reasonably anticipated to be received with respect to such loss is less than [Five Million Dollars ($5,000,000)], and the Mortgagor shall assist the Mortgagee in any such adjustment at the request of the Mortgagee. If the Mortgagee at its election as aforesaid joins the Mortgagor in any adjustment process, then the Mortgagee's approval of the adjustment shall not be unreasonably withheld; (i) Notwithstanding anything contained herein to the contrary, if an Event of Default shall have occurred and be continuing, the Mortgagee may, at its option, (A) refrain from paying to the Mortgagor or the Insurance Trustee any net insurance proceeds or (B) instruct the Insurance Trustee to pay to the Mortgagee any insurance proceeds then held by the Insurance Trustee, as the case may be. Section 5.12. LIMITATIONS ON BUILDING DEMOLITION, ALTERATIONS, IMPROVEMENTS AND NEW CONSTRUCTION. The Mortgagor will not authorize, permit or make any demolition, alteration or improvement of any building included in the Trust Estate or any new construction on any part of the Trust Estate, except in conformity with and subject to the limitations hereinafter in this Section 5.12 set forth. Unless an Event of Default shall have occurred and be continuing, the Mortgagor shall have the right at all times to make or permit such alterations, improvements or new constructions, structural or otherwise (herein sometimes called collectively "alterations"), of or on the Trust Estate, to be made in all cases subject to the conditions set forth in Section 5.12 of the Note Mortgage. Section 5.13. LEASES. The Mortgagor shall not: 47 (a) subject to the provisions of Section 5.13(d), enter into any Lease, or renew, modify, extend, terminate, or amend any Lease, except in the ordinary course of business of operating the Casino-Hotel; (b) receive or collect, or permit the receipt or collection of, any rental payments under any Lease more than one year in advance of the respective periods in respect of which they are to accrue, except that, in connection with the execution and delivery of any Lease or of any amendment to any Lease, rental payments thereunder may be collected and received in advance in an amount not in excess of three months' rent and/or a security deposit may be required thereunder in an amount not exceeding one year's rent; (c) collaterally assign, transfer or hypothecate (other than to the Mortgagee hereunder, to the mortgagee under the Note Mortgage or to the holder of any Working Capital Facility Lien) any rental payment under any Lease whether then due or to accrue in the future, the interest of the Mortgagor as landlord under any Lease or the rents, issues or profits of the Trust Estate; (d) after the date hereof, enter into any Lease, or renew any Lease unless such Lease contains terms to the effect as follows: (1) the Lease and the rights of the tenants thereunder shall be subject and subordinate to the rights of the Mortgagee under this Mortgage, the mortgagee under the Note Mortgage and the holders of any Superior Mortgage, (2) the Lease may be assigned by the landlord thereunder to the Mortgagee, (3) the rights and remedies of the tenant in respect of any obligations of the landlord thereunder shall be nonrecourse as to any assets of the landlord other than its equity in the building in which the leased premises are located or the proceeds thereof, (4) the rights of the tenant shall be subject and subordinate to the rights of the lessee under any new lease entered into in the event of a termination of a Ground Lease; 48 (e) modify any Lease with respect to the matters described in clauses (1) through (4) of paragraph (d). If the Mortgagor enters into a Lease (other than with any Affiliate of the Mortgagor) for a term of not less than 3 nor more than 10 years, the Mortgagee shall deliver a non-disturbance and attornment agreement substantially in the form of Schedule 4 hereto, following receipt of a certificate of a leasing broker (who is not an Affiliate of the Mortgagor or the broker involved in such transaction) experienced with respect to leases of commercial space in the Atlantic City area stating that the rent under the Lease is not less than fair market rent and that the other terms of the Lease are fair and reasonable in the commercial leasing market. The Mortgagor shall, upon demand, reimburse the Mortgagee for any costs and expenses (including reasonable attorney's fees) incurred by the Mortgagee in connection with the preparation, review and delivery of such non-disturbance and attornment agreements. Promptly after the execution and delivery hereof, the Mortgagor will cause the lessee under each Lease now in effect and promptly after each Lease is executed or becomes effective after the date of the execution and delivery hereof, the Mortgagor will cause the lessee under each such Lease, to be duly notified in writing (unless the substance and effect of such notice shall be contained in such Lease) of the subjection of the owner's interest, as lessor, in and to such Lease to the lien of this Mortgage and of the name and address of the Mortgagee. Each such notice shall state that the lease of such lessee is a Lease as herein defined. If a new Mortgagee is at any time appointed hereunder or the address of the Mortgagee shall at any time be changed, the Mortgagor will cause each lessee under each Lease to be promptly notified in writing of the name address of such new Mortgagee or the new address of the Mortgagee. The Mortgagor will use reasonable efforts (but shall not be obligated to incur any expenditure other than DE MINIMIS amounts) to obtain from each lessee under each Lease to whom any notice is sent pursuant to this paragraph an acknowledgment of receipt of such notice, and the Mortgagor will promptly deliver to the Mortgagee, upon request, a copy of each such acknowledgment of receipt which it is able to obtain. The Mortgagee shall not be responsible for securing or causing the Mortgagor to secure any such acknowledgment. Nothing contained in this Section 5.13 shall limit the provisions of Section 4.04 hereof. Section 5.14. [Reserved] 49 Section 5.15. MAINTENANCE OF EXISTENCE OF THE MORTGAGOR. Subject to Article Four, the Mortgagor will do or cause to be done all things necessary to preserve and keep in full force and effect its existence as a corporation, and its rights (both statutory and under its articles of incorporation) and franchises. Section 5.16. TO KEEP BOOKS; INSPECTION BY MORTGAGEE. The Mortgagor will keep proper books of record and account in accordance with Section 12.05 of the Indenture. Section 5.17. ADVANCES BY MORTGAGEE. If the Mortgagor shall fail to perform any of its covenants in this Mortgage and such failure shall continue for 10 days following notice thereof given by the Mortgagee (or at any time, without notice, in case of emergency), the Mortgagee may (but is not obligated to), at any time and from time to time, take any action or make advances, to effect performance of any such covenant on behalf of the Mortgagor; and all moneys so used or advanced by the Mortgagee and all reasonable costs and expenses incurred by Mortgagee in connection therewith, together with interest on all of the same at the rate of interest set forth in the Notes, shall be repaid by the Mortgagor upon demand and such advances shall be secured under this Mortgage prior to the Guaranty. Section 5.18. WAIVER OF STAY, EXTENSION OR USURY LAWS. The Mortgagor covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any usury, stay or extension law or any other law which would prohibit or forgive the Mortgagor from paying all or any portion of the obligations under the Guaranty as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may otherwise affect the covenants or the performance of this Mortgage; and the Mortgagor (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Mortgagee, but will suffer and permit the execution of every such power as though no such law had been enacted. Section 5.19. [Reserved] Section 5.20. EMINENT DOMAIN. The Mortgagor shall satisfy the provisions of Section 5.20 of the Note Mortgage upon obtaining knowledge of any Taking affecting the Trust Estate. Section 5.21. GROUND LEASES. 50 (a) The Mortgagor covenants and agrees that it will do or cause to be done all things necessary to preserve and keep unimpaired the rights of the Mortgagor, as lessee under the Ground Lease, and to prevent any termination, surrender, cancellation, forfeiture or impairment thereof. The Mortgagor shall at all times fully perform and comply with all agreements, covenants, terms and conditions imposed upon or assumed by it as lessee under each of the Ground Leases (including without limitation the covenant to pay rent and all taxes, assessments and other charges mentioned therein) prior to the expiration of any notice and/or cure period provided in each such Ground Lease. Upon receipt by the Mortgagee from a Lessor of any written notice of default by the lessee thereunder, Mortgagee may rely thereon and take any action the Mortgagee deems necessary in its sole discretion to prevent or to cure any default by the Mortgagor in the performance of or compliance with any of the agreements, covenants, terms or conditions imposed upon or assumed by the Mortgagor as lessee under each of the Ground Leases, even though the existence of such default or the nature thereof be questioned or denied by the Mortgagor or by any party on behalf of the Mortgagor, provided that if the Mortgagor has theretofore delivered to the Mortgagee the Officers' Certificate, Opinion of Counsel and a copy of the injunction, all as described in Section 3.01(g), the Mortgagee shall not take any such action unless and until the Mortgagor and/or the Mortgagee no longer has the benefit of any tolling or stay referred to in Section 3.01(g). Without limiting the generality of Section 3.09 hereof, the Mortgagor hereby expressly grants to the Mortgagee, and agrees that the Mortgagee shall have, the absolute and immediate right to enter in and upon the Premises or any part thereof to such extent and as often as the Mortgagee, in its sole discretion, deems necessary or desirable for the purpose permitted by the immediately preceding sentence, subject only to applicable Legal Requirements. Subject to the preceding and without limiting the Mortgagee's other remedies under this Mortgage, the Mortgagee may pay and expend such sums of money as the Mortgagee in its sole discretion deems necessary for any such purpose, and the Mortgagor hereby agrees to pay to the Mortgagee, immediately and without demand, all such sums so paid and expended by the Mortgagee, together with interest thereon from the date of each such payment at the highest rate of interest set forth in the Notes. All sums so paid and expended by the Mortgagee, and the interest thereon, shall be added to and be secured by the lien of this Mortgage. (b) The Mortgagor further covenants and agrees: (i) it will not surrender any leasehold estate and interest hereinabove described, nor terminate or cancel any Ground Lease, and that it will not without the express written consent of the Mortgagee modify, change, 51 Seq. 113 of 113 1/4/94 9:09 PM EX10_59I.DOC INITIAL FILING supplement, alter or amend such Ground Leases either orally or in writing and, as further security for the repayment of the indebtedness secured hereby and for the performance of the covenants herein and in such Ground Leases contained, the Mortgagor hereby assigns to the Mortgagee all of its rights, privileges and prerogatives as lessee under such Ground Leases to terminate, cancel, modify, change, supplement, alter or amend such Ground Leases, and any such termination, cancellation, modification, change, supplement, alteration or amendment of such Ground Leases without the prior written consent thereto by Mortgagee shall be void and of no force and effect. Unless (1) an Event of Default has occurred and is continuing and (2) either (A) there has been an acceleration of maturity of the Notes pursuant to Section 3.02 of the Note Mortgage or (B) the Mortgagee exercises its rights under Section 3.09 hereof, the Mortgagee shall have no right to terminate, cancel, modify, change, supplement, alter or amend the Ground Leases; (ii) solely for the benefit of the Mortgagee, Trustee, the Noteholders and no other person, no release or forbearance of any of the Mortgagor's obligations under such Ground Leases, pursuant to such Ground Leases or otherwise, shall release the Mortgagor from any of its obligations under this Mortgage, including its obligations with respect to the payment of rent as provided for in such Ground Leases and the performance of all of the terms, provisions, covenants, conditions and agreements contained in such Ground Leases, to be kept, performed and complied with by the lessee therein; (iii) unless the Mortgagee shall otherwise expressly consent in writing, the fee title to the Leased Land, the Mortgagor's interest in the improvements on the Leased Land and the leasehold estates shall not merge by and shall always remain separate and distinct, notwithstanding the union of such estates either in the Lessor or in the lessee, or in a third party by purchase or otherwise; (iv) the Mortgagor shall promptly notify the Mortgagee in writing of any request made by the Mortgagor, as lessee under each of the Ground Leases, or any of the Lessors, for arbitration proceedings pursuant to the Ground Leases and of the institution of any arbitration proceedings, as well as all proceedings thereunder. In addition, the Mortgagor shall promptly deliver to the Mortgagee a copy of the determination of the arbitrators in each such arbitration proceeding. The Mortgagee shall have the right to participate in such arbitration proceedings in association with the Mortgagor 52 or on its own behalf as an interested party in accordance with the terms of the Ground Leases; (v) the Mortgagor shall not consent to the subordination of any Ground Lease to any mortgage deed of trust or other lien of the fee interest of the Lessor; (vi) in the event (A) the Mortgagor exercises its option under any Ground Lease to purchase any portion of the Leased Land, the Mortgagor shall deliver a copy of its election to exercise such option within 5 days after the Mortgagor has delivered notice of such election to the Lessor or (B) the Mortgagor acquires fee simple title or any other estate, title or interest in the Leased Land, the Mortgagor shall promptly notify the Mortgagee of such acquisition and shall cause to be executed and recorded all such other and further assurances or other instruments in writing as may be required by law or, in the opinion of the Mortgagee, be reasonably desirable to carry out the intent and meaning of clause (x) of Granting Clause Second; (vii) within 5 days after the Mortgagor's receipt of any notice of any motion, application or effort to reject the Ground Lease by any Lessor or any trustee arising from or in connection with any case, proceeding or other action commenced or pending by or against any Lessor under the Code or any comparable provision contained in any present or future federal, state, local, foreign or other statute, law, rule or regulation, the Mortgagor shall give notice thereof to the Mortgagee. The Mortgagor hereby (A) assigns to the Mortgagee any and all of the Mortgagor's rights as lessee under Section 365(h) of the Code or any comparable provision contained in any present or future federal, state, local, foreign or other statute, law, rule or regulation ("Comparable Provision") and (B) covenants that it shall not elect to treat any Ground Lease as terminated pursuant to Section 365(h) of the Code or any Comparable Provision without the prior written consent of the Mortgagee and (C) agrees that any such election by the Mortgagor without such consent shall be null and void; (viii) without limiting the generality of the foregoing, the Mortgagor hereby unconditionally assigns, transfers and sets over to the Mortgagee all of the Mortgagor's claims and rights to the payment of damages arising from any rejection by Lessor of any Ground lease under the Code or any Comparable Provision. The Mortgagee shall have the right to proceed in its own name or in the name of the Mortgagor in respect of any claim, suit, action or proceeding relating to the rejection of 53 any Ground Lease, including, without limitation, the right to file and prosecute, in cooperation with the Mortgagor, any proofs of claim, complaints, motions, applications notices and other documents, in any case in respect of Lessor under the Code or any Comparable Provision. This assignment constitutes a present, irrevocable and unconditional assignment of the foregoing claims, rights and remedies, and shall continue in effect until all of the indebtedness and obligations secured by this Mortgage shall have been satisfied and discharged in full. Any amounts received by the Mortgagee in damages arising out of the rejection of any Ground Lease as aforesaid shall be applied first to all reasonable costs and expenses of the Mortgagee (including, without limitation, reasonable attorneys' fees) incurred in connection with the exercise of any of its rights or remedies under this Section 5.21, and thereafter as provided in Section 3.03 hereof; (ix) if there shall be filed by or against the Mortgagor a petition under the Code or any Comparable Provision and the Mortgagor, as lessee under the Ground Leases, shall determine to reject any or all of the Ground Leases the Mortgagor shall give the Mortgagee not less than 10 days' prior notice of the date on which the Mortgagor shall apply to the Bankruptcy Court or other judicial body with appropriate jurisdiction for authority to reject the lease. The Mortgagee shall have the right, but not the obligation, to serve upon the Mortgagor within such 10 day period a notice stating that (a) the Mortgagee demands that the Mortgagor assume and assign such Ground Lease(s) to the Mortgagee pursuant to Section 365 of the Code or any Comparable Provision and (b) the Mortgagee covenants to cure or provide adequate assurance of prompt cure of all defaults and provide adequate assurance of future performance under such Ground Lease(s). If the Mortgagee serves upon the Mortgagor the notice described in the preceding sentence, the Mortgagor shall not seek to reject such Ground Lease(s) and shall comply with the demand provided for in clause (a) of the preceding sentence within 30 days after the notice shall have been given subject to the performance by the Mortgagee of the covenant provided for in clause (b) of the preceding sentence. Effective upon the entry of an order for relief in respect of the Mortgagor under Chapter 7 of the Code or Any Comparable Provision the Mortgagor hereby assigns and transfers to the Mortgagee a non-exclusive right to apply to the Bankruptcy Court or other judicial body with appropriate jurisdiction for an order extending the period during which the Ground Lease may be rejected or assumed; 54 (x) the Mortgagor shall promptly give to the Mortgagee copies of (A) all notices of default or (B) any other communications or notices with respect to events which relate to the possible impairment of the security of this Mortgage, which it shall give or receive under the Ground Leases and shall promptly notify the Mortgagor of any default under any Ground lease on the part of the Lessor or the Mortgagor; (xi) the Mortgagor shall enforce the obligations of the Lessor under each Ground Lease, to the end that the Mortgagor may enjoy all of the rights granted to it under the Ground leases; and (xii) the Mortgagor shall notify the Mortgagee within 5 days after the transfer of a fee interest in the Leased Land or any portion thereof to or from an Affiliate. (c) The Mortgagor hereby represents and warrants that all fixed net rent, taxes and assessments, payable under the Ground Leases have been paid to the extent they were due and payable to the date hereof and that the Mortgagor has not received notice of its failure to pay any other amounts payable under the Ground Leases which have not been cured. (d) If both the Lessor's and lessee's estates under any of the Ground Leases or any portion thereof shall at any time become vested in one owner, this Mortgage and the lien created hereby shall nevertheless not be merged, extinguished, destroyed or terminated by application of the doctrine of merger and, in such event, Mortgagee shall continue to have all of the rights and privileges of the a leasehold mortgagee. (e) The Mortgagor hereby acknowledges that if any Ground Lease shall be terminated prior to the natural expiration of its term due to default by the lessee thereunder, and if pursuant to such Ground Lease, the Mortgagee or its designee shall acquire from the Lessor a new lease of the Leased land or any portion thereof, the Mortgagor shall have no right, title or interest in or to such lease or the leasehold estate created thereby, or the options therein contained. (f) Any leases for parking purposes hereafter entered into by the Mortgagor as lessee shall contain provisions permitting the assignment of the same to the Mortgagee and the Trustee and permitting assignment without the lessor's consent if this Mortgage is foreclosed. Section 5.22. SUPERIOR MORTGAGES. 55 (a) The Mortgagor covenants and agrees that it will at all times fully perform and comply with all agreements, covenants, terms and conditions imposed upon or assumed by it as mortgagor under the Superior Mortgages prior to the expiration of any notice and/or cure period provided in each such Superior Mortgage. If a notice of default has been given by the holder of any Superior Mortgage and the maturity of the indebtedness secured by such Superior Mortgage has been accelerated as a result thereof, the Mortgagee may rely thereon and take any action the Mortgagee deems necessary in its sole discretion to prevent or to cure any default by the Mortgagor in the performance of or compliance with any of the agreements, covenants, terms or conditions imposed upon or assumed by the Mortgagor as mortgagor under each of the Superior Mortgages even though the existence of such default or the nature thereof may be questioned or denied by the Mortgagor or by any party on behalf of the Mortgagor provided that if the Mortgagor has heretofore taken such actions as described in Section 3.01(h), the Mortgagee shall not take any such action unless and until the Mortgagor and/or the Mortgagee no longer has the benefit of any such tolling or stay referred to in Section 3.01(h). Without limiting the generality of Section 3.09 hereof, the Mortgagor hereby expressly grants to the Mortgagee, and agrees that upon such acceleration the Mortgagee shall have, the absolute and immediate right to enter in and upon the Premises or any part thereof to such extent and as often as the Mortgagee, in its sole discretion, deems necessary for the purpose permitted by the immediately preceding sentence, subject only to applicable Legal Requirements. The Mortgagee may (i) pay and expend such sums of money as the Mortgagee in its sole discretion deems necessary for any such purpose and (ii) in its sole discretion prepay any Superior Mortgage, and the Mortgagor hereby agrees to pay to the Mortgagee, immediately and without demand, all such sums referred to in (i) and (ii) above so paid and expended by the Mortgagee, together with interest thereon from the date of each such payment at the rate of interest set forth in the Note. All sums so paid and expended by the Mortgagee and the interest thereon shall be added to and be secured by the lien of this Mortgage. (b) The Mortgagor further covenants and agrees: (i) the Mortgagor shall not, without first satisfying the conditions set forth in Section 5.22(b)(i) of the Note Mortgage: (A) modify any of the terms, covenants or conditions of any Superior Mortgage, and without limiting the foregoing, the Mortgagor shall not, without satisfying such conditions, enter into or obtain any agreement whereby the holder of any Superior Mortgage waives, postpones, extends, reduces or modifies the payment of the installment of principal or interest or 56 any other item or amount now required to be paid under the terms of any Superior Mortgage or modifies any other provision thereof, or (B) acquire or permit or suffer any Affiliate of the Mortgagor to acquire any Superior Mortgage or any interest therein. Notwithstanding anything in clause (A) to the contrary, the Mortgagor shall have the right to amend, supplement or modify any Superior Mortgage, if (x) the then outstanding principal balance of the indebtedness secured by such Superior Mortgage is not increased thereby, and (y) in the case of any After-Acquired Fee Mortgage, such amendment, supplement or agreement does not increase the property covered thereby; (ii) the Mortgagor shall timely pay and perform all of the obligations to be paid or performed by the mortgagor under each Superior Mortgage, the note secured thereby and any other instrument evidencing or securing the indebtedness owing to any holder of any Superior Mortgage; (iii) at any time, and from time to time, the Mortgagor shall upon request of the Mortgagee promptly use its reasonable efforts to obtain an estoppel certificate or letter addressed to the Mortgagee from holders of the Superior Mortgages, such certificate or letter to be in such form as the Mortgagee shall request; and (iv) the Mortgagor shall promptly give to the Mortgagee copies of (A) all notices of default or (B) any other notice or communication with respect to events which relate to the possible impairment of the security of this Mortgage, which it shall give or receive under the Superior Mortgages and shall promptly notify the Mortgagor of any default under any Superior Mortgages on the part of the Mortgagor. (c) The lien of this Mortgage in and to all or specified portions of the Trust Estate shall be subject and subordinate to any Existing Encumbrances and any mortgage, assignment, security agreement, financing statement or other lien securing any Working Capital Facility (the "Working Capital Facility Lien") encumbering Mortgagor's interest in the affected portions of the Trust Estate or any part thereof. The foregoing provisions of this Section 5.22(c) shall be self-operative with respect to Existing Encumbrances and shall be self-operative with respect to any Working Capital Facility Lien, and no further instrument shall be required to give effect to such subordination. Mortgagee shall, however, from time to time, execute instruments in form 57 and substance reasonably satisfactory to the holder of the Working Capital Facility Lien, confirming such subordination and agreeing to such other matters reasonably required by the holder of the Working Capital Facility Lien which do not, in the aggregate, materially adversely reduce or impair the rights of Trustee under the Mortgage, and Mortgagor and others may rely conclusively thereon, provided that Mortgagee shall have no liability thereunder and all costs and expenses (including reasonable attorneys' fees) shall be paid by Mortgagor. (d) The lien of the Mortgage in and to all or specified portions of the Trust Estate shall be subject and subordinate to any Existing Encumbrances. The provisions of this Section 5.22(d) shall be self-operative, and no further instrument shall be required to give effect to such subordination. Section 5.23. MORTGAGE PARI PASSU WITH NOTE MORTGAGE. Notwithstanding recordation of this Mortgage in the Atlantic County, New Jersey Clerk's Office after the recordation of the Note Mortgage, the lien of this Mortgage ranks pari passu with, and not junior to, the lien created by the Note Mortgage. ARTICLE SIX MISCELLANEOUS Section 6.01. ACTION UNDER NOTE MORTGAGE. Mortgagee acknowledges that it is the assignee of the Note Mortgage, which Note Mortgage creates a lien upon the Trust Estate which is PARI PASSU with the lien of this Mortgage. Mortgagee further acknowledges and agrees that whenever it is provided in the Note Mortgage that the Mortgagor shall deliver any notice or document, or is required to make any payment thereunder, the delivery of such notice or document or the making of such payment pursuant to the terms of the Note Mortgage shall also constitute the delivery of such notice or document or the making of such payment in satisfaction of the terms, conditions and provisions of this Mortgage to the same extent as the same constitutes satisfaction of the terms, conditions and provisions of the Note Mortgage. Section 6.02. COUNTERPARTS. This instrument may be executed in any number of counterparts, each of which as executed shall be deemed to be an original, but all such counterparts shall constitute one and the same instrument. Section 6.03. MODIFICATION. This Mortgage is subject to "modification" within the meaning of N.J.S.A. 46:9- 58 8.1 ET SEQ., and this Mortgage shall have the benefit of the lien priority provisions of such statute. Such modification may include, without limitation, a change in the interest rate, maturity date or other terms and conditions of this Mortgage. THE MORTGAGOR DECLARES THAT THE MORTGAGOR HAS RECEIVED A TRUE COPY OF THIS MORTGAGE. IN WITNESS WHEREOF, the parties hereto have caused this Mortgage to be duly executed and attested, all as of the day and year first above written. RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation By:_____________________________ Name: Title: (Vice) President ATTEST:_________________________ Name: Title: (Asst.) Secretary STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION By:_____________________________ Name: Title: (Vice) President ATTEST:_________________________ Name: Title: (Asst.) Secretary 59 Exhibit F Mortgage Securing Guaranty of Mortgage Notes between Resorts International Hotel, Inc. and State Street Bank and Trust Company of Connecticut, National Association NA932230075 - GUARANTY MORTGAGE GD&C DRAFT DATED 12/17/93 MORTGAGE SECURING GUARANTY OF MORTGAGE NOTES by and between RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation, as Mortgagor, and STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION a national banking association, as Mortgagee Dated as of ________ __, 1994 Prepared by:_______________________ D. Eric Remensperger After recording return to: Gibson, Dunn & Crutcher 200 Park Avenue New York, New York 10166 Attention: D. Eric Remensperger MORTGAGE SECURING GUARANTY OF MORTGAGE NOTES ----------------- THIS MORTGAGE, dated as of ________ ___, 1994, between RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation ("Mortgagor"), and STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, a national banking association having an address at 750 Main Street, Suite 1114 Hartford, Connecticut 06103 ("Mortgagee"), in its capacity as Trustee under that certain Indenture dated as of even date herewith (the "Indenture") among Mortgagor, Mortgagee and Resorts International Hotel Financing, Inc. ("RIHF"). WITNESSETH: In consideration of $10.00 in hand paid by Mortgagee to Mortgagor and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in order to secure (i) the Guaranty by Mortgagor of the payments of principal and interest due on the 11% Mortgage Notes due 2003 in an aggregate principal amount of $125,000,000, issued pursuant to the provisions of the Indenture (defined therein, and hereinafter collectively referred to herein, as the "Notes"), in accordance with the terms and conditions of Article Fourth of the Indenture; and performance and observance of all of the provisions herein contained, Mortgagor has executed and delivered this Mortgage and has bargained, sold, aliened, mortgaged, pledged, released, conveyed and confirmed unto Mortgagee and its successors hereunder and assigns forever, all of its right, title and interest in, to and under any of the following described property: GRANTING CLAUSES GRANTING CLAUSE FIRST All the property, rights, title, interest, privileges and franchises particularly described in annexed Schedule 1 (the "Owned Land") which Schedule is hereby made a part of, and deemed to be described in, this Granting Clause as fully as if set forth in this Granting Clause at length. GRANTING CLAUSE SECOND All of the property, rights, title, interest, privileges and franchises of the Mortgagor as lessee in those certain leases (the "Ground Leases") particularly described in Schedule 2, which Schedule is hereby made a part of, and deemed to be described in, this Granting Clause as fully as if set forth in this Granting Clause at length, which Ground Leases cover the real property described in Schedule 2 (the "Leased Land") and in and to any and all modifications, extensions and renewals of the Ground Leases and all options set forth therein, together with (i) all credits, deposits, privileges and rights of the Mortgagor as lessee under the Ground Leases, now or at any time existing, (ii) the leaseholds and the leasehold estates created by the Ground Leases and (iii) all of the estates, rights, titles, claims or demands whatsoever of Mortgagor, either in law or in equity, in possession or in expectancy, of, in and to the Ground Leases and the Leased Land, together with (x) any and all other, further or additional title, estates, interests or rights which may at anytime be acquired by the Mortgagor in or to the Leased Land, and the Mortgagor expressly agrees that if the Mortgagor shall, at any time prior to payment in full of all indebtedness secured hereby, acquire fee simple title or any other greater estate to the Leased Land pursuant to the Ground Leases, or otherwise, the lien of this Mortgage shall attach, extend to, cover and be a lien upon such fee simple title or other greater estate and thereupon the lien of this Mortgage shall be prior to the lien of any mortgage or deed of trust placed on such acquired title, estate, interest or right subsequent to the date of this Mortgage and (y) any right to possession or statutory term of years derived from, or incident to, the Ground Leases pursuant to Section 365(h) of the U.S. Bankruptcy Code (the "Code") or any comparable provision contained in any present or future federal, state, local, foreign or other statute, law, rule or regulation. GRANTING CLAUSE THIRD All the rents, issues, profits, revenues and other income and proceeds of the property subjected or required to be subjected to the lien of this Mortgage, including, without limitation, the property described in Granting Clauses First, Second, and Sixth (such property is hereinafter collectively referred to as the "Premises") and all the estate, right, title and interest of every nature whatsoever of the Mortgagor in and to the same and every part thereof. The collective metes and bounds description of the Owned Land and the Leased Land is set forth in annexed Schedule 3. 2 GRANTING CLAUSE FOURTH All of the rights as lessor under Leases in effect on the date of execution of this Mortgage or hereafter entered into by the Mortgagor, if any, including extensions, renewals or amendments of all of the same, and the immediate and continuing right as security in accordance with an Assignment of Leases and Rents of even date herewith between Mortgagor and Mortgagee, and, after the occurrence of an Event of Default, to make claim for, collect, receive and receipt for (and to apply the same as provided herein) any and all rents, income, revenues, issues, profits, security and other sums of money payable or receivable thereunder or pursuant thereto, and all proceeds thereof, whether payable as rent, insurance proceeds, condemnation awards, security or otherwise and whether payable prior to or subsequent to the maturity date of the Notes, to receive and give notices and consents thereunder, to bring actions and proceedings thereunder or for the enforcement thereof, to make waivers and agreements, to take such action upon the happening of a default under any Lease, including the commencement, conduct and consummation of any proceedings at law or in equity as shall be permitted by any provision of any Lease, and to do any and all things which the Mortgagor or any lessor is or may become entitled to do under the Leases; provided, that the assignment made by this granting Clause Fourth shall not impair or diminish any obligation of the Mortgagor under the Leases, or shall any such obligation be imposed upon the Mortgagee. GRANTING CLAUSE FIFTH Without limiting the generality of the provisions of Granting Clause Third, the Mortgagor's rights, privileges and franchises in and to the following, to the extent of the Mortgagor's interest therein and thereto and to the extent assignable (collectively, "Operating Assets"): (a) bookings and receipts for the use of guest rooms, banquet facilities and meeting rooms at the Casino-Hotel; (b) all contracts respecting utility services for, and the maintenance, operations, or equipping of the Premises, including guaranties and warranties relating thereto; (c) the Permits; (d) all contract rights, leases, concessions, trademarks, trade names, service marks, service names, logos, copyrights, warranties and other items of 3 intangible personal property relating to the ownership or operation of the Casino-Hotel, including, without limitation, (1) telephone and other communication numbers, (2) all software licensing agreements as are required to operate computer software systems at the Casino-Hotel, all transferable proprietary interest in software required to operate the computer systems at the Casino Hotel and books and records relating to the software programs, and (3) lessee's interest under leases of Tangible Personal Property; (e) all agreements entered into by or on behalf of the Mortgagor or which have been assigned to the Mortgagor, for the design and construction, and for the equipping and furnishing, of the Casino-Hotel, including architect's agreements, engineering agreements, construction contracts, consulting agreements and agreements or purchase orders for all items of Tangible Personal Property and payment and performance bonds in favor of the Mortgagor in connection with the Trust Estate (and all warranties and guaranties thereunder and warranties and guaranties of any subcontractor and bond issued in connection with the work to be performed by any subcontractor); (f) the following personal property (the "Tangible Personal Property") now or hereafter acquired by the Mortgagor: (i) all furniture, furnishings, equipment, machinery, apparatus, appliances, fixtures and fittings and other articles of tangible personal property which are, or are to be located on, or used in connection with the operation of, the Casino-Hotel; (ii) all slot machines, electronic gaming devices, crap tables, blackjack tables, roulette tables, baccarat tables, and big six wheels, located or to be located in the Casino-Hotel, and all furnishings and equipment to be used in connection with the operation thereof; (iii) all cards, dice, gaming chips and placques, tokens, chip racks, dealing shoes, dice cups, dice sticks, layouts, paddles, roulette balls and other consumable supplies and items to be used in connection with the gaming operations of the Casino-Hotel; (iv) all china, glassware, linens, kitchen utensils, silverware and uniforms, whether 4 in use or held in reserve storage for future use, in connection with the operation of the Casino-Hotel, which are on hand or on order whether stored on-site or off-site; (v) all consumables and operating supplies of every kind and nature for use in all of the operating departments of the Casino-Hotel, or in the improvements now or hereafter located on any of the Owned Land, including without limitation, accounting supplies, guest supplies, forms, printing, stationery, food and beverage stock, bar supplies, laundry supplies and brochures to existing purchase orders; (vi) all sets and scenery, costumes, props and other items of tangible personal property on hand or on order for use in the production of shows in the showroom of the Casino-Hotel; and (vii) all cars, limousines, vans, buses, trucks and other vehicles owned or leased by the Mortgagor for use in Casino-Hotel operations, together with all equipment, parts and supplies used to service, repair, maintain and equip the foregoing; (g) all drawings, designs, plans and specifications prepared by the architects, interior designers, landscape designers and any other consultants for the development of the Premises, as amended from time to time; (h) any administrative and judicial proceedings initiated by the Mortgagor, or in which the Mortgagor has intervened, concerning the Casino-Hotel, and agreements, if any, which are the subject matter of such proceedings; (i) any customer lists utilized by the Mortgagor, including lists of transient guests and restaurant and bar patrons and "high roller" lists; and (j) all of the goodwill in connection with the operation of the Premises. The Mortgagor and Mortgagee acknowledge that notwithstanding anything contained in this Mortgage to the contrary, the Mortgagor may share facilities, operations and employees with any other hotel owned by any Affiliate of the Mortgagor provided that (i) such sharing of facilities is permitted by all applicable Legal Requirements, (ii) terms on 5 which such facilities are shared are not detrimental to the operations of the Casino-Hotel or the financial condition of the Mortgagor and (iii) the regular operation of the Casino-Hotel would not be materially impaired upon the separation of such facilities. The assignment made by this Granting Clause Fifth shall not impair or diminish any obligation of the Mortgagor with respect to the Operating Assets, nor shall any such obligation be imposed on the Mortgagee. GRANTING CLAUSE SIXTH (a) All of the Mortgagor's right, title and interest in and to all buildings and improvements of every kind and description now or hereafter erected or placed on the Owned Land and/or the Leased Land and all fixtures and articles of personal property now or hereafter attached to or contained in and used in connection with such buildings and improvements, including, but not limited to, all apparatus, furniture, furnishings, machinery, motors, elevators, fittings, radiators, cooking ranges, ice boxes, ice machines, printing presses, mirrors, bars, mechanical refrigerators, furnaces, coal and oil-burning apparatus, wall cabinets, machinery, generators, partitions, steam and hot water boilers, lighting and power plants, pipes, plumbing, radiators, sinks, bath tubs, water closets, gas and electrical fixtures, awnings, shades, screens, blinds, dishwashers, freezers, vacuum cleaning systems, office equipment and other furnishings, and all plumbing, heating, lighting, cooking, laundry, ventilating, incinerating, air-conditioning and sprinkler equipment or other fire prevention or extinguishing apparatus and material, and fixtures and appurtenances thereto; and all renewals or replacements thereof or articles in substitution therefor, whether or not the same are or shall be attached to the Owned Land, the Leased Land or to any such buildings and improvements thereon, in any manner; and (b) All of the Mortgagor's right, title and interest in and to (i) the Leased Land, if the Mortgagor acquires the fee simple title to the Leased Land or any part thereof (subject to the provisions of Section 2.06 hereof), (ii) all air rights and rights to maintain supporting columns 6 and all rights to construct and maintain bridges, and to create private rights of way over streets now or hereafter owned or enjoyed by the Mortgagor and appurtenant to the Owned Land or Leased Land, and (iii) all right, title and interest of Mortgagor as grantee or licensee in and to the following to the extent necessary for the use and enjoyment of the Owned Land or the Leased Land: (A) all those plots, pieces or parcels of land and air rights, more particularly described on Schedule 5, attached hereto and made a part hereof (the "Bridge Easement Parcels"), with respect to which Mortgagor has easements, licenses or other rights of possession or use pursuant to these certain easement and license agreements more particularly described on Schedule 5 (the "Bridge Easements"), (B) all those plots, pieces or parcels of land and air rights, more particularly described on Schedule 6 attached hereto and made a part hereof (the "Elevator Easement Parcels"), with respect to which Mortgagor has easements, licenses or other rights of possession or use pursuant to those certain license agreements more particularly described on Schedule 6 (the "Elevator Easements"), and; (C) all that plot, piece or parcel of land and air rights more particularly described on Schedule 7 attached hereto and made a part hereof (the "Turn-Around Easement Parcel") with respect to which Mortgagor has easements, licenses, or other rights of possession or use pursuant to that certain easement more particularly described on Schedule 7 (the "Turn-Around Easement"), (the Bridge Easement Parcels, the Elevator Easement Parcels and the Turn-Around Easement Parcel are collectively referred to herein as the "Easement Parcels"; and the Bridge Easements, the Elevator Easements and the Turn-Around Easement are collectively referred to as the "Easements"), together with all rights of way, privileges, liberties, tenements, hereditaments and appurtenances belonging or in any way appertaining to such estates, it being the intention hereof that all property, interests, rights and privileges and franchises pertaining to the Premises (other than Excepted Property) shall be as fully embraced within and subjected to the lien hereof as if such property were specifically described herein. To the extent the grant of a security interest in any portion of the Trust Estate is governed by the Uniform Commercial Code, this Mortgage is hereby deemed to be as well a security agreement under the Uniform Commercial Code for the purpose of creating hereby a security interest in all of the Mortgagor's right, title and interest in and to such property, securing the obligations secured hereby, for the benefit of the Mortgagee. * * * TOGETHER with all of the Mortgagor's right, title and interest in and to all mineral and water rights and any title or reversion, in and to the beds of the ways, streets, avenues and alleys adjoining the Premises to the center line thereof and in and to all strips, gaps and gores adjoining the premises on all sides thereof; and TOGETHER with all of the Mortgagor's right, title and interest to and singular the tenements, hereditaments, easements, appurtenances, passages, water courses, riparian rights, other rights, liberties and privileges thereof or in 7 any way appertaining to the Premises, including any other claim at law or in equity as well as any after-acquired title, franchise or license and the reversion and reversions and remainder and remainders thereof; and TOGETHER with all awards and other compensation heretofore or hereafter to be made to the present and all subsequent owners of the Trust Estate for any taking by eminent domain, either permanent or temporary, of all or any part of the Trust Estate or any easement or appurtenances thereof, including severance and consequential damage and change in grade of streets, all in accordance with and subject to the provisions of the Superior Instrument Requirements and Section 5.20; and TOGETHER with all proceeds of any unearned premiums on any insurance policies described in Section 5.11, and the right to receive and apply the proceeds of any insurance, judgments, or settlements made in lieu thereof, for damage to the Trust Estate or otherwise, all in accordance with and subject to the provisions of Section 5.11 and the Superior Instrument Requirements. EXCLUDING, with respect to all of the hereinabove granted property, rights, title, interest, privileges and franchises, the Excepted Property. TO HAVE AND TO HOLD all the Premises, Leases, Ground Leases, Operating Assets, Easements, properties, options, credits, deposits, rights, privileges and franchises of every kind and description, real, personal or mixed, granted hereby, bargained, sold, aliened, assigned, transferred, hypothecated, pledged, released, conveyed, mortgaged, or confirmed as aforesaid, or intended, agreed or covenanted so to be, together with all the appurtenances thereto appertaining (the Premises, Leases, Ground Leases, Operating Assets, Easements, properties, options, credits, deposits, rights, privileges and franchises, being herein collectively called the "Trust Estate") unto the Mortgagee and its successors and assigns forever. SUBJECT, HOWEVER, on the date hereof, to Existing Encumbrances and, after the date hereof, to Permitted Encumbrances. SUBJECT, FURTHER, to the rights and obligations of the Mortgagee and the Noteholder as set forth in that certain Intercreditor Agreement dated as of the date hereof among RIH, RIHF, Mortgagee, Fidelity Management and Trust Company ("Fidelity"), as trustee under that certain note purchase agreement dated as of the date hereof among Fidelity, RIH and RIHF, and 8 U.S. Trust Company of California, N.A. ("U.S. Trust"), as trustee under that certain indenture dated as of the date hereof among U.S. Trust, RIH and RIHF (and such other parties that may from time to time become a party thereto). BUT IN TRUST, NEVERTHELESS, for the Ratable Benefit and security of the Noteholders without any priority of any of the Notes over any other of the Notes. UPON CONDITION that, until the happening of an Event of Default and subject to the provisions of Article Two, the Mortgagor shall be permitted to possess and use the Trust Estate, and to receive and use the rents, issues, profits, revenues and other income of the Trust Estate. AND IT IS HEREBY COVENANTED AND DECLARED that the Trust Estate is to be held and applied by the Mortgagee, subject to the further covenants, conditions and trusts hereinafter set forth, and the Mortgagor does hereby covenant and agree to and with the Mortgagee, for the Ratable Benefit of the Noteholders as follows: ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION Section 1.01. DEFINITIONS. For all purposes of this Mortgage, except as otherwise expressly provided or unless the context otherwise requires: (a) the terms defined in this Article One have the meanings assigned to them in this Article One and include the plural as well as the singular; (b) all accounting terms not otherwise defined herein have the meanings assigned to them, and all computations herein provided for shall be made in accordance with generally accepted accounting principles consistently applied; and (c) the words "herein," "hereof" and "hereunder" and other words of similar import refer to this Mortgage as a whole and not to any particular Article, Section or other subdivision. "AFFILIATE" has the meaning set forth in Section 1.01 of the Indenture. 9 "AFTER-ACQUIRED FEE MORTGAGE" has the meaning set forth in Section 2.07. "ALTERATIONS" has the meaning set forth in Section 5.12. "APPRAISER" means an MAI appraiser (i.e., a Member in good standing of the American Institute of Real Estate Appraisers) who is (i) of recognized standing among appraisers of properties similar to the Casino-Hotel and (ii) experienced in the appraisals of properties of a similar size and scope to that of the Casino-Hotel, selected by the Mortgagor. "ASSIGNMENT OF LEASES AND RENTS" has the meaning stated in Section 1.01 of the Indenture. "CAPITALIZED LEASE OBLIGATION" has the meaning stated in Section 1.01 of the Indenture. "CASINO" means that portion of the Casino-Hotel used for gaming and related activities. "CASINO-HOTEL" means the casino and hotel complex and ancillary structures and facilities located on the Premises and furniture, fixtures and equipment at any time contained therein. "CASUALTY" means any act or occurrence of any kind or nature which results in damage, loss or destruction to any buildings or improvements on the Premises and/or Tangible Personal Property. "CODE" has the meaning stated in Granting Clause Second. "COMBINATION TRANSACTION" has the meaning stated in Section 10.01 of the Indenture. "DEFAULT" means the occurrence and continuance of an Event of Default or an event which, after notice or lapse of time or both, would become an Event of Default. "DEPOSITARY" means an Independent entity to which insurance proceeds or a condemnation award is paid to be held in trust for restoration pursuant to the provisions of a Ground Lease or Superior Mortgage. "EVENT OF DEFAULT" has the meaning stated in Section 3.01. An Event of Default shall "exist" if an Event of Default shall have occurred and be continuing. "EXCEPTED PROPERTY" means: 10 (1) subject to the provisions of the Assignment of Leases and Rents, any cash held by the Mortgagor from rents, issues, profits, revenues and other proceeds of the Trust Estate to the extent that such cash may be, but has not been, distributed or paid out in accordance with the Services Agreement or in accordance with the provisions of Section 12.07 the Indenture; (2) all personal property owned by lessees under Leases and the personal property of any guests staying in the Hotel; (3) any property deemed to be Excepted Property pursuant to the provisions of Section 2.03 hereof; (4) Tangible Personal Property subject to an FF&E Financing Agreement; and (5) counterchecks and any other property the granting of a security interest in which is prohibited by the New Jersey Casino Control Act, N.J.S.A. 5:12-1 ET SEQ., and the regulations promulgated thereunder. "EXISTING ENCUMBRANCES" means the matters set forth in Schedule 8. "FIRST MORTGAGE DEBT" means any financing secured by a Superior Mortgage secured by or imposing a lien on all or a portion of the Trust Estate on a parity with or senior to the lien of this Mortgage. "FF&E FINANCING AGREEMENT" means a purchase money lien upon any Tangible Personal Property and other items constituting Operating Assets, such as computer software, which are financed, purchased or leased by the Mortgagor, provided that, except as set forth on Schedule 3, the principal amount of the indebtedness secured by such lien shall not exceed eighty-five (85%) percent of the cost to the Mortgagor of such property at the time of acquisition. "GROUND LEASES" has the meaning stated in Granting Clause Second. "GUARANTY" has the meaning set forth in Article Fourteen of the Indenture. "HOTEL" means that portion of the Casino-Hotel not included within the Casino. "IMPOSITIONS" has the meaning stated in Section 5.08. 11 "INDENTURE" means that certain Indenture - 11% Mortgage Notes due 2003, dated as of even date herewith among the Mortgagor, RIHF, as issuer, and Mortgagee, as trustee, as it may from time to time be supplemented, modified or amended by one or more trust indentures or other instruments supplemental thereto entered into pursuant to the applicable provisions thereof. "INDEPENDENT" when used with respect to any specified Person means such a Person who (a) is in fact independent, (b) does not have any direct financial interest or any material indirect financial interest in the Mortgagor or in any other obligor upon the Notes or in any Affiliate of the Mortgagor or of such other obligor and (c) is not connected with the Mortgagor or such other obligor or any Affiliate of the Mortgagor or such other obligor as an officer, employee, promoter, underwriter, trustee, partner, director or person performing similar functions. Whenever it is herein provided that any Independent Person's opinion or certificate shall be furnished to the Mortgagee, such opinion or certificate shall state that the signer has read this definition and that the signer is Independent within the meaning thereof. A Person who is performing or who has performed services as an independent contractor to any specified Person shall not be considered not Independent merely by reason of the fact that such Person is or has performed such services. "INSURANCE AMOUNT" has the meaning stated in Section 5.11(a)(1). "INSURANCE REQUIREMENTS" means all terms of any insurance policy covering or applicable to the Trust Estate or any part thereof, all requirements of the issuer of any such policy, and all orders, rules, regulations and other requirements of the National Board of Fire Underwriters (or any other body exercising similar functions) applicable to or affecting the Trust Estate or any part thereof or any use or condition of the Trust Estate or any other part thereof. "INSURANCE TRUSTEE" means the Trustee or, if the Trustee so elects, any bank, trust company or insurance company with net worth in excess of $100,000,000, designated by the Trustee. "INSURER" means an insurance company or companies selected by the Mortgagor authorized to issue insurance in the State of New Jersey with an A.M. Best rating as high or higher than the rating of insurance companies insuring other casino-hotels in Atlantic City, New Jersey. 12 "LEASE" means each lease or sublease demising all or any portion of the Owned Land, the Leased Land or the buildings or improvements thereon and made by the Mortgagor as lessor or sublessor, as the case may be, or any spaces in any building or buildings which constitute a part of the Trust Estate, including every agreement relating thereto or entered into in connection therewith and every guaranty of the performance and observance of the covenants, conditions and agreements to be performed by the lessee under any such lease. Notwithstanding the foregoing, the term "Lease" shall not include any transient room rentals. "LEASED LAND" has the meaning stated in Granting Clause Second. "LEGAL REQUIREMENTS" means all laws, statutes, codes, acts, ordinances, orders, judgments, decrees, injunctions, rules, regulations, permits, licenses, authorizations, directions and requirements (including, without limitation, the New Jersey Environment Cleanup Responsibility Act and the New Jersey Spill Compensation and Control Act of 1976) of all governments, departments, commissions, boards, courts, authorities, agencies, officials and officers, of governments, federal, state and municipal (including, without limitation, the New Jersey Department of Environmental Protection, the Atlantic City Bureau of Investigations, Division of Protection, the Atlantic City Bureau of Investigations, Division of Gaming Enforcement of the State of New Jersey, and the Casino Control Commission of the State of New Jersey), foreseen or unforeseen, ordinary or extraordinary, which now is or at any time hereafter becomes applicable to the Trust Estate or any part thereof, or any of the adjoining sidewalks, or the use of the Casino-Hotel as a gaming or gambling facility or any other use or condition of the Trust Estate or any part thereof. "LESSORS" means the lessors under the Ground Leases. "MATURITY" when used with respect to the Notes means the date on which the principal of such Notes becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration or prepayment or otherwise. "MORTGAGE DOCUMENTS" has the meaning set forth in Section 1.01 of the Indenture. "MORTGAGOR" means the Person named as the "Mortgagor" in the first paragraph of this instrument until a successor entity shall have become such pursuant to the applicable provisions of this Mortgage, and thereafter, except 13 to the extent otherwise contemplated by Section 4.02, "Mortgagor" shall mean such successor entity exclusively. "NOTEHOLDERS" has the meaning set forth in Section 1.01 of the Indenture. "NOTE MORTGAGE" means that certain Mortgage Securing RIH Promissory Note dated as of the date hereof from Mortgagor to RIHF, which secures the RIH Promissory Note (as defined in the Indenture), the lien of which shall be PARI PASSU with the lien of this Mortgage. "NOTES" has the meaning set forth in the Preamble. "NOTICES" has the meaning stated in Section 1.02. "OFFICERS' CERTIFICATE" means a certificate signed by an officer of the Mortgagor and delivered to the Mortgagee. Whenever this Mortgage requires that an Officers' Certificate be signed also by an Architect or an Accountant or other expert, such Architect, Accountant or other expert may (except as otherwise expressly provided in this Mortgage) be in the general employ of the Mortgagor. "OPERATING ASSETS" has the meaning stated in Granting Clause Fifth. "OPINION OF COUNSEL" means a written opinion of counsel who may (except as otherwise expressly provided in this Mortgage) be an employee of the Mortgagor or an employee of an Affiliate of the Mortgagor. Unless otherwise specifically provided in this Mortgage, such counsel may rely, as to any state of facts not personally known to such counsel and relating to such opinions, on an Officers' Certificate to the extent not rejected by the Trustee and its counsel (which rejection shall not be unreasonably given). "ORIGINAL POLICY" means an ALTA Loan Policies of Title issued by [list title insurance companies], pursuant to Title Commitment No. ____________ redated to the date hereof. "OUTSTANDING AMOUNT" has the meaning stated in Section 1.01 of the Indenture. "OWNED LAND" has the meaning stated in Granting Clause First. "PERMITS" means all licenses, franchises, statements of compliance, certificates of operation, certificates of occupancy and permits required for the lawful ownership, occupancy, operation and use of all or a material portion of the Premises whether held by the Mortgagor or any other Person 14 (which may be temporary or permanent) (including, without limitation, those required for the use of the Casino-Hotel as a licensed casino facility), in accordance with all applicable Legal Requirements. "PERMITTED ENCUMBRANCES" means: (1) liens for taxes, assessments, or governmental charges not yet due and payable or if due and payable are not delinquent to the extent that any fine, penalty, interest or cost may be added for nonpayment thereof; (2) Existing Encumbrances; (3) FF&E Financing Agreements; (4) After-Acquired Fee Mortgages; (5) the lien of the Mortgage Documents and any rights granted as provided therein; (6) Restricted Encumbrances; (7) the lien of the Trustee provided for by Section 8.07 of the Indenture; (8) any Working Capital Facility Lien; and (9) Capitalized Lease Obligations. "PERSON" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or any other entity or government or any agency or political subdivision thereof. "PREMISES" has the meaning set forth in Granting Clause Third. "RATABLE BENEFIT" has the meaning stated in Section 1.01 of the Indenture. "RELEASED LAND" has the meaning stated in Section 2.05. "RELEASED FEE LAND" has the meaning stated in Section 2.06. "RESTORATION" has the meaning stated in Section 5.11(e). "RESTRICTED ENCUMBRANCES" means Leases permitted by and made in accordance with Section 5.13 of this Mortgage. 15 "RIHF" shall mean Resorts International Hotel Financing, Inc., a Delaware corporation. "SERVICES AGREEMENT" has the meaning set forth in Section 1.01 of the Indenture. "STATED MATURITY" when used with respect to a note means the date specified in such note as the fixed date on which the principal of such note is due and payable. "SUPERIOR INSTRUMENT REQUIREMENTS" means the applicable terms, conditions and provisions of (i) the Ground Leases with respect to the Leased Land; and (ii) Superior Mortgages with respect to the portion of the Trust Estate encumbered thereby. "SUPERIOR MORTGAGES" means, collectively, any Working Capital Facility Lien and any After-Acquired Fee Mortgages. "TAKING" means the acquisition or condemnation by eminent domain of the whole or any part of the Premises, by a competent authority, for any public or quasi-public use or purpose. "TANGIBLE PERSONAL PROPERTY" has the meaning stated in Granting Clause Fifth. "TRUSTEE" means the Person named as the "Trustee" in the first paragraph of the Indenture and any successor thereto. "TRUST ESTATE" has the meaning stated in the habendum to the Granting Clauses. "TRUST INDENTURE ACT" has the meaning stated in Section 1.01 of the Indenture. "WORKING CAPITAL FACILITY" has the meaning stated in Section 1.01 of the Indenture. "WORKING CAPITAL FACILITY LIEN" has the meaning stated in Section 5.22(c) of this Mortgage. Section 1.02. NOTICES, ETC. (a) Any request, demand, authorization, direction, notice (including, without limitation, a notice of default), consent, waiver or other document provided or permitted by this Mortgage to be made upon, given or furnished to, or filed with, the Mortgagor or the Mortgagee (collectively, "Notices") shall be deemed given when either (i) delivered by hand or 16 (ii) two days after sending by registered or certified mail, postage prepaid, addressed as follows: To the Mortgagor: Resorts International Hotel, Inc. c/o Resorts International, Inc. 1133 Boardwalk Atlantic City, New Jersey 08401 Attention: Christopher D. Whitney If to Mortgagee: State Street Bank and Trust Company of Connecticut, National Association 750 Main Street, Suite 1114 Hartford, Connecticut Attention: Corporate Trust Department (b) By Notice to the Mortgagor, the Mortgagee and the Trustee, any party may designate additional or substitute address for Notices which, notwithstanding Subsection (a) above, shall be deemed given when received. Section 1.03. FORM AND CONTENT OF DOCUMENTS DELIVERED TO MORTGAGEE. Whenever 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 such matters in one or several documents. Any certificate or opinion of an Officer of the Mortgagor may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such Officer knows that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any 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 Mortgagor stating that the information with respect to such factual matters is in the possession of the Mortgagor, unless such counsel knows that the certificate or opinion or representations with respect to such matters are erroneous. If appropriate to the matter being opined upon and to the extent not prohibited by the Trust Indenture Act, any Opinion of Counsel may be subject to rights of creditors and the availability of equitable remedies. 17 Whenever any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Mortgage, they may, but need not, be consolidated and form one instrument. Whenever in this Mortgage, in connection with any application or certificate or report to the Mortgagee, it is provided that the Mortgagor shall deliver any document as a condition of the granting of such application, or as evidence of the Mortgagor's compliance with any term hereof, it is intended that the truth and accuracy, at the time of the granting of such application or at the effective date of such certificate or report (as the case may be), of the facts and opinions stated in such document shall in such case be conditions precedent to the right of the Mortgagor to have such application granted or to the sufficiency of such certificate or report. Section 1.04. COMPLIANCE CERTIFICATES AND OPINIONS. Upon any application or request by the Mortgagor to the Mortgagee to take any action under any provision of this Mortgage, the Mortgagor shall furnish to the Mortgagee an Officers' Certificate stating that all conditions precedent, if any, provided for in this Mortgage 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 Mortgage 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 Mortgage shall include: (a) a statement that each individual signing such certificate or opinion has read such condition or covenant and the definitions herein relating thereto; (b) 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; (c) 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 condition or covenant has been complied with; and 18 (d) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. Section 1.05. EFFECT OF HEADINGS. The Article and Section headings herein are for convenience only and shall not affect the construction hereof. Section 1.06. SUCCESSORS AND ASSIGNS; AMENDMENTS. (a) Subject to Section 4.02 hereof and Section 10.02 of the Indenture, this Mortgage shall be binding upon and inure to the benefit of the parties hereto and of the respective successors and assigns of the parties hereto to the same effect as if each such successor or assign were in each case named as a party to this Mortgage. (b) This Mortgage may not be modified, amended, discharged, released nor any of its provisions waived except by agreement in writing executed by the Mortgagor and the Mortgagee and in accordance with the provisions of this Mortgage and the Indenture. Section 1.07. SEPARABILITY CLAUSE. In case any provision in this Mortgage 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 1.08. BENEFITS OF MORTGAGE. Nothing in this Mortgage or in the Guaranty, express or implied, shall give to any Person, other than the parties hereto and their successors and assigns, any benefit or any legal or equitable right, remedy or claim under this Mortgage. Section 1.09. GOVERNING LAW. This Mortgage shall be deemed to be a contract under the laws of the State of New Jersey and shall be construed in accordance with and governed by the laws of the State of New Jersey. Section 1.10. [Reserved] Section 1.11. PROVISIONS REQUIRED BY INDENTURE. Whenever the provisions of this Mortgage and the provisions of the Indenture shall be inconsistent, the provisions of the Indenture shall govern. Section 1.12. RIGHTS OF THE TRUSTEE. So long as the Trustee is the Mortgagee hereunder, except as otherwise provided in Section 8.01 of the Indenture: (a) the Mortgagee 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, coupon or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) whenever in the administration of this Mortgage the Mortgagee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Mortgagee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate; (c) the Mortgagee 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 the Mortgagee hereunder in good faith and in reliance thereon; (d) the Mortgagee shall be under no obligation to exercise any of the rights or powers vested in it by this Mortgage at the request or direction of any Noteholder pursuant to the Indenture, unless such holder shall have offered to the Mortgagee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (e) the Mortgagee 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, or other paper or document but the Mortgagee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Mortgagee shall determine to make such further inquiry or investigation, it shall be entitled (subject to the express limitations with respect thereto contained in this Mortgage) to examine the books, records and premises of the Mortgagor, personally or by agent or attorney; (f) the Mortgagee may execute any of the trusts or power hereunder or perform any duties hereunder either directly or by or through agents or attorneys, and the Mortgagee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder; (g) the Mortgagee shall not be personally liable, in case of entry by it upon the Trust Estate, for debts contracted or liabilities or damages incurred in the management or operation of the Trust Estate; and (h) no provision of this Mortgage shall require the Mortgagee to expend or risk its own funds or otherwise incur any financial liability in the performance of its obligations hereunder, or in the exercise 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. Section 1.13. MORTGAGE SUBJECT TO THE PROVISIONS OF THE ACT. Each provision of this Mortgage is 19 subject to and shall be enforced in compliance with the provisions of the New Jersey Casino Control Act. This Mortgage shall not be transferred, assigned or amended without prior approval of the New Jersey Casino Control Commission. Section 1.14. DISCHARGE OF LIEN. If the Mortgagor shall pay or cause to be paid, or there shall otherwise be paid, to the Mortgagee all amounts required to be paid by the Mortgagor pursuant to the Guaranty, or the Note Mortgage and the Notes, and the conditions precedent for the Indenture to cease, determine and become null and void in accordance with Section 5.01 of the Indenture shall have occurred, the Mortgagee shall promptly cancel and discharge this Mortgage, and execute and deliver to the Mortgagor all such instruments as may be necessary, required or appropriate to evidence such discharge and satisfaction of such lien or liens. Section 1.15. GENERAL APPLICATION. (a) The assertion of any rights upon any Default shall be subject in each instance to the giving of any notice and the expiration of any grace period provided for in Section 3.01 as a condition to such Default making it an Event of Default, unless the Trust Indenture Act requires otherwise, in which case the Trust Indenture Act shall control. (b) For the purposes of this Mortgage, it is understood that an event which does not materially diminish the value of the Mortgagee's interest in the Trust Estate shall not be deemed an "impairment of security", as that phrase is used in this Mortgage. ARTICLE TWO RELEASE; OTHER EXCEPTED PROPERTY; SUBORDINATION Section 2.01. POSSESSION BY MORTGAGOR; DISPOSITIONS WITHOUT RELEASE. So long as there shall have been no demand for payment under the Guaranty pursuant to Section 3.02 of this Mortgage, the Mortgagor shall be suffered and permitted, with power freely and without let or hindrance on the part of the Mortgagee, subject to the provisions of this Mortgage and the Note Mortgage, to possess, use, manage, operate and enjoy the Trust Estate and every part thereof and to collect, receive, use, invest and dispose of the rents, issues, tolls, profits, revenues and other income from the Trust Estate or any part hereof, to use, consume and dispose of any consumables, goods, wares and merchandise in the ordinary course of business of operating the Casino-Hotel and to adjust and settle all matters relating to choses in action, leases and contracts. 20 Section 2.02. OBSOLETE PROPERTY; TANGIBLE PERSONAL PROPERTY; LEASE MODIFICATIONS. The Mortgagor shall have the right, at any time and from time to time, unless an Event of Default shall have occurred and be continuing, without any release from or consent by the Mortgagee: (a) to sell or dispose of, free from the lien of this Mortgage, any Tangible Personal Property which, in its reasonable opinion, may have become obsolete or unfit for use or which is no longer necessary in the conduct of its businesses or the operation of the Trust Estate, and no purchaser of any such property shall be bound to inquire into any question affecting the Mortgagor's right to sell or otherwise dispose of the same, free from the lien of this Mortgage; (b) to alter, repair, replace, change the location (provided notice shall be given to Mortgagee as to any new location) or position of and add to any Tangible Personal Property; provided, however, that no change shall be made in the location of any such property subject to the lien of this Mortgage which would in any respect impair the security of this Mortgage upon such property; or (c) to renew, extend, surrender, terminate, modify or amend any leases of Tangible Personal Property, when, in the Mortgagor's reasonable opinion, it is prudent to do so. The Mortgagor shall retain any net cash proceeds (subject to the right to pay dividends or make cash distributions pursuant to Section 12.07 of the Indenture) received from the sale or disposition of any Tangible Personal Property under Subsection (a) of this Section 2.02, in the business of operating the Casino-Hotel. The Mortgagee shall be under no responsibility or duty with respect to the exercise of the rights of the Mortgagor under this Section 2.02 or the application of the proceeds of any sale or disposition of any Tangible Personal Property. Section 2.03. OTHER EXCEPTED PROPERTY. Notwithstanding any provisions contained in this Mortgage or 21 the Indenture to the contrary, including, without limitation, the provisions of Granting Clauses Fifth and Sixth and of Articles Two and Five hereof, if the Mortgagor acquires Tangible Personal Property and other items constituting operating assets, such as computer software subject to any FF&E Financing Agreement, or becomes the lessee under a lease for any of the same and if the document evidencing such FF&E Financing Agreement prohibits subordinate liens or the provisions of any such lease prohibits any assignment thereof by the lessee, and if any such prohibition is customary with respect to similar transactions of the lender or lessor, as the case may be, then the property so purchased or the lessee's interest in the lease, as the case may be, shall be deemed to be Excepted Property. If any such FF&E Financing Agreement permits subordinate liens then the Mortgagee agrees to execute and deliver to the Mortgagor, at the Mortgagor's expense, such documents as the holder of such FF&E Financing Agreement may reasonably request to evidence the subordination of the lien of this Mortgage to the lien of such FF&E Financing Agreement. Section 2.04. [Reserved] Section 2.05. RELEASED LAND. (a) Notwithstanding anything to the contrary herein contained, the Mortgagor shall have the right, at any time and from time to time, unless an Event of Default shall have occurred and be continuing, to convey all or any part of the Released Fee Land (the land to be so conveyed is hereinafter referred to as the "Released Land"), free from the lien of the Mortgage, provided that the conditions set forth in Section 2.05(a) of the Note Mortgage have been satisfied. (b) The Mortgagee shall, from time to time, promptly execute any written instrument in form reasonably satisfactory to the prospective purchaser to confirm the release of the Released Fee Land, upon receipt by the Mortgagee of an Officers' Certificate stating that the Mortgagor is entitled to such release by virtue of the Mortgagor's compliance with this Section 2.05 and, if applicable, Section 2.05 of the Note Mortgage, PROVIDED, that the Mortgagee shall have no liability thereunder and all costs and expenses (including reasonable attorneys' fees) shall be paid by the Mortgagor. Section 2.06. RELEASED FEE LAND. (a) Notwithstanding anything to the contrary herein contained, in the event the Mortgagor intends to exercise an option to acquire fee title to Leased Land under the provisions of any Ground Lease, the Mortgagor shall have the right, unless an Event of Default shall have occurred and be 22 continuing, to have an Affiliate exercise such options(s) or for the Mortgagor to exercise such options(s) on behalf of an Affiliate and in connection therewith to cause fee simple title to the Leased Land or any part thereof to be conveyed to an Affiliate of the Mortgagor (provided that no portion of the purchase price of the Leased Land or part thereof is paid by Mortgagor), free from the lien of this Mortgage (the land to be so conveyed is hereinafter referred to as the "Released Fee Land"), provided that the Mortgagor furnishes the Mortgagee with the following: (i) an Officers' Certificate requesting the release of the Released Fee Land from the Trust Estate and stating that (A) the Mortgagor is not required to own the Released Fee Land in order to maintain all Permits and in order to comply with the provisions of all material contracts to which the Mortgagor is a party or by which the Mortgagor is bound, (B) such Affiliate has received all Permits necessary to own the Released Fee Land (including without limitation all approvals required by the Casino Control Commission of the State of New Jersey), (C) there has been delivered to the Mortgagor and the Mortgagee a true copy of an instrument executed by such Affiliate stating that (i) such Affiliate may only engage in the activity of owning the Released Fee Land and (ii) such Affiliate shall not convey the Released Fee Land to another Affiliate of the Mortgagor, unless such other Affiliate executes and delivers to the Mortgagor and the Mortgagee, the instruments that would have been required to be delivered pursuant to clause (C) if the Mortgagor conveyed the Released Fee Land to such other Affiliate (provided that this restriction shall only be effective until such time as this Mortgage shall be satisfied of record) and (D) the deed conveying the Released Fee Land to such Affiliate shall state that such conveyance is made subject to the terms, provisions and conditions of the applicable Ground Lease and that the fee and leasehold interests in the Released Fee Land shall not merge by reason of the Mortgagor and/or any Affiliate owning both the leasehold and fee estate therein, and that such estates shall always remain separate and distinct; (ii) an Opinion of Counsel to the effect that (A) the Mortgagor is not required to own the Released Fee Land in order to maintain in good standing all Permits or by the provisions of any material contract to which the Mortgagor is a party or by which it is bound to own the Released Fee Land and (B) the instruments described in clause (C) of subparagraph (i) were duly executed by and are binding upon such Affiliate; and 23 (iii) an endorsement to the Original Policy, confirming that no merger of the fee and leasehold estates in the Released Fee Land has resulted from such conveyance. In addition, simultaneously with such acquisition, the Affiliate and Mortgagor shall enter into an instrument in form and substance reasonably satisfactory to Mortgagee, amending the applicable Ground Lease to provide such mortgagee protections as are customary and to the extent reasonably required by Mortgagee, including, without limitation, (A) a covenant of the landlord not to terminate the Ground Lease for any reason whatsoever (including without limitation, due to any default by tenant of its obligations under such Ground Lease), and (B) an agreement by the landlord not to accept payment of any fixed or base rent from the tenant (and, if tendered by the Mortgagor, and agreement to return same to the Mortgagor) or any other charges payable thereunder at any time that an Event of Default shall have occurred and shall be continuing. (b) The Mortgagee shall, from time to time, promptly execute any written instrument in form reasonably satisfactory to the prospective purchaser to confirm the release of the Released Fee Land, upon receipt by the Mortgagee of an Officers' Certificate stating that the Mortgagor is entitled to such release by virtue of the Mortgago's compliance with this Section 2.06, PROVIDED that the Mortgagee shall have no liability thereunder and all costs and expenses (including reasonable attorneys' fees) shall be paid by the Mortgagor. Section 2.07. AFTER-ACQUIRED FEE MORTGAGES. (a) Notwithstanding anything contained herein to the contrary (i) if no Event of Default has occurred and is continuing and (ii) if the Mortgagor shall acquire Released Fee Land, then simultaneously with the acquisition thereof, the Mortgagor shall have the right to encumber such fee simple title with a mortgage (such mortgage and any refinancing thereof permitted by the Indenture is hereinafter referred to as an "After-Acquired Fee Mortgage"). The lien of this Mortgage on the Released Fee Land shall be subordinated to the lien of the After-Acquired Fee Mortgage on the Released Fee Land (and to the lien of other Superior Mortgages which shall become a lien thereon in accordance with the terms thereof), provided the following conditions are satisfied: (i) the After-Acquired Fee Mortgage encumbers the fee simple title to such real property and no other property; 24 (ii) the indebtedness secured by the After-Acquired Fee Mortgage (A) does not exceed 75% of the cost to the Mortgagor of such fee simple title at the time of the acquisition and (B) satisfies the criteria set forth in Section 12.08 of the Indenture; (iii) in the event the After-Acquired Fee Mortgage encumbers fee simple title to the Leased Land or any part thereof, such After-Acquired Fee Mortgage contains provisions binding on the holder of the After-Acquired Fee Mortgage and its successors and assigns confirming the provisions of Section 5.21(d) of this Mortgage; (iv) the Released Fee Land is not being acquired from an Affiliate of the Mortgagor; (v) the After-Acquired Fee Mortgage and other loan documents shall contain a provision binding upon the holder of such After-Acquired Fee Mortgage and other loan documents that all insurance proceeds in the event of a Casualty and awards for Takings of less than the entire Released Fee Land shall be used for purposes of Restoration; and (vi) the Mortgagor delivers to the Mortgagee an Officers' Certificate requesting such subordination and certifying that the requirements of (i) through (v) above have been satisfied. (b) Anything contained in this Section 2.07 or elsewhere in this Mortgage to the contrary notwithstanding, the subordination of this Mortgage to any After-Acquired Fee Mortgage constituting a lien on Released Fee Land shall not be self-operative but shall be effective only upon the execution and delivery by the Mortgagee of an instrument in writing effecting such subordination. The Mortgagee shall deliver such instrument of subordination on the following conditions: (x) the Mortgagee shall have received an Officers' Certificate confirming that the conditions of (i) through (vi) of paragraph (a) have been satisfied, together with a true and correct copy of the After-Acquired Fee Mortgage and all other instruments securing the indebtedness evidenced thereby and (y) the instrument of subordination shall specifically state that this Mortgage is being subordinated not with respect to the lien of this Mortgage on the Ground Lease or on the leasehold estate created thereby, but only with respect to the fee simple title to the Leased Land or applicable part thereof and only if and to the extent that the After-Acquired Fee Mortgage being subordinated to is subject and subordinate to the Ground Lease and the leasehold estate created thereby. 25 ARTICLE THREE REMEDIES Section 3.01. EVENTS OF DEFAULT. "Event of Default," whenever used herein, means any one of following events (including any applicable notice requirement and any period of grace as specified in this Section 3.01) (whatever the reason for such event 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): (a) default by the Mortgagor under the Guaranty and continuance of such default for a period of 10 days after there has been given a written notice to the Mortgagor specifying such default and stating that such notice is a "Notice of Default" hereunder; or (b) an "Event of Default," as defined in Section 3.01 of the Note Mortgage, shall occur; or (c) default in the performance, or breach, of any of the provisions of Article Four and the continuance of such default or breach for a period of 60 days after there has been given a written notice to the Mortgagor specifying that such notice is a "Notice of Default" hereunder; or (d) any representation or warranty of the Mortgagor set forth in this Mortgage shall prove to be incorrect as of the time when made and the facts constituting such incorrectness impairs the Mortgagee's security and such impairment continues for a period of 30 days, unless such impairment is curable, but not susceptible of cure within such 30-day period (for reasons other than lack of funds), provided that the conditions set forth in Section 3.01(l) of the Note Mortgage have been satisfied. Section 3.02. DEMAND UNDER THE GUARANTY. If an Event of Default occurs and is continuing, and the Mortgagee has declared the Outstanding Amount of the Note to be due and payable immediately pursuant to Section 3.02 of the Note Mortgage, then the Mortgagee may declare all obligations under the Guaranty to be due and payable immediately. Section 3.03. APPLICATION OF MONEYS RECEIVED BY MORTGAGEE. Any moneys received by the Mortgagee pursuant to the provisions of this Article Three (including moneys received by the Trustee after any action or act by the Mortgagee under Section 3.10) shall be applied by the 26 Mortgagee in accordance with the provisions of Section 7.06 of the Indenture. Section 3.04. RESTORATION OF RIGHTS AND REMEDIES. If the Mortgagee has instituted any proceeding to enforce any right or remedy under this Mortgage and such proceeding has been discontinued or abandoned for any reason or has been determined adversely to the Mortgagee, then and in every such case the Mortgagor and the Mortgagee shall, subject to any determination in such proceeding, be restored to its former position hereunder, and thereafter all rights and remedies of the Mortgagee shall continue as though no such proceeding had been instituted. Section 3.05. RIGHTS AND REMEDIES CUMULATIVE. No right or remedy herein conferred upon or reserved to the Mortgagee 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 3.06. DELAY OR OMISSION NOT WAIVER. No delay or omission of the Mortgagee to exercise any right or remedy accruing upon an 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 Three by law to the Mortgagee may be exercised, from time to time, and as often as may be deemed expedient, by the Mortgagee. Section 3.07. UNDERTAKING FOR COSTS. If any action or proceeding shall be commenced (including, without limitation, an action to foreclose this Mortgage or to collect under the Guaranty secured hereby) to which action or proceeding the Mortgagee is made or becomes a party, or in which it becomes necessary in the opinion of the Mortgagee to defend or uphold the lien of this Mortgage, then, to the extent it has not already done so pursuant to the terms of Section 3.07 of the Note Mortgage, the Mortgagor shall pay to Mortgagee all expenses, including reasonable attorneys' fees and expenses, incurred by the Mortgagee in connection therewith, together with interest at the rate then payable on the Notes, from the date of payment less the net amount received by the Mortgagee or the Trustee, as their interests may appear under any title insurance policy, and, until paid, all such expenses, together with interest as aforesaid, shall be a lien on the Trust Estate. 27 Section 3.08. WAIVER OF APPRAISEMENT AND OTHER LAWS. To the full extent that it may lawfully so agree, the Mortgagor will not at any time insist upon, plead, claim or take the benefit or advantage of, any appraisement, valuation, stay, extension or redemption law now or hereafter in force, in order to prevent or hinder the enforcement of this Mortgage or the absolute sale of the Trust Estate, or any part hereof, or the possession thereof by any purchaser at any sale under this Article Three; and the Mortgagor, for itself and all who may claim under it, so far as it or they now or hereafter may lawfully do so, hereby waives the benefit of all such laws. The Mortgagor, for itself and all who may claim under it, waives, to the extent that it may lawfully do so, all right to have the property in the Trust Estate marshalled upon any foreclosure hereof, and agrees that any court having jurisdiction to foreclose this Mortgage may order the sale of the Trust Estate as an entirety. If any law in this Section 3.08 referred to and now in force, of which the Mortgagor or its successor or successors might take advantage despite this Section 3.08, shall hereafter be repealed or cease to be in force, such law shall not thereafter be deemed to constitute any part of the contract herein contained or to preclude the application of this Section 3.08. Section 3.09. ENTRY. The Mortgagor agrees that upon the occurrence of an Event of Default the Mortgagor, upon demand of the Mortgagee during the continuance thereof, shall forthwith surrender to the Mortgagee the actual possession of, and it shall be lawful for the Mortgagee by such officers or agents as it may appoint to enter and take possession of, the Trust Estate (and the books and papers of the Mortgagor), and to hold, operate and manage the Trust Estate (including the making of all needful repairs, and such alterations, additions and improvements as the Mortgagee shall deem wise) and to receive the rents, issues, tolls, profits, revenues and other income thereof, and, after deducting the costs and expenses of entering, taking possession, holding, operating and managing the Trust Estate, as well as payments for taxes, insurance and other proper charges upon the Trust Estate and reasonable compensation to itself, its agents and counsel, to apply the same as provided in Section 3.03, PROVIDED, HOWEVER, that the Mortgagee's rights under this Section 3.09 shall be subject to the provisions of the New Jersey Casino Control Act and Section 3.14. Whenever all that is then due upon the Note and under any of the terms of this Mortgage shall have been paid and all defaults hereunder shall have been made good, the Mortgagee shall surrender possession to the Mortgagor. 28 Section 3.10. POWER OF SALE; SUITS FOR ENFORCEMENT. In case an Event of Default shall occur and be continuing, the Mortgagee, with or without entry, in its discretion may: (a) sell, subject to any mandatory requirements of applicable law, the Trust Estate as an entirety, or in such parcels, as the Mortgagee may determine, to the highest bidder at public auction at such place and at such time (which sale may be adjourned by the Mortgagee from time to time in its discretion by announcement at the time and place fixed for such sale, without further notice) and upon such terms as the Mortgagee may fix and briefly specify in a notice of sale to be published as required by law; or (b) proceed to protect and enforce its rights under this Mortgage by sale pursuant to judicial proceedings or by a suit, action or proceeding in equity or at law or otherwise, whether for the specific performance of any covenant or agreement contained in this Mortgage or in aid of the execution of any power granted in this Mortgage or for the foreclosure of this Mortgage or for the enforcement of any other legal, equitable or other remedy, as the Mortgagee, being advised by counsel, shall deem most effectual to protect and enforce any of the rights of the Mortgagee; the failure to join tenants shall not be asserted as a defense to any foreclosure or proceeding to enforce the rights of the Mortgagee. Section 3.11. INCIDENT OF SALE. Upon any sale of any of the Trust Estate, whether made under the power of sale hereby given or pursuant to judicial proceedings, to the extent permitted by law: (a) all obligations owing under the Guaranty, if not previously due, shall at once become and be immediately due and payable; (b) subject to the provisions of Section 3.14 and the receipt of any required prior approvals of the New Jersey Casino Control Commission, the Mortgagee may bid for and purchase the property offered for sale, and upon compliance with the terms of sale may hold, retain and possess and dispose of such property, without further accountability, and may, in paying the purchase money therefor, delivery any notes or claims for interest thereon in lieu of cash to the amount which shall, upon distribution of the net proceeds of such sale, be payable thereon, and such notes or claims for interest thereon, in case the amounts so payable thereon shall be less than the amount due thereon, shall be returned to the holders 29 thereof after being appropriately stamped to show partial payment; (c) the Mortgagee may make and deliver to the purchaser or purchasers a good and sufficient deed, bill of sale and instrument of assignment and transfer of the property sold; (d) the Mortgagee is hereby irrevocably appointed the true and lawful attorney of the Mortgagor, in its name and stead, to make all necessary deeds, bills of sale and instruments of assignment and transfer of the property thus sold; and for that purpose it may execute all necessary deeds, bills of sale and instruments of assignment and transfer, and may substitute one or more persons, firms or corporations with like power, the Mortgagor hereby ratifying and confirming all that its attorney or such substitute or substitutes shall lawfully do by virtue hereof; but if so requested by the Mortgagee or by any purchaser, the Mortgagor shall ratify and confirm any such sale or transfer by executing and delivering to the Mortgagee or to such purchaser or purchasers all proper deeds, bills of sale, instruments of assignment and transfer and releases as may be designated in any such request; (e) all right, title, interest, claim and demand whatsoever, either at law or in equity or otherwise, of the Mortgagor of, in and to the property so sold shall be divested and such sale shall be a perpetual bar both at law and in equity against the Mortgagor, its successors and assigns, and against any and all persons claiming or who may claim the property sold or any part thereof from, through or under the Mortgagor, its successors and assigns; and (f) the receipt of the Mortgagee or of the officer making such sale shall be a sufficient discharge to the purchaser or purchasers at such sale for his or their purchase money and such purchaser or purchasers and his or their assigns or personal representatives shall not, after paying such purchase money and receiving such receipt, be obliged to see to the application of such purchase money, or be in anywise answerable for any loss, misapplication or non-application thereof. Section 3.12. RECEIVER. Upon the occurrence of an Event of Default and commencement of judicial proceedings by the Mortgagee to enforce any right under this Mortgage, the Mortgagee shall be entitled, as against the Mortgagor, without notice or demand and without regard to the adequacy of the security for the Guaranty or the solvency of the Mortgagor, to 30 the appointment of a receiver of the Trust Estate, and of the rents, issues, profits, revenues and other income thereof, PROVIDED, HOWEVER, that the Mortgagee's rights under this Section 3.12 shall be subject to the provisions of the New Jersey Casino Control Act and Section 3.14 hereof. Section 3.13. SUITS TO PROTECT THE TRUST ESTATE. Upon 5 days' prior written notice to the Mortgagor (or such shorter period or without notice if deemed necessary and appropriate by the Mortgagee), the Mortgagee shall have power to institute and maintain such proceedings as it may deem necessary and appropriate to prevent any impairment of the Trust Estate by any acts which may be unlawful or in violation of this Mortgage and to protect its interests in the Trust Estate and in the rents, issues, profits, revenues and other income arising therefrom, including power to institute and maintain proceedings to restrain the enforcement of or compliance with any 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 hereunder or be materially prejudicial to the interests of the Mortgagee. Section 3.14. MANAGEMENT OF CASINO-HOTEL. Notwithstanding any provision of this Article Three to the contrary, following an Event of Default and the taking of possession of the Trust Estate or any part thereof by the Mortgagee and/or the appointment of receiver of the Trust Estate or any part thereof, the Mortgagee or any such receiver shall be authorized, in addition to the rights and powers of the Mortgagee and such receiver set forth elsewhere in this Mortgage, to retain one or more experienced operators of hotels and/or casinos to manage the Casino-Hotel, PROVIDED that any such operator shall have all necessary legal qualifications, including all Permits, to manage the Casino-Hotel. ARTICLE FOUR CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE Section 4.01. CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER ONLY ON CERTAIN TERMS. The Mortgagor shall comply with all provisions applicable to the Mortgagor in Article Ten of the Indenture. Section 4.02. SUCCESSOR ENTITY SUBSTITUTED. Upon any consolidation or combination or any conveyance or transfer of the Trust Estate or any portion thereof in accordance with Section 10.01 of the Indenture, the successor entity formed 31 by such consolidation or into which the Mortgagor is combined or to which such conveyance or transfer is made shall succeed to, and be substituted for, and may exercise every right and power of, the Mortgagor under this Mortgage with the same effect as if such successor entity had been named as the Mortgagor herein; PROVIDED, HOWEVER, that no such conveyance or transfer of the Trust Estate substantially as an entirety, unless such conveyance or transfer is in compliance with the provisions of Article Ten of the Indenture, shall have the effect of releasing the Person named as "the Mortgagor" in the first paragraph of this instrument or any successor entity which shall theretofore have become such in the manner prescribed in such Article Ten from its liability as guarantor. Section 4.03. LIMITATION ON SALES OF TRUST ESTATE. Except as otherwise expressly permitted by this Mortgage or the Indenture, the Mortgagor shall not sell, assign, lease, sublease, hypothecate, pledge, mortgage or otherwise transfer all or any part of the Trust Estate or any interest therein (including without limitation any interest in the Ground Leases). Without limiting the generality of the foregoing, the Mortgagor shall not separate, or attempt to separate, its ownership of its interest in the Ground Leases from its ownership of the buildings constituting the Casino-Hotel or any part thereof. ARTICLE FIVE COVENANTS AND REPRESENTATIONS OF MORTGAGOR Section 5.01. [Reserved] Section 5.02. FF&E FINANCING AGREEMENTS. The Mortgagor covenants and agrees to comply with all of the terms and conditions set forth in any FF&E Financing Agreements before the expiration of any applicable notice and cure periods contained in the FF&E Financing Agreements. Section 5.03. LIMITATIONS ON LIENS. The Mortgagor will not create, incur, suffer or permit to be created or incurred or to exist any mortgage, lien, charge or encumbrance on or pledge of any of the Trust Estate, other than (i) Permitted Encumbrances, (ii) liens on the Trust Estate in connection with indebtedness permitted by clauses (i), (ii), (iii), (iv) or (v) of Section 12.08(a) of the Indenture, and (iii) a building contract or a notice of intention filed by a mechanic, materialman or laborer under the New Jersey lien law. Without limiting the generality of the foregoing sentence but notwithstanding the provisions of the foregoing sentence, the Mortgagor shall not be deemed to have breached the provisions of the foregoing sentence by virtue of the 32 existence of a lien for Impositions or mechanics liens so long as the Mortgagor is in good faith contesting the validity of the same in accordance with the provisions of Section 5.09 to the extent that the matters described in (i) and (ii) do not constitute a default under any Ground Lease or Superior Mortgage. Section 5.04. [Reserved] Section 5.05. ACTIONS AND PROCEEDINGS. The Mortgagor hereby acknowledges the right of the Mortgagee, in the name of and on behalf of the Mortgagor, (a) to appear in and defend any action or proceeding brought with respect to the Trust Estate or any part thereof and (b) upon 5 days' prior written notice to the Mortgagor (or such shorter period or without notice if deemed necessary and appropriate by the Mortgage), to commence any action or proceeding to protect the interest of the Mortgagee in the Trust Estate. Section 5.06. WARRANTY OF LEASEHOLD ESTATE AND TITLE. The Mortgagor represents and warrants that as of the date hereof: (a) it is duly authorized under the laws of the State of New Jersey and all other applicable laws to execute and deliver this Mortgage, and all corporate action on its part necessary for the valid execution and delivery of this Mortgage has been duly and effectively taken; (b) it is the lawful owner and is lawfully seized and possessed of the Owned Land and all buildings and improvements thereon, free and clear of all liens, charges or encumbrances, other than the lien of the Mortgage Documents, any Working Capital Facility Lien and Existing Encumbrances; (c) it is the holder of and has good and marketable title to the leasehold interests and leasehold estates under the Ground Leases and to the Ground Leases, subject to no lien, encumbrance or charge other than the lien of the Mortgage Documents, any Working Capital Facility Lien and Existing Encumbrances; (d) (i) the Ground Leases are valid and subsisting demises of the Leased Land for the terms therein set forth, (ii) there are no defaults thereunder by any Lessor or the lessee as to which written notice has been given to or by the lessee, (iii) the Mortgagor has delivered true and correct copies of the Ground Leases and all modifications, amendments and supplements thereto, and (iv) each of the Ground Leases is in full 33 force and effect and has not been modified, amended or supplemented, except as described on Schedule 2; (e) it has good title to the Operating Assets, subject to no lien, encumbrance or charge, other than the lien of the Mortgage Documents, any Working Capital Facility Lien and Existing Encumbrances; and (f) the Mortgagor has good and lawful right and authority to execute this Mortgage and to grant, bargain, sell, alien, convey, assign, transfer, hypothecate, pledge, mortgage and confirm the Trust Estate as provided herein (including without limitation with respect to the Operating Assets and the Ground Leases, without the consent of any third party, other than governmental authorities but any applicable or necessary consent or approval of any such governmental authority has been given or waived at or prior to the execution and delivery of this Mortgage), and this Mortgage constitutes a valid second mortgage lien and second priority security interest in the Trust Estate PARI PASSU with the lien of the Note Mortgage, subject only to Working Capital Facility Liens and Existing Encumbrances. The Mortgagor hereby does and will forever warrant and defend (x) the title to Trust Estate (including without limitation, its leasehold estates under the lessee's interests in the Ground Leases) (subject to Permitted Encumbrances) and (y) the priority of the lien of this Mortgage (subject to Permitted Encumbrances other than Restricted Encumbrances), against the claims and demands of all persons whomsoever, at the Mortgagor's sole cost and expense. Section 5.07. FURTHER ASSURANCES; RECORDING. The Mortgagor will, as provided in Section 5.13, from time to time subject its right, title and interest under all Leases to the lien of this Mortgage. The Mortgagor will cause this instrument and all other instruments of further assurance, including all financing statements and continuation statements covering security interests in personal property, to be promptly recorded, registered and filed, and at all times to be kept recorded, registered and filed, and will execute and file such financing statements and cause to be issued and filed such continuation statements, all in such manner and in such places as may be required by law or as requested by the Mortgagee to fully preserve and protect the rights of the Mortgagee as a secured party under the Uniform Commercial Code to all property comprising the Trust Estate (to the extent a grant of a security interest therein is governed by the Uniform Commercial Code) and to perfect, preserve and protect the lien 34 of this Mortgage as a valid mortgage lien of record and a valid security interest on the Trust Estate subject to Permitted Encumbrances (other than Restricted Encumbrances). The Mortgagor will pay all filing or recording fees, and all expenses incident to the execution and delivery of this Mortgage, and any instrument of further assurance, and all federal, state, county and municipal stamp taxes and other taxes, duties, imposts, assessments and charges arising out of or in connection with the execution and delivery of this Mortgage, any financing statement or continuation statement with respect to the personal property constituting part of the Trust Estate or any instrument of further assurance. Section 5.08. PAYMENT OF TAXES AND CERTAIN CLAIMS; COMPLIANCE WITH LEGAL REQUIREMENTS AND INSURANCE REQUIREMENTS. The Mortgagor will: (a) subject to the provisions of Section 5.09 relating to contests, pay or cause to be paid promptly (or when installments of the same shall become due and payable, if, by law or by agreement or arrangement with the applicable governmental agency or authority, the same may be paid in installments) before any fine, penalty, interest or cost may be added for nonpayment (but no later than when the same are payable by the Mortgagor pursuant to any Superior Instrument Requirement), all taxes (including, without limitation, real estate taxes, personal or other property taxes and all sales, value added, use and similar taxes), assessments (including, without limitation, all assessments for public improvements or benefits, whether or not commenced or completed prior to the date hereof and whether or not to be completed prior to the satisfaction of this Mortgage), water, sewer or other rents, rates and charges, excises, levies, license fees, permit fees, inspection fees and other authorization fees and other charges, in each case whether general or special, ordinary or extraordinary, or foreseen or unforeseen, of every character (including all interest, additions to tax and penalties thereon), that may be assessed, levied, confirmed or imposed on or in respect of or be a lien upon (1) the Trust Estate (including without limitation the Leased Land) or any part thereof or any rent therefrom or any estate, right or interest therein, or (2) any acquisition, occupancy, use, leasing, or possession of or activity conducted on the real property or any part thereof included in the Trust Estate or any gross receipts thereof or of the rent therefrom (all of the foregoing being referred to collectively as "Impositions"). Notwithstanding the foregoing or any other provision of this Mortgage, the Mortgagor shall not be required to pay any income, 35 profits or revenue tax upon the income of the Mortgagee, the Trustee or the Noteholders nor any franchise, excise, corporate, estate, inheritance, succession, capital levy or transfer tax of the Mortgagee, the Trustee or the Noteholders nor any interest, additions to tax or penalties in respect thereof, unless such tax is imposed, levied or assessed in substitution for any Impositions that the Mortgagor is required to pay pursuant to this Section 5.08. The Mortgagor will deliver to the Mortgagee official receipts or other proof evidencing payments of any Impositions in accordance with the requirements of this Section 5.08. The Mortgagor shall not be entitled to any credit for taxes or assessments paid against the Guaranty; (b) except for such property which the Mortgagor may dispose of or replace pursuant to Section 2.02, maintain and keep all its properties used or useful in the conduct of its business (other than obsolete equipment), including, without limitation, the Casino-Hotel and all Tangible Personal Property, in such good repair, working order and condition, except for reasonable wear and use, and make or cause to be made all such needful and proper repairs, renewals and replacements thereto consistent with the standards of other casino-hotels in Atlantic City, New Jersey; (c) occupy and continuously operate the Casino-Hotel and keep the Casino-Hotel supplied with Tangible Personal Property, all in a manner consistent with the standards of other casino-hotels in Atlantic City, New Jersey (provided that nothing contained in this Section 5.08(c) shall be deemed to reduce the time period set forth in Section 3.01(f)); (d) subject to the provisions of Section 5.09 relating to contests, the Mortgagor at its sole expense will timely (1) comply with all Legal Requirements and Insurance Requirements, whether or not compliance therewith shall require structural changes in the buildings and improvements included in the Trust Estate or interfere with the use and enjoyment of the Trust Estate or any part thereof, (2) procure, maintain and comply with all permits and other authorizations required for (i) the use of the Casino as a gaming and gambling facility, (ii) the on-premises consumption of alcoholic beverages at the Casino-Hotel and (iii) any other use of the Trust Estate or any part thereof then being made, and for the proper erection, installation, operation and maintenance of the improvements or any part thereof, and (3) comply with any instruments of record at the time in force affecting the Trust Estate or any part thereof, if 36 the failure to comply with the same would impair the Mortgagee's security hereunder. Without limiting the generality of the foregoing, the Mortgagor represents and warrants that at the time of the execution of this Mortgage, the Mortgagor is in compliance with the requirements of clauses (1), (2) and (3); (e) in the event of the passage after the date of this Mortgage of any law of the State of New Jersey, or any other governmental entity, changing in any way the laws now in force for the taxation of mortgages, or debts secured thereby, for state or local purposes, or the manner of the operation of any such taxes, so as to affect the interest of the Mortgagee, then and in such event, the Mortgagor shall bear and pay the full amount of such taxes, provided that if for any reason payment by the Mortgagor of any such new or additional taxes would be unlawful or if the payment thereof would constitute usury or render the indebtedness secured hereby wholly or partially usurious under any of the terms or provisions of the Note, or this Mortgage, or otherwise, the Mortgagee may, at the Mortgagee's option, declare the whole sum secured by this Mortgage, with interest thereon, to be due and payable 90 days after notice of election thereof has been given by the Mortgagee, or the Mortgagee may, at the Mortgagee's option, pay that amount or portion of such taxes as renders the loan or indebtedness secured hereby unlawful or usurious, in which event the Mortgagor shall concurrently therewith pay the remaining lawful and nonusurious portion or balance of such taxes. Section 5.09. PERMITTED CONTESTS. The Mortgagor may, at its sole expense, contest by appropriate legal proceedings conducted in good faith and with due diligence, the amount or validity or application, in whole or in part of any Imposition or lien therefor or any Legal Requirement or Insurance Requirement or the application of any instrument of record affecting the Trust Estate or any part thereof or any claims of mechanics, materialmen, suppliers, or vendors or lien therefore, and may withhold payment of the same pending such proceedings if permitted by law, or make payment under protest, or defer compliance with any such Legal Requirement, any such Insurance Requirement or the terms of any such instrument, and the same shall not be a Default hereunder, provided that (a) in the case of any Impositions or lien therefor or any claims of mechanics, materialmen, suppliers or vendors or lien therefor, such proceedings shall suspend the collection thereof from each of the Mortgagor, the Mortgagee, the Trustee, the Noteholders and the Trust Estate, (b) neither the Trust Estate nor any interest therein would be in any danger of being sold, forfeited, or lost, (c) such action 37 would not result in or constitute a default under any Ground Lease or Superior Mortgage, (d) in the case of a Legal Requirement, neither the Noteholders nor the Mortgagee shall be in any danger of any civil or any criminal liability, and the failure of the Mortgagor to comply with such Legal Requirement shall not affect the continuance in good standing of any Permit or result in the suspension, termination, non-renewal or material adverse modification of any permit, and (e) in the case of an Insurance Requirement, the failure of the Mortgagor to comply therewith shall not affect the validity of any insurance required to be maintained by the Mortgagor hereunder. Section 5.10. MECHANICS' AND OTHER LIENS. Without limiting the generality of the first sentence of Section 5.03 and notwithstanding the provisions of Section 5.03(a)(ii), the Mortgagor will cause to be removed, either by payment, or bonding or otherwise, all claims and demands of mechanics, materialmen, laborers, and others which, if unpaid, might result in, or permit the creation of, a lien on the Premises and/or Trust Estate or any part thereof, or on the revenues, rents, issues, income and profits arising therefrom and in general will do or cause to be done everything necessary so that the lien hereof shall be fully preserved, at the cost of the Mortgagor, without expense to the Mortgagee. Section 5.11. INSURANCE. (a) The Mortgagor will, at its expense, maintain with Insurers: (1) insurance with respect to the Mortgagor's insurable properties constituting a part of the Trust Estate against loss or damage by fire, lightning, and other risks from time to time included under "all-risk" policies and against loss or damage by sprinkler leakage, water damage, collapse, malicious mischief and explosion in respect of any steam and pressure boiler and similar apparatus located on such insurable properties, in amounts at all times sufficient to prevent the Mortgagor from becoming a coinsurer within the terms of the applicable policies, but in any event such insurance shall be maintained in such insurable amounts not less than the greatest of the following (hereinafter referred to as the "Insurance Amount"): (i) 100% of the then full insurable value of such insurable properties, the term "full insurable value" to mean the actual replacement cost (excluding the costs of foundation, footing, excavation, paving, landscaping and other similar, non-insurable improvements) determined from time to time (but not less frequently than once in any 36 calendar months), by an Architect, contractor, appraiser, or an Insurer, or 38 (ii) the amount required to be maintained pursuant to the Superior Instrument Requirements; (2) war risk insurance as and when such insurance is obtainable from the United States of America or any agency thereof as promptly as reasonably practicable after the same becomes so obtainable, in an amount not less than the Insurance Amount, or in such lesser amount as may then be so obtainable; (3) public liability, including personal injury and property damage and comprehensive general liability connected with the possession, use, leasing, operation or condition of such insurable properties in such amounts as, in the Mortgagor's judgment, are prudent, considering the cost of such insurance, for personal injury and property damage with respect to any one occurrence, which may be under an umbrella policy. Anything contained in this clause (3) to the contrary notwithstanding, the Superior Instrument Requirements with respect to the kinds and amount of insurance described in this clause (3) shall be satisfied by the Mortgagor; (4) appropriate workers' compensation insurance with respect to any work (to the extent the risks to be covered thereby are not already covered by other policies of insurance maintained by the Mortgagor) on or about such insurable properties; (5) business interruption insurance covering not less than 12 months of loss, provided that, at any time that the Mortgagor is renewing any policy for such insurance or taking out any new or replacement such policy covering a period of less than 12 months, the Mortgagor shall deliver to the Mortgagee an Officers' Certificate certifying that the period of coverage to be maintained by the Mortgagor under such policy is the maximum that can be maintained at rates determined by the Mortgagor to be reasonable for such coverage; (6) to the extent available, flood insurance in an amount not less than the Insurance Amount, or such lesser amount as may then be so obtainable; and (7) such other insurance with respect to such insurable properties against loss or damage of the kinds (i) from time to time customarily insured against by persons owning or using casino-hotels of comparable size in the boardwalk area of Atlantic City, New Jersey and 39 (ii) required to be maintained pursuant to the Superior Instrument Requirements. Notwithstanding the foregoing, to the extent permitted by Superior Instrument Requirements, (i) the Mortgagor shall be permitted to maintain a deductible with respect to the insurance policies described in clauses (1), (2), (6) and (7) in an amount not to exceed (x) for the twelve month period commencing the date hereof, $100,000 with respect to the insurance policies described in clause (1), (2), (6) and (7) thereafter, the customary deductible (if any) with respect to the insurance maintained by casino-hotels of a similar size and value in Atlantic City, New Jersey (but in no event more than $1,000,000), (ii) the Mortgagor shall be permitted to maintain a $200,000 self insured retention under the general liability policy described in clause (3) and a deductible with respect to the other insurance policies described in clause (3) in an amount not to exceed the amount of deductible as is customarily maintained by casino-hotels of similar size in Atlantic City, New Jersey, (iii) the Mortgagor shall not reduce its insurance coverage for the matters described in clause (3) (which for purposes of this paragraph means a reduction in single limits or an increase in deductible) unless and until the Mortgagor delivers to the Mortgagee an Officers' Certificate certifying (w) that the coverage the Mortgagor was theretofore maintaining cannot be maintained at rates determined by the Mortgagor to be reasonable for such coverage, (x) the amount of the proposed reduction, (y) the premium for the existing and the proposed reduced coverage, and (z) that the proposed deductible satisfied the criteria set forth in this clause (iii), and (iv) the Mortgagor shall be permitted to maintain a deductible with respect to the insurance policies described in clause (5) in the forms of and in an amount not to exceed the amount of deductible as is customarily maintained by casino-hotels of similar size in Atlantic City, New Jersey. (b) Each policy of insurance maintained by the Mortgagor pursuant to Subsection (a) of this Section 5.11 shall, (1) except in the case of workers' compensation insurance, name as additional insureds the Mortgagee, in both its individual and fiduciary capacities, and, to the extent required by the Superior Instrument Requirements, the Lessors and the holders of the Superior Mortgages, (2) provide that all insurance proceeds for losses, except in the case of public liability insurance and workers' compensation insurance or as otherwise provided in Subsections (d), (e) and (f) of this Section 5.11, be payable solely to the Mortgagee or such other party as is required to receive such proceeds under a Superior Mortgage, (3) except in the case of workers' compensation, include effective waivers (whether under the terms of any such policy or otherwise) by the insurer of all claims for insurance premiums against all lost payees and named insureds (other than the Mortgagor) and all rights of subrogation against any named insured, (4) except in the case of public liability and 40 workers' compensation insurance, provide that any losses shall be payable notwithstanding (i) any act, failure to act, negligence of, or violation or breach of warranties, declarations or conditions contained in such policy by the Mortgagor or the Mortgagee or any other named insured or loss payee (including, without limitation, with respect to the Released Fee Land, the holders of any After-Acquired Fee Mortgages), (ii) the occupation or use of the insurable properties for purposes more hazardous than permitted by the terms of the policy, (iii) any foreclosure or other proceeding or notice of sale relating to the insurable properties or (iv) any change in the title to or ownership or possession of the insurable properties, (5) contain a non-contributory mortgagee clause in favor of the Mortgagee, and (6) provide that if all or any part of such policy is cancelled, terminated or expires, the insurer will forthwith give notice thereof to each named insured an loss payee and that no cancellation, reduction in amount or material change in coverage thereof shall be effective until at least 30 days after receipt by each named insured and loss payee of written notice thereof. (c) The Mortgagor will deliver to the Mortgagee, (1) duplicate originals of all insurance policies that the Mortgagor is required to maintain pursuant to this Section 5.11 and (2) within 30 days after each reduction in insurance required to be maintained by the Mortgagor hereunder, an Officers' Certificate setting forth the particulars as to all such insurance policies and certifying that the same comply with the requirements of this Section 5.11, that all premiums or installments thereof then due thereon have been paid and that the same are in full force and effect. The Mortgagee shall not be responsible for effecting or renewing any insurance or for the responsibility or solvency of the insurers. (d) The Mortgagor shall give written notice to the Mortgagee immediately upon obtaining knowledge of any Casualty which (x) results in damage, loss or destruction in an amount in excess of $5,000,000 to any buildings or improvements on the Premises and/or any Tangible Personal Property or (y) pursuant to any Superior Instrument Requirement, would require the deposit of insurance proceeds with the Depositary, or action or proceeding with respect thereto. Whenever the Superior Instrument Requirements require or permit the selection of the Depositary by the Mortgagor, the Mortgagor shall select the Insurance Trustee as the Depositary. Within 30 days after any Casualty which results in any damage, loss or destruction in an amount in excess of $10,000,000 to any buildings or improvements of the Premises and/or any Tangible Personal Property, the Mortgagor shall deliver to the Mortgagee a certificate of an Architect stating whether, in such Architect's opinion, applicable Legal Requirements permit 41 the Restoration of such buildings and improvements for the same uses and to the same size and quality in all material respects, as existed immediately prior to the Casualty (and if such certificate states the Legal Requirements do not permit such Restoration, such certificate shall describe the manner closest approximating such criteria to which the buildings and improvements could be so restored and shall be accompanied by a Certificate of Appraised Value dated not more than 10 days prior to delivery setting forth the Appraised Value immediately prior to the Casualty and the estimated Appraised Value immediately after the Restoration). If the Mortgagor is required to deliver such Certificates of Appraised Value and if based on such Certificates of Appraised Value immediately after Restoration, the aggregate Outstanding Amount of First Mortgage Debt immediately after such Restoration shall exceed the greater of (i) 66 2/3% of the Appraised Value immediately after such Restoration or (ii) the quotient of the Outstanding Amount of First Mortgage Debt immediately prior to such Casualty divided by the Appraised Value immediately prior to the Casualty multiplied by the Appraised Value immediately after such Restoration, then the proceeds of any insurance shall, at the election of Mortgagee, either be applied to Restoration as set forth in Subsections (e), (h) and (i) below) or paid and delivered to the Mortgagee to the extent of the then Outstanding Amount of the Note and any other interest or other sums due hereunder or thereunder to be applied to the satisfaction of the Mortgage to the extent proceeds are available for such purpose and provided that no additional sums are due to the Trustee or the Noteholder under the Indenture, the balance of any net insurance proceeds shall be paid to the Mortgagor. Notwithstanding the foregoing sentence, if such Certificates of Appraised Values indicates that the Outstanding Amount of First Mortgage Debt immediately after such Restoration exceeds the greater of the two amounts determined pursuant to subclauses (i) and (ii) above, the proceeds of insurance will be made available for Restoration (subject to paragraphs, (e), (h) and (i) below) if the Mortgagor obtains an irrevocable commitment from a nationally recognized financial institution having a combined capital and surplus of at least $100,000,000, to supply, upon an acceleration under this Mortgage as a result of an Event of Default, funds to the Mortgagor as additions to capital in an amount equal to the Outstanding Amount of First Mortgage Debt in excess of the Appraised Value necessary to be paid down so that the Outstanding Amount of First Mortgage Debt will not exceed either of the two amounts determined pursuant to such clauses (i) and (ii), PROVIDED that such commitment may only be released if, upon an Appraisal at any time following completion of such Restoration, the aggregate Outstanding Amount of the First Mortgage Debt does not exceed 66-2/3% of the Appraised Value. 42 (e) Subject to the provisions of Subsection (d) above, in case a Casualty occurs, the following shall apply: (1) if the cost of Restoration (as hereinafter defined) does not exceed the sum of $10,000,000, the net insurance proceeds shall be paid by the Mortgagee to the Mortgagor (unless the Superior Instrument Requirements provide that the same shall be paid to the Depositary); (2) if the cost of Restoration is $10,000,000 or more or if the Superior Instrument Requirements provide that the same shall be paid to the Depositary, the net insurance proceeds shall be paid by the Mortgagee to the Insurance Trustee (or other Depositary required by the Superior Instrument Requirements, provided that such Depositary holds such proceeds in trust for purposes of paying the costs of Restoration); (3) the Mortgagor shall commence with reasonable promptness under the circumstances and thereafter with due diligence proceed to perform and complete in a good and workmanlike manner the restoration, repair, replacement or rebuilding of the damage or destruction resulting from the Casualty (all of which restoration, repair, replacement or rebuilding are referred to as the "Restoration") in accordance with the plans and specifications submitted to the Insurance Trustee, in conformance with all Legal Requirements and Superior Instrument Requirements, and in accordance with the further provisions of this Subsection (e), regardless of the extent of any such Casualty and whether or not net insurance proceeds, if any, shall be available or, if available, shall be sufficient, for the purpose of the Restoration (provided, however, that if the Mortgagor does not receive any net insurance proceeds within 30 days after any Casualty because the adjustment of the loss has not yet occurred, then the obligation of the Mortgagor to commence such Restoration shall be deferred until such proceeds are made available to the Mortgagor, provided that (i) Mortgagor delivers to the Mortgagee an Officers' Certificate certifying that the Mortgagor is diligently and continuously adjusting such loss with the Insurer, (ii) the Mortgagor delivers to the Mortgagee an Officers' Certificate within such 30-day period requesting the extension of such period, estimating the date on which such proceeds will be available and describing the Mortgagor's efforts to adjust such loss and certifying that such extension does not constitute a default or a breach of any of the provisions of any of the Ground Leases (or if so, such default or breach has been waived) and (iii) the Mortgagor delivers to the Mortgagee additional Officers' Certificates every 30 days thereafter updating the 43 information contained in the certificate described in Clause (ii)). All Restoration work shall be performed in accordance with the applicable provisions of Section 5.12 and in conformance with all Superior Instrument Requirements, Legal Requirements and Insurance Requirements and, prior to commencing any Restoration, the Mortgagor shall obtain all Permits necessary in connection therewith, and shall obtain, and keep in full force and effect until the completion of such Restoration, such additional insurance as the Insurance Trustee and Superior Instrument Requirements may require. The plans and specifications for the Restoration shall be accompanied by a certificate of the Mortgagor and an Opinion of Counsel to the effect that upon the completion of the Restoration pursuant to the plans and specifications the Premises, and all buildings and improvements, thereon will comply with all superior Instrument Requirements, Legal Requirements and Insurance Requirements. Notwithstanding anything in this Section 5.11 to the contrary, if such Casualty is in an amount less than $5,000,000, the Mortgagor shall not be required to perform and complete such Restoration (unless the performance and completion of the Restoration is necessary in order for the Mortgagor to be in compliance with any term, provision or condition of this Mortgage (other than this Section 5.11(e)) or any Superior Instrument Requirements; (4) Any insurance proceeds which the Mortgagor receives, shall be held by the Mortgagor in trust for the purpose of paying the cost of the Restoration, except as otherwise provided herein; (5) Any net insurance proceeds that the Insurance Trustee holds pursuant to this Subsection (e), shall be deposited in an interest-bearing investment reasonably designate by Mortgagor (to the extent the Mortgagor is permitted to designate such investment under the Superior Instrument Requirements) (and the interest thereon shall be added to such proceeds) and shall be paid by the Insurance Trustee in reimburse the Mortgagor for, or to make payment for, the Restoration, after the Insurance Trustee deducts therefrom the amount of any reasonable costs and expenses incurred in connection with the performance of its obligations under this Section 5.11. The Insurance Trustee shall make such payments not more frequently than once every 30 days upon the written request of the Mortgagor (unless more frequent payments are required by Superior Instrument Requirements), by paying to the Mortgagor or the persons named in the certificate described in Clause (6) of this Subsection (e) the respective amounts stated in such certificate 44 from time to time as the Restoration progresses, provided the Mortgagor has complied with the requirements of this Subsection (e) and such payment is permitted by an applicable Superior Instrument Requirements. The Mortgagor's written request shall be accompanied by (i) the certificate described in Clause (6) of this Subsection (e) and (ii) a title company or official search, or other evidence reasonably acceptable to the Insurance Trustee, showing that there have not been filed with respect to the Premises, any vendor's, contractor's mechanic's, laborer's or materialman's statutory or similar lien which has not been discharged of record (or bonded against or secured by other security) or any other encumbrance irrespective of its priority (other than Permitted Encumbrances). (6) The certificate required by Clause (5) of this Subsection (e) shall (A) be an Officers' Certificate, countersigned by the Architect in charge of the Restoration with respect to the matters described in (i) and (v) below, (B) be dated not more than 10 days prior to such request and (C) set forth (in addition to any other requirements contained in any applicable Superior Instrument Requirements) that: (i) all of the Restoration work theretofore performed is in substantial compliance with the plans and specifications theretofore submitted to the Insurance Trustee and in compliance with all Superior Instrument Requirements, Legal Requirements and Insurance Requirements; (ii) the sum then requested either has been paid by the Mortgagor or is justly due to contractors, subcontractors, materialmen, engineers, architects or other persons who have rendered services or furnished or contracted to deliver materials for the Restoration therein specified, and the names and addresses of such persons, a brief description of such services and materials and the several amounts so paid or due to each of such persons in respect thereof; (iii) no part of the amount requested has been or is the basis in any pervious or then pending request for the withdrawal of net insurance proceeds, and that the sum then requested does not exceed the value of the services and materials described in the certificate; (iv) except for the amount, if any, stated pursuant to Subclause (ii) of this Clause (6) in 45 such certificate to be due for services or materials, and except for amounts in dispute and/or customary retainages, there is no outstanding indebtedness known to the person signing such certificate, after due inquiry, which is then due for labor, wages, materials, supplies or services in connection with such Restoration; and (v) the remaining cost, as estimated by the persons signing such certificate, of the Restoration in order to complete the same does not exceed the net insurance proceeds remaining in the hands of Insurance Trustee after payment of the sum requested in such certificate or if such estimated cost does exceed such insurance proceeds such certificate shall state the amount of any such deficiency. If the certificate states that such deficiency will exist, the Mortgagor shall deliver the amount of such deficiency in cash or cash equivalent to the Insurance Trustee simultaneously with the delivery of such certificate, which amount shall be deemed insurance proceeds for purposes of this Section 5.11(e); and (7) If net insurance proceeds shall be insufficient to pay the entire cost of the Restoration, then, after completion of the Restoration, the Mortgagor shall pay the deficiency. If all or any part of the net insurance proceeds are not used for the restoration in accordance with this Subsection (e) (because such proceeds exceed the amount required to complete the Restoration), then upon completion of the Restoration in accordance with this Subsection (e), such amount not so used, if held by the Insurance Trustee, shall be paid to the Mortgagor (if permitted by Superior Instrument Requirements). (f) Provided that no Event of Default has occurred and is continuing, all net business interruption insurance proceeds shall be paid to the Mortgagor, to be segregated from the other funds of Mortgagor and held in trust by Mortgagor for the following purposes and in the following order of priority: (i) for the payment of Impositions and amounts due under the Ground Leases and Superior Mortgages; (ii) for debt service for the estimated period of Restoration (for purposes of this Section 5.11(f), interest and principal payments due on any payment date under the Notes will deemed to accrue in equal daily installments beginning the day after the immediately preceding payment date and ending on such payment date); and (iii) for any expense incurred in connection with the operation or business of the Casino-Hotel. 46 (g) The Mortgagor shall not take out separate insurance, concurrent in form or contributing in the event of loss with that required to be maintained pursuant to this Section 5.11, unless the same are permitted by Superior Instrument Requirements and the Mortgagee is included therein as a named insured, with loss payable to the Mortgagee and the Insurance Trustee pursuant to Section 5.11(b) hereof. The Mortgagor shall immediately notify the Mortgagee whenever any such separate insurance is taken out and shall promptly deliver to the Mortgagee a duplicate original of the policy of such insurance, a copy thereof certified by the insurer or a certificate thereof. (h) Subject to final adjustment by the insurer, insurance claims by reason of damage or destruction to any portion of the Trust Estate may be adjusted by the Mortgagor, but the Mortgagee shall have the right (but not the obligation) to join the Mortgagor in adjusting, and approving the adjustment of, any such loss except in the event of a loss where the amount of insurance reasonably anticipated to be received with respect to such loss is less than [Five Million Dollars ($5,000,000)], and the Mortgagor shall assist the Mortgagee in any such adjustment at the request of the Mortgagee. If the Mortgagee at its election as aforesaid joins the Mortgagor in any adjustment process, then the Mortgagee's approval of the adjustment shall not be unreasonably withheld; (i) Notwithstanding anything contained herein to the contrary, if an Event of Default shall have occurred and be continuing, the Mortgagee may, at its option, (A) refrain from paying to the Mortgagor or the Insurance Trustee any net insurance proceeds or (B) instruct the Insurance Trustee to pay to the Mortgagee any insurance proceeds then held by the Insurance Trustee, as the case may be. Section 5.12. LIMITATIONS ON BUILDING DEMOLITION, ALTERATIONS, IMPROVEMENTS AND NEW CONSTRUCTION. The Mortgagor will not authorize, permit or make any demolition, alteration or improvement of any building included in the Trust Estate or any new construction on any part of the Trust Estate, except in conformity with and subject to the limitations hereinafter in this Section 5.12 set forth. Unless an Event of Default shall have occurred and be continuing, the Mortgagor shall have the right at all times to make or permit such alterations, improvements or new constructions, structural or otherwise (herein sometimes called collectively "alterations"), of or on the Trust Estate, to be made in all cases subject to the conditions set forth in Section 5.12 of the Note Mortgage. Section 5.13. LEASES. The Mortgagor shall not: 47 (a) subject to the provisions of Section 5.13(d), enter into any Lease, or renew, modify, extend, terminate, or amend any Lease, except in the ordinary course of business of operating the Casino-Hotel; (b) receive or collect, or permit the receipt or collection of, any rental payments under any Lease more than one year in advance of the respective periods in respect of which they are to accrue, except that, in connection with the execution and delivery of any Lease or of any amendment to any Lease, rental payments thereunder may be collected and received in advance in an amount not in excess of three months' rent and/or a security deposit may be required thereunder in an amount not exceeding one year's rent; (c) collaterally assign, transfer or hypothecate (other than to the Mortgagee hereunder, to the mortgagee under the Note Mortgage or to the holder of any Working Capital Facility Lien) any rental payment under any Lease whether then due or to accrue in the future, the interest of the Mortgagor as landlord under any Lease or the rents, issues or profits of the Trust Estate; (d) after the date hereof, enter into any Lease, or renew any Lease unless such Lease contains terms to the effect as follows: (1) the Lease and the rights of the tenants thereunder shall be subject and subordinate to the rights of the Mortgagee under this Mortgage, the mortgagee under the Note Mortgage and the holders of any Superior Mortgage, (2) the Lease may be assigned by the landlord thereunder to the Mortgagee, (3) the rights and remedies of the tenant in respect of any obligations of the landlord thereunder shall be nonrecourse as to any assets of the landlord other than its equity in the building in which the leased premises are located or the proceeds thereof, (4) the rights of the tenant shall be subject and subordinate to the rights of the lessee under any new lease entered into in the event of a termination of a Ground Lease; 48 (e) modify any Lease with respect to the matters described in clauses (1) through (4) of paragraph (d). If the Mortgagor enters into a Lease (other than with any Affiliate of the Mortgagor) for a term of not less than 3 nor more than 10 years, the Mortgagee shall deliver a non-disturbance and attornment agreement substantially in the form of Schedule 4 hereto, following receipt of a certificate of a leasing broker (who is not an Affiliate of the Mortgagor or the broker involved in such transaction) experienced with respect to leases of commercial space in the Atlantic City area stating that the rent under the Lease is not less than fair market rent and that the other terms of the Lease are fair and reasonable in the commercial leasing market. The Mortgagor shall, upon demand, reimburse the Mortgagee for any costs and expenses (including reasonable attorney's fees) incurred by the Mortgagee in connection with the preparation, review and delivery of such non-disturbance and attornment agreements. Promptly after the execution and delivery hereof, the Mortgagor will cause the lessee under each Lease now in effect and promptly after each Lease is executed or becomes effective after the date of the execution and delivery hereof, the Mortgagor will cause the lessee under each such Lease, to be duly notified in writing (unless the substance and effect of such notice shall be contained in such Lease) of the subjection of the owner's interest, as lessor, in and to such Lease to the lien of this Mortgage and of the name and address of the Mortgagee. Each such notice shall state that the lease of such lessee is a Lease as herein defined. If a new Mortgagee is at any time appointed hereunder or the address of the Mortgagee shall at any time be changed, the Mortgagor will cause each lessee under each Lease to be promptly notified in writing of the name address of such new Mortgagee or the new address of the Mortgagee. The Mortgagor will use reasonable efforts (but shall not be obligated to incur any expenditure other than DE MINIMIS amounts) to obtain from each lessee under each Lease to whom any notice is sent pursuant to this paragraph an acknowledgment of receipt of such notice, and the Mortgagor will promptly deliver to the Mortgagee, upon request, a copy of each such acknowledgment of receipt which it is able to obtain. The Mortgagee shall not be responsible for securing or causing the Mortgagor to secure any such acknowledgment. Nothing contained in this Section 5.13 shall limit the provisions of Section 4.04 hereof. Section 5.14. [Reserved] 49 Section 5.15. MAINTENANCE OF EXISTENCE OF THE MORTGAGOR. Subject to Article Four, the Mortgagor will do or cause to be done all things necessary to preserve and keep in full force and effect its existence as a corporation, and its rights (both statutory and under its articles of incorporation) and franchises. Section 5.16. TO KEEP BOOKS; INSPECTION BY MORTGAGEE. The Mortgagor will keep proper books of record and account in accordance with Section 12.05 of the Indenture. Section 5.17. ADVANCES BY MORTGAGEE. If the Mortgagor shall fail to perform any of its covenants in this Mortgage and such failure shall continue for 10 days following notice thereof given by the Mortgagee (or at any time, without notice, in case of emergency), the Mortgagee may (but is not obligated to), at any time and from time to time, take any action or make advances, to effect performance of any such covenant on behalf of the Mortgagor; and all moneys so used or advanced by the Mortgagee and all reasonable costs and expenses incurred by Mortgagee in connection therewith, together with interest on all of the same at the rate of interest set forth in the Notes, shall be repaid by the Mortgagor upon demand and such advances shall be secured under this Mortgage prior to the Guaranty. Section 5.18. WAIVER OF STAY, EXTENSION OR USURY LAWS. The Mortgagor covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any usury, stay or extension law or any other law which would prohibit or forgive the Mortgagor from paying all or any portion of the obligations under the Guaranty as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may otherwise affect the covenants or the performance of this Mortgage; and the Mortgagor (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Mortgagee, but will suffer and permit the execution of every such power as though no such law had been enacted. Section 5.19. [Reserved] Section 5.20. EMINENT DOMAIN. The Mortgagor shall satisfy the provisions of Section 5.20 of the Note Mortgage upon obtaining knowledge of any Taking affecting the Trust Estate. Section 5.21. GROUND LEASES. 50 (a) The Mortgagor covenants and agrees that it will do or cause to be done all things necessary to preserve and keep unimpaired the rights of the Mortgagor, as lessee under the Ground Lease, and to prevent any termination, surrender, cancellation, forfeiture or impairment thereof. The Mortgagor shall at all times fully perform and comply with all agreements, covenants, terms and conditions imposed upon or assumed by it as lessee under each of the Ground Leases (including without limitation the covenant to pay rent and all taxes, assessments and other charges mentioned therein) prior to the expiration of any notice and/or cure period provided in each such Ground Lease. Upon receipt by the Mortgagee from a Lessor of any written notice of default by the lessee thereunder, Mortgagee may rely thereon and take any action the Mortgagee deems necessary in its sole discretion to prevent or to cure any default by the Mortgagor in the performance of or compliance with any of the agreements, covenants, terms or conditions imposed upon or assumed by the Mortgagor as lessee under each of the Ground Leases, even though the existence of such default or the nature thereof be questioned or denied by the Mortgagor or by any party on behalf of the Mortgagor, provided that if the Mortgagor has theretofore delivered to the Mortgagee the Officers' Certificate, Opinion of Counsel and a copy of the injunction, all as described in Section 3.01(g), the Mortgagee shall not take any such action unless and until the Mortgagor and/or the Mortgagee no longer has the benefit of any tolling or stay referred to in Section 3.01(g). Without limiting the generality of Section 3.09 hereof, the Mortgagor hereby expressly grants to the Mortgagee, and agrees that the Mortgagee shall have, the absolute and immediate right to enter in and upon the Premises or any part thereof to such extent and as often as the Mortgagee, in its sole discretion, deems necessary or desirable for the purpose permitted by the immediately preceding sentence, subject only to applicable Legal Requirements. Subject to the preceding and without limiting the Mortgagee's other remedies under this Mortgage, the Mortgagee may pay and expend such sums of money as the Mortgagee in its sole discretion deems necessary for any such purpose, and the Mortgagor hereby agrees to pay to the Mortgagee, immediately and without demand, all such sums so paid and expended by the Mortgagee, together with interest thereon from the date of each such payment at the highest rate of interest set forth in the Notes. All sums so paid and expended by the Mortgagee, and the interest thereon, shall be added to and be secured by the lien of this Mortgage. (b) The Mortgagor further covenants and agrees: (i) it will not surrender any leasehold estate and interest hereinabove described, nor terminate or cancel any Ground Lease, and that it will not without the express written consent of the Mortgagee modify, change, 51 supplement, alter or amend such Ground Leases either orally or in writing and, as further security for the repayment of the indebtedness secured hereby and for the performance of the covenants herein and in such Ground Leases contained, the Mortgagor hereby assigns to the Mortgagee all of its rights, privileges and prerogatives as lessee under such Ground Leases to terminate, cancel, modify, change, supplement, alter or amend such Ground Leases, and any such termination, cancellation, modification, change, supplement, alteration or amendment of such Ground Leases without the prior written consent thereto by Mortgagee shall be void and of no force and effect. Unless (1) an Event of Default has occurred and is continuing and (2) either (A) there has been an acceleration of maturity of the Notes pursuant to Section 3.02 of the Note Mortgage or (B) the Mortgagee exercises its rights under Section 3.09 hereof, the Mortgagee shall have no right to terminate, cancel, modify, change, supplement, alter or amend the Ground Leases; (ii) solely for the benefit of the Mortgagee, Trustee, the Noteholders and no other person, no release or forbearance of any of the Mortgagor's obligations under such Ground Leases, pursuant to such Ground Leases or otherwise, shall release the Mortgagor from any of its obligations under this Mortgage, including its obligations with respect to the payment of rent as provided for in such Ground Leases and the performance of all of the terms, provisions, covenants, conditions and agreements contained in such Ground Leases, to be kept, performed and complied with by the lessee therein; (iii) unless the Mortgagee shall otherwise expressly consent in writing, the fee title to the Leased Land, the Mortgagor's interest in the improvements on the Leased Land and the leasehold estates shall not merge by and shall always remain separate and distinct, notwithstanding the union of such estates either in the Lessor or in the lessee, or in a third party by purchase or otherwise; (iv) the Mortgagor shall promptly notify the Mortgagee in writing of any request made by the Mortgagor, as lessee under each of the Ground Leases, or any of the Lessors, for arbitration proceedings pursuant to the Ground Leases and of the institution of any arbitration proceedings, as well as all proceedings thereunder. In addition, the Mortgagor shall promptly deliver to the Mortgagee a copy of the determination of the arbitrators in each such arbitration proceeding. The Mortgagee shall have the right to participate in such arbitration proceedings in association with the Mortgagor 52 or on its own behalf as an interested party in accordance with the terms of the Ground Leases; (v) the Mortgagor shall not consent to the subordination of any Ground Lease to any mortgage deed of trust or other lien of the fee interest of the Lessor; (vi) in the event (A) the Mortgagor exercises its option under any Ground Lease to purchase any portion of the Leased Land, the Mortgagor shall deliver a copy of its election to exercise such option within 5 days after the Mortgagor has delivered notice of such election to the Lessor or (B) the Mortgagor acquires fee simple title or any other estate, title or interest in the Leased Land, the Mortgagor shall promptly notify the Mortgagee of such acquisition and shall cause to be executed and recorded all such other and further assurances or other instruments in writing as may be required by law or, in the opinion of the Mortgagee, be reasonably desirable to carry out the intent and meaning of clause (x) of Granting Clause Second; (vii) within 5 days after the Mortgagor's receipt of any notice of any motion, application or effort to reject the Ground Lease by any Lessor or any trustee arising from or in connection with any case, proceeding or other action commenced or pending by or against any Lessor under the Code or any comparable provision contained in any present or future federal, state, local, foreign or other statute, law, rule or regulation, the Mortgagor shall give notice thereof to the Mortgagee. The Mortgagor hereby (A) assigns to the Mortgagee any and all of the Mortgagor's rights as lessee under Section 365(h) of the Code or any comparable provision contained in any present or future federal, state, local, foreign or other statute, law, rule or regulation ("Comparable Provision") and (B) covenants that it shall not elect to treat any Ground Lease as terminated pursuant to Section 365(h) of the Code or any Comparable Provision without the prior written consent of the Mortgagee and (C) agrees that any such election by the Mortgagor without such consent shall be null and void; (viii) without limiting the generality of the foregoing, the Mortgagor hereby unconditionally assigns, transfers and sets over to the Mortgagee all of the Mortgagor's claims and rights to the payment of damages arising from any rejection by Lessor of any Ground lease under the Code or any Comparable Provision. The Mortgagee shall have the right to proceed in its own name or in the name of the Mortgagor in respect of any claim, suit, action or proceeding relating to the rejection of 53 any Ground Lease, including, without limitation, the right to file and prosecute, in cooperation with the Mortgagor, any proofs of claim, complaints, motions, applications notices and other documents, in any case in respect of Lessor under the Code or any Comparable Provision. This assignment constitutes a present, irrevocable and unconditional assignment of the foregoing claims, rights and remedies, and shall continue in effect until all of the indebtedness and obligations secured by this Mortgage shall have been satisfied and discharged in full. Any amounts received by the Mortgagee in damages arising out of the rejection of any Ground Lease as aforesaid shall be applied first to all reasonable costs and expenses of the Mortgagee (including, without limitation, reasonable attorneys' fees) incurred in connection with the exercise of any of its rights or remedies under this Section 5.21, and thereafter as provided in Section 3.03 hereof; (ix) if there shall be filed by or against the Mortgagor a petition under the Code or any Comparable Provision and the Mortgagor, as lessee under the Ground Leases, shall determine to reject any or all of the Ground Leases the Mortgagor shall give the Mortgagee not less than 10 days' prior notice of the date on which the Mortgagor shall apply to the Bankruptcy Court or other judicial body with appropriate jurisdiction for authority to reject the lease. The Mortgagee shall have the right, but not the obligation, to serve upon the Mortgagor within such 10 day period a notice stating that (a) the Mortgagee demands that the Mortgagor assume and assign such Ground Lease(s) to the Mortgagee pursuant to Section 365 of the Code or any Comparable Provision and (b) the Mortgagee covenants to cure or provide adequate assurance of prompt cure of all defaults and provide adequate assurance of future performance under such Ground Lease(s). If the Mortgagee serves upon the Mortgagor the notice described in the preceding sentence, the Mortgagor shall not seek to reject such Ground Lease(s) and shall comply with the demand provided for in clause (a) of the preceding sentence within 30 days after the notice shall have been given subject to the performance by the Mortgagee of the covenant provided for in clause (b) of the preceding sentence. Effective upon the entry of an order for relief in respect of the Mortgagor under Chapter 7 of the Code or Any Comparable Provision the Mortgagor hereby assigns and transfers to the Mortgagee a non-exclusive right to apply to the Bankruptcy Court or other judicial body with appropriate jurisdiction for an order extending the period during which the Ground Lease may be rejected or assumed; 54 (x) the Mortgagor shall promptly give to the Mortgagee copies of (A) all notices of default or (B) any other communications or notices with respect to events which relate to the possible impairment of the security of this Mortgage, which it shall give or receive under the Ground Leases and shall promptly notify the Mortgagor of any default under any Ground lease on the part of the Lessor or the Mortgagor; (xi) the Mortgagor shall enforce the obligations of the Lessor under each Ground Lease, to the end that the Mortgagor may enjoy all of the rights granted to it under the Ground leases; and (xii) the Mortgagor shall notify the Mortgagee within 5 days after the transfer of a fee interest in the Leased Land or any portion thereof to or from an Affiliate. (c) The Mortgagor hereby represents and warrants that all fixed net rent, taxes and assessments, payable under the Ground Leases have been paid to the extent they were due and payable to the date hereof and that the Mortgagor has not received notice of its failure to pay any other amounts payable under the Ground Leases which have not been cured. (d) If both the Lessor's and lessee's estates under any of the Ground Leases or any portion thereof shall at any time become vested in one owner, this Mortgage and the lien created hereby shall nevertheless not be merged, extinguished, destroyed or terminated by application of the doctrine of merger and, in such event, Mortgagee shall continue to have all of the rights and privileges of the a leasehold mortgagee. (e) The Mortgagor hereby acknowledges that if any Ground Lease shall be terminated prior to the natural expiration of its term due to default by the lessee thereunder, and if pursuant to such Ground Lease, the Mortgagee or its designee shall acquire from the Lessor a new lease of the Leased land or any portion thereof, the Mortgagor shall have no right, title or interest in or to such lease or the leasehold estate created thereby, or the options therein contained. (f) Any leases for parking purposes hereafter entered into by the Mortgagor as lessee shall contain provisions permitting the assignment of the same to the Mortgagee and the Trustee and permitting assignment without the lessor's consent if this Mortgage is foreclosed. Section 5.22. SUPERIOR MORTGAGES. 55 (a) The Mortgagor covenants and agrees that it will at all times fully perform and comply with all agreements, covenants, terms and conditions imposed upon or assumed by it as mortgagor under the Superior Mortgages prior to the expiration of any notice and/or cure period provided in each such Superior Mortgage. If a notice of default has been given by the holder of any Superior Mortgage and the maturity of the indebtedness secured by such Superior Mortgage has been accelerated as a result thereof, the Mortgagee may rely thereon and take any action the Mortgagee deems necessary in its sole discretion to prevent or to cure any default by the Mortgagor in the performance of or compliance with any of the agreements, covenants, terms or conditions imposed upon or assumed by the Mortgagor as mortgagor under each of the Superior Mortgages even though the existence of such default or the nature thereof may be questioned or denied by the Mortgagor or by any party on behalf of the Mortgagor provided that if the Mortgagor has heretofore taken such actions as described in Section 3.01(h), the Mortgagee shall not take any such action unless and until the Mortgagor and/or the Mortgagee no longer has the benefit of any such tolling or stay referred to in Section 3.01(h). Without limiting the generality of Section 3.09 hereof, the Mortgagor hereby expressly grants to the Mortgagee, and agrees that upon such acceleration the Mortgagee shall have, the absolute and immediate right to enter in and upon the Premises or any part thereof to such extent and as often as the Mortgagee, in its sole discretion, deems necessary for the purpose permitted by the immediately preceding sentence, subject only to applicable Legal Requirements. The Mortgagee may (i) pay and expend such sums of money as the Mortgagee in its sole discretion deems necessary for any such purpose and (ii) in its sole discretion prepay any Superior Mortgage, and the Mortgagor hereby agrees to pay to the Mortgagee, immediately and without demand, all such sums referred to in (i) and (ii) above so paid and expended by the Mortgagee, together with interest thereon from the date of each such payment at the rate of interest set forth in the Note. All sums so paid and expended by the Mortgagee and the interest thereon shall be added to and be secured by the lien of this Mortgage. (b) The Mortgagor further covenants and agrees: (i) the Mortgagor shall not, without first satisfying the conditions set forth in Section 5.22(b)(i) of the Note Mortgage: (A) modify any of the terms, covenants or conditions of any Superior Mortgage, and without limiting the foregoing, the Mortgagor shall not, without satisfying such conditions, enter into or obtain any agreement whereby the holder of any Superior Mortgage waives, postpones, extends, reduces or modifies the payment of the installment of principal or interest or 56 any other item or amount now required to be paid under the terms of any Superior Mortgage or modifies any other provision thereof, or (B) acquire or permit or suffer any Affiliate of the Mortgagor to acquire any Superior Mortgage or any interest therein. Notwithstanding anything in clause (A) to the contrary, the Mortgagor shall have the right to amend, supplement or modify any Superior Mortgage, if (x) the then outstanding principal balance of the indebtedness secured by such Superior Mortgage is not increased thereby, and (y) in the case of any After-Acquired Fee Mortgage, such amendment, supplement or agreement does not increase the property covered thereby; (ii) the Mortgagor shall timely pay and perform all of the obligations to be paid or performed by the mortgagor under each Superior Mortgage, the note secured thereby and any other instrument evidencing or securing the indebtedness owing to any holder of any Superior Mortgage; (iii) at any time, and from time to time, the Mortgagor shall upon request of the Mortgagee promptly use its reasonable efforts to obtain an estoppel certificate or letter addressed to the Mortgagee from holders of the Superior Mortgages, such certificate or letter to be in such form as the Mortgagee shall request; and (iv) the Mortgagor shall promptly give to the Mortgagee copies of (A) all notices of default or (B) any other notice or communication with respect to events which relate to the possible impairment of the security of this Mortgage, which it shall give or receive under the Superior Mortgages and shall promptly notify the Mortgagor of any default under any Superior Mortgages on the part of the Mortgagor. (c) The lien of this Mortgage in and to all or specified portions of the Trust Estate shall be subject and subordinate to any Existing Encumbrances and any mortgage, assignment, security agreement, financing statement or other lien securing any Working Capital Facility (the "Working Capital Facility Lien") encumbering Mortgagor's interest in the affected portions of the Trust Estate or any part thereof. The foregoing provisions of this Section 5.22(c) shall be self-operative with respect to Existing Encumbrances and shall be self-operative with respect to any Working Capital Facility Lien, and no further instrument shall be required to give effect to such subordination. Mortgagee shall, however, from time to time, execute instruments in form 57 and substance reasonably satisfactory to the holder of the Working Capital Facility Lien, confirming such subordination and agreeing to such other matters reasonably required by the holder of the Working Capital Facility Lien which do not, in the aggregate, materially adversely reduce or impair the rights of Trustee under the Mortgage, and Mortgagor and others may rely conclusively thereon, provided that Mortgagee shall have no liability thereunder and all costs and expenses (including reasonable attorneys' fees) shall be paid by Mortgagor. (d) The lien of the Mortgage in and to all or specified portions of the Trust Estate shall be subject and subordinate to any Existing Encumbrances. The provisions of this Section 5.22(d) shall be self-operative, and no further instrument shall be required to give effect to such subordination. Section 5.23. MORTGAGE PARI PASSU WITH NOTE MORTGAGE. Notwithstanding recordation of this Mortgage in the Atlantic County, New Jersey Clerk's Office after the recordation of the Note Mortgage, the lien of this Mortgage ranks pari passu with, and not junior to, the lien created by the Note Mortgage. ARTICLE SIX MISCELLANEOUS Section 6.01. ACTION UNDER NOTE MORTGAGE. Mortgagee acknowledges that it is the assignee of the Note Mortgage, which Note Mortgage creates a lien upon the Trust Estate which is PARI PASSU with the lien of this Mortgage. Mortgagee further acknowledges and agrees that whenever it is provided in the Note Mortgage that the Mortgagor shall deliver any notice or document, or is required to make any payment thereunder, the delivery of such notice or document or the making of such payment pursuant to the terms of the Note Mortgage shall also constitute the delivery of such notice or document or the making of such payment in satisfaction of the terms, conditions and provisions of this Mortgage to the same extent as the same constitutes satisfaction of the terms, conditions and provisions of the Note Mortgage. Section 6.02. COUNTERPARTS. This instrument may be executed in any number of counterparts, each of which as executed shall be deemed to be an original, but all such counterparts shall constitute one and the same instrument. Section 6.03. MODIFICATION. This Mortgage is subject to "modification" within the meaning of N.J.S.A. 46:9- 58 8.1 ET SEQ., and this Mortgage shall have the benefit of the lien priority provisions of such statute. Such modification may include, without limitation, a change in the interest rate, maturity date or other terms and conditions of this Mortgage. THE MORTGAGOR DECLARES THAT THE MORTGAGOR HAS RECEIVED A TRUE COPY OF THIS MORTGAGE. IN WITNESS WHEREOF, the parties hereto have caused this Mortgage to be duly executed and attested, all as of the day and year first above written. RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation By:_____________________________ Name: Title: (Vice) President ATTEST:_________________________ Name: Title: (Asst.) Secretary STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION By:_____________________________ Name: Title: (Vice) President ATTEST:_________________________ Name: Title: (Asst.) Secretary 59 Exhibit G Intercreditor Agreement Terms Exhibit G Outline of Material Terms of the Intercreditor Agreement for Resorts International, Inc. Subject Credit Senior Secured Loan due July 15, 2002 (the Facilities "Senior Facility"); Senior Mortgage Notes due [March] 15, 2003 (the "Senior Mortgage Notes"); Junior Mortgage Notes due June 15, 2004 (the "Junior Mortgage Notes"); and Any other credit facilities which may be required by the Indentures for the Senior Facility, the Senior Mortgage Notes or the Junior Mortgage Notes to be included in the Intercreditor Agreement (the "Additional Facilities," and together with the Senior Facility, the Senior Mortgage Notes and the Junior Mortgage Notes, the "Credit Facilities") Creditor Parties Senior Facility Trustee; Senior Mortgage Note Trustee; Junior Mortgage Note Trustee; and any lenders (or trustees or agents on behalf of any lenders) which provide Additional Facilities (collectively, the "Trustees") Each Creditor Party, by its execution of the Intercreditor Agreement (whether directly or through its trustee or agent), acknowledges the making of the other Credit Facilities and the intended uses of proceeds thereof and waives any right to object to any contemporaneous or existing Credit Facility as having constituted a fraudulent conveyance. Classification of Initial Designations:Credit Facilities Class 1 Facilities: Senior Facility, all guarantees thereof and all intercompany obligations pledged as collateral therefor. Class 2 Facilities: Senior Mortgage Notes, all guarantees thereof and all intercompany obligations pledged as collateral therefor. Class 3 Facilities: Junior Mortgage Notes, all guarantees thereof and all intercompany obligations pledged as collateral therefor. Subsequent Designations - as indicated on the signature page(s) to be executed by the lenders (or any trustees or agents on behalf of any lenders) which provide Additional Facilities and consented to by all other parties at such time. Borrower Parties Resorts International Hotel Financing, Inc. ("RIHF"), as borrower under the Secured Facilities; Resorts International Hotel, Inc. ("RIH") as guarantor under the Secured Facilities and issuer of the secured intercompany notes to RIHF collaterally assigned to each respective Trustee; Resorts International, Inc. ("RII"), as guarantor under the Senior Facility and issuer of any intercompany notes which may be issued to RIH; and [GRI, Inc. ("GRI", and together with RIHF, RIH and RII, the "Borrower Parties") as guarantor under the Senior Facility and issuer of any intercompany notes which may be issued to RIH.]1* The Borrower Parties will execute the Intercreditor Agreement principally for the purposes of (i) acknowledging the relative rights of and relationships among the Secured Facilities established therein and (ii) agreeing not to take any actions, including making any payments, inconsistent therewith. - ------------------- * Subject to discussion on structure 2 Relative Priorities Liens: Notwithstanding the time of filing, recording or perfecting of the Security Documents (which will be defined to include the Mortgages and other liens and encumbrances): Each Lien created on behalf of a Class 1 Facility shall be (i) pari passu with any other Lien created on behalf of any other Class 1 Facility and (ii) senior to any Lien created on behalf of any Class 2 Facility or Class 3 Facility. Each Lien created on behalf of a Class 2 Facility shall be (i) pari passu with any other Lien created on behalf of any other Class 2 Facility, (ii) senior to any Lien created on behalf of any Class 3 Facility and (iii) junior to any Lien created on behalf of any Class 1 Facility. Each Lien created on behalf of a Class 3 Facility shall be (i) pari passu with any other Lien created on behalf of any other Class 3 Facility, and (ii) junior to any Lien created on behalf of any Class 1 Facility or Class 2 Facility. Subrogation To be waived by all guarantors. Mortgage Default Each Class 3 Creditor shall notify each Cure Provisions Class 2 Creditor and each Class 1 Creditor of any Default or Event of Default under its respective Class 3 Facility or the Mortgage or other Security Documents securing its facility, and promptly shall send to each Class 2 Creditor and each Class 1 Creditor copies of all notices of default and all notices relating to cure and/or grace periods under such Class 3 Facility or the Mortgage or other Security Documents securing its facility. Each Class 2 Creditor shall notify each Class 1 Creditor and each Class 3 Creditor of any Default or Event of 3 Default under its respective Class 2 Facility or the Mortgage or other Security Documents securing its facility, and promptly shall send to each Class 1 Creditor and each Class 3 Creditor copies of all notices of default and all notices relating to cure and/or grace periods under such Class 2 Facility or the Mortgage or other Security Documents securing its facility. Each Class 1 Creditor shall notify each Class 2 Creditor and each Class 3 Creditor of any Default or Event of Default under its respective Class 1 Facility or the Mortgage or other Security Documents securing its facility, and promptly shall send to each Class 2 Creditor and each Class 3 Creditor copies of all notices of default and all notices relating to cure and/or grace periods under such Class 1 Facility or the Mortgage or other Security Documents securing its facility. In addition, each Trustee will be obligated to notify all other Trustees prior to exercising any remedies with respect to any shared collateral. Application of Proceeds from dispositions of Proceeds collateral, insurance proceeds, condemnation awards and similar amounts will be applied in accordance with relative priorities of Liens. Representations and Each party to the Intercreditor Warranties Agreement will make appropriate representations, including those relating to its corporate existence, power and authority, as well as to the validity and enforceability of the Intercreditor Agreement. Amendments Intercreditor Agreement may not be amended except pursuant to a writing executed by all parties thereto. Amendments for the sole purpose of adding permitted parties may be executed by the Trustees without the consent of 4 the creditors for whom they serve if all conditions precedent to the incurrence of such indebtedness have been satisfied. Amendments to sections [ ] and [ ] may be executed by the Trustees only with the approval of 100% of the creditors for whom they serve and amendments to sections [ ] and [ ] may be executed by the Trustees only with the approval of 66 2/3% of the creditors for whom they serve. Third Party Each party to the Intercreditor Beneficiarie Agreement will acknowledge that such agreement is being entered into for the benefit of the lenders under the Credit Facilities and their respective successors and assigns, each of whom is a direct intended third-party beneficiary. Certain Specific performance; no waivers; Miscellaneous cooperation and further assurances. Provisions Governing Law New York [GD&C Draft--12/30/93] [NA932820.031] -------------------------------------------- RESORTS INTERNATIONAL HOTEL FINANCING, INC., Issuer, RESORTS INTERNATIONAL HOTEL, INC., Guarantor, and U.S. TRUST COMPANY OF CALIFORNIA, N.A. Trustee -------------------------------------------- I N D E N T U R E Dated as of [ ], 1994 -------------------------------------------- 11.375% JUNIOR MORTGAGE NOTES DUE 2004 CROSS-REFERENCE TABLE SECTION OF TRUST INDENTURE ACT OF 1939 SECTION OF INDENTURE - -------------------------------------- -------------------- 310(a)(1) . . . . . . . . . . . . . . . . . . . . 8.08; 8.09 (a)(2) . . . . . . . . . . . . . . . . . . . . 8.09 (a)(3) . . . . . . . . . . . . . . . . . . . . 8.14(b) (a)(4) . . . . . . . . . . . . . . . . . . . . Not Applicable (b). . . . . . . . . . . . . . . . . . . . . . 8.08 (c). . . . . . . . . . . . . . . . . . . . . . Not Applicable 311(a). . . . . . . . . . . . . . . . . . . . . . 8.13 (b). . . . . . . . . . . . . . . . . . . . . . 8.13 (c). . . . . . . . . . . . . . . . . . . . . . Not Applicable 312(a). . . . . . . . . . . . . . . . . . . . . . 9.01; 9.02(a) (b). . . . . . . . . . . . . . . . . . . . . . 9.02(b) (c). . . . . . . . . . . . . . . . . . . . . . 9.02(c) 313(a). . . . . . . . . . . . . . . . . . . . . . 9.03(a) (b). . . . . . . . . . . . . . . . . . . . . . 9.03(a) (c). . . . . . . . . . . . . . . . . . . . . . 9.03(a) (d). . . . . . . . . . . . . . . . . . . . . . 9.03(b) 314(a). . . . . . . . . . . . . . . . . . . . . . 9.04 (b). . . . . . . . . . . . . . . . . . . . . . 6.02 (c)(1) . . . . . . . . . . . . . . . . . . . . 1.06 (c)(2) . . . . . . . . . . . . . . . . . . . . 1.06 (c)(3) . . . . . . . . . . . . . . . . . . . . 9.04(c); 12.07(i) (d). . . . . . . . . . . . . . . . . . . . . . 6.02 (e). . . . . . . . . . . . . . . . . . . . . . 1.06 (f). . . . . . . . . . . . . . . . . . . . . . Not Applicable 315(a). . . . . . . . . . . . . . . . . . . . . . 8.01(a) (b). . . . . . . . . . . . . . . . . . . . . . 8.02 (c). . . . . . . . . . . . . . . . . . . . . . 8.01(b) (d). . . . . . . . . . . . . . . . . . . . . . 8.01(c) (e). . . . . . . . . . . . . . . . . . . . . . 7.14 316(a)(l)(A). . . . . . . . . . . . . . . . . . . 7.12(b) (a)(l)(B). . . . . . . . . . . . . . . . . . . 7.13 (a)(2) . . . . . . . . . . . . . . . . . . . . Not Applicable (b). . . . . . . . . . . . . . . . . . . . . . 7.08 317(a)(l) . . . . . . . . . . . . . . . . . . . . 7.03 (a)(2) . . . . . . . . . . . . . . . . . . . . 7.04 (b). . . . . . . . . . . . . . . . . . . . . . 12.03 318(a). . . . . . . . . . . . . . . . . . . . . . 1.07 --------------------- Note: This Cross-Reference Table shall not be deemed, for any purpose, to be a part of this Indenture. TABLE OF CONTENTS PAGE ---- ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION Section 1.01. Definitions. . . . . . . . . . . . . . . . . . . . . 2 Section 1.02. Acts of Noteholders. . . . . . . . . . . . . . . . . 16 Section 1.03. Notices, etc., to Trustee, RIH and the Company. . . . . . . . . . . . . . . . . . . . . . 17 Section 1.04. Notices to Noteholders; Waiver.. . . . . . . . . . . 18 Section 1.05. Form and Contents of Documents Delivered to Trustee.. . . . . . . . . . . . . . . . . . . . . 19 Section 1.06. Compliance Certificates and Opinions.. . . . . . . . 20 Section 1.07. Conflict with Trust Indenture Act. . . . . . . . . . 21 Section 1.08. Effect of Headings and Table of Contents.. . . . . . 21 Section 1.09. Successors and Assigns.. . . . . . . . . . . . . . . 21 Section 1.10. Separability Clause. . . . . . . . . . . . . . . . . 21 Section 1.11. Benefits of Indenture. . . . . . . . . . . . . . . . 21 Section 1.12. Governing Law. . . . . . . . . . . . . . . . . . . . 21 Section 1.13. Casino Control Act.. . . . . . . . . . . . . . . . . 22 Section 1.14. General Application. . . . . . . . . . . . . . . . . 22 ARTICLE TWO NOTE FORM Section 2.01. Form Generally.. . . . . . . . . . . . . . . . . . . 22 Section 2.02. Form of Notes. . . . . . . . . . . . . . . . . . . . 23 Section 2.03. Form of Trustee's Certificate of Authentication.. . . . . . . . . . . . . . . . . . . 29 (i) PAGE ---- Section 2.04. Form of the Guaranty.. . . . . . . . . . . . . . . . 29 ARTICLE THREE THE NOTE Section 3.01. General Title. . . . . . . . . . . . . . . . . . . . 30 Section 3.02. Form and Denominations.. . . . . . . . . . . . . . . 30 Section 3.03. Execution, Authentication, Delivery and Dating . . . . . . . . . . . . . . . . . . . . . . . 29 Section 3.04. Temporary Notes. . . . . . . . . . . . . . . . . . . 31 Section 3.05. Registration, Transfer and Exchange. . . . . . . . . 31 Section 3.06. Mutilated, Destroyed, Lost and Stolen Notes. . . . . . . . . . . . . . . . . . . . . . . . 32 Section 3.07. Payment of Interest on Notes; Interest Rights Preserved.. . . . . . . . . . . . . . . . . . 33 Section 3.08. Persons Deemed Owners. . . . . . . . . . . . . . . . 34 Section 3.09. Cancellation.. . . . . . . . . . . . . . . . . . . . 35 Section 3.10. Term and Form. . . . . . . . . . . . . . . . . . . . 35 Section 3.11. Payment of Interest in Additional Notes. . . . . . . 36 Section 3.12. Exchangeability. . . . . . . . . . . . . . . . . . . 37 Section 3.13. Redemption . . . . . . . . . . . . . . . . . . . . . 37 Section 3.14. Authentication and Delivery of Original Issue. . . . . . . . . . . . . . . . . . . . . . . . 37 ARTICLE FOUR GUARANTY Section 4.01. Guaranty . . . . . . . . . . . . . . . . . . . . . . 37 Section 4.02. Execution and Delivery of Guaranty . . . . . . . . . 39 Section 4.03 Mortgage Securing Guaranty . . . . . . . . . . . . . 39 (ii) PAGE ---- ARTICLE FIVE SATISFACTION AND DISCHARGE Section 5.01. Payment of Indebtedness; Satisfaction and Discharge of Indenture . . . . . . . . . . . . . . . 40 Section 5.02. Application of Deposited Money . . . . . . . . . . . 41 Section 5.03. Repayment to the Company . . . . . . . . . . . . . . 42 ARTICLE SIX SECURITY Section 6.01. Assignment Agreement . . . . . . . . . . . . . . . . 42 Section 6.02. Recording, Etc.. . . . . . . . . . . . . . . . . . . 43 Section 6.03. Custody of Mortgage Documents. . . . . . . . . . . . 45 Section 6.04. Suits to Protect the Trust Estate and Mortgage Documents . . . . . . . . . . . . . . . . . 45 ARTICLE SEVEN REMEDIES Section 7.01. Events of Default. . . . . . . . . . . . . . . . . . 46 Section 7.02. Acceleration of Maturity; Rescission and Annulment . . . . . . . . . . . . . . . . . . . . . 50 Section 7.03. Covenant to Pay Trustee Amounts Due on Notes and Right of Trustee to Judgment . . . . . . . . . . 51 Section 7.04. Trustee May File Proofs of Claim . . . . . . . . . . 52 Section 7.05. Trustee May Enforce Claims Without Possession of Notes. . . . . . . . . . . . . . . . . 52 Section 7.06. Application of Money Collected . . . . . . . . . . . 53 Section 7.07. Limitation on Suits. . . . . . . . . . . . . . . . . 53 Section 7.08. Unconditional Right of Noteholders to Receive Principal and Interest . . . . . . . . . . . 54 Section 7.09. Restoration of Rights and Remedies . . . . . . . . . 54 (iii) PAGE ---- Section 7.10. Rights and Remedies Cumulative . . . . . . . . . . . 55 Section 7.11. Delay or Omission Not Waiver . . . . . . . . . . . . 55 Section 7.12. Other Rights . . . . . . . . . . . . . . . . . . . . 55 Section 7.13. Waiver of Past Defaults. . . . . . . . . . . . . . . 56 Section 7.14. Undertaking for Costs. . . . . . . . . . . . . . . . 56 Section 7.15. Enforcement. . . . . . . . . . . . . . . . . . . . . 57 Section 7.16. Management of Casino-Hotel . . . . . . . . . . . . . 57 ARTICLE EIGHT THE TRUSTEE Section 8.01. Certain Duties and Responsibilities. . . . . . . . . 58 Section 8.02. Notice of Defaults . . . . . . . . . . . . . . . . . 59 Section 8.03. Certain Rights of Trustee. . . . . . . . . . . . . . 59 Section 8.04. Not Responsible for Recitals or Issuance of Notes or Application of Proceeds. . . . . . . . . 61 Section 8.05. May Hold Notes . . . . . . . . . . . . . . . . . . . 61 Section 8.06. Money Held in Trust. . . . . . . . . . . . . . . . . 62 Section 8.07. Compensation and Reimbursement . . . . . . . . . . . 62 Section 8.08. Disqualification; Conflicting Interests. . . . . . . 63 Section 8.09. Corporate Trustee Required; Eligibility. . . . . . . 63 Section 8.10. Resignation and Removal; Appointment of Successor . . . . . . . . . . . . . . . . . . . . . 63 Section 8.11. Acceptance of Appointment by Successor . . . . . . . 65 Section 8.12. Merger, Conversion, Consolidation or Succession to Business . . . . . . . . . . . . . . . 65 Section 8.13. Preferential Collection of Claims Against Company. . . . . . . . . . . . . . . . . . . . . . . 66 Section 8.14. Co-trustees and Separate Trustees. . . . . . . . . . 66 (iv) PAGE ---- Section 8.15. Appointment of Authenticating Agent. . . . . . . . . 68 ARTICLE NINE NOTEHOLDERS' LISTS AND REPORTS BY TRUSTEE Section 9.01. Company to Furnish Trustee Semi-Annual Lists of Noteholders . . . . . . . . . . . . . . . . 69 Section 9.02. Preservation of Information; Communications to Noteholders. . . . . . . . . . . . 69 Section 9.03. Reports by Trustee . . . . . . . . . . . . . . . . . 70 ARTICLE TEN CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE Section 10.01. Consolidation, Merger, Conveyance or Transfer Only on Certain Terms . . . . . . . . . . . 72 Section 10.02. Successor Entity Substituted . . . . . . . . . . . . 73 Section 10.03. Successor Management of Casino-Hotel . . . . . . . . 74 Section 10.04. Limitation on Sales of Trust Estate. . . . . . . . . 74 ARTICLE ELEVEN AMENDMENTS, SUPPLEMENTS AND WAIVER Section 11.01. Without Consent of Noteholders . . . . . . . . . . . 74 Section 11.02. With Consent of Noteholders. . . . . . . . . . . . . 75 Section 11.03. Execution of Amendments and Supplements. . . . . . . 77 Section 11.04. Effect of Amendment or Supplement. . . . . . . . . . 77 Section 11.05. Conformity with Trust Indenture Act. . . . . . . . . 77 Section 11.06. Reference in Notes to Amendment or Supplement . . . . . . . . . . . . . . . . . . . . . 78 (v) ARTICLE TWELVE COVENANTS Section 12.01. Payment of Principal and Interest. . . . . . . . . . 78 Section 12.02. Maintenance of Office or Agency. . . . . . . . . . . 79 Section 12.03. Money for Security Payments to Be Held in Trust. . . . . . . . . . . . . . . . . . . . . . . . 79 Section 12.04. Corporate Existence. . . . . . . . . . . . . . . . . 81 Section 12.05. To Keep Books; Inspection by Trustee . . . . . . . . 81 Section 12.06. Reports and Compliance Certificates. . . . . . . . . 81 Section 12.07. Limitation on Dividends and Restricted Payments . . . . . . . . . . . . . . . . . . . . . . 83 Section 12.08. Limitation on Additional Indebtedness and Issuance of Notes. . . . . . . . . . . . . . . . . . 85 Section 12.09. Limitation on Repayment of Subordinated Indebtedness . . . . . . . . . . . . . . . . . . . . 86 Section 12.10. Limitation on Certain Transactions . . . . . . . . . 86 Section 12.11. Restriction of Activities. . . . . . . . . . . . . . 86 Section 12.12. Limitation on Subsidiaries; Consolidated Group. . . . . . . . . . . . . . . . . . . . . . . . 87 Section 12.13. Limitations on Liens . . . . . . . . . . . . . . . . 88 Section 12.14. Compliance with Laws . . . . . . . . . . . . . . . . 88 Section 12.15. Payment of Taxes and Other Claims. . . . . . . . . . 88 Section 12.16. Maintenance of Properties. . . . . . . . . . . . . . 89 Section 12.17. Insurance . . . . . . . . . . . . . . . . . . . . . 89 Section 12.18 Waiver of Stay, Extension or Usury Laws. . . . . . . 89 Section 12.19. Appointment to Fill a Vacancy in Office of Trustee . . . . . . . . . . . . . . . . . . . . . 90 Section 12.20 Validity of Liens. . . . . . . . . . . . . . . . . . 90 (vi) PAGE ---- Section 12.21. Transactions with Stockholders and Affiliates . . . . . . . . . . . . . . . . . . . . . 91 Section 12.22. Limitation on Open Market Purchases. . . . . . . . . 91 ARTICLE THIRTEEN REDEMPTION OF NOTES Section 13.01. General Applicability of Article . . . . . . . . . . 91 Section 13.02. Election to Redeem; Notice to Trustee. . . . . . . . 91 Section 13.03. Selection by Trustee of Notes to Be Redeemed . . . . . . . . . . . . . . . . . . . . . . 91 Section 13.04. Notice of Redemption . . . . . . . . . . . . . . . . 92 Section 13.05. Deposit of Redemption Price. . . . . . . . . . . . . 92 Section 13.06. Notes Payable on Redemption Date . . . . . . . . . . 93 Section 13.07. Notes Redeemed in Part . . . . . . . . . . . . . . . 93 Section 13.08. Redemption Pursuant to Casino Control Act. . . . . . . . . . . . . . . . . . . . . . . . . 93 (vii) TABLE OF EXHIBITS EXHIBITS DOCUMENT - -------- -------- Exhibit A RIH Junior Promissory Note Exhibit B Assignment Agreement from Resorts International Hotel Financing, Inc. Exhibit C Subordination Provisions Exhibit D Mortgage securing RIH Junior Promissory Note between Resorts International Hotel, Inc. and Resorts International Hotel Financing, Inc. Exhibit E Assignment of Leases and Rents from Resorts International Hotel, Inc. to Resorts International Hotel Financing, Inc. Exhibit F Mortgage securing Guaranty of Junior Mortgage Notes between Resorts International Hotel, Inc. and U.S. Trust Company of California, N.A., as Trustee Exhibit G Intercreditor Agreement Terms (vii) INDENTURE THIS INDENTURE dated as of [ ], 1994, among Resorts International Hotel Financing, Inc., a Delaware corporation (the "Company"), Resorts International Hotel, Inc., a New Jersey corporation ("RIH"), and U.S. Trust Company of California, N.A., a national banking association, as trustee (together with its successors as such trustee, the "Trustee"). PRELIMINARY STATEMENT The capitalized terms used in this Indenture which are not otherwise defined herein have the meanings set forth in Article I. The Company has duly authorized the creation, execution and delivery of its 11.375% Junior Mortgage Notes due 2004 (the "Notes"), issuable in accordance with the terms hereof, and RIH has duly authorized the guaranty of the Company's obligations under this Indenture, and, to secure the Notes and to provide therefor, each of the Company and RIH has duly authorized the execution and delivery of this Indenture. Each $1,000 principal amount of the Notes will be issued with one share of Resorts International, Inc.'s Class B Redeemable Common Stock (the "Class B Common Stock") (each $1,000 principal amount of the Notes and share of Class B Common Stock are referred to collectively herein as a "Unit"). Each Note may not be transfered separately from the share(s) of Class B Common Stock issued in respect of such Note. All things have been done which are necessary to make the Notes, when executed by the Company and authenticated and delivered by the Trustee hereunder and duly issued by the Company, the valid obligations of the Company, and to constitute this Indenture a valid agreement of the Company and RIH, in accordance with the terms of the Notes and this Indenture. THEREFORE, for and in consideration of the premises and the purchase or acceptance of the Notes by the Holders thereof, RIH and the Company do hereby covenant and agree to and with the Trustee, for the Ratable Benefit of all Holders of the Notes thereto appertaining, as follows: ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION Section 1.01. DEFINITIONS. For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires: (a) the terms defined in this Article One have the meanings assigned to them in this Article One and include the plural as well as the singular; (b) 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; (c) all accounting terms not otherwise defined herein have the meanings assigned to them, and all computations herein provided for shall be made, in accordance with GAAP consistently applied; and (d) 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. "ACCOUNTANT" means a Person engaged in the practice of accounting who (except as otherwise expressly provided in this Indenture) may be employed by or affiliated with the Company or RIH. "ACT" when used with respect to any Noteholder or Noteholders has the meaning stated in Section 1.02(a). "ADDITIONAL NOTES" means additional 11.375% Junior Mortgage Notes due 2004 issued in payment of interest accrued on outstanding Notes pursuant to Section 3.11. "AFFILIATE" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person, and, with respect to any specified natural Person, any other Person having a relationship by blood, marriage or adoption not more remote than first cousin with such specified Person. For purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms 2 "controlling" and "controlled" have meanings correlative to the foregoing; PROVIDED, HOWEVER, that, except as may be required under the TIA, the term "Affiliate" shall not include, with respect to the Company or RIH, any of Fidelity Management & Research Company, TCW Special Credits or funds or accounts managed or advised by either of them. "AFTER-ACQUIRED FEE MORTGAGE DEBT" means any Indebtedness secured by an After-Acquired Fee Mortgage. "AFTER-ACQUIRED FEE MORTGAGE" has the meaning stated in Section 2.07 of the Mortgage. "ASSIGNMENT AGREEMENT" means the Assignment of Agreements dated as of the date hereof, providing for the assignment of the RIH Junior Promissory Note and other Mortgage Documents to the Trustee by the Company, and acknowledgment thereof by RIH, a copy of which is attached hereto as Exhibit B. "ASSIGNMENT OF LEASES AND RENTS" means the Assignment of Leases and Rents dated as of the date hereof, from RIH to the Company securing the RIH Junior Promissory Note, a copy of which is attached hereto as Exhibit E. "AUTHENTICATING AGENT" means any Person named as Authenticating Agent for the Notes in accordance with the provisions of this Indenture until a successor Authenticating Agent becomes such pursuant thereto, and thereafter Authenticating Agent shall mean such successor. "AUTHORIZED SIGNATURE" means the signatures of the chairman of the board, the president or a Vice President and of the treasurer, an assistant treasurer, the controller, an assistant controller, the secretary or an assistant secretary of the Company or RIH, as the case may be. "CAPITALIZED LEASE OBLIGATION" means, with respect to any Person, any lease of any property (whether real, personal or mixed) by such Person as lessee which, in conformity with GAAP consistently applied, is accounted for as a capitalized lease on the balance sheet of such Person. "CASINO" means that portion of the Casino-Hotel used for gaming and related activities. "CASINO-HOTEL" means the casino and hotel complex and ancillary structures and facilities located on the Premises and furniture, fixtures and equipment at any time contained therein. 3 "CASINO CONTROL ACT" means the New Jersey Casino Control Act and the regulations promulgated thereunder, as amended. "CASINO CONTROL COMMISSION" means the New Jersey Casino Control Commission, as from time to time constituted, or if at any time after the execution of this Indenture such Commission is not existing and performing the duties theretofore assigned to it, then the body performing such duties at such time. "COMBINATION TRANSACTION" has the meaning stated in Section 10.01. "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 instrument such Commission is not existing and performing the duties theretofore assigned to it under the TIA, then the body performing such duties at such time. "COMPANY" means the Person named as the "Company" in the first paragraph of this instrument until a successor entity shall have become such pursuant to the applicable provisions of this Indenture, and thereafter, except to the extent otherwise contemplated by Section 10.02, "Company" shall mean such successor entity exclusively. "COMPANY CONSENT", "COMPANY ORDER" and "COMPANY REQUEST" mean, respectively, a written consent, order or request signed with an Authorized Signature and delivered to the Trustee. "CONSOLIDATED CASH FLOW" means, with respect to any Person for any period, an amount equal to the sum of (i) the consolidated net income (or loss) of such Person for such period determined in accordance with GAAP consistently applied, excluding interest income, interest expense and gains or losses from extraordinary or nonrecurring items, plus (ii) all amounts deducted in computing such consolidated net income (or loss) in respect of depreciation and amortization, plus (iii) non-cash charges arising from the reduction of CRDA Deposits to market value, minus (iv) taxes based upon or measured by income which are payable in cash, minus (v) CRDA Deposits. "CONSOLIDATED INTEREST CHARGES" means, with respect to any Person for any period, the consolidated interest expense (not including the non-cash amortization of discount on the original issuance of (a) the RIH Promissory Note, (b) any intercompany indebtedness of RIH issued in connection with Indebtedness represented by the Junior 4 Mortgage Facility and (c) any intercompany indebtedness of RIH issued in connection with Indebtedness represented by the Working Capital Facility), whether payable in cash or in-kind (and with respect to RIH, including, without limitation, the interest paid or accrued (without duplication) on (i) the RIH Promissory Note, (ii) any intercompany indebtedness of RIH issued in connection with Indebtedness represented by the Junior Mortgage Facility and (iii) any intercompany indebtedness of RIH issued in connection with Indebtedness represented by the Working Capital Facility), without deduction for interest income (other than cash interest income received from RII in payment of its interest cost on any Working Capital Facility), in each case for such Person and its consolidated Subsidiaries for such period determined in accordance with GAAP consistently applied. "CONSOLIDATED INTEREST COVERAGE RATIO" shall mean, at any date of calculation thereof, the ratio of (a) Consolidated Cash Flow of RIH and its consolidated Subsidiaries for the immediately preceding four consecutive fiscal quarters to (b) Consolidated Interest Charges of RIH and its consolidated Subsidiaries for such period. "CONSOLIDATED NET INCOME" means, with respect to any Person for any period, an amount equal to consolidated net income (or loss) of such Person for such period determined in accordance with GAAP consistently applied, minus (a) federal and state taxes based upon or measured by income which are payable in cash, plus (b) non-cash charges arising from federal and state taxes based upon or measured by income. "CRDA DEPOSITS" means (a) the quarterly deposits made by RIH to the Casino Reinvestment Development Authority in an amount equal to 1.25% of RIH's gross revenue in order to satisfy its investment obligation pursuant to the Casino Control Act, and (b) the amounts invested in qualified investments in lieu of any of the quarterly deposits (or portion thereof) referred to in clause (a) above. "CRDA DISPUTE" means the dispute existing on the date hereof between RIH and the New Jersey Casino Reinvestment Development Authority regarding CRDA Deposits and New Jersey Casino Reinvestment Authority Notes, which dispute involves an amount of approximately $30,000,000. "DEFAULT" means the occurrence and continuance of an Event of Default or an event which, after notice or lapse of time or both, would become an Event of Default. "DEFAULTED INTEREST" has the meaning stated in Section 3.07. 5 "EFFECTIVE DATE" means the date on which the prepackaged plan of reorganization of RII and GRI becomes effective. "EVENT OF DEFAULT" has the meaning stated in Section 7.01. An Event of Default shall "exist" if an Event of Default shall have occurred and be continuing. "EXCHANGE ACT" means the Securities and Exchange Act of 1934, as amended. "EXISTING ENCUMBRANCES" has the meaning stated in Section 1.01 of the Mortgage. "FAIR MARKET VALUE" of any Notes means (a) the average of the closing sales price of the Notes for the 30 trading days immediately prior to the date of determination of such value on the largest national securities exchange on which such Notes shall have traded on such trading days, or (b) if no such sales of such Notes occurred during such 30-day period or if the Notes are not so listed but are traded in the over-the-counter market with quotations available in the National Association of Securities Dealers Automated Quotation System ("NASDAQ"), the average of the means between the "bid" and "asked" prices on such national securities exchange or as quoted on NASDAQ, as the case may be, during such 30-day period, or (c) if the Notes are not traded on a national securities exchange or quoted on NASDAQ, the fair market value of such Notes as of the date of determination as determined by agreement of two nationally recognized Independent investment banking firms, one to be chosen by the Company and the other by the Holder of the Notes being valued, with the costs of each such firm being the responsibility of the Person selecting such firm. If such firms cannot agree upon such fair market value, such firms shall select a third nationally recognized Independent investment banking firm, which shall determine such fair market value, the costs of such third firm being shared equally by the Company and such Holder. "F,F&E FINANCING AGREEMENT" has the meaning stated in Section 1.01 of the Mortgage. "GAAP" means United States generally accepted accounting principles. "GRI" means GGRI, Inc., a Delaware corporation. "GROUND LEASES" has the meaning stated in Granting Clause Second of the Mortgage. "GUARANTY" means the guaranty contained in Article Four. 6 "GUARANTY MORTGAGE" means the Mortgage securing Guaranty of Junior Mortgage Notes dated as of the date hereof, between RIH, as mortgagor, and the Trustee, as mortgagee, securing the Guaranty, a copy of which is attached hereto as Exhibit F. "HOTEL" means that portion of the Casino-Hotel not included within the Casino. "INDEBTEDNESS" means, as applied to any Person, without duplication, any indebtedness, exclusive of deferred taxes, (a) in respect of borrowed money (whether or not the recourse of the lender is to the whole of the assets of such Person or only to a portion thereof); (b) evidenced by bonds, notes, debentures or similar instruments or letters of credit; (c) representing the balance deferred and unpaid of the purchase price of any property, if and to the extent such indebtedness would appear as a liability upon a balance sheet of such Person prepared in accordance with GAAP (but excluding trade accounts payable arising in the ordinary course of business that are not overdue by more than 90 days or are being contested by such Person in good faith); (d) any Capitalized Lease Obligations (other than, with respect to RIH or the Company, the Ground Leases) of such Person; and (e) Indebtedness of others guaranteed by such Person, including, without limitation, every obligation of such Person (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or to purchase (or to advance or supply funds for the purchase of) any security for the payment of such Indebtedness, (ii) to purchase property, securities or services for the purpose of assuring the holder of such Indebtedness of the payment of such Indebtedness, or (iii) to maintain working capital, equity capital or other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness; PROVIDED, HOWEVER, that the guaranty by any Person shall not include endorsements by such Person for collection or deposit, in either case in the ordinary course of business. The term "INDEBTEDNESS" does not include: (1) any of the types of indebtedness described in clauses (a) through (e) above (inclusive) owed by the Company to RIH or any of their Subsidiaries, by RIH to the Company or any of their Subsidiaries or by any such Subsidiary to RIH, the Company or any other such Subsidiary (including, without limitation, the RIH Promissory Note and the RIH Junior Promissory Note); (2) the Guaranty, the Junior Guaranty, the Senior Guaranty and the Working Capital Facility Guaranty; (3) matters relating to the CRDA Dispute, New Jersey Casino Reinvestment Development Authority Notes or CRDA Deposits; and (4) any payments made by the Company or RIH under the RII Management Agreement, the RII Tax Sharing Agreement or the Services Agreement. 7 "INDENTURE" means this instrument as originally executed or as it may from time to time be supplemented, modified or amended by one or more indentures or other instruments supplemental hereto entered into pursuant to the applicable provisions thereof. "INDEPENDENT" when used with respect to any specified Person means such a Person who (a) is in fact independent, (b) does not have any direct financial interest or any material indirect financial interest in the Company or in any other obligor upon the Notes or in any Affiliate of the Company or of such other obligor and (c) is not connected with the Company or such other obligor or any Affiliate of the Company or such other obligor as an officer, employee, promoter, underwriter, trustee, partner, director or person performing similar functions. Whenever it is herein provided that any Independent Person's opinion or certificate shall be furnished to the Trustee, such Person shall be appointed by a Company Order, and such opinion or certificate shall state that the signer has read this definition and that the signer is Independent within the meaning hereof. A Person who is performing or who has performed services as an independent contractor to any specified Person shall not be considered not Independent merely by reason of the fact that such Person is or has performed such services. "INTERCREDITOR AGREEMENT" means the Intercreditor Agreement dated as of the date hereof, among the Trustee, the trustee under the Senior Mortgage Note Indenture and such other parties that may from time to time become a party thereto, which shall incorporate the terms set forth in Exhibit G. "INTEREST PAYMENT DATE" means the date on which an installment of interest on the Notes is due and payable. "JUNIOR GUARANTY" means the Guaranty and any other guaranty of the Junior Mortgage Facility by RIH. "JUNIOR MORTGAGE FACILITY" means the Notes and any secured or unsecured facility or facilities entered into by RIH or the Company providing for the making of loans to RIH or the Company on a revolving or term basis, or the issuance of notes, debentures or bonds by RIH or the Company, as such agreement, indenture or instrument may be amended, supplemented or modified from time to time, or any refinancing thereof, in an aggregate principal amount up to $35,000,000 plus additional notes, debentures or bonds issued in payment of interest accrued on outstanding notes, debentures or bonds; PROVIDED, HOWEVER, that the lender or lenders thereunder (or any trustee or agent acting on behalf of such lender or lenders) shall have executed an intercreditor agreement covering the matters set forth on Exhibit G. The liens, if 8 any, securing the Junior Mortgage Facility shall be PARI PASSU with the lien of the Mortgage and the Guaranty Mortgage. The term "Junior Mortgage Facility" does not include the Junior Guaranty. "LEGAL REQUIREMENTS" has the meaning stated in Section 1.01 of the Mortgage. "MATURITY" when used with respect to any Note means the date on which the principal (or any portion thereof) of such Note becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration or call for redemption or otherwise. "MORTGAGE" means the Mortgage securing the RIH Junior Promissory Note dated as of the date hereof, between the Company, as successor mortgagee, and RIH, as mortgagor. "MORTGAGE DEBT" means, at any point in time, the RIH Promissory Note, the RIH Junior Promissory Note and any secured Indebtedness outstanding under any Working Capital Facility. "MORTGAGE DOCUMENTS" means (a) the Mortgage, the Guaranty Mortgage, the RIH Junior Promissory Note, the Assignment of Leases and Rents and any other security document to which either RIH or the Company is a party relating to the Notes, which is executed and delivered pursuant to or in connection with the Mortgage, the Guaranty Mortgage or the Assignment Agreement, and (b) any mortgage, deed of trust, guaranty, promissory note, collateral assignment agreement, assignment of leases and rents, assignment of operating assets and any other security document to which either RIH or the Company is a party relating to the Junior Mortgage Facility. "NATIONAL ACCOUNTANTS" has the meaning stated in Section 12.06(a). "NEW JERSEY CASINO REINVESTMENT DEVELOPMENT AUTHORITY NOTES" shall mean bonds issued by the Casino Reinvestment Development Authority, a public authority created under the Casino Control Act. "NON-RECOURSE INDEBTEDNESS" means indebtedness incurred in connection with the acquisition, purchase, improvement or development of property or assets (other than the Trust Estate) used by the Company, RIH or any Subsidiary of RIH or the Company to engage in the casino business, the hotel business or related or ancillary business or purpose and which is secured only by such assets and without recourse to RIH, the Company or any Subsidiary of RIH or the Company or the Trust Estate for such indebtedness. 9 "NOTEHOLDER" or "HOLDER" means a Person in whose name a Note is registered in the Note Register. "NOTE REGISTER" and "NOTE REGISTRAR" have the respective meanings stated in Section 3.05. "NOTES" has the meaning stated in the Preliminary Statement of this instrument and more particularly includes any Note authenticated and delivered hereunder, including, without limitation, any Additional Notes. The term "Notes" does not include the Guaranty. "OFFICER" of the Company or RIH means any Person authorized to execute an Authorized Signature. "OFFICERS' CERTIFICATE" delivered by the Company or RIH means a certificate signed with an Authorized Signature and delivered to the Trustee. Whenever this Indenture requires that an Officers' Certificate be signed also by an Accountant or other expert, such Accountant or other expert may (except as otherwise expressly provided in this Indenture) be in the general employ of the Company or RIH. "OPINION OF COUNSEL" means a written opinion of counsel who may (except as otherwise expressly provided in this Indenture) be an employee of the Company or RIH. Unless otherwise specifically provided in this Indenture, such counsel may rely as to any statement of facts not personally known to such counsel and relating to such opinion on an Officers' Certificate, to the extent not rejected by the Trustee and its counsel (which rejection shall not be unreasonably given). "OUTSTANDING" when used with respect to Notes means, as of the date of determination, all Notes theretofore authenticated and delivered under this Indenture, except: (a) Notes theretofore canceled by the Trustee or delivered to the Trustee for cancellation; (b) Notes for whose payment or redemption money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent in trust for the Holders of such Notes; (c) Notes in exchange for or in lieu of which other Notes have been authenticated and delivered under this Indenture; and (d) Notes alleged to have been destroyed, lost or stolen which have been paid as provided in Section 3.06; 10 PROVIDED, HOWEVER, that in determining whether the Holders of the requisite principal amount of Notes Outstanding have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Notes owned by the Company or any other obligor upon the Notes or any Affiliate of the Company or of such other obligor shall be disregarded and deemed not to be outstanding. In determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Notes which the Trustee actually knows to be so owned shall be so disregarded. "OUTSTANDING AMOUNT" of any Indebtedness at any time means the principal amount outstanding of such Indebtedness at such time. "PAYING AGENT" means any Person now or hereafter authorized by the Company to pay the principal of or interest on any Notes on behalf of the Company. "PERMITS" has the meaning stated in Section 1.01 of the Mortgage. "PERMITTED ENCUMBRANCES" has the meaning stated in Section 1.01 of the Mortgage. "PERSON" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or any other entity or government or any agency or political subdivision thereof. "PLACE OF PAYMENT" when used with respect to the Notes means a city or any political subdivision thereof in which the Company is by this Indenture required to maintain an office or agency for the payment of the principal of or interest on the Notes. "PLAN" means the Plan of Reorganization of RII and GRI dated [ ], 1994. "PREDECESSOR NOTES" of any particular Note means every previous Note evidencing all or a portion of the same debt as that evidenced by such particular Note; and, for purposes of this definition, any Note authenticated and delivered under Section 3.06 in lieu of a lost, destroyed or stolen Note shall be deemed to evidence the same debt as the lost, destroyed or stolen Note. "PREMISES" has the meaning stated in Granting Clause Third of the Mortgage. "RATABLE BENEFIT" means, for any class or classes of Indebtedness at any time, in proportion to the total Outstanding Amount of such class or classes held by each holder thereof at such time. 11 Outstanding Amount of such class or classes held by each holder thereof at such time. "REDEMPTION DATE" when used with respect to any Note to be redeemed means the date fixed for such redemption pursuant to this Indenture. "REDEMPTION PRICE" when used with respect to any Note to be redeemed means the price at which it is to be redeemed pursuant to this Indenture. It does not include installments of interest due on or before the Redemption Date. "REGULAR RECORD DATE" for the interest payable on any Interest Payment Date on the Notes means the date specified in the provisions of this Indenture. "RESPONSIBLE OFFICER" means any Vice President, any Assistant Vice President or any other officer of assistant officer of the Trustee assigned by the Trustee to administer its corporate trust matters. "RESTRICTED PAYMENT" means (a) any declaration or payment of any dividend or the making of any distribution to holders of capital stock of RIH or the Company or any Subsidiary of RIH or the Company in respect of such capital stock (other than to RIH or the Company or a direct or indirect wholly owned Subsidiary of RIH or the Company), (b) any purchase, redemption or other acquisition or retirement for value of any capital stock (or warrants, rights or options to acquire any capital stock or Indebtedness convertible into or exchangeable for any capital stock) of RIH or the Company or any Subsidiary of RIH or the Company (other than purchases, redemptions, acquisitions or retirement solely from RIH or the Company or a direct or indirect wholly owned Subsidiary of RIH or the Company); PROVIDED, HOWEVER, that any such purchase, redemption or other acquisition or retirement that is required by the Casino Control Commission or under the Casino Control Act shall not constitute a Restricted Payment. The term "Restricted Payment" also shall not include any loan or advance to RII of all or any portion of the proceeds of the Indebtedness represented by the Working Capital Facility. 12 "RIH" means the person named as "RIH" in the first paragraph of this instrument until a successor entity shall have become such pursuant to the applicable provisions of the Indenture, and thereafter, except to the extent otherwise contemplated by Section 10.02, "RIH" shall mean such successor entity exclusively. "RIH JUNIOR PROMISSORY NOTE" means the secured junior promissory note, dated the date hereof, made by RIH in the principal amount of $35,000,000, plus any additional junior promissory notes issued in connection with the payment of interest accrued on outstanding Notes payable to the order of the Company, a copy of which is attached hereto as Exhibit A. "RIH SALE" means (a) a consolidation, combination or merger involving RIH and any other Person, (b) a sale, assignment, conveyance or transfer or RIH's interest in the Trust Estate, substantially as an entirety, to any other Person or group of Persons in one transaction or a series of related transactions, or (c) any transaction as a result of which RIH ceases to be a direct or indirect wholly owned Subsidiary of RII; PROVIDED, HOWEVER, that any of the transactions described in clauses (a), (b) and (c) above shall not constitute an RIH Sale if the other party or parties to the transaction consists of only one or more of the following Persons: the Company or any wholly owned direct or indirect subsidiary of RIH or the Company; PROVIDED, FURTHER, HOWEVER, that notwithstanding any other provision of this definition, if the primary effect of any of the aforesaid transactions is the redemption of the Notes, then such transaction shall not be considered to be an RIH Sale. "RIH PROMISSORY NOTE" means the secured promissory note, amended and restated as of the date hereof, made by RIH in the principal amount of $125,000,000 payable to the order of the Company, a copy of which is attached to the Senior Mortgage Note Indenture as Exhibit A. "RIHF SENIOR FACILITY" means the senior secured note facility contemplated by the purchase agreement dated as of the date hereof, among the Company, RIH, RII and funds managed by Fidelity Management and Research Company, which allows the Company to borrow up to $20,000,000 in aggregate principal amount through the issuance of RIHF Senior Facility Notes. The term "RIHF Senior Facility" does not include the Working Capital Facility Guaranty. "RIHF SENIOR FACILITY NOTES" means, collectively, the notes executed and delivered by the Company under the RIHF Senior Facility. 13 "RII" means Resorts International, Inc., a Delaware corporation. "RII MANAGEMENT CONTRACT" means the Management Contract dated as of the date hereof, between RII and RIH pursuant to which RII provides certain management services to RIH for an annual fee of 3% of the gross revenues of RIH. "RII TAX SHARING AGREEMENT" means the Tax Sharing Agreement dated as of the date hereof between RII and RIH pursuant to which (i) RIH will not make any payments to RII or any other Affiliate in respect of taxes, other than to reimburse RII for any cash payments actually made by RII in respect of any federal, state or local income or alternative minimum taxes arising from the earnings or operations of RIH; PROVIDED, HOWEVER, that RIH shall not be required to reimburse RII for cash payments in respect of federal, state or local income or alternative minimum taxes that would not have been owed but for the reduction, if any, of the amount of the consolidated net operating loss carryforwards or consolidated current losses of the affiliated group of which RII is a common parent which resulted from the inclusion in the consolidated return filed for such group for any taxable year ending after the Effective Date of the income of any entity other than RIH, other than income directly attributable to the consummation of the Plan, including but not limited to the transfer of the stock of RIB (as defined in the Plan) and the assets of the U.S. Paradise Island Subsidiaries (as defined in the Plan), and (ii) RIH will be entitled to any refund (plus the interest thereon) of any taxes for which RIH is required to reimburse RII. "SENIOR ASSIGNMENT OF LEASES AND RENTS" means the Assignment of Leases and Rents dated as of the date hereof, from RIH to the Company securing the RIH Promissory Note. "SENIOR GUARANTY" means the guaranty of the 11% Senior Mortgage Notes due 2003 by RIH contained in Article Four of the Senior Mortgage Note Indenture. "SENIOR GUARANTY MORTGAGE" means the Mortgage securing the Guaranty of Senior Mortgage Notes dated as of the date hereof, between RIH, as mortgagor, and State Street Bank and Trust Company of Connecticut, N.A., as mortgagee. "SENIOR MORTGAGE" means the Mortgage securing the RIH Promissory Note dated as of the date hereof, between the Company, as successor mortgagee, and RIH, as mortgagor. "SENIOR MORTGAGE DOCUMENTS" means the Senior Mortgage, the Senior Guaranty Mortgage, the RIH 14 Promissory Note, the Senior Assignment of Leases and Rents and any other security document to which either RIH or the Company is a party relating to the Senior Mortgage Notes, which is executed and delivered pursuant to or in connection with the Senior Mortgage, the Senior Guaranty Mortgage or the Senior Assignment Agreement. "SENIOR MORTGAGE NOTE INDENTURE" means the Indenture dated as of the date hereof, among the Company, RIH and State Street Bank and Trust Company of Connecticut, N.A., as trustee, pursuant to which the Senior Mortgage Notes were issued, as originally executed or as it may from time to time be supplemented, modified or amended by one or more indentures or other instruments supplemental thereto entered pursuant to the applicable provisions thereof. "SENIOR MORTGAGE NOTES" means the 11% Mortgage Notes due 2003 of the Company issued pursuant to the Senior Mortgage Note Indenture. "SERVICES AGREEMENT" means the Services Agreement dated as of September 17, 1992, between RII, RIH and The Griffin Group, Inc. "SPECIAL RECORD DATE" for the payment of any Defaulted Interest on Notes means a date fixed by the Trustee pursuant to Section 3.07. "STATED MATURITY" when used with respect to any Note means the date specified in such Note as the fixed date on which the principal of such Note is due and payable. "SUBSIDIARY" of any Person means a corporation more than 50% of the outstanding voting stock of which is owned, directly or indirectly, by such Person or one or more Subsidiaries of such Person. "TIA" or "TRUST INDENTURE ACT" means the Trust Indenture Act of 1939, as amended. "TRUSTEE" means the Person named as the "Trustee" in the first paragraph of this instrument until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter Trustee shall mean such successor Trustee. "TRUST ESTATE" has the meaning stated in the Granting Clauses to the Mortgage. 15 "VICE PRESIDENT" when used with respect to the Company, RIH or the Trustee means any vice president, whether or not designated by a number or a word added to the title. "WORKING CAPITAL FACILITY" means the RIHF Senior Facility (and the RIHF Senior Facility Notes issued thereunder) and any other secured or unsecured facility or facilities entered into by RIH and/or the Company providing for the making of working capital loans to RIH or the Company (with RII [and GRI] as a guarantor[s] thereunder) on a revolving or term basis, or the issuance of notes, debentures or bonds by RIH, the Company or RII, as such agreement may be amended, supplemented or modified from time to time, or any refinancing thereof, in an aggregate principal amount up to $20,000,000; PROVIDED, HOWEVER, that the lender or lenders thereunder (or any trustee or agent acting on behalf of such lender or lenders) shall have executed an intercreditor agreement covering the matters set forth on Exhibit G. The liens, if any, securing the Working Capital Facility may be senior to the lien of the Mortgage, the Guaranty Mortgage, the Senior Mortgage and the Senior Guaranty Mortgage. The term "Working Capital Facility" does not include the Working Capital Facility Guaranty. "WORKING CAPITAL FACILITY MORTGAGE DOCUMENTS" means any mortgage, deed of trust, guaranty, promissory note, collateral assignment agreement, assignment of leases and rents, assignment of operating assets and any other security document to which either RIH or the Company is a party relating to the Working Capital Facility. "WORKING CAPITAL FACILITY GUARANTY" means any guaranty of the Working Capital Facility by RIH, including, without limitation, the guaranty of the RIHF Senior Facility Notes. Section 1.02. ACTS OF NOTEHOLDERS. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Noteholders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Noteholders in person or by an agent 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 Noteholders 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 16 favor of the Company and (subject to Section 8.01(c)) in favor of the Trustee, if made in the manner provided in this Section 1.02. (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 the certificate of any 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. Whenever such execution is by an officer of a corporation or a member of a partnership on behalf of such corporation or partnership, such certificate or affidavit shall also constitute sufficient proof of his authority. (c) The fact and date of execution of any such instrument or writing and the authority of any Person executing the same may also be proved in any other manner which the Trustee deems sufficient; and the Trustee may in any instance require further proof with respect to any of the matters referred to in this Section 1.02. (d) The ownership of Notes shall be proved by the Note Register. (e) Any request, demand, authorization, direction, notice, consent, waiver or other action by the Holder of any Note shall bind every future Holder of the same Note and the Holder of every Note issued upon the transfer thereof or in exchange therefor or in lieu thereof, in respect of anything done 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 Note. (f) The Company may, in the circumstances permitted by the Trust Indenture Act, set any day as the record date for the purpose of determining the holder of Outstanding Notes entitled to give or take any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by this Indenture to be given or taken by holders of Notes. With regard to any record date set pursuant to this Section 1.02(f) the holders of Outstanding Notes on such record date (or their duly appointed agents), and only such Persons, shall be entitled to give or take the relevant action, whether or not such Persons remain holders after such record date. (g) Until a waiver or consent becomes effective, such a waiver or consent by a Holder is a continuing waiver or consent by the Holder and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder's Note, even if notation of the waiver or consent is not made on any Note. However, any such Holder or 17 subsequent Holder may, until such waiver or consent becomes effective, revoke the waiver or consent as to his Note or portion of his Note. Such revocation shall be effective only if the Trustee receives the notice of such revocation before the date on which the waiver or consent has become effective. Section 1.03. NOTICES, ETC., TO TRUSTEE, RIH AND THE COMPANY. (a) Any request, demand, authorization, direction, notice (including, without limitation, a notice of default), consent, waiver or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with, the Company, RIH or the Trustee shall be deemed given when either (i) delivered by hand or (ii) two days after sending by registered or certified mail, postage prepaid, in either case, addressed as follows: To the Company: Resorts International Hotel Financing, Inc. c/o Resorts International, Inc. 1133 Boardwalk Atlantic City, New Jersey 08401 Attn.: Secretary To RIH: Resorts International Hotel, Inc. c/o Resorts International, Inc. 1133 Boardwalk Atlantic City, New Jersey 08401 Attn.: Secretary To the Trustee: U.S. Trust Company of California, N.A. 555 S. Flower Street Suite 2700 Los Angeles, California 90071 Attn.: Corporate Trust Department To Casino Control Commission: New Jersey Casino Control Commission Arcade Building Tenessee Avenue & Boardwalk Atlantic City, New Jersey 08401 Attn.: Chairman 18 To Director of Division of Gaming Enforcement: New Jersey Division of Gaming Enforcement 140 E. Front Street CN 047 Trenton, New Jersey 08625 Attn.: Director (b) By notice to the Company, RIH and/or the Trustee, Casino Control Commission and/or Director of Division of Gaming Enforcement, given as provided above, any party may designate additional or substitute addresses for such notices, which, notwithstanding Section 1.03(a), shall be deemed given when received. Section 1.04. NOTICES TO NOTEHOLDERS; WAIVER. Where this Indenture provides for notice to Noteholders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each Holder of such Notes, at the address of such Holder as it appears in the Note Register, not later than the latest date, and not earlier than the earliest date, prescribed for the provision of such notice. In any case where notice to Noteholders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Noteholder shall affect the sufficiency of such notice with respect to other Noteholders. 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 Noteholders 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 regular mail service, or by reason of any other cause, it shall be impracticable to give such notice by mail, then such notification may be given by any other method that the Trustee shall consider to be reasonable and shall be deemed to be a sufficient giving of such notice for every purpose hereunder. Section 1.05. FORM AND CONTENTS OF DOCUMENTS DELIVERED TO TRUSTEE. Whenever 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 19 some matters and one or more other such Persons as to such matters in one or several documents. Any certificate or opinion of an Officer of the Company or of RIH may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such Officer knows that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any 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 RIH stating that the information with respect to such factual matters is in the possession of the Company or RIH, unless such counsel knows that the certificate or opinion or representations with respect to such matters are erroneous. If appropriate to the matter being opined upon and to the extent not prohibited by the TIA, any Opinion of Counsel may be subject to rights of creditors and the availability of equitable remedies. Whenever 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. Whenever in this Indenture, in connection with any application or certificate or report to the Trustee, it is provided that the Company or RIH shall deliver any document as a condition of the granting of such application, or as evidence of the Company's or RIH's compliance with any term hereof, it is intended that the truth and accuracy, at the time of the granting of such application or at the effective date of such certificate or report (as the case may be), of the facts and opinions stated in such document shall in such case be conditions precedent to the right of the Company or RIH to have such application granted or to the sufficiency of such certificate or report. Section 1.06. COMPLIANCE CERTIFICATES AND OPINIONS. Upon any application or request by the Company or RIH to the Trustee to take any action under any provision of this Indenture or any Mortgage Document, the Company or RIH shall furnish to the Trustee an Officers' Certificate stating that all conditions precedent, if any, provided for in this Indenture or such Mortgage Document 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 20 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 or any Mortgage Document shall include: (a) a statement that each individual signing such certificate or opinion has read such condition or covenant and the definitions herein relating thereto; (b) 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; (c) 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 condition or covenant has been complied with; and (d) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. Section 1.07. CONFLICT WITH TRUST INDENTURE ACT. If any provision hereof or of the Mortgage Documents or the Assignment Agreement limits, qualifies or conflicts with another provision hereof or of the Mortgage Documents or the Assignment Agreement which is required to be included herein or therein by any of the provisions of the TIA, such required provision shall control. Section 1.08. EFFECT OF HEADINGS AND TABLE OF CONTENTS. The Article and Section headings herein and in the Table of Contents are for convenience only and shall not affect the construction hereof. Section 1.09. SUCCESSORS AND ASSIGNS. All covenants and agreements in this Indenture by the Company or RIH shall, subject to Section 10.02, bind its successors and assigns, whether so expressed or not. Section 1.10. SEPARABILITY CLAUSE. In case any provision in this Indenture or in the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining 21 provisions shall not in any way be affected or impaired thereby. Section 1.11. BENEFITS OF INDENTURE. Nothing in this Indenture or in the Notes, express or implied, shall give to any Person other than the parties hereto and their successors hereunder, any separate trustee or co-trustee appointed under Section 8.14 and the Holders of Notes, any benefit or any legal or equitable right, remedy or claim under this Indenture. Section 1.12. GOVERNING LAW. This Indenture and each Note shall be deemed to be a contract under the laws of the State of New York and shall be construed in accordance with and governed by the internal laws of the State of New York. Section 1.13. CASINO CONTROL ACT. Each of the provisions of this Indenture is subject to and shall be enforced in compliance with the provisions of the Casino Control Act, unless such provisions are in conflict with the TIA, in which case the TIA shall control. Section 1.14. GENERAL APPLICATION. (a) The assertion of any rights upon any Default shall be subject in each instance to the giving of any notice and the expiration of any grace period provided for in Section 7.01 as a condition to such Default becoming an Event of Default, unless the TIA requires otherwise, in which case the TIA shall control. (b) For the purposes of this Indenture, it is understood that an event which does not materially diminish the value of the Trustee's interest in the Trust Estate shall not be deemed an impairment of security, as that phrase is used in this Indenture. (c) This Indenture may not be used to interpret another indenture, loan or debt agreement of the Company, other than the Mortgage and the Guaranty Mortgage. Any such indenture, loan or debt agreement may not be used to interpret this Indenture. (d) In the event of a conflict between any provision of this Indenture and any provision of a Mortgage Document, the provision of this Indenture shall prevail. 22 ARTICLE TWO NOTE FORM Section 2.01. FORM GENERALLY. The Notes and the Trustee's certificate of authentication shall be substantially in the forms set forth in this Article Two, 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 Notes as evidenced by their execution thereof. Any portion of the text of any Note may be set forth on the reverse thereof. The definitive Notes shall be printed, lithographed or engraved or produced by any combination of these methods or produced in any other manner permitted by the rules of any securities exchange on which the Notes may be listed, all as determined by the officers executing such Notes as evidenced by their execution thereof. Section 2.02. FORM OF NOTES. The form of the Notes shall be substantially as follows: [FACE OF NOTES] RESORTS INTERNATIONAL HOTEL FINANCING, INC. 11.375% Junior Mortgage Note due 2004 THIS NOTE HAS BEEN ISSUED AS PART OF A UNIT WITH A NUMBER OF SHARES OF CLASS B STOCK OF RESORTS INTERNATIONAL, INC. SUCH THAT ONE SHARE OF CLASS B STOCK HAS BEEN ISSUED IN RESPECT OF EACH $1,000 PRINCIPAL AMOUNT OF NOTES. THIS NOTE MAY NOT BE TRANSFERRED SEPARATELY FROM THE SHARES OF CLASS B STOCK ISSUED IN RESPECT OF THIS NOTE. No. $ ------------- ------------- Resorts International Hotel Financing, Inc., a Delaware corporation (hereinafter called the "Company", which term includes any successor entity under the Indenture referred to on the reverse), for value received, hereby promises to pay to______________, or registered assigns, on December 15, 2004 the sum of _____________ Dollars (or so much 23 thereof as shall not have been paid upon prior redemption) and to pay interest (computed on the basis of a 360-day year of twelve 30-day months based on the actual number of days elapsed) thereon from [ ], 1994 [the Effective Date], or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually at June 15 and December 15 in each year (commencing December 15, 1994), at the rate of 11.375% per annum, until the principal hereof is paid or made available for payment. Interest also shall accrue on Additional Notes (as defined below) at such rates from and including the date of issuance thereof until the principal amount thereof is paid or made available for payment. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in said Indenture, be paid to the Person in whose name this Note (or one or more Predecessor Notes) is registered at the close of business on the Regular Record Date for such interest, which shall be the first day (whether or not a business day) of the calendar month of such Interest Payment Date. Any such interest not so punctually paid or duly provided for (including by issuance of Additional Notes in lieu of cash interest payment) shall forthwith cease to be payable to the Holder on such Regular Record Date, and may be paid to the Person in whose name this Note (or one or more Predecessor Notes) 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 thereof being given to Noteholders not less than ten 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 Notes may be listed and upon such notice as may be required by such exchange, all as more fully provided in said Indenture. The principal of and interest on this Note shall be payable at the corporate trust office of the Trustee, as defined on the reverse, or at an office or agency of the Company in the Borough of Manhattan, City and State of New York. All such payments shall be made 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, or by check or, at the option of the Company, on any Interest Payment Date, if Consolidated Cash Flow of RIH and its consolidated Subsidiaries for the period of four fiscal quarters ended on the last day of the last quarter ended prior to such Interest Payment Date was less than $35,000,000, all or any portion of such interest may be paid in additional Notes in a principal amount equal to the amount of accrued interest so paid ("Additional Notes"), PROVIDED, HOWEVER, that Additional Notes shall be issued in minimum denominations of $100 (but not fractions thereof) in a principal amount equal to such interest payment, or portion thereof, which the Company elects to so pay. The Company shall pay cash in lieu of issuing any fractional Additional Notes. The issuance of such Additional Notes shall constitute 24 full payment of interest in respect of which such Additional Notes are issued in the principal amount so issued. All interest payments made in Additional Notes must be made PRO RATA in respect of all outstanding Notes, on the basis of the respective dollar amounts of accrued and unpaid interest on such Notes. The Additional Notes shall be issued as Units such that one share of Class B Common Stock shall be issued in respect of each $1,000 principal amount of Additional Notes. The Additional Notes may not be transferred separately from the shares of Class B Common Stock issued in respect of such Additional Notes. All interest payments made in cash (other than cash payments made in lieu of issuance of fractional Additional Notes) shall be made PRO RATA in respect of all outstanding Notes, on the basis of the respective dollar amounts of accrued and unpaid interest on such Notes. The Company may deliver any such interest payment to the Paying Agent or may mail any such interest payment to a Holder at the Holder's registered address. "Consolidated Cash Flow" means, with respect to any period, an amount equal to the sum of (i) the consolidated net income (or loss) of RIH for such period determined in accordance with GAAP consistently applied, excluding interest income, interest expense and gains or losses from extraordinary or nonrecurring items, plus (ii) all amounts deducted in computing such consolidated net income (or loss) in respect of depreciation and amortization, plus (iii) non-cash charges arising from the reduction of CRDA Deposits to market value, minus (iv) taxes based upon or measured by income which are payable in cash, minus (v) CRDA Deposits. Unless the certificate of authentication hereon has been executed by the Trustee or the Authenticating Agent by manual signature, this Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. THIS NOTE SHALL BE DEEMED TO BE A CONTRACT UNDER THE LAWS OF THE STATE OF NEW YORK AND SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK. 25 IN WITNESS WHEREOF, the Company has caused this Note to be executed. RESORTS INTERNATIONAL HOTEL FINANCING, INC. Dated: By: ----------------- ------------------------- Attest: ----------------- [BACK OF NOTES] This Note is one of a duly authorized issue of Notes of the Company designated as "11.375% Junior Mortgage Notes due 2004" (the "Notes"), issued under an Indenture dated as of __________ __, 1994 (the "Indenture"), among the Company, Resorts International Hotel, Inc., a New Jersey corporation, as guarantor ("RIH"), and U.S. Trust Company of California, N.A., a national banking association, as Trustee (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 description of the nature and extent of the security, the respective rights thereunder of the Holders of the Notes, the Trustee and the Company and the terms upon which the Notes are, and are to be, authenticated and delivered. Payment of principal and interest (including interest on overdue principal) and performance of all obligations under the Indenture is guaranteed by RIH (the "Guaranty"). The Notes are secured by an assignment of one or more secured junior promissory notes of RIH, which owns and operates the property known as Merv Griffin's Resorts Casino Hotel, and of a mortgage on the Trust Estate made by RIH (the "Mortgage"). Additionally, the Guaranty is secured by a separate direct mortgage of the Trust Estate made by RIH to the Trustee (the "Guaranty Mortgage"). All terms in this Note defined in the Indenture shall have the same meaning herein as therein. The lien of the Mortgage is pari passu with the lien of the Guaranty Mortgage and junior to the lien securing payment of the RIHF Senior Facility Notes, the lien, if any, securing any other secured Working Capital Facility, the lien (if any) securing the Working Capital Facility Guaranty, to the lien securing payment of the Senior Mortgage Notes and to the lien securing the Senior Mortgage Guaranty. The Notes may be redeemed at the option of the Company, as a whole or from time to time in part, on or after 26 the fifth anniversary of the Effective Date on notice as provided in the Indenture, at par together with interest accrued and unpaid thereon to the date fixed for redemption. In the event of an RIH Sale, all the Notes shall be redeemed by the Company, whether such RIH Sale occurs before, on or after the fifth anniversary of the Effective Date, at par together with interest, if any, accrued and unpaid thereon to the Redemption Date; PROVIDED, HOWEVER, that such obligation of the Company to redeem the Notes in the event of a proposed RIH Sale shall cease to exist if the Holders of not less than 66-2/3% in Outstanding Amount of the Outstanding Notes have consented to such proposed RIH Sale. Notwithstanding the foregoing, each Holder by accepting a Note agrees that if the Casino Control Commission does not waive the qualification requirement as to the Holder (whether the record owner or beneficial owner) of this Note and requires that the Holder be qualified under the Casino Control Act, then, in such event, the Holder must qualify under the Casino Control Act. If the Holder does not so qualify, the Holder must dispose of its interest in this Note, within 30 days after the Company's receipt of notice of such finding, or the Company may repurchase this Note at the lower of the Holder's original cost and the Fair Market Value of this Note, plus accrued interest thereon to the date of such repurchase. Commencing on the date the Casino Control Commission serves notice upon either RIH or the Company that any Holder is disqualified, it shall be unlawfull for any such disqualified Holder: (i) to receive any dividends or interest upon this Note; (ii) to exercise, directly or through any trustee or nominee, any right conferred by this Note; or (iii) to receive any remuneration in any form from either the Company or RIH for services rendered or otherwise. It is provided in the Indenture that Notes of a denomination larger than $1,000 may be redeemed in part ($1,000 or a multiple thereof) and that upon any partial redemption of any such Note the same shall be surrendered in exchange for one or more new Notes in authorized form for the unredeemed portion of principal. Notes (or portions thereof as aforesaid) for whose redemption and payment provision is made in accordance with the Indenture shall thereupon cease to be entitled to the lien of the Indenture and the Mortgage and shall cease to bear interest from and after the date fixed for redemption. If an Event of Default shall occur, the principal of the Notes and all accrued and unpaid interest thereon may become or be declared due and payable in the manner and with the effect provided in the Indenture. The Indenture permits, with certain exceptions as therein provided, the amendment thereto and the modification 27 of the rights and obligations of the Company and the rights of the Holders of the Notes under the Indenture at any time by the Company with the consent of the Holders of a majority or 66-2/3%, as the case may be, in aggregate Outstanding Amount of the Notes at the time Outstanding affected by such modification. The Indenture also contains provisions permitting the Holders of specified percentages in Outstanding Amount of Notes at the time Outstanding on behalf of the Holders of all the Notes to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Note shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note issued upon the transfer hereof or in exchange hereof or in lieu hereof, in respect of anything done or offered to be done by the Trustee in the Company in reliance thereon, whether or not notation of such action is made upon this Note. The Company may, in the circumstances permitted by the Trust Indenture Act, set any day as the record date for the purpose of determining the holders of Outstanding Notes entitled to give or take any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by the Indenture to be given or taken by holders of Notes. With regard to any such record date, the holders of Outstanding Notes on such record date (or their duly appointed agents), and only such Persons, shall be entitled to give or take the relevant action, whether or not such Persons remain holders after such record date. No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and interest on this Note at the times, places and rates, and in the coin or currency, or, in the case of interest payments, by issuance of Additional Notes in lieu of cash interest payment, herein prescribed. As provided in the Indenture and subject to certain limitations therein set forth, this Note is transferable on the Note Register of the Company, upon surrender of this Note for transfer at the corporate trust office of the Trustee, or at an office or agency of the Company in the Borough of Manhattan, City and State of New York, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Note Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Notes, of authorized denominations and for the same aggregate principal amount will be issued to the designated transferee or transferees. 2 The Notes are issuable only as registered Notes without coupons in denominations of $1,000 and integral multiples thereof, except that Additional Notes may be in denominations of $100 and integral multiples of $100. As provided in the Indenture, and subject to certain limitations therein set forth, Notes are exchangeable for a like aggregate principal amount of Notes of a different authorized denomination, as requested by the Holder surrendering the same. No service charge shall be made for any transfer or exchange hereinbefore referred to, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. The Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Note is registered as the owner hereof for the purpose of receiving payment as herein provided and for all other purposes, whether or not this Note be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. Section 2.03. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION. This is one of the Notes referred to in the within-mentioned Indenture. U.S. Trust Company of California, N.A. as Trustee By: ------------------------- Authorized Signature Section 2.04. FORM OF THE GUARANTY. The form of the Guaranty of RIH shall be substantially as follows and shall appear on the reverse of each Note: GUARANTY OF RESORTS INTERNATIONAL HOTEL, INC. For value received, Resorts International Hotel, Inc., a New Jersey corporation, hereby unconditionally guarantees, as more fully set forth in Article Four of the Indenture, to the Holder of this Note the payment of the principal of and interest on this Note in the amounts and at the time when due and interest on the overdue principal and 29 interest, if any, of this Note, if lawful, and the payment or performance of all other obligations of the Company to the Holder or the Trustee, all in accordance with and subject to the terms and limitations of this Note and Article Four of the Indenture, the foregoing Guaranty being a guaranty of payment and not of collectibility and being absolute and in no way conditional or contingent. This Guaranty will not become effective until the Trustee or the Authenticating Agent signs the certificate of authentication on such Note. As more fully described in the Indenture, this Guaranty is secured by a mortgage of the Trust Estate made by RIH to the Trustee. RESORTS INTERNATIONAL HOTEL, INC. Dated: By: ----------------- ---------------------------- Attest: ----------------- ARTICLE THREE THE NOTES Section 3.01. GENERAL TITLE. The general title of the Notes shall be "11.375% Junior Mortgage Notes due 2004". Section 3.02. FORM AND DENOMINATIONS. The form of the Notes shall be as provided by the provisions of this Indenture. The Notes shall be issuable only in registered form and in such denominations as shall be provided in the provisions of this Indenture. The Notes shall be of the denominations of $1,000 and any integral multiple thereof except that Additional Notes may be in denominations of $100 and integral multiples of $100. Section 3.03. EXECUTION, AUTHENTICATION, DELIVERY AND DATING. The Notes shall be executed on behalf of the Company by its chairman of the board, vice chairman of the board, its president, or one of its Vice Presidents and attested to by an Officer of the Company other than an Officer who has executed the Notes.The signature of any of these Persons on the Notes 30 may be manual or facsimile. Notes bearing the manual or facsimile signatures of individuals who were at any time Officers of the Company shall bind the Company, notwithstanding that such individuals or any of them shall have ceased to be such prior to the authentication and delivery of such Notes. At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Notes executed by the Company to the Trustee for authentication and the Trustee shall authenticate and deliver such Notes as in this Indenture provided and not otherwise. All Notes shall be dated the date of their authentication. No Note shall be secured by, or be entitled to any lien, right or benefit under, this Indenture or be valid or obligatory for any purpose, unless there appears on such Note a certificate of authentication substantially in the form provided for herein, executed by the Trustee or the Authenticating Agent by manual signature, and such certificate upon any Note shall be conclusive evidence, and the only evidence, that such Note has been duly authenticated and delivered hereunder. Section 3.04. TEMPORARY NOTES. Pending the preparation of definitive Notes, the Company may execute, and upon Company Request the Trustee shall authenticate and deliver, temporary Notes which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any denomination, substantially of the tenor of the definitive Notes in lieu of which they are issued, in registered form, without coupons, with provision for registration as to principal and with such appropriate insertions, omissions, substitutions and other variations as the Officers executing such Notes may determine, as evidenced by their execution of such Notes. If temporary Notes are issued, the Company will cause definitive Notes to be prepared without unreasonable delay. After the preparation of definitive Notes, the temporary Notes shall be exchangeable for definitive Notes upon surrender of the temporary Notes at the office or agency of the Company in a Place of Payment therefor, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Notes, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a like principal amount of definitive Notes of authorized denominations. Until so exchanged, temporary Outstanding Notes shall in all respects be entitled to the security and benefits of this Indenture. 3 Section 3.05. REGISTRATION, TRANSFER AND EXCHANGE. The Company shall cause to be kept at one of the offices or agencies maintained by the Company as provided in Section 12.02 a register (herein sometimes referred to as the "Note Register") in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Notes and registration of transfers of Notes entitled to be registered or transferred as herein provided. The Trustee is hereby appointed "Note Registrar" for the purpose of registering Notes and transfers of Notes as herein provided. Upon surrender for transfer of any Note at the office or agency of the Company in a Place of Payment therefor, the Company shall execute and, upon request of the Company, the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Notes of any authorized denominations and of a like aggregate principal amount. The Trustee has no obligation to determine that any Note has been properly transferred and may conclusively rely on instructions given to the Company pursuant to this Section 3.05. All Notes surrendered upon any exchange or transfer provided for in this Indenture shall be promptly canceled by the Trustee and thereafter disposed of as directed by a Company Request. All Notes issued upon any transfer or exchange of Notes shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same security and benefits under this Indenture, as the Notes surrendered upon such transfer or exchange. Every Note presented or surrendered for transfer, exchange or discharge from registration shall (if so required by the Company or the Note Registrar) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Note Registrar duly executed, by the Holder thereof or his attorney duly authorized in writing. No service charge shall be made for any registration, discharge from registration, transfer or exchange of Notes, 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 transfer or exchange of Notes, other than exchanges under Section 3.04 or 11.06 not involving any transfer. The Company shall not be required (i) to issue, transfer or exchange any Note during a period beginning at the 32 opening of business 15 days before the day of the mailing of a notice of redemption of Notes under Section 13.04 and ending at the close of business on the day of such mailing, or (ii) to transfer or exchange any Note so selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part. Section 3.06. MUTILATED, DESTROYED, LOST AND STOLEN NOTES. If (a) any mutilated Note is surrendered to the Trustee, or the Company and the Trustee receive evidence to their satisfaction of the destruction, loss or theft of any Note and (b) 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 Note has been acquired by a bona fide purchaser, the Company shall execute and upon its request the Trustee shall authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Note, a new Note of like tenor and principal amount, bearing a number not contemporaneously outstanding. In case any such mutilated, destroyed, lost or stolen Note has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Note, pay such Note. Upon the issuance of any new Note under this Section 3.06, 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 connected therewith. Every new Note issued pursuant to this Section 3.06 in lieu of any destroyed, lost or stolen Note shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Note shall be at any time enforceable by anyone, and shall be entitled to all the security and benefits of this Indenture equally and ratably with all other Notes. The provisions of this Section 3.06 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 Notes. Section 3.07. PAYMENT OF INTEREST ON NOTES; INTEREST RIGHTS PRESERVED. Interest on any Note 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 that Note (or 33 one or more Predecessor Notes) is registered at the close of business on the Regular Record Date for such interest specified in the provisions of this Indenture. Any interest on any Note which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date ("Defaulted Interest") shall forthwith cease to be payable to the Holder on the relevant Regular Record Date solely by virtue of such Holder having been such Holder; and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in subsection (a) or (b) below: (a) The Company may elect to make payment of any Defaulted Interest on the Notes to the Persons in whose names such Notes (or their respective Predecessor Notes) 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 Note and the date of the proposed payment (which date shall be such as will enable the Trustee to comply with the next sentence hereof), and at the same time the Company shall deposit with the Trustee an amount of money equal to, or Additional Notes having a principal amount 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 or Additional Notes when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as provided in this subsection (a) and not to be deemed part of the Trust Estate. Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 nor less than ten days prior to the date of the proposed payment and not less than ten 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 mailed, first-class postage prepaid, to each Holder of a Note at his address as it appears in the Note Register not less than ten days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been mailed as aforesaid, such Defaulted Interest shall be paid to the Persons in whose names the Notes (or their respective Predecessor Notes) are registered on such Special Record Date and shall no longer be payable pursuant to subsection (b) of this Section 3.07. 34 (b) The Company may make payment of any Defaulted Interest on the Notes in any other lawful manner not inconsistent with the requirements of any securities exchange in which the Notes 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 subsection (b), such payment shall be deemed practicable by the Trustee. Subject to the foregoing provisions of this Section 3.07, each Note delivered under this Indenture upon transfer of or in exchange for or in lieu of any other Note shall carry all the rights to interest accrued and unpaid, and to accrue, which were carried by such other Note. Section 3.08. PERSONS DEEMED OWNERS. The Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name any Note is registered as the owner of such Note for the purpose of receiving payment of principal of, and interest on, such Note and for all other purposes whatsoever whether or not such Note be overdue, and, to the extent permitted by law, neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. Section 3.09. CANCELLATION. All Notes surrendered for payment, redemption, transfer, exchange or conversion, if surrendered to the Trustee, shall be promptly canceled by it, and, if surrendered to any Person other than the Trustee, shall be delivered to the Trustee and, if not already canceled, shall be promptly canceled by it. The Company shall deliver to the Trustee for cancellation any Notes previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever, and all Notes so delivered shall be promptly canceled by the Trustee. No Note shall be authenticated in lieu of or in exchange for any Note canceled as provided in this Section 3.09, except as expressly provided by this Indenture. All canceled Notes held by the Trustee shall be disposed of as directed by a Company Request. Section 3.10. TERM AND FORM. The Stated Maturity of the Notes shall be December 15, 2004. The aggregate principal amount of Notes that may be authenticated, delivered and outstanding is limited to $35,000,000, plus Additional Notes, if any, issued by the Company pursuant to the terms hereof. The Notes shall bear interest from [ ], 1994 [the Effective Date] or from the most recent Interest Payment Date to which interest has been paid or duly provided for, payable semi- 35 annually on June 15 and December 15 of each year, commencing December 15, 1994. The Notes shall bear interest at the rate of 11.375% per annum until the principal thereof shall become due and payable, and at the rate of 14.375% per annum on any overdue principal and, to the extent permitted by law, overdue interest. Interest shall be computed on the basis of a 360-day year of twelve 30-day months based on the actual number of days elapsed. The principal and the Redemption Price of the Notes and interest on the Notes on each Interest Payment Date shall be payable at a Place of Payment, and, in addition to any other lawful means of such payment, may be paid by check payable to the order of the Noteholder. The Regular Record Date referred to in Section 3.07 for the payment of the interest on the Notes payable, and punctually paid or duly provided for, on any Interest Payment Date shall be the first day (whether or not a business day) of the calendar month of such Interest Payment Date. Section 3.11. PAYMENT OF INTEREST IN ADDITIONAL NOTES (a) Notwithstanding any other provision of this Indenture or the Notes, the Company, at its option and in its sole discretion, on any Interest Payment Date, if Consolidated Cash Flow of RIH and its consolidated Subsidiaries for the period of four consecutive fiscal quarters of RIH ended on the last day of the last quarter ended prior to such Interest Payment Date was less than $35,000,000, may pay all or any portion of interest accrued on the Outstanding Notes (including without limitation any Additional Notes previously issued to pay interest) in Additional Notes. The Additional Notes shall have a principal amount equal to the amount of such interest payment, or portion thereof, which the Company elects to so pay. The Company shall pay cash in lieu of issuing any fractional Additional Notes. The issuance of such Additional Notes shall constitute full payment of interest in respect of which such Additional Notes are issued in the principal amount so issued. (b) All interest payments made in Additional Notes pursuant to Section 3.11(a) shall be made PRO RATA in respect of all outstanding Notes, on the basis of the respective dollar amounts of accrued and unpaid interest on such Notes. All interest payments made in cash (other than cash payments made in lieu of issuance of fractional Additional Notes) shall be so made PRO RATA in respect of all outstanding Notes, on the basis of the respective dollar amounts of accrued and unpaid interest on such Notes. (c) Prior to the issuance of any Additional Notes, a Trust Officer of the Trustee and any Paying Agent shall have 36 received an Officers' Certificate from the Company at least five Business Days prior to the relevant Regular Record Date stating that the Company will pay such interest in Additional Notes, together with a resolution of the Board of Directors authorizing the issuance of the appropriate principal amount of Additional Notes. On or before the date that is three Business Days following the relevant Regular Record Date, the Company will deliver an Officers' Certificate to the Trustee demonstrating the computation of the principal amount of Additional Notes issuable to the Holders and an Opinion of Counsel that the issuance of such Additional Notes is in compliance with all federal securities laws, and that such Additional Notes will be binding obligations of the Company, enforceable according to their terms. (d) THE ADDITIONAL NOTES SHALL BE ISSUED AS UNITS SUCH THAT ONE SHARE OF CLASS B STOCK SHALL BE ISSUED IN RESPECT OF EACH $1,000 PRINCIPAL AMOUNT OF ADDITIONAL NOTES. THE ADDITIONAL NOTES MAY NOT BE TRANSFERRED SEPARATELY FROM THE SHARES OF CLASS B COMMON STOCK ISSUED IN RESPECT OF SUCH ADDITIONAL NOTES. Section 3.12. EXCHANGEABILITY. Subject to Section 3.05, all Notes and Additional Notes shall be fully interchangeable with other Notes and Additional Notes, and, upon surrender at the office or agency of the Company in a Place of Payment therefor, all Notes shall be exchangeable for other Notes of a different authorized denomination or denominations, as requested by the Holder surrendering the same. The Company will execute, and the Trustee shall authenticate and deliver, Notes whenever the same are required for any such exchange. Section 3.13. REDEMPTION. The Company may, at its option, redeem, in accordance with Article Thirteen, all or from time to time any part of the Notes on or after the fifth anniversary of the Effective Date, at par together, in each case, with interest, if any, accrued and unpaid thereon to the Redemption Date. In the event of an RIH Sale, all Notes shall be redeemed by the Company, whether such RIH Sale occurs before, on or after the fifth anniversary of the Effective Date, at par together with interest, if any, accrued and unpaid thereon to the Redemption Date; PROVIDED, HOWEVER, that such obligation of the Company to redeem the Notes in the event of a proposed RIH Sale shall cease to exist if the Holders of not less than 66-2/3% in Outstanding Amount of the Outstanding Notes have consented to such proposed RIH Sale. 37 Section 3.14. AUTHENTICATION AND DELIVERY OF ORIGINAL ISSUE. Forthwith upon the execution and delivery of this Indenture, Notes up to an aggregate principal amount of $35,000,000 may be executed by the Company and delivered to the Trustee for authentication, and shall thereupon be authenticated and delivered by the Trustee upon Company Order, without any further action by the Company. ARTICLE FOUR GUARANTY Section 4.01. GUARANTY. RIH hereby guarantees (such guaranty to be referred to herein as the "Guaranty") to each Holder of a Note 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 Notes or the obligations of the Company hereunder or thereunder, that: (a) the principal of and interest on the Notes will be promptly paid in the amounts and at the times when due, whether at the maturity or Interest Payment Date, by acceleration, call for redemption or otherwise, and interest on the overdue principal, if any, of the Notes, and all other obligations of the Company to the Holders or the Trustee hereunder or thereunder will be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and (b) in case of any extension of time of payment or renewal of any Notes or payment or performance of any of such other obligations, that 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 for whatever reason, RIH will be obligated to pay the same immediately. RIH hereby agrees that its obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Notes or this Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Notes with respect to any provisions hereof or thereof, any releases of collateral, any delays in obtaining or realizing upon or failures to obtain or realize upon collateral, the recovery of any judgment against the Company, any action to enforce the same or any other circumstances which might otherwise constitute a legal or equitable discharge or defense of a guarantor. This Guaranty is a guaranty of payment and not of collectibility, and is secured by the Guaranty Mortgage, as described therein. RIH hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to 38 require a proceeding first against the Company, protest, notice and all demands whatsoever and covenants that this Guaranty will not be discharged except by complete performance of the obligations contained in the Notes and this Indenture. If any Noteholder or the Trustee is required by any court or otherwise to return to either RIH or the Company, or any custodian, trustee, liquidator or other similar official acting in relation to either RIH or the Company, any amount paid by either RIH or the Company to the Trustee or such Noteholder, this Guaranty, to the extent theretofore discharged, shall be reinstated in full force and effect. RIH agrees that it shall not be entitled to, and hereby irrevocably waives, any right of subrogation in relation to the Company in respect of any obligations guaranteed hereby. RIH further agrees that, as between RIH, on the one hand, and the Holders and the Trustee, on the other hand, (i) the maturity of the obligations guaranteed hereby may be accelerated as provided in Section 7.02 for the purposes of this Guaranty, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (ii) in the event of any declaration of acceleration of such obligations as provided in Section 7.02, such obligations (whether or not due and payable) shall forthwith become due and payable by RIH for the purpose of this Guaranty. Section 4.02. EXECUTION AND DELIVERY OF GUARANTY. To evidence its Guaranty set forth in Section 4.01, RIH hereby agrees to execute its Guaranty substantially in the form set forth in Section 2.04, to be endorsed on each Note authenticated and delivered by the Trustee and that this Indenture shall be executed on behalf of RIH by an Authorized Signature. RIH hereby agrees that its Guaranty set forth in Section 4.01 shall remain in full force and effect notwithstanding any failure to endorse on each Note a notation of such Guaranty; PROVIDED, HOWEVER, that the Trustee or the Authenticating Agent has signed the certificate of authentication on such Note. If an Officer whose signature is on this Indenture no longer holds that office at the time the Trustee authenticates a Note on which a Guaranty is endorsed, the Guaranty shall be valid nevertheless. The delivery of any Note by the Trustee, after the authentication thereof hereunder, shall constitute due delivery of the Guaranty set forth in this Indenture on behalf of RIH. 39 Section 4.03 MORTGAGE SECURING GUARANTY. In order to secure the due and punctual payment of all amounts which may ever become owing under the Guaranty, when and as the same shall be due and payable, and performance of all other obligations of RIH to the Holders or the Trustee under the Guaranty, according to the terms hereof, RIH has mortgaged and encumbered all of its right, title and interest in and to the Trust Estate to the Trustee pursuant to the Guaranty Mortgage. RIH has the full right, power and authority to grant, bargain, sell, release, convey, hypothecate, assign, mortgage, pledge, transfer and confirm the property constituting the Trust Estate, in the manner and form done, or intended to be done, in the Guaranty Mortgage, free and clear of all liens, pledges, charges and encumbrances, whatsoever, except for the items described in clauses (a) through (d) (inclusive) of Section 12.13, and (a) will forever warrant and defend the title to the same against the claims of all Persons whatsoever in accordance with the terms of the Guaranty Mortgage, (b) will execute, acknowledge and deliver to the Trustee such further instruments as the Trustee may require or request, and (c) will do or cause to be done all such acts and things as may be reasonably necessary or proper, or as may be required by the Trustee (other than obtaining a loan title insurance policy or title policy endorsement pertaining to the Guaranty Mortgage), to assure and confirm to the Trustee its interest in the Trust Estate and the right, title and interest in and to the Guaranty Mortgage, so as to render the same available for the security and benefit of this Guaranty secured thereby, according to the intent and purposes herein expressed. The Guaranty Mortgage creates and vests in the Trustee a direct and valid lien, which lien is pari passu with the lien of the Mortgage and junior to the liens securing payment of the RIHF Senior Facility Notes, any other secured Working Capital Facility, the Working Capital Facility Guaranty, the Senior Mortgage Notes and the Senior Guaranty. To the extent that any security interest in the Trust Estate or the Guaranty Mortgage is deemed to be granted and to be governed by the Uniform Commercial Code, the Guaranty Mortgage is deemed to be a security agreement. ARTICLE FIVE SATISFACTION AND DISCHARGE Section 5.01. PAYMENT OF INDEBTEDNESS; SATISFACTION AND DISCHARGE OF INDENTURE. Whenever the following conditions exist, namely: 40 (a) all Notes theretofore authenticated and delivered have been canceled by the Trustee or delivered to the Trustee for cancellation, excluding, however, (1) Notes for the payment of which money has theretofore been deposited in trust with the Trustee or a Paying Agent (other than the Company) or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust as provided in Section 12.03, (2) Notes alleged to have been destroyed, lost or stolen which have been replaced or paid as provided in Section 3.06, except for any such Note which, prior to the satisfaction and discharge of this Indenture, has been presented to the Trustee with a claim of ownership and enforceability by the Holder thereof and where enforceability has not been determined adversely against such Holder by a court of competent jurisdiction, and (3) other than any Notes excluded by clauses (1) and (2) of this Section 5.01(a), Notes which have become due and payable, Notes which will become due and payable at their Stated Maturity within one year and Notes which have been or 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, provided the Company, in the case of such Notes, has deposited or caused to be deposited with the Trustee in trust for the purpose an amount sufficient to pay and discharge the entire indebtedness on such Notes for principal and interest to the date of maturity thereof in the case of Notes which have become due and payable or to the Stated Maturity or Redemption Date, as the case may be; (b) the Company or RIH has paid or caused to be paid all other sums payable hereunder by the Company; and (c) the Company or RIH has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each of which shall state that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with; then this Indenture and the lien, rights and interests created hereby shall cease, terminate and become null and void (except as to any surviving rights of transfer or exchange of Notes herein or therein provided for and any right to receive payments of principal and interest as provided in 41 Section 5.01(a)(3)) and the Trustee and each co-trustee and separate trustee, if any, then acting as such hereunder shall, at the expense of the Company, execute and deliver a termination statement prepared by the Company in form reasonably satisfactory to the Trustee and such instruments of satisfaction and discharge as may be necessary and pay, assign, transfer and deliver to the Company or upon Company Order all cash, securities and other personal property then held by it hereunder, other than pursuant to Section 5.01(a)(3). In the absence of satisfaction of all of the above conditions, the payment of all Outstanding Notes shall not render this Indenture inoperative. Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Section 8.07 shall survive. Section 5.02. APPLICATION OF DEPOSITED MONEY. Money deposited with the Trustee pursuant to Section 5.01 shall constitute a separate trust fund for the benefit of the Persons entitled thereto. Subject to the provisions of Section 12.03, such money shall be applied by the Trustee to the payment (either directly or through any Paying Agent, as the Trustee may determine) to the Persons entitled thereto, of the principal and interest for whose payment such money has been deposited with the Trustee. Section 5.03. REPAYMENT TO THE COMPANY. The Trustee and any Paying Agent shall promptly pay to the Company upon request any excess money or securities held by them at any time. Any money (or, with respect to interest to be paid in Additional Notes, such Additional Notes) deposited with the Trustee or any Paying Agent, or then held by the Company, in Trustee or any Paying Agent, or then held by the Company, in trust, for the payment of the principal of, or interest on, any Note and remaining unclaimed for two years after such principal or interest has become due and payable shall be paid to the Company on its request, or (if then held by the Company) shall be discharged from such trust, unless otherwise required by mandatory provisions of applicable escheat or abandoned or unclaimed property law, and the Holder of such Note 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 regard to such money (or Additional Notes), and all liability 42 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 City of New York, State of New York, or mailed to each such Holder, or both, notice that such money (or Additional Notes) remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication or mailing, as the case may be, any unclaimed balance of such money then remaining will be paid to the Company. ARTICLE SIX SECURITY Section 6.01. ASSIGNMENT AGREEMENT. In order to secure the due and punctual payment of the principal of and interest on the Notes, when and as the same shall be due and payable, whether at Maturity or at an Interest Payment Date, by acceleration, call for redemption or otherwise, of the Notes and performance of all other obligations of the Company to the Holders or the Trustee under this Indenture, according to the terms hereof, the Company has made an assignment of all of its right, title and interest in and to the Mortgage Documents (other than the Guaranty Mortgage) to the Trustee pursuant to the Assignment Agreement. RIH has the full right, power and authority to grant, bargain, sell, release, convey, hypothecate, assign, mortgage, pledge, transfer and confirm the property constituting the Trust Estate, in the manner and form done, or intended to be done, in the Mortgage Documents, and the Company has the full right, power and authority to grant, bargain, sell, release, re-convey, assign, transfer and confirm, absolutely, all of its right, title and interest in and to the Mortgage Documents, in each case free and clear of all liens, pledges, charges and encumbrances, whatsoever, except for the items described in clauses (a) through (d) (inclusive) of Section 12.13, and (a) each will forever warrant and defend the title to the same against the claims of all persons whatsoever in accordance with the terms of the Mortgage Documents and the Assignment Agreement, (b) each will execute, acknowledge and deliver to the Trustee such further assignments, transfers, assurances or other instruments as the Trustee may require or request, and (c) each will do or cause to be done all such acts and things as may be reasonably necessary or proper, or as may be required by the Trustee, to assure and confirm to the Trustee its interest in the Trust Estate and the right, title and interest in and to the Mortgage Documents, so as to render the 43 same available for the security and benefit of this Indenture and of the Notes secured hereby, according to the intent and purposes herein expressed. The Mortgage Documents (other than the Guaranty Mortgage) and the Assignment Agreement together create and vest in the Trustee a direct and valid lien, which is pari passu with the Guaranty Mortgage, junior to the liens securing payment of the RIHF Senior Facility Notes, any other secured Working Capital Facility, the Working Capital Facility Guaranty, the Senior Mortgage Notes and the Senior Guaranty on the property constituting the Trust Estate and the interest in the Mortgage Documents which they purport to create. To the extent that any security interest in the Trust Estate or the Mortgage Documents are deemed to be granted and to be governed by the Uniform Commercial Code, the Mortgage and the Assignment Agreement are deemed to be security agreements. Section 6.02. RECORDING, ETC. The Company will cause, at its own expense, the Assignment Agreement, the Mortgage Documents, this Indenture and all amendments or supplements thereto, to be registered, recorded and filed and/or re-recorded, re-filed and renewed in such manner and in such place or places, if any, as may be required by law in order fully to preserve and protect the lien of the Mortgage Documents and the Assignment Agreement on all parts of the Trust Estate and the Mortgage Documents and the interest in the RIH Junior Promissory Note and to effectuate and preserve the security of the Noteholders and all rights of the Trustee. The Company shall furnish to the Trustee: (a) promptly after the execution and delivery of this Indenture or other instrument of further assurance or amendment, including any supplemental indenture, an Opinion or Opinions of Counsel either (1) stating that, in the opinion of such counsel, this Indenture, the Mortgage Documents and the assignment to the Trustee of the Mortgage Documents intended to be made by the Assignment Agreement and all other instruments of further assurance or amendment have been properly recorded, registered and filed to the extent necessary to make effective the liens intended to be created by the Mortgage Documents and the Assignment Agreement, and reciting the details of such action or referring to prior Opinions of Counsel in which such details are given, and stating that as to the Mortgage Documents and the Assignment Agreement such recording, registering and filing are the only recordings, registerings and filings necessary to give notice thereof and that no re-recordings, re-registerings or re-filings are necessary to maintain such notice, and further stating that all financing statements and continuation statements have 44 been executed and filed that are necessary fully to preserve and protect the rights of the Noteholders and the Trustee hereunder and under the Mortgage Documents and the Assignment Agreement, or (2) stating that, in the opinion of such counsel, no such action is necessary to make such liens and assignments effective; and (b) within 60 days after June 30 in each year beginning with the year 1995, an Opinion or Opinions of Counsel, dated as of such date, either (1) stating that, in the opinion of such counsel, such action has been taken with respect to the recording, registering, filing, re-recording, re-registering and re-filing of all supplemental indentures, financing statements, continuation statements or other instruments of further assurance as is necessary to maintain the liens of the Mortgage Documents and the assignment of the Mortgage Documents to the Trustee made by the Assignment Agreement and reciting the details of such action or referring to prior Opinions of Counsel in which such details are given, and stating that all financing statements and continuation statements have been executed and filed that are necessary fully to preserve and protect the rights of the Noteholders and the Trustee hereunder and under the Mortgage Documents and the Assignment Agreement, or (2) stating that, in the opinion of such counsel, no such action is necessary to maintain such liens and assignments. The Company and RIH shall cause TIA SECTION 314(d) relating to the release of property from the liens of the Mortgage to be complied with. Any certificate or opinion required by TIA SECTION 314(d) may be made by an Officer of the Company or RIH, unless otherwise required by TIA SECTION 314(d). Section 6.03. CUSTODY OF MORTGAGE DOCUMENTS. The Trustee shall hold in its possession the Mortgage Documents, except as it from time to time may be required for actions, suits or proceedings relating to the Mortgage Documents or for the purpose of enforcing or realizing upon any right or value thereby represented. The Trustee may, from time to time, in its sole discretion, for the purpose of convenient location of the Mortgage Documents, appoint one or more agents to hold physical custody, for the account of the Trustee, of the Mortgage Documents. Section 6.04. SUITS TO PROTECT THE TRUST ESTATE AND MORTGAGE DOCUMENTS. Upon five days' prior written notice to the Company (or such shorter period or without notice if deemed necessary and appropriate by the Trustee), the Trustee shall have the 45 power, but not the obligation, to institute and to maintain such suits and proceedings as it may deem necessary or appropriate to prevent any impairment of the Trust Estate by any acts which may be unlawful or in violation of the Mortgage Documents, the Assignment Agreement or this Indenture, and such suits and proceedings as the Trustee may deem necessary or appropriate to preserve or protect its interest and the interests of the Noteholders in the Trust Estate and the Mortgage Documents and the principal, interest, issues, 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 result in an impairment of security hereunder or be materially prejudicial to the interests of the Noteholders or of the Trustee). The Trustee shall also have authority to exercise any rights or powers conferred on the Trustee as the holder of the Note. ARTICLE SEVEN REMEDIES Section 7.01. EVENTS OF DEFAULT. "EVENT OF DEFAULT", whenever used herein, means any one of the following events (including any applicable notice requirement and any period of grace as specified in this Section 7.01) (whatever the reason for such event 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): (a) default in the payment of any interest upon any Note when such interest becomes due and payable and continuance of such default (the deposit with the Trustee pursuant to Section 3.07 of funds or Additional Notes sufficient to make such interest payment in full being deemed to cure any such default for the purposes hereof) for a period of ten days; or (b) default in the payment of all or any portion of the principal of any Note at its Maturity; or (c) default in the performance or breach of any covenant of the Company or RIH in this Indenture (other than a covenant a default in the performance or breach of which is elsewhere in this Section 7.01 specifically dealt with), the Assignment Agreement or any of the 46 Mortgage Documents and continuance of such default or breach for a period of 30 days (or such shorter or longer cure period, if any, as may be specified in respect of such default or breach in the Assignment Agreement or the applicable Mortgage Document, as the case may be), and (other than with respect to Sections 12.07, 12.08, 12.09, 12.10, 12.11, 12.12, 12.13 or 12.21) after there has been given (i) to the Company by the Trustee or (ii) to the Company and the Trustee by the Holders of at least 25% in Outstanding Amount of the Outstanding Notes, 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; PROVIDED, HOWEVER, that, if such default or breach is of a covenant set forth in Section 12.02, 12.04, 12.05, 12.11, 12.13 or 12.21, and if such default or breach is of such a nature that is curable but is not susceptible of being cured with due diligence within such 30-day period (or such shorter or longer cure period) (for reasons other than lack of funds), then such period shall be extended for such further period of time as may reasonably be required to cure such default or breach, so long as (i) RIH delivers an Officers' Certificate to the Trustee within such period stating (A) the applicability of the provisions of this proviso to such default or breach, (B) the Company's or RIH's intention to remedy such default or breach with reasonable diligence and (C) the steps which the Company or RIH has undertaken to remedy such default or breach, and (ii) RIH delivers to the Trustee additional Officers' Certificates every 30 days thereafter updating the information contained in the certificate described in clause (i) above, in which case such period shall be extended for such further period of time as may reasonably be required to cure such default or breach, provided that the Company or RIH is then proceeding and thereafter continues to proceed to cure such default or breach with reasonable diligence; PROVIDED FURTHER, HOWEVER, that such additional period of time shall not in any case exceed 60 days; or (d) a proceeding or case shall be commenced, without the application or consent of the Company or RIH, in any court of competent jurisdiction, seeking (i) its liquidation, reorganization, dissolution or winding-up, or the composition or readjustment of its debts, (ii) the appointment of a trustee, receiver, custodian, liquidator or the like of the Company or RIH or of all or any substantial part of its assets, or (iii) similar relief in respect of the Company or RIH under any law relating to bankruptcy, insolvency, reorganization, winding-up, or composition or adjustment of debts, and such proceeding or case shall continue undismissed, or an order, judgment or decree approving or ordering any of the foregoing 4 shall be entered and continue unstayed and in effect, for a period of 60 consecutive days; or (e) the commencement by the Company or RIH of a voluntary case under the federal bankruptcy laws or any other applicable federal or state law, or the consent or acquiescence by any of them to the filing of any such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee or sequestrator (or other similar official) of the Company or RIH or any substantial part of any of their property, or the making by any of them of an assignment for the benefit of creditors, or the taking of action by the Company or RIH in furtherance of any such action; or (f) the revocation, suspension or involuntary loss of any Permit which results in the cessation of a substantial portion of the operations of the Casino-Hotel for a period of more than 90 consecutive days; or (g) (i) a default by the Company, RIH or any of their Subsidiaries under any Indebtedness (other than the Indebtedness represented by the Working Capital Facility and the Junior Mortgage Facility) in an aggregate principal amount in excess of $5,000,000, which default results in the acceleration of the maturity of any such Indebtedness under the evidence of indebtedness, indenture or other instrument governing such Indebtedness; provided, however, that, if such default under such evidence of indebtedness, indenture or other instrument shall be cured by the obligor, or be waived by the holders of such Indebtedness, in each case as may be permitted by such evidence of indebtedness, indenture or other instrument and in each case resulting in rescission of such acceleration thereunder, then the Event of Default hereunder by reason of such default shall be deemed likewise to have been thereupon cured or waived; or (ii) a default by the Company, RIH or any of their Subsidiaries under any Indebtedness represented by the Working Capital Facility or the Junior Mortgage Facility, the effect of which default (after the expiration of any applicable notice or grace periods) is to permit the holder or holders of any such Indebtedness represented by the Working Capital Facility or the Junior Mortgage Facility in an aggregate principal amount in excess of $5,000,000 (or a trustee or agent on behalf of such holder or holders) to cause the acceleration of the maturity of such Indebtedness represented by the Working Capital Facility or the Junior Mortgage Facility under the evidence of indebtedness, indenture or other instrument governing such Indebtedness; provided, however, that if such default under such evidence of indebtedness, indenture or other instrument shall be 48 cured by the obligor, or be waived by the holders of such Indebtedness, in each case as may be permitted by such evidence of indebtedness, indenture or other instrument and, if such default resulted in the acceleration of the maturity of such Indebtedness, such acceleration shall have been rescinded thereunder, then the Event of Default hereunder by reason of such default shall be deemed likewise to have been thereupon cured or waived; or (iii) the existence of a final judgment of a court of competent jurisdiction in an amount in excess of $3,000,000 against the Company, RIH or the Trust Estate, which judgment has not been satisfied or otherwise provided for, for a period of 30 days (during which execution shall not be effectively stayed) following the date on which such judgment becomes a lien against the Trust Estate or any part thereof (unless the lawsuit in question was commenced without effective service of process upon either the Company or RIH in which case such 30-day period shall not commence until the Company or RIH receives notice of such final judgment); or (iv) the existence of a final judgment of a court of competent jurisdiction in an amount in excess of $15,000,000 against the Company, RIH or the Trust Estate, which judgment has not been satisfied or otherwise provided for, for a period of 60 days (during which execution shall not be effectively stayed) following the date of such final judgment; or (v) the existence of a final judgment of a court of competent jurisdiction, regardless of amount, against the Company, RIH or the Trust Estate, which judgment has not been satisfied or otherwise provided for, for a period of 60 days (during which execution shall not be effectively stayed) following the date of such final judgment, if such judgment, by itself or upon recordation or other action of the judgment creditor, imposes or would impose a lien on the Trust Estate or any part thereof senior to the lien of the Mortgage; or (h) default in the performance, or breach, of any covenant of the Company or RIH in Article Ten; or (i) the existence of a judgment of a court of competent jurisdiction in an amount in excess of $3,000,000 against RIH regarding the CRDA Dispute, which judgment has not been stayed, satisfied or otherwise provided for, for a period of 30 days (during which execution shall not be effectively stayed) (unless the lawsuit in question was commenced without effective service of process upon RIH in which case such 30-day period shall not commence until RIH receives notice of such final judgment); or 4 (j) if RII fails to pay or discharge or cause to be paid or discharged, within 30 days before the same shall become delinquent, all taxes levied or imposed upon RII; PROVIDED, HOWEVER, that no Event of Default or Default shall be deemed to exist hereunder with respect to any tax liability not paid or discharged by RII if and to the extent that the amount, applicability or validity of such tax liabilities is being contested in good faith by appropriate proceedings if adequate reserves therefor have been established in accordance with GAAP; provided further, however, that this clause (j) shall not apply to amounts due with respect to any period during which neither the Company, RIH nor any of their Subsidiaries is included in RII's consolidated group for federal income tax purposes. No action, event, claim, liability or judgment regarding the CRDA Dispute shall constitute a Default or an Event of Default under this Section 7.01 unless and until a judgment shall have been entered against RIH which constitutes an Event of Default pursuant to clause (i) of this Section 7.01. Section 7.02. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT. If an Event of Default (other than one referred to in clause (d) or (e) of Section 7.01) occurs and is continuing, then and in every such case the Trustee or the Holders of not less than 25% in Outstanding Amount of the Notes Outstanding may declare the Outstanding Amount of all the Notes and all accrued interest to be due and payable immediately, by a notice in writing to the Company (and to the Trustee, if given by any Noteholders), and upon any such declaration such Outstanding Amount shall become immediately due and payable. If an Event of Default referred to in clause (d) or (e) of Section 7.01 occurs, then the Outstanding Amount of all the Notes shall automatically become immediately due and payable without presentment, demand, protest or other formalities of any kind, all of which are hereby expressly waived by the Company. At any time after such a declaration of acceleration has been made, but before any judgment or decree for payment of money due on any Notes has been obtained by the Trustee as hereinafter provided in this Article Seven, the Holders of a majority in Outstanding Amount of the Notes may, by written notice to the Company and the Trustee, rescind and annul such declaration and its consequences if: (a) the Company has deposited with the Trustee a sum sufficient to pay: 50 (1) all overdue installments of interest on all Notes, (2) the principal of any Notes which have become due otherwise than by such declaration of acceleration and interest thereon at the rate or rates prescribed therefor in the Notes, and (3) 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 (b) all Events of Default, other than the non-payment of the Outstanding Amount of Notes which have become due solely by such declaration of acceleration, have been cured, or have been waived as provided in Section 7.13. No such rescission and annulment shall affect any subsequent default or impair any right consequent thereon. Section 7.03. COVENANT TO PAY TRUSTEE AMOUNTS DUE ON NOTES AND RIGHT OF TRUSTEE TO JUDGMENT. The Company covenants that, if: (a) default is made in the payment of any interest upon any Note when such interest becomes due and payable and such default continues for a period of 10 days (the deposit with the Trustee during such 10 day period pursuant to Section 3.07 of funds or Additional Notes (if permitted hereby) sufficient to make such interest payment in full being deemed to cure any such default for the purposes hereof), or (b) default is made in the payment of the principal of any Note at its Maturity, then, upon demand of the Trustee, the Company will pay to the Trustee for the benefit of the Holders of such Notes, the whole amount then due and payable on such Notes for principal and interest, with interest at the rate prescribed therefor in the Notes on overdue principal 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 and as trustee of an express trust, shall be entitled to sue for and recover judgment against the Company, RIH and any other obligor on the Notes for the whole amount so due and unpaid. The Trustee shall be entitled to institute such suit either 51 before, after or during the pendency of any proceedings for the enforcement of this Indenture or of the Mortgage Documents or of the Assignment Agreement, but only after the occurrence of an Event of Default. Subject to the Intercreditor Agreement, in the case of a foreclosure of the Mortgage and a sale of the Trust Estate and application of the proceeds as provided in Section 7.06, the Trustee, in its own name and as trustee of an express trust, shall be entitled to enforce payment of, and to receive, all amounts then remaining due and unpaid upon the Notes, for the benefit of the Holders thereof, and shall be entitled to recover judgment for any portion of the same remaining unpaid, with interest as aforesaid. No recovery of any such judgment upon any property of the Company shall affect or impair the security provided by this Indenture and the Assignment Agreement or the lien of the Mortgage upon the Trust Estate or any rights, powers or remedies of the Holders of the Notes. Section 7.04. 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 RIH or any other obligor upon the Notes or the property of the Company or RIH or of such other obligor or their creditors, the Trustee (irrespective of whether the principal (or any portion thereof) of the Notes 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 or interest) shall be entitled and empowered, by intervention in such proceeding or otherwise, (a) to file and prove a claim for the whole amount of principal and interest owing and unpaid in respect of the Outstanding Notes 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 Noteholders allowed in such judicial proceeding, and (b) 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 other similar official in any such judicial proceeding is hereby authorized by each Noteholder to make such payments to the Trustee, and in the event that the 52 Trustee shall consent to the making of such payments directly to the Noteholders, to pay to the Trustee any amount due to 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 8.07. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Noteholder any plan of reorganization, arrangement, adjustment or compensation affecting the Notes or the rights of any Holder thereof, or to authorize the Trustee to vote on the claim of any Noteholder in any such proceeding. Section 7.05. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF NOTES. All rights of action and claims under this Indenture, the Notes, the Assignment Agreement or the Mortgage Documents may be prosecuted and enforced by the Trustee without the possession of any of the Notes or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust. 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 Notes in respect of which such judgment has been recovered. Section 7.06. APPLICATION OF MONEY COLLECTED. Subject to the Intercreditor Agreement, any money collected by the Trustee pursuant to this Article Seven or pursuant to Article Three or Section 5.11 or 5.20 of the Mortgage which is not required to be paid to the Mortgagor thereunder shall be applied in the following order, at the date or dates fixed by the Trustee and upon such date interest shall cease to accrue, and, in case of the distribution of such money on account of principal upon presentation of the Notes, and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid: (a) FIRST: To the payment of all amounts due the Trustee under Section 8.07; (b) SECOND: To the payment of the whole amount then due upon the Outstanding Notes, for principal and interest, in respect of which or for the benefit of which such money has been collected, with interest (to the extent that such interest has been collected by the Trustee or a sum sufficient therefor has been so collected and payment thereof is legally enforceable at the respective rate or rates prescribed therefor in the 53 Notes) on overdue principal; and in case such proceeds shall be insufficient to pay in full the whole amount so due and unpaid upon such Notes, then first, payment of accrued but unpaid interest (with interest thereon as aforesaid), and second, to outstanding principal, in each case, ratably according to the aggregate amount so due; and (c) THIRD: To the payment of the remainder, if any, to the Company or to whomever may be lawfully entitled to receive the same or as a court of competent jurisdiction may direct. Section 7.07. LIMITATION ON SUITS. No Holder of any Note shall have any right to institute any proceeding, judicial or otherwise, under or with respect to this Indenture, the Assignment Agreement or the Mortgage Documents, or for the appointment of a receiver or trustee or for any other remedy hereunder, unless: (a) such Holder has previously given written notice to the Trustee of a continuing Event of Default; (b) the Holders of not less than 25% in Outstanding Amount of the Outstanding Notes 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; (c) 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; (d) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and (e) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holder of a majority in Outstanding Amount of the Outstanding Notes; it being understood and intended that no one or more Holders of Notes shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture, the Assignment Agreement or the Mortgage Documents, to affect, disturb or prejudice the right of any other Holders of Notes, or to obtain or to seek to obtain priority or preference over any other Holders or to enforce any right under this Indenture, the Assignment Agreement or the Mortgage Documents, 54 except in the manner herein and therein provided and for the Ratable Benefit of all Notes. Section 7.08. UNCONDITIONAL RIGHT OF NOTEHOLDERS TO RECEIVE PRINCIPAL AND INTEREST. Notwithstanding any other provision in this Indenture, the Holder of any Note shall have the right, which is absolute and unconditional, to receive payment of the principal of and interest on such Note on the Stated Maturity or Interest Payment Dates expressed in such Note (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 7.09. RESTORATION OF RIGHTS AND REMEDIES. If the Trustee or any Noteholder has instituted any proceeding to enforce any right or remedy under this Indenture, the Assignment Agreement or the Mortgage Documents and such proceeding has been discontinued or abandoned for any reason or has been determined adversely to the Trustee or to such Noteholder, then and in every such case the Company, the Trustee and the Noteholders shall, subject to any determination in such proceeding, be restored to their former positions hereunder, and thereafter all rights and remedies of the Trustee and the Noteholders shall continue as though no such proceeding had been instituted. Section 7.10. RIGHTS AND REMEDIES CUMULATIVE. No right or remedy herein conferred upon or reserved to the Trustee or to the Noteholders 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 7.11. DELAY OR OMISSION NOT WAIVER. No delay or omission of the Trustee or of any Holder of any Note to exercise any right or remedy accruing upon an 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 Seven or by law to the Trustee or to the Noteholders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Noteholders, as the case may be. 55 Section 7.12. OTHER RIGHTS. Subject to Section 8.03(e), the Holders of a majority in Outstanding Amount of the Outstanding Notes shall have the right, during the continuance of an Event of Default, (a) to require the Trustee to proceed to enforce this Indenture, either by judicial proceedings for the enforcement of the payment of the Notes by the foreclosure of the Mortgage and exercise of any remedies under the Mortgage Documents and the Assignment Agreement and the sale of the Trust Estate or otherwise or, at the election of the Trustee, by the exercise of the power of entry and/or sale conferred by the Mortgage; and (b) 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 upon the Trustee hereunder, provided that (1) such direction shall not be in conflict with any rule of law or this Indenture or any applicable Mortgage Document or the Assignment Agreement; (2) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction; and (3) the Trustee shall not be required to determine if any action so directed would be unjustly prejudicial to the Holders not taking part in such direction. Section 7.13. WAIVER OF PAST DEFAULTS. Before any judgment or decree for payment of money due has been obtained by the Trustee as provided in this Article Seven, the Holders of not less than 66-2/3% in Outstanding Amount of the Outstanding Notes may, by Act of such Noteholders delivered to the Trustee and the Company, on behalf of the Holders of all the Notes waive any past Default hereunder and its consequences, except a Default (a) in the payment of the principal of or interest on any Note, or (b) in respect of a covenant or provision hereof which under Article Eleven cannot be modified or amended without the consent of the Holder of each Outstanding Note affected. 56 Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or impair any right subsequent thereon. Section 7.14. UNDERTAKING FOR COSTS. All parties to this Indenture agree, and each Holder of any Note by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, the Assignment Agreement or the Mortgage Documents, or in any suit against the Trustee for any action taken or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to the merits and good faith of the claim or defense made by such party litigant; but the provisions of this Section 7.14 shall not apply to any suit instituted by the Trustee, to any suit instituted by any Noteholders, or group of Noteholders, holding in the aggregate more than 10% in Outstanding Amount of the Outstanding Notes, or to any suit instituted by any Noteholder for the enforcement of the payment of the principal of or interest on any Note on or after the Stated Maturity expressed in such Note (or, in the case of redemption, on or after the Redemption Date) or the relevant Interest Payment Date. Section 7.15. ENFORCEMENT. In case an Event of Default shall occur and be continuing, the Trustee, in it discretion may, subject to the provisions of Section 7.12, proceed to protect and enforce its rights and the rights of the Noteholders under this Indenture by a suit, action or proceeding in equity or at law or otherwise, whether for the specific performance of any covenant or agreement contained in this Indenture or in aid of the execution of any power granted in this Indenture or for the enforcement of any other legal, equitable or other remedy, as the Trustee, being advised by counsel, shall deem most effectual to protect and enforce any of the rights of the Trustee or the Noteholders hereunder. In case an Event of Default shall occur and be continuing under the Mortgage, the Trustee, as assignee of the Mortgage Documents, in its discretion may, subject to the provisions of Section 7.12, proceed to enforce its rights under the Mortgage Documents and the Assignment Agreement. 57 Section 7.16. MANAGEMENT OF CASINO-HOTEL. Notwithstanding any provision of this Article Seven to the contrary, (a) following an Event of Default under the Mortgage and the taking of possession of the Trust Estate by the Trustee and/or the appointment of a receiver of the Trust Estate or any part thereof, the Trustee or any such receiver shall be authorized, in addition to the rights and power of the Trustee and such receiver set forth elsewhere in this Indenture, the Assignment Agreement and the Mortgage Documents, to retain one or more experienced operators of hotels and/or casinos to manage and operate the Casino-Hotel on behalf of the Noteholders, provided that any such operator shall have all necessary legal qualifications, including all Permits, to manage the Casino-Hotel; and (b) no Noteholder shall have any right to take possession of, operate or manage all or any portion of the Casino-Hotel, individually or as a member of a group, unless such Noteholder shall have all necessary legal qualifications, including all Permits, to do so and shall otherwise be qualified to be retained to manage the Casino-Hotel under subsection (a) of this Section 7.16. ARTICLE EIGHT THE TRUSTEE Section 8.01. CERTAIN DUTIES AND RESPONSIBILITIES. (a) Except during the continuance of an Event of Default, (1) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture and the Mortgage Documents, and no implied covenants or obligations shall be read into this Indenture and the Mortgage Documents against the Trustee; and (2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture or the Mortgage Documents; but in the case of any such certificates or opinions which by any provision hereof or thereof are specifically required to be furnished to the Trustee, the Trustee shall be 5 under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture and the Mortgage Documents. (b) In case an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture or the Mortgage Documents, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person's own affairs. (c) No provision of this Indenture or any Mortgage Document shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that (1) this Section 8.01(c) shall not be construed to limit the effect of Section 8.01(a); (2) the Trustee shall not be liable for any error of judgment made in good faith by it, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; (3) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of not less than a majority in Outstanding Amount of the Outstanding Notes relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture or any Mortgage Document; and (4) no provision of this Indenture or the Mortgage Documents shall require the Trustee 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. (d) Whether or not therein expressly so provided, every provision of this Indenture or the Mortgage Documents relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section 8.01. Section 8.02. NOTICE OF DEFAULTS. Within 45 days after the occurrence of any Default hereunder of which a Responsible Officer of the 59 Trustee has actual knowledge, the Trustee shall transmit by mail to all Holders of Notes as their names and addresses appear in the Note Register, 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 interest on any Note, 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 best interests of the Noteholders. Section 8.03. CERTAIN RIGHTS OF TRUSTEE. Except as otherwise provided in Section 8.01: (a) 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, coupon, 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; (b) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order; (c) 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; (d) 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 the Trustee hereunder in good faith and in reliance thereon; (e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture or any of the Mortgage Documents at the request or direction of any of the Noteholders pursuant to this Indenture, unless such Noteholders shall have offered to the Trustee reasonable security or indemnity reasonably satisfactory to the Trustee against the costs, 60 expenses and liabilities which might be incurred by it in compliance with such request or direction; (f) 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, 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 and RIH, personally or by agent or attorney; (g) 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; (h) the Trustee shall not be deemed to have knowledge of and shall not be required to take any action with respect to any event of Default (other than an Event of default described in Sections 7.01(a) and (b) or any event which would, with the giving of notice or the passage of time or both, constitute an Event of Default, unless the Trustee shall have actual knowledge of such event or shall have been notified in writing of such event by Noteholders holding in the aggregate more than 25% in Outstanding Amount of the Outstanding Notes; (i) subject to Section 8.01(c), the Trustee shall not be personally liable, in case of entry by it upon the Trust Estate, for debts contracted or liabilities or damages incurred in the management or operation of the Trust Estate; and (j) in addition to and not in limitation of its other powers hereunder, the Trustee shall have such power and authority as may be necessary to enter into and accept delivery of any document as may be necessary to effect on behalf of the Holders of the Notes the subordination of the indebtedness in respect of the Notes to any secured Working Capital Facility (in accordance with the provisions of the Mortgage), and upon written request of the Company, the Trustee shall enter into such agreements on behalf of the holders of the Notes. 61 Section 8.04. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF NOTES OR APPLICATION OF PROCEEDS. The recitals contained herein and in the Notes, except in a certificate of authentication on the Notes, shall be taken as the statements of the Company, and the Trustee assumes no responsibility for their correctness. The Trustee makes no representation as to the validity or sufficiency of this Indenture, the Notes or the Mortgage Documents. The Trustee shall not be accountable for the use or application by the Company of Notes or the proceeds thereof or of any money paid to the Company or by a Company Order under any provision hereof. Section 8.05. MAY HOLD NOTES. The Trustee, any Paying Agent, Note Registrar, Authenticating Agent or any other agent of the Company, in its individual or any other capacity, may become the owner or pledgee of Notes and, subject to Sections 8.08 and 8.13, if operative, may otherwise deal with the Company with the same rights it would have if it were not Trustee, Paying Agent, Note Registrar, Authenticating Agent or such other agent. Section 8.06. MONEY HELD IN TRUST. 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 agreed with the Company. Section 8.07. COMPENSATION AND REIMBURSEMENT. The Company agrees: (a) to pay to the Trustee from time to time reasonable compensation for all services rendered by it hereunder and under the Mortgage Documents (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (b) except as otherwise expressly provided herein and in the Mortgage Documents, 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 the Trustee's negligence or bad faith; and 62 (c) 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 Indenture or the trust created hereunder or the performance of its duties hereunder, including the reasonable costs and expenses of defending itself against or investigaing any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder (including reasonable attorneys' fees and expenses). As security for the performance of the obligations of the Company and RIH under this Section 8.07, the Trustee shall be secured under this Indenture and the Mortgage Documents by a lien prior to the Mortgage upon all property and funds held or collected by the Trustee, and for the payment of such compensation, expenses, reimbursements and indemnity the Trustee shall have the right to use and apply any money held by it pursuant hereto. Notwithstanding the satisfaction of this Indenture, the obligations of the Company and RIH under this Section 8.07 shall survive. Section 8.08. DISQUALIFICATION; CONFLICTING INTERESTS. This Indenture shall always have a Trustee who satisfies the requirements of TIA SECTION 310(a)(l) and SECTION 310(a)(5). The Trustee shall comply with TIA SECTION 310(b) including the second sentence of TIA SECTION 310(b)(9). Section 8.09. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY. There shall at all times be a Trustee hereunder which shall be a corporation organized and doing business under the law of the United States of America or of any state, authorized under such laws to exercise corporate trust powers, having (or in the case of a corporation included in a bank holding company system, the related bank holding company having) a combined capital and surplus of at least $100,000,000, subject to supervision or examination by federal or state authority. In addition, if the Trustee is a corporation included in a bank holding company system, the Trustee, independently of such bank holding company, shall meet the capital requirements of TIA 310(a)(2). The Trustee shall comply with TIA 310(b); PROVIDED, HOWEVER, that there shall be excluded from the operation of TIA 310(b)(1) any indenture or indentures under which other securities, or certificates of interest or participation in other securities of the Company are outstanding, if the requirements for such exclusion set forth in TIA 310(b)(1) are met. If such 63 corporation publishes reports of condition at least annually, pursuant to law or to the requirements of such supervising or examining authority, then for the purposes of this Section 8.09, 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 8.09, it shall resign immediately in the manner and with the effect hereinafter specified in this Article Eight. Section 8.10. 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 Eight shall become effective until the acceptance of appointment by the successor Trustee under Section 8.11. (b) The Trustee may resign at any time by giving written notice thereof to the Company. If an instrument of acceptance by a successor Trustee 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) The Trustee may be removed at any time by Act of the Holders of a majority in Outstanding Amount of the Outstanding Notes, delivered to the Trustee and to the Company. (d) If at any time: (1) the Trustee shall fail to comply with Section 8.08 after written request therefor by the Company or by any Noteholder who is a bona fide Holder of a Note, or (2) the Trustee shall cease to be eligible under Section 8.09 and shall fail to resign after written request therefor by the Company or by any Noteholder who is a bona fide Holder of a Note, or (3) 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, (i) the Company by a Company Order may remove the Trustee, or (ii) subject to Section 7.14, any Noteholder who is a bona fide Holder of a Note may, on behalf 64 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 the Trustee for any cause, the Company, by a Company Order, shall promptly appoint a successor Trustee. In case all or substantially all of the Trust Estate shall be in the possession of a receiver or trustee lawfully appointed, such receiver or trustee, by written instrument, may similarly appoint a successor to fill such vacancy until a new Trustee shall be so appointed by the Noteholders. If, within one year after such resignation, removal or incapacity or the occurrence of such vacancy, a successor Trustee shall be appointed by Act of the Holders of a majority in Outstanding Amount of the Outstanding Notes 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 or by such receiver or trustee. If no successor Trustee shall have been so appointed by the Company or the Noteholders and accepted appointment in the manner hereinafter provided, subject to Section 7.14, any Noteholder who is a bona fide Holder of a Note may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee. (f) The Company shall give written notice of each resignation and each removal of the Trustee and each appointment of a successor Trustee to each Noteholder by mailing such notice by first-class mail, postage prepaid, to each Noteholder as such Noteholder's name and address appears in the Note Register; provided, however, that failure of the Company to give such notice shall not affect the resignation or removal of such Trustee. Each notice shall include the name of the successor Trustee and the address of its principal corporate trust office. Section 8.11. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR. Every successor Trustee appointed hereunder shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall became effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the estates, properties, 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 conveying and transferring to such successor Trustee all the estates, 65 properties, 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, subject nevertheless to its lien, if any, provided for in Section 8.07. 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 estates, properties, 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 Eight. Section 8.12. 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 Eight, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Notes 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 Notes so authenticated with the same effect as if such successor Trustee had itself authenticated such Notes. Section 8.13. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY. The Trustee will comply with TIA SECTION 311(a). A Trustee who has resigned or been removed shall be subject to TIA SECTION 311(a) to the extent indicated. Section 8.14. CO-TRUSTEES AND SEPARATE TRUSTEES. At any time or times, for the purpose of meeting the legal requirements of the TIA or of any jurisdiction in which any of the Trust Estate may at the time be located or in which it shall be necessary or desirable for the Trustee to act, the Company and the Trustee shall have power to appoint, and, upon the written request of the Trustee or of the Holders of at least 25% in Outstanding Amount of the Notes Outstanding, the Company shall for such purpose join with the Trustee in the execution, delivery and performance of all instruments and 66 agreements necessary or proper to appoint, one or more Persons approved by the Trustee either to act as co-trustee, jointly with the Trustee, of all or any part of the Mortgage Documents or of the Trust Estate covered by such Mortgage Documents, or to act as separate trustee of any such property, in either case with such powers as may be provided in the instrument of appointment, and to vest in such Person or Persons in the capacity aforesaid, any property, title, right or power deemed necessary or desirable, subject to the other provisions of this Section 8.14. If the Company does not join in such appointment within 15 days after the receipt by it of a request so to do, or in case an Event of Default has occurred and is continuing, the Trustee alone shall have power to make such appointment. Should any written instrument from the Company be required by any co-trustee or separate trustee so appointed for more fully confirming to such co-trustee or separate trustee such property, title, right or power, any and all such instruments shall, on request, be executed, acknowledged and delivered by the Company within three business days of such request. Every co-trustee or separate trustee shall, to the extent permitted by law, but to such extent only, be appointed subject to the following terms, namely: (a) the Notes shall be authenticated and delivered, and all rights, powers, duties and obligations hereunder in respect of the custody of securities, cash and other personal property held by, or required to be deposited or pledged with, the Trustee hereunder, shall be exercised solely, by the Trustee; (b) the rights, powers, duties and obligations hereby conferred or imposed upon the Trustee in respect of any property covered by such appointment shall be conferred or imposed upon and exercised or performed by the Trustee or by the Trustee and such co-trustee or separate trustee jointly, as shall be provided in the instrument appointing such co-trustee or separate trustee, except to the extent that under any law of any jurisdiction in which any particular act is to be performed, the Trustee shall be incompetent or unqualified to perform such act, in which event such rights, powers, duties and obligations shall be exercised and performed by such co-trustee or separate trustee; (c) the Trustee, at any time, by an instrument in writing executed by it may accept the resignation of or remove any co-trustee or separate trustee appointed under this Section 8.14. A successor to any co-trustee or 67 separate trustee so resigned or removed may be appointed in the manner provided in this Section 8.14; (d) the Trustee, or any other such trustee hereunder, shall not be personally liable by reason of any act or omission of any co-trustee or separate trustee hereunder, and no co-trustee or separate trustee hereunder shall be personally liable by reason of any act or omission of the Trustee, or any other such trustee hereunder; (e) any Act of Noteholders delivered to the Trustee shall be deemed to have been delivered to each such co-trustee and separate trustee; and (f) any co-trustee or separate trustee appointed hereunder shall be entitled to compensation and indemnification from the Company under Section 8.07 hereunder and shall be entitled to all such other rights and protections afforded the Trustee hereunder. Section 8.15. APPOINTMENT OF AUTHENTICATING AGENT. Upon the request of the Company, the Trustee shall appoint an Authenticating Agent with power to act on its behalf and subject to its direction in the authentication and delivery of the Notes designated for such authentication by the Company and containing provisions therein for such authentication in connection with transfers and exchanges under Sections 3.04, 3.05, 3.06 and 13.07, as fully to all intents and purposes as though the Authenticating Agent had been expressly authorized by those Sections to authenticate and deliver such Notes. For all purposes of this Indenture, the authentication and delivery of Notes by the Authenticating Agent pursuant to this Section 8.15 shall be deemed to be the authentication and delivery of Notes "by the Trustee". Such Authenticating Agent shall at all times be a bank or trust company having its principal office in the Borough of Manhattan, City and State of New York, and shall at all times be a corporation organized and doing business under the laws of the United States or of any State with a combined capital and surplus of at least $50,000,000 and authorized under such laws to exercise corporate trust powers and subject to supervision or examination by federal or state authority. If such corporation publishes reports of condition at least annually pursuant to law or the requirements of such authority, then for the purposes of this Section 8.15 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. Any corporation into which any Authenticating Agent may be merged or converted or with which it may be 68 consolidated, or any corporation resulting from any merger, consolidation or conversion to which any Authenticating Agent shall be a party, or any corporation succeeding to the corporate trust business of any Authenticating Agent, shall be the successor of the Authenticating Agent hereunder, if such successor corporation is otherwise eligible under this Section 8.15, without the execution or filing of any further act on the part of the parties hereto or the Authenticating Agent or such successor corporation. Any Authenticating Agent may at any time resign by giving written notice of resignation to the Trustee and the Company. The Trustee may at any time terminate the agency of any Authenticating Agent by giving written notice of termination to such Authenticating Agent and the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time any Authenticating Agent shall cease to be eligible under this Section 8.15, the Trustee shall promptly appoint a successor Authenticating Agent, and shall give written notice of such appointment to the Company. The Company agrees to pay to the Authenticating Agent from time to time reasonable compensation for its services. The provisions of Sections 3.10, 8.04 and 8.05 shall be applicable to any Authenticating Agent. ARTICLE NINE NOTEHOLDERS' LISTS AND REPORTS BY TRUSTEE Section 9.01. COMPANY TO FURNISH TRUSTEE SEMI-ANNUAL LISTS OF NOTEHOLDERS. The Company will furnish or cause to be furnished to the Trustee semi-annually, not less than 45 days nor more than 60 days after each date (month and day) specified as a semi-annual Interest Payment Date for the Notes (whether or not any Notes are then Outstanding), and at such other times as the Trustee may request in writing, within 60 days after receipt by the Company of any such request, a list in such form as the Trustee may reasonably require containing all the information in the possession or control of the Company, or any of its Paying Agents other than the Trustee, as to the names and addresses of the Holders of Notes, obtained since the date as of which the next previous list, if any, was furnished, excluding from any such list the names and addresses received by the Trustee in its capacity as Note Registrar. Any such list may be dated as of a date not more than 15 days prior to 69 the time such information is furnished and need not include information received after such date. Section 9.02. PRESERVATION OF INFORMATION; COMMUNICATIONS TO NOTEHOLDERS. (a) The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders of Notes (1) contained in the most recent list furnished to the Trustee as provided in Section 9.01, (2) received by the Trustee in the capacity of Paying Agent (if so acting) hereunder or (3) received by the Trustee in its capacity as Note Registrar. The Trustee may destroy any list furnished or provided in Section 9.01 upon receipt of a new list so furnished. (b) Holders may communicate pursuant to TIA SECTION 312(b) with other Holders with respect to their rights under this Indenture or the Notes. The Company, the Trustee, the Note Registrar and any other Person shall have the protection of TIA SECTION 312(c). (c) Every Holder of Notes, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee nor any Paying Agent shall be held accountable by reason of the disclosure of any such information as to the names and addresses of the Holders of Notes in accordance with Section 9.02(b), regardless of the source from which information was derived, and that the Trustee shall not be held accountable by reason of mailing any material pursuant to a request made under Section 9.02(b). Section 9.03. REPORTS BY TRUSTEE. (a) Within 60 days after each May 15 beginning with May 15, 1995, the Trustee shall transmit to each Noteholder a report dated as of such May 15 that complies with TIA SECTION 313(a). The Trustee shall also comply with TIA SECTION 313(b) and SECTION 313(c). (b) A copy of each such report shall, at the time of such transmission to Noteholders, be filed by the Trustee with any stock exchange on which the Notes are listed and also with the Commission. The Company will notify the Trustee when the Notes are listed on any stock exchange. (c) The Trustee will provide the Casino Control Commission and the Director of the Division of Gaming Enforcement of New Jersey with: (1) copies of all notices, reports and other written communications which the Trustee gives to Noteholders; 70 (2) a list of Noteholders promptly after the original issuance of the Notes and a list of Noteholders annually on December 1 of each year, or such other time as requested by the Casino Control Commission or Director of the Division of Gaming Enforcement; (3) notice of any Event of Default under this Indenture actually known by the Trustee or of any event, occurrence or condition actually known by the Trustee which, with the giving of notice or lapse of time or both would constitute an Event of Default under this Indenture (including the Guaranty), the RIH Junior Promissory Note or the Mortgage Documents (as such term is defined in such instruments), any acceleration of the Indebtedness evidenced or secured hereby or thereby, the institution of any legal actions or proceedings before any court or governmental authority in respect of this Indenture (including the Guaranty) or the Mortgage Documents, the entering into or taking possession of any property constituting the Trust Estate and any rescission, annulment or waiver in respect of an Event of Default under any instruments described in this clause (3); (4) notice of the removal or resignation of the Trustee; (5) notice of any transfer or assignment of rights under this Indenture (including the Guaranty) (but not in respect of the Notes) or the Mortgage Documents after a Responsible Officer of the Trustee becomes aware of the same; and (6) a copy of any amendment to the Notes, this Indenture (including the Guaranty) or the Mortgage Documents immediately; PROVIDED, HOWEVER, that the Trustee shall not be liable to any Person (other than the Casino Control Commission and the Director of the Division of Gaming Enforcement of New Jersey) for any failure to provide any of the above-mentioned documents to the Casino Control Commission and the Director of the Division of Gaming Enforcement of New Jersey. The notice specified in Section 9.03(c) above shall be in writing and, except as set forth below, shall be given immediately after the Trustee has actual knowledge of any circumstances requiring such notice. In the case of any notice in respect of any Default or Event of Default under any instrument described in Section 9.03(c), such notice shall be accompanied by a copy of 71 any notice from the Holders of Notes, or a representative thereof or the Trustee, to the defaulting Person and, if accompanied by any such notice to the defaulting Person, shall be given simultaneously with the giving of any such notice to the defaulting Person. In the case of any legal actions or proceedings, such notice shall be accompanied by a copy of the complaint or other initial pleading or document. The Trustee and its Responsible Officers shall cooperate with the Casino Control Commission and the Director of the Division of Gaming Enforcement of New Jersey in order to provide such Commission and Director with information and documentation relevant to compliance with Section 9.03(c) above and as otherwise required by the Casino Control Act. The expiration date of the current gaming Permit held by RIH is February 26, 1994. Subsequent gaming Permits held by RIH are scheduled to expire every two years on February 26th, commencing February 26, 1996 unless and until the Trustee is advised otherwise. RIH will advise the Trustee of any change in such expiration date within five business days of knowledge thereof. ARTICLE TEN CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE Section 10.01. CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER ONLY ON CERTAIN TERMS. Neither the Company nor RIH shall consolidate, combine or merge with or into any other Person or permit any other Person to consolidate, combine or merge with or into the Company or RIH, as the case may be; and neither the Company with respect to its assets nor RIH with respect to the Trust Estate shall sell, assign, convey or transfer its interest in such assets or the Trust Estate, as the case may be, substantially as an entirety (and notwithstanding anything to the contrary contained herein (including the proviso at the end of this sentence), but subject to the provisions of the Mortgage regarding dispositions of the Trust Estate, neither the Company with respect to its assets nor RIH with respect to the Trust Estate may sell, assign, convey or transfer such assets or the Trust Estate, as the case may be, other than substantially as an entirety) to any other Person or group of Persons in one transaction or a series of related transactions, or permit any other Person or group of Persons to convey or transfer all or substantially all of its assets, subject to liabilities other than DE MINIMIS liabilities, to 7 the Company or RIH; and the Company and RIH shall not transfer, convey, sell or otherwise dispose of to any other Person, or issue to any Person, any equity interest in the Company or RIH, as the case may be (each of the aforesaid transactions described in this Section 10.01 is referred to herein as a "Combination Transaction"); PROVIDED, HOWEVER, that (i) the Company may engage in a Combination Transaction in which the only other party or parties is RIH or a direct or indirect wholly owned Subsidiary of the Company or RIH, and (ii) the Company or RIH may engage in any other Combination Transaction (either independently or at the same time as other Combination Transactions), subject to the following with respect to each such Combination Transaction: (a) the conditions set forth in Section 10.03 are satisfied; (b) in the event the Company or RIH shall consolidate, combine or merge with or into another Person or sell, assign, convey or transfer its interest in its assets or in the Trust Estate, as the case may be, substantially as an entirety (but not less than substantially as an entirety) to another Person in one transaction or a series of related transactions, the entity which is formed by or survives such consolidation, combination or merger or the Person to which such assets or the Trust Estate are conveyed or transferred: (1) shall be organized and existing under the laws of the United States of America, any state thereof, or the District of Columbia; (2) shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form reasonably satisfactory to the Trustee, the performance and observance of every covenant, obligation and condition of this Indenture to be performed or observed by the Company or RIH, whichever the case may be; (3) shall expressly assume, by an instrument executed and delivered to the Trustee, in form reasonably satisfactory to the Trustee, the due and punctual performance of every covenant, obligation and condition of the Mortgage Documents and Assignment Agreement to be performed by the Company or RIH, whichever the case may be; and (4) immediately after and giving effect to such transaction could incur at least $1.00 of additional Indebtedness under Section 12.08; 73 (c) immediately after giving effect to such transaction, no Event of Default, or Default hereunder or under the Mortgage shall have occurred and be continuing; (d) such Combination Transaction shall be on such terms as shall not impair the lien and security and priority hereof or of the Mortgage Documents or of the Assignment Agreement and the rights and powers of the Trustee and the Holders of the Notes hereunder and thereunder; and (e) the Company or RIH, as the case may be, shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each of which shall state that such Combination Transaction and such supplemental indenture comply with this Article Ten and that all conditions precedent herein provided for relating to such transaction have been complied with. Section 10.02. SUCCESSOR ENTITY SUBSTITUTED. Upon any consolidation, combination or merger or any conveyance or transfer of an interest in the assets of the Company or in the Trust Estate permitted by Section 10.01, the successor entity formed by such consolidation or into which the Company or RIH is combined or to which such conveyance or transfer is made shall succeed to, and be substituted for, and may exercise every right and power of, and shall be bound by every obligation and liability of, the Company or RIH, whichever the case may be, under this Indenture with the same effect as if such successor entity had been named as the Company or RIH herein; PROVIDED, HOWEVER, that no such consolidation or combination involving the Company or RIH, unless such transaction is in compliance with the provisions of this Article Ten, shall have the effect of releasing the Person named as "the Company" or "RIH", as the case may be, in the first paragraph of this instrument, or any successor entity which shall theretofore have become such in the manner prescribed in this Article Ten, from its liability as obligor and maker on the RIH Junior Promissory Note or any of the Notes. Section 10.03. SUCCESSOR MANAGEMENT OF CASINO-HOTEL. Neither the Company nor RIH shall engage in any Combination Transaction unless, immediately following such Combination Transaction, (a) RIH (or any successor entity) shall be eligible for and shall meet all relevant Legal Requirements, including holding all permits, required for the normal operation of the business of owning and operating the Casino-Hotel, and (b) RIH (or any successor entity) shall be controlled by a Person that is, or shall retain to manage the 74 Casino-Hotel one or more Persons that are, experienced in the operation and management of casino-hotels. Section 10.04. LIMITATION ON SALES OF TRUST ESTATE. Except as otherwise expressly permitted by the Mortgage and this Indenture, neither the Company nor RIH shall sell, assign, lease, sublease, hypothecate, pledge, mortgage or otherwise transfer all or any part of the assets of the Company or the Trust Estate or any interest therein (including, without limitation, any interest in the Ground Leases). Without limiting the generality of the foregoing, RIH shall not separate, or attempt to separate, its ownership of its interest in the Ground Leases from the ownership of the buildings constituting the Casino-Hotel or any part thereof. ARTICLE ELEVEN AMENDMENTS, SUPPLEMENTS AND WAIVER Section 11.01. WITHOUT CONSENT OF NOTEHOLDERS. Without the consent of the Holders of any Notes, the parties hereto may from time to time amend or supplement this Indenture, the Assignment Agreement, the Notes or the Mortgage Documents, as long as the form of such amendment or supplement is satisfactory to the Trustee, for any of the following purposes: (a) to correct or amplify the description of the Trust Estate or better to assure, convey and confirm unto the Trustee the assignment of the Mortgage Documents; or (b) to add additional conditions, limitations and restrictions thereafter to be observed to the conditions, limitations and restrictions on the authorized amount, terms of issue, authentication and delivery of Notes as herein set forth; or (c) to comply with Article Ten; or (d) to add to the covenants of the Company for the benefit of the Holders of all Notes or to surrender any right or power herein conferred upon the Company; or (e) to cure any ambiguity, defect or inconsistency in any of the enumerated documents, provided such action shall not adversely affect the interests of the Holders of the Notes; or (f) to modify, eliminate or add to the provisions of this Indenture to such extent as shall be necessary to 75 effect the qualification of this Indenture under the TIA or under any similar federal statute hereafter enacted, and to add to this Indenture such other provisions as may be expressly permitted by the TIA, EXCLUDING, HOWEVER, the provisions referred to in TIA SECTION 316(a)(2) as in effect at the date as of which this instrument was executed or any corresponding provision in any similar federal statute hereafter enacted; or (g) to effectuate any subordination contemplated in Section 8.03(i); or (h) to comply with the requirements of the Casino Control Act. The terms of any such enumerated document entered into pursuant to this Section 11.01 shall be subject to prior approval of the Casino Control Commission in consultation with the New Jersey Division of Gaming Enforcement. Section 11.02. WITH CONSENT OF NOTEHOLDERS. With the consent of the Holders of not less than 66-2/3% in Outstanding Amount of the Notes then Outstanding, by Act of such Holders delivered to the Company and the Trustee, the parties hereto may amend or supplement this Indenture, the Mortgage Documents, the Assignment Agreement or the Notes, provided that the form of such amendment or supplement is reasonably satisfactory to the Trustee. The Holders of 66-2/3% in Outstanding Amount of the Notes then Outstanding may waive compliance by the Company or RIH with any provision of this Indenture, the Mortgage Documents, the Assignment Agreement or the Notes, except a default in the payment of principal of or interest on any Note, without notice to any Noteholder. Notwithstanding the foregoing, no modification, waiver, consent or amendment to the Notes or this Indenture shall permit the redemption of the Notes prior to the fifth anniversary of the Effective Date (other than pursuant to an RIH Sale) unless the same also shall have ben approved by the holders of 66-2/3% in Outstanding Amount (as such term is defined in the Senior Mortgage Note Indenture) of the Senior Mortgage Notes then Outstanding (as such terms are defined in the Senior Mortgage Note Indenture). Without the consent of the Holder of each Outstanding Note affected thereby, an amendment, supplement or waiver, including a waiver pursuant to Section 7.13, may not: (a) change the Stated Maturity of the principal of, or any installment of interest on, any Note, or reduce the principal amount thereof or the interest thereon or the amount payable upon the redemption thereof, or change any Place of Payment where, or the coin or currency in which, any Note, or the interest thereon, is payable, or 76 impair the right to institute suit for the enforcement of any such payment on or after the Stated Maturity thereof (or, in the case of redemption, on or after the Redemption Date); or (b) reduce the percentage in Outstanding Amount of the Outstanding Notes, the consent of whose Holders is required for any amendment, supplement or waiver; or (c) modify or alter the provisions of the proviso to the definition of the term Outstanding; or (d) modify any of the provisions of this Section or Section 7.13, except to increase any percentage provided thereby or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Note affected thereby; or (e) permit the creation of any lien ranking prior to the lien of the Mortgage (except for such liens expressly permitted pursuant to Section 12.13). In determining whether to execute any amendment or supplement, subject to Sections 11.02(a) through (e), the Trustee may in its discretion determine whether or not any Notes would be affected by any such amendment or supplement and any such determination shall be conclusive upon the Holders of all Notes, whether theretofore or thereafter authenticated and delivered hereafter. The Trustee shall not be liable for any such determination made in good faith. It shall not be necessary for any Act of Noteholders under this Section to approve the particular form of any proposed amendment, supplement or waiver, but it shall be sufficient if such Act shall approve the substance thereof. In connection with any amendment, supplement or waiver under this Indenture, the Company or RIH may, but shall not be obligated to, offer to any Holder who consents to such amendment, supplement or waiver, or to all Holders, at the discretion of the Company or RIH, consideration for such Holder's consent to such amendment, supplement or waiver. The terms of any such enumerated document entered into pursuant to this Section 11.02 shall be subject to the prior approval of the Casino Control Commission in consultation with New Jersey Division of Gaming Enforcement. Section 11.03. EXECUTION OF AMENDMENTS AND SUPPLEMENTS. In executing, or accepting the additional trusts created by, any amendment or supplement permitted by this Article or the modification thereby of the trusts already created by this Indenture, the Trustee shall be entitled to 77 receive from the Company, and, subject to Section 8.01(c), shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such amendment or supplement is authorized or permitted by this Indenture. The Trustee may, but shall not, except to the extent required in the case of a supplemental indenture entered into under Section 11.01(e), be obligated to, enter into any such amendment or supplement which affects the Trustee's own rights, duties or immunities under this Indenture or otherwise. Section 11.04. EFFECT OF AMENDMENT OR SUPPLEMENT. Upon the execution of any amendment or supplement under this Article, every Holder of Notes theretofore or thereafter authenticated and delivered hereunder shall be bound thereby. Section 11.05. CONFORMITY WITH TRUST INDENTURE ACT. Every supplemental indenture executed pursuant to this Article shall conform to the requirements of the TIA and Casino Control Act as then in effect. Section 11.06. REFERENCE IN NOTES TO AMENDMENT OR SUPPLEMENT. In the absence of a direction from the Company, Notes authenticated and delivered after the execution of any amendment or supplement pursuant to this Article may, and if required by the Trustee shall, bear a notation in form approved by the Trustee as to any matter provided for in such amendment or supplement. If the Company shall so determine, new Notes so modified as to conform, in the opinion of the Trustee and the Company, to any such amendment or supplement may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for Outstanding Notes. ARTICLE TWELVE COVENANTS Section 12.01. PAYMENT OF PRINCIPAL AND INTEREST. The Company will duly and punctually pay or cause to be paid the principal of and interest on each of the Notes at the place or places, at the respective times and in the manner provided in the Notes and this Indenture. Each installment of interest on the Notes may be paid by mailing checks for such interest payable to or upon the written order of (or, with respect to interest to be paid in Additional Notes, such 78 Additional Notes) the Holders of Notes entitled thereto, to such address and in such name as they shall appear on the Note Register. Any installment of principal and interest shall be considered paid on the date it is due if the Trustee or Paying Agent (other than the Company or a Subsidiary of the Company or any Affiliate thereof) holds on that date money in immediately available funds designated exclusively for and sufficient to pay the installment (or, with respect to interest to be paid in Additional Notes, such Additional Notes) and the Trustee and/or the Paying Agent has not received instructions from the Company not to make such payment or is not prohibited from making such payment to the Noteholders pursuant to the terms of this Indenture. The Company shall pay interest (including post-petition interest in any proceeding under any applicable bankruptcy law) to the extent legally permitted on overdue principal at the rate set forth in the Notes; and it shall pay interest (including post-petition interest in any proceeding under any applicable bankruptcy law) on unpaid interest otherwise payable under the first clause of this sentence at the same rate to the extent legally permitted. Section 12.02. MAINTENANCE OF OFFICE OR AGENCY. The Company will maintain, in the Borough of Manhattan, the City of New York, State of New York, an office or agency where Notes may be presented or surrendered for payment, where Notes may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Company in respect of the Notes and this Indenture may be served. The Company initially appoints the Trustee as its agent for presentation or surrender of Notes for payment or registration, transfer or exchange. The Trustee (or its corporate parent) will maintain an office in the Borough of Manhattan, the City of New York, State of New York, for such purposes. The Company may from time to time designate one or more other offices or agencies (in or outside the City of New York, State of New York) where the Notes may be presented or surrendered for any or all such purposes, and may from time to time rescind such designations; 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 Borough of Manhattan, the City of New York, State of New York, for such purposes as stated in this Section 12.02. The Company will give prompt written notice to the Trustee of any such designation and any change in the location of any such office or agency. 79 If at any time the Company shall fail to maintain such an 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 principal corporate trust office of the Trustee, and the Company hereby appoints the Trustee its agent to receive all such presentations, surrenders, notices and demands. Section 12.03. 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, or interest on, any of the Notes, segregate and hold in trust for the benefit of the Persons entitled thereto a sum, sufficient to pay the principal or interest so becoming due until such sums shall be paid or issued to such Persons or otherwise disposed of as herein provided, and will promptly notify the Trustee of such action or any failure so to act. The Company will, on or before each due date of the principal of or interest on, any Notes, deposit with a Paying Agent a sum in same day funds (or, with respect to interest to be paid in Additional Notes, such Additional Notes), sufficient to pay the principal or interest so becoming due, such sum, as the case may be, to be held in trust for the benefit of the Persons entitled to such principal 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: (a) hold all sums received by it as such agent for the payment of the principal of or interest on Notes (whether such sums have been paid to it by the Company or by any other obligor on the Notes) 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; (b) promptly give the Trustee notice of any failure by the Company (or any other obligor upon the Notes) to make any payment of the principal of, or interest on, the Notes when the same shall be due and payable; and (c) at any time during the continuance of any such failure, upon the written request of the Trustee, 80 forthwith pay to the Trustee all sums so held in trust by such Paying Agent. Any money (or, with respect to interest to be paid in Additional Notes, such Additional Notes) deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of, or interest on, any Note and remaining unclaimed for two years after such principal or interest has become due and payable shall be paid to the Company on its request, or (if then held by the Company) shall be discharged from such trust, unless otherwise required by mandatory provisions of applicable escheat or abandoned or unclaimed property law, 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 regard to such money (or Additional Notes), 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 City of New York, State of New York, or mailed to each such Holder, or both, notice that such money (or Additional Notes) remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication or mailing, as the case may be, any unclaimed balance of such money then remaining will be paid to the Company. Section 12.04. CORPORATE EXISTENCE. Subject to Article Ten, each of the Company and RIH will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence and the corporate existence of each of its Subsidiaries in accordance with the respective organizational documents of the Company, RIH and each such Subsidiary and the rights (charter and statutory), licenses, permits, approvals and governmental franchises of it and each of its Subsidiaries necessary to the conduct of its and their respective businesses, including, without limitation, all licenses, permits, approvals and franchises necessary to assure the continued operation of RIH's gaming operations at the Casino-Hotel; PROVIDED, HOWEVER, any direct or indirect wholly owned subsidiary of RIH may consolidate with, merge into or transfer or distribute all or part of its properties and assets to RIH or the Company or as otherwise provided in Section 10.01. 81 Section 12.05. TO KEEP BOOKS; INSPECTION BY TRUSTEE. The Company and RIH will each keep proper books of record and account, in which full and correct entries shall be made of all material dealings or transactions of or in relation to the Notes and the properties, business and affairs of the Company and RIH in accordance with GAAP. The Company and RIH will at any and all times, upon the written request of the Trustee and at the expense of RIH, permit the Trustee by its representatives to inspect the Casino-Hotel and the books of account, records, reports and other papers of the Company and RIH, and to make copies and extracts therefrom, and will afford and procure a reasonable opportunity to make any such inspection (provided that the Company and RIH shall have received reasonable advance notice of such inspection and that any such inspection shall not unreasonably interfere with the business operations of the Company and RIH). The Company and RIH will furnish to the Trustee any and all information as the Trustee may reasonably request with respect to the performance by the Company and RIH of their covenants in this indenture. Section 12.06. REPORTS AND COMPLIANCE CERTIFICATES. (a) RIH shall furnish or cause to be furnished to the Trustee, within 105 days after each fiscal year of RIH: (i) a copy of annual audited financial statements of RIH prepared in conformity with GAAP, accompanied by a report of Ernst & Young or of another firm of independent certified public accountants of recognized national standing selected by RIH (the "National Accountants"), together with a certificate from such National Accountants stating that their audit examination has included a review of the terms of this Indenture and that the National Accountants have not become aware of any Event of Default or that a Default has occurred and is continuing, and if they have become aware of any such Event of Default or Default, describing it; PROVIDED, HOWEVER, that the National Accountants shall not be liable to any Person for any failure to discover any Event of Default or Default in connection with such review; and (ii) a copy of annual unaudited financial statements of RIH, including notes to such financial statements and corresponding management's discussion and analysis, in form and substance comparable to that which would be required to be filed with the Commission in an Annual Report on Form 10-K under the Exchange Act, prepared in the same manner as the audited financial statements referred to in clause (i) of this Section 12.06(a), signed by a proper accounting officer of RIH. RIH, contemporaneously with the furnishing of such audited financial statements to the Trustee under clause (i) of this Section 12.06(a), shall mail copies of such audited financial statements to the Holders (which need not include the certificate referred to in such clause (i)). 82 (b) RIH shall furnish or cause to be furnished to the Trustee, within 60 days after each quarter of each fiscal year of RIH, except the final quarter of such fiscal year, a copy of unaudited financial statements of RIH prepared on a consistent basis with the audited financial statements referred to in clause (i) of Section 12.06(a), signed by a proper accounting officer of RIH and consisting of at least a balance sheet as at the close of such quarter and statements of operations and cash flow for such quarter and for the period from the beginning of such fiscal year to the close of such quarter, including notes to such financial statements and corresponding management's discussion and analysis, in form and substance comparable to that which would be required to be filed with the Commission in a Quarterly Report on Form 10-Q under the Exchange Act. RIH, contemporaneously with the furnishing of such unaudited financial statements to the Trustee under this Section 12.06(b), shall mail copies of such unaudited financial statements to the Holders (which need not be signed by a proper accounting officer of RIH). (c) RIH shall furnish or cause to be furnished to the Trustee, contemporaneously with the furnishing of a copy of the annual financial statements and of the quarterly financial statements referred to in Section 12.06(a) and Section 12.06(b), an Officers' Certificate dated the date of such annual financial statement or such quarterly financial statements to the effect that no Default or Event of Default has occurred and is continuing, or, if there is any such Default or Event of Default, describing it and the steps, if any, being taken to cure it. (d) RIH shall furnish or cause to be furnished to the Trustee, copies of each filing and report made by RIH or the Company with the Commission pursuant to the reporting and filing requirements of Section 13 or 15(d) of the Exchange Act, within 15 days after RIH or the Company, as applicable, is required to file the same. (e) RIH agrees that, if RIH becomes exempt from the Commission reporting and filing requirements of Section 13 or 15(d) of the Exchange Act, RIH shall prepare such periodic reports as it would otherwise have been required to file with the Commission and (i) at its own expense, cause all such periodic reports to be filed with the Commission, the Trustee and any exchange upon which the Notes then are listed, in each case on the date when such periodic report would have been required to be filed with the Commission under Section 13 or 15(d) of the Exchange Act, if either of such provisions were applicable, and (ii) keep copies of such periodic reports available at its office and promptly provide any Person who so requests with a copy of any such periodic report, at the Company's expense. 83 (f) Each of the Company and RIH shall comply with the provisions of SECTION 314(a) of the Trust Indenture Act. (g) The Company shall deliver to the Trustee, promptly upon becoming aware of any Default or Event of Default (but in no event later than five business days thereafter) in the performance of any covenant or agreement of the Company contained in this Indenture or any of the Mortgage Documents, an Officers' Certificate specifying with particularity such event. Section 12.07. LIMITATION ON DIVIDENDS AND RESTRICTED PAYMENTS. (a) The Company hereby covenants that, on and after the date of this Indenture, it will not, directly or indirectly, make, or permit any Subsidiary of the Company to make, any Restricted Payment. (b) RIH hereby covenants that, on or after the date of this Indenture, it will not, directly or indirectly, make, or permit any Subsidiary of RIH to make, any Restricted Payment; PROVIDED, HOWEVER, that: (i) if RIH's Consolidated Interest Coverage Ratio, as certified to the Trustee by an Officers' Certificate, calculated at the time of the declaration of the dividend or distribution is equal to or exceeds two, then RIH may declare and pay cash dividends or make cash distributions in respect of any class of capital stock of RIH in an amount not to exceed in the aggregate with any other such cash dividends or distributions declared or made from and after the date hereof, 50 percent of RIH's Consolidated Net Income from and after the date hereof; and (ii) if (1) RIH's Consolidated Interest Coverage Ratio, as certified to the Trustee by an Officer's Certificate, calculated at the time of the declaration of the dividend or distribution is equal to or exceeds two; and (2) RIH has cash in excess of the amount required to pay interest on the Notes and the Junior Mortgage Notes on the next Interest Payment Date plus $20,000,000, then RIH may declare and pay cash dividends or make cash distributions in respect of any class of capital stock of RIH in an amount not to exceed such excess cash amount. (c) The Company and RIH will not, and will not permit any of their respective Subsidiaries to, create or otherwise cause or suffer to exist or become effective any encumbrance or restriction of any kind on the ability of any Subsidiary of RIH or the Company: (i) to pay dividends or make any other distribution on the capital stock of such Subsidiary that is owned by RIH, the Company or a wholly owned Subsidiary of the Company or RIH, as applicable; (ii) to pay any Indebtedness owed by such Subsidiary to RIH, the Company or any wholly owned Subsidiary of the Company or RIH, as 84 applicable; (iii) to make loans or advances to RIH, the Company or any wholly owned Subsidiary of the Company or RIH, as applicable; or (iv) to transfer any of its property or assets to the Company, RIH or any wholly owned Subsidiary of the Company or RIH, as applicable, except (A) any restrictions existing on or prior to the date hereof, or in connection with agreements in effect, or entered into, on the date hereof, or any permitted amendments, renewals, refundings, refinancings or extensions thereof; PROVIDED, HOWEVER, that the terms and conditions of any such amendments, renewals, refundings, refinancings or extensions are no more restrictive with respect to the matters set forth in clauses (i) through (iv) of this Section 12.07(c) than the agreements being amended, refunded, renewed, refinanced or extended; (B) any restrictions or encumbrances existing or arising pursuant to the terms of Indebtedness of a Person outstanding at the time such Person becomes a Subsidiary of the Company or RIH and not incurred in connection with, or in contemplation of, such Person becoming a Subsidiary of the Company or RIH or any permitted amendments, renewals, refinancings or extensions thereof; PROVIDED, HOWEVER, that the terms and conditions of any such amendments, renewals, refundings, refinancings or extensions are no more restrictive with respect to the matters set forth in clauses (i) through (iv) of this Section 12.07(c) than the agreements being amended, renewed, refunded, refinanced or extended; (c) encumbrances or restrictions existing under or by reason of applicable law or regulation (including, without limitation, the Casino Control Act) or this Indenture; (d) customary provisions restricting assignment of contracts or subletting or assignment of any lease governing a leasehold interest of any Subsidiary of the Company or RIH; or (e) net worth maintenance requirements imposed by any governmental authority. Section 12.08. LIMITATION ON ADDITIONAL INDEBTEDNESS AND ISSUANCE OF NOTES. (a) The Company and RIH shall not, and shall not permit any of their respective Subsidiaries to, directly or indirectly, incur, issue, assume, guarantee or otherwise become directly or indirectly liable with respect to, including, without limitation, through any merger or consolidation to which the Company, RIH or any of their respective Subsidiaries is a party or through any other acquisition of any such Subsidiary (collectively, "incur"), or have outstanding, any Indebtedness other than, without duplication, the following: (i) the Notes and the Senior Mortgage Notes; (ii) Indebtedness represented by the Junior Mortgage Facility; 85 (iii) Indebtedness represented by the Working Capital Facility; (iv) Indebtedness represented by Capitalized Lease Obligations in an amount not in excess of $5,000,000 in the aggregate at any time outstanding; (v) Indebtedness represented by F,F&E Financing Agreements in an amount not in excess of $10,000,000 in the aggregate at any time outstanding; (vi) unsecured Indebtedness in an amount not in excess of $5,000,000 in the aggregate at any time outstanding that is subordinated and junior to the Notes at least to the extent set forth in the Subordination Provisions attached hereto as Exhibit C and which Indebtedness does not have any requirements for amortization payments, mandatory redemption or sinking fund payments prior to the stated maturity of the Notes and does not provide for the payment of interest in cash at any time when the most recent installment of interest on the Notes was not paid in cash; (vii) Non-Recourse Indebtedness in an amount not in excess of $25,000,000 in the aggregate at any time outstanding; (viii) After-Acquired Fee Mortgage Debt in an amount not in excess of $3,000,000 in the aggregate at any time outstanding; and (ix) Intercompany advances between RIH, the Company or any of their direct or indirect Subsidiaries on the one hand, and RII, on the other hand, in an aggregate amount not to exceed $1,000,000. (b) The Company and RIH shall not permit any of their respective Subsidiaries to issue (other than to the Company, RIH or a direct or indirect wholly owned Subsidiary of the Company or RIH) any capital stock which has voting rights or has a preference as to any distribution over its common stock. Section 12.09. LIMITATION ON REPAYMENT OF SUBORDINATED INDEBTEDNESS. Neither the Company nor RIH shall, and neither the Company nor RIH shall permit any Subsidiary to, directly or indirectly, purchase, redeem, defease (including, but not limited to, in-substance or legal defeasance) or otherwise acquire or retire for value prior to the stated maturity of, 8 or prior to any scheduled mandatory redemption or sinking fund payment with respect to (collectively, to "repay" or a "repayment"), the principal of any Indebtedness of the Company, RIH or any Subsidiary of the Company or RIH which is subordinated (whether pursuant to its terms or by operation of law) in right of payment to the Notes. Section 12.10. LIMITATION ON CERTAIN TRANSACTIONS. Each of the Company and RIH covenants that it will not, and will not permit any Subsidiary to, repurchase any Notes in the open market if an Event of Default shall have occurred and shall be continuing hereunder, under the Senior Mortgage Note Indenture or under the Senior Facility Note Indenture. Section 12.11. RESTRICTION OF ACTIVITIES. (a) RIH shall not, on or after the date of execution of this Indenture, until the date that is 91 days after the payment in full by the Company of the principal of (and interest, if any, on) all Outstanding Notes, engage in any business or investment activities other than those necessary for, incident to, connected with or arising out of acquiring, financing, owning and operating the Casino-Hotel or additional hotels or casinos or related or ancillary businesses. (b) Neither the Company nor RIH shall make any loans to any Affiliate or any other Person other than (i) Indebtedness of the type described in clause (ix) of Section 12.08(a), and (ii) loans to RII from the proceeds of the Indebtedness represented by the Working Capital Facility; PROVIDED, HOWEVER, that RIH shall have the right to make loans to employees of RIH actively involved in the operation of the Casino-Hotel or to engage in credit transactions in the operation of the Casino-Hotel, if such loans or credit transactions are in the ordinary course of business of operating a casino-hotel. (c) The Company shall not engage in any business (and shall not have any Subsidiaries) other than (i) to collect principal, interest (and any interest on overdue principal and interest) and other amounts under any intercompany notes or guaranties made to the order of or otherwise in favor of the Company, (ii) to preserve its rights under this Indenture and the Mortgage Documents and otherwise to comply with its obligations thereunder and under the Notes, (iii) to do or cause to be done all things necessary or appropriate to protect the Trust Estate, (iv) to preserve its rights under the Senior Mortgage Indenture and the Senior Mortgage Documents and otherwise to comply with its obligations thereunder and under the Senior Mortgage Notes, 87 (v) to issue Indebtedness represented by the Working Capital Facility, (vi) to preserve its rights under the Working Capital Facility and otherwise comply with its obligations under the Working Capital Facility, (vii) to incur any other Indebtedness permitted under this Indenture, (viii) to do all such acts and deeds necessary in connection with the Junior Mortgage Facility and the documents and instruments relating thereto and the Working Capital Facility and the documents and instruments relating thereto, (ix) to declare, issue and pay dividends on, or make any redemptions or repurchases of, the Company's capital stock as contemplated by its Certificate of Incorporation (to the extent permitted hereby) and otherwise to comply with and perform the provisions of its Certificate of Incorporation and By-laws, and (x) to do such further acts and deeds to effectuate any of the matters listed in the foregoing clauses of this Section 12.11(c). Section 12.12. LIMITATION ON SUBSIDIARIES; CONSOLIDATED GROUP. The Company and RIH shall not have any Subsidiaries except the Subsidiaries existing on the date of this Indenture and Subsidiaries acquired by the Company or RIH in transactions not prohibited by the other provisions of this Indenture which are and shall at all times be wholly owned (directly or indirectly) by the Company or RIH. Section 12.13. LIMITATIONS ON LIENS. Neither the Company nor RIH will create, incur, suffer to exist or permit to be created or incurred any mortgage, lien, charge or encumbrance on or pledge of the Mortgage Documents or any of the Trust Estate, other than (a) the lien of the Mortgage Documents and the Assignment Agreement, (b) liens on the Trust Estate in connection with Indebtedness permitted by clauses (i), (ii), (iii), (iv) or (v) of Section 12.08(a), (c) other Permitted Encumbrances on the Trust Estate, and (d) a notice of intention or building contract filed by a mechanic, materialman or laborer under the New Jersey lien law. Without limiting the generality of the previous sentence, but notwithstanding the provisions of such sentence, RIH shall not be deemed to have breached such provisions by virtue of the existence of liens for Impositions (as defined in the Mortgage) or mechanics' liens so long as RIH is in good faith contesting the validity of such liens in accordance with the provisions of Section 5.09 of the Mortgage. Section 12.14. COMPLIANCE WITH LAWS. Each of the Company and RIH shall comply, and shall cause each of its Subsidiaries to comply, with the Casino Control Act and all other applicable statutes (including, 88 without limitation, ERISA), rules, regulations, orders and restrictions of the United States of America, states and municipalities, and of any governmental department, commission, board, regulatory authority, bureau, agency and instrumentality of the foregoing in respect of the conduct of its business and the ownership of its properties and assets, including, without limitation, the Trust Estate, except such as are being contested in good faith by appropriate proceedings in accordance with the Mortgage Documents (to the extent applicable) and except for such non-compliances as will not in the aggregate have a material adverse effect on the business, properties, operations or financial condition of the Company, RIH or their respective Subsidiaries. Section 12.15. PAYMENT OF TAXES AND OTHER CLAIMS. The Company or RIH shall 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, RIH or any of their respective Subsidiaries or upon the Trust Estate or any portion thereof or upon the income, profits or property of the Company, RIH or any of their respective Subsidiaries, and (b) all lawful claims for labor, materials and supplies which, if unpaid, will by law become a Lien upon the Trust Estate or upon any other property of the Company, RIH or any of their respective Subsidiaries; PROVIDED, HOWEVER, that the Company and RIH shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessments, charge or claim the amount, applicability or validity of which is being contested in good faith by appropriate proceedings in accordance with the Mortgage Documents (to the extent applicable) if adequate reserves therefor have been established in accordance with GAAP. Section 12.16. MAINTENANCE OF PROPERTIES. Each of the Company and RIH shall cause the Trust Estate and all other properties (other than obsolete equipment) owned by or leased to it or any of its Subsidiaries, and used or useful in the conduct of its business or the business of the Company, RIH or such Subsidiary to be maintained and kept in good condition, repair and working order, except for reasonable wear and use, and will cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as required by the Mortgage Documents or, to the extent not governed by the Mortgage Documents, as in the reasonable judgment of the Board of Directors of RII may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times. 89 Section 12.17. INSURANCE. Each of the Company and RIH shall maintain, and shall cause each of its Subsidiaries to maintain, with financially sound and reputable insurers, appropriate insurance on each of their respective properties and businesses against liabilities, casualties, risks and contingencies of the type and in amounts required by the Mortgage Documents or, to the extent not governed by the Mortgage Documents, as customarily maintained by corporations and other entities engaged in the same or similar businesses and similarly situated; PROVIDED, HOWEVER, that any such insurer shall be qualified to do business in the jurisdiction where the insured property is located. Section 12.18 WAIVER OF STAY, EXTENSION OR USURY LAWS. Each of the Company and RIH covenants (to the extent that it may lawfully do so) that it will not, and will not cause or permit any of its Subsidiaries to, at any time insist upon, or plead, or in any manner whatsoever claim, and will resist any and all efforts to be compelled to take the benefit or advantage of, any stay or extension law or any usury law or other law that would prohibit or forgive the Company or RIH from paying all or any portion of the principal of, or premium, if any, and interest on the Notes or the RIH Junior Promissory Note or the Guaranty as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Indenture or the RIH Junior Promissory Note or the Guaranty; and (to the extent that it may lawfully do so) the Company and RIH hereby expressly waive all benefit or advantage of any such law, and covenant that they will not hinder, delay or impede the execution of any power granted to the Trustee herein and in the Mortgage Documents, but will suffer and permit the execution of every such power as though no such law had been enacted. Section 12.19. APPOINTMENT TO FILL A VACANCY IN OFFICE OF TRUSTEE. The Company, whenever necessary to avoid or fill a vacancy in the office of Trustee, will appoint, in the manner provided in Section 8.10, a Trustee, so that there shall at all times be a Trustee hereunder. Section 12.20 VALIDITY OF LIENS. Each of the Company and RIH represents and warrants that it has, and covenants that it shall continue to have, full corporate power and lawful authority to grant, release, convey, assign, transfer, mortgage, pledge, hypothecate and otherwise create the lien on the Trust Estate; and the Company 90 and RIH shall warrant, preserve and defend the interest of the Trustee in and to the Trust Estate against the claims of all Persons, except as otherwise expressly permitted by the Mortgage Documents or this Indenture, and will take all action necessary to maintain and preserve the lien on the Trust Estate contemplated therein. Section 12.21. TRANSACTIONS WITH STOCKHOLDERS AND AFFILIATES. Each of the Company and RIH covenants that it shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, enter into or permit to exist any transaction (including, without limitation, the purchase, sale, lease or exchange of any property or the rendering of any service) with any Affiliate of the Company or RIH or with any Affiliate of any such holder, unless (a) such transaction is upon fair and reasonable terms which are no less favorable to the Company or such Subsidiary, as the case may be, than would be available in an arm's-length transaction with an unrelated person and (b) if over $250,000, such transaction is determined in the good faith judgment of a majority of the members of the Board of Directors of either (i) RII, so long as RII owns directly or indirectly a majority of the outstanding capital stock of RIH, directly or indirectly, or (ii) RIH, to be in the best interests of the Company, RIH or such Subsidiary as applicable; PROVIDED, HOWEVER, that this provision shall not apply to (A) any agreements, documents, instruments or transactions entered into in connection with the RIHF Senior Facility Notes, (B) the Services Agreement, (C) the RII Management Contract, or (D) the RII Tax Sharing Agreement. Section 12.22. LIMITATION ON OPEN MARKET PURCHASES The Company and RIH shall not, and shall not permit any of their respective Subsidiaries to, purchase or otherwise acquire (other than pursuant to Article Thirteen) any Notes unless all interest accrued on the Notes and payable on the Interest Payment Date immediately preceding the date of such repurchase was paid solely in cash and not in Additional Notes. ARTICLE THIRTEEN REDEMPTION OF NOTES Section 13.01. GENERAL APPLICABILITY OF ARTICLE. Notes which are redeemable before their Stated Maturity shall be redeemable in accordance with their terms and in accordance with this Article. 91 Section 13.02. ELECTION TO REDEEM; NOTICE TO TRUSTEE. The election of the Company to redeem any Notes shall be evidenced by a Company Order. Redemption of any Notes shall not take place earlier than 15 days after the corporate action taken to authorize the redemption. In case of any redemption at the election of the Company of less than all the Outstanding Notes, 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 Notes to be redeemed. Section 13.03. SELECTION BY TRUSTEE OF NOTES TO BE REDEEMED. If less than all the Outstanding Notes are to be redeemed, the particular Notes to be redeemed shall be selected by a random, automated selection process or PRO RATA, as deemed appropriate by the Trustee, not more than 60 days prior to the Redemption Date by the Trustee from the Outstanding Notes which have not previously been called for redemption, and such selection method may provide for the selection for redemption of portions (equal to the greater of $1,000 and the smallest authorized denomination of the Notes of such series, or a multiple thereof) of the principal of Notes of a denomination larger than $1,000. The Trustee shall promptly notify the Company in writing of the Notes selected for redemption and, in the case of any Note 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 the redemption of Notes shall relate, in the case of any Note redeemed or to be redeemed only in part, to the portion of the principal of such Note which has been or is to be redeemed. Section 13.04. NOTICE OF REDEMPTION. Notice of redemption 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 by first-class mail, postage prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption Date, to each Holder of Notes of such series to be redeemed, at his address appearing in the Note Register. Any notice which is mailed in the manner herein provided shall be conclusively presumed to have been duly given, whether or not the Holder receives the notice. In any case, failure to duly give notice by mail, or any defect in 92 the notice to the Holder of any Notes designated for redemption in whole or in part, shall not affect the validity of the proceedings for the redemption of any other Notes. All notices of redemption shall state: (a) the Redemption Date; (b) the Redemption Price; (c) the principal amount of Notes to be redeemed, and, if less than all outstanding Notes are to be redeemed, the identification (and, in the case of partial redemption, the respective principal amounts) of the Notes to be redeemed; (d) that on the Redemption Date, the Redemption Price of each of the Notes to be redeemed will become due and payable and that the interest thereon shall cease to accrue from and after such date; and (e) the place or places where the Notes to be redeemed are to be surrendered for payment of the Redemption Price. Section 13.05. 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 12.03) an amount of money sufficient to pay the Redemption Price of all the Notes which are to be redeemed on that date. Such money shall be held in trust for the benefit of the Persons entitled to such Redemption Price and shall not be deemed to be part of the Trust Estate. Section 13.06. NOTES PAYABLE ON REDEMPTION DATE. Notice of redemption having been given as aforesaid, the Notes so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified and from and after such date (unless the Company shall default in the payment of the Redemption Price) such Notes shall cease to bear interest. Upon surrender of any such Note for redemption in accordance with said notice, such Note shall be paid by the Company at the Redemption Price. Installments of interest due on or prior to the Redemption Date shall be payable to the Holders of the Notes registered as such on the relevant Record Dates according to the terms of such Notes and the provisions of Section 3.07. 93 If any Note called for redemption shall not be so paid upon surrender thereof for redemption, the principal shall, until paid, bear interest from the Redemption Date at the rate prescribed therefor in the Note. Section 13.07. NOTES REDEEMED IN PART. Any Note which is to be redeemed only in part shall be surrendered at a Place of Payment therefor (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 his attorney duly authorized in writing) and the Company shall execute and the Trustee shall authenticate and deliver to the Holder of such Note, without service charge, a new Note or Notes of any authorized denomination or denominations as requested by such Holder in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Note so surrendered. Section 13.08. REDEMPTION PURSUANT TO CASINO CONTROL ACT. Notwithstanding the provisions of this Article Thirteen, if the Casino Control Commission does not waive the qualification requirements as to any Noteholder (whether the record owner or beneficial owner) and requires that such Noteholder be qualified under the Casino Control Act, then, in such event, such Noteholder must qualify under such Act. If a Noteholder does not so qualify, the Noteholder must dispose of its interest in the Notes, within 30 days after the Company's receipt of notice of such finding, or the Company may repurchase such Notes at the lower of the Outstanding Amount and the Fair Market Value of such Notes, plus accrued interest to the date of such repurchase. Commencing on the date the Casino Control Commission serves notice upon either RIH or the Company that any Holder is disqualified, it shall be unlawful for any such disqualified Holder: (i) to receive any dividends or interest upon this Note; (ii) to exercise, directly or through any trustee or nominee, any right conferred by this Note; or (iii) to receive any remuneration in any form from either the Company or RIH for services rendered or otherwise. ------------------------------ This instrument may be executed in any number of counterparts or with counterpart signatures, each of which as executed shall be deemed to be an original, but all such counterparts shall constitute one and the same instrument. 94 IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed and attested, all as of the day and year first above written. RESORTS INTERNATIONAL HOTEL FINANCING, INC. Attest: By: ------------------- ------------------------------ Name: Title: RESORTS INTERNATIONAL HOTEL, INC. Attest: By: ------------------- ------------------------------ Name: Title: U.S. TRUST COMPANY OF CALIFORNIA, N.A., as Trustee Attest: By: ------------------- ------------------------------ Name: Title: 95 STATE OF NEW YORK : : ss COUNTY OF NEW YORK : I certify that on __________, 1993, _______________ personally came before me, and he acknowledged under oath, to my satisfaction, that: (a) he is the ______________ of Resorts International Hotel Financing, Inc., the corporation named in this document; (b) he is the attesting witness to the signing of this document by the proper corporate officer who is _______________ of Resorts International Hotel Financing Inc.; (c) this document was signed and delivered by the corporation as its voluntary act duly authorized by a proper resolution of its Board of Directors; (d) he knows the proper seal of the corporation which was affixed to this document; and (e) he signed this proof to attest to the truth of these facts. ------------------------- Signed and sworn to before me on _________, 1993. - ---------------------- Notary Public of the State of New York STATE OF NEW YORK : : ss COUNTY OF NEW YORK : I certify that on ________, 1993, ________________ personally came before me, and this person acknowledged under oath, to my satisfaction, that: (a) this person is the __________________________ of Resorts International Hotel, Inc., the corporation named in this document; (b) this person is the attesting witness to the signing of this document by the proper corporate officer who is ______________________, the __________________________ of Resorts International Hotel, Inc.; (c) this document was signed and delivered by the corporation by its voluntary act duly authorized by a proper resolution of its Board of Directors; (d) this person knows the proper seal of the corporation which was affixed to this document; and (e) this person signed this proof to attest to the truth of these facts. -------------------- Signed and sworn to before me on _________, 1993. - ------------------------- Notary Public [seal] STATE OF NEW YORK : : ss COUNTY OF NEW YORK : I certify that on ________, 1993, ________________ personally came before me, and this person acknowledged under oath, to my satisfaction, that: (a) this person is the __________________________ of U.S. Trust Company of California, N.A., a national banking association named in this document; (b) this person is the attesting witness to the signing of this document by the proper corporate officer who is ______________________, the __________________________ of U.S. Trust Company of California, N.A., a national banking association; (c) this document was signed and delivered by the corporation by its voluntary act duly authorized by a proper resolution of its Board of Directors; (d) this person knows the proper seal of the corporation which was affixed to this document; and (e) this person signed this proof to attest to the truth of these facts. ------------------------- Signed and sworn to before me on _________, 1993. - ------------------------- Notary Public [seal] Exhibit A RIH Senior Promissory Note EXHIBIT A AMENDED AND RESTATED SECURED PROMISSORY NOTE $35,000,000 [ ], 1994 WHEREAS, in partial repayment of certain inter-company debt owed by Resorts International Hotel, Inc., a New Jersey corporation ("RIH"), to Resorts International, Inc., a Delaware corporation ("RII"), RIH has issued to RII a promissory note on the date hereof in the principal amount of $35,000,000 (as the same may be amended or restated from time to time, the "Note"), which Note is secured by a Mortgage Securing RIH Junior Promissory Note dated as of the date hereof (the "Mortgage"), by RIH, as Mortgagor, which Mortgage encumbers certain real property owned or leased by RIH together with all buildings and improvements erected thereon (collectively, the "Property"); and WHEREAS, RII has transferred the Note and the Mortgage to RIHF in exchange for 11.375% Junior Mortgage Notes due 2004 (the "Junior Notes") in an aggregate principal amount of $35,000,000, which Junior Notes were issued pursuant to that certain Indenture dated as of even date herewith (the "Indenture") among RIHF, as issuer, RIH, as guarantor, and U.S. Trust Company of California, N. A., as trustee (the "Trustee"); and WHEREAS, RIHF has requested RIH to amend and restate the Note; NOW, THEREFORE, RIH agrees to amend and restate the Note as follows: RIH, for value received hereby promises to pay to the order of RIHF (RIHF and any subsequent holder of this Note being herein referred to as the "Payee"), the principal sum of Thirty-Five Million Dollars ($35,000,000), or such other principal sum as shall be outstanding hereunder, on December 15, 2004 (the "Maturity Date") in accordance with the provisions hereof, with interest on such principal sum from time to time outstanding, computed from [ ], 1994 [the Effective Date], in semi-annual installments of interest on June 15 and December 15 of each year, commencing initially on December 15, 1994, at a rate of 11.375% per annum on the unpaid balance hereof, until the principal hereof is paid in full. Payments of principal and interest on this Note shall be made at [address of the Payee], or at such other address as the Payee may designate in writing. Interest will be computed on the basis of a 360-day year of twelve 30-day months based on the actual number of days elapsed. Principal and interest shall be paid in money of the United States that at the time of payment is legal tender for public and private debts. The principal sum of this Note shall be increased from time to time if any Additional Notes (as defined in the Indenture) are issued under the Indenture as of the date of their original issuance by the principal amount of such Additional Notes. l.(a) This Note shall be prepaid (i) in connection with, but only to the extent of, any redemption of the Junior Notes of RIHF issued pursuant to the Indenture (all prepayments of this Note are hereinafter referred to as "Prepayments"), and/or (ii) by the surrender to the Trustee of the principal amount of any Junior Notes purchased or otherwise acquired by RIH or the Company (as defined in the Indenture) other than pursuant to the redemption provisions of the Junior Notes for cancellation in accordance with the provisions of the Junior Notes or the Indenture (it being expressly understood that the same Junior Notes shall reduce the principal amount of this Note only once). Each Prepayment under clause (i) above shall be made at the time that payment is required or permitted to be made by the Company to the Trustee under the Indenture in respect of any redemption of Junior Notes. Each Prepayment under clause (ii) above shall be deemed to be made at the time of surrender of such Junior Notes for cancellation. Each Prepayment of this Note pursuant to clause (i) above shall be in an amount equal to the aggregate amount paid to holders of Junior Notes on account of the redemption thereof (other than interest), together with accrued and unpaid interest on the amount of the reduction in the principal amount of this Note as a result of such Prepayment. The principal amount of this Note shall be reduced as a result of such prepayment in an amount equal to the aggregate principal amount of the Junior Notes so redeemed or surrendered. (b)Except as set forth in Section 1(a), this Note may not be prepaid in whole or in part. 2.RIH shall pay interest on overdue principal and prepayment premium at the rate of 14.375% per annum. 3.This Note is secured by the Mortgage on the Property. 2 4.If (i) RIH defaults in the payment of interest when the same becomes due and payable and the default continues for a period of ten days following receipt of a notice from the Payee or the Trustee specifying such default and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; (ii) RIH defaults in the payment of the principal or any part thereof when the same becomes due and payable at Maturity (as defined in the Mortgage); (iii) there shall occur any other Event of Default under the Mortgage or any other Note (as defined in the Mortgage); or (iv) there shall occur any other Event of Default under the Indenture, then on the happening of any such event, the Payee may declare the entire Outstanding Amount (as defined in the Indenture) of this Note and all accrued and unpaid interest thereon and all sums due under Section 5 of this Note and the Mortgage (collectively, the "Debt") to become immediately due and payable. 5. RIH hereby waives presentment and demand for payment, notice of dishonor, protest and notice of protest of this Note and agrees to pay all costs of collection when incurred, including reasonable attorneys' fees, which costs may be added to the amount due under this Note and be receivable therewith, and to perform and comply with each of the terms, covenants and provisions contained in this Note and the Mortgage on the part of RIH to be observed or performed. Except as expressly provided herein, no release of any security for the principal sum due under this Note or extension of time for payment of this Note, or any installment hereof, and no alteration, amendment or waiver of any provision of this Note or the Mortgage shall release, discharge, modify, change or affect the liability of RIH under this Note or the Mortgage. 6. RIH covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any usury, stay or extension law or any other law which would prohibit or forgive RIH from paying all or any portion of the interest on this Note, wherever enacted, now or at any time hereafter in force, or which may otherwise affect the covenants or the performance of this Note or the Mortgage; and RIH (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Payee, but will suffer and permit the execution of every such power as though no such law had been enacted. 7. This Note shall be deemed to be a contract under the laws of the State of New York and shall be construed 3 in accordance with and governed by the internal laws of the State of New York. 8. This Note may not be changed or terminated orally, but only by an agreement in writing signed by the party against whom enforcement of such change or termination is sought. 9. RIH shall not claim any credit or deduction from the interest or principal due hereunder by reason of payment of any tax assessed upon the Property. 10. Whenever the provisions of this Note and the provisions of the Indenture shall be inconsistent, the provisions of the Indenture shall govern. 11. This Note is subject to and shall be enforced in compliance with the provisions of the New Jersey Casino Control Act. This note shall not be transferred, assigned or amended without prior approval of the New Jersey Casino Control Commission. 12. Whenever used herein, the singular number shall include the plural, the plural the singular, and the words "Payee" and "RIH" shall include their respective successors and assigns. IN WITNESS WHEREOF, RIH has duly executed this Note as of the day and year first above written. RESORTS INTERNATIONAL HOTEL, INC. By: ________________________ Name: Title: 4 STATE OF NEW YORK ) ) ss. COUNTY OF NEW YORK ) BE IT REMEMBERED, that on this [ ] day of [ ], 1994, before me, the subscriber, a Notary public of the State of New York, personally appeared [ ], [ ] of RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation, and he acknowledged that he signed, sealed and delivered the same as his voluntary act and deed and the act and deed of said RESORTS INTERNATIONAL HOTEL, INC., and that he received a true copy of the within instrument on behalf of said corporation. _____________________________________ Notary Public of the State of New York [Seal] 5 Exhibit B Assignment Agreement from Resorts International Hotel Financing, Inc. NA932810098 - JUNIOR MORTGAGE ASSIGNMENT GD&C DRAFT DATED 12/17/93 ============================================================================== ASSIGNMENT OF AGREEMENTS ________________ RESORTS INTERNATIONAL HOTEL FINANCING, INC., a Delaware corporation, as Assignor, TO U.S. TRUST COMPANY OF CALIFORNIA, N.A., a national banking association, as Assignee Dated as of _________________, 1994 =============================================================================== Prepared by:__________________________ D. Eric Remensperger, Esq. ASSIGNMENT OF AGREEMENTS THIS ASSIGNMENT made as of the ___ day of ___________, 1994, by RESORTS INTERNATIONAL HOTEL FINANCING, INC., a Delaware corporation ("ASSIGNOR"), having an address at c/o Resorts International, Inc., 1133 Boardwalk, Atlantic City, New Jersey 08401, to U. S. TRUST COMPANY OF CALIFORNIA, N.A. a national banking association, having an address at 555 South Flower Street, Suite 2780 Los Angeles, California 90071, in its capacity as Trustee ("ASSIGNEE"), under that certain Indenture dated as of even date herewith (the "INDENTURE") among Assignor, Assignee and Resorts International Hotel, Inc., a New Jersey corporation ("MORTGAGOR"). WITNESSETH: WHEREAS, in partial repayment of certain inter-company debt owed by Mortgagor to Resorts International, Inc., a Delaware corporation ("RII"), Mortgagor has issued to RII a promissory note on the date hereof in the principal amount of $35,000,000 (as the same may be amended or restated from time to time, the "RIH JUNIOR PROMISSORY NOTE"), which note is secured by a Mortgage Securing RIH Junior Promissory Note dated as of the date hereof (the "MORTGAGE"), which Mortgage encumbers certain real property owned or leased by Mortgagor as more specifically described on SCHEDULE 1 hereto together with all buildings and improvements erected thereon (collectively, the "PROPERTY"); and WHEREAS, RII has transferred the RIH Junior Promissory Note and the Mortgage to Assignor in exchange for 11.375% Junior Mortgage Notes due 2004 (the "NOTES") in an aggregate principal amount of $35,000,000, which Notes were issued pursuant to the Indenture; and WHEREAS, as further security for the obligations of Mortgagor under the RIH Junior Promissory Note, Mortgagor has executed and delivered (i) an Assignment of Operating Assets and (ii) an Assignment of Leases and Rents, each in favor of Assignor (as assignee of RII) and each dated as of the date hereof (said Assignments and the Mortgage collectively referred to herein as the "RIH JUNIOR PROMISSORY NOTE MORTGAGE DOCUMENTS"), pursuant to which Mortgagor granted a security interest in specified personal property, assigned certain other rights and assigned all right, title and interest of Mortgagor in leases and rents to Assignor, all as security for the performance and observance of obligations of Mortgagor under the RIH Junior Promissory Note; and WHEREAS, the rights and obligations of the Assignee hereunder are subject to the terms set forth in that certain Intercreditor Agreement dated as of the date hereof among Assignor, Assignee, Mortgagor, Fidelity Management and Trust Company, as trustee, and State Street Bank and Trust Company of Connecticut, National Association, as trustee (and such other parties that may from time to time become a party thereto); and WHEREAS, in order to secure payment of the Notes and all other payments due to the holder(s) from time to time of the Notes (collectively, the "HOLDERS") or the Trustee under the Indenture, Assignor has agreed to execute this Assignment and to be bound by its terms; NOW, THEREFORE, THIS ASSIGNMENT FURTHER WITNESSETH: That Assignor in consideration of the purchase of the Notes by the Holders, Ten Dollars ($10.00) lawful money of the United States of America duly paid to Assignor by Assignee at or before the execution and delivery of these presents and for other good and valuable consideration, the receipt of which are hereby acknowledged, does hereby sell, assign and transfer unto Assignee and unto its successors and to its assigns forever, for its benefit and for the benefit of the Holders, and does hereby grant to Assignee a security interest in and to all of Assignor's estate, right, title and interest in, to and under any and all of the following described property, rights and interests (collectively, the "ASSIGNED PROPERTIES"): GRANTING CLAUSE FIRST All right, title and interest of Assignor in and to the RIH Junior Promissory Note, including all renewals, extensions, modifications and replacements of the same, and without limiting the generality of the foregoing, the present, continuing and future right to make claim for, collect or cause to be collected, receive or cause to be received directly from Mortgagor thereunder, all payments of principal, interest and other sums of money payable thereunder. GRANTING CLAUSE SECOND All right, title and interest of Assignor in and to the RIH Junior Promissory Note Mortgage Documents, including 2 all extensions, renewals, modifications, supplements and replacements of the same. TO HAVE AND TO HOLD all said properties, rights and interests unto Assignee and its successors and assigns forever. THIS ASSIGNMENT FURTHER WITNESSETH, that Assignor hereby agrees and covenants with Assignee as follows: ARTICLE ONE PARTICULAR COVENANTS OF ASSIGNOR Section 1.01. PERFORMANCE OF COVENANTS. Assignor represents, warrants and covenants that it is duly authorized to enter into this Assignment, and to grant and convey a lien on and security interest in the Assigned Properties to Assignee in the manner and to the extent herein set forth and that all action on its part required for the execution and delivery of this Assignment has been duly and effectively taken. Section 1.02. FURTHER ACTION REQUIRED. (a) Assignor covenants that it will, from time to time, execute and deliver such further instruments and take such further actions as may be required to carry out the purposes of this Assignment. (b) Assignor hereby appoints Assignee as its lawful attorney-in-fact (such power being coupled with an interest) in the name of Assignor or Assignee or both to execute any instruments or to take any actions to enforce all rights, powers and remedies of Assignor under or pursuant to the Assigned Properties. (c) Nothing contained herein shall limit the rights of Assignee contained in the Mortgage or the Indenture. (d) Until this Assignment is discharged in accordance with Section 5.01 hereof, no amendment, waiver, modification, discharge, release, enforcement or satisfaction by Assignor of any of the rights or remedies under the Assigned Properties shall be effective without the prior consent and approval of Assignee, and Assignor shall have no power or authority to take any such action without such consent and approval. ARTICLE TWO OBLIGATIONS TO ASSIGNEE Section 2.01. CONTINUING OBLIGATIONS. 3 (a) Assignee shall have no obligation, duty or liability with respect to the Assigned Properties or any of them (other than those specifically assumed in its capacity as Trustee pursuant to the Indenture). (b) Assignor shall at all times remain liable to observe and perform all of its covenants and obligations, if any, under the Assigned Properties, and does hereby agree to indemnify and hold harmless Assignee, its successors and assigns, from any liability, loss, damage or expense it or they may incur under the Assigned Properties or by reason of this Assignment. ARTICLE THREE PAYMENTS Section 3.01. PAYMENTS. All Revenues (as hereinafter defined) due and to become due under or pursuant to the Assigned Properties shall be paid by Mortgagor directly to Assignee at the address set forth in Section 6.02 hereof. Neither Assignor nor Assignee shall have the right, without Mortgagor's prior written consent, to instruct Mortgagor to pay Revenues to Assignor or in any manner or to any party other than directly to Assignee. Section 3.02. MORTGAGOR'S ACKNOWLEDGMENT. Mortgagor hereby joins in the execution of this Assignment to acknowledge (a) the assignment by Assignor to Assignee of Assignor's right, title and interest in, to and under the Assigned Properties, (b) Mortgagor's agreement to make payment of all Revenues under the Assigned Properties directly to Assignee at the address set forth in this Assignment, and (c) the right of Assignee to exercise or enforce in its own name, in the name of Assignor, or both, all of the rights, powers and remedies of Assignor in, to and under the Assigned Properties. Section 3.03. REVENUES. As used herein, the term "REVENUES" shall mean (a) all amounts paid or payable by Mortgagor under the RIH Junior Promissory Note or the RIH Junior Promissory Note Mortgage Documents, and (b) the net proceeds realized upon or as a result of the enforcement of any mortgage lien or security interest granted under the Assigned Properties or this Assignment or upon or as a result of the exercise of any right or remedy under the Assigned Properties or this Assignment. Section 3.04. CONFIRMATION. Assignor hereby agrees, and Mortgagor hereby acknowledges, that Mortgagor may rely exclusively on Assignee's directive that Assignee is entitled to take action under this Assignment. 4 ARTICLE FOUR DEFAULT PROVISIONS AND REMEDIES Section 4.01. ENFORCEMENT OF REMEDIES. (a) Upon the occurrence of any default under the Indenture or the Assigned Properties, or any of them (each, a "DEFAULT"), not cured within the applicable grace period after the applicable notice provision, if any, has been satisfied (each called an "EVENT OF DEFAULT"), Assignee may, at its option, (i) proceed directly to protect and enforce its rights and the rights of any Holders under this Assignment or pursuant to the Assigned Properties, or any one of them, by such suits, actions or special proceedings in equity or at law, or by proceedings in the office of any board or officer having jurisdiction, either for the specific performance of any covenant or agreement contained herein, or in the Assigned Properties, or any of them, or in aid of execution of any power granted herein or pursuant to the Assigned Properties, or any one of them, or for the enforcement of any proper legal or equitable remedy, including, without limitation, foreclosure of the Mortgage and/or the sale of the collateral or part thereof secured thereby at such foreclosure sale, subject to statutory and other legal requirements, as Assignee shall deem most effective to protect and enforce such rights, and Assignor hereby appoints Assignee as its lawful attorney-in-fact (such power being coupled with an interest) in the name of Assignor or Assignee or both to effectuate such foreclosure and/or sale of such collateral or part thereof; or (ii) instruct, direct and cause Assignor to effectuate the foregoing on behalf of and for the benefit of Assignee and the Holders, it being further understood that Mortgagor joins in the execution of this Assignment in order to acknowledge its agreement to promptly and duly execute and deliver any and all documents and take any and all actions required by Assignee in order to permit Assignee to foreclose and/or sell such collateral or part thereof, and obtain the benefits of this Assignment, as aforesaid. (b) Upon the occurrence of any Event of Default, Assignee shall be entitled to sue for, enforce payment of and receive any and all amounts then and at any time remaining due from Assignor or Mortgagor for principal and interest on the RIH Junior Promissory Note, or other sums due under the RIH Junior Promissory Note Mortgage Documents, as the case may be, or otherwise under any of the provisions of the Assigned Properties, or any of them, with interest on overdue payments of such principal, at the rate set forth in the RIH Junior Promissory Note, from the date of Default to the date of such payment, together with any and all fees, costs and expenses of collection (including reasonable attorneys' fees and court costs), subject to statutory and other legal requirements. 5 (c) Regardless of the occurrence of an Event of Default, upon five days' written notice to Mortgagor (or such shorter period or without notice if deemed necessary and appropriate by Assignee), Assignee may institute and maintain or cause in the name of Assignor or Assignee or both to be instituted and maintained such suits and proceedings as it may be advised by its counsel shall be necessary and appropriate to prevent any impairment of the Assigned Properties, or any of them, and to protect its interests in the Assigned Properties, and in the rents, issues, rights, revenues and other income arising therefrom, including power to institute and maintain proceedings to restrain the enforcement or compliance with any 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 hereunder or would be materially prejudicial to the interests of Assignee. (d) Nothing contained in this Article Four is intended to grant Assignee any greater remedies and rights than those allowed to Assignor in the respective Assigned Properties. In the event of any conflict between the remedies and rights contained in any of the Assigned Properties and the remedies and rights contained in this Article Four, then the remedies and rights set forth in the applicable Assigned Property shall govern. ARTICLE FIVE DISCHARGE OF ASSIGNMENT Section 5.01. DISCHARGE OF ASSIGNMENT. If Assignor shall pay or cause to be paid, or there shall otherwise be paid, to Assignee and/or the Holders' all amounts required to be paid by Assignor pursuant to the Indenture and the Notes, and the conditions precedent for the Indenture shall cease, determine and become null and void in accordance with Section 5.01 of the Indenture, Assignee shall promptly cancel and discharge of record this Assignment and any financing statements filed in connection herewith and execute and deliver to Assignor and to Mortgagor all such instruments as may be appropriate to evidence such discharge and satisfaction of said lien or liens, and Assignee shall pay over or deliver to Assignor all other moneys and securities held by it pursuant to this Assignment, which are not required for the payment of (a) principal and redemption price, if applicable, of and interest on, the Notes, and (b) all other amounts required to be paid by Assignor pursuant to the Indenture and the Notes. 6 ARTICLE SIX MISCELLANEOUS PROVISIONS Section 6.01. BINDING SUCCESSORS AND ASSIGNS. All of the covenants, stipulations, obligations and agreements contained in this Assignment shall be binding upon and inure to the benefit of Assignor, Assignee and Mortgagor (to the extent applicable to Mortgagor) and their respective successors and assigns. Section 6.02. NOTICES. (a) Any request, notice, demand, authorization, direction, request or other instrument authorized or required by this Assignment to be given to or filed with Assignor, Assignee or Mortgagor (collectively, "NOTICES") shall be deemed given when either (i) delivered by hand or (ii) five days after sending by registered or certified mail, postage prepaid, in either case addressed as follows: If to Assignor, at: Resorts International Hotel Financing, Inc. c/o Resorts International, Inc. 1133 Boardwalk Atlantic City, New Jersey 08401 Attention: Christopher D. Whitney If to Assignee, at: U.S. TRUST COMPANY OF CALIFORNIA, N.A. 555 South Flower Street Suite 2780 Los Angeles, California 90071 Attention: Corporate Trust Department If to Mortgagor, at: Resorts International Hotel, Inc. c/o Resorts International, Inc. 1133 Boardwalk Atlantic City, New Jersey 08401 Attention: Christopher D. Whitney (b) By Notice to Mortgagor, Assignor and/or Assignee, given as provided above, any party may designate additional or substitute addresses for Notices, which shall, notwithstanding Section 6.02(a), be deemed given with received. Section 6.03. PARTIAL INVALIDITY. In case any one or more of the provisions of this Assignment shall for any 7 reason be held to be illegal or invalid, such illegality or invalidity shall not affect any other provision of this Assignment, but this Assignment shall be construed and enforced at the time as if such illegal or invalid provisions had not been contained herein or therein, nor shall such illegality or invalidity or any application thereof affect any legal and valid application herein or thereof from time to time. Section 6.04. APPLICABLE LAW. This Assignment shall be governed by and construed under the internal laws of the State of New Jersey, without giving effect to the principles of conflicts of law. Section 6.05. NO AMENDMENT. For so long as the Notes shall remain outstanding, the Assigned Properties may not be modified, amended or terminated except in accordance with the provisions of the Indenture or the Assigned Properties. Section 6.07. CASINO CONTROL ACT. Each of the provisions of this Assignment is subject to and shall be enforced in compliance with the provisions of the New Jersey Casino Control Act. This Agreement shall not be transferred, assigned or amended without prior approval of the New Jersey Casino Control Commission. IN WITNESS WHEREOF, Assignor, Assignees and Mortgagor have executed this Assignment Agreement as of the date first above written. RESORTS INTERNATIONAL HOTEL FINANCING, INC. Attest: _________________________________ By:_______________________________ President RESORTS INTERNATIONAL HOTEL, INC. Attest: _________________________________ By:_______________________________ President 8 U.S. TRUST COMPANY OF CALIFORNIA, N.A. Attest: ___________________________________ By:_________________________________ Title 9 STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK) BE IT REMEMBERED that on ______________, 1994, before me, the subscriber, __________________, personally appeared _______________, who, being by me duly sworn on his oath, deposes and makes proof to my satisfaction, that he is the Asst. Secretary of U.S. TRUST COMPANY OF CALIFORNIA, N.A., the corporation named in the within instrument; that __________________ is the Vice President of said Corporation; that the execution, as well as the making of this instrument, has been duly authorized by a proper resolution of the board of directors of the said corporation; that deponent well knows the corporate seal of said corporation; and that the seal affixed to said instrument is the proper corporate seal and was thereto affixed and said instrument signed and delivered by said Vice President as and for the voluntary act and deed of said corporation. In presence of deponent who thereupon subscribed his name thereto as attesting witness; and deponent signed this proof to attest to the truth of these facts. ____________________________ [Name] [Assistant] Secretary Sworn to and subscribed before me, the date aforesaid ____________________________ Notary Public My commission expires: ____________________________ 10 STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK) BE IT REMEMBERED that on _________________, 1994, before me, the subscriber, __________________, personally appeared ___________________, who being by me duly sworn on his oath, deposes and makes proof to my satisfaction, that he is the Asst. Secretary of Resorts International Hotel, Inc., the corporation named in the within instrument; that ____________ is the Vice President of said Corporation; that the execution, as well as the making of this instrument, has been duly authorized by a proper resolution of the board of directors of the said corporation; that deponent well knows the corporate seal of said corporation; and that the seal affixed to said instrument is the proper corporate seal and was thereto affixed and said instrument signed and delivered by said Vice President as and for the voluntary act and deed of said corporation. In presence of deponent who thereupon subscribed his name thereto as attesting witness; and deponent signed this proof to attest to the truth of these facts. ____________________________ [Name] [Assistant] Secretary Sworn to and subscribed before me, the date aforesaid ____________________________ Notary Public My commission expires: ____________________________ 11 STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK) BE IT REMEMBERED that on _________________, 1994, before me, the subscriber, __________________, personally appeared ___________________, who being by me duly sworn on his oath, deposes and makes proof to my satisfaction, that he is the Asst. Secretary of Resorts International Hotel, Inc., the corporation named in the within instrument; that ______________ is the Vice President of said corporation; that the execution, as well as the making of this instrument, has been duly authorized by a proper resolution of the board of directors of the said corporation; that deponent well knows the corporate seal of said corporation; and that the seal affixed to said instrument is the proper corporate seal and was thereto affixed and said instrument signed and delivered by said Vice President as and for the voluntary act and deed of said corporation. In presence of deponent who thereupon subscribed his name thereto as attesting witness; and deponent signed this proof to attest to the truth of these facts. ____________________________ [Name] [Assistant] Secretary Sworn to and subscribed before me, the date aforesaid ____________________________ Notary Public My commission expires: ____________________________ 12 EXHIBIT C SUBORDINATION PROVISIONS EXHIBIT C SUBORDINATION PROVISIONS A. SUBORDINATION. Anything herein to the contrary notwithstanding, Subordinated Debt, including principal, premium, if any, and interest, shall be subordinate and junior to the extent set forth in subparagraphs (i) to (v), inclusive, below, to all Senior Indebtedness. (i) If the Company (as defined in this Exhibit C) shall default in the payment of any principal of or interest on any Senior Indebtedness when the same becomes due and payable, whether at maturity or at a date fixed for prepayment or by declaration of acceleration or otherwise, then, unless and until such default shall have been remedied by payment in full in cash or waived or shall have ceased to exist or all amounts then due and payable in respect of Senior Indebtedness shall have been paid in full or provision shall have been made for such payment in cash, no holder of the Subordinated Debt shall accept or receive any direct or indirect payment (in cash, property, by set-off or otherwise) of or on account of any Subordinated Debt. (ii) In the event of any insolvency, bankruptcy, liquidation, reorganization or other similar proceedings, or any receivership proceedings in connection therewith, relative to the Company, and in the event of any proceedings for voluntary liquidation, dissolution or other winding up of the Company, whether or not involving insolvency or bankruptcy proceedings, then all Senior Indebtedness shall first be paid in full in cash, or such payment shall have been provided for in cash, before any payment of or on account of principal or interest is made by the Company upon the Subordinated Debt. (iii) In any of the proceedings referred to in subparagraph (ii) above, any payment or distribution of any kind or character, whether in cash, property, stock or obligations, which may be payable or deliverable by the Company in respect of the Subordinated Debt shall be paid or delivered directly to the holders of Senior Indebtedness (or to a banking institution selected by the court or Person making the payment or delivery or designated by any holder of Senior Indebtedness) for application in payment thereof in accordance with the priorities then existing among such holders, unless and until all principal of and interest on all Senior Indebtedness shall have been paid in full in cash or such payment shall have been provided for; PROVIDED, HOWEVER, that no such delivery shall be made to holders of Senior Indebtedness of stock or obligations which are issued pursuant to reorganization proceedings or dissolution or liquidation proceedings, or upon any merger, consolidation, sale, lease, transfer or other disposal not prohibited by the provisions of the Subordinated Debt, by the Company, as reorganized, or by the corporation succeeding to the Company or acquiring its property and assets, if such stock or obligations are subordinate and junior (whether by law or agreement) at least to the extent provided in this Section ___ to the payment of all Senior Indebtedness then outstanding and to the payment of any stock or obligations which are issued in exchange or substitution for any Senior Indebtedness then outstanding. (iv) Upon the occurrence and continuance of any Default Subordination Event (other than under circumstances when the terms of subparagraph (ii) above are applicable), no holder of the Subordinated Debt shall accept or receive any direct or indirect payment (in cash, property, by set-off or otherwise) of or on account of any indebtedness in respect of the Subordinated Debt during the Applicable Stand-Still Period; PROVIDED, HOWEVER, that in the case of any payment on or in respect of any Subordinated Debt which would (in the absence of any such Default Subordination Event) have been due and payable on any date (a "Scheduled Payment Date") during such Applicable Stand-Still Period, the provisions of this subparagraph (iv) shall not prevent such payment (a "Scheduled Payment") on or after the date (the "Deferred Maturity Date") immediately following the termination of such Applicable Stand-Still Period. Notwithstanding the foregoing provisions of this subparagraph (iv), the failure by the Company to make a Scheduled Payment on a Scheduled Payment Date during an Applicable Stand-Still Period shall nevertheless constitute an Event of Default. (v) If any payment or distribution of any character, whether in cash, securities or other property, shall be received by any holder of Subordinated Debt in contravention of any of the terms of this Section ___ and before all the Senior Indebtedness shall have been paid in full, such payment or distribution shall be received in trust for the benefit of the holders of the Senior Indebtedness at the time outstanding in accordance with the priorities then existing among such holders, and shall forthwith be paid over or delivered and transferred to the holders of Senior Indebtedness. B. OBLIGATION OF OBLIGORS UNCONDITIONAL. The provisions of this Section ___ are for the purpose of defining the relative rights of the holders of Senior Indebtedness on the one hand, and the holders of the Subordinated Debt on the other hand, against the Company and its property; and nothing herein shall impair, as between the Company and the holders of the Subordinated Debt, the obligation of the Company, which is unconditional and absolute, to pay to the holders thereof the principal thereof and premium, if any, and interest thereon in accordance with their terms and the provisions hereof, nor shall anything herein prevent the holders of the Subordinated Debt from exercising all remedies otherwise permitted by applicable law or hereunder upon default hereunder or under the Subordinated Debt (including, without limitation, the right to demand payment and sue for performance hereof and of the Subordinated Debt and to accelerate the maturity thereof as provided in Section ___), subject to the rights, if any, under this Section ___ of holders of Senior Indebtedness to receive cash, property, stock or obligations otherwise payable or deliverable by the Company to the holders of the Subordinated Debt; PROVIDED, HOWEVER, that upon the commencement and during the continuance of an Applicable Stand-Still Period the holders of the Subordinated Debt, to the extent they are otherwise entitled to do so, will not accelerate the maturity of the Subordinated Debt or pursue any other remedy to enforce payment thereof or initiate any bankruptcy or insolvency proceeding relative to the Company unless and until the earlier of (i) the end of such Applicable Stand-Still Period and (ii) the acceleration of the Senior Indebtedness related to such Applicable Stand-Still Period. C. Subrogation. Upon payment in full of Senior Indebtedness, the holders of the Subordinated Debt shall be subrogated to the rights of the holders of the Senior Indebtedness to receive payments or distributions of assets of the Company made on Senior Indebtedness until the principal of and premium, if any, and interest on the Subordinated Debt shall be paid in full, and, for the purposes of such subrogation, no payments to the holders of Senior Indebtedness of any cash, property, stock or obligations to which the holders of the Subordinated Debt would be entitled except for the provisions of subparagraph (iii) of Section A above shall, as between the Company, its creditors (other than the holders of the Senior Indebtedness) and the holders of the Subordinated Debt, be deemed to be a payment by the Company to or on account of the Senior Indebtedness. D. DEFINITIONS. "DEFAULT SUBORDINATION EVENT" means the existence of all of the following: (i) an event of default shall have occurred and be continuing in respect of the Senior Indebtedness, (ii) the holders of the Subordinated Debt shall have received a notice from or on behalf of any holder of Senior Indebtedness specifying that such event of default has occurred and is continuing and that such notice constitutes a "Default Subordination Notice", and (iii) no other Default Subordination Notice shall have been delivered by or on behalf of any holder of Senior Indebtedness within the 365-day period immediately preceding the giving of such notice. The "APPLICABLE STAND-STILL PERIOD" relating to any Default Subordination Event shall be deemed to continue until the event of default under the Senior Indebtedness giving rise thereto shall have been cured (by payment or otherwise) or waived or a period of 180 days shall have elapsed from the giving of the Default Subordination Notice relating thereto, in any such case whichever shall be the shorter period. "SENIOR INDEBTEDNESS" shall mean and include all obligations (whether now outstanding or hereafter incurred), for the payment of which the Company is responsible or liable as obligor, guarantor or otherwise, including, without limitation, principal, interest, premium, fees, expenses and indemnities, whether now owing or hereafter incurred (including any interest accruing subsequent to the commencement of a proceeding described in Section 7.04, regardless of whether the claims of holders of such payment obligations for such interest are allowed in any such proceeding). NA932810086 - NOTE MORTGAGE RIH JUNIOR PROMISSORY NOTE GD&C DRAFT DATED 12/17/93 MORTGAGE SECURING RIH JUNIOR PROMISSORY NOTE by and between RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation, as Mortgagor, and RESORTS INTERNATIONAL HOTEL FINANCING, INC. a Delaware corporation, as Mortgagee Dated as of ________ __, 1994 Prepared by:_______________________ D. Eric Remensperger After recording return to: Gibson, Dunn & Crutcher 200 Park Avenue New York, New York 10166 Attention: D. Eric Remensperger MORTGAGE SECURING RIH JUNIOR PROMISSORY NOTE THIS MORTGAGE, dated as of ________ ___, 1994, between RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation ("Mortgagor"), and RESORTS INTERNATIONAL HOTEL FINANCING, INC., a Delaware corporation ("RIHF"), having an address at c/o Resorts International, Inc., 1133 Boardwalk, Atlantic City, New Jersey 08401 (RIHF, or its successors or assigns which shall than be the Noteholder (as hereinafter defined), being referred to herein as "Mortgagee"). WITNESSETH: In consideration of $10.00 in hand paid by Mortgagee to Mortgagor and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in order to secure (i) the payment of the principal amount (and premium, if any) of the secured junior promissory note by Mortgagor to Mortgagee in the principal amount of $35,000,000 as amended and restated the date hereof (hereinafter collectively referred to as the "Note"), in lawful money of the United States, to be paid in accordance with the provisions thereof (and all renewals, extensions, and modifications thereof) all of which are hereby made an integral part hereof as though set forth at length herein; (ii) payment of interest (including interest on all overdue principal and premium, if any) becoming due under the provisions of the Note; (iii) payment by Mortgagor to Mortgagee of all sums expended or advanced by Mortgagee pursuant to any term or provision of this Mortgage; (iv) performance of each covenant, term, condition and agreement of Mortgagor herein or in the Note contained; (v) all costs and expenses, including reasonable counsel fees and expenses as provided in Section 3.07, which may arise in respect of the Note and this Mortgage or of the obligations secured hereby; and (vi) performance and observance of all of the provisions herein contained, Mortgagor has executed and delivered this Mortgage and has bargained, sold, aliened, mortgaged, pledged, released, conveyed and confirmed unto Mortgagee and its successors hereunder and assigns forever, all of its right, title and interest in, to and under any of the following described property: GRANTING CLAUSES GRANTING CLAUSE FIRST All the property, rights, title, interest, privileges and franchises particularly described in annexed Schedule 1 (the "Owned Land") which Schedule is hereby made a part of, and deemed to be described in, this Granting Clause as fully as if set forth in this Granting Clause at length. GRANTING CLAUSE SECOND All of the property, rights, title, interest, privileges and franchises of the Mortgagor as lessee in those certain leases (the "Ground Leases") particularly described in Schedule 2, which Schedule is hereby made a part of, and deemed to be described in, this Granting Clause as fully as if set forth in this Granting Clause at length, which Ground Leases cover the real property described in such Schedule 2 (the "Leased Land") and in and to any and all modifications, extensions and renewals of the Ground Leases and all options set forth therein, together with (i) all credits, deposits, privileges and rights of the Mortgagor as lessee under the Ground Leases, now or at any time existing, (ii) the leaseholds and the leasehold estates created by the Ground Leases and (iii) all of the estates, rights, titles, claims or demands whatsoever of Mortgagor, either in law or in equity, in possession or in expectancy, of, in and to the Ground Leases and the Leased Land, together with (x) any and all other, further or additional title, estates, interests or rights which may at anytime be acquired by the Mortgagor in or to the Leased Land, and the Mortgagor expressly agrees that if the Mortgagor shall, at any time prior to payment in full of all indebtedness secured hereby, acquire fee simple title or any other greater estate to the Leased Land pursuant to the Ground Leases, or otherwise, the lien of this Mortgage shall attach, extend to, cover and be a lien upon such fee simple title or other greater estate and thereupon the lien of this Mortgage shall be prior to the lien of any mortgage or deed of trust placed on such acquired title, estate, interest or right subsequent to the date of this Mortgage (except as otherwise provided herein) and (y) any right to possession or statutory term of years derived from, or incident to, the Ground Leases pursuant to Section 365(h) of the U.S. Bankruptcy Code (the "Code") or any comparable provision contained in any present or future federal, state, local, foreign or other statute, law, rule or regulation. 2 GRANTING CLAUSE THIRD All the rents, issues, profits, revenues and other income and proceeds of the property subjected or required to be subjected to the lien of this Mortgage, including, without limitation, the property described in Granting Clauses First, Second, and Sixth (such property is hereinafter collectively referred to as the "Premises") and all the estate, right, title and interest of every nature whatsoever of the Mortgagor in and to the same and every part thereof. The collective metes and bounds description of the Owned Land and the Leased Land is set forth in annexed Schedule 3. GRANTING CLAUSE FOURTH All of the rights as lessor under Leases in effect on the date of execution of this Mortgage or hereafter entered into by the Mortgagor, if any, including extensions, renewals or amendments of all of the same, and the immediate and continuing right as security in accordance with an Assignment of Leases and Rents of even date herewith between Mortgagor and Mortgagee, and, after the occurrence of an Event of Default, to make claim for, collect, receive and receipt for (and to apply the same as provided herein) any and all rents, income, revenues, issues, profits, security and other sums of money payable or receivable thereunder or pursuant thereto, and all proceeds thereof, whether payable as rent, insurance proceeds, condemnation awards, security or otherwise and whether payable prior to or subsequent to the maturity date of the Note, to receive and give notices and consents thereunder, to bring actions and proceedings thereunder or for the enforcement thereof, to make waivers and agreements, to take such action upon the happening of a default under any Lease, including the commencement, conduct and consummation of any proceedings at law or in equity as shall be permitted by any provision of any Lease, and to do any and all things which the Mortgagor or any lessor is or may become entitled to do under the Leases; provided, that the assignment made by this granting Clause Fourth shall not impair or diminish any obligation of the Mortgagor under the Leases, or shall any such obligation be imposed upon the Mortgagee. GRANTING CLAUSE FIFTH Without limiting the generality of the provisions of Granting Clause Third, the Mortgagor's rights, privileges and franchises in and to the following, to the extent of the Mortgagor's interest therein and thereto and to the extent assignable (collectively, "Operating Assets"): 3 (a) bookings and receipts for the use of guest rooms, banquet facilities and meeting rooms at the Casino-Hotel; (b) all contracts respecting utility services for, and the maintenance, operations, or equipping of the Premises, including guaranties and warranties relating thereto; (c) the Permits; (d) all contract rights, leases, concessions, trademarks, trade names, service marks, service names, logos, copyrights, warranties and other items of intangible personal property relating to the ownership or operation of the Casino-Hotel, including, without limitation, (1) telephone and other communication numbers, (2) all software licensing agreements as are required to operate computer software systems at the Casino-Hotel, all transferable proprietary interest in software required to operate the computer systems at the Casino Hotel and books and records relating to the software programs, and (3) lessee's interest under leases of Tangible Personal Property; (e) all agreements entered into by or on behalf of the Mortgagor or which have been assigned to the Mortgagor, for the design and construction, and for the equipping and furnishing, of the Casino-Hotel, including architect's agreements, engineering agreements, construction contracts, consulting agreements and agreements or purchase orders for all items of Tangible Personal Property and payment and performance bonds in favor of the Mortgagor in connection with the Trust Estate (and all warranties and guaranties thereunder and warranties and guaranties of any subcontractor and bond issued in connection with the work to be performed by any subcontractor); (f) the following personal property (the "Tangible Personal Property") now or hereafter acquired by the Mortgagor: (i) all furniture, furnishings, equipment, machinery, apparatus, appliances, fixtures and fittings and other articles of tangible personal property which are, or are to be located on, or used in connection with the operation of, the Casino-Hotel; (ii) all slot machines, electronic gaming devices, crap tables, blackjack tables, roulette tables, baccarat tables, and big six wheels, located or to be located in the Casino-Hotel, and all 4 furnishings and equipment to be used in connection with the operation thereof; (iii) all cards, dice, gaming chips and placques, tokens, chip racks, dealing shoes, dice cups, dice sticks, layouts, paddles, roulette balls and other consumable supplies and items to be used in connection with the gaming operations of the Casino-Hotel; (iv) all china, glassware, linens, kitchen utensils, silverware and uniforms, whether in use or held in reserve storage for future use, in connection with the operation of the Casino-Hotel, which are on hand or on order whether stored on-site or off-site; (v) all consumables and operating supplies of every kind and nature for use in all of the operating departments of the Casino-Hotel, or in the improvements now or hereafter located on any of the Owned Land, including without limitation, accounting supplies, guest supplies, forms, printing, stationery, food and beverage stock, bar supplies, laundry supplies and brochures to existing purchase orders; (vi) all sets and scenery, costumes, props and other items of tangible personal property on hand or on order for use in the production of shows in the showroom of the Casino-Hotel; and (vii) all cars, limousines, vans, buses, trucks and other vehicles owned or leased by the Mortgagor for use in Casino-Hotel operations, together with all equipment, parts and supplies used to service, repair, maintain and equip the foregoing; (g) all drawings, designs, plans and specifications prepared by the architects, interior designers, landscape designers and any other consultants for the development of the Premises, as amended from time to time; (h) any administrative and judicial proceedings initiated by the Mortgagor, or in which the Mortgagor has intervened, concerning the Casino-Hotel, and agreements, if any, which are the subject matter of such proceedings; (i) any customer lists utilized by the Mortgagor, including lists of transient guests and restaurant and bar patrons and "high roller" lists; and 5 (j) all of the goodwill in connection with the operation of the Premises. The Mortgagor and Mortgagee acknowledge that notwithstanding anything contained in this Mortgage to the contrary, the Mortgagor may share facilities, operations and employees with any other hotel owned by any Affiliate of the Mortgagor provided that (i) such sharing of facilities is permitted by all applicable Legal Requirements, (ii) terms on which such facilities are shared are not detrimental to the operations of the Casino-Hotel or the financial condition of the Mortgagor and (iii) the regular operation of the Casino-Hotel would not be materially impaired upon the separation of such facilities. The assignment made by this Granting Clause Fifth shall not impair or diminish any obligation of the Mortgagor with respect to the Operating Assets, nor shall any such obligation be imposed on the Mortgagee. GRANTING CLAUSE SIXTH (a) All of the Mortgagor's right, title and interest in and to all buildings and improvements of every kind and description now or hereafter erected or placed on the Owned Land and/or the Leased Land and all fixtures and articles of personal property now or hereafter attached to or contained in and used in connection with such buildings and improvements, including, but not limited to, all apparatus, furniture, furnishings, machinery, motors, elevators, fittings, radiators, cooking ranges, ice boxes, ice machines, printing presses, mirrors, bars, mechanical refrigerators, furnaces, coal and oil-burning apparatus, wall cabinets, machinery, generators, partitions, steam and hot water boilers, lighting and power plants, pipes, plumbing, radiators, sinks, bath tubs, water closets, gas and electrical fixtures, awnings, shades, screens, blinds, dishwashers, freezers, vacuum cleaning systems, office equipment and other furnishings, and all plumbing, heating, lighting, cooking, laundry, ventilating, incinerating, air-conditioning and sprinkler equipment or other fire prevention or extinguishing apparatus and material, and fixtures and appurtenances thereto; and all renewals or replacements thereof or articles in substitution therefor, whether or not the same are or shall be attached to the Owned Land, the Leased Land or to any such buildings and improvements thereon, in any manner; and 6 (b) All of the Mortgagor's right, title and interest in and to (i) the Leased Land, if the Mortgagor acquires the fee simple title to the Leased Land or any part thereof (subject to the provisions of Section 2.06 hereof), (ii) all air rights and rights to maintain supporting columns and all rights to construct and maintain bridges, and to create private rights of way over streets now or hereafter owned or enjoyed by the Mortgagor and appurtenant to the Owned Land or Leased Land, and (iii) all right, title and interest of Mortgagor as grantee or licensee in and to the following to the extent necessary for the use and enjoyment of the Owned Land or the Leased Land: (A) all those plots, pieces or parcels of land and air rights, more particularly described on Schedule 5, attached hereto and made a part hereof (the "Bridge Easement Parcels"), with respect to which Mortgagor has easements, licenses or other rights of possession or use pursuant to these certain easement and license agreements more particularly described on Schedule 5 (the "Bridge Easements"), (B) all those plots, pieces or parcels of land and air rights, more particularly described on Schedule 6 attached hereto and made a part hereof (the "Elevator Easement Parcels"), with respect to which Mortgagor has easements, licenses or other rights of possession or use pursuant to those certain license agreements more particularly described on Schedule 6 (the "Elevator Easements"), and; (C) all that plot, piece or parcel of land and air rights more particularly described on Schedule 7 attached hereto and made a part hereof (the "Turn-Around Easement Parcel") with respect to which Mortgagor has easements, licenses, or other rights of possession or use pursuant to that certain easement more particularly described on Schedule 7 (the "Turn-Around Easement"), (the Bridge Easement Parcels, the Elevator Easement Parcels and the Turn-Around Easement Parcel are collectively referred to herein as the "Easement Parcels"; and the Bridge Easements, the Elevator Easements and the Turn-Around Easement are collectively referred to as the "Easements"), together with all rights of way, privileges, liberties, tenements, hereditaments and appurtenances belonging or in any way appertaining to such estates, it being the intention hereof that all property, interests, rights and privileges and franchises pertaining to the Premises (other than Excepted Property) shall be as fully embraced within and subjected to the lien hereof as if such property were specifically described herein. To the extent the grant of a security interest in any portion of the Trust Estate is governed by the Uniform Commercial Code, this Mortgage is hereby deemed to be as well a security agreement under the Uniform Commercial Code for the purpose of creating hereby a security interest in all of the Mortgagor's right, title and interest in and to such property, securing the obligations secured hereby, for the benefit of the Mortgagee; * * * TOGETHER with all of the Mortgagor's right, title and interest in and to all mineral and water rights and any title or reversion, in and to the beds of the ways, streets, avenues and alleys adjoining the Premises to the center line 7 thereof and in and to all strips, gaps and gores adjoining the premises on all sides thereof; and TOGETHER with all of the Mortgagor's right, title and interest to and singular the tenements, hereditaments, easements, appurtenances, passages, water courses, riparian rights, other rights, liberties and privileges thereof or in any way appertaining to the Premises, including any other claim at law or in equity as well as any after-acquired title, franchise or license and the reversion and reversions and remainder and remainders thereof; and TOGETHER with all awards and other compensation heretofore or hereafter to be made to the present and all subsequent owners of the Trust Estate for any taking by eminent domain, either permanent or temporary, of all or any part of the Trust Estate or any easement or appurtenances thereof, including severance and consequential damage and change in grade of streets, all in accordance with and subject to the provisions of the Superior Instrument Requirements and Section 5.20; and TOGETHER with all proceeds of any unearned premiums on any insurance policies described in Section 5.11, and the right to receive and apply the proceeds of any insurance, judgments, or settlements made in lieu thereof, for damage to the Trust Estate or otherwise, all in accordance with and subject to the provisions of Section 5.11 and the Superior Instrument Requirements. EXCLUDING, with respect to all of the hereinabove granted property, rights, title, interest, privileges and franchises, the Excepted Property. TO HAVE AND TO HOLD all the Premises, Leases, Ground Leases, Operating Assets, Easements, properties, options, credits, deposits, rights, privileges and franchises of every kind and description, real, personal or mixed, granted hereby, bargained, sold, aliened, assigned, transferred, hypothecated, pledged, released, conveyed, mortgaged, or confirmed as aforesaid, or intended, agreed or covenanted so to be, together with all the appurtenances thereto appertaining (the Premises, Leases, Ground Leases, Operating Assets, Easements, properties, options, credits, deposits, rights, privileges and franchises, being herein collectively called the "Trust Estate") unto the Mortgagee and its successors and assigns forever. SUBJECT, HOWEVER, on the date hereof, to Existing Encumbrances and, after the date hereof, to Permitted Encumbrances. SUBJECT, FURTHER, to the rights and obligations of the Mortgagee and the Noteholder as set forth in that certain 8 Intercreditor Agreement dated as of the date hereof among RIH, RIHF, Trustee, Fidelity Management and Trust Company ("Fidelity"), as trustee under that certain note purchase agreement dated as of the date hereof among Fidelity, RIH and RIHF, and State Street Bank and Trust Company of Connecticut, National Association ("State Street"), as trustee under that certain indenture dated as of the date hereof among State Street, RIH and RIHF (and such other parties that may from time to time become a party thereto). BUT IN TRUST, NEVERTHELESS, for the benefit and security of the Noteholder. UPON CONDITION that, until the happening of an Event of Default and subject to the provisions of Article Two, the Mortgagor shall be permitted to possess and use the Trust Estate, and to receive and use the rents, issues, profits, revenues and other income of the Trust Estate. AND IT IS HEREBY COVENANTED AND DECLARED that the Trust Estate is to be held and applied by the Mortgagee, subject to the further covenants, conditions and trusts hereinafter set forth, and the Mortgagor does hereby covenant and agree to and with the Mortgagee, for the benefit of the holder of the Note as follows: ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION Section 1.01. DEFINITIONS. For all purposes of this Mortgage, except as otherwise expressly provided or unless the context otherwise requires: (a) the terms defined in this Article One have the meanings assigned to them in this Article One and include the plural as well as the singular; (b) all accounting terms not otherwise defined herein have the meanings assigned to them, and all computations herein provided for shall be made in accordance with generally accepted accounting principles consistently applied; and (c) the words "herein," "hereof" and "hereunder" and other words of similar import refer to this Mortgage as a whole and not to any particular Article, Section or other subdivision. "AFFILIATE" has the meaning set forth in Section 1.01 of the Indenture. 9 "AFTER-ACQUIRED FEE MORTGAGE" has the meaning set forth in Section 2.07. "ALTERATIONS" has the meaning set forth in Section 5.12. "APPRAISER" means an MAI appraiser (i.e., a Member in good standing of the American Institute of Real Estate Appraisers) who is (i) of recognized standing among appraisers of properties similar to the Casino-Hotel and (ii) experienced in the appraisals of properties of a similar size and scope to that of the Casino-Hotel, selected by the Mortgagor. "ASSIGNMENT OF LEASES AND RENTS" has the meaning stated in Section 1.01 of the Indenture. "CAPITALIZED LEASE OBLIGATION" has the meaning stated in Section 1.01 of the Indenture. "CASINO" means that portion of the Casino-Hotel used for gaming and related activities. "CASINO-HOTEL" means the casino and hotel complex and ancillary structures and facilities located on the Premises and furniture, fixtures and equipment at any time contained therein. "CASUALTY" means any act or occurrence of any kind or nature which results in damage, loss or destruction to any buildings or improvements on the Premises and/or Tangible Personal Property. "CODE" has the meaning stated in Granting Clause Second. "COMBINATION TRANSACTION" has the meaning stated in Section 10.01 of the Indenture. "DEFAULT" means the occurrence and continuance of an Event of Default or an event which, after notice or lapse of time or both, would become an Event of Default. "DEPOSITARY" means an Independent entity to which insurance proceeds or a condemnation award is paid to be held in trust for restoration pursuant to the provisions of a Ground Lease or Superior Mortgage. "EVENT OF DEFAULT" has the meaning stated in Section 3.01. An Event of Default shall "exist" if an Event of Default shall have occurred and be continuing. "EXCEPTED PROPERTY" means: 10 (1) subject to the provisions of the Assignment of Leases and Rents, any cash held by the Mortgagor from rents, issues, profits, revenues and other proceeds of the Trust Estate to the extent that such cash may be, but has not been, distributed or paid out in accordance with the Services Agreement or in accordance with the provisions of Section 12.07 the Indenture; (2) all personal property owned by lessees under Leases and the personal property of any guests staying in the Hotel; (3) any property deemed to be Excepted Property pursuant to the provisions of Section 2.03 hereof; (4) Tangible Personal Property subject to an FF&E Financing Agreement; and (5) counterchecks and any other property the granting of a security interest in which is prohibited by the New Jersey Casino Control Act, N.J.S.A. 5:12-1 et seq., and the regulations promulgated thereunder. "EXISTING ENCUMBRANCES" means the matters set forth in Schedule 8. "FIRST MORTGAGE DEBT" means any financing secured by a Superior Mortgage secured by or imposing a lien on all or a portion of the Trust Estate on a parity with or senior to the lien of this Mortgage. "FF&E FINANCING AGREEMENT" means a purchase money lien upon any Tangible Personal Property and other items constituting Operating Assets, such as computer software, which are financed, purchased or leased by the Mortgagor, provided that, except as set forth on Schedule 3, the principal amount of the indebtedness secured by such lien shall not exceed eighty-five (85%) percent of the cost to the Mortgagor of such property at the time of acquisition. "GROUND LEASES" has the meaning stated in Granting Clause Second. "GUARANTY MORTGAGE" means that certain Mortgage Securing Guaranty of Junior Mortgage Notes dated as of the date hereof from Mortgagor to U.S. Trust Company of California, N.A., a national banking association, which secures the Notes (as defined in the Indenture), the lien of which shall be PARI PASSU with the lien of this Mortgage. "HOTEL" means that portion of the Casino-Hotel not included within the Casino. 11 "IMPOSITIONS" has the meaning stated in Section 5.08. "INDENTURE" means that certain Indenture - 11.375% Junior Mortgage Notes due 2004, dated as of even date herewith among the Mortgagor, RIHF, as issuer, and U.S. Trust Company of California, N.A., as trustee, as it may from time to time be supplemented, modified or amended by one or more trust indentures or other instruments supplemental thereto entered into pursuant to the applicable provisions thereof. "INDEPENDENT" when used with respect to any specified Person means such a Person who (a) is in fact independent, (b) does not have any direct financial interest or any material indirect financial interest in the Mortgagor or in any other obligor upon the Note or in any Affiliate of the Mortgagor or of such other obligor and (c) is not connected with the Mortgagor or such other obligor or any Affiliate of the Mortgagor or such other obligor as an officer, employee, promoter, underwriter, trustee, partner, director or person performing similar functions. Whenever it is herein provided that any Independent Person's opinion or certificate shall be furnished to the Mortgagee, such opinion or certificate shall state that the signer has read this definition and that the signer is Independent within the meaning thereof. A Person who is performing or who has performed services as an independent contractor to any specified Person shall not be considered not Independent merely by reason of the fact that such Person is or has performed such services. "INSURANCE AMOUNT" has the meaning stated in Section 5.11(a)(1). "INSURANCE REQUIREMENTS" means all terms of any insurance policy covering or applicable to the Trust Estate or any part thereof, all requirements of the issuer of any such policy, and all orders, rules, regulations and other requirements of the National Board of Fire Underwriters (or any other body exercising similar functions) applicable to or affecting the Trust Estate or any part thereof or any use or condition of the Trust Estate or any other part thereof. "INSURANCE TRUSTEE" means the Trustee or, if the Trustee so elects, any bank, trust company or insurance company with net worth in excess of $100,000,000, designated by the Trustee. "INSURER" means an insurance company or companies selected by the Mortgagor authorized to issue insurance in the State of New Jersey with an A.M. Best rating as high or higher than the rating of insurance companies insuring other casino-hotels in Atlantic City, New Jersey. 12 "LEASE" means each lease or sublease demising all or any portion of the Owned Land, the Leased Land or the buildings or improvements thereon and made by the Mortgagor as lessor or sublessor, as the case may be, or any spaces in any building or buildings which constitute a part of the Trust Estate, including every agreement relating thereto or entered into in connection therewith and every guaranty of the performance and observance of the covenants, conditions and agreements to be performed by the lessee under any such lease. Notwithstanding the foregoing, the term "Lease" shall not include any transient room rentals. "LEASED LAND" has the meaning stated in Granting Clause Second. "LEGAL REQUIREMENTS" means all laws, statutes, codes, acts, ordinances, orders, judgments, decrees, injunctions, rules, regulations, permits, licenses, authorizations, directions and requirements (including, without limitation, the New Jersey Environment Cleanup Responsibility Act and the New Jersey Spill Compensation and Control Act of 1976) of all governments, departments, commissions, boards, courts, authorities, agencies, officials and officers, of governments, federal, state and municipal (including, without limitation, the New Jersey Department of Environmental Protection, the Atlantic City Bureau of Investigations, Division of Protection, the Atlantic City Bureau of Investigations, Division of Gaming Enforcement of the State of New Jersey, and the Casino Control Commission of the State of New Jersey), foreseen or unforeseen, ordinary or extraordinary, which now is or at any time hereafter becomes applicable to the Trust Estate or any part thereof, or any of the adjoining sidewalks, or the use of the Casino-Hotel as a gaming or gambling facility or any other use or condition of the Trust Estate or any part thereof. "LESSORS" means the lessors under the Ground Leases. "MATURITY" when used with respect to the Note means the date on which the principal of such Note becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration or prepayment or otherwise. "MORTGAGE DOCUMENTS" has the meaning set forth in Section 1.01 of the Indenture. "MORTGAGOR" means the Person named as the "Mortgagor" in the first paragraph of this instrument until a successor entity shall have become such pursuant to the applicable provisions of this Mortgage, and thereafter, except to the extent otherwise contemplated by Section 4.02, "Mortgagor" shall mean such successor entity exclusively. 13 "NOTEHOLDER" shall mean the holder or holders of the Note. "NOTE" has the meaning set forth in the Preamble. "NOTICES" has the meaning stated in Section 1.02. "OFFICERS' CERTIFICATE" means a certificate signed by an officer of the Mortgagor and delivered to the Mortgagee. Whenever this Mortgage requires that an Officers' Certificate be signed also by an Architect or an Accountant or other expert, such Architect, Accountant or other expert may (except as otherwise expressly provided in this Mortgage) be in the general employ of the Mortgagor. "OPERATING ASSETS" has the meaning stated in Granting Clause Fifth. "OPINION OF Counsel" means a written opinion of counsel who may (except as otherwise expressly provided in this Mortgage) be an employee of the Mortgagor or an employee of an Affiliate of the Mortgagor. Unless otherwise specifically provided in this Mortgage, such counsel may rely, as to any state of facts not personally known to such counsel and relating to such opinions, on an Officers' Certificate to the extent not rejected by the Trustee and its counsel (which rejection shall not be unreasonably given). "ORIGINAL POLICY" means an ALTA Loan Policies of Title issued by [list title insurance companies], pursuant to Title Commitment No. ____________ redated to the date hereof. "OUTSTANDING AMOUNT" has the meaning stated in Section 1.01 of the Indenture. "OWNED LAND" has the meaning stated in Granting Clause First. "PERMITS" means all licenses, franchises, statements of compliance, certificates of operation, certificates of occupancy and permits required for the lawful ownership, occupancy, operation and use of all or a material portion of the Premises whether held by the Mortgagor or any other Person (which may be temporary or permanent) (including, without limitation, those required for the use of the Casino-Hotel as a licensed casino facility), in accordance with all applicable Legal Requirements. "PERMITTED ENCUMBRANCES" means: (1) liens for taxes, assessments, or governmental charges not yet due and payable or if due and payable are not delinquent to the extent that any fine, penalty, interest or cost may be added for nonpayment thereof; 14 (2) Existing Encumbrances; (3) FF&E Financing Agreements; (4) After-Acquired Fee Mortgages; (5) the lien of the Mortgage Documents and any rights granted as provided therein; (6) Restricted Encumbrances; (7) the lien of the Trustee provided for by Section 8.07 of the Indenture; (8) any Working Capital Facility Lien; (9) liens created by the Senior Mortgage Documents; and (10) Capitalized Lease Obligations. "PERSON" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or any other entity or government or any agency or political subdivision thereof. "PREMISES" has the meaning set forth in Granting Clause Third. "RELEASED LAND" has the meaning stated in Section 2.05. "RELEASED FEE LAND" has the meaning stated in Section 2.06. "RESTORATION" has the meaning stated in Section 5.11(e). "RESTRICTED ENCUMBRANCES" means Leases permitted by and made in accordance with Section 5.13 of this Mortgage. "RIHF" shall mean Resorts International Hotel Financing, Inc., a Delaware corporation. "SENIOR GUARANTY MORTGAGE" has the meaning set forth in Section 1.01 of the Indenture. "SENIOR MORTGAGE" has the meaning set forth in Section 1.01 of the Indenture. "SENIOR MORTGAGE DOCUMENTS" has the meaning set forth in Section 1.01 of the Indenture. 15 "SERVICES AGREEMENT" has the meaning set forth in Section 1.01 of the Indenture. "SETTLEMENT COSTS" has the meaning stated in Section 5.20. "STATED MATURITY" when used with respect to a note means the date specified in such note as the fixed date on which the principal of such note is due and payable. "SUPERIOR INSTRUMENT REQUIREMENTS" means the applicable terms, conditions and provisions of (i) the Ground Leases with respect to the Leased Land; and (ii) Superior Mortgages with respect to the portion of the Trust Estate encumbered thereby. "SUPERIOR MORTGAGES" means, collectively, the Senior Mortgage, the Senior Guaranty Mortgage, any Working Capital Facility Lien and any After-Acquired Fee Mortgages. "TAKING" means the acquisition or condemnation by eminent domain of the whole or any part of the Premises, by a competent authority, or any public or quasi-public use or purpose. "TANGIBLE PERSONAL PROPERTY" has the meaning stated in Granting Clause Fifth. "TRUSTEE" means the Person named as the "Trustee" in the first paragraph of the Indenture and any successor thereto. "TRUST ESTATE" has the meaning stated in the habendum to the Granting Clauses. "TRUST INDENTURE ACT" has the meaning stated in Section 1.01 of the Indenture. "WORKING CAPITAL FACILITY" has the meaning stated in Section 1.01 of the Indenture. "WORKING CAPITAL FACILITY LIEN" has the meaning stated in Section 5.22(c) of this Mortgage. Section 1.02. NOTICES, ETC. (a) Any request, demand, authorization, direction, notice (including, without limitation, a notice of default), consent, waiver or other document provided or permitted by this Mortgage to be made upon, given or furnished to, or filed with, the Mortgagor or the Mortgagee (collectively, "Notices") shall be deemed given when either (i) delivered by hand or (ii) two days after sending by registered or certified mail, postage prepaid, addressed as follows: 16 To the Mortgagor: Resorts International Hotel, Inc. c/o Resorts International, Inc. 1133 Boardwalk Atlantic City, New Jersey 08401 Attention: Christopher D. Whitney If to Mortgagee: Resorts International Hotel Financing, Inc. c/o Resorts International, Inc. 1133 Boardwalk Atlantic City, New Jersey 08401 Attention: Christopher D. Whitney (b) By Notice to the Mortgagor, the Mortgagee and the Trustee, any party may designate additional or substitute address for Notices which, notwithstanding Subsection (a) above, shall be deemed given when received. Section 1.03. FORM AND CONTENT OF DOCUMENTS DELIVERED TO MORTGAGEE. Whenever 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 such matters in one or several documents. Any certificate or opinion of an Officer of the Mortgagor may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such Officer knows that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any 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 Mortgagor stating that the information with respect to such factual matters is in the possession of the Mortgagor, unless such counsel knows that the certificate or opinion or representations with respect to such matters are erroneous. If appropriate to the matter being opined upon and to the extent not prohibited by the Trust Indenture Act, any Opinion of Counsel may be subject to rights of creditors and the availability of equitable remedies. Whenever any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Mortgage, they may, but need not, be consolidated and form one instrument. 17 Whenever in this Mortgage, in connection with any application or certificate or report to the Mortgagee, it is provided that the Mortgagor shall deliver any document as a condition of the granting of such application, or as evidence of the Mortgagor's compliance with any term hereof, it is intended that the truth and accuracy, at the time of the granting of such application or at the effective date of such certificate or report (as the case may be), of the facts and opinions stated in such document shall in such case be conditions precedent to the right of the Mortgagor to have such application granted or to the sufficiency of such certificate or report. Section 1.04. COMPLIANCE CERTIFICATES AND OPINIONS. Upon any application or request by the Mortgagor to the Mortgagee to take any action under any provision of this Mortgage, the Mortgagor shall furnish to the Mortgagee an Officers' Certificate stating that all conditions precedent, if any, provided for in this Mortgage 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 Mortgage 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 Mortgage shall include: (a) a statement that each individual signing such certificate or opinion has read such condition or covenant and the definitions herein relating thereto; (b) 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; (c) 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 condition or covenant has been complied with; and (d) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. Section 1.05. EFFECT OF HEADINGS. The Article and Section headings herein are for convenience only and shall not affect the construction hereof. 18 Section 1.06. SUCCESSORS AND ASSIGNS; AMENDMENTS. (a) Subject to Section 4.02 hereof and Section 10.02 of the Indenture, this Mortgage shall be binding upon and inure to the benefit of the parties hereto and of the respective successors and assigns of the parties hereto to the same effect as if each such successor or assign were in each case named as a party to this Mortgage. (b) This Mortgage may not be modified, amended, discharged, released nor any of its provisions waived except by agreement in writing executed by the Mortgagor and the Mortgagee and in accordance with the provisions of this Mortgage and the Indenture. Section 1.07. SEPARABILITY CLAUSE. In case any provision in this Mortgage 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 1.08. BENEFITS OF MORTGAGE. Nothing in this Mortgage, express or implied, shall give to any Person, other than the parties hereto and their successors and assigns, any benefit or any legal or equitable right, remedy or claim under this Mortgage. Section 1.09. GOVERNING LAW. This Mortgage shall be deemed to be a contract under the laws of the State of New Jersey and shall be construed in accordance with and governed by the laws of the State of New Jersey. Section 1.10. [Reserved] Section 1.11. PROVISIONS REQUIRED BY INDENTURE. Whenever the provisions of this Mortgage and the provisions of the Indenture shall be inconsistent, the provisions of the Indenture shall govern. Section 1.12. RIGHTS OF THE TRUSTEE. So long as the Trustee is the Mortgagee hereunder, except as otherwise provided in Section 8.01 of the Indenture: (a) the Mortgagee 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, coupon or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) whenever in the administration of this Mortgage the Mortgagee shall deem it desirable that a matter be 19 proved or established prior to taking, suffering or omitting any action hereunder, the Mortgagee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate; (c) the Mortgagee 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 the Mortgagee hereunder in good faith and in reliance thereon; (d) the Mortgagee shall be under no obligation to exercise any of the rights or powers vested in it by this Mortgage at the request or direction of any Noteholder pursuant to the Indenture, unless such holder shall have offered to the Mortgagee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (e) the Mortgagee 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, or other paper or document but the Mortgagee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Mortgagee shall determine to make such further inquiry or investigation, it shall be entitled (subject to the express limitations with respect thereto contained in this Mortgage) to examine the books, records and premises of the Mortgagor, personally or by agent or attorney; (f) the Mortgagee may execute any of the trusts or power hereunder or perform any duties hereunder either directly or by or through agents or attorneys, and the Mortgagee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder; (g) the Mortgagee shall not be personally liable, in case of entry by it upon the Trust Estate, for debts contracted or liabilities or damages incurred in the management or operation of the Trust Estate; and (h) no provision of this Mortgage shall require the Mortgagee to expend or risk its own funds or otherwise incur any financial liability in the performance of its obligations hereunder, or in the exercise of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate 20 indemnity against such risk or liability is not reasonably assured to it. Section 1.13. MORTGAGE SUBJECT TO THE PROVISIONS OF THE ACT. Each provision of this Mortgage is subject to and shall be enforced in compliance with the provisions of the New Jersey Casino Control Act. This Mortgage shall not be transferred, assigned or amended without prior approval of the New Jersey Casino Control Commission. Section 1.14. DISCHARGE OF LIEN. If the Mortgagor shall pay or cause to be paid, or there shall otherwise be paid, to the Mortgagee all amounts required to be paid by the Mortgagor pursuant to the Note, and the conditions precedent for the Indenture to cease, determine and become null and void in accordance with Section 5.01 of the Indenture shall have occurred, the Mortgagee shall promptly cancel and discharge this Mortgage, and execute and deliver to the Mortgagor all such instruments as may be necessary, required or appropriate to evidence such discharge and satisfaction of such lien or liens. Section 1.15. GENERAL APPLICATION. (a) The assertion of any rights upon any Default shall be subject in each instance to the giving of any notice and the expiration of any grace period provided for in Section 3.01 as a condition to such Default making it an Event of Default, unless the Trust Indenture Act requires otherwise, in which case the Trust Indenture Act shall control. (b) For the purposes of this Mortgage, it is understood that an event which does not materially diminish the value of the Mortgagee's interest in the Trust Estate shall not be deemed an "impairment of security", as that phrase is used in this Mortgage. ARTICLE TWO RELEASE; OTHER EXCEPTED PROPERTY; SUBORDINATION Section 2.01. POSSESSION BY MORTGAGOR; DISPOSITIONS WITHOUT RELEASE. So long as there shall have been no acceleration of maturity of the Note under Section 3.02, the Mortgagor shall be suffered and permitted, with power freely and without let or hindrance on the part of the Mortgagee, subject to the provisions of this Mortgage and the Guaranty Mortgage, to possess, use, manage, operate and enjoy the Trust Estate and every part thereof and to collect, receive, use, invest and dispose of the rents, issues, tolls, profits, revenues and other income from the Trust Estate or any part hereof, to use, consume and dispose of any consumables, goods, wares and merchandise in the ordinary course of business of operating the Casino-Hotel and to adjust 21 and settle all matters relating to choses in action, leases and contracts. Section 2.02. OBSOLETE PROPERTY; TANGIBLE PERSONAL PROPERTY; LEASE MODIFICATIONS. The Mortgagor shall have the right, at any time and from time to time, unless an Event of Default shall have occurred and be continuing, without any release from or consent by the Mortgagee: (a) to sell or dispose of, free from the lien of this Mortgage, any Tangible Personal Property which, in its reasonable opinion, may have become obsolete or unfit for use or which is no longer necessary in the conduct of its businesses or the operation of the Trust Estate, and no purchaser of any such property shall be bound to inquire into any question affecting the Mortgagor's right to sell or otherwise dispose of the same, free from the lien of this Mortgage; (b) to alter, repair, replace, change the location (provided notice shall be given to Mortgagee as to any new location) or position of and add to any Tangible Personal Property; provided, however, that no change shall be made in the location of any such property subject to the lien of this Mortgage which would in any respect impair the security of this Mortgage upon such property; or (c) to renew, extend, surrender, terminate, modify or amend any leases of Tangible Personal Property, when, in the Mortgagor's reasonable opinion, it is prudent to do so. The Mortgagor shall retain any net cash proceeds (subject to the right to pay dividends or make cash distributions pursuant to Section 12.07 of the Indenture) received from the sale or disposition of any Tangible Personal Property under Subsection (a) of this Section 2.02, in the business of operating the Casino-Hotel. The Mortgagee shall be under no responsibility or duty with respect to the exercise of the rights of the Mortgagor under this Section 2.02 or the application of the proceeds of any sale or disposition of any Tangible Personal Property. 22 Section 2.03. OTHER EXCEPTED PROPERTY. Notwithstanding any provisions contained in this Mortgage or the Indenture to the contrary, including, without limitation, the provisions of Granting Clauses Fifth and Sixth and of Articles Two and Five hereof, if the Mortgagor acquires Tangible Personal Property and other items constituting operating assets, such as computer software subject to any FF&E Financing Agreement, or becomes the lessee under a lease for any of the same and if the document evidencing such FF&E Financing Agreement prohibits subordinate liens or the provisions of any such lease prohibits any assignment thereof by the lessee, and if any such prohibition is customary with respect to similar transactions of the lender or lessor, as the case may be, then the property so purchased or the lessee's interest in the lease, as the case may be, shall be deemed to be Excepted Property. If any such FF&E Financing Agreement permits subordinate liens then the Mortgagee agrees to execute and deliver to the Mortgagor, at the Mortgagor's expense, such documents as the holder of such FF&E Financing Agreement may reasonably request to evidence the subordination of the lien of this Mortgage to the lien of such FF&E Financing Agreement. Section 2.04. [Reserved] Section 2.05. RELEASED LAND. (a) Notwithstanding anything to the contrary herein contained, the Mortgagor shall have the right, at any time and from time to time, unless an Event of Default shall have occurred and be continuing, to convey all or any part of the Released Fee Land (the land to be so conveyed is hereinafter referred to as the "Released Land"), free from the lien of the Mortgage, provided that: (i) the Mortgagor furnishes the Mortgagee with an Officers' Certificate requesting the release of such property from the Trust Estate and stating (w) so long as the Released Land is owned or used by an Affiliate of the Mortgagor, the Released Land shall not be operated in a manner in competition with the operation of the Casino-Hotel as a casino, (x) that no permanent structures have been constructed on the Released Land, (y) that the Mortgagor is not required to hold the Released Land in order to maintain all Permits and in order to comply with the provisions of all material contracts to which the Mortgagor is a party or by which the Mortgagor is bound and either (A) the Mortgagor has made adequate provision to maintain all Permits and to comply with such contractual requirements by: (1) owning and using the 23 balance of the Trust Estate; (2) acquiring fee title to any real property that would enable Mortgagor to maintain all Permits and satisfy such contractual requirements; or (3) acquiring a Qualified Leasehold Interest in real property that would enable the Mortgagor to maintain such Permits and satisfy such contractual requirements; or (B) neither the requirements of such Permits nor such contracts require the Mortgagor to own the Released Land or use or operate any land in the manner in which the Released Land is intended to be used; or (C) such requirements have been waived, and (z) that such conveyance will not materially interfere with the operation of the Casino-Hotel; (ii) the Mortgagor delivers to the Mortgagee an Opinion of Counsel to the effect that the Mortgagor is not required to own and use the Released Land in order to maintain in good standing all Permits or by the provisions of any material contract to which the Mortgagor is a party or by which it is bound to own and use the Released Land; (iii) the Mortgagor delivers to the Mortgagee, if applicable, an endorsement to the Original Policy in accordance with Section 2.05(d); (iv) the Mortgagor delivers to the Mortgagee an executed counterpart of the instruments of conveyance in recordable form, which shall contain a covenant prohibiting the use of the Released Land by any Affiliate of the Mortgagor (A) as a casino or (B) in a manner in competition with the operation of the Casino-Hotel as a casino prior to the latest Stated Maturity Date of the Note; and (v) in the case of a conveyance or release described in (A) or (B) above, if the Released Land is being conveyed to an Affiliate of the Mortgagor, the cash consideration received by the Mortgagor for the Released Land shall not be less than the product of the Release Price multiplied by the area (in square feet) of the Released Land. (b) The Mortgagee shall, from time to time, promptly execute any written instrument in form reasonably satisfactory to the prospective purchaser to confirm the release of the Released Fee Land, upon receipt by the Mortgagee of an Officers' Certificate stating that the Mortgagor is entitled to such release by virtue of the Mortgagor's compliance with this Section 2.05 and, if applicable, Section 2.05 of the Guaranty Mortgage, PROVIDED, that the Mortgagee shall have no liability thereunder and all costs and expenses (including reasonable attorneys' fees) shall be paid by the Mortgagor. 24 Section 2.06. RELEASED FEE LAND. (a) Notwithstanding anything to the contrary herein contained, in the event the Mortgagor intends to exercise an option to acquire fee title to Leased Land under the provisions of any Ground Lease, the Mortgagor shall have the right, unless an Event of Default shall have occurred and be continuing, to have an Affiliate exercise such options(s) or for the Mortgagor to exercise such options(s) on behalf of an Affiliate and in connection therewith to cause fee simple title to the Leased Land or any part thereof to be conveyed to an Affiliate of the Mortgagor (provided that no portion of the purchase price of the Leased Land or part thereof is paid by Mortgagor), free from the lien of this Mortgage (the land to be so conveyed is hereinafter referred to as the "Released Fee Land"), provided that the Mortgagor furnishes the Mortgagee with the following: (i) an Officers' Certificate requesting the release of the Released Fee Land from the Trust Estate and stating that (A) the Mortgagor is not required to own the Released Fee Land in order to maintain all Permits and in order to comply with the provisions of all material contracts to which the Mortgagor is a party or by which the Mortgagor is bound, (B) such Affiliate has received all Permits necessary to own the Released Fee Land (including without limitation all approvals required by the Casino Control Commission of the State of New Jersey), (C) there has been delivered to the Mortgagor and the Mortgagee a true copy of an instrument executed by such Affiliate stating that (i) such Affiliate may only engage in the activity of owning the Released Fee Land and (ii) such Affiliate shall not convey the Released Fee Land to another Affiliate of the Mortgagor, unless such other Affiliate executes and delivers to the Mortgagor and the Mortgagee, the instruments that would have been required to be delivered pursuant to clause (C) if the Mortgagor conveyed the Released Fee Land to such other Affiliate (provided that this restriction shall only be effective until such time as this Mortgage shall be satisfied of record) and (D) the deed conveying the Released Fee Land to such Affiliate shall state that such conveyance is made subject to the terms, provisions and conditions of the applicable Ground Lease and that the fee and leasehold interests in the Released Fee Land shall not merge by reason of the Mortgagor and/or any Affiliate owning both the leasehold and fee estate therein, and that such estates shall always remain separate and distinct; (ii) an Opinion of Counsel to the effect that (A) the Mortgagor is not required to own the Released Fee Land in order to maintain in good standing all Permits or by the provisions of any material contract to which the 25 Mortgagor is a party or by which it is bound to own the Released Fee Land and (B) the instruments described in clause (C) of subparagraph (i) were duly executed by and are binding upon such Affiliate; and (iii) an endorsement to the Original Policy, confirming that no merger of the fee and leasehold estates in the Released Fee Land has resulted from such conveyance. In addition, simultaneously with such acquisition, the Affiliate and Mortgagor shall enter into an instrument in form and substance reasonably satisfactory to Mortgagee, amending the applicable Ground Lease to provide such mortgagee protections as are customary and to the extent reasonably required by Mortgagee, including, without limitation, (A) a covenant of the landlord not to terminate the Ground Lease for any reason whatsoever (including without limitation, due to any default by tenant of its obligations under such Ground Lease), and (B) an agreement by the landlord not to accept payment of any fixed or base rent from the tenant (and, if tendered by the Mortgagor, and agreement to return same to the Mortgagor) or any other charges payable thereunder at any time that an Event of Default shall have occurred and shall be continuing. (b) The Mortgagee shall, from time to time, promptly execute any written instrument in form reasonably satisfactory to the prospective purchaser to confirm the release of the Released Fee Land, upon receipt by the Mortgagee of an Officers' Certificate stating that the Mortgagor is entitled to such release by virtue of the Mortgagor's compliance with this Section 2.06, PROVIDED that the Mortgagee shall have no liability thereunder and all costs and expenses (including reasonable attorneys' fees) shall be paid by the Mortgagor. 26 Section 2.07. AFTER-ACQUIRED FEE MORTGAGES. (a) Notwithstanding anything contained herein to the contrary (i) if no Event of Default has occurred and is continuing and (ii) if the Mortgagor shall acquire Released Fee Land, then simultaneously with the acquisition thereof, the Mortgagor shall have the right to encumber such fee simple title with a mortgage (such mortgage and any refinancing thereof permitted by the Indenture is hereinafter referred to as an "After-Acquired Fee Mortgage"). The lien of this Mortgage on the Released Fee Land shall be subordinated to the lien of the After-Acquired Fee Mortgage on the Released Fee Land (and to the lien of other Superior Mortgages which shall become a lien thereon in accordance with the terms thereof), provided the following conditions are satisfied: (i) the After-Acquired Fee Mortgage encumbers the fee simple title to such real property and no other property; (ii) the indebtedness secured by the After-Acquired Fee Mortgage (A) does not exceed 75% of the cost to the Mortgagor of such fee simple title at the time of the acquisition and (B) satisfies the criteria set forth in Section 12.08 of the Indenture; (iii) in the event the After-Acquired Fee Mortgage encumbers fee simple title to the Leased Land or any part thereof, such After-Acquired Fee Mortgage contains provisions binding on the holder of the After-Acquired Fee Mortgage and its successors and assigns confirming the provisions of Section 5.21(d) of this Mortgage; (iv) the Released Fee Land is not being acquired from an Affiliate of the Mortgagor; (v) the After-Acquired Fee Mortgage and other loan documents shall contain a provision binding upon the holder of such After-Acquired Fee Mortgage and other loan documents that all insurance proceeds in the event of a Casualty and awards for Takings of less than the entire Released Fee Land shall be used for purposes of Restoration; and (vi) the Mortgagor delivers to the Mortgagee an Officers' Certificate requesting such subordination and certifying that the requirements of (i) through (v) above have been satisfied. (b) Anything contained in this Section 2.07 or elsewhere in this Mortgage to the contrary notwithstanding, the subordination of this Mortgage to any After-Acquired Fee Mortgage constituting a lien on Released Fee Land shall not be 27 self-operative but shall be effective only upon the execution and delivery by the Mortgagee of an instrument in writing effecting such subordination. The Mortgagee shall deliver such instrument of subordination on the following conditions: (x) the Mortgagee shall have received an Officers' Certificate confirming that the conditions of (i) through (vi) of paragraph (a) have been satisfied, together with a true and correct copy of the After- Acquired Fee Mortgage and all other instruments securing the indebtedness evidenced thereby and (y) the instrument of subordination shall specifically state that this Mortgage is being subordinated not with respect to the lien of this Mortgage on the Ground Lease or on the leasehold estate created thereby, but only with respect to the fee simple title to the Leased Land or applicable part thereof and only if and to the extent that the After-Acquired Fee Mortgage being subordinated to is subject and subordinate to the Ground Lease and the leasehold estate created thereby. ARTICLE THREE REMEDIES Section 3.01. EVENTS OF DEFAULT. "Event of Default," whenever used herein, means any one of following events (including any applicable notice requirement and any period of grace as specified in this Section 3.01) (whatever the reason for such event 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): (a) default in the payment of any interest on the Note when such interest becomes due and payable and continuance of such default for a period of 10 days after there has been given a written notice to the Mortgagor specifying such default and stating that such notice is a "Notice of Default" hereunder; or (b) default in the payment of the principal of any Note at its Maturity; or (c) an "Event of Default" as defined in Section 3.01 of the Guaranty Mortgage shall occur; or (d) default in the payment of any other sum due under the Note or this Mortgage and the continuance of such default for a period of 10 days after there has been given to the Mortgagor a written notice specifying such default and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; or (e) default in the performance, or breach, of any covenant of the Mortgagor in this Mortgage (other than a 28 covenant a default in the performance or breach of which is elsewhere in this Section specifically dealt with), and continuance of such default or breach for a period of 30 days after there has been given to the Mortgagor 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 (i) the default or breach is of such a nature that is curable but not susceptible of being cured with due diligence within such 30-day period (for reasons other than the lack of funds), (ii) the Mortgagor delivers an Officers' Certificate to the Mortgagee within such 30-day period stating (A) the applicability of the provisions of Clause (i) to such default or breach, (B) the Mortgagor's intention to remedy such default or breach with reasonable diligence and (C) the steps which the Mortgagor has undertaken to remedy such default or breach and (iii) the Mortgagor delivers to the Mortgagee additional Officers' Certificates every 30 days thereafter updating the information contained in the certificate described in Clause (ii), in which case such 30 day period shall be extended for such further period of time as may reasonably be required to cure the same, provided that the Mortgagor is then proceeding and thereafter continues to proceed to cure the same with reasonable diligence; or (f) an "Event of Default" as defined in Section 7.01 of the Indenture, shall occur; or (g) default by the Mortgagor under any of the terms of any Ground Lease which shall not be fully cured or waived prior to the expiration of any grace period contained in such Ground Lease, unless prior to the expiration of such grace period, the Mortgagor gives the Mortgagee an Officers' Certificate, an Opinion of Counsel and a true copy of the Injunction referred to below, which Certificate and Opinion state that (i) a court of competent jurisdiction has issued an injunction (which is in force and effect and has not been modified or reversed on appeal) tolling or staying the expiration of the grace period set forth in such Ground Lease with respect to such default, (ii) such injunction specifically provides that in addition to the tolling or stay describe in (i) above, such tolling or stay also applies to the Mortgagee for purposes of determining the duration and expiration of the periods during which the Mortgagee may exercise its rights under such Ground Lease (including without limitation, periods to cure lessee defaults and delivering a guarantee and the period during which the Mortgagee may elect to enter into a new lease thereunder), (iii) such injunction further provides that the tolling or stay under (i) and (ii) shall be effective until such time that the Mortgagee is personally served 29 with notice of the expiration of such injunction and (iv) the Mortgagee is named as a party in any action or proceeding involving such injunction and therefore entitled to notice of any modification or termination thereof; and, if such injunction is issued, then so long as such injunction remains in force and effect and the preceding provisions of this Section 3.01(g) have been complied with, the grace period referred to in the third line of this subparagraph (g) shall be deemed to mean the grace period after giving effect to any such tolling or stay in (i) above; or (h) default by the Mortgagor under any of the terms of any Superior Mortgage which default results in the acceleration of the maturity of such Superior Mortgage and which shall not be fully cured or waived prior to the expiration of any grace period contained in such Superior Mortgage, unless prior to the expiration of such grace period, the Mortgagor gives the Mortgagee an Officers' Certificate and an Opinion of Counsel and a true copy of the injunction referred to below, which Certificate and Opinion shall state (i) that a court of competent jurisdiction has issued an injunction (which is in force and effect and has not been modified or reversed on appeal) tolling or staying the expiration of the grace period set forth in such Superior Mortgage with respect to such default and (ii) the Mortgagee is named a party in any action or proceeding relating to such injunction and therefore is entitled to notice of any modification or termination thereof; and if such injunction is issued, then so long as such injunction remains in force and effect, and the preceding provisions of this Section 3.01(h) have been complied with, the grace period referred to in the third line of this subparagraph (h) shall be deemed to mean the grace period after giving effect to any such tolling or stay; or (i) any modification, amendment or supplement of any Ground Lease without the prior written consent of the Mortgage; or (j) any modification, amendment or supplement of any Superior Mortgage without the prior written consent of the Mortgagee, except to the extent that such modification, amendment or supplement is permitted by Section 5.22(b)(i) hereof; or (k) default in the performance, or breach, of any of the provisions of Article Four and the continuance of such default or breach for a period of 60 days after there has been given a written notice to the Mortgagor specifying that such notice is a "Notice of Default" hereunder; or 30 (l) any representation or warranty of the Mortgagor set forth in this Mortgage or in any notice, certificate, demand or request delivered to the Mortgagee pursuant to this Mortgage shall prove to be incorrect as of the time when made and the facts constituting such incorrectness impairs the Mortgagee's security and such impairment continues for a period of 30 days after there has been given to the Mortgagor a written notice specifying that such notice is a "Notice of Default" hereunder, unless (i) such impairment is curable, but not susceptible of cure within such 30-day period (for reasons other than lack of funds), (ii) the Mortgagor gives an Officers' Certificate to the Mortgagee within such 30-day period stating (A) the applicability of the provisions of (i) to such impairment, (B) the Mortgagor's intention to remedy the same with reasonable diligence and (C) the steps which the Mortgagor has undertaken to remedy such default or breach and (iii) the Mortgagor delivers to the Mortgagee additional Officers' Certificates every 30 days thereafter updating the information contained in the certificate described in (ii), in which case such 30-day period shall be extended for such further period of time as may reasonably be required to cure the same, provided that the Mortgagor is then proceeding and thereafter continues to proceed to cure the same with reasonable diligence. Section 3.02. DEMAND UNDER NOTE. If an Event of Default occurs and is continuing, then the Mortgagee may declare the Outstanding Amount of the Note to be due and payable immediately, by a notice in writing to the Mortgagor and upon any such declaration such principal shall become immediately due and payable. Section 3.03. APPLICATION OF MONEYS RECEIVED BY MORTGAGEE. Any moneys received by the Mortgagee pursuant to the provisions of this Article Three (including moneys received by the Trustee after any action or act by the Mortgagee under Section 3.10) shall be applied by the Mortgagee in accordance with the provisions of Section 7.06 of the Indenture. Section 3.04. RESTORATION OF RIGHTS AND REMEDIES. If the Mortgagee has instituted any proceeding to enforce any right or remedy under this Mortgage and such proceeding has been discontinued or abandoned for any reason or has been determined adversely to the Mortgagee, then and in every such case the Mortgagor and the Mortgagee shall, subject to any determination in such proceeding, be restored to its former position hereunder, and thereafter all rights and remedies of the Mortgagee shall continue as though no such proceeding had been instituted. 31 Section 3.05. RIGHTS AND REMEDIES CUMULATIVE. No right or remedy herein conferred upon or reserved to the Mortgagee 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 3.06. DELAY OR OMISSION NOT WAIVER. No delay or omission of the Mortgagee to exercise any right or remedy accruing upon an 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 Three by law to the Mortgagee may be exercised, from time to time, and as often as may be deemed expedient, by the Mortgagee. Section 3.07. UNDERTAKING FOR COSTS. If any action or proceeding shall be commenced (including, without limitation, an action to foreclose this Mortgage or to collect the indebtedness secured hereby) to which action or proceeding the Mortgagee is made or becomes a party, or in which it becomes necessary in the opinion of the Mortgagee to defend or uphold the lien of this Mortgage, the Mortgagor shall pay to Mortgagee all expenses, including reasonable attorneys' fees and expenses, incurred by the Mortgagee in connection therewith, together with interest at the rate then payable on the Note, from the date of payment less the net amount received by the Mortgagee or the Trustee, as their interests may appear under any title insurance policy, and, until paid, all such expenses, together with interest as aforesaid, shall be a lien on the Trust Estate. Section 3.08. WAIVER OF APPRAISEMENT AND OTHER LAWS. To the full extent that it may lawfully so agree, the Mortgagor will not at any time insist upon, plead, claim or take the benefit or advantage of, any appraisement, valuation, stay, extension or redemption law now or hereafter in force, in order to prevent or hinder the enforcement of this Mortgage or the absolute sale of the Trust Estate, or any part hereof, or the possession thereof by any purchaser at any sale under this Article Three; and the Mortgagor, for itself and all who may claim under it, so far as it or they now or hereafter may lawfully do so, hereby waives the benefit of all such laws. The Mortgagor, for itself and all who may claim under it, waives, to the extent that it may lawfully do so, all right to have the property in the Trust Estate marshalled upon any foreclosure hereof, and agrees that any court having jurisdiction to foreclose this Mortgage may order the sale of the Trust Estate as an entirety. 32 If any law in this Section 3.08 referred to and now in force, of which the Mortgagor or its successor or successors might take advantage despite this Section 3.08, shall hereafter be repealed or cease to be in force, such law shall not thereafter be deemed to constitute any part of the contract herein contained or to preclude the application of this Section 3.08. Section 3.09. ENTRY. The Mortgagor agrees that upon the occurrence of an Event of Default the Mortgagor, upon demand of the Mortgagee during the continuance thereof, shall forthwith surrender to the Mortgagee the actual possession of, and it shall be lawful for the Mortgagee by such officers or agents as it may appoint to enter and take possession of, the Trust Estate (and the books and papers of the Mortgagor), and to hold, operate and manage the Trust Estate (including the making of all needful repairs, and such alterations, additions and improvements as the Mortgagee shall deem wise) and to receive the rents, issues, tolls, profits, revenues and other income thereof, and, after deducting the costs and expenses of entering, taking possession, holding, operating and managing the Trust Estate, as well as payments for taxes, insurance and other proper charges upon the Trust Estate and reasonable compensation to itself, its agents and counsel, to apply the same as provided in Section 3.03, PROVIDED, HOWEVER, that the Mortgagee's rights under this Section 3.09 shall be subject to the provisions of the New Jersey Casino Control Act and Section 3.14. Whenever all that is then due upon the Note and under any of the terms of this Mortgage shall have been paid and all defaults hereunder shall have been made good, the Mortgagee shall surrender possession to the Mortgagor. Section 3.10. POWER OF SALE; SUITS FOR ENFORCEMENT. In case an Event of Default shall occur and be continuing, the Mortgagee, with or without entry, in its discretion may: (a) sell, subject to any mandatory requirements of applicable law, the Trust Estate as an entirety, or in such parcels, as the Mortgagee may determine, to the highest bidder at public auction at such place and at such time (which sale may be adjourned by the Mortgagee from time to time in its discretion by announcement at the time and place fixed for such sale, without further notice) and upon such terms as the Mortgagee may fix and briefly specify in a notice of sale to be published as required by law; or (b) proceed to protect and enforce its rights under this Mortgage by sale pursuant to judicial proceedings or by a suit, action or proceeding in equity or at law or otherwise, whether for the specific performance of any covenant or agreement contained in this Mortgage or in aid of the execution of any power granted in this Mortgage or for the foreclosure of this 33 Mortgage or for the enforcement of any other legal, equitable or other remedy, as the Mortgagee, being advised by counsel, shall deem most effectual to protect and enforce any of the rights of the Mortgagee; the failure to join tenants shall not be asserted as a defense to any foreclosure or proceeding to enforce the rights of the Mortgagee. Section 3.11. INCIDENT OF SALE. Upon any sale of any of the Trust Estate, whether made under the power of sale hereby given or pursuant to judicial proceedings, to the extent permitted by law: (a) the principal of and accrued interest on the Note, if not previously due, shall at once become and be immediately due and payable; (b) subject to the provisions of Section 3.14 and the receipt of any required prior approvals of the New Jersey Casino Control Commission, the Mortgagee may bid for and purchase the property offered for sale, and upon compliance with the terms of sale may hold, retain and possess and dispose of such property, without further accountability, and may, in paying the purchase money therefor, delivery any notes or claims for interest thereon in lieu of cash to the amount which shall, upon distribution of the net proceeds of such sale, be payable thereon, and such notes or claims for interest thereon, in case the amounts so payable thereon shall be less than the amount due thereon, shall be returned to the holders thereof after being appropriately stamped to show partial payment; (c) the Mortgagee may make and deliver to the purchaser or purchasers a good and sufficient deed, bill of sale and instrument of assignment and transfer of the property sold; (d) the Mortgagee is hereby irrevocably appointed the true and lawful attorney of the Mortgagor, in its name and stead, to make all necessary deeds, bills of sale and instruments of assignment and transfer of the property thus sold; and for that purpose it may execute all necessary deeds, bills of sale and instruments of assignment and transfer, and may substitute one or more persons, firms or corporations with like power, the Mortgagor hereby ratifying and confirming all that its attorney or such substitute or substitutes shall lawfully do by virtue hereof; but if so requested by the Mortgagee or by any purchaser, the Mortgagor shall ratify and confirm any such sale or transfer by executing and delivering to the Mortgagee or to such purchaser or purchasers all proper deeds, bills of sale, instruments 34 of assignment and transfer and releases as may be designated in any such request; (e) all right, title, interest, claim and demand whatsoever, either at law or in equity or otherwise, of the Mortgagor of, in and to the property so sold shall be divested and such sale shall be a perpetual bar both at law and in equity against the Mortgagor, its successors and assigns, and against any and all persons claiming or who may claim the property sold or any part thereof from, through or under the Mortgagor, its successors and assigns; and (f) the receipt of the Mortgagee or of the officer making such sale shall be a sufficient discharge to the purchaser or purchasers at such sale for his or their purchase money and such purchaser or purchasers and his or their assigns or personal representatives shall not, after paying such purchase money and receiving such receipt, be obliged to see to the application of such purchase money, or be in anywise answerable for any loss, misapplication or non-application thereof. Section 3.12. RECEIVER. Upon the occurrence of an Event of Default and commencement of judicial proceedings by the Mortgagee to enforce any right under this Mortgage, the Mortgagee shall be entitled, as against the Mortgagor, without notice or demand and without regard to the adequacy of the security for the Note or the solvency of the Mortgagor, to the appointment of a receiver of the Trust Estate, and of the rents, issues, profits, revenues and other income thereof, PROVIDED, HOWEVER, that the Mortgagee's rights under this Section 3.12 shall be subject to the provisions of the New Jersey Casino Control Act and Section 3.14 hereof. Section 3.13. SUITS TO PROTECT THE TRUST ESTATE. Upon 5 days' prior written notice to the Mortgagor (or such shorter period or without notice if deemed necessary and appropriate by the Mortgagee), the Mortgagee shall have power to institute and maintain such proceedings as it may deem necessary and appropriate to prevent any impairment of the Trust Estate by any acts which may be unlawful or in violation of this Mortgage and to protect its interests in the Trust Estate and in the rents, issues, profits, revenues and other income arising therefrom, including power to institute and maintain proceedings to restrain the enforcement of or compliance with any 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 hereunder or be materially prejudicial to the interests of the Mortgagee. Section 3.14. MANAGEMENT OF CASINO-HOTEL. Notwithstanding any provision of this Article Three to the 35 contrary, following an Event of Default and the taking of possession of the Trust Estate or any part thereof by the Mortgagee and/or the appointment of receiver of the Trust Estate or any part thereof, the Mortgagee or any such receiver shall be authorized, in addition to the rights and powers of the Mortgagee and such receiver set forth elsewhere in this Mortgage, to retain one or more experienced operators of hotels and/or casinos to manage the Casino-Hotel, PROVIDED that any such operator shall have all necessary legal qualifications, including all Permits, to manage the Casino-Hotel. ARTICLE FOUR CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE Section 4.01. CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER ONLY ON CERTAIN TERMS. The Mortgagor shall comply with all provisions applicable to the Mortgagor in Article Ten of the Indenture. Section 4.02. SUCCESSOR ENTITY SUBSTITUTED. Upon any consolidation or combination or any conveyance or transfer of the Trust Estate or any portion thereof in accordance with Section 10.01 of the Indenture, the successor entity formed by such consolidation or into which the Mortgagor is combined or to which such conveyance or transfer is made shall succeed to, and be substituted for, and may exercise every right and power of, the Mortgagor under this Mortgage with the same effect as if such successor entity had been named as the Mortgagor herein; PROVIDED, HOWEVER, that no such conveyance or transfer of the Trust Estate substantially as an entirety, unless such conveyance or transfer is in compliance with the provisions of Article Ten of the Indenture, shall have the effect of releasing the Person named as "the Mortgagor" in the first paragraph of this instrument or any successor entity which shall theretofore have become such in the manner prescribed in such Article Ten from its liability as obligor or maker of the Note. Section 4.03. LIMITATION ON SALES OF TRUST ESTATE. Except as otherwise expressly permitted by this Mortgage or the Indenture, the Mortgagor shall not sell, assign, lease, sublease, hypothecate, pledge, mortgage or otherwise transfer all or any part of the Trust Estate or any interest therein (including without limitation any interest in the Ground Leases). Without limiting the generality of the foregoing, the Mortgagor shall not separate, or attempt to separate, its ownership of its interest in the Ground Leases from its ownership of the buildings constituting the Casino-Hotel or any part thereof. 36 ARTICLE FIVE COVENANTS AND REPRESENTATIONS OF MORTGAGOR Section 5.01. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST. The Mortgagor will duly and punctually pay the principal of (and premium, if any) and interest on the Note in accordance with the terms of the Note and this Mortgage. Section 5.02. FF&E FINANCING AGREEMENTS. The Mortgagor covenants and agrees to comply with all of the terms and conditions set forth in any FF&E Financing Agreements before the expiration of any applicable notice and cure periods contained in the FF&E Financing Agreements. Section 5.03. LIMITATIONS ON LIENS. (a) The Mortgagor will not create, incur, suffer or permit to be created or incurred or to exist any mortgage, lien, charge or encumbrance on or pledge of any of the Trust Estate, other than (i) Permitted Encumbrances, (ii) liens on the Trust Estate in connection with indebtedness permitted by clauses (i), (ii), (iii), (iv) or (v) of Section 12.08(a) of the Indenture, and (iii) a building contract or a notice of intention filed by a mechanic, materialman or laborer under the New Jersey lien law. Without limiting the generality of the foregoing sentence but notwithstanding the provisions of the foregoing sentence, the Mortgagor shall not be deemed to have breached the provisions of the foregoing sentence by virtue of the existence of a lien for Impositions or mechanics liens so long as the Mortgagor is in good faith contesting the validity of the same in accordance with the provisions of Section 5.09 to the extent that the matters described in (i) and (ii) do not constitute a default under any Ground Lease or Superior Mortgage. (b) Mortgagee acknowledges that, contemporaneously with the execution and delivery of this Mortgage, it has assigned this Mortgage to the Trustee and that the Trustee is also the mortgagee under the Guaranty Mortgage, which Guaranty Mortgage creates a lien upon the same Trust Estate pari passu with the lien of this Mortgage. Mortgagee further acknowledges and agrees that whenever it is provided in the Guaranty Mortgage that the Mortgagor shall deliver any notice or document, or is require to make any payment thereunder, the delivery of such notice or document or the making of such payment pursuant to the terms of the Guaranty Mortgage shall also constitute the delivery of such notice or document or the making of such payment in satisfaction of the terms, conditions and provisions of this Mortgage to the same extent as the same constitutes satisfaction of the terms, conditions and provisions of the Guaranty Mortgage. Section 5.04. [Reserved] 37 Section 5.05. ACTIONS AND PROCEEDINGS. The Mortgagor hereby acknowledges the right of the Mortgagee, in the name of and on behalf of the Mortgagor, (a) to appear in and defend any action or proceeding brought with respect to the Trust Estate or any part thereof and (b) upon 5 days' prior written notice to the Mortgagor (or such shorter period or without notice if deemed necessary and appropriate by the Mortgage), to commence any action or proceeding to protect the interest of the Mortgagee in the Trust Estate. Section 5.06. WARRANTY OF LEASEHOLD ESTATE AND TITLE. The Mortgagor represents and warrants that as of the date hereof: (a) it is duly authorized under the laws of the State of New Jersey and all other applicable laws to execute and deliver this Mortgage, and all corporate action on its part necessary for the valid execution and delivery of this Mortgage has been duly and effectively taken; (b) it is the lawful owner and is lawfully seized and possessed of the Owned Land and all buildings and improvements thereon, free and clear of all liens, charges or encumbrances, other than the lien of the Mortgage Documents, any Working Capital Facility Lien and Existing Encumbrances; (c) it is the holder of and has good and marketable title to the leasehold interests and leasehold estates under the Ground Leases and to the Ground Leases, subject to no lien, encumbrance or charge other than the lien of the Mortgage Documents, any Working Capital Facility Lien and Existing Encumbrances; (d)(i) the Ground Leases are valid and subsisting demises of the Leased Land for the terms therein set forth, (ii) there are no defaults thereunder by any Lessor or the lessee as to which written notice has been given to or by the lessee, (iii) the Mortgagor has delivered true and correct copies of the Ground Leases and all modifications, amendments and supplements thereto, and (iv) each of the Ground Leases is in full force and effect and has not been modified, amended or supplemented, except as described on Schedule 2; (e) it has good title to the Operating Assets, subject to no lien, encumbrance or charge, other than the lien of the Mortgage Documents, any Working Capital Facility Lien and Existing Encumbrances; and (f) the Mortgagor has good and lawful right and authority to execute this Mortgage and to grant, bargain, sell, alien, convey, assign, transfer, hypothecate, 38 pledge, mortgage and confirm the Trust Estate as provided herein (including without limitation with respect to the Operating Assets and the Ground Leases, without the consent of any third party, other than governmental authorities but any applicable or necessary consent or approval of any such governmental authority has been given or waived at or prior to the execution and delivery of this Mortgage), and this Mortgage constitutes a valid third mortgage lien and third priority security interest in the Trust Estate PARI PASSU with the lien of the Guaranty Mortgage, subject only to Working Capital Facility Liens and Existing Encumbrances. The Mortgagor hereby does and will forever warrant and defend (x) the title to Trust Estate (including without limitation, its leasehold estates under the lessee's interests in the Ground Leases) (subject to Permitted Encumbrances) and (y) the priority of the lien of this Mortgage (subject to Permitted Encumbrances other than Restricted Encumbrances), against the claims and demands of all persons whomsoever, at the Mortgagor's sole cost and expense. Section 5.07. FURTHER ASSURANCES; RECORDING. The Mortgagor will, as provided in Section 5.13, from time to time subject its right, title and interest under all Leases to the lien of this Mortgage. The Mortgagor will cause this instrument and all other instruments of further assurance, including all financing statements and continuation statements covering security interests in personal property, to be promptly recorded, registered and filed, and at all times to be kept recorded, registered and filed, and will execute and file such financing statements and cause to be issued and filed such continuation statements, all in such manner and in such places as may be required by law or as requested by the Mortgagee to fully preserve and protect the rights of the Mortgagee as a secured party under the Uniform Commercial Code to all property comprising the Trust Estate (to the extent a grant of a security interest therein is governed by the Uniform Commercial Code) and to perfect, preserve and protect the lien of this Mortgage as a valid mortgage lien of record and a valid security interest on the Trust Estate subject to Permitted Encumbrances (other than Restricted Encumbrances). The Mortgagor will pay all filing or recording fees, and all expenses incident to the execution and delivery of this Mortgage, and any instrument of further assurance, and all federal, state, county and municipal stamp taxes and other taxes, duties, imposts, assessments and charges arising out of or in connection with the execution and delivery of the Note, this Mortgage, any financing statement or continuation statement with respect to the personal property constituting 39 part of the Trust Estate or any instrument of further assurance. Section 5.08. PAYMENT OF TAXES AND CERTAIN CLAIMS; MAINTENANCE OF PROPERTIES; COMPLIANCE WITH LEGAL REQUIREMENTS AND INSURANCE REQUIREMENTS. The Mortgagor will: (a)subject to the provisions of Section 5.09 relating to contests, pay or cause to be paid promptly (or when installments of the same shall become due and payable, if, by law or by agreement or arrangement with the applicable governmental agency or authority, the same may be paid in installments) before any fine, penalty, interest or cost may be added for nonpayment (but no later than when the same are payable by the Mortgagor pursuant to any Superior Instrument Requirement), all taxes (including, without limitation, real estate taxes, personal or other property taxes and all sales, value added, use and similar taxes), assessments (including, without limitation, all assessments for public improvements or benefits, whether or not commenced or completed prior to the date hereof and whether or not to be completed prior to the satisfaction of this Mortgage), water, sewer or other rents, rates and charges, excises, levies, license fees, permit fees, inspection fees and other authorization fees and other charges, in each case whether general or special, ordinary or extraordinary, or foreseen or unforeseen, of every character (including all interest, additions to tax and penalties thereon), that may be assessed, levied, confirmed or imposed on or in respect of or be a lien upon (1) the Trust Estate (including without limitation the Leased Land) or any part thereof or any rent therefrom or any estate, right or interest therein, or (2) any acquisition, occupancy, use, leasing, or possession of or activity conducted on the real property or any part thereof included in the Trust Estate or any gross receipts thereof or of the rent therefrom (all of the foregoing being referred to collectively as "Impositions"). Notwithstanding the foregoing or any other provision of this Mortgage, the Mortgagor shall not be required to pay any income, profits or revenue tax upon the income of the Mortgagee, the Trustee or any Noteholder nor any franchise, excise, corporate, estate, inheritance, succession, capital levy or transfer tax of the Mortgagee, the Trustee or the Noteholder nor any interest, additions to tax or penalties in respect thereof, unless such tax is imposed, levied or assessed in substitution for any Impositions that the Mortgagor is required to pay pursuant to this Section 5.08. The Mortgagor will deliver to the Mortgagee official receipts or other proof evidencing payments of any Impositions in accordance with the requirements of this Section 5.08. The Mortgagor shall 40 not be entitled to any credit for taxes or assessments paid against the Note; (b) except for such property which the Mortgagor may dispose of or replace pursuant to Section 2.02, maintain and keep all its properties used or useful in the conduct of its business (other than obsolete equipment), including, without limitation, the Casino-Hotel and all Tangible Personal Property, in such good repair, working order and condition, except for reasonable wear and use, and make or cause to be made all such needful and proper repairs, renewals and replacements thereto consistent with the standards of other casino-hotels in Atlantic City, New Jersey; (c) occupy and continuously operate the Casino-Hotel and keep the Casino-Hotel supplied with Tangible Personal Property, all in a manner consistent with the standards of other casino-hotels in Atlantic City, New Jersey (provided that nothing contained in this Section 5.08(c) shall be deemed to reduce the time period set forth in Section 3.01(f)); (d) subject to the provisions of Section 5.09 relating to contests, the Mortgagor at its sole expense will timely (1) comply with all Legal Requirements and Insurance Requirements, whether or not compliance therewith shall require structural changes in the buildings and improvements included in the Trust Estate or interfere with the use and enjoyment of the Trust Estate or any part thereof, (2) procure, maintain and comply with all permits and other authorizations required for (i) the use of the Casino as a gaming and gambling facility, (ii) the on-premises consumption of alcoholic beverages at the Casino-Hotel and (iii) any other use of the Trust Estate or any part thereof then being made, and for the proper erection, installation, operation and maintenance of the improvements or any part thereof, and (3) comply with any instruments of record at the time in force affecting the Trust Estate or any part thereof, if the failure to comply with the same would impair the Mortgagee's security hereunder. Without limiting the generality of the foregoing, the Mortgagor represents and warrants that at the time of the execution of this Mortgage, the Mortgagor is in compliance with the requirements of clauses (1), (2) and (3); (e) in the event of the passage after the date of this Mortgage of any law of the State of New Jersey, or any other governmental entity, changing in any way the laws now in force for the taxation of mortgages, or debts secured thereby, for state or local purposes, or the manner of the operation of any such taxes, so as to affect the interest of the Mortgagee, then and in such 41 event, the Mortgagor shall bear and pay the full amount of such taxes, provided that if for any reason payment by the Mortgagor of any such new or additional taxes would be unlawful or if the payment thereof would constitute usury or render the indebtedness secured hereby wholly or partially usurious under any of the terms or provisions of the Note, or this Mortgage, or otherwise, the Mortgagee may, at the Mortgagee's option, declare the whole sum secured by this Mortgage, with interest thereon, to be due and payable 90 days after notice of election thereof has been given by the Mortgagee, or the Mortgagee may, at the Mortgagee's option, pay that amount or portion of such taxes as renders the loan or indebtedness secured hereby unlawful or usurious, in which event the Mortgagor shall concurrently therewith pay the remaining lawful and nonusurious portion or balance of such taxes. Section 5.09. PERMITTED CONTESTS. The Mortgagor may, at its sole expense, contest by appropriate legal proceedings conducted in good faith and with due diligence, the amount or validity or application, in whole or in part of any Imposition or lien therefor or any Legal Requirement or Insurance Requirement or the application of any instrument of record affecting the Trust Estate or any part thereof or any claims of mechanics, materialmen, suppliers, or vendors or lien therefore, and may withhold payment of the same pending such proceedings if permitted by law, or make payment under protest, or defer compliance with any such Legal Requirement, any such Insurance Requirement or the terms of any such instrument, and the same shall not be a Default hereunder, provided that (a) in the case of any Impositions or lien therefor or any claims of mechanics, materialmen, suppliers or vendors or lien therefor, such proceedings shall suspend the collection thereof from each of the Mortgagor, the Mortgagee, the Trustee, the Noteholder and the Trust Estate, (b) neither the Trust Estate nor any interest therein would be in any danger of being sold, forfeited, or lost, (c) such action would not result in or constitute a default under any Ground Lease or Superior Mortgage, (d) in the case of a Legal Requirement, neither the Noteholder nor the Mortgagee shall be in any danger of any civil or any criminal liability, and the failure of the Mortgagor to comply with such Legal Requirement shall not affect the continuance in good standing of any Permit or result in the suspension, termination, non-renewal or material adverse modification of any permit, and (e) in the case of an Insurance Requirement, the failure of the Mortgagor to comply therewith shall not affect the validity of any insurance required to be maintained by the Mortgagor hereunder. Section 5.10. MECHANICS' AND OTHER LIENS. Without limiting the generality of the first sentence of Section 5.03 and notwithstanding the provisions of Section 5.03(a)(ii), the 42 Mortgagor will cause to be removed, either by payment, or bonding or otherwise, all claims and demands of mechanics, materialmen, laborers, and others which, if unpaid, might result in, or permit the creation of, a lien on the Premises and/or Trust Estate or any part thereof, or on the revenues, rents, issues, income and profits arising therefrom and in general will do or cause to be done everything necessary so that the lien hereof shall be fully preserved, at the cost of the Mortgagor, without expense to the Mortgagee. Section 5.11. INSURANCE. (a) The Mortgagor will, at its expense, maintain with Insurers: (1) insurance with respect to the Mortgagor's insurable properties constituting a part of the Trust Estate against loss or damage by fire, lightning, and other risks from time to time included under "all-risk" policies and against loss or damage by sprinkler leakage, water damage, collapse, malicious mischief and explosion in respect of any steam and pressure boiler and similar apparatus located on such insurable properties, in amounts at all times sufficient to prevent the Mortgagor from becoming a coinsurer within the terms of the applicable policies, but in any event such insurance shall be maintained in such insurable amounts not less than the greatest of the following (hereinafter referred to as the "Insurance Amount"): (i) 100% of the then full insurable value of such insurable properties, the term "full insurable value" to mean the actual replacement cost (excluding the costs of foundation, footing, excavation, paving, landscaping and other similar, non-insurable improvements) determined from time to time (but not less frequently than once in any 36 calendar months), by an Architect, contractor, appraiser, or an Insurer, (ii) the amount required to be maintained pursuant to the Superior Instrument Requirements; (2) war risk insurance as and when such insurance is obtainable from the United States of America or any agency thereof as promptly as reasonably practicable after the same becomes so obtainable, in an amount not less than the Insurance Amount, or in such lesser amount as may then be so obtainable; (3) public liability, including personal injury and property damage and comprehensive general liability connected with the possession, use, leasing, operation or condition of such insurable properties in such amounts as, in the Mortgagor's judgment, are prudent, considering the cost of such insurance, for personal injury and 43 property damage with respect to any one occurrence, which may be under an umbrella policy. Anything contained in this clause (3) to the contrary notwithstanding, the Superior Instrument Requirements with respect to the kinds and amount of insurance described in this clause (3) shall be satisfied by the Mortgagor; (4) appropriate workers' compensation insurance with respect to any work (to the extent the risks to be covered thereby are not already covered by other policies of insurance maintained by the Mortgagor) on or about such insurable properties; (5) business interruption insurance covering not less than 12 months of loss, provided that, at any time that the Mortgagor is renewing any policy for such insurance or taking out any new or replacement such policy covering a period of less than 12 months, the Mortgagor shall deliver to the Mortgagee an Officers' Certificate certifying that the period of coverage to be maintained by the Mortgagor under such policy is the maximum that can be maintained at rates determined by the Mortgagor to be reasonable for such coverage; (6) to the extent available, flood insurance in an amount not less than the Insurance Amount, or such lesser amount as may then be so obtainable; and (7) such other insurance with respect to such insurable properties against loss or damage of the kinds (i) from time to time customarily insured against by persons owning or using casino-hotels of comparable size in the boardwalk area of Atlantic City, New Jersey and (ii) required to be maintained pursuant to the Superior Instrument Requirements. Notwithstanding the foregoing, to the extent permitted by Superior Instrument Requirements, (i) the Mortgagor shall be permitted to maintain a deductible with respect to the insurance policies described in clauses (1), (2), (6) and (7) in an amount not to exceed (x) for the twelve month period commencing the date hereof, $100,000 with respect to the insurance policies described in clause (1), (2), (6) and (7) thereafter, the customary deductible (if any) with respect to the insurance maintained by casino-hotels of a similar size and value in Atlantic City, New Jersey (but in no event more than $1,000,000), (ii) the Mortgagor shall be permitted to maintain a $200,000 self insured retention under the general liability policy described in clause (3) and a deductible with respect to the other insurance policies described in clause (3) in an amount not to exceed the amount of deductible as is customarily maintained by casino-hotels of similar size in Atlantic City, New Jersey, (iii) the Mortgagor shall not reduce its insurance coverage for the matters described in clause (3) (which for purposes of 44 this paragraph means a reduction in single limits or an increase in deductible) unless and until the Mortgagor delivers to the Mortgagee an Officers' Certificate certifying (w) that the coverage the Mortgagor was theretofore maintaining cannot be maintained at rates determined by the Mortgagor to be reasonable for such coverage, (x) the amount of the proposed reduction, (y) the premium for the existing and the proposed reduced coverage, and (z) that the proposed deductible satisfied the criteria set forth in this clause (iii), and (iv) the Mortgagor shall be permitted to maintain a deductible with respect to the insurance policies described in clause (5) in the forms of and in an amount not to exceed the amount of deductible as is customarily maintained by casino-hotels of similar size in Atlantic City, New Jersey. (b) Each policy of insurance maintained by the Mortgagor pursuant to Subsection (a) of this Section 5.11 shall, (1) except in the case of workers' compensation insurance, name as additional insureds the Mortgagee and, to the extent required by the Superior Instrument Requirements, the Lessors and the holders of the Superior Mortgages, (2) provide that all insurance proceeds for losses, except in the case of public liability insurance and workers' compensation insurance or as otherwise provided in Subsections (d), (e) and (f) of this Section 5.11, be payable solely to the Mortgagee or such other party as is required to receive such proceeds under a Superior Mortgage, (3) except in the case of workers' compensation, include effective waivers (whether under the terms of any such policy or otherwise) by the insurer of all claims for insurance premiums against all lost payees and named insureds (other than the Mortgagor) and all rights of subrogation against any named insured, (4) except in the case of public liability and workers' compensation insurance, provide that any losses shall be payable notwithstanding (i) any act, failure to act, negligence of, or violation or breach of warranties, declarations or conditions contained in such policy by the Mortgagor or the Mortgagee or any other named insured or loss payee (including, without limitation, with respect to the Released Fee Land, the holders of any After-Acquired Fee Mortgages), (ii) the occupation or use of the insurable properties for purposes more hazardous than permitted by the terms of the policy, (iii) any foreclosure or other proceeding or notice of sale relating to the insurable properties or (iv) any change in the title to or ownership or possession of the insurable properties, (5) contain a non-contributory mortgagee clause in favor of the Mortgagee, and (6) provide that if all or any part of such policy is cancelled, terminated or expires, the insurer will forthwith give notice thereof to each named insured an loss payee and that no cancellation, reduction in amount or material change in coverage thereof shall be effective until at least 30 days after receipt by each named insured and loss payee of written notice thereof. 45 (c) The Mortgagor will deliver to the Mortgagee, (1) duplicate originals of all insurance policies that the Mortgagor is required to maintain pursuant to this Section 5.11 and (2) within 30 days after each reduction in insurance required to be maintained by the Mortgagor hereunder, an Officers' Certificate setting forth the particulars as to all such insurance policies and certifying that the same comply with the requirements of this Section 5.11, that all premiums or installments thereof then due thereon have been paid and that the same are in full force and effect. The Mortgagee shall not be responsible for effecting or renewing any insurance or for the responsibility or solvency of the insurers. (d) The Mortgagor shall give written notice to the Mortgagee immediately upon obtaining knowledge of any Casualty which (x) results in damage, loss or destruction in an amount in excess of $5,000,000 to any buildings or improvements on the Premises and/or any Tangible Personal Property or (y) pursuant to any Superior Instrument Requirement, would require the deposit of insurance proceeds with the Depositary, or action or proceeding with respect thereto. Whenever the Superior Instrument Requirements require or permit the selection of the Depositary by the Mortgagor, the Mortgagor shall select the Insurance Trustee as the Depositary. Within 30 days after any Casualty which results in any damage, loss or destruction in an amount in excess of $10,000,000 to any buildings or improvements of the Premises and/or any Tangible Personal Property, the Mortgagor shall deliver to the Mortgagee a certificate of an Architect stating whether, in such Architect's opinion, applicable Legal Requirements permit the Restoration of such buildings and improvements for the same uses and to the same size and quality in all material respects, as existed immediately prior to the Casualty (and if such certificate states the Legal Requirements do not permit such Restoration, such certificate shall describe the manner closest approximating such criteria to which the buildings and improvements could be so restored and shall be accompanied by a Certificate of Appraised Value dated not more than 10 days prior to delivery setting forth the Appraised Value immediately prior to the Casualty and the estimated Appraised Value immediately after the Restoration). If the Mortgagor is required to deliver such Certificates of Appraised Value and if based on such Certificates of Appraised Value immediately after Restoration, the aggregate Outstanding Amount of First Mortgage Debt immediately after such Restoration shall exceed the greater of (i) 66 2/3% of the Appraised Value immediately after such Restoration or (ii) the quotient of the Outstanding Amount of First Mortgage Debt immediately prior to such Casualty divided by the Appraised Value immediately prior to the Casualty multiplied by the Appraised Value immediately after such Restoration, then the proceeds of any insurance shall, at the election of Mortgagee, either be applied to Restoration as set forth in Subsections (e), (h) and (i) 46 below) or paid and delivered to the Mortgagee to the extent of the then Outstanding Amount of the Notes and any other interest or other sums due hereunder or thereunder to be applied to the satisfaction of the Mortgage to the extent proceeds are available for such purpose and provided that no additional sums are due to the Trustee or the Noteholders under the Notes or the Indenture, the balance of any net insurance proceeds shall be paid to the Mortgagor. Notwithstanding the foregoing sentence, if such Certificates of Appraised Values indicates that the Outstanding Amount of First Mortgage Debt immediately after such Restoration exceeds the greater of the two amounts determined pursuant to subclauses (i) and (ii) above, the proceeds of insurance will be made available for Restoration (subject to paragraphs, (e), (h) and (i) below) if the Mortgagor obtains an irrevocable commitment from a nationally recognized financial institution having a combined capital and surplus of at least $100,000,000, to supply, upon an acceleration under this Mortgage as a result of an Event of Default, funds to the Mortgagor as additions to capital in an amount equal to the Outstanding Amount of First Mortgage Debt in excess of the Appraised Value necessary to be paid down so that the Outstanding Amount of First Mortgage Debt will not exceed either of the two amounts determined pursuant to such clauses (i) and (ii), PROVIDED that such commitment may only be released if, upon an Appraisal at any time following completion of such Restoration, the aggregate Outstanding Amount of the First Mortgage Debt does not exceed 66-2/3% of the Appraised Value. (e) Subject to the provisions of Subsection (d) above, in case a Casualty occurs, the following shall apply: (1) if the cost of Restoration (as hereinafter defined) does not exceed the sum of $10,000,000, the net insurance proceeds shall be paid by the Mortgagee to the Mortgagor (unless the Superior Instrument Requirements provide that the same shall be paid to the Depositary); (2) if the cost of Restoration is $10,000,000 or more or if the Superior Instrument Requirements provide that the same shall be paid to the Depositary, the net insurance proceeds shall be paid by the Mortgagee to the Insurance Trustee (or other Depositary required by the Superior Instrument Requirements, provided that such Depositary holds such proceeds in trust for purposes of paying the costs of Restoration); (3) the Mortgagor shall commence with reasonable promptness under the circumstances and thereafter with due diligence proceed to perform and complete in a good and workmanlike manner the restoration, repair, replacement or rebuilding of the damage or destruction 47 resulting from the Casualty (all of which restoration, repair, replacement or rebuilding are referred to as the "Restoration") in accordance with the plans and specifications submitted to the Insurance Trustee, in conformance with all Legal Requirements and Superior Instrument Requirements, and in accordance with the further provisions of this Subsection (e), regardless of the extent of any such Casualty and whether or not net insurance proceeds, if any, shall be available or, if available, shall be sufficient, for the purpose of the Restoration (provided, however, that if the Mortgagor does not receive any net insurance proceeds within 30 days after any Casualty because the adjustment of the loss has not yet occurred, then the obligation of the Mortgagor to commence such Restoration shall be deferred until such proceeds are made available to the Mortgagor, provided that (i) Mortgagor delivers to the Mortgagee an Officers' Certificate certifying that the Mortgagor is diligently and continuously adjusting such loss with the Insurer, (ii) the Mortgagor delivers to the Mortgagee an Officers' Certificate within such 30-day period requesting the extension of such period, estimating the date on which such proceeds will be available and describing the Mortgagor's efforts to adjust such loss and certifying that such extension does not constitute a default or a breach of any of the provisions of any of the Ground Leases (or if so, such default or breach has been waived) and (iii) the Mortgagor delivers to the Mortgagee additional Officers' Certificates every 30 days thereafter updating the information contained in the certificate described in Clause (ii)). All Restoration work shall be performed in accordance with the applicable provisions of Section 5.12 and in conformance with all Superior Instrument Requirements, Legal Requirements and Insurance Requirements and, prior to commencing any Restoration, the Mortgagor shall obtain all Permits necessary in connection therewith, and shall obtain, and keep in full force and effect until the completion of such Restoration, such additional insurance as the Insurance Trustee and Superior Instrument Requirements may require. The plans and specifications for the Restoration shall be accompanied by a certificate of the Mortgagor and an Opinion of Counsel to the effect that upon the completion of the Restoration pursuant to the plans and specifications the Premises, and all buildings and improvements, thereon will comply with all superior Instrument Requirements, Legal Requirements and Insurance Requirements. Notwithstanding anything in this Section 5.11 to the contrary, if such Casualty is in an amount less than $5,000,000, the Mortgagor shall not be required to perform and complete such Restoration (unless the performance and completion of the Restoration is necessary in order for the Mortgagor to be in compliance with any term, provision or condition of this Mortgage 48 (other than this Section 5.11(e)) or any Superior Instrument Requirements; (4) Any insurance proceeds which the Mortgagor receives, shall be held by the Mortgagor in trust for the purpose of paying the cost of the Restoration, except as otherwise provided herein; (5) Any net insurance proceeds that the Insurance Trustee holds pursuant to this Subsection (e), shall be deposited in an interest-bearing investment reasonably designate by Mortgagor (to the extent the Mortgagor is permitted to designate such investment under the Superior Instrument Requirements) (and the interest thereon shall be added to such proceeds) and shall be paid by the Insurance Trustee in reimburse the Mortgagor for, or to make payment for, the Restoration, after the Insurance Trustee deducts therefrom the amount of any reasonable costs and expenses incurred in connection with the performance of its obligations under this Section 5.11. The Insurance Trustee shall make such payments not more frequently than once every 30 days upon the written request of the Mortgagor (unless more frequent payments are required by Superior Instrument Requirements), by paying to the Mortgagor or the persons named in the certificate described in Clause (6) of this Subsection (e) the respective amounts stated in such certificate from time to time as the Restoration progresses, provided the Mortgagor has complied with the requirements of this Subsection (e) and such payment is permitted by an applicable Superior Instrument Requirements. The Mortgagor's written request shall be accompanied by (i) the certificate described in Clause (6) of this Subsection (e) and (ii) a title company or official search, or other evidence reasonably acceptable to the Insurance Trustee, showing that there have not been filed with respect to the Premises, any vendor's, contractor's mechanic's, laborer's or materialman's statutory or similar lien which has not been discharged of record (or bonded against or secured by other security) or any other encumbrance irrespective of its priority (other than Permitted Encumbrances). (6) The certificate required by Clause (5) of this Subsection (e) shall (A) be an Officers' Certificate, countersigned by the Architect in charge of the Restoration with respect to the matters described in (i) and (v) below, (B) be dated not more than 10 days prior to such request and (C) set forth (in addition to any other requirements contained in any applicable Superior Instrument Requirements) that: (i) all of the Restoration work theretofore performed is in substantial compliance with the 49 plans and specifications theretofore submitted to the Insurance Trustee and in compliance with all Superior Instrument Requirements, Legal Requirements and Insurance Requirements; (ii) the sum then requested either has been paid by the Mortgagor or is justly due to contractors, subcontractors, materialmen, engineers, architects or other persons who have rendered services or furnished or contracted to deliver materials for the Restoration therein specified, and the names and addresses of such persons, a brief description of such services and materials and the several amounts so paid or due to each of such persons in respect thereof; (iii) no part of the amount requested has been or is the basis in any pervious or then pending request for the withdrawal of net insurance proceeds, and that the sum then requested does not exceed the value of the services and materials described in the certificate; (iv) except for the amount, if any, stated pursuant to Subclause (ii) of this Clause (6) in such certificate to be due for services or materials, and except for amounts in dispute and/or customary retainages, there is no outstanding indebtedness known to the person signing such certificate, after due inquiry, which is then due for labor, wages, materials, supplies or services in connection with such Restoration; and (v) the remaining cost, as estimated by the persons signing such certificate, of the Restoration in order to complete the same does not exceed the net insurance proceeds remaining in the hands of Insurance Trustee after payment of the sum requested in such certificate or if such estimated cost does exceed such insurance proceeds such certificate shall state the amount of any such deficiency. If the certificate states that such deficiency will exist, the Mortgagor shall deliver the amount of such deficiency in cash or cash equivalent to the Insurance Trustee simultaneously with the delivery of such certificate, which amount shall be deemed insurance proceeds for purposes of this Section 5.11(e); and (7) If net insurance proceeds shall be insufficient to pay the entire cost of the Restoration, then, after completion of the Restoration, the Mortgagor shall pay the deficiency. If all or any part of the net insurance proceeds are not used for the restoration in accordance 50 with this Subsection (e) (because such proceeds exceed the amount required to complete the Restoration), then upon completion of the Restoration in accordance with this Subsection (e), such amount not so used, if held by the Insurance Trustee, shall be paid to the Mortgagor (if permitted by Superior Instrument Requirements). (f) Provided that no Event of Default has occurred and is continuing, all net business interruption insurance proceeds shall be paid to the Mortgagor, to be segregated from the other funds of Mortgagor and held in trust by Mortgagor for the following purposes and in the following order of priority: (i) for the payment of Impositions and amounts due under the Ground Leases and Superior Mortgages; (ii) for debt service for the estimated period of Restoration (for purposes of this Section 5.11(f), interest and principal payments due on any payment date under the Note will deemed to accrue in equal daily installments beginning the day after the immediately preceding payment date and ending on such payment date); and (iii) for any expense incurred in connection with the operation or business of the Casino-Hotel. (g) The Mortgagor shall not take out separate insurance, concurrent in form or contributing in the event of loss with that required to be maintained pursuant to this Section 5.11, unless the same are permitted by Superior Instrument Requirements and the Mortgagee is included therein as a named insured, with loss payable to the Mortgagee and the Insurance Trustee pursuant to Section 5.11(b) hereof. The Mortgagor shall immediately notify the Mortgagee whenever any such separate insurance is taken out and shall promptly deliver to the Mortgagee a duplicate original of the policy of such insurance, a copy thereof certified by the insurer or a certificate thereof. (h) Subject to final adjustment by the insurer, insurance claims by reason of damage or destruction to any portion of the Trust Estate may be adjusted by the Mortgagor, but the Mortgagee shall have the right (but not the obligation) to join the Mortgagor in adjusting, and approving the adjustment of, any such loss except in the event of a loss where the amount of insurance reasonably anticipated to be received with respect to such loss is less than Five Million Dollars ($5,000,000), and the Mortgagor shall assist the Mortgagee in any such adjustment at the request of the Mortgagee. If the Mortgagee at its election as aforesaid joins the Mortgagor in any adjustment process, then the Mortgagee's approval of the adjustment shall not be unreasonably withheld; (i) Notwithstanding anything contained herein to the contrary, if an Event of Default shall have occurred and be continuing, the Mortgagee may, at its option, (A) refrain from paying to the Mortgagor or the Insurance Trustee any net insurance proceeds or (B) instruct the Insurance Trustee to 51 pay to the Mortgagee any insurance proceeds then held by the Insurance Trustee, as the case may be. Section 5.12. LIMITATIONS ON BUILDING DEMOLITION, ALTERATIONS, IMPROVEMENTS AND NEW CONSTRUCTION. The Mortgagor will not authorize, permit or make any demolition, alteration or improvement of any building included in the Trust Estate or any new construction on any part of the Trust Estate, except in conformity with and subject to the limitations hereinafter in this Section 5.12 set forth. Unless an Event of Default shall have occurred and be continuing, the Mortgagor shall have the right at all times to make or permit such alterations, improvements or new constructions, structural or otherwise (herein sometimes called collectively "alterations"), of or on the Trust Estate, to be made in all cases subject to the following conditions: (a) no alteration shall be undertaken or carried out except in conformity with all Superior Instrument Requirements, Legal Requirements and Insurance Requirements; (b) if the estimated cost of any alteration, together with other alterations that constitute a single construction plan or project (whether or not accomplished in several stages or procedures), exceeds $5,000,000, the building or buildings, as so improved or altered, upon completion of the work shall be of a value not less than the value of such building or buildings immediately prior to the making of such alterations; (c) any alteration which is structural in nature or involves an estimated cost of more than $5,000,000 shall be conducted under the supervision of an Architect, and no such alteration shall be undertaken until 10 days after there shall have been filed with the Mortgagee detailed plans and specifications and cost estimates therefor, stating that such plans and specification conform to all, prepared and approved in writing by such Architect and accompanied by a certificate of such Architect stating that such plans and specifications conform to all applicable provisions of this Section 5.12; (d) no alteration involving an estimated cost of more than $5,000,000 shall be undertaken until the Mortgagor has furnished to the Mortgagee, at the Mortgagor's sole cost and expense, a surety bond or bonds, covering performance, and labor and material payments with respect to the work to be so performed, naming the Mortgagee as obligee, issued by a responsible surety company, authorized to do business in the state of New Jersey, in a form generally and customarily used 52 by such surety in an amount equal to the estimated cost of construction of the work covered by the plans and specifications therefor, guaranteed and conditioned upon the performance and completion of such construction, substantially in conformity with the such plans and specifications and within a reasonable time, subject to delays by fire, strikes, lock-out, acts of God, inability to obtain labor or materials, governmental restrictions, enemy action, civil commotion or unavoidable Casualty or other similar causes beyond the control of the Mortgagor, free and clear of all liens, claims and liabilities for the cost of such alterations. In the event such surety bond or bonds shall be unobtainable the Mortgagor shall deliver to the Mortgagee security by cash, letter of credit or other guarantee, affording substantially the same protection as would such bond or bonds; (e) all work done in connection with any alterations shall be done promptly and in good and workmanlike manner. The work in connection with any alteration shall be prosecuted with reasonable dispatch, delays due to fire, strikes, lockouts, acts of God, inability to obtain labor or materials, governmental restrictions, enemy action, civil commotion or unavoidable casualty or similar causes beyond the control of the Mortgagor excepted; (f) if the estimated cost of alterations exceed $5,000,000, the Mortgagor shall have delivered to the Mortgagee (A) prior to the commencement of such alterations, additions or improvements copies of all Permits required for the commencement of such work together with a certificate of the Architect or an Opinion of Counsel to the effect that all Permits required for the commencement of such alterations have been obtained; and (B) within a reasonable period of time after the completion of the alterations, copies of all Permits required in connection with the completion thereof, together with either an Opinion of Counsel or a certificate of the Architect that all such Permits have been so obtained by the Mortgagor and that the Mortgagor has complied with all the requirements of this Section 5.12; (g) no alterations of any kind shall be made to any building which shall change the use or reduce the size or quality of the building in any material respect; and (h) no alterations costing in excess of $5,000,000, together with other alterations that constitute a single construction plan or project (whether or not accomplished in several stages or procedures), shall be made to any building if such alterations are not 53 expected to be completed at least 120 days prior to the maturity date of the Note (except if such alterations are required in order to comply with Legal Requirements or Superior Instrument Requirements). Section 5.13. LEASES. The Mortgagor shall not: (a) subject to the provisions of Section 5.13(d), enter into any Lease, or renew, modify, extend, terminate, or amend any Lease, except in the ordinary course of business of operating the Casino-Hotel; (b) receive or collect, or permit the receipt or collection of, any rental payments under any Lease more than one year in advance of the respective periods in respect of which they are to accrue, except that, in connection with the execution and delivery of any Lease or of any amendment to any Lease, rental payments thereunder may be collected and received in advance in an amount not in excess of three months' rent and/or a security deposit may be required thereunder in an amount not exceeding one year's rent; (c) collaterally assign, transfer or hypothecate (other than to the Mortgagee hereunder, to the mortgagee under the Guaranty Mortgage or to the holder of any Working Capital Facility Lien) any rental payment under any Lease whether then due or to accrue in the future, the interest of the Mortgagor as landlord under any Lease or the rents, issues or profits of the Trust Estate; (d) after the date hereof, enter into any Lease, or renew any Lease unless such Lease contains terms to the effect as follows: (1) the Lease and the rights of the tenants thereunder shall be subject and subordinate to the rights of the Mortgagee under this Mortgage, the mortgagee under the Guaranty Mortgage and the holders of any Superior Mortgage, (2) the Lease may be assigned by the landlord thereunder to the Mortgagee, (3) the rights and remedies of the tenant in respect of any obligations of the landlord thereunder shall be nonrecourse as to any assets of the landlord other than its equity in the building in which the leased premises are located or the proceeds thereof, (4) the rights of the tenant shall be subject and subordinate to the rights of the lessee 54 under any new lease entered into in the event of a termination of a Ground Lease; (e) modify any Lease with respect to the matters described in clauses (1) through (4) of paragraph (d). If the Mortgagor enters into a Lease (other than with any Affiliate of the Mortgagor) for a term of not less than 3 nor more than 10 years, the Mortgagee shall deliver a non-disturbance and attornment agreement substantially in the form of Schedule 4 hereto, following receipt of a certificate of a leasing broker (who is not an Affiliate of the Mortgagor or the broker involved in such transaction) experienced with respect to leases of commercial space in the Atlantic City area stating that the rent under the Lease is not less than fair market rent and that the other terms of the Lease are fair and reasonable in the commercial leasing market. The Mortgagor shall, upon demand, reimburse the Mortgagee for any costs and expenses (including reasonable attorney's fees) incurred by the Mortgagee in connection with the preparation, review and delivery of such non-disturbance and attornment agreements. Promptly after the execution and delivery hereof, the Mortgagor will cause the lessee under each Lease now in effect and promptly after each Lease is executed or becomes effective after the date of the execution and delivery hereof, the Mortgagor will cause the lessee under each such. Lease, to be duly notified in writing (unless the substance and effect of such notice shall be contained in such Lease) of the subjection of the owner's interest, as lessor, in and to such Lease to the lien of this Mortgage and of the name and address of the Mortgagee. Each such notice shall state that the lease of such lessee is a Lease as herein defined. If a new Mortgagee is at any time appointed hereunder or the address of the Mortgagee shall at any time be changed, the Mortgagor will cause each lessee under each Lease to be promptly notified in writing of the name address of such new Mortgagee or the new address of the Mortgagee. The Mortgagor will use reasonable efforts (but shall not be obligated to incur any expenditure other than de minimis amounts) to obtain from each lessee under each Lease to whom any notice is sent pursuant to this paragraph an acknowledgment of receipt of such notice, and the Mortgagor will promptly deliver to the Mortgagee, upon request, a copy of each such acknowledgment of receipt which it is able to obtain. The Mortgagee shall not be responsible for securing or causing the Mortgagor to secure any such acknowledgment. Nothing contained in this Section 5.13 shall limit the provisions of Section 4.04 hereof. Section 5.14. [Reserved] 55 Section 5.15. MAINTENANCE OF EXISTENCE OF THE MORTGAGOR. Subject to Article Four, the Mortgagor will do or cause to be done all things necessary to preserve and keep in full force and effect its existence as a corporation, and its rights (both statutory and under its articles of incorporation) and franchises. Section 5.16. TO KEEP BOOKS; INSPECTION BY MORTGAGEE. The Mortgagor will keep proper books of record and account in accordance with Section 12.05 of the Indenture. Section 5.17. ADVANCES BY MORTGAGEE. If the Mortgagor shall fail to perform any of its covenants in this Mortgage and such failure shall continue for 10 days following notice thereof given by the Mortgagee (or at any time, without notice, in case of emergency), the Mortgagee may (but is not obligated to), at any time and from time to time, take any action or make advances, to effect performance of any such covenant on behalf of the Mortgagor; and all moneys so used or advanced by the Mortgagee and all reasonable costs and expenses incurred by Mortgagee in connection therewith, together with interest on all of the same at the rate of interest set forth in the Note, shall be repaid by the Mortgagor upon demand and such advances shall be secured under this Mortgage prior to the Note. Section 5.18. WAIVER OF STAY, EXTENSION OR USURY LAWS. The Mortgagor covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any usury, stay or extension law or any other law which would prohibit or forgive the Mortgagor from paying all or any portion of the obligations evidenced by the Note as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may otherwise affect the covenants or the performance of this Mortgage; and the Mortgagor (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Mortgagee, but will suffer and permit the execution of every such power as though no such law had been enacted. Section 5.19. [Reserved] Section 5.20. EMINENT DOMAIN. (a) The Mortgagor shall give written notice to the Mortgagee immediately upon obtaining knowledge of any Taking affecting the Trust Estate. If the Taking (i) is estimated to result in an award of more than [$5,000,000] or (ii) the Taking would interfere with or adversely affect the operation of the Casino-Hotel in accordance with Legal Requirements then within 30 days after any such Taking, the Mortgagor shall 56 deliver to the Mortgagee a certificate of an Architect stating whether, in such Architect's opinion, applicable Legal Requirements permit the Restoration of any buildings and improvements for the same uses and the same size and quality in all material respects as existed immediately prior to the Taking (and if such certificate states that Legal Requirements do not permit such Restoration, such certificate shall describe the manner closest approximating such criteria to which the buildings and improvements could be so restored and shall be accompanied by a Certificate of Appraised Value dated not more than 10 days prior to delivery setting forth the Appraised Value immediately prior to the Taking and the estimated Appraised Value immediately after the permitted Restoration). If the Mortgagor is required to deliver such Certificates of Appraised Value and if based on such Certificates of Appraised Value immediately after Restoration, the aggregate Outstanding Amount of First Mortgage Debt immediately after such Restoration shall exceed the greater of (i) 66-2/3% of the Appraised Value immediately after such Restoration or (ii) the quotient of the Outstanding Amount of the First Mortgage Debt immediately prior to such Taking divided by the Appraised Value immediately prior to the Taking multiplied by the Appraised Value immediately after such Restoration, then the Taking shall be deemed a Taking of "the whole or substantially all of the Premises." Notwithstanding the foregoing sentence, if such Certificates of Appraised Value indicate that the Outstanding Amount of First Mortgage Debt immediately after such Restoration exceeds the greater of the two amounts determined pursuant to subclauses (i) and (ii) above, the Taking will not be deemed a Taking of "the whole or substantially all of the Premises", if the Mortgagor obtains an irrevocable commitment from a nationally recognized financial institution having a combined capital and surplus of at least [$100,000,000], to supply, upon an acceleration under this Mortgage as a result of an Event of Default, funds to the Mortgagor as additions to capital in an amount equal to the Outstanding Amount of First Mortgage Debt in excess of the Appraised Value necessary to be paid down so that the Outstanding Amount of First Mortgage Debt will not exceed either of the two amounts determined pursuant to such clauses (i) and (ii), PROVIDED that such commitment may only be released if, upon an Appraisal at any time following completion of such Restoration, the aggregate Outstanding Amount of the First Mortgage Debt does not exceed 66-2/3% of the Appraised Value. (b) If at any time there shall occur a Taking of less than the whole or substantially all of the Premises and the award or awards resulting therefrom payable to the Mortgagor (and not to any Lessor or the holder of any Superior Mortgage) (after there shall have been first deducted the fees and expenses incurred in connection with the termination, settlement and collection of such award or awards, including but not limited to reasonable counsel fees and expenses, 57 hereinafter referred to as "Settlement Costs") (i) shall not exceed the sum of [$10,000,000] (except to the extent that the Insurance trustee or a Depositary is required to hold such amount pursuant to a Superior Instrument Requirement), the entire amount of such award shall be paid to the Mortgagor; and (ii) if such award is [$10,000,000] or more, the entire amount of such award shall be paid to the Insurance Trustee (or other Depositary required by a Superior Mortgage, provided that such Depositary holds such award in trust for purposes of paying the cost of Restoration). In either event, such awards shall be applied to the cost of demolition, repair, Restoration and replacement of the Trust Estate to as nearly practicable to their uses, value and condition immediately prior to the Taking (except to the extent otherwise provided by Superior Instrument Requirements). The Mortgagor shall promptly commence and with due diligence perform that Restoration in accordance with clauses (3), (4) and (7) of Section 5.11(e) (after substituting the words "Taking" of "Casualty" and "award" for "not insurance proceeds"), at no cost to the Mortgagee. All claims or suits arising out of any Taking may be settled by the Mortgagor, except that the Mortgagee shall have the right (but not the obligation) to participate in such claim or suit, and not the obligation) to participate in such claim or suit, and to approve settlement thereof (and notwithstanding anything in the Ground Leases to the contrary, the Mortgagor shall not agree to any settlement or compromise of the amount of any such claim or suit), except a claim or suit where the amount reasonably anticipated to be received by the Mortgagor is less than $5,000,000. If the Mortgagee at its election as aforesaid joins such claim or suit, the Mortgagee's approval of such settlement shall not be unreasonably withheld. The Insurance Trustee shall promptly pay such sums as are received by it from such Taking from time to time in accordance with the procedures set forth in clauses (5) and (6) of Section 5.11(e) (after substituting the words "Taking" for "Casualty" and "award" for "net insurance proceeds"). (c) If at any time there shall occur a Taking of the whole or substantially all of the Premises, then the award payable to the Mortgagor shall not be applied to Restoration but shall instead be paid and delivered to the Trustee (subject to the rights of the Lessors under the Superior Leases and the holders of any Superior Mortgages) to the extent of the then Outstanding Amount of the Note and any other interest or other sums due hereunder or thereunder to be applied to the satisfaction of this Mortgage to the extent proceeds are available for such purpose and provided that no additional sums are due the Trustee or the Noteholder under the Note or the Indenture, the balance of any award shall be paid to the Mortgagor. (d) Notwithstanding anything contained herein to the contrary, if an Event of Default shall have occurred and 58 is continuing, the Mortgagee may, at its option, (A) refrain from paying to the Mortgagor or the Insurance Trustee any award or (B) instruct the Insurance Trustee to pay to the Mortgagee any award then held by the Insurance Trustee, as the case may be. Section 5.21. GROUND LEASES. (a) The Mortgagor covenants and agrees that it will do or cause to be done all things necessary to preserve and keep unimpaired the rights of the Mortgagor, as lessee under the Ground Lease, and to prevent any termination, surrender, cancellation, forfeiture or impairment thereof. The Mortgagor shall at all times fully perform and comply with all agreements, covenants, terms and conditions imposed upon or assumed by it as lessee under each of the Ground Leases (including without limitation the covenant to pay rent and all taxes, assessments and other charges mentioned therein) prior to the expiration of any notice and/or cure period provided in each such Ground Lease. Upon receipt by the Mortgagee from a Lessor of any written notice of default by the lessee thereunder, Mortgagee may rely thereon and take any action the Mortgagee deems necessary in its sole discretion to prevent or to cure any default by the Mortgagor in the performance of or compliance with any of the agreements, covenants, terms or conditions imposed upon or assumed by the Mortgagor as lessee under each of the Ground Leases, even though the existence of such default or the nature thereof be questioned or denied by the Mortgagor or by any party on behalf of the Mortgagor, provided that if the Mortgagor has theretofore delivered to the Mortgagee the Officers' Certificate, Opinion of Counsel and a copy of the injunction, all as described in Section 3.01(g), the Mortgagee shall not take any such action unless and until the Mortgagor and/or the Mortgagee no longer has the benefit of any tolling or stay referred to in Section 3.01(g). Without limiting the generality of Section 3.09 hereof, the Mortgagor hereby expressly grants to the Mortgagee, and agrees that the Mortgagee shall have, the absolute and immediate right to enter in and upon the Premises or any part thereof to such extent and as often as the Mortgagee, in its sole discretion, deems necessary or desirable for the purpose permitted by the immediately preceding sentence, subject only to applicable Legal Requirements. Subject to the preceding and without limiting the Mortgagee's other remedies under this Mortgage, the Mortgagee may pay and expend such sums of money as the Mortgagee in its sole discretion deems necessary for any such purpose, and the Mortgagor hereby agrees to pay to the Mortgagee, immediately and without demand, all such sums so paid and expended by the Mortgagee, together with interest thereon from the date of each such payment at the highest rate of interest set forth in the Note. All sums so paid and expended by the Mortgagee, and the interest thereon, shall be added to and be secured by the lien of this Mortgage. 59 (b) The Mortgagor further covenants and agrees: (i) it will not surrender any leasehold estate and interest hereinabove described, nor terminate or cancel any Ground Lease, and that it will not without the express written consent of the Mortgagee modify, change, supplement, alter or amend such Ground Leases either orally or in writing and, as further security for the repayment of the indebtedness secured hereby and for the performance of the covenants herein and in such Ground Leases contained, the Mortgagor hereby assigns to the Mortgagee all of its rights, privileges and prerogatives as lessee under such Ground Leases to terminate, cancel, modify, change, supplement, alter or amend such Ground Leases, and any such termination, cancellation, modification, change, supplement, alteration or amendment of such Ground Leases without the prior written consent thereto by Mortgagee shall be void and of no force and effect. Unless (1) an Event of Default has occurred and is continuing and (2) either (A) there has been an acceleration of maturity of the Note pursuant to Section 3.02 hereof or (B) the Mortgagee exercises its rights under Section 3.09 hereof, the Mortgagee shall have no right to terminate, cancel, modify, change, supplement, alter or amend the Ground Leases; (ii) solely for the benefit of the Mortgagee, Trustee, the Noteholders and no other person, no release or forbearance of any of the Mortgagor's obligations under such Ground Leases, pursuant to such Ground Leases or otherwise, shall release the Mortgagor from any of its obligations under this Mortgage, including its obligations with respect to the payment of rent as provided for in such Ground Leases and the performance of all of the terms, provisions, covenants, conditions and agreements contained in such Ground Leases, to be kept, performed and complied with by the lessee therein; (iii) unless the Mortgagee shall otherwise expressly consent in writing, the fee title to the Leased Land, the Mortgagor's interest in the improvements on the Leased Land and the leasehold estates shall not merge by and shall always remain separate and distinct, notwithstanding the union of such estates either in the Lessor or in the lessee, or in a third party by purchase or otherwise; (iv) the Mortgagor shall promptly notify the Mortgagee in writing of any request made by the Mortgagor, as lessee under each of the Ground Leases, or any of the Lessors, for arbitration proceedings pursuant to the Ground Leases and of the institution of any arbitration proceedings, as well as all proceedings thereunder. In addition, the Mortgagor shall promptly 60 deliver to the Mortgagee a copy of the determination of the arbitrators in each such arbitration proceeding. The Mortgagee shall have the right to participate in such arbitration proceedings in association with the Mortgagor or on its own behalf as an interested party in accordance with the terms of the Ground Leases; (v) the Mortgagor shall not consent to the subordination of any Ground Lease to any mortgage deed of trust or other lien of the fee interest of the Lessor; (vi) in the event (A) the Mortgagor exercises its option under any Ground Lease to purchase any portion of the Leased Land, the Mortgagor shall deliver a copy of its election to exercise such option within 5 days after the Mortgagor has delivered notice of such election to the Lessor or (B) the Mortgagor acquires fee simple title or any other estate, title or interest in the Leased Land, the Mortgagor shall promptly notify the Mortgagee of such acquisition and shall cause to be executed and recorded all such other and further assurances or other instruments in writing as may be required by law or, in the opinion of the Mortgagee, be reasonably desirable to carry out the intent and meaning of clause (x) of Granting Clause Second; (vii) within 5 days after the Mortgagor's receipt of any notice of any motion, application or effort to reject the Ground Lease by any Lessor or any trustee arising from or in connection with any case, proceeding or other action commenced or pending by or against any Lessor under the Code or any comparable provision contained in any present or future federal, state, local, foreign or other statute, law, rule or regulation, the Mortgagor shall give notice thereof to the Mortgagee. The Mortgagor hereby (A) assigns to the Mortgagee any and all of the Mortgagor's rights as lessee under Section 365(h) of the Code or any comparable provision contained in any present or future federal, state, local, foreign or other statute, law, rule or regulation ("Comparable Provision") and (B) covenants that it shall not elect to treat any Ground Lease as terminated pursuant to Section 365(h) of the Code or any Comparable Provision without the prior written consent of the Mortgagee and (C) agrees that any such election by the Mortgagor without such consent shall be null and void; (viii) without limiting the generality of the foregoing, the Mortgagor hereby unconditionally assigns, transfers and sets over to the Mortgagee all of the Mortgagor's claims and rights to the payment of damages arising from any rejection by Lessor of any Ground lease under the Code or any Comparable Provision. The Mortgagee shall have the right to proceed in its own name or in 61 the name of the Mortgagor in respect of any claim, suit, action or proceeding relating to the rejection of any Ground Lease, including, without limitation, the right to file and prosecute, in cooperation with the Mortgagor, any proofs of claim, complaints, motions, applications notices and other documents, in any case in respect of Lessor under the Code or any Comparable Provision. This assignment constitutes a present, irrevocable and unconditional assignment of the foregoing claims, rights and remedies, and shall continue in effect until all of the indebtedness and obligations secured by this Mortgage shall have been satisfied and discharged in full. Any amounts received by the Mortgagee in damages arising out of the rejection of any Ground Lease as aforesaid shall be applied first to all reasonable costs and expenses of the Mortgagee (including, without limitation, reasonable attorneys' fees) incurred in connection with the exercise of any of its rights or remedies under this Section 5.21, and thereafter as provided in Section 3.03 hereof; (ix) if there shall be filed by or against the Mortgagor a petition under the Code or any Comparable Provision and the Mortgagor, as lessee under the Ground Leases, shall determine to reject any or all of the Ground Leases the Mortgagor shall give the Mortgagee not less than 10 days' prior notice of the date on which the Mortgagor shall apply to the Bankruptcy Court or other judicial body with appropriate jurisdiction for authority to reject the lease. The Mortgagee shall have the right, but not the obligation, to serve upon the Mortgagor within such 10 day period a notice stating that (a) the Mortgagee demands that the Mortgagor assume and assign such Ground Lease(s) to the Mortgagee pursuant to Section 365 of the Code or any Comparable Provision and (b) the Mortgagee covenants to cure or provide adequate assurance of prompt cure of all defaults and provide adequate assurance of future performance under such Ground Lease(s). If the Mortgagee serves upon the Mortgagor the notice described in the preceding sentence, the Mortgagor shall not seek to reject such Ground Lease(s) and shall comply with the demand provided for in clause (a) of the preceding sentence within 30 days after the notice shall have been given subject to the performance by the Mortgagee of the covenant provided for in clause (b) of the preceding sentence. Effective upon the entry of an order for relief in respect of the Mortgagor under Chapter 7 of the Code or Any Comparable Provision the Mortgagor hereby assigns and transfers to the Mortgagee a non-exclusive right to apply to the Bankruptcy Court or other judicial body with appropriate jurisdiction for an order extending the period during which the Ground Lease may be rejected or assumed; 62 (x) the Mortgagor shall promptly give to the Mortgagee copies of (A) all notices of default or (B) any other communications or notices with respect to events which relate to the possible impairment of the security of this Mortgage, which it shall give or receive under the Ground Leases and shall promptly notify the Mortgagor of any default under any Ground lease on the part of the Lessor or the Mortgagor; (xi) the Mortgagor shall enforce the obligations of the Lessor under each Ground Lease, to the end that the Mortgagor may enjoy all of the rights granted to it under the Ground leases; and (xii) the Mortgagor shall notify the Mortgagee within 5 days after the transfer of a fee interest in the Leased Land or any portion thereof to or from an Affiliate. (c) The Mortgagor hereby represents and warrants that all fixed net rent, taxes and assessments, payable under the Ground Leases have been paid to the extent they were due and payable to the date hereof and that the Mortgagor has not received notice of its failure to pay any other amounts payable under the Ground Leases which have not been cured. (d) If both the Lessor's and lessee's estates under any of the Ground Leases or any portion thereof shall at any time become vested in one owner, this Mortgage and the lien created hereby shall nevertheless not be merged, extinguished, destroyed or terminated by application of the doctrine of merger and, in such event, Mortgagee shall continue to have all of the rights and privileges of the a leasehold mortgagee. (e) The Mortgagor hereby acknowledges that if any Ground Lease shall be terminated prior to the natural expiration of its term due to default by the lessee thereunder, and if pursuant to such Ground Lease, the Mortgagee or its designee shall acquire from the Lessor a new lease of the Leased land or any portion thereof, the Mortgagor shall have no right, title or interest in or to such lease or the leasehold estate created thereby, or the options therein contained. (f) Any leases for parking purposes hereafter entered into by the Mortgagor as lessee shall contain provisions permitting the assignment of the same to the Mortgagee and the Trustee and permitting assignment without the lessor's consent if this Mortgage is foreclosed. Section 5.22. SUPERIOR MORTGAGES. (a) The Mortgagor covenants and agrees that it will at all times fully perform and comply with all agreements, 63 covenants, terms and conditions imposed upon or assumed by it as mortgagor under the Superior Mortgages prior to the expiration of any notice and/or cure period provided in each such Superior Mortgage. If a notice of default has been given by the holder of any Superior Mortgage and the maturity of the indebtedness secured by such Superior Mortgage has been accelerated as a result thereof, the Mortgagee may rely thereon and take any action the Mortgagee deems necessary in its sole discretion to prevent or to cure any default by the Mortgagor in the performance of or compliance with any of the agreements, covenants, terms or conditions imposed upon or assumed by the Mortgagor as mortgagor under each of the Superior Mortgages even though the existence of such default or the nature thereof may be questioned or denied by the Mortgagor or by any party on behalf of the Mortgagor provided that if the Mortgagor has heretofore taken such actions as described in Section 3.01(h), the Mortgagee shall not take any such action unless and until the Mortgagor and/or the Mortgagee no longer has the benefit of any such tolling or stay referred to in Section 3.01(h). Without limiting the generality of Section 3.09 hereof, the Mortgagor hereby expressly grants to the Mortgagee, and agrees that upon such acceleration the Mortgagee shall have, the absolute and immediate right to enter in and upon the Premises or any part thereof to such extent and as often as the Mortgagee, in its sole discretion, deems necessary for the purpose permitted by the immediately preceding sentence, subject only to applicable Legal Requirements. The Mortgagee may (i) pay and expend such sums of money as the Mortgagee in its sole discretion deems necessary for any such purpose and (ii) in its sole discretion prepay any Superior Mortgage, and the Mortgagor hereby agrees to pay to the Mortgagee, immediately and without demand, all such sums referred to in (i) and (ii) above so paid and expended by the Mortgagee, together with interest thereon from the date of each such payment at the rate of interest set forth in the Note. All sums so paid and expended by the Mortgagee and the interest thereon shall be added to and be secured by the lien of this Mortgage. (b) The Mortgagor further covenants and agrees: (i) the Mortgagor shall not, without first obtaining the written consent of the Mortgagee in each instance: (A) modify any of the terms, covenants or conditions of any Superior Mortgage, and without limiting the foregoing, the Mortgagor shall not, without satisfying such conditions, enter into or obtain any agreement whereby the holder of any Superior Mortgage waives, postpones, extends, reduces or modifies the payment of the installment of principal or interest or any other item or amount now required to be paid under the terms of any Superior Mortgage or modifies any other provision thereof, or (B) acquire or permit or suffer any Affiliate of the Mortgagor to acquire any Superior 64 Mortgage or any interest therein. Notwithstanding anything in clause (A) to the contrary, the Mortgagor shall have the right to amend, supplement or modify any Superior Mortgage, if (x) the then outstanding principal balance of the indebtedness secured by such Superior Mortgage is not increased thereby, and (y) in the case of any After-Acquired Fee Mortgage, such amendment, supplement or agreement does not increase the property covered thereby; (ii) the Mortgagor shall timely pay and perform all of the obligations to be paid or performed by the mortgagor under each Superior Mortgage, the note secured thereby and any other instrument evidencing or securing the indebtedness owing to any holder of any Superior Mortgage; (iii) at any time, and from time to time, the Mortgagor shall upon request of the Mortgagee promptly use its reasonable efforts to obtain an estoppel certificate or letter addressed to the Mortgagee from holders of the Superior Mortgages, such certificate or letter to be in such form as the Mortgagee shall request; and (iv) the Mortgagor shall promptly give to the Mortgagee copies of (A) all notices of default or (B) any other notice or communication with respect to events which relate to the possible impairment of the security of this Mortgage, which it shall give or receive under the Superior Mortgages and shall promptly notify the Mortgagor of any default under any Superior Mortgages on the part of the Mortgagor. (c) The lien of this Mortgage in and to all or specified portions of the Trust Estate shall be subject and subordinate to any Existing Encumbrances, to the liens created by the Senior Mortgage Documents and any mortgage, assignment, security agreement, financing statement or other lien securing any Working Capital Facility (the "Working Capital Facility Lien") encumbering Mortgagor's interest in the affected portions of the Trust Estate or any part thereof. The foregoing provisions of this Section 5.22(c) shall be self-operative with respect to the liens created by the Senior Mortgage Documents and any Working Capital Facility Lien, and no further instrument shall be required to give effect to such subordination. Mortgagee shall, however, from time to time, execute instruments in form and substance reasonably satisfactory to the holder of the liens created by the Senior Mortgage Documents and the holder of the Working Capital Facility Lien, confirming such subordination and agreeing to such other matters reasonably required by the holders of such liens which do not, in the aggregate, 65 materially adversely reduce or impair the rights of Trustee under the Mortgage, and Mortgagor and others may rely conclusively thereon, provided that Mortgagee shall have no liability thereunder and all costs and expenses (including reasonable attorneys' fees) shall be paid by Mortgagor. (d) The lien of the Mortgage in and to all or specified portions of the Trust Estate shall be subject and subordinate to any Existing Encumbrances. The provisions of this Section 5.22(d) shall be self-operative, and no further instrument shall be required to give effect to such subordination. Section 5.23. MORTGAGE PARI PASSU WITH GUARANTY MORTGAGE. Notwithstanding recordation of this Mortgage in the Atlantic County, New Jersey Clerk's Office prior to the recordation of the Guaranty Mortgage, the lien of this Mortgage ranks PARI PASSU with, and not senior to, the lien created by the Guaranty Mortgage. ARTICLE SIX MISCELLANEOUS Section 6.01. COUNTERPARTS. This instrument may be executed in any number of counterparts, each of which as executed shall be deemed to be an original, but all such counterparts shall constitute one and the same instrument. Section 6.02. MODIFICATION. This Mortgage is subject to modification" within the meaning of N.J.S.A. 46:9-8.1 et seq., and this Mortgage shall have the benefit of the lien priority provisions of such statute. Such modification may include, without limitation, a change in the interest rate, maturity date or other terms and conditions of this Mortgage. THE MORTGAGOR DECLARES THAT THE MORTGAGOR HAS RECEIVED A TRUE COPY OF THIS MORTGAGE. IN WITNESS WHEREOF, the parties hereto have caused this Mortgage to be duly executed and attested, all as of the day and year first above written. RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation 66 ATTEST:______________________ By:_____________________________ Name: Name: Title: (Asst.) Secretary Title: (Vice) President RESORTS INTERNATIONAL HOTEL FINANCING, INC. ATTEST:______________________ By:_____________________________ Name: Name: Title: (Asst.) Secretary Title: (Vice) President 67 Exhibit E Assignment of Leases and Rents from Resorts International Hotel, Inc. to Resorts International Hotel Financing, Inc. NA932810100 - ASSIGNMENT OF RENTS (RIH JUNIOR PROMISSORY NOTE) GD&C DRAFT DATED 12/17/93 ============================================================================= ASSIGNMENT OF LEASES AND RENTS ________________ RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation, as Assignor, TO RESORTS INTERNATIONAL HOTEL FINANCING, INC., a Delaware corporation, as Assignee Dated as of _________________, 1994 ========================================================================== Prepared by:__________________________ D. Eric Remensperger, Esq. ASSIGNMENT OF LEASES AND RENTS THIS ASSIGNMENT made as of the ____ day of ____________, 1994, by RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation, having its principal office at c/o Resorts International, Inc., 1133 Boardwalk, Atlantic City, New Jersey ("ASSIGNOR") to RESORTS INTERNATIONAL HOTEL FINANCING, INC., a Delaware corporation, having its principal office at c/o Resorts International, Inc., 1133 Boardwalk, Atlantic City, New Jersey ("ASSIGNEE"). WITNESSETH: WHEREAS, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in order to secure: (i) the obligations of Assignor under a promissory note dated as of the date hereof made by Assignor to Assignee in the principal amount of $35,000,000 (as the same may be amended or restated from time to time, the "RIH JUNIOR PROMISSORY NOTE"), which note is secured by a Mortgage Securing RIH Junior Promissory Note dated as of the date hereof, between Assignor, as mortgagor, and Assignee, as mortgagee (the "MORTGAGE"; capitalized terms used and not otherwise defined herein shall have the meanings ascribed to those terms in the Mortgage); and (ii) the performance and observance of all of the provisions herein contained; NOW, THEREFORE, Assignor has and does hereby bargain, sell, transfer, assign, convey, set over and deliver unto Assignee, for the purposes set forth above (subject, however, to the rights of the holders of Superior Mortgages and other Existing Encumbrances), all leases or occupancy agreements wherein it is lessor concerning or affecting the use or occupancy of the certain real property owned or leased by Assignor, which real property is described on SCHEDULE 1 hereto and which real property, together with all buildings and improvements erected thereon, is hereinafter collectively referred to as the "PROPERTY", or any part thereof, now existing or which may be executed at any time in the future, and all amendments, extensions and renewals of such leases or occupancy agreements, and any of them, all of which are collectively referred to as the "LEASES", all rents and other income which may now or hereafter be or become due or owing under the Leases, and any of them, and any and all payments derived from or relating to the Leases to which Assignor is entitled, including but not limited to (a) claims for the recovery of damages done to the Property, (b) claims for damages resulting from acts of insolvency or acts of bankruptcy or otherwise, and (c) lump sum payments for the cancellation of Leases or the waiver of any obligation or term thereof prior to the expiration date; PROVIDED, HOWEVER, that no Excepted Property is conveyed hereby; it being intended hereby to establish a present and complete transfer unto Assignee of all of Assignor's right, title, interest and estate in and to the Leases and all the rents, payments and other income arising thereunder; PROVIDED, HOWEVER, that Assignor is hereby granted a license by Assignee to (i) collect all of such rents, payments and other income herein assigned which may become due during the life of this Assignment and (ii) enter into, renew, modify, extend, terminate, amend, collectively assign, transfer or hypothecate any or all of the Leases, in accordance with the provisions of Sections 4.04 and 5.13 of the Mortgage, each until an Event of Default under the Mortgage (an "EVENT OF DEFAULT") shall have occurred and be continuing. Upon the occurrence of an Event of Default, Assignor agrees to deposit with Assignee upon demand such of the Leases and the rents payable thereunder as may from time to time be designated by Assignee. Assignor hereby appoints Assignee the true and lawful attorney of Assignor with full power of substitution, and with power for Assignor and in the name of Assignor and/or in its name, place and stead, to demand, collect, receive and give receipts and complete acquittance for any and all other rents and other amounts herein assigned which may be or become due and payable under the Leases, and at its discretion to file any claim or take any other action or proceeding and make any settlement of any claims, either in its own name or in the name of Assignor or otherwise, which Assignee may deem necessary or desirable in order to collect and enforce the payment of any and all rents and other amounts herein assigned. No right shall be exercised by Assignee under this paragraph until an Event of Default has occurred. All lessees under the Leases are hereby expressly authorized and directed, after the occurrence, and during the continuance, of an Event of Default, to pay all rents and other sums herein assigned to Assignee or such nominee as Assignee may designate in writing delivered to and received by such lessees, who thereafter are expressly relieved of any and all duty, liability or obligation to Assignor in respect of all payments so made. Assignee is hereby vested with full power to use all measures, legal and equitable, deemed by it necessary or proper to enforce this Assignment and to collect the rents and other sums assigned hereunder. Assignee shall be under no obligation to exercise any of the rights or to press any of the claims assigned to it hereunder, or to perform or carry out any of the obligations of Assignor under any of the Leases, and does not assume any of the liabilities in connection with or arising or growing out of the covenants and agreements of Assignor in the Leases. It is further 2 understood that this Assignment shall not operate to place responsibility for the control, care, management or repair of Assignor's estates or interests in and to the Property, or parts thereof, upon Assignee, nor shall it operate to make Assignee liable for the carrying out of any of the terms and conditions of any of the Leases, or for any waste to Assignor's estates or interests in and to the Property by any lessee or sublessee of Assignor under any leases, or by any occupant of the Property, or by any party whatsoever or for any dangerous or defective condition of the Property or for any negligence in the management, upkeep, repair or control of Assignor's estates or interests in and to the Property resulting in loss or injury or death to any lessee, licensee, employee or stranger thereat. No right shall be exercised by Assignee under this paragraph until an Event of Default has occurred. Assignee hereby agrees promptly to remit to Assignor any amounts collected hereunder by Assignee which are in excess of those applied to pay in full the aforesaid liabilities and indebtedness at the time due. Nothing herein contained is intended to limit or reduce the rights of Assignee or the obligations of Assignor set forth in the Mortgage, but rather all of the terms, provisions and conditions of this Assignment are in addition to and in supplement of such rights and obligations. If any provision contained in this Assignment is in conflict with, or inconsistent with, any provision in the Mortgage, the provisions contained in the Mortgage shall govern and control. Upon the release of any portion of the Property from the lien of the Mortgage pursuant to Section 2.05 or 2.06 of the Mortgage, this Assignment shall be null and void with respect to those Leases (the "RELEASED LEASES") which cover exclusively the portion of the Property so released (and no other portion of the Property) and all estate, right, title and interest of Assignee in and to the Released Leases shall revert to Assignor, but in all other respects and for all other purposes, this Assignment shall remain in full force and effect. Assignee shall, from time to time, promptly execute any written instrument in form reasonably satisfactory to the proposed purchaser of a portion of the Property as aforesaid to confirm any reversion of Assignee's right, title and interest in the Released Leases effectuated in accordance with this paragraph, upon receipt by Assignee of an Officer's Certificate stating that Assignor is entitled to such reversion by virtue of the Mortgagor's compliance with the provisions of this paragraph and Section 2.05 or 2.06 of the Mortgage (as the case may be), provided that Assignee shall have no liability thereunder and all costs and expenses shall be paid by Assignor. 3 Assignee acknowledges that (i) contemporaneously with the execution and delivery of this Assignment, it has assigned this Assignment to U.S. Trust Company of California, N.A. ("Trustee"), as trustee under an Indenture of even date herewith among Assignor, Assignee and Trustee (the "Indenture"), and (ii) that the Trustee is also the assignee under an Assignment of Leases and Rents dated as of the date hereof from Assignor to Trustee securing the obligations of Assignor in respect of the Guaranty under and as defined in the Indenture (the "Other Assignment"), which assignment creates a lien on the Leases and rents and income due and owing thereunder PARI PASSU with the lien of this Assignment. Assignee further acknowledges and agrees that whenever it is provided in the Other Assignment that the Assignor shall deliver any notice or document, or is require to make any payment thereunder, the delivery of such notice or document or the making of such payment pursuant to the terms of such Other Assignment shall also constitute the delivery of such notice or document or the making of such payment in satisfaction of the terms, conditions and provisions of this Assignment to the same extent as the same constitutes satisfaction of the terms, conditions and provisions of the Other Assignment. Upon the termination of the Mortgage and the payment in full of the obligations secured thereby, this Assignment shall be and become null and void, and all estate, right, title and interest of Assignee in and to the Leases shall revert to Assignor and Assignee shall promptly cancel and discharge of record this Assignment and any financing statement filed in connection herewith and execute and deliver to Assignor all such instruments as may be appropriate to evidence such discharge and satisfaction of this Assignment (provided that Assignee shall have no liability hereunder or thereunder and all costs and expenses shall be paid by Assignor); otherwise, this Assignment shall remain in full force and effect as herein provided, shall inure to the benefit of Assignee and its successors and assigns, and shall be binding upon Assignor and its successors and assigns, and any subsequent holder of Assignor's right, title and interest and estate in and to the Property. This Assignment shall be governed by and construed under the internal laws of the State of New Jersey, without giving effect to the principles of conflicts of laws. This Assignment is subject to and shall be enforced in compliance with the provisions of the New Jersey Casino Control Act. This Assignment shall not be transferred, assigned or amended without the prior approval of the New Jersey Casino Control Commission. The rights and obligations of the Assignee hereunder are subject to the terms set forth in that certain Intercreditor Agreement dated as of the date hereof among 4 Assignor, Assignee, Fidelity Management and Trust Company, as trustee, Trustee and State Street Bank and Trust Company of Connecticut, National Association, as trustee (and such other parties that may from time to time become a party thereto). IN WITNESS WHEREOF, the parties hereto have caused this Assignment to be duly executed and attested, all as of the day and year first above written. RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation By:_____________________________ Name: Title: (Vice) President ATTEST:_________________________ Name: Title: (Asst.) Secretary RESORTS INTERNATIONAL HOTEL, FINANCING, INC., a Delaware corporation By:_____________________________ Name: Title: (Vice) President ATTEST:_________________________ Name: Title: (Asst.) Secretary 5 STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK) BE IT REMEMBERED that on ______________, 1994, before me, the subscriber, __________________, personally appeared _____________, who, being by me duly sworn on his oath, deposes and makes proof to my satisfaction, that he is the (Asst.) Secretary of RESORTS INTERNATIONAL HOTEL, INC., the corporation named in the within instrument; that ______________ is the (Vice) President of said corporation; that the execution, as well as the making of this instrument, has been duly authorized by a proper resolution of the board of directors of the said corporation; that deponent well knows the corporate seal of said corporation; and that the seal affixed to said instrument is the proper corporate seal and was thereto affixed and said instrument signed and delivered by said Vice President as and for the voluntary act and deed of said corporation. In presence of deponent who thereupon subscribed his name thereto as attesting witness; and deponent signed this proof to attest to the truth of these facts. _____________________________ [Name] Assistant Secretary Sworn to and subscribed before me, the date aforesaid ____________________________ Notary Public My commission expires:_____________________________ 6 STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK) BE IT REMEMBERED that on _________________, 1994, before me, the subscriber, __________________, personally appeared ___________________, who being by me duly sworn on his oath, deposes and makes proof to my satisfaction, that he is the Asst. Secretary of RESORTS INTERNATIONAL HOTEL FINANCING, INC., the corporation named in the within instrument; that ____________ is the Vice President of said corporation; that the execution, as well as the making of this instrument, has been duly authorized by a proper resolution of the board of directors of the said corporation; that deponent well knows the corporate seal of said corporation; and that the seal affixed to said instrument is the proper corporate seal and was thereto affixed and said instrument signed and delivered by said Vice President as and for the voluntary act and deed of said corporation. In presence of deponent who thereupon subscribed his name thereto as attesting witness; and deponent signed this proof to attest to the truth of these facts. __________________________ [Name] Secretary Sworn to and subscribed before me, the date aforesaid ____________________________ Notary Public My commission expires:_____________________________ 7 Exhibit F Mortgage securing Guaranty of Junior Mortgage Notes between Resorts International Hotel, Inc. and U.S. Trust Company of California, N.A. ------------------------------------ : NA932810097 - GUARANTY MORTGAGE : : JUNIOR NOTES : : GD&C DRAFT DATED 12/17/93 : ------------------------------------ MORTGAGE SECURING GUARANTY OF JUNIOR MORTGAGE NOTES by and between RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation, as Mortgagor, and U.S. Trust Company of California, N.A., a national banking association, as Mortgagee Dated as of ________ __, 1994 Prepared by:_______________________ D. Eric Remensperger After recording return to: Gibson, Dunn & Crutcher 200 Park Avenue New York, New York 10166 Attention: D. Eric Remensperger MORTGAGE SECURING GUARANTY OF JUNIOR MORTGAGE NOTES THIS MORTGAGE, dated as of ________ ___, 1994, between RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation ("Mortgagor"), and U.S. Trust Company of California, N.A., a national banking association having an address at 555 South Flower Street, Suite 2780, Los Angeles, California 90071 ("Mortgagee"), in its capacity as Trustee under that certain Indenture dated as of even date herewith (the "Indenture") among Mortgagor, Mortgagee and Resorts International Hotel Financing, Inc. ("RIHF"). WITNESSETH: In consideration of $10.00 in hand paid by Mortgagee to Mortgagor and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in order to secure (i) the Guaranty by Mortgagor of the payments of principal and interest due on the 11.375% Junior Mortgage Notes due 2004 in an aggregate principal amount of $35,000,000, issued pursuant to the provisions of the Indenture (defined therein, and hereinafter collectively referred to herein, as the "Notes"), in accordance with the terms and conditions of Article Fourth of the Indenture; and performance and observance of all of the provisions herein contained, Mortgagor has executed and delivered this Mortgage and has bargained, sold, aliened, mortgaged, pledged, released, conveyed and confirmed unto Mortgagee and its successors hereunder and assigns forever, all of its right, title and interest in, to and under any of the following described property: GRANTING CLAUSES GRANTING CLAUSE FIRST All the property, rights, title, interest, privileges and franchises particularly described in annexed Schedule 1 (the "Owned Land") which Schedule is hereby made a part of, and deemed to be described in, this Granting Clause as fully as if set forth in this Granting Clause at length. GRANTING CLAUSE SECOND All of the property, rights, title, interest, privileges and franchises of the Mortgagor as lessee in those certain leases (the "Ground Leases") particularly described in Schedule 2, which Schedule is hereby made a part of, and deemed to be described in, this Granting Clause as fully as if set forth in this Granting Clause at length, which Ground Leases cover the real property described in Schedule 2 (the "Leased Land") and in and to any and all modifications, extensions and renewals of the Ground Leases and all options set forth therein, together with (i) all credits, deposits, privileges and rights of the Mortgagor as lessee under the Ground Leases, now or at any time existing, (ii) the leaseholds and the leasehold estates created by the Ground Leases and (iii) all of the estates, rights, titles, claims or demands whatsoever of Mortgagor, either in law or in equity, in possession or in expectancy, of, in and to the Ground Leases and the Leased Land, together with (x) any and all other, further or additional title, estates, interests or rights which may at anytime be acquired by the Mortgagor in or to the Leased Land, and the Mortgagor expressly agrees that if the Mortgagor shall, at any time prior to payment in full of all indebtedness secured hereby, acquire fee simple title or any other greater estate to the Leased Land pursuant to the Ground Leases, or otherwise, the lien of this Mortgage shall attach, extend to, cover and be a lien upon such fee simple title or other greater estate and thereupon the lien of this Mortgage shall be prior to the lien of any mortgage or deed of trust placed on such acquired title, estate, interest or right subsequent to the date of this Mortgage (except as otherwise provided herein) and (y) any right to possession or statutory term of years derived from, or incident to, the Ground Leases pursuant to Section 365(h) of the U.S. Bankruptcy Code (the "Code") or any comparable provision contained in any present or future federal, state, local, foreign or other statute, law, rule or regulation. GRANTING CLAUSE THIRD All the rents, issues, profits, revenues and other income and proceeds of the property subjected or required to be subjected to the lien of this Mortgage, including, without limitation, the property described in Granting Clauses First, Second, and Sixth (such property is hereinafter collectively referred to as the "Premises") and all the estate, right, title and interest of every nature whatsoever of the Mortgagor in and to the same and every part thereof. The collective 2 metes and bounds description of the Owned Land and the Leased Land is set forth in annexed Schedule 3. GRANTING CLAUSE FOURTH All of the rights as lessor under Leases in effect on the date of execution of this Mortgage or hereafter entered into by the Mortgagor, if any, including extensions, renewals or amendments of all of the same, and the immediate and continuing right as security in accordance with an Assignment of Leases and Rents of even date herewith between Mortgagor and Mortgagee, and, after the occurrence of an Event of Default, to make claim for, collect, receive and receipt for (and to apply the same as provided herein) any and all rents, income, revenues, issues, profits, security and other sums of money payable or receivable thereunder or pursuant thereto, and all proceeds thereof, whether payable as rent, insurance proceeds, condemnation awards, security or otherwise and whether payable prior to or subsequent to the maturity date of the Notes, to receive and give notices and consents thereunder, to bring actions and proceedings thereunder or for the enforcement thereof, to make waivers and agreements, to take such action upon the happening of a default under any Lease, including the commencement, conduct and consummation of any proceedings at law or in equity as shall be permitted by any provision of any Lease, and to do any and all things which the Mortgagor or any lessor is or may become entitled to do under the Leases; provided, that the assignment made by this granting Clause Fourth shall not impair or diminish any obligation of the Mortgagor under the Leases, or shall any such obligation be imposed upon the Mortgagee. GRANTING CLAUSE FIFTH Without limiting the generality of the provisions of Granting Clause Third, the Mortgagor's rights, privileges and franchises in and to the following, to the extent of the Mortgagor's interest therein and thereto and to the extent assignable (collectively, "Operating Assets"): (a) bookings and receipts for the use of guest rooms, banquet facilities and meeting rooms at the Casino-Hotel; (b) all contracts respecting utility services for, and the maintenance, operations, or equipping of the Premises, including guaranties and warranties relating thereto; (c) the Permits; 3 (d) all contract rights, leases, concessions, trademarks, trade names, service marks, service names, logos, copyrights, warranties and other items of intangible personal property relating to the ownership or operation of the Casino-Hotel, including, without limitation, (1) telephone and other communication numbers, (2) all software licensing agreements as are required to operate computer software systems at the Casino-Hotel, all transferable proprietary interest in software required to operate the computer systems at the Casino Hotel and books and records relating to the software programs, and (3) lessee's interest under leases of Tangible Personal Property; (e) all agreements entered into by or on behalf of the Mortgagor or which have been assigned to the Mortgagor, for the design and construction, and for the equipping and furnishing, of the Casino-Hotel, including architect's agreements, engineering agreements, construction contracts, consulting agreements and agreements or purchase orders for all items of Tangible Personal Property and payment and performance bonds in favor of the Mortgagor in connection with the Trust Estate (and all warranties and guaranties thereunder and warranties and guaranties of any subcontractor and bond issued in connection with the work to be performed by any subcontractor); (f) the following personal property (the "Tangible Personal Property") now or hereafter acquired by the Mortgagor: (i) all furniture, furnishings, equipment, machinery, apparatus, appliances, fixtures and fittings and other articles of tangible personal property which are, or are to be located on, or used in connection with the operation of, the Casino-Hotel; (ii) all slot machines, electronic gaming devices, crap tables, blackjack tables, roulette tables, baccarat tables, and big six wheels, located or to be located in the Casino-Hotel, and all furnishings and equipment to be used in connection with the operation thereof; (iii) all cards, dice, gaming chips and placques, tokens, chip racks, dealing shoes, dice cups, dice sticks, layouts, paddles, roulette balls and other consumable supplies and items to be used 4 in connection with the gaming operations of the Casino-Hotel; (iv) all china, glassware, linens, kitchen utensils, silverware and uniforms, whether in use or held in reserve storage for future use, in connection with the operation of the Casino-Hotel, which are on hand or on order whether stored on-site or off-site; (v) all consumables and operating supplies of every kind and nature for use in all of the operating departments of the Casino-Hotel, or in the improvements now or hereafter located on any of the Owned Land, including without limitation, accounting supplies, guest supplies, forms, printing, stationery, food and beverage stock, bar supplies, laundry supplies and brochures to existing purchase orders; (vi) all sets and scenery, costumes, props and other items of tangible personal property on hand or on order for use in the production of shows in the showroom of the Casino-Hotel; and (vii) all cars, limousines, vans, buses, trucks and other vehicles owned or leased by the Mortgagor for use in Casino-Hotel operations, together with all equipment, parts and supplies used to service, repair, maintain and equip the foregoing; (g) all drawings, designs, plans and specifications prepared by the architects, interior designers, landscape designers and any other consultants for the development of the Premises, as amended from time to time; (h) any administrative and judicial proceedings initiated by the Mortgagor, or in which the Mortgagor has intervened, concerning the Casino-Hotel, and agreements, if any, which are the subject matter of such proceedings; (i) any customer lists utilized by the Mortgagor, including lists of transient guests and restaurant and bar patrons and "high roller" lists; and (j) all of the goodwill in connection with the operation of the Premises. 5 The Mortgagor and Mortgagee acknowledge that notwithstanding anything contained in this Mortgage to the contrary, the Mortgagor may share facilities, operations and employees with any other hotel owned by any Affiliate of the Mortgagor provided that (i) such sharing of facilities is permitted by all applicable Legal Requirements, (ii) terms on which such facilities are shared are not detrimental to the operations of the Casino-Hotel or the financial condition of the Mortgagor and (iii) the regular operation of the Casino-Hotel would not be materially impaired upon the separation of such facilities. The assignment made by this Granting Clause Fifth shall not impair or diminish any obligation of the Mortgagor with respect to the Operating Assets, nor shall any such obligation be imposed on the Mortgagee. GRANTING CLAUSE SIXTH (a) All of the Mortgagor's right, title and interest in and to all buildings and improvements of every kind and description now or hereafter erected or placed on the Owned Land and/or the Leased Land and all fixtures and articles of personal property now or hereafter attached to or contained in and used in connection with such buildings and improvements, including, but not limited to, all apparatus, furniture, furnishings, machinery, motors, elevators, fittings, radiators, cooking ranges, ice boxes, ice machines, printing presses, mirrors, bars, mechanical refrigerators, furnaces, coal and oil-burning apparatus, wall cabinets, machinery, generators, partitions, steam and hot water boilers, lighting and power plants, pipes, plumbing, radiators, sinks, bath tubs, water closets, gas and electrical fixtures, awnings, shades, screens, blinds, dishwashers, freezers, vacuum cleaning systems, office equipment and other furnishings, and all plumbing, heating, lighting, cooking, laundry, ventilating, incinerating, air-conditioning and sprinkler equipment or other fire prevention or extinguishing apparatus and material, and fixtures and appurtenances thereto; and all renewals or replacements thereof or articles in substitution therefor, whether or not the same are or shall be attached to the Owned Land, the Leased Land or to any such buildings and improvements thereon, in any manner; and 6 (b) All of the Mortgagor's right, title and interest in and to (i) the Leased Land, if the Mortgagor acquires the fee simple title to the Leased Land or any part thereof (subject to the provisions of Section 2.06 hereof), (ii) all air rights and rights to maintain supporting columns and all rights to construct and maintain bridges, and to create private rights of way over streets now or hereafter owned or enjoyed by the Mortgagor and appurtenant to the Owned Land or Leased Land, and (iii) all right, title and interest of Mortgagor as grantee or licensee in and to the following to the extent necessary for the use and enjoyment of the Owned Land or the Leased Land: (A) all those plots, pieces or parcels of land and air rights, more particularly described on Schedule 5, attached hereto and made a part hereof (the "Bridge Easement Parcels"), with respect to which Mortgagor has easements, licenses or other rights of possession or use pursuant to these certain easement and license agreements more particularly described on Schedule 5 (the "Bridge Easements"), (B) all those plots, pieces or parcels of land and air rights, more particularly described on Schedule 6 attached hereto and made a part hereof (the "Elevator Easement Parcels"), with respect to which Mortgagor has easements, licenses or other rights of possession or use pursuant to those certain license agreements more particularly described on Schedule 6 (the "Elevator Easements"), and; (C) all that plot, piece or parcel of land and air rights more particularly described on Schedule 7 attached hereto and made a part hereof (the "Turn-Around Easement Parcel") with respect to which Mortgagor has easements, licenses, or other rights of possession or use pursuant to that certain easement more particularly described on Schedule 7 (the "Turn-Around Easement"), (the Bridge Easement Parcels, the Elevator Easement Parcels and the Turn-Around Easement Parcel are collectively referred to herein as the "Easement Parcels"; and the Bridge Easements, the Elevator Easements and the Turn-Around Easement are collectively referred to as the "Easements"), together with all rights of way, privileges, liberties, tenements, hereditaments and appurtenances belonging or in any way appertaining to such estates, it being the intention hereof that all property, interests, rights and privileges and franchises pertaining to the Premises (other than Excepted Property) shall be as fully embraced within and subjected to the lien hereof as if such property were specifically described herein. To the extent the grant of a security interest in any portion of the Trust Estate is governed by the Uniform Commercial Code, this Mortgage is hereby deemed to be as well a security agreement under the Uniform Commercial Code for the purpose of creating hereby a security interest in all of the Mortgagor's right, title and interest in and to such property, securing the obligations secured hereby, for the benefit of the Mortgagee; * * * TOGETHER with all of the Mortgagor's right, title and interest in and to all mineral and water rights and any title or reversion, in and to the beds of the ways, streets, 7 avenues and alleys adjoining the Premises to the center line thereof and in and to all strips, gaps and gores adjoining the premises on all sides thereof; and TOGETHER with all of the Mortgagor's right, title and interest to and singular the tenements, hereditaments, easements, appurtenances, passages, water courses, riparian rights, other rights, liberties and privileges thereof or in any way appertaining to the Premises, including any other claim at law or in equity as well as any after-acquired title, franchise or license and the reversion and reversions and remainder and remainders thereof; and TOGETHER with all awards and other compensation heretofore or hereafter to be made to the present and all subsequent owners of the Trust Estate for any taking by eminent domain, either permanent or temporary, of all or any part of the Trust Estate or any easement or appurtenances thereof, including severance and consequential damage and change in grade of streets, all in accordance with and subject to the provisions of the Superior Instrument Requirements and Section 5.20; and TOGETHER with all proceeds of any unearned premiums on any insurance policies described in Section 5.11, and the right to receive and apply the proceeds of any insurance, judgments, or settlements made in lieu thereof, for damage to the Trust Estate or otherwise, all in accordance with and subject to the provisions of Section 5.11 and the Superior Instrument Requirements. EXCLUDING, with respect to all of the hereinabove granted property, rights, title, interest, privileges and franchises, the Excepted Property. TO HAVE AND TO HOLD all the Premises, Leases, Ground Leases, Operating Assets, Easements, properties, options, credits, deposits, rights, privileges and franchises of every kind and description, real, personal or mixed, granted hereby, bargained, sold, aliened, assigned, transferred, hypothecated, pledged, released, conveyed, mortgaged, or confirmed as aforesaid, or intended, agreed or covenanted so to be, together with all the appurtenances thereto appertaining (the Premises, Leases, Ground Leases, Operating Assets, Easements, properties, options, credits, deposits, rights, privileges and franchises, being herein collectively called the "Trust Estate") unto the Mortgagee and its successors and assigns forever. SUBJECT, HOWEVER, on the date hereof, to Existing Encumbrances and, after the date hereof, to Permitted Encumbrances. 8 SUBJECT, FURTHER, to the rights and obligations of the Mortgagee and the Noteholder as set forth in that certain Intercreditor Agreement dated as of the date hereof among RIH, RIHF, Mortgagee, Fidelity Management and Trust Company ("Fidelity"), as trustee under that certain note purchase agreement dated as of the date hereof among Fidelity, RIH and RIHF, and State Street Bank and Trust Company of Connecticut, National Association ("State Street"), as trustee under that certain indenture dated as of the date hereof among State Street, RIH and RIHF (and such other parties that may from time to time become a party thereto). BUT IN TRUST, NEVERTHELESS, for the Ratable Benefit and security of the Noteholders without any priority of any of the Notes over any other of the Notes. UPON CONDITION that, until the happening of an Event of Default and subject to the provisions of Article Two, the Mortgagor shall be permitted to possess and use the Trust Estate, and to receive and use the rents, issues, profits, revenues and other income of the Trust Estate. AND IT IS HEREBY COVENANTED AND DECLARED that the Trust Estate is to be held and applied by the Mortgagee, subject to the further covenants, conditions and trusts hereinafter set forth, and the Mortgagor does hereby covenant and agree to and with the Mortgagee, for the Ratable Benefit of the Noteholders as follows: ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION Section 1.01. DEFINITIONS. For all purposes of this Mortgage, except as otherwise expressly provided or unless the context otherwise requires: (a) the terms defined in this Article One have the meanings assigned to them in this Article One and include the plural as well as the singular; (b) all accounting terms not otherwise defined herein have the meanings assigned to them, and all computations herein provided for shall be made in accordance with generally accepted accounting principles consistently applied; and (c) the words "herein," "hereof" and "hereunder" and other words of similar import refer to this Mortgage 9 as a whole and not to any particular Article, Section or other subdivision. "AFFILIATE" has the meaning set forth in Section 1.01 of the Indenture. "AFTER-ACQUIRED FEE MORTGAGE" has the meaning set forth in Section 2.07. "ALTERATIONS" has the meaning set forth in Section 5.12. "APPRAISER" means an MAI appraiser (i.e., a Member in good standing of the American Institute of Real Estate Appraisers) who is (i) of recognized standing among appraisers of properties similar to the Casino-Hotel and (ii) experienced in the appraisals of properties of a similar size and scope to that of the Casino-Hotel, selected by the Mortgagor. "ASSIGNMENT OF LEASES AND RENTS" has the meaning stated in Section 1.01 of the Indenture. "CAPITALIZED LEASE OBLIGATION" has the meaning stated in Section 1.01 of the Indenture. "CASINO" means that portion of the Casino-Hotel used for gaming and related activities. "CASINO-HOTEL" means the casino and hotel complex and ancillary structures and facilities located on the Premises and furniture, fixtures and equipment at any time contained therein. "CASUALTY" means any act or occurrence of any kind or nature which results in damage, loss or destruction to any buildings or improvements on the Premises and/or Tangible Personal Property. "CODE" has the meaning stated in Granting Clause Second. "COMBINATION TRANSACTION" has the meaning stated in Section 10.01 of the Indenture. "DEFAULT" means the occurrence and continuance of an Event of Default or an event which, after notice or lapse of time or both, would become an Event of Default. "DEPOSITARY" means an Independent entity to which insurance proceeds or a condemnation award is paid to be held in trust for restoration pursuant to the provisions of a Ground Lease or Superior Mortgage. 10 "EVENT OF DEFAULT" has the meaning stated in Section 3.01. An Event of Default shall "exist" if an Event of Default shall have occurred and be continuing. "EXCEPTED PROPERTY" means: (1) subject to the provisions of the Assignment of Leases and Rents, any cash held by the Mortgagor from rents, issues, profits, revenues and other proceeds of the Trust Estate to the extent that such cash may be, but has not been, distributed or paid out in accordance with the Services Agreement or in accordance with the provisions of Section 12.07 of the Indenture; (2) all personal property owned by lessees under Leases and the personal property of any guests staying in the Hotel; (3) any property deemed to be Excepted Property pursuant to the provisions of Section 2.03 hereof; (4) Tangible Personal Property subject to an FF&E Financing Agreement; and (5) counterchecks and any other property the granting of a security interest in which is prohibited by the New Jersey Casino Control Act, N.J.S.A. 5:12-1 et seq., and the regulations promulgated thereunder. "EXISTING ENCUMBRANCES" means the matters set forth in Schedule 8. "FIRST MORTGAGE DEBT" means any financing secured by a Superior Mortgage secured by or imposing a lien on all or a portion of the Trust Estate on a parity with or senior to the lien of this Mortgage. "FF&E FINANCING AGREEMENT" means a purchase money lien upon any Tangible Personal Property and other items constituting Operating Assets, such as computer software, which are financed, purchased or leased by the Mortgagor, provided that, except as set forth on Schedule 3, the principal amount of the indebtedness secured by such lien shall not exceed eighty-five (85%) percent of the cost to the Mortgagor of such property at the time of acquisition. "GROUND LEASES" has the meaning stated in Granting Clause Second. "GUARANTY" has the meaning set forth in Article Fourteen of the Indenture. 11 "HOTEL" means that portion of the Casino-Hotel not included within the Casino. "IMPOSITIONS" has the meaning stated in Section 5.08. "INDENTURE" means that certain Indenture - 11.375% Junior Mortgage Notes due 2004, dated as of even date herewith among the Mortgagor, RIHF, as issuer, and Mortgagee, as trustee, as it may from time to time be supplemented, modified or amended by one or more trust indentures or other instruments supplemental thereto entered into pursuant to the applicable provisions thereof. "INDEPENDENT" when used with respect to any specified Person means such a Person who (a) is in fact independent, (b) does not have any direct financial interest or any material indirect financial interest in the Mortgagor or in any other obligor upon the Notes or in any Affiliate of the Mortgagor or of such other obligor and (c) is not connected with the Mortgagor or such other obligor or any Affiliate of the Mortgagor or such other obligor as an officer, employee, promoter, underwriter, trustee, partner, director or person performing similar functions. Whenever it is herein provided that any Independent Person's opinion or certificate shall be furnished to the Mortgagee, such opinion or certificate shall state that the signer has read this definition and that the signer is Independent within the meaning thereof. A Person who is performing or who has performed services as an independent contractor to any specified Person shall not be considered not Independent merely by reason of the fact that such Person is or has performed such services. "INSURANCE AMOUNT" has the meaning stated in Section 5.11(a)(1). "INSURANCE REQUIREMENTS" means all terms of any insurance policy covering or applicable to the Trust Estate or any part thereof, all requirements of the issuer of any such policy, and all orders, rules, regulations and other requirements of the National Board of Fire Underwriters (or any other body exercising similar functions) applicable to or affecting the Trust Estate or any part thereof or any use or condition of the Trust Estate or any other part thereof. "INSURANCE TRUSTEE" means the Trustee or, if the Trustee so elects, any bank, trust company or insurance company with net worth in excess of $100,000,000, designated by the Trustee. 12 "INSURER" means an insurance company or companies selected by the Mortgagor authorized to issue insurance in the State of New Jersey with an A.M. Best rating as high or higher than the rating of insurance companies insuring other casino-hotels in Atlantic City, New Jersey. "LEASE" means each lease or sublease demising all or any portion of the Owned Land, the Leased Land or the buildings or improvements thereon and made by the Mortgagor as lessor or sublessor, as the case may be, or any spaces in any building or buildings which constitute a part of the Trust Estate, including every agreement relating thereto or entered into in connection therewith and every guaranty of the performance and observance of the covenants, conditions and agreements to be performed by the lessee under any such lease. Notwithstanding the foregoing, the term "Lease" shall not include any transient room rentals. "LEASED LAND" has the meaning stated in Granting Clause Second. "LEGAL REQUIREMENTS" means all laws, statutes, codes, acts, ordinances, orders, judgments, decrees, injunctions, rules, regulations, permits, licenses, authorizations, directions and requirements (including, without limitation, the New Jersey Environment Cleanup Responsibility Act and the New Jersey Spill Compensation and Control Act of 1976) of all governments, departments, commissions, boards, courts, authorities, agencies, officials and officers, of governments, federal, state and municipal (including, without limitation, the New Jersey Department of Environmental Protection, the Atlantic City Bureau of Investigations, Division of Protection, the Atlantic City Bureau of Investigations, Division of Gaming Enforcement of the State of New Jersey, and the Casino Control Commission of the State of New Jersey), foreseen or unforeseen, ordinary or extraordinary, which now is or at any time hereafter becomes applicable to the Trust Estate or any part thereof, or any of the adjoining sidewalks, or the use of the Casino-Hotel as a gaming or gambling facility or any other use or condition of the Trust Estate or any part thereof. "LESSORS" means the lessors under the Ground Leases. "MATURITY" when used with respect to the Notes means the date on which the principal of such Notes becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration or prepayment or otherwise. 13 "MORTGAGE DOCUMENTS" has the meaning set forth in Section 1.01 of the Indenture. "MORTGAGOR" means the Person named as the "Mortgagor" in the first paragraph of this instrument until a successor entity shall have become such pursuant to the applicable provisions of this Mortgage, and thereafter, except to the extent otherwise contemplated by Section 4.02, "Mortgagor" shall mean such successor entity exclusively. "NOTEHOLDERS" has the meaning set forth in Section 1.01 of the Indenture. "NOTE MORTGAGE" means that certain Mortgage Securing RIH Junior Promissory Note dated as of the date hereof from Mortgagor to RIHF, which secures the RIH Junior Promissory Note (as defined in the Indenture), the lien of which shall be pari passu with the lien of this Mortgage. "NOTES" has the meaning set forth in the Preamble. "NOTICES" has the meaning stated in Section 1.02. "OFFICERS' CERTIFICATE" means a certificate signed by an officer of the Mortgagor and delivered to the Mortgagee. Whenever this Mortgage requires that an Officers' Certificate be signed also by an Architect or an Accountant or other expert, such Architect, Accountant or other expert may (except as otherwise expressly provided in this Mortgage) be in the general employ of the Mortgagor. "OPERATING ASSETS" has the meaning stated in Granting Clause Fifth. "OPINION OF COUNSEL" means a written opinion of counsel who may (except as otherwise expressly provided in this Mortgage) be an employee of the Mortgagor or an employee of an Affiliate of the Mortgagor. Unless otherwise specifically provided in this Mortgage, such counsel may rely, as to any state of facts not personally known to such counsel and relating to such opinions, on an Officers' Certificate to the extent not rejected by the Trustee and its counsel (which rejection shall not be unreasonably given). "ORIGINAL POLICY" means an ALTA Loan Policies of Title issued by [list title insurance companies], pursuant to Title Commitment No. ____________ redated to the date hereof. "OUTSTANDING AMOUNT" has the meaning stated in Section 1.01 of the Indenture. 14 "OWNED LAND" has the meaning stated in Granting Clause First. "PERMITS" means all licenses, franchises, statements of compliance, certificates of operation, certificates of occupancy and permits required for the lawful ownership, occupancy, operation and use of all or a material portion of the Premises whether held by the Mortgagor or any other Person (which may be temporary or permanent) (including, without limitation, those required for the use of the Casino-Hotel as a licensed casino facility), in accordance with all applicable Legal Requirements. "PERMITTED ENCUMBRANCES" means: (1) liens for taxes, assessments, or governmental charges not yet due and payable or if due and payable are not delinquent to the extent that any fine, penalty, interest or cost may be added for nonpayment thereof; (2) Existing Encumbrances; (3) FF&E Financing Agreements; (4) After-Acquired Fee Mortgages; (5) the lien of the Mortgage Documents and any rights granted as provided therein; (6) Restricted Encumbrances; (7) the lien of the Trustee provided for by Section 8.07 of the Indenture; (8) any Working Capital Facility Lien; (9) liens created by the Senior Mortgage Documents; and (10) Capitalized Lease Obligations. "PERSON" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or any other entity or government or any agency or political subdivision thereof. "PREMISES" has the meaning set forth in Granting Clause Third. "RATABLE BENEFIT" has the meaning stated in Section 1.01 of the Indenture. 15 "RELEASED LAND" has the meaning stated in Section 2.05. "RELEASED FEE LAND" has the meaning stated in Section 2.06. "RESTORATION" has the meaning stated in Section 5.11(e). "RESTRICTED ENCUMBRANCES" means Leases permitted by and made in accordance with Section 5.13 of this Mortgage. "RIHF" shall mean Resorts International Hotel Financing, Inc., a Delaware corporation. "SENIOR GUARANTY MORTGAGE" has the meaning stated in Section 1.01 of the Indenture. "SENIOR MORTGAGE" has the meaning stated in Section 1.01 of the Indenture. "SENIOR MORTGAGE DOCUMENTS" has the meaning stated in Section 1.01 of the Indenture. "SERVICES AGREEMENT" has the meaning set forth in Section 1.01 of the Indenture. "STATED MATURITY" when used with respect to a note means the date specified in such note as the fixed date on which the principal of such note is due and payable. "SUPERIOR INSTRUMENT REQUIREMENTS" means the applicable terms, conditions and provisions of (i) the Ground Leases with respect to the Leased Land; and (ii) Superior Mortgages with respect to the portion of the Trust Estate encumbered thereby. "SUPERIOR MORTGAGES" means, collectively, the Senior Mortgage, the Senior Guaranty Mortgage, any Working Capital Facility Lien and any After-Acquired Fee Mortgages. "TAKING" means the acquisition or condemnation by eminent domain of the whole or any part of the Premises, by a competent authority, for any public or quasi-public use or purpose. "TANGIBLE PERSONAL PROPERTY" has the meaning stated in Granting Clause Fifth. 16 "TRUSTEE" means the Person named as the "Trustee" in the first paragraph of the Indenture and any successor thereto. "TRUST ESTATE" has the meaning stated in the habendum to the Granting Clauses. "TRUST INDENTURE ACT" has the meaning stated in Section 1.01 of the Indenture. "WORKING CAPITAL FACILITY" has the meaning stated in Section 1.01 of the Indenture. "WORKING CAPITAL FACILITY LIEN" has the meaning stated in Section 5.22(c) of this Mortgage. Section 1.02. NOTICES, ETC. (a) Any request, demand, authorization, direction, notice (including, without limitation, a notice of default), consent, waiver or other document provided or permitted by this Mortgage to be made upon, given or furnished to, or filed with, the Mortgagor or the Mortgagee (collectively, "Notices") shall be deemed given when either (i) delivered by hand or (ii) two days after sending by registered or certified mail, postage prepaid, addressed as follows: To the Mortgagor: Resorts International Hotel, Inc. c/o Resorts International, Inc. 1133 Boardwalk Atlantic City, New Jersey 08401 Attention: Christopher D. Whitney If to Mortgagee: U.S. Trust Company of California, N.A. 555 South Flower Street, Suite 2780 Los Angeles, California 90071 Attention: Corporate Trust Department (b) By Notice to the Mortgagor, the Mortgagee and the Trustee, any party may designate additional or substitute address for Notices which, notwithstanding Subsection (a) above, shall be deemed given when received. Section 1.03. FORM AND CONTENT OF DOCUMENTS DELIVERED TO MORTGAGEE. Whenever 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 17 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 such matters in one or several documents. Any certificate or opinion of an Officer of the Mortgagor may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such Officer knows that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any 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 Mortgagor stating that the information with respect to such factual matters is in the possession of the Mortgagor, unless such counsel knows that the certificate or opinion or representations with respect to such matters are erroneous. If appropriate to the matter being opined upon and to the extent not prohibited by the Trust Indenture Act, any Opinion of Counsel may be subject to rights of creditors and the availability of equitable remedies. Whenever any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Mortgage, they may, but need not, be consolidated and form one instrument. Whenever in this Mortgage, in connection with any application or certificate or report to the Mortgagee, it is provided that the Mortgagor shall deliver any document as a condition of the granting of such application, or as evidence of the Mortgagor's compliance with any term hereof, it is intended that the truth and accuracy, at the time of the granting of such application or at the effective date of such certificate or report (as the case may be), of the facts and opinions stated in such document shall in such case be conditions precedent to the right of the Mortgagor to have such application granted or to the sufficiency of such certificate or report. Section 1.04. COMPLIANCE CERTIFICATES AND OPINIONS. Upon any application or request by the Mortgagor to the Mortgagee to take any action under any provision of this Mortgage, the Mortgagor shall furnish to the Mortgagee an Officers' Certificate stating that all conditions precedent, if any, provided for in this Mortgage 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 18 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 Mortgage 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 Mortgage shall include: (a) a statement that each individual signing such certificate or opinion has read such condition or covenant and the definitions herein relating thereto; (b) 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; (c) 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 condition or covenant has been complied with; and (d) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. Section 1.05. EFFECT OF HEADINGS. The Article and Section headings herein are for convenience only and shall not affect the construction hereof. Section 1.06. SUCCESSORS AND ASSIGNS; AMENDMENTS. (a) Subject to Section 4.02 hereof and Section 10.02 of the Indenture, this Mortgage shall be binding upon and inure to the benefit of the parties hereto and of the respective successors and assigns of the parties hereto to the same effect as if each such successor or assign were in each case named as a party to this Mortgage. (b) This Mortgage may not be modified, amended, discharged, released nor any of its provisions waived except by agreement in writing executed by the Mortgagor and the Mortgagee and in accordance with the provisions of this Mortgage and the Indenture. Section 1.07. SEPARABILITY CLAUSE. In case any provision in this Mortgage shall be invalid, illegal or unenforceable, the validity, legality and enforceability of 19 the remaining provisions shall not in any way be affected or impaired thereby. Section 1.08. BENEFITS OF MORTGAGE. Nothing in this Mortgage or in the Guaranty, express or implied, shall give to any Person, other than the parties hereto and their successors and assigns, any benefit or any legal or equitable right, remedy or claim under this Mortgage. Section 1.09. GOVERNING LAW. This Mortgage shall be deemed to be a contract under the laws of the State of New Jersey and shall be construed in accordance with and governed by the laws of the State of New Jersey. Section 1.10. [Reserved] Section 1.11. PROVISIONS REQUIRED BY INDENTURE. Whenever the provisions of this Mortgage and the provisions of the Indenture shall be inconsistent, the provisions of the Indenture shall govern. Section 1.12. RIGHTS OF THE TRUSTEE. So long as the Trustee is the Mortgagee hereunder, except as otherwise provided in Section 8.01 of the Indenture: (a) the Mortgagee 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, coupon or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) whenever in the administration of this Mortgage the Mortgagee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Mortgagee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate; (c) the Mortgagee 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 the Mortgagee hereunder in good faith and in reliance thereon; 2 (d) the Mortgagee shall be under no obligation to exercise any of the rights or powers vested in it by this Mortgage at the request or direction of any Noteholder pursuant to the Indenture, unless such holder shall have offered to the Mortgagee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (e) the Mortgagee 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, or other paper or document but the Mortgagee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Mortgagee shall determine to make such further inquiry or investigation, it shall be entitled (subject to the express limitations with respect thereto contained in this Mortgage) to examine the books, records and premises of the Mortgagor, personally or by agent or attorney; (f) the Mortgagee may execute any of the trusts or power hereunder or perform any duties hereunder either directly or by or through agents or attorneys, and the Mortgagee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder; (g) the Mortgagee shall not be personally liable, in case of entry by it upon the Trust Estate, for debts contracted or liabilities or damages incurred in the management or operation of the Trust Estate; and (h) no provision of this Mortgage shall require the Mortgagee to expend or risk its own funds or otherwise incur any financial liability in the performance of its obligations hereunder, or in the exercise 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. 2 Section 1.13. MORTGAGE SUBJECT TO THE PROVISIONS OF THE ACT. Each provision of this Mortgage is subject to and shall be enforced in compliance with the provisions of the New Jersey Casino Control Act. This Mortgage shall not be transferred, assigned or amended without the prior approval of the New Jersey Casino Control Commission. Section 1.14. DISCHARGE OF LIEN. If the Mortgagor shall pay or cause to be paid, or there shall otherwise be paid, to the Mortgagee all amounts required to be paid by the Mortgagor pursuant to the Guaranty, or the Note Mortgage and the Notes, and the conditions precedent for the Indenture to cease, determine and become null and void in accordance with Section 5.01 of the Indenture shall have occurred, the Mortgagee shall promptly cancel and discharge this Mortgage, and execute and deliver to the Mortgagor all such instruments as may be necessary, required or appropriate to evidence such discharge and satisfaction of such lien or liens. Section 1.15. GENERAL APPLICATION. (a) The assertion of any rights upon any Default shall be subject in each instance to the giving of any notice and the expiration of any grace period provided for in Section 3.01 as a condition to such Default making it an Event of Default, unless the Trust Indenture Act requires otherwise, in which case the Trust Indenture Act shall control. (b) For the purposes of this Mortgage, it is understood that an event which does not materially diminish the value of the Mortgagee's interest in the Trust Estate 22 shall not be deemed an "impairment of security", as that phrase is used in this Mortgage. ARTICLE TWO RELEASE; OTHER EXCEPTED PROPERTY; SUBORDINATION Section 2.01. POSSESSION BY MORTGAGOR; DISPOSITIONS WITHOUT RELEASE. So long as there shall have been no demand for payment under the Guaranty pursuant to Section 3.02 of this Mortgage, the Mortgagor shall be suffered and permitted, with power freely and without let or hindrance on the part of the Mortgagee, subject to the provisions of this Mortgage and the Note Mortgage, to possess, use, manage, operate and enjoy the Trust Estate and every part thereof and to collect, receive, use, invest and dispose of the rents, issues, tolls, profits, revenues and other income from the Trust Estate or any part hereof, to use, consume and dispose of any consumables, goods, wares and merchandise in the ordinary course of business of operating the Casino-Hotel and to adjust and settle all matters relating to choses in action, leases and contracts. Section 2.02. OBSOLETE PROPERTY; TANGIBLE PERSONAL PROPERTY; LEASE MODIFICATIONS. The Mortgagor shall have the right, at any time and from time to time, unless an Event of Default shall have occurred and be continuing, without any release from or consent by the Mortgagee: (a) to sell or dispose of, free from the lien of this Mortgage, any Tangible Personal Property which, in its reasonable opinion, may have become obsolete or unfit for use or which is no longer necessary in the conduct of its businesses or the operation of the Trust Estate, and no purchaser of any such property shall be bound to inquire into any question affecting the Mortgagor's right to sell or otherwise dispose of the same, free from the lien of this Mortgage; (b) to alter, repair, replace, change the location (provided notice shall be given to Mortgagee as to any new location) or position of and add to any Tangible Personal Property; provided, however, that no change shall be made in the location of any such property subject to the lien of this Mortgage which would in any respect impair the security of this Mortgage upon such property; or (c) to renew, extend, surrender, terminate, modify or amend any leases of Tangible Personal Property, when, 23 in the Mortgagor's reasonable opinion, it is prudent to do so. The Mortgagor shall retain any net cash proceeds (subject to the right to pay dividends or make cash distributions pursuant to Section 12.07 of the Indenture) received from the sale or disposition of any Tangible Personal Property under Subsection (a) of this Section 2.02, in the business of operating the Casino-Hotel. The Mortgagee shall be under no responsibility or duty with respect to the exercise of the rights of the Mortgagor under this Section 2.02 or the application of the proceeds of any sale or disposition of any Tangible Personal Property. The Mortgagee shall, from time to time, promptly execute any written instrument in form satisfactory to it to confirm the propriety of any action taken by the Mortgagor under this Section 2.02, provided that the conditions set forth in Section 2.02 of the Note Mortgage have been satisfied. Section 2.03. OTHER EXCEPTED PROPERTY. Notwithstanding any provisions contained in this Mortgage or the Indenture to the contrary, including, without limitation, the provisions of Granting Clauses Fifth and Sixth and of Articles Two and Five hereof, if the Mortgagor acquires Tangible Personal Property and other items constituting operating assets, such as computer software subject to any FF&E Financing Agreement, or becomes the lessee under a lease for any of the same and if the document evidencing such FF&E Financing Agreement prohibits subordinate liens or the provisions of any such lease prohibits any assignment thereof by the lessee, and if any such prohibition is customary with respect to similar transactions of the lender or lessor, as the case may be, then the property so purchased or the lessee's interest in the lease, as the case may be, shall be deemed to be Excepted Property. If any such FF&E Financing Agreement permits subordinate liens then the Mortgagee agrees to execute and deliver to the Mortgagor, at the Mortgagor's expense, such documents as the holder of such FF&E Financing Agreement may reasonably request to evidence the subordination of the lien of this Mortgage to the lien of such FF&E Financing Agreement. Section 2.04. [Reserved] Section 2.05. RELEASED LAND. (a) Notwithstanding anything to the contrary herein contained, the Mortgagor shall have the right, at any time and 24 from time to time, unless an Event of Default shall have occurred and be continuing, to convey all or any part of the Released Fee Land (the land to be so conveyed is hereinafter referred to as the "Released Land"), free from the lien of the Mortgage, provided that the conditions set forth in Section 2.05(a) of the Note Mortgage have been satisfied. (b) The Mortgagee shall, from time to time, promptly execute any written instrument in form reasonably satisfactory to the prospective purchaser to confirm the release of the Released Fee Land, upon receipt by the Mortgagee of an Officers' Certificate stating that the Mortgagor is entitled to such release by virtue of the Mortgagor's compliance with this Section 2.05 and, if applicable, Section 2.05 of the Note Mortgage, provided, that the Mortgagee shall have no liability thereunder and all costs and expenses (including reasonable attorneys' fees) shall be paid by the Mortgagor. Section 2.06. RELEASED FEE LAND. (a) Notwithstanding anything to the contrary herein contained, in the event the Mortgagor intends to exercise an option to acquire fee title to Leased Land under the provisions of any Ground Lease, the Mortgagor shall have the right, unless an Event of Default shall have occurred and be continuing, to have an Affiliate exercise such options(s) or for the Mortgagor to exercise such options(s) on behalf of an Affiliate and in connection therewith to cause fee simple title to the Leased Land or any part thereof to be conveyed to an Affiliate of the Mortgagor (provided that no portion of the purchase price of the Leased Land or part thereof is paid by Mortgagor), free from the lien of this Mortgage (the land to be so conveyed is hereinafter referred to as the "Released Fee Land"), provided that the Mortgagor furnishes the Mortgagee with the following: (i) an Officers' Certificate requesting the release of the Released Fee Land from the Trust Estate and stating that (A) the Mortgagor is not required to own the Released Fee Land in order to maintain all Permits and in order to comply with the provisions of all material contracts to which the Mortgagor is a party or by which the Mortgagor is bound, (B) such Affiliate has received all Permits necessary to own the Released Fee Land (including without limitation all approvals required by the Casino Control Commission of the State of New Jersey), (C) there has been delivered to the Mortgagor and the Mortgagee a true copy of an instrument executed by such Affiliate stating that (i) such Affiliate may only engage in the activity of owning the Released Fee Land and (ii) such Affiliate shall not convey the Released Fee Land to another Affiliate of the Mortgagor, 25 unless such other Affiliate executes and delivers to the Mortgagor and the Mortgagee, the instruments that would have been required to be delivered pursuant to clause (C) if the Mortgagor conveyed the Released Fee Land to such other Affiliate (provided that this restriction shall only be effective until such time as this Mortgage shall be satisfied of record) and (D) the deed conveying the Released Fee Land to such Affiliate shall state that such conveyance is made subject to the terms, provisions and conditions of the applicable Ground Lease and that the fee and leasehold interests in the Released Fee Land shall not merge by reason of the Mortgagor and/or any Affiliate owning both the leasehold and fee estate therein, and that such estates shall always remain separate and distinct; (ii) an Opinion of Counsel to the effect that (A) the Mortgagor is not required to own the Released Fee Land in order to maintain in good standing all Permits or by the provisions of any material contract to which the Mortgagor is a party or by which it is bound to own the Released Fee Land and (B) the instruments described in clause (C) of subparagraph (i) were duly executed by and are binding upon such Affiliate; and (iii) an endorsement to the Original Policy, confirming that no merger of the fee and leasehold estates in the Released Fee Land has resulted from such conveyance. In addition, simultaneously with such acquisition, the Affiliate and Mortgagor shall enter into an instrument in form and substance reasonably satisfactory to Mortgagee, amending the applicable Ground Lease to provide such mortgagee protections as are customary and to the extent reasonably required by Mortgagee, including, without limitation, (A) a covenant of the landlord not to terminate the Ground Lease for any reason whatsoever (including without limitation, due to any default by tenant of its obligations under such Ground Lease), and (B) an agreement by the landlord not to accept payment of any fixed or base rent from the tenant (and, if tendered by the Mortgagor, an agreement to return same to the Mortgagor) or any other charges payable thereunder at any time that an Event of Default shall have occurred and shall be continuing. (b) The Mortgagee shall, from time to time, promptly execute any written instrument in form reasonably satisfactory to the prospective purchaser to confirm the release of the Released Fee Land, upon receipt by the Mortgagee of an Officers' Certificate stating that the Mortgagor is entitled to such release by virtue of the 26 Mortgagor's compliance with this Section 2.06, PROVIDED that the Mortgagee shall have no liability thereunder and all costs and expenses (including reasonable attorneys' fees) shall be paid by the Mortgagor. Section 2.07. AFTER-ACQUIRED FEE MORTGAGES. (a) Notwithstanding anything contained herein to the contrary (i) if no Event of Default has occurred and is continuing and (ii) if the Mortgagor shall acquire Released Fee Land, then simultaneously with the acquisition thereof, the Mortgagor shall have the right to encumber such fee simple title with a mortgage (such mortgage and any refinancing thereof permitted by the Indenture is hereinafter referred to as an "After-Acquired Fee Mortgage"). The lien of this Mortgage on the Released Fee Land shall be subordinated to the lien of the After-Acquired Fee Mortgage on the Released Fee Land (and to the lien of other Superior Mortgages which shall become a lien thereon in accordance with the terms thereof), provided the following conditions are satisfied: (i) the After-Acquired Fee Mortgage encumbers the fee simple title to such real property and no other property; (ii) the indebtedness secured by the After-Acquired Fee Mortgage (A) does not exceed 75% of the cost to the Mortgagor of such fee simple title at the time of the acquisition and (B) satisfies the criteria set forth in Section 12.08 of the Indenture; (iii) in the event the After-Acquired Fee Mortgage encumbers fee simple title to the Leased Land or any part thereof, such After-Acquired Fee Mortgage contains provisions binding on the holder of the After-Acquired Fee Mortgage and its successors and assigns confirming the provisions of Section 5.21(d) of this Mortgage; (iv) the Released Fee Land is not being acquired from an Affiliate of the Mortgagor; (v) the After-Acquired Fee Mortgage and other loan documents shall contain a provision binding upon the holder of such After-Acquired Fee Mortgage and other loan documents that all insurance proceeds in the event of a Casualty and awards for Takings of less than the entire Released Fee Land shall be used for purposes of Restoration; and (vi) the Mortgagor delivers to the Mortgagee an Officers' Certificate requesting such subordination and 27 certifying that the requirements of (i) through (v) above have been satisfied. (b) Anything contained in this Section 2.07 or elsewhere in this Mortgage to the contrary notwithstanding, the subordination of this Mortgage to any After-Acquired Fee Mortgage constituting a lien on Released Fee Land shall not be self-operative but shall be effective only upon the execution and delivery by the Mortgagee of an instrument in writing effecting such subordination. The Mortgagee shall deliver such instrument of subordination on the following conditions: (x) the Mortgagee shall have received an Officers' Certificate confirming that the conditions of (i) through (vi) of paragraph (a) have been satisfied, together with a true and correct copy of the After-Acquired Fee Mortgage and all other instruments securing the indebtedness evidenced thereby and (y) the instrument of subordination shall specifically state that this Mortgage is being subordinated not with respect to the lien of this Mortgage on the Ground Lease or on the leasehold estate created thereby, but only with respect to the fee simple title to the Leased Land or applicable part thereof and only if and to the extent that the After-Acquired Fee Mortgage being subordinated to is subject and subordinate to the Ground Lease and the leasehold estate created thereby. ARTICLE THREE REMEDIES Section 3.01. EVENTS OF DEFAULT. "Event of Default," whenever used herein, means any one of following events (including any applicable notice requirement and any period of grace as specified in this Section 3.01) (whatever the reason for such event 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): (a) default by the Mortgagor under the Guaranty and continuance of such default for a period of 10 days after there has been given a written notice to the Mortgagor specifying such default and stating that such notice is a "Notice of Default" hereunder; or (b) an "Event of Default," as defined in Section 3.01 of the Note Mortgage, shall occur; or (c) default in the performance, or breach, of any of the provisions of Article Four and the continuance of such default or breach for a period of 60 days after there has been given a written notice to the Mortgagor 28 specifying that such notice is a "Notice of Default" hereunder; or (d) any representation or warranty of the Mortgagor set forth in this Mortgage shall prove to be incorrect as of the time when made and the facts constituting such incorrectness impairs the Mortgagee's security and such impairment continues for a period of 30 days, unless such impairment is curable, but not susceptible of cure within such 30-day period (for reasons other than lack of funds), provided that the conditions set forth in Section 3.01(l) of the Note Mortgage have been satisfied. Section 3.02. DEMAND UNDER THE GUARANTY. If an Event of Default occurs and is continuing, and the Mortgagee has declared the Outstanding Amount of the Note to be due and payable immediately pursuant to Section 3.02 of the Note Mortgage, then the Mortgagee may declare all obligations under the Guaranty to be due and payable immediately. Section 3.03. APPLICATION OF MONEYS RECEIVED BY MORTGAGEE. Any moneys received by the Mortgagee pursuant to the provisions of this Article Three (including moneys received by the Trustee after any action or act by the Mortgagee under Section 3.10) shall be applied by the Mortgagee in accordance with the provisions of Section 7.06 of the Indenture. Section 3.04. RESTORATION OF RIGHTS AND REMEDIES. If the Mortgagee has instituted any proceeding to enforce any right or remedy under this Mortgage and such proceeding has been discontinued or abandoned for any reason or has been determined adversely to the Mortgagee, then and in every such case the Mortgagor and the Mortgagee shall, subject to any determination in such proceeding, be restored to its former position hereunder, and thereafter all rights and remedies of the Mortgagee shall continue as though no such proceeding had been instituted. Section 3.05. RIGHTS AND REMEDIES CUMULATIVE. No right or remedy herein conferred upon or reserved to the Mortgagee 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. 29 Section 3.06. DELAY OR OMISSION NOT WAIVER. No delay or omission of the Mortgagee to exercise any right or remedy accruing upon an 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 Three by law to the Mortgagee may be exercised, from time to time, and as often as may be deemed expedient, by the Mortgagee. Section 3.07. UNDERTAKING FOR COSTS. If any action or proceeding shall be commenced (including, without limitation, an action to foreclose this Mortgage or to collect under the Guaranty secured hereby) to which action or proceeding the Mortgagee is made or becomes a party, or in which it becomes necessary in the opinion of the Mortgagee to defend or uphold the lien of this Mortgage, then, to the extent it has not already done so pursuant to the terms of Section 3.07 of the Note Mortgage, the Mortgagor shall pay to Mortgagee all expenses, including reasonable attorneys' fees and expenses, incurred by the Mortgagee in connection therewith, together with interest at the rate then payable on the Notes, from the date of payment less the net amount received by the Mortgagee or the Trustee, as their interests may appear under any title insurance policy, and, until paid, all such expenses, together with interest as aforesaid, shall be a lien on the Trust Estate. Section 3.08. WAIVER OF APPRAISEMENT AND OTHER LAWS. To the full extent that it may lawfully so agree, the Mortgagor will not at any time insist upon, plead, claim or take the benefit or advantage of, any appraisement, valuation, stay, extension or redemption law now or hereafter in force, in order to prevent or hinder the enforcement of this Mortgage or the absolute sale of the Trust Estate, or any part hereof, or the possession thereof by any purchaser at any sale under this Article Three; and the Mortgagor, for itself and all who may claim under it, so far as it or they now or hereafter may lawfully do so, hereby waives the benefit of all such laws. The Mortgagor, for itself and all who may claim under it, waives, to the extent that it may lawfully do so, all right to have the property in the Trust Estate marshalled upon any foreclosure hereof, and agrees that any court having jurisdiction to foreclose this Mortgage may order the sale of the Trust Estate as an entirety. If any law in this Section 3.08 referred to and now in force, of which the Mortgagor or its successor or successors might take advantage despite this Section 3.08, shall hereafter be repealed or cease to be in force, such law shall not thereafter be deemed to constitute any part of the 30 contract herein contained or to preclude the application of this Section 3.08. Section 3.09. ENTRY. The Mortgagor agrees that upon the occurrence of an Event of Default the Mortgagor, upon demand of the Mortgagee during the continuance thereof, shall forthwith surrender to the Mortgagee the actual possession of, and it shall be lawful for the Mortgagee by such officers or agents as it may appoint to enter and take possession of, the Trust Estate (and the books and papers of the Mortgagor), and to hold, operate and manage the Trust Estate (including the making of all needful repairs, and such alterations, additions and improvements as the Mortgagee shall deem wise) and to receive the rents, issues, tolls, profits, revenues and other income thereof, and, after deducting the costs and expenses of entering, taking possession, holding, operating and managing the Trust Estate, as well as payments for taxes, insurance and other proper charges upon the Trust Estate and reasonable compensation to itself, its agents and counsel, to apply the same as provided in Section 3.03, PROVIDED, HOWEVER, that the Mortgagee's rights under this Section 3.09 shall be subject to the provisions of the New Jersey Casino Control Act and Section 3.14. Whenever all that is then due upon the Note and under any of the terms of this Mortgage shall have been paid and all defaults hereunder shall have been made good, the Mortgagee shall surrender possession to the Mortgagor. Section 3.10. POWER OF SALE; SUITS FOR ENFORCEMENT. In case an Event of Default shall occur and be continuing, the Mortgagee, with or without entry, in its discretion may: (a) sell, subject to any mandatory requirements of applicable law, the Trust Estate as an entirety, or in such parcels, as the Mortgagee may determine, to the highest bidder at public auction at such place and at such time (which sale may be adjourned by the Mortgagee from time to time in its discretion by announcement at the time and place fixed for such sale, without further notice) and upon such terms as the Mortgagee may fix and briefly specify in a notice of sale to be published as required by law; or (b) proceed to protect and enforce its rights under this Mortgage by sale pursuant to judicial proceedings or by a suit, action or proceeding in equity or at law or otherwise, whether for the specific performance of any covenant or agreement contained in this Mortgage or in aid of the execution of any power granted in this Mortgage or for the foreclosure of this Mortgage or for the enforcement of any other legal, equitable or other remedy, as the Mortgagee, being advised by counsel, shall deem most effectual to protect 31 and enforce any of the rights of the Mortgagee; the failure to join tenants shall not be asserted as a defense to any foreclosure or proceeding to enforce the rights of the Mortgagee. Section 3.11. INCIDENT OF SALE. Upon any sale of any of the Trust Estate, whether made under the power of sale hereby given or pursuant to judicial proceedings, to the extent permitted by law: (a) all obligations owing under the Guaranty, if not previously due, shall at once become and be immediately due and payable; (b) subject to the provisions of Section 3.14 and the receipt of any required prior approvals of the New Jersey Casino Control Commission, the Mortgagee may bid for and purchase the property offered for sale, and upon compliance with the terms of sale may hold, retain and possess and dispose of such property, without further accountability, and may, in paying the purchase money therefor, delivery any notes or claims for interest thereon in lieu of cash to the amount which shall, upon distribution of the net proceeds of such sale, be payable thereon, and such notes or claims for interest thereon, in case the amounts so payable thereon shall be less than the amount due thereon, shall be returned to the holders thereof after being appropriately stamped to show partial payment; (c) the Mortgagee may make and deliver to the purchaser or purchasers a good and sufficient deed, bill of sale and instrument of assignment and transfer of the property sold; (d) the Mortgagee is hereby irrevocably appointed the true and lawful attorney of the Mortgagor, in its name and stead, to make all necessary deeds, bills of sale and instruments of assignment and transfer of the property thus sold; and for that purpose it may execute all necessary deeds, bills of sale and instruments of assignment and transfer, and may substitute one or more persons, firms or corporations with like power, the Mortgagor hereby ratifying and confirming all that its attorney or such substitute or substitutes shall lawfully do by virtue hereof; but if so requested by the Mortgagee or by any purchaser, the Mortgagor shall ratify and confirm any such sale or transfer by executing and delivering to the Mortgagee or to such purchaser or purchasers all proper deeds, bills of sale, instruments of assignment and transfer and releases as may be designated in any such request; 32 (e) all right, title, interest, claim and demand whatsoever, either at law or in equity or otherwise, of the Mortgagor of, in and to the property so sold shall be divested and such sale shall be a perpetual bar both at law and in equity against the Mortgagor, its successors and assigns, and against any and all persons claiming or who may claim the property sold or any part thereof from, through or under the Mortgagor, its successors and assigns; and (f) the receipt of the Mortgagee or of the officer making such sale shall be a sufficient discharge to the purchaser or purchasers at such sale for his or their purchase money and such purchaser or purchasers and his or their assigns or personal representatives shall not, after paying such purchase money and receiving such receipt, be obliged to see to the application of such purchase money, or be in anywise answerable for any loss, misapplication or non-application thereof. Section 3.12. RECEIVER. Upon the occurrence of an Event of Default and commencement of judicial proceedings by the Mortgagee to enforce any right under this Mortgage, the Mortgagee shall be entitled, as against the Mortgagor, without notice or demand and without regard to the adequacy of the security for the Guaranty or the solvency of the Mortgagor, to the appointment of a receiver of the Trust Estate, and of the rents, issues, profits, revenues and other income thereof, PROVIDED, HOWEVER, that the Mortgagee's rights under this Section 3.12 shall be subject to the provisions of the New Jersey Casino Control Act and Section 3.14 hereof. Section 3.13. SUITS TO PROTECT THE TRUST ESTATE. Upon 5 days' prior written notice to the Mortgagor (or such shorter period or without notice if deemed necessary and appropriate by the Mortgagee), the Mortgagee shall have power to institute and maintain such proceedings as it may deem necessary and appropriate to prevent any impairment of the Trust Estate by any acts which may be unlawful or in violation of this Mortgage and to protect its interests in the Trust Estate and in the rents, issues, profits, revenues and other income arising therefrom, including power to institute and maintain proceedings to restrain the enforcement of or compliance with any 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 hereunder or be materially prejudicial to the interests of the Mortgagee. Section 3.14. MANAGEMENT OF CASINO-HOTEL. Notwithstanding any provision of this Article Three to the 33 contrary, following an Event of Default and the taking of possession of the Trust Estate or any part thereof by the Mortgagee and/or the appointment of receiver of the Trust Estate or any part thereof, the Mortgagee or any such receiver shall be authorized, in addition to the rights and powers of the Mortgagee and such receiver set forth elsewhere in this Mortgage, to retain one or more experienced operators of hotels and/or casinos to manage the Casino-Hotel, PROVIDED that any such operator shall have all necessary legal qualifications, including all Permits, to manage the Casino-Hotel. ARTICLE FOUR CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE Section 4.01. CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER ONLY ON CERTAIN TERMS. The Mortgagor shall comply with all provisions applicable to the Mortgagor in Article Ten of the Indenture. Section 4.02. SUCCESSOR ENTITY SUBSTITUTED. Upon any consolidation or combination or any conveyance or transfer of the Trust Estate or any portion thereof in accordance with Section 10.01 of the Indenture, the successor entity formed by such consolidation or into which the Mortgagor is combined or to which such conveyance or transfer is made shall succeed to, and be substituted for, and may exercise every right and power of, the Mortgagor under this Mortgage with the same effect as if such successor entity had been named as the Mortgagor herein; PROVIDED, HOWEVER, that no such conveyance or transfer of the Trust Estate substantially as an entirety, unless such conveyance or transfer is in compliance with the provisions of Article Ten of the Indenture, shall have the effect of releasing the Person named as "the Mortgagor" in the first paragraph of this instrument or any successor entity which shall theretofore have become such in the manner prescribed in such Article Ten from its liability as guarantor. Section 4.03. LIMITATION ON SALES OF TRUST ESTATE. Except as otherwise expressly permitted by this Mortgage or the Indenture, the Mortgagor shall not sell, assign, lease, sublease, hypothecate, pledge, mortgage or otherwise transfer all or any part of the Trust Estate or any interest therein (including without limitation any interest in the Ground Leases). Without limiting the generality of the foregoing, the Mortgagor shall not separate, or attempt to separate, its ownership of its interest in the Ground Leases from its ownership of the buildings constituting the Casino-Hotel or any part thereof. 34 ARTICLE FIVE COVENANTS AND REPRESENTATIONS OF MORTGAGOR Section 5.01. [Reserved] Section 5.02. FF&E FINANCING AGREEMENTS. The Mortgagor covenants and agrees to comply with all of the terms and conditions set forth in any FF&E Financing Agreements before the expiration of any applicable notice and cure periods contained in the FF&E Financing Agreements. Section 5.03. LIMITATIONS ON LIENS. The Mortgagor will not create, incur, suffer or permit to be created or incurred or to exist any mortgage, lien, charge or encumbrance on or pledge of any of the Trust Estate, other than (i) Permitted Encumbrances, (ii) liens on the Trust Estate in connection with indebtedness permitted by clauses (i), (ii), (iii), (iv) or (v) of Section 12.08(a) of the Indenture, and (iii) a building contract or a notice of intention filed by a mechanic, materialman or laborer under the New Jersey lien law. Without limiting the generality of the foregoing sentence but notwithstanding the provisions of the foregoing sentence, the Mortgagor shall not be deemed to have breached the provisions of the foregoing sentence by virtue of the existence of a lien for Impositions or mechanics liens so long as the Mortgagor is in good faith contesting the validity of the same in accordance with the provisions of Section 5.09 to the extent that the matters described in (i) and (ii) do not constitute a default under any Ground Lease or Superior Mortgage. Section 5.04. [Reserved] Section 5.05. ACTIONS AND PROCEEDINGS. The Mortgagor hereby acknowledges the right of the Mortgagee, in the name of and on behalf of the Mortgagor, (a) to appear in and defend any action or proceeding brought with respect to the Trust Estate or any part thereof and (b) upon 5 days' prior written notice to the Mortgagor (or such shorter period or without notice if deemed necessary and appropriate by the Mortgage), to commence any action or proceeding to protect the interest of the Mortgagee in the Trust Estate. Section 5.06. WARRANTY OF LEASEHOLD ESTATE AND TITLE. The Mortgagor represents and warrants that as of the date hereof: (a) it is duly authorized under the laws of the State of New Jersey and all other applicable laws to 35 execute and deliver this Mortgage, and all corporate action on its part necessary for the valid execution and delivery of this Mortgage has been duly and effectively taken; (b) it is the lawful owner and is lawfully seized and possessed of the Owned Land and all buildings and improvements thereon, free and clear of all liens, charges or encumbrances, other than the lien of the Mortgage Documents, any Working Capital Facility Lien and Existing Encumbrances; (c) it is the holder of and has good and marketable title to the leasehold interests and leasehold estates under the Ground Leases and to the Ground Leases, subject to no lien, encumbrance or charge other than the lien of the Mortgage Documents, any Working Capital Facility Lien and Existing Encumbrances; (d) (i) the Ground Leases are valid and subsisting demises of the Leased Land for the terms therein set forth, (ii) there are no defaults thereunder by any Lessor or the lessee as to which written notice has been given to or by the lessee, (iii) the Mortgagor has delivered true and correct copies of the Ground Leases and all modifications, amendments and supplements thereto, and (iv) each of the Ground Leases is in full force and effect and has not been modified, amended or supplemented, except as described on Schedule 2; (e) it has good title to the Operating Assets, subject to no lien, encumbrance or charge, other than the lien of the Mortgage Documents, any Working Capital Facility Lien and Existing Encumbrances; and (f) the Mortgagor has good and lawful right and authority to execute this Mortgage and to grant, bargain, sell, alien, convey, assign, transfer, hypothecate, pledge, mortgage and confirm the Trust Estate as provided herein (including without limitation with respect to the Operating Assets and the Ground Leases, without the consent of any third party, other than governmental authorities but any applicable or necessary consent or approval of any such governmental authority has been given or waived at or prior to the execution and delivery of this Mortgage), and this Mortgage constitutes a valid third mortgage lien and third priority security interest in the Trust Estate PARI PASSU with the lien of the Note Mortgage, subject only to Working Capital Facility Liens and Existing Encumbrances. 36 The Mortgagor hereby does and will forever warrant and defend (x) the title to Trust Estate (including without limitation, its leasehold estates under the lessee's interests in the Ground Leases) (subject to Permitted Encumbrances) and (y) the priority of the lien of this Mortgage (subject to Permitted Encumbrances other than Restricted Encumbrances), against the claims and demands of all persons whomsoever, at the Mortgagor's sole cost and expense. Section 5.07. FURTHER ASSURANCES; RECORDING. The Mortgagor will, as provided in Section 5.13, from time to time subject its right, title and interest under all Leases to the lien of this Mortgage. The Mortgagor will cause this instrument and all other instruments of further assurance, including all financing statements and continuation statements covering security interests in personal property, to be promptly recorded, registered and filed, and at all times to be kept recorded, registered and filed, and will execute and file such financing statements and cause to be issued and filed such continuation statements, all in such manner and in such places as may be required by law or as requested by the Mortgagee to fully preserve and protect the rights of the Mortgagee as a secured party under the Uniform Commercial Code to all property comprising the Trust Estate (to the extent a grant of a security interest therein is governed by the Uniform Commercial Code) and to perfect, preserve and protect the lien of this Mortgage as a valid mortgage lien of record and a valid security interest on the Trust Estate subject to Permitted Encumbrances (other than Restricted Encumbrances). The Mortgagor will pay all filing or recording fees, and all expenses incident to the execution and delivery of this Mortgage, and any instrument of further assurance, and all federal, state, county and municipal stamp taxes and other taxes, duties, imposts, assessments and charges arising out of or in connection with the execution and delivery of this Mortgage, any financing statement or continuation statement with respect to the personal property constituting part of the Trust Estate or any instrument of further assurance. Section 5.08. PAYMENT OF TAXES AND CERTAIN CLAIMS; COMPLIANCE WITH LEGAL REQUIREMENTS AND INSURANCE REQUIREMENTS. The Mortgagor will: (a) subject to the provisions of Section 5.09 relating to contests, pay or cause to be paid promptly (or when installments of the same shall become due and payable, if, by law or by agreement or arrangement with the applicable governmental agency or authority, the same 37 may be paid in installments) before any fine, penalty, interest or cost may be added for nonpayment (but no later than when the same are payable by the Mortgagor pursuant to any Superior Instrument Requirement), all taxes (including, without limitation, real estate taxes, personal or other property taxes and all sales, value added, use and similar taxes), assessments (including, without limitation, all assessments for public improvements or benefits, whether or not commenced or completed prior to the date hereof and whether or not to be completed prior to the satisfaction of this Mortgage), water, sewer or other rents, rates and charges, excises, levies, license fees, permit fees, inspection fees and other authorization fees and other charges, in each case whether general or special, ordinary or extraordinary, or foreseen or unforeseen, of every character (including all interest, additions to tax and penalties thereon), that may be assessed, levied, confirmed or imposed on or in respect of or be a lien upon (1) the Trust Estate (including without limitation the Leased Land) or any part thereof or any rent therefrom or any estate, right or interest therein, or (2) any acquisition, occupancy, use, leasing, or possession of or activity conducted on the real property or any part thereof included in the Trust Estate or any gross receipts thereof or of the rent therefrom (all of the foregoing being referred to collectively as "Impositions"). Notwithstanding the foregoing or any other provision of this Mortgage, the Mortgagor shall not be required to pay any income, profits or revenue tax upon the income of the Mortgagee, the Trustee or the Noteholders nor any franchise, excise, corporate, estate, inheritance, succession, capital levy or transfer tax of the Mortgagee, the Trustee or the Noteholders nor any interest, additions to tax or penalties in respect thereof, unless such tax is imposed, levied or assessed in substitution for any Impositions that the Mortgagor is required to pay pursuant to this Section 5.08. The Mortgagor will deliver to the Mortgagee official receipts or other proof evidencing payments of any Impositions in accordance with the requirements of this Section 5.08. The Mortgagor shall not be entitled to any credit for taxes or assessments paid against the Guaranty; (b) except for such property which the Mortgagor may dispose of or replace pursuant to Section 2.02, maintain and keep all its properties used or useful in the conduct of its business (other than obsolete equipment), including, without limitation, the Casino-Hotel and all Tangible Personal Property, in such good repair, working order and condition, except for reasonable wear and use, and make or cause to be made all 38 such needful and proper repairs, renewals and replacements thereto consistent with the standards of other casino-hotels in Atlantic City, New Jersey; (c) occupy and continuously operate the Casino-Hotel and keep the Casino-Hotel supplied with Tangible Personal Property, all in a manner consistent with the standards of other casino-hotels in Atlantic City, New Jersey (provided that nothing contained in this Section 5.08(c) shall be deemed to reduce the time period set forth in Section 3.01(f)); (d) subject to the provisions of Section 5.09 relating to contests, the Mortgagor at its sole expense will timely (1) comply with all Legal Requirements and Insurance Requirements, whether or not compliance therewith shall require structural changes in the buildings and improvements included in the Trust Estate or interfere with the use and enjoyment of the Trust Estate or any part thereof, (2) procure, maintain and comply with all permits and other authorizations required for (i) the use of the Casino as a gaming and gambling facility, (ii) the on-premises consumption of alcoholic beverages at the Casino-Hotel and (iii) any other use of the Trust Estate or any part thereof then being made, and for the proper erection, installation, operation and maintenance of the improvements or any part thereof, and (3) comply with any instruments of record at the time in force affecting the Trust Estate or any part thereof, if the failure to comply with the same would impair the Mortgagee's security hereunder. Without limiting the generality of the foregoing, the Mortgagor represents and warrants that at the time of the execution of this Mortgage, the Mortgagor is in compliance with the requirements of clauses (1), (2) and (3); (e) in the event of the passage after the date of this Mortgage of any law of the State of New Jersey, or any other governmental entity, changing in any way the laws now in force for the taxation of mortgages, or debts secured thereby, for state or local purposes, or the manner of the operation of any such taxes, so as to affect the interest of the Mortgagee, then and in such event, the Mortgagor shall bear and pay the full amount of such taxes, provided that if for any reason payment by the Mortgagor of any such new or additional taxes would be unlawful or if the payment thereof would constitute usury or render the indebtedness secured hereby wholly or partially usurious under any of the terms or provisions of the Note, or this Mortgage, or otherwise, the Mortgagee may, at the Mortgagee's option, declare the whole sum secured by this Mortgage, with interest 39 thereon, to be due and payable 90 days after notice of election thereof has been given by the Mortgagee, or the Mortgagee may, at the Mortgagee's option, pay that amount or portion of such taxes as renders the loan or indebtedness secured hereby unlawful or usurious, in which event the Mortgagor shall concurrently therewith pay the remaining lawful and nonusurious portion or balance of such taxes. Section 5.09. PERMITTED CONTESTS. The Mortgagor may, at its sole expense, contest by appropriate legal proceedings conducted in good faith and with due diligence, the amount or validity or application, in whole or in part of any Imposition or lien therefor or any Legal Requirement or Insurance Requirement or the application of any instrument of record affecting the Trust Estate or any part thereof or any claims of mechanics, materialmen, suppliers, or vendors or lien therefore, and may withhold payment of the same pending such proceedings if permitted by law, or make payment under protest, or defer compliance with any such Legal Requirement, any such Insurance Requirement or the terms of any such instrument, and the same shall not be a Default hereunder, provided that (a) in the case of any Impositions or lien therefor or any claims of mechanics, materialmen, suppliers or vendors or lien therefor, such proceedings shall suspend the collection thereof from each of the Mortgagor, the Mortgagee, the Trustee, the Noteholders and the Trust Estate, (b) neither the Trust Estate nor any interest therein would be in any danger of being sold, forfeited, or lost, (c) such action would not result in or constitute a default under any Ground Lease or Superior Mortgage, (d) in the case of a Legal Requirement, neither the Noteholders nor the Mortgagee shall be in any danger of any civil or any criminal liability, and the failure of the Mortgagor to comply with such Legal Requirement shall not affect the continuance in good standing of any Permit or result in the suspension, termination, non-renewal or material adverse modification of any permit, and (e) in the case of an Insurance Requirement, the failure of the Mortgagor to comply therewith shall not affect the validity of any insurance required to be maintained by the Mortgagor hereunder. Section 5.10. MECHANICS' AND OTHER LIENS. Without limiting the generality of the first sentence of Section 5.03 and notwithstanding the provisions of Section 5.03(a)(ii), the Mortgagor will cause to be removed, either by payment, or bonding or otherwise, all claims and demands of mechanics, materialmen, laborers, and others which, if unpaid, might result in, or permit the creation of, a lien on the Premises and/or Trust Estate or any part thereof, or on the revenues, rents, issues, income and profits arising therefrom and in general will do or cause to be done everything necessary so 40 that the lien hereof shall be fully preserved, at the cost of the Mortgagor, without expense to the Mortgagee. Section 5.11. INSURANCE. (a) The Mortgagor will, at its expense, maintain with Insurers: (1) insurance with respect to the Mortgagor's insurable properties constituting a part of the Trust Estate against loss or damage by fire, lightning, and other risks from time to time included under "all-risk" policies and against loss or damage by sprinkler leakage, water damage, collapse, malicious mischief and explosion in respect of any steam and pressure boiler and similar apparatus located on such insurable properties, in amounts at all times sufficient to prevent the Mortgagor from becoming a coinsurer within the terms of the applicable policies, but in any event such insurance shall be maintained in such insurable amounts not less than the greatest of the following (hereinafter referred to as the "Insurance Amount"): (i) 100% of the then full insurable value of such insurable properties, the term "full insurable value" to mean the actual replacement cost (excluding the costs of foundation, footing, excavation, paving, landscaping and other similar, non-insurable improvements) determined from time to time (but not less frequently than once in any 36 calendar months), by an Architect, contractor, appraiser, or an Insurer, or (ii) the amount required to be maintained pursuant to the Superior Instrument Requirements; (2) war risk insurance as and when such insurance is obtainable from the United States of America or any agency thereof as promptly as reasonably practicable after the same becomes so obtainable, in an amount not less than the Insurance Amount, or in such lesser amount as may then be so obtainable; (3) public liability, including personal injury and property damage and comprehensive general liability connected with the possession, use, leasing, operation or condition of such insurable properties in such amounts as, in the Mortgagor's judgment, are prudent, considering the cost of such insurance, for personal injury and property damage with respect to any one occurrence, which may be under an umbrella policy. Anything contained in this clause (3) to the contrary notwithstanding, the Superior Instrument Requirements with respect to the 41 kinds and amount of insurance described in this clause (3) shall be satisfied by the Mortgagor; (4) appropriate workers' compensation insurance with respect to any work (to the extent the risks to be covered thereby are not already covered by other policies of insurance maintained by the Mortgagor) on or about such insurable properties; (5) business interruption insurance covering not less than 12 months of loss, provided that, at any time that the Mortgagor is renewing any policy for such insurance or taking out any new or replacement such policy covering a period of less than 12 months, the Mortgagor shall deliver to the Mortgagee an Officers' Certificate certifying that the period of coverage to be maintained by the Mortgagor under such policy is the maximum that can be maintained at rates determined by the Mortgagor to be reasonable for such coverage; (6) to the extent available, flood insurance in an amount not less than the Insurance Amount, or such lesser amount as may then be so obtainable; and (7) such other insurance with respect to such insurable properties against loss or damage of the kinds (i) from time to time customarily insured against by persons owning or using casino-hotels of comparable size in the boardwalk area of Atlantic City, New Jersey and (ii) required to be maintained pursuant to the Superior Instrument Requirements. Notwithstanding the foregoing, to the extent permitted by Superior Instrument Requirements, (i) the Mortgagor shall be permitted to maintain a deductible with respect to the insurance policies described in clauses (1), (2), (6) and (7) in an amount not to exceed (x) for the twelve month period commencing the date hereof, $100,000 with respect to the insurance policies described in clause (1), (2), (6) and (7) thereafter, the customary deductible (if any) with respect to the insurance maintained by casino-hotels of a similar size and value in Atlantic City, New Jersey (but in no event more than $1,000,000), (ii) the Mortgagor shall be permitted to maintain a $200,000 self insured retention under the general liability policy described in clause (3) and a deductible with respect to the other insurance policies described in clause (3) in an amount not to exceed the amount of deductible as is customarily maintained by casino-hotels of similar size in Atlantic City, New Jersey, (iii) the Mortgagor shall not reduce its insurance coverage for the matters described in clause (3) (which for purposes of this paragraph means a reduction in single limits or an increase in deductible) unless and until the Mortgagor 42 delivers to the Mortgagee an Officers' Certificate certifying (w) that the coverage the Mortgagor was theretofore maintaining cannot be maintained at rates determined by the Mortgagor to be reasonable for such coverage, (x) the amount of the proposed reduction, (y) the premium for the existing and the proposed reduced coverage, and (z) that the proposed deductible satisfied the criteria set forth in this clause (iii), and (iv) the Mortgagor shall be permitted to maintain a deductible with respect to the insurance policies described in clause (5) in the forms of and in an amount not to exceed the amount of deductible as is customarily maintained by casino-hotels of similar size in Atlantic City, New Jersey. (b) Each policy of insurance maintained by the Mortgagor pursuant to Subsection (a) of this Section 5.11 shall, (1) except in the case of workers' compensation insurance, name as additional insureds the Mortgagee, in both its individual and fiduciary capacities, and, to the extent required by the Superior Instrument Requirements, the Lessors and the holders of the Superior Mortgages, (2) provide that all insurance proceeds for losses, except in the case of public liability insurance and workers' compensation insurance or as otherwise provided in Subsections (d), (e) and (f) of this Section 5.11, be payable solely to the Mortgagee or such other party as is required to receive such proceeds under a Superior Mortgage, (3) except in the case of workers' compensation, include effective waivers (whether under the terms of any such policy or otherwise) by the insurer of all claims for insurance premiums against all lost payees and named insureds (other than the Mortgagor) and all rights of subrogation against any named insured, (4) except in the case of public liability and workers' compensation insurance, provide that any losses shall be payable notwithstanding (i) any act, failure to act, negligence of, or violation or breach of warranties, declarations or conditions contained in such policy by the Mortgagor or the Mortgagee or any other named insured or loss payee (including, without limitation, with respect to the Released Fee Land, the holders of any After-Acquired Fee Mortgages), (ii) the occupation or use of the insurable properties for purposes more hazardous than permitted by the terms of the policy, (iii) any foreclosure or other proceeding or notice of sale relating to the insurable properties or (iv) any change in the title to or ownership or possession of the insurable properties, (5) contain a non-contributory mortgagee clause in favor of the Mortgagee, and (6) provide that if all or any part of such policy is cancelled, terminated or expires, the insurer will forthwith give notice thereof to each named insured and loss payee and that no cancellation, reduction in amount or material change in coverage thereof shall be effective until at least 30 days after receipt by each named insured and loss payee of written notice thereof. 43 (c) The Mortgagor will deliver to the Mortgagee, (1) duplicate originals of all insurance policies that the Mortgagor is required to maintain pursuant to this Section 5.11 and (2) within 30 days after each reduction in insurance required to be maintained by the Mortgagor hereunder, an Officers' Certificate setting forth the particulars as to all such insurance policies and certifying that the same comply with the requirements of this Section 5.11, that all premiums or installments thereof then due thereon have been paid and that the same are in full force and effect. The Mortgagee shall not be responsible for effecting or renewing any insurance or for the responsibility or solvency of the insurers. (d) The Mortgagor shall give written notice to the Mortgagee immediately upon obtaining knowledge of any Casualty which (x) results in damage, loss or destruction in an amount in excess of [$5,000,000] to any buildings or improvements on the Premises and/or any Tangible Personal Property or (y) pursuant to any Superior Instrument Requirement, would require the deposit of insurance proceeds with the Depositary, or action or proceeding with respect thereto. Whenever the Superior Instrument Requirements require or permit the selection of the Depositary by the Mortgagor, the Mortgagor shall select the Insurance Trustee as the Depositary. Within 30 days after any Casualty which results in any damage, loss or destruction in an amount in excess of $10,000,000 to any buildings or improvements of the Premises and/or any Tangible Personal Property, the Mortgagor shall deliver to the Mortgagee a certificate of an Architect stating whether, in such Architect's opinion, applicable Legal Requirements permit the Restoration of such buildings and improvements for the same uses and to the same size and quality in all material respects, as existed immediately prior to the Casualty (and if such certificate states the Legal Requirements do not permit such Restoration, such certificate shall describe the manner closest approximating such criteria to which the buildings and improvements could be so restored and shall be accompanied by a Certificate of Appraised Value dated not more than 10 days prior to delivery setting forth the Appraised Value immediately prior to the Casualty and the estimated Appraised Value immediately after the Restoration). If the Mortgagor is required to deliver such Certificates of Appraised Value and if based on such Certificates of Appraised Value immediately after Restoration, the aggregate Outstanding Amount of First Mortgage Debt immediately after such Restoration shall exceed the greater of (i) 66 2/3% of the Appraised Value immediately after such Restoration or (ii) the quotient of the Outstanding Amount of First Mortgage Debt immediately prior to such Casualty divided by the Appraised Value immediately prior to the Casualty multiplied by the Appraised Value immediately 44 after such Restoration, then the proceeds of any insurance shall, at the election of Mortgagee, either be applied to Restoration as set forth in Subsections (e), (h) and (i) below) or paid and delivered to the Mortgagee to the extent of the then Outstanding Amount of the Note and any other interest or other sums due hereunder or thereunder to be applied to the satisfaction of the Mortgage to the extent proceeds are available for such purpose and provided that no additional sums are due to the Trustee or the Noteholder under the Indenture, the balance of any net insurance proceeds shall be paid to the Mortgagor. Notwithstanding the foregoing sentence, if such Certificates of Appraised Values indicates that the Outstanding Amount of First Mortgage Debt immediately after such Restoration exceeds the greater of the two amounts determined pursuant to subclauses (i) and (ii) above, the proceeds of insurance will be made available for Restoration (subject to paragraphs, (e), (h) and (i) below) if the Mortgagor obtains an irrevocable commitment from a nationally recognized financial institution having a combined capital and surplus of at least $100,000,000, to supply, upon an acceleration under this Mortgage as a result of an Event of Default, funds to the Mortgagor as additions to capital in an amount equal to the Outstanding Amount of First Mortgage Debt in excess of the Appraised Value necessary to be paid down so that the Outstanding Amount of First Mortgage Debt will not exceed either of the two amounts determined pursuant to such clauses (i) and (ii), PROVIDED that such commitment may only be released if, upon an Appraisal at any time following completion of such Restoration, the aggregate Outstanding Amount of the First Mortgage Debt does not exceed 66- 2/3% of the Appraised Value. (e) Subject to the provisions of Subsection (d) above, in case a Casualty occurs, the following shall apply: (1) if the cost of Restoration (as hereinafter defined) does not exceed the sum of $10,000,000, the net insurance proceeds shall be paid by the Mortgagee to the Mortgagor (unless the Superior Instrument Requirements provide that the same shall be paid to the Depositary); (2) if the cost of Restoration is $10,000,000 or more or if the Superior Instrument Requirements provide that the same shall be paid to the Depositary, the net insurance proceeds shall be paid by the Mortgagee to the Insurance Trustee (or other Depositary required by the Superior Instrument Requirements, provided that such Depositary holds such proceeds in trust for purposes of paying the costs of Restoration); 45 (3) the Mortgagor shall commence with reasonable promptness under the circumstances and thereafter with due diligence proceed to perform and complete in a good and workmanlike manner the restoration, repair, replacement or rebuilding of the damage or destruction resulting from the Casualty (all of which restoration, repair, replacement or rebuilding are referred to as the "Restoration") in accordance with the plans and specifications submitted to the Insurance Trustee, in conformance with all Legal Requirements and Superior Instrument Requirements, and in accordance with the further provisions of this Subsection (e), regardless of the extent of any such Casualty and whether or not net insurance proceeds, if any, shall be available or, if available, shall be sufficient, for the purpose of the Restoration (provided, however, that if the Mortgagor does not receive any net insurance proceeds within 30 days after any Casualty because the adjustment of the loss has not yet occurred, then the obligation of the Mortgagor to commence such Restoration shall be deferred until such proceeds are made available to the Mortgagor, provided that (i) Mortgagor delivers to the Mortgagee an Officers' Certificate certifying that the Mortgagor is diligently and continuously adjusting such loss with the Insurer, (ii) the Mortgagor delivers to the Mortgagee an Officers' Certificate within such 30-day period requesting the extension of such period, estimating the date on which such proceeds will be available and describing the Mortgagor's efforts to adjust such loss and certifying that such extension does not constitute a default or a breach of any of the provisions of any of the Ground Leases (or if so, such default or breach has been waived) and (iii) the Mortgagor delivers to the Mortgagee additional Officers' Certificates every 30 days thereafter updating the information contained in the certificate described in Clause (ii)). All Restoration work shall be performed in accordance with the applicable provisions of Section 5.12 and in conformance with all Superior Instrument Requirements, Legal Requirements and Insurance Requirements and, prior to commencing any Restoration, the Mortgagor shall obtain all Permits necessary in connection therewith, and shall obtain, and keep in full force and effect until the completion of such Restoration, such additional insurance as the Insurance Trustee and Superior Instrument Requirements may require. The plans and specifications for the Restoration shall be accompanied by a certificate of the Mortgagor and an Opinion of Counsel to the effect that upon the completion of the Restoration pursuant to the plans and specifications the Premises, and all buildings and improvements, thereon will comply with all superior Instrument Requirements, Legal Requirements and Insurance 46 Requirements. Notwithstanding anything in this Section 5.11 to the contrary, if such Casualty is in an amount less than $5,000,000, the Mortgagor shall not be required to perform and complete such Restoration (unless the performance and completion of the Restoration is necessary in order for the Mortgagor to be in compliance with any term, provision or condition of this Mortgage (other than this Section 5.11(e)) or any Superior Instrument Requirements; (4) Any insurance proceeds which the Mortgagor receives, shall be held by the Mortgagor in trust for the purpose of paying the cost of the Restoration, except as otherwise provided herein; (5) Any net insurance proceeds that the Insurance Trustee holds pursuant to this Subsection (e), shall be deposited in an interest-bearing investment reasonably designated by Mortgagor (to the extent the Mortgagor is permitted to designate such investment under the Superior Instrument Requirements) (and the interest thereon shall be added to such proceeds) and shall be paid by the Insurance Trustee to reimburse the Mortgagor for, or to make payment for, the Restoration, after the Insurance Trustee deducts therefrom the amount of any reasonable costs and expenses incurred in connection with the performance of its obligations under this Section 5.11. The Insurance Trustee shall make such payments not more frequently than once every 30 days upon the written request of the Mortgagor (unless more frequent payments are required by Superior Instrument Requirements), by paying to the Mortgagor or the persons named in the certificate described in Clause (6) of this Subsection (e) the respective amounts stated in such certificate from time to time as the Restoration progresses, provided the Mortgagor has complied with the requirements of this Subsection (e) and such payment is permitted by an applicable Superior Instrument Requirements. The Mortgagor's written request shall be accompanied by (i) the certificate described in Clause (6) of this Subsection (e) and (ii) a title company or official search, or other evidence reasonably acceptable to the Insurance Trustee, showing that there have not been filed with respect to the Premises, any vendor's, contractor's, mechanic's, laborer's or materialman's statutory or similar lien which has not been discharged of record (or bonded against or secured by other security) or any other encumbrance irrespective of its priority (other than Permitted Encumbrances). (6) The certificate required by Clause (5) of this Subsection (e) shall (A) be an Officers' Certificate, 47 countersigned by the Architect in charge of the Restoration with respect to the matters described in (i) and (v) below, (B) be dated not more than 10 days prior to such request and (C) set forth (in addition to any other requirements contained in any applicable Superior Instrument Requirements) that: (i) all of the Restoration work theretofore performed is in substantial compliance with the plans and specifications theretofore submitted to the Insurance Trustee and in compliance with all Superior Instrument Requirements, Legal Requirements and Insurance Requirements; (ii) the sum then requested either has been paid by the Mortgagor or is justly due to contractors, subcontractors, materialmen, engineers, architects or other persons who have rendered services or furnished or contracted to deliver materials for the Restoration therein specified, and the names and addresses of such persons, a brief description of such services and materials and the several amounts so paid or due to each of such persons in respect thereof; (iii) no part of the amount requested has been or is the basis in any pervious or then pending request for the withdrawal of net insurance proceeds, and that the sum then requested does not exceed the value of the services and materials described in the certificate; (iv) except for the amount, if any, stated pursuant to Subclause (ii) of this Clause (6) in such certificate to be due for services or materials, and except for amounts in dispute and/or customary retainages, there is no outstanding indebtedness known to the person signing such certificate, after due inquiry, which is then due for labor, wages, materials, supplies or services in connection with such Restoration; and (v) the remaining cost, as estimated by the persons signing such certificate, of the Restoration in order to complete the same does not exceed the net insurance proceeds remaining in the hands of Insurance Trustee after payment of the sum requested in such certificate or if such estimated cost does exceed such insurance proceeds such certificate shall state the amount of any such deficiency. If the certificate states that such deficiency will exist, the Mortgagor shall deliver the amount of 48 such deficiency in cash or cash equivalent to the Insurance Trustee simultaneously with the delivery of such certificate, which amount shall be deemed insurance proceeds for purposes of this Section 5.11(e); and (7) If net insurance proceeds shall be insufficient to pay the entire cost of the Restoration, then, after completion of the Restoration, the Mortgagor shall pay the deficiency. If all or any part of the net insurance proceeds are not used for the Restoration in accordance with this Subsection (e) (because such proceeds exceed the amount required to complete the Restoration), then upon completion of the Restoration in accordance with this Subsection (e), such amount not so used, if held by the Insurance Trustee, shall be paid to the Mortgagor (if permitted by Superior Instrument Requirements). (f) Provided that no Event of Default has occurred and is continuing, all net business interruption insurance proceeds shall be paid to the Mortgagor, to be segregated from the other funds of Mortgagor and held in trust by Mortgagor for the following purposes and in the following order of priority: (i) for the payment of Impositions and amounts due under the Ground Leases and Superior Mortgages; (ii) for debt service for the estimated period of Restoration (for purposes of this Section 5.11(f), interest and principal payments due on any payment date under the Notes will deemed to accrue in equal daily installments beginning the day after the immediately preceding payment date and ending on such payment date); and (iii) for any expense incurred in connection with the operation or business of the Casino-Hotel. (g) The Mortgagor shall not take out separate insurance, concurrent in form or contributing in the event of loss with that required to be maintained pursuant to this Section 5.11, unless the same are permitted by Superior Instrument Requirements and the Mortgagee is included therein as a named insured, with loss payable to the Mortgagee and the Insurance Trustee pursuant to Section 5.11(b) hereof. The Mortgagor shall immediately notify the Mortgagee whenever any such separate insurance is taken out and shall promptly deliver to the Mortgagee a duplicate original of the policy of such insurance, a copy thereof certified by the insurer or a certificate thereof. (h) Subject to final adjustment by the insurer, insurance claims by reason of damage or destruction to any portion of the Trust Estate may adjusted by the Mortgagor, but the Mortgagee shall have the right (but not the obligation) to join the Mortgagor in adjusting, and approving the adjustment of, any such loss except in the event of a loss where the amount of insurance reasonably anticipated 49 to be received with respect to such loss is less than Five Million Dollars ($5,000,000), and the Mortgagor shall assist the Mortgagee in any such adjustment at the request of the Mortgagee. If the Mortgagee at its election as aforesaid joins the Mortgagor in any adjustment process, then the Mortgagee's approval of the adjustment shall not be unreasonably withheld; (i) Notwithstanding anything contained herein to the contrary, if an Event of Default shall have occurred and be continuing, the Mortgagee may, at its option, (A) refrain from paying to the Mortgagor or the Insurance Trustee any net insurance proceeds or (B) instruct the Insurance Trustee to pay to the Mortgagee any insurance proceeds then held by the Insurance Trustee, as the case may be. Section 5.12. LIMITATIONS ON BUILDING DEMOLITION, ALTERATIONS, IMPROVEMENTS AND NEW CONSTRUCTION. The Mortgagor will not authorize, permit or make any demolition, alteration or improvement of any building included in the Trust Estate or any new construction on any part of the Trust Estate, except in conformity with and subject to the limitations hereinafter in this Section 5.12 set forth. Unless an Event of Default shall have occurred and be continuing, the Mortgagor shall have the right at all times to make or permit such alterations, improvements or new constructions, structural or otherwise (herein sometimes called collectively "alterations"), of or on the Trust Estate, to be made in all cases subject to the conditions set forth in Section 5.12 of the Note Mortgage. Section 5.13. LEASES. The Mortgagor shall not: (a) subject to the provisions of Section 5.13(d), enter into any Lease, or renew, modify, extend, terminate, or amend any Lease, except in the ordinary course of business of operating the Casino-Hotel; (b) receive or collect, or permit the receipt or collection of, any rental payments under any Lease more than one year in advance of the respective periods in respect of which they are to accrue, except that, in connection with the execution and delivery of any Lease or of any amendment to any Lease, rental payments thereunder may be collected and received in advance in an amount not in excess of three months' rent and/or a security deposit may be required thereunder in an amount not exceeding one year's rent; (c) collaterally assign, transfer or hypothecate (other than to the Mortgagee hereunder, to 50 the mortgagee under the Note Mortgage or to the holder of any Working Capital Facility Lien) any rental payment under any Lease whether then due or to accrue in the future, the interest of the Mortgagor as landlord under any Lease or the rents, issues or profits of the Trust Estate; (d) after the date hereof, enter into any Lease, or renew any Lease unless such Lease contains terms to the effect as follows: (1) the Lease and the rights of the tenants thereunder shall be subject and subordinate to the rights of the Mortgagee under this Mortgage, the mortgagee under the Note Mortgage and the holders of any Superior Mortgage, (2) the Lease may be assigned by the landlord thereunder to the Mortgagee, (3) the rights and remedies of the tenant in respect of any obligations of the landlord thereunder shall be nonrecourse as to any assets of the landlord other than its equity in the building in which the leased premises are located or the proceeds thereof, (4) the rights of the tenant shall be subject and subordinate to the rights of the lessee under any new lease entered into in the event of a termination of a Ground Lease; (e) modify any Lease with respect to the matters described in clauses (1) through (4) of paragraph (d). If the Mortgagor enters into a Lease (other than with any Affiliate of the Mortgagor) for a term of not less than 3 nor more than 10 years, the Mortgagee shall deliver a non-disturbance and attornment agreement substantially in the form of Schedule 4 hereto, following receipt of a certificate of a leasing broker (who is not an Affiliate of the Mortgagor or the broker involved in such transaction) experienced with respect to leases of commercial space in the Atlantic City area stating that the rent under the Lease is not less than fair market rent and that the other terms of the Lease are fair and reasonable in the commercial leasing market. The Mortgagor shall, upon demand, reimburse the Mortgagee for any costs and expenses (including reasonable attorney's fees) incurred by the Mortgagee in connection with the preparation, review and delivery of such non-disturbance and attornment agreements. 51 Promptly after the execution and delivery hereof, the Mortgagor will cause the lessee under each Lease now in effect and promptly after each Lease is executed or becomes effective after the date of the execution and delivery hereof, the Mortgagor will cause the lessee under each such Lease, to be duly notified in writing (unless the substance and effect of such notice shall be contained in such Lease) of the subjection of the owner's interest, as lessor, in and to such Lease to the lien of this Mortgage and of the name and address of the Mortgagee. Each such notice shall state that the lease of such lessee is a Lease as herein defined. If a new Mortgagee is at any time appointed hereunder or the address of the Mortgagee shall at any time be changed, the Mortgagor will cause each lessee under each Lease to be promptly notified in writing of the name and address of such new Mortgagee or the new address of the Mortgagee. The Mortgagor will use reasonable efforts (but shall not be obligated to incur any expenditure other than de minimis amounts) to obtain from each lessee under each Lease to whom any notice is sent pursuant to this paragraph an acknowledgment of receipt of such notice, and the Mortgagor will promptly deliver to the Mortgagee, upon request, a copy of each such acknowledgment of receipt which it is able to obtain. The Mortgagee shall not be responsible for securing or causing the Mortgagor to secure any such acknowledgment. Nothing contained in this Section 5.13 shall limit the provisions of Section 4.04 hereof. Section 5.14. [Reserved] Section 5.15. MAINTENANCE OF EXISTENCE OF THE MORTGAGOR. Subject to Article Four, the Mortgagor will do or cause to be done all things necessary to preserve and keep in full force and effect its existence as a corporation, and its rights (both statutory and under its articles of incorporation) and franchises. Section 5.16. TO KEEP BOOKS; INSPECTION BY MORTGAGEE. The Mortgagor will keep proper books of record and account in accordance with Section 12.05 of the Indenture. Section 5.17. ADVANCES BY MORTGAGEE. If the Mortgagor shall fail to perform any of its covenants in this Mortgage and such failure shall continue for 10 days following notice thereof given by the Mortgagee (or at any time, without notice, in case of emergency), the Mortgagee may (but is not obligated to), at any time and from time to time, take any action or make advances, to effect performance of any such covenant on behalf of the Mortgagor; and all moneys so used or advanced by the Mortgagee and all reasonable costs and 52 expenses incurred by Mortgagee in connection therewith, together with interest on all of the same at the rate of interest set forth in the Notes, shall be repaid by the Mortgagor upon demand and such advances shall be secured under this Mortgage prior to the Guaranty. Section 5.18. WAIVER OF STAY, EXTENSION OR USURY LAWS. The Mortgagor covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any usury, stay or extension law or any other law which would prohibit or forgive the Mortgagor from paying all or any portion of the obligations under the Guaranty as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may otherwise affect the covenants or the performance of this Mortgage; and the Mortgagor (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Mortgagee, but will suffer and permit the execution of every such power as though no such law had been enacted. Section 5.19. [Reserved] Section 5.20. EMINENT DOMAIN. The Mortgagor shall satisfy the provisions of Section 5.20 of the Note Mortgage upon obtaining knowledge of any Taking affecting the Trust Estate. Section 5.21. GROUND LEASES. (a) The Mortgagor covenants and agrees that it will do or cause to be done all things necessary to preserve and keep unimpaired the rights of the Mortgagor, as lessee under the Ground Lease, and to prevent any termination, surrender, cancellation, forfeiture or impairment thereof. The Mortgagor shall at all times fully perform and comply with all agreements, covenants, terms and conditions imposed upon or assumed by it as lessee under each of the Ground Leases (including without limitation the covenant to pay rent and all taxes, assessments and other charges mentioned therein) prior to the expiration of any notice and/or cure period provided in each such Ground Lease. Upon receipt by the Mortgagee from a Lessor of any written notice of default by the lessee thereunder, Mortgagee may rely thereon and take any action the Mortgagee deems necessary in its sole discretion to prevent or to cure any default by the Mortgagor in the performance of or compliance with any of the agreements, covenants, terms or conditions imposed upon or assumed by the Mortgagor as lessee under each of the Ground Leases, even though the existence of such default or the nature thereof be questioned or denied by 53 the Mortgagor or by any party on behalf of the Mortgagor, provided that if the Mortgagor has theretofore delivered to the Mortgagee the Officers' Certificate, Opinion of Counsel and a copy of the injunction, all as described in Section 3.01(g), the Mortgagee shall not take any such action unless and until the Mortgagor and/or the Mortgagee no longer has the benefit of any tolling or stay referred to in Section 3.01(g). Without limiting the generality of Section 3.09 hereof, the Mortgagor hereby expressly grants to the Mortgagee, and agrees that the Mortgagee shall have, the absolute and immediate right to enter in and upon the Premises or any part thereof to such extent and as often as the Mortgagee, in its sole discretion, deems necessary or desirable for the purpose permitted by the immediately preceding sentence, subject only to applicable Legal Requirements. Subject to the preceding and without limiting the Mortgagee's other remedies under this Mortgage, the Mortgagee may pay and expend such sums of money as the Mortgagee in its sole discretion deems necessary for any such purpose, and the Mortgagor hereby agrees to pay to the Mortgagee, immediately and without demand, all such sums so paid and expended by the Mortgagee, together with interest thereon from the date of each such payment at the highest rate of interest set forth in the Notes. All sums so paid and expended by the Mortgagee, and the interest thereon, shall be added to and be secured by the lien of this Mortgage. (b) The Mortgagor further covenants and agrees: (i) it will not surrender any leasehold estate and interest hereinabove described, nor terminate or cancel any Ground Lease, and that it will not without the express written consent of the Mortgagee modify, change, supplement, alter or amend such Ground Leases either orally or in writing and, as further security for the repayment of the indebtedness secured hereby and for the performance of the covenants herein and in such Ground Leases contained, the Mortgagor hereby assigns to the Mortgagee all of its rights, privileges and prerogatives as lessee under such Ground Leases to terminate, cancel, modify, change, supplement, alter or amend such Ground Leases, and any such termination, cancellation, modification, change, supplement, alteration or amendment of such Ground Leases without the prior written consent thereto by Mortgagee shall be void and of no force and effect. Unless (1) an Event of Default has occurred and is continuing and (2) either (A) there has been an acceleration of maturity of the Notes pursuant to Section 3.02 of the Note Mortgage or (B) the Mortgagee exercises its rights under Section 3.09 hereof, the Mortgagee shall have no right to terminate, cancel, modify, change, supplement, alter or amend the Ground Leases; 54 (ii) solely for the benefit of the Mortgagee, Trustee, the Noteholders and no other person, no release or forbearance of any of the Mortgagor's obligations under such Ground Leases, pursuant to such Ground Leases or otherwise, shall release the Mortgagor from any of its obligations under this Mortgage, including its obligations with respect to the payment of rent as provided for in such Ground Leases and the performance of all of the terms, provisions, covenants, conditions and agreements contained in such Ground Leases, to be kept, performed and complied with by the lessee therein; (iii) unless the Mortgagee shall otherwise expressly consent in writing, the fee title to the Leased Land, the Mortgagor's interest in the improvements on the Leased Land and the leasehold estates shall not merge by and shall always remain separate and distinct, notwithstanding the union of such estates either in the Lessor or in the lessee, or in a third party by purchase or otherwise; (iv) the Mortgagor shall promptly notify the Mortgagee in writing of any request made by the Mortgagor, as lessee under each of the Ground Leases, or any of the Lessors, for arbitration proceedings pursuant to the Ground Leases and of the institution of any arbitration proceedings, as well as all proceedings thereunder. In addition, the Mortgagor shall promptly deliver to the Mortgagee a copy of the determination of the arbitrators in each such arbitration proceeding. The Mortgagee shall have the right to participate in such arbitration proceedings in association with the Mortgagor or on its own behalf as an interested party in accordance with the terms of the Ground Leases; (v) the Mortgagor shall not consent to the subordination of any Ground Lease to any mortgage deed of trust or other lien of the fee interest of the Lessor; (vi) in the event (A) the Mortgagor exercises its option under any Ground Lease to purchase any portion of the Leased Land, the Mortgagor shall deliver a copy of its election to exercise such option within 5 days after the Mortgagor has delivered notice of such election to the Lessor or (B) the Mortgagor acquires fee simple title or any other estate, title or interest in the Leased Land, the Mortgagor shall promptly notify the Mortgagee of such acquisition and shall cause to be executed and recorded all such other and further assurances or other instruments in writing as may be required by law or, in the opinion of the Mortgagee, be reasonably 55 desirable to carry out the intent and meaning of clause (x) of Granting Clause Second; (vii) within 5 days after the Mortgagor's receipt of any notice of any motion, application or effort to reject the Ground Lease by any Lessor or any trustee arising from or in connection with any case, proceeding or other action commenced or pending by or against any Lessor under the Code or any comparable provision contained in any present or future federal, state, local, foreign or other statute, law, rule or regulation, the Mortgagor shall give notice thereof to the Mortgagee. The Mortgagor hereby (A) assigns to the Mortgagee any and all of the Mortgagor's rights as lessee under Section 365(h) of the Code or any comparable provision contained in any present or future federal, state, local, foreign or other statute, law, rule or regulation ("Comparable Provision") and (B) covenants that it shall not elect to treat any Ground Lease as terminated pursuant to Section 365(h) of the Code or any Comparable Provision without the prior written consent of the Mortgagee and (C) agrees that any such election by the Mortgagor without such consent shall be null and void; (viii) without limiting the generality of the foregoing, the Mortgagor hereby unconditionally assigns, transfers and sets over to the Mortgagee all of the Mortgagor's claims and rights to the payment of damages arising from any rejection by Lessor of any Ground lease under the Code or any Comparable Provision. The Mortgagee shall have the right to proceed in its own name or in the name of the Mortgagor in respect of any claim, suit, action or proceeding relating to the rejection of any Ground Lease, including, without limitation, the right to file and prosecute, in cooperation with the Mortgagor, any proofs of claim, complaints, motions, applications notices and other documents, in any case in respect of Lessor under the Code or any Comparable Provision. This assignment constitutes a present, irrevocable and unconditional assignment of the foregoing claims, rights and remedies, and shall continue in effect until all of the indebtedness and obligations secured by this Mortgage shall have been satisfied and discharged in full. Any amounts received by the Mortgagee in damages arising out of the rejection of any Ground Lease as aforesaid shall be applied first to all reasonable costs and expenses of the Mortgagee (including, without limitation, reasonable attorneys' fees) incurred in connection with the exercise of any of its rights or remedies under this Section 5.21, and thereafter as provided in Section 3.03 hereof; 56 (ix) if there shall be filed by or against the Mortgagor a petition under the Code or any Comparable Provision and the Mortgagor, as lessee under the Ground Leases, shall determine to reject any or all of the Ground Leases the Mortgagor shall give the Mortgagee not less than 10 days' prior notice of the date on which the Mortgagor shall apply to the Bankruptcy Court or other judicial body with appropriate jurisdiction for authority to reject the lease. The Mortgagee shall have the right, but not the obligation, to serve upon the Mortgagor within such 10 day period a notice stating that (a) the Mortgagee demands that the Mortgagor assume and assign such Ground Lease(s) to the Mortgagee pursuant to Section 365 of the Code or any Comparable Provision and (b) the Mortgagee covenants to cure or provide adequate assurance of prompt cure of all defaults and provide adequate assurance of future performance under such Ground Lease(s). If the Mortgagee serves upon the Mortgagor the notice described in the preceding sentence, the Mortgagor shall not seek to reject such Ground Lease(s) and shall comply with the demand provided for in clause (a) of the preceding sentence within 30 days after the notice shall have been given subject to the performance by the Mortgagee of the covenant provided for in clause (b) of the preceding sentence. Effective upon the entry of an order for relief in respect of the Mortgagor under Chapter 7 of the Code or Any Comparable Provision the Mortgagor hereby assigns and transfers to the Mortgagee a non-exclusive right to apply to the Bankruptcy Court or other judicial body with appropriate jurisdiction for an order extending the period during which the Ground Lease may be rejected or assumed; (x) the Mortgagor shall promptly give to the Mortgagee copies of (A) all notices of default or (B) any other communications or notices with respect to events which relate to the possible impairment of the security of this Mortgage, which it shall give or receive under the Ground Leases and shall promptly notify the Mortgagor of any default under any Ground Lease on the part of the Lessor or the Mortgagor; (xi) the Mortgagor shall enforce the obligations of the Lessor under each Ground Lease, to the end that the Mortgagor may enjoy all of the rights granted to it under the Ground Leases; and (xii) the Mortgagor shall notify the Mortgagee within 5 days after the transfer of a fee interest in the Leased Land or any portion thereof to or from an Affiliate. 57 (c) The Mortgagor hereby represents and warrants that all fixed net rent, taxes and assessments, payable under the Ground Leases have been paid to the extent they were due and payable to the date hereof and that the Mortgagor has not received notice of its failure to pay any other amounts payable under the Ground Leases which have not been cured. (d) If both the Lessor's and Lessee's estates under any of the Ground Leases or any portion thereof shall at any time become vested in one owner, this Mortgage and the lien created hereby shall nevertheless not be merged, extinguished, destroyed or terminated by application of the doctrine of merger and, in such event, Mortgagee shall continue to have all of the rights and privileges of the leasehold mortgagee. (e) The Mortgagor hereby acknowledges that if any Ground Lease shall be terminated prior to the natural expiration of its term due to default by the Lessee thereunder, and if pursuant to such Ground Lease, the Mortgagee or its designee shall acquire from the Lessor a new lease of the Leased land or any portion thereof, the Mortgagor shall have no right, title or interest in or to such lease or the leasehold estate created thereby, or the options therein contained. (f) Any leases for parking purposes hereafter entered into by the Mortgagor as lessee shall contain provisions permitting the assignment of the same to the Mortgagee and the Trustee and permitting assignment without the lessor's consent if this Mortgage is foreclosed. Section 5.22. SUPERIOR MORTGAGES. (a) The Mortgagor covenants and agrees that it will at all times fully perform and comply with all agreements, covenants, terms and conditions imposed upon or assumed by it as mortgagor under the Superior Mortgages prior to the expiration of any notice and/or cure period provided in each such Superior Mortgage. If a notice of default has been given by the holder of any Superior Mortgage and the maturity of the indebtedness secured by such Superior Mortgage has been accelerated as a result thereof, the Mortgagee may rely thereon and take any action the Mortgagee deems necessary in its sole discretion to prevent or to cure any default by the Mortgagor in the performance of or compliance with any of the agreements, covenants, terms or conditions imposed upon or assumed by the Mortgagor as mortgagor under each of the Superior Mortgages even though the existence of such default or the nature thereof may be questioned or denied by the Mortgagor or by any party on behalf of the Mortgagor provided that if the Mortgagor has heretofore taken such actions as 58 described in Section 3.01(h), the Mortgagee shall not take any such action unless and until the Mortgagor and/or the Mortgagee no longer has the benefit of any such tolling or stay referred to in Section 3.01(h). Without limiting the generality of Section 3.09 hereof, the Mortgagor hereby expressly grants to the Mortgagee, and agrees that upon such acceleration the Mortgagee shall have, the absolute and immediate right to enter in and upon the Premises or any part thereof to such extent and as often as the Mortgagee, in its sole discretion, deems necessary for the purpose permitted by the immediately preceding sentence, subject only to applicable Legal Requirements. The Mortgagee may (i) pay and expend such sums of money as the Mortgagee in its sole discretion deems necessary for any such purpose and (ii) in its sole discretion prepay any Superior Mortgage, and the Mortgagor hereby agrees to pay to the Mortgagee, immediately and without demand, all such sums referred to in (i) and (ii) above so paid and expended by the Mortgagee, together with interest thereon from the date of each such payment at the rate of interest set forth in the Note. All sums so paid and expended by the Mortgagee and the interest thereon shall be added to and be secured by the lien of this Mortgage. (b) The Mortgagor further covenants and agrees: (i) the Mortgagor shall not, without first satisfying the conditions set forth in Section 5.22(b)(i) of the Note Mortgage: (A) modify any of the terms, covenants or conditions of any Superior Mortgage, and without limiting the foregoing, the Mortgagor shall not, without satisfying such conditions, enter into or obtain any agreement whereby the holder of any Superior Mortgage waives, postpones, extends, reduces or modifies the payment of the installment of principal or interest or any other item or amount now required to be paid under the terms of any Superior Mortgage or modifies any other provision thereof, or (B) acquire or permit or suffer any Affiliate of the Mortgagor to acquire any Superior Mortgage or any interest therein. Notwithstanding anything in clause (A) to the contrary, the Mortgagor shall have the right to amend, supplement or modify any Superior Mortgage, if (x) the then outstanding principal balance of the indebtedness secured by such Superior Mortgage is not increased thereby, and (y) in the case of any After-Acquired Fee Mortgage, such amendment, supplement or agreement does not increase the property covered thereby; (ii) the Mortgagor shall timely pay and perform all of the obligations to be paid or performed by the Mortgagor under each Superior Mortgage, the note secured thereby and any other instrument evidencing or 59 securing the indebtedness owing to any holder of any Superior Mortgage; (iii) at any time, and from time to time, the Mortgagor shall upon request of the Mortgagee promptly use its reasonable efforts to obtain an estoppel certificate or letter addressed to the Mortgagee from holders of the Superior Mortgages, such certificate or letter to be in such form as the Mortgagee shall request; and (iv) the Mortgagor shall promptly give to the Mortgagee copies of (A) all notices of default or (B) any other notice or communication with respect to events which relate to the possible impairment of the security of this Mortgage, which it shall give or receive under the Superior Mortgages and shall promptly notify the Mortgagor of any default under any Superior Mortgages on the part of the Mortgagor. (c) The lien of this Mortgage in and to all or specified portions of the Trust Estate shall be subject and subordinate to any Existing Encumbrances, the liens created by the Senior Mortgage Documents and any mortgage, assignment, security agreement, financing statement or other lien securing any Working Capital Facility (the "Working Capital Facility Lien") encumbering Mortgagor's interest in the affected portions of the Trust Estate or any part thereof. The foregoing provisions of this Section 5.22(c) shall be self-operative with respect to the liens created by the Senior Mortgage Note Documents and any Working Capital Facility Lien, and no further instrument shall be required to give effect to such subordination. Mortgagee shall, however, from time to time, execute instruments in form and substance reasonably satisfactory to the holder of the Working Capital Facility Lien, confirming such subordination and agreeing to such other matters reasonably required by the holder of the liens created by the Senior Mortgage Documents and the holders of such liens which do not, in the aggregate, materially adversely reduce or impair the rights of Trustee under the Mortgage, and Mortgagor and others may rely conclusively thereon, provided that Mortgagee shall have no liability thereunder and all costs and expenses (including reasonable attorneys' fees) shall be paid by Mortgagor. (d) The lien of the Mortgage in and to all or specified portions of the Trust Estate shall be subject and subordinate to any Existing Encumbrances. The provisions of this Section 5.22(d) shall be self-operative, and no further instrument shall be required to give effect to such subordination. 60 Section 5.23. MORTGAGE PARI PASSU WITH NOTE MORTGAGE. Notwithstanding recordation of this Mortgage in the Atlantic County, New Jersey Clerk's Office after the recordation of the Note Mortgage, the lien of this Mortgage ranks PARI PASSU with, and not junior to, the lien created by the Note Mortgage. ARTICLE SIX MISCELLANEOUS Section 6.01. ACTION UNDER NOTE MORTGAGE. Mortgagee acknowledges that it is the assignee of the Note Mortgage, which Note Mortgage creates a lien upon the Trust Estate which is PARI PASSU with the lien of this Mortgage. Mortgagee further acknowledges and agrees that whenever it is provided in the Note Mortgage that the Mortgagor shall deliver any notice or document, or is required to make any payment thereunder, the delivery of such notice or document or the making of such payment pursuant to the terms of the Note Mortgage shall also constitute the delivery of such notice or document or the making of such payment in satisfaction of the terms, conditions and provisions of this Mortgage to the same extent as the same constitutes satisfaction of the terms, conditions and provisions of the Note Mortgage. Section 6.02. COUNTERPARTS. This instrument may be executed in any number of counterparts, each of which as executed shall be deemed to be an original, but all such counterparts shall constitute one and the same instrument. Section 6.03. MODIFICATION. This Mortgage is subject to "modification" within the meaning of N.J.S.A. 46:9-8.1 et seq., and this Mortgage shall have the benefit of the lien priority provisions of such statute. Such modification may include, without limitation, a change in the interest rate, maturity date or other terms and conditions of this Mortgage. THE MORTGAGOR DECLARES THAT THE MORTGAGOR HAS RECEIVED A TRUE COPY OF THIS MORTGAGE. IN WITNESS WHEREOF, the parties hereto have caused this Mortgage to be duly executed and attested, all as of the day and year first above written. 61 RESORTS INTERNATIONAL HOTEL, INC., a New Jersey corporation By:_____________________________ Name: Title: (Vice) President ATTEST:_________________________ Name: Title: (Asst.) Secretary U.S. TRUST COMPANY OF CALIFORNIA, N.A. By:_____________________________ Name: Title: (Vice) President ATTEST:_________________________ Name: Title: (Asst.) Secretary 62 Exhibit G Intercreditor Agreement Terms Exhibit G Outline of Material Terms of the Intercreditor Agreement for Resorts International, Inc. Subject Credit Senior Secured Loan due July 15, 2002 (the Facilities "Senior Facility"); Senior Mortgage Notes due [March] 15, 2003 (the "Senior Mortgage Notes"); Junior Mortgage Notes due June 15, 2004 (the "Junior Mortgage Notes"); and Any other credit facilities which may be required by the Indentures for the Senior Facility, the Senior Mortgage Notes or the Junior Mortgage Notes to be included in the Intercreditor Agreement (the "Additional Facilities," and together with the Senior Facility, the Senior Mortgage Notes and the Junior Mortgage Notes, the "Credit Facilities") Creditor Parties Senior Facility Trustee; Senior Mortgage Note Trustee; Junior Mortgage Note Trustee; and any lenders (or trustees or agents on behalf of any lenders) which provide Additional Facilities (collectively, the "Trustees") Each Creditor Party, by its execution of the Intercreditor Agreement (whether directly or through its trustee or agent), acknowledges the making of the other Credit Facilities and the intended uses of proceeds thereof and waives any right to object to any contemporaneous or existing Credit Facility as having constituted a fraudulent conveyance. Classification of Initial Designations:Credit Facilities Class 1 Facilities: Senior Facility, all guarantees thereof and all intercompany obligations pledged as collateral therefor. Class 2 Facilities: Senior Mortgage Notes, all guarantees thereof and all intercompany obligations pledged as collateral therefor. Class 3 Facilities: Junior Mortgage Notes, all guarantees thereof and all intercompany obligations pledged as collateral therefor. Subsequent Designations - as indicated on the signature page(s) to be executed by the lenders (or any trustees or agents on behalf of any lenders) which provide Additional Facilities and consented to by all other parties at such time. Borrower Parties Resorts International Hotel Financing, Inc. ("RIHF"), as borrower under the Secured Facilities; Resorts International Hotel, Inc. ("RIH") as guarantor under the Secured Facilities and issuer of the secured intercompany notes to RIHF collaterally assigned to each respective Trustee; Resorts International, Inc. ("RII"), as guarantor under the Senior Facility and issuer of any intercompany notes which may be issued to RIH; and [GRI, Inc. ("GRI", and together with RIHF, RIH and RII, the "Borrower Parties") as guarantor under the Senior Facility and issuer of any intercompany notes which may be issued to RIH.]1* The Borrower Parties will execute the Intercreditor Agreement principally for the purposes of (i) acknowledging the relative rights of and relationships among the Secured Facilities established therein and (ii) agreeing not to take any actions, including making any payments, inconsistent therewith. - ------------------- * Subject to discussion on structure 2 Relative Priorities Liens: Notwithstanding the time of filing, recording or perfecting of the Security Documents (which will be defined to include the Mortgages and other liens and encumbrances): Each Lien created on behalf of a Class 1 Facility shall be (i) pari passu with any other Lien created on behalf of any other Class 1 Facility and (ii) senior to any Lien created on behalf of any Class 2 Facility or Class 3 Facility. Each Lien created on behalf of a Class 2 Facility shall be (i) pari passu with any other Lien created on behalf of any other Class 2 Facility, (ii) senior to any Lien created on behalf of any Class 3 Facility and (iii) junior to any Lien created on behalf of any Class 1 Facility. Each Lien created on behalf of a Class 3 Facility shall be (i) pari passu with any other Lien created on behalf of any other Class 3 Facility, and (ii) junior to any Lien created on behalf of any Class 1 Facility or Class 2 Facility. Subrogation To be waived by all guarantors. Mortgage Default Each Class 3 Creditor shall notify each Cure Provisions Class 2 Creditor and each Class 1 Creditor of any Default or Event of Default under its respective Class 3 Facility or the Mortgage or other Security Documents securing its facility, and promptly shall send to each Class 2 Creditor and each Class 1 Creditor copies of all notices of default and all notices relating to cure and/or grace periods under such Class 3 Facility or the Mortgage or other Security Documents securing its facility. Each Class 2 Creditor shall notify each Class 1 Creditor and each Class 3 Creditor of any Default or Event of 3 Default under its respective Class 2 Facility or the Mortgage or other Security Documents securing its facility, and promptly shall send to each Class 1 Creditor and each Class 3 Creditor copies of all notices of default and all notices relating to cure and/or grace periods under such Class 2 Facility or the Mortgage or other Security Documents securing its facility. Each Class 1 Creditor shall notify each Class 2 Creditor and each Class 3 Creditor of any Default or Event of Default under its respective Class 1 Facility or the Mortgage or other Security Documents securing its facility, and promptly shall send to each Class 2 Creditor and each Class 3 Creditor copies of all notices of default and all notices relating to cure and/or grace periods under such Class 1 Facility or the Mortgage or other Security Documents securing its facility. In addition, each Trustee will be obligated to notify all other Trustees prior to exercising any remedies with respect to any shared collateral. Application of Proceeds from dispositions of Proceeds collateral, insurance proceeds, condemnation awards and similar amounts will be applied in accordance with relative priorities of Liens. Representations and Each party to the Intercreditor Warranties Agreement will make appropriate representations, including those relating to its corporate existence, power and authority, as well as to the validity and enforceability of the Intercreditor Agreement. Amendments Intercreditor Agreement may not be amended except pursuant to a writing executed by all parties thereto. Amendments for the sole purpose of adding permitted parties may be executed by the Trustees without the consent of 4 the creditors for whom they serve if all conditions precedent to the incurrence of such indebtedness have been satisfied. Amendments to sections [ ] and [ ] may be executed by the Trustees only with the approval of 100% of the creditors for whom they serve and amendments to sections [ ] and [ ] may be executed by the Trustees only with the approval of 66 2/3% of the creditors for whom they serve. Third Party Each party to the Intercreditor Beneficiarie Agreement will acknowledge that such agreement is being entered into for the benefit of the lenders under the Credit Facilities and their respective successors and assigns, each of whom is a direct intended third-party beneficiary. Certain Specific performance; no waivers; Miscellaneous cooperation and further assurances. Provisions Governing Law New Yor SCHEDULE "2" SOFTWARE 1. Casino Customer Rating Software for Games and Slots. 2. Casino Tracking System for Field Agents, Junkets, Special Events and Commissioned Agents. 3. Casino Player Marketing System. 4. Casino/Hotel Computer Interface. 5. Property - Player Interface. 6. Casino Purges. 7. Complimentary Slips. 8. Enhancements developed by _____________________ relating to the Hotel System computer software leased from IBM. 9. Modifications and enhancements developed by _______________________ with respect to the Inventory/Purchasing System software licensed from ____________________________________ 10. MVP Card software. 11. D-Card software for consolidation of debit information concerning room, food and beverage charges. 12. Accounts Receivable System software. 13. Interactive Television Services software. 14. Maid Accounting System software. 15. Source Archive System software for monitoring each programmer's use of each software unit. 46 16. Income Journal System software. 17. Cross System Support software used for maintaining back-up files. 18. Guest Refund Check System software. 19. Check Reconciliation System software used in connection with payroll, guest refunds and accounts payable. 20. W-2 Program software. 21. W-2G/10425 Reporting System software used to generate W-2G forms for slot winnings. 22. Shipment Management Tools software. 23. Software Tool Version software used to monitor the version of software being used. 24. Worker Tracker System software used to monitor and prioritize problem reports with respect to software and hardware and requests for modifications. 25. Show Reservation & Ticket Box Office System software. 26. Payroll/Personnel System software. 27. Problem Management software used to monitor reports of system problems, person assigned to repair, length of time to respond, etc. 28. Employee Survey System software used to generate information based on responses from guest comment cards. 29. Gross Revenue Tip Reporting and Allocation System software. 30. Surveillance Tracking System software. (Currently under development). 31. Record Retention System software. (Currently under development). 47 32. Prospect Database software used for a direct mail marketing system for prospective customers. 33. Job Accounting System software used to identify each job and program running on the main system at any given time. 34. Security Audit System software used to monitor security codes assigned to employees. 48 EX-10 30 EXHIBIT 10.62 APPOINTMENT OF AGENT FOR SERVICE OF PROCESS Reference is made to that certain Registration Statement on Form S-4 (Registration Number 33-50733) under the Securities Act of 1933, as filed with the Securities and Exchange Commission on October 25, 1993 (the "REGISTRATION STATEMENT"). P. I. Resorts Limited, a Bahamas corporation ("PIRL"), hereby appoints The Prentice-Hall Corporation System, Inc. ("PHCS"), located at 15 Columbus Circle, New York, New York, 10023, as its agent to receive service of process with respect to any action brought against PIRL in the United States District Court for the Southern District of New York under the securities laws of the United States or any State, or any action brought against it in the Supreme Court in the State of New York in the County of New York under the securities laws of the State of New York. The appointment shall be effective from October 25, 1993, through and including October 24, 1995 (the "TERM"). The responsibility of PHCS shall be to send the summons or any other legal process received during the Term by Federal Express or hand delivery to the address of PIRL set forth below under its signature (with copies as indicated). PIRL will provide PHCS in writing with any changes to its address, such changes to be mailed to the address of PHCS set forth below under its signature. PHCS shall have no responsibility for the receipt or non-receipt by PIRL of such summons or other legal process; should such summons or legal process be returned to PHCS for any reason, PHCS shall have no responsibility other than to return such summons or other legal process to the sender by first class mail. PIRL agrees to indemnify, hold harmless and defend PHCS from and against any and all claims, damages, liabilities and causes of action (including attorneys fees and costs) imposed upon, incurred by or asserted against PHCS, directly or indirectly, relating to or arising out of the Registration Statement; PROVIDED, HOWEVER, that the indemnification shall not extend to willful misconduct or gross negligence by PHCS. This paragraph will survive the expiration or termination of the Term. PIRL agrees to pay PHCS a fee of $95.00 for the first year, and an annual fee of $75.00 for each subsequent year, per party represented by PHCS for services hereunder, payable in advance for the full Term. This appointment will be irrevocable for the full Term upon payment of this fee. The fee is not refundable, in full or in part, for any reason, including the premature ending of this appointment. AGREED: P. I. RESORTS LIMITED THE PRENTICE-HALL CORPORATION SYSTEM, INC. By:/s/ Christopher D. Whitney By:/s/ Delia Taliento --------------------------- --------------------------- Authorized Officer Delia Taliento, Assistant Vice President c/o Resorts International, Inc. Prentice-Hall Legal & Financial 1133 Boardwalk Services Atlantic City, NJ 08401 Simon & Schuster Professional Information Group 15 Columbus Circle New York, New York 10023-7773 Address: Attn: Maris Kruze City: State: Zip: (212) 373-7500 or (800) 221-077 Fax: (212) 373-7220 WITH COPIES TO: Fidelity Management and Research Co. 82 Devonshire Street Boston, Massachusetts 02109 Attn: Judy Mencher, Esq. TCW Special Credits 865 Figueroa Street Suite 1800 Los Angeles, California 90017 Attn: Bruce Karsh Weil, Gotshal & Manges 767 Fifth Avenue Address: New York, New York 10153 City: Attn: Bruce R. Zirinsky, Esq. State: Zip: 2 EX-10 31 EXHIBIT 10.63 As of July l, 1993 Resorts International, Inc. North Carolina Ave. & Boardwalk Atlantic City, NJ 08404 Attention: Mr. David P. Hanlon President & Chief Executive Officer Gentlemen: We are pleased to set forth the amended and restated terms of the retention of Bear Stearns & Co. Inc. ("Bear Stearns") by Resorts International, Inc. (collectively, with its affiliates, the "Company"). 1. Bear Stearns will assist the Company as its financial advisor in connection with a long term financial plan (the "Plan") for the Company, which Plan must be adopted by the Company's Board of Directors, including the development of short and long term financial alternatives and carrying out any Restructuring or Transaction(s) (as such terms are defined below) which may be appropriate to the execution of the Plan. In connection with Bear Stearns' activities on the Company's behalf, Bear Stearns will familiarize itself, to the extent reasonably necessary, with the business, operations, properties, financial condition and prospects of the Company. In connection with our role as your financial advisor, we would expect our services to include: (i) the analysis and development of financial alternatives for the Company in connection with its financial structure following the sale of the Bahamas or, if the Bahamas cannot be sold in the near term; (ii) the analysis and development of other alternatives for the Company that take into account the short and long term interests of the Company's stockholders, employees, management, and bondholders; and (iii) such other investment banking services as may be mutually agreed upon by Bear Stearns and the Company As used in this Agreement, the term "Transaction" shall mean any Acquisition Transaction, any Sale Transaction or any Restructuring (as such terms are defined below). As used in this Agreement, the term "Acquisition Transaction" shall mean Page 2 (a) any merger, consolidation, reorganization, recapitalization, business combination or other transaction pursuant to which the Company is combined with or acquired by, any person, group of persons, partnership, corporation or other entity (an "Acquiror") or (b) the acquisition, directly or indirectly, by the Company, in a single transaction or series of transactions, of (i) all or substantially all of the assets of a third party or (ii) fifty percent or more of an third party's outstanding common stock or (c) the acquisition, directly or indirectly, by an Acquiror (or by one or more persons acting together with an Acquiror pursuant to a written agreement or otherwise), in a single transaction or a series of transactions, of (i) all or substantially all of the assets of the Company or (ii) fifty percent or more of the Company's outstanding common stock. 2. In connection with Bear Stearns' activities on the Company's behalf, the Company will cooperate with Bear Stearns and will furnish Bear Stearns with all information and data concerning the Company and any Transaction (the "Information") which Bear Stearns deems appropriate in connection with the services to be rendered by it hereunder and, in that connection, will provide Bear Stearns with access to the Company's officers, directors, employees, independent accountants and legal counsel. The Company represents that, to the best of its knowledge, all Information made available to Bear Stearns by the Company will, at all times during the period of the engagement of Bear Stearns hereunder, be complete and correct in all material respects and will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein not misleading in the light of the circumstances under which such statements are made. The Company further represents and warrants that any projections provided by it to Bear Stearns will have been prepared in good faith and will be based upon assumptions which, in light of the circumstances under which they are made, are reasonable. The Company acknowledges and agrees that, in rendering its services hereunder, Bear Stearns will be using and relying on the Information (and information available from public sources and other sources deemed reliable by Bear Stearns) without independent verification thereof by Bear Stearns or independent appraisal by Bear Stearns of any of the Company's assets. Bear Stearns does not assume responsibility for the accuracy or completeness of the Information or any other information regarding the Company or any Transaction. Any advice rendered by Bear Stearns pursuant to this Agreement may not be disclosed publicly without our prior written consent, which will not be unreasonably withheld. 3. If the Company requires financing ("Financing") to complete its Plan, then Bear Stearns shall have the first opportunity to agree to act as the Company's sole managing underwriter or exclusive agent, as the case may be, in connection with raising such Financing. The raising of such Financing will be undertaken pursuant to a separate engagement letter on mutually agreeable terms and subject to the approval of Bear Stearns' Commitment Committee and the Company. Page 3 4. In consideration of our services pursuant to this Agreement and subject to Paragraph 5 hereof, Bear Stearns shall be entitled to receive, and the Company shall pay to Bear Stearns, the following compensation: (a) Commencing on July 1, 1993, a monthly cash fee of $75,000 payable for the remainder of the term of this Agreement, in each case on the first business day of each month. (b) Upon the renegotiation, compromise, replacement or exchange of any of the existing indebtedness or other liabilities of the Company (a "Restructuring"), the Company shall pay to Bear Stearns an additional cash fee of $1,633,000 upon the Company's execution of the related loan documents, amendments, exchange agreements, or other appropriate legal documents. (c) If an Acquisition Transaction is consummated as part of the execution of the Plan, then the Company shall pay Bear Stearns, upon such consummation, an additional cash fee equal to 1.0% of the value of the total consideration paid by an Acquiror or the Company, as the case may be, in the Acquisition Transaction in respect of (i) assets of the Company or third party, as the case may be, (ii) capital stock of the Company or third party, as the case may be, (and any securities convertible into, or options, warrants or other rights to acquire, such capital stock) (such capital stock and such other securities, options, warrants and other rights being collectively referred to as "Subject Securities") and (iii) the assumption, directly or indirectly (by operation of law or otherwise), or repayment of indebtedness (including, without limitation, indebtedness secured by assets of the Company) and other liabilities of the Company or third party, as the case may be. In the event an Acquisition Transaction is consummated in one or more steps or if all or a portion of the consideration paid in the Acquisition Transaction is other than cash or securities, then the "Additional Consideration" described in Appendix A shall apply. (d) If an Acquisition Transaction is not consummated, but instead as part of the execution of the Plan the Company acquires any subsidiary, business segment or operation, division, assets or securities of a third party, or an Acquiror acquires any subsidiary, business segment or operation, division, assets or securities of the Company other than the Paradise Island operations and properties and Paradise Island Airlines, Page 4 Inc. (a -Sale Transaction"), then the Company shall pay to Bear Stearns, upon consummation of such Sale Transaction, a cash fee equal to 1.0% of the value (as determined in accordance with subparagraph 4(c) of this Agreement) of the total consideration, including the assumption, directly or indirectly (by operation of law or otherwise), or repayment of indebtedness (including, without limitation, indebtedness secured by assets of the Company or third party, as the case may be, and other liabilities of the Company or third party, as the case may be), paid by the Company or the Acquiror, as the case may be, in connection with such Sale Transaction. (e) Any fees paid to Bear Stearns pursuant to subparagraph 4(a) above shall be credited against amounts owed pursuant to subparagraph 4(b) above. (f) Any fees paid to Bear Stearns in the 90 days immediately preceding consummation of any Acquisition Transaction or Sale Transaction (i) pursuant to subparagraphs 4(a) and 4(b) above or (ii) before July 1, 1993 shall be credited against any amounts owed by the Company to Bear Stearns pursuant to subparagraphs 4(c) and 4(d) above. 5. Bear Stearns shall be entitled to the fees enumerated in paragraph 4 upon the occurrence, during the term, or within nine months after the date of termination, of this Agreement, if the Company accomplishes a Transaction, on terms substantially similar to those proposed by Bear Stearns or the Company prior to such termination. 6. In addition to the fees described in paragraph 4 above, the Company agrees to promptly reimburse Bear Stearns, upon request from time to time, for all reasonable (consistent with Bear Stearns' policies relating to travel, subsistence and similar expenses, a copy of which has been provided to the Company) and necessary out-of-pocket expenses incurred by Bear Stearns (including, without limitation, fees of counsel, and other consultants and advisors retained by Bear Stearns) in connection with the matters contemplated by this Agreement, provided however that Bear Stearns will notify the Company prior to incurring any legal fees that exceed $50,000 and, if such fees should exceed $50,000, will further notify the Company of each $20,000 increase in such expenditure and provided further that (a) the Company shall not be responsible for legal fees in connection with any transaction as to which such fees would not customarily be borne by the Company and (b) all legal fees shall be based solely upon regular hourly charges for time actually incurred and shall not include any fee based upon success or value of the relevant transaction. Page5 7. The Company agrees to indemnify Bear Stearns in accordance with the indemnification provisions (the "Indemnification Provisions") included in Appendix B to this Agreement, which Indemnification Provisions are incorporated herein and made a part hereof. 8. Except as may be otherwise required by applicable law, advised by Bear Stearns' legal counsel (with reasonable prior notice to the Company) or with the prior written consent of the Company: (a) neither Bear Stearns nor its agents, representatives or employees shall disclose to any person other than among themselves, the Company and their respective legal counsel the existence of this Agreement or the nature of the services rendered hereunder; and (b) Bear Stearns shall keep all Information and data concerning the Company and its subsidiaries and affiliates confidential and shall not at any time, without the prior written consent of the Company, publish, disclosed or divulge to any person or entity or use, directly or indirectly, for its own benefit or the benefit of any other person or entity other than the Company, any of the Information or any other property, trade secrets or confidential or proprietary information of the Company derived or obtained by Bear Stearns in connection with the performance of its services hereunder. The term "Information" does not include material which (i) was or becomes generally available to the public other than as a result of a disclosure by Bear Stearns (ii) was or becomes available to Bear Stearns on a nonconfidential basis from a source other than the Company or their representatives, provided that such source is not to the knowledge of Bear Stearns bound by a confidentiality agreement with the Company or otherwise prohibited from transmitting the material to Bear Stearns by a contractual, legal or fiduciary obligation, or (iii) was within Bear Stearns' possession prior to its being furnished to Bear, Stearns by or on behalf of the Company, provided that the source of such material was not known by Bear Stearns to be bound by a confidentiality agreement with the Company or to be otherwise prohibited from transmitting the material to Bear Stearns by a contractual, legal or fiduciary obligation. 9. Bear Stearns understands and acknowledges that the Company is subject to the requirements of the New Jersey Control Act, N.J.S.A. 5:12-1 et seq., and the regulations promulgated by the New Jersey Casino Control Commission ("Commission") thereunder, as a holding company of casino licensee, Resorts International Hotel, Inc. Bear Stearns agrees to file for licensure as a casino service industry, if required by the Commission. This agreement may be subject to review and approval by the Commission. 10. Either party hereto may terminate this Agreement at any time upon written notice, without liability or continuing obligation except as set forth in the Page 6 following sentence. Neither termination nor completion of this assignment shall affect: (i) any compensation earned by Bear Stearns up to the date of termination or completion, as the case may be, ((ii)) any compensation to be earned by Bear Stearns after termination pursuant to paragraph 5 hereof, (iii) the reimbursement of expenses incurred by Bear Stearns up to the date of termination or completion, as the case may be, (iv) the provisions of paragraph 3 - 12, inclusive, of this Agreement and (v) the attached Indemnification Provisions which are incorporated herein, all of which shall remain operative and in full force and effect, 11. The validity and interpretation of this Agreement shall be governed by the law of the State of New York applicable to agreements made and to be fully performed therein. 12. The benefits of this Agreement shall inure to the respective successors and assigns of the parties hereto and of the indemnified parties hereunder and their successors and assigns and representatives, and the obligations and liabilities assumed in this Agreement by the parties hereto shall be binding upon their respective successors and assigns. 13. For the convenience of the parties hereto, any number of counterparts of this Agreement may be executed by the parties hereto. Each such counterpart shall be, and shall be deemed to be, an original instrument, but all such counterparts taken together shall constitute one and the same Agreement. This Agreement may not be modified or amended except in writing signed by the parties hereto. 14. If the foregoing correctly sets forth our Agreement, we would appreciate your signing the enclosed copy of this letter in the space provided and returning it to us. Very truly yours, BEAR STEARNS & CO. INC. By: __________________________ Managing Director Confirmed and Agreed to this ____ day of ____________ 1993 RESORTS INTERNATIONAL, INC. By: ________________________________ Name: Title: APPENDIX A ADDITIONAL CONSIDERATION In the event an Acquisition Transaction is consummated in one or more steps, including, without limitation, by way of a second-step merger, any additional consideration paid or to be paid in any subsequent step in the Acquisition Transaction in respect of (x) assets of the Company or third party, as the case may be, (y) Subject Securities and (z) the assumption, directly or indirectly (by operation of law or otherwise), or repayment of indebtedness and other liabilities of the Company or third party, as the case may be, shall be included for purposes of calculating Bear Stearns' fee pursuant to subparagraph 4(d) of this Agreement. If all or a portion of the consideration paid in the Acquisition Transaction is other than cash or securities, then the value of such non-cash consideration shall be then the fair market value thereof on the date the Acquisition Transaction is consummated as mutually agreed upon in good faith between the Company's Board of Directors and Bear Stearns. If such non-cash consideration consists of common stock, options, warrants or rights for which a public trading market existed prior to the consummation of the Acquisition Transaction, then the value of such securities shall be determined by the closing or last sales price of thereof on the date of the consummation of the Acquisition Transaction; PROVIDED, HOWEVER, that if such non-cash consideration consists of newly-issued, publicly-traded common stock, options, warrants or other rights for which no public trading market existed prior to the consummation of the Acquisition Transaction, then the value of such securities shall be the average of the closing prices for the 20 trading days subsequent to the fifth trading day after the consummation of the Acquisition Transaction. In such event, the fee payable to Bear Stearns pursuant to subparagraph 4(d) of this Agreement shall be paid on the 30th trading day subsequent to consummation of the Acquisition Transaction. If no public trading market exists for the common stock, options, warrants or other rights issued in the Acquisition Transaction, then the value of such securities shall be as mutually agreed upon in good faith by the Company's Board of Directors and Bear Stearns. If all or a portion of the consideration payable in connection with the Acquisition Transaction includes contingent future payments, then the Company shall pay to Bear Stearns, upon consummation of such Acquisition Transaction, an additional cash fee, determined in accordance with subparagraph 4(d) of this Agreement, based upon the present value of the reasonably expected amount of such contingent future payments (as such amount is determined in good faith between the Company's Board of Directors and Bear Stearns) using a discount rate of 15%. However, in the event of an installment purchase at a fixed price and a fixed time schedule, the Company agrees to pay Bear Stearns, upon consummation of the Acquisition Transaction, a cash fee determined in accordance with subparagraph 4(d) of this Agreement based upon the present value of such installment payments using a discount rate of 2% over the prime rate at the time of consummation of the Acquisition Transaction. APPENDIX B INDEMNIFICATION PROVISIONS The Company (as such term is defined in the Agreement (as such term is defined below)) agrees to indemnify and hold harmless Bear Stearns against any and all losses, claims, damages, liabilities, obligations, penalties, judgments, awards, costs, expenses and disbursements (and any and all actions, suits, proceedings and investigations in respect thereof and any and all legal and other costs, expenses or disbursement in giving testimony or furnishing documents in response to a subpoena or otherwise), including, without limitation, the costs, expenses and disbursements, as and when incurred, of investigating, preparing or defending any such action, suit, proceeding or investigation (whether or not in connection with litigation in which Bear Stearns is a party), directly or indirectly, caused by, relating to, based upon, arising out of or in connection with (a) Bear Stearns' acting for the Company, including, without limitation, any act or omission by Bear Stearns in connection with its acceptance of or the performance or non- performance of its obligations under the agreement dated October 18, 1991 between Bear Stearns and Resorts International, Inc. as it may be amended from time to time (the "Agreement"), (b) any Transaction (as such term is defined in the Agreement), (c) any untrue statement or alleged untrue statement of a material fact contained in, or omissions or alleged omissions from, any filing with any Agency (as such term is defined in the Agreement) or omissions in or from any information furnished by the Company to Bear Stearns or to any party to a Transaction or Financing or (d) any Financing (as such term is defined in the Agreement); PROVIDED, HOWEVER, such indemnity agreement shall not apply to any portion of any such loss, claim, damage, obligation, penalty, judgment, award, liability, cost, expense or disbursement to the extent it is found in a final judgment by a court of competent jurisdiction (not subject to further appeal) to have resulted primarily and directly from the negligence or misconduct of Bear Stearns. The Company also agrees that Bear Stearns shall not have any liability (whether direct or indirect, in contract or tort or otherwise) to the Company or to any person (including, without limitation, Company shareholders) claiming through the Company for or in connection with the engagement of Bear Stearns, except to the extent that any such liability that is found in a final judgment by a court of competent jurisdiction (not subject to further appeal) to have resulted primarily and directly from Bear Stearns' negligence or misconduct. These Indemnification Provisions shall be in addition to any liability which the Company may otherwise have to Bear Stearns or the persons indemnified below in this sentence and shall extend to the following: The Bear Stearns Companies Inc., Bear Stearns & Co. Inc., their respective affiliated entities, directors, officers, employees, legal counsel, agents and controlling persons (within the meaning of the federal securities laws). All references to Bear Stearns in these Indemnification Provisions shall be understood to include any and all of the foregoing. If any action, suit, proceeding or investigation is commenced, as to which Bear Stearns proposes to demand indemnification, it shall notify the Company with reasonable promptness. Bear Stearns shall have the right to retain counsel of its own choice to represent it, and the Company shall pay the reasonable fees, expenses and disbursements of such counsel; and such counsel shall, to the extent consistent with its professional responsibilities, cooperate with the Company and any counsel designated by the Company. The Company shall be liable for any settlement of any claim against Bear Stearns made with the Company's written consent, which consent shall not be unreasonably withheld. In order to provide for just and equitable contribution, if a claim for indemnification pursuant to these Indemnification Provisions is made but it is found in a final judgment by a court of competent jurisdiction (not subject to further appeal) that such indemnification may not be enforced in such case, even though the express provisions hereof provide for indemnification in such case, then the Company, on the one hand, and Bear Stearns, on the other hand, shall contribute to the losses, claims, damages, obligations, penalties, judgments, awards, liabilities, costs, expenses and disbursements to which the indemnified persons may be subject in accordance with the relative benefits received by the Company, on the one hand, and Bear Stearns, on the other hand, and also the relative fault of the Company, on the one hand, and Bear Stearns on the other hand, in connection with the statements, acts or omissions which resulted in such losses, claims, damages, obligations, penalties, judgments, awards, liabilities, costs, expenses and disbursements and the relevant equitable considerations shall also be considered. No person found liable for a fraudulent misrepresentation shall be entitled to contribution from any person who is not also found liable for such fraudulent misrepresentation. Notwithstanding the foregoing, Bear Stearns shall not be obligated to contribute any amount hereunder that exceeds the amount of fees previously received by Bear Stearns pursuant to the Agreement. Neither termination nor completion of the engagement of Bear Stearns referred to above shall affect these Indemnifications Provisions which shall then remain operative and in full force and effect. EX-12 32 EXHIBIT 12.01 EXHIBIT 12.01 RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (IN THOUSANDS OF DOLLARS)
FOR THE YEAR ENDED DECEMBER 31, ------------------------------------------------------------------------------------ 1988 1990 -------------------------- ------------------------ THROUGH FROM THROUGH FROM NOVEMBER 14 NOVEMBER 15 1989 AUGUST 31 SEPTEMBER 1 1991 1992 ------------ ------------ ---------- ---------- ------------ -------- -------- Earnings available for fixed charges: Loss before income taxes and extraordinary item................... $ (370,678 ) $ (17,752 ) $ (306,589) $ (171,594) $ (13,531 ) $(42,402) $(54,802) Interest and amortization of debt discount and expense................. 68,294 17,102 121,579 434 14,057 63,262 78,425 Portion (one-third) of rental charges.............................. 1,427 181 2,464 1,443 561 2,152 2,535 ------------ ------------ ---------- ---------- ------------ -------- -------- Earnings available for fixed charges............................ $ (300,957 ) $ (469 ) $ (182,546) $ (169,717) $ 1,087 $ 23,012 $ 26,158 ------------ ------------ ---------- ---------- ------------ -------- -------- ------------ ------------ ---------- ---------- ------------ -------- -------- Fixed charges: Interest and amortization of debt discount and expense................. $ 68,294 $ 17,102 $ 121,579 $ 434 $ 14,057 $ 63,262 $ 78,425 Capitalized interest.................. 12,867 79 99 Portion (one-third) of rental charges.............................. 1,427 181 2,464 1,443 561 2,152 2,535 ------------ ------------ ---------- ---------- ------------ -------- -------- Total fixed charges................. $ 82,588 $ 17,362 $ 124,142 $ 1,877 $ 14,618 $ 65,414 $ 80,960 ------------ ------------ ---------- ---------- ------------ -------- -------- ------------ ------------ ---------- ---------- ------------ -------- -------- Ratio of earnings to fixed charges (a).................................... -- -- -- -- -- -- -- ------------ ------------ ---------- ---------- ------------ -------- -------- ------------ ------------ ---------- ---------- ------------ -------- -------- FOR THE THREE QUARTERS ENDED SEPTEMBER 30, ------------------ 1992 1993 -------- -------- Earnings available for fixed charges: Loss before income taxes and extraordinary item................... $(37,223) $(57,370) Interest and amortization of debt discount and expense................. 57,304 75,656 Portion (one-third) of rental charges.............................. 1,902 1,870 -------- -------- Earnings available for fixed charges............................ $ 21,983 $ 20,156 -------- -------- -------- -------- Fixed charges: Interest and amortization of debt discount and expense................. $ 57,304 $ 75,656 Capitalized interest.................. Portion (one-third) of rental charges.............................. 1,902 1,870 -------- -------- Total fixed charges................. $ 59,206 $ 77,526 -------- -------- -------- -------- Ratio of earnings to fixed charges (a).................................... -- -- -------- -------- -------- -------- - ------------------- (a) Earnings were insufficient to cover fixed charges by $383,545,000 for the period through November 14, 1988; $17,831,000 for the period from November 15, 1988; $306,688,000 for the year 1989; $171,594,000 for the period through August 31, 1990; $13,531,000 for the period from September 1, 1990; $42,402,000 for the year 1991; $54,802,000 for the year 1992; $37,223,000 for the three quarters ended September 30, 1992; and $57,370,000 for the three quarters ended September 30, 1993.
As explained in Note A to Selected Historical Financial Data for RII and Note 2 of Notes to Consolidated Financial Statements for RII, changes in control, management and accounting basis occurred on November 14, 1988 and August 31, 1990. EX-12 33 EXHIBIT 12.02 EXHIBIT 12.02 RESORTS INTERNATIONAL HOTEL, INC. AND SUBSIDIARIES COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (IN THOUSANDS OF DOLLARS)
FOR THE YEAR ENDED DECEMBER 31, ------------------------------------------------------------------------------------ 1988 1990 -------------------------- ------------------------ THROUGH FROM THROUGH FROM NOVEMBER 14 NOVEMBER 15 1989 AUGUST 31 SEPTEMBER 1 1991 1992 ------------ ------------ ---------- ---------- ------------ -------- -------- Earnings available for fixed charges: Earnings (loss) before income taxes and extraordinary item............... $ (44,785 ) $ (3,953 ) $ (152,442) $ (210,129) $ 5,000 $ 21,761 $ 27,356 Interest and amortization of debt discount and expense................. 40,017 6,147 48,008 306 136 563 395 Portion (one-third) of rental charges.............................. 747 109 902 749 243 938 942 ------------ ------------ ---------- ---------- ------------ -------- -------- Earnings available for fixed charges............................ $ (4,021 ) $ 2,303 $ (103,532) $ (209,074) $ 5,379 $ 23,262 $ 28,693 ------------ ------------ ---------- ---------- ------------ -------- -------- ------------ ------------ ---------- ---------- ------------ -------- -------- Fixed charges: Interest and amortization of debt discount and expense................. $ 40,017 $ 6,147 $ 48,008 $ 306 $ 136 $ 563 $ 395 Portion (one-third) of rental charges.............................. 747 109 902 749 243 938 942 ------------ ------------ ---------- ---------- ------------ -------- -------- Total fixed charges................. $ 40,764 $ 6,256 $ 48,910 $ 1,055 $ 379 $ 1,501 $ 1,337 ------------ ------------ ---------- ---------- ------------ -------- -------- ------------ ------------ ---------- ---------- ------------ -------- -------- Ratio of earnings to fixed charges (a).................................... -- -- -- -- 14.19 15.50 21.46 ------------ ------------ ---------- ---------- ------------ -------- -------- ------------ ------------ ---------- ---------- ------------ -------- -------- FOR THE THREE QUARTERS ENDED SEPTEMBER 30, ------------------ 1992 1993 -------- -------- Earnings available for fixed charges: Earnings (loss) before income taxes and extraordinary item............... $ 24,048 $ 19,666 Interest and amortization of debt discount and expense................. 317 190 Portion (one-third) of rental charges.............................. 716 694 -------- -------- Earnings available for fixed charges............................ $ 25,081 $ 20,550 -------- -------- -------- -------- Fixed charges: Interest and amortization of debt discount and expense................. $ 317 $ 190 Portion (one-third) of rental charges.............................. 716 694 -------- -------- Total fixed charges................. $ 1,033 $ 884 -------- -------- -------- -------- Ratio of earnings to fixed charges (a).................................... 24.28 23.25 -------- -------- -------- -------- - ------------------- (a) Earnings were insufficient to cover fixed charges by $44,785,000 for the period through November 14, 1988; $3,953,000 for the period from November 15, 1988; $152,442,000 for the year 1989; and $210,129,000 for the period through August 31, 1990.
As explained in Note A to Selected Historical Financial Data for RIH and Note 2 of Notes to Consolidated Financial Statements for RIH, changes in control, management and accounting basis occurred on November 14, 1988 and August 31, 1990. EX-12 34 EXHIBIT 12.03 EXHIBIT 12.03 RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES COMPUTATION OF PRO FORMA RATIO OF EARNINGS TO FIXED CHARGES (IN THOUSANDS OF DOLLARS)
FOR THE THREE FOR THE YEAR ENDED QUARTERS ENDED DECEMBER 31, 1992 SEPTEMBER 30, 1993 ------------------ ------------------ Pro forma earnings available for fixed charges: Earnings (loss) before income taxes and extraordinary item.............. $ 1,668 $ 3,006 Interest and amortization of debt discount and expense.................. 28,552 21,663 Portion (one-third) of rental charges................................... 856 628 -------- -------- Earnings available for fixed charges.................................. $ 31,076 $ 25,297 -------- -------- -------- -------- Pro forma fixed charges: Interest and amortization of debt discount and expense.................. $ 28,552 $ 21,663 Portion (one-third) of rental charges................................... 856 628 -------- -------- Total fixed charges................................................... $ 29,408 $ 22,291 -------- -------- -------- -------- Pro forma ratio of earnings to fixed charges.............................. 1.06 1.13 -------- -------- -------- --------
EX-12 35 EXHIBIT 12.04 EXHIBIT 12.04 RESORTS INTERNATIONAL HOTEL, INC. AND SUBSIDIARIES COMPUTATION OF PRO FORMA RATIO OF EARNINGS TO FIXED CHARGES (IN THOUSANDS OF DOLLARS)
FOR THE THREE FOR THE YEAR ENDED QUARTERS ENDED DECEMBER 31, 1992 SEPTEMBER 30, 1993 ------------------ ------------------ Pro forma earnings available for fixed charges: Earnings (loss) before income taxes and extraordinary item.............. $ 3,020 $ 2,281 Interest and amortization of debt discount and expense.................. 18,855 14,092 Portion (one-third) of rental charges................................... 942 694 -------- -------- Earnings available for fixed charges.................................. $ 22,817 $ 17,067 -------- -------- -------- -------- Pro forma fixed charges: Interest and amortization of debt discount and expense.................. $ 18,855 $ 14,092 Portion (one-third) of rental charges................................... 942 694 -------- -------- Total fixed charges................................................... $ 19,797 $ 14,786 -------- -------- -------- -------- Pro forma ratio of earnings to fixed charges.............................. 1.15 1.15 -------- -------- -------- --------
EX-23 36 EXHIBIT 23.01 ERNST & YOUNG Two Commerce Square Phone: 215 448 5000 Suite 4000 Fax: 215 448 4069 2001 Market Street Philadelphia Pennsylvania 19103-7096 Consent We consent to the reference to our firm under the caption "Experts" and to the use of our reports, as outlined in the following table, in the Registration Statement (Form S-4 No. 33-50733 Amendment No. 1) and related Prospectus of Resorts International, Inc., Resorts International Hotel Financing, Inc., Resorts International Hotel, Inc. and P.I. Resorts Limited dated January 5, 1994. Resorts International, Inc. February 19, 1993 and February 19, 1993 except for Note 17, as to which the date is December 29, 1993 Resorts International Hotel, February 19, 1993 and Inc. February 19, 1993 except for Note 14, as to which the date is December 29, 1993 PIRL Group April 23, 1993 and April 23, 1993 except for Note 13, as to which the date is December 29, 1993 Resorts International Hotel December 29, 1993 Financing, Inc. P.I. Resorts Limited December 29, 1993 /s/ ERNST & YOUNG Philadelphia, Pennsylvania January 5, 1994 -----END PRIVACY-ENHANCED MESSAGE-----