As filed with the Securities and Exchange Commission on May 6, 1994
Registration No. 33-52309
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
Pre-Effective Amendment No. 1 to Form S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
----------------------
TRUMP'S CASTLE FUNDING, INC.
(Exact Name of Registrant as Specified in its Charter)
7011
(Primary Standard Industrial Classification Code Number)
New Jersey 11-2739203
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
---------------------
Brigantine Boulevard and Huron Avenue
Atlantic City, New Jersey 08401
(609) 441-8640
(Address, Including Zip Code, and Telephone Number, Including
Area Code, of Registrant's Principal Executive Offices)
----------------------
TRUMP'S CASTLE ASSOCIATES
(Exact Name of Registrant as Specified in its Charter)
7011
(Primary Standard Industrial Classification Code Number)
New Jersey 22-2608426
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
----------------------
Brigantine Boulevard and Huron Avenue
Atlantic City, New Jersey 08401
(609) 441-8640
(Address, Including Zip Code, and Telephone Number, Including
Area Code, of Registrant's Principal Executive Offices)
----------------------
Nicholas L. Ribis
c/o The Trump Organization
725 Fifth Avenue
New York, New York 10022
(212) 832-2000
Name, Address, Including Zip Code and Telephone Number,
Including Area Code, of Agent for Service)
----------------------
PLEASE SEND COPIES OF COMMUNICATIONS TO:
Michael A. Schwartz, Esq. Robert L. Nutt, Esq.
Willkie Farr & Gallagher Ropes & Gray
153 East 53rd Street One International Place
New York, New York 10022 Boston, Massachusetts 02110
(212) 821-8000 (617) 951-7000
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box: / /
----------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
<PAGE>
TRUMP'S CASTLE FUNDING, INC.
TRUMP'S CASTLE ASSOCIATES
CROSS-REFERENCE SHEET PURSUANT TO ITEM 501(b) OF REGULATION S-K
Item Number and Caption Heading to Prospectus
----------------------- ---------------------
1. Forepart of theRegistration
Statement andOutside Front Cover
Page of Prospectus . . . . . . . Forepart of the Registration
Statement and Outside Front
Cover of Prospectus
2. Inside Front and Outside Back
Cover Pages of Prospectus . . . . Inside Front and Outside Back
Cover Pages of Prospectus
3. Risk Factors, Ratio of Earnings
to Fixed Charges and Other
Information. . . . . . . . . . . Prospectus Summary; Risk
Factors; Summary Financial Information
4. Terms of the Transaction . . . . The Exchange Offer; Prospectus
Summary; Certain Federal
Income Tax Considerations;
Description of the Senior Notes
5. Pro Forma Financial Information.. Not Applicable
6. Material Contracts with the
Conmpany Being Acquired . . . . . Not Applicable
7. Additional Information Required
for Reoffering by Persons and
Parties Deemed to be Underwriters Not Applicable
8. Interest of Named Experts
and Counsel. . . . . . . . . . . Experts; Legal Matters
9. Disclosure of Commission
Position on Indemnification for
Securities Act Liabilities. . . . Management
10 Information with Respect to
S-3 Registrants. . . . . . . . . Not Applicable
11 Incorporation of Certain
Information by Reference . . . . Not Applicable
12 Information with Respect to
S-2 and S-3 Registrants. . . . . Not Applicable
13 Incorporation of Certain
Information by Reference . . . . Not Applicable
14 Information with Respect to
Registrants Other than S-3
or S-2 Registrants
a) Description of Business . . . Risk Factors; Prospectus Summary;
Funding; The Partnership; Business
b) Description of Property . . . Business--Properties
c) Legal Proceedings . . . . . . Business--Legal Proceedings
d) Market Price of and
Dividends on
Registrants' Common
Equity and Related
Stockholder Matters . . . . . Not Applicable
e) Financial Statements. . . . . Financial Statements
f) Selected Financial Data. . . . Selected Financial Information
g) Supplementary Financial
Information . . . . . . . . . Not Applicable
h) Management's Discussion and
Analysis of Financial
Condition and Results of
Operations . . . . . . . . . . Management's Discussion and Analysis
of Financial Condition and Results of
Operations
i) Changes in and
Disagreements with Accountants Not Applicable
15 Information with Respect to
S-3 Companies. . . . . . . . . . . Not Applicable
16 Information with Respect to
S-2 or S-3 Companies . . . . . . . Not Applicable
17 Information with Respect to
Companies Other Than S-3 or S-2
Companies. . . . . . . . . . . . . Not Applicable
18 Information if Proxies, Consents
or Authorizations are to be
Solicited. . . . . . . . . . . . . Not Applicable
19 Information if Proxies, Consents
or Authorizations are not to be
Solicited or in an Exchange Offer . The Exchange Offer; Prospectus Summary
<PAGE>
PROSPECTUS
TRUMP'S CASTLE FUNDING, INC.
TRUMP'S CASTLE ASSOCIATES
OFFER TO EXCHANGE
all outstanding
11-1/2% Series A Senior Secured Notes due 2000
($27,000,000 principal amount outstanding)
for
11-1/2% Series B Senior Secured Notes due 2000
($27,000,000 principal amount)
of
Trump's Castle Funding, Inc.
Trump's Castle Funding, Inc. ("Funding") and Trump's Castle Associates (the
"Partnership") hereby offer (the "Exchange Offer"), upon the terms and subject
to the conditions set forth in this Prospectus to exchange $1,000 principal
amount of Funding's 11-1/2% Series B Senior Secured Notes due 2000 (the "Series
B Notes"), which have been registered under the Securities Act of 1933, as
amended (the "Securities Act"), pursuant to the Registration Statement (as
defined) of which this Prospectus is a part, for each $1,000 principal amount of
Funding's outstanding 11-1/2% Series A Senior Secured Notes due 2000 (the
"Series A Notes"; the Series A Notes and the Series B Notes are collectively
referred to herein as the "Senior Notes") held by Eligible Holders (as defined),
of which an aggregate of $27 million in principal amount is outstanding as of
the date hereof. See "THE EXCHANGE OFFER."
THE EXCHANGE OFFER WILL EXPIRE AT 11:00 A.M., MINNEAPOLIS-ST. PAUL TIME, ON
JUNE 15, 1994, WHICH DATE MAY BE EXTENDED BY FUNDING AND THE PARTNERSHIP, IN
THEIR SOLE DISCRETION (THE "EXPIRATION DATE").
Upon the terms and subject to the conditions of the Exchange Offer,
acceptance for exchange of the Series A Notes validly tendered at or prior to
the Expiration Date will occur at the Expiration Date. Delivery of the Series B
Notes will occur promptly following the Expiration Date, and the Series B Notes
issued in the Exchange Offer will be dated, and will begin to accrue interest
from, the next preceding interest payment date. The Exchange Offer is not
conditioned upon any minimum principal amount of the Series A Notes being
tendered for exchange. However, the Exchange Offer is subject to certain
customary conditions which may be waived by Funding and the Partnership and to
the terms and the provisions of the Registration Rights Agreement, dated as of
December 28, 1993 (the "Registration Rights Agreement"), between Funding, the
<PAGE>
Partnership and the initial purchasers of the Series A Notes (the "Senior Note
Purchasers"). The Series A Notes may be tendered only in multiples of $1,000.
See "THE EXCHANGE OFFER."
If an Eligible Holder is participating in the Exchange Offer for the
purpose of distributing the Series B Notes to be acquired in the Exchange Offer,
such Eligible Holder must comply with registration and prospectus delivery
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
in connection with a secondary resale transaction.
IN CONSIDERING WHETHER OR NOT TO TENDER THEIR SERIES A NOTES IN THE
EXCHANGE OFFER, HOLDERS OF SERIES A NOTES SHOULD CAREFULLY CONSIDER ALL
INFORMATION CONTAINED IN THIS PROSPECTUS, INCLUDING THE MATTERS SET FORTH UNDER
"RISK FACTORS" AND THE FOLLOWING RISKS:
. Potential limitation on claims in a future bankruptcy
. The risks in the payment of principal and interest on the
Senior Notes
. The recent bankruptcy of the Partnership and Funding, and
their recent operating performance
. The high level of competition in the casino gaming industry
. The security for and ranking of the Senior Notes
. The interests of certain officers and directors of the
Partnership and its affiliates
. The importance of Trump and Trump's financial condition to
Trump's Castle
The Series A Notes were issued on December 28, 1993 as part of the
refinancing plan of the Partnership and its affiliated entities (the
"Recapitalization") and sold pursuant to a Purchase Agreement, dated December
28, 1993 (the "Purchase Agreement"), between Funding, the Partnership and the
Senior Note Purchasers. Funding, the Partnership and the Senior Note Purchasers
also entered into the Registration Rights Agreement, pursuant to which Funding
and the Partnership granted certain registration rights for the benefit of
holders of the Series A Notes. The Exchange Offer is intended to satisfy certain
of Funding's and the Partnership's obligations under the Registration Rights
Agreement with respect to the Series A Notes. See "THE EXCHANGE OFFER - Purposes
and Effects of the Exchange Offer."
The Recapitalization also included: (i) an exchange offer (the
"Recapitalization's Exchange Offer") pursuant to which each $1,000 principal
<PAGE>
amount of Funding's 9-1/2% Mortgage Bonds due 1998 (the "Bonds") was exchanged
for $750 principal amount of Funding's 11-3/4% Mortgage Notes due 2003 (the
"Mortgage Notes"), $120 aggregate principal amount of Funding's Increasing Rate
Subordinated Pay-in-Kind Notes due 2005 (the "PIK Notes") and a cash payment of
$6.19 and (ii) the merger (the "Merger") of Trump's Castle Holding, Inc.
("Holding"), a Delaware corporation wholly owned by the Partnership, with and
into TC/GP, Inc. ("TC/GP") pursuant to which holders of TC/GP Common Stock
received $35 principal amount of PIK Notes for each share of TC/GP Common Stock.
The Series A Notes were and the Series B Notes will be issued under the
Senior Note Indenture, dated as of December 28, 1993 (the "Senior Note
Indenture"), among Funding, the Partnership and First Bank National Association
(the "Senior Note Trustee"). The form and terms of the Series B Notes are
identical in all material respects to the form and terms of the Series A Notes,
except that (i) the Series B Notes are being registered under the Securities
Act, and, therefore, do not bear legends restricting transfer thereof, (ii)
holders of Series B Notes will not be entitled to certain liquidated damages
under the terms of the Registration Rights Agreement (the "Liquidated Damages"),
which Liquidated Damages terminate upon consummation of the Exchange Offer and
(iii) holders of the Series B Notes will not be, and upon consummation of the
Exchange Offer, holders of the Series A Notes will no longer be, entitled to
certain rights under the Registration Rights Agreement intended for the holders
of unregistered securities. See "DESCRIPTION OF THE SENIOR NOTES - Registration
Rights."
The Senior Notes are secured by an assignment of a non-recourse promissory
note of the Partnership (the "Senior Partnership Note"), which is in turn
secured by a mortgage (the "Senior Note Mortgage") on the assets constituting
the real property owned and leased by the Partnership and substantially all of
the Partnership's other assets, all of which constitute the casino hotel,
located in Atlantic City, New Jersey, known as Trump's Castle Casino Resort
("Trump's Castle"). In addition, the Partnership has issued a non-recourse
guarantee of the payment of the principal of, premium, if any, and interest on
the Senior Notes (the "Senior Guarantee"), which Senior Guarantee is secured by
a mortgage (the "Senior Guarantee Mortgage") on the assets of the Partnership
described above, pari passu with the lien of the Senior Note Mortgage. The
Senior Partnership Note and the Senior Guarantee are subordinated to the term
loan (the "Midlantic Term Loan") of the Partnership from Midlantic National Bank
("Midlantic"), which had an aggregate principal amount outstanding of $38
million as of December 31, 1993. The assets subject to the Senior Note Mortgage
and the Senior Guarantee Mortgage are subject to certain mortgages which are
<PAGE>
senior to the liens of the Senior Note Mortgage and the Senior Guarantee
Mortgage.
Interest on the Senior Notes is payable semiannually on May 15 and November
15 of each year, commencing May 15, 1994. The Senior Notes bear interest at the
rate of 11-1/2% per annum; provided, however, that if as of any date prior to
November 15, 1998, Funding has redeemed all the then outstanding PIK Notes
through the offering of a direct or indirect equity interest in the Partnership
or through the application of internally generated funds and not through the
incurrence of additional indebtedness, then on and after the first day of the
next succeeding calendar month, the rate of interest on the Senior Notes will be
reduced to 11-1/4% per annum. The Registration Rights Agreement and the Senior
Note Indenture provide that if Funding and the Partnership fail to file a
registration statement with respect to the Exchange Offer on or prior to March
28, 1994 and consummate the Exchange Offer on or prior to June 24, 1994, the
rate of interest on the Senior Notes will be increased by one quarter of one
percent (1/4%) per annum. The rate of interest on the Senior Notes will be
increased by an additional one quarter of one percent (1/4%) per annum on the
61st day following such failure. The increase in the rate of interest on the
Senior Notes will cease to be effective upon such filing and/or consummation.
A sinking fund will provide for the redemption of $4,050,000 principal
amount of Senior Notes on each of June 1, 1998 and June 1, 1999, calculated to
retire 30% of the original aggregate principal amount of the Senior Notes prior
to maturity. In addition, upon the occurrence of a Change of Control (as
defined), each holder of Senior Notes may require Funding or the Partnership to
repurchase such holder's Senior Notes at 101% of the principal amount thereof,
together with accrued and unpaid interest to the date of repurchase. However,
there can be no assurance that Funding or the Partnership will have adequate
financial resources to pay the required purchase price if a Change of Control
were to occur. See "DESCRIPTION OF THE SENIOR NOTES - Certain Covenants -
Purchase of Senior Notes Upon Change of Control."
Funding has no indebtedness other than the $27 million principal amount
outstanding of its Senior Notes, the approximately $242 million principal amount
outstanding of its Mortgage Notes (which are subordinated to the Senior Notes)
and the approximately $50 million principal amount outstanding of its PIK Notes
(which are subordinated to both the Senior Notes and the Mortgage Notes). In
addition, Funding has guaranteed the Midlantic Term Loan.
<PAGE>
As of December 31, 1993, the Partnership had outstanding approximately $357
million principal amount of indebtedness. In addition, the Partnership, certain
of its creditors and the Senior Note Trustee have entered into an agreement
pursuant to which the Partnership has agreed not to make any payments with
respect to the Senior Partnership Note or the Senior Guarantee, so long as there
exists any payment default on the Midlantic Term Loan (which had an aggregate
principal amount outstanding of $38 million as of December 31, 1993).
No person is authorized to give any information or to make any
representation not contained in this Prospectus and, if given or made, such
information or representation should not be relied upon as having been
authorized. This Prospectus does not constitute an offer to sell, or a
solicitation of any offer to purchase, the securities offered by this Prospectus
in any jurisdiction or to any person to whom it would be unlawful to make such
offer or solicitation. Neither the delivery of this Prospectus nor any
distribution of the securities to which this Prospectus relates shall, under any
circumstances, create an implication that there has been no change in the
affairs of Funding or the Partnership or in the information set forth herein
since the date of this Prospectus.
-------------------
THESE SECURITIES HAVE NOT 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
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
-------------------
THE NEW JERSEY CASINO CONTROL COMMISSION HAS NOT PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS UNLAWFUL.
<PAGE>
-------------------
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS UNLAWFUL.
-------------------
This Prospectus is first being mailed to holders of Series A Notes on or
about May 11, 1994.
The date of this Prospectus is May 6, 1994.
2
<PAGE>
AVAILABLE INFORMATION
Funding and the Partnership (the "Registrants") have filed with the office
of the Securities and Exchange Commission (the "SEC") in Washington, D.C., a
Registration Statement on Form S-4 (the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act") with respect to the
securities offered hereby. This Prospectus does not contain all of the
information set forth in the Registration Statement, certain portions of which
have been omitted as permitted by the rules and regulations of the SEC. For
further information pertaining to the securities offered hereby and to the
Registrants, reference is made to the Registration Statement, including the
exhibits filed as a part thereof. Statements contained herein concerning the
provisions of any documents are not necessarily complete and, in each instance,
reference is made to the copy of such document filed as an exhibit to the
Registration Statement. Each such statement is qualified in its entirety by such
reference.
The Registrants are subject to the informational reporting requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
accordingly have filed reports and other information with the SEC. Reports,
proxy statements and other information of the Registrants filed with the SEC are
available for inspection and copying at the public reference facilities
maintained by the SEC at Room 1024, 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549 and at certain regional offices of the SEC located at
Suite 1400, Northwestern Atrium Center, 500 West Madison Street, Chicago,
Illinois 60621- 2511 and Seven World Trade Center, New York, New York 10048.
Copies of such material can be obtained from the Public Reference Section of the
SEC, 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549 at
prescribed rates.
3
<PAGE>
TABLE OF CONTENTS
Page
PROSPECTUS SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Trump's Castle . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
The Registrants. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
The Exchange Offer . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Comparison of Series A Notes and Series B Notes. . . . . . . . . . . . 15
Other Debt Facilities. . . . . . . . . . . . . . . . . . . . . . . . . 15
SUMMARY FINANCIAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . 16
Summary Historical Financial Information . . . . . . . . . . . . . . . 16
OWNERSHIP STRUCTURE OF THE PARTNERSHIP
AND RELATED ENTITIES . . . . . . . . . . . . . . . . . . . . . . . . . 20
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Potential Limitations on Claims in a Future Bankruptcy . . . . . . . . 21
Loss of Certain Rights In Connection with the Exchange
Offer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
High Leverage And Fixed Charges. . . . . . . . . . . . . . . . . . . . 21
Risk In Refinancing And Repayment Of Indebtedness. . . . . . . . . . . 23
Recent Losses And The Partnership's 1992 Bankruptcy
Resulting From Its Inability To Meet Its
Debt Service Requirements. . . . . . . . . . . . . . . . . . . . . . 24
Competition And Industry Rate Of Growth. . . . . . . . . . . . . . . . 25
The Ranking Of The Senior Notes Junior To The
Midlantic Term Loan And The Regulatory Limitations
On The Senior Note Trustee's Ability To Realize
On Collateral. . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
The Restrictions Imposed By Certain Debt Instruments On The
Partnership's Ability To Respond To Changing Business And
Economic Conditions. . . . . . . . . . . . . . . . . . . . . . . . . 31
Certain Consequences of a Public Offering
of Casino Interests. . . . . . . . . . . . . . . . . . . . . . . . . 32
Risks Inherent in an International Marketing Strategy. . . . . . . . . . 33
The Conflicting Interests Of Certain Officers And
Directors Of The Partnership And Its Affiliates. . . . . . . . . . . 34
Control And Involvement Of Trump . . . . . . . . . . . . . . . . . . . 35
Reliance On Key Personnel. . . . . . . . . . . . . . . . . . . . . . . 39
Strict Regulation Of The Partnership By The CCC. . . . . . . . . . . . 39
Potential Disqualification Of Holders Of The Senior
Notes By The CCC . . . . . . . . . . . . . . . . . . . . . . . . . . 39
The Effect Of Currency Transaction Reporting
Requirements On The Partnership's Business . . . . . . . . . . . . . 40
Trading Markets; Potential Volatility Of Market Prices . . . . . . . . 40
FUNDING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
THE PARTNERSHIP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
THE EXCHANGE OFFER . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4
<PAGE>
Background of the Exchange Offer . . . . . . . . . . . . . . . . . . . 42
Terms of the Exchange Offer. . . . . . . . . . . . . . . . . . . . . . 42
Termination of Certain Rights. . . . . . . . . . . . . . . . . . . . . 43
Limitation on Resale . . . . . . . . . . . . . . . . . . . . . . . . . 44
Procedure for Tendering Series A Notes . . . . . . . . . . . . . . . . 44
Acceptance and Delivery of Series B Notes. . . . . . . . . . . . . . . 46
Period for Tendering Series A Notes. . . . . . . . . . . . . . . . . . 47
Withdrawal Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Conditions of the Exchange Offer . . . . . . . . . . . . . . . . . . . 49
Depositary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Fees and Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Appraisal Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
CAPITALIZATION OF REGISTRANTS. . . . . . . . . . . . . . . . . . . . . . . 52
SELECTED FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . 53
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS. . . . . . . . . . . . . . . . . . . . . . . 56
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Results of Operations for the Years Ended
December 31, 1993 and 1992 . . . . . . . . . . . . . . . . . . . . . 56
Results of Operations for the Years Ended
December 31, 1992 and 1991 . . . . . . . . . . . . . . . . . . . . . 58
Inflation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Liquidity and Capital Resources. . . . . . . . . . . . . . . . . . . . 59
BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
The Recapitalization . . . . . . . . . . . . . . . . . . . . . . . . . 62
The Restructuring. . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Casino Hotel Operations. . . . . . . . . . . . . . . . . . . . . . . . 66
Marketing Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Atlantic City Market . . . . . . . . . . . . . . . . . . . . . . . . . 70
Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Employees and Labor Relations. . . . . . . . . . . . . . . . . . . . . 72
Seasonality. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Competition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . . 73
REGULATORY MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Casino Control Commission. . . . . . . . . . . . . . . . . . . . . . . 75
Operating Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Casino License . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Control Persons. . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Financial Sources . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Institutional Investors. . . . . . . . . . . . . . . . . . . . . . . . 78
Ownership and Transfer of Securities . . . . . . . . . . . . . . . . . 79
Interim Casino Authorization . . . . . . . . . . . . . . . . . . . . . 80
Approved Hotel Facilities. . . . . . . . . . . . . . . . . . . . . . . 81
License Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Gross Revenue Tax. . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Investment Alternative Tax Obligations . . . . . . . . . . . . . . . . 82
5
<PAGE>
Minimum Casino Parking Charges . . . . . . . . . . . . . . . . . . . . 82
Conservatorship. . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Employees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Gaming Credit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Control Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Other Laws and Regulations . . . . . . . . . . . . . . . . . . . . . . 84
MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Directors and Executive Officer. . . . . . . . . . . . . . . . . . . . 86
Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
Employment Agreements. . . . . . . . . . . . . . . . . . . . . . . . . 92
Compensation of Directors. . . . . . . . . . . . . . . . . . . . . . . 93
Compensation Committee Interlocks
and Insider Participation. . . . . . . . . . . . . . . . . . . . . . 93
CERTAIN TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
Other Trump Casinos. . . . . . . . . . . . . . . . . . . . . . . . . . 94
Other Transactions With Affiliates . . . . . . . . . . . . . . . . . . 95
Services Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 96
DESCRIPTION OF THE SENIOR NOTES. . . . . . . . . . . . . . . . . . . . . . 97
General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
Guarantee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
Ranking. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Non-Recourse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Sinking Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
Mandatory Redemption . . . . . . . . . . . . . . . . . . . . . . . . . 100
Certain Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . 101
Merger and Sale of Assets, etc . . . . . . . . . . . . . . . . . . . . 109
Events of Default. . . . . . . . . . . . . . . . . . . . . . . . . . . 111
Defeasance or Covenant Defeasance of
Senior Note Indenture. . . . . . . . . . . . . . . . . . . . . . . . . 115
Satisfaction and Discharge . . . . . . . . . . . . . . . . . . . . . . 116
Modifications and Amendments . . . . . . . . . . . . . . . . . . . . . 117
Gaming Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
The Purchase Agreement . . . . . . . . . . . . . . . . . . . . . . . . 118
The Senior Note Mortgage and the Senior
Guarantee Mortgage . . . . . . . . . . . . . . . . . . . . . . . . . 119
The Senior Note Trustee. . . . . . . . . . . . . . . . . . . . . . . . 121
Usury Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122
Registration Rights. . . . . . . . . . . . . . . . . . . . . . . . . . 122
Intercreditor Agreement. . . . . . . . . . . . . . . . . . . . . . . . 123
Certain Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . 123
THE MIDLANTIC TERM LOAN. . . . . . . . . . . . . . . . . . . . . . . . . . 137
Midlantic Term Loan. . . . . . . . . . . . . . . . . . . . . . . . . . 137
Intercreditor Agreement. . . . . . . . . . . . . . . . . . . . . . . . 139
Put Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139
DESCRIPTION OF THE MORTGAGE NOTES. . . . . . . . . . . . . . . . . . . . . 140
General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140
Guarantee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141
Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141
6
<PAGE>
Ranking. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142
Non-Recourse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142
Mandatory Redemption . . . . . . . . . . . . . . . . . . . . . . . . . 142
Optional Redemption. . . . . . . . . . . . . . . . . . . . . . . . . . 142
Events of Default. . . . . . . . . . . . . . . . . . . . . . . . . . . 143
Certain Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . 143
DESCRIPTION OF THE PIK NOTES . . . . . . . . . . . . . . . . . . . . . . . 143
General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144
Guarantee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144
Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144
Ranking. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144
Non-Recourse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145
Mandatory Redemption . . . . . . . . . . . . . . . . . . . . . . . . . 145
Optional Redemption. . . . . . . . . . . . . . . . . . . . . . . . . . 145
Events of Default. . . . . . . . . . . . . . . . . . . . . . . . . . . 146
Certain Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . 146
DESCRIPTION OF THE AMENDED AND RESTATED PARTNERSHIP
AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146
General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146
Management of the Partnership. . . . . . . . . . . . . . . . . . . . . 146
Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . 150
Casino Control Commission Regulation . . . . . . . . . . . . . . . . . 151
DESCRIPTION OF THE SERVICES AGREEMENT. . . . . . . . . . . . . . . . . . . 152
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS. . . . . . . . . . . . . . . . . 155
EXPERTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156
LEGAL MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156
7
<PAGE>
PROSPECTUS SUMMARY
The following is a summary of certain of the information contained in this
Prospectus and is qualified in its entirety by the more detailed information and
financial statements included elsewhere herein. Certain capitalized terms used
herein are defined elsewhere in the Prospectus. Holders of the Series A Notes
are urged to read the entire Prospectus thoroughly.
Trump's Castle
The Partnership owns and operates Trump's Castle Casino Resort, a luxury
casino hotel located in the Marina District of Atlantic City, New Jersey
("Trump's Castle"). Its 70,000 square foot casino, first-class guest rooms and
other luxury amenities have earned Trump's Castle a "Four Star" Mobil Travel
Guide rating in each of the last three years. Management believes that the "Four
Star" rating further reflects the high quality amenities and services that are
associated with the "Trump" name.
Trump's Castle is located in a bay setting seven miles from New Jersey's
Garden State Parkway. Management believes that the location of Trump's Castle
appeals to a major segment of the gaming market that prefers to be away from the
congestion of downtown Atlantic City. Trump's Castle's proximity to major
north/south and east/west expressways make it ideally situated to accommodate
"drive-in" gaming patrons seeking a destination resort casino. The State of New
Jersey is in the process of completing a $17.5 million improvement of the
highway that connects the New Jersey Garden State Parkway to the Marina District
of Atlantic City.
In addition, the Casino Reinvestment Development Authority (the "CRDA") has
provided funding approval for a "Marina District Beautification Project",
pursuant to which Trump's Castle in conjunction with Harrah's Casino Hotel will
create an entranceway to the Marina District consistent with the downtown
"tourist corridor" project. Management believes that the 33 acre beautification
project will significantly benefit Trump's Castle.
The Trump's Castle casino offers 94 table games (including 13 poker tables)
and 2,098 slot machines. During 1993, Trump's Castle completed a 10,000 square
foot expansion to its casino which has enabled Trump's Castle to increase the
number of slot machines on the casino floor by 300 units, to provide more space
between slot machines, and to place stools in front of additional slot machines,
all of which are designed to provide the gaming patron with a more comfortable
8
<PAGE>
gaming experience. Presently, Trump's Castle is undertaking an approximately
3,000 square foot expansion to accommodate the addition of simulcast race-track
wagering. The expansion will also increase casino access and casino visibility
for hotel patrons. In addition, Trump's Castle recently completed the
construction of a Las Vegas style marquee and reader board, the largest of its
kind on the East Coast.
Trump's Castle has identified exceptional service as a means of
differentiating itself from and competing with other casinos in Atlantic City.
It has invested significant resources to the development of its 700 managers and
3,000 employees to insure that the corporate culture meets its service
strategies. In addition, Trump's Castle's annual capital expenditures are
designed to insure that room accommodations, restaurants, public areas, the
casino and all other areas of the hotel are maintained in first-class "Four
Star" condition.
Trump's Castle's primary marketing strategy focuses on attracting and
retaining middle and upper middle market "drive-in" patrons who visit Atlantic
City frequently and have proven to be the most profitable market segment.
Trump's Castle has also recently implemented an aggressive overseas marketing
plan designed to broaden its patron base by seeking to attract "high roller"
table game patrons who tend to wager large sums of money. Recently, Trump's
Castle has recruited several senior level casino marketing executives who have
extensive experience in overseas marketing and a proven track record of
attracting profitable international "high rollers". This new strategy will also
include promotions and offer special events aimed at the overseas market and is
designed to offset the decline of table games play by the domestic market.
Trump's Castle also intends to capitalize on its first-class facilities,
particularly its luxury suite tower and on-site helipad to attract international
patrons.
The Registrants
Trump's Castle Associates, a New Jersey general partnership (the
"Partnership"), is the owner and operator of Trump's Castle, a luxury casino
hotel located in the Marina area of Atlantic City, New Jersey. Trump, Trump's
Castle Hotel & Casino, Inc., a New Jersey corporation ("TCHI") and TC/GP, Inc.
("TC/GP") are the current general partners of the Partnership. Trump
beneficially owns 100% of the common equity of the Partnership (subject to the
9
<PAGE>
terms of a settlement agreement arising out of certain securities litigation,
pursuant to which TCHI will issue warrants (the "Litigation Warrants") for
additional equity securities representing a 0.5% indirect equity interest in the
Partnership).
Trump's Castle Funding, Inc. ("Funding") was incorporated under the laws of
the State of New Jersey in May 1985 and is wholly-owned by the Partnership.
Funding was formed to serve as a financing corporation to raise funds for the
benefit of the Partnership.
See the diagrams included elsewhere in this Prospectus for a description of
the relationship of Funding, the Partnership and certain other related entities.
In December 1993, the Partnership and its affiliated entities consummated
the Recapitalization, which included the Recapitalization's Exchange Offer, the
Merger and the issuance of the Series A Notes. The Series A Notes were sold on
December 28, 1993 by Funding and the Partnership to the Senior Note Purchasers
pursuant to the Purchase Agreement. Funding, the Partnership and the Senior Note
Purchasers also entered into the Registration Rights Agreement, pursuant to
which Funding and the Partnership have agreed, with respect to the Senior Notes,
to (i) cause to be filed, on or prior to March 28, 1994, a registration
statement with the SEC under the Securities Act covering the Exchange Offer and
(ii) use their reasonable best efforts to cause (A) such registration statement
to be declared effective on or prior to June 24, 1994 and (B) Series B Notes to
be delivered to the Depositary for delivery to all holders who have tendered
Registrable Series A Notes pursuant to the Exchange Offer. See "BUSINESS - The
Recapitalization."
In 1990, the Partnership began to experience a liquidity problem. On May
29, 1992 (the "Effective Date"), TCHI, Funding and the Partnership completed a
restructuring (the "Restructuring") of their indebtedness through a prepackaged
plan of reorganization under chapter 11 of title 11 of the United States Code,
as amended (the "Bankruptcy Code"). See "BUSINESS - The Restructuring."
Risk Factors
In considering whether or not to tender their Series A Notes in the
Exchange Offer, holders of Series A Notes should carefully consider all
information contained in this Prospectus, including the following risks:
10
<PAGE>
o The possibility that in a subsequent bankruptcy, the
bankruptcy court might allow a claim for less than the
principal amount of the Series B Notes
o The loss of certain rights provided for in the
Registration Rights Agreement upon consummation of the
Exchange Offer
o The high leverage and fixed charges of Funding and the
Partnership, which will affect the ability to pay cash
interest on the Senior Notes and may leave the
Partnership unable to meet its liquidity needs
o The limitations on Funding's ability to repay the
principal of the Senior Notes when due either through a
refinancing or from cash flow from the Partnership's
operations
o The Partnership's historical inability to pay interest
on its public debt securities, which led to the
Restructuring in 1992
o The high level of competition faced by Trump's Castle
both from other casinos in Atlantic City and from other
gaming enterprises
o The ranking of the security for the Senior Notes junior
to the $38 million Midlantic Term Loan, and the
regulatory limitations on the ability of the Senior
Note Trustee to foreclose on Trump's Castle
o The restrictions imposed by certain debt facilities on
the Partnership's operations, which may limit its
ability to respond to changing business and economic
conditions
o The risks inherent in an International Marketing
Strategy
o The conflicting interests of certain officers and
directors of the Partnership and its affiliates
o The importance of Trump and Trump's financial
condition to Trump's Castle
o The risk that a future equity offering by an affiliate
of Trump could trigger an Event of Default under the
Senior Note Indenture
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<PAGE>
o The reliance of the Partnership on certain key
personnel
o The strict regulation of the operation of Trump's
Castle by the CCC
o The potential disqualification of holders of the
Senior Notes by the CCC
o The effect of recently enacted currency transaction
reporting requirements on the Partnership's business
o The trading markets for, and the potential volatility
of market prices of, the Senior Notes
For a discussion of the foregoing, see "RISK FACTORS."
The Exchange Offer
Terms of the
Exchange .......................... Funding is offering upon the terms and
subject to the conditions set forth
herein to exchange $1,000 in principal
amount of Series B Notes for each $1,000
in principal amount of the outstanding
Series A Notes. As of the date of this
Prospectus, $27 million in aggregate
principal amount of Series A Notes is
outstanding, the maximum amount
authorized by the Senior Note Indenture.
See "THE EXCHANGE OFFER - Terms of the
Exchange Offer."
-12-
<PAGE>
Conditions to the
Exchange Offer..................... The Exchange Offer is not conditioned
upon any minimum principal amount of
Series A Notes being tendered for
exchange. However, the Exchange Offer is
subject to certain customary conditions,
including (i) no pending or threatened
legal or governmental action with
respect to the Exchange Offer, which, in
the judgment of Funding and the
Partnership, would make it inadvisable
to proceed with the Exchange Offer, (ii)
no enactment of any statute, rule or
regulation, with respect to the Exchange
Offer which, in the judgment of Funding
and the Partnership, would make it
inadvisable to proceed with the Exchange
Offer, (iii) no banking moratorium or
similar event or international calamity
involving the United States, (iv) no
change in the business or prospects of
Funding or the Partnership that may have
a material adverse effect on Funding or
the Partnership. All such conditions may
be waived by Funding and the
Partnership. See "THE EXCHANGE OFFER -
Conditions of the Exchange Offer."
Termination of
Certain Rights..................... Pursuant to the terms of the
Registration Rights Agreement and the
Series A Notes, holders of Series A
Notes have (i) rights to receive the
Liquidated Damages and (ii) certain
rights intended for the holders of
unregistered securities. These rights
will terminate upon the consummation of
the Exchange Offer. See "THE EXCHANGE
OFFER - Termination of Certain Rights"
and "Comparison of Series A Notes and
Series B Notes."
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<PAGE>
Expiration Date...................... 11:00 a.m. Minneapolis-St. Paul time, on
June 15, 1994, which time and date may
be extended by Funding and the
Partnership, in their sole discretion.
See "THE EXCHANGE OFFER - Period for
Tendering Series A Notes."
Limitation on Resale................. If an Eligible Holder is participating
in the Exchange Offer for the purpose of
distributing the Series B Notes to be
acquired in the Exchange Offer, such
Eligible Holder must comply with
registration and prospectus delivery
requirements of the Securities Act in
connection with a secondary resale
transaction.
Procedure for Tendering.............. Holders of Series A Notes desiring to
accept the Exchange Offer must deliver
to the Depositary the Series A Notes to
be tendered. Holders of Series A Notes
having such Series A Notes registered in
the name of a broker, dealer, commercial
bank, trust company or nominee are urged
to contact such person promptly if they
wish to tender Series A Notes pursuant
to the Exchange Offer. See "THE EXCHANGE
OFFER - Procedure for Tendering Bonds."
Withdrawal Rights.................... Tenders of Series A Notes may be
withdrawn at any time prior to 11:00
a.m., Minneapolis-St. Paul time, on the
Expiration Date. See "THE EXCHANGE
OFFER - Withdrawal Rights."
Acceptance of Tendered
Series A Notes...................... Upon the terms and subject to the
conditions of the Exchange Offer,
acceptance for exchange of the Series A
Notes validly tendered at or prior to
the Expiration Date will occur at the
Expiration Date.
14
<PAGE>
Delivery of Series B
Notes.............................. Funding will deliver the Series B Notes
as soon as practicable after the
Expiration Date. The Series B Notes will
be dated the date of their
authentication, and will begin to accrue
interest from, the next preceding
interest payment date. See "THE EXCHANGE
OFFER - Acceptance and Delivery of
Series B Notes."
Certain Federal Income Tax
Considerations for Holders of
Series A Notes..................... The exchange of the Series A Notes for
the Series B Notes will not result in a
taxable exchange for Federal income tax
purposes and exchanging holders will
therefore not recognize taxable gain or
loss as a result of the exchange. An
exchanging holder will have the same
basis and holding period in the Series B
Note as in the Series A Note exchanged
therefor. See "CERTAIN FEDERAL INCOME
TAX CONSIDERATIONS."
Depositary........................... First Bank National Association, a
national banking association (the
"Depositary") will act as depositary for
the Exchange Offer.
Comparison Of Series A Notes And Series B Notes
Under the Senior Note Indenture, Funding has authorized the creation of an
issue of up to $27 million aggregate principal amount of its Senior Notes. The
form and terms of the Series A Notes and the Series B Notes are identical in all
material respects, except that (i) the Series B Notes have been registered under
the Securities Act and, therefore, do not bear legends restricting the transfer
thereof, (ii) holders of the Series B Notes are not entitled to Liquidated
Damages and (iii) holders of Series B Notes will not be, and, upon consummation
of the Exchange Offer, holders of the Series A Notes will no longer be, entitled
to shelf-registration rights under the Registration Rights Agreement intended
for the holders of unregistered securities. See "THE EXCHANGE OFFER -
Termination of Certain Rights," and "DESCRIPTION OF THE SENIOR NOTES."
-15-
<PAGE>
Other Debt Facilities
The Partnership currently has a debt facility with Midlantic, the $38
million Midlantic Term Loan. The Midlantic Term Loan is secured by a lien on
substantially all of the assets of the Partnership that is senior to the lien
securing the Senior Notes. The Partnership, Midlantic and the Senior Note
Trustee have entered into an agreement pursuant to which the Senior Note Trustee
has agreed not to accept payments from the Partnership with respect to the
Senior Partnership Note or the Senior Guarantee securing the Senior Notes so
long as there exists anypayment default on the Midlantic Term Loan. See
"DESCRIPTION OF THE MIDLANTIC TERM LOAN."
In connection with the Recapitalization, Funding issued $242,141,304
aggregate principal amount of Mortgage Notes which are secured by an assignment
of a non-recourse promissory note of the Partnership (the "Partnership Note"),
which is in turn secured by a mortgage (the "Note Mortgage") on the assets
constituting the real property owned and leased by the Partnership and
substantially all of the Partnership's other assets, all of which constitute
Trump's Castle. In addition, the Partnership issued a non-recourse guarantee of
the payment of the principal of, premium, if any, and interest on the Mortgage
Notes (the "Guarantee"), which Guarantee is secured by a mortgage (the
"Guarantee Mortgage") on the assets of the Partnership described above, pari
passu with the lien of the Note Mortgage. The Partnership Note and the Guarantee
are subordinated to the Midlantic Term Loan, the Senior Partnership Note and the
Senior Guarantee (collectively, the "Senior Indebtedness"). The assets subject
to the Note Mortgage and the Guarantee Mortgage are subject to certain mortgages
which are senior to the liens of the Note Mortgage and the Guarantee Mortgage.
See "DESCRIPTION OF THE MORTGAGE NOTES."
Funding also issued $50,498,648 aggregate principal amount of PIK Notes in
connection with the Recapitalization. The PIK Notes are secured by an assignment
of a subordinated non-recourse promissory note of the Partnership (the
"Subordinated Partnership Note"). In addition, the Partnership issued a
subordinated guarantee of the payment of principal of, premium, if any, and
interest on the PIK Notes (the "Subordinated Guarantee"). The Subordinated
Partnership Note and the Subordinated Guarantee are subordinated to the
Partnership Note, the Guarantee and all Senior Indebtedness of the Partnership.
See "DESCRIPTION OF THE PIK NOTES - Ranking."
-16-
<PAGE>
SUMMARY FINANCIAL INFORMATION
Summary Historical Financial Information
The following table sets forth certain historical financial information of
the Partnership and Funding for each of the five years ended December 31, 1993.
The financial information of the Partnership and Funding as of December 31,
1989, 1990, 1991, 1992 and 1993 and for the years then ended set forth below has
been derived from the audited consolidated financial statements of the
Partnership and Funding. This information should be read in conjunction with
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS" and the consolidated financial statements of the Partnership and
Funding and the related notes thereto included elsewhere in this Prospectus.
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<PAGE>
<TABLE>
Year Ended December 31,
------------------------------------------------------------------------
1989 1990 1991 1992 1993
-------- -------- -------- -------- --------
(dollars in thousands, except gaming data)
<S> <C> <C> <C> <C> <C>
Statements of Operations Data:
Net revenues .................. $294,731 $268,832 $220,086 $268,650 $273,227
Depreciation and amortization.. 17,564 20,658 21,414 19,802 16,425
Income (loss) from operations.. 34,424 1,249 (2,360) 8,027 27,866
Net interest expense .......... (41,588) (47,866) (47,839) (44,861) (56,251)
Loss before extraordinary gain (6,678) (43,481) (50,199) (36,834) (28,385)
Balance Sheet Data (at end of
period):
Total assets .................. 439,775 408,276 391,303 379,641 375,935
Total long-term debt, net of
current maturities .......... 335,144 - (a) - (a) 279,445 309,794
Preferred partnership interest N/A N/A N/A 15,000 15,000
Total capital (deficit)........ 30,274 (13,207) (63,406) 60,799 31,678
Financial Ratios and
Other Data:
EBITDA (b)..................... 53,052 22,020 23,690 34,330 45,244
Capital expenditures .......... 50,129 12,614 5,117 8,574 10,396
Ratio of earnings to fixed
charges (c).................. -(d) -(d) -(d) -(d) -(d)
Ratio of EBITDA to net interest
expense ..................... 1.28 .46 .50 .77 .80
Gaming Data (dollars in
millions): (e)
Table Games:
Total Atlantic City table
drop (f) .................... $ 7,664 $ 7,903 $ 7,219 $ 7,055 $ 6,836
Atlantic City table drop growth 0.1% 3.1% -8.7% -2.3% -3.1%
Atlantic City table hold
percentage (g)............... 16.0% 15.5% 15.8% 15.6% 15.6%
Trump's Castle table drop (f).. $ 746 $ 665 $ 441 $ 504 $ 492
Trump's Castle table hold
percentage (g)............... 15.8% 14.8% 15.3% 15.4% 14.5%
Trump's Castle table games
market share (h)............. 9.6% 8.0% 5.9% 7.1% 7.2%
Trump's Castle table games
fair share (i)............... 8.7% 8.0% 7.6% 7.6% 7.6%
Trump's Castle table games
efficiency (j)............... 110.3% 100.0% 77.6% 93.4% 94.7%
Slots:
Total Atlantic City slot
revenue ..................... $ 1,577 $ 1,724 $ 1,851 $ 2,114 $ 2,215
Atlantic City slot revenue
growth ...................... 5.6% 9.3% 7.4% 14.2% 4.8%
Trump's Castle slot revenue (k) $ 147 $ 136 $ 129 $ 163 $ 173
Trump's Castle slot market
share(i)..................... 9.3% 7.9% 7.0% 7.7% 7.8%
Trump's Castle slot fair
share (l) ................... 9.0% 8.0% 7.6% 7.7% 8.2%
Trump's Castle slot
efficiency (j)............... 103.3% 98.8% 92.1% 100.0% 95.1%
</TABLE>
-18-
<PAGE>
(a) As of December 31, 1990 and 1991 long term debt of $337,649 and $340,553,
respectively had been reclassified to current maturities.
(b) EBITDA represents income from operations before depreciation, amortization,
restructuring costs and the non-cash write-down of CRDA investments. The
Partnership has included information concerning EBITDA, as it understands
that it is used by certain investors as one measure of the Partnership's
historical ability to service its debt. EBITDA should not be considered as
an alternative to, or more meaningful than, operating income or cash flow
as an indicator of the Partnership's operating performance.
(c) For purposes of computing this ratio, earnings consist of loss before
income taxes and extraordinary items and fixed charges, adjusted to exclude
capitalized interest. Fixed charges consist of interest expense, including
amounts capitalized, preferred partnership distribution requirements and
the portion of operating lease rental expense that is representative of the
interest factor (deemed to be one-third of operating lease rental expense).
(d) Earnings before income taxes and fixed charges were insufficient to cover
fixed charges for the years ended December 31, 1989, 1990, 1991, 1992 and
1993 by $9,894, $43,481, $50,199, $36,834 and $28,385, respectively.
(e) Atlantic City industry data has been compiled from information filed with
and published by the CCC and is unaudited.
(f) Table drop represents the total dollar value of chips purchased for table
games for the period indicated.
(g) Table hold percentage represents the percentage of money that a casino
retains (or wins) out of the table drop.
(h) Market share represents the total Trump's Castle gaming revenue expressed
as a percentage of total Atlantic City gaming revenue.
(i) Fair share is the percentage of the total number of gaming units (table
games or slot machines) in Trump's Castle to the total number of gaming
units in casinos in Atlantic City.
(j) Efficiency is the ratio of Trump's Castle's market share to its fair share.
(k) Slot revenue is shown on the cash basis and excludes amounts reserved for
progressive jackpot accruals.
19
<PAGE>
OWNERSHIP STRUCTURE OF THE PARTNERSHIP
AND RELATED ENTITIES
Set forth herein is a chart depicting the ownership structure of the
Trump's Castle Casino Resort described in the second paragraph of the section
captioned "THE PARTNERSHIP".
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RISK FACTORS
In considering whether or not to tender their Series A Notes in the
Exchange Offer holders of Series A Notes should carefully consider all
information contained in this Prospectus, including the following:
Potential Limitations on Claims in a Future Bankruptcy
Except in certain very limited circumstances, unmatured interest, including
non-accreted original issue discount ("OID"), is not allowable as a claim under
the Bankruptcy Code. It is possible that a Bankruptcy Court would determine that
the Series B Notes were issued with OID as a result of their issuance in
exchange for the Series A Notes. The method that a Bankruptcy Court would use to
determine the amount of OID is uncertain; however, it is likely that a
Bankruptcy Court would calculate OID, if any, by comparing the face amount of
the Series B Notes to the value of the consideration given for them. One method
to determine the consideration given for the Series B Notes would be to value
the Series A Notes at the fair market value on the Expiration Date or on an
earlier date. It is not possible to predict, with any assurance, what the fair
market value of the Series A Notes will be on such date, but if it is less than
the principal amount of the Series B Notes issued with respect thereto, a
Bankruptcy Court would likely determine that OID does exist and would allow a
claim for less than the full principal amount of the Series B Notes. Holders of
Series B Notes under such circumstances might, even if sufficient funds were
available, receive a lesser amount with respect to the principal amount of their
securities than the holders of other indebtedness of Funding or the Partnership.
Loss of Certain Rights In Connection with the Exchange Offer
Pursuant to the terms of the Registration Rights Agreement, the holders of
the Series A Notes are entitled to certain rights above and beyond those set
forth in the Senior Note Indenture. A holder of Series A Notes who exchanges his
Series A Notes for Series B Notes will no longer be entitled to such rights. See
"THE EXCHANGE OFFER - Termination of Certain Rights."
High Leverage And Fixed Charges
Funding and the Partnership are each highly leveraged. As of December 31,
1993, the outstanding amount of indebtedness of the Partnership was
approximately $357 million including the Midlantic Term Loan, the Senior
Partnership Note, the Partnership Note and the Subordinated Partnership Note
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securing the outstanding indebtedness of Funding. The outstanding indebtedness
of Funding as of December 31, 1993 was $27 million principal amount of Senior
Notes, approximately $242 million principal amount of Mortgage Notes, which are
subordinated in right of payment to the Senior Notes, and approximately $50
million principal amount of PIK Notes, which are subordinated in right of
payment to the Senior Notes and the Mortgage Notes. Moreover, Funding has
guaranteed the repayment of the $38 million principal amount Midlantic Term
Loan. The Partnership as of December 31, 1993 had a net worth of approximately
$31.7 million.
In addition, the Partnership may, in the future, obtain a Working Capital
Facility of up to $10 million. Obligations under the Working Capital Facility,
if obtained, may be secured by liens pari passu with the lien of the Senior Note
Mortgage and the Senior Guarantee Mortgage. If the Partnership were to draw down
the entire amount of funds available under such a Working Capital Facility, the
aggregate principal amount of its indebtedness would be increased by $10
million. As a result, its debt service burden would increase.
Funding's ability to pay cash interest on the Senior Notes will be entirely
dependent upon the Partnership's ability to generate cash flow from operations
sufficient for such purposes. See "RISK FACTORS - Recent Losses and the
Partnership's 1992 Bankruptcy Resulting from its Inability to Meet its Debt
Service Requirements." The Partnership has entered into an agreement with
Midlantic, pursuant to which the Partnership has agreed not to make any payments
with respect to the Senior Partnership Note or the Senior Guarantee so long as
there exists any payment default on the Midlantic Term Loan (which had an
aggregate principal amount of $38 million as of December 31, 1993). See "THE
MIDLANTIC TERM LOAN."
The substantial indebtedness and fixed charges of the Partnership may limit
the Partnership's ability to respond to changing business and economic
conditions, to fund capital expenditures for any future expansion or otherwise,
either through cash flow or additional indebtedness, to absorb adverse operating
results or to maintain Trump's Castle's facilities at an operating level which
will continue to attract patrons. In addition, in the absence of the Working
Capital Facility, the Partnership may be unable to meet its liquidity needs,
which fluctuate due to the seasonality of the Partnership's business. See
"BUSINESS - Seasonality."
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Risk In Refinancing And Repayment Of Indebtedness
Funding's ability to pay the principal of the Senior Notes when due will be
dependent upon the Partnership's ability to either generate cash from operations
sufficient for such purpose or to refinance the Senior Notes. The Partnership
does not currently anticipate being able to generate sufficient cash flow from
its operations to repay a substantial portion of the principal amount of the
Senior Notes. Thus, the repayment of the principal amount of the Senior Notes is
likely to be dependent primarily upon the Partnership's ability to refinance the
Senior Notes when due. The Partnership's future operating performance and
ability to refinance the Senior Notes will be subject to the then prevailing
economic conditions and to financial, business and other factors, many of which
are beyond Funding's or the Partnership's control. There can be no assurance
that the Partnership's future operating performance will be sufficient to meet
these repayment obligations or that the status of the capital markets or the
Partnership's operating performance in the future will be conducive to
refinancing the Senior Notes or other attempts to raise capital.
Trump, who is the 100% beneficial owner of Funding and the Partnership
(subject to the Litigation Warrants), is personally obligated under certain debt
agreements. Pursuant to these debt agreements, Trump has covenanted, subject to
certain exceptions, not to incur or refinance, and to prevent his affiliates,
including Funding and the Partnership, from incurring or refinancing, any
indebtedness. Therefore, any future refinancing, including that of the Senior
Notes, by Funding or the Partnership will likely require the consent of the
lenders under these agreements or under any agreements entered into to refinance
or replace such agreements. There can be no assurance, however, that any such
consent, if sought, would be obtained. See "RISK FACTORS - Control and
Involvement of Trump."
The Partnership has entered into an agreement with Midlantic, which
subordinated the Senior Notes to the Midlantic Term Loan (which had an aggregate
principal amount of $38 million as of December 31, 1993). The Midlantic Term
Loan will mature in May 1995. Under the terms of the Midlantic Term Loan, the
Partnership has the right to extend the term of the loan until May 2000 upon
satisfaction of certain conditions, including the absence of any default with
respect to such loan. There can be no assurance that such conditions will be
met. See "THE MIDLANTIC TERM LOAN." The Partnership intends to repay the
indebtedness secured by the mortgages and other security agreements and
assignments securing the Midlantic Term Loan and the Working Capital Facility,
if obtained (collectively, the "Senior Mortgages") with the proceeds of one or
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more refinancings and funds generated from operations. There can be no
assurance, however, regarding such repayment, and the failure to repay such
indebtedness upon maturity would constitute an Event of Default under the Senior
Note Indenture. See "RISK FACTORS Recent Losses and the Partnership's 1992
Bankruptcy Resulting from its Inability to Meet its Debt Service Requirements."
Recent Losses And The Partnership's 1992 Bankruptcy Resulting
From Its Inability To Meet Its Debt Service Requirements
The Partnership had net losses of $50.2 million, $36.8 million (before an
extraordinary gain of $128.2 million) and $28.4 million for the years ended
December 31, 1991, 1992 and 1993. Historically, the Partnership's earnings
before income taxes and fixed charges have been insufficient to cover its fixed
charges. See "PROSPECTUS SUMMARY - Summary Financial Information."
In 1990, the Partnership began to experience liquidity problems. As a
result of the Partnership's liquidity problems, Funding failed to make its $41.1
million June 15, 1991 interest and sinking fund payments and its $18.4 million
December 15, 1991 interest payments on its 13-3/4% First Mortgage Bonds, Series
A- 1, Due 1997 (the "Series A-1 Bonds") and its 7% First Mortgage Bonds, Series
A-2, Due 1999 (the "Series A-2 Bonds" and, together with the Series A-1 Bonds,
the "Old Bonds"). In 1990, the Partnership also failed to pay interest
installments on certain indebtedness due Midlantic, although the Partnership
subsequently made payment to Midlantic of all unpaid interest on such debt and
met its debt service obligations to Midlantic. On May 29, 1992, TCHI, Funding
and the Partnership consummated a prepackaged plan of reorganization under
chapter 11 of the Bankruptcy Code and completed the Restructuring, the purpose
of which was to improve the amortization schedule of the Partnership's
indebtedness. See "BUSINESS - The Restructuring."
The Partnership believes that the deterioration in results experienced in
1990 and 1991 was attributable primarily to a recession in the Northeast, the
Persian Gulf War and increased industry competition, primarily due to the
opening of the Trump Taj Mahal Casino Resort (the "Taj Mahal") in April 1990
which had a disproportionate impact on Trump's Castle and the Trump Plaza Hotel
and Casino ("Trump Plaza") as compared to other Atlantic City casinos. The
Partnership believes that its improved operating results for 1992 (excluding the
effects of the Restructuring) and 1993 are attributable, in part, to the success
of its new business strategy. See "BUSINESS - Marketing Strategy." Continued
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improvement in operating results, as well as the Partnership's ability to
maintain its improved results, will be dependent, in part, on sustained economic
recovery in the United States generally, and in the Northeast, in particular,
and there can be no assurance that this will occur.
Competition And Industry Rate Of Growth
Competition in the Atlantic City casino hotel market is intense. Trump's
Castle competes primarily with other casinos located in Atlantic City, New
Jersey, as well as gaming establishments located on Native American reservations
in New York and Connecticut, and also would compete with any other facilities in
the northeastern and mid-Atlantic regions of the United States at which casino
gaming or other forms of wagering may be authorized in the future. To a lesser
extent, Trump's Castle faces competition from cruise lines, riverboat gaming and
casinos located in Mississippi, Nevada, New Orleans, Puerto Rico, the Bahamas
and other locations inside and outside the United States, and from other forms
of legalized gaming in New Jersey and in its surrounding states such as
lotteries, horse racing (including off-track betting), jai alai and dog racing,
and from illegal wagering of various types.
At present, there are 12 casino hotels located in Atlantic City, including
Trump's Castle, all of which compete for patrons. In addition, there are several
sites on The Boardwalk and in the Atlantic City Marina area on which casino
hotels could be built in the future, or on which existing casino hotels could
expand, including the property commonly known as the "Trump Regency Hotel" on
which Trump Plaza has an option.
Total Atlantic City gaming revenues have increased over the past three
years, although at varying rates. In 1991, six Atlantic City casino hotels
reported increases in gaming revenues as compared to 1990, and five reported
decreases in gaming revenues (including Trump's Castle). The Partnership
believes that results in 1991 were affected by the weakness in the economy
throughout the Northeast and the adverse impact in 1991 on tourism and consumer
spending of the Persian Gulf War. See "BUSINESS - Atlantic City Market."
Although all 12 Atlantic City casinos reported increases in gaming revenues in
1992 as compared to 1991, the Partnership believes that this was due, in part,
to the depressed industry conditions in 1991. In 1993, nine casinos (including
Trump's Castle) experienced increased casino revenues, as compared to 1992,
while three casinos reported decreases.
In 1990, the Atlantic City casino industry experienced a significant
increase in room capacity and in available casino floor space, including the
rooms and floor space made available by the opening of the Taj Mahal, which at
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the time was wholly-owned by Trump. The effects of such expansion were to
increase competition and to contribute to a decline in 1990 in gaming revenues
per square foot. In 1990, the Atlantic City casino industry experienced a
decline in gaming revenues per square foot of 5.0%, which trend continued in
1991, although at the reduced rate of 2.9%. However, in 1992 and 1993, the
Atlantic City casino industry experienced an increase of 6.9% and 1.4%,
respectively in gaming revenues per square foot each as compared to the prior
year.
The profitability of Trump's Castle could be affected by its proximity to
Harrah's Marina Hotel Casino, which is owned and operated by a third party not
affiliated with the Partnership. Trump's Castle and Harrah's Marina Hotel Casino
are the only casino hotels located in the Marina area of Atlantic City. The
remaining Atlantic City casino hotels are located on The Boardwalk. The
Partnership believes that the concentration of casino hotels on The Boardwalk
has resulted in a significant number of patrons being attracted to that area and
away from the vicinity of Trump's Castle. The Partnership further believes that
the location of Trump's Castle has adversely affected its ability to attract
walk-in patrons, although the Partnership believes that its location away from
The Boardwalk area serves as an attractive feature to visitors seeking to avoid
the congested downtown area. The Partnership also believes that Trump's Castle
benefits, to some extent, from its relative geographic isolation by virtue of
the fact that patrons do not have the option of walking from one casino to
another once they arrive at Trump's Castle.
Casinos in Atlantic City must be located in approved hotel facilities which
offer dining, entertainment and other guest facilities. Competition among casino
hotels is based primarily upon promotional allowances, advertising, the
attractiveness of the casino area, service, quality and price of rooms, food and
beverages, restaurant, convention and parking facilities and entertainment. In
order to compete effectively with all other Atlantic City casino hotels, the
Partnership offers complimentary drinks, meals, room accommodations and/or
travel arrangements to patrons with a demonstrated propensity to wager at
Trump's Castle, as well as cash bonuses and other incentives pursuant to
approved coupon programs.
In 1988, Congress passed the Indian Gaming Regulatory Act ("IGRA"), which
requires any state in which casino-style gaming is permitted (even if only for
limited charity purposes) to negotiate compacts with federally recognized Native
American tribes at the request of such tribes. Under IGRA, Native American
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tribes enjoy comparative freedom from regulation and taxation of gaming
operations, which provides such tribes with an advantage over their competitors,
including the Partnership. In 1991, the Mashantucket Pequot Nation opened a
casino facility in Ledyard, Connecticut, located in the far eastern portion of
such state, an approximately three-hour drive from New York City. In February
1992, the Mashantucket Pequot Nation initiated 24 hour gaming. In January 1993,
slot machines were added at such facility, and the facility currently contains
over 3,100 slot machines. The Mashantucket Pequot Nation has announced various
expansion plans, including its intention to build another casino in Ledyard
together with hotels, restaurants and a theme park.
Trump, the Partnership and the partnerships that own Trump Plaza and the
Taj Mahal (collectively, the "Other Trump Casinos") have recently filed a
lawsuit seeking, among other things, a declaration that IGRA is unconstitutional
and seeking an injunction against the enforcement of certain provisions of IGRA.
The complaint states, among other things, that the Mashantucket Pequot Nation's
casino has caused the Partnership substantial economic injury. The complaint
states further that any future expansions of existing Native American gaming
facilities or new ventures by such persons or others in the northeastern or
mid-Atlantic region of the United States would have a further adverse impact on
Atlantic City in general and could cause the Partnership further substantial
economic injury.
A group in New Jersey terming itself the "Ramapough Indians" has applied to
the U.S. Department of the Interior to be recognized formally as a Native
American tribe, which recognition would permit it to require the State of New
Jersey to negotiate a gaming compact under IGRA. On December 3, 1993, however,
the Interior Department proposed that such Federal recognition to the Ramapough
Indians be denied. Similarly, a group in Cumberland County, New Jersey calling
itself the "Nanticoke Lenni Lenape" tribe has filed a notice of intent with the
Federal Bureau of Indian Affairs seeking formal recognition as a Native American
tribe. Also, it has been reported that a Sussex County, New Jersey businessman
has offered to donate land he owns there to the Oklahoma-based Lenape/Delaware
Indian Nation which originated in New Jersey and already has Federal tribal
status but does not have a reservation in the state. In addition, in July 1993,
the Oneida Nation opened a casino featuring 24-hour table gaming, but without
slot machines, near Syracuse, New York. Representatives of the St. Regis Mohawk
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Nation signed a gaming compact with New York State officials for the opening of
a casino, without slot machines, in the northern portion of the state close to
the Canadian border. The St. Regis Mohawk Nation has announced that it intends
to open their casino in the summer of 1994. The Narragansett Nation of Rhode
Island has recently won a Federal court case which will require the Governor of
Rhode Island to negotiate a casino gaming compact with the Nation. The Mohegan
Nation, which is located in Connecticut, received federal recognition in March
1994. Other Native American Nations are seeking federal recognition, land, and
negotiation of gaming compacts in New York, Pennsylvania, Connecticut and other
nearby states.
Legislation permitting other forms of casino gaming has been proposed, from
time to time, in various states, including those bordering New Jersey. Trump's
Castle's operations would be adversely affected by such competition,
particularly if casino gaming were permitted in jurisdictions near or in New
Jersey or other states in the Northeast. In December 1993, the Rhode Island
Lottery Commission approved the addition of slot machine games on video
terminals at Lincoln Greyhound Park and Newport Jai Alai, where poker and
blackjack have been offered for over two years. The State of Louisiana recently
approved casino gaming in the city of New Orleans, and a developer has been
selected. Currently, casino gaming, other than Native American gaming, is not
allowed in other areas of New Jersey or in New York or Pennsylvania. However,
Trump's Castle expects that proposals may be introduced to legalize riverboat or
other forms of gaming in Philadelphia and one or more other locations in
Pennsylvania. To the extent that legalized gaming becomes more prevalent in New
Jersey or other jurisdictions, competition would intensify.
In addition, legislation has from time to time been introduced in the New
Jersey State Legislature relating to types of statewide legalized gaming, such
as video games with small wagers. To date, no such legislation, which may
require a state constitutional amendment, has been enacted. The Partnership is
unable to predict whether any such legislation, if enacted, would have a
material adverse impact on the results of operations or financial condition of
the Partnership.
The Ranking Of The Senior Notes Junior To The Midlantic Term Loan
And The Regulatory Limitations On The Senior Note Trustee's
Ability To Realize On Collateral
General. Payment of the principal of, premium, if any, and interest on the
Senior Notes is subordinated to the prior payment of the Midlantic Term Loan
which had an aggregate principal amount outstanding of $38 million as of
December 31, 1993. Similarly, payment of the principal of, premium, if any, and
interest on the Senior Partnership Note and payments pursuant to the Senior
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Guarantee are subordinated to the Midlantic Term Loan. The Senior Notes are
secured by the assignment by Funding to the Senior Note Trustee of the Senior
Partnership Note and the Senior Note Mortgage, and the Senior Guarantee is
secured by the Senior Guarantee Mortgage. The Senior Note Mortgage and Senior
Guarantee Mortgage each evidence a security interest in Trump's Castle and
substantially all of the other assets of the Partnership. The Partnership has
entered into an Intercreditor Agreement pursuant to which the Partnership has
agreed not to make any payments with respect to the Senior Partnership Note or
the Senior Guarantee and the Senior Note Trustee will be prohibited from
realizing on the Senior Note Mortgage and the Senior Guarantee Mortgage so long
as there exists any payment default on the Midlantic Term Loan.
If there is an Event of Default under the Senior Note Indenture, the Senior
Note Mortgage or the Senior Guarantee Mortgage (collectively, the "Senior Note
Agreements"), the Senior Note Trustee will have the right, subject to the
requirements of the New Jersey Casino Control Act and the regulations
promulgated thereunder (the "Casino Control Act"), to enforce the rights and
remedies contained in the Senior Note Agreements. Because the Senior Partnership
Note and the Senior Guarantee are non-recourse with respect to the partners of
the Partnership and their assets, the Senior Note Trustee's rights and remedies
may be exercised solely with respect to the assets subject to the lien of the
Senior Note Agreements. Trump's Castle is also encumbered by the mortgages which
secure the Midlantic Term Loan and the up to $10 million Working Capital
Facility, if obtained. Accordingly, the net amount realized in any foreclosure
sale for the benefit of holders of the Senior Notes will be only that amount
which remains after payment of all amounts then due and owing to creditors
having security interests in the collateral senior to the liens of the Senior
Note Mortgage and the Senior Guarantee Mortgage and certain taxes and other
items. There can be no assurance that a foreclosure on the Senior Note Mortgage
or the Senior Guarantee Mortgage would produce proceeds in an amount that would
be sufficient to pay the principal of, and accrued interest on, the Senior
Notes. See "DESCRIPTION OF THE SENIOR NOTES - Security."
Certain Regulatory Considerations. No person can hold a casino license in
the State of New Jersey unless found qualified to do so by the CCC. If the
Senior Note Trustee sought to acquire collateral relating to an ongoing casino
operation in a foreclosure sale or otherwise, the Senior Note Trustee would be
required to comply with the licensing requirements of the Casino Control Act,
including the requirement that it hold a casino license.
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The Senior Note Trustee would be required to make application to the CCC
for interim casino authorization before it acquires such assets. If interim
casino authorization is denied, the Senior Note Trustee would not be permitted
to acquire such assets. If interim casino authorization is granted, the Senior
Note Trustee could acquire such assets subject to an interim casino
authorization trust. If casino licensure is subsequently granted, the interim
casino authorization trust would no longer be operative, and the Senior Note
Trustee would be permitted to acquire such assets. If casino licensure is
thereafter denied, the interim casino authorization trustee would be required to
dispose of all property subject to the interim casino authorization trust. See
"REGULATORY MATTERS - Interim Casino Authorization."
In addition, in any foreclosure sale or subsequent resale by the Senior
Note Trustee, licensing requirements under the Casino Control Act may limit the
number of potential bidders and may delay any sale, either of which events could
have an adverse effect on the sale price of such collateral. See "REGULATORY
MATTERS."
Certain Bankruptcy Limitations. The right of the Senior Note Trustee under
the Senior Note Agreements to repossess and dispose of the collateral upon the
occurrence of an event of default on the Senior Notes is likely to be
significantly impaired by applicable bankruptcy law if a bankruptcy proceeding
were to be commenced by or against Funding or the Partnership prior to the
Senior Note Trustee's having repossessed and disposed of the collateral. Under
applicable bankruptcy law, secured creditors such as the holders of the Senior
Notes are prohibited from repossessing their security from a debtor in a
bankruptcy case, or from disposing of security repossessed from such debtor,
without bankruptcy court approval. Moreover, applicable bankruptcy law permits
the debtor to continue to retain and to use collateral even though the debtor is
in default under the applicable debt instruments, provided that the secured
creditor is given "adequate protection." The meaning of the term "adequate
protection" may vary according to circumstances, but it is intended in general
to protect the value of the secured creditor's interest in the collateral and
may include cash payments or the granting of additional security, if and at such
times as the court in its discretion determines, for any diminution in the value
of the collateral as a result of the stay of repossession or disposition or any
use of the collateral by the debtor during the pendency of the bankruptcy case.
In view of the lack of a precise definition of the term "adequate protection"
and the broad discretionary powers of a bankruptcy court, it is impossible to
predict how long payments under the Senior Notes could be delayed following
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commencement of a bankruptcy case, whether or when the Senior Note Trustee could
repossess or dispose of the collateral or whether or to what extent holders of
the Senior Notes would be compensated for any delay in payment or loss of value
of the collateral through the requirement of "adequate protection."
The Restrictions Imposed By Certain Debt Instruments On The
Partnership's Ability To Respond To Changing Business And
Economic Conditions
The Midlantic Term Loan, the Senior Note Indenture, the Mortgage Note
Indenture and PIK Note Indenture impose restrictions on the activities of
Funding and the Partnership. Generally, these restrictions relate to the
incurrence of additional indebtedness, the distribution of cash and/or property
to the Partnership's partners and the repayment or repurchase of pari passu or
junior securities, investments, mergers and sales of assets and the creation of
liens. See "THE MIDLANTIC TERM LOAN," "DESCRIPTION OF THE SENIOR NOTES,"
"DESCRIPTION OF THE MORTGAGE NOTES," and "DESCRIPTION OF THE PIK NOTES." These
restrictions could limit the ability of the Partnership to respond to changing
business and economic conditions. A failure to comply with any of these
obligations could also result in an Event of Default under the Midlantic Term
Loan, the Senior Note Indenture, the Mortgage Note Indenture and the PIK Note
Indenture, which could permit acceleration of the Midlantic Term Loan and
acceleration of indebtedness of the Partnership under other instruments that may
contain cross-acceleration or cross- default provisions. In addition, the
Working Capital Facility, if obtained, could contain affirmative and negative
covenants customary to loan documentation for highly leveraged companies, which
covenants could be more restrictive than those contained in the Midlantic Term
Loan and the Senior Note Indenture.
The activities of Funding and the Partnership are further restricted by
certain debt agreements under which Trump is personally obligated. These
agreements impose restrictions on Trump and his affiliates, including Funding
and the Partnership, relating, among other things, to the incurrence of
additional indebtedness, the creation of liens, mergers and sales of assets,
investments, leases, issuance of equity interests, affiliate transactions and
capital expenditures. It is anticipated that Funding and the Partnership will
not be permitted to refinance the Senior Notes, without the prior consent of
such lenders. There can be no assurance, however, that any such consent, if
sought, would be obtained. See "RISK FACTORS - Control and Involvement of
Trump."
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Certain Consequences of a Public Offering of Casino Interests
Trump or an affiliate of Trump may, in the future, conduct an offering of
equity securities of an entity which holds interest in one or more of Trump's
Castle, Trump Taj Mahal Casino Resort (the "Taj Mahal") and Trump Plaza Hotel
and Casino ("Trump Plaza"). The Partnership is obligated to use 35% of the net
proceeds of an offering of a direct or indirect equity interest in the
Partnership to redeem PIK Notes at 100% of their principal amount. See
"DESCRIPTION OF THE PIK NOTES - Mandatory Redemption." Any such offering could
constitute a Change of Control for purposes of the Senior Note Indenture, and
the failure to include the Partnership in such equity offering could result in
an Event of Default under the Senior Note Indenture.
A Change of Control is defined as an event as a result of which either (a)
Trump or an entity controlled by Trump (a "Permitted Holder") does not have the
right or ability by voting power, contract or otherwise to elect or designate
for election a majority of the Board of Partnership Representatives of the
Partnership or to control the management of the Partnership; or (b) the
Partnership is liquidated or dissolved or adopts a plan of liquidation or
dissolution; provided, however, a Change of Control is not deemed to occur as a
result of one or more public offerings so long as both (i) the Permitted Holder
continues to beneficially own 20% or more of the entity which conducted the
public offering and (ii) no other holder beneficially owns a greater percentage
of the entity which conducted the public offering than the Permitted Holder. The
Senior Note Indenture provides the holders of such securities with a right to
require the Partnership to repurchase their securities upon a Change of Control
at a price equal to 101% of the principal amount thereof, plus accrued and
unpaid interest. Because a Change of Control will not necessarily occur in
connection with a future public offering, the provisions of the Senior Note
Indenture may not necessarily provide holders of Senior Notes with protection in
the form of a Change of Control Offer in the event of a public offering.
If a public offering did constitute a Change of Control, Funding's and the
Partnership's ability to purchase PIK Notes upon a Change of Control is
restricted by the terms of the Midlantic Term Loan. There can be no assurance
that if a future equity offering results in a Change of Control the Partnership
would be able to repurchase Senior Notes submitted for purchase. Any such
failure to repurchase Senior Notes upon the occurrence of a Change of Control
would constitute an Event of Default under the Senior Note Indenture. In
addition, the Mortgage Notes and PIK Notes (which together had an aggregate
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principal amount of approximately $292 million as of December 31, 1993) contain
a similar right of repurchase upon the occurrence of a Change of Control. There
can be no assurance that if a future equity offering results in a Change of
Control the Partnership would be able to repurchase Mortgage Notes or PIK Notes
submitted for purchase. Any such failure to repurchase Mortgage Notes or PIK
Notes upon the occurrence of a Change of Control would constitute an Event of
Default under the Mortgage Note Indenture or the PIK Note Indenture, as the case
may be.
It is an event of default under the Senior Note Indenture (as well as under
the Mortgage Note Indenture and PIK Note Indenture) if an entity which at the
time directly or indirectly holds general partnership interests in both Trump
Taj Mahal Associates (the Partnership that owns Taj Mahal, of which Donald J.
Trump is 50% beneficial owner ("TTMA")) and Trump Plaza Associates (the
partnership which owns Trump Plaza, of which Donald J. Trump is the 100%
beneficial owner ("TPA")), which interests had previously been held by Trump and
his affiliates, offers through a public distribution its equity securities
without having first acquired all the direct and indirect general partnership
interests in the Partnership now held by Trump and his affiliates. See
"DESCRIPTION OF THE SENIOR NOTES Events of Default." In the event that such a
public offering were to take place, it would constitute an Event of Default
under the Senior Note Indenture (as well as under the Mortgage Note Indenture
and PIK Note Indenture). Trump has informed the Partnership that he intends to
include the Partnership in such an offering and if he were not able to include
the Partnership in such an offering he intends either to terminate the offering
or to obtain a waiver of such provision pursuant to the terms of the Senior Note
Indenture.
Upon the occurrence of an Event of Default, whether as a result of a
failure to repurchase Senior Notes or upon a Change of Control, a public
distribution of securities described above or otherwise, the Trustee or the
holder of 25% of the outstanding principal amount of the Senior Notes, as the
case may be, could accelerate the maturity of the Senior Notes. Such
acceleration would also result in defaults under indebtedness which is cross-
defaulted or cross-accelerated with the Senior Note Indenture such as the
Midlantic Term Loan.
Risks Inherent in an International Marketing Strategy
The Partnership has recently implemented an aggressive overseas marketing
plan designed to broaden its patron base by seeking to attract "high rollers",
patrons who tend to wager large sums of money. The potential benefit derived
from these patrons may not outweigh the high costs associated with attracting
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such players. In addition, the large sums of money wagered by "high rollers" may
result in substantial gains or losses by individual patrons, which could
increase the volatility of Trump's Castle's results of operations and thus
increase the Partnership's need for liquidity. The collection of the
Partnership's receivables from international customers could be adversely
affected by future business or economic trends or significant events in the
countries in which such customers reside. There can be no assurance that
operating cash flows and results of operations will not be adversely impacted by
the Partnership's inability to collect receivables from high-level- wagerer
customers. In addition, gaming debts may not be legally enforced in certain
foreign jurisdictions or in certain jurisdictions within the United States on
grounds that they are against public policy.
The Conflicting Interests Of Certain Officers And Directors Of
The Partnership And Its Affiliates
Trump is the beneficial owner of Trump Plaza and a 50% beneficial owner of
the Taj Mahal and is the sole owner of Trump Plaza Management Corp. ("TPM"), an
entity that provides management services to Trump Plaza. In addition, Trump has
a personal services agreement with the partnership that owns the Taj Mahal
("TTMA") pursuant to which he receives substantial compensation based, in part,
on the financial results of the Taj Mahal. In April 1994, TTMA and certain
affiliated entities filed a registration statement with the SEC relative to a
proposed recapitalization which, if consummated, would result in Trump being the
100% beneficial owner of the Taj Mahal. Trump could under certain circumstances
have an incentive to operate the Other Trump Casinos to the competitive
detriment of the Partnership. However, the Services Agreement entered into
between the Partnership and TC/GP provides that Trump and his affiliates will
not engage in any activity, transaction or action which would result in the
Other Trump Casinos realizing a competitive advantage over Trump's Castle. The
Other Trump Casinos compete directly with each other and with other Atlantic
City casino hotels, including Trump's Castle. Nicholas L. Ribis, the Chief
Executive Officer of the Partnership, is also the chief executive officer of the
partnerships that own the Other Trump Casinos, and Messrs. Ernest E. East and
John P. Burke, officers of the Partnership, are also executive officers of the
partnerships that own the Other Trump Casinos. In addition, Messrs. Trump,
Ribis, East and Burke serve on the governing bodies of the partnerships that own
the Other Trump Casinos. As a result of Trump's interests in three competing
Atlantic City casinos, the common chief executive officer, and other common
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officers, a conflict of interest may be deemed to exist by reason of such
persons' access to information and business opportunities possibly useful to any
or all of such casinos. Although no specific procedures have been devised for
resolving conflicts of interest confronting, or which may confront, Trump, such
persons and the Other Trump Casinos, Messrs. Trump, Ribis, East and Burke do not
engage in any activity which they reasonably expect will harm Trump's Castle or
is otherwise inconsistent with their fiduciary obligations to the Partnership.
As described under "RISK FACTORS - Control and Involvement of Trump," Trump
is subject to certain loan agreements which contain covenants which relate to
the operations of his affiliates, including the Partnership. Such covenants are
generally more restrictive than those contained in the Senior Note Indenture.
The Senior Note Indenture does not restrict the ability of Trump to engage
in new or competing ventures, including gaming ventures located elsewhere in
Atlantic City. An entity controlled by Trump has entered into a letter of intent
relating to a proposed lease for a dockside site in Gulfport, Mississippi, which
site may be used to develop gaming facilities, and Trump is pursuing other
potential gaming ventures at several locations throughout the United States,
including locations that could compete with the operations of the Partnership.
Control And Involvement Of Trump
Trump is the 100% beneficial owner of each of Funding and the Partnership
(subject to the Litigation Warrants). The Partnership believes that the
involvement of Trump in the affairs of Trump's Castle is one of several factors
affecting the success of Trump's Castle. Trump presently participates in the
management of Trump's Castle through his position as Chairman of the Board of
Partner Representatives of the Partnership. In addition, the Partnership and
TC/GP have entered into a services agreement for the provision of certain
services by TC/GP to Trump's Castle. See "CERTAIN TRANSACTIONS - Services
Agreement" and "DESCRIPTION OF THE SERVICES AGREEMENT."
Trump has entered into an Amended and Restated Put Agreement with
Midlantic, pursuant to which he is required to purchase from Midlantic all of
its right, title and interest in the Midlantic Term Loan, upon the occurrence of
certain events. The purchase price payable by Trump would be equal to the then
outstanding principal amount of the Midlantic Term Loan and all accrued but
unpaid interest thereon, together with certain fees and expenses of Midlantic.
See "THE MIDLANTIC TERM LOAN - Put Agreement."
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Although Trump has no obligation to contribute funds to the Partnership,
the Partnership believes that Trump's financial condition and general business
success and the public's perception of such success may be relevant to the
success of Trump's Castle due, in part, to the marquee value of the "Trump"
name. Under certain circumstances, TC/GP would have the option to terminate the
Services Agreement, which action could be detrimental to the Partnership. Trump
is engaged through various enterprises in a wide range of business activities.
During 1989 and 1990, certain of Trump's businesses, including businesses for
which Trump supplied personal guarantees, experienced financial difficulties
that necessitated a comprehensive financial restructuring of certain of his
properties and holdings, including Funding and the Partnership, and his personal
indebtedness. By 1990, the aggregate amount of Trump's personal indebtedness and
guarantees to financial institutions was approximately $950 million. In August
1990, Trump concluded a financial restructuring of his personal and other
indebtedness to such financial institutions. Under the terms of such restruc-
turing, the maturity dates of the various loans were extended, interest payments
were deferred (with such deferred interest being secured by liens on
substantially all of Trump's assets) and the lenders agreed not to exercise
remedies against Trump personally in respect of such loans until June 30, 1995,
subject to earlier termination upon the occurrence of certain defaults,
including in particular a personal bankruptcy of Trump. As part of the
restructuring, certain of the lenders advanced funds to Trump for working
capital purposes under a new credit agreement (the "Trump Credit Agreement").
Under the terms of the Trump Credit Agreement and certain other agreements under
which Trump is obligated, Trump is, and will continue to be, subject to certain
restrictive covenants which relate to the operations of his affiliates,
including the Partnership. Such covenants prohibit the incurrence by the
Partnership of additional indebtedness, with certain limited exceptions, and
severely restrict affiliate transactions.
Since 1990, Trump has engaged in a series of transactions designed to
reduce his personal indebtedness. Such transactions generally have involved
transfers or planned transfers of specific properties or equity interests in
various operating companies owned by Trump to lenders in exchange for agreements
to forbear or in one instance, subject to certain conditions, to enter into an
agreement to forbear (collectively, the "forbearance agreements") from asserting
against Trump claims in respect of related loans either totally or in excess of
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certain reduced amounts. Under the forbearance agreements, the obligation to
forbear from asserting claims may be terminated if certain events occur
including, without limitation, a personal bankruptcy of Trump or a finding that
certain transfers of assets to, or the granting of certain liens in favor of,
certain lenders constituted a fraudulent transfer. Transactions involving the
former "Trump Shuttle," The Plaza Hotel in New York City (the "Plaza Hotel"),
Trump's interest in Alexander's Inc. and various real estate assets owned by
Trump have been consummated. The aggregate principal amount of personal
indebtedness associated with such loans is approximately $490 million, and the
reduced amount due with respect thereto (most of which must be satisfied by June
30, 1995) is $80 million. In addition, Trump is seeking to enter into additional
restructuring agreements relating to his interest in a New York hotel property.
Under the terms of such agreements, if executed, the lenders would, subject to
the satisfaction of certain conditions, agree to forbear from asserting personal
claims in excess of $35 million (subject to increase under certain
circumstances) in respect of approximately $140 million in principal amount of
personal indebtedness relating to, or secured by, Trump's interest in such
property or otherwise eliminate claims in excess of a reduced amount. The
applicable lenders are under no obligation to enter into any such agreements.
Even if entered into, consummation of those agreements would be subject to
satisfaction of a number of conditions, including the negotiation of business
arrangements among such lenders and, depending upon various restructuring
alternatives, with a non-affiliated third party holding an equity interest in
the property, with whom litigation relating to such property presently exists.
Such conditions may not be satisfied, and, accordingly, those agreements, if
entered into, may not become effective. In such case, the reductions
contemplated with respect to those loans would not occur. If these agreements
are not entered into, Trump's interest in such property could be subject to
foreclosure (which could occur at any time) resulting in defaults under various
material loan agreements to which Trump is a party. Trump has also entered into
an agreement with one lender to transfer, or agree to transfer, certain other
New York real estate assets to (or as directed by) such lender in exchange for a
forbearance agreement with respect to other loans in the aggregate principal
amount of approximately $28 million.
In addition, certain loans secured by significant New York real estate
assets owned by Trump in an aggregate principal amount of approximately $300
million became due in May and June of 1993. One such loan was restructured in
June 1993 to provide for a forbearance agreement for a maximum term of three
years, with the possibility of earlier termination of such forbearance
agreement, and Trump has had discussions with the lenders regarding the
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extension and restructuring of the other such loans. The failure to achieve such
restructuring or the termination of the forbearance agreement could have a
material adverse effect on Trump and could result in defaults under various
material loan agreements to which Trump is a party and which are secured by
substantially all of his assets. No assurance can be given that such
restructurings will occur or that the forbearance agreement described above will
not be terminated.
Trump has a substantial amount of personal indebtedness, most of which will
become due in June 1995. The total amount of such indebtedness will depend on a
number of factors. Assuming no events which terminate the "forbearance
agreements" described above occur, the aggregate amount of remaining personal
indebtedness to financial institutions will be approximately $340 million (plus
accrued interest), or if the New York hotel restructuring agreements referred to
above are entered into, $235 million. No assurance can be given that such
restructuring agreements will be entered into or that any such forbearance
termination events will not occur. In either such event, the amount due would be
substantially greater.
In addition, the agreements with respect to Trump's indebtedness generally
contain comprehensive covenants and events of default. If such covenants are
breached or events of default otherwise occur, which could occur at any time,
such indebtedness could be subject to acceleration by the applicable lenders.
Any such acceleration could have a material adverse effect on Trump.
Furthermore, a substantial portion of Trump's assets consists of real property
or interests in regulated enterprises, which may affect the liquidity of such
assets. Trump has advised the Part- nership that he is actively pursuing all
reasonable means of pro- viding for the repayment or rescheduling of such
indebtedness.
There can be no assurance that Trump will be successful in repaying or
rescheduling his indebtedness, which events may be beyond the control of Trump.
Any failure by Trump to repay or reschedule his indebtedness or to otherwise
maintain financial stability may have a material adverse effect on the
Partnership and, under such circumstances, could adversely affect the
Partnership's ability to provide for the payment of interest or principal on the
Senior Notes or to refinance the Senior Notes at maturity thereof. Moreover, if
the CCC at any time finds Trump to be financially unstable under the Casino
Control Act, the CCC is authorized to take any necessary public action to
protect the public interest, including the suspension or revocation of the
casino license of the Partnership. See "REGULATORY MATTERS."
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Trump is not a party to the Senior Note Indenture and is not restricted by
such document from incurring additional indebtedness.
Reliance On Key Personnel
The ability of the Partnership to operate successfully is dependent, in
part, upon the continued services of certain of its employees, especially
Nicholas L. Ribis, its Chief Executive Officer, and Roger P. Wagner its
President and Chief Operating Officer, both of whom have employment agreements
with the Partnership. Mr. Ribis' employment agreement expires in September 1996
(subject to earlier termination upon the occurrence of certain events), and Mr.
Wagner's employment agreement expires on January 16, 1997. There can be no
assurance that such employment agreements will be renewed upon their expiration
or that suitable replacements could be found in the event of the termination of
their employment. See "MANAGEMENT."
Strict Regulation Of The Partnership By The CCC
The ownership and operation of casino hotel facilities and related
businesses in Atlantic City are subject to strict state regulation under the
Casino Control Act. The Partnership and its various officers have received the
licenses, permits and authorizations required to operate Trump's Castle. Failure
to maintain or obtain a casino license would have a material adverse effect on
Funding and the Partnership. On April 19, 1993, the CCC renewed the casino
license of the Partnership through May 31, 1995. No assurance can be given as to
what license conditions, if any, may be imposed by the CCC in connection with
any future renewals of the Partnership's casino license. See "REGULATORY
MATTERS."
Potential Disqualification Of Holders Of The Senior Notes By
The CCC
The Casino Control Act imposes substantial restrictions on the ownership of
securities of Funding. See "REGULATORY MATTERS." A holder of Senior Notes may be
required to meet the qualification provisions of the Casino Control Act relating
to financial sources and/or security holders. Each Institutional Investor (as
defined) seeking a waiver of qualification must execute a certification which
will be provided to the Division of Gaming Enforcement (the "Division") and the
CCC. The Senior Note Indenture provides that if the CCC requires a holder of
securities (whether the record or beneficial owner) to qualify under the Casino
Control Act and such holder does not so qualify, then such holder must dispose
of his interest in the Senior Notes within 30 days after receipt by Funding of
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notice of such finding that such holder does not so qualify, or Funding may
redeem such Senior Notes at the lower of outstanding principal amount or Fair
Market Value (as defined) of such Senior Notes.
The Effect Of Currency Transaction Reporting Requirements On The
Partnership's Business
The Partnership is subject to United States Department of the Treasury
regulations which require the reporting of transactions in currency involving
more than $10,000 per patron per gaming day. See "REGULATORY MATTERS - Other
Laws and Regulations." The Department of the Treasury has adopted further
regulations, the effectiveness of which has been suspended until December 1994,
which will require the Partnership, among other things, to keep records of the
name, permanent address and taxpayer identification number (or in the case of a
nonresident alien, such person's passport number) of any person engaging in a
currency transaction in excess of $3,000. The Partnership is unable to predict
what effect, if any, these new reporting obligations will have on the gaming
practices of certain of its patrons.
Trading Markets; Potential Volatility Of Market Prices
There is no public market for the Senior Notes and Funding does not intend
to apply for listing of the Senior Notes on any national securities exchange or
for quotation of the Senior Notes through NASDAQ. No assurance can be given,
however, as to the liquidity of the trading market for the Senior Notes or that
an active public market for the Senior Notes will develop. If an active public
market does not develop, the market price and liquidity of the Senior Notes may
be adversely affected.
The market for "high yield" securities, such as the Senior Notes, is
volatile and unpredictable, which may have an adverse effect on the liquidity
of, and prices for, such securities. In addition, factors such as quarterly
fluctuations in the Partnership's financial and operating results, announcements
by the Partnership or others, and developments affecting the Partnership, its
customers or the gaming industry generally, could cause the market price of the
Senior Notes to fluctuate substantially.
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FUNDING
Trump's Castle Funding, Inc. was incorporated under the laws of the State
of New Jersey in May 1985 and is wholly-owned by the Partnership. Funding was
formed to serve as a financing corporation to raise funds through the issuance
of its securities, as nominee for the Partnership, and to lend the proceeds
thereof to the Partnership in exchange for a promissory note. Funding may not
engage in any other business activities (including having any subsidiaries).
Funding has its principal executive offices at Brigantine Boulevard and
Huron Avenue, Atlantic City, New Jersey 08401, and its telephone number is (609)
441-8640.
THE PARTNERSHIP
Trump's Castle Associates was originally formed as a limited partnership
under the laws of the State of New Jersey on May 28, 1985. The Partnership was
formed to acquire, complete the construction of and operate Trump's Castle and
its ancillary properties.
TC/GP has a 37.5% interest in the Partnership, Trump has a 61.5% interest
in the Partnership, TCHI has a 1% interest in the Partnership and Trump is the
beneficial owner of 100% of the common equity interest in the Partnership,
subject to the right of the plaintiffs in certain litigation to be issued
Litigation Warrants representing the right to acquire an indirect beneficial
interest in 0.5% of the common equity interest in the Partnership. See "BUSINESS
- -- Legal Proceedings."
The Partnership has its principal executive offices at Brigantine Boulevard
and Huron Avenue, Atlantic City, New Jersey 08401, and its telephone number is
(609) 441-8640.
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THE EXCHANGE OFFER
Background of the Exchange Offer
The Series A Notes were issued as part of the Recapitalization of the
Partnership and its affiliated entities, which also included the
Recapitalization's Exchange Offer and the Merger. The Series A Notes were sold
by Funding and the Partnership to the Senior Note Purchasers on December 28,
1993 pursuant to the Purchase Agreement. Funding, the Partnership and the Senior
Note Purchasers also entered into the Registration Rights Agreement, pursuant to
which Funding and the Partnership agreed, with respect to the Senior Notes, (i)
to cause to be filed, on or prior to March 28, 1994, a registration statement
with the SEC under the Securities Act covering the Exchange Offer and (ii) to
use their reasonable best efforts to cause (A) such registration statement to be
declared effective on or prior to June 24, 1994 and (B) the Series B Notes to be
delivered to the Depositary for delivery to all holders who have tendered
Registrable Series A Notes pursuant to the Exchange Offer.
Terms of the Exchange Offer
Funding hereby offers, upon the terms and subject to the conditions set
forth herein, to exchange $1,000 principal amount of Series B Notes for each
$1,000 principal amount of outstanding Series A Notes held by Eligible Holders.
For purposes of the Exchange Offer, "Eligible Holder" means the registered owner
of any Series A Notes that remain Registrable Series A Notes (as defined), as of
the Record Date (as defined below). For purposes of the Exchange Offer,
"Registrable Series A Notes" is defined in the Registration Rights Agreement and
refers to the Series A Notes upon original issuance thereof, and at all times
subsequent thereto, until in the case of any such Series A Note, (i) a
registration statement with respect to such Series A Note has been declared
effective under the Securities Act and such Series A Note has been disposed of
in accordance with such registration statement, (ii) such Series A Note is
distributed to the public pursuant to Rule 144 (or any successor provisions)
promulgated under the Securities Act, (iii) such Series A Note has been
otherwise transferred and new certificates for such Series A Note not bearing a
legend restricting further transfer shall have been delivered by Funding, or
(iv) such Series A Note ceases to be outstanding.
Funding will accept for exchange any and all Series A Notes that are
validly tendered on or prior to 11:00 a.m., Minneapolis-St. Paul time, on the
Expiration Date. Tenders of Series A Notes may be withdrawn at any time prior to
11:00 a.m., Minneapolis-St. Paul time, on the Expiration Date. The Exchange
Offer is not conditioned upon any minimum principal amount of Series A Notes
being tendered for exchange. However, the Exchange Offer is subject to certain
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customary conditions which may be waived by Funding and the Partnership and to
the terms of the Registration Rights Agreement. See "THE EXCHANGE OFFER --
Conditions of the Exchange Offer."
Series A Notes may be tendered only in multiples of $1,000. Subject to the
foregoing, Eligible Holders may tender less than the aggregate principal amount
represented by the Series A Notes held by them, provided that they appropriately
indicate this fact on the Letter of Transmittal accompanying tendered Series A
Notes (or so indicate pursuant to the procedures for book-entry transfer).
As of the date of this Prospectus, $27 million aggregate principal amount
of the Series A Notes were outstanding, the maximum amount authorized by the
Senior Note Indenture. As of the Record Date, there was one registered holder of
the Series A Notes. Solely for reasons of administration (and for no other
purpose), Funding has fixed the close of business on April 8, 1994, as the
record date (the "Record Date") for purposes of determining the persons to whom
this Prospectus and the Letter of Transmittal will be mailed initially. Only an
Eligible Holder of the Series A Notes (or such Eligible Holders' legal
representative or attorney-in-fact) may participate in the Exchange Offer. There
will be no fixed record date for determining Eligible Holders of Series A Notes
entitled to participate in the Exchange Offer.
Funding shall be deemed to have accepted validly tendered Series A Notes
when, as and if Funding has given oral or written notice thereof to the
Depositary. The Depositary will act as agent for the tendering Eligible Holders
of Series A Notes and for the purposes of receiving Series B Notes from Funding.
Termination of Certain Rights
Pursuant to the Registration Rights Agreement and the Series A Notes,
holders of the Series A Notes (i) have rights to receive Liquidated Damages and
(ii) have certain rights intended for the holders of unregistered securities.
These rights will terminate upon the consummation of the Exchange Offer.
The Registration Rights Agreement provides that if Funding and the
Partnership fail to fulfill their obligations under the Registration Rights
Agreement, then Funding and the Partnership, jointly and severally, will pay, in
addition to amounts otherwise due under the Senior Note Indenture and the
Registrable Series A Notes, Liquidated Damages to each holder of Registrable
Series A Notes. See "DESCRIPTION OF THE SENIOR NOTES -- Registration Rights."
Upon consummation of the Exchange Offer, the right of holders of the Registrable
Series A Notes to receive Liquidated Damages will terminate.
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The Registration Rights Agreement also provides, with respect to the Senior
Notes, that Funding and the Partnership will (i) cause to be filed, on or prior
to March 28, 1994, a registration statement under the Securities Act covering
the Exchange Offer and (ii) use their reasonable best efforts to cause (A) such
registration statement to be declared effective by the SEC on or prior to June
24, 1994, and (B) Series B Notes to be delivered to the Depositary for delivery
to all holders who have tendered Registrable Series A Notes pursuant to the
Exchange Offer. The Exchange Offer is intended to satisfy Funding's and the
Partnership's exchange obligations under the Registration Rights Agreement.
Under certain circumstances, if a determination is made that the Exchange Offer
cannot be consummated, the Registration Rights Agreement provides that Funding
and the Partnership will file a shelf registration statement with the SEC and
use their best efforts to cause such shelf registration statement to be declared
effective under the Securities Act on or prior to June 24, 1994 and to keep the
shelf registration statement effective for a period of two years from the date
upon which the shelf registration is declared effective. These registration
rights, as well as certain related rights provided in the Registration Rights
Agreement, will terminate upon consummation of the Exchange Offer.
Limitation on Resale
If an Eligible Holder is participating in the Exchange Offer for the
purpose of distributing the Series B Notes to be acquired in the Exchange Offer,
such Eligible Holder must comply with registration and prospectus delivery
requirements of the Securities Act in connection with a secondary resale
transaction.
Procedure for Tendering Series A Notes
To tender Series A Notes validly pursuant to the Exchange Offer, a holder
must cause a properly completed and duly executed Letter of Transmittal (or
facsimile thereof), with any required signature guarantees and any other
required documents, to be received by the Depositary at one of its addresses set
forth on the back cover of this Prospectus and must either cause certificates
for tendered Series A Notes to be received by the Depositary at one of such
addresses or cause such Series A Notes to be delivered pursuant to the
procedures for book-entry delivery set forth below (and a confirmation of
receipt of such delivery to be received by the Depositary), in each case before
the Expiration Date.
Signatures on all Letters of Transmittal must be guaranteed by a firm which
is a member of a national securities exchange or of the National Association of
Securities Dealers, Inc. (the "NASD") or by a commercial bank or trust company
having an office or correspondent in the United States (collectively, "Eligible
Institutions"), except in cases where Series A Notes are tendered (i) by a
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registered holder of Series A Notes who has not completed the box entitled
"Special Delivery Instructions" on the Letter of Transmittal or (ii) for the
account of an Eligible Institution. See Instruction 1 of the Letter of
Transmittal. If the certificates are registered in the name of a person other
than the signer of the Letter of Transmittal, or if Series B Notes are to be
delivered to a person other than the registered owner of the certificates
surrendered, then the certificates must be endorsed or accompanied by
appropriate bond powers, in either case signed exactly as the name or names of
the registered owner or owners appear on the certificates, with the signature(s)
on the certificates or bond powers guaranteed as aforesaid.
Any beneficial owner whose Series A Notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender Series A Notes should contact such holder promptly and instruct such
holder to tender Series A Notes on such beneficial owner's behalf. If such
beneficial owner wishes to tender such Series A Notes himself, such beneficial
owner must, prior to completing and executing the Letter of Transmittal and
delivering such Series A Notes, either make appropriate arrangements to register
ownership of the Series A Notes in such beneficial owner's name or follow the
procedures described in the immediately preceding paragraph. The transfer of
record ownership may take considerable time.
The method of delivery of all required documents is at the election and
risk of each holder. If delivery is by mail, registered mail with return receipt
requested, properly insured, is recommended. Sufficient time should be allowed
to assure timely delivery.
Unless an exemption applies under the applicable law and regulations
concerning "backup withholding" of federal income tax, the Depositary will be
required to withhold, and will withhold, 31% of the gross proceeds otherwise
payable to a holder pursuant to the Exchange Offer if the holder does not
provide his taxpayer identification number (social security number or employer
identification number) and certify that such number is correct. Each tendering
holder should complete and sign the main signature form and the Substitute Form
W-9 included as part of the Letter of Transmittal, so as to provide the
information and certification necessary to avoid backup withholding, unless an
applicable exemption exists and is proved in a manner satisfactory to Funding
and the Depositary.
In all cases, delivery of the Series B Notes for Series A Notes tendered
and accepted for exchange pursuant to the Exchange Offer will be made only after
timely receipt by the Depositary of certificates for such Series A Notes, a
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properly completed and duly executed Letter of Transmittal (or facsimile
thereof) and any other documents required by the Letter of Transmittal.
If a holder desires to tender Series A Notes pursuant to the Exchange
Offer, but the certificates evidencing such Series A Notes have been mutilated,
lost, stolen or destroyed, such holder should write to or telephone Patricia M.
Wild, Esq., Senior Vice President and General Counsel of the Partnership, at the
following address about procedures for obtaining replacement certificates for
such Series A Notes:
Trump's Castle Funding, Inc.
c/o Trump's Castle Casino Resort
Brigantine Boulevard and Huron Avenue
Atlantic City, New Jersey 08401
(609) 441-8640
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance for payment of any tender of Series A Notes will be
determined by Funding and the Partnership, in their sole discretion, which
determination shall be final and binding. Alternative, conditional or contingent
tenders will not be considered valid. Funding and the Partnership reserve the
absolute right to reject any and all tenders determined by them not to be in
proper form or which may, in the opinion of their counsel, be unlawful. Funding
and the Partnership also reserve the absolute right to waive any of the
conditions of the Exchange Offer or any defect or irregularity in the tender of
any Series A Notes of any particular holder whether or not similar defects or
irregularities are waived in the case of other holders. None of Funding, the
Partnership, the Depositary or any other person will be under any duty to give
notification of any defects or irregularities in tenders or shall incur any
liability for failure to give any such notification. Funding's and the
Partnership's interpretation of the terms and conditions of the Exchange Offer
(including the Letter of Transmittal and the instructions thereto) will be final
and binding.
Acceptance and Delivery of Series B Notes
Upon the terms and subject to the conditions of the Exchange Offer, Funding
will accept for exchange and will exchange Series A Notes validly tendered on or
prior to the Expiration Date pursuant to the Exchange Offer as soon as
practicable after the Expiration Date.
For purposes of the Exchange Offer, Funding will be deemed to have accepted
for exchange tendered Series A Notes properly tendered to the Depositary and not
withdrawn, if, as and when Funding gives oral or written notice to the
Depositary of its acceptance for exchange of the tenders of such Series A Notes.
Upon such acceptance, the Series B Notes will be deemed to have been issued as
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of the date of their authentication. Upon the terms and subject to the
conditions of the Exchange Offer, delivery of the Series B Notes will be made by
the Depositary to any tendering holder of Series A Notes whose Series A Notes
are accepted for exchange as soon as practicable after receipt of such notice.
The Depositary will act as agent for tendering holders of Series A Notes for the
purpose of receiving the Series B Notes from Funding and transmitting such
Series B Notes to tendering holders of Series A Notes whose Series A Notes are
accepted for exchange.
If any tendered Series A Notes are not accepted for exchange pursuant to
the terms and conditions of the Exchange Offer for any reason or are not
exchanged because of invalid tender, or if certificates are submitted for more
Series A Notes than are tendered, certificates for such unexchanged Series A
Notes will be returned, without expense to the tendering holder, as soon as
practicable following expiration or termination of the Exchange Offer.
If Funding is delayed in its acceptance for exchange of, or in its exchange
for, Series A Notes or is unable to accept for exchange Series A Notes pursuant
to the Exchange Offer for any reason, then, without prejudice to Funding's
rights under the Exchange Offer (but subject to compliance with applicable rules
under the Exchange Act), the Depositary may, nevertheless, on behalf of Funding,
retain tendered Series A Notes, and such Series A Notes may not be withdrawn
except to the extent tendering holders are entitled to withdrawal rights as
described below.
Period for Tendering Series A Notes
Funding and the Partnership expressly reserve the right, at any time and
from time to time, to extend the period of time during which the Exchange Offer
is open by giving oral or written notice of such extension to the Depositary.
There can be no assurance that Funding and the Partnership will exercise such
rights to extend the Exchange Offer. Funding and the Partnership expressly
reserve the right (i) to amend the Exchange Offer or to delay acceptance for
exchange of any Series A Notes, or to terminate the Exchange Offer by giving
notice of such termination to the Depositary, and not to accept for exchange any
Series A Notes not theretofore accepted for exchange, upon the occurrence of any
of the conditions specified herein and (ii) at any time and from time to time,
to amend the Exchange Offer in any respect, so long as such amendment does not
violate the terms of the Registration Rights Agreement. Any such extension,
termination or amendment will be followed as promptly as practicable by public
announcement thereof, such announcement in the case of an extension to be issued
not later than 9:00 a.m., New York City time, on the next business day after the
previously scheduled Expiration Date. The manner in which Funding or the
47
<PAGE>
Partnership will make such public announcement may, if appropriate, be limited
to a release to the Dow Jones News Service. The reservation by Funding and the
Partnership of the right to delay acceptance for exchange of any Series A Notes
is subject to the provisions of applicable law, which require that Funding pay
the consideration offered or return the Series A Notes deposited by or on behalf
of holders promptly after termination or withdrawal of the Exchange Offer. For
purposes of the Exchange Offer, a "business day" means any day other than a
Saturday, Sunday or Federal holiday and consists of the time period from 12:01
a.m. through 12:00 midnight, New York City time.
If Funding or the Partnership waive any material condition to the Exchange
Offer, or amend the Exchange Offer in any other material respect, and if at the
time that notice of such waiver or amendment is first published, sent or given
to holders of Series A Notes in the manner specified above, the Exchange Offer
is scheduled to expire at any time earlier than the expiration of a period
ending on the fifth business day from, and including, the date that such notice
is first so published, sent or given, then the Exchange Offer will be extended
until the expiration of such period of five business days.
This Prospectus and the related Letter of Transmittal and other relevant
materials will be mailed by Funding to record holders of Series A Notes and will
be furnished to brokers, banks and similar persons whose names, or the names of
whose nominees, appear on the lists of holders or, if applicable, who are listed
as participants in a clearing agency's security position listing, for subsequent
transmittal to beneficial owners of Series A Notes.
Withdrawal Rights
Tenders of Series A Notes may be withdrawn by delivery of a written notice
to the Depositary, at its address set forth on the back page of this Prospectus,
at any time prior to 11:00 a.m., Minneapolis-St. Paul time, on the Expiration
Date. To be effective, a written, telegraphic, telex or facsimile notice of
withdrawal must be timely received by the Depositary at one of its addresses set
forth on the back cover of this Prospectus. Any notice of withdrawal must
specify the name of the person having tendered the Series A Notes to be
withdrawn, the number of Series A Notes to be withdrawn and the name of the
registered holder, if different from the name of the person who tendered the
Series A Notes. If certificates for Series A Notes have been delivered or
otherwise identified to the Depositary, then, before the physical release of
such certificates, the serial numbers shown on such certificates must be
submitted to the Depositary and the signatures on the notice of withdrawal must
48
<PAGE>
be guaranteed by an Eligible Institution, unless such Series A Notes have been
tendered for the account of an Eligible Institution.
Withdrawal of tenders of Series A Notes may not be rescinded, and any
Series A Notes properly withdrawn will be deemed not to be validly tendered for
purposes of the Exchange Offer. Withdrawn Series A Notes may, however, be
retendered by repeating one of the procedures described herein at any time
before the Expiration Date.
All questions as to the form and validity (including time of receipt) of
any notice of withdrawal will be determined by Funding and the Partnership, in
their sole discretion, which determination will be final and binding. Neither
Funding, the Partnership nor the Depositary will be under any duty to give
notification of any defects or irregularities in any notice of withdrawal or to
incur any liability for failure to give any such notification.
Conditions of the Exchange Offer
Notwithstanding any other provision of the Exchange Offer, Funding will not
be required to accept for exchange or may delay the acceptance for exchange of
tendered Series A Notes, unless each of the following conditions have been met
to the satisfaction of Funding and the Partnership:
(a) there shall not have been instituted or threatened any action or
proceeding before any court or governmental agency or other regulatory or
administrative authority (i) challenging or seeking to make illegal, to delay or
otherwise directly or indirectly to restrain or prohibit the Exchange Offer,
(ii) otherwise directly or indirectly relating to the Exchange Offer, or which
otherwise, in the judgment of Funding or the Partnership, might materially
adversely affect Funding, the Partnership or the value of the Series A Notes, or
(iii) in the judgment of Funding or the Partnership, materially adversely
affecting the business, properties, assets, liabilities, capitalization,
shareholders' equity, condition (financial or other), operations, licenses or
franchises, results of operations or prospects of Funding or the Partnership;
(b) no action shall have been taken and no statute, rule, regulation, or
order shall have been proposed, enacted, enforced, or deemed to be applicable to
the Exchange Offer, by any government or governmental agency or other regulatory
or administrative authority, domestic or foreign, which, in the judgment of
Funding or the Partnership, would or might prohibit, restrict, or delay
consummation of the Exchange Offer or materially impair the contemplated
benefits of the Exchange Offer to Funding and the Partnership;
49
<PAGE>
(c) there shall not have occurred (i) any general suspension of trading in,
or general limitation on prices for securities on the American Stock Exchange,
(ii) a declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States or any limitation by any governmental
agency or authority that adversely affects the extension of credit to Funding or
the Partnership, or (iii) a commencement of a war, armed hostilities or other
similar international calamity directly or indirectly involving the United
States; or, in the case any of the foregoing existing at the time of
commencement of the Exchange Offer, a material acceleration or worsening
thereof; and
(d) no material adverse change shall have occurred or be threatened in the
business, condition (financial or otherwise), operations, stock ownership or
prospects of Funding or the Partnership.
The foregoing conditions are for the sole benefit of Funding and the
Partnership and may be asserted by them with respect to all or any portion of
the Exchange Offer regardless of the circumstances (including any action or
inaction by Funding or the Partnership) giving rise to such condition or may be
waived by Funding and the Partnership in whole or in part at any time or from
time to time in their sole discretion. The failure by Funding or the Partnership
at any time to exercise any of the foregoing rights will not be deemed a waiver
of any such right, and each right will be deemed an ongoing right which may be
asserted at any time or from time to time. In addition, Funding and the
Partnership have reserved the right, notwithstanding the satisfaction of each of
the foregoing conditions, to terminate or amend the Exchange Offer.
Any determination by Funding or the Partnership concerning the fulfillment
or non-fulfillment of any conditions will be final and binding upon all parties.
Depositary
First Bank National Association has been appointed Depositary for the
Exchange Offer. All deliveries and correspondence sent to the Depositary should
be directed to one of the addresses set forth on the back cover of this
Prospectus. Requests for assistance or additional copies of this Prospectus or
the Letter of Transmittal should be directed to the Depositary at the address
and/or phone number set forth on the back cover of this Prospectus.
All deliveries, correspondence and questions sent or presented to the
Depositary relating to the Exchange Offer should be directed to its address or
telephone number set forth on the back cover of this Prospectus.
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<PAGE>
Fees and Expenses
The Partnership will pay the Depositary reasonable and customary fees for
services and will reimburse it for reasonable out-of-pocket expenses in
connection therewith. The Partnership has also agreed to indemnify the
Depositary for certain liabilities, including liabilities under the federal
securities laws.
The cash expenses to be incurred in connection with the Exchange Offer,
including the fees and expenses of the Depositary and printing, accounting,
investment banking and legal fees, will be paid by the Partnership and are
estimated at $150,000.
Appraisal Rights
HOLDERS OF SERIES A NOTES WILL NOT HAVE DISSENTERS' RIGHTS OR APPRAISAL
RIGHTS IN CONNECTION WITH THE EXCHANGE OFFER.
Miscellaneous
The Exchange Offer is not being made to (nor will tenders be accepted from
or on behalf of) holders of Series A Notes in any jurisdiction in which the
making of the Exchange Offer or the acceptance thereof would not be in
compliance with the laws of such jurisdiction. Nevertheless, Funding and the
Partnership may, in their sole discretion, take such action as they may deem
necessary to make the Exchange Offer in any such jurisdiction and extend the
Exchange Offer to holders of Series A Notes in such jurisdiction. In any
jurisdiction the securities laws or blue sky laws of which require the Exchange
Offer to be made by a licensed broker or dealer, the Exchange Offer will be made
on behalf of Funding and the Partnership by brokers or dealers licensed under
the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF FUNDING OR THE PARTNERSHIP NOT CONTAINED IN THIS
PROSPECTUS OR IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
51
<PAGE>
CAPITALIZATION OF REGISTRANTS
The following table sets forth the capitalization of the
Partnership and Funding as of December 31, 1993, which is subsequent to the date
of the Recapitalization. This table should be read in conjunction with
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS," the historical financial statements and the notes thereto appearing
elsewhere in this Prospectus.
TRUMP'S CASTLE ASSOCIATES
December 31, 1993
(dollars in
thousands)
-----------------
Debt:
11-3/4% Mortgage Notes due 2003........................... 202,552(a)
----------
Increasing Rate Subordinated
Pay-in-Kind Notes due 2005............................. 42,242(b)
----------
Midlantic Term Loan........................................ 38,000
11-1/2% Senior Notes....................................... 27,000
----------
Total Debt............................................. 309,794
Total Capital.............................................. 31,678
----------
Total Capitalization................................... $ 341,472
==========
- -------------
(a) Net of unamortized discounts of $39,589, based on 96%
exchange, as of December 31, 1993.
(b) Net of unamortized discounts of $8,256, based on 96%
exchange, as of December 31, 1993.
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<PAGE>
SELECTED FINANCIAL INFORMATION
The following table sets forth historical financial information of the
Partnership and Funding for each of the five years ended December 31, 1993. The
selected financial information of the Partnership and Funding set forth below as
of December 31, and for each of the years ended December 31, has been derived
from the audited consolidated financial statements of the Partnership and
Funding. This information should be read in conjunction with the financial
statements of the Partnership and Funding and related notes included elsewhere
in this Prospectus and in "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS."
53
<PAGE>
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------------------------------------
1989 1990 1991 1992(1) 1993(2)
---- ---- ---- ------- -------
INCOME STATEMENT DATA:
<S> <C> <C> <C> <C> <C>
Gross Revenues $338,508,000 $302,223,000 $247,968,000 $299,306,000 $304,826,000
Less-Promotional Allowances 43,777,000 33,391,000 27,882,000 30,656,000 31,599,000
------------ ------------ ------------ ------------ -----------
Net Revenues 294,731,000 268,832,000 220,086,000 268,650,000 273,227,000
Total Costs and Expenses 260,307,000 267,583,000 222,446,000 260,623,000 245,361,000
------------ ------------ ------------ ------------ -----------
Income (Loss) from 34,424,000 1,249,000 (2,360,000) 8,027,000 27,866,000
Continuing Operations
Interest Income 1,712,000 893,000 505,000 499,000 675,000
Interest Expense (43,300,000) (48,759,000) (48,344,000) (45,360,000) (56,926,000)
Gain on Sinking Fund Payment - 3,136,000 - - -
Extraordinary Item(3) - - - 128,187,000 -
Benefit for State Income Tax 486,000 - - - -
------------ ----------- ------------- ------------ ------------
Net Income (Loss) ($6,678,000) ($43,481,000) ($50,199,000) $91,353,000 ($28,385,000)
============ ============= ============= =========== =============
BALANCE SHEET DATA:
Cash and cash equivalents $14,600,000 $8,046,000 $14,972,000 $23,610,000 $20,439,000
Total assets 439,775,000 408,276,000 391,303,000 379,641,000 375,935,000
Current Liabilities 74,357,000 421,483,000 454,709,000 39,397,000 34,463,000
Total long-term debt(4) 335,144,000 - - 279,445,000 309,794,000
Total capital (deficit) 30,274,000 (13,207,000) (63,406,000) 60,799,000 31,678,000
</TABLE>
Notes: (1) On May 29, 1992, Funding, the Partnership and TCHI consummated the
Plan, which materially affects the
comparability of the information set forth above.
(2) On December 28, 1993, the Partnership and its affiliated entities
consummated the Recapitalization, which materially affects
the comparability of the information set forth above.
(3) The extraordinary gain of $128,187,000, for year ended December 31,
1992 reflects a $96,896,000 accounting adjustment to carry the
Bonds at fair market value based on current rates of interest
at the date of issuance, an $18,000,000 forgiveness of bank
borrowings, $22,805,000 representing discharge of accrued
interest and net of the write-off of $9,514,000 of unamortized Bond
issuance costs.
(4) Long-term debt of $337,649,000 and $340,553,000 as of December 31,
1990 and 1991 had been classified as a current liability.
54
<PAGE>
<TABLE>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
<S> <C> <C> <C> <C>
SELECTED QUARTERLY FINANCIAL DATA:
1993:
Net Revenues 61,522,000 67,866,000 78,361,000 65,478,000
Income (Loss) from Operations 2,350,000 5,204,000 14,445,000 5,867,000
Net Income (Loss) (8,746,000) (5,900,000) 1,864,000 (15,603,000)
1992:
Net Revenues $60,348,000 $65,258,000 $79,215,000 $63,829,000
Income (Loss) from Operations (268,000) (1,446,000) 10,218,000 873,000
Extraordinary Items - 128,187,000 - -
Net Income (Loss) (13,173,000) 115,238,000 (651,000) (10,061,000)
1991:
Net Revenues $50,633,000 $51,887,000 $63,573,000 $53,993,000
Income (Loss) from Operations (2,080,000) (2,177,000) 4,799,000 (2,902,000)
Net Income (Loss) (14,150,000) (14,102,000) (7,186,000) (14,761,000)
</TABLE>
55
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
In 1990, the Partnership began experiencing a liquidity problem that
culminated in the Restructuring, which was consummated on May 29, 1992. Results
of operations of the Partnership through December 31, 1992 were affected by the
Restructuring, which resulted in an extraordinary gain of approximately $128.2
million for the year ended December 31, 1992. See "BUSINESS -- The
Restructuring." The Partnership's business is highly competitive, and any future
expansions by the Mashantucket Pequot Nation or new gaming ventures by other
Native American tribes or other persons in the northeastern or mid-atlantic
region of the United States could have a material adverse effect on the
Partnership's future financial condition and results of operations. See "RISK
FACTORS -- Competition and Industry Rate of Growth" and "BUSINESS --
Competition."
The financial information presented below reflects the results of
operations of the Partnership. Since Funding has no business operations its
results of operations are not discussed below.
Results of Operations for the Years Ended December 31, 1993 and 1992
The Partnership's net revenues (gross revenues less promotional expenses)
for the years ended December 31, 1993 and 1992 totaled approximately $273.2
million and $268.7 million, respectively, representing a $4.5 million (1.7%)
increase. Gaming revenues were approximately $246.4 million for the year ended
December 31, 1993 and $242.0 million for the comparable period in 1992.
Management believes the $4.4 million (1.8%) increase in gaming revenues is
attributable primarily to a continuing emphasis on customer service and a
repositioning by Trump's Castle to expand profitable market segments.
Gaming revenue is comprised of table game win and slot machine win. For the
years ended December 31, 1993 and 1992, slot win at Trump's Castle approximated
$173.0 million and $164.3 million, respectively. Dollars wagered on slot
machines totaled approximately $1,851.4 million and $1,682.9 million for the
years ended December 31, 1993 and 1992, respectively, with a win percentage of
9.3% in 1993 and 9.8% in 1992. The lower slot win percentage (slot win as a
percentage of dollars wagered on slot machines) of 9.3% was largely intentional
and designed by Trump's Castle in order to remain competitive and stimulate
patron play. Slot machine wagerings increased 10.0% and slot win increased 5.3%
for the year ended December 31, 1993 over the comparable period in 1992. For the
years ended December 31, 1993 and 1992, table game win at Trump's Castle
approximated $73.4 million and $77.7 million, respectively. During these
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<PAGE>
periods, dollars wagered on table games totaled approximately $492.1 million
with a win percentage of 14.9% in 1993 and $504.5 million with a win percentage
of 15.4% in 1992.
For the years ended December 31, 1993 and 1992, gaming credit extended to
customers was approximately 28.9% and 28.1% of overall table play, respectively.
At December 31, 1993, gaming receivables amounted to approximately $7.3 million,
net of allowances for doubtful gaming receivables of approximately $1.9 million,
an increase of approximately $2.5 million over gaming receivables of $4.8
million, net of allowances for doubtful gaming receivables of approximately $2.7
million as of December 31, 1992.
Nongaming revenues at Trump's Castle increased approximately $1.2 million
from $57.3 million for the twelve months ended December 31, 1992, to $58.5
million for the comparable period in 1993. This improvement was attributable
primarily to an increase in rooms revenue of $ 1.9 million (10.5%) to
approximately $19.6 million for the year ended December 31, 1993, of which $12.2
million consisted of complimentary rooms. This increase was partially offset by
a decline in food and beverage revenues of $0.8 million (-2.4%), to $30.6
million for the year ended December 31, 1993, of which approximately $15.9
million consisted of complimentary food and beverage. Room occupancy at Trump's
Castle was 88.0% and 85.8%, including occupancy of 55.3% and 50.7% of the
available rooms by patrons receiving complimentary rooms, and the average rate
was approximately $78 and $76 for the years ended December 31, 1993 and 1992,
respectively. The average rate showed modest growth primarily from pricing
casino room promotional allowances at competitive levels in the Atlantic City
market. While the number of customers served in the food and beverage outlets
increased in 1993, food and beverage revenues declined as a result of a decrease
in the average guest check. As a percentage of gaming revenues, promotional
allowances did not vary significantly from year to year.
General and administrative expenses decreased approximately $2.9 million
(5.5%) for the year ended December 31, 1993 as compared to the prior year. While
gaming revenues improved in 1993, gaming costs and expenses decreased for the
year ended December 31, 1993 by $1.0 million (.6%) and all other costs and
expenses excluding Depreciation and Amortization and Reorganization costs
decreased $2.1 million (6.3%). The reduction in operating expenses was due to
previously established cost containment measures including the discontinuance of
certain marketing programs. Such measures were implemented to improve overall
operating efficiencies while remaining competitive and focusing on long range
marketing goals.
For the year ended December 31, 1993, depreciation and amortization
decreased $3.4 million (-17.1%) over the comparable period in 1992, primarily as
a result of the impact of fully depreciated assets as well as the discharge of
the outstanding deferred bond costs which were eliminated as a result of the
Restructuring.
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<PAGE>
Reorganization costs were not incurred in 1993, compared to costs of $6.0
million for the same period in 1992 due to the completion of the Restructuring
in 1992.
Income from Trump's Castle's operations improved $19.8 million (or $13.8
million excluding restructuring costs) as a result of increased revenues,
previously implemented cost containment measures and a continued emphasis on
customer service for the year ended December 31, 1993 as compared to the same
period in 1992.
Interest expense increased for the twelve month period ended December 31,
1993 by approximately $11.6 million. The $11.6 million increase includes
nonrecurring recapitalization costs of approximately $9.0 million.
The Partnership experienced a net loss of $28.4 million for the year ended
December 31, 1993 and a profit of $91.4 million, primarily as a result of the
Restructuring, during the comparable period in 1992.
Results of Operations for the Years Ended December 31, 1992 and 1991
Net revenues (gross revenues, less promotional expenses) for the years
ended December 31, 1992 and 1991 totalled approximately $268.7 million and
$220.1 million, respectively. Gaming revenues were approximately $242.0 million
and $194.8 million in 1992 and 1991, respectively. Management believes the
increase in gaming revenues in 1992 of 24.3% is attributable to improved
customer service and a refocusing of marketing efforts to reduce unprofitable
market segments.
For the years ended December 31, 1992 and 1991, table game win approximated
$77.7 million and $67.6 million and slot win approximated $164.3 million and
$127.2 million, respectively. During these periods, table game win percentage
was 15.4% in 1992 and 15.3% in 1991. Slot win percentage in 1992 was 9.8% and
9.9% in 1991. The lower slot win percentage in 1992 was largely intentional and
designed to remain competitive and stimulate patron play. Slot machine wagerings
increased 31.6% for the twelve months ended December 31, 1992 over the
comparable period in 1991, while slot machine revenue increased 29.2%.
The Partnership elected to discontinue certain Progressive Slot Jackpot
Programs which positively impacted slot revenue by $1.8 million for the year
ended December 31, 1992.
During the year ended December 31, 1992, gaming credit extended to
customers was approximately 28.1% of overall table play. At December 31, 1992,
gaming receivables amounted to approximately $4.8 million, net of allowances for
doubtful gaming receivables of approximately $2.7 million.
58
<PAGE>
Nongaming revenues increased approximately $4.1 million from $53.2 million
in 1991 to $57.3 million in 1992. This improvement was attributable primarily to
an increase in food and beverage revenues of 10.8% in 1992 as compared to 1991
and an increase in revenues from hotel rooms of 7.1% in 1992 as compared to
1991. Revenues from food and beverage sales for this period amounted to
approximately $31.4 million, of which approximately $16.1 million consisted of
complimentary food and beverage. Revenues from hotel rooms during this period
amounted to approximately $17.8 million, of which $11.0 million consisted of
complimentary rooms. Trump's Castle's average hotel occupancy rate, based on
available rooms, was 85.8% in 1992, including occupancy of 50.7% of the
available rooms by patrons receiving complimentary rooms. The average rate
remained constant primarily from pricing casino room promotional allowances at
competitive levels in the Atlantic City market. Food and beverage revenues
improved as the marketing emphasis was shifted from attracting large numbers of
mass market gaming patrons to upscale patrons with higher gaming budgets.
Offsetting the nongaming revenue increase was an increase in promotional
allowances of $2.8 million. Promotional allowances as a percentage of gaming
revenues declined to 12.7% in 1992 from 14.3% in 1991.
Gaming costs and expenses increased for the year ended December 31, 1992 by
$29.6 million (or 24.8%) and all other operating expenses, excluding
depreciation and amortization and restructuring costs, increased $7.3 million
(or 9.5%). The comparatively lower percentage increase in other expenses (as
compared to the percentage increase in gaming expenses) was due to cost
containment measures, including payroll reductions and discontinuance of
unprofitable marketing programs. Such measures were implemented to improve
overall operating efficiencies while remaining competitive and dedicated to long
range marketing goals.
Depreciation and amortization declined $1.6 million (7.5%) due primarily to
the implementation of cost containment measures related to capital expenditures.
Income from operations improved $11.7 million primarily as a result of
revenue improvements and the continuation of cost containment measures.
The Partnership generated a net income of $91.4 million for the year ended
December 31, 1992 and incurred a net loss of $50.2 million for the comparable
period in 1991. The net income of $91.4 million includes an extraordinary gain,
as a result of the Restructuring, of $128.2 million offset by litigation
expenses of $1.4 million.
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<PAGE>
Inflation
There was no significant impact on the Partnership's operations as a result
of inflation during 1993, 1992 and 1991.
Liquidity and Capital Resources
Cash flow from operating activities is the Partnership's principal source
of liquidity. For the year ended December 31, 1993, the Partnership's net cash
flow provided by operating activities before cash debt service obligations was
$24.7 million and cash debt service was $33.8 million, resulting in net cash
used by operating activities of $9.1 million. Cash and cash equivalents of $20.4
million at December 31, 1993 reflects a reduction of $3.2 million from $23.6
million at December 31, 1992. The $3.2 million reduction in cash was due to the
$9.1 million used by operating activities, $10.4 million used to acquire capital
assets and $3.0 million used to purchase CRDA investments ($22.3 million in the
aggregate) offset by a net $19.3 million provided by financing activities.
Upon consummation of the Recapitalization in December 1993, the Partnership
had a working capital surplus of $2.2 million which amount is adequate to meet
its needs for cash. The Partnership believes that this level of working capital
is adequate to sustain existing operations in the foreseeable future.
The effect of the Recapitalization on the Partnership's capital structure
has been to increase the Partnership's weighted average cost of debt from
approximately 9.43% to approximately 11.74%. The increase in the weighted
average cost of debt capital will be offset, at least initially, by an
approximately $23 million decrease in the principal amount of the Partnership's
outstanding indebtedness and by a reduction in the cash required to meet the
Partnership's debt service obligations in the near future. As a result of the
Recapitalization, the Partnership's consolidated indebtedness has been reduced
from $381 million to $357 million. The pay-in-kind feature of the PIK Notes
could, however, result in an additional $130 million of indebtedness over the
next ten years, assuming all accrued interest on the PIK Notes is paid in
additional PIK Notes. It is projected that the Partnership will require
approximately $31.4 million in 1994 and $36.1 million in 1995 in operating cash
flow to meet its debt service obligations. If necessary, the Partnership may
seek to obtain a credit facility of up to $10 million in principal amount to
fund any shortfall in cash available to meet debt service obligations.
Capital expenditures of $11.0 million for the year ended December 31, 1993
increased approximately $2.4 million due primarily to the expansion of the
casino floor and the construction of an electronic graphic sign affixed to the
front of the building. Capital expenditures were $8.6 million for the year ended
December 31, 1992 and included the Partnership's remaining obligation on the
Marina Roadway and the acquisition of new slot machines.
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<PAGE>
The lower level of capital expenditures for 1992 and 1991 of $8.6 million
and $5.1 million, respectively, reflected the Partnership's liquidity problems.
Anticipated capital expenditures for 1994 are approximately $8 million and
include casino floor improvements, renovation of certain hotel rooms and the
purchase of additional slot machines for the casino expansion. Management
believes that currently planned future levels of capital expenditures would be
sufficient to maintain the attractiveness of Trump's Castle and the aesthetics
of its casino, hotel rooms and other public areas. The Partnership intends to
finance its capital expenditures in the future with existing cash on hand and
cash flow from operations.
Management also believes, based upon its current level of operations, that
although the Partnership is highly leveraged, it will continue to have the
ability to pay interest on its indebtedness and to pay other liabilities with
funds from operations for the foreseeable future. However, there can be no
assurance to that effect. In the event that circumstances change, the
Partnership may seek to obtain the Working Capital Facility, although there can
be no assurance that such financing will be available on terms acceptable to the
Partnership. See "RISK FACTORS - High Leverage and Fixed Charges."
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BUSINESS
The Partnership owns and operates Trump's Castle Casino Resort, a luxury
casino hotel located in the Marina District of Atlantic City, New Jersey, seven
miles from New Jersey's Garden State Parkway. Management believes that the
location of Trump's Castle appeals to a major segment of the gaming market that
prefers to be away from the congestion of downtown Atlantic City. Trump's
Castle's proximity to major north/south and east/west expressways makes it
convenient for "drive-in" gaming patrons seeking a destination resort casino.
The State of New Jersey is in the process of completing a $17.5 million
improvement of the highway that connects the New Jersey Garden State Parkway to
the Marina District of Atlantic City.
In addition, the CRDA has provided funding approval for a "Marina District
Beautification Project," pursuant to which Trump's Castle, in conjunction with
Harrah's Casino Hotel, will create an entranceway to the Marina District
consistent with the downtown "tourist corridor" project. Management believes
that the 33 acre beautification project will significantly benefit Trump's
Castle.
Trump's Castle has identified exceptional service as a means of
differentiating itself from and competing with other casinos in Atlantic City.
It has invested significant resources to the development of its 700 managers and
3,000 employees to insure that the corporate culture meets its service
strategies. In addition, Trump's Castle's annual capital expenditures are
designed to insure that room accommodations, restaurants, public areas, the
casino and all other areas of the hotel are maintained in first-class "Four
Star" condition.
Trump Castle's primary marketing strategy focuses on attracting and
retaining middle and upper middle market "drive-in" patrons who visit Atlantic
City frequently and have proven to be the most profitable market segment.
Trump's Castle has also recently implemented an aggressive overseas marketing
plan designed to broaden its patron base by seeking to attract "high roller"
table game patrons who tend to wager large sums of money. Recently, Trump's
Castle has recruited several senior level casino marketing executives who have
extensive experience in overseas marketing and a proven track record of
attracting profitable international "high rollers". This new strategy will also
include promotions and offer special events aimed at the overseas market and is
designed to offset the decline of table games play by the domestic market.
Trump's Castle also intends to capitalize on its first-class facilities,
particularly its luxury suite tower and on-site helipad to attract international
patrons.
The Recapitalization
In December 1993, the Partnership and its affiliated entities consummated
the Recapitalization, which included the Recapitalization's Exchange Offer and
the Merger. Pursuant to the Recapitalization's Exchange Offer, each $1,000
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principal amount of outstanding Bonds was exchanged for $750 principal amount of
Mortgage Notes, $120 principal amount of PIK Notes and a cash payment equal to
$6.19. As a result of the Merger, holders of TC/GP Common Stock received $35
principal amount of PIK Notes for each Share of TC/GP Common Stock.
The Series A Notes were issued as part of the Recapitalization and were
sold by Funding and the Partnership to the Senior Note Purchasers on December
28, 1993 pursuant to the Purchase Agreement. Funding, the Partnership and the
Senior Note Purchasers also entered into the Registration Rights Agreement,
pursuant to which Funding and the Partnership agreed, with respect to the Senior
Notes, (i) to cause to be filed, on or prior to March 28, 1994, a registration
statement with the SEC under the Securities Act covering the Exchange Offer and
(ii) to use their reasonable best efforts to cause (A) such registration
statement to be declared effective on or prior to June 24, 1994 and (B) Series B
Notes to be delivered to the Depositary for delivery to all holders who have
tendered Registrable Series A Notes pursuant to the Exchange Offer.
The net proceeds from the sale of the Series A Notes were used by the
Partnership (i) to fund the redemption of the Bonds not exchanged in the
Recapitalization's Exchange Offer, (ii) to repay in full all principal and
accrued interest outstanding under the Midlantic Grid Note, (iii) to fund any
amounts judicially awarded in respect of statutory appraisal rights arising out
of the Merger (subject to certain limitations) and (iv) to pay transaction costs
incurred in connection with the Recapitalization.
As a result of the Recapitalization, TC/GP has a 37.5% interest in the
Partnership, Trump has a 61.5% interest in the Partnership, TCHI has a 1%
interest in the Partnership and Trump is the beneficial owner of 100% of the
common equity interests in the Partnership (subject to the Litigation Warrants).
Also as a consequence of the Recapitalization, the principal amount of the
Partnership's debt has been reduced, and, initially, the Partnership's cash
charges have been reduced.
The Restructuring
In 1990, the Partnership began experiencing a liquidity problem. The
Partnership believes that its liquidity problem was attributable, in part, to an
overall deterioration in the Atlantic City gaming market, as indicated by
reduced rates of casino revenue growth for the industry for the two prior years,
aggravated by an economic recession in the Northeast and the Persian Gulf War.
Comparatively excessive casino gaming capacity in Atlantic City, due in part to
the opening of the Taj Mahal in April 1990, may also have contributed to the
Partnership's liquidity problem.
As a result of the Partnership's liquidity problem, Funding failed to make
its $41.1 million June 15, 1991 interest and sinking fund payments and its $18.4
million December 15, 1991 interest payments on the Old Bonds. In 1990, the
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Partnership also failed to pay interest installments on certain indebtedness due
Midlantic, although the Partnership subsequently made payment to Midlantic of
all unpaid interest on such debt and met its debt service obligations to
Midlantic.
In order to alleviate its liquidity problem, on May 29, 1992, TCHI, Funding
and the Partnership (collectively, the "Debtors") restructured their
indebtedness through a prepackaged plan of reorganization under chapter 11 of
the Bankruptcy Code. At the time, the Debtors believed that there was no
alternative to their liquidity problem other than filing a petition under the
Bankruptcy Code. The Partnership had been unable to obtain additional financing,
and Funding was restricted from amending the payment terms of the Old Bonds
outside of a case under the Bankruptcy Code without the unanimous consent of the
holders thereof. The purpose of the Restructuring was to improve the
amortization schedule and extend the maturity of the Partnership's indebtedness
by reducing and deferring the Debtor's annual debt service requirements by (1)
lowering the interest rate on the Partnership's and Funding's long term
indebtedness to Midlantic and (2) by issuing the Bonds with an overall lower
rate of interest as compared with Funding's Old Bonds.
Chapter 11 of the Bankruptcy Code is the principal 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 itself, its
creditors and its stockholders. Upon filing of a petition for reorganization
under chapter 11 of the Bankruptcy Code, section 362 of the Bankruptcy Code
generally provides for an automatic stay of all attempts to collect claims or
enforce liens against a debtor or the property of a debtor that arose prior to
the commencement of such debtor's reorganization case or that otherwise
interfere with the debtor's property.
Confirmation of a plan of reorganization is the principal objective of a
chapter 11 case. A plan of reorganization sets forth the means for treating
claims against, and interests in, a debtor. 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 claims or interests are altered. A holder of an impaired
claim or interest is entitled to vote to accept or reject a plan of
reorganization if such claim or interest has been allowed under section 502 of
the Bankruptcy Code. Chapter 11 of the Bankruptcy Code does not require each
holder of a claim or interest to vote in favor of a plan of reorganization in
order for the Bankruptcy Court to confirm the plan. However, the Bankruptcy
Court must find that the plan of reorganization meets a number of statutory
tests before it may confirm, or approve, the plan of reorganization. Many of
these tests are designed to protect the interests of holders of claims or
interests who do not vote to accept the plan of reorganization but who will
nonetheless be bound by the plan's provisions if it is confirmed by the
Bankruptcy Court.
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The Debtors consummated the Restructuring through a so-called "prepackaged"
plan of reorganization in which a plan is drafted and the votes of the holders
of the impaired claims and interests are solicited prior to the filing of a
petition for relief under the Bankruptcy Code (the "Plan"). The primary purpose
of soliciting votes prior to the filing of a petition for relief under the
Bankruptcy Code is to enable the plan to be confirmed as soon as possible,
thereby minimizing the disruption to the operations of the debtor. The Debtors
utilized a prepackaged plan of reorganization due to their belief that the
recovery to holders of Old Bonds would have been less in any other
reorganization than was achieved under the Restructuring. This belief was based
upon (i) the longer period of time that would likely be required to consummate a
non-prepackaged reorganization case, (ii) the comparatively greater negative
public relations impact on the operations of Trump's Castle that could result
from a prolonged reorganization case, (iii) the increased expenses for
professionals and administrative costs normally associated with a
non-prepackaged reorganization case, (iv) the possible loss of suppliers and
patrons, (v) the negative effect on employee morale, (vi) the possibility of
having to renegotiate agreements reached with the holders of certain of the
Partnership's debt and (vii) increased uncertainty regarding the Partnership's
casino license.
Pursuant to the Plan, TC/GP received a 49.995% interest in the Partnership
and became a general partner. TC/GP also received half the equity in TCHI which
held a .01% partnership interest in the Partnership, thereby making TC/GP the
beneficial owner of 50% of the Partnership, the remainder of which was owned by
Trump. As a result of the Recapitalization in 1993, Trump became the beneficial
owner of 100% of the equity in the Partnership (subject to the Litigation
Warrants). See "BUSINESS - The Recapitalization."
Upon consummation of the Plan, each $1,000 principal amount of Funding's
Series A-1 Bonds or $1,000 accreted amount as of December 15, 1990 of Series A-2
Bonds were exchanged for $1,000 in principal amount of Bonds, together with one
share of the Common Stock of TC/GP and certain other payments. As a result of
the Recapitalization's Exchange Offer, all of the Bonds were either exchanged
for Mortgage Notes, PIK Notes, and a cash payment, or redeemed for cash at 75%
of their principal amount. See "BUSINESS - The Recapitalization."
In addition, upon consummation of the Plan, the outstanding principal
amount of the Midlantic Term Loan was reduced from $50 million to $38 million.
The interest rate on the Midlantic Term Loan was changed from 1% above
Midlantic's prime rate of interest to 9% per annum, subject to adjustment. The
outstanding principal amount of a second layer of the Partnership's indebtedness
to Midlantic, the Midlantic Grid Note, was reduced from $13 million to $7
million. The interest rate on the Midlantic Grid Note was changed from
Midlantic's prime rate of interest to 8.5% per annum, subject to adjustment. As
part of the Recapitalization, the Partnership repaid the Midlantic Grid Note
with a portion of the proceeds from the sale of the Series A Notes. See
"BUSINESS - The Recapitalization."
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Casino Hotel Operations
Trump's Castle's casino offers 94 table games (including 13 poker tables)
and 2,098 slot machines. During 1993, Trump's Castle completed a 10,000 square
foot expansion to its casino which has enabled Trump's Castle to increase the
number of slot machines on the casino floor by 300 units, to provide more space
between slot machines, and to place stools in front of additional slot machines,
all of which are designed to provide the gaming patron with a more comfortable
gaming experience. Presently, Trump's Castle is undertaking an approximately
3,000 square foot expansion to accommodate the addition of simulcast race-track
wagering. The expansion will also increase casino access and casino visibility
for hotel patrons. In addition, Trump's Castle recently completed the
construction of a Las Vegas style marquee and reader board, the largest of its
kind on the East Coast. See "BUSINESS - Properties."
Casino gaming in Atlantic City is strictly regulated under the Casino
Control Act and other applicable laws, which affect virtually all aspects of the
Partnership's operations. See "REGULATORY MATTERS."
Marketing Strategy
General
In 1990, the Atlantic City casino industry experienced a significant
increase in room capacity and in available casino floor space, due primarily to
opening of the Taj Mahal, which at the time was wholly-owned by Trump.
Management believes that the opening of the Taj Mahal had a disproportionately
adverse effect on Trump's Castle due to the common use of the "Trump" name, and
the fact that Trump's Castle is reached via the same access road as the Taj
Mahal. The Partnership believes that results in 1991 were also affected by the
weakness in the economy throughout the Northeast and the adverse impact on
tourism and consumer spending in 1991 of the war in the Middle East. See "RISK
FACTORS - Competition."
In 1991, the Partnership retained the services of Nicholas L. Ribis, as
Chief Executive Officer, and Roger P. Wagner, as President and Chief Operating
Officer. At such time, Mr. Ribis was also retained as the chief executive
officer of the partnerships which operate the Other Trump Casinos. See "RISK
FACTORS- The Conflicting Interests of Certain Officers and Directors of the
Partnership and its Affiliates" and "MANAGEMENT." Trump and this new management
team implemented a new business strategy designed to capitalize on Trump's
Castle's first-class facilities and improve operating results.
Key elements of the new business strategy consist of differentiating
Trump's Castle from other Atlantic City casinos based on its level of service,
gaming environment and location, redirecting marketing efforts and continually
monitoring operations to adapt to, and anticipate, industry trends. After
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establishing the new marketing strategy in 1991, the Partnership in 1992
implemented an aggressive plan to regain the patrons it had lost in 1990 and
1991 and to attract new patrons by increasing its promotional activities and
complimentaries offered. Trump's Castle improved its market share by the end of
1992 and continues to improve operating margins by directing complimentaries and
promotional activities to attract the most profitable patrons in each market
segment. In addition, Trump's Castle has recently implemented an aggressive
overseas marketing plan designed to broaden its patron base by seeking to
attract high-end table game patrons. This new strategy will include promotions
and offer special events and is designed to offset the decline of table games
play by the domestic market.
Service
The Partnership has identified service as a means of differentiating itself
from and competing with other Atlantic City casinos, and has adopted the slogan
"Trump's Castle Where Service Is King." In 1990, the Partnership created a new
service enhancement department designed to increase the quality of service
provided to casino patrons, and create a service oriented culture.
The Partnership believes that in the past most casino services were
directed at high rollers and middle market patrons who wagered at table games.
By providing a high level of service to all patrons, including middle market
slot patrons, the Partnership seeks to foster loyalty among its patrons and
repeat play.
Gaming Environment
In 1993, the Partnership completed a 10,000 square foot expansion of its
main casino floor space bringing the total casino floor space to 70,000 square
feet. This expansion enabled the Partnership to introduce live poker games and
at the same time to increase the number of slot machines, to provide more space
between slot machines, and to place stools in front of additional slot machines.
These changes are designed to provide the gaming patron with a more comfortable
gaming experience. In addition, Trump's Castle has also introduced a separate
non-smoking area on its casino floor.
The Partnership continuously monitors the configuration of the casino floor
and the games it offers to patrons with a view towards making changes and
improvements. Trump's Castle's casino floor was the first in Atlantic City to
feature live poker.
In recent years, there has been an industry trend towards fewer table games
and more slot machines. For the Atlantic City casino industry, revenue from slot
machines increased from 54.6% of the industry gaming revenue in 1988 to 67.1% of
the industry gaming revenue in 1993. Trump's Castle experienced a similar
increase, with slot revenue increasing from 52.5% of gaming revenue in 1988 to
70.2% of gaming revenue in 1993. In response to this trend, Trump's Castle has
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devoted more of its casino floor space to slot machines and has replaced 900 of
its slot machines with newer machines. In the next six months Trump's Castle
intends to acquire an additional 100 slot machines to replace less popular,
older models. Moreover, as part of its program to attract middle market slot
patrons, the Partnership has created "Castle Square", a section of the casino
floor devoted to one dollar slot machines, and "Monte Carlo", a section of the
casino floor devoted to high denomination slot machines (most of which provide
for $5 or more per play). The Partnership is currently considering introducing
another high denomination slot machine area next to the "King of Clubs" lounge
and intends to introduce "keno" in the second quarter of 1994, subject to
approval by the CCC.
"Comping" Strategy
In order to compete effectively with other Atlantic City casino hotels, the
Partnership offers complimentary drinks, meals, room accommodations and/or
travel arrangements to its patrons ("complimentaries" or "comps"). In 1991 and
1992, Trump's Castle increased promotional activities and complimentaries to its
targeted patrons in order to regain lost market share. Currently, the policy at
Trump's Castle is to focus promotional activities, including complimentaries, on
a middle and upper middle market "drive-in" patrons who visit Atlantic City
frequently and have proven to be the most profitable market segment.
Entertainment and Special Events
The Partnership pursues a coordinated program of headline entertainment and
special events. Trump's Castle offers headline entertainment approximately
twelve times a year which, in 1993, included performances by Joan Rivers, Johnny
Cash, Ann Margaret, Frankie Avalon, Bobby Rydell, and The Neville Brothers.
Headliners who are scheduled to appear at Trump's Castle in 1994 include Tom
Jones, Sheena Easton, The Everly Brothers, The Pointer Sisters and The Beach
Boys. During 1994, Trump's Castle will also produce a series of review-style
shows with up to 12 shows per week for 30 weeks over the year. The review-style
shows will focus on attracting mass market customers and will also be used to
reward loyal high frequency middle market customers.
As a part of its overseas marketing plan, Trump's Castle offers special
events aimed at the overseas market. In 1993, for example, Trump's Castle held
an Italian Christmas celebration targeted toward the European Market. In
addition, Trump's Castle hosts over 100 special events on an invitation only
basis in an effort to attract middle market gaming patrons and build loyalty
among patrons. These special events include boxing, golf tournaments, birthday
parties and theme parties. Headline entertainment is scheduled so as not to
overlap with any of these special events.
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Player Development and Casino Hosts
The Partnership has contracts with approximately ten sales representatives
in New Jersey, New York and other states to promote Trump's Castle. Trump's
Castle has sought to attract more middle market slot machine gaming patrons, as
well as high rollers, through its "junket" marketing operations, which involves
attracting groups of patrons by providing airfare, gifts and room
accommodations. Trump's Castle has also recently undertaken a marketing effort
aimed at developing patronage from the high-end table gaming markets in Europe,
Asia, Canada and Latin America. The Partnership also has contracts with two
international sales representatives and has recruited several senior level
casino marketing executives who have extensive experience in overseas marketing
and a proven track record of attracting profitable high-end table gaming
patrons.
Trump's Castle's casino hosts assist table game patrons, and Trump's
Castle's slot sales representatives assist slot patrons on the casino floor,
make room and dinner reservations and provide general assistance. Slot sales
representatives also solicit Castle Card (the frequent player slot card)
sign-ups in order to increase the Partnership's marketing base.
Promotional Activities
The Castle Card (the frequent player identification slot card) constitutes
a key element in Trump's Castle's direct marketing program. Slot machine players
are encouraged to register for and utilize their personalized Castle Card to
earn various complimentaries based upon their level of play. The Castle Card is
inserted during play into a card reader attached to the slot machine for use in
computerized rating systems. These computer systems record data about the
cardholder, including playing preferences, frequency and denomination of play
and the amount of gaming revenues produced. Slot sales and management personnel
are able to monitor the identity and location of the cardholder and the
frequency and denomination of his slot play. They also use this information to
provide attentive service to the cardholder while he is on the casino floor.
Trump's Castle designs promotional offers, conveyed via direct mail and
telemarketing, to patrons expected to provide revenues based upon their
historical gaming patterns. Such information is gathered on slot wagering by the
Castle Card and on table wagering by the casino games supervisor. Trump's Castle
also utilizes a special events calendar (e.g., birthday parties, sweepstakes and
special competitions) to promote its gaming operations.
Credit Policy
Historically, Trump's Castle has extended credit to certain qualified
patrons. For the years ended December 31, 1991 and 1992, credit play at Trump's
Castle as a percentage of total dollars wagered was approximately 31% and 28%,
respectively. In recognition of the general economic conditions in the Northeast
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and consistent with a more focused marketing strategy, Trump's Castle also
imposed stricter standards on applications for new or additional credit.
Although Trump's Castle has successfully attracted high-end table games patrons,
who in general tend to use a higher percentage of credit in their wagering,
through its "junket" marketing operations and has recently undertaken a
marketing effort aimed at high-end international table game patrons, who also
tend to use a higher percentage of credit in their wagering, credit play as a
percentage of total dollars wagered increased to only 29% for the year ended
December 31, 1993.
Bus Program
Trump's Castle has a bus program which transports approximately 2,100
gaming patrons per day during the week and 2,600 per day on the weekends. The
Partnership's bus program offers incentives and discounts to certain scheduled
and chartered bus customers. Based on historical surveys, the Partnership has
determined that gaming patrons who arrive by scheduled bus line as opposed to
special charter or who travel distances of 60 miles or more are more likely to
create higher gaming revenue for Trump's Castle. Accordingly, Trump's Castle's
marketing efforts are focused on such bus patrons.
Atlantic City Market
Gaming in Atlantic City started in May 1978 when the first casino hotel
opened for business. Since 1978, gaming in Atlantic City has grown from one
casino to 12 casinos at the beginning of 1994, with approximately $3.3 billion
of casino industry revenue generated in 1993. Gaming revenue for all Atlantic
City casino hotels has increased approximately 2.6%, 5.2%, 1.3%, 7.5% and 2.6%
during 1989, 1990, 1991, 1992 and 1993, respectively (in each case as compared
to the prior year). See "RISK FACTORS - Competition and Industry Rate of
Growth."
Atlantic City is near many densely populated metropolitan areas. The
primary area served by Atlantic City casino hotels is the corridor that extends
from Washington, D.C. to Boston and includes New York City and Philadelphia.
Within this primary area, Atlantic City may be reached by automobile or bus.
Principal arteries lead into Atlantic City from the metropolitan New York area
and from the Baltimore/Washington, D.C. area, both of which are approximately
three hours away by automobile. Atlantic City can also be reached by air and
rail transportation, although most patrons arrive by automobile or bus.
Historically, Atlantic City has suffered from inadequate rail and air
transportation. As a result, a majority of Atlantic City gaming patrons travel
from the mid-atlantic and northeast regions of the United States by automobile
or bus. Rail service to Atlantic City has recently been improved with the
introduction of Amtrak express service to and from Philadelphia and New York
City. An expansion of the Atlantic City International Airport (located
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approximately 12 miles from Atlantic City) to handle large airline carriers and
large passenger jets was recently completed. Despite the expansion of the
Atlantic City International Airport, however, access to Atlantic City by air is
still limited by a lack of regularly scheduled flights and by inadequate
terminal facilities. The lack of adequate transportation infrastructure has
limited the expansion of the Atlantic City gaming industry's geographic patron
base and the attractiveness of Atlantic City to major conventions.
The gaming industry in Atlantic City traditionally has been seasonal, with
its strongest performance occurring from May through September, and with
December and January showing substantial decreases in activity. Revenues have
been significantly higher on Fridays, Saturdays, Sundays and holidays than on
other days.
In February of 1993, the State of New Jersey broke ground for a new
quarter-billion dollar Convention Center on a 30.5 acre site adjacent to the
Atlantic City Expressway. Targeted for completion in 1996, the new Convention
Center, as currently planned, will house approximately 500,000 square feet of
exhibit space along with 45 meeting rooms totalling nearly 110,000 square feet.
The building, as currently planned, will include a 1,600 car underground garage
and an indoor street linking the Convention Center to the existing Atlantic City
Rail Terminal. The new Convention Center has been designed to serve as the
centerpiece of Atlantic City's renaissance as a meeting destination.
Properties
The Casino Parcel
Trump's Castle is located in the Marina area of Atlantic City on an
approximately 14.7 acre triangular-shaped parcel of land, which is owned by the
Partnership in fee, located at the intersection of Huron Avenue and Brigantine
Boulevard directly across from the Marina, approximately two miles from The
Boardwalk.
Trump's Castle has 70,000 square feet of casino space, which accommodates
94 table games (including 13 poker tables) and 2,098 slot machines. In addition
to the casino, Trump's Castle consists of a 27 story hotel with 725 guest rooms,
including 185 suites, of which 99 are "Crystal Tower" luxury suites. Renovation
of 300 of the guest rooms was completed in 1993 and 250 more guest rooms are
scheduled to be renovated by April of 1994. The facility also offers nine
restaurants, a 460 seat cabaret theater, two cocktail lounges, 58,000 square
feet of convention, ballroom and meeting space, a swimming pool, tennis courts
and a sports and health club facility. Trump's Castle has been designed so that
it can be enlarged in phases into a facility containing 2,000 rooms, a 1,600
seat cabaret theater and additional recreational amenities. Trump's Castle also
has a nine-story garage providing on-site parking for approximately 3,000
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vehicles, and a helipad which is located atop the parking garage making Trump's
Castle the only Atlantic City casino with access by land, sea and air.
During 1993, Trump's Castle completed a 10,000 square foot expansion to its
casino which has enabled Trump's Castle to increase the number of slot machines
on the casino floor by 300 units, to provide more space between slot machines
and to place stools in front of additional slot machines, all of which are
designed to provide the gaming patron with a more comfortable gaming experience.
Presently, Trump's Castle is undertaking an approximately 3,000 square foot
expansion to accommodate the addition of simulcast race track wagering. The
expansion will also increase casino access and casino visibility for hotel
patrons. In addition, Trump's Castle recently completed the construction of a
Las Vegas style marquee and reader board, the largest of its kind on the East
Coast.
The Marina
Pursuant to an agreement (the "Marina Agreement") with the New Jersey
Division of Parks and Forestry, the Partnership in 1987 began operating and
renovating the Marina, including docks containing approximately 600 slips. An
elevated pedestrian walkway connecting Trump's Castle to a two story building at
the Marina was completed in 1989. The Partnership has reconstructed the
two-story building, which contains a 240 seat restaurant and offices as well as
a snack bar and a large nautical theme retail store. Any improvements made to
the Marina (which is owned by the State of New Jersey), excluding the elevated
pedestrian walkway, automatically become the property of the State of New Jersey
upon their completion. Pursuant to the Marina Agreement and pursuant to a
certain lease between the State of New Jersey, as landlord, and the Partnership
as tenant, dated as of September 1, 1990, the Partnership commenced leasing the
Marina and the improvements thereon for an initial term of twenty-five years.
The lease is a net lease pursuant to which the Partnership, in addition to the
payment of annual rent equal to the greater of (i) a certain percentage of gross
revenues and (ii) minimum base rent of $300,000 annually (increasing every five
years to $500,000 in 2011), is responsible for all costs and expenses related to
the premises, including but not limited to, all maintenance and repair costs,
insurance premiums, real estate taxes, assessments and utility charges.
Parking Parcel
The Partnership also owns an employee parking lot located on Route 30,
approximately two miles from Trump's Castle, which can accommodate approximately
1,000 cars.
Employees and Labor Relations
As of December 31, 1993, the Partnership employed approximately 3,700 full
and part time employees for the operation of Trump's Castle, of whom
approximately 932 were subject to collective bargaining agreements. The
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Partnership's collective bargaining agreement with Local No. 54 affiliated with
the Hotel Employees and Restaurant Employees International Union AFL-CIO expires
on September 14, 1994. Such agreement extends to approximately 820 employees.
Preparation for negotiations for a new collective bargaining agreement with
Local No. 54 are currently underway. In addition, three other collective
bargaining agreements which expire in 1996 cover approximately 112 maintenance
employees. The Partnership believes that its relationships with its employees
are satisfactory. Funding has no employees.
All of the Partnership's employees are required to be registered with or
licensed by the CCC pursuant to the Casino Control Act. Casino employees are
subject to more stringent licensing requirements than non-casino employees, and
must meet applicable standards pertaining to such matters as financial
responsibility, good character, ability, casino training, experience and New
Jersey residency. Such regulations have resulted in significant competition for
employees who meet these requirements.
Seasonality
The gaming industry in Atlantic City traditionally has been seasonal, with
its strongest performance occurring from May through September, and with
December and January showing substantial decreases in activity. Revenues have
been significantly higher on Fridays, Saturdays, Sundays and holidays than on
other days. In addition, in the summer months, Trump's Castle may be adversely
affected by the desire of certain patrons to wager at a location which is
readily accessible to The Boardwalk.
Competition
Competition in the Atlantic City casino hotel market is intense. Trump's
Castle competes primarily with other casinos located in Atlantic City, New
Jersey, as well as gaming establishments located on Native American reservations
in New York and Connecticut and also would compete with any other facilities in
the northeastern and mid-Atlantic regions of the United States at which casino
gaming or other forms of wagering may be authorized in the future. To a lesser
extent, Trump's Castle faces competition from cruise lines, riverboat gaming and
casinos located in Mississippi, Nevada, New Orleans, Puerto Rico, the Bahamas
and other locations inside and outside the United States, and from other forms
of legalized gaming in New Jersey and in its surrounding states such as
lotteries, horse racing (including off-track betting), jai alai and dog racing,
and from illegal wagering of various types. See "RISK FACTORS - Competition and
Industry Rate of Growth."
Legal Proceedings
The Partnership, its partners, certain members of the former Executive
Committee, Funding, and certain of their employees are involved in various legal
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proceedings, some of which are described below. The Partnership and Funding have
agreed to indemnify such persons and entities against any and all losses,
claims, damages, expenses (including reasonable costs, disbursements and counsel
fees) and liabilities (including amounts paid or incurred in satisfaction of
settlements, judgments, fines and penalties) incurred by them in said legal
proceedings. Such persons and entities are vigorously defending the allegations
against them and intend to vigorously contest any future proceedings.
Bondholder Litigation. Since June 1990, various purported class actions
were commenced on behalf of the holders of Funding's Old Bonds which were
outstanding prior to the consummation of the prepackaged plan of reorganization
under chapter 11 of the Bankruptcy Code, and the publicly traded bonds of the
Other Trump Casinos.
By an order of the Judicial Panel on Multidistrict Litigation dated
December 4, 1990, the United States District Court for the District of New
Jersey (the "Court") was given jurisdiction over these class actions for
coordinated consolidated pretrial proceedings. Pursuant to an Order of the New
Jersey District Court, on or about March 1, 1991, plaintiffs in the class filed
an amended and consolidated complaint (the "Complaint") that superseded the
complaints originally filed in those actions.
On March 5, 1992, the parties executed a Stipulation and Agreement of
Compromise and Settlement (the "Stipulation of Settlement"), which embodied the
agreement contained in a Memorandum of Understanding, dated July 30, 1991. On
March 10, 1992, the Court preliminarily approved the terms and conditions of the
Settlement proposed in the Stipulation of Settlement (the "Settlement") and
certified a settlement class (the "Settlement Class"). On May 21, 1992 a
settlement hearing was held before the Court and the Court approved the
Settlement and determined that the Settlement was fair, reasonable, adequate,
and in the best interest of the Settlement Class.
Under the terms of the Settlement, the holders of Funding's publicly traded
bonds outstanding prior to the Restructuring will receive: (1) the Litigation
Warrants, giving holders thereof the right to purchase common stock reflecting
an indirect .50% of the equity of the Partnership on a fully diluted basis,
which Litigation Warrants contain an option, pursuant to which for a six month
period commencing March 2000 the holders thereof can require the issuer to
repurchase such Litigation Warrants at an aggregate exercise price of $4
million, subject to certain terms and conditions set out more fully in the
Memorandum of Understanding, but which include payment in full of the Bonds
(which condition has been satisfied), satisfaction of the mortgage securing the
Midlantic Term Loan, the Partnership earning net income of $20 million in the
aggregate for the years 1997, 1998 and 1999, and holders of at least 60% of the
Litigation Warrants electing to exercise the option; and (2) a settlement in the
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amount of $1,350,000 in cash, which will be used to satisfy the costs of notice
and administration as well as to compensate plaintiffs.
Other Litigation. Various legal proceedings are now pending against the
Partnership. Except for the appraisal proceeding described below, the
Partnership considers all such proceedings to be ordinary litigation incident to
the character of its business. In addition, the holder of less than 25 shares of
TC/GP common stock has filed an appraisal action with respect to such shares in
connection with the consummation of the Recapitalization. The majority of such
claims are covered by liability insurance (subject to applicable deductibles),
and the Partnership believes that the resolution of these claims, to the extent
not covered by insurance, will not, individually or in the aggregate, have a
material adverse effect on the financial condition or results of operations of
the Partnership.
REGULATORY MATTERS
The following is only a summary of the applicable provisions of the Casino
Control Act and certain other laws and regulations. It does not purport to be a
full description thereof and is qualified in its entirety by reference to the
Casino Control Act and such other laws and regulations.
In general, the Casino Control Act contains detailed provisions concerning,
among other things: the granting of casino licenses; the suitability of the
approved hotel facility and the amount of authorized casino space and gaming
units permitted therein; the qualification of natural persons and entities
related to the casino licensee; the licensing and registration of employees and
vendors of casino licensees; rules of the games; the selling and redeeming of
gaming chips; the granting and duration of credit and the enforceability of
gaming debts; management control procedures, accounting and cash control methods
and reports to gaming agencies; security standards; the manufacture and
distribution of gaming equipment; equal employment opportunity for employees of
casino operators, contractors of casino facilities and others; and advertising,
entertainment and alcoholic beverages.
Casino Control Commission
The ownership and operation of casino hotel facilities in Atlantic City are
the subject of strict state regulation under the Casino Control Act. The CCC is
empowered to regulate a wide spectrum of gaming and non-gaming related
activities and to approve the form of ownership and financial structure of not
only a casino licensee, but also its entity qualifiers and intermediary and
holding companies.
Operating Licenses
The Partnership was issued its initial casino license in June 1985. During
April 1993, the CCC renewed the Partnership's casino license and approved Trump
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as a natural person qualifier through May 1995. No assurance can be given that
the CCC will renew the Partnership's casino license or, if it does so, as to the
conditions it may impose, if any, with respect thereto.
Casino License
No casino hotel facility may operate unless the appropriate license and
approvals are obtained from the CCC, which has broad discretion with regard to
the issuance, renewal, revocation and suspension of such licenses and approvals,
which are non-transferable. The qualification criteria with respect to the
holder of a casino license include its financial stability, integrity and
responsibility; the integrity and adequacy of its financial resources which bear
any relation to the casino project; its good character, honesty and integrity;
and the sufficiency of its business ability and casino experience to establish
the likelihood of a successful, efficient casino operation. The casino license
held by the Partnership is renewable for periods of up to two years. The CCC may
reopen licensing hearings at any time, and must reopen a licensing hearing at
the request of the Division.
To be considered financially stable, a licensee must demonstrate the
following ability: to pay winning wagers when due, to achieve a gross operating
profit; to pay all local, state and federal taxes when due, to make necessary
capital and maintenance expenditures to insure that it has a superior
first-class facility, and to pay, exchange, refinance or extend debts which will
mature or become due and payable during the license term.
In the event a licensee fails to demonstrate financial stability, the CCC
may take such action as it deems necessary to fulfill the purposes of the Casino
Control Act and protect the public interest, including: issuing conditional
licenses, approvals or determinations; establishing an appropriate cure period;
imposing reporting requirements; placing restrictions on the transfer of cash or
the assumption of liability; requiring reasonable reserves or trust accounts;
denying licensure; or appointing a conservator. See "- Conservatorship."
The Partnership believes that it has adequate financial resources to meet
the financial stability requirements of the CCC for the foreseeable future.
Pursuant to the Casino Control Act, CCC Regulations and precedent, no
entity may hold a casino license unless each officer, director, principal
employee, person who directly or indirectly holds any beneficial interest or
ownership in the licensee, each person who in the opinion of the CCC has the
ability to control or elect a majority of the board of directors of the licensee
(other than a banking or other licensed lending institution which makes a loan
or holds a mortgage or other lien acquired in the ordinary course of business),
and any lender, underwriter, agent or employee of the licensee or other person
whom the CCC may consider appropriate, obtains and maintains qualification
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approval from the CCC. Qualification approval means that such person must, but
for residence, individually meet the qualification requirements as a casino key
employee. See "- Employees." Pursuant to conditions of the Partnership's casino
license, payments by the Partnership to or for the benefit of any related entity
or any partner are subject to prior CCC approval; and, if the Partnership's cash
position falls below $5 million for three consecutive business days, the
Partnership must present to the CCC and the Division evidence as to why it
should not obtain a working capital facility in an appropriate amount.
Control Persons
An entity qualifier or intermediary or holding company, such as TC/GP, TCHI
and Funding, is required to register with the CCC and meet the same basic
standards for approval as a casino licensee; provided, however, that the CCC,
with the concurrence of the Director of the Division, may waive compliance by a
publicly-traded corporate holding company with the requirement that each
officer, director, lender, underwriter, agent or employee thereof, or person
directly or indirectly holding a beneficial interest or ownership of the
securities thereof, individually qualify for approval under casino key employee
standards, so long as the CCC and the Director are, and remain, satisfied that
such officer, director, lender, underwriter, agent or employee is not
significantly involved in the activities of the casino licensee, or that such
security holder does not have the ability to control the publicly-traded
corporate holding company or elect one or more of its directors. Persons holding
five percent or more of the equity securities of such holding company are
presumed to have the ability to control the company or elect one or more of its
directors and will, unless this presumption is rebutted, be required to
individually qualify. Equity securities are defined as any voting stock or any
security similar to or convertible into or carrying a right to acquire any
security having a direct or indirect participation in the profits of the issuer.
Financial Sources
The CCC may require all financial backers, investors, mortgagees, bond
holders and holders of notes or other evidence of indebtedness, either in effect
or proposed, which bears any relation to the casino project, including holders
of the Senior Notes, publicly-traded securities of an entity which holds a
casino license or is an entity qualifier, subsidiary or holding company of a
casino licensee (a "Regulated Company"), to qualify as financial sources. In the
past, the CCC has waived the qualification requirement for holders of less than
15% of a series of publicly-traded mortgage bonds so long as the bonds remained
widely-distributed and freely-traded in the public market and the holder had no
ability to control the casino licensee. The CCC may require holders of less than
15% of a series of debt to qualify as financial sources even if not active in
the management of the issuer or the casino licensee. In connection with the
Recapitalization, the CCC made a determination that the Senior Notes would be
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"publicly-traded" securities (within the meaning assigned thereto by the CCC)
upon registration thereof with the SEC.
Institutional Investors
An institutional investor ("Institutional Investor") is defined by the
Casino Control Act as any retirement fund administered by a public agency for
the exclusive benefit of federal, state or local public employees; investment
company registered under the Investment Company Act of 1940; collective
investment trust organized by banks under Part Nine of the Rules of the
Comptroller of the Currency; closed end investment trust; chartered or licensed
life insurance company or property and casualty insurance company; banking and
other chartered or licensed lending institution; investment advisor registered
under the Investment Advisers Act of 1940; and such other persons as the CCC may
determine for reasons consistent with the policies of the Casino Control Act.
An Institutional Investor may be granted a waiver by the CCC from financial
source or other qualification requirements applicable to a holder of
publicly-traded securities, in the absence of a prima facie showing by the
Division that there is any cause to believe that the holder may be found
unqualified, on the basis of CCC findings that: (a) its holdings were purchased
for investment purposes only and, upon request by the CCC, it files a certified
statement to the effect that it has no intention of influencing or affecting the
affairs of the issuer, the casino licensee or its holding or intermediary
companies; provided, however, that the Institutional Investor will be permitted
to vote on matters put to the vote of the outstanding security holders; and (b)
if (i) the securities are debt securities of a casino licensee's holding or
intermediary companies or another subsidiary company of the casino licensee's
holding or intermediary companies which is related in any way to the financing
of the casino licensee and represent either (x) 20% or less of the total
outstanding debt of the company or (y) 50% or less of any issue of outstanding
debt of the company, (ii) the securities are equity securities and represent
less than 10% of the equity securities of a casino licensee's holding or
intermediary companies or (iii) if the securities so held exceed such
percentages, upon a showing of good cause. There can be no assurance, however,
that the CCC will make such findings or grant such waiver and, in any event, an
Institutional Investor may be required to produce for the CCC or Division upon
request, any document or information which bears any relation to such debt or
equity securities.
Generally, the CCC requires each institutional holder seeking waiver of
qualification to execute a certification to the effect that (i) the holder has
received the definition of Institutional Investor under the Casino Control Act
and believes that it meets the definition of Institutional Investor; (ii) the
holder purchased the securities for investment purposes only and holds them in
the ordinary course of business; (iii) the holder has no involvement in the
business activities of, and no intention of influencing or affecting the affairs
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of, the issuer, the casino licensee or any affiliate; and (iv) if the holder
subsequently determines to influence or affect the affairs of the issuer, the
casino licensee or any affiliate, it shall provide not less than 30 days' prior
notice of such intent and shall file with the CCC an application for
qualification before taking any such action. If an Institutional Investor
changes its investment intent, or if the CCC finds reasonable cause to believe
that it may be found unqualified, the Institutional Investor may take no action
with respect to the security holdings, other than to divest itself of such
holdings, until it has applied for interim casino authorization (see "Interim
Casino Authorization") and has executed a trust agreement pursuant to such an
application.
Ownership and Transfer of Securities
The Casino Control Act imposes certain restrictions upon the issuance,
ownership and transfer of securities of a Regulated Company and defines the term
"security" to include instruments which evidence a direct or indirect beneficial
ownership or creditor interest in a Regulated Company including, but not limited
to, mortgages, debentures, security agreements, notes and warrants. Funding and
the Partnership are each deemed to be a Regulated Company, and instruments, such
as the Senior Notes, evidencing a beneficial ownership or creditor interest
therein, including partnership interest, are deemed to be the securities of a
Regulated Company.
If the CCC finds that a holder of such securities is not qualified under
the Casino Control Act, it has the right to take any remedial action it may deem
appropriate including the right to force divestiture by such disqualified holder
of such securities. In the event that certain disqualified holders fail to
divest themselves of such securities, the CCC has the power to revoke or suspend
the casino license affiliated with the Regulated Company which issued the
securities. If a holder is found unqualified, it is unlawful for the holder (i)
to exercise, directly or through any trustee or nominee, any right conferred by
such securities, or (ii) to receive any dividends or interest upon any such
securities or any remuneration, in any form, from its affiliated casino licensee
for services rendered or otherwise.
With respect to non-publicly-traded securities, the Casino Control Act and
CCC Regulations require that the corporate charter or partnership agreement of a
Regulated Company establish a right in the CCC of prior approval with regard to
transfers of securities, shares and other interests and an absolute right in the
Regulated Company to repurchase at the market price or the purchase price,
whichever is the lesser, any such security, share or other interest in the event
that the CCC disapproves a transfer. With respect to publicly-traded securities,
such corporate charter or partnership agreement is required to establish that
any such securities of the entity are held subject to the conditions that, if a
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holder thereof is found to be disqualified by the CCC, such holder shall dispose
of such securities.
Interim Casino Authorization
Interim casino authorization is a process which permits a person who enters
into a contract to obtain property relating to a casino operation or who obtains
publicly-traded securities relating to a casino licensee to close on the
contract or own the securities until plenary licensure or qualification. During
the period of interim authorization, the property relating to the casino
operation or the securities are held in trust.
Whenever any person enters into a contract to transfer any property which
relates to an ongoing casino operation, including a security of the casino
licensee or a holding or intermediary company or entity qualifier, under
circumstances which would require that the transferee obtain licensure or be
qualified under the Casino Control Act, and that person is not already licensed
or qualified, the transferee is required to apply for interim authorization.
Furthermore, the closing or settlement date in the contract may not be earlier
than the 121st day after the submission of a complete application for licensure
or qualification together with a fully executed trust agreement in a form
approved by the CCC. If, after the report of the Division and a hearing by the
CCC, the CCC grants interim authorization, the property will be subject to a
trust. If the CCC denies interim authorization, the contract may not close or
settle until the CCC makes a determination on the qualifications of the
applicant. If the CCC denies qualification, the contract will be terminated for
all purposes and there will be no liability on the part of the transferor.
If, as the result of a transfer of publicly-traded securities of a
licensee, a holding or intermediary company or entity qualifier of a licensee or
a financing entity of a licensee, any person is required to qualify under the
Casino Control Act, that person is required to file an application for licensure
or qualification within 30 days after the CCC determines that qualification is
required or declines to waive qualification. The application must include a
fully executed trust agreement in a form approved by the CCC or, in the
alternative, within 120 days after the CCC determines that qualification is
required, the person whose qualification is required must divest such securities
as the CCC may require in order to remove the need to qualify.
The CCC may grant interim casino authorization where it finds by clear and
convincing evidence that: 1) statements of compliance have been issued pursuant
to the Casino Control Act; 2) the casino hotel is an approved hotel in
accordance with the Casino Control Act; 3) the trustee satisfies qualification
criteria applicable to key casino employees, except for residency and casino
experience; and 4) interim operation will best serve the interests of the
public.
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When the CCC finds the applicant qualified, the trust will terminate. If
the CCC denies qualification to a person who has received interim casino
authorization, the trustee is required to endeavor, and is authorized, to sell,
assign, convey or otherwise dispose of the property subject to the trust to such
persons who are licensed or qualified or shall themselves obtain interim casino
authorization.
Where a holder of publicly-traded securities is required, in applying for
qualification as a financial source or qualifier, to transfer such securities to
a trust in application for interim casino authorization and the CCC thereafter
orders that the trust become operative: (a) during the time the trust is
operative, the holder may not participate in the earnings of the casino hotel or
receive any return on its investment or debt security holdings; and (b) after
disposition, if any, of the securities by the trustee, proceeds distributed to
the unqualified holder may not exceed the lower of their actual cost to the
unqualified holder or their value calculated as if the investment had been made
on the date the trust became operative.
Approved Hotel Facilities
The CCC may permit a licensee, such as the Partnership, to increase its
casino space if the licensee agrees to add a prescribed number of qualifying
sleeping units within two years after the commencement of gaming operations in
the additional casino space. However, if the casino licensee does not fulfill
such agreement due to conditions within its control, the licensee will be
required to close the additional casino space, or any portion thereof that the
CCC determines should be closed. Trump's Castle will not be required to add any
additional sleeping units in connection with its approximately 3,000 square foot
expansion for simulcast race track wagering.
License Fees
The CCC is authorized to establish annual fees for the renewal of casino
licenses. The renewal fee is based upon the cost of maintaining control and
regulatory activities prescribed by the Casino Control Act, and may not be less
than $200,000 for a two-year casino license. Additionally, casino licensees are
subject to potential assessments to fund any annual operating deficits incurred
by the CCC or the Division. There is also an annual license fee of $500 for each
slot machine maintained for use or in use in any casino.
Gross Revenue Tax
Each casino licensee is also required to pay an annual tax of 8% on its
gross casino revenues. For each of the years ended December 31, 1992 and 1993,
the Partnership's gross revenue tax was approximately $19 million, and its
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license, investigations, and other fees and assessments totalled approximately
$3.2 million and $2.6 million, respectively.
Investment Alternative Tax Obligations
An investment alternative tax imposed on the gross casino revenues of each
licensee in the amount of 2.5% is due and payable on the last day of April
following the end of the calendar year. A licensee is obligated to pay the
investment alternative tax for a period of 25 years. Estimated payments of the
investment alternative tax obligation must be made quarterly in an amount equal
to 1.25% of estimated gross revenues for the preceding three-month period.
Investment tax credits may be obtained by making qualified investments or by the
purchase of bonds issued by CRDA. CRDA bonds may have terms as long as 50 years
and bear interest at below market rates, resulting in a value lower than the
face value of such CRDA bonds.
For the first 10 years of its obligation, the licensee is entitled to an
investment tax credit against the investment alternative tax in an amount equal
to twice the purchase price of bonds issued to the licensee by the CRDA.
Thereafter, the licensee is (i) entitled to an investment tax credit in an
amount equal to twice the purchase price of such bonds or twice the amount of
its investments authorized in lieu of such bond investments or made in projects
designated as eligible by the CRDA and (ii) has the option of entering into a
contract with the CRDA to have its tax credit comprised of direct investments in
approved eligible projects which may not comprise more than 50% of its eligible
tax credit in any one year.
From the moneys made available to the CRDA, the CRDA is required to set
aside $100,000,000 for investment in hotel development projects in Atlantic City
undertaken by a licensee which result in the construction or rehabilitation of
at least 200 hotel rooms by December 31, 1996. The CRDA is required to determine
the amount each casino licensee may be eligible to receive out of the moneys set
aside.
Minimum Casino Parking Charges
As of July 1, 1993, each casino licensee was required to impose on and
collect from patrons a standard minimum parking charge of at least $2.00 for the
use of parking space for the purpose of parking, garaging or storing motor
vehicles in a parking facility owned or leased by a casino licensee or by any
person on behalf of a casino licensee. Of the amount collected by the casino
licensee, $1.50 is required to be paid to the New Jersey State Treasurer and
paid by the New Jersey State Treasurer into a special fund established and held
by the New Jersey State Treasurer for the exclusive use of the CRDA.
Amounts in the special fund will be expended by the CRDA for (i) eligible
projects in the corridor region of Atlantic City, which projects are related to
the improvement of roads, infrastructure, traffic regulation and public safety
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and (ii) funding up to 35% of the cost to casino licensees of expanding their
hotel facilities to provide additional hotel rooms, which hotel rooms are
required to be available upon the opening of the Atlantic City Convention Center
and dedicated to convention events.
Conservatorship
If, at any time, it is determined that TC/GP, TCHI, Funding or the
Partnership has violated the Casino Control Act or that any of such entities
cannot meet the qualification requirements of the Casino Control Act, such
entity could be subject to fines or the suspension or revocation of its license
or qualification. If the Partnership's license is suspended for a period in
excess of 120 days or revoked or if the CCC fails or refuses to renew such
casino license, the CCC could appoint a conservator to operate and dispose of
the Partnership's casino hotel facilities. A conservator would be vested with
title to all property of the Partnership relating to the casino and the approved
hotel subject to valid liens and/or encumbrances. The conservator would be
required to act under the direct supervision of the CCC and would be charged
with the duty of conserving, preserving and, if permitted, continuing the
operation of the casino hotel. During the period of the conservatorship, a
former or suspended casino licensee is entitled to a fair rate of return out of
net earnings, if any, on the property retained by the conservator. The CCC may
also discontinue any conservatorship action and direct the conservator to take
such steps as are necessary to effect an orderly transfer of the property of a
former or suspended casino licensee. Such events could result in an event of
default under the Senior Note Indenture. See "DESCRIPTION OF THE SENIOR NOTES -
Events of Default."
Employees
All employees of the Partnership must be licensed by or registered with the
CCC, depending on the nature of the position held. Casino employees are subject
to more stringent requirements than non-casino employees and must meet
applicable standards pertaining to financial stability, integrity and
responsibility, good character, honesty and integrity, business ability and
casino experience and New Jersey residency. These requirements have resulted in
significant competition among Atlantic City casino operators for the services of
qualified employees.
Gaming Credit
The Partnership's casino games are conducted on a credit as well as cash
basis. Gaming debts arising in Atlantic City in accordance with applicable
regulations are enforceable in the courts of the State of New Jersey. The
extension of gaming credit is subject to regulations that detail procedures
which casinos must follow when granting gaming credit and recording counter
checks which have been exchanged, redeemed or consolidated.
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Control Procedures
Gaming at Trump's Castle is conducted by trained and supervised personnel.
The Partnership employs extensive security and internal controls. Security
checks are made to determine, among other matters, that job applicants for key
positions have had no criminal history or associations. Security controls
utilized by the surveillance department include closed circuit video cameras to
monitor the casino floor and money counting areas. The count of moneys from
gaming is also observed daily by representatives of the CCC.
Other Laws and Regulations
The United States Department of the Treasury has adopted regulations
pursuant to which a casino is required to file a report of each deposit,
withdrawal, exchange of currency, gambling tokens or chips, or other payments or
transfers by, through, or to such casino which involves a transaction in
currency of more than $10,000 per patron, per gaming day. Such reports are
required to be made on forms prescribed by the Secretary of the Treasury and are
filed with the Commissioner of the Internal Revenue Service (the "Service"). In
addition, the Partnership is required to maintain detailed records (including
the names, addresses, social security numbers and other information with respect
to its gaming customers) dealing with, among other items, the deposit and
withdrawal of funds and the maintenance of a line of credit. The Department of
the Treasury has adopted further regulations, the effectiveness of which has
been suspended until December 1994, which will require the Partnership, among
other things, to keep records of the name, permanent address and taxpayer
identification number (or in the case of a nonresident alien, such person's
passport number) of any person engaging in a currency transaction in excess of
$3,000. The Partnership is unable to predict what effect, if any, these new
reporting obligations will have on the gaming practices of certain of its
patrons. See "RISK FACTORS - The Effect of Currency Transaction Reporting
Requirements on the Partnership's Business."
In the past, the Service had taken the position that gaming winnings from
table games by nonresident aliens were subject to a 30% withholding tax;
however, the Service subsequently adopted a practice of not collecting such tax.
Recently enacted legislation exempts from withholding tax table game winnings by
nonresident aliens, unless the Secretary of the Treasury determines by
regulation that such collections have become administratively feasible.
As the result of an audit conducted by the Office of Financial Enforcement
of the Department of the Treasury, the Partnership was alleged to have failed to
timely file the "Currency Transaction Report by Casino" in connection with
currency transactions in excess of $10,000 during the period from May 7, 1985 to
December 31, 1988. The Partnership entered into a settlement agreement and
without admitting to any wrongdoing agreed to pay a civil monetary penalty of
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$175,500. The Partnership has revised its internal control procedures to ensure
continued compliance with these regulations.
The Partnership is subject to other federal, state and local regulations
and, on a periodic basis, must obtain various licenses and permits, including
those required to sell alcoholic beverages. The Partnership believes that it has
obtained all required licenses and permits to conduct its business.
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MANAGEMENT
All decisions affecting the business and affairs of the Partnership,
including the operation of Trump's Castle, are decided by the general partners
acting by and through a Board of Partner Representatives, which includes a
minority of Representatives elected indirectly by the holders of the Mortgage
Notes and PIK Notes (the "Board of Partner Representatives"). See "DESCRIPTION
OF THE AMENDED AND RESTATED PARTNERSHIP AGREEMENT." As currently constituted,
the Board of Partner Representatives consists of Donald J. Trump, Chairman,
Nicholas L. Ribis, Roger P. Wagner, Ernest E. East, Asher O. Pacholder, Thomas
F. Leahy and Wallace B. Askins. Messrs. Trump, Ribis and East also serve on the
governing boards of TTMA and TPA. See "RISK FACTORS - The Conflicting Interests
of Certain Officers and Directors of the Partnership and its Affiliates."
The Partnership also has an Audit Committee on which Mr. Ribis serves with
Mr. Leahy and Mr. Askins, who have been appointed thereto in accordance with the
requirements of the CCC. The Audit Committee reviews matters of policy, purpose,
responsibilities and authority and makes recommendations with respect thereto on
the basis of reports made directly to the Audit Committee. The Surveillance
Department is responsible for the surveillance, detection and video-taping of
unusual and illegal activities in the casino hotel. The Internal Audit
Department is responsible for the review of, reporting instances of
noncompliance with, and recommending procedures to eliminate weakness in
internal controls.
The sole director of Funding is Trump. Trump also serves as its Chairman of
the Board, President and Treasurer. Patricia M. Wild serves as its Secretary,
and Robert E. Schaffhauser serves as its Assistant Treasurer.
Directors and Executive Officers
Set forth below are the names, ages, positions and offices held
with Funding and the Partnership and a brief account of the business experience
during the past five years of each member of the Board of Partner
Representatives, the executive officers of Funding and the Partnership, and the
director of Funding.
Donald J. Trump -- Trump, 47 years old, has been the managing general
partner of the Partnership and Chairman of the Board of Partner Representatives
since May 1992 and Chairman of the Board, President and sole director of Funding
since June 1985. Trump has been the President and sole director of TC/GP since
December 1993. Trump served as Chairman of the Executive Committee of the
Partnership from June 1985 to May 1992 and as President and sole director of
TC/GP from November 1991 to May 1992. Trump has been a director and Treasurer of
TCHI since April 17, 1985. Trump is the sole shareholder, Chairman of the Board
of Directors, President and Treasurer of Trump Plaza Funding, Inc. ("TPFI"), the
managing general partner of TPA. Trump was President and Chairman of the Board
of Directors and a 50% shareholder of TP/GP Corp. ("TP/GP"), the former managing
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general partner of TPA, from May 1992 through June 1993; and Chairman of the
Executive Committee and President of TPA from May 1986 to May 1992. Trump has
been a director and President of Trump Plaza Holding, Inc. ("TPHI") and a
partner in Trump Plaza Holding Associates ("TPHA") since February 1993. Trump
was Chairman of the Executive Committee of TTMA, from June 1988 to October 1991;
and has been Chairman of the Board of Directors of the managing general partner
of TTMA since October 1991; and President of the Trump Organization, which has
been in the business, through its affiliates and subsidiaries, of acquiring,
developing and managing real estate properties for more than the past five
years. Trump was a member of the Board of Directors of Alexander's Inc. from
1987 to March 1992.
Nicholas L. Ribis -- Mr. Ribis, 49 years old, has been a partner
representative on the Board of Partner Representatives since May 1992 and Chief
Executive Officer of the Partnership since March 1991. Mr. Ribis has served as
Vice President and Assistant Secretary of TCHI since December 1993 and January
1991, respectively. Mr. Ribis served as a member of the Executive Committee of
the Partnership from April 1991 to May 1992 and as Secretary of TC/GP from
November 1991 to May 1992. Mr. Ribis has served as Vice President of TC/GP since
December 1993. Mr. Ribis has served as a director of TPHI since June 1993 and of
TPFI since July 1993; as a director and Vice President of TP/GP from May 1992 to
June 1993; Chief Executive Officer of TPA since February 1991; and a member of
the Executive Committee of TPA from April 1991 to May 1992. He has been Chief
Executive Officer of TTMA since March 1991; a member of the Executive Committee
of TTMA from April 1991 to October 1991; and a member of the Board of Directors
of the managing general partner of TTMA since October 1991. From January 1980 to
January 1991, Mr. Ribis was Senior Partner in, and since February 1991 is
Counsel to, the law firm of Ribis, Graham & Curtin, which serves as New Jersey
legal counsel to all of the above-named companies, and certain of their
affiliated entities. Mr. Ribis serves as the Chairman of the Atlantic City
Casino Association and is a member of the Board of Trustees of the CRDA.
Ernest E. East -- Mr. East, 51 years old, has been a partner representative
on the Board of Partner Representatives since May 1992 and has been Senior Vice
President -- Administrative and Corporate Affairs of the Partnership since July
1991. Mr. East has served as Secretary of TC/GP since December 1993. Mr. East
has been a director of TPHI since June 1993; Secretary of TPFI since July 1992;
Senior Vice President -- Administrative and Corporate Affairs of TPA since July
1991; Senior Vice President -- Administrative and Corporate Affairs of TTMA
since July 1991; and a member of the Board of Directors of the managing general
partner of TTMA since October 1991. Mr. East was formerly the Vice President --
General Counsel of the Del Webb Corporation from January 1984 through June 1991.
Roger P. Wagner -- Mr. Wagner, 46 years old, has been a partner
representative on the Board of Partner Representatives since May 1992 and
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President and Chief Operating Officer of the Partnership since January 1991. Mr.
Wagner served as a member of the Executive Committee of the Partnership from
January 1991 to May 1992. Mr. Wagner has been a director and president of TCHI
since January 1991. Prior to joining the Partnership, Mr. Wagner served as
President of the Claridge Hotel Casino from June 1985 to January 1991.
Asher O. Pacholder -- Dr. Pacholder, 56 years old, has been a partner
representative of the Board of Partner Representatives since May 1992. Dr.
Pacholder served as a director and the President of TC/GP from May 1992 to
December 1993. Dr. Pacholder has served as Chairman of the Board and Managing
Director of Pacholder Associates, Inc., an investment advisory firm, since 1987.
In addition, Dr. Pacholder serves on the Board of Directors of The Southland
Corporation, United Gas Holding Corp., ICO, Inc., an oil field services company,
UF&G Pacholder Fund, Inc., a publicly traded closed end mutual fund, U.S.
Trails, Inc., a recreational facility company, and Forum Group, Inc., a
retirement community managerial company.
Wallace B. Askins -- Mr. Askins, 63 years old, has been a partner
representative of the Board of Partner Representatives since May 1992. Mr.
Askins served as a director of TC/GP from May 1992 to December 1993. From 1987
to November 1992, Mr. Askins served as Executive Vice President, Chief Financial
Officer and as a director of Armco Inc. Mr. Askins also serves as a director of
EnviroSource, Inc.
Thomas F. Leahy -- Mr. Leahy, 56 years old, has been a Member of the Board
of Partner Representatives since June 1993. Mr. Leahy served as a director and
Treasurer of TC/GP from May 1992 to December 1993. From 1987 to July 1992, Mr.
Leahy served as Executive Vice President of CBS Broadcast Group, a unit of CBS,
Inc. Since November 1992, Mr. Leahy has served as President of the Theater
Development Fund, a service organization for the performing arts. From July 1992
through November 1992, Mr. Leahy served as chairman of VT Properties, Inc., a
privately-held corporation which invests in literary, stage and film properties.
Patrick R. Dennehy -- Mr. Dennehy, 45 years old, has been Executive Vice
President of Operations of the Partnership since November 1992. Prior to joining
the Partnership, Mr. Dennehy was with Harrah's Atlantic City from 1980 until
1992 in the capacity of Director of Gaming Operations, Director of Casino
Marketing, Director of Casino Credit and Cashier Manager.
Patricia M. Wild -- Ms. Wild, 41 years old, has been Secretary of Funding
and Senior Vice President and General Counsel of the Partnership and Secretary
of TCHI since December 1993. Ms. Wild served as Assistant Secretary of TPFI and
Vice President, General Counsel of TPA from February 1991 to December 1993; Vice
President and General Counsel of TPFI from July 1992 through December 1993; and
Associate General Counsel of TPA from May 1989 through January 1991. From
December 1986 to April 1989, Ms. Wild served as Deputy Attorney General on the
Environmental Prosecutions Task Force of the New Jersey Department of Law and
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Public Safety, Division of Criminal Justice. From April 1983 to December 1986,
Ms. Wild served as Deputy Attorney General with the New Jersey Division of
Gaming Enforcement.
Thomas P. Venier -- Mr. Venier, 42 years old, has been Senior Vice
President of Strategic Development and Planning of the Partnership since January
1994 and was Senior Vice President of Finance of the Partnership from September
1991 to January 1994. Mr. Venier has been Chief Financial Officer of TC/GP since
May 1992. Mr. Venier has been Assistant Treasurer of TCHI since March 1992.
Previously, Mr. Venier served as Vice President of Finance of the Partnership
from May 1988 to September 1991 and Director of Financial Accounting from July
1985 to April 1988.
Nicholas J. Niglio -- Mr. Niglio joined the Partnership as Executive Vice
President-Marketing in October 1993. Mr Niglio previously served as Senior Vice
President of Eastern Operations of Caesars World Marketing Corporation for three
years. Prior to that he served as Vice President-Casino Manager at Caesars
Atlantic City for three years.
Robert E. Schaffhauser -- Mr. Schaffhauser, 47 years old, joined the
Partnership as Senior Vice President of Finance in January 1994 and also became
an Assistant Treasurer, Chief Financial Officer and Chief Accounting Officer of
Funding and an Assistant Treasurer of TCHI and TC/GP in January 1994. He served
as a consultant to Trump during the immediately preceding year. Mr. Schaffhauser
previously served as Senior Vice President of Finance and Administration for the
Sands Hotel & Casino in Atlantic City for four years. For a period of 13 years
prior thereto, he served as the Chief Financial Officer and Secretary for Metex
Corporation, a publicly held manufacturer of engineered products. Mr.
Schaffhauser also served as a member of Metex Corporation's Board of Directors.
John P. Burke -- Mr. Burke, 46 years old, has been the Corporate Treasurer
of the Partnership and TPA since October 1991. Mr. Burke has been Chief
Accounting Officer of TC/GP since May 1992. Mr. Burke has been a Vice President
of TCHI, TC/GP, Funding and the Partnership since December 1993. Mr. Burke has
been Vice President of The Trump Organization since September 1990. He is a
member of the Board of Directors of the managing general partner of TTMA. Mr.
Burke was an Executive Vice President and Chief Administrative Officer of
Imperial Corporation of America ("Imperial") from April 1989 through September
1990. Previously he was Executive Vice President and Chief Financial Officer of
Tamco Enterprises, Inc. from May 1980 through April 1989.
Each member of the Board Partner of Representatives, of the Audit
Committee and all of the other persons listed above have been licensed or found
qualified by the CCC.
The employees of the Partnership serve at the pleasure of the
Board of Partner Representatives subject to any contractual rights contained in
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any employment agreement. The officers of Funding serve at the pleasure of
Donald J. Trump, the sole director of Funding.
Donald J. Trump, Nicholas L. Ribis and Ernest E. East served as either
executive officers and/or directors of TTMA and its affiliated entities when
such parties filed their petition for reorganization under chapter 11 of the
Bankruptcy Code on July 17, 1991. The Second Amended Joint Plan of
Reorganization of such parties was confirmed on August 28, 1991, and was
declared effective on October 4, 1991. Donald J. Trump, Nicholas L. Ribis,
Ernest E. East and John P. Burke served as executive committee members,
officers, and/or directors of TPA and its affiliated entities, at the time such
parties filed a petition for reorganization under chapter 11 of the Bankruptcy
Code on March 9, 1992. The First Amended Joint Plan of Reorganization of such
parties was confirmed on April 30, 1992, and declared effective on May 29, 1992.
Donald J. Trump, Nicholas L. Ribis, Ernest E. East, Roger P. Wagner and John P.
Burke served as either executive officers and/or directors of the Partnership
and its affiliated entities when such parties filed their petition for
reorganization under chapter 11 of the Bankruptcy Code in March 1992. The First
Amended Joint Plan of Reorganization of such parties was confirmed on May 5,
1992, and was declared effective on May 29, 1992. Donald J. Trump was a partner
of Plaza Operating Partners Ltd. when it filed a petition for reorganization
under chapter 11 of the Bankruptcy Code on November 2, 1992. The Plan of
Reorganization was confirmed on December 11, 1992 and declared effective in
January 1993. John P. Burke was Executive Vice President and Chief
Administrative Officer of Imperial, a thrift holding company whose major
subsidiary, Imperial Savings was seized by the Resolution Trust Corporation in
February 1990. Subsequently, in February 1990, Imperial filed a petition for
reorganization under chapter 11 of the Bankruptcy Code.
Compensation
Executive officers of Funding do not receive any additional compensation
for serving in such capacity. In addition, Funding and the Partnership do not
offer their executive officers stock option or stock appreciation right plans,
long-term incentive plans or defined benefit pension plans.
The following table sets forth compensation paid or accrued during the
years ended December 31, 1993, 1992 and 1991 to the Chief Executive Officer,
each of the four most highly compensated executive officers of the Partnership
whose cash compensation, including bonuses and deferred compensation, exceeded
$100,000 for the year ended December 31, 1993. Also included in the table is
information regarding Robert Pickus, who served as General Counsel of the
Partnership for eleven months of 1993. Compensation accrued during one year and
paid in another is recorded under the year of accrual. Information relating to
long-term compensation is inapplicable and has therefore been omitted from the
table.
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COMPENSATION TABLE
<TABLE>
Name and Other All Other
Principal Position Year Salary Bonus Compensation (1) Compensation (2)
<S> <C> <C> <C> <C> <C>
Nicholas L. Ribis (3), 1993 $250,000 $250,000 $226,000 $1,150
Chief Executive 1992 150,000 300,000 168,500 --
Officer 1991 192,956 250,135 -- --
Roger P. Wagner, 1993 $402,070 $ 27,341 $ 65,000 $4,497
Chief Operating 1992 425,228 95,000 60,000 4,171
Officer 1991 357,973 658,742 -- 4,695
Patrick R. Dennehy 1993 $177,083 $ 12,042 -- $2,248
Executive Vice 1992 22,885 50,000 -- --
President of 1991 -- -- -- --
Operations
Thomas P. Venier, 1993 $145,002 $ 9,860 -- $3,821
Senior Vice President 1992 145,983 15,000 -- 3,560
of Strategic 1991 111,221 -- -- 2,213
Development and
Planning
Ernest E. East (3), 1993 $100,644 $ 50,000 $ 67,500 $ 750
Vice President-- 1992 85,481 66,667 60,000 727
Administrative Affairs 1991 25,866 33,333 -- --
Robert M. Pickus (4), 1993 $148,553 $ 21,300 -- $3,774
Senior Vice President-- 1992 144,875 12,500 -- 3,117
General Counsel 1991 134,310 -- -- 2,678
</TABLE>
- -------------------------
(1) Represents the dollar value of annual compensation not properly categorized
as salary or bonus, including amounts reimbursed for income taxes and
Director's Fees. Following SEC rules, perquisites and other personal
benefits are not included in this table if the aggregate amount of that
compensation is the lesser of either $50,000 or 10% of the total salary and
bonus for that officer.
(2) Represents vested and unvested contributions made by the Partnership under
the Trump's Castle Hotel & Casino Retirement Savings Plan. Funds
accumulated for an employee, which consist of a certain percentage of the
employee's compensation plus Partnership contributions equalling 50% of the
participant's contributions, are retained until termination of employment,
attainment of age 59-1/2 or financial hardship, at which time the employee
may withdraw his or her vested funds.
(3) Messrs. Ribis and East devote approximately one-third of their professional
time to the affairs of the Partnership; the compensation for their
positions at Other Trump Casinos has not been included.
(4) Effective December 6, 1993, Mr. Pickus resigned as General Counsel of the
Partnership and from all other positions with the Partnership and its
affiliated entities to become General Counsel to TPA.
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Employment Agreements
In September 1993, the Partnership entered into an employment agreement
with Nicholas L. Ribis pursuant to which Mr. Ribis acts as Chief Executive
Officer of the Partnership. The agreement, which expires in September 1996,
provides for an annual salary of $550,000. The salary increases by ten percent
for each of the second and third years of the agreement. Upon execution of the
employment agreement, Mr. Ribis received a $250,000 signing bonus. In the event
the Partnership, or any entity which acquires substantially all of the equity
interests or assets of the Partnership, proposes to engage in an offering of
common shares to the public, the Partnership and Mr. Ribis have agreed to
negotiate new compensation arrangements which shall include equity participation
for Mr. Ribis. Mr. Ribis also acts as Chief Executive Officer of TTMA and TPA,
the Partnerships that own the Other Trump Casinos, and receives additional
compensation from such entities. Mr. Ribis devotes approximately one-third of
his professional time to the affairs of the Partnership. All other executive
officers of the Partnership, except Messrs. East and Burke, devote substantially
all of their time to the business of the Partnership.
The Partnership, on January 17, 1991, entered into an employment agreement
with Roger P. Wagner, with an amendment thereto dated January 17, 1991, and a
second amendment thereto dated July 18, 1992, pursuant to which Mr. Wagner
serves as the Partnership's and TCHI's President and Chief Operating Officer.
Mr. Wagner's employment agreement, which terminates on January 16, 1997,
provides for an annual salary beginning at a minimum of $400,000 until January
16, 1994, thereafter $500,000 per year until January 16, 1995, thereafter
$600,000 per year until January 16, 1996, and thereafter $750,000 per year from
January 17, 1996 until January 16, 1997 and, subject to CCC approval, 1% of the
Partnership's Income from Operations (as defined in such agreement) in excess of
$40.0 million.
The Partnership has an employment agreement with Ernest E. East, Esq., who
is Senior Vice President -- Administration and Corporate Affairs of the
Partnership. The agreement, which expires in June 1995, provides for an annual
salary of $100,000 and a discretionary bonus. Mr. East also has similar
employment agreements with each of TTMA and TPA. Mr. East devotes approximately
one-third of his professional time to the affairs of the Partnership.
Pursuant to an employment agreement dated January 31, 1992, as amended
March 31, 1993 and December 30, 1993, Thomas P. Venier serves as Senior Vice
President of Strategic Development and Planning of the Partnership. The
agreement provides for an annual salary of $148,000, which is subject to review.
As of April 23, 1993, and on the last day of each week thereafter, the term of
the agreement has been automatically extended for one (1) week so that at all
times the term during the duration of the agreement is an unexpired period of
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twelve (12) months. Notwithstanding such provision, Mr. Venier has the right to
terminate his employment by giving 30 days written notice to the Partnership of
his intent to do so.
Compensation of Directors
Each Partner Representative of the Partnership (other than Trump) receives
an annual fee of $50,000 and $2,500 per meeting attended, plus reasonable
out-of-pocket expenses incurred in attending any meeting of the Board.
Compensation Committee Interlocks and Insider Participation
In general, the compensation of executive officers of the Partnership is
determined by the Board of Partner Representatives, which is composed of Donald
J. Trump, Nicholas L. Ribis, Roger P. Wagner, Ernest E. East, Asher O.
Pacholder, Thomas F. Leahy and Wallace B. Askins. The compensation of Nicholas
L. Ribis and Roger P. Wagner is set forth in their employment agreements with
the Partnership. The Partnership has delegated the responsibility over certain
matters, such as the bonus of Mr. Ribis, to Trump. Executive officers of Funding
do not receive any additional compensation for serving in such capacity.
The SEC requires issuers to disclose the existence of any other corporation
in which both (i) an executive officer of the registrant serves on the board of
directors and/or compensation committee, and (ii) a director of the registrant
serves as an executive officer. Messrs. Ribis, East, Wagner and Burke, executive
officers of the Partnership, serve on the Board of Directors of other entities
in which members of the Board of Partner Representatives (namely, Messrs. Trump
and Ribis) serve as executive officers. The Partnership believes that such
relationships have not affected the compensation decisions made by the Board of
Partner Representatives in the last fiscal year.
Mr. Wagner serves as a director of TCHI, of which Messrs. Trump and Ribis
serve as executive officers.
Messrs. Ribis, East and Burke serve on the Board of Directors of Taj Mahal
Holding Corp., which holds an indirect equity interest in TTMA, the partnership
that owns the Taj Mahal, of which Messrs. Trump and Ribis are executive
officers. Such persons also serve on the Board of Directors of TM/GP Corporation
(a subsidiary of Taj Mahal Holding Corp.), the managing general partner of TTMA,
of which Messrs. Trump and Ribis are executive officers. Mr. Ribis is
compensated by TTMA for his services as its chief executive officer.
Mr. Ribis also serves on the Board of Directors of Trump Taj Mahal Realty
Corp. ("Taj Realty Corp."), which leases certain real property to TTMA, of which
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Trump is an executive officer. Trump, however, does not receive any compensation
for serving as an executive officer of Taj Realty Corp.
Messrs. Trump and Ribis serve on the Board of Directors of TPFI, the
managing general partner of TPA, of which Messrs. Trump, Ribis and East are
executive officers. Messrs. Trump, Ribis and East also serve on the Board of
Directors of TPHI, of which such persons are also executive officers. Mr. Ribis
is compensated by TPA for his services as chief executive officer.
CERTAIN TRANSACTIONS
Although the Partnership has not fully considered all of the areas in which
it intends to engage in transactions with affiliates of the partners, it is free
to do so on terms it believes to be the same as could be obtained in third party
transactions, and may in the future expand the scope of its current transactions
with affiliates, subject to certain conditions set forth in the Midlantic Term
Loan, the Senior Note Indenture, the Mortgage Note Indenture and PIK Note
Indenture, which generally require that such transactions be as if on an
arm's-length basis and on terms comparable to those generally available in
equivalent transactions with third parties. In addition, the Partnership
Agreement requires that any transaction with Trump or any of his Affiliates
requires the affirmative vote of at least two of the three outside members of
the Board of Partner Representatives.
Pursuant to conditions imposed by the CCC on the Partnership's casino
license, payments from the Partnership to any related entity or any partner of
the Partnership require prior CCC approval with the exception of (1) payments
pursuant to a tax allocation agreement; (2) payments to satisfy or maintain a
debt obligation, the structure of which has been expressly approved by the CCC;
(3) payments representing the Partnership's proportionate share of group
insurance premiums; (4) payments for fair and adequate consideration for
services rendered or property purchased or leased by or to casino service
industries or junket enterprises or applicants for such licenses; and (5) any
individual payment in the ordinary course of business less than $100,000 and any
such cumulative payments not exceeding $500,000 in any calendar year. Under a
condition imposed by the CCC on the Partnership's casino license, any payments
from the Partnership, whether directly or indirectly, to any officer, director
or principal employee of the Partnership or any holding company thereof, or any
entity controlled by any officer, director or principal employee of the
Partnership or any holding company thereof, for services rendered outside the
scope of the position or employment of the individual, shall be subject to prior
CCC approval.
Other Trump Casinos
The following table sets forth the amounts due to the Partnership from
Trump and his Affiliates as of December 31, 1993. For a more detailed
description of the Partnership's transactions with Trump and his Affiliates, see
"- Other Transactions with Affiliates."
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Amount Due and Outstanding
to the Partnership
as of December 31, 1993
--------------------------
Trump Plaza Associates................................. $321,000
Trump Taj Mahal Associates............................. 69,000
The Trump Organization................................. 225,000
Total Due from Affiliates
as of December 31, 1993........................... $615,000
Other Transactions With Affiliates
In December 1990, Fred Trump, the father of Donald J. Trump, placed $3.5
million in cash on deposit with the Partnership's casino cage, which was
recorded by the Partnership as a gaming patron deposit. Counter check(s)
totalling $3.5 million were issued against the deposit, for which Fred Trump
received gaming chips valued at $3.5 million. These gaming chips were included
in the outstanding chip liability on the Partnership's books at September 30,
1992. In each of October 1992 and December 1993, in accordance with the Bond
Indenture, Fred Trump redeemed $1.0 million in gaming chips for cash.
The Partnership has engaged in transactions with TPA, TTMA, Plaza Operating
Partners, Ltd., the partnership which operates the Plaza Hotel and The Trump
Organization. TPA, Plaza Operating Partners, Ltd., The Trump Organization and
TTMA are affiliates of Donald J. Trump. These transactions include certain
shared payroll costs, fleet maintenance and limousine services, as well as
complimentary services offered to customers, for which the Partnership makes the
initial payment and is then reimbursed by the Affiliates. During 1993, the
Partnership incurred expenses of approximately $1.3 million in corporate
salaries, and $1.0 million of other transactions on behalf of these related
entities. In addition, the Partnership received payments totalling $2.0 million
for services rendered and had $0.4 million of deductions for similar services
incurred by these related entities on behalf of the Partnership.
During 1992, the Partnership incurred expenses of approximately $1.2
million in corporate salaries, and $0.5 million of other transactions on behalf
of these related entities. In addition, the Partnership received payments
totalling $1.4 million for services rendered and had $0.2 million of deductions
for similar services incurred by these related entities on behalf of the
Partnership.
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During 1991, the Partnership incurred expenses of approximately $0.9
million in corporate salaries, $1.3 million in fleet maintenance/limousine
services and $0.6 million of other transactions on behalf of these related
entities. In addition, the Partnership received payments totalling $2.7 million
for services rendered and had $0.6 million of deductions for similar services
incurred by these related entities on behalf of the Partnership.
In connection with the 1992 Restructuring of the indebtedness of the
Partnership and Funding, including, among other things, preparation of the Plan
and the solicitation, certain employees of The Trump Organization provided
various services to the Partnership.
In connection with the 1993 Recapitalization, the Partnership purchased the
Midlantic Grid Note. Payment of the Midlantic Grid Note was guaranteed by Trump,
which guaranty was secured by a pledge of his direct and indirect equity
interest in the Partnership. In addition, Winton Associates, Inc. ("Winton") was
retained by a holder of Units to negotiate the terms of the Recapitalization on
behalf of the Unitholders. The Partnership paid Winton a non-refundable fee of
$100,000 as well as its out-of-pocket expenses, and an additional fee of
$400,000 upon consummation of the Recapitalization. Winton, in turn, retained
Prudential Securities, Inc. to assist it in representing Putnam Investment
Management, and paid Prudential one-half of the fees described above and
reimbursed Prudential for its out-of-pocket expenses. Winton is a wholly owned
subsidiary of Pacholder Associates, Inc., of which Dr. Asher Pacholder, a member
of the Board of Partner Representatives, is the Chairman of the Board and
Managing Director.
Pursuant to the terms of the Partnership Agreement, the Partnership paid a
$1.5 million cash bonus to Trump on February 16, 1994.
Services Agreement
On December 28, 1993, the Partnership and TC/GP entered into a Services
Agreement (the "Services Agreement"). In general, the Services Agreement
obligates TC/GP to provide to the Partnership, from time-to-time when reasonably
requested, consulting services on a non-exclusive basis, relating to marketing,
advertising, promotional and other related services with respect to the business
and operations of the Partnership, in exchange for certain fees to be paid only
in those years in which EBITDA exceeds prescribed amounts. See "DESCRIPTION OF
THE SERVICES AGREEMENT."
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DESCRIPTION OF THE SENIOR NOTES
The Series A Notes were, and Series B Notes offered hereby will be, issued
under the Senior Note Indenture, dated as of December 28, 1993, by and among
Funding, as issuer, the Partnership, as guarantor, and First Bank National
Association, as Senior Note Trustee, a copy of the form of which is filed as an
exhibit to the Registration Statement of which this Prospectus is a part. The
form and terms of the Series B Notes will be identical in all material respects
to the form and terms of the Series A Notes, except for certain registration
rights which will terminate upon consummation of the Exchange Offer. See
"PROSPECTUS SUMMARY - Comparison of Series A Notes and Series B Notes." The
Senior Note Indenture is subject to and is governed by the Trust Indenture Act.
The following is only a summary of the material provisions of the Senior Note
Indenture and the Senior Mortgage Documents as they relate to the Series B Notes
and does not purport to be complete, and where reference is made to particular
provisions of the Senior Note Indenture or the Senior Mortgage Documents, such
provisions, including the definitions of certain terms, are qualified in their
entirety by reference to all the provisions of the Senior Note Indenture and the
Senior Mortgage Documents and those terms made a part of the Senior Note
Indenture and the Senior Mortgage Documents by the Trust Indenture Act. Unless
otherwise specified, references to Articles and Sections are to Articles and
Sections of the Senior Note Indenture.
General
The Senior Notes mature on November 15, 2000. Each Senior Note bears
interest payable in cash at the rate of 11-1/2%, payable semiannually in arrears
on May 15 and November 15 each year, commencing May 15, 1994, to the Person in
whose name the Senior Note (or any predecessor Senior Note) is registered at the
close of business on the May 1 or November 1 next preceding such Interest
Payment Date; provided, however, that if, as of a date prior to November 15,
1998, Funding shall have redeemed all the then outstanding PIK Notes through the
application of the proceeds of one or more Equity Offerings or of internally
generated funds and not through the incurrence of additional indebtedness, then
on and after the first day of the calendar month next commencing after such
date, the aforesaid interest rate of 11-1/2% per annum will be reduced to
11-1/4% per annum (the "Interest Rate Reduction"). Senior Notes will be issuable
only in registered form without coupons, in denominations of $1,000 and integral
multiples thereof. (Section 3.2)
Payment of the Senior Notes is guaranteed by the Partnership and the Senior
Notes are secured by the Senior Mortgage Documents. See "Security" and
"Guarantee."
Principal of, premium, if any, and interest on, the Senior Notes are
payable, and the Senior Notes are exchangeable and transferable, at the office
or agency of Funding in The City of New York maintained for such purpose (which
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initially will be the Corporate Trust Office of the Senior Note Trustee or its
agent); provided, however, that payment of interest may be made at the option of
Funding by check mailed to each holder of Senior Notes at his registered
address. The Senior Notes may be presented for registration of transfer and
exchange at such office of the Senior Note Trustee. No service charge will be
made for any registration of transfer, exchange or redemption of Senior Notes,
except in certain circumstances for any tax or other governmental charge that
may be imposed in connection therewith. (Section 3.5)
Guarantee
The obligations of Funding to pay the principal of, premium, if any, and
interest on, the Senior Notes are unconditionally guaranteed by a non-recourse
Senior Guarantee of the Partnership. The Senior Guarantee is secured by the
Senior Guarantee Mortgage on the assets of the Partnership, as described under
"Security," pari passu with the lien of the Senior Note Mortgage.
Security
The Senior Notes are secured by an assignment by Funding to the Senior Note
Trustee, for the benefit of the holders of the Senior Notes, of (a) the Senior
Partnership Note and (b) the Senior Note Mortgage (the Senior Partnership Note,
the Senior Note Mortgage, the Senior Guarantee Mortgage (which has been made
directly to the Senior Note Trustee) and any ancillary documents executed by
Funding, the Partnership or the Senior Note Trustee for purposes of providing
security for the benefit of the holders of the Senior Notes are referred to
herein as the "Senior Mortgage Documents"), which encompasses a lien on (i)
Trump's Castle and the leasehold and fee interests of the Partnership in the
land on which Trump's Castle and its ancillary facilities are located, including
certain additions and improvements constructed thereon, and (ii) substantially
all the other assets of the Partnership (collectively, the "Collateral").
The Senior Partnership Note contains interest, principal, redemption and
default terms which are virtually identical to those of the Senior Notes. The
Senior Note Mortgage encumbers the Partnership's interest in Trump's Castle and
in all other facilities owned by or leased to the Partnership, including certain
additions and improvements thereto and (except, in certain circumstances, as
permitted by the Senior Note Mortgage, where such property is financed)
substantially all furniture, furnishings, fixtures, machinery and equipment at
any time forming a part thereof, or used in connection therewith. The Senior
Note Mortgage constitutes a lien and security interest on Trump's Castle and
such other assets, subject to the prior liens securing the Midlantic Term Loan
and other permitted encumbrances and pari passu with liens securing the Working
Capital Facility, if incurred. See "RISK FACTORS -- Ranking of Senior Notes;
Limitation on Ability to Realize on Collateral."
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The Partnership has also executed the Senior Guarantee Mortgage in favor of
the Senior Note Trustee. The Senior Guarantee Mortgage secures the obligations
of the Partnership under the Senior Guarantee. The lien of the Senior Guarantee
Mortgage is pari passu with the lien of the Senior Note Mortgage. The Senior
Note Mortgage and the Senior Guarantee Mortgage have substantially identical
terms, secure essentially the same debt and constitute a lien on the same
assets. They have both been executed so as to provide to the Senior Note Trustee
and the holders of the Senior Notes alternative remedies, such that in the event
legal or equitable defenses were successfully raised against enforcement of one
of the mortgages, foreclosure could nevertheless be pursued under the other
mortgage.
Certain of the Partnership's intangible assets that may be significant to
its operations, such as computer software licenses, are by their terms not
assignable and, accordingly, are not included in the property subject to the
Senior Note Mortgage and the Senior Guarantee Mortgage.
Ranking
In connection with the Recapitalization, the Partnership entered into an
agreement with Midlantic pursuant to which the Partnership has agreed not to
make any payments with respect to the Senior Partnership Note or the Senior
Guarantee and the Senior Note Trustee has been prohibited from realizing on the
Senior Note Mortgage and the Senior Guarantee Mortgage so long as there exists
any payment default on the Midlantic Term Loan. There was an aggregate principal
amount of $38 million of Midlantic Term Loan outstanding as of December 31,
1993.
Funding is prohibited from incurring additional Indebtedness other than
Indebtedness with respect to the Midlantic Term Loan, the Mortgage Notes, the
Senior Notes, the PIK Notes and any intercompany loan from the Partnership and
the Partnership is subject to restrictions on the incurrence of any additional
Indebtedness. See "-- Certain Covenants -- Limitation on Indebtedness" and "--
Limitation on Activities and Investments."
Non-Recourse
The Senior Note Indenture provides that, notwithstanding anything therein
or in any other agreement, document, certificate, instrument, statement or
omission referred to below to the contrary, the Partnership and Funding are
liable thereunder only to the extent of the assets of the Partnership and
Funding and the interest of Funding in the Senior Notes, and no other person or
entity, including, but not limited to, any partner, officer, committee or
committee member of the Partnership or any Partner therein or of any Affiliate
of the Partnership (or of any other obligor on the Senior Notes), or any
incorporator, officer, director or shareholder of Funding, or any Affiliate or
controlling person or entity of any of the foregoing, or any agent, employee or
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lender of any of the foregoing, or any successor, personal representative, heir
or assign of any of the foregoing, in each case past, present or as they may
exist in the future, shall be liable in any respect (including, without
limitation, for the breach of any representation, warranty, covenant, agreement,
condition or indemnification or contribution undertaking contained therein)
under, in connection with, arising out of, or relating to the Senior Note
Indenture, or any other agreement, document, certificate, instrument or
statement (oral or written) related to, executed or to be executed, delivered or
to be delivered, or made or to be made, or any omission made or to be made, in
connection with any of the foregoing or any of the transactions contemplated in
any such agreement, document, certificate, instrument or statement.
Notwithstanding the foregoing, the holders of the Senior Notes preserve any
personal claims they may have for fraud, liabilities under the Securities Act,
and other liabilities that cannot be waived under the applicable federal and
state laws in connection with the purchase of the Senior Notes; provided,
however, that such conduct will not constitute an Event of Default under the
Senior Note Indenture, the Senior Notes or the Senior Note Mortgage or any
document executed in conjunction therewith or otherwise related thereto.
(Section 3.11)
Sinking Fund
The sinking fund will provide for the mandatory redemption of $4,050,000
principal amount of the Senior Notes on each of June 1, 1998 and June 1, 1999,
at a redemption price equal to 100% of the principal amount, plus accrued
interest to the redemption date, providing for the redemption of 30% of the
original aggregate principal amount of the Senior Notes prior to maturity.
Funding or the Partnership may, at their option, receive a credit against
sinking fund obligations equal to the aggregate principal amount of Senior Notes
acquired by Funding or the Partnership and surrendered to the Senior Note
Trustee for cancellation and equal to the aggregate principal amount of Senior
Notes redeemed or called for redemption otherwise than through operation of the
sinking fund that have not previously been so credited for such purpose by the
Senior Note Trustee. (Section 11.2) If less than all of the Senior Notes are to
be redeemed, the Senior Note Trustee shall select the Senior Notes or portions
thereof to be redeemed pro rata, by lot or by any other method the Trustee shall
deem fair and reasonable. (Section 11.6)
Mandatory Redemption
Pursuant to the Casino Control Act, Funding or the Partnership may redeem
Senior Notes at the lower of the Outstanding Amount (as defined) or the Fair
Market Value (as defined) thereof held by Persons that are found by the CCC not
to be qualified to hold such securities and who fail to dispose of such
securities within 30 days after notice of such finding. (Section 11.1)
Subject to the rights of the holders of the Senior Indebtedness, Funding or
the Partnership must also redeem the Senior Notes at the principal amount
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thereof, without premium, plus accrued and unpaid interest, at any time as a
result of a Total Taking or Casualty. (Section 11.3)
Certain Covenants
The Senior Note Indenture contains, among others, the following covenants:
Limitation on Indebtedness. The Partnership will not, and will not permit
its Subsidiaries to, create, incur, assume, or directly or indirectly guaranty
or in any other manner become directly or indirectly liable with respect to any
Indebtedness (including Acquired Indebtedness, but excluding Permitted
Indebtedness) unless, in the case of Indebtedness of the Partnership and
Acquired Indebtedness, (a) the Partnership's Consolidated Fixed Charge Coverage
Ratio for the four full fiscal quarters immediately preceding such event, taken
as one period (and after giving pro forma effect to: (i) the incurrence of such
Indebtedness, and (if applicable) the application of the net proceeds therefrom,
including to refinance other Indebtedness, as if such Indebtedness were incurred
and the application of such proceeds occurred at the beginning of such
four-quarter period; (ii) the incurrence, repayment or retirement of any other
Indebtedness by the Partnership or the Subsidiaries since the first day of such
four-quarter period as if such Indebtedness were incurred, repaid or retired at
the beginning of such four-quarter period (except that, in making such
computation, the amount of Indebtedness under any revolving credit facility
shall be computed based upon the average daily balance of such Indebtedness
during such four-quarter period); and (iii) the acquisition (whether by
purchase, merger or otherwise) or disposition (whether by sale, merger or
otherwise) of any company, entity or business acquired or disposed by the
Partnership or the Subsidiaries, as the case may be, since the first day of such
four-quarter period, as if such acquisition or disposition occurred at the
beginning of such four-quarter period), would have been at least equal to the
ratios set forth below for any such four-quarter period ending during the fiscal
years indicated below:
Fiscal Year Ratio
----------- -----
1993 and 1994.............................................. 1.50 to 1
1995 and thereafter........................................ 1.75 to 1,
and (b) except in the case of Permitted Indebtedness, Acquired Indebtedness or
Pari Passu Indebtedness, such Indebtedness created, incurred, assumed or
guaranteed pursuant to this section, (i) has an Average Life to Stated Maturity
that exceeds the remaining Average Life to Stated Maturity of the Senior Notes
and (ii) has a Stated Maturity for its final scheduled principal payment later
than the Stated Maturity for the final scheduled principal payment of the Senior
Notes and (c) if such Indebtedness created, incurred, assumed or guaranteed
pursuant to this section is Pari Passu Indebtedness which is not Permitted
Indebtedness or Acquired Indebtedness, such Indebtedness will have (i) an
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Average Life to Stated Maturity no shorter than the remaining Average Life to
Stated Maturity of the Senior Notes and (ii) a Stated Maturity for its final
scheduled principal payment that is not earlier than the Stated Maturity for the
final scheduled principal payment of the Senior Notes. (Section 10.7)
Limitation on Liens. Neither Funding nor the Partnership will, nor will any
of the Subsidiaries be permitted to, create, incur, assume or suffer to exist
any Liens, other than (a) the Lien of the Senior Mortgage Documents and (b)
Permitted Liens. (Section 10.8)
Limitation on Restricted Payments. Neither Funding nor the Partnership
will, and will not permit any of the Subsidiaries to, directly or indirectly:
(i) declare or make any distribution on Funding's Capital Stock or the
Partnership's Equity Interests, as the case may be (other than
distributions payable in Funding's Qualified Capital Stock or the
Partnership's Qualified Equity Interests or in options, warrants or other
rights to purchase such Qualified Capital Stock or Qualified Equity
Interests);
(ii) purchase, redeem or otherwise acquire or retire for value any
such Capital Stock or Equity Interests, or any options, warrants or other
rights to acquire such Capital Stock or Equity Interests;
(iii) make any principal payment on or redeem, repurchase, defease or
otherwise acquire or retire for value prior to any scheduled principal
payment, scheduled sinking fund payment or maturity, any Pari Passu
Indebtedness (other than Permitted Indebtedness) or Subordinated
Indebtedness of the Partnership (other than pursuant to clause (C) below);
or
(iv) incur, create, assume or suffer to exist any guaranty (other than
guarantees existing on the date of the Senior Note Indenture and any
renewals, extensions, substitutions, refinancings or replacements of such
guarantees) of Indebtedness of any Affiliate of the Partnership or Funding;
(the foregoing actions set forth in clauses (i) through (iv) being referred to
as "Restricted Payments"), except that the Partnership may apply up to 50% of
its Excess Available Cash to make a Restricted Payment if: at the time of such
Restricted Payment and after giving effect thereto, (A) no Default or Event of
Default shall have occurred and be continuing; (B) the Partnership's
Consolidated Fixed Charge Coverage Ratio for the four full fiscal quarters
immediately preceding the Restricted Payment, taken as one period (after giving
pro forma effect to the Restricted Payment and (if applicable) the application
of the net proceeds therefrom and any events set forth in clauses (a)(ii) and
(a)(iii) under "Limitation on Indebtedness" above) would have been at least
equal to 1.75 to 1; and (C) prior to making such Restricted Payment, Funding or
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the Partnership shall have used an amount equal to such Restricted Payment to
purchase either Mortgage Notes or PIK Notes on the open market or pursuant to a
tender offer which purchase shall not be deemed to be a Restricted Payment.
Notwithstanding the foregoing, and so long as there is no Default or Event
of Default continuing, the foregoing provisions will not prohibit:
(i) payments made pursuant to the terms of the Services Agreement as
in effect on the date of the Senior Note Indenture;
(ii) distributions on the Trump Priority Interest to the extent
permitted under the Amended Partnership Agreement as in effect on the date
of the Senior Note Indenture;
(iii) payment of an annual bonus to Trump that has been approved by a
majority of the Noteholder Representatives;
(iv) dividend payments within 60 days after declaration if such
payments would comply with the foregoing provision;
(v) the repurchase, redemption or other acquisition or retirement of
any shares of any class of Capital Stock of Funding or Equity Interest of
the Partnership in exchange for (including any such exchange pursuant to
the exercise of a conversion right or privilege in connection with which
cash is paid in lieu of the issuance of fractional shares, interests or
scrip), or out of the Net Cash Proceeds of a substantially concurrent issue
and sale (other than to a Subsidiary) of, other shares of Capital Stock of
Funding or Equity Interests of the Partnership, as the case may be (other
than Redeemable Capital Stock or Redeemable Equity Interests, as the case
may be);
(vi) (I) the redemption, repayment, defeasance, repurchase or other
acquisition or retirement for value of any Subordinated Indebtedness or
Pari Passu Indebtedness of the Partnership (other than Redeemable Equity
Interests) in exchange for or out of the net cash proceeds of a
substantially concurrent issue and sale of (A) new Indebtedness of Funding
or (B) Equity Interests of the Partnership (other than Redeemable Equity
Interests) or Capital Stock of Funding (other than Redeemable Capital
Stock), provided that, with respect to clause (A), (1) the aggregate
principal amount of any such new Indebtedness does not exceed the aggregate
principal amount of such Subordinated or Pari Passu Indebtedness (or, if
such Subordinated or Pari Passu Indebtedness provides for an amount less
than the principal amount thereof to be due and payable upon a declaration
of acceleration thereof, then such lesser amount as of the date of
determination) plus accrued interest thereon plus the amount of any premium
or other payment required to be paid under the terms of the instrument
governing such Subordinated or Pari Passu Indebtedness or the amount of any
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premium reasonably determined by the Partnership as necessary to accomplish
such refinancing by means of a tender offer or privately negotiated
purchase and, in each case, actually paid, plus the amount of expenses of
the Partnership incurred in connection with such refinancing, (2) if the
Indebtedness so redeemed, repaid, defeased, repurchased, acquired or
retired is Subordinated Indebtedness, any such new Indebtedness (x) has an
Average Life to Stated Maturity that exceeds the Average Life to Stated
Maturity of the Senior Notes and a Stated Maturity that is not earlier than
the final Stated Maturity of the Senior Notes and (y) is expressly
subordinated in right of payment to the Senior Guarantee at least to the
same extent as the Subordinated Indebtedness to be redeemed, repaid,
defeased, repurchased, acquired or retired and (3) if the Indebtedness so
redeemed, repaid, defeased, repurchased, acquired or retired is Pari Passu
Indebtedness, any such new Indebtedness has an Average Life to Stated
Maturity that is not less than the Average Life to Stated Maturity of such
Indebtedness and a Stated Maturity that is not earlier than the final
Stated Maturity of such Indebtedness; or (II) the redemption, repayment,
defeasance, repurchase or other acquisition or retirement for value of any
Redeemable Equity Interests of the Partnership through the issuance of new
shares of Redeemable Equity Interests of the Partnership, provided that any
such new Redeemable Equity Interests (1) do not have a maturity or are
otherwise redeemable at the option of the holder prior to the Stated
Maturity of the Senior Notes and (2) are expressly subordinated in right of
payment to the Senior Guarantee at least to the same extent as Redeemable
Equity Interests to be redeemed, repurchased or otherwise acquired or
retired for value;
(vii) the redemption of any shares of any class of Capital Stock of
Funding, Equity Interest of the Partnership or any Indebtedness of the
Partnership or Funding, if (A) the holder thereof delivers an Opinion of
Counsel to the Senior Note Trustee that failure to so redeem would subject
the holder thereof to an adverse action by a Gaming Authority (or, if
applicable, a failure to act by a Gaming Authority that is adverse to the
holder) and (B) the Board of Partner Representatives determines (as
evidenced by a Board Resolution delivered to the Senior Note Trustee) that
such adverse action (or, if applicable, such failure to act) would be
likely to have a material adverse effect on such holder;
(viii) (A) distributions or intercompany loans to Funding by the
Partnership to pay interest in cash on the outstanding Mortgage Notes in
accordance with the terms thereof, (B) distributions or intercompany loans
of up to 50% of the Partnership's Excess Available Cash to Funding by the
Partnership to purchase, redeem or otherwise acquire Outstanding PIK Notes
in accordance with the terms thereof, provided that the Partnership's
Consolidated Fixed Charge Coverage Ratio for the four full fiscal quarters
immediately preceding the Restricted Payment, taken as one period (after
giving pro forma effect to the Restricted Payment and (if applicable) the
application of the net proceeds therefrom and any events set forth in
clauses (a)(ii) and (a)(iii) under "Limitation on Indebtedness" above)
would have been at least equal to 1.50 to 1, (C) distributions or
intercompany loans to Funding by the Partnership to pay interest in cash on
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the Outstanding PIK Notes in accordance with the terms thereof, provided
that any events set forth in clause (a) under "Limitation on Indebtedness"
above is at that time satisfied and (D) distributions or intercompany loans
to Funding by the Partnership to pay any tax liability of Funding resulting
from any such distribution or intercompany loan provided for in (A), (B) or
(C) above;
(ix) distributions or intercompany loans by the Partnership pursuant
to the terms of the Partnership Agreement as in effect on the date of the
Senior Note Indenture (A) to pay reasonable general and administrative
expenses, including directors' fees and premiums for directors' and
officers' liability insurance of any corporate partner and (B) to make
indemnification payments as required by the Certificate of Incorporation of
TC/GP or Funding or the Partnership Agreement each as in effect on the date
of the Senior Note Indenture and (C) to make distributions by the
Partnership, pursuant to the Partnership Agreement, to Partners in amounts
in respect of any tax year of the Partnership which do not exceed the
Partners' tax liability in respect of the Partnership's income for such
year computed as if the Partners were each taxpayers deriving items of
income, gain, loss or deduction only from the Partnership for such year and
by applying the sum of the higher of (x) the highest federal income tax
rate imposed on individuals for such year or (y) the highest federal income
tax rate imposed on corporations for such year, plus (z) in either case,
eight percent (8%) as the rate applicable to such year's results;
(x) guarantees by the Partnership of Indebtedness of any special
purpose financing Affiliate of the Partnership if the incurrence of any
such guaranty is made in accordance with "Limitation on Indebtedness" above
and the net proceeds of any such Indebtedness are provided to the
Partnership;
(xi) distribution by the Partnership to Trump of the Common Stock of
TC/GP upon consummation of the Recapitalization; and
(xii) the purchase, redemption or other acquisition of securities
representing an aggregate of 0.5% common equity interest in the Partnership
pursuant to the terms of the Litigation Warrants and any distribution or
advance by the Partnership to TC/GP, as the survivor of the merger of
Trump's Castle Holding, Inc. with TC/GP, to fund the payment of statutory
appraisal rights perfected in connection with such merger. (Section 10.9)
Limitation on Partnership Leases. The Partnership will not, nor will any of
the Subsidiaries be permitted to, lease as tenant or subtenant real or personal
property (except Permitted Leases), unless the Partnership's Consolidated Fixed
Charge Coverage Ratio for the four full fiscal quarters immediately preceding
such event, taken as one period (and after giving pro forma effect to any such
lease as if such lease was entered into at the beginning of such four-quarter
period and any events set forth in clauses (a)(ii) and (a)(iii) under
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"Limitation on Indebtedness" above), would have been at least equal to the
ratios set forth below for any such four-quarter period ending during the fiscal
year indicated below:
Fiscal Year Ratio
----------- -----
1993 and 1994............................................... 1.50 to 1
1995 and thereafter......................................... 1.75 to 1
In giving effect to the lease as of such four full fiscal quarters, it will
be assumed that the rent for such prior four fiscal quarters was the greater of
the (i) average rent over the term of such lease and (ii) rent payable for the
first four fiscal quarters. (Section 10.10)
Limitation on Preferred Stock of Subsidiaries and Subsidiary Distributions.
(a) The Partnership will not permit any of the Subsidiaries to, directly or
indirectly, issue or sell any Preferred Stock (except to the Partnership or a
Wholly-owned Subsidiary thereof).
(b) The Partnership will not permit any of the Subsidiaries to, directly or
indirectly, (i) declare or pay any dividend or make any distribution on the
Capital Stock of such Subsidiary or to the holders of such Subsidiary's Capital
Stock (other than dividends or distributions payable in Capital Stock of such
Subsidiary) or (ii) purchase, redeem or otherwise acquire or retire for value
any such Capital Stock; provided that this covenant will not prevent the payment
by any Subsidiary of dividends or other distributions to the Partnership or a
Wholly-owned Subsidiary or the redemption or repurchase by any Subsidiary of any
of its Capital Stock owned by the Partnership or a Wholly-owned Subsidiary.
(Section 10.11)
Limitation on Payment Restrictions Affecting Subsidiaries. The Partnership
will not, nor will any of the Subsidiaries be permitted to, create or otherwise
cause or suffer to exist or become effective any consensual encumbrance or
restriction of any kind on the ability of the Partnership or such Subsidiary to
(a) pay dividends or make any other distributions on the Equity Interest of the
Partnership or the Capital Stock of such Subsidiary or pay any Indebtedness owed
to the Partnership or any other Subsidiary, (b) make any loans or advances to
the Partnership or any other Subsidiary or (c) transfer any of its property or
assets to the Partnership or any other Wholly-owned Subsidiary, except (i) any
restrictions, with respect to a Subsidiary that is not a Subsidiary on the date
of the Senior Note Indenture, in existence at the time such Person becomes a
Subsidiary of the Partnership (but not created in contemplation of such Person
becoming a Subsidiary), (ii) any restrictions with respect to a Subsidiary
imposed pursuant to an agreement which has been entered into for the sale or
disposition of all or substantially all of the Capital Stock or assets of such
Subsidiary, (iii) any encumbrance or restriction pursuant to an agreement in
effect at or entered into on the date of the Senior Note Indenture, and (iv) any
restrictions existing under any agreement which refinances or replaces the
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agreements containing the restrictions in clauses (i), (ii) and (iii), provided
that the terms and conditions of any such agreement are no less favorable to
holders of the Senior Notes than those under or pursuant to the agreement
evidencing the Indebtedness refinanced. (Section 10.12)
Purchase of Senior Notes upon Change of Control. If a Change of Control
shall occur at any time, then each holder of Senior Notes will have the right to
require that Funding or the Partnership repurchase such holder's Senior Notes in
whole or in part in integral multiples of $1,000 at a purchase price in cash in
an amount equal to 101% of the principal amount thereof, plus accrued and unpaid
interest (including any defaulted interest), if any, to the date of purchase,
pursuant to the Change of Control Offer described in the following paragraph and
the other procedures set forth in the Senior Note Indenture. Neither the Board
of Directors of Funding nor the Senior Note Trustee has the ability to waive
this Change of Control Offer requirement.
The definition of Change of Control (see "-- Certain Definitions" below),
and the corresponding Change of Control Offer requirement, relate specifically
to the practical ability of Trump to control the activities of the Partnership.
A Change of Control may not occur if Funding recapitalizes or enters into a
transaction with management or any Affiliates, including Trump, subject to the
particular terms and conditions of any such recapitalization or transaction,
which are difficult to ascertain in advance. Accordingly, the provisions of the
Senior Note Indenture may not necessarily provide holders of Senior Notes with
protection in the form of a Change of Control Offer in the event of a highly
leveraged transaction, reorganization, restructuring, merger or similar
transaction involving Funding that does not result in a Change of Control.
Within 30 days following any Change of Control, Funding or the Partnership
will send by first-class mail, postage prepaid, to the Senior Note Trustee and
to each holder of the Senior Notes, a notice stating, among other things: the
purchase price; that the purchase date will be a business day no earlier than 45
days nor later than 60 days from the date of such notice; that any Senior Note
not tendered will continue to accrue interest; that, unless Funding or the
Partnership defaults in the payment of the purchase price, any Senior Notes
accepted for payment pursuant to the Change of Control Offer will cease to
accrue interest after the Change of Control payment date; and certain other
procedures that a holder must follow to accept the Change of Control Offer or to
withdraw such acceptance.
Funding and the Partnership will not, and will not permit any
Subsidiary to, create or permit to exist or become effective any restriction
(other than restrictions existing under Indebtedness as in effect of the date of
the Senior Note Indenture) that would materially impair the ability of Funding
or the Partnership to make a Change of Control Offer to purchase the Senior
Notes or, if such Change of Control Offer is made, to pay for the Senior Notes
tendered for purchase. (Section 10.13)
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Funding and the Partnership may not have adequate financial resources to
effect a Change of Control Offer. Moreover, Funding's and the Partnership's
ability to repurchase the Senior Notes upon a Change of Control is restricted by
the terms of the Midlantic Term Loan. The inability of Funding or the
Partnership to repurchase Senior Notes upon a Change of Control would constitute
an Event of Default under the Senior Note Indenture.
Funding and the Partnership will comply with the applicable tender offer
rules, including Rule 14e-1 under the Exchange Act, and other securities laws or
regulations in connection with a Change of Control Offer.
Limitations on Transactions with Affiliates. Neither Funding nor the
Partnership will, nor will any of the Subsidiaries be permitted to, directly or
indirectly, enter into or suffer to exist any transaction or series of related
transactions (including, without limitation, the sale, purchase, exchange or
lease of assets, property or services) with any Affiliate of Funding or the
Partnership (other than a Wholly-owned Subsidiary) unless (a) such transaction
or series of related transactions is on terms that are no less favorable to
Funding, the Partnership or such Subsidiary, as the case may be, than would be
available at the time of such transaction or transactions in a comparable
transaction in arm's-length dealings with an unaffiliated third party and with
respect to a transaction or series of related transactions involving aggregate
payments equal to or greater than $5.0 million, such transaction or series of
related transactions is approved by a majority of the Noteholder
Representatives, and (b) Funding or the Partnership, as the case may be,
delivers an Officers' Certificate to the Senior Note Trustee certifying that
such transaction or transactions comply with clause (a) above. The foregoing
restriction will not apply to (1) operations under the Services Agreement as in
effect on the date of the Senior Note Indenture, (2) the payment of compensation
to the senior executive officers of the Partnership (excluding Trump) which has
been approved by a majority of the Noteholder Representatives, (3) the payment
of an annual bonus to Trump which has been approved by a majority of the
Noteholder Representatives, (4) the payment of director fees (other than to
Trump) not in excess of those in effect as of the date of the Senior Note
Indenture, (5) payments made pursuant to the Partnership Agreement as in effect
on the date of the Senior Note Indenture, (6) payments pursuant to the Senior
Partnership Note or with respect to any Subordinated Indebtedness, and (7)
payments permitted under "Limitation on Restricted Payments" above. (Section
10.14)
Restriction on Transfer of Assets. The Partnership will not sell, convey,
transfer, lease or otherwise dispose of its assets or property to any of the
Subsidiaries. (Section 10.15)
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Limitation on Activities and Investments. Neither the Partnership nor any
of the Subsidiaries will engage in any business or investment activities other
than those necessary or appropriate for, incident to, in connection with or
arising out of, developing, financing, owning and operating the Casino Hotel.
The Partnership will not, and will not permit any Subsidiary to, make any
investment other than a Permitted Investment.
Funding will not conduct any business (including having any Subsidiary)
whatsoever, other than (i) to collect the amounts due and owing under the Senior
Partnership Note and any Subordinated Indebtedness, (ii) to preserve its rights
under the Senior Partnership Note, the Partnership Note and any Subordinated
Indebtedness and (iii) to do or cause to be done all things necessary or
appropriate to protect the property included in the Liens of the Senior Note
Mortgage and any further security and to preserve its rights therein and
otherwise to comply with its obligations under the Senior Notes, the Senior Note
Indenture, the PIK Notes, the PIK Note Indenture, the Mortgage Notes and the
Mortgage Note Indenture.
Funding will not incur or otherwise become liable for any Indebtedness
(other than (i) Indebtedness with respect to the Midlantic Term Loan, (ii) the
Senior Notes, (iii) the PIK Notes, including any PIK Notes issued as payment of
interest, (iv) the Mortgage Notes, (v) any renewal, extension, substitution,
refunding, refinancing or replacement thereof in accordance with the applicable
indentures or (vi) any intercompany loan from the Partnership), nor issue any
Preferred Stock. (Section 10.16)
Restriction on Payment of Services Fee. Funding and the Partnership will
not, and will not permit the Subsidiaries to, pay any Services Fee under the
Services Agreement or to pay or reimburse any expenses relating thereto if a
Default or Event of Default has occurred and is continuing. The terms of the
Services Agreement cannot be amended to increase the amounts to be paid
thereunder in the aggregate or on any particular date, or in any other manner
which would be adverse to the Partnership, and the Partnership will not, and
will not permit the Subsidiaries to, enter into any management or consulting
agreement with any Affiliate relating to Trump's Castle other than the Services
Agreement. (Section 10.17)
Merger and Sale of Assets, etc.
The Partnership may not consolidate with, merge with or into any other
Person, sell, assign, convey, transfer, lease or otherwise dispose of all or
substantially all of its properties and assets (as an entirety or substantially
as an entirety in one transaction or series of related transactions) to any
Person unless, among other things: (a) the Partnership shall be the continuing
Person, or the Person (if other than the Partnership) formed by such
consolidation or into which the Partnership is merged or the Person to which the
properties and assets of the Partnership are transferred (the "Surviving
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Entity") shall be a corporation or partnership duly organized and validly
existing under the laws of the United States or any state thereof or the
District of Columbia and shall expressly assume, by a supplemental indenture,
all of the obligations of the Partnership under the Senior Guarantee and the
performance and observance of the Senior Note Indenture and the Senior Note
Mortgage and the Senior Note Indenture and the Senior Note Mortgage shall remain
in full force and effect; (b) immediately before and immediately after giving
effect to such transaction, no Event of Default and no Default shall have
occurred and be continuing; (c) immediately after giving effect to such
transaction on a pro forma basis, the Consolidated Net Worth (as defined) of the
Surviving Entity is at least equal to the Consolidated Net Worth of the
Partnership immediately prior to such transaction or series of transactions; (d)
immediately before and immediately after giving effect to such transaction on a
pro forma basis, the Partnership or the Surviving Entity, as the case may be,
could incur at least $1.00 of additional Indebtedness (other than Permitted
Indebtedness) pursuant to the "Limitation on Partnership Indebtedness"; and (e)
immediately after such transaction, the Partnership or the Surviving Entity
holds all Permits required for operation of Trump's Castle.
Funding may not consolidate with, merge with or into any other Person, or
sell, assign, convey, transfer, lease or otherwise dispose of all or
substantially all of its properties or assets (as an entirety in one transaction
or series of related transactions) to any Person unless, among other things: (a)
Funding shall be the continuing Person, or the Person (if other than Funding)
formed by such consolidation or into which Funding is merged or to which the
properties and assets of Funding are transferred shall be a corporation,
partnership or trust duly organized and validly existing under the laws of the
United States or any state thereof or the District of Columbia and shall
expressly assume, by a supplemental indenture, all of the obligations of Funding
under the Senior Notes, the Senior Note Indenture and the Senior Note Mortgage;
(b) immediately before and immediately after giving effect to such transaction
on a pro forma basis, no Event of Default and no Default shall have occurred and
be continuing; (c) immediately after giving effect to such transaction on a pro
forma basis, the Consolidated Net Worth of Funding, or the Person (if other than
Funding) is at least equal to the Consolidated Net Worth of Funding immediately
prior to such transaction or series of transactions; (d) immediately before and
immediately after giving effect to such transaction on a pro forma basis, the
Partnership, could incur at least $1.00 of additional Indebtedness (other than
Permitted Indebtedness); (e) the Partnership shall have by supplemental
indenture confirmed that its obligations under the Senior Guarantee and the
Senior Note Mortgage shall apply to such Person's obligations under the Senior
Note Indenture and the Senior Notes; and (f) immediately after such transaction,
Funding or the entity formed by such merger or consolidation or to whom all or
substantially all of the assets of Funding are transferred holds all Permits
required for the operation of the business of Funding.
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Funding shall also deliver to the Senior Note Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that (a) such consolidation,
merger, sale, assignment, conveyance, transfer, lease or disposition and such
supplemental indenture comply with the Senior Note Indenture and (b) the
transaction shall not impair the Senior Note Indenture or the Lien of the Senior
Note Mortgage, the Senior Note Indenture and the Senior Notes and the rights and
powers of the Senior Note Trustee and holders of the Senior Notes thereunder.
(Section 8.1)
In the event of any transaction (other than a lease) described in and
complying with the conditions listed in the immediately preceding paragraphs in
which Funding or the Partnership is not the continuing Person, the successor
Person formed or remaining shall succeed to, and be substituted for, and may
exercise every right and power of, Funding or the Partnership, as the case may
be, and Funding or the Partnership, as the case may be, would be discharged from
all obligations and covenants under the Senior Note Indenture, the Senior Notes
and the Senior Mortgage Documents. (Section 8.2)
Events of Default
The following events are defined in the Senior Note Indenture as "Events of
Default":
(a) default in the payment of any interest on any of the Senior
Notes when such interest becomes due and payable and continuance of such default
for a period of 30 days;
(b) default in the payment of any Sinking Fund Payment on any of
the Senior Notes when the same becomes due and payable and the default continues
for a period of 10 days;
(c) default in the payment of the principal of (or premium, if
any, on) any of the Senior Notes when the same becomes due and payable at its
Stated Maturity, upon acceleration, optional redemption, required repurchase,
scheduled principal payment or otherwise;
(d) (i) default in the performance, or breach, of any covenant of
Funding or the Partnership under the Senior Notes, the Senior Note Indenture or
the Senior Guarantee (other than a default or breach that is specifically dealt
with elsewhere in these provisions) that continues for 30 days after written
notice has been given (x) to Funding by the Senior Note Trustee or (y) to
Funding and the Senior Note Trustee by holders of at least 25% of the aggregate
principal amount of the Outstanding Senior Notes; (ii) default in the
performance or breach of the provisions of "Merger and Sale of Assets, etc.";
(iii) Funding or the Partnership shall have failed to make or consummate a
Change of Control Offer in accordance with provisions of "Certain Covenants --
Purchase of Senior Notes Upon Change of Control"; or (iv) Funding or the
Partnership shall have failed to make or consummate a required purchase of
Mortgage Notes or PIK Notes in accordance with the provisions of "Certain
Covenants -- Limitation on Restricted Payments";
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(e) (i) so long as there are only Registrable Series A Notes
outstanding, default by the Partnership, Funding or any Subsidiaries in the
payment, when due (whether at maturity, required payment, acceleration, demand
or otherwise) of any Indebtedness in an aggregate principal amount in excess of
$10 million or any interest or premium thereon and such failure continues after
the applicable grace period, if any, specified in the agreement or instrument
relating to such Indebtedness or any such Indebtedness is declared to be due and
payable or required to be prepaid (other than by a regularly scheduled required
prepayment) prior to the stated maturity thereof; and (ii) on and after the date
on which (A) a registration statement with respect to the Series A Notes has
been declared effective under the Securities Act and such Series A Notes have
been disposed of in accordance with such registration statement, (B) the Series
A Notes are distributed to the public pursuant to Rule 144 promulgated under the
Securities Act or (C) the Series A Notes have been otherwise transferred and new
certificates for them not bearing a legend restricting further transfer have
been delivered by Funding, the Partnership, Funding or any of the Subsidiaries
fail to perform any term, covenant or agreement to be performed or observed
under any agreement or instrument evidencing or securing or relating to any
Indebtedness in an aggregate principal amount in excess of $10 million, if the
effect of such failure is to accelerate the maturity of such Indebtedness;
(f) one or more judgments, orders or decrees for the payment of
money in excess of $10 million, either individually or in the aggregate, shall
be rendered against Funding, the Partnership or any Subsidiaries or any of their
respective properties and shall not be discharged and either (i) an enforcement
proceeding shall have been commenced by any creditor upon such judgment, order
or decree or (ii) there shall be any period of 60 days during which a stay of
enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect;
(g) an "Event of Default" under any Indebtedness secured by a Lien
on any of the property or assets of Funding or any of the Subsidiaries having a
book value in excess of $500,000, which Lien is senior to the Lien on such
property or assets which secures the Senior Notes;
(h) there shall have been the entry by a court having jurisdiction
in the premises of (i) a decree or order for relief in respect of Funding, the
Partnership or any of the Subsidiaries in an involuntary case or proceeding
under any applicable Bankruptcy Law or (ii) a decree or order adjudging Funding,
the Partnership or any of the Subsidiaries bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment or composition of or in respect of
Funding, the Partnership or any of the Subsidiaries under any applicable federal
or state law, or appointing a custodian, receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of Funding, the Partnership or
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any of the Subsidiaries or of any substantial part of their property, or
ordering the winding-up or liquidation of their affairs, and the continuance of
any such decree or order for relief or any such other decree or order unstayed
and in effect for a period of 60 consecutive days;
(i) (i) Funding, the Partnership or any of the Subsidiaries
commences a voluntary case or proceeding under any applicable Bankruptcy Law or
any other case or proceeding to be adjudicated bankrupt or insolvent, or (ii)
Funding, or any of the Subsidiaries consents to the entry of a decree or order
for relief in respect of Funding, the Partnership or such Subsidiary in an
involuntary case or proceeding under any applicable Bankruptcy Law or to the
commencement of any bankruptcy or insolvency case or proceeding against it, or
(iii) Funding, the Partnership or any of the Subsidiaries files a petition or
answer or consent seeking reorganization or relief under any applicable federal
or state law, or Funding, the Partnership or any of the Subsidiaries consents to
(1) the filing of such petition or the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, trustee, sequestrator or similar
official of Funding, the Partnership or such Subsidiary or of any substantial
part of its property, (2) the making by it of an assignment for the benefit of
creditors or (3) the admission by it in writing of its inability to pay its
debts generally as they become due or (iv) the taking of corporate or
partnership action by Funding, the Partnership or any of the Subsidiaries in
furtherance of any such action in this paragraph (i);
(j) the revocation, suspension or involuntary loss of any Permit
which results in the cessation of a substantial portion of the operations of the
Trump's Castle for a period of more than 90 consecutive days;
(k) the Senior Guarantee, the Senior Guarantee Mortgage, or Senior
Note Mortgage shall for any reason cease to be in full force and effect or
enforceable in accordance with its terms;
(l) an "Event of Default" under the Senior Note Mortgage or the
Mortgage Note Indenture or the PIK Note Indenture shall have occurred and be
continuing; and
(m) an entity, which at the time, directly or indirectly, holds
general partnership interests in both of TPA and TTMA, which general partnership
interests had previously been held by Trump and his Affiliates, sells through an
initial public distribution its equity securities without having first acquired
all the direct and indirect general partnership interests in the Partnership
held by Trump as of the date of the Senior Note Indenture.
(Section 5.1)
If an Event of Default (other than an Event of Default described in clause
(h) or (i) above) occurs and is continuing, the Senior Note Trustee or the
holders of not less than 25% in principal amount of Outstanding Senior Notes, by
notice in writing to Funding (and to the Senior Note Trustee, if given by such
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holders), may, and the Senior Note Trustee at the request of such holders shall,
declare all principal of, premium, if any, and interest on the Senior Notes to
be due and payable and thereupon the Senior Note Trustee may, at its discretion,
proceed to protect and enforce the rights of the holders of the Senior Notes by
appropriate judicial proceeding. If an Event of Default described in clause (h)
or (i) above occurs, the principal of all the Senior Notes shall ipso facto
become and be due and payable immediately without any declaration or other act
on the part of the Senior Note Trustee or any holder of the Senior Notes.
(Section 5.2)
After a declaration of acceleration, but before a judgment or decree for
payment of the money due has been obtained by the Senior Note Trustee, the
holders of a majority in aggregate principal amount of Senior Notes outstanding,
by written notice to Funding and the Senior Note Trustee, may annul such
declaration if (a) Funding has paid or deposited with the Senior Note Trustee a
sum sufficient to pay (i) all sums paid or advanced by the Senior Note Trustee
under the Senior Note Indenture and the reasonable compensation, expenses,
disbursements and advances of the Senior Note Trustee, its agents and counsel,
(ii) all overdue interest on all Senior Notes, (iii) the principal of and
premium, if any, on any Senior Notes which have become due otherwise than by
such declaration of acceleration and interest thereon at the rate borne by the
Senior Notes, and (iv) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate borne by the Senior Notes; and (b)
all Events of Default, other than the nonpayment of principal of the Senior
Notes which have become due solely by such declaration of acceleration, have
been cured or waived. (Section 5.2)
The holders of not less than a majority in principal amount of the Senior
Notes outstanding may on behalf of the holders of the Senior Notes waive any
past Defaults under the Senior Note Indenture, except a Default in the payment
of the principal of, premium, if any, or interest on any Senior Note, or in
respect of a covenant or provision which under the Senior Note Indenture cannot
be modified or amended without the consent of the holder of each Outstanding
Senior Note affected. (Section 5.13)
Funding is required to furnish to the Senior Note Trustee, within 120 days
after the close of each fiscal year, an Officer's Certificate stating whether,
after a review of the activities of Funding and its performance under the Senior
Note Indenture has been made, there has been any default during such fiscal year
and, if so, specifying such default and the nature and status thereof. If
Funding obtains knowledge of a default under the Senior Note Indenture, it is
required promptly to notify the Senior Note Trustee of such default. (Section
10.19).
The Senior Note Indenture provides that the Senior Note Trustee, within 30
days after the occurrence of a Default, shall give notice thereof by mail to all
holders of the Senior Notes, unless the Default has been cured or waived;
provided, however, except in the case of a Default in the payment of principal
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of or interest on the Senior Notes, the Senior Note Trustee may withhold such
notice of such default if a trust committee of Responsible Officers of the
Senior Note Trustee in good faith determines that such withholding is in the
interest of the holders of Senior Notes. (Section 6.1)
Defeasance or Covenant Defeasance of Senior Note Indenture
(a) Funding and the Partnership may, at their option and at any
time upon compliance with the conditions set forth in the Senior Note Indenture,
elect to have the obligations of Funding discharged with respect to the
outstanding Senior Notes ("defeasance"). Such defeasance means that Funding and
the Partnership shall be deemed to have paid and discharged the entire
indebtedness represented by the outstanding Senior Notes, except for (i) the
rights of holders of outstanding Senior Notes to receive payments in respect of
the principal of, premium, if any, and interest on such Senior Notes when such
payments are due, (ii) Funding's obligations with respect to the Senior Notes
concerning issuing temporary Senior Notes, registration of Senior Notes,
mutilated, destroyed, lost or stolen Senior Notes and the maintenance of an
office or agency for payment and money for security payments held in trust,
(iii) the rights, powers, trusts, duties and immunities of the Senior Note
Trustee and (iv) the defeasance provisions of the Senior Note Indenture. In
addition, Funding and the Partnership may, at their option and at any time,
elect to have the obligations of Funding and the Partnership released with
respect to certain covenants that are described in the Senior Note Indenture
("covenant defeasance") and any omission to comply with such obligations will
not constitute a Default or an Event of Default with respect to the Senior
Notes. In the event covenant defeasance occurs, certain events (not including
nonpayment, bankruptcy and insolvency events) described under "Events of
Defaults" will no longer constitute an Event of Default with respect to the
Senior Notes. (Sections 4.1, 4.2 and 4.3)
(b) In order to exercise either defeasance or covenant defeasance,
among other things, (i) Funding or the Partnership must irrevocably deposit with
the Senior Note Trustee, in trust, for the benefit of the holders of the Senior
Notes, cash in United States dollars, U.S. Government Obligations (as defined in
the Senior Note Indenture), or a combination thereof, in such amounts as will be
sufficient, to pay the principal of, premium, if any, and interest on the
outstanding Senior Notes on the Stated Maturity of such principal or installment
of principal or interest and any mandatory payments applicable to the
outstanding Senior Notes; (ii) Funding or the Partnership must deliver to the
Senior Note Trustee an Opinion of Counsel stating that the holders of the
outstanding Senior Notes will not recognize income, gain or loss for Federal
income tax purposes as a result of such defeasance and will be subject to
Federal income tax on the same amounts, in the same manner and at the same time
as would have been the case if such defeasance had not occurred; (iii) such
defeasance or covenant defeasance must not cause the Senior Note Trustee for the
Senior Notes to have a conflicting interest with respect to any securities of
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Funding; (iv) such defeasance or covenant defeasance must not result in a breach
or violation of, or constitute a Default or Event of Default under the Senior
Note Indenture or any other material agreement or instrument to which Funding or
the Partnership is a party or by which it is bound; (v) Funding or the
Partnership must deliver to the Senior Note Trustee an Officers' Certificate
stating that the deposit was not made by Funding or the Partnership with the
intent of defeating, hindering, delaying or defrauding creditors of Funding or
the Partnership or others and (vi) Funding or the Partnership must deliver to
the Senior Note Trustee an Officers' Certificate and an Opinion of Counsel, each
stating that all conditions precedent provided for relating to either the
defeasance or the covenant defeasance, as the case may be, have been complied
with. (Section 4.4)
If the funds deposited with the Senior Note Trustee to effect the
defeasance or covenant defeasance are insufficient to pay the principal of,
premium, if any and interest on the Senior Notes when due, then the obligations
of Funding under the Senior Note Indenture will be revived, and no such
defeasance or covenant defeasance will be deemed to have occurred.
Satisfaction and Discharge
The Senior Note Indenture and all Senior Mortgage Documents will cease to
be of further effect (except as to surviving rights of registration of transfer
or exchange of the Senior Notes) as to all outstanding Senior Notes when (a)
either (i) all the Senior Notes theretofore authenticated and delivered (except
lost, stolen or destroyed Senior Notes which have been replaced or paid) have
been delivered to the Senior Note Trustee for cancellation or (ii) all Senior
Notes not theretofore delivered to the Senior Note Trustee for cancellation (x)
have become due and payable, (y) will become due and payable at their stated
maturity within one year or (z) are to be called for redemption within one year,
and Funding or the Partnership in the case of (ii)(x), (y) or (z) above, has
irrevocably deposited or caused to be deposited with the Senior Note Trustee
funds in an amount sufficient to pay and discharge the entire indebtedness on
the Senior Notes not theretofore delivered to the Senior Note Trustee for
cancellation, for principal of, premium, if any, and interest to the date of
payment; (b) Funding or the Partnership has paid all other sums payable under
the Senior Note Indenture by Funding and the Partnership; and (c) Funding and
the Partnership have delivered to the Senior Note Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent under the Senior Note Indenture relating to the satisfaction and
discharge of the Senior Note Indenture have been complied with and that such
satisfaction and discharge will not result in a breach or violation of or
constitute a default under the Senior Note Indenture or any other material
agreement or instrument to which the Partnership or Funding is a party or by
which either Funding or the Partnership is bound. (Section 13.1)
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Modifications and Amendments
From time to time, the parties to the Senior Note Indenture, without the
consent of the holders of the Senior Notes, may enter into one or more
supplemental indentures for certain specified purposes, including, among other
things, curing ambiguities or inconsistencies, provided the provisions do not
adversely affect the rights of any holders, adding covenants or successor
parties, and complying with regulatory or statutory requirements. (Section 9.1).
Modifications, changes and amendments to the Senior Note Indenture or any
Senior Mortgage Document also may be made by the parties thereto with the
consent of the holders of not less than a majority of the principal amount of
the Outstanding Senior Notes; provided, however, that no such modification or
amendment may, without the consent of the holder of each outstanding Senior Note
affected thereby: (i) change the Stated Maturity of the principal of, or any
installment of interest on, any Senior Note or reduce the principal amount
thereof or the rate of interest thereon or any premium payable upon the
redemption thereof, or change the coin or currency in which any Senior Note or
any premium or the interest thereon is payable, or impair the right to institute
suit for the enforcement of any such payment after the Stated Maturity thereof;
(ii) modify the obligation of Funding or the Partnership to make and consummate
a Change of Control Offer (or modify any of the provisions or definitions with
respect thereto in a manner which adversely affects the rights of the holders of
Senior Notes); (iii) reduce the percentage in principal amount of outstanding
Senior Notes, the consent of whose holders is required for any such supplemental
indenture or the consent of whose holders is required for any waiver; (iv)
modify any of the provisions regarding modifications and amendments or the
percentage of the Senior Note Indenture required for any waiver, except to
increase any such percentage or to provide that certain other provisions of the
Senior Note Indenture cannot be modified or waived without the consent of the
holder of each Senior Note affected thereby; or (v) except as otherwise
permitted under "Merger and Sale of Assets, etc.," consent to the assignment or
transfer by Funding or the Partnership of any of its rights and obligations
under the Senior Note Indenture. (Section 9.2)
The holders of a majority of the principal amount of the Outstanding Senior
Notes may waive compliance with certain restrictive covenants and provisions of
the Senior Note Indenture. (Section 10.20)
Gaming Laws
In certain circumstances holders of Senior Notes, may be required to
qualify under the Casino Control Act as financial sources of the Partnership and
as holders of securities of Funding. See "REGULATORY MATTERS." The Senior Note
Indenture provides that if the CCC requires that a holder of Senior Notes
(whether the record or beneficial owner) qualify under the Casino Control Act
and if such holder does not so qualify, then such holder must dispose of his
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interest in the Senior Notes within 30 days after Funding's receipt of notice of
such finding, or within such earlier time as the CCC may require, or Funding or
the Partnership may redeem such Senior Notes. Any such redemption by Funding
shall be at the lower of (i) the Outstanding Amount (as defined) and (ii) the
Fair Market Value (as defined) of such Senior Notes. (Section 11.9) If any
holder of Senior Notes is found unqualified by the CCC, it is unlawful for such
holder (i) to exercise, directly or through any trustee or nominee, any right
conferred by the Senior Notes, or (ii) to receive any interest upon the Senior
Notes or any remuneration in any form from any Regulated Company (including the
Partnership, Funding or the Senior Note Trustee) for services rendered or
otherwise.
The Senior Note Indenture further requires the Senior Note Trustee to
report the names of all record holders of the Senior Notes to the Director of
the Division and to the CCC promptly after the initial issuance of the Senior
Notes and at stated intervals thereafter. The Senior Note Indenture also
requires the Senior Note Trustee to provide to the Director of the Division and
the CCC copies of all written communications from the Senior Note Trustee to the
holders of the Senior Notes, notice of any default under the Senior Note
Indenture, certain other information concerning the Senior Note Trustee's
enforcement of rights under the Senior Note Indenture, and other matters
respecting the security for the Senior Notes. (Section 7.3)
The Purchase Agreement
Termination of Certain Rights. Pursuant to the terms of the Purchase
Agreement, the holders of Privately Outstanding Notes (as defined) are entitled
to certain rights (the "Purchase Agreement Rights") above and beyond those set
forth in the Senior Note Indenture. For purposes of the Exchange Offer,
"Privately Outstanding Notes" is defined in the Purchase Agreement and refers to
the Senior Notes upon the original issuance thereof and at all times subsequent
thereto until, in the case of any Senior Note, (i) the Exchange Offer has been
consummated and such Senior Note has been resold by the Senior Note Purchaser,
(ii) the sale or other public distribution of such Senior Note has been
registered pursuant to the Securities Act and such Senior Note has been disposed
of by the Senior Note Purchaser in accordance with such registration, or (iii)
such Senior Note has been resold by the Senior Note Purchaser pursuant to Rule
144, Rule 144A or other resale exemption from the registration requirements of
the Securities Act. A subsequent purchaser of Series B Notes will not be
entitled to the Purchase Agreement Rights, which include: (i) the right to
require Funding to pay the delivery expenses in the event of the surrender of a
Senior Note for substitution, replacement, or exchange, (ii) the right to
require Funding to pay all stamp, transfer, and other similar taxes and
governmental fees in connection with the issuance, transfer or exchange,
including exchange pursuant to the Exchange Offer, of the Series A Notes, (iii)
the right to direct the Senior Note Trustee to forward the interest payment on
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the Senior Notes directly to the account of the holder of the Senior Notes, (iv)
the right to inspect the Partnership's facilities upon reasonable notice, (v)
the obligation of Funding and the Partnership to provide to the holders of the
Senior Notes certain financial information and certificates, (vi) the obligation
of Funding to report directly to the holders of the Senior Notes the occurrence
of certain events under ERISA, and (vii) the waiver of the obligation that a
holder of Senior Notes must post a bond in connection with the issuance of a
replacement Senior Note in exchange for a lost, destroyed, or wrongfully taken
Senior Note.
The Senior Note Mortgage and the Senior Guarantee Mortgage
General. The Senior Partnership Note is secured by the Senior Note
Mortgage, which has been assigned to the Senior Note Trustee for the benefit of
the holders of the Senior Notes. Performance under the Senior Guarantee is
secured by the Senior Guarantee Mortgage, which has been made directly to the
Senior Note Trustee for the benefit of the holders of the Senior Notes. The
Senior Note Mortgage and the Senior Guarantee Mortgage encumber Trump's Castle
and the fee and leasehold interests of the Partnership in the land on which
Trump's Castle and its ancillary facilities (including the Marina) are located,
all other facilities owned by or leased to the Partnership, substantially all
additions and improvements constructed thereon and (except, in certain
circumstances, as permitted by the Senior Note Mortgage where such property is
financed) the interest of the Partnership in substantially all furniture,
furnishings, fixtures, machinery and equipment at any time forming a part
thereof, or used in connection therewith and substantially all of the other
assets of the Partnership. Since Funding's right as mortgagee under the Senior
Note Mortgage is assigned to the Senior Note Trustee pursuant to an instrument
of assignment, all references in the Senior Note Mortgage to "Mortgagee" are
referred to herein as the Senior Note Trustee. The Partnership has the right to
release from the Lien of the Senior Mortgage Documents certain tangible personal
property which has become obsolete or unfit for use or which is no longer
necessary in the conduct of its business or the operation of the Collateral.
Events of Default under the Senior Note Mortgage. The following events are
defined in the Senior Note Mortgage as "Events of Default":
(a) default in the payment of any interest on the Senior
Partnership Note when such interest becomes due and payable and default
continues for a period of 30 days;
(b) default in the payment of all or a portion of the principal of
(or premium, if any, on) the Senior Partnership Note when the same becomes due
and payable at its Maturity;
(c) default in the payment of any other sum due under the Senior
Partnership Note or under the Senior Note Mortgage, and the continuance of such
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default for a period of 30 days after there has been given to the Partnership a
notice specifying such default and requiring it to be remedied and stating that
such notice is a "Notice of Default" under the Senior Note Mortgage;
(d) default in the performance, or breach, of any covenant of the
Partnership in the Senior Note Mortgage (other than a covenant, a default in the
performance or breach of which is elsewhere in the Senior Note Mortgage
specifically dealt with), and continuance of such default or breach for a period
of 30 days after there has been given to the Partnership a notice specifying
such default or breach and requiring it to be remedied and stating that such
notice is a "Notice of Default" under the Senior Note Mortgage, 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 Partnership delivers an Officers' Certificate to
the Senior Note Trustee within such 30-day period stating (A) the applicability
of the provisions of clause (i) to such default or breach, (B) the Partnership's
intention to remedy such default or breach with reasonable diligence and (C) the
steps which the Partnership has undertaken or intends to undertake to remedy
such default or breach and (iii) the Partnership delivers to the Senior Note
Trustee 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 (but in no
event more than 60 days after the last day of such 30-day period) as may
reasonably be required to cure the same, provided that the Partnership is then
proceeding and thereafter continues to proceed to cure the same with reasonable
diligence;
(e) an "Event of Default" as defined in the Senior Note Indenture,
shall occur and be continuing;
(f) default in the performance, or breach, of any of the
provisions governing consolidation and mergers in the Senior Note Mortgage;
(g) if any representation or warranty of the Partnership set forth
in the Senior Note Mortgage or in any notice, certificate, demand or request
delivered to the Senior Note Trustee pursuant to the Senior Note Mortgage shall
prove to be incorrect in any material respect as of the time when made; or
(h) default by the Partnership, Funding or any of the Subsidiaries
under any Indenture, whether such Indebtedness now exists or shall hereafter be
created, if such default would permit the holders of such Indebtedness to cause,
or has resulted in, acceleration of the maturity of such Indebtedness, in an
aggregate principal amount in excess of $5,000,000.
Events of Default under the Senior Guarantee Mortgage. Under the Senior
Guarantee Mortgage, "Events of Default" include all of the events defined above
as "Events of Default" under the Senior Note Mortgage (but substituting the
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Senior Guarantee Mortgage for all references therein to the Senior Note Mortgage
and adding a default under the Senior Notes to the defaults described in clauses
(a), (b) and (c) above) and, in addition (i) default in the payment or
performance of any obligation of the Partnership under the Senior Guarantee at
the time such payment or performance is required under the Senior Note Indenture
and (ii) the occurrence of an "Event of Default," as defined in the Senior Note
Mortgage. (Section 3.1 of the Senior Guarantee Mortgage)
The Senior Note Trustee
The Senior Note Trustee is First Bank National Association, a national
banking association, which also serves as the PIK Note Trustee, the Mortgage
Note Trustee and the warrant agent for the Litigation Warrants.
The Senior Note Indenture provides that, except during the continuance of
an Event of Default, the Senior Note Trustee will perform only such duties as
are specifically set forth in the Senior Note Indenture, the Senior Note
Mortgage and the Senior Guarantee Mortgage. During the existence of an Event of
Default, the Senior Note Trustee will exercise such of the rights and powers
vested in it under the Senior Note Indenture. (Section 5.3) Subject to the
provisions of Section 315 of the Trust Indenture Act, the Senior Note Trustee
will be under no obligation to exercise any of its rights or powers under the
Senior Note Indenture at the request of any of the holders, unless they shall
have offered to the Senior Note Trustee security or indemnity against the costs
and expenses which might be incurred in compliance with such request. (Section
6.2) The holders of a majority in principal amount of Outstanding Senior Notes
shall have the right to direct the time, method, and place of conducting any
proceeding for exercising any remedy available to the Senior Note Trustee
subject to certain conditions. (Section 5.12)
The Senior Note Indenture and provisions of the Trust Indenture Act
incorporated by reference therein contain limitations on the rights of the
Senior Note Trustee, should it become a creditor of Funding, to obtain payment
of claims in certain cases, or to realize on certain property received in
respect of any such claims as security or otherwise. Except under certain
limited circumstances set forth in the Trust Indenture Act, if the Senior Note
Trustee becomes a creditor of Funding or the Partnership, then the Senior Note
Trustee will be deemed to have a conflicting interest and must, within 90 days,
eliminate such conflicting interest or take prompt steps to have a successor
trustee appointed. The Senior Note Trustee will be permitted to engage in other
transactions; provided, however, that if it acquires any conflicting interest
(as defined) it must eliminate such conflict or resign. (Article 6)
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Usury Law
Funding and the Partnership have agreed not to claim voluntarily the
benefit of any usury law against the holders of the Senior Notes. (Section 5.15)
Registration Rights
On December 28, 1993, Funding, the Partnership and the Senior Note
Purchasers entered into the Registration Rights Agreement. A copy of the
Registration Rights Agreement is filed as an exhibit to the Registration
Statement of which this Prospectus is a part.
Pursuant to the terms of the Registration Rights Agreement, Funding and the
Partnership, with respect to the Series A Notes, agreed to (i) cause to be
filed, on or prior to March 28, 1994, a registration statement with the SEC
under the Securities Act covering the Exchange Offer and (ii) use their
reasonable best efforts to cause (A) such registration statement to be declared
effective on or prior to June 24, 1994 and (B) Series B Notes to be delivered to
the Depositary for delivery to all holders who have tendered Registrable Series
A Notes pursuant to the Exchange Offer.
The Registration Rights Agreement provides that, upon the occurrence of
certain events preventing the consummation of the Exchange Offer, in lieu
thereof, Funding and the Partnership will file a shelf registration statement
with the SEC and use their best efforts to cause such registration statement to
be effective for a period of 24 months. Funding and the Partnership are also
required to file additional registration statements upon the conclusion of the
24 month period, upon the request of the holders of a majority of the
outstanding principal amount of Senior Notes.
Liquidated Damages. The Registration Rights Agreement and the Senior Note
Indenture provide that if (i) Funding and the Partnership fail to file a
registration statement with respect to the Exchange Offer (or the shelf
registration statement) by March 28, 1994, (ii) the Exchange Offer has not been
consummated (or the shelf registration statement has not become effective) on or
prior to June 24, 1994, (iii) a stop order has been issued with respect to any
shelf registration statement, or (iv) Funding or the Partnership provides the
holders of the Senior Notes with a notice of the occurrence of any event which
causes there to be a material misstatement or omission in the prospectus for the
Senior Notes (each an "Event Date"), the rate of interest on the Senior Notes
will be increased by one quarter of one percent (1/4%) per annum. The rate of
interest on the Senior Notes will be increased by an additional one quarter of
one percent (1/4%) per annum on the 61st day following the Event Date. The
increase in the rate of interest on the Senior Notes will cease to be effective
(a) with respect to an Event Date of the type specified in clause (i), upon the
filing of the registration statement, (b) with respect to an Event Date of the
type specified in clause (ii), upon the consummation of the Exchange Offer (or
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the effectiveness of the registration statement), (c) with respect to an Event
Date of the type specified in clause (iii), when the registration statement is
no longer subject to such order and (d) with respect to an Event Date of the
type specified in clause (iv), when such notice is longer applicable.
Intercreditor Agreement
The Senior Note Trustee, on behalf of the holders of Senior Notes, has
entered into an intercreditor agreement with Midlantic pursuant to which the
Partnership has agreed not to make any payments with respect to the Senior
Partnership Note or the Senior Guarantee and the Senior Note Trustee has been
prohibited from realizing on the Senior Note Mortgage and the Senior Guarantee
Mortgage so long as there exists any payment default on the Midlantic Term Loan.
See "THE MIDLANTIC DEBT AGREEMENTS."
Certain Definitions
"Acquired Indebtedness" means Indebtedness of a Person (a) existing at the
time such Person becomes a Subsidiary or (b) assumed in connection with the
acquisition of assets from such Person, in each case, other than Indebtedness
incurred in connection with, or in contemplation of, such Person becoming a
Subsidiary or such acquisition. Acquired Indebtedness shall be deemed to be
incurred on the date of the related acquisition of assets from any Person or the
date the acquired Person becomes a Subsidiary.
"Adjusted Consolidated Interest Expense" means, without duplication, for
any period, the sum of (a) the interest expense of the Partnership and its
Consolidated Subsidiaries for such period, on a Consolidated basis, including,
without limitation, (i) amortization of debt discount, (ii) the net cost under
interest rate contracts (including amortization of discounts), (iii) the
interest portion of any deferred payment obligation and (iv) accrued interest
plus (b) the interest component of the Capital Lease Obligations paid, accrued
and/or scheduled to be paid, or accrued by the Partnership and its Consolidated
Subsidiaries during such period, in each case as determined in accordance with
GAAP consistently applied.
"Adjusted Consolidated Net Income (Loss)" means, for any period, the
Consolidated net income (or loss) of the Partnership and its Consolidated
Subsidiaries for such period as determined in accordance with GAAP consistently
applied, adjusted, to the extent included in calculating such net income (loss),
by excluding (a) all extraordinary gains or losses (less all fees and expenses
relating thereto), (b) the portion of net income (or loss) of the Partnership
and its Consolidated Subsidiaries allocable to minority interests in
unconsolidated Persons to the extent that cash dividends or distributions have
not actually been received by the Partnership or one of its Consolidated
Subsidiaries, (c) net income (or loss) of any Person combined with the
Partnership or any of the Subsidiaries on a "pooling of interests" basis
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attributable to any period prior to the date of combination, (d) any gain or
loss, net of taxes, realized upon the termination of any employee pension
benefit plan, (e) net gains or losses (less all fees and expenses relating
thereto) in respect of dispositions of assets other than in the ordinary course
of business, or (f) the net income of any Subsidiary to the extent that the
declaration of dividends or similar distributions by that Subsidiary of that
income is not at the time permitted, directly or indirectly, by operation of the
terms of its charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to that Subsidiary or its
shareholders.
"Affiliate" means, with respect to any specified Person, (a) any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person or (b) any other Person that
owns, directly or indirectly, 5% or more of such Person's Capital Stock or
Equity Interest or any officer or director of any such Person or other Person or
with respect to any natural Person, any person having a relationship with such
Person by blood, marriage or adoption not more remote than first cousin. For the
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 ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Average Life to Stated Maturity" means, as of the date of determination
with respect to any Indebtedness, the quotient obtained by dividing (a) the sum
of the products of (i) the number of years from the date of determination to the
date or dates of each successive scheduled principal payment of such
Indebtedness multiplied by (ii) the amount of each such principal payment by (b)
the sum of all such principal payments.
"Cage Cash" means the sum of $5,000,000 retained for daily operations of
Trump's Castle.
"Capital Lease Obligation" of any Person means any obligation of such
Person and its subsidiaries on a Consolidated basis under any capital lease of
real or personal property which, in accordance with GAAP, has been recorded as a
capitalized lease obligation.
"Capital Stock" of any Person means any and all shares, interests,
participations or other equivalents (however designated) of such Person's
capital stock.
"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 (as such terms are defined in the Senior Note
Mortgage).
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"CCC" means the New Jersey Casino Control Commission or any successor
entity thereto.
"Change of Control" means an event as a result of which (a) the Permitted
Holder does not have the right or ability by voting power, contract or otherwise
to elect or designate for election a majority of the Board of Partner
Representatives of the Partnership or to control the management of the
Partnership; or (b) the Partnership is liquidated or dissolved or adopts a plan
of liquidation or dissolution; provided, however, a Change of Control shall not
be deemed to occur as a result of one or more Public Offerings so long as both
(i) the Permitted Holder continues to beneficially own 20% or more of the entity
which conducted the Public Offering and (ii) no other holder beneficially owns a
greater percentage of the voting securities of such entity than the Permitted
Holder.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" means, collectively, all of the property and assets that are
from time to time subject to the Lien of the Senior Note Mortgage.
"Consolidated Fixed Charge Coverage Ratio" means for any period the ratio
of (a) the sum of Adjusted Consolidated Net Income, Adjusted Consolidated
Interest Expense and Consolidated Income Tax Expense, plus, without duplication,
all depreciation, amortization and all other non-cash charges (excluding any
such non-cash charges constituting an extraordinary item of loss or any non-cash
charge which requires an accrual of or a reserve for cash charges for any future
period) in each case, for such period, of the Partnership and its Consolidated
Subsidiaries on a Consolidated basis, all determined in accordance with GAAP
consistently applied, to (b) Adjusted Consolidated Interest Expense for such
period.
"Consolidated Income Tax Expense" means for any period the provision for
federal, state, local and foreign income taxes of the Partnership and its
Consolidated Subsidiaries for such period as determined in accordance with GAAP
consistently applied.
"Consolidation" means, with respect to any Person, the consolidation of the
accounts of such Person and each of its subsidiaries if and to the extent the
accounts of such Person and each of its subsidiaries would normally be
consolidated with those of such Person, all in accordance with GAAP consistently
applied. The term "Consolidated" shall have a similar meaning.
"Corporate Trust Office" means the office of the Senior Note Trustee, or
its agent, at which at any particular time its corporate trust business shall be
administered.
"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
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"Equity Interest" of any Person means any shares, interests, participations
or other equivalents (however designated) of such Person in equity.
"Excess Available Cash" shall be calculated semi-annually on June 30 and
December 31 and means the sum of the Partnership's cash and cash equivalents as
shown on its balance sheet at such date less the sum of (1) the Partnership's
Cage Cash, (2) the Partnership's working capital reserve of $10 million less the
amount, if any, available to the Partnership under the Working Capital Facility,
(3) the aggregate amount required to meet the cash interest payments due on all
Permitted Indebtedness on the respective next interest payment dates and the
sinking fund payment on the Senior Notes during the succeeding six month period,
(4) distributions to be made during the succeeding six month period in respect
of taxes as contemplated by clause (c) of Section 10.9(b)(ix) of the Senior Note
Indenture and (5) the cash amounts required to meet the Partnership's Capital
Expenditures (as defined in the Partnership Agreement), CRDA bond payments and
other fixed charges projected during the succeeding six month period.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"F,F&E Financing Agreement" means an agreement which creates a Lien upon
any after-acquired Tangible Personal Property (as defined in the Senior Note
Mortgage) and/or other items constituting Operating Assets (as defined in the
Senior Note Mortgage), which are financed, purchased or leased by the
Partnership.
"Gaming Authority" means the CCC, the NJDGE or any other governmental
agency which regulates gaming in a jurisdiction in which the Partnership
conducts gaming activities.
"Guaranteed Debt" of any Person means, without duplication, all
Indebtedness of any other Person referred to in the definition of Indebtedness
contained herein guaranteed directly or indirectly in any manner by such Person,
or in effect guaranteed directly or indirectly by such Person through an
agreement (a) to pay or purchase such Indebtedness or to advance or supply funds
for the payment or purchase of such Indebtedness, (b) to purchase, sell or lease
(as lessee or lessor) property, or to purchase or sell services, primarily for
the purpose of enabling the debtor to make payment of such Indebtedness or to
assure the holder of such Indebtedness against loss, (c) to supply funds to, or
in any other manner invest in, the debtor (including any agreement to pay for
property or services without requiring that such property be received or such
services be rendered), (d) to maintain working capital or equity capital of the
debtor, or otherwise to maintain the net worth, solvency or other financial
condition of the debtor or (e) otherwise to assure a creditor against loss;
provided that the term "guaranty" shall not include endorsements for collection
or deposit, in either case in the ordinary course of business; provided further,
that the obligations of the Partnership pursuant to the Services Agreement as in
effect on December 28, 1993, shall not be deemed to be Guaranteed Debt of the
Partnership.
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"Indebtedness" means, with respect to any Person, without duplication, (a)
all indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services, excluding any trade payables and other accrued
current liabilities arising in the ordinary course of business, but including,
without limitation, all obligations, contingent or otherwise, of such Person in
connection with any letters of credit issued under letter of credit facilities,
acceptance facilities or other similar facilities and in connection with any
agreement to purchase, redeem, exchange, convert or otherwise acquire for value
any Capital Stock or Equity Interest of such Person, or any warrants, rights or
options to acquire such Capital Stock or Equity Interest, now or hereafter
outstanding, (b) all obligations of such Person evidenced by bonds, notes,
debentures or other similar instruments, (c) every obligation of such Person
issued or contracted for as payment in consideration of the purchase by such
Person or an Affiliate of such Person of the Capital Stock or Equity Interest or
substantially all of the assets of another Person or in consideration for the
merger or consolidation with respect to which such Person or an Affiliate of
such Person was a party, (d) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person (even if the rights and remedies of the seller or lender
under such agreement in the event of default are limited to repossession or sale
of such property), but excluding trade payables and other accrued current
liabilities arising in the ordinary course of business, (e) all obligations
under interest rate contracts of such Person, (f) all Capital Lease Obligations
of such Person, (g) all Indebtedness referred to in clauses (a) through (f)
above of other Persons and all dividends of other Persons, the payment of which
are secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien, upon or in property
(including, without limitation, accounts and contract rights) owned by such
Person, even though such Person has not assumed or become liable for the payment
of such Indebtedness, (h) all Guaranteed Debt of such Person, (i) all Redeemable
Capital Stock or Redeemable Equity Interests valued at the greater of its
voluntary or involuntary maximum fixed repurchase price plus accrued and unpaid
dividends, and (j) any amendment, supplement, modification, deferral, renewal,
extension or refunding of any liability of the types referred to in clauses (a)
through (i) above. The "maximum fixed repurchase price" of any Redeemable
Capital Stock or Redeemable Equity Interest which does not have a fixed
repurchase price will be calculated in accordance with the terms of such
Redeemable Capital Stock or Redeemable Equity Interest as if such Redeemable
Capital Stock or Redeemable Equity Interest were purchased on any date on which
Indebtedness will be required to be determined pursuant to the Senior Note
Indenture, and if such price is based upon, or measured by, the Fair Market
Value of such Redeemable Capital Stock or Redeemable Equity Interest, such Fair
Market Value to be determined in good faith by the board of directors of the
issuer (or managing general partner of the issuer) of such Redeemable Capital
Stock or Redeemable Equity Interest.
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"Indenture Obligations" means the obligations of Funding, the Partnership
and any other obligor under the Senior Note Indenture or under the Senior Notes,
to pay principal of, premium, if any, and interest when due and payable, and all
other amounts due or to become due under or in connection with the Senior Note
Indenture, the Senior Notes and the performance of all other obligations to the
Senior Note Trustee and the holders under the Senior Note Indenture, the Senior
Notes and the Senior Note Mortgage, according to the terms thereof.
"Interest Payment Date" means the Stated Maturity of an installment of
interest on the Senior Notes.
"Investments" means, with respect to any Person, directly or indirectly,
any advance, loan or other extension of credit or capital contribution to (by
means of any transfer of cash or other property to others or any payment for
property or services for the account or use of others), or any purchase or other
acquisition by such Person of any Capital Stock, Equity Interest, bonds, notes,
debentures or other securities or assets issued or owned by, any other Person.
"Lien" means any mortgage, charge, pledge, lien (statutory or otherwise),
privilege, security interest, hypothecation or other encumbrance upon or with
respect to any property of any kind, real or personal, movable or immovable, now
owned or hereafter acquired.
"Litigation Warrants" means warrants to be issued by TCHI for additional
equity securities representing a 0.5% common equity interest in the Partnership
pursuant to the terms of a settlement agreement arising out of certain
securities litigation.
"Marina Lease" means the lease agreement of September 1, 1990 between the
State of New Jersey, as landlord, and the Partnership, as tenant, with respect
to the property known as the Senator Frank S. Farley Marina in Atlantic City,
together with all amendments, restatements, extensions and renewals thereof.
"Maturity" when used with respect to any Senior Note means the date on
which the principal of such Senior Note becomes due and payable as therein
provided or as provided in the Senior Note Indenture, whether at Stated
Maturity, Change of Control Purchase Date, or Redemption Date and whether by
declaration of acceleration, Change of Control Offer, call for redemption or
otherwise.
"Mortgage Debt" means any Indebtedness secured by Liens (other than
involuntary Liens) on any portion of the Collateral.
"Net Cash Proceeds" of an issuance means the cash proceeds of such
issuance, net of attorneys' fees, accountants' fees, brokerage, consultant,
underwriting and other fees and expenses actually incurred in connection with
such issuance, sale, conversion or exchange and net of taxes paid or payable as
a result thereof.
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"NJDGE" means the New Jersey Division of Gaming Enforcement or any
successor entity thereto.
"Outstanding" when used with respect to Senior Notes means, as of the date
of determination, all Senior Notes theretofore authenticated and delivered under
the Senior Note Indenture, except:
(a) Senior Notes theretofore cancelled by the Senior Note Trustee or
delivered to the Senior Note Trustee for cancellation;
(b) Senior Notes, or portions thereof, for whose payment or redemption
money in the necessary amount has been theretofore deposited with the
Senior Note Trustee or any Paying Agent (other than Funding) in trust or
set aside and segregated in trust by Funding (if Funding shall act as its
own Paying Agent) for the holders of such Senior Notes; provided that if
such Senior Notes are to be redeemed, notice of such redemption has been
duly given pursuant to the Senior Note Indenture or provision therefor
satisfactory to the Senior Note Trustee has been made; and Senior Notes,
except to the extent provided in the Senior Note Indenture, with respect to
which Funding has effected defeasance or covenant defeasance as provided in
Article Four of the Senior Note Indenture; and
(c) Senior Notes in exchange for or in lieu of which other Senior
Notes have been authenticated and delivered pursuant to the Senior Note
Indenture, other than any such Senior Notes in respect of which there shall
have been presented to the Senior Note Trustee proof satisfactory to it
that such Senior Notes are held by a bona fide purchaser in whose hands the
Senior Notes are valid obligations of Funding;
provided, however, that in determining whether the holders of the requisite
principal amount of outstanding Senior Notes have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Senior Notes
owned by Funding, the Partnership, or any other obligor upon the Senior Notes or
any Affiliate of Funding, the Partnership, any Guarantor or such other obligor
shall be disregarded and deemed not to be Outstanding, except that, in
determining whether the Senior Note Trustee shall be protected in relying upon
any such request, demand, authorization, direction, notice, consent or waiver,
only Senior Notes which the Senior Note Trustee knows to be so owned shall be so
disregarded. Senior Notes so owned which have been pledged in good faith may be
regarded as Outstanding if the pledgee establishes to the satisfaction of the
Senior Note Trustee the pledger's right so to act with respect to such Senior
Notes and that the pledgee is not Funding, the Partnership or any other obligor
upon the Senior Notes or any Affiliate of Funding, the Partnership or such other
obligor.
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"Outstanding Amount" of any Indebtedness at any time means the principal
amount outstanding of such Indebtedness at such time, unless such Indebtedness
was issued at a discount, in which case the "Outstanding Amount" of such
Indebtedness means the original issue price of such Indebtedness plus the
accretion to such time of the original issue discount, determined in accordance
with GAAP.
"Pari Passu Indebtedness" means any Indebtedness of the Partnership that is
pari passu in right of payment to the Senior Guarantee.
"Partnership Agreement" means the Partnership's Second Amended and Restated
Partnership Agreement, dated as of December 30, 1993, in the form filed as an
exhibit to the Registration Statement of which this Prospectus is a part, as
amended from time to time in accordance with the terms thereof and the Senior
Note Indenture.
"Permit" means any license, franchise, authorization, statement of
compliance, certificate of operation, certificate of occupancy and permit
required for the lawful ownership, occupancy, operation and use of all or a
material portion of the Collateral whether held by the Partnership 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 (as defined in the Senior
Note Mortgage).
"Permitted Holder" means Donald J. Trump and any corporations or other
entities that are controlled by Donald J. Trump.
"Permitted Indebtedness" means the following:
(a) Indebtedness of the Partnership and Funding pursuant to the
Midlantic Term Loan;
(b) Indebtedness of the Partnership and Funding pursuant to the Senior
Mortgage Documents and the Senior Note Indenture;
(c) Indebtedness of the Partnership pursuant to any Working Capital
Facility;
(d) Indebtedness of the Partnership and Funding pursuant to the
Mortgage Note Indenture and the Mortgage Documents (as defined in the
Mortgage Note Indenture);
(e) Indebtedness of the Partnership and Funding pursuant to the PIK
Note Indenture and the Pledge Agreement (as defined in the PIK Note
Indenture);
(f) Indebtedness of the Partnership outstanding on the date of the
Senior Note Indenture and listed on a schedule attached to the Senior Note
Indenture;
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(g) Indebtedness of the Partnership or any Wholly Owned Subsidiary to
any one or the other of them;
(h) Indebtedness of the Partnership or any Subsidiary represented by
F,F&E Financing Agreements of the Partnership not to exceed at any one time
outstanding (i) $2,000,000 or (ii) $25,000,000 following the time at which
the Partnership shall have achieved EBITDA (as defined in the Partnership
Agreement) for any period of four consecutive fiscal quarters in an amount
not less than $45,000,000;
(i) Indebtedness in respect of Capital Lease Obligations or secured
purchase money security interests of the Partnership or any Subsidiary, in
either case not created by an F,F&E Financing Agreement, provided, however,
that the aggregate principal amount of all such Capitalized Lease
Obligations permitted by the Senior Note Indenture shall not exceed at any
one time outstanding (i) $10,000,000 or (ii) $15,000,000 following the time
at which the Partnership shall have achieved EBITDA for any period of four
consecutive fiscal quarters in an amount not less than $60,000,000 and
provided, further, that the aggregate principal amount of all such
Indebtedness secured by purchase money security interests shall not exceed
at any one time outstanding $10,000,000;
(j) any renewals, extensions, substitutions, refundings, refinancings
or replacements of any Indebtedness described in clauses (a) through (i) of
the definition of "Permitted Indebtedness," including any successive
renewals, extensions, substitutions, refundings, refinancings or
replacements so long as the aggregate principal amount of Indebtedness
represented thereby does not exceed the principal amount of such
Indebtedness being renewed, extended, substituted, refunded, refinanced or
replaced (or, if such Indebtedness provides for an amount less than the
principal amount thereof to be due and payable upon a declaration of
acceleration thereof, such lesser amount as of the date of determination)
plus accrued interest thereon, plus, in the case of refinancings, the
amount of any premium or other payment required to be paid under the terms
of the instrument governing such Indebtedness or the amount of any premium
reasonably determined by the Partnership as necessary to accomplish such
refinancing by means of a tender offer or privately negotiated purchase
and, in each case, actually paid, plus the amount of expenses of the
Partnership incurred in connection with such refinancing and such renewal,
extension, substitution, refinancing or replacement does not reduce the
Average Life to Stated Maturity or the final Stated Maturity of such
Indebtedness; and
(k) Indebtedness of the Partnership and Funding with respect to the
Bonds until the defeasance thereof has been consummated in connection with
the Recapitalization.
"Permitted Investment" means (a) Investment in any of the Senior Notes,
Mortgage Notes or PIK Notes; (b) Temporary Cash Investments; (c) intercompany
notes to the extent permitted under the definition of "Permitted Indebtedness";
and (d) any Investments in existence on December 28, 1993 and listed on a
schedule attached to the Senior Note Indenture.
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"Permitted Leases" means the following:
(i) the Marina Lease;
(ii) any Capital Lease Obligation permitted by clause (i) of the
definition of "Permitted Indebtedness"; and
(iii) Leases other than Capital Lease Obligations and the Marina
Lease; provided, however, that the aggregate fixed rental payments paid or
accrued for any period of four consecutive fiscal quarters commencing after
the date hereof under all such leases (including payments required to be
made by the lessee in respect of taxes and insurance, whether or not
denominated as rent), shall not exceed for such period (a) $2,000,000 or
(b) $7,500,000 following the time at which the Partnership shall have
achieved EBITDA for any period of four consecutive fiscal quarters in an
amount not less than $45,000,000.
"Permitted Liens" means:
(a) any Lien existing as of the date of the Senior Note Indenture
under the Midlantic Term Loan, the Senior Note Mortgage, the Senior
Guarantee Mortgage, the Mortgage Documents (including, without limitation,
"Permitted Encumbrances" and "Restricted Encumbrances", both as defined in
the Note Mortgage) and the Pledge Agreement, "Permitted Encumbrances"
hereafter arising and permitted under the Mortgage Documents, or any Lien
thereafter arising under any Working Capital Facility;
(b) Capital Lease Obligations and purchase money liens included in
Permitted Indebtedness;
(c) the Liens in favor of the Senior Note Trustee pursuant to Section
6.6 of the Senior Note Indenture, in favor of the Mortgage Note Trustee
pursuant to Section 6.6 of the Mortgage Note Indenture and in favor of the
PIK Note Trustee pursuant to Section 6.6 of the PIK Note Indenture;
(d) any Lien arising by reason of (i) any judgment, decree or order of
any court, so long as such Lien is adequately bonded and any appropriate
legal proceedings which may have been duly initiated for the review of such
judgment, decree or order shall not have been finally terminated or the
period within which such proceedings may be initiated shall not have
expired; (ii) security for payment of workmen's compensation or other
insurance; (iii) good faith deposits in connection with tenders, leases,
contracts (other than contracts for the payment of money); and (iv)
deposits to secure public or statutory obligations, or in lieu of surety or
appeal bonds; and
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(e) any Lien arising by reason of any renewal, extension,
substitution, refunding, refinancing or replacement of any Indebtedness
permitted by clause (j) of the definition of Permitted Indebtedness.
"Person" means any individual, corporation, limited or general partnership,
joint venture, association, joint stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
"Predecessor Senior Note" of any particular Senior Note means every
previous Senior Note evidencing all or a portion of the same debt as that
evidenced by such particular Senior Note; and, for the purposes of this
definition, any Senior Note authenticated and delivered pursuant to the Senior
Note Indenture in exchange for a mutilated Senior Note or in lieu of a lost,
destroyed or stolen Senior Note shall be deemed to evidence the same debt as the
mutilated, lost, destroyed or stolen Senior Note.
"Preferred Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated) of such
Person's preferred or preference stock whether now outstanding, or issued after
the date of the Senior Note Indenture, and including, without limitation, all
classes and series of preferred or preference stock.
"Public Offering" shall mean a registered public offering of a direct or
indirect equity interest in the Partnership.
"Qualified Capital Stock" of any Person means any and all Capital Stock of
such Person other than Redeemable Capital Stock.
"Qualified Equity Interest" of any Person means any Equity Interests of
such Person other than Redeemable Equity Interests.
"Redeemable Capital Stock" means any Capital Stock that, either by its
terms, by the terms of any security into which it is convertible or exchangeable
or otherwise, is or upon the happening of an event (other than the
disqualification of the holder thereof by the CCC) or passage of time would be,
required to be redeemed prior to any Stated Maturity of the principal of the
Senior Notes or is redeemable at the option of the holder thereof at any time
prior to any such Stated Maturity, or is convertible into or exchangeable for
debt securities at any time prior to any such Stated Maturity at the option of
the holder thereof.
"Redeemable Equity Interest" means any Equity Interest that, either by its
terms, by the terms of any security into which it is convertible or exchangeable
or otherwise, is or upon the happening of an event (other than the
disqualification of the holder thereof by the CCC) or passage of time would be,
required to be redeemed prior to any Stated Maturity of the principal of the
Senior Notes or is redeemable at the option of the holder thereof at any time
prior to any such Stated Maturity, or is convertible into or exchangeable for
debt securities at any time prior to any such Stated Maturity at the option of
the holder thereof.
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"Redemption Date" when used with respect to any Senior Note to be redeemed
means the date fixed for such redemption by or pursuant to the Senior Note
Indenture.
"Redemption Price" when used with respect to any Senior Note to be redeemed
means the price at which it is to be redeemed pursuant to the Senior Note
Indenture.
"Registrable Series A Notes" means the Series A Notes upon original
issuance thereof, and at all times subsequent thereto, until, in the case of
such Series A Note, (A) a registration statement with respect to such Series A
Note has been declared effective under the Securities Act and such Series A Note
has been disposed of in accordance with such registration statement; (B) such
Series A Note is distributed to the public pursuant to Rule 144 (or any
successor provisions) promulgated under the Securities Act; (C) such Series A
Note has been otherwise transferred and new certificates for them not bearing a
legend restricting further transfer shall have been delivered by the Issuer; or
(D) such Series A Note ceases to be outstanding.
"Registration Rights Agreement" means the registration rights agreement
dated of even date with the Senior Note Indenture between Funding and certain
original purchasers of the Series A Notes.
"Regular Record Date" for the interest payable on any Interest Payment Date
means the May 1 or November 1 (whether or not a Business Day) next preceding
such Interest Payment Date.
"Restoration" has the meaning set forth in the Senior Note Mortgage.
"SEC" means the Securities and Exchange Commission, as from time to time
constituted, created under the Exchange Act, or if at any time after the
execution of the Senior Note Indenture such SEC is not existing and performing
the duties now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Assignment Agreement" means the Assignment Agreement between
Funding and the Senior Note Trustee providing for the assignment of the Senior
Partnership Note and the Senior Note Mortgage to the Senior Note Trustee by
Funding and acknowledgement thereof by the Partnership.
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"Senior Guarantee" means the guaranty by the Partnership of Funding's
Indenture Obligations pursuant to the guaranty included in the Senior Note
Indenture.
"Senior Guarantee Mortgage" means the Indenture of Mortgage and Security
Agreement, dated as of the date of the Senior Note Indenture, between the
trustee under the Senior Note Indenture, as mortgagee, and the Partnership, as
mortgagor.
"Senior Indebtedness" means the Midlantic Term Loan.
"Senior Mortgage Documents" means (i) the Senior Partnership Note, (ii) the
Senior Guarantee, (iii) the Senior Note Mortgage, (iv) the Senior Assignment,
(v) the Senior Guarantee Mortgage and (vi) any other security document to which
the Partnership, Funding or the Senior Note Trustee is a party, which is
executed and delivered pursuant to or in connection with the foregoing documents
described in clauses (i) through (vi), as each such agreement may be amended,
renewed, extended, substituted, refinanced, restructured, replaced, supplemented
or otherwise modified from time to time in accordance with the provisions of the
Senior Note Indenture and the Senior Mortgage Documents.
"Senior Note Mortgage" means the Indenture of Mortgage and Security
Agreement, dated as of December 28, 1993 between Funding, as mortgagee, and the
Partnership, as mortgagor.
"Senior Partnership Note" means the Partnership Note dated as of December
28, 1993 in the principal amount of $27,000,000 made by the Partnership in favor
of Funding.
"Senior Notes" means the 11-1/2% Senior Secured Notes due 2000 of Funding.
"Series A Notes" means the 11-1/2% Series A Senior Secured Notes due 2000
of Funding.
"Series B Notes" means the 11-1/2% Series B Senior Secured Notes due 2000
of Funding.
"Stated Maturity" when used with respect to any Indebtedness or any
installment of interest thereon means the dates specified in such Indebtedness
as the fixed date on which the principal of such Indebtedness or such
installment of interest is due and payable.
"Subordinated Indebtedness" means Indebtedness of the Partnership
subordinated in right of payment to the Senior Guarantee.
"Subsidiary" means any Person a majority of the equity ownership or the
Voting Stock of which is at the time owned, directly or indirectly, by the
Partnership or by one or more other Subsidiaries, or by the Partnership and one
or more other Subsidiaries.
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"Taking" means the acquisition or condemnation by eminent domain of the
whole or any part of the Premises (as such term is defined in the Senior Note
Mortgage), by a competent authority, for any public or quasi-public use or
purpose.
"Temporary Cash Investments" means (a) any evidence of Indebtedness,
maturing not more than one year after the date of acquisition, issued by the
United States of America, or an instrumentality or agency thereof and guaranteed
fully as to principal, premium, if any, and interest by the United States of
America, (b) any certificate of deposit, maturing not more than one year after
the date of acquisition, issued by, or time deposit of, a commercial banking
institution that is a member of the Federal Reserve System and that has combined
capital and surplus and undivided profits of not less than $300,000,000, whose
debt has a rating, at the time as of which any investment therein is made, of
"P-1" (or higher) according to Moody's Investors Service, Inc. or any successor
rating agency, or "A-1" (or higher) according to Standard & Poor's Corporation
or any successor rating agency, (c) commercial paper, maturing not more than one
year after the date of acquisition, issued by a corporation (other than an
Affiliate or subsidiary of Funding or the Partnership) organized and existing
under the laws of the United States of America with a rating, at the time as of
which any investment therein is made, of "P-1" (or higher) according to Moody's
Investors Service, Inc. or any successor rating agency, or "A-1" (or higher)
according to Standard & Poor's Corporation or any successor rating agency, and
(d) any money market deposit accounts issued or offered by a domestic commercial
bank having capital and surplus in excess of $300,000,000.
"Total Taking or Casualty" means a Taking or Casualty with respect to
which, pursuant to the provisions of the Senior Note Mortgage, any proceeds
resulting from such Taking or Casualty are to be used to pay amounts due under
the Senior Notes and the Senior Note Mortgage and not for purposes of
Restoration.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended.
"Voting Stock" means stock of the class or classes pursuant to which the
holders thereof have the general voting power under ordinary circumstances to
elect at least a majority of the board of directors, managers or trustees of a
corporation (irrespective of whether or not at the time stock of any other class
or classes shall have or might have voting power by reason of the happening of
any contingency).
"Wholly-Owned Subsidiary" means a Subsidiary all the Capital Stock of which
is owned by the Partnership or by one or more Wholly-Owned Subsidiaries or by
the Partnership and one or more Wholly-Owned Subsidiaries; provided, however,
that Funding shall not be considered a Wholly-Owned Subsidiary of the
Partnership.
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THE MIDLANTIC TERM LOAN
Upon consummation of the Restructuring on May 29, 1992, the Partnership
amended the terms of its indebtedness to Midlantic. The Partnership, Funding and
Midlantic entered into the Midlantic Term Loan relating to indebtedness with an
outstanding principal amount of $38 million. The Midlantic Term Loan is secured
by a lien on Trump's Castle senior to the lien securing the Senior Notes.
In connection with the Recapitalization, the Partnership also entered into
an amendment to the Midlantic Term Loan providing for certain modifications to
the provisions thereof to give effect to the Recapitalization. The following is
a summary of the significant terms of the Midlantic Term Loan, as amended. The
Midlantic Term Loan is filed as an Exhibit to the Registration Statement of
which this Prospectus is a part.
Midlantic Term Loan
General. The Midlantic Term Loan has an aggregate principal amount of
$38,000,000 and bears interest at the rate of 9% per annum; provided, however,
that any overdue and unpaid principal payment will bear interest from the date
of non-payment until paid in full at a rate of interest equal to 3% above the
prime lending rate of Midlantic in effect from time to time.
Maturity. The Midlantic Term Loan matures on May 29, 1995 with no
amortization of principal prior thereto. The Midlantic Term Loan will be subject
to mandatory prepayment rights in the event of a Change of Control or Total
Taking or Casualty.
Extension. Under the Midlantic Term Loan, the Partnership has an option,
exercisable during the 90-day period between 30 and 120 days prior to the
maturity of the Midlantic Term Loan stated above, to extend the term thereof for
an additional five-year period, provided, however, that such option will not be
exercisable if, among other things, an Event of Default under the Midlantic Term
Loan will have occurred and be continuing at such time of extension. Upon such
an extension, the interest rate applicable to the Midlantic Term Loan will be
either a fluctuating or fixed rate, at Midlantic's option, adjusted to such rate
in excess of Midlantic's prime rate as Midlantic may determine is reasonable for
a secured term loan of that nature, but in any event such rate will not be less
than 9% per annum nor more than, in the case of a fluctuating rate, 3% above
Midlantic's prime rate in effect from time to time, and in the case of a fixed
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rate, 3% above Midlantic's prime rate in effect at the time of extension (with
the same provision for interest on any overdue and unpaid principal payment as
described above). In addition, if the term of the Midlantic Term Loan is
extended, the outstanding principal amount of the Midlantic Term Loan will be
amortized over the five-year extension period on a twenty-year amortization
schedule requiring principal prepayments of $158,333 per month over such period.
It will be an additional condition to the exercise of such extension option
that the Partnership will have paid Midlantic all accrued interest and principal
required to be paid on the Midlantic Term Loan through the date of extension.
Lien. The Midlantic Term Loan is secured by a mortgage and certain related
security documents granting to Midlantic a first priority lien (subject to
Permitted Senior Encumbrances) upon and security interest in Trump's Castle and
substantially all of the other assets of the Partnership, including furniture,
fixtures and equipment, senior to the lien and security interest in favor of the
holders of the Senior Notes, Mortgage Notes and the Working Capital Facility, if
obtained.
Guaranty. The obligations of the Partnership to pay the principal of and
interest on the Midlantic Term Loan have been guaranteed by Funding.
Covenants. The Midlantic Term Loan contains covenants which, among other
things, (i) restrict the Partnership and Funding from incurring any liens,
except for existing encumbrances, certain liens to secure taxes, certain
purchase money security interests and certain other statutory and other similar
liens, (ii) restrict Funding from engaging in any business other than to collect
principal and interest under the obligations of the Partnership to Funding,
(iii) restrict the Partnership and Funding from entering into management or
services agreements with Trump or his affiliates (other than the Services
Agreement) or from amending the same to increase the fees payable to Trump or to
reduce his obligations thereunder, (iv) restrict the Partnership and Funding
from (x) amending the Senior Note Indenture, Mortgage Note Indenture or PIK Note
Indenture to shorten the stated maturity dates or increase the interest rates
with respect to the related debt or to permit partial redemptions of such
securities or to require the redemption of such securities other than as set
forth in the applicable indentures, (y) incurring debt to refinance existing
debt unless the debt service on the new debt does not exceed at any time debt
service on the refinanced debt and the aggregate principal amount of new debt
does not exceed the aggregate principal amount of the debt refinanced, or (z)
making open market purchases of such securities, (v) restrict the ability of the
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Partnership to make distributions except for certain distributions pursuant to
the Amended Partnership Agreement, (vi) restrict the Partnership and Funding
from engaging in transactions with affiliates except on terms comparable to
those generally available on an arm's-length basis with third parties, (vii)
restrict the Partnership's and Funding's ability to consolidate, combine or
merge with any person and (viii) prohibit the lease of the trust estate as an
entirety or the sale, lease, pledge, mortgage or transfer of all or any material
part of the trust estate or the assets of Funding, or any interest therein. The
Midlantic Term Loan also limits the amount of cash interest that may be paid on
the PIK Notes to an amount that does not exceed the difference between the cash
interest that would have been required to be paid on the Bonds less the cash
interest payable in respect of the Senior Notes and Mortgage Notes. The
Midlantic Term Loan also precludes partial redemption of the Senior Notes,
Mortgage Notes and PIK Notes, except pursuant to the sinking fund requirements
of the Senior Notes and the provisions of the PIK Note Indenture relating to the
redemption of PIK Notes from the net proceeds of an Equity Offering.
Intercreditor Agreement
In connection with the Recapitalization, the Partnership, the Senior Note
Trustee, the Mortgage Note Trustee and the PIK Note Trustee entered into the
Intercreditor Agreement with Midlantic pursuant to which (i) the Partnership has
agreed not to make any payments with respect to the Senior Partnership Note, the
Senior Guarantee, the Partnership Note, the Guarantee, the Subordinated
Partnership Note or the Subordinated Guarantee, (ii) the Senior Note Trustee is
prohibited from realizing on the Senior Note Mortgage and the Senior Guarantee
Mortgage and (iii) the Mortgage Note Trustee is prohibited from realizing on the
Note Mortgage and the Guarantee Mortgage, so long as there exists any payment
default on the Midlantic Term Loan.
Put Agreement
Pursuant to an Amended and Restated Put Agreement entered into between
Trump and Midlantic, Trump is required to purchase from Midlantic all of its
right, title and interest in the Midlantic Term Loan, including the right to
receive repayment thereof and all collateral and security therefor (including
the Midlantic Mortgage) and guarantees thereof, upon written notice from
Midlantic if, and only if: (i) an Event of Default shall have occurred and be
continuing under the Midlantic Term Loan (subject to the forbearance provisions
of the Intercreditor Agreement), (ii) Midlantic shall have given written notice
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to the Partnership of the acceleration of the Midlantic Term Loan, and (iii)(A)
the Senior Note Trustee, the Mortgage Note Trustee, the Partnership, Funding or
Trump or any affiliate of the foregoing shall take certain actions prohibiting
or materially interfering with the acceleration of the Midlantic Term Loan or
Midlantic's foreclosing or realizing upon or obtaining possession of Trump's
Castle and the leasehold and fee interests of the Partnership in the land on
which Trump's Castle and its ancillary facilities are located, including certain
additions and improvements constructed thereon, and substantially all the other
assets of the Partnership secured by the mortgage securing the Midlantic Term
Loan (collectively, the "Secured Property"), or (B) the mortgage securing the
Midlantic Term Loan and related security documents shall cease to be effective
to grant to Midlantic a first priority lien (subject to certain senior
encumbrances permitted by the Midlantic Term Loan) upon and security interest in
the Secured Property, senior to the liens and security interests granted to the
Senior Note Trustee pursuant to the Senior Note Documents and the Senior Note
Indenture and to the Mortgage Note Trustee pursuant to the Mortgage Documents
and the Mortgage Note Indenture, or certain specified persons shall so assert in
writing or make any such claim in any litigation, investigation or proceeding.
The purchase price payable by Trump shall be equal to the then outstanding
principal amount of the Midlantic Term Loan and all accrued but unpaid interest
thereon, together with certain fees and expenses of Midlantic. In the event the
Midlantic Term Loan is so purchased by Trump, the Midlantic Term Loan and the
lien of the Midlantic Mortgage will be subordinated to the indebtedness
represented by the Senior Notes and Mortgage Notes and the lien of the Senior
Note Documents and the Mortgage Documents.
DESCRIPTION OF THE MORTGAGE NOTES
The Mortgage Notes were issued under an Indenture dated December 28, 1993
(the "Mortgage Note Indenture") by and among Funding, as issuer, the
Partnership, as guarantor and First Bank National Association, as Trustee (the
"Mortgage Note Trustee"). The following is only a summary of the terms of the
Mortgage Notes, does not purport to be a full description thereof, and is
qualified in its entirety by reference to the Mortgage Note Indenture a copy of
the form of which is filed as an exhibit to the Registration Statement of which
this Prospectus is a part.
General
The Mortgage Notes mature on November 15, 2003. Each Mortgage Note bears
interest payable in cash at the rate of 11-3/4%. Notwithstanding the foregoing,
if, as of a date prior to November 15, 1998, Funding has defeased or redeemed
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all the then outstanding PIK Notes through the application of the proceeds of
one or more Equity Offerings or of internally generated funds and not through
the incurrence of additional indebtedness, then on and after the first day of
the calendar month next commencing after such date, the aforesaid interest rate
of 11-3/4% per annum will be reduced to 11-1/2% per annum. The ability of the
Partnership to make payments on the Partnership Note to fund the payment of
interest on the Mortgage Notes is restricted by the terms of the Midlantic Term
Loan and the Senior Note Indenture. See "DESCRIPTION OF THE MIDLANTIC TERM LOAN
- - Intercreditor Agreement" and "DESCRIPTION OF THE SENIOR NOTES - Certain
Covenants - Limitation on Restricted Payments."
Funding loaned the gross proceeds from the offering of the Mortgage Notes
to the Partnership in exchange for the Partnership Note, the Note Mortgage, the
Guarantee and the Guarantee Mortgage. See "Security" and "Guarantee."
Guarantee
The obligations of Funding to pay the principal of, premium, if any, and
interest on, the Mortgage Notes are unconditionally guaranteed by a non-recourse
guarantee of the Partnership (the "Guarantee"). The Guarantee is secured by a
mortgage (the "Guarantee Mortgage") encumbering substantially all of the
property of the Partnership on a basis pari passu to the lien of the Note
Mortgage.
Security
The Mortgage Notes are secured by an assignment by Funding to the Mortgage
Note Trustee, for the benefit of the holders of the Mortgage Notes, of (a) the
Partnership Note and (b) the Note Mortgage (the Partnership Note, the Note
Mortgage, the Guarantee Mortgage and any ancillary documents executed by
Funding, the Partnership or the Mortgage Note Trustee for purposes of providing
security for the benefit of the holders of the Mortgage Notes are referred to
herein as the "Mortgage Documents") which encompasses a lien on (i) Trump's
Castle and the leasehold and fee interests of the Partnership in the land on
which Trump's Castle and its ancillary facilities are located, including certain
additions and improvements constructed thereon, and (ii) substantially all the
other assets of the Partnership.
The Partnership Note contains interest, principal, redemption and default
terms which are virtually identical to those of the Mortgage Notes. The Note
Mortgage and Guarantee Mortgage each constitute a lien and security interest on
Trump's Castle and such other assets, subject to the prior lien securing the
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Midlantic Term Loan, the Senior Note Mortgage, the Senior Guarantee Mortgage,
the lien, if any, securing any Working Capital Facility that may be obtained and
other permitted encumbrances.
Ranking
In connection with the Recapitalization, the Partnership entered into an
agreement with Midlantic pursuant to which the Partnership has agreed not to
make any payments with respect to the Partnership Note or the Guarantee and the
Mortgage Note Trustee has been prohibited from realizing on the Note Mortgage
and the Guarantee Mortgage so long as there exists any payment default on the
Midlantic Term Loan.
Payment of the principal of, premium, if any, and interest on the Mortgage
Notes is subordinated to the prior payment of the Senior Notes.
Non-Recourse
The Partnership Note and the Guarantee are non-recourse to the partners of
the Partnership.
Mandatory Redemption
Pursuant to the Casino Control Act, Funding may redeem Mortgage Notes at
the lower of the principal amount or the Fair Market Value (as defined) thereof
held by Persons that are found by the CCC not to be qualified to hold such
securities and who fail to dispose of such securities within 30 days after
notice of such finding.
Funding must also redeem the Mortgage Notes at the principal amount
thereof, without premium, plus accrued interest, at any time as a result of a
Total Taking or Casualty.
Optional Redemption
The Mortgage Notes are subject to redemption at any time on or after
December 31, 1998, at the option of Funding or the Partnership, in whole or in
part, on not less than 30 nor more than 60 days' prior notice, in amounts of
$1,000 or an integral multiple thereof at the following redemption prices
(stated as percentages of the principal amount), if redeemed during the 12-month
periods beginning on December 31, of the years indicated below:
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Redemption Price
----------------
Prior to Interest After Interest
Year Rate Reduction Rate Reduction
----- ----------------- --------------
1998 . . . . . . . . . 105.8750% 105.7500%
1999 . . . . . . . . . 103.9170% 103.8333%
2000 . . . . . . . . . 101.9580% 101.9167%
and, thereafter at 100% of principal amount, in each case together with accrued
and unpaid interest, if any, through the Redemption Date. The ability of the
Partnership to prepay the Partnership Note to fund the optional redemption of
the Mortgage Notes is restricted by the terms of the Midlantic Term Loan and the
Senior Note Indenture. See "DESCRIPTION OF THE MIDLANTIC TERM LOAN - Midlantic
Term Loan - Certain Covenants" and "DESCRIPTION OF THE SENIOR NOTES - Certain
Covenants - Limitation on Restricted Payments."
Events of Default
The Mortgage Note Indenture contains events of default substantially
similar to those set forth in the Senior Note Indenture. An acceleration of the
Mortgage Notes upon the occurrence of an event of default under the Mortgage
Note Indenture would constitute an Event of Default under the Senior Note
Indenture.
Certain Covenants
The Mortgage Notes contain covenants substantially similar to those
contained in the Senior Note Indenture including covenants relating to, among
other things, (i) limitations on indebtedness, (ii) limitations on liens, (iii)
restrictions on activities, (iv) restricted payments, (v) transactions with
affiliates, (vi) consolidation, merger, conveyance or transfer, and (vii) a
provision that each holder of Mortgage Notes may require the issuer of such
Mortgage Notes to repurchase such Mortgage Notes at a purchase price of 101% of
par upon the occurrence of a Change of Control (as such term is defined in the
Mortgage Note Indenture).
DESCRIPTION OF THE PIK NOTES
The PIK Notes were issued pursuant to an Indenture dated December 28, 1993
(the "PIK Note Indenture") by and among Funding, as issuer, the Partnership as
guarantor and First Bank National Association, as Trustee (the "PIK Note
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Trustee"). The following is only a summary of the terms of the PIK Notes, does
not purport to be a full description thereof, and is qualified in its entirety
by reference to the PIK Note Indenture a copy of the form of which is filed as
an exhibit to the Registration Statement of which this Prospectus is a part.
General
The PIK Notes will mature on November 15, 2005. Each PIK Note bears
interest at the rate of 7% through September 30, 1994 and thereafter at the rate
of 13-7/8%, payable semi-annually in arrears on May 15 and November 15 each
year. On or prior to November 15, 2003, interest may, at the option of Funding,
be paid in whole or in part, in cash or through the issuance of additional PIK
Notes. After November 15, 2003 interest on the PIK Notes will be payable only in
cash.
The ability of the Partnership to make payments on the Subordinated
Partnership Note to fund the payment of cash interest on the PIK Notes is
restricted by the terms of the Midlantic Term Loan, the Senior Note Indenture
and the Mortgage Note Indenture. See "DESCRIPTION OF THE MIDLANTIC TERM LOAN -
Intercreditor Agreement", "DESCRIPTION OF THE SENIOR NOTES - Certain Covenants -
Limitation on Restricted Payments" and "DESCRIPTION OF THE MORTGAGE NOTES -
Certain Covenants."
Guarantee
The obligations of Funding to pay the principal of, premium, if any, and
interest on the PIK Notes are guaranteed by the Subordinated Guarantee, a
non-recourse guaranty of the Partnership.
Security
The PIK Notes are secured by an assignment by Funding to the PIK Note
Trustee, for the benefit of the holders of the PIK Notes of the Subordinated
Partnership Note. The Subordinated Partnership Note contains interest,
principal, redemption and default terms which are virtually identical to those
of the PIK Notes.
Ranking
In connection with the Recapitalization, the Partnership entered into an
agreement with Midlantic pursuant to which the Partnership has agreed not to
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make any payments with respect to the Subordinated Partnership Note or the
Subordinated Guarantee so long as there exists any payment default on the
Midlantic Term Loan.
Payment of the principal of, premium, if any, and interest on the PIK Notes
is subordinated to the prior payment of the Senior Notes and the Mortgage Notes.
Non-Recourse
The Subordinated Partnership Note and the Subordinated Guarantee are
non-recourse to the partners of the Partnership.
Mandatory Redemption
In the event of an Equity Offering, the Partnership or Funding is required,
within 30 days after receipt of the proceeds thereof, to use 35% of the net
proceeds of such Equity Offering to redeem outstanding PIK Notes, at a
redemption price equal to 100% of the principal amount thereof, together with
accrued and unpaid interest to the redemption date.
Pursuant to the Casino Control Act, Funding may redeem PIK Notes at the
lower of the principal amount or the Fair Market Value (as defined) thereof held
by Persons that are found by the CCC not to be qualified to hold such securities
and who fail to dispose of such securities within 30 days after notice of such
finding.
Funding may also redeem PIK Notes at the principal amount thereof, without
premium, plus accrued interest, at any time as a result of a Total Taking or
Casualty.
Optional Redemption
The PIK Notes are subject to redemption at any time, at the option of
Funding, in whole or in part, on not less than 30 nor more than 60 days' prior
notice, in amounts of $1 or an integral multiple of $1 at 100% of the principal
amount, together with accrued and unpaid interest through the redemption date.
The ability of the Partnership to prepay the Partnership Note to fund the
optional redemption of the PIK Notes is restricted by the terms of the Midlantic
Term Loan, the Senior Note Indenture and the Mortgage Note Indenture. See
"DESCRIPTION OF THE MIDLANTIC TERM LOAN - Intercreditor Agreement", "DESCRIPTION
OF THE SENIOR NOTES - Certain Covenants - Limitation on Restricted Payments" and
"DESCRIPTION OF THE MORTGAGE NOTES - Certain Covenants."
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Events of Default
The PIK Note Indenture contains events of default substantially similar to
those set forth in the Senior Note Indenture, other than events of default
relating to the Senior Note Guarantee and the Senior Note Documents. An
acceleration of the PIK Notes upon the occurrence of an event of default under
the PIK Note Indenture would constitute an Event of Default under the Senior
Note Indenture.
Certain Covenants
The PIK Notes contain certain covenants and events of default substantially
similar to those contained in the Senior Note Indenture including covenants
relating to, among other things, (i) limitations on indebtedness, (ii)
limitations on liens, (iii) restrictions on activities, (iv) restricted
payments, (v) transactions with affiliates, (vi) consolidation, merger,
conveyance or transfer, and (vii) a provision that each holder of PIK Notes may
require the issuer of such PIK Notes to repurchase such PIK Notes at a purchase
price of 101% of par upon the occurrence of a Change of Control (as such term is
defined in the PIK Note Indenture).
DESCRIPTION OF THE AMENDED AND
RESTATED PARTNERSHIP AGREEMENT
The following is a summary of the terms of the Amended Partnership
Agreement. This summary is qualified in its entirety by reference to the terms
of the Amended Partnership Agreement, which is filed as an exhibit to the
Registration Statement of which this Prospectus is a part.
General
The business of the Partnership is to conduct casino gaming and to own and
operate Trump's Castle. See "BUSINESS." TC/GP has a 37.5% interest in the
Partnership, Donald J. Trump has a 61.5% interest in the Partnership and TCHI
has a 1% interest in the Partnership. The Partnership will terminate on December
31, 2041, unless sooner terminated in accordance with the provisions of the
Amended Partnership Agreement.
Management of the Partnership
Board of Partner Representatives. Management over the affairs of the
Partnership is vested in TC/GP, Donald J. Trump and TCHI (the "Partners"). Until
the earlier of (i) such time as all amounts under the Mortgage Notes and the PIK
Notes are paid in full or (ii) such time as (A) the amount obtained by
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multiplying the Partnership's EBITDA for the immediately preceding twelve full
calendar months by 5 exceeds (B) the aggregate consolidated principal amount of
the Partnership's indebtedness for borrowed money on a consolidated basis,
outstanding as of such time, the Partners will exercise their overall control
over the business, operations and activities of the Partnership through a Board
of Partner Representatives. The Board will have full authority to do all things
deemed necessary or desirable by it in the conduct of the business of the
Partnership. Unless otherwise provided in the Amended Partnership Agreement, all
matters of policy pertaining to the business of Trump's Castle must be approved
by the Board.
The day-to-day control of the business, operations and activities of the
Partnership will be vested in and conducted by the Partners, who will be
responsible for supervising the activities of the Partnership's officers,
employees and agents.
The Board consists of seven Partner Representatives. The initial
Representatives appointed to the Board by Trump are Trump, Nicholas L. Ribis,
Ernest E. East and Roger P. Wagner. Until the Mortgage Notes and the PIK Notes
are paid in full, the other three Partner Representatives are designated as the
"Noteholder Representatives." The initial Noteholder Representatives are Asher
O. Pacholder, Thomas F. Leahy and Wallace B. Askins. Any vacancy on the Board
created by the resignation, removal, incapacity or death of any Noteholder
Representative will be filled by a designated alternate Representative (the
"Alternate Noteholder Representative"), who initially is Arthur S. Bahr. If
there is any vacancy in the position of Noteholder Representative or Alternate
Noteholder Representative, such vacancy will be filled by the agreement of any
two of the remaining Noteholder Representatives or by the sole remaining
Noteholder Representative if only one Noteholder Representative remains in
office. The holders of the Mortgage Notes and the PIK Notes, voting as a single
class, will have the right to remove the Noteholder Representatives.
In the event that the Mortgage Notes and PIK Notes are redeemed in their
entirety or repurchased and retired in their entirety, then each of the
Noteholder Representatives will be deemed to have resigned, and Trump will have
the right to appoint all seven Representatives.
Quorum. Except as may be otherwise provided by law or the Amended
Partnership Agreement, at any meeting of the Board a majority of the Partner
Representatives, including, however, in any event at least one of the Noteholder
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Representatives, will constitute a quorum; a quorum will not in any case be less
than one-third of the total number of Partner Representatives constituting the
whole Board. Any meeting may be adjourned from time to time by a majority of the
votes cast upon the question, whether or not a quorum is present, and the
meeting may be held as adjourned without further notice. Notwithstanding the
foregoing provisions, participation by a Noteholder Representative will not be
necessary to form a quorum if all of the Noteholder Representatives fail to
attend three consecutive meetings of the Board, so long as (i) such meetings
were duly scheduled or called, as the case may be, in compliance with the
Amended Partnership Agreement, (ii) notice was duly given to each Noteholder
Representatives in accordance with the Amended Partnership Agreement and (iii)
no action was taken by any Partner to hinder or obstruct participation by any
Noteholder Representatives at such meetings. In the event of such failure, a
majority of the Partner Representatives appointed by Trump (but not less than
one-third of the total number of Partner Representatives constituting the whole
Board) will constitute a quorum at such third consecutive meeting and for a
six-month period from and after the date thereof; provided, however, that
immediately following the second such consecutive meeting the Partner
Representatives shall notify the Noteholder Representatives of their failure to
participate; and provided, further, that such third consecutive meeting shall be
held not less than three business days after the second meeting at a place where
conference telephone facilities are available, and that the notice of such third
meeting clearly specifies the date, time and place of such meeting and the
correct telephone number to be called in the event that a Noteholder
Representative wishes to participate therein via conference telephone.
Special Noteholder Representative Vote Requirements. So long as any
Mortgage Notes or PIK Notes are outstanding, the approval of the following
actions will require, in addition to the vote of a majority of the Partner
Representatives present at a meeting at which there is a quorum, the affirmative
vote of at least two of the Noteholder Representatives (or one of the Noteholder
Representatives in the case of the actions referred to in clause (vi) below):
(i) Certain sales or dispositions of the Partnership's assets, or the
merger, combination, consolidation, or termination or liquidation of the
Partnership with or into any other entity or the merger, combination or
consolidation of any other entity with or into the Partnership or the entering
into of any agreement with respect to the foregoing.
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<PAGE>
(ii) Any amendment or waiver of or supplement to or any change in the
Mortgage Note Indenture or PIK Note Indenture to be accomplished without the
consent of the holders of Mortgage Notes or PIK Notes, as the case may be.
(iii) Certain transactions or series of transactions to which any partner
or any of his or its respective affiliates is a party, participant or
beneficiary.
(iv) Certain changes in the senior management of the Partnership.
(v) The incurrence of debt, operating leases and capital expenditures in
excess of certain threshold amounts.
(vi) (a) The commencement by the Partnership of a voluntary case under
chapter 11 of the Code; (b) the seeking of relief as a debtor under any
applicable law, other than said chapter 11, of any jurisdiction relating to the
liquidation or reorganization of debtors or to the modification or alteration of
the rights of creditors; (c) the filing of an answer or similar pleading with
respect to any involuntary case under said chapter 11 or any other such
applicable law; or (d) the assignment for the benefit of, or the entering into a
composition with, the Partnership's creditors.
(vii) Any amendment or supplement to, or modification of, or waiver under,
or any other change in, the Midlantic Term Loan.
(viii) The payment of compensation to Trump in excess of amounts payable
under the Services Agreement.
(ix) The amendment or any supplement to the Services Agreement.
(x) A change in the nature of business conducted.
(xi) Any determination to effect a Restoration (as such term is defined in
the Note Mortgage).
Officers of the Partnership. The Partnership will have a Chief Executive
Officer, a Chief Operating Officer, a Chief Financial Officer, a Secretary and
such other officers, if any, as the Partners from time to time may in their
discretion elect or appoint. The Partnership may also have such agents, if any,
as the Partners from time to time may in its discretion choose. Any officer may
be but none need be a Partner Representative.
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<PAGE>
Compensation and Reimbursement. No Partner or Partner Representative will
be entitled to separate compensation for services as Partner or Partner
Representative, except that Partner Representatives (other than Trump or any of
his Affiliates) will be entitled to receive an annual fee not in excess of
$50,000 plus an additional fee of $2,500 for each meeting attended (in person or
by conference telephone call) (provided, that the aggregate amount of said
additional fees may not exceed $25,000 in any fiscal year), and to reimbursement
of reasonable out-of-pocket expenses incurred in connection with attendance at
meetings. Notwithstanding the foregoing, payments may be made in accordance with
the Services Agreement.
The Partners and the Partner Representatives will be reimbursed by the
Partnership for all expenses, disbursements and advances incurred or made in
good faith to third parties for or on behalf of the Partnership.
Indemnification
The Partnership will indemnify and hold harmless each Partner, its
Affiliates, each Partner Representative and his Affiliates, and all officers,
directors, employees and agents of such Partner or Partner Representative, and
his Affiliates (individually, an "Indemnitee") from and against any and all
losses, claims, demands, costs, damages, liabilities, joint and several,
expenses of any nature (including attorneys' fees and disbursements), judgments,
fines, settlements and other amounts arising from any and all claims, demands,
actions, suits or proceedings, civil, criminal, administrative or investigative,
in which the Indemnitee may be involved, or threatened to be involved, as a
party or otherwise, arising out of or incidental to the business of the
Partnership, including, without limitation, liabilities under the Federal and
state securities laws, regardless of whether the Indemnitee continues to be a
Partner, an Affiliate of a Partner, a Partner Representative or an Affiliate of
a Partner Representative, or an officer, director, employee, or agent of a
Partner or Partner Representative or an Affiliate of such Persons at the time
any such liability or expense is paid or incurred, but only if such course of
conduct does not constitute gross negligence or willful misconduct; provided,
however, that such indemnification or agreement to hold harmless will be
recoverable only out of assets of the Partnership and not from the Partners. The
indemnification provided by the Amended Partnership Agreement will be in
addition to any other rights to which an Indemnitee may be entitled under any
agreement, as a matter of law or equity, or otherwise, both as to action in the
Indemnitee's capacity as a Partner, an Affiliate of a Partner, a Partner
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<PAGE>
Representative or an Affiliate of a Partner Representative, or as an officer,
director, employee or agent of a Partner or an Affiliate of such Persons and as
to any action in another capacity, and will continue as to an Indemnitee who has
ceased to serve in such capacity and will inure to the benefit of the heirs,
successors, assigns and administrators of the Indemnitee. No Indemnitee will be
denied indemnification in whole or in part under the Amended Partnership
Agreement by reason of the fact that the Indemnitee had an interest in the
transaction with respect to which the indemnification applies if the transaction
was approved in accordance with the Amended Partnership Agreement.
Casino Control Commission Regulation
The Amended Partnership Agreement will be deemed to include all provisions
required by the Casino Control Act and to the extent that anything contained in
the Amended Partnership Agreement is inconsistent with the Casino Control Act,
the provisions of the Casino Control Act will govern. All provisions of the
Casino Control Act, to the extent required by law to be included in the Amended
Partnership Agreement, are incorporated therein by reference.
If the continued holding of a Partnership Interest by any Partner will
disqualify the Partnership to continue as the owner and operator of a casino
licensed in the State of New Jersey under the provisions of the Casino Control
Act, such Partner will enter into such escrow, trust or similar arrangement as
may be required by the CCC under the circumstances.
All transfers (as defined by the Casino Control Act) of securities (as
defined by the Casino Control Act), shares and other interests in the
Partnership will be subject to the right of prior approval by the CCC; and the
Partnership will have the absolute right to repurchase at the market price or
purchase price, whichever is the lesser, any security, share or other interest
in the Partnership in the event that the CCC disapproves a transfer in
accordance with the provisions of the Casino Control Act.
Each Partner has agreed to cooperate reasonably and promptly with the
others in obtaining any and all licenses, permits or approvals required by any
governmental authority or deemed expedient by the Partners in connection with
the Casino Control Act.
Each Partner will have the right to offer to acquire any Partnership
Interest required to be disposed of pursuant to the above provisions on the same
basis as other potential purchasers, subject to the Casino Control Act.
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<PAGE>
DESCRIPTION OF THE SERVICES AGREEMENT
The following is only a summary of the principal terms of the Services
Agreement. It does not purport to be a full description thereof, and is
qualified in its entirety by reference to the Services Agreement, a copy of
which has been filed as an Exhibit to the Registration Statement of which this
Prospectus is a part.
General
The Partnership has entered into the Services Agreement with TC/GP, a
Delaware corporation controlled by Trump. The Partnership believes that the
terms of the Services Agreement are at least as favorable to the Partnership as
those which could be obtained from an unaffiliated third party. In general, the
Services Agreement obligates TC/GP, as agent for the Partnership, to provide
certain services in connection with the operations of Trump's Castle, in
exchange for certain fees, all as further described below.
Responsibilities, Powers and Authority of TC/GP
Pursuant to the Services Agreement, TC/GP is required to provide to the
Partnership, from time to time when reasonably requested, consulting services on
a non-exclusive basis, relating to marketing, advertising, promotional and other
similar and related services (the "Services") with respect to the business and
operations of the Partnership, including such other services consistent with the
Services Agreement as the Managing Partner may reasonably request. TC/GP will
not be required to devote any prescribed amount of time to the performance of
its duties.
Services Fee
In consideration for the Services to be rendered by TC/GP, the Partnership
will pay an annual fee in the amount of $1.5 million to TC/GP for each year in
which EBITDA exceeds the following amounts for the years indicated: 1993-$40.5
million; 1994-$45.0 million; 1995 and thereafter-$50.0 million. If EBITDA in any
fiscal year does not exceed the applicable amount, the annual fee will be $0. In
addition, TC/GP will be entitled to an incentive fee beginning with the fiscal
year ending December 31, 1994 in an amount equal to 10% of EBITDA in excess of
$45.0 million for such fiscal year. The Partnership will also be required to
advance to TC/GP $125,000 a month which will be applied toward the annual fee,
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<PAGE>
provided, however, that no advances will be made during any year if and for so
long as the Managing Partner determines, in his good faith reasonable judgment,
that the Partnership's budget and year-to-date performance indicate that the
EBITDA target for such year will not be met. If for any year during which annual
fee advances have been made it is determined that the annual fee was not earned,
TC/GP will be obligated to promptly repay any amounts previously advanced. For
purposes of calculating EBITDA under the Services Agreement, any incentive fees
paid in respect of 1994 or thereafter shall not be deducted in determining net
income.
In addition to the fees described above, the Partnership will reimburse
TC/GP on a monthly basis for all reasonable and sufficiently documented expenses
incurred by TC/GP, its officers and employees and/or agents in rendering the
Services, together with all amounts billed to TC/GP by unaffiliated Persons
and/or entities for such Persons and/or entities' reasonable fees, charges,
costs and expenses incurred in connection with TC/GP's performance of the
Services Agreement; provided, however, that any single expense or group of
related expenses which aggregate in excess of $15,000 must be approved by the
Board of Partner Representatives.
Term
Unless sooner terminated pursuant to its terms, the Services Agreement will
commence on the Expiration Date and will expire on December 31, 2005.
Termination
Each of TC/GP and the Partnership (by action of the Managing Partner) will
have the right to terminate the Services Agreement upon written notice to the
other party following any sale of Trump's Castle. In addition, each of TC/GP and
the Partnership (by action of the Managing Partner) will have the right to
terminate the Services Agreement on thirty (30) days' written notice to the
other party in the event that the other party commits a material breach of any
of the representations, warranties, conditions, agreements or obligations of
such other party contained in the Services Agreement, which breach is not cured
within such thirty (30) day period (or such longer period, if any, as shall be
specified by the terminating party in such notice).
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Casino Control Act
The Services Agreement, which may not be amended or assigned without the
express approval of the CCC, is deemed to include all provisions required by the
Casino Control Act.
Conflict of Interest
The parties to the Services Agreement have acknowledged and agreed that
Trump intends to continue to own and/or operate the Other Trump Casinos (which
will continue to compete with Trump's Castle) and devote time and effort to
their affairs, as well as to other business matters, and that nothing in the
Services Agreement will be construed as preventing or otherwise restricting
Trump from operating such Other Trump Casinos in a commercially reasonable
manner.
Subject to the foregoing paragraph, in respect of any matter or matters
involving employees, contractors, entertainers, celebrities, vendors, patrons,
marketing programs, promotions, special events or otherwise, Trump will agree to
act, and (to the best of his ability and consistent with his fiduciary
obligations to the Partnership and the Other Trump Casinos) will cause his
Affiliates to act, fairly and in a commercially reasonable manner so that on an
annual overall basis (x) no Other Trump Casino will realize a competitive
advantage over Trump's Castle by reason of any activity, transaction or action
engaged in by Trump or his Affiliates and (y) Trump's Castle will not be
discriminated against. Subject to the foregoing paragraph, Trump will not
engage, and (to the best of his ability and consistent with his fiduciary
obligations to the Partnership and the Other Trump Casinos) will cause his
Affiliates not to engage, in any activity which could reasonably be expected to
harm or malign the Trump's Castle name or reputation.
Pursuant to the Services Agreement, TC/GP has agreed that during the term
of the Services Agreement it will not render any services to the Other Trump
Casinos.
Indemnification of TC/GP and Trump
To the extent that Trump or TC/GP and its officers, employees, agents and
controlling persons will not be fully covered by the insurance to be provided by
the Partnership pursuant to the Services Agreement, the Partnership has agreed
to indemnify and hold Trump and TC/GP and its officers, employees, agents and
controlling persons free and harmless from and against any damages, liability,
costs, claim, fees, obligation or expense, including attorneys' fees and
expenses incurred in defense of any of the foregoing, arising out of or in
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connection with the Services Agreement; provided, however, that the obligation
to indemnify and hold harmless under the Services Agreement will not include any
losses suffered by Trump or TC/GP and its officers, employees, agents and
controlling persons arising out of the gross negligence or willful misconduct of
Trump or TC/GP or its officers, employees, agents or controlling persons, or the
performance of duties not in conformity with, or in breach of, the Services
Agreement.
To the extent that the Partnership will not be fully covered by insurance,
TC/GP will indemnify the Partnership and hold it harmless from and against any
damage, liability, cost, claim, fee, obligation or expense, including attorneys'
fees and expenses incurred by the Partnership in defense of any of the foregoing
arising out of or in connection with gross negligence or willful misconduct of
TC/GP (or any person acting on its behalf or under its direction) in its
performance of its obligations not in conformity with, or in breach of, the
Services Agreement.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The Exchange
The exchange of the Series A Notes for the Series B Notes will not result
in a taxable exchange for Federal income tax purposes and exchanging Holders
will therefore not recognize taxable gain or loss solely as a result of the
exchange. An exchanging Holder will have the same basis and holding period in
the Series B Note as in the Series A Note exchanged therefor.
Interest
Holders of the Series B Notes will be required to report interest earned on
the Series B Notes as income for Federal income tax purposes. As a general rule,
a Holder of a Series B Note using the accrual method of accounting will be
required to include interest in ordinary income as it accrues on the Series B
Note and a Holder of a Series B Note using the cash method of tax accounting
will be required to include interest in ordinary income when cash payments of
interest on the Series B Note are actually or constructively received by the
Holder.
Backup Withholding
Under the backup withholding rules, a Holder of a Series B Note may be
subject to backup withholding at the rate of 31% with respect to reportable
payments of interest or the proceeds of a sale, exchange or redemption of the
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<PAGE>
Series B Note unless the Holder (a) is a corporation or comes within certain
other exempt categories and when required demonstrates that fact, or (b)
provides a correct taxpayer identification number, certifies as to no loss of
exemption from backup withholding and otherwise complies with applicable
requirements of the backup withholding rules. Amounts paid as backup withholding
do not constitute an additional tax and would be allowable as a credit against
the Holder's Federal income tax liability. Holders of Series B Notes should
consult their tax advisors as to their qualification for exemption from backup
withholding and the procedure for obtaining such an exemption.
EXPERTS
The financial statements and schedules included in this Prospectus and
elsewhere in the Registration Statement have been audited by Arthur Andersen &
Co., independent public accountants, as indicated in their reports with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in giving said reports.
The statements as to matters of law and legal conclusions concerning New
Jersey gaming laws included under the captions "RISK FACTORS - Strict Regulation
of the Partnership by the CCC," "- Potential Disqualification of Holders of the
Senior Notes by the CCC," "REGULATORY MATTERS" (other than the subcaption " -
Other Laws and Regulations") and "DESCRIPTION OF THE SENIOR NOTES - Gaming Laws"
have been prepared by Sterns & Weinroth, a professional corporation, Trenton,
New Jersey, gaming counsel for Funding and the Partnership, and are included
herein upon their authority as experts.
LEGAL MATTERS
Certain legal matters in connection with the securities offered hereby are
being passed upon for Funding and the Partnership by Willkie Farr & Gallagher,
New York, New York who will rely upon an opinion of Ribis Graham & Curtin,
Morristown, New Jersey as to matters of New Jersey law. Nicholas L. Ribis, the
Chief Executive Officer of the Partnership, is Counsel to Ribis Graham & Curtin.
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<PAGE>
TRUMP'S CASTLE ASSOCIATES AND SUBSIDIARY
INDEX TO FINANCIAL STATEMENTS
Report of Independent Public Accountants F-1
Consolidated Balance Sheets of Trump's Castle
Associates and Subsidiary as of December 31,1993
and 1992 F-2
Consolidated Statements of Operations of Trump's
Castle Associates and Subsidiary for the years
ended December 31, 1993, 1992 and 1991 F-3
Consolidated Statements of Capital (Deficit) of
Trump's Castle Associates for the years ended
December 31, 1993, 1992 and 1991 F-4
Consolidated Statements of Cash Flows of Trump's
Castle Associates and Subsidiary for the years ended
December 31, 1993, 1992 and 1991 F-5
Notes to Consolidated Financial Statements of
Trump's Castle Associates and Subsidiary F-6
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Trump's Castle Associates
and Subsidiary:
We have audited the accompanying consolidated balance sheets of Trump's
Castle Associates (a New Jersey general partnership) and Subsidiary as of
December 31, 1993 and 1992, and the related consolidated statements of
operations, partners' capital (deficit) and cash flows for each of the three
years in the period ended December 31, 1993. These consolidated financial
statements referred to below are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with the 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.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Trump's Castle Associates
and Subsidiary as of December 31, 1993 and 1992, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1993, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN & CO.
Roseland, New Jersey
February 11, 1994
<PAGE>
TRUMP'S CASTLE ASSOCIATES AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS -- DECEMBER 31, 1993 AND 1992
<TABLE>
<CAPTION>
ASSETS 1993 1992
------ ---- ----
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents (Note 3) $ 20,439,000 $ 23,610,000
Trade receivable, less allowance for
doubtful accounts of $1,928,000 and
$2,721,000 respectively 7,316,000 4,841,000
Accounts receivable, other 2,338,000 1,980,000
Due from affiliates, net (Note 6) 615,000 742,000
Inventories (Note 3) 2,315,000 2,160,000
Prepaid expenses and other current assets 3,515,000 2,929,000
------------- -------------
Total current assets 36,538,000 36,262,000
------------- -------------
PROPERTY AND EQUIPMENT (Notes 3,4, and 5):
Land and land improvements 62,177,000 62,117,000
Buildings and building improvements 324,636,000 321,345,000
Furniture, fixtures and equipment 103,446,000 97,194,000
Construction in progress 3,194,000 2,401,000
------------- -------------
493,453,000 483,057,000
Less - Accumulated depreciation 159,099,000 142,674,000
------------- -------------
334,354,000 340,383,000
------------- -------------
OTHER ASSETS 5,043,000 2,996,000
------------- -------------
Total assets $375,935,000 $379,641,000
============ ============
LIABILITIES AND CAPITAL (DEFICIT) 1993 1992
--------------------------------- ---- ----
CURRENT LIABILITIES:
Trade accounts payable 2,354,000 4,484,000
Accrued payroll 8,842,000 7,598,000
Accrued interest payable (Note 2) 234,000 11,713,000
Unredeemed chip liability (Note 6) 4,448,000 3,765,000
Patron deposits (Note 6) 3,099,000 67,000
Other 15,486,000 11,770,000
------------- -------------
Total current liabilities 34,463,000 39,397,000
MORTGAGE NOTES, due 2003 (Notes 4 and 10) 202,552,000 -
PIK NOTES, due 2005 (Notes 4 and 10) 42,242,000 -
MORTGAGE BONDS, due 1998 (Notes 4 and 10) - 234,445,000
OTHER BORROWINGS (Note 5) 65,000,000 45,000,000
------------- -------------
Total liabilities 344,257,000 318,842,000
------------- -------------
COMMITMENTS AND CONTINGENCIES (Note 7)
PARTNERS' CAPITAL (Notes 2 and 6):
Contributed Capital 73,395,000 73,395,000
Accumulated Deficit (41,717,000) (12,596,000)
------------- -------------
Total patners' capital 31,678,000 60,799,000
------------- -------------
Total liabilities and capital $375,935,000 $379,641,000
============= =============
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these consolidated balance sheets.
F-2
<PAGE>
TRUMP'S CASTLE ASSOCIATES AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
REVENUES:
Gaming (Note 3) $246,370,000 $242,008,000 $194,760,000
Rooms 19,647,000 17,785,000 16,599,000
Food and beverage 30,608,000 31,361,000 28,307,000
Other 8,201,000 8,152,000 8,302,000
------------ ------------ ------------
Gross Revenues 304,826,000 299,306,000 247,968,000
Less- Promotional allowances (Note 3) 31,599,000 30,656,000 27,882,000
------------ ------------ ------------
Net Revenues 273,227,000 268,650,000 220,086,000
------------ ------------ ------------
COSTS AND EXPENSES (Notes 2, 6 and 7)
Gaming 148,415,000 149,376,000 119,719,000
Rooms 3,421,000 3,306,000 3,253,000
Food and beverage 15,970,000 16,502,000 13,236,000
General and administrative 50,044,000 52,939,000 46,337,000
Depreciation and amortization 16,425,000 19,802,000 21,414,000
Reorganization costs - 5,983,000 4,499,000
Other 11,086,000 12,715,000 13,988,000
------------ ------------ ------------
245,361,000 260,623,000 222,446,000
------------ ------------ ------------
Income (loss) from operations 27,866,000 8,027,000 (2,360,000)
INTEREST INCOME 675,000 499,000 505,000
INTEREST EXPENSE, including approximately $9,000,000
in transaction costs related to the Recapitalization Plan
in 1993 (Note 2). (56,926,000) (45,360,000) (48,344,000)
------------ ------------ ------------
Loss before extraordinary gain (28,385,000) (36,834,000) (50,199,000)
EXTRAORDINARY GAIN ON PLAN
OF REORGANIZATION (Note 2) - 128,187,000 -
------------ ------------ ------------
Net Income (Loss) ($28,385,000) $91,353,000 ($50,199,000)
============ ============ ============
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these consolidated statements.
F-3
<PAGE>
TRUMP'S CASTLE ASSOCIATES AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
<TABLE>
<CAPTION>
Contributed Accumulated
Capital Deficit Total
----------- ----------- -----------
<S> <C> <C> <C>
Balance at December 31, 1990 $40,070,000 ($53,277,000) ($13,207,000)
Net loss - (50,199,000) (50,199,000)
----------- ----------- -----------
Balance at December 31, 1991 40,070,000 (103,476,000) (63,406,000)
Capital Contribution 33,325,000 - 33,325,000
Net income - 91,353,000 91,353,000
Partnership Distribution - (473,000) (473,000)
----------- ----------- -----------
Balance at December 31, 1992 73,395,000 (12,596,000) 60,799,000
Net loss - (28,385,000) (28,385,000)
Partnership Distribution (Note 6) - (736,000) (736,000)
----------- ----------- -----------
Balance at December 31, 1993 $73,395,000 ($41,717,000) $31,678,000
=========== =========== ===========
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these consolidated statements.
F-4
<PAGE>
TRUMP'S CASTLE ASSOCIATES AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss)income ($28,385,000) $91,353,000 ($50,199,000)
Adjustments to reconcile net (loss)income
to net cash flows (used in) provided by
operating activities-
Noncash charges-
Extraordinary Gain - (128,187,000) -
Depreciation and amortization 16,425,000 19,802,000 21,414,000
Accretion of bond discount 10,395,000 6,617,000 2,904,000
Provision for losses on receivables 755,000 2,290,000 3,387,000
Amortization of CRDA tax credits 115,000 679,000 1,959,000
Valuation allowance - CRDA investments 953,000 656,000 137,000
----------- ------------ ------------
258,000 (6,790,000) (20,398,000)
(Increase) decrease in receivables (3,461,000) (2,057,000) 3,303,000
(Increase) decrease in inventories (155,000) (309,000) 922,000
(Increase) decrease in other current assets (701,000) 141,000 (1,596,000)
(Increase) decrease in other assets (42,000) 9,368,000 (99,000)
(Decrease) increase in current liabilities (4,980,000) 19,028,000 30,322,000
----------- ------------ ------------
Net cash flows (used in) provided by
operating activities (9,081,000) 19,381,000 12,454,000
----------- ------------ ------------
CASH FLOWS USED BY INVESTING ACTIVITIES:
Purchases of property and equipment, net (10,396,000) (8,574,000) (5,117,000)
Purchase of CRDA investments (2,958,000) (1,696,000) (411,000)
----------- ------------ ------------
Net cash flows used in investing activities (13,354,000) (10,270,000) (5,528,000)
----------- ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of Senior Notes 27,000,000 - -
Repayment of Bank Borrowings (7,000,000) - -
Distributions to TC\GP,INC. (736,000) (473,000) -
----------- ------------ ------------
Net cash flows provided by (used in)
financing activites 19,264,000 (473,000) -
----------- ------------ ------------
Net (decrease) increase in
cash and cash equivalents (3,171,000) 8,638,000 6,926,000
CASH AND CASH EQUIVALENTS
AT BEGINNING OF YEAR 23,610,000 14,972,000 8,046,000
----------- ------------ ------------
CASH AND CASH EQUIVALENTS
AT END OF YEAR $20,439,000 $23,610,000 $14,972,000
=========== ============ ============
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these consolidated statements.
F-5
<PAGE>
TRUMP'S CASTLE ASSOCIATES AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Organization and Operations:
The accompanying consolidated financial statements include those of Trump's
Castle Associates, a New Jersey general partnership (the "Partnership") and its
wholly-owned subsidiary, Trump's Castle Funding, Inc., a New Jersey corporation
(the "Company"). All significant intercompany balances and transactions have
been eliminated in the consolidated financial statements.
The Partnership was formed as a limited partnership in 1985 for the sole
purpose of acquiring and operating Trump's Castle Casino Resort ("Trump's
Castle"). The Partnership converted to a general partnership in February 1992.
As a result of a recapitalization involving the Partnership, the Company and
TC/GP, Inc. ("TC/GP") in December, 1993 (Note 2), the Partnership is wholly
owned by Donald J. Trump, and his wholly owned companies, TC/GP and Trump's
Castle Hotel & Casino Inc. ("TCHC"). Donald J. Trump has pledged his direct and
indirect ownership interest in the Partnership as collateral under various
personal debt agreements.
The Company was incorporated on May 28, 1985 solely to serve as a financing
company to raise funds through the issuance of bonds to the public (Note 4).
Since the Company has no business operations, its ability to repay the principal
and interest on 11-3/4% Mortgage Notes due 2003 (the "Mortgage Notes") and its
Increasing Rate Subordinated Pay-in-Kind Notes due 2005 (the "PIK Notes") is
completely dependent upon the operations of the Partnership.
(2) Plan of Reorganization and Subsequent Recapitalization:
Plan of Reorganization
On March 9, 1992, the Partnership, the Company, and TCHC filed a voluntary
petition for relief under chapter 11, title 11 of the United States Bankruptcy
Code (the "Bankruptcy Code") and filed a Plan of Reorganization (the "Plan").
The Plan was confirmed by the Bankruptcy Court on May 5, 1992 and the Plan was
consummated on May 29, 1992 (the "Effective Date"). Pursuant to the terms of the
Plan, the Company's then outstanding bonds (the "Old Bonds") were exchanged for
new bonds and common stock of TC/GP (Note 4) and certain modifications were made
to the terms of bank borrowings (Note 5) and amounts owed to Donald J. Trump
(Note 6). The issuance of the common stock of TC/GP resulted in approximately
50% of the beneficial ownership interest in the Partnership being transferred to
the holders of the bonds.
F-6
<PAGE>
In accordance with AICPA Statement of Position 90-7, "Financial Reporting
by Entities in Reorganization Under the Bankruptcy Code," the Bonds issued at
the time of the reorganization were stated at the present value of amounts to be
paid, determined at current interest rates (effective rate of approximately
17.4%). The effective interest rate of these bonds was determined based on the
trading price of these bonds for a specific period. Stating the debt at its
approximate present value resulted in a reduction in the $322,987,000 initial
face amount of these bonds of approximately $96,896,000. This gain will be
offset by increased interest costs over the period of the bonds to accrete such
bonds to their face value at maturity.
On the Effective Date, TC/GP received a 49.995% Partnership interest in the
Partnership and was admitted as a partner. TC/GP also received a 50% beneficial
interest in TCHC, a partner in the Partnership, which held a .01% partnership
interest, thereby giving TC/GP a 50% beneficial interest in the Partnership. On
the Effective Date the partners executed the Amended and Restated Partnership
Agreement (the "Partnership Agreement"), which provided for, among other things,
a Board of Partner Representatives (the "Board") to oversee the business and
operations of the Partnership. Pursuant to the terms of the Partnership
Agreement, Donald J. Trump was appointed the Managing General Partner of the
Partnership responsible for its day-to-day operations and appointed four of the
seven members of the Board. The remaining members of the Board were appointed by
TC/GP through the holders of its Common Stock.
The Plan resulted in an extraordinary gain totaling approximately
$128,187,000, including the $96,896,000 discussed above, $18,000,000
representing the forgiveness of bank debt (Note 5), and $22,805,000 representing
a discharge of accrued interest and accretion on indebtedness less the write-off
of unamortized loan issuance costs of $9,514,000. On the Effective date, 35,447
of additional units were issued in lieu of the Bond Carryforward Amount, as
defined and the Effective Date Amount, as defined. Additionally, the Plan
resulted in a discharge of related party indebtedness in the approximate amount
of $33,325,000 which has been accounted for as a contribution to capital (Note
6).
Recapitalization
On December 28, 1993, the Partnership, the Company and TC/GP consummated a
Recapitalization Plan whereby each $1,000 of principal of the 9.5% Mortgage
Bonds issued as part of the Plan was exchanged for $750 principal amount of the
Company's 11-3/4% Mortgage Notes due 2003 (the "Mortgage Notes"), $120 principal
amount of the Company's Increasing Rate Subordinated Pay-in-Kind Notes due 2005
(the "PIK Notes") and a cash payment of $6.19 plus all accrued and unpaid
interest. Those bondholders who did not elect to exchange their bonds received a
cash payment of $750 for each $1,000 of principal amount of bonds plus accrued
and unpaid interest. In addition, each share of TC/GP common stock was exchanged
for $35 principal amount of PIK Notes.
F-7
<PAGE>
As a result of the Recapitalization Plan, approximately 96% of the
principal amount of the previously issued bonds were exchanged for Mortgage and
PIK Notes and the TC/GP common stock was redeemed. Those bonds that were
redeemed for cash were purchased at an amount which approximated their net book
value at the date of purchase. The net book value of the exchanged bonds has
been carried forward and allocated to the Mortgage and PIK Notes in proportion
to the principal amount of Notes issued. The difference between the principal
amount and net book value of these Notes will be accreted as a charge to
interest expense over the life of the Notes using the effective interest method.
In addition to the Mortgage and PIK Notes, the Company issued $27 million
of 11-1/2% Senior Secured Notes, due 2000 (the "Senior Notes"). A portion of the
proceeds from the Senior Notes were used to repay the $7 million Grid Note (Note
5).
Transaction costs related to the Recapitalization Plan of approximately
$9,000,000 are included in interest expense. Included in these costs is a
$1,500,000 bonus to Donald J. Trump for the services he provided in connection
with the recapitalization.
(3) Accounting Policies:
Gaming Revenues
The Partnership records as gross gaming revenues the differences between
amounts wagered and amounts won by casino patrons.
During 1992, certain Progressive Slot Jackpot Programs were discontinued
which resulted in $1,767,000 of related accruals being taken into income.
Promotional Allowances
Gross revenues include the retail value of the complimentary food, beverage
and hotel services furnished to patrons. The retail value of these promotional
allowances is deducted from gross revenues to arrive at net revenues. The cost
of such complimentaries have been included as casino expenses in the
accompanying consolidated statements of operations. The cost of complimentaries
allocated from rooms, food and beverage departments to the casino department
during the years ended December 31, 1993, 1992 and 1991 are as follows:
1993 1992 1991
----------- ----------- -----------
Rooms $ 5,834,000 $ 5,390,000 $ 4,304,000
Food and Beverage 17,332,000 17,351,000 13,694,000
Other 2,073,000 1,954,000 1,360,000
----------- ----------- -----------
$25,239,000 $24,695,000 $19,358,000
=========== =========== ===========
F-8
<PAGE>
Income taxes
The accompanying consolidated financial statements do not include a
provision for Federal income taxes of the Partnership, since any income or
losses allocated to the partners are reportable for Federal income tax purposes
by the Partners.
Under the Casino Control Act (the "Act") and the regulations promulgated
thereunder, the Partnership and the Company are required to file a consolidated
New Jersey corporation business tax return. However, no provision for State
income taxes has been reflected in the accompanying consolidated financial
statements, since the Partnership has experienced cumulative net operating
losses.
As of December 31, 1993, the Partnership had New Jersey State net operating
losses of approximately $144,000,000, which are available to offset taxable
income through 2000.
Inventories
Inventories of provisions and supplies are carried at the lower of cost
(first-in, first-out basis) or market.
Property and equipment
Property and equipment is recorded at cost and is depreciated on the
straight-line method over the estimated useful lives of the assets. Estimated
useful lives for furniture, fixtures and equipment and buildings are from three
to eight years and forty years, respectively.
Statements of cash flows
For purposes of the statements of cash flows, the Company and the
Partnership consider all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents.
The following supplemental disclosures are made to the statements of cash
flows:
1993 1992 1991
----------- ----------- -----------
Cash paid during the
year for interest
(net of amounts
capitalized) $44,857,000 $8,172,000 $7,902,000
=========== ========== ==========
(4) Mortgage Bonds and Notes:
Upon consummation of the Plan on May 29, 1992, each $1,000 principal amount
of the Company's then outstanding Series A-1 Bonds or $1,000 accreted amount as
F-9
<PAGE>
of December 15, 1990 of Series A-2 Bonds were exchanged for $1,000 in principal
amount of the Company's 9.50% Bonds (the "Bonds"), together with one share of
the Common Stock of TC/GP and certain other payments. The New Bonds and Common
Stock traded together as a unit (the "Unit") and could not be transferred
separately, except upon the occurrence of certain events.
The Bonds had a scheduled maturity of August 15, 1998 and bore interest at
9.50% per annum from the date of issuance, payable semi-annually on each
February 15 and August 15, commencing August 15, 1992. The Company was required
to pay interest in cash to the holders of the Bonds outstanding on the
immediately preceding August 1 or February 1 at varying rates per annum (the
"Mandatory Cash Amounts") as follows:
Mandatory
Cash Rate
Interest Payment Date (Per Annum)
- --------------------- -----------
August 15, 1992 5.00%
February 15, 1993 6.00%
August 15, 1993 7.00%
February 15, 1994 8.00%
August 15, 1994 and thereafter 9.50%
For interest payment dates on or before February 15, 1994, the difference
between interest calculated at the rate of 9.50% per annum and the Mandatory
Cash Amount (the "Additional Amount") was required to be payable to holders of
the Bonds in cash to the extent that Excess Available Cash, as defined, of the
Partnership was available for such purpose and in additional Units to the extent
that Excess Available Cash was less than the Additional Amount, as defined.
Through August 15, 1993, interest was paid to the bondholders at the mandatory
cash rate, with the balance paid in additional units.
As discussed in Note 2, On December 28, 1993 all of the outstanding
Mortgage Bonds and TC/GP Common stock were either redeemed or exchanged for
Mortgage and PIK Notes. The Mortgage Notes bear interest, payable in cash,
semi-annually, commencing May 15, 1994 at 11-3/4% and mature on November 15,
2003. As discussed in Note 2, Recapitalization, the net book value of the
exchanged bonds has been carried forward and allocated to the Mortgage and PIK
Notes in proportion to the principal amount of Notes issued. Accordingly, as of
December 31, 1993, the Mortgage and PIK Notes outstanding are reflected on the
balance sheet net of unamortized discount of $39,589,000 and $8,257,000
respectively. In the event the PIK Notes are redeemed prior to November 15,
1998, the interest rate on the Mortgage Notes will be reduced to 11-1/2%. The
Mortgage Notes may be redeemed at the Company's option at a specified percentage
of the principal amount commencing in 1998.
F-10
<PAGE>
The PIK Notes bear interest, payable at the Company's option in whole or in
part in cash and through the issuance of additional PIK Notes, semi-annually
commencing May 15, 1994 at the rate of 7% through September 30, 1994 and 13-7/8%
through November 15, 2003. Thereafter interest on these Notes is payable in
cash, semi-annually at the rate of 13-7/8%. The PIK Notes mature on November 15,
2005. The PIK Notes may be redeemed at the Company's option at 100% of the
principal amount under certain conditions, as defined in the PIK Note Indenture,
and are required to be redeemed from a specified percentage of any equity
offering which includes the Partnership.
The terms of both the Mortgage Notes and PIK Notes include limitations on
the amount of additional indebtedness the Partnership may incur, distributions
of Partnership capital, investments and other business activities.
The Mortgage Notes are secured by a promissory note of the Partnership to
the Company (the "Partnership Note") in an amount and with payment terms
necessary to service the Mortgage Notes. The Partnership Note is secured by a
mortgage on Trump's Castle and substantially all of the other assets of the
Partnership. The Partnership Note has been assigned by the Company to the
Trustee to secure the repayment of the Mortgage Notes. In addition, the
Partnership has guaranteed (the "Guaranty") the payment of the Mortgage Notes,
which Guaranty is secured by a mortgage on Trump's Castle. The Partnership Note
and the Guaranty are expressly subordinated to the indebtedness described in
Note 5 (the "Senior Indebtedness") and the liens of the mortgages securing the
Partnership Note and the Guaranty are subordinate to the liens securing the
Senior Indebtedness.
The PIK Notes are secured by a subordinated promissory note of the
Partnership to the Company (the "Subordinated Partnership Note"), which has been
assigned to the Trustee for the PIK Notes, and the Partnership has issued a
subordinated guaranty (the "Subordinated Guaranty") of the PIK Notes. The
Subordinated Partnership Note and the Subordinated Guaranty are expressly
subordinated to the Senior Indebtedness, the Partnership Note and the Guaranty.
(5) Other Borrowings:
Bank Borrowings
In February 1988, the Company and the Partnership entered into a
$50,000,000 revolving credit facility with Midlantic National Bank ("Midlantic")
which was later converted to a term loan in August 1990 ("Term Loan"). In
addition, in June 1990, the Partnership borrowed $13,000,000 from Midlantic
under an unsecured line of credit pursuant to a grid note ("Grid Note").
Pursuant to the Plan, the terms of both of these loans were modified.
The principal amount of the amended Term Loan (the "Amended Term Loan") was
reduced to $38,000,000. The Amended Term Loan has an initial maturity of three
F-11
<PAGE>
years from the Effective Date and bears interest at 9% per annum over such
period. In accordance with its terms, the Partnership has the option, subject to
certain conditions, to extend the Amended Term Loan an additional five years.
Upon such an extension, the interest rate on such loan will adjust to a market
rate, but not less than a minimum rate of 9%. The Amended Term Loan is secured
by a mortgage lien on Trump's Castle that is prior to the lien securing the
Mortgage Notes (Note 4) and the Senior Notes described below.
The amended Grid Note (the "Amended Grid Note") bore interest at 8.5% and
the outstanding principal amount was reduced to $7,000,000 payable on demand. On
December 28, 1993, the Amended Grid Note was paid in full.
Senior Notes
On December 28, 1993, the Company issued 11-1/2% Senior Secured Notes, due
2000. Similar to the Mortgage Notes, the Senior Notes are secured by an
assignment of a promissory note of the Partnership (the "Senior Partnership
Note") which is in turn secured by a mortgage on Trump's Castle and
substantially all of the other assets of the Partnership. In addition, the
Partnership has guaranteed (the "Senior Guaranty") the payment of the Senior
Notes, which Senior Guaranty is secured by a mortgage on Trump's Castle. The
Senior Partnership Note is subordinated to the Amended Term Loan described
above.
Interest on the Senior Notes is payable semiannually commencing May 15,
1994 at the rate of 11-1/2%; however in the event that the PIK Notes are
redeemed prior to November 15, 1998, the interest rate will be reduced to
11-1/4%. The Senior Notes are subject to a required partial redemption
commencing on June 1, 1998 at 100% of the principal amount.
(6) Related Party Transactions:
Trump Priority Interest
During 1990, the Partnership borrowed $28,265,000 from Donald J. Trump, one
of its general partners, which included $9,889,000 of Series A-1 Bonds (face
value $12,480,000), the proceeds of which were used to partially satisfy the
June 1990 interest and sinking fund requirements of the Old Bonds. Pursuant to
the Plan, the above obligations and related accrued interest of $5,060,000 were
canceled and contributed to capital and Donald J. Trump received in exchange
therefor a priority interest in the Partnership (the "Trump Priority Interest").
The Trump Priority Interest was initially $15,000,000 and pursuant to the terms
of the Partnership Agreement, the Partnership was required to pay a priority
return thereon semi-annually at a rate per annum of up to 9.50%. Pursuant to the
terms of the Recapitalization Plan, the Partnership Agreement was amended to
provide, among other things, that Trump will be entitled to receive a priority
F-12
<PAGE>
distribution equal to the Trump Priority Interest upon liquidation and to
eliminate the priority return. For the year ended December 31, 1993 and 1992, no
amounts were paid as priority return on capital.
Trump Management Fee
The Partnership had a management agreement with Trump's Castle Management
Corp. ("TCMC"), a corporation wholly owned by Donald J. Trump (the "Management
Agreement"). The Management Agreement provided that the day-to-day operation of
Trump's Castle and all ancillary properties and businesses of the Partnership
was to be under the exclusive management and supervision of TCMC.
Pursuant to the Management Agreement, the Partnership was required to pay
an annual fee in the amount of $1,500,000 to TCMC for each year in which
Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA"), as
defined, exceeds certain levels. In addition, TCMC, beginning with the fiscal
year ended December 31, 1994, was to receive an incentive fee equal to 10% of
the excess EBITDA over $45,000,000 for such fiscal year. During the years ended
1993 and 1992, the Partnership incurred fees and expenses of $1,647,000 and
888,000 respectively, under the Management Agreement.
As a result of the Recapitalization Plan described in Note 2, on December
28, 1993, the Partnership terminated the Management Agreement with TCMC and
entered into a Services Agreement with TC/GP. Pursuant to the terms of the
services agreement, TC/GP is obligated to provide the Partnership, from time to
time, when reasonably requested, consulting services on a non-exclusive basis,
relating to marketing, advertising, promotional and other similar and related
services with respect to the business and operations of the Partnership,
including such other services as the Managing Partner may reasonably request.
In consideration for the services to be rendered, the Partnership will pay
TC/GP an annual fee on the same basis as that of the previous Management
Agreement, discussed above. The Services Agreement expires on December 31, 2005.
Fred Trump Gaming Chip Liability
In December 1990, Fred Trump, the father of Donald J. Trump, placed
$3,500,000 in cash on deposit with the Partnership's casino cage, which was
recorded by the Partnership as a gaming patron deposit. Counter checks totaling
$3,500,000 were issued against the deposit, for which Fred Trump received gaming
chips valued at $3,500,000. On October 8, 1992, in accordance with the
indenture, Fred Trump redeemed $1,000,000 in gaming chips for cash. In December
1993, Fred Trump redeemed $1,000,000 in gaming chips and placed the same amount
on deposit in the casino cage. This amount was included in Patrons Deposits as
of December 31, 1993 and was subsequently redeemed on January 6, 1994. The
remaining liability may be redeemed at any time provided there shall exist no
Event of Default, the Partnership shall have achieved EBITDA for any period of
F-13
<PAGE>
four consecutive fiscal quarters in an amount not less than $45,000,000 and or
if approved by a unanimous vote of the Board of Partner Representatives with the
unanimous consent of the Noteholder Representatives. The remaining gaming chip
liability to Fred Trump of $1,500,000 is included in unredeemed chip liability
as of December 31, 1993.
Due from Affiliates
Amounts due from affiliates were $615,000 and $742,000 as of December 31,
1993 and 1992, respectively. The Partnership has engaged in some limited
intercompany transactions with Trump's Plaza Associates (TPA), Trump Taj Mahal
Associates, (TTMA), Plaza Operating Partners, Ltd. (Plaza Hotel --the
partnership which operates The Plaza Hotel in New York City) and the Trump
Organization (TO). TPA, TTMA, Plaza Hotel and TO are affiliates of Donald J.
Trump. These transactions include certain shared payroll costs as well as
complimentary services offered to customers, for which the Partnership makes
initial payments and is then reimbursed by the affiliates.
During 1993, the Partnership incurred expenses of approximately $1,332,000
in corporate salaries and $952,000 of other transactions on behalf of these
related entities. In addition, the Partnership received payments totaling
$2,004,000 for services rendered and had $407,000 of deductions for similar
costs incurred by these related entities on behalf of the Partnership.
During 1992, the Partnership incurred expenses of approximately $1,240,000
in corporate salaries and $513,000 of other transactions on behalf of these
related entities. In addition, the Partnership received payments totaling
$1,372,000 for services rendered and had $202,000 of deductions for similar
costs incurred by these related entities on behalf of the Partnership.
During 1991, the Partnership incurred expenses of approximately $898,000 in
corporate salaries, $1,294,000 in fleet maintenance/limousine services and
$623,000 of other transactions on behalf of these related entities. In addition,
the Partnership received payments totaling $2,721,000 for services rendered and
had $642,000 of deductions for similar costs incurred by these related entities
on behalf of the Partnership.
Partnership Distribution
Under the terms of the Partnership Agreement, the Partnership was required
to pay all costs incurred by TC/GP. For the year ended December 31, 1993 and for
the period from May 29, 1992 through December 31, 1992, the Partnership paid
$736,000 and $473,000, respectively of expenses on behalf of TC/GP, which has
been reflected as a partnership distribution.
F-14
<PAGE>
(7) Commitments and Contingencies:
Casino License Renewal
The Partnership is subject to regulation and licensing by the New Jersey
Casino Control Commission (the "CCC"). The Partnership's casino license must be
renewed periodically, is not transferable, is dependent upon the financial
stability of the Partnership and can be revoked at any time. Due to the
uncertainty of any license renewal application, there can be no assurance that
the license will be renewed. Upon revocation, suspension for more than 120 days,
or failure to renew the casino license due to the Partnership's financial
condition or for any other reason, the Casino Control Act ("the Act") provides
that the CCC may appoint a conservator to take possession of and title to the
hotel and casino's business and property, subject to all valid liens, claims and
encumbrances.
The CCC renewed the casino license of the Partnership through May 31, 1995
subject to certain continuing reporting and compliance conditions.
Employment Agreements
The Partnership has entered into employment agreements with certain key
employees which expire at various dates through January 16, 1997. Total minimum
commitments on these agreements at December 31, 1993 were approximately
$6,507,000.
Legal Proceedings
The Partnership is involved in legal proceedings incurred in the normal
course of business. In the opinion of management and its counsel, if adversely
decided, none of these proceedings would have a material effect on the
consolidated financial position of the Partnership.
Casino Reinvestment Development Authority Obligations
Pursuant to the provisions of the Act, the Partnership, commencing twelve
months after the date of opening of Trump's Castle in June 1985 and continuing
for a period of twenty-five years thereafter, must either obtain investment tax
credits (as defined in the Act), in an amount equivalent to 1.25% of its gross
casino revenues (as defined in the Act) or pay an alternative tax of 2.5% of its
gross casino revenues. Investment tax credits may be obtained by making
qualified investments, as defined, or by the purchase of bonds at below market
interest rates from the Casino Reinvestment Development Authority ("CRDA"). The
Partnership is required to make quarterly deposits with the CRDA to satisfy its
investment obligations.
In April 1990, the Partnership modified its agreement with the CRDA under
which it was required to purchase CRDA bonds to satisfy the investment
alternative tax. Under the terms of the agreement, the Partnership donated
F-15
<PAGE>
$9,589,000 in deposits previously made to the CRDA for the purchase of CRDA
bonds through December 31, 1989 in exchange for satisfaction of an equivalent
amount of its prior bond purchase commitments, as well as receiving future tax
credits to be used to satisfy substantial portions of the Partnership's future
investment alternative tax obligations over the following four to six quarters.
As a result of this agreement, the Partnership charged $1,588,000 to operations
in 1990 to reduce deposits previously made to the amount of the future tax
credits received.
For the years ended December 31, 1993, 1992, and 1991, the Partnership
charged to operations, $115,000, $679,000 and $1,959,000, respectively, which
represents amortization of a portion of the tax credits discussed above. In
addition, for the years ended December 31, 1993, 1992, and 1991, the Partnership
charged to operations $953,000, $656,000 and $137,000, respectively, to give
effect to the below market interest rates associated with purchased CRDA bonds.
(8) Employee Benefits Plans:
The Partnership has a retirement savings plan for its nonunion employees
under Section 401(k) of the Internal Revenue Code. Employees are eligible to
contribute up to 15% of their earnings to the plan up to the maximum amount
permitted by law, and the Partnership will match 50% of an eligible employee's
contributions up to a maximum of 4% of the employee's earnings. The Partnership
recorded charges of approximately $846,000, $764,000 and $343,000 for matching
contributions for the years ended December 31, 1993, 1992 and 1991,
respectively.
The Partnership makes payments to various trusteed pension plans under
industry-wide union agreements. The payments are based on the hours worked by or
gross wages paid to covered employees. It is not practical to determine the
amount of payments ultimately used to fund pension benefit plans or the current
financial condition of the plans. Under the Employee Retirement Income Security
Act, the Partnership may be liable for its share of the plans' unfunded
liabilities, if any, if the plans are terminated. Pension expense for the years
ended December 31, 1993, 1992 and 1991 were $407,000, $397,000 and $308,000,
respectively.
The Partnership provides no other material post employment benefits.
(9) Financial Information of the Company:
Financial information relating to the Company as of and for the years ended
December 31, 1993 and 1992 is as follows:
F-16
<PAGE>
1993 1992
---- ----
Total Assets (including $319,876,000 $337,771,000
Mortgage Notes Receivable ============ ============
Of $242,141,000, PIK
Notes Receivable of
$50,499,000 and Senior
Notes Receivable of
$27,000,000 in 1993 and
Mortgage Bonds Receivable
of $326,056,000 in 1992.)
Total Liabilities and $319,876,000 $337,771,000
Capital (including ============ ============
Mortgage Notes payable of
$242,141,000, PIK Notes
payable of $50,499,000
and Senior Notes Payable
of $27,000,000 in 1993 and
Mortgage Bonds Payable of
$326,056,000 in 1992
Interest Income $ 42,008,000 $ 34,866,000
Interest Expense $ 42,008,000 $ 34,866,000
------------ ------------
Net Income $ - $ -
============ ============
(10) Fair Value of Financial Instruments
The carrying amount of the following financial instruments of the
Partnership and the Company approximate fair value, as follows: (a) cash and
cash equivalents and accrued interest receivables and payables based on the
short term nature of the financial instruments, (b) CRDA bonds and deposits
based on the allowances to give effect to the below market interest rates (c)
the Senior Notes based on the recently negotiated terms as of December 28, 1993.
The fair values of the Mortgage Notes and PIK Notes are based on quoted
market prices. The fair value of the Mortgage Bonds was based on quoted market
prices obtained by the Partnership from its investment advisor.
The estimated fair values of other financial instruments are as follows:
December 31, 1993
-----------------------------
Carrying Amount Fair Value
--------------- -------------
11-3/4% Mortgage Notes............ $ 202,552,000 $ 232,456,000
Increasing Rate PIK Notes.......... $ 42,242,000 $ 42,419,000
F-17
<PAGE>
December 31, 1992
-----------------------------
Carrying Amount Fair Value
--------------- -------------
9-1/2% Mortgage Bonds............. $ 234,445,000 $ 233,945,000
There are no quoted market prices for the Partnership Amended Term Loan and
a reasonable estimate of its value could not be made without incurring excessive
costs.
F-18
<PAGE>
Facsimile copies of the Letter of Transmittal will be accepted. The Letter
of Transmittal and certificates for Series A Notes and any other required
documents should be sent or delivered by each holder or his broker, dealer,
commercial bank, trust company or other nominee to the Depositary at one of its
addresses set forth below:
The Depositary is: First Bank National Association
By Mail: By Facsimile: By Hand:
Trump's Castle Funding, (612) 244-0711 Trump's Castle Funding, Inc.
Inc. c/o First Bank National
c/o First Bank National Confirm by Association
Association Telephone: First Trust Center
First Trust Center (612) 244-0721 180 East Fifth Stree
180 East Fifth Street Saint Paul, MN 55101
Saint Paul, MN 55101 Attn: Corporate Trust
Attn: Corporate Trust Department
Department
No person has been authorized to give any information or to make any
representations, other than those contained in this Prospectus. If given or
made, such information or representation may not be relied upon as having been
authorized by any Registrant. Funding is not aware of any jurisdiction in which
the making of the Exchange Offer is not in compliance with applicable law. If
Funding becomes aware of any jurisdiction in which the making of the Exchange
Offer would not be in compliance with applicable law, Funding will make a good
faith effort to comply with such law. If, after such good faith effort, Funding
cannot comply with any such law, the Exchange Offer will not be made to (nor
will tenders of Series A Notes be accepted from or on behalf of) holders of
Series A Notes residing in such jurisdiction. Neither the delivery of this
Prospectus nor any distribution of securities hereunder shall under any
circumstances create any implication that the information contained herein is
correct as of any time subsequent to the date hereof or that there has been no
change in the information set forth herein or in the affairs of the Registrants
since the date hereof.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers
Funding's Amended and Restated Certificate of Incorporation provides for
indemnification of any present or former "corporate agent" (as defined in
N.J.S.A. 14A:3-5). Funding's Certificate of Incorporation provides that Funding
shall indemnify and reimburse any present or former corporate agent who serves
Funding, or any constituent corporation absorbed by Funding in a merger or
consolidation, or any other corporation or business entity in which Funding has
a business interest, against any reasonable and necessary expenses, counsel fees
and liabilities actually incurred by them in any civil or criminal proceeding
brought or threatened for acts arising out of their status as corporate agents,
to the maximum extent permitted by law and in accordance with the procedures set
forth in N.J.S.A. 14A:3-5. Termination of any proceeding by judgment, order,
settlement, conviction or upon a plea of nolo contendere or its equivalent shall
not of itself create a presumption that such corporate agent did not meet the
applicable standard of conduct for indemnification. Indemnity shall be paid in
advance of the final disposition of the proceeding, provided the corporate agent
undertakes to repay Funding if it shall be ultimately determined that he is not
entitled to indemnification. Funding's Certificate of Incorporation further
provides that such indemnification rights will be construed as in addition to,
and not exclusive of, all other rights to indemnification to which any corporate
agent may be entitled.
The Partnership's Amended and Restated Partnership Agreement provides for
indemnification of each Partner, its Affiliates, each Partner Representative and
his or her Affiliates and all officers, directors, employees and agents of such
Partner or Partner Representative and his, her or its affiliates (individually,
an "Indemnitee") from and against any and all losses, claims, demands, costs,
damages, liabilities, joint and several, expenses of any nature (including
attorneys' fees and disbursements), judgments, fines, settlements and other
amounts arising from any and all claims, demands, actions, suits or proceedings,
civil, criminal, administrative or investigative, in which the Indemnitee may be
involved, or threatened to be involved, as a party or otherwise, arising out of
or incidental to the business of the Partnership, including without limitation
liabilities under the Federal and state securities laws, regardless of whether
the Indemnitee continues to be a Partner, an Affiliate of a Partner, a Partner
Representative or an Affiliate of a Partner Representative, or an officer,
II-1
<PAGE>
director, employee, or agent of a Partner or Partner Representative or an
Affiliate of such Persons at the time any such liability or expense is paid or
incurred, but only if such course of conduct does not constitute gross
negligence or willful misconduct; provided, however, that such indemnification
or agreement to hold harmless shall be recoverable only out of assets of the
Partnership and not from the Partners. The indemnification provided by the
Amended and Restated Partnership Agreement is in addition to any other rights to
which an Indemnitee may be entitled under any agreement, as a matter of law or
equity, or otherwise, both as to action in the Indemnitee's capacity as a
Partner, an Affiliate of a Partner, a Partner Representative or an Affiliate of
a Partner Representative, or as an officer, director, employee or agent of a
Partner or Partner Representative or an Affiliate of such Persons and as to any
action in another capacity, and 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 the Indemnitee. No Indemnitee is
denied indemnification in whole or in part under the Amended and Restated
Partnership Agreement by reason of the fact that the Indemnitee had an interest
in the transaction with respect to which the indemnification applies if the
transaction was approved in accordance with Article 7 of the Amended and
Restated Partnership Agreement.
The Partnership and Funding have obtained Directors and Officers liability
insurance in the aggregate sum of $5 million.
N.J.S.A. 14A:3-5 grants a corporation broad power to indemnify certain
persons, including directors and officers, if they have acted in good faith and
in a manner they reasonably believed to be in, or not opposed to, the best
interests of the corporation, and, in a derivative action, if they have not been
adjudged to be liable to the corporation (unless a court makes an exception to
this requirement), or, in a criminal proceeding, if they had no reasonable cause
to believe their conduct was unlawful. A director or officer must be indemnified
against expenses to the extent that he has been successful in the defense of a
claim. N.J.S.A. 14A:3-5 further provides that the foregoing provisions are not
exclusive of any other rights to which those seeking indemnification may be
entitled under a certificate of incorporation, bylaw, agreement, vote of
shareholders or otherwise, and grants a corporation the power to purchase and
maintain insurance for a director or officer against any expenses incurred in
any proceeding and any liabilities asserted against him by reason of his having
II-2
<PAGE>
been a director or officer, whether or not it would have the power to indemnify
him against such expenses and liabilities under the foregoing provisions.
The employment contract between the Partnership and Ernest E. East contains
certain indemnification provisions.
II-3
<PAGE>
Item 21. Exhibits and Financial Statement Schedules
A. Exhibits
3(15) -Amended and Restated Certificate of Incorporation
of Funding.
3.1(15) -Bylaws of Funding.
3.2-3.6 -Intentionally omitted.
3.7(14) -Second Amended and Restated Partnership Agreement
of the Partnership.
4.1 - 4.10 -Intentionally omitted.
4.11(14) -Indenture, among Funding, as issuer, the
Partnership, as guarantor, and the Mortgage Note
Trustee, as trustee.
4.12(14) -Indenture of Mortgage between the Partnership, as
Mortgagor, and Funding, as Mortgagee.
4.13(14) -Assignment Agreement between Funding and the
Mortgage Note Trustee.
4.14(14) -Partnership Note.
4.15 -Form of Mortgage Note (included in Exhibit 4.11).
4.16 -Form of Partnership Guarantee (included in Exhibit
4.11).
4.17(14) -Indenture between Funding, as issuer, the
Partnership, as guarantor, and the PIK Note Trustee, as
trustee.
4.18(14) -Pledge Agreement between Funding and the PIK Note
Trustee.
4.19(14) -Subordinated Partnership Note.
4.20 -Form of PIK Note (included in Exhibit 4.17).
4.21 -Form of Subordinated Partnership Guarantee
(included in exhibit 4.17).
II-4
<PAGE>
4.22(15) -Letter Agreement between the Partnership and the
Proposed Senior Secured Note Purchasers regarding
the Senior Secured Notes.
4.23(14) -Note Purchase Agreement for 11-1/2% Series A Senior
Secured Notes of the Partnership due 1999.
4.24(14) -Indenture, among Funding, as issuer, the
Partnership, as guarantor, and the Senior Secured
Note Trustee, as trustee.
4.25(14) -Indenture of Mortgage and Security Agreement
between the Partnership, as mortgagor/debtor, and
Funding as mortgagee/secured party. (Senior Note
Mortgage).
4.26(14) -Registration Rights Agreement by and among the
Partnership and certain purchasers.
4.27 -Intentionally omitted.
4.28(14) -Guarantee Mortgage.
4.29(14) -Senior Partnership Note.
4.30(14) -Indenture of Mortgage and Security Agreement between
the Partnership as mortgagor/debtor and the Senior Note
Trustee as mortgagee/secured party.
(Senior Guarantee Mortgage).
4.31(14) -Assignment Agreement between Funding, as assignor,
and the Senior Note Trustee, as assignee.
(Senior Assignment Agreement).
4.32(14) -Amended and Restated Nominee Agreement.
4.33 -Form of Senior Notes, Series B (included in Exhibit
4.24).
5.1(11) -Opinion of Willkie Farr & Gallagher.
5.2(11) -Opinion of Ribis Graham & Curtin.
10.1- 10.2 -Intentionally omitted.
10.3(7) -Employment Agreement dated January 17, 1991,
between the Partnership and Roger P. Wagner.
II-5
<PAGE>
10.4(2) -Second Amendment to Employment Agreement dated
January 17, 1991 between the Partnership, TCHI, and
Roger P. Wagner
10.5(3) -Form of License Agreement between the Partnership
and Donald J. Trump.
10.6 -Intentionally Omitted.
10.7(5) -Lease, dated June 25, 1986, between the Partnership and
Trump Plaza, as the nominee of the Trump Organization.
10.8-10.10 -Intentionally omitted.
10.11(14) -Employment Agreement, between the Partnership and
Nicholas Ribis.
10.12(5) -Trump's Castle Hotel & Casino Retirement Savings
Plan, effective as of September 1, 1986.
10.13-10.16 -Intentionally omitted.
10.17(9) -Agreement, dated June 1, 1987, between Marina
Associates, GNAC Corp., and the Partnership,
individually and as assignee of Hilton New Jersey
Corporation and the New Jersey Department of
Transportation and the New Jersey Department of
Environmental Protection.
10.18(9) -Agreement, dated June 1, 1987, between Marina Associates, the
Partnership, individually and as assignee and successor of
Hilton New Jersey Corporation and Golden Nugget, Inc.,
individually and on behalf of all of its past, present
and future subsidiaries.
10.19(7) -Lease Agreement by and between State of New Jersey
acting through its Department of Environmental
Protection, Division of Parks and Forests, as Landlord,
and the Partnership, as tenant, dated
September 1, 1990.
10.20-10.21 -Intentionally omitted.
10.22(1) -Memorandum of Understanding, dated July 30, 1991,
between Willkie Farr & Gallagher, Clapp & Eisenberg and
Goodkind Labaton & Rudoff.
II-6
<PAGE>
10.23(2) -Form of Employment Agreement between the
Partnership and Ernest E. East.
10.24A(3) -Employment Agreement, dated January 31, 1992
between Thomas P. Venier and the Partnership.
10.24B(13) -Amendment to Employment Agreement, dated March 19,
1993, between Thomas P. Venier and the Partnership.
10.25(3) -Stipulation and Agreement of Compromise and
Settlement, between Willkie Farr & Gallagher, Clapp
& Eisenberg and Goodkind, Labaton, Rudoff &
Sucharow.
10.26A(10) -Employment Agreement, dated November 2, 1992, between
Patrick Dennehy and the Partnership.
10.26B(15) -Amendment of Employment Agreement, dated May 13, 1993,
between Patrick Dennehy and the Partnership.
10.27(15) -Services Agreement.
10.28-10.29 -Intentionally omitted.
10.30(15) -Employment Agreement, dated October 4, 1993, between
Nicholas Niglio and the Partnership.
10.31(16) -Employment Agreement, dated January 3, 1994,
between Robert E. Schaffhauser and the Partnership.
10.32(16) -Employment Agreement dated December 20, 1993
between Patricia M. Wild and the Partnership
10.33(16) -Amendment of Employment Agreement, dated December
30, 1993, between Thomas Venier and the Partnership.
10.34(16) -Amended and Restated Credit Agreement, dated as of
December 28, 1993, among Midlantic, the Partnership and
Funding.
10.35(16) -Amendment No. 1 to Amended and Restated Indenture
of Mortgage, between the Partnership, as Mortgagor and
Midlantic, as Mortgagee.
10.36(16) -Amended and Restated Indenture of Mortgage, between the
Partnership, as Mortgagor and Midlantic, as Mortgagee,
dated as of May 29, 1992.
10.37(16) -Amendment No. 1 to Amended and Restated Assignment
of Leases and Rents, between the Partnership, as
assignor, and Midlantic, as assignee.
II-7
<PAGE>
10.38(16) -Amended and Restated Assignment of Leases and Rents,
between the Partnership, as assignor, and Midlantic, as
assignee, dated as of May 29, 1992.
10.39(16) -Amendment No. 1 to Amended and Restated Assignment
of Operating Assets, between the Partnership, as
assignor and Midlantic, as assignee.
10.40(16) -Amended and Restated Assignment of Operating Assets,
between the Partnership, as assignor, and Midlantic, as
assignee, dated as of May 29, 1992.
10.41(16) -Intercreditor Agreement, by and among Midlantic, the
Senior Note Trustee, the Mortgage Note Trustee, the PIK
Note Trustee, Funding and the Partnership.
24.1(11) -Consent of Arthur Andersen & Co.
24.2 -Consent of Ribis Graham & Curtin (included in
Exhibit 5.2).
24.3 -Consent of Willkie Farr & Gallagher (included in
Exhibit 5.1).
24.4(11) -Consent of Sterns & Weinroth
25(16) -Power of Attorney of certain directors and certain
officers of Funding and the Partnership
99(11) -Form of Letter of Transmittal and related
documents.
- -------------
(1) Incorporated herein by reference to the identically numbered Exhibit to
Funding's Registration Statement on Form S-4, Registration No. 33-41759,
declared effective on January 23, 1992.
(2) Incorporated herein by reference to the Exhibit to Funding's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1992.
(3) Incorporated herein by reference to the Exhibit to Funding's Annual Report
on Form 10-K for the year ended December 31, 1991.
II-8
<PAGE>
(4) Incorporated herein by reference to the Exhibit to Funding's Annual Report
on Form 10-K for the year ended December 31, 1987.
(5) Incorporated herein by reference to the Exhibit to Funding's Annual Report
on Form 10-K for the year ended December 31, 1986.
(6) Incorporated herein by reference to Exhibit 10.12 to Funding's Annual
Report on Form 10-K for the year ended December 31, 1989.
(7) Incorporated herein by reference to the Exhibit to Funding's Annual Report
on Form 10-K for the year ended December 31, 1990.
(8) Incorporated herein by reference to Exhibit 10.2 to Funding's Registration
Statement on Form S-1, Registration No. 2-99088, declared effective on
September 20, 1985.
(9) Incorporated herein by reference to the Exhibit to Funding's Registration
Statement on Form S-1, Registration No. 33-14907, declared effective on
July 21, 1987.
(10) Incorporated herein by reference to the Exhibit to Funding's Annual Report
on Form 10-K for the year ended December 31, 1992.
(11) Filed herewith.
(12) Incorporated herein by reference to the Exhibit to TC/GP's Quarterly Report
on Form 10-Q for the quarter ended June 30, 1992.
(13) Incorporated herein by reference to the Exhibit to Funding's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1993.
(14) Incorporated herein by reference to the Exhibit to Amendment No. 5 to the
Schedule 13E-3 of TC/GP and the Partnership, File No. 5-36825, filed with
the SEC on January 11, 1994.
(15) Incorporated herein by reference to the Exhibit to Funding's and the
Partnership's Registration Statement on Form S-4, Registration No.
33-68038.
(16) Previously filed in Funding's and the Parthership's Registration Statement
on Form S-4, Registration No. 33- 52309.
II-9
<PAGE>
B. Financial Statements Schedules
Report of Independent Public Accountants
II -Amounts Receivable From Related Parties, Underwriters,
Promoters, and Employees other than Related Parties
V -Property and Equipment
VI -Accumulated Depreciation of Property and Equipment
VIII -Valuation and Qualifying Accounts
IX -Short-Term Borrowings
X -Supplementary Income Statement Information
Other Schedules are omitted for the reason that they are not required or
are not applicable, or the required information is shown in the consolidated
financial statements or notes thereto.
II-10
<PAGE>
Item 22. Undertakings
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has 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 registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant 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:
(1) That prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is part of this registration
statement, by any person or party who is deemed to be an underwriter within the
meaning of Rule 145(c), the issuer undertakes that such reoffering prospectus
will contain the information called for by 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) 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 any 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.
II-11
<PAGE>
(3) 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-12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, each Registrant has duly caused this Pre-Effective Amendment
to Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State
of New York, on the 6th day of May, 1994.
TRUMP'S CASTLE FUNDING, INC.
By: Donald J. Trump
--------------------
By: Donald J. Trump
Title: President
TRUMP'S CASTLE ASSOCIATES
By: Donald J. Trump
-------------------------
By: Donald J. Trump
Title: Managing General
Partner and Chairman of
the Board of Partner
Representatives
II-13
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
Pre-Effective Amendment to Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated:
Signature Title Date
TRUMP'S CASTLE FUNDING, INC.
By: Donald J. Trump Chairman of the Board, May 6, 1994
----------------- President, Chief
Donald J. Trump Executive Officer
(Principal Executive
Officer), Treasurer
(Principal Financial
Officer) and sole
Director of the
Registrant.
By: Robert E. Schaffhauser Assistant Treasurer of May 6, 1994
---------------------- the Registrant
Robert E. Schaffhauser (Principal Accounting
Officer)
TRUMP'S CASTLE ASSOCIATES
By: Donald J. Trump Chairman, Board of May 6, 1994
--------------- Partner Representatives
Donald J. Trump
By: Nicholas L. Ribis Member, Board of May 6, 1994
----------------- Partner Representatives
Nicholas L. Ribis and Chief Executive
Officer
By: Roger P. Wagner Member, Board of May 6, 1994
----------------- Partner Representatives
Roger P. Wagner and President
II-14
<PAGE>
By: Ernest E. East Member, Board of May 6, 1994
-------------- Partner Representatives
Ernest E. East
By: Asher O. Pacholder Member, Board of May 6, 1994
------------------- Partner Representatives
Asher O. Pacholder
By: Wallace B. Askins Member, Board of May 6, 1994
------------------ Partner Representatives
Wallace B. Askins
By: Thomas F. Leahy Member, Board of May 6, 1994
---------------- Partner Representatives
Thomas F. Leahy
By: Robert E. Schaffhauser Chief Financial and May 6, 1994
----------------------- Accounting Officer
Robert E. Schaffhauser
II-15
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Trump's Castle Associates
and Subsidiary:
We have audited, in accordance with generally accepted auditing standards, the
consolidated financial statements of Trump's Castle Associates and subsidiary
included in this registration statement and have issued our report thereon dated
February 11, 1994. Our audit was made for the purpose of forming an opinion on
the basic consolidated financial statements taken as a whole. The schedules
listed in the accompanying index are the responsibility of the management of
Trump's Castle Associates and subsidiary and are presented for purposes of
complying with the Securities and Exchange Commission's rules and are not part
of the basic consolidated financial statements. These schedules have been
subjected to the auditing procedures applied in the audit of the basic
consolidated financial statements and, in our opinion, fairly state in all
material respects the financial data required to be set forth therein in
relation to the basic consolidated financial statements taken as a whole.
ARTHUR ANDERSEN & CO.
Roseland, New Jersey
February 11, 1994
S-1
<PAGE>
SCHEDULE II
TRUMP'S CASTLE ASSOCIATES AND SUBSIDIARY
SCHEDULE II -- AMOUNTS RECEIVABLE FROM RELATED PARTIES,
UNDERWRITERS, PROMOTERS AND EMPLOYEES OTHER THAN RELATED PARTIES
For the Years Ended December 31, 1993, 1992 and 1991
<TABLE>
<CAPTION>
Balance at
Beginning Balance at
Name of Debtor of Period Additions Deductions End of Period
-------------- ---------- --------- ---------- -------------
<S> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1993:
The Trump Organization $200,000 $51,000 ($26,000) $225,000
Trump Plaza Associates 336,000 1,168,000 (1,183,000) 321,000
Trump Taj Mahal Associates
Partnership 206,000 1,065,000 (1,202,000) 69,000
---------- ---------- ---------- --------
$742,000 $2,284,000 ($2,411,000) $615,000
========== ========== ========== ========
YEAR ENDED DECEMBER 31, 1992:
The Trump Organization $120,000 $93,000 ($13,000) $200,000
Trump Plaza Associates 349,000 1,009,000 (1,022,000) 336,000
New York Plaza Hotel 24,000 - (24,000) -
Trump Taj Mahal Associates
Partnership 70,000 651,000 (515,000) 206,000
---------- ---------- ---------- --------
$563,000 $1,753,000 ($1,574,000) $742,000
========== ========== ========== ========
YEAR ENDED DECEMBER 31, 1991:
The Trump Organization $3,000 $120,000 ($3,000) $120,000
Trump Plaza Associates 481,000 1,121,000 (1,253,000) 349,000
New York Plaza Hotel 89,000 - (65,000) 24,000
Trump Taj Mahal Associates
Partnership 538,000 1,574,000 (2,042,000) 70,000
---------- ---------- ---------- --------
$1,111,000 $2,815,000 ($3,363,000) $563,000
========== ========== ========== ========
</TABLE>
All of the above amounts are noninterest bearing and are due on demand.
S-2
<PAGE>
<TABLE>
SCHEDULE V
TRUMP'S CASTLE ASSOCIATES AND SUBSIDIARY
SCHEDULE V--PROPERTY AND EQUIPMENT
For the Years Ended December 31, 1993, 1992 and 1991
Other
Balance at Changes-- Balance at
Beginning Additions Additions End
of Period at Cost Retirements (Deductions(A) of Period
----------- --------- ----------- -------------- ----------
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1993:
Land and land improvements..... $ 62,117,000 $ 60,000 $ -- $ -- $ 62,177,000
Buildings and building
improvements................ 321,345,000 255,000 -- 3,037,000 324,637,000
Furniture, Fixtures and
gquipment................... 97,194,000 5,354,000 -- 897,000 103,445,000
Construction in progress....... 2,401,000 4,727,000 -- (3,934,000) 3,194,000
------------- ----------- ----------- ------------- -------------
$ 483,057,000 $10,396,000 $ -- $ -- $ 493,453,000
============= =========== =========== ============= =============
Year Ended December 31, 1992:
Land and land improvements..... $ 58,279,000 $ 3,838,000 $ -- $ -- $ 62,117,000
Buildings and building
improvements................ 320,370,000 60,000 (347,000) 1,262,000 321,345,000
Furniture, Fixtures and
equipment................... 94,440,000 2,137,000 -- 617,000 97,194,000
Construction in progress....... 1,394,000 2,886,000 -- (1,879,000) 2,401,000
------------- ----------- ----------- ------------- -------------
$ 474,483,000 $ 8,921,000 ($ 347,000) $ -- $ 483,057,000
============= =========== =========== ============= =============
Year Ended December 31, 1991:
Land and land improvements..... $ 57,766,000 $ 747,000 ($234,000) $ -- $ 58,279,000
Buildings and building
improvements................ 319,792,000 1,088,000 (1,558,000) 1,048,000 320,370,000
Furniture, Fixtures and
equipment................... 91,394,000 3,140,000 (276,000) 182,000 94,440,000
Construction in progress....... 901,000 1,723,000 -- (1,230,000) 1,394,000
------------- ----------- ----------- ------------- -------------
$ 469,853,000 $ 6,698,000 ($ 2,068,000) $ -- $ 474,483,000
============= =========== =========== ============= =============
</TABLE>
(A) Represents the reclassification of completed projects to in--service
classification.
S-3
<PAGE>
<TABLE>
SCHEDULE VI
TRUMP'S CASTLE ASSOCIATES AND SUBSIDIARY
SCHEDULE VI--ACCUMULATED DEPRECIATION AND AMORTIZATION
OF PROPERTY AND EQUIPMENT
For the Years Ended December 31, 1993, 1992 and 1991
Additions
Balance at Charged to Balance at
Beginning Costs and End
of Period Expenses Retirements of Period
---------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Year Ended December 31, 1993:
Land improvements........................ $ 1,135,000 $ 86,000 $ -- $ 1,221,000
Buildings and building improvements...... 51,903,000 8,053,000 -- 59,956,000
Furniture, fixtures and equipment........ 89,636,000 8,286,000 -- 97,922,000
------------- ----------- --------- ------------
$ 142,674,000 $16,425,000 $ -- $159,099,000
============= =========== ========= ============
Year Ended December 31, 1992:
Land improvements......................... $ 1,049,000 $ 86,000 $ -- $ 1,035,000
Buildings and building improvements....... 43,899,000 8,004,000 -- 51,903,000
Furniture, fixtures and equipment......... 78,358,000 11,278,000 -- 89,636,000
------------- ----------- --------- ------------
$ 123,306,000 $19,368,000 -- $142,674,000
============= =========== ========= ============
Year Ended December 31, 1991:
Land improvements......................... $ 963,000 $ 86,000 $ -- $ 1,049,000
Buildings and building improvements....... 35,940,000 7,959,000 -- 43,899,000
Furniture, fixtures and equipment......... 66,410,000 12,436,000 (488,000) 78,358,000
------------- ----------- --------- ------------
$ 103,313,000 $20,481,000 ($488,000) $123,306,000
============= =========== ========= ============
</TABLE>
S-4
<PAGE>
<TABLE>
SCHEDULE VIII
TRUMP'S CASTLE ASSOCIATES AND SUBSIDIARY
SCHEDULE VIII--VALUATION AND QUALIFYING ACCOUNTS
For the Years Ended December 31, 1993, 1992 and 1991
Balance at Charged to Balance at
Beginning Costs and Other End
of Period Expenses Charges of Period
--------- -------- ------- ---------
<S> <C> <C> <C> <C>
Year Ended December 31, 1990:
Allowance for doubtful accounts.......... $2,721,000 $ 755,000 ($1,548,000)(A) $1,928,000
========== =========== ========== ==========
Valuation allowance for interest
differential on CRDA bonds............ $1,409,000 $ 953,000 -- $2,362,000
========== =========== ========== ==========
Years Ended December 31, 1992:
Allowance for doubtful accounts.......... $3,104,000 $ 2,290,000 ($2,673,000)(A) $2,721,000
========== =========== ========== ==========
Valuation allowance for interest
differential on CRDA bonds............ $ 753,000 $ 656,000 -- $1,409,000
========== =========== ========== ==========
Year Ended December 31, 1991:
Allowance for doubtful accounts.......... $5,184,000 $ 3,387,000 ($5,467,000)(A) $3,104,000
========== =========== ========== ==========
Valuation allowance for interest
differential on CRDA bonds............ $ 674,000 $ 137,000 ($ 58,000) $ 753,000
========== =========== ========== ==========
</TABLE>
(A) Net write-off of uncollectible accounts.
(B) Net write-off of allowance applicable to
contribution of CRDA deposits.
S-5
<PAGE>
<TABLE>
SCHEDULE IX
TRUMP'S CASTLE ASSOCIATES AND SUBSIDIARY
SCHEDULE IX--SHORT-TERM BORROWINGS
For the Years Ended December 31, 1993, 1992 and 1991
Weighted Maximum Average Weighted
Interest Amount Amount Average
Balance at Rate at Outstanding Outstanding Interest Rate
Category of Aggregate End End of During the During the During the
Short-Term Borrowings of Period Period Period Period(A) Period(B)
--------------------- ----------- -------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
1993:
Line of credit......................... $ -- -- $ -- $ -- --
Term loan.............................. -- -- -- -- --
----------- --- ----------- ----------- ---
$ -- -- $ -- $ -- --
=========== === =========== =========== ===
1992:
Line of credit......................... $ -- -- $ -- $ -- --
Term loan.............................. -- -- -- -- --
----------- --- ----------- ----------- ---
$ -- -- $ -- $ -- --
=========== === =========== =========== ===
1991:
Line of credit......................... $13,000,000 6.5% $13,000,000 $13,000,000 8.6%
Term loan.............................. 50,000,000 7.5 50,000,000 50,000,000 9.6
----------- --- ----------- ----------- ---
$63,000,000 8.0% $63,000,000 $83,000,000 9.0%
=========== === =========== =========== ===
</TABLE>
(A) Computed by dividing the total of monthly outstanding
balances by the total months during the period.
(B) Computed by dividing interest expense on the borrowings
by the average amount outstanding during the year.
S-6
<TABLE>
<PAGE>
SCHEDULE X
TRUMP'S CASTLE ASSOCIATES AND SUBSIDIARY
SCHEDULE X--SUPPLEMENTARY INCOME STATEMENT INFORMATION
For the Years Ended December 31, 1993, 1992 and 1991
(in thousands of dollars)
Charged to Costs and Expenses
--------------------------------------------
Items 1993 1992 1991
----- ------- ------- -------
<S> <C> <C> <C>
Maintenance and repairs............................ $ 2,284 $ 2,691 $ 2,120
======= ======= =======
Taxes, other than payroll and income taxes:
Gaming taxes.................................... $19,652 $19,070 $15,480
======= ======= =======
State taxes........................................ $ 5,556 $ 6,808 $ 7,975
======= ======= =======
Advertising costs.................................. $ 4,870 $ 6,101 $ 4,736
======= ======= =======
</TABLE>
S-7
<PAGE>
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------
EXHIBITS
filed with
Form S-4
Pre-Effective Amendment No. 1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------
TRUMP'S CASTLE FUNDING, INC.
--------
TRUMP'S CASTLE ASSOCIATES
===============================================================================
<PAGE>
INDEX OF EXHIBITS
Exhibit No. Description
5.1 Opinion of Willkie Farr & Gallagher
5.2 Opinion of Ribis Graham & Curtin
24.1 Consent of Arthur Andersen & Co.
24.4 Consent of Sterns & Weinroth
99 Form of Transmittal Letter and Related Documents
<PAGE>
[LETTERHEAD OF WILLKIE FARR & GALLAGHER]
May 2, 1994
Trump's Castle Funding, Inc.
Trump's Castle Associates
c/o The Trump Organization
725 Fifth Avenue
New York, New York 10022
Re: Registration Statement on Form S-4
(File No. 33-52309)
-------------------
Dear Sirs:
We have acted as counsel for Trump's Castle Funding, Inc., a New Jersey
corporation (the "Company"), and Trump's Castle Associates, a New Jersey general
partnership (the "Partnership"), in connection with the registration pursuant to
the Securities Act of 1933, as amended (the "Act"), of (i) $27,000,000 aggregate
principal amount of the Company's 11-1/2 Senior Secured Notes due 2000, Series B
(the "Senior Notes") and (ii) a guarantee by the Partnership of the Senior Notes
(the "Senior Guarantee"), as described in the above-referenced Registration
Statement on Form S-4 (the "Registration Statement").
The Senior Notes will be issued under an Indenture (the "Senior Note
Indenture") entered into by and among the Company, as issuer, the Partnership,
as guarantor, and First Bank National Association, as trustee (the "Trustee").
In connection therewith, we have participated in the preparation of the
Registration Statement relating to the Senior Notes and the Senior Guarantee,
including PreEffective Amendment No. 1 to the Registration Statement on Form S-4
(File No. 33-52309) being filed with the Securities and Exchange Commission
contemporaneously herewith, and we are familiar with the corporate and
partnership proceedings taken to date in connection with the authorization and
issuance of the Senior Notes and the Senior Note Guarantee.
In so acting, we have examined original, reproduced or certified copies of such
records of the Company and the Partnership relevant and necessary for the
opinions hereinafter set forth including, but not limited to, the Registration
Statement, the Senior Note Indenture, the Amended and Restated Certificate of
<PAGE>
Trump's Castle Funding, Inc.
Trump's Castle Associates
May 2, 1994
Page 2
Incorporation of the Company, the Amended and Restated By-Laws of the Company,
the Partnership's Second Amended and Restated Partnership Agreement and the form
of the Senior Notes (including the form of the Senior Guarantee set forth
therein), as each of such documents has been filed as an Exhibit to the
Registration Statement, and the relevant minutes of the corporate proceedings of
the Company or partnership proceedings of the Partnership. In such examination,
we have assumed the genuineness of all signatures, the authenticity of all
documents submitted to us as originals and the conformity to authentic originals
of all documents submitted to us as certified or reproduced copies. As to
various questions of fact material to such opinions, we have relied upon
certificates of, or communications with, officers of the Company, the
Partnership and of public officials. We have also relied on the assumptions set
forth in Section 4 of the Legal Opinion Accord of the ABA Section of Business
Law (1991).
Based on the foregoing and assuming that the following shall have occurred:
(i) the Registration Statement shall have been declared effective under the Act,
(ii) the Senior Note Indenture, in the form filed as an Exhibit to the
Registration Statement, shall have been qualified under the Trust Indenture Act
of 1939 and shall have been duly authorized, executed and delivered by each of
the parties thereto, (iii) no certificate of dissolution or proceeding therefor
shall have been filed or commenced with respect to the Company and (iv) the
Exchange Offer shall have been consummated, and further assuming that a
dissolution (as defined in the New Jersey Uniform Partnership Law) shall not
have occurred with respect to the Partnership, we are of the opinion that:
1. The Company has been duly incorporated and is a validly existing
corporation in good standing under the laws of the State of New Jersey.
2. The Partnership is validly existing as a general partnership under the
laws of the State of New Jersey.
3. The execution and delivery of the Senior Note Indenture and the issuance
of the Senior Notes have been Pduly authorized by the Company.
<PAGE>
Trump's Castle Funding, Inc.
Trump's Castle Associates
May 2, 1994
Page 3
When the Senior Note Indenture has been duly executed and delivered by the
parties thereto and the Senior Notes have been duly executed and delivered by
the Company and duly authenticated by the Trustee, all in accordance with the
terms of the Senior Note Indenture, and the Senior Notes have been issued in the
manner described in the Registration Statement after it has become effective
under the Act, the Senior Notes will be duly and validly issued, and will
constitute legal, valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms, except insofar as
enforceability thereof may be limited by (a) usury, bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar laws
affecting creditors' rights generally, (b) general principles of equity, and (c)
the Casino Control Act, N.J.S.A. 5:12-1, et seq., the regulations adopted
pursuant thereto, or rulings of the New Jersey Casino Control Commission, as
such laws, regulations or rulings may now or hereafter be in effect.
4. The execution and delivery of the Senior Guarantee have been duly
authorized by all requisite partnership action of the Partnership. When the
Senior Guarantee has been duly executed and delivered by the Partnership, and
the Senior Notes to which it relates have been duly executed and delivered by
the Company and duly authenticated by the Trustee, all in accordance with the
terms of the Senior Note Indenture, and the Senior Guarantee has been issued
together with the Senior Notes, in the manner described in the Registration
Statement after it has become effective under the Act, the Senior Guarantee will
be duly and validly issued, and will constitute the legal, valid and binding
obligation of the Partnership, enforceable against the Partnership in accordance
with its terms, except insofar as enforceability thereof may be limited by (a)
usury, bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance
or other similar laws affecting creditors' rights generally, (b) general
principles of equity, and (c) the Casino Control Act, N.J.S.A. 5:12-1, et seq.,
the regulations adopted pursuant thereto, or rulings of the New Jersey Casino
Control Commission, as such laws, regulations or rulings may now or hereafter be
in effect.
<PAGE>
Trump's Castle Funding, Inc.
Trump's Castle Associates
May 2, 1994
Page 4
No person or entity other than you may rely or claim reliance upon this
opinion. This opinion is limited to the matters stated herein and no opinion is
implied or may be inferred beyond the matters expressly stated. We call to your
attention that we are not admitted to practice, do not purport to be experts in
the laws of, and, accordingly, do not express an opinion as to matters arising
under the laws of any jurisdiction, other than The United States of America and
the State of New York. We are not admitted to practice law in the State of New
Jersey and, with respect to matters herein governed by the laws of the State of
New Jersey, have relied entirely upon the opinion of Ribis, Graham & Curtin,
including the assumptions set forth therein, a copy of which is annexed hereto.
We hereby consent to being named as counsel for the Company and the
Partnership in the Registration Statement, and in any amendments to the
Registration Statement, under the caption "Legal Matters" in the Prospectus
included in the Registration Statement, to the filing of this opinion as an
exhibit to said Registration Statement and to the use of this opinion in
connection with the registration of the Senior Notes and the Senior Guarantee
under the Act. In giving such consent, we do not hereby admit that we are in the
category of persons whose consent is required under Section 7 of the Act.
Very truly yours,
WILLKIE FARR & GALLAGHER
<PAGE>
[LETTERHEAD OF RIBIS, GRAHAM & CURTIN]
May 2, 1994
Trump's Castle Funding, Inc.
Trump's Castle Associates
c/o The Trump Organization
725 Fifth Avenue
New York, New York 10022
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, New York 10022
Re: Registration Statement on Form S-4
----------------------------------
Dear Sirs:
We have acted as special counsel in the State of New Jersey to Trump's
Castle Funding, Inc. (the "Company") and Trump's Castle Associates (the
"Partnership") in connection with the registration by the Company and the
Partnership pursuant to the Securities Act of 1933, as amended (the "Act") of
(x) $27,000,000 in aggregate principal amount of the Company's Senior Notes due
2000 (the "Senior Notes") and (y) a guarantee by the Partnership of the Senior
Notes (the "Senior Guarantee") as described in the above-referenced Registration
Statement on Form S-4 (the "Registration Statement"). The Senior Notes will be
issued under an Indenture (the "Senior Note Indenture") entered into by and
among the Company, as issuer, the Partnership, as guarantor, and First Bank
National Association, as trustee.
In connection therewith, we have participated in the preparation of the
Registration Statement relating to the Senior Notes and the Senior Guarantee and
we are familiar with the corporate and partnership proceedings taken to date in
<PAGE>
connection with the authorization and issuance of the Senior Notes and the
Senior Guarantee.
In so acting, we have examined original, reproduced or certified copies of
such records of the Company and the Partnership relevant and necessary for the
opinions hereinafter set forth, including, but not limited to, the Registration
Statement, the Senior Note Indenture, the Amended and Restated Certificate of
Incorporation of the Company, the Amended and Restated By-Laws of the Company,
the Second Amended and Restated Partnership Agreement of the Partnership and the
form of the Senior Notes (including the form of the Senior Guarantee set forth
therein), as each of such documents was filed as an Exhibit to the Registration
Statement, and the relevant minutes of corporate or partnership proceedings of
the Company and the Partnership. In such examination we have assumed the
genuineness of all signatures, the authenticity of all documents submitted to us
as originals and the conformity to authentic originals of all documents
submitted to us as certified or reproduced copies. As to various questions of
fact material to such opinions, we have relied upon certificates of, or
communications with, officers of the Company, the Partnership and of public
officials.
We have made such examination of New Jersey law as we have deemed relevant
for the purpose of this opinion, but we have not made an independent review of
federal law or the laws of any other state or foreign jurisdiction. Accordingly,
we express no opinion as to federal law or the laws of any state or any foreign
jurisdiction, and this opinion is confined to such matters as are governed
solely by New Jersey law.
Based on the foregoing and assuming that the following shall have occurred:
(i) the Registration Statement shall have been declared effective under the Act;
(ii) the Senior Note Indenture, in the form filed as an Exhibit to the
Registration Statement, shall have been qualified under the Trust Indenture Act
of 1939; (iii) no certificate of dissolution or proceeding therefor shall have
been filed or commenced with respect to the Company; and (iv) the Exchange Offer
shall have been consummated, and further assuming that a dissolution (as defined
in the New Jersey Uniform Partnership Law) shall not have occurred with respect
to the Partnership, we are of the opinion that:
1. The Company has been duly incorporated and is a validly existing
corporation in good standing under the laws of the State of New Jersey.
-2-
<PAGE>
2. The Partnership is validly existing as a general partnership under the
laws of the State of New Jersey.
3. The execution and delivery of the Senior Note Indenture and the issuance
of the Senior Notes have been duly authorized by all requisite corporate action
of the Company.
4. The execution and delivery of the Senior Guarantee have been duly
authorized by all requisite partnership action of the Partnership.
No person or entity other than the Company, the Partnership and Willkie
Farr & Gallagher, in rendering its validity opinion of even date herewith to the
Company and the Partnership, may rely or claim reliance upon this opinion. This
opinion is limited to the matters stated herein and no opinion is implied or may
be inferred beyond the matters expressly stated.
We hereby consent to being named as counsel for the Company and the
Partnership in the Registration Statement and in any amendments to the
Registration Statement, under the caption "Legal Matters" in the Prospectus
included in the Registration Statement, to the filing of this opinion as an
exhibit to the Registration Statement and to the use of this opinion by you in
connection with the registration of the Senior Notes and the Senior Guarantee
under the Act. In giving such consent, we do not hereby admit that we are in the
category of persons whose consent is required under Section 7 of the Act.
Very truly yours,
RIBIS, GRAHAM & CURTIN
-3-
<PAGE>
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent ot the use of our
reports dated February 11, 1994 covering the consolidated financial statements
of Trump's Castle Associates and subsidiary and the accompanying schedules of
Trump's Castle Associates and subsidiary and to all references to our firm,
included in or made part of this registration statement.
ARTHUR ANDERSEN & CO.
Roseland, New Jersey
May 4, 1994
<PAGE>
CONSENT
We have been involved in the preparation of the statements as to matters
of law and legal conclusions concerning New Jersey Gaming Laws included under
the captions "RISK FACTORS--Strict Regulation of the Partnership by the CCC" and
"--Potential Disqualification of Holders of the Senior Notes by the CCC,"
"REGULATORY MATTERS" (other than the subcaption--"Other Laws and Regulations"),
"DESCRIPTION OF THE SENIOR NOTES--Gaming Laws" and consent to the inclusion of
such statements in the Prospectus included in the Registration Statement on For,
S-4. We also consent to the reference to our firm under the caption "Experts" in
the Prospectus.
STERNS & WEINROTH
A Professional Corporation
Trenton, New Jersey
May 3, 1994
<PAGE>
<PAGE>
LETTER OF TRANSMITTAL
To Tender 11-1/2% Series A Senior Secured Notes
due 2000 of
TRUMP'S CASTLE FUNDING, INC.
in Exchange for
11-1/2% Series B Senior Secured Notes due 2000 of
TRUMP'S CASTLE FUNDING, INC.
Pursuant to the Prospectus Dated May 6, 1994
----------------------------------------------------------------
THE EXCHANGE OFFER WILL EXPIRE AT 11:00 AM, MINNEAPOLIS-ST. PAUL
TIME, ON JUNE 15, 1994, UNLESS THE EXCHANGE OFFER IS EXTENDED.
----------------------------------------------------------------
To the Depositary:
---------------------
First Bank National Association
By Mail: Facsimile Copy Number: By Hand:
Trump's Castle Funding Inc. (612) 244-0711 Trump's Castle Funding, Inc.
c/o First Bank National c/o First Bank National
Association Telex Number: Association
First Trust Center First Trust Center
180 East Fifth Street 180 East Fifth Street
St. Paul, MN 55010 St. Paul, MN 55101
Attn: Corporate Trust Attn: Corporate Trust
Department Department
For Information Call:
(612) 244-0721
---------------------
<PAGE>
Delivery of this Letter of Transmittal ("Letter of Transmittal") to an
address or facsimile number other than as set forth above will not constitute a
valid delivery.
The undersigned acknowledges receipt of (a) the Prospectus and Offer to
Exchange dated May 6, 1994 (the "Offer to Exchange") included in the
Registration Statement on Form S-4 of Trump's Castle Funding, Inc. ("Funding")
and Trump's Castle Associates (the "Partnership") and (b) this Letter of
Transmittal relating to the 11-1/2% Series A Senior Secured Notes due 2000 of
Funding (the "Series A Notes"), which together constitute Funding's offer to
exchange (the "Exchange Offer") each $1,000 principal amount of outstanding
Series A Notes for $1,000 principal amount of its new 11-1/2% Series B Senior
Secured Notes due 2000 (the "Series B Notes"), the payment of which is
guaranteed by the Partnership. Capitalized terms used but not otherwise defined
herein shall have the meanings assigned thereto in the Offer to Exchange.
This Letter of Transmittal is to be used by Holders (as defined below) of
Series A Notes if certificates are to be forwarded herewith pursuant to the
procedures set forth in "EXCHANGE OFFER -- Procedure for Tendering Series A
Notes" in the Offer to Exchange.
The term "Holder" with respect to the Exchange Offer means any person in
whose name Series A Notes are registered on the books of the registrar thereof
or such person's duly designated proxy. Only Holders of Series A Notes are
entitled to tender Series A Notes pursuant to the Exchange Offer. Beneficial
owners of Series A Notes who are not the registered Holders thereof and who wish
to tender such Series A Notes must (i) obtain a properly completed and executed
Letter of Transmittal and any other required documents from the registered
Holder of such Series A Notes or (ii) obtain a properly completed and executed
power of attorney from such registered Holder. Forms of proxies are being
furnished together with this Letter of Transmittal. Alternatively, a beneficial
owner of Series A Notes who is not the registered Holder thereof should request
such registered Holder to tender such Series A Notes on his or her behalf. See
"EXCHANGE OFFER -- Procedure for Tendering Series A Notes" in the Offer to
Exchange.
The undersigned has completed, signed, dated and delivered this Letter of
Transmittal to indicate the action the undersigned desires to take with respect
to the Exchange Offer.
In order to properly complete this Letter of Transmittal, a Holder must (i)
complete the box entitled "DESCRIPTION OF SERIES A NOTES," (ii) if appropriate,
check and complete the boxes relating to Special Exchange Instructions and
Special Delivery Instructions, (iii) sign the Letter of Transmittal by
completing the box entitled "SIGN HERE", and (iv) complete the Substitute Form
W-9.
<PAGE>
Your broker, dealer, commercial bank, trust company or other nominee can
assist you in completing this form. The instructions at the end of this Letter
of Transmittal must be followed in their entirety. Questions and requests for
assistance or additional copies of the Offer to Exchange or this Letter of
Transmittal may be directed to FUNDING OR FIRST BANK NATIONAL ASSOCIATION, which
is acting as Funding's Depository in connection with the Exchange Offer, at the
address or telephone number set forth below.
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE CHECKING ANY BOX BELOW.
List in the table below the Series A Notes that are to be tendered pursuant
to the Offer to Exchange and this Letter of Transmittal. If the space provided
is inadequate, list the certificate numbers and principal amounts on a separate,
signed schedule and affix the list to this Letter of Transmittal.
-2-
<PAGE>
DESCRIPTION OF SERIES A NOTES
----------------------------------------------------------------------
Aggregate
Name(s) Principal Principal
and Address(es) Certificate Amount of Amount
of Holder(s) Number(s) Certificates(s) Tendered1
_____________________________________________________________________
---------- --------------- ----------
---------- --------------- ----------
---------- --------------- ----------
---------- --------------- ----------
---------- --------------- ----------
---------- --------------- ----------
---------- --------------- ----------
---------- --------------- ----------
---------- --------------- ----------
---------------------------------------------------------------------
--------------------------
1 Unless otherwise indicated in the column labeled "Principal Amount
Tendered," any tendering Holder will be deemed to have tendered the entire
aggregate principal amount represented by the Series A Notes indicated in
the column labeled "Aggregate Principal Amount of Certificate(s)." See
Instruction 5 of this Letter of Transmittal.
-3-
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
----------------------------------------
PLEASE READ CAREFULLY THE ACCOMPANYING INSTRUCTIONS.
----------------------------------------------------
Ladies and Gentlemen:
The undersigned acknowledges receipt of (a) the Prospectus and Offer to
Exchange dated May 6, 1994 (the "Offer to Exchange") included in the
Registration Statement on Form S-4 of Trump's Castle Funding, Inc. ("Funding")
and Trump's Castle Associates (the "Partnership") and (b) this Letter of
Transmittal relating to the 11-1/2% Series A Senior Secured Notes due 2000 of
Funding (the "Series A Notes"), which together constitute Funding's offer to
exchange (the "Exchange Offer") each $1,000 principal amount of outstanding
Series A Notes for $1,000 principal amount of its 11-1/2% Series B Senior
Secured Notes due 2000 (the "Series B Notes") the payment of which is guaranteed
(the "Senior Guarantee") by the Partnership.
Subject to, and effective upon, acceptance for exchange of the Series A
Notes tendered herewith in accordance with the terms and subject to the
conditions of the Exchange Offer, the undersigned hereby assigns and transfers
to, or upon the order of, Funding all right, title and interest in and to all
the Series A Notes that are being tendered hereby and that are being accepted
for exchange pursuant to the Exchange Offer and irrevocably constitutes and
appoints the Depositary the true and lawful agent and attorney-in-fact of the
undersigned with respect to such Series A Notes, together with full power of
substitution (such power of attorney being deemed to be an irrevocable power
coupled with an interest), to (a) deliver certificates for such Series A Notes
with all accompanying evidences of transfer and authenticity, to or upon the
order of Funding upon receipt by the Depositary, as the undersigned's agent, of
the Series B Notes, (b) present such Series A Notes for transfer on the books of
Funding and (c) receive all benefits and otherwise exercise all rights of
beneficial ownership of such Series A Notes, all in accordance with the terms of
the Exchange Offer.
Upon the satisfaction or waiver of the conditions to the Exchange Offer,
Funding will accept for exchange, and will promptly thereafter exchange all
Series A Notes validly tendered pursuant to the Exchange Offer. See "EXCHANGE
OFFER -- Acceptance and Delivery of Series B Notes" in the Offer to Exchange.
-4-
<PAGE>
FUNDING AND THE PARTNERSHIP RESERVE THE RIGHT TO EXTEND OR, SUBJECT TO THE
TERMS OF THE OFFER TO EXCHANGE, AMEND THEEXCHANGE OFFER AT ANY TIME OR
FROMEXCHANGE OFFER AT ANY TIME OR FROM TIME TO TIME IN THEIR SOLE DISCRETION.
SUBJECT TO THE TERMS OF THE OFFER TO EXCHANGE, FUNDING AND THE PARTNERSHIP ALSO
RESERVE THE RIGHT TO WAIVE ANY AND ALL CONDITIONS TO THE EXCHANGE OFFER AND
ACCEPT FOR PAYMENT ANY SERIES A NOTES TENDERED PURSUANT THERETO. IN THE EVENT
THERE ARE ANY CHANGES IN THE TERMS OF THE EXCHANGE OFFER, SUCH TENDERS, WILL BE
REVOCABLE FOR A REASONABLE PERIOD OF TIME AS DETERMINED BY THE PARTNERSHIP AND
FUNDING IN THEIR SOLE DISCRETION.
For purposes of the Exchange Offer, Funding will be deemed to have accepted
for exchange validly tendered Series A Notes if, as and when Funding has given
written notice thereof to the Depositary.
The valid tender of Series A Notes in the Exchange Offer is conditioned
upon, among other things, the Holder of such Series A Notes executing and
delivering this Letter of Transmittal. If any tendered Series A Notes are not
accepted for exchange because of an invalid tender or the occurrence of certain
other events set forth in the Offer to Exchange, or otherwise, certificates for
any such unaccepted Series A Notes will be returned, without expense, to the
tendering Holder thereof, as promptly as practicable after the expiration or
termination of the Series A Notes.
All authority herein conferred or agreed to be conferred in this Letter of
Transmittal shall not be affected by, and shall survive, the death or incapacity
of the undersigned and any obligation of the undersigned hereunder shall be
binding upon the successors, assigns, heirs, executors, administrators and legal
and personal representatives of the undersigned.
The undersigned understands that tenders of Series A Notes pursuant to any
one of the procedures described in the Offer to Exchange and in the instructions
hereto will constitute a binding agreement between the undersigned and Funding
upon the terms and subject to the conditions of the Exchange Offer.
Unless otherwise indicated herein under "Special Exchange Instructions,"
please issue the Series B Notes or return any certificates for Series A Notes
not tendered or accepted for exchange in the name(s) of the registered Holder(s)
appearing under "Description of Series A Notes Tendered." Similarly, unless
otherwise indicated under "Special Delivery Instructions", please mail the
Series B Notes or return any certificates for Series A Notes not tendered or
accepted for exchange (and accompanying documents, as appropriate) to the
registered Holder(s) appearing under "Description of Series A Notes Tendered" at
the address shown below the undersigned's signature.
-5-
<PAGE>
If both the Special Delivery Instructions and the Special Exchange Instructions
are completed, please issue the Series B Notes, return any certificates for
Series A Notes not tendered or accepted for exchange in the name of, and deliver
said Series B Notes and return such certificates to, the person or persons so
indicated. The undersigned recognizes that Funding has no obligation pursuant to
the Special Exchange Instructions to transfer any Series A Notes from the name
of the registered Holder thereof if Funding does not accept for exchange any of
the Series A Notes so tendered.
The Undersigned represents that it will be acquiring the Series B Notes in
the ordinary course of its business, that it has no arrangement or understanding
with any person to participate in the distribution of Series B Notes, and that
by accepting the Exchange Offer, it is not engaged in, and does not intend to
engage in, a distribution of the Series B Notes.
-6-
<PAGE>
SPECIAL EXCHANGE INSTRUCTIONS
(See Instructions 6, 7 and 8)
To be completed ONLY if certificates for Series A Notes not tendered or not
exchanged, or certificates for Series B Notes exchanged for Series A are to be
issued in the name of someone other than the undersigned.
Issue to:
Name
---------------------------------------------------------------------------
(Please Print)
Address
-----------------------------------------------------------------------
(Include Zip Code)
- -------------------------------------------------------------------------------
(Tax Identification or Social Security Number)
-7-
<PAGE>
SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 6, 7 and 8)
To be completed ONLY if certificates for Series A Notes not tendered or not
exchanged or certificates for Series B Notes exchanged for Series A Notes are to
be sent to someone other than the undersigned, or to the undersigned at an
address other than that shown below.
Mail Series B Notes to:
Name
---------------------------------------------------------------------------
(Please Print)
Address
------------------------------------------------------------------------
(Include Zip Code)
- -------------------------------------------------------------------------------
(Tax Identification or Social Security Number)
-8-
<PAGE>
SIGN HERE
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Signature(s) of Owner(s)
IMPORTANT: COMPLETE AND SIGN THE SUBSTITUTE FORM W-9 HEREIN
Dated: , 19
------------------------------------------------------------------- --
(Must be signed by registered Holder(s) exactly as name(s) appear(s) on bond
certificate(s) or by person(s) authorized to become registered Holder(s) by
certificates and documents transmitted herewith. If signature is by trustees,
executors, administrators, guardians, attorneys-in-fact, agents, officers of
corporations or others acting in a fiduciary or representative capacity, please
provide the following information. See Instruction 6.)
Name(s)
------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Please Print)
Capacity (full title)
----------------------------------------------------------
Address
------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Including Zip Code)
Area Code and
Telephone Number
---------------------------------------------------------------
Tax Identification or
Social Security No.
------------------------------------------------------------
Guarantee of Signature(s)
-------------------------
(See Instructions 1 and 6)
Name of
Firm
---------------------------------------------------------------------------
Authorized
Signature
---------------------------------------------------------------------
Dated: , 19
-------------------------------------------------------------------- --
-9-
<PAGE>
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Exchange Offer
1. Guarantee of Signatures. No signature guarantee on this Letter of
Transmittal is required (i) if this Letter of Transmittal is signed by the
registered Holder of the Series A Notes tendered herewith, unless such Holder
has completed either the box entitled "Special Delivery Instructions" or the box
entitled "Special Exchange Instructions" or (ii) if such Series A Notes are to
be tendered for the account of a member firm of a national securities exchange
or a member of the National Association of Securities Dealers, Inc. or by a
commercial bank or trust company having an office or correspondent in the United
States (collectively, "Eligible Institutions"). In all other cases, all
signatures on the Letter of Transmittal must be guaranteed by an Eligible
Institution. See Instruction 6.
2. Delivery of Letter of Transmittal and Certificates. This Letter of
Transmittal is to be completed by Holders if certificates are to be forwarded
herewith. Certificates for all physically tendered Series A Notes, as well as a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof) and any other documents required by this Letter of Transmittal, must be
received by the Depositary at one of its addresses set forth herein on or before
the Expiration Date (as defined in the Offer to Exchange).
The method of delivery of this Letter of Transmittal, the certificates for
Series A Notes and all other required documents, is at the option and risk of
the tendering Holder and, except as otherwise provided in this Instruction 2,
the delivery will be deemed made only when actually received by the Depositary.
If delivery is by mail, registered mail with return receipt requested, properly
insured, is recommended.
No alternative, conditional or contingent tenders will be accepted. All
tendering Holders, by execution of this Letter of Transmittal (or facsimile
thereof), waive any right to receive any notice of the acceptance of their
Series A Notes for exchange.
3. Inadequate Space. If the space provided herein is inadequate, the
certificate numbers or the number of Series A Notes should be listed on a
separate signed schedule attached hereto.
-10-
<PAGE>
4. Withdrawal. Tenders of Series A Notes made pursuant to the Exchange
Offer may be revoked at any time prior to the Expiration Date. To be effective,
a written, telegraphic, telex or facsimile notice of withdrawal must be timely
received by the Depositary at its address set forth in this Letter of
Transmittal. Any notice of withdrawal must specify the name of the person having
tendered the Series A Notes to be withdrawn, the number of Series A Notes to be
withdrawn and the name of the registered Holder, if different from the name of
the person who tendered the Series A Notes. If certificates for Series A Notes
have been delivered or otherwise identified to the Depositary, then, before the
physical release of such certificates, the serial numbers shown on such
certificates must be submitted to the Depositary and the signatures on the
notice of withdrawal must be guaranteed by an Eligible Institution, unless such
Series A Notes have been tendered for the account of an Eligible Institution.
Withdrawal of tenders of Series A Notes may not be rescinded, and any Series A
Notes properly withdrawn will be deemed not to be validly tendered for purposes
of the Exchange Offer. Withdrawn Series A Notes may, however, be retendered by
repeating one of the procedures described herein at any time before the
Expiration Date. All questions as to the form and validity (including time of
receipt) of any notice of withdrawal will be determined by Funding and the
Partnership, in their sole discretion, which determination will be final and
binding. Neither Funding, the Partnership nor the Depositary will be under any
duty to give notification of any defects or irregularities in any notice of
withdrawal or to incur any liability for failure to give any such notification.
5. Partial Tenders. If less than the entire principal amount of the Series
A Notes evidenced by any certificate submitted are to be tendered, fill in the
principal amount of Series A Notes which are to be tendered in the box entitled
"Principal Amount Tendered." In such case, new certificate(s) for the remainder
of the Series A Notes that were evidenced by the old certificate(s) will be sent
to the registered Holder, unless otherwise provided in the boxes on this Letter
of Transmittal, as soon as practicable after the Expiration Date. All Series A
Notes represented by certificates delivered to the Depositary will be deemed to
have been tendered unless otherwise indicated.
6. Signatures on Letter of Transmittal, Powers of Attorney and
Endorsements. (a) If this Letter of Transmittal is signed by the registered
Holder(s) of the Series A Notes tendered hereby, the signature(s) must
correspond exactly to the name(s) as written on the face of the certificate(s)
without alteration, enlargement or any change whatsoever.
-11-
<PAGE>
(b) If any of the Series A Notes tendered hereby are owned of record by two
or more joint owners, all such owners must sign this Letter of Transmittal.
(c) If any tendered Series A Notes are registered in different names on
several certificates, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of
certificates.
(d) If this Letter of Transmittal or any certificates or powers of attorney
are 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 so indicate when signing, and proper evidence
satisfactory to Funding of such person's authority so to act must be submitted.
(e) When this Letter of Transmittal is signed by the registered Holder(s)
of the Series A Notes listed and transmitted hereby, no endorsements of
certificates or separate powers of attorney are required unless payment or
certificates for Series A Notes not tendered or exchanged are to be issued to a
person other than the registered Holder(s). Signatures on such certificates or
powers of attorney must be guaranteed by an Eligible Institution (unless signed
by an Eligible Institution).
(f) If this Letter of Transmittal is signed by a person other than the
registered Holder(s) of the Series A Notes listed, the certificates must be
endorsed or accompanied by appropriate powers of attorney that authorizes such
person to tender such Series A Notes and execute and deliver a consent with
respect thereto on behalf of such registered Holder(s), in either case signed
exactly as the name or names of the registered Holder(s) appear on the
certificates. A form of irrevocable proxy, for use by persons who are not
registered Holders of their Series A Notes, has been furnished together with
this Letter of Transmittal.
7. Transfer Taxes. Except as set forth in this Instruction 7, Funding will
pay or cause to be paid any transfer taxes with respect to the transfer of
exchanged Series A Notes to it or its order pursuant to the Exchange Offer. If
Series B Notes are to be given to, or if certificates for Series A Notes not
tendered or exchanged are to be registered in the name of, any person other than
the registered Holder, or if tendered certificates are registered in the name of
any person other than the person(s) signing this Letter of Transmittal,
satisfactory evidence must be submitted of the payment (or exemption therefrom)
of the amount of any transfer taxes (whether imposed on the registered Holder or
such other person) payable on account of the transfer to such person.
<PAGE>
-12-
Except as provided in this Instruction 7, it will not be necessary for
transfer tax stamps to be affixed to the certificates listed in this Letter of
Transmittal.
8. Special Exchange and Delivery Instructions. If Series B Notes or
certificates for unexchanged Series A Notes are to be issued in the name of a
person other than the signer of this Letter of Transmittal or if Series B Notes
are to be sent or such certificates are to be returned to someone other than the
signer of this Letter of Transmittal or to an address other than that shown
above, the appropriate boxes on this Letter of Transmittal should be completed.
9. Mutilated, Lost, Stolen or Destroyed Series A Notes. If a Holder desires
to tender Series A Notes pursuant to the Exchange Offer, but the certificates
evidencing such Series A Notes have been mutilated, lost, stolen or destroyed,
such Holder should write to or telephone Patricia M. Wild, Esq., Senior Vice
President and General Counsel of the Partnership, at the following address about
procedures for obtaining replacement certificates for such Series A Notes:
Trump's Castle Funding, Inc.
c/o Trump's Castle Casino Resort
Brigantine Boulevard and Huron Avenue
Atlantic City, New Jersey 08401
(609) 441-8640
10. Requests for Assistance or Additional Copies. Requests for assistance
may be directed to or additional copies of the Offer to Exchange and this Letter
of Transmittal may be obtained from the Depositary at its address set forth
below or from your broker, dealer, commercial bank or trust company.
11. Irregularities. All questions as to the validity, form, eligibility
(including time of receipt) and acceptance of any tender of Series A Notes will
be determined by Funding or the Partnership, in their sole discretion, and their
determination shall be final and binding. Funding and the Partnership reserve
the absolute right to reject any or all tenders of any particular Series A Notes
(i) determined by them to be not in appropriate form or (ii) the acceptance for
exchange of which may, in the opinion of Funding's or the Partnership's counsel,
be unlawful. Funding and the Partnership also reserve the absolute right to
waive any of the conditions of the Exchange Offer or any defect or irregularity
<PAGE>
-13-
in tender with regard to any particular Series A Notes or Holder, and Funding's
and the Partnership's interpretations of the terms and conditions of the
Exchange Offer (including these instructions) shall be final and binding. Unless
waived, any defects or irregularities must be cured within such time as Funding
or the Partnership shall determine. None of Funding, the Partnership, the
Depositary or any other person shall be under any duty to give notice of any
defects or irregularities in tenders, nor shall any of them incur any liability
for failure to give any such notice. Tenders shall not be deemed to have been
made until all defects and irregularities have been cured or waived.
12. Substitute Form W-9. The tendering Holder is required to provide the
Depositary with a correct Taxpayer Identification Number ("TIN") on Substitute
Form W-9 which is provided under "Important Tax Information" below, and to
indicate that the Holder is not subject to backup withholding by checking the
box in Part 2 of the Substitute Form W-9. Failure to provide the information on
the Substitute Form W-9 may subject the tendering Holder to a 31% Federal income
tax withholding on the gross proceeds payable to a Holder pursuant to the
Exchange Offer. The box in Part 3 of the Substitute Form W-9 may be checked if
the tendering Holder has not been issued a TIN and has applied for a number or
intends to apply for a number in the near future. If the box in Part 3 is
checked and the Depositary is not provided with a TIN within 60 days, the
Depositary will withhold 31% of the gross proceeds payable to a Holder pursuant
to the Exchange Offer until a TIN is provided to the Depositary.
Important: This Letter of Transmittal (or a facsimile thereof), together
with certificates and all other required documents, must be received by the
Depositary prior to 11:00 AM, Minneapolis-St. Paul time on the Expiration Date,
unless the Exchange Offer is extended.
-14-
<PAGE>
(DO NOT WRITE IN SPACE BELOW)
Series A Series A Series A
Notes Notes Notes Series B Certifi- Block
Surrendered Tendered Accepted Notes Issued cate No. No.
- -------------- --------- --------- ------------ --------- -----
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Delivery Prepared By Date
--------------------- ----------- --------------
-15-
<PAGE>
IMPORTANT TAX INFORMATION
Under Federal income tax law, a Holder whose tendered Series A Notes are
accepted for exchange is required to provide the Depositary with such Holder's
correct TIN on Substitute Form W-9 below. If such Holder is an individual, the
TIN is his social security number. If such Holder is an entity, it is such
Holder's employer identification number. If the Depositary is not provided with
the correct TIN, the Holder may be subject to a $50 penalty imposed by the
Internal Revenue Service (the "IRS"). In addition, the gross proceeds payable to
such Holder with respect to Series A Notes exchanged pursuant to the Exchange
Offer may be subject to backup withholding.
Certain Holders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, that Holder must submit a statement on Form W-8, signed under
penalties of perjury, attesting to that individual's exempt status. Copies of
Form W-8 may be obtained from the Depositary. See the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of the gross proceeds otherwise payable to a Holder pursuant to the Exchange
Offer. Backup withholding is not an additional tax. Rather, the tax liability of
persons subject to backup withholding will be reduced by the amount of tax
withheld. If withholding results in an overpayment of taxes, a refund may be
obtained.
Purpose of Substitute Form W-9
To prevent backup withholding on payments that are made to a Holder with
respect to Series A Notes exchanged pursuant to the Exchange Offer, the Holder
is required to notify the Depositary of his correct TIN by completing the form
below certifying under penalties of perjury that the TIN provided on the
Substitute Form W-9 is correct (or that such Holder is awaiting a TIN).
What Number to Give the Depositary
The Holder is required to give the Depositary the social security number or
employer identification number of the record owner of the Series A Notes. If the
Series A Notes are in more than one name or are not in the name of the actual
owner, consult the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional guidelines on which
number to report.
-16-
<PAGE>
NOTE: FAILURE TO COMPLETE AND RETURN SUBSTITUTE FORM W-9 OR, WHERE APPLICABLE,
FORM W-8, MAY RESULT IN BACKUP WITHHOLDING UPON DISTRIBUTIONS MADE TO YOU
PURSUANT TO THIS TRANSMITTAL LETTER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR
CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR
ADDITIONAL DETAILS.
-17-
<PAGE>
===============================================================================
PAYER'S NAME:
- -------------------------------------------------------------------------------
SUBSTITUTE Part 1 - PLEASE -------------------
PROVIDE YOUR TIN Social Security
Form W-9 IN THE BOX AT THE Number
RIGHT AND CERTIFY
BY SIGNING AND OR
DATING BELOW
-------------------
Employer
Identification Number
- -------------------------------------------------------------------------------
Department of the Part 2 - For Payees Exempt From
Treasury Withholding (See Instructions on
Internal Revenue the attached Guidelines for
Service Certification)
Payer's Request Part 3 - Awaiting TIN / /
for Taxpayer
Identification
Number (TIN)
- -------------------------------------------------------------------------------
-18-
<PAGE>
- -------------------------------------------------------------------------------
Certification - Under Penalties of Perjury, I
certify that:
(1) The number shown on this form is my correct
Taxpayer Identification Number (or I am
waiting for a number to be issued to me) and
(2) I am not subject to backup withholding
because: (a) I am exempt from backup
withholding; (b) I have not been notified by
the IRS that I am subject to backup
withholding as a result of a failure to
report all interest or dividends; or (c) the
IRS has notified me that I am no longer
subject to backup withholding.
Certificate instructions - You must cross out
item (2) above if you have been notified by the
IRS that you are subject to backup withholding
because of underreporting interest or dividends
on your tax return.
SIGNATURE...................... DATE...........
===============================================================================
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENT MADE TO YOU PURSUANT TO THE EXCHANGE
OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL
DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED
THE BOX IN PART 3 OF THE SUBSTITUTE FORM W-9
-19-
<PAGE>
===============================================================================
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and either (a) I have mailed or delivered an application
to receive a taxpayer identification number to the appropriate Internal Revenue
Service Center or Social Security Administration Officer or (b) I intend to mail
or deliver an application in the near future. I understand that if I do not
provide a taxpayer identification number within sixty (60) days, 31% of all
reportable payments made to me thereafter will be withheld until I provide a
number.
Signature............................................ Date................
===============================================================================
-20-
<PAGE>
Purpose of Form W-9.-A person who is required to file an information return
with the IRS must obtain your correct TIN to report income paid to you, real
estate transactions, mortgage interest you paid, the acquisition or abandonment
of secured property, or contributions you made to an IRA. Use Form W-9 to
furnish your correct TIN to the requester (the person asking you to furnish your
TIN) and, when applicable, (1) to certify that the TIN you are furnishing is
correct (or that you are waiting for a number to be issued), (2) to certify that
you are not subject to backup withholding, and (3) to claim exemption from
backup withholding if you are an exempt payee. Furnishing your correct TIN and
making the appropriate certifications will prevent certain payments from being
subject to backup withholding.
NOTE: If a requester gives you a form other than a W-9 to request your TIN,
you must use the requester's form.
How to Obtain a TIN.-If you do not have a TIN, apply for one immediately.
To apply, get Form SS-5, Application for a Social Security Number Card (for
individuals) from your local office of the Social Security Administration, or
Form SS-4, Application for Employer Identification Number (for businesses and
all other entities), from your IRS office.
To complete Form W-9 if you do not have a TIN, check the space for
"Awaiting TIN" on Part 3, sign and date the form, and give to the requester.
Generally, you will then have 60 days to obtain a TIN and furnish it to the
requester. If the requester does not receive your TIN within 60 days, backup
withholding, if applicable, will begin and continue until you furnish your TIN
to the requester. For reportable interest or dividend payments, the payer must
exercise one of the following options concerning backup withholding during this
60-day period. Under option (1), a payer must backup withhold on any reportable
interest or dividend payments made to your account, regardless of whether you
make any withdrawals. The backup withholding under option (2) must begin no
later than seven business days after the requester receives this form back.
Under option (2), the payer is required to refund the amounts withheld if your
certified TIN is received within the 60-day period and you were not subject to
backup withholding during that period.
NOTE: Checking "Awaiting TIN" on the form means that you have already
applied for a TIN OR that you intend to apply for one in the near future.
As soon as you receive your TIN, complete another Form W-9, include your
TIN, sign and date the form, and give it to the requester.
-21-
<PAGE>
The Depositary is:
First Bank National Association
By Facsimile: By Hand, Mail or Overnight Courier: Confirm by
Telephone:
(612) 244-0711 Trump's Castle Funding, Inc. (612) 244-0721
c/o First Bank National
Association
First Trust Center
180 East Fifth Street
St. Paul, MN 55101
Attention: Corporate Trust
Department
-22-
<PAGE>
TRUMP'S CASTLE FUNDING, INC.
11-1/2% SERIES A SENIOR SECURED NOTES DUE 2000
For Each Each Exchanging Holder Will Receive
- -------- -----------------------------------
$1,000 principal $1,000 principal amount of Funding's 11-1/2%
amount of Series B Senior Secured Notes due 2000, the
Series A Notes payment of which is guaranteed by the Partnership.
THE EXCHANGE OFFER WILL EXPIRE AT 11:00 A.M., MINNEAPOLIS-ST. PAUL TIME,
ON JUNE 15, 1994, UNLESS EXTENDED.
, 1994
-----------
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
Enclosed is the Prospectus and Offer to Exchange of Trump's Castle Funding,
Inc. ("Funding") and Trump's Castle Associates (the "Partnership"), dated May 6,
1994 (the "Offer to Exchange"), and the related Letter of Transmittal which
together constitute Funding's offer to exchange (the "Exchange Offer") each
$1,000 principal amount of its outstanding 11-1/2% Series A Senior Secured Notes
due 2000 (the "Series A Notes") for $1,000 principal amount of its new 11-1/2%
Series B Senior Secured Notes due 2000, the payment of which is guaranteed by
the Partnership. Capitalized terms used but not otherwise defined herein shall
have the meanings assigned thereto in the Offer to Exchange.
Funding's obligation to accept tendered Series A Notes for exchange is
subject to certain conditions set forth in the Offer to Exchange under the
caption "THE EXCHANGE OFFER -- Conditions of the Exchange Offer."
Except as disclosed in the Offer to Exchange, Funding will not pay any fees
or commissions to any broker or dealer or other person for soliciting tenders of
Series A Notes pursuant to the Exchange Offer. You will be reimbursed for
customary mailing and handling expenses incurred by you in forwarding any of the
enclosed materials to your clients. Funding will pay or cause to be paid
security transfer taxes, if any, with respect to the Exchange Offer and transfer
of any Series A Notes to it pursuant to the Exchange Offer, except as otherwise
provided in Instruction 7 of the enclosed Letter of Transmittal.
<PAGE>
Enclosed are copies of the following documents:
1. Offer to Exchange;
2. Letter of Transmittal to be used in accepting the Exchange Offer;
3. Form of proxy to be used by persons who are not registered Holders (as
defined below) of Series A Notes;
4. Guidelines of the Internal Revenue Service for certification of Taxpayer
Identification Number on Substitute Form W-9; and
5. Form of letter which may be sent to your clients for whose accounts you
hold Series A Notes in your name or in the name of your nominee, with space
provided for obtaining such client's instructions with respect to the Exchange
Offer.
The term "Holder" with respect to the Exchange Offer means any person in
whose name Series A Notes are registered on the books of the registrar thereof
or such person's duly designated proxy.
Your immediate attention to this matter is requested. We urge you to
contact your clients as promptly as possible. The term "Expiration Date" shall
mean 11:00 a.m., Minneapolis-St. Paul time, on June 15, 1994, unless the
Exchange Offer is extended, in which case the term "Expiration Date" shall mean
the latest date and time on which the Exchange Offer as so extended shall
expire. HOLDERS WHO WISH TO RECEIVE THE EXCHANGE CONSIDERATION MUST TENDER PRIOR
TO THE EXPIRATION DATE.
In order to take advantage of the Exchange Offer, a properly completed and
duly executed Letter of Transmittal, certificates representing the tendered
Series A Notes and any other required documents should be delivered to the
Depositary, all in accordance with the instructions set forth in the Offer to
Exchange and the Letter of Transmittal.
-2-
<PAGE>
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY PERSON AS AN AGENT OF FUNDING, THE INFORMATION AGENT OR THE DEPOSITARY,
OR AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENTS ON BEHALF OF THEM
WITH RESPECT TO THE EXCHANGE OFFER, EXCEPT FOR STATEMENTS EXPRESSLY MADE IN THE
OFFER TO EXCHANGE OR THE LETTER OF TRANSMITTAL.
Sincerely,
Secretary
-3-
<PAGE>
TRUMP'S CASTLE FUNDING, INC.
11-1/2% SERIES A SENIOR SECURED NOTES DUE 2000
For Each Each Exchanging Holder Will Receive
- -------- -----------------------------------
$1,000 principal $1,000 principal amount of Funding's 11-1/2%
amount of Series B Senior Secured Notes due 2000, the
Series A Notes payment of which is guaranteed by the Partnership.
THE EXCHANGE OFFER WILL EXPIRE AT 11:00 A.M., MINNEAPOLIS-ST. PAUL TIME, ON
JUNE 15, 1994, UNLESS EXTENDED.
, 1994
----------
To Our Clients:
Enclosed for your consideration is the Prospectus and Offer to Exchange of
Trump's Castle Funding, Inc. ("Funding") and Trump's Castle Associates (the
"Partnership"), dated May 6, 1994 (the "Offer to Exchange"), and the related
Letter of Transmittal which together constitute Funding's offer to exchange (the
"Exchange Offer") each $1,000 principal amount of its outstanding 11-1/2% Series
A Senior Secured Notes due 2000 (the "Series A Notes") for $1,000 principal
amount of its new 11-1/2% Series B Senior Secured Notes due 2000 (the "Series B
Notes"), the payment of which is guaranteed by the Partnership. Capitalized
terms used but not otherwise defined herein shall have the meanings assigned
thereto in the Offer to Exchange.
We are the registered Holder of Series A Notes for your account. The term
"Holder" with respect to the Exchange Offer means any person in whose name
Series A Notes are registered on the books of the registrar thereof or such
person's duly designated proxy. A tender of such Series A Notes may be made only
by us as the registered Holder pursuant to your instructions. The Letter of
Transmittal is furnished to you for your information only and cannot be used by
you to tender Series A Notes held by us for your account.
We request your instructions as to whether you wish us to tender with
respect to any or all of the Series A Notes held by us for your account.
IF YOU DESIRE TO TENDER YOUR SERIES A NOTES, WE MUST RECEIVE SUCH
INSTRUCTIONS FROM YOU PRIOR TO JUNE 15, 1994.
-1-
<PAGE>
Your instructions to us should be forwarded as promptly as possible in
order to permit us to tender your Series A Notes in accordance with the
provisions set forth in the Offer to Exchange and the Letter of Transmittal.
Your attention is directed to the following:
1. Funding will exchange for each $1,000 principal amount of Series A
Notes, $1,000 principal amount of its Series B Notes (the "Exchange
Consideration").
2. The term "Expiration Date" shall mean 11:00 a.m., Minneapolis-St.
Paul time, on June 15, 1994, unless the Exchange Offer is extended, in
which case the "Expiration Date" shall mean the latest time and date on
which the Exchange Offer as so extended shall expire. If you desire to
receive the Exchange Consideration for your Series A Notes, we must receive
your instructions in ample time to permit us to tender Series A Notes on
your behalf by the Expiration Date.
3. Funding's obligation to pay the Exchange Consideration for tendered
Series A Notes is subject to certain conditions set forth in the Offer to
Exchange under the caption "THE EXCHANGE OFFER -- Conditions of the
Exchange Offer."
4. Funding will pay or cause to be paid security transfer taxes, if
any, with respect to the exchange and transfer of any Series A Notes to it
pursuant to the Exchange Offer, except as otherwise provided in Instruction
7 of the Letter of Transmittal.
If you wish to have us tender any or all of your Series A Notes, please so
instruct us by completing, executing, detaching and returning to us the
instruction form attached hereto. An envelope to return your instructions to us
is enclosed. If you authorize the tender of your Series A Notes, all such Series
A Notes will be tendered unless otherwise specified on the form attached hereto.
If you wish to receive the Exchange Consideration, your instructions should be
forwarded to us in ample time to permit us to tender your Series A Notes by the
Expiration Date.
-2-
<PAGE>
Instructions with Respect to
Offer to Exchange
for
11-1/2% SERIES A SENIOR SECURED NOTES DUE 2000
of
TRUMP'S CASTLE FUNDING, INC.
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Exchange, dated May 6, 1994, and the related Letter of Transmittal in
connection with the offer by Trump's Castle Funding, Inc. ("Funding") and
Trump's Castle Associates to exchange each $1,000 principal amount of Funding's
outstanding 11-1/2% Series A Senior Secured Notes due 2000(the "Series A Notes")
for $1,000 principal amount of its new 11-1/2% Series B Senior Secured Notes due
2000.
This will instruct you to tender the Series A Notes indicated below which
are held by you for the account of the undersigned, upon the terms and subject
to the conditions set forth in the Offer to Exchange and the related Letter of
Transmittal.
Principal amount of Series A Notes which
are to be tendered:$_____________________
----------------------------------
Signature(s)
----------------------------------
Name(s) (please print)
----------------------------------
Address (including zip code)
-----------------------------------
Telephone No. (including area code)
-----------------------------------
Date
-3-
<PAGE>
