MORTGAGE AND SECURITY AGREEMENT
WITH ASSIGNMENT OF RENTS
THIS MORTGAGE AND SECURITY AGREEMENT WITH ASSIGNMENT OF RENTS (this "Mortgage"), dated as of the 16th day of April 1993, given by GNOC, Corp. ("GNOC"), a New Jersey corporation, having an office at Boston and Pacific Avenues, P.O. Box 1737, Atlantic City, New Jersey 08404, and GNAC, Corp. ("GNAC"), a New Jersey corporation, having an office at Boston and Pacific Avenues, P.O. Box 1737, Atlantic City, New Jersey, 08404, (GNOC and GNAC are referred to individually as a Mortgagor and collectively, as "Mortgagor") to FIRST FIDELITY BANK, NATIONAL ASSOCIATION, NEW JERSEY ("First Fidelity"), a national banking association, having an address at 550 Broad Street, Newark, New Jersey 07101 and MIDLANTIC NATIONAL BANK ("Midlantic"), a national banking association, having an address at 499 Thornall Street, Metropark, Edison, New Jersey 08137 (First Fidelity and Midlantic are referred to collectively as the "Mortgagee").
It is the intention of the Mortgagor that this instrument be a "Pari Passu Mortgage" within the meaning of the indenture dated as of March 10, 1993 (the "Indenture"), among GNF Corp., a New Jersey Corporation ("GNF"), GNAC as guarantor, GNOC, and Amalgamated Bank of Chicago as Trustee (the "Trustee"). Pursuant to the Mortgage and Security Agreement with Assignment of Rents dated as of March 10, 1993 given by GNAC and GNOC, as mortgagor, to Amalgamated Bank of Chicago, as mortgagee, the lien created by this instrument ranks pari passu with the lien created by said Mortgage recorded on March 11, 1993 in Mortgage Book 4980 at page 92 in the Atlantic County, New Jersey Clerk's Office (the "Trustee's Mortgage"). The rights of Mortgagee under this Mortgage are governed by an intercreditor agreement of even date (the "Intercreditor Agreement") executed by the Mortgagee, the Mortgagors, GNF and the Trustee. To the extent any of the terms of this Mortgage are inconsistent with the terms of the Intercreditor Agreement, the terms of the Intercreditor Agreement shall control. Any capitalized terms not defined herein or not refered to as part of the Indenture shall have the meaning set forth in the Loan Agreement (as hereinafter defined).
To secure the following obligations and liabilities: (a) the payment to Mortgagee under that certain loan agreement dated as of April 16, 1993 (the "Loan Agreement") by GNOC, Corp. as the borrower, GNAC and GNF, Corp, as guarantors, of (i) the indebtedness in the maximum principal amount of TWENTY MILLION DOLLARS, evidenced by Revolving Credit Notes issued pursuant to the provisions of the Loan Agreement, (ii) any and all interest due or to become due on the Revolving Credit Notes in accordance with the provisions of the Loan Agreement and the Revolving Credit Notes, and (iii) any and all other sums due or to become due under the Loan Agreement, the Revolving Credit Notes, this Mortgage and any further or subsequent advances or expenditures made under any other Loan Document (hereinafter defined) by Mortgagee pursuant to the provisions hereof (the items set forth in clauses (i)-(iii) above being hereinafter collectively referred to as the "Indebtedness"), and (b) the performance of all of the terms, covenants, conditions, agreements, obligations, and liabilities of Mortgagor (which, together with the Indebtedness is referred to collectively as the "Obligations") under (i) this Mortgage, (ii) the Loan Agreement, (iii) the Revolving Credit Notes, and (iv) the Assignment of Leases and Rents dated as of the date hereof given by Mortgagor to Mortgagee (the "Assignment"), (v) and other documents executed by the Mortgagor in connection with the foregoing, and (vi) any extensions, renewals, replacements or modifications of any of the foregoing (this Mortgage, the Loan Agreement, the Assignment, the Revolving Credit Notes, and all other documents executed in connection with the foregoing being hereinafter collectively referred to as the "Loan Documents" and, individually, as a "Loan Document").
Mortgagor does hereby encumber, give, grant, bargain, sell, warrant, alienate, remise, release, convey, assign, transfer, hypothecate, deposit, pledge, set over, create and grant a security interest in and confirm to Mortgagee the following described real property, personal property, rights, collateral and all substitutions for and all replacements, reversions and remainders of such tangible personal property, whether now owned or held or hereafter acquired by Mortgagor (collectively, the "Encumbered Property"):
The Mortgagor's interest in all those plots, pieces or parcels of land more particularly described in Exhibit A annexed hereto and made a part hereof, together with the right, title and interest of Mortgagor, if any, in and to the streets and in and to the land lying in the bed of any streets, roads or avenues, open or proposed, public or private, in front of, adjoining or abutting said land to the center line thereof, the air space and development rights pertaining to said land and the right to use such air space and development rights, all rights of way, privileges, liberties, tenements, hereditaments and appurtenances belonging, or in any way appertaining thereto, all easements now or hereafter benefiting said land and all royalties and rights appertaining to the use and enjoyment of said land, including, but without limiting the generality of the foregoing, all alley, vault, drainage, mineral, water, oil, coal, gas and other similar rights (all of the foregoing being hereinafter collectively referred to as the "Land");
TOGETHER with Mortgagor's interest, right and title in and to the buildings and other improvements now or hereafter erected on the Land, as hereinafter defined (such buildings and other improvements being hereinafter collectively referred to as the "Buildings"), the Land, and the Buildings being hereinafter collectively referred to as the "Real Property";
TOGETHER with all and singular the reversion or reversions, remainder or remainders, rents and revenues produced in connection with the Real Property and all of the estate, right, title, interest, property, possession, claim and demand whatsoever, both in law and at equity, or Mortgagor of, in and to the Real Property and of, in and to every part and parcel thereof, with the appurtenances, at any time belonging or in any way appertaining thereto;
TOGETHER with Mortgagor's right, title and interest in and to all chattels, furnishings, goods, equipment, fixtures, tangible personal property, materials, and all other contents of every kind and nature, including, without limitation, all tangible personal property used in connection with the hotel, casino and restaurant facilities located on the Real Property and all gaming equipment, tables and slots that shall be owned or hereafter acquired, used in connection with or placed prior to the satisfaction of the Indebtedness and Obligations on the Real Property including machinery, fixtures, systems, apparatus, fittings, materials and equipment now or which may hereafter be used in the operation of the Real Property, including, but without limiting the generality of the foregoing, all heating, electrical, mechanical, lighting, lifting, plumbing, ventilating, air conditioning and air-cooling fixtures, systems, machinery, apparatus and equipment, refrigerating, incinerating and power fixtures, systems, machinery, apparatus and equipment, loading and unloading fixtures, systems, machinery, apparatus and equipment, escalators, elevators, boilers, communication systems, casino gambling equipment, switchboards, sprinkler systems and other fire prevention and extinguishing fixtures, systems, machinery, apparatus and equipment, and all engines, motors, dynamos, machinery, wiring, pipes, pumps, tanks, conduits and ducts constituting a part of any of the foregoing, and all additions to, substitutions for, renewals and proceeds of any of the foregoing, together with all attachments, substituted parts, accessories, accessions, improvements and replacements thereof, including the equity of Mortgagor in any such item that is subject to a purchase money or other prior security interest (all such personal property, fixtures, additions, substitutions and proceeds being sometimes hereinafter collectively referred to as the "Personal Property");
TOGETHER with Mortgagor's right, title and interest to and under all leases, subleases, underletting, licenses and other occupancy agreements which now or hereafter may affect the Real Property or any portion thereof and under any and all guarantees, modifications, renewals and extensions thereof as listed in Exhibit B (collectively, the "Leases"), and to and under all documents and instruments made or hereafter made in respect of the Leases, and in and to any and all deposits made or hereafter made as security under the Leases (excluding, however, any sums paid as "key money" in connection with the execution or renewal thereof or any sums paid in connection with the execution or renewal of a Lease as advance rental, to the extent the same has been paid prior to the occurrence of an Event of Default (hereinafter defined)), subject to the legal rights under the Leases of the persons or entities making such deposits, together with any and all of the benefits, rentals, revenues, issues, profits, income and rents due or to become due or to which Mortgagor is now or hereafter may become entitled arising out of the Leases (collectively, the "Rents");
TOGETHER with all plans, specifications, engineering reports, land planning maps, surveys, and any other reports, exhibits or plans used or to be used in connection with the operation or maintenance of the Real Property, together with all amendments and modifications thereof;
TOGETHER with (a) subject to the provisions of Article VI hereof, Mortgagor's interest in and to all proceeds which now or hereafter may be paid under any insurance policies now or hereafter obtained by Mortgagor in connection with the conversion of the Encumbered Property or any portion thereof into cash or liquidated claims, together with the interest payable thereon and the right to collect and receive the same, including, but without limiting the generality of the foregoing, proceeds of casualty insurance, title insurance, business interruption insurance and any other insurance now or hereafter maintained with respect to the Real Property or in connection with the use or operation thereof (collectively, the "Insurance Proceeds"), and (b) subject to the provisions of Article VII hereof, all of Mortgagor's right, title and interest in and to all awards, payments and/or other compensation, together with the interest payable thereon and the right to collect and receive the same, which now or hereafter may be made with respect to the Encumbered Property as a result of (i) a taking by eminent domain, condemnation or otherwise, (ii) the change of grade of any street, road or avenue or the widening of any streets, roads or avenues adjoining or abutting the Land, or (iii) any other injury to or decrease in the value of the Encumbered Property or any portion thereof (collectively, the "Awards"), in any of the foregoing circumstances described in clauses (a) or (b) above to the extent of the entire amount of the Indebtedness outstanding as of the date of Depositary's (hereinafter defined) receipt of any such Insurance Proceeds or Awards, notwithstanding that the entire amount of the Indebtedness may not then be due and payable, and also to the extent of reasonable attorneys' fees, costs and disbursements incurred by Depositary or Mortgagee in connection with the collection of any such Insurance Proceeds or Awards. Subject to the provisions of Articles VI and VII hereof, Mortgagor hereby assigns to Mortgagee, and Depositary is hereby authorized to collect and receive, all Insurance Proceeds and Awards and to give proper receipts and acquittances therefor and to apply the same in accordance with the provisions of this Mortgage. Mortgagor hereby agrees to make, execute and deliver, from time to time, upon demand, further documents, instruments or assurances to confirm the assignment of the Insurance Proceeds and the Awards to Depositary and Mortgagee, free and clear of any interest of Mortgagor whatsoever therein, except as specifically permitted in this Mortgage, and free and clear of any other liens, claims or encumbrances of any kind or nature whatsoever;
TOGETHER with all right, title and interest of Mortgagor in and to all improvements, betterments, renewals and all substitutes and replacements of, and all additions and appurtenances to, the Real Property, and in each such case, the foregoing shall be deemed a part of the Real Property and shall become subject to the lien of this Mortgage as fully and completely, and with the same priority and effect, as though now owned by Mortgagor and specifically described herein, without any further mortgage, conveyance, assignment or other act by Mortgagor;
TOGETHER with all proceeds of any or all of the foregoing; and
TO HAVE AND TO HOLD the Encumbered Property and the rights and privileges hereby encumbered or intended so to be unto Mortgagee and its successors and assigns for the uses and purposes herein set forth.
Mortgagor, for itself and its successors and assigns, further represents, warrants, covenants and agrees with Mortgagee as follows:
I. Warranty of Title.
Mortgagor warrants to Mortgagee that (i) it has good and marketable fee simple title to the Land, (ii) it has good and marketable fee simple title to the Buildings located on the Land and good and marketable title to the Personal Property located on or used in connection with the Real Property, (iii) it has the right to mortgage the Real Property and the Leases in accordance with the provisions set forth in this Mortgage, (iv) it has the right to grant a security interest in the Personal Property and the Rents in accordance with the provisions set forth in this Mortgage, and (v) this Mortgage is a valid and enforceable first lien on the Encumbered Property, subject, as of the date hereof, only to the exceptions to title listed on Schedule B, Section 1 and Section 2 of Title Insurance Commitment No. F2366251L issued by the Commonwealth Land Title Insurance Co. dated March 11, 1993 as continued through the date hereof (collectively, the "Closing Encumbrances"). Mortgagor shall (i) preserve such title and the validity and priority of the lien of this Mortgage and shall forever warrant and defend the same, subject to the Closing Encumbrances and the Permitted Liens (as that term is defined in the Loan Agreement) (collectively, the Closing Encumbrances and the Permitted Liens are referred to as the "Permitted Encumbrances"), unto Mortgagee against the claims of all and every person or persons, corporation or corporations and parties whomsoever, and (ii) make, execute, acknowledge and deliver all such further or other deeds, documents, instruments or assurances and cause to be done all such further acts and things as may at any time hereafter be reasonably required to confirm and fully protect the lien and priority of this Mortgage.
II. Payment of Indebtedness.
A. Mortgagor shall pay the Indebtedness at the times and places and in the manner specified in the Loan Documents and shall perform all of the Obligations in accordance with the provisions set forth herein and in the other Loan Documents.
B. Any payment made in accordance with the terms of this Mortgage by any person at any time liable for the payment of the whole or any part of the Indebtedness, or by any subsequent owner of the Encumbered Property, or by any other person whose interest in the Encumbered Property might be prejudiced in the event of a failure to make such payment, or by any stockholder, officer or director of a corporation or by any partner of a partnership which at any time may be liable for such payment or may own or have such an interest in the Encumbered Property, shall be deemed, as between Mortgagee and all persons who at any time may be liable as aforesaid or may own the Encumbered Property, to have been made on behalf of all such persons.
III. Requirements; Proper Care and Use.
A. Subject to the right of Mortgagor to contest a Legal Requirement (hereinafter defined) as provided in Article X hereof, Mortgagor promptly shall comply with, or cause to be complied with, in all material respects, all present and future laws, statutes, codes, ordinances, orders, judgments, decrees, injunctions, rules, regulations, restrictions and requirements (collectively, "Legal Requirements") of every Governmental Authority (hereinafter defined) having jurisdiction over Mortgagor or the Encumbered Property or the use, manner of use, occupancy, possession, operation, maintenance, alteration, repair or Restoration (hereinafter defined) of the Encumbered Property, without regard to the nature of the work to be done or the cost of performing the same, whether foreseen of unforeseen, ordinary or extraordinary, and shall perform, or cause to be performed, in all material respects, all obligations, agreements, covenants, restrictions and conditions now or hereafter of record which may be applicable to Mortgagor or to the Encumbered Property or to the use, manner of use, occupancy, possession, operation, maintenance, alteration, repair or Restoration of the Encumbered Property; provided, however, that Mortgagor shall not be required to comply with any Legal Requirement which, by its terms, does not require that the Encumbered Property so comply, or if such failure would not have a Material Adverse Effect.
B. Mortgagor shall except as otherwise provided herein (i) not abandon the Encumbered Property or any portion thereof that does not have a material adverse effect on the Encumbered Property, (ii) maintain, in all material respects, the Encumbered Property in good repair, order and condition, reasonable wear and tear excepted, and supplied with all necessary equipment, (iii) promptly make all necessary repairs, renewals, replacements, additions and improvements to the Encumbered Property which, in the reasonable judgment of Mortgagor, may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times, (iv) refrain from impairing or diminishing in any material manner the value of the Encumbered Property or the priority or security of the lien of this Mortgage, (v) not remove or demolish any of the Encumbered Property, if such removal or demolition might materially impair the value of the Encumbered Property except in accordance with Article 12 of the Indenture, except that Mortgagor shall have the right to remove and dispose of, free of the lien of this Mortgage, such Personal Property as may, from time to time, become worn out or obsolete or which, in accordance with good business practices, should be removed or disposed of, provided that if such removal shall materially adversely effect the value of the Encumbered Property, simultaneously with, or prior to, such removal, any such Personal Property shall be replaced with other Personal Property which shall have a value and utility at least equal to that of the replaced Personal Property and which shall be free of any security agreements or other liens or encumbrances except in accordance with Article 12 of the Indenture, (vi) not make, install or permit to be made or installed any alterations or additions to the Encumbered Property if doing so would materially impair the value of the Encumbered Property except in accordance with Article 12 of the Indenture, (vii) not make, suffer or permit any nuisance (it being acknowledged that casino use shall not be deemed to be a nuisance) to exist on the Encumbered Property or any portion thereof, and (viii) subject to the rights of tenants and other persons or entities in possession, permit Mortgagee and its agents, at all reasonable times and with reasonable prior notice (except in the case of an emergency), to enter upon the Real Property for the purpose of inspecting and appraising the Encumbered Property or any portion thereof.
C. Mortgagor shall not, by any act or omission, permit any building or other improvement located on any property which is not subject to the lien of this Mortgage to rely upon the Real Property or any portion thereof or any interest therein to fulfill any Legal Requirement, except to the extent that such reliance exists as of the date hereof, and Mortgagor hereby assigns to Mortgagee any and all rights to give consent for all or any portion of the Real Property or any interest therein to be so used. Mortgagor shall not, by any act or omission, impair the integrity of the Real Property, as it exists today, as a single or multiple zoning lot or lots, as the case may be, separate and apart from all its premises. Any act or omission by Mortgagor which would result in a violation of any of the provisions of this Article III shall be null and void. Notwithstanding the foregoing, Mortgagor shall have the right to grant easements, rights of way and similar interests which are subordinate to the lien of this Mortgage and which do not materially impair the value of the Encumbered Property.
D. Mortgagor has and will maintain in effect at all times until the Obligations are satisfied in full, all necessary licenses (including without limitation all licenses necessary under the Act (hereinafter defined) or otherwise to operate the casino portion of the Encumbered Property as a casino), authorizations, registrations and approvals to own, use, occupy and operate the Real Property, and Mortgagor has full power and authority to carry on its business at the Real Property as currently conducted and has not received any notice of any violation of any Legal Requirement that materially impairs the value of the Encumbered Property.
E. During the term of this Mortgage and any renewals or extensions hereof, as to any (i) "license," as such term is defined in N.J.S.A. 5:12-30, issued pursuant to the New Jersey Casino Control Act and regulations promulgated thereunder (collectively being referred to herein as the "Act") which is material to the continued lawful operation of Mortgagor as a casino licensed pursuant to the provisions of the Act, and (ii) any material requirements of the "Operation Certificate," as such term is defined in N.J.S.A. 5:12-35, issued with regard to the Encumbered Property (the foregoing subparagraphs (i) and (ii) are herein collectively referred to as the "Operational Requirements"):
a. As of the date hereof, the Operational Requirements are to the best of Mortgagor's knowledge in good standing, free of material violations, and all conditions under which they have been issued or renewed have been or are being satisfied and fulfilled.
b. Mortgagor will keep, maintain and preserve the Operational Requirements in full force and effect and in good standing.
c. Mortgagor will not knowingly violate, nor will it knowingly suffer any violation of, the Operational Requirements.
d. In the event Mortgagor knows of any fact, circumstances, or occurrence which may result in a violation of the Operation Requirements, Mortgagor shall promptly give Mortgagee written notice thereof.
IV. Taxes on Mortgagee.
A. If the United States of America, the State of New Jersey or any political subdivision thereof or any city, town, county or municipality in which the Encumbered Property is located or any agency, department, bureau, board, commission, including the Casino Control Commission as defined in the Loan Agreement, or instrumentality of any of the foregoing now existing or hereafter created (collectively, "Governmental Authorities" and, individually, a "Governmental Authority") shall, at any time after the date hereof (whether or not the lien of this Mortgage shall have been released), levy, assess or charge any tax, assessment or imposition upon this Mortgage or any other Loan Document, the Indebtedness, the Obligations or the interest of Mortgagee in the Encumbered Property by reason of this Mortgage or any other Loan Document, the Indebtedness or the Obligations (excepting therefrom any income tax on payments made under the Loan Agreement and any franchise tax), Mortgagor shall pay all such taxes, assessments and impositions to, for, or on account of, Mortgagee, as they become due and payable and, on demand, shall furnish proof of such payment to Mortgagee. If Mortgagor shall fail to pay any such tax, assessment or imposition, then Mortgagee, at its option (but without any obligation to do so), upon thirty (30) days' notice to Mortgagor (or such shorter period as Mortgagee may deem reasonable if Mortgagee believes that failure to pay any such tax, assessment or imposition promptly may subject the Encumbered Property (or any portion thereof) to loss, forfeiture or a material diminution in value), may pay such tax, assessment or imposition and, in such event, the amount so paid (i) shall be deemed to be Indebtedness, (ii) shall be a lien on the Encumbered Property prior to any right or title to, interest in, or claim upon, the Encumbered Property subordinate to the lien of this Mortgage and (iii) immediately shall be due and payable, on demand, together with interest thereon at the rate of interest then payable under the Loan Agreement, including, in calculating such rate of interest, any additional interest which may be imposed under the Loan Agreement by reason of any default thereunder (such rate of interest being hereinafter referred to as the "Interest Rate"), from the date of any such payment by Mortgagee to the date of repayment to Mortgagee.
B. If any Governmental Authority shall at any time require revenue, documentary or similar stamps to be affixed to this Mortgage or any other Loan Document or shall require the payment of any tax with respect to the ownership or recording of this Mortgage or any other Loan Document, Mortgagor, upon demand, shall pay for such stamps in the required amount and shall deliver the same to Mortgagee, together with a copy of the receipted bill therefor. If Mortgagor shall fail to pay for any such stamps, then Mortgagee, at its option (but without any obligation to do so), upon thirty (30) days' notice to Mortgagor (or such shorter period as Mortgagee may deem reasonable if Mortgagee believes that failure to pay for any such stamps promptly may subject the Encumbered Property (or any portion thereof) to loss, forfeiture or a material diminution in value), may pay for the same and, in such event, the amount so paid (i) shall be deemed to be Indebtedness, (ii) shall be a lien on the Encumbered Property prior to any right or title to, or interest in, or claim upon, the Encumbered Property subordinate to the lien of this Mortgage and (iii) immediately shall be due and payable, on demand, together with interest thereon at the Interest Rate, from the date of any such payment by Mortgagee to the date of repayment to Mortgagee.
C. In the event of the passage, after the date of this Mortgage, of any law of the jurisdiction in which the Encumbered Property is located which shall deduct from the value of the Encumbered Property, for purposes of taxation, any lien thereon shall change in any way the laws for the taxation of mortgages or debts secured by mortgages for state of local purposes or the manner of the collection of any such taxes and shall impose a tax, either directly or indirectly, on this Mortgage or any other Loan Document, then, so long as Mortgagor, Mortgagee, this Mortgage or the Loan Agreement is not exempt from payment of such tax and if Mortgagor shall be permitted by law to pay the whole or such tax in addition to all other payments required hereunder and under the other Loan Documents, Mortgagor shall pay such tax when the same shall be due and payable and shall agree in writing to pay such tax when thereafter levied or assessed against the Encumbered Property.
V. Payment of Impositions.
A. Subject to the provisions of Article X hereof, not later than the date on which payment of the same shall be due, that is, the day before the date on which any fine, penalty, interest, late charge or loss may be added thereto or imposed by reason of the nonpayment thereof, Mortgagor shall pay and discharge all taxes (including, but without limiting the generality of the foregoing, all real property taxes and assessments and per