Restructuring Agreement

EXHIBIT 10(n)


RESTRUCTURING AGREEMENT


RESTRUCTURING AGREEMENT, dated October 27, 1988, among DEL WEBB CORPORATION, an Arizona corporation ("Webb"), DEL E. WEBB NEW JERSEY, INC., a New Jersey corporation ("DEWNJ"), ATLANTIC CITY BOARDWALK ASSOCIATES, L.P., a New Jersey limited partnership (the "Partnership"), THE CLARIDGE HOTEL AND CASINO CORPORATION, a New York corporation (the "Corporation"), THE CLARIDGE AT PARK PLACE, INCORPORATED, a New Jersey corporation ("New Claridge"), ROBERT K. SWANSON ("Swanson"), EVERETT L. MANGAM ("Mangam"), T. EDWARD PLANT ("Plant" and, together with Swanson and Mangam, the "Individual General Partners"), ANTHONY ATCHLEY ("Atchley"), GERALD C. HEETLAND ("Heetland" and, together with Atchley, the "New General Partners"), AC BOARDWALK PARTNERS CORPORATION, a New Jersey corporation ("AC Boardwalk" and, together with the Individual General Partners, the "General Partners") and FIRST FIDELITY BANK, NATIONAL ASSOCIATION, NEW JERSEY (the Bank").


WHEREAS, the Bank and Claridge Limited, a New Jersey limited partnership (the "Old Partnership"), entered into a Loan Agreement, dated as of October 31, 1983 (as heretofore assumed, modified, amended and supplemented, including assumption and amendment by the Assumption and Amendment Agreement, dated as of March 17, 1986, between New Claridge and the Bank, the "Loan Agreement"), and pursuant to the Loan Agreement, the Old Partnership granted to the Bank a first priority mortgage dated as of October 31, 1983, as amended by a First Mortgage Modification Agreement, dated March 17, 1986, among the Partnership, DEWNJ and the Bank (the "First Mortgage");


WHEREAS, the Old Partnership has been liquidated and dissolved;


WHEREAS, the Partnership acquired the real property, other than the Land, and the Hotel Assets (as such terms are defined in the Loan Agreement), both covered by the First Mortgage subject to the lien thereof,


WHEREAS, the Partnership leased the land on which the Claridge Hotel and Casino (the "Claridge") is situated pursuant to the Ground Lease, dated October 31, 1983 (as heretofore amended, the "Ground Lease"), between the Old Partnership and the Partnership;


WHEREAS, the Partnership leased certain air space located in Atlantic City, New Jersey pursuant to the Air Rights Lease, dated March 17. 1986 (the "Air Rights Lease"), between DEWNJ and the Partnership;


WHEREAS, upon its liquidation, certain of the other assets of the Old Partnership, including the Land and the Gaming and Other Assets (as such items are respectively defined in the Loan Agreement), became the property of DEWNJ, subject to the lien of the First Mortgage;


WHEREAS, New Claridge acquired the Gaming and Other Assets from DEWNJ on October 31, 1983;


WHEREAS, New Claridge has leased and subleased the Hotel Assets and the land on which the Claridge is located, respectively, from the Partnership pursuant to the Operating Lease Agreement, dated October 31, 1983 (as heretofore amended, the "Operating Lease"), between the Partnership and New Claridge;


WHEREAS, New Claridge has leased and Subleased the property set forth in the Expansion Operating Lease and the air space described in the Air Rights Lease. respectively, from the Partnership pursuant to the Expansion Operating Lease Agreement, dated March 17, 1986 ( as heretofore amended, the "Expansion Operating Lease", and together with the Operating Lease, the "Combined Operating Lease"), between the Partnership and New Claridge;


WHEREAS, New Claridge advanced certain sums to the Partnership pursuant to the Expandable Wraparound Mortgage Loan Agreement, dated as of October 31, 1983, between New Claridge and the Partnership, which was amended by the First Amendment to Expandable Wraparound Mortgage Loan Agreement, dated March 17, 1986, between New Claridge and the Partnership (as heretofore modified, amended and supplemented, the "Wraparound Loan Agreement");


WHEREAS, in connection with the Wraparound Loan Agreement, the Partnership granted to New Claridge the Expandable Wraparound Mortgage, dated October 31, 1983, which was amended by the First Supplemental Amendment to Expandable Wraparound Mortgage and Security Agreement, dated March 17, 1986 (as heretofore modified, amended and supplemented, the "Wraparound Mortgage");


WHEREAS, New Claridge guaranteed the obligations of the Old Partnership under the Loan Agreement pursuant to the Unlimited Guaranty, dated October 31, 1983, by New Claridge in favor of the Bank (as heretofore modified, amended or supplemented, the "Guaranty"), and confirmed that the Guaranty guarantees the increased obligations to the Bank pursuant to the First Mortgage modification, in the Consent and Amendment Agreement, dated as of March 17, 1986, between New Claridge and the Bank;


WHEREAS, in connection with the Guaranty, New Claridge entered into the General Security Agreement, dated October 31, 1983, in favor of the Bank (as heretofore modified, amended or supplemented, the "Security Agreement");


WHEREAS, the Partnership has entered into a Maintenance Services Contract, dated as of October 31, 1983 (such Maintenance Services Contract, as amended by the First Amendment to Maintenance Services Contract, dated as of March 17, 1986, is herein referred to as the "Maintenance Services Contract") with DEWNJ, under which DEWNJ provides facility maintenance and engineering services on behalf of the Partnership to New Claridge in accordance with the Operating Lease;


WHEREAS, the Hotel Assets are subject to a second mortgage, dated October 31, 1983, securing a nonrecourse note in the principal amount of $47,000,000 given by the Partnership to DEWNJ as part of the purchase price paid by the Partnership to DEWNJ for the Hotels Assets, as amended by the First Supplemental Amendment to Purchase Money Second Mortgage and Security Agreement, dated as of March 17, 1986, between the Partnership and DEWNJ, the First Amendment to Purchase Money Loan Agreement, dated as of March 17, 1986, between the Partnership and DEWNJ, and the First Amendment to Second Mortgage Note, dated March 17, 1986, between the Partnership and DEWNJ (the "Second Mortgage");


WHEREAS, New Claridge and DEWNJ have entered into a Management Agreement, dated as of October 31, 1983, as amended by First Amendment, dated July 31, 1985, Second Amendment, dated November 1, 1985, Third Amendment, dated January 1, 1986, Fourth Amendment, dated March 17, 1986, Fifth Amendment, dated February 24, 1987, Sixth Amendment, dated June 30, 1987, and Seventh Amendment, dated November 19, 1987 (the "Management Agreement");


WHEREAS, the Corporation holds all of the issued and outstanding shares of Common Stock of New Claridge;


WHEREAS, Webb and the Corporation have entered into a Cross Option Agreement, dated as of October 31, 1983 (the "Cross Option Agreement"), relating to outstanding capital stock of New Claridge and the Corporation;


WHEREAS. New Claridge and DEWNJ have entered into a Land Option Agreement, dated as of October 3 1, 1983 (such Land Option Agreement, as amended by the Amended and Restated Land Option Agreement, dated March 17, 1986, is hereinafter referred to as the "Land Option Agreement"), relating to the Land;


WHEREAS, Webb, pursuant to a Collection Guaranty, dated October 31, 1983, as amended by Consent and Amendment Agreement. dated as of March 17, 1986 (the "Collection Guaranty"), has guaranteed collection of up to $20,000,000 of amounts owing under the Loan Agreement as set forth in the Collection Guaranty;


WHEREAS, the parties hereto wish to provide for the restructuring set forth below so as to insure the continued licensing, operation and financial viability of the Claridge, to provide the Bank with improved loan-to-value ratio, to protect the interests of the investors in the Corporation and in the Partnership and to permit Webb and DEWNJ to fulfill, satisfy and terminate their respective obligations and commitments with respect to the Partnership, the Corporation, New Claridge and the Claridge;


WHEREAS, as a result of the transactions contemplated by this Agreement, among other things, Webb and DEWNJ will be (I) releasing New Claridge and/or the Partnership from liability for indebtedness, unpaid fees and accrued interest aggregating in excess of $101 million at September 30, 1988, (ii) making payments aggregating approximately $19.5 million which will reduce by the same amount indebtedness, $14,500,000 of which is secured by the assets of the Partnership, the Corporation and New Claridge, without Webb or DEWNJ having any right of subrogation, and (iii) transferring to the Partnership the Land and certain air rights which New Claridge has the option to acquire for $9 million (which option is terminated herein) and as a result of which the payments by the Partnership under the Ground Lease of approximately $1,300,000 per year will be eliminated; and


WHEREAS, none of the Partnership, the Corporation or New Claridge has the ability to pay the amounts respectively owed by each of them to Webb or DEWNJ (which amounts total more than $101 million collectively, including the Second Mortgage), or has any expectation of being able to make any such payments. In addition, none of the Partnership, the Corporation or New Claridge has the ability to pay such $19.5 million portion of their indebtedness, $14,500,000 of which is secured by their property, which portion is being satisfied by Webb and DEWNJ, or any expectation of being able to do so. However, as a consequence of the transactions contemplated by this Agreement, the financial obligations of the Partnership, the Corporation and New Claridge will be materially reduced and restructured so that, the parties believe, they will be financially viable entities, be left with adequate capital remaining for the conduct of their business, loss to creditors (other than Webb and DEWNJ) will be prevented or mitigated in whole or in part, and the value of the investment of Limited Partners of the Partnership and holders of Class A Shares in the Corporation, which might otherwise be zero, will be materially enhanced. In addition, Webb and its wholly-owned subsidiary, DEWNJ, will be relieved of continuing obligations to the Partnership and New Claridge and Webb's contingent liability on the Collection Guaranty will be satisfied; and


WHEREAS, in order to insure the financial stability to obtain licensing of New Claridge and the Claridge, the New Jersey Casino Control Commission has required that the Bank and/or Webb provide additional working capital financing to those entities in the maximum amount of $5 million and the Bank and Webb have agreed with respect to this obligation (the obligations of the Bank and Webb both being subject to the provisions of Section 4(f)), in order to avoid the immediate serious financial consequences to the Claridge resulting from the loss of its gaming license and greater losses to Webb.


NOW, THEREFORE, the parties hereto hereby agree as follows:


1. Closing, Transactions to Occur at Closing.


(a) At a closing (the "Closing,"). to be held at the offices of Rogers & Wells, 200 Park Avenue, New York, New York, commencing at 9:30 a.m. on the Closing Date (as hereinafter defined), subject to satisfaction of the conditions set forth in Sections 2 and 3 hereof, the parties shall take the actions set


forth below in paragraph (c) of this Section I and the events set forth in paragraph (c) of this Section I shall be deemed to have occurred at the Closing. The "Closing Date" shall be March 31. 1989, provided that upon not less than ten days' prior written notice to the other parties hereto, Webb may select an earlier business day as the Closing Date, but only in the event that (i) the conditions in Sections 2 and 3 hereof have been or will be satisfied on such day, and (ii) such earlier Closing, Date has been approved by the New Jersey Casino Control Commission (the "Commission"). In the event that the conditions set forth in Section 3 shall not have been satisfied on or before the Closing, Date, by mutual agreement of Webb and the Bank in writing, the Closing Date may be extended from time to time to a date not later than August 1, 1989.


(b) Such actions to be taken, and events to occur, at the Closing shall include payment of certain amounts, release of certain obligations and termination of certain agreements or obligations. As used in this Agreement, (i) any reference to "payment" by one party to another of a certain amount shall mean that at the time of the Closing the party making the payment shall wire-transfer the specified amount to the other party in immediately available funds, ( ii ) any reference to "discharge," "satisfy" or "release" by a party of obligations of another party shall mean that at the time of Closing, and thereafter, and without the need to execute any other instrument or document, the obligation of the party being, released shall be deemed discharged, satisfied and released without liability to any person, the party being, released shall have no further duty or obligation to pay, perform or take any other action with respect to the obligation being released and the party releasing the other party shall have no further right to enforce or otherwise require performance of such obligation; (iii) any reference to "termination" of an agreement or other obligation shall mean that the parties to such agreement or obligation agree that at the time of Closing, and thereafter, and without the need to execute any other instrument or document, such agreement or obligation shall be terminated and no longer in force or of effect and none of the parties thereto shall have any further obligation under such agreement or obligation or any further right to enforce or otherwise require performance of such agreement or obligation; and (iv) any reference to anything being "deemed" to occur shall mean that, at the time of Closing, and thereafter, without the need to execute any other instrument or document, such thing shall have occurred; provided, however, that, notwithstanding anything to the contrary in this Agreement, if a claim or claims of any type whatsoever is made after the Closing (relating to periods on or prior to the Closing, and with respect to Section 4(f), relating to periods before, on, or after the Closing) by the Corporation, New Claridge or the Partnership or the successors, assignees, receivers, assignees for the benefit of creditors or trustees in bankruptcy, an unsecured creditor of the Corporation, New Claridge or the Partnership, or any similar person or entity, or any of them upon Webb, DEWNJ or any other directly or indirectly wholly-owned subsidiaries of Webb for the recovery of any amount or property, then all of the obligations and amounts owed by the Partnership, the Corporation and New Claridge to Webb and DEWNJ which are released, forgiven or paid to one or more of the Partnership, the Corporation or New Claridge pursuant to this Agreement (including pursuant to Sections I (c) (4), (5), (8) and (9)), or which are paid by Webb or DEWNJ to the Bank under Section 4(f) and are the obligations of New Claridge, shall (to the extent provided below) conclusively be deemed to be reinstated and never to have been released or forgiven and shall be immediately due and payable, Webb shall (to the extent provided below) have an unsecured claim in the amount equal to the payments made by it under Section I (c)( I ) (not by subrogation to any claim of the Bank, but independent of such claim), Webb shall (to the extent provided below) have full rights of subrogation under Section 1(c) (2) and the release of such rights of subrogation in Section I (c) (2) shall conclusively be deemed not to have occurred, and Webb shall have full rights of subrogation for any sums it has paid under Section 4(f), but in each and every case only (i) to the extent such obligations and amounts may be used to offset fully, as a complete defense or as a full recoupment with respect to, such claim or claims, and (ii) to the extent such offset, defense or recoupment is not available, in an amount which, when collected, will be equal to that paid or to be paid on and in respect of such claim or claims. In addition to the foregoing, if a claim or claims of any type whatsoever is made after the Closing, by Webb or its successors, assigns or trustee in bankruptcy upon the Bank for payment or recoupment of the amount paid to the Bank under Section I (c)(1) or Section 4(a) hereof and the Bank pays all or part of said amount by reason of (x) any judgment, decree or order of any court or administrative body having jurisdiction over the Bank or any of its property, or (y) any settlement or compromise of any such claim effected by the Bank with any such claimant or in order to permit the Bank to participate in distributions of the estate of any debtor in a bankruptcy or similar proceeding, then, and in any such event, the loan under the Loan Agreement shall be increased by an amount equal to the amount so paid by the Bank as if said amount had not been received by the Bank.


(c) The actions to be taken, and events deemed to have occurred, at the Closing, are as follows:


(1) (i) Webb shall pay to the Bank, in satisfaction of Webb's obligations under the Collection Guaranty, an amount equal to (A) $19,500,000, minus (B) the amount (not exceeding $5,000,000) paid by Webb to Manufacturers Hanover Bank and Trust Company, ("MHT"), under paragraph (2) of this Section l(c), plus (C) the amount, if any, by which $10,350,000 exceeds the difference of (x) the outstanding principal balance (as of the time immediately prior to the Closing of working capital loans and advances made by Webb or DEWNJ to New Claridge, minus (y) an amount equal to interest, at the respective rates provided in the applicable governing instruments, accruing, after November 30, 1988, on $14,500,000 of the First Mortgage and on all of the MHT Line (defined below) including Switchover Interest (defined below), less any such interest paid directly by Webb or DEWNJ to the Bank or MHT, respectively, and for which neither Webb nor DEWNJ has been reimbursed ( the difference of (x) minus (y)(but not less than zero) shall be referred to as the "Closing Balance"): (ii) in consideration of such payment, the obligation s of Webb under the Collection Guaranty shall be released and the Collection Guaranty terminated (and Webb, by making such payment, waives and releases any right of subrogation against the Partnership and New Claridge, and to any collateral securing the Partnership's or New Claridge's obligations, arising by virtue of such payment), and (iii) the Bank shall apply the entire amount of such payment to reduce the principal amount of the loan under the Loan Agreement.


(2) Webb shall pay MHT up to $5,000,000 (or such lesser amounts, including letters of credit, as are then outstanding under the MHT Line) in full satisfaction of the obligations of Webb under the Guarantee, dated June 16, 1986, by Webb to MHT (the "MHT Working Capital Guaranty"), and as satisfaction in full of all amounts outstanding under the Promissory Note, dated June 16, 1986, between New Claridge and MHT and under the letter of credit issued by MHT (the "MHT Line") (and Webb, by making such payment, waives and releases any right of subrogation against New Claridge, and to any collateral securing New Claridge's obligations, arising by virtue of such payment, but retaining such rights of reinstatement and subrogation as are provided in the proviso at the end of the second sentence of Section l(b) hereof).


(3) Subject to the satisfaction of all conditions to lending set forth in the Amended and Restated Loan Agreement referred to in paragraph (7) of this Section l(c), the Bank shall lend to New Claridge under the Revolving Credit Facility (as that term is defined in the Amended and Restated Loan Agreement) the amount referred to in the next sentence, which loan shall in no event exceed (I) $5,000,000, plus (ii) an amount equal to the amount by which at the Closing the outstanding principal balance of the loan under the Loan Agreement is reduced to less than $75,000,000, plus (iii) the amount of the Additional Commitment as defined in Section 4(f) hereof, plus (iv) certain additional amounts within the Revolving Credit Facility Commitment as defined in the Amended and Restated Loan Agreement. Whether or not such loan is made in whole or in part, New Claridge shall pay to Webb an amount equal to the amount, if any, by which at the Closing the Closing Balance exceeds $10,350,000, plus interest accrued and unpaid through the Closing on that portion of the aggregate outstanding principal balance of such working capital loans and advances which during all or any portion of the period from July 1, 1988 through the Closing exceeded $10,350,000 (excluding therefrom, for the computation of interest, from time to time as applicable, amounts which would be included in (y) of Section 1 (c)(1)(I).


(4) Except as provided in the second sentence of Section 1 (c)(3) and in the proviso at the end of the second sentence of Section 1 (b), Webb and DEWNJ shall release New Claridge from any obligation with respect to working capital loans or advances made by Webb or DEWNJ to New Claridge; and any obligation of New Claridge with respect to such loans or advances shall be terminated: and Webb and DEWNJ shall be released from any obligation to provide, or cause to be provided, to New Claridge working capital funds under the Management Agreement or otherwise; and any and all such obligations shall be terminated.


(5) (a) To the extent not theretofore paid under Section 4(e) hereof, each of Webb and DEWNJ shall pay to New Claridge the following actually received by Webb or DEWNJ. if any, as principal, fees, interest or lease payments on or after July 1, 1988 that Webb or DEWNJ would not have received had the Closing contemplated by this Agreement occurred on July 1, 1998: (A) management fees, and accrued interest thereon under Articles VI and VIII of the Management Agreement, ( B) maintenance services fees under Section 6.1 of the Maintenance Services Contract, (C) payments of Basic Annual Rent under Section 2.1 of the Ground Lease and Section 2.1 of the Air Rights Lease, ( D) except as provided in the second sentence of section l(c)(3), interest on working capital loans and (E) payments of principal and interest under the Second Mortgage. In addition to the foregoing, Webb shall pay to New Claridge the amount, if any, by which the amount referred to in clause (y) of the definition of Closing Balance exceeds the amount referred to in clause (x) of such definition.


(b) Except to the extent previously paid under Section 4(d) hereof, and subject to Section 4(f) hereof, the Partnership shall (I) pay to New Claridge any amount actually received and retained by it, if any, as lease payments under the Combined Operating Lease on or after July 1, 1988, that it would not have received and retained had the transactions contemplated by this Agreement occurred on July 1, 1988, and (ii) lend to New Claridge on a subordinated basis against delivery by New Claridge to the Partnership of a note in the form of Exhibit Y hereto, all other cash or cash equivalents remaining in the Partnership after giving effect to the payment referred to in clause (I) of this Section l(c)(5)(b), except to the extent that such amounts are actually needed to pay expenses incurred through or at the Closing.


(6) New Claridge shall pay to the Bank an amount equal to all cash on hand at New Claridge at the time of the Closing, other than the "Opening Bankroll" (as such term is defined in the form of Amended and Restated Loan Agreement referred to in paragraph (7) of this Section 1 (c) ) after giving effect to adjustments, refunds or returns of payments to adjust the transactions contemplated by this Agreement as if such transactions had occurred on July 1, 1988 (including, without limitation, the amounts paid to New Claridge under Section 1 (c) (5) (b) (I) hereof and the amounts, if any, loaned to New Claridge under Section l(c)(5)(b)(ii) hereof, except to the extent such sums were already paid to the Bank under Section 4(f) hereof); and the Bank shall apply the entire amount of such payments to reduction of the principal amount of the loan under the Loan Agreement. The amount of principal paid on the loan under the Loan Agreement from and after July 1, 1988 through the time immediately prior to Closing shall not be adjusted to July 1, 1988.


(7) The Bank shall execute and deliver to New Claridge, and New Claridge shall execute and deliver to the Bank, an amendment and restatement of the Loan Agreement substantially in the form of Exhibit A hereto (the Loan Agreement, as amended by such amendment and subsequently amended from time to time, is herein referred to as the "Amended and Restated Loan Agreement").


(8) Subject to the proviso at the end of the second sentence of Section l(b) hereof, DEWNJ shall release New Claridge and the Partnership from all obligations under the Second Mortgage, and from all obligations secured thereby, including all principal thereof and all accrued and unpaid interest thereon; the Second Mortgage and the obligations secured thereby shall be terminated; and DEWNJ shall deliver to the Partnership an instrument of satisfaction in the form of Exhibit B hereto duly executed on behalf of DEWNJ and in recordable form and such termination statements as the Partnership shall reasonably request. The Partnership and New Claridge hereby acknowledge that the release by DEWNJ of the Second Mortgage and the obligations secured thereby shall not reduce the principal balance due under the Wraparound Loan Agreement and the obligations secured thereby.


(9) Except as otherwise provided in Section 10 and in the proviso at the end of the second sentence of Section 1 (b), DEWNJ shall release New Claridge from any obligation with respect to all amounts then or thereafter payable under the Management Agreement, including, without limitation, all accrued and unpaid management fees, and interest thereon; and the Management Agreement shall be terminated.


10) Webb shall deliver to the Corporation a consent in the form of Exhibit C hereto, in its capacity as holder of all the issued and outstanding shares of Class B Common Stock of the Corporation, consenting to the amendment to the Certificate of Incorporation of the Corporation in the form of Exhibit D hereto (the "Charter Amendment"), and such delivery shall be deemed to occur immediately prior to all payments by Webb or DEWNJ under Sections 1(c)(1), 1(c)(2) and 1(c)(5) hereof.


11) DEWNJ shall deliver to the Partnership deeds in the forms of Exhibits E-1 and E-2 hereto, subject to such title encumbrances and warranties as the parties shall agree, duly executed by DEWNJ, conveying all of DEWNJ's right, title and interest in the real property described on Exhibit F hereto and the related air rights, and an instrument in the form included in Exhibit E-3 hereto assigning, the related easement agreement, and New Claridge shall pay the transfer and other taxes attendant to such conveyances. The Brighton Park Maintenance Agreement (as amended to the date hereof, the "Brighton Agreement"), shall be assigned to New Claridge pursuant to an instrument in the form of Exhibit E-4, effective July 1, 1988, and New Claridae shall assume Webb's and DEWNJ's obligations, if any, under the Brighton Agreement, including, but not limited to, obligations payable on or after July 1, 1988, but excluding obligations payable prior to July 1, 1988, and shall indemnify Webb and DEWNJ against, hold them harmless from and promptly reimburse them for the obligations so assumed.


12) The Partnership shall duly execute and deliver to New Claridge, and New Claridge shall duly execute and deliver to the Partnership, an amendment to the Operating Lease and the Expansion Operating Lease in the form attached hereto as Exhibit G.


13) The Partnership shall execute and deliver to New Claridge, and New Claridge shall execute and deliver to the Partnership, an amendment to the Wraparound Mortgage and the Wraparound Mortgage Loan in the form of Exhibits H-1 and H-2 hereto, respectively.


14) Atchley and Heetland, or such other person or persons acceptable to the Partnership, the Corporation and New Claridge, shall execute and deliver to the Partnership an instrument in the form of Exhibit I hereto.


15) Each of the General Partners and the New General Partners shall execute and deliver, as general partners of the Partnership, an amendment to the Partnership Agreement in the form of Exhibit J hereto; and one of the New General Partn ...